Wednesday, February 3, 2010

Increasing Exports, ctd.

I promise that this will be the last post on export promotion, but a few things caught my eye today that deserve quick mention:
  • The President spoke more on trade at today's (otherwise boring) meeting with Senate Democrats.  His response to a hilariously-trite question from Sen. Arlen "Need Every Union Vote I Can Get" Specter (RD-PA) was good and bad.  Good: he refused to confirm the protectionist myths that Specter was spewing (import-caused job losses in manufacturing, trade deficit demagoguery, China-bashing, trade cheating, etc. - Arlen pulled out the stops!).  Bad: Obama's big free trade solutions remain reciprocity, export promotion and increased enforcement, thus tacitly reinforcing Specter's protectionist nonsense and ensuring sub-par export results.  Oh, and no mention of FTAs or the WTO's Doha Round - not a good sign that the White House plans to confront anti-trade Democrats this year, now is it?  (More on that below.)
  • Speaking of protectionist myths and the policies that promote them, professional anti-traders Public Citizen released the following response to Obama's new export plan: "Obama's export promise is a step in the right direction, given our overwhelming trade deficit, and a decline in exports of 19 percent last year.  However, by our calculations, a doubling of exports would imply a 15 percent annual export growth rate, sustained over the next five years. That's almost double the annual average from 2004-08. Moreover, if imports grow at their 2004-08, we would still be left with a trade deficit by 2014. That means that we need a trade policy... that commits to looking at both sides of our trade balance ledger." Gee, that sure sounds familiar, huh?  Ugh.
  • The Peterson Institute's Fred Bergsten has a new Washington Post op-ed on "How Best to Boost US Exports."  Most of his solutions sound verrrry familiar: (i) passing trade agreements; (ii) reforming export controls; and (iii) lowering corporate taxes, including a possible switch to a domestic consumption tax.  Unfortunately, the influential Bergsten also believes that monetary policy should play a key part in export promotion and calls for aggressive action against China, in particular.  Obviously, I have serious doubts about this suggestion, not only because it's absurdly interventionist, but also because I think it'd be both dangerously provocative and ultimately ineffectual.  Speaking of which...
  • Author and journalist Alexandra Harney has a great op-ed in today's WSJ Asia about how appreciation of China's currency will have little effect on Chinese exports or US manufacturing - something I've been saying for months now.  She concludes: "Proponents of a Chinese revaluation often claim it would contribute to a global rebalancing between high-consuming Americans and high-saving Chinese.  The reality is that China has strong competitive advantages in manufacturing that will exist for the foreseeable future, whatever the exchange rate."  I can't say I agree with everything Harney writes here, but on this point I think she's dead-on (and I'm certainly not alone in that thinking).
  • On tax policy and trade, Matthew Slaughter has an excellent op-ed in today's 'Merican WSJ about the unmitigated disaster that would be President Obama's plan to "end tax breaks for companies that ship US jobs overseas."  Citing a boatload of awesome data, Slaughter finds that Obama's international tax plans would impose an additional $122.2 billion in taxes on US multinational companies, thereby destroying US jobs, exports and investment.  Slaughter rightly concludes that "[t]o climb out of the recession, we need to create millions of the kinds of jobs that U.S. multinationals tend to create. Economic policy on all fronts should be encouraging job growth by these firms.  The proposed international-tax reforms do precisely the opposite."  Instead of these reforms, Slaughter recommends - big shock! - passage of pending FTAs with Colombia, Panama and South Korea, as well as adopting pro-growth tax policies.
  • Speaking of pending FTAs, it appears that Treasury Secretary Timmy Geithner got a little overheated today at a House Ways & Means Committee hearing and boldly proclaimed that 2010 passage of pending US FTAs with Colombia, Panama and South Korea was "absolutely" part of the administration's new export strategy.  Unfortunately, Treasury and USTR officials quickly called the cops on Geithner's FTA party by "clarifying" those unscripted remarks with the same nonsense that they've been peddling for 13 months now: "They said U.S. trade officials still had to resolve outstanding issues with the three countries before Obama would send the FTAs to Congress for a vote. 'Once these issues are resolved, the administration looks forward to working with Congress on the best time to move the agreements forward,' a Treasury spokeswoman said."  Feel the excitement!
Ok, ok, I'd say that's enough on exports for a while. (Unless something else comes up tomorrow, natch.)

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