Obama’s Trade Policy Agenda
Is that the Agenda, Mr. Ambassador?
The Obama Administration’s 2010 Trade Policy Agenda was published Monday to almost no notice by anybody. I guess it is just wonks like me who read such things. The agenda comes out as part of the annual report to the Congress of the Office of the U.S. Trade Representative. It is probably skimmed by a few Congressional staffers and then put on a shelf somewhere, or saved as a .pdf file. But it can contain some important clues for any company involved in international business.
Scott Lincicombe read the agenda before I knew it was out and does a good analysis of how inherently mercantilist the document is. I’ll let his blog speak to that, but nobody should be surprised. U.S. and other major country trade policies have been mercantilist for as long as I can remember. How many members of Congress can you remember who advocated increasing American imports? Occasionally we do it for altruistic reasons, such as the Generalized System of Preferences or the Caribbean Basin Initiative, but truly meaningful cuts in import barriers are pretty scarce outside of major trade rounds. We did allow in some Brazilian pork rinds recently. It tends to be smaller, perhaps more mature countries that see that free markets for imports are just as important for an economy as the same thing for exports. In my experience, Singapore, Hong Kong, Chile come to mind. An old friend, who headed up Austria’s Foreign Service, argued that if you start doing business in one direction, you will likely end up doing business in the opposite direction, too. That’s my credo.
So what did I glean from the new agenda? In order of what I spotted in a quick read:
- The Commerce Department says over ten million American jobs were supported by industrial exports in 2008, and the Department of Agriculture chimes in that ag exports supported 800,000 jobs. Let’s see, industrial exports supports close to 93% of the jobs and ag exports support only 7%. Now why, do you suppose, that the Administration and the Congress continue to throw 90% of the federal export promotion budget into agricultural exports? Can you say “farm lobby”? Can you say “misallocation of scarce resources”?
- 95% of the world’s customers and 80% of production are outside the United States. Does this give you a clue as to where your company should look for growth? The IMF says 87% of economic growth will be offshore during the coming five years.
- There is lots of boilerplate about reviving the Doha Round. I hate to say it, because I am a believer in multilateral negotiations and a couple of former colleagues drafted the agenda, but businesses can ignore the Doha stuff for now. Ain’t gonna happen soon.
- You can also ignore the lengthy section on enforcement of trade agreements. That’s simply pandering to know-nothings in Congress who persist in believing that the United States is all righteous and correct, while everybody else cheats and takes advantage of our good nature. I can assure you that we are just as tricky and slick as anybody else – but that truth doesn’t attract votes.
- Did you realize that USTR emphasized “deepening engagement with major emerging markets“, especially the BRIC countries, in 2009? I didn’t either, but I have to question the choice of targets, apparently chosen by Goldman Sachs. Why on earth would USTR want to push companies into the criminal morass that is Russia, or get them bogged down in figuring out how to do business in China? Both markets make sense for a small sub-set of companies, but most should be heading for easier markets. I have always preferred cash flow over potential.
- There is much about joining the Trans Pacific Partnership and working with APEC. I am growing warmer about TPP, so I like this. The language leaves the impression that we are negotiating a new TPP and gives scant notice to the fact that TPP has been around for several years and joining it involves talks and give-and-take with several other countries. We’re not starting from scratch.
- Like Scott Lincicombe, I see no indication that the Obama Administration is prepared to ask Congress to ratify the free trade agreements with South Korea, Panama and Colombia. Pity. That’s several hundred thousand U.S. jobs down the tubes. I guess they figure that Americans aren’t looking for jobs right now. (Check out Public Citizen’s Eyes on Trade blog re: Ron Kirk’s testimony about the Trade Agenda. Kudos to Senators Grassley and Baucus.)
- What’s missing? Trade in services. Apparently Ron Kirk and his merry men and women haven’t noticed the overwhelming advantages that U.S. exporters have in services, or that services give a tremendous boost to our balance of payments. (Services don’t show up in the balance of trade, the preserve of hard goods exports and imports.) Perhaps the national trade agenda should include pushing our services exports? Just a little bit?
The agenda is a generally disappointing document. I see little that is new or innovative, and I see a document just loaded with pandering to know-nothings. As it is a mandated report to the Congress, perhaps that is appropriate.
