TRADE REPORT: Your Weekly Fill of What's Really Going On

With this week's reemergence [1] of globalization and trade as major 2008 campaign issues, we thought it as good a time as any to launch our regular report on globalization, helping you sort through what is too often an esoteric and inaccessible discourse on one of the most important set of issues we face. We are aiming to have this report out every Thursday - though bear with us as we get this product off the ground. Ultimately, we hope you consider it your one-stop must-read to keep up to date on all the economic rhetoric - and propaganda - that is now filling up the airwaves.

CAMPAIGN '08 - IS OBAMA'S RENEWED POPULISM THE REAL DEAL, OR A WINK AND NOD?

The Hill newspaper [1] reports that the Obama economic adviser Jason Furman issued a particularly scathing statement in response to this week's Commerce Department announcement that the U.S. trade deficit hit $693 million in June.
Since the Democratic primary ended, Obama has noticeably tamped down his criticism of NAFTA-style trade pacts - even giving an interview to Fortune magazine [2] suggesting he may not be as aggressive a fair trader as he once portrayed himself to be.

So this week's announcement, coupled with new evidence [3] that he is focusing on trade in swing states, may signal his campaign's tack back to more populist themes - themes that Washington Post columnist Harold Myerson [4] (and before that, yours truly [5]) says is the best way for Obama to counter McCain's race-tinged cultural populism. Then again, at the same time Furman lashed out at the trade deficit, the Wall Street Journal [6] reports that he "is spending this weekend in the tony Hamptons outside New York, as will many top Wall Street executives" where he will try to court corporate leaders to support Obama's campaign.

CONVENTION '08 - FAIR TRADERS IMPACT THE DEMOCRATIC PLATFORM

The Wall Street Journal reports that fair traders - led by Steelworkers President Leo Gerard [7] - have used the pre-convention political lull to focus on adding stronger language to the Democratic Party's official platform - and that their efforts were successful [8]. The final document "promises to improve the North American Free Trade Agreement," writes the Journal - a stunning rebuke to longtime NAFTA backers Bill and Hillary Clinton at a time the Denver Post [9] reports that the Democratic convention is being quietly engineered to celebrate the Clinton legacy.

CONGRESS - BAUCUS DEMANDS MORE NAFTAs

Montana Sen. Max Baucus (D) this week told the Associated Press [10] that he is worried that his fellow congressional Democrats are having too much success stopping NAFTA-style trade pacts. The statement follows Baucus's statement a few weeks ago [11] - almost completely unreported - that he officially supports the passage of President Bush's Colombia Free Trade Agreement.

Though Baucus is an obscure lawmaker, he chairs the Finance Committee, which oversees U.S. trade policy. As I wrote in my syndicated column [12] last week, that means he will be in a pivotal position to trip up what could end up being a clear election mandate demanding trade policy reform.

BUSINESS - RACE TO THE BOTTOM CONTINUES AS CHINA WAGES RISE

Fortune [13] magazine reports that with China's wages and environmental standards gradually rise, corporations are now looking to move their outsourcing operations to countries where conditions are even more desperate. "China's actions to strengthen its environmental and worker protections are unquestionably good moves for the country, its people, and the global economy," writes the magazine. "But for outsourcers focused on rock-bottom production prices, the search is on for new low-cost countries."

Of course, this race-to-the-bottom dynamic is encouraged [14] by a standards-free U.S. trade policy that allows companies to troll the world for the worst conditions, exploit those conditions, and sell the products of that exploitation back into the American market. Put another way, our trade policy is helping foreign governments manufacture comparative advantages out of their horrific labor, environmental and human rights records.

The good news is an unexpected silver-lining around the energy crisis: Businessweek [15] reports that as energy costs rise, more companies are keeping operations in the United States. As much as Tom Friedmans of the world scoff at blue collar work, the magazine notes that this is "a good time for an American manufacturing renaissance."

The trend directly undermines President Bush's attempt [16] to cite jobs as his reason to oppose the Kyoto Treaty. If carbon controls result in higher prices for fossil fuels, that may actually encourage companies to keep manufacturing operations at home, so as to avoid higher transportation costs. The challenge, though, remains reducing the cost of necessity energy - gasoline, heating, etc. for the middle class - without incentivizing job outsourcing.