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Post election observations on ''looming'' protectionism and a probable shift in US trade policy

Bloomberg News – Shanghai, PRC:

Asia's leaders, led by an ascendant China, say they hope Barack Obama didn't really mean those campaign promises to protect American trade. And if he did, they are in better shape to object than ever before.

To Asian ears, Obama's calls for tougher labor and environmental rules and steps to reduce the U.S. trade deficit sound like thinly veiled protectionism, just as a global financial crisis makes exports more crucial than ever.

"The immediate concern with Obama will be economic relations," said Wu Xinbo, deputy director of the Center for American Studies at Fudan University in Shanghai.

The U.S. will be less forthcoming in pursuing economic liberalization in the Asia region because of concerns about jobs lost to trade.

Obama's goal of corralling developing economies into binding pollution-reduction commitments and his pledges to insert labor and environmental standards in trade agreements may spark unified opposition in an Asia that has more tools than ever to resist Western pressure.

Financial Times – London, England:

"I don’t think Senator Obama is knee-jerk anything," says Brian Pomper, a Democratic trade lobbyist at Parven Pomper Strategies in Washington."I think he is very smart, thoughtful and pragmatic, and I would expect him to approach trade policy with those same qualities."

Still, nervousness among proponents of further trade liberalisation about the true identity of an Obama administration remains.

Globe & Mail – Toronto, Canada:

"Obama’s books hint that he’s a free trader, while his Senate votes suggest otherwise. But what’s most concerning has been campaign rhetoric that a times seems almost populist," said Bill Lane, Washington director for governmental affairs for Caterpillar, the maker of construction machinery.

Some of the issues that earned credit with Mr. Bush's administration, such as increased military spending, and Canada's role as a staunch NATO ally in Afghanistan, will still be appreciated in Washington, as Mr. Obama has pledged to make that mission a priority.

But a bigger Canadian concern will be a Democratic president backed by a heavily Democratic Congress riding a wave of protectionism fuelled by economic recession.

The question is how Canada manages it, many analysts say.

Will there be protectionist tendencies coming out of the 111th Congress? Yes. Will Barack Obama be more likely to stand in the way of those than George Bush would?

Probably not. But that does not mean Canada should panic about its relationship with us," said Maryscott (Scotty) Greenwood, who was chief of staff at the U.S. embassy in Ottawa during the Bill Clinton administration and is now executive director of the Canadian - American Business Council.

Despite Mr. Obama's comment during the Democratic primaries that he would force renegotiation of the North American free-trade agreement, he is surrounded by economic advisers friendly to North American trade, and many analysts believe he is not likely to threaten the core of the deal.

Associated Press – Beijing, PRC:

Many expressed unease about Mr. Obama's pledges to vigorously enforce trade laws and criticism of a pending trade pact with South Korea that he says fails to address an imbalance in auto shipments.

The Democrats, traditionally viewed as more protectionist on trade than Republicans, now control the presidency and Congress.

Obama has said he is in favour of free trade agreements if they benefit the United States. He has criticized the one with South Korea, saying it does not adequately address an imbalance in auto trade. South Korean automakers sold 772,482 vehicles in the United States in 2007, while the U.S. sold 6,235 in South Korea, according to industry statistics.

"He appears to be a protectionist," said Chea Mony, president of the Free Trade Union of Workers in Cambodia, which has an export-driven textile industry. "I am quite concerned about that because most of our clothing products are exported to America."

In an Oct. 24 letter to the U.S. National Council of Textile Organizations, Mr. Obama pledged “strong enforcement” of trade remedy laws, which can include added tariffs on imports that are deemed to hurt American businesses.

Mr. Obama said he would include labour and environmental standards in free trade agreements — a measure that many in Asia view as a possible pretext to shield U.S. companies from foreign competition.

New Zealand Herald – Auckland, New Zealand:

Media mogul Rupert Murdoch says the next United States President must resist the temptation to introduce more protectionist trade policies to try to deal with global financial crisis.

The News Corp chairman and chief executive said imposing new US tariffs on Chinese imports could set off a trade battle that would worsen the slowdown in the global economy.

"For the past three or four years, some Democrats have been threatening to do things like put on extra tariffs [against Chinese imports] if they don't change their currency," Murdoch was quoted as saying.

"If it happened, it could set off retaliatory action which would certainly damage the world economy seriously," he told the Weekend Australian, one of the papers he owns.

Murdoch said he was not sure Barack Obama would implement protectionist measures mooted by some Democrats if he were elected President.

But he said a rise in protectionism in the US "could add to all sorts of tensions in the world financial system and the world trading system and eventually all the way down to employment. I am not saying all these things are going to happen, but we are living in a dangerous period," he said.

Deutsche Presse-Agentur – Beijing, PRC:

China expects continuity but fears trade protectionism once Barack Obama takes office as US president, a leading scholar said.

"China's expectation of the new president is the same as the whole world's expectation, that is, to develop US finance and the economy away from the global financial crisis and economic recession," said Shi Yinhong, an international relations expert at People's University in Beijing.

"Meanwhile, China hopes that he (Obama) will develop the cooperation that already exists between China and the United States," Shi told Deutsche Presse.

"If there is any dispute, we should negotiate peacefully," he said, adding that he feared trade disputes "may escalate" between the two countries if global financial problems persist.

"If the financial crisis is revived, or if the US is not satisfied with what China can do in financial cooperation, I think trade disputes between China and the US will develop more than ever," Shi said.

GMA News – Manila, The Philippines:

Local businessmen do not see a Barack Obama presidency significantly changing US-Philippines economic ties despite observations that with the Democrats in power, free trade could take a back seat to protectionism.

At most, some tightening with respect to agriculture and services can be expected, Philippine Chamber of Commerce and Industry President Donald G. Dee said following the Illinois senator’s historic.

"Mr. Obama would not agree to substantial subsidy cuts in agriculture and would try keep jobs in the US through tax breaks, which could affect the outsourcing sector," he said.

"I don’t think the US would be closing its doors to trade with the Philippines but it also won’t be opening up ... Our trade with them won’t go negative but I do see that it would become more difficult to have greater market access."

Go back, or read the latest Front Page stories:

Outlook Dim for Global Trade in 2009

LOS ANGELES – 12/31/08 – World trade will shrink next year for the first time since 1982, according to the World Bank’s new Global Economic Prospects report; the forcasted downturn is blamed on the high cost of trade finance, tight credit and lagging consumer demand, but, the report says, things should brighten by the end of the year.