So they are both free traders now? Or protectionists?

[Tigermike 3,055]

It's hard to keep track with these two.

Are Clinton and Obama part-time free traders? Or are they part-time protectionists?

Neither and both, just pandering as usual.

May 06, 2008, 4:00 a.m.

Traders

Despite Democrats’ rhetoric, Americans embrace trade.

By Daniel Ikenson

Whatever Hillary Clinton and Barack Obama say about the fallout from free trade, producers in Indiana and North Carolina are enjoying a golden age of exports.

Both Clinton and Obama promise to halt new trade agreements and force our trading partners to renegotiate their existing deals. Both candidates support actions that would ultimately hurt American producers, consumers, and investors. And both insinuate that our trade partners are actually adversaries.

But Indianans should recognize those trade partners as their fastest-growing customers. According to the U.S. Department of Commerce, Indiana’s producers shipped $26 billion worth of goods to foreign customers in 2007 — 14 percent more than the year before, and 80 percent more than in 2001. In fact, since 2001, the state’s exports have grown at a rate one-third faster than U.S. exports overall. In North Carolina, producers shipped $23 billion worth of goods to foreign customers in 2007 — 10 percent more than the year before, and 59 percent more than five years ago.

In 2007, exports accounted for 20 percent of U.S. manufacturers’ total sales revenues — the highest percentage in modern history. And nowhere in America is manufacturing more important to the economy than in Indiana, where the sector accounts for over 30 percent of the state’s gross domestic product. Manufacturing is also more important to North Carolina’s economy than it is to most other states, accounting for 22 percent of the state’s gross domestic product, ranking it fifth among states in that measure.

In China, Canada, and Mexico — the primary villains in the candidates’ anti-trade narratives — Indiana’s producers are building relationships that are yielding extraordinary returns. Exports from Indiana to China increased by a whopping 36 percent between 2006 and 2007 — twice the rate of total U.S. export growth to China, and nearly four times Indiana’s exports to China in 2001.

Likewise, Indiana’s exports to Canada and Mexico have grown 9 percent from 2006 and 67 percent from 2001, eclipsing overall U.S. export growth to the NAFTA countries in both periods. North Carolina’s exports to NAFTA have grown 46 percent over the past five years — to $7.4 billion.

Export growth is not concentrated is one or two industries either. It is economy-wide and the numbers are staggering. Of 32 broad industry groupings, 28 in Indiana experienced export growth between 2006 and 2007, and 30 experienced growth between 2001 and 2007. Of the 28 industries showing export growth between 2006 and 2007, 23 experienced double- or triple-digit percentage growth. From Indiana’s largest goods-producing industries to its smallest, strong export growth is evident.

The fact is that U.S. manufacturing is thriving. But Clinton and Obama never mention that U.S. factories account for 21 percent of the world’s manufacturing output, while China’s account for just 8 percent. Instead, at the behest of the steel industry, unions, and other protectionist lobbies, the Democratic candidates are threatening to take harsh actions against China and other American trading partners.

Blaming trade for all that ails us is a time-honored political tradition. Acting on that impulse by imposing trade barriers or otherwise retreating from the global economy is never the proper course, but it would be particularly foolish now, with industry after industry experiencing an export boom.

That boom couldn’t be happening at a better time. In the past, whenever the U.S. economy slowed, the world economy slowed along with it. But with the awakening of demand in developing economies, growth remains strong in many parts of the world. The U.S. slowdown might therefore be short-lived, as export growth keeps the economy moving ahead. That is, unless policymakers do something to jeopardize America’s access to foreign markets.

As the residents of Indiana and North Carolina understand, and Senators Clinton and Obama must realize, our trading partners are our customers. We don’t want them to take their business elsewhere.

— Daniel Ikenson is associate director of the Cato Institute’s Center for Trade Policy Studies.

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Trade Stances Reframed

For Indiana, North Carolina

Democrats Soften Message to Areas On the Upswing

By NICK TIMIRAOS

May 6, 2008; Page A6

DURHAM, N.C. -- Weeks after slamming the North American Free Trade Agreement in Ohio, Sens. Hillary Clinton and Barack Obama have retooled their messages for Indiana and North Carolina, states that have made gains from free trade amid losses elsewhere.

Ahead of Tuesday's primaries in both states, the Democratic candidates had campaign schedules that started at dawn and had them going well into the night. Tuesday marks Sen. Clinton's best chance at changing the momentum in the race, and she is widely expected to win Indiana, while Sen. Obama is favored in North Carolina.

The rivals predicted that the nomination fight would continue until the last primaries on June 3. Some 187 delegates are at stake on Tuesday, leaving 217 in the six remaining primaries. Sen. Obama leads with 1,743 to Sen. Clinton's 1,607, according to the Associated Press; 2,025 are needed to secure the nomination.

In the steel-producing region of northwest Indiana, the Democratic presidential candidates blamed China for the erosion of manufacturing jobs. But other parts of the state have witnessed an uptick in foreign investment and have positioned themselves as hubs for major distribution centers.

"We may not be able to bring back all the jobs we've lost because of trade, but we can create tomorrow's jobs in this country," Sen. Obama said last week at a high school in Indianapolis. At a steel factory in Munster, Ind., he told the crowd, "We're going to have to trade."

Indiana is trying to keep competitive with a combination of low taxes and an aggressive economic-development effort, says Nathan Feltman, Indiana's commerce secretary. Republican Gov. Mitch Daniels completed his third trip to Japan last fall, leading to an agreement by Toyota Motor Corp. to produce Camry sedans at Fuji Heavy Industries Ltd.'s Subaru plant in Lafayette, creating 1,100 jobs. Honda Motor Co. has promised to create 2,000 jobs when it begins production at a new plant in Greensburg this year.

Still, Indiana isn't immune from the economic slowdown. While the state's unemployment rate remained the lowest of its Midwest neighbors, it increased to 5.1% in March from 4.6% in February.

Toyota's factory in Princeton recently cut production to 80% of capacity because of poor sales of Tundra trucks, which have been dented by high fuel prices. The Subaru plant in Lafayette had a similar slowdown in the first three months of the year.

Meanwhile, North Carolina has positioned itself as a biotech and banking capital, anchored by Bank of America Corp. and Wachovia Corp. based in Charlotte and the research park in the Raleigh-Durham-Chapel Hill metro area, which boasts the highest average wages in the state. Monday, in a stop in Durham, Sen. Obama addressed employees at Cree Inc., which makes energy-efficient light-emitting-diode, or LED, lightbulbs.

But unemployment has soared in the rural parts of the state where textile mills and furniture factories have been hard hit by foreign competition. Unemployment fell to 3.8% in Durham County last year even as it hit 7.5% in Edgecombe County in the eastern part of the state. In an earlier stop in Wilson, N.C., Sen. Obama lamented the closing of VF Corp.'s Wrangler denim factory.

Polls show that free trade is more unpopular today than at any point in the past decade, and the Democratic candidates have made clear their opposition to new trade deals that don't have stronger labor and environmental standards.

Still, some Democratic voters say they see benefits in their lives from increased trade.

"Perhaps we should negotiate new deals," says Jack Henricks, 63 years old, who owns a paint-manufacturing business in Anderson, Ind. He says business has slowed recently, but he adds, "It's still doing OK. I think there have been some strides at the state level."

Judith Babinsky, 45, lost her tractor-manufacturing job in 1999 when the factory moved to Taiwan. But the South Bend, Ind., resident says, "I'm OK with free trade if it helps lower prices."

Write to Nick Timiraos at nick.timiraos@wsj.com

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But there is one candidate running for President who has an impeccable trade record, John McCain.