Free Market Carnivore's Blog

From his first month in office  – telling Canadians that he favored more trade while his agriculture secretary was hustling mCOOL along towards confrontation with Canada and Mexico – President Obama has been double talking the trade issue.  He has painted himself as a free trader at the same time he had three fully negotiated and Senate-ratified free trade agreements (FTA) on his desk for signature that he totally ignored, until recently.

While the president cast about for the last year for something that would boost economic growth and create jobs, he studiously avoided looking in the corner where the blinking, flashing FTAs were waiting.  The FTAs could have been contributing billions in business and jobs for American producing, exporting and transporting companies but the president did nothing.  Of course, the reason was primarily political: labor unions oppose trade as a matter of policy.  For some reason, the Teamsters who haul everything, the Longshoremen who load and unload at ports, the assembly line workers who build tractors and bulldozers, which get exported worldwide, and the workers at packers and processors and elevators don’t count.

Certainly, the economic data that shows a booming export business creates more jobs in American than get lost to overseas companies, gets ignored by unions, this Administration and, unfortunately, too many voters who don’t understand the overall benefits of trade to the overall economy.

With the G20 meetings taking place in South Korea, it was difficult for even President Obama to ignore the existence of the Korean FTA.  Now, anyone with any knowledge of trade agreements knows that tier after tier of negotiators spend years putting these agreements together.  Then they must be ratified by governing bodies in our trading partners’ governments, be ratified by our Senate and signed by the president.

The protectionist, leftist elements of American politics – from the same line of thinking that produced the Smoot-Hawley tariffs that ignited a trade war and extended the Great Depression in the 1930s  —  have prevailed upon President Obama to sit on his hands, in the name of protecting American jobs.

But many folks hoped exports would add revenue and jobs the economy could surely use.  To placate those folks, the President, with just months to go before the Korean visit, said he would like to sign the agreement with Korea in connection with the trip.  But he needed to re-negotiate a few things before he could sign it.  The unions and the liberal activists have used two straw men rallying points in opposition to free trade: other countries must be made to adhere to our ridiculous environmental  restrictions and they must adhere to our labor rules.  These two tactics have been surefire tricks to stymie free trade renegotiations.

Of course, going back on our word has done nothing to enhance the U.S. reputation as trading partners.

So while the existing FTAs could have been piling up economic progress for two years, with precedents set for beef and auto benchmarks and Korean consumers getting used to relying on great American products, the two countries could have used the G20 summit as a time for refining and adding to existing, functioning agreements.  Instead, the administration, Democratic lawmakers, the unions and Ford Motor Co. have spent the last few weeks trying to scuttle what we already had sealed, delivered and ready for signing in 2007.  The Wall Street Journal called the Korean FTA the “biggest bilateral trade deal the U.S. has taken up in more than a decade,” (“U.S. Hit by Trade Setback,” 11/12/`10.)

Thank you Mr. Obama.  Not only has billions not come into the economy and many millions not come into livestock coffers, but the Administration ignited a new trucking war with one of our biggest trading partners – Mexico.

And while our Federal Reserve pumps half a trillion dollars into the economy, weakening our dollar and the U.S. demonstrates itself to be a trading bumbler on the world stage, China asked the president at the G20 why we have the nerve to complain to them about keeping the value of their currency undervalued.

All of this is in the forefront while the president actually postures that his goal is to double exports by 2015.  Since our trading partners and trading competitors have been negotiating rings around us while the Obama Administration did nothing, that goal is a paper tiger.  Korea negotiated a nearly identical agreement to the deal we should have had with the EU in 2007, Wall Street pointed out, (“Embarrassment in Seoul,” 11/13-14, 2010).  We’re losing market share, losing out on new access to markets and losing reputation as a trustworthy trading partner.  While the world economy grows, global consumers want more and more high quality products – like beef available only from the U.S. and Canada.  But our government keeps throwing up roadblocks.

Even before Obama, the Democratic Congress had failed to renew the president’s fast track negotiating authority.  That might have slowed President Bush but since Obama’s doing nothing anyhow, it hasn’t made much difference.  That authority needs renewing but in the environment now, with scared, out-of-work people ignorant of the benefits of trade and looking to place blame, some serious educating will be necessary.

The bottom line is that the Administration has done nothing to boost revenues or access to markets already agreed to three years ago, has partially poisoned the well with our partners and now, by pumping a half-trillion dollars into the market, is making dollar-denominated commodities like oil and grains more expensive.  The boost will help grain producers but it is the harbinger of the inflation for everyone else we may see someday if our government ever gets out of our way and lets the economy recover.  At least the recent election is a step towards making that “if” a “when.”