On Trade, the Best Defense is a Good Offense

Apr 23, 2009

Today's Washington Post has an editorial ringing the alarm about "small signs of protectionism … popping up around the globe."

We have seen this with the "Buy American" provisions initially stuck into the stimulus bill, which President Obama wisely persuaded the Senate to alter, as well as restrictions on the operation of Mexican trucks in the United States. We are seeing evidence of this creeping protectionism around the world, as well. In its recent effort to "name and shame," the World Trade Organization published a long list of countries that have made counterproductive trade changes … In looking at instances of protectionism since November's Group of 20 meetings, the World Bank found that 17 of the 20 members, all of whom signed on to the group's communiques pledging to avoid protectionism, have adopting measures restricting trade.

These are examples of "low-intensity protectionism" or protectionist initiatives contained. But the Post is right to express concern because the stakes are so high for the United States.

That's because the United States is the world's largest exporter, and our foreign sales of goods and services approached $2 trillion last year. More than 57 million Americans work at companies that benefit from international trade, according to the Treasury Department. That's 40% of the private sector work force.

How can the administration and Congress get out ahead of the problem? The best defense is a good offense, and this week, the outlook has brightened. President Obama and U.S. Trade Representative Ron Kirk have made a number of positive comments about their plans for a vigorous, forward-leaning trade agenda:

Panama: "President Obama and obviously President Torrijos would both like to see the Panama Free Trade Agreement sooner rather than later," Kirk told reporters on April 20. He noted that Panama will hold elections on May 3 and inaugurate a new president on July 1, adding "we may have a discreet window to move more forcefully... and come up with a timeline to move it more expeditiously" than previously thought, Kirk said. He also noted "some concerns in Congress about Panama's tax laws," and said talks with a "high-level team from Panama" will continue this week in Washington.

Colombia: "It was a very, very good, productive meeting," Kirk said of his meeting with President Uribe at the Summit of the Americas. "My own personal thought as a mayor and as a lawyer is that when you've got two willing partners, that's a pretty good recipe for getting a deal done… President Obama believes very strongly Colombia is a very important ally for the United States, and we believe they have made remarkable progress "in cutting rates of violence in Colombia, Kirk said, while noting "as of right now, there are a number of issues that need to be resolved."

"One of the commitments I made was that we would consult with the Congress early, and we would consult with them often," Kirk said. "The Colombia trade agreement is one that begs for that kind of consultation. "He was reluctant to predict when Congress could approve the Colombia agreement, even though Uribe and Obama believe that "would be a good thing for both economies.”

Carbon Tariffs: In an April 14 letter to a number of House Republicans, Kirk addressed the trade-related aspects of a cap-and-trade program. "The Administration believes that that best approach to address concerns with carbon leakage is to negotiate a new international climate agreement in the UN that ensures that all major emitters take long term, significant action to reduce their greenhouse gas emissions… [climate change policy must be] compatible with our international trade obligations and minimize incentives for our trading partners to pursue counter measures that could negatively impact U.S. exports. "The letter rejects the notion of tariffs on carbon-intensive imports such cement and steel, which could violate U.S. obligations as a member of the WTO. The Chamber supports this approach.

Korea: At the other end of Pennsylvania Avenue, the chairman and ranking member of the Senate Finance Committee — Max Baucus and Charles Grassley — wrote Obama on April 20, asking him to "begin the hard work of winning broad approval" of a trade pact with Korea. North Korea's recent missile launch and "statements that it will resume its nuclear program demonstrate yet again the threat that North Korea poses in the northeast Asian region… In the face of this threat, it is vital that the United States maintain and expand its strong and proven partnership with the Republic of Korea," they wrote.

This is all great news for American businesses that are keen to tap foreign markets and sell their wares to the 95% of the world's consumers who live outside the United States. Getting back on offense will be a key part of the U.S. economic recovery, and trade will play an important role in our efforts.

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