Are international markets invested in who wins the U.S. presidential election? They certainly should be. There are huge differences in how Barack Obama and Mitt Romney would handle the global economy. But if the election were decided on these issues alone, it would be a pretty tough choice. Here are my appraisals of the candidates' points of view on the main issues:
The Obama administration's record on trade is nothing to write home about. Two years after resigning as U.S. trade representative, Susan Schwab wrote a 2011 article in Foreign Affairs essentially arguing that Washington should give up on negotiations through the World Trade Organization to open foreign markets. She was right -- the Doha Round of talks is dead. With this in mind, the White House should have pursued more bilateral and regional deals.
Instead, the administration played it safe. It pushed existing agreements signed with Colombia, South Korea, and Panama through Congress -- but that was par for the course. The United States should be trying to secure more deals in economically and strategically important regions such as Latin America and Southeast Asia. In the latter, such a strategy would have fit well with the administration's much-publicized "pivot to Asia." The talks for a "Trans-Pacific Partnership," which would create a free trade zone in the Asia-Pacific, are a start -- but half of the countries involved already have free trade agreements with the United States.
With former U.S. Trade Representative Rob Portman among his top advisors, Romney is likely to seek new deals much more actively. He has pledged to request trade promotion authority from Congress, which would allow him to sign new agreements without legislative approval. Yet despite the huge benefits Romney has reaped from the global economy, he has taken a bizarrely protectionist stance on one of America's biggest trading partners: China.
Romney has said that he will label China a currency manipulator on his first day in office. ("They will recognize that if they cheat, there is a price to pay," he warned.) But though China's exchange rate can only move within a band set by Beijing, to call China a currency manipulator is now a stretch. The yuan has gained 19 percent against the dollar and 33 percent against the euro in the past five years as demand for Chinese securities has risen. Meanwhile, Chinese trade surpluses have shrunk to just 2 or 3 percent of GDP. Also, antagonizing China does the United States no good at all, as American consumers enjoy higher living standards thanks to cheap Chinese exports. Rather than demonizing China, the next U.S. president should be building a stronger economic relationship -- with more exchanges of people, ideas, goods, and services, not less.
Most disappointingly, neither candidate has a plan for managing the ongoing challenges of globalization. While pursuing gains from trade with varying avidity, successive administrations have done next to nothing for Americans whose jobs have disappeared or become uncompetitive. Reintegrating them into the workforce is a task as great as the reassimilation of veterans after World War II, yet no presidential candidate has proposed anything as ambitious as, say, the GI Bill.