Congrats to the winners of tonight's Iowa caucuses. Their reward? Additional scrutiny of their trade policies.
Here's Huckabee, talking about trade in the context of his FairTax:
If you buy a bottle of domestic wine, you're paying the taxes/compliance/matching payments of all the folks who produced the grapes, the wine, the bottle, the cork, the label. If you buy a bottle of French wine, the producers had their Value Added Tax rebated to them when the wine was exported. So French consumers pay those taxes, but you don't. Our current tax system puts our goods at a disadvantage both here and overseas. Other governments give their goods an advantage on the world market, an advantage estimated at 18% compared to American goods.
So no matter how hard Americans work, no matter how innovative and creative we are, no matter how superior our products are, we suffer from a built-in competitive disadvantage simply because of our tax system. A recent study by MIT found that our tax system deprives us of about $1 billion in exports annually. When you export over-priced goods as we have, you inevitably end up exporting jobs and industries as we now are. We are the square peg trying to fit into the round hole of international trade. The rest of the world isn't going to change, it's time that we do.
Later, he says:
I believe in free trade, but it has to be fair trade. We are losing jobs because of an unlevel, unfair trading arena that has to be fixed. Behind the statistics, there are real families and real lives and real pain. I'm running for President because I don't want people who have worked loyally for a company for twenty or thirty years to walk in one morning and be handed a pink slip and be told, "I'm sorry, but everything you spent your life working for is no longer here."
I believe that globalization, done right, done fairly, can be a blessing for our society. As the Industrial Revolution raised living standards by allowing ordinary people to buy mass-produced goods that previously only the rich could afford, so globalization gives all of us the equivalent of a big pay raise by letting us buy all kinds of things from clothing to computers to TVs much more inexpensively.
It's hard to cut through all the rhetoric, but I see Huckabee as a moderate free trader. He has some specific criticisms of the current rules, such as the perceived unfairness of the VAT export exemption that some countries use, but there is no talk about "withdrawing" from NAFTA or even "fixing" it, as we've heard from some Democrats. The reference to "fair trade" could be taken as implicitly endorsing protectionist policies, but it's a pretty common qualifier even for free traders. My take is that trade is not really his focus, and if he were elected his views would not differ much from the Bush Administration.
On the other side, I'm going to mention a very specific point Obama makes on investment rules in trade agreements. He has said that he wants to make sure that investor rights in FTAs are "strictly limited" and do not undermine other policies. He wants to "amend" NAFTA so that its investment rules reflect these principles. And he supports the way the Peru FTA dealt with these issues.
Here's my question for him on these issues. Annex 10-B of Chapter 10 of the Peru FTA tries to clarify this area, and in sub-paragaph 3(b) states:
Except in rare circumstances, non-discriminatory regulatory actions by a Party that are designed and applied to protect legitimate public welfare objectives, such as public health, safety, and the environment, do not constitute indirect expropriations.
That strikes me as moving towards where the trade skeptics want to go, but does it really go far enough for these folks? The "except in rare circumstances" language is quite vague. Under what "circumstances" could non-discriminatory regulations constitute an indirect expropriation? If I were Obama, I'd want to know the answer to that.
