The policy differences between presidential nominees Sen. John McCain (R., Ariz.) and Sen. Barack Obama (D., Ill.) are sharply drawn in many areas, but nowhere are they starker than in the area of international trade.
For the U.S. metal industries, trade issues still stand at or near the top of the overall agenda, even in these times of financial turmoil and market chaos. Toss China's allegedly unfair steel exports and currency manipulation into the mix and you have a boiling stew.
Put simply, McCain is an unabashed, old-school free trader with few reservations; Obama's position, while nuanced and uncertain in some areas, might best be summed up as fair trade.
McCain supports the pending free-trade agreements negotiated by the Bush administration with South Korea, Colombia and Panama and strongly opposes any attempt to reopen the North American Free Trade Agreement (Nafta). The bottom line there wouldn't be many changes from what's been in place the last eight years.
During the primary campaign against Sen. Hillary Clinton (D., N.Y.), Obama said he favored renegotiating Nafta to strengthen its labor and environmental provisions and threatened to opt out of the deal altogether if Canada and Mexico refused to agree to changes. In real life, it's not that simple to renegotiate agreements signed and sealed with foreign governments 15 years ago.
On the pending free-trade agreements, Obama flatly opposes the deal with Korea because it fails to do enough to open that country's highly protected auto markets and he opposes the Colombia agreement because of that country's dismal record on protecting labor rights.
Significantly, Obama favors turning up the heat on the World Trade Organization (WTO) to force tougher enforcement of trade agreements and to halt government subsidies to exporters. He also wants to revamp the fast-track process—straight up-or-down votes in Congress on trade deals—to take into account labor and environmental matters.
Perhaps the sharpest contrast between the two presidential candidates would be on China trade policy, industry sources said. "If Obama becomes President, you can bet that China will be named as a currency manipulator as soon as next spring," one steel industry lobbyist said.
China is the 800-pound gorilla in the room in the ongoing financial crisis. What was surprising was that the subject never came up in the first presidential debate in late September except for a passing reference by Obama at the tail-end of the proceedings to this country's massive deficit.
Other key issues to watch with an impact on metals
Auto bailout Obama and McCain both back the $25-billion federal loan program for the nation's automakers and their suppliers, although McCain initially opposed the idea and Obama originally proposed help to shift the auto industry to more fuel-efficient vehicles as part of a wider "green manufacturing" initiative. Funding for the program cleared both houses of Congress in late September, but how quickly the money would actually flow to the industry remains in doubt. General Motors Corp., Ford Motor Co. and Chrysler LLC would like to expand the program so that it is not limited to retooling to improve fuel efficiency but could also be used to aid in other efforts of more pressing concern in times of financial crisis. It's not clear how this issue will be resolved.
Infrastructure spending Obama undoubtedly would be more aggressive in pushing for more spending on the nation's deteriorating highways, bridges and the like. His platform calls for $60-billion in infrastructure spending. It's likely Obama would back a package similar to the second economic stimulus, which failed to make it through Congress in its pre-election session. McCain's proposals are more limited. But the fact is that both men will be severely restrained by the widening global financial crisis. In any event, any big plans likely would be delayed to 2011 or beyond, experts think.
Climate change There is probably not too much difference on this front. McCain, though a late convert to the notion that global warming poses a serious threat, and Obama both back the cap-and-trade emissions policy that seems likely to emerge from the next Congress. The domestic steel industry does not support cap and trade and this looms as a contentious issue no matter who wins the election. "If it is not structured properly, you wind up hurting the competitiveness of the domestic steel lindustry," says Jennifer Higgins, vice president, government relations at the American Iron and Steel Institute.
Mining McCain and his running mate, Alaska Gov. Sarah Palin, would have a significant edge on mining issues, at least from the industry viewpoint. McCain has illustrated on several occasions his pro-resource development policies (drill, baby, drill), while Palin has been a visible and outspoken advocate of mining development in her home state. MARTYN CHASE