Picture the scene: It’s a formal dinner at Harvard University in Cambridge, Mass., on the cusp of a presidential election year. A conference of young leaders from all over the world has gathered to discuss the challenges and opportunities of globalization. After dinner, David Gergen and Lawrence Summers take the stage. A tall man with patrician bearing, Gergen has advised four U.S. presidents: Richard Nixon, Gerald Ford, Ronald Reagan and Bill Clinton. Summers was secretary of the treasury under Clinton. President of Harvard for five years, he is now a professor of economics.
“As someone who has been a proponent of globalization, recognizing the benefits of free trade,” Gergen says to Summers, “you know that the system’s viability and stability depends on how well it works for the middle class. Does it still work for the middle class?”
Summers looks thoughtful. “Earlier today, I spoke with a group of newly elected mayors from across the U.S.,” he replies. “They basically had one concern: people in our cities thought that they would get better jobs, and now they don’t have better jobs. The mayors want to know what to tell them.” In such an atmosphere, Summers says, staying committed to free trade is “a huge challenge” facing the United States.
Why is free trade under fire down south, and what could it mean for Canada? The U.S. economy is reeling from a credit crisis that at year-end showed no sign of abating. There is some good news — productivity is up at an annual rate of 6.3% in the third quarter. But growth has been slowing, wages are stagnating, and free trade appears to be getting the rap. (An estimated 21 of 36 newly elected Democrats in November’s 2006 congressional elections are “trade skeptics.”) One of Bill Clinton’s senior economic advisers, Robert Shapiro, who now heads a Washington, D.C.–based initiative on globalization for a think-tank, puts it this way: “I’ve worked in this town for 22 years, and I’ve never seen a weaker consensus on free trade.”
Judging by the rhetoric seeping into the presidential campaign, those who benefit hugely from free trade with the United States — read, Canadians — could be forgiven a moment of concern. John Edwards has said that, if elected, he’d renegotiate NAFTA. Hillary Clinton told Bloomberg.com that a “time out” is needed on new trade pacts. (As New York senator, Clinton voted against trade deals with South Korea in 2007 and Central America in 2005. For the record, Shapiro, who has known both Clintons for 20 years, says that if she is elected, he would not expect her to rework existing trade pacts.) Barack Obama’s voting record in the Senate echoes Clinton’s.
On the Republican side, the commitment to free trade is sturdier. Front-runner Rudy Giuliani’s platform states he would “aggressively advance” free trade deals and restart the stalled Doha round of multilateral trade talks at the WTO. Mitt Romney’s campaign literature has stated that as president he “will seek to bring together nations committed to open markets and playing by the rules in the largest ever free trade area…while challenging China and others advancing agreements that exclude America.” (Trade law expert and former WTO lawyer Simon Lester says this implies an “us and them” mentality that could, ultimately, be more disruptive to trade than beneficial.)
That leaves Republican dark-horse candidate Mike Huckabee, who performed strongly in a recent CNN-YouTube debate. The pro-trade Club For Growth, based in Washington, D.C., calls Huckabee’s record on trade as governor of Arkansas “limited.” (Huckabee, a former Baptist minister, is on the record saying free trade can lead to the loss of American jobs.)
So the outlook for freer trade is mixed. According to Summers, though, much of the rhetoric is political posturing. “It’s an election year, and the economy’s in bad shape,” he said after his talk. “But you’ll find the candidates’ bark is worse than their bite. No matter who is elected president, the U.S. policy on free trade will remain broadly internationalist.” Now that’s more like it.