Presidential Candidates Differ On Free Trade

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ROBERT SIEGEL, host:

Well, as we've heard, John McCain is traveling in Latin America where one topic on his agenda is trade. And yesterday in Colombia, he told that country's president how much he wants to conclude a U.S.-Colombian free trade agreement.

Senator JOHN McCAIN (Republican, Arizona; Presidential Candidate): I know that a free trade agreement has been concluded between Colombia and Canada, and you are negotiating with the European Union as well. I hope that we could move forward with a free trade agreement between our two countries.

SIEGEL: There is a U.S.-Colombia trade deal pending, but many Democrats on Capitol Hill oppose it, including Barack Obama.

Joining us to talk about trade policy as a campaign issue is John Bussey, Washington bureau chief of The Wall Street Journal. John Bussey, first, trade is an area of economic policy where there are real differences between the two candidates.

Mr. JOHN BUSSEY (Washington Bureau Chief, The Wall Street Journal): There really are, and I think that as the economy worsens, you're going to see trade fall into even sharper relief. As people worry more about housing prices dropping, and the stock market dropping, they begin to worry about job security and trade inevitably springs very much to the forefront of that.

And I think that on that issue, you see notable differences between these two candidates. Obama clearly raising questions about previous trade accords, future trade accords, the notion of globalization and free trade, and McCain very much sounding the (unintelligible) of free trade, that it's a positive thing and, from his standpoint, an effective way to extend U.S. foreign policy abroad.

SIEGEL: Barack Obama said earlier this year of the Colombia free trade agreement, violence against the unions in Colombia would make a mockery of the very labor protections that we've insisted be included in these kinds of agreements. Like a lot of Democrats, he would place labor and environmental standards, or try to at least, in trade agreements.

Mr. BUSSEY: That's right. And this has been something that you've heard from other candidates as well, and you've heard increasingly in Congress. Remember in 2006, there were a number of Congress people who were elected based on their concern about these same issues and the concern about stagnant wage growth in the United States which they associated with the downsides of globalization, that is the transfer of U.S. jobs abroad.

And I think one thing to keep in mind is that there's a difference between a national campaign and what candidate does after he or she gets elected. In this case, Obama or McCain will have to manage an economy and manage a relationship not just with labor in the United States but with U.S. business, which is very much engaged in trade abroad.

So there will be powerful lobbying groups acting upon them just as President Clinton and President Bush found that they could sound very tough during their campaigns but then were fairly much free traders once they got into office.

SIEGEL: But it is possible, at least, that what was an era of good feelings over trade policy since the Clinton presidency might be breaking down. Is it possible that an Obama presidency would just be a more pro-labor, liberal position on trade, but that is politically liberal not economically liberal?

Mr. BUSSEY: Yeah, I think that that's possible, and I think that you're right to frame that in economic terms, as well. Clinton was very tough on China during the campaign, and then, of course, it was the Clinton administration that got China into the WTO. But mind you, the '90s were fairly positive economic times in the United States.

Now, with the economy on the skids and the bottom not in sight, things like sovereign wealth funds - these very large government funds from abroad investing in U.S. banks and in other sectors of the economy that has made the American electorate much more nervous. And you see this reflected in congressional votes on free trade pacts declining from the NAFTA days when the Democrats particularly were in support of it more recently to Central American Free Trade Accord that had far fewer Democrats voting for them in the '90s.

SIEGEL: Well, in the face of anxiety over sovereign wealth funds - big investments effectively by foreign governments - and anxiety over the economic slowdown, what does Senator McCain say in defense of a free trade policy?

Mr. BUSSEY: Well, he says it's good for U.S. job growth. That if you bring down tariffs, that if you bring down barriers between different economies around the world that inevitably you're out ahead. You generate more business globally, more economic fatality globally. And the U.S., which has all sorts of innovative products to sell - not just grain or cars, but financial services and other types of goods - will benefit.

And I think if he's got a tailwind behind him from the S&P 500 companies, the bulk of whom have a huge chunk of their profits derived from business abroad and want to see that continue. They don't want to see barriers begin to be erected that would stymie some of that business.

SIEGEL: Well, John Bussey, thanks a lot for talking with us.

Mr. BUSSEY: My pleasure.

SIEGEL: That's John Bussey who is Washington bureau chief of the Wall Street Journal.

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