Monday, February 13, 2012

Everything You Need to Know About Obama's Trade "Enforcement" Budget (and the Political Problems with Romney's China Trade Plan)

President Obama officially released his 2012 budget today, and, as expected, it proposes significant new funds for the super-duper trade enforcement team - the "Interagency Trade Enforcement Center" - that he outlined during his recent State of the Union Address.  Because the substance and future of both the President's budget and the ITEC is in serious doubt (as I've already noted), it's probably a waste of time to spend too much virtual ink on the proposals and their implications.  But just in case you're just dying for commentary, here's all you really need to know about the whether the proposed agency is a good or bad thing for US trade policy (and what "enforcement" really means): the President's plan is strongly supported by the vehemently anti-trade United Steelworkers Union (USW).  In fact, USW President Leo Gerard issued a lengthy press release lauding the plan:
President Obama has acted to enforce America's laws against unfair trade since coming to office and announced in his State of the Union address last month, a clear commitment to this effort. The USW is especially pleased to know the President's budget will be asking for millions of dollars to arm his new Interagency Trade Enforcement Center (ITEC) with the resources needed to fight for American jobs.

Too many American workers have had their jobs stolen from them by foreign unfair, predatory and illegal trade practices. Many of our trade competitors agree to the rules, but then fail to abide by them. Enforcing our laws – and the commitments other countries have made – must be high priority. President Obama is devoting resources to accomplish that goal....

In his State of the Union message, the President highlighted the success of the trade case brought by the Steelworkers against a flood of tire imports from China that had been decimating employment here. His leadership has helped to return the industry to stability, put American tire builders back to work and has stimulated the expansion of production and investment here at home. His efforts deserve, and have, our sincere gratitude.
Yes, yes, the President's Chinese tire and other trade remedies efforts just might deserve, and have, the union's sincere gratitude, but, as I've repeatedly noted here, they - or, more accurately, the skyrocketing prices, injured retailers and consumers, rampant trade diversion and economic uncertainty that they created - certainly deserve everyone else's extreme ridicule and disdain.  And if the USW's anti-trade policy and the Chinese tire tariffs are an indication of what President Obama's new budget is going to buy us (on credit!), then we once again can be thankful that the plan won't be carried out.

Beyond helping us understand the true intent of President Obama's "enforcement" plans, the USW press release also provides further proof that placating anti-traders with token acts or promises of protectionism is a fool's errand, especially for Republican politicians.  After Gerard finished praising the President for his commitment to painful protectionism enforcement, he then lays into GOP hopeful Mitt Romney, alleging that  "[t]his President's budget makes an important investment in trade law. The Republican candidate, Mitt Romney, would jeopardize our successes and reverse course on enforcing the rules."  Gerard then spends a couple paragraphs hitting Romney - who, by the way, is campaigning in Michigan right now - for his views on the China tires case and the auto bailouts.

Yet never once does Gerard - who literally just finished praising President Obama's aggressive China protectionism - heap similar praise onto Romney for his even more aggressive stance on China trade and currency (a stance that even Obama won't take).  Now, I certainly think that Romney's China currency stance is misguided from a legal, moral and economic perspective, but some pro-Romney cynics have argued that, those fair criticisms aside, his policy is smart politics because it will attract votes and support in heavily-unionized swing states like Ohio, Pennsylvania and, yes, Michigan.  I disagreed with such political calculations (and continue to do so), and Gerard's statements provide support for my view that Romney's China trade plans are not only bad policy, but also bad politics.

Protectionists will just never - ever - be placated with token protectionism (especially when it's a Republican politician doing the placating).

Now, leaving the USW and other professional protectionists aside, Romney's China currency plan is already revealing another big political flaw: the policy's economic and legal failings undermine much-deserved criticism of Obama's very bad record on trade policy (another problem I noted a few months back).   Indeed, just a few days ago, NYU law professor Robert Howse dismissed a very good op-ed by Columbia's Jagdish Bhagwati that absolutely destroyed Obama's latest trade pandering.  Howse did so not by addressing the substance of Bhagwati's claims, but instead by simply pointing to Romney's even worse stance on China trade.  I'm quite sure that if Romney's the nominee, we can expect similar diversions from Obama supporters between now and November.  And considering just how bad President Obama's trade policy has been over the last few years, it's a real shame that the likely Republican standard-bearer won't be able to mount an effective, full-throated criticism.

Sounds depressingly familiar, now that I think of it.  Sigh.

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