With the eyes of the world on President Barack Obama and his plans for the future direction of the United States, many countries are worried that tougher trade rules may be on the agenda.

"American public opinion has changed, it's slightly less free trade oriented now," said John Fortier, from the rightwing think tank the American Enterprise Institute.

With the world's top economy struggling under the weight of the global financial crisis, there are some fears that the US response could be to pull in the draw-bridge and ride out the storm.

Obama criticized Bush

In the months before his historic November 4 election triumph, Obama heavily criticized the current administration of President George W. Bush for a fiscal policy which rewarded many big businesses even though they moved production overseas to take advantage of cheaper, foreign workforces.

Unemployment figures have risen to their highest levels since 1994, and Obama has vowed to re-stimulate the economy and create jobs.

"Clearly there will be an interest in reassessing US trade policy," said Jeffrey Schott, a former Treasury official and an expert with the Institute of International Economics.

"There is an unfinished agenda and the Obama administration will have to figure out a political strategy for dealing with the free trade agreements with Colombia and South Korea that are already signed but not yet ratified."

British Prime Minister Gordon Brown on Monday urged Obama to lead a new era of US cooperation to help fashion a changed world order out of the global financial crisis.

Recent joint action on interest rates and banks showed the potential of wider multilateralism as the world grapples with the financial crisis, he said.

New multilateralism

"While I see a world that is facing financial crisis and still diminished by conflict and injustice, I also see the chance to forge a new multilateralism that is both hard-headed and progressive," Brown said.

But as Illinois senator, Obama took a cautious approach. He opposed the free trade deal with Seoul fearful of giving South Korean cars free access to US markets. And he also opposed the ongoing Colombia deal due to suspect labor conditions.

Obama also insisted he would work to renegotiate the North American Free Trade Accord (NAFTA) with Mexico and Canada, backing opposition to the deal from American labour unions.

"I think that one new initiative early on in the Obama administration will be to get together with Canada and Mexico and reassess NAFTA and see what needs to be done to update it, to take account of the very significant changes that have occured in the world economy since the agreement was negotiated 15 years ago," said Schott.

Border security, energy security and climate change

"There are three main areas of concern for all three countries: border security, energy security and climate change," he said. "In all three areas there is an urgent need for NAFTA to be updated."

There could also be a review of US policy towards China in order to "integrate their approach in both trade terms, investments, foreign policy and the security issue."

Schott argued Obama's administration was likely to be more meticulous in ensuring that countries like China stick to trade rules and ensure proper workforce conditions.

He noted Obama had recently sent a letter to the Chinese textile industry on such issues.

Obama was also likely to be more critical of Beijing's insistence on keeping the value of the yuan low in order to make its exports competitive, Schott said.

"The huge trade deficit, caused by too much imported oil and intervention by Asian governments in currency markets to boost their exports ... had a lot to do with flooding US capital markets with cheap funds and creating the first credit bubble," said Peter Morici, a former chief economist at the US International Trade Commission.

WTO talks

As for World Trade Organizations talks, launched in Doha in 2001, with the aim of liberalizing trade rules for the benefit of developing countries, Obama will likely seek to unblock the stalled negotiations.

The "Obama administration will be comitted to finding way to successfully finish those talks," argued Schott.

But "the first order of business is to deal with the global financial market and any protectionist impulses will just throw gasoline on that fire."

AFP

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