Monday, November 16, 2009

Obama's Newfound "Focus" on Exports: Reason for Skepticism

As I noted yesterday, President Obama announced over the weekend a new "Asia strategy" that will focus on "re-balancing" the US-Asia trade relationship. According to Obama, increased US exports - boosted by, among other things, expanded market access in Asia - will play a prominent roll in his plan. But just how serious is the administration about boosting exports through trade liberalization policies?

Based on a quick review of the facts, I'd say "not very."

First let's look at two of the key trade policies mentioned by Obama in his Japan speech, the Doha Round and the Trans-Pacific Partnership FTA.  On Doha, Obama claimed that an "integral part" of his strategy would be "working toward an ambitious and balanced Doha agreement."  But as I've noted repeatedly, US trading partners have been complaining about US non-involvement in the WTO's Doha Round since Obama took office in January. And the administration's abject refusal to own the 2008 US commitments on farm subsidy cuts, while it openly demands that its trading partners improve market access, is a clear indication that the White House is not serious about concluding Doha anytime soon.

Obama next stated that "[t]he United States will also be engaging with the Trans-Pacific Partnership countries with the goal of shaping a regional agreement that will have broad-based membership and the high standards worthy of a 21st century trade agreement." However, almost immediately following his speech, Deputy National Security Advisor Mark Froman totally hedged when asked what the President meant:
I think what he meant is that there is an ongoing initiative called the Trans-Pacific Partnership and that our intent is to engage with them to see whether we can shape that initiative into one that is comprehensive and a very high standard and could serve as a platform for further trade liberalization and regional integration in the region. We'll begin those discussions with the current and potential future members of the Trans-Pacific Partnership, and see whether this is something that could prove to be an important platform going forward.
Translation: the US has decided that it will begin the process of seeing whether it will want to seriously consider formally entering into TPP negotiations.  How bold!  In reality, Froman's flaccid statement makes clear that the United States has not committed to formal negotiations to enter the TPP.  But it might, someday.  Meanwhile, completed FTAs with Colombia, Panama, and South Korea remain shelved due to political concerns, costing US exporters billions.

Second, and as I summarized in a recent op-ed, the administration's unilateral trade actions - each designed to secure support for domestic policy priorities - have significantly harmed American exporting interests.  Obama's decision to slap tariffs on Chinese tires under "Section 421" of US trade law has jeopardized American chicken and automobile exports in China, and the administration's decision to sit on a Transportation Department plan to re-admit Mexican trucks on US roads has subjected a wide range of American goods to $2.4 billion in Mexican retaliatory tariffs.  Politics has trumped trade every time.

So pardon me if I sound a tad skeptical of the President's newfound appreciation for exports.  There are plenty of ways that the Obama administration could put its "pro-export" money where its mouth is and immediately and significantly boost sales of US goods and services around the world.  And yet it has done nothing of the sort.  Indeed, its much-heralded announcement to enter into new FTA negotiations (with the TPP) appears to be nothing more than rhetorical window dressing.  So until I see some concrete commitments to real trade liberalization, I'll continue to think that Obama's Asia speeches have little to do with signaling a renaissance of US free trade policies and much more to do with signaling other policy plans at home and abroad.

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