The Obama cheer squad seems a bit subdued lately. Maybe it is the chronic early fumbling by his economic team. Or an increasingly Keystone Cops nomination process (do any of the President’s friends pay tax?). More likely, it’s just reality starting to bite. Apparently this governing caper is harder than it looks. It is easier to talk about competence than demonstrate it!
Traditionally Asian governments – and Australia – have two worries about Democrat administrations: security and trade.
On security, Hillary Clinton sent the right messages on her first trip to Asia, being careful to visit Japan before she went to China and to emphasise the importance of US alliances.
Whenever commentators have expressed concern about Obama’s trade credentials, apologists have been quick to insist he really does believe in globalisation and that his opposition to FTAs with Colombia and South Korea was just campaign rhetoric. Maybe not.
According to The Washington Post, ‘The Obama Administration is aggressively reworking trade policy to more strongly emphasise domestic and social issues, from the displacement of American workers to climate change: '…the administration is preparing to take a harder line with America’s trading partners.’
Coming on top of the Buy America provisions in the bailout package, this will send a further chill through US trade partners and the devastated global economy. Tougher labour and environment standards are a throwback to the Clinton Administration, and governments around Asia know full well they are code for protectionism.
The Obama team has even come up with a new excuse for backing away from traditional US leadership on trade: ‘social accountability’. The Rudd Government continues to talk up the Doha round, but it might as well be giving CPR to a corpse.
As well as keeping a beady eye on US trade policy, America’s allies should pay attention to future US defence budget plans. Before the election Obama talked about the need for a bigger US military. The global financial crisis has already provided cover for two familiar manoeuvres straight out of the Democrats’ playbook: jacking up spending and hiking taxes. It could also provide the perfect excuse for another: defence cuts.
