Legal Commentary

To the relief of free trade fans like myself (who feared the nomination of Xavier Becarra), but to the ire of anti-globalization constituencies, Obama nominated Ron Kirk, mayor of Dallas, as U.S. Trade Rep. As I noted in an earlier post, the appointment of trade rep is Obama's single most revealing appointment, because Obama's position on trade policy is so obscure.

I have no desire to open up an exchange of epithets among those who support and oppose tariff-free trade. The topic obviously inspires heated emotion on both sides, but I doubt that anything new will be said on the topic on this blog. Instead, I want to ask a question: Does Obama's simultaneous appointment of Ron Kirk as USTR and Hilda Solis as Secretary of Labor signal the possibility of a grand bargain on trade? The two nominees have diametrically opposed views on trade agreements. But rather than signaling schizophrenia in the Obama cabinet, the dual choices might indicate that Obama is going to take Barney Frank up on the grand bargain that he has been long offering -- "fast track" authority for negotiating reduction of tariffs in exchange for protection of domestic labor against the shock of cheap imports. The protection could take several forms -- high levels of transition relief, job training, longer and higher levels of unemployment insurance, or, controversially, enforcement of ILO standards -- but the basic idea would be secure votes for tariff reductions (Kirk's job) by supporting compensation to those who lose out from freer trade (Solis's job).

It seems to me that such a bargain is critical for trade liberalization. Bush likely failed to advance tariff reduction, because Republicans refused to offer protections for labor in return for votes on fast track authority. With the current focus on economic stimulation, the political atmosphere has never been better for a bill to give labor a cushion against the costs of tariff reduction. As a matter of justice and prudence, such a deal seems both just and prudent: Trade increases wealth, so why not compensate those who lose from trade with some of the bounty? Since the losers will likely have a veto over any effort to liberalize trade, compensation is good politics as well as moral economics.

If Obama can secure such a deal, then he will be the second Democratic President (the first was Clinton) to advance the agenda of free trade as or more effectively than the Republican Presidents who are that agenda's most vocal champions.