Playing defence, not offence
US President Barack Obama is unlikely to come up with any trade initiatives soon, but he may be forced to make decisions.
For years, trade has been a problem for governments in Washington, DC, whichever political party controls the White House.
In the 1980s, the free-trade apostle Ronald Reagan did more to close the US market than any US president since Herbert Hoover. In the 1990s, Bill Clinton's support for globalisation cost the Democratic Party votes. Now it is Barack Obama's turn to wrestle with this divisive issue.
Despite lingering worries raised by Obama's criticism of trade during the presidential campaign and the flap over a ‘Buy American' provision in the economic stimulus package, there is a widespread perception in the US that the administration will be pro-trade.
But that does not mean the Obama team is likely to make trade a priority. With congressional democrats deeply divided on the issue, the public wary and prospects for significant new export opportunities slim, the administration's inclination will be to let sleeping dogs lie.
But the White House may not have the luxury of choosing its battles. Trade is inextricably linked to foreign policy. As administration officials look for co-operation from Pakistan or China on a range of issues, they are likely to be pressed for trade concessions or at least forbearance in trade disputes with the US. Whether it likes it or not, the White House is likely to be forced to make trade policy on the hoof.
The details of that trade policy have yet to be revealed, largely because such specifics must await the Senate's confirmation of key administration officials. And the trade background of those who will implement that strategy is mixed. Ron Kirk, the incoming trade representative, lacks any experience in trade, which may further weaken the influence of a post that has rarely had much clout anyway. Gary Locke, the incoming commerce secretary, who was governor of the state of Washington, is a strong promoter of commerce with Asia and the architect of the state subsidies for Boeing now being challenged by the EU at the World Trade Organization (WTO).
The Doha round of global trade talks will be the major issue on their agenda. But US business interests have already told the White House that what was on the negotiating table in Geneva last July, when the long-running talks broke down, is no longer acceptable.
A more specialised trade challenge is China, which now accounts for two-thirds of the non-oil US trade deficit, in part thanks to Beijing's undervalued currency.
Congress wants action on the yuan and during his presidential run Obama charged Beijing with currency manipulation. Given US dependence on Chinese capital and with Wall Street already in freefall, it is not self-evident what action Washington could afford to take on the issue at this time.
As a candidate, Obama also promised tougher enforcement of US trade laws. And the Congress has demanded more aggressive efforts against foreign non-tariff trade barriers, more cases against Chinese subsidies and action to stop surges of Chinese imports.
Since anti-dumping cases always go up during recessions, expect more defensive trade action out of Washington, if nothing else.
The White House will also have to decide what to do with controversial WTO cases left over by the administration of George W. Bush, including actions against European subsidies of Airbus and European restrictions on US poultry.
Obama must be wary because the huge subsidies Washington is doling out to the auto industry, the financial sector and green technologies will make the US vulnerable to challenges of its own in the WTO.
In the next year or so, do not expect many new trade initiatives from the Obama administration. It will play more defence than offence. With unavoidable, politically difficult decisions necessary on a range of domestic economic challenges, the White House will be reluctant to spend political capital to promote trade any time soon.
Bruce Stokes is a transatlantic fellow of the German Marshall Fund and international economics columnist for the National Journal.