Free Market Carnivore's Blog

For two years we’ve been calling on President Obama to let us help create revenue, growth and jobs by signing the three Free Trade Agreements on his desk – or, more likely, off out of sight in a cubbyhole somewhere.

 Instead, while claiming to favor free trade, he ignored the agreements, keeping his left and his labor union allies happy.  And the gains for the beef industry already painstakingly negotiated – primarily tariff reductions and increased access – were never realized.  Instead, beef and pork markets suffered interruptions and difficulties stemming from Mexico’s unhappiness with the administrations reneging on Mexican trucking access.  Canada – as the sole producer of high quality fed beef — has had free rein to complete trade agreements around the world.

 Then, when the President wanted to curry Korean favor because of his trip to Seoul for the G20, intensified by the imperative to strengthen our relationship with South Korea while North Korea shelled South Korean territory, he did not do the prudent and expedient but the egotistical thing.  He should have apologized to America’s farmers and ranchers and manufacturing exporters for having delayed their sales and growth for two years, signed the agreement the South Koreans had fought so hard for and presented it to the Koreans when he arrived.  He should also have apologized to the unemployed people who could have had jobs out of billions of dollars in new trade over the two years.

 Of course, had he signed the agreement when he came into office, knowing the economy needed all the boosting it could get, he would have been in a totally different position in 2010.  With the Koreans having enjoyed the benefits of two years of more and cheaper American short ribs, and time for some of the fears and tensions over American beef safety to have soothed, the time would have been more propitious for President Obama to nudge the Koreans toward a 30-month age limit in concert with most of the rest of the world.

 Not having done any of those prudent things, yielding to ego and to his auto union allies, he elected to force negotiations on new side agreements, so that he could get a better deal  — more protection  —  for the American auto industry.  And he got nothing added for the beef industry at all.

 Now the agreement has to go back to both the Korean parliament and to the U.S. senate all over again for approval.  Will the South Korean demonstrators go back to the streets over American beef like they did the last time?  Perhaps not, as while some Korean consumers are still leary of American beef, many of the demonstrators the last time turned out to be auto union members and rent-a-demonstrators massing over lots more than just American beef.

 Perhaps more worrisome is the mood of the American electorate, singed by a lousy economy and historically huge unemployment, suspicious of anything that might take away jobs.  The unions have convinced many Americans  — including many Republicans – that free trade hurts the American job market.  But the facts are undeniable.  Trade by 2003 accounted for nearly a quarter of the U.S. GDP.  Trade barriers raise prices for consumers, reducing the purchasing power of their paychecks.  A University of Michigan study found that eliminating all tariffs would expand the U.S. economy by $95 billion, contributing to job creation and higher wages (“Free Trade by Any Means: How the Global Free Trade Alliance Enhances America’s Overall Trading Strategy,” Heritage Backgrounder No. 1786, 8/10/04.)

 So, hopefully, the newly-elected conservatives, who surveys tell us favor trade, will approve the Korean deal and increased access and lower tariffs can start generating business.