Which candidate is better for trade policy?

The financial crisis on Wall Street has brought the economy to the forefront of the American presidential campaign. But few have discussed how the outcome of the 2008 elections - not just for President, but perhaps even more importantly, for Congress - will set the tone and path of the debate about international trade for years to come. Will we see an American government willing to work with the rest of the world to dismantle barriers to trade, or will we see a recalcitrant government eager to erect further protectionist barriers?

The present mood in the US is undeniably protectionist. People are hurting from lost jobs, shrinking paychecks, and lost homes; the populist argument that free trade threatens the economic wellbeing of the average American is gaining ground. The next President cannot simply be a trumpeter of Schumpeter's "creative destruction" to convince Americans that periods of economic adjustment are necessary. Whoever is elected will have to work within the framework of public opinion that is already viscerally anti-trade.

It's undeniable that McCain's trade policy is stronger than Obama's. An independent poll of economists commissioned by cartoonist Scott Adams showed that even though most support Obama, they almost unanimously give the advantage on trade to McCain. Simply put, Obama's curious rhetoric on trade agreements like NAFTA cannot be reassuring to those who see trade as crucial to a strong world economy. Might an Obama administration risk plunging the world into further economic crisis by advocating a Smoot-Hawley-esque tariff? The question of whether a new administration would work to sever trade links is a crucial one that demands an answer.

But whether we have a President McCain or a President Obama is ultimately not the most important question for trade. Congress is the body that would pass any new tariffs, and the new one, in all likelihood, will be extremely protectionist. The 2006 election swept protectionist populists such as Senator Sherrod Brown into Congress, and with the public and pundits alike now blaming "deregulation" and free markets for the present economic crisis, it is inconceivable that the Democrats - who, according to current polls will win both the House and the Senate in a landslide - will suddenly be friendly to new trade agreements.

If the next Congress does indeed have a solid Democratic majority, what can we expect from the presidential candidates on trade policy? McCain's record on trade is solid: he can be expected to push for stronger economic ties with other countries, even if he lacks the wherewithal to attack traditional sacred cows like massive farm subsidies. Obama, on the other hand, has a very mixed record: his remarks on trade have, at the very best, been unconvincing. There is no indication that trade is a top priority for Obama. On paper, the advantage goes to McCain.

But in reality, a President McCain dealing with a hostile Congress will not be able to hold the legislative body's protectionist sentiments in check; a potentially more moderate President Obama may very well be the better man for trade policy. McCain's willingness to buck the accepted wisdom does him plenty of good as a senator, but the same assertive stubbornness will harm his ability to forge a working relationship with the Democratic Congress - taking them head-on would only strengthen their protectionist resolve. Obama has always been reluctant to disagree openly with the party line - as one can tell from his votes in the Senate - but he has shown a talent for changing what the party line actually is. In the case of education, for example, Obama won accolades from teachers unions while promoting the traditionally conservative cause of holding teachers accountable for poor performance. While Obama is skeptical of the justness of the market and is unlikely to pursue unlimited free trade, he doesn't seem content with his party's strong anti-trade sentiments either.

Obama's actions suggest that he is open to the possibilities of a more open trade policy. His selection of free market economist Austan Goolsbee as his top economic adviser four years ago indicates that Obama's real position on the economy is not as radical as his rhetoric sometimes is. During the Democratic primaries, Goolsbee inadvertently revealed that Obama had communicated his support for NAFTA to the Canadian government, suggesting that Obama would be very reluctant to roll back existing trade agreements. With even "progressive" economists like newly-minted Nobelist Paul Krugman in full support of free trade, the academic in Obama will be hard-pressed to listen to the radical activists opposing further trade agreements.

It is impossible to imagine the next Congress giving McCain the fast-track authority that is crucial to trade negotiations; it is very likely, however, that if Obama asks Congress for fast-tracking that he will get it. Obama's record as a senator suggests that he fully favors "fair trade," where trade agreements are conditioned on stronger environmental and labor regulations. In May, Obama argued that his support for a trade agreement with Peru was consistent with his opposition to CAFTA because the Peru deal included worker protections that CAFTA lacked. Although hardly desirable to many orthodox laissez-faire advocates, fair trade is still better than no trade. Any agreement that lowers the barriers to a free flow of goods and services between countries is an improvement on the status quo. A fair trade agreement under a President Obama is still preferable to the deadlock that would likely ensue after a President McCain takes on a Democratic Congress.

The possibility remains that a Democratic Congress or an Obama presidency will confound predictions, for good or for ill. Perhaps the Democrats will come around to the benefits of free trade, or a President Obama will unleash a new brand of populist protectionism against the warnings of his economic advisers. But given the policies of both major presidential candidates and the likely Democratic majority in the next Congress, at the moment it seems that an Obama administration would be able to bridge the divide between the parties and make sure that even if America does not embrace free trade, it doesn't succumb to protectionism either.