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Obama: NAFTA not so bad after all

The Democratic nominee, in an interview with Fortune, says he wants free trade "to work for all people."

By Nina Easton, Washington editor
Last Updated: June 18, 2008: 3:00 PM EDT

WASHINGTON (Fortune) -- The general campaign is on, independent voters are up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.

In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee backed off his harshest attacks on the free trade agreement and indicated he didn't want to unilaterally reopen negotiations on NAFTA.

"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," despite nonpartisan studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.

Does that mean his rhetoric was overheated and amplified? "Politicians are always guilty of that, and I don't exempt myself," he answered.

Obama says he believes in "opening up a dialogue" with trading partners Canada and Mexico "and figuring to how we can make this work for all people."

Obama spokesman Bill Burton said that Obama-as the candidate noted in Fortune's interview-has not changed his core position on NAFTA, and that he has always said he would talk to the leaders of Canada and Mexico in an effort to include enforceable labor and environmental standards in the pact.

Nevertheless, Obama's tone stands in marked contrast to his primary campaign's anti-NAFTA fusillades. The pact creating a North American free-trade zone was President Bill Clinton's signature accomplishment; but NAFTA is also the bugaboo of union leaders, grassroots activists and Midwesterners who blame free trade for the factory closings they see in their hometowns.

The Democratic candidates fought hard to win over those factions of their party, with Obama generally following Hillary Clinton's lead in setting a protectionist tone.

In February, as the campaign moved into the Rust Belt, both candidates vowed to invoke a six-month opt-out clause ("as a hammer," in Obama's words) to pressure Canada and Mexico to make concessions.

Canadian Prime Minister Stephen Harper called that threat a mistake, and other leaders abroad expressed worries about their trade deals. Leading House Democrats, including Democratic Caucus Chairman Rahm Emanuel, distanced themselves from the candidates.

Now, however, Obama says he doesn't believe in unilaterally reopening NAFTA. On the afternoon that I sat down with him to discuss the economy, Obama said he had just spoken with Harper, who had called to congratulate him on winning the nomination.

"I'm not a big believer in doing things unilaterally," Obama said. "I'm a big believer in opening up a dialogue and figuring out how we can make this work for all people."

Obama has repeatedly described himself as a free-trade proponent who wants to be a "better bargainer" on behalf of U.S. interests and wants agreements to include labor and environmental standards.

In May 2007, congressional Democrats and the Bush administration agreed to a plan to include environmental and international labor standards in upcoming trade agreements. Still, later that year Obama supported one agreement (Peru) and opposed three others (Panama, Colombia, South Korea). Labor leaders - many of whom backed Obama in the primary - were the chief opponents of those pacts.

Obama jumped into the anti-trade waters with Clinton even though his top economics adviser, the University of Chicago's Austan Goolsbee, has written that America's wage gap is primarily the result of a globalized information economy - not free trade.

On Feb. 8, Goolsbee met with the Canadian consul general in Chicago and offered assurances that Obama's rhetoric was "more reflective of political maneuvering than policy," according to a Canadian memo summarizing the meeting that was obtained by Fortune. "In fact," the Canadian memo said, Goolsbee "mentioned that going forward the Obama camp was going to be careful to send the appropriate message without coming off as too protectionist."

In the Fortune interview, Obama noted that despite his support for opening markets, "there are costs to free trade" that must be recognized. He noted that under NAFTA, a more efficient U.S. agricultural industry displaced Mexican farmers, adding to the problem of illegal immigration.

We "can't pretend that those costs aren't real," Obama added. Otherwise, he added, it feeds "the protectionist sentiment and the anti-immigration sentiment that is out there in both parties."

Obama also reiterated his determination to be a tougher trade bargainer. "The Chinese love free trade," he said, "but they are tough as nails when it comes to a bargain, right? They will resist any calls to stop manipulating their currency. It's no secret they have consistently encroached on our intellectual property and our copyright laws. ...We should make sure in our trade negotiations that our interests and our values are adequately reflected."

Republican nominee John McCain, for his part, is emphasizing his consistent position as a free-trader. In a press conference in Boston this week, he attacked Obama as protectionist: "Senator Obama said that he would unilaterally - unilaterally! - renegotiate the North American Free Trade Agreement, where 33 percent of our trade exists. And you know what message that sends? That no agreement is sacred if someone declares that as president of the United States they would unilaterally renegotiate it. I stand for free trade, and with all the difficulties and economic troubles we're in today, there's a real bright spot and that's our exports. Protectionism does not work." To top of page

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