The celebrations are underway, both in America and abroad, cheering the result of the American presidential election.  The jubilation among voters is mixed with deep-seated concern about the economy, according to exit polls captured by Pew Research and Gallup, which gives rise to questions about the expected movement of the Obama administration.  Is American protectionism on the horizon?

The idea of protectionism seems loony on its’ face, given the resounding global cheer as the first American black man won the White House.  Where Americans had a harder time deciding their leader, with current results showing Obama leading 52 percent to McCain’s 46 percent, the global community was overwhelmingly in support of an Obama victory, in some cases by a 4-to-one margin.  But the strong language on matters of trade may last far longer than the streamers and champagne corks in ballrooms and community centers globally.

Taken directly from the Obama website are three of his five plan points on trade.  The entire text of each of the points is indented for clear attribution.

1. Amend the North American Free Trade Agreement: Obama and Biden believe that NAFTA and its potential were oversold to the American people. They will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.
   

A Bush-Clinton era agreement, NAFTA has shown quantifiable improvement in the Mexican economy, including a reduction in poverty and an improvement in real income levels, according to the CATO Group.  NAFTA is blamed for the loss of American manufacturing and assembly jobs, numbering well into the millions according to the U.S. Bureau of Labor Statistics, and for problems in agricultural business between the three countries.

But what “fix” is needed for NAFTA to “work for American workers” that does not involve bringing millions of manufacturing and assembly jobs back to the United States?  It is unclear what impact such a move would have on the fabric of the NAFTA agreement, on the price of goods manufactured using cheaper Mexican labor or on the Mexican economy.  To have any material connection to the language used by the Obama camp, a vigorous protectionist policy would have to be put in place.

1. End Tax Breaks for Companies that Send Jobs Overseas: Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama and Biden will also fight to ensure that public contracts are awarded to companies that are committed to American workers.
   

The Obama administration’s bullet point here is more illuminative on the matter of jobs.  Here, and in concert with the promised repair of NAFTA, is the meat of the work.  Most ominous is the language surrounding the way in which public contracts are awarded, at least for those companies from overseas who sell their goods and services to the American government.

1. Reward Companies that Support American Workers: Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America if it has ever been in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military.
   

The lengthiest of the trade points, this introduces a subjective term to the language: good.  Reward is given for good jobs with good benefits; by inference, those companies which do not receive reward or have their tax breaks ended have bad jobs with bad benefits.  This language has the least impact on foreign trade, as it deals primarily with American workers and US jobs, but the remainder of the section sounds a more ominous note.

Companies placing their corporate headquarters outside the US will not qualify for this tax credit.  Moreover it is retroactive, saying that if the executive offices were ever in America then they need to remain in America.  The relative proportion of US workers has to be maintained or increase.  Support for America’s volunteer military through support for workers involved in the military is also mandated -- a tough pill to swallow for countries who have opposed US military intervention for the last decade.

How does this impact the global economy?  The global economy is largely dependent on the American economy for survival, so long as the Americans continue the work of globalization.  The current financial crisis shows the impact an American financial problem has globally, but what may not be clear is that Japan recently suffered a similar slowdown for more than a dozen years with no global impact and Mexico endured a brutal economic crisis in the mid 90’s without a global hiccup.

Here, they say, is wisdom: Trending away from globalization will cripple the economy outside the US, with the exceptions of China and Russia, which will in turn allow those two countries to increase their sphere of influence through economic expansion and the creation of a similar dependence on their economies which exist on the American economy today.  The gap this causes will hurt the planet for years, and will diminish American primacy.

But will it help the American economy?  This is ironically less clear, as while the cost of goods will increase the economic engine of the US will be fueling itself and not the remainder of the world.  The pace of those two things could produce significant improvements in American wealth, or it could produce a wealthy elite unlike any before in American history, or it could produce staggering inflation because of global responses to our island mentality.

But for the purposes of the global audience, these policies are significantly detrimental to their economic future.