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Obama Protectionism Analysis

As the last two sections have shown, contrary to popular takes on both the Obama Presidency and US trade politics, Obama’s inducing of protectionist measures into his trade policy does not constitute an overall breaking of the mould in US trade politics, rather it is merely a sustenance of the US executive succumbing to longstanding protectionist pressures domestically.

In consideration of not only how protectionism is not a new development within US trade politics but also that Obama has been bound by the same domestic pressures as his predecessors, it may be considered surprising that Obama has been ascribed with a protectionist label that his predecessors often escaped. This consequently provides a new political puzzle that needs to be addressed within the context of this discussion: why has Obama being ascribed with an undeserved protectionist label when his trade policy fits directly into historical trends?

Whilst the chronic glazing over of historical protectionism in the US on behalf of trade analysts has played a part in Obama being considered as a ‘dangerous protectionist’ (The Economist, 2008), (Buiter and Sibert, 2008) and (Ashbee and Wadden, 2010, p253), the key reasoning for this branding has been Obama’s rhetoric. This is because a significant and invariant theme across the Obama Presidency is the purporting of a different message with regards to trade.

Recall that just two months before the 2008 general election Obama declared that “our trade policy rests firmly on the notion of change” (Obama, 2008) and whilst an actual shift did not occur, there has indeed been a shift in rhetoric in two key ways. Firstly, under the Obama administration there has been a distinct absence of a wholehearted championing of the doctrine of free trade.

This has proven to be a consistent trend throughout his tenure. For instance in the 2008 campaign against John McCain, Obama’s trade rhetoric was more suggestive of a commitment to protectionism than the free market, as shown in his criticising of NAFTA, opposing of proposed trade deals with Columbia and South Korea as well as his commitment preventing jobs being outsourced overseas (Bhagwati, Financial Times, 2008).

This protectionist rhetoric was focused on by his opponents, with McCain branding Obama’s economy policy as “retreating behind protectionist walls” (McCain, Washington Times, 2008), whilst in the same article his senior advisor Carly Fiorina was quoted as saying Obama was “the most protectionist candidate that the Democratic Party has ever fielded” (Fiorina, Washington Times, 2008).

In 2011, Obama’s rhetorical commitment to free market economics was shown to be questionable yet again when in a public statement he outlined the neoliberal theory of the market and stated that “whilst this simple theory speaks to our rugged individualism there is a problem: it doesn’t work. It has never worked” (Obama, CNS News, 2011). Indeed the closest thing Obama has come to supporting free trade is his emphasizing of how the US needs to increase exports, though such statements are often followed by a stressing of the need to defend domestic industries.

This process was demonstrated perfectly in Obama’s 2012 State of the Union Address in which he argued “I will go anywhere in the world to open up markets for American products but I will not stand idly by as our competitors have a leg up on ours… more needs to be done, and this Congress should make sure that no foreign company as an advantage over American workers” (Obama, 2012). Here we see a clear rhetorical commitment to promoting US exports abroad whilst also defending domestic producers from foreign competition.

Such a rhetoric led Economics journalist Matthew Yglesias to assert that Obama’s strategy was to “boost the economy by restricting trade” with the President showing a “strikingly retrograde, self-contradictory, and confused agenda of reviving American prosperity through mercantilism” (Yglesias, 2012). The absence of an unqualified commitment to free trade within Obama’s rhetoric does separate him from former administrations. This is because it has been a common theme amongst US Presidents to ostensibly declare their commitment to free and open trade.

A good example of this comes from Truman’s 1950 State of the Union Address, in which he argued that “World prosperity requires that we do all we can to expand world trade… The GATT is an effort to prevent the kind of anarchy and irresponsibility in world trade which did so much to bring about the world depression of the 1930’s” (Truman, 1950). Over a quarter of a century later Reagan echoed this sentiment, stating that “Our trade policy rests firmly on the foundation of free and open markets.

History has taught us that the freer the flow of world trade, the stronger the tides of human progress and peace among nations” (Reagan, Misus Institute, 1988). Of course, such a message on trade is not limited to Reagan and Truman but rather has been continuously delivered by US executives since the end of the Second World War. Notable examples include Kennedy’s ‘Benefits of Increased Trade’ Speech to Congress in 1962 (Kennedy, 1962) and Bush’s argument that ‘the more markets we open, the more competitive America becomes’ (Bush, 2006).

Whilst it would be possible to go through each former President and highlight their harbouring of free trade, the above examples are sufficient in demonstrating the timeless and bipartisan nature of the rhetorical commitment to free trade on behalf of US executives. In further analysis, even Presidents who have exhibited a more cautious trade rhetoric were still more pro free trade than Obama. Carter for example argued that “free trade must also be fair trade, though we must firmly resist the demands for self-defeating protectionism” (Carter, 1978, p94).

As can be seen, despite Carter not wholeheartedly endorsing the notion of uninhibited free trade he was quick to emphasise that he was not a protectionist. He was therefore still more of a pro-free trade President in his rhetoric than Obama, of whom has not declared his scorning of protectionism. A consequence of this process is that while former Presidents have been forced to spin a free trade orientated justification for protectionist measures, Obama has been more open to the protectionist label and has even discussed the benefits of protectionism for the US economy.

Using a free trade orientated justification to defend protectionist decisions has been used most explicit by the Republicans. For example after Bush provided protection for US car manufacturers he argued that he’d “abandoned free market principles to save the free market system” (Bush, 2008). Reagan’s administration was also drawn towards this justification, as previously mentioned he justified tariffs on Japanese semiconductors by stating he was imposing free trade principles.

In another example, following Reagan’s decision to impose Steel quotas his Presidential Spokesman Marlin Fitzwater argued that “the objective of the programme is to bring an end to constant trade disputes over Steel by reversing trends toward excess capacity, greater subsidization and increasingly protected foreign markets” (Fitzwater, 1984). As can be seen in order to justify their protectionist measures both Reagan and Bush were forced into discussing how it would benefit the free market in order to defend their free trade absolutist rhetoric.

Obama on the other hand having not declared an unconditional commitment to free trade has not been pressed into spinning a free trade justification for protectionist policies, which manifests another rhetorical discontinuity. This process was demonstrated perfectly in the campaigning for the 2012 Presidential election in which Obama was forced to tackle protectionist jibes from his Republican opponent Mitt Romney.

Romney was heavily critical of Obama’s trade record, arguing in his 2010 book ‘No Apology’ that “Obama’s action to defend American tires may make good politics by repaying unions for their support of his campaign, but it is decidedly bad for the nation and our workers… Protectionism stifles productivity” (Romney, 2010, p119). Obama chose not to sidestep this critique but rather to tackle it head on, arguing that “Governor Romney criticised me on the tire case saying that it would be protectionist, American workers don’t feel that way they feel as if they finally have an administration that will take this issue seriously” (Obama, 2012).

Clearly in this case Obama did not shy away from protectionist critique but rather sought to justify his policy by eluding to how it benefitted American workers. This has certainly not been an anomaly within Obama’s trade message: in another example the United States Trade Representative has sought to defend the various protectionist measures within the TPP by arguing that they are there in order to “protect American innovation, workers, and the environment” (USTR, 2016).

Evidenced here is another clear example of the Obama administration openly justifying protectionist measures through their benefits on American citizens. The key issue with this argument however is one of causality. This is because whilst it is plausible to suggest that Obama’s overtly protectionist rhetoric has been the key factor in him being branded as a protectionist, to claim causality between these two variables remains speculative. However, whilst causality is difficult here there are two key reasons as to why this rhetoric argument still holds.

Firstly because in all other aspects of US trade politics Obama’s trade policy has been proven to be directly reflective of prolonged protectionist trends. As was previously shown, Obama’s policies, reasoning and even targets for protectionism were precisely the same as those under former administrations, meaning the key observable difference between Obama and his predecessors has been their message on global trade. This therefore elucidates to the importance of Presidential rhetoric with regards to trade matters, particularly as former Presidents have been complimented for their upholding of free trade principles.

Another key reason as to why my rhetoric section still holds is because those who have branded Obama as a protectionist have explicitly highlighted his mercantilist rhetoric. Recall arguments mentioned earlier from Carney and Yglesias regarding Obama’s protectionist/mercantilist vision in his 2012 State of the Union address, as well as well as Chukwumerije argument that Obama’s trade and rhetoric were detrimental to longstanding US foreign policy objectives (Chukwumerije, 2009, p42).

Sharing this assertion is Wall Street Journalist Jennifer Smith who in 2009 stated that “on his present discourse, Obama is giving the world every reason to conclude he is a protectionist” (Smith, Wall Street Journal, 2009) as well as Olson who when discussing Obama’s trade policy argued that “the benefits of free trade are clear, but Obama’s rhetoric and political jockeying has diverted attention from its obvious benefits. Misleading and deceptive trade rhetoric is not good policy: It hurts Americans and our economic standing” (Olson, 2012).

As evidenced, not only is Obama’s presidential rhetoric the only key distinction in Obama’s trade policy but also those who have branded Obama with a protectionist label have explicitly highlighted his overall message on trade in their justifications for ascribing him with a protectionist critique. This therefore permits an assured proclamation that it is indeed Obama’s rhetoric, not his policies that has separated him from former US executives and been influential in him being observed as a protectionist.

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