FT: You have said that as president you would take “time out” on new trade deals. But the debate has mostly been focused on the smaller and more symbolic deals like Peru and Colombia. Would your principle extend to the stalled Doha round of world trade talks?
HC: Well what I have called for is a time-out which is really a review of existing trade agreements and where they are benefiting our workers and our economy and where the provision should be strengthened to benefit the rising standards of living across the world and I also want to have a more comprehensive and thoughtful trade policy for the 21st century. There is nothing protectionist about this. It is a responsible course. The alternative is simply to pick up where President Bush left off and that’s not an option. Now I’m trying to take the trade agreements that he has negotiated each one on its merits and I will support the Peru agreements because it has the kind of strong labour and environmental provisions that I’ve long called for. And it helps to level the playing field for American workers because as things stand most Peruvian goods already enter America tariff-free but the tariff that are attached to most American goods entering Peru make them less competitive. I have said I will oppose the agreement with South Korea because the auto provisions don’t go far enough and we have prior experience.
My husband’s administration tried to enforce a memorandum of agreement that they entered into with the South Koreans about opening up their market to American autos and it just didn’t happen. So it’s not that we’re starting on some totally different approach to trade it’s that we have to take stock of where we are today. And specifically with Doha and with these large global agreements, again we have to see what works and what doesn’t work. We have benefited through most of the 20th century from trade. It has helped to raise American standards of living, it has helped to create jobs. And I agree with Paul Samuelson, the very famous economist, who has recently spoken and written about how comparative advantage as it is classically understood may not be descriptive of the 21st century economy in which we find ourselves.
We know for sure that every other country wants access to our markets, because we have high levels of consumer spending since we don’t save anything in America and we have a very vigorous competitive market that is a real prize. On the other hand I want to see living standards improve around the world. I want to see environmental standards improve. And I am concerned by some of the provisions that would prevent countries from for example enforcing stronger environmental and worker safety rules under the WTO. I think we have to take a hard look at this and do it in the right way and that is what I am proposing to do.
FT: In your speech in Knoxville last week you said that the growth of sovereign wealth funds controlled by foreign governments posed a potential risk to America’s economic sovereignty. Can you flesh out what measures you’d take to address that?
HC: Well as president I’m going to direct my National Economic Council to recommend ways of making these funds more transparent. Things are interconnected. We welcome foreign investment in America. I don’t want in any way want to discourage investing in our country and in our financial markets. But I think vigilance is in order when the investor is a foreign government. I want the World Bank and the IMF to draft transparency rules so we have more information about what the funds are investing in and how they are being managed. That is my principal concern – to increase transparency so that there is a clear understanding of where the funds are coming from, what the funds are being invested in, what the potential downsides might be of essentially having a foreign government control certain assets in our country. That is what I am looking for because obviously it is a balance we have to strike and I want to try to get it right.
So, has the woman gone the way of Lou Dobbs and Tom Tancredo-style demagoguery over trade? I'm sure many of you have doubts like me. As I've already pointed out, husband Bill also talked tough on China, NAFTA, etc. while campaigning, then look what sort of policies he actually pursued when in office. Suffice to say, pro- and anti-trade folks probably agree that if it's Dobbs-Tancredo 2008 you're hankering for, you probably won't get it with Mrs. Clinton. The World Trade Law blog has details on a controversy concerning whether her interpretation was correct of what Paul Samuelson said about trade. What follows is a little more from the FT:
Hillary Clinton would ask hard questions about whether it was worth reviving the stalled Doha round of world trade talks if she were elected US president, the former first lady has told the Financial Times in an interview.
Mrs Clinton said she believed that theories underpinning free trade might no longer hold true in the era of globalisation. She has called previously for the US to take “time out” on new trade agreements.
Mrs Clinton’s remarks come at a critical moment in the Democratic presidential race, which has seen rising scepticism among candidates and grassroots supporters about the benefits of an open global economy.
Although the Democratic frontrunner has not gone as far as John Edwards, who is in third place, in attacking free trade deals such as the North American Free Trade Association negotiated by her husband, Bill Clinton, in 1993, she has called for a full review of all deals, including Nafta. Mrs Clinton has also attacked trade agreements that do not include provisions to protect workers and enforce higher environmental standards.
Her remarks are likely to reinforce expectations that US trade policy would change course were a Democratic candidate to take the White House next year.