You're confusing footnote 6, which may reference a citation with a typo–but this references another issue—with footnote 7. It is in this footnote that he explains his claim,"...free capital mobility would invalidate the principle of comparative advantage."
In footnote 7 he writes, "Capitalists are interested in maximizing absolute profits and therefore seek to minimize absolute costs. If capital is mobile between nations, it will move to the nation with lowest absolute costs. Only if capital is internationally immobile will capitalists bother to compare internal cost ratios of countries and choose to specialize in the domestic products having the lowest relative cost compared to other nations, and to trade that good (in which they have a comparative advantage) for other goods. In other words, comparative advantage is a second-best policy that capitalists will follow only when the first-best policy of following absolute advantage is blocked by international capital immobility. For more on this, see Chapter 18 in Herman Daly and Joshua Farley, Ecological Economics (Washington, DC: Island Press, 2004)."
What Daly means is that given free factor movement, firms will not attempt to find comparative advantage domestically, but will instead move Kaptial* abroad to where costs are lowest in term of lower wages (resulting from a lower living standard), lower rents, and lower environmental and worker protection standards. This "race to the bottom" supersedes firms changing industries domestically to where, without free Kaptial mobility, their comparative advantage would otherwise lie.
Daly’s claim is largely correct: Kapital will move to where its production compliments are cheapest. This does not, however, necessarily result in comparative advantage being unrealized. Comparative advantage will be based on the new Kapital locations brought about by their being "sucked to the bottom" in terms of costs. Comparative advantage remains, but with free capital mobility, it is no longer the case that both trading partners will be necessarily left better off.
The reason for this is that absolute advantage changes with Kaptial mobilization, and this, despite comparative advantage being realized, can leave one trading partner worse off, because the effects of Kapital mobility can predominate any advantages found in realizing comparative advantage to either or both of the trading partners, free trade with Kapital mobility need not prevent comparative advantage from being realized to result in net derogatory effects to at least one of the countries.
For example, the U.S.A. might, say, have had an absolute advantage in toothbrush and toy production over China. Given that China has a comparative advantage in toothbrush production and the U.S. in toy production, If, in autarky, the U.S. could produce 100 toothbrushes or 10 toys and China 2 toothbrushes or 1 toy,** then, if, under Kaptial-mobile free trade, Kaptial for the production of both toothbrushes and toys moved to China such that China could produce 100 toothbrushes and 10 toys and the U.S. 2 toothbrushes or 1 toy, China produces toothbrushes and the U.S. toys, but given that the international price of a toy is now, say, 10 toothbrushes, the U.S. could now consume only 10 toothbrushes or 1 toy; if the international price were 2 two toothbrushes for 1 toy, the U.S. could now consume only 2 toothbrushes or 1 toy. Either way, under free-trade with Kapital mobility, comparative advantage exists, but one of the trading partners is made worse off.
Though and extreme example, the point is made: because absolute advantage is transferable under conditions of free Kapital mobility and free trade, it can change form one partner to the next, leaving the Kapital exporter worse off. Because Kaptial holders, as opposed to national leaders, are making the production decisions in a free-market economy, free trade under Kapital mobility conditions, at least where production costs vary, does not necessarily leave both trading partners better off and may leave one worse off. Theres is also the issue of increased environmental damage and ecological destruction form Kapital moving to countries where the market externalities that they produce are less sufficiently compensated in which they may leave one or both countries in the future, if not the present, worse off.
If all factors are mobile, comparative advantage cannot exist because comparative advantage is a function of at least some of these factors remaining stationary. Theoretically, if costs differed between countries, all factors would move such that no country had a comparative advantage because they would all be the same in terms of productive ability. All factors would have to be mobile such as human abilities (human Kaptial—agents are otherwise homogenous), climate, topography, and soil quality to name at least a few. The lack of mobility of some of these factors in the "real world" may make this seem irrelevant, but the point is, any comparative advantage is only a matter of Kaptial staticity.