Economics, International economy

Holding Obama’s Feet to the Trade Fire

It seems that President Obama’s feet are finally being held to the fire on trade. Not by U.S. exporters or those in the United States who believe free trade may be an effective recipe for growth, but by Asian and other world leaders who believe that the president has simply let them down. With the campaign sloganeering, “Buy America” provision in the stimulus package, tariffs on Chinese tires, inordinate influence of Big Labor (just to name a few), it’s been well noticed that President Obama has plainly abdicated leadership on a cornerstone of post-WWII foreign policy during the first quarter of his administration. Did President Obama actually believe he could omit trade from his constructive engagement strategy, especially in Asia where trade is so important, and no one would notice?

However, we would be remiss if we did not credit President Obama for taking up a Bush administration initiative to pursue a regional free trade agreement (FTA) with Trans-Pacific Partnership (TPP) countries—Singapore, Brunei, New Zealand, and Chile. While it is the first FTA that the president has pursued, we would also be remiss to take this too seriously. In his announcement President Obama said that the TPP would ensure “the high standards worthy of a 21st-century trade agreement.” U.S. Trade Representative Ron Kirk likewise indicated that the agreement would be done “in close consultation with the United States Congress and with stakeholders at home.”

The problem is that those statements actually mean: “We’ll pack our demands with unworkable labor and environment standards to ensure ‘fair trade.’ We’ll then force you to agree to them, but then our Democratic colleagues on the Hill and anti-trade constituencies, such as Big Labor, won’t allow our agreement to go anywhere.” Then one realizes that the announcement was likely nothing more than mere rhetoric and instead provides President Obama cover to grandstand on trade. The president can purport to support an agreement for which progress will be slow and any political ramifications distantly prospective—and that is if the negotiations even go anywhere.

And that is if real negotiations begin. Deputy National Security Advisor Mark Froman’s press briefing shortly after the president’s speech leaves amorphous whether the president is in fact actually committed to the TPP.

If the president were really serious about trade, he would have already forged support among his Democratic colleagues in Congress to pass FTAs already negotiated—such as the U.S.-Korea free trade agreement KORUS—especially before going to Asia. This just may be a topic of conversation during the president’s imminent trip to Seoul.

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