McCain’s Empty ‘Fair Trade’ Rhetoric

Our guest blogger is Will Straw, Associate Director for Economic Growth at the Center for American Progress Action Fund.

Arguably the most interesting and important area of McCain’s technology plan is where he reasserts his commitment to open world markets. John McCain has long made a play of his commitment to lowering barriers to trade and chose to visit Latin America rather than Europe to emphasize this point. This new announcement appears to be the first time that McCain has put in print his commitment to promoting “fair trade agreements.” It is a shame, however, that he does not expand on what he means.

The Center for American Progress published a report last year, Virtuous Circle, which sets out what a fair trade policy actually looks like. One important way to ensure that the benefits of globalization are broadly shared by Americans is to ensure that the global market place for U.S. exports continues to expand. It is essential that middle income countries move away from short-term export-led growth strategies and build a middle-class with a rising standard of living that will create greater domestic consumption.

For this to happen, the United States must not be afraid to shout foul play when its trade partners compete unfairly. The IMF, World Bank, International Labour Organization and WTO have important responsibilities to ensure that trade rules are obeyed, carbon emissions reduced, labor rights protected, and currencies not manipulated. By engaging rather than dismissing these bodies and providing adequate funding, the United States can help induce middle-income countries to become more cooperative, ensuring a level playing field for its exports.

But cooperation and rising living standards don’t come for free. In order to ensure that the United States’ trading partners stick to their international obligations and put in place necessary social safety nets requires expertise, institutional capacity building, and encouragement. While Barack Obama has pledged to double annual investments in foreign assistance to $50 billion, John McCain is unwilling to make any such commitment. Searching for the words “development” and “aid” on McCain’s website leads to an astonishing lack of any policy at all. It appears that McCain has not even thought about the raising living standards for the world’s poor as a means to foster America’s next export market.

The other piece of the puzzle is to ensure poverty and inequality at home are tackled so that the gains from trade are shared more evenly. Aside from more sickly sweet apple pie outlining the need to “educate [American] workers for the innovation age” and necessary reforms to unemployment insurance, McCain makes no mention of other crucial measures like increasing the minimum wage to half the average hourly wage, expansion of the Earned Income Tax Credit and Child Tax Credit, protection of workers’ right to organize, and a guarantee of childcare assistance for low-income families.

Only this combination of policies can ensure that the global market place expands, America competes, and all in society benefit.