President Obama’s Trade Failure
Derek Scissors /
There is a consensus, spanning the Democratic and Republican parties, our Asia-Pacific trade partners, and those interested around the world that President Obama is heading to Asia with one hand tied behind is back. The reason is his failure to develop and present a clear, coherent trade policy.
Economics is king in the Asia-Pacific and trade with the US is the jewel in the king’s crown. Ignore most of what you hear about China as the engine of growth; China runs a huge trade surplus. That means, in the short term, it is taking GDP away from the world, not adding to it. Goods are flowing to China from the rest of the region but still chiefly in order to assemble and export to the US. The US is by far the most important country for the region.
Unfortunately, we’re undermining that lofty perch, in more ways than one. First and most pressing is the long-term health of our own economy. A government that isn’t sure when it can stop borrowing $1 trillion every year sends a terrible signal about economic health. Deficit spending weakens the dollar, which makes East Asia uncomfortable about taking the dollars we pay for products streaming across the Pacific.
The White House has a response, of course: it’s a crisis, it’s temporary. Whatever you think of that response, the knockout blow is it can’t be used for trade.
Last year, our trade with the Asia-Pacific Economic Cooperation (APEC) group was no less than $2 trillion, more than that with North America and the EU combined. This trade isn’t some afterthought to take up after the endless Congressional consideration of health care and climate change, it’s central to our economy and recovery.
And the Administration has done nothing. The free trade agreement with our treaty ally Korea could serve as trade policy centerpiece but remains in limbo, with no timetable for when the President will send it to Congress. We are engaged in creeping protectionism against China, with no apparent plan or purpose.
Most inexcusable: we still haven’t heard the comprehensive statement on trade from President Obama that has been rumored for months. It would bolster our Asia-Pacific friends and partners considerably just to hear a ringing and specific endorsement of open trade. Of all things, this President should at least give us a good speech.
Barring that, East Asia will be forced to hedge its bets. Hedging in this case means more regional cooperation that excludes a vacillating America and more hope against hope that China can take America’s place. President Obama has been pushing the region in the wrong direction and now has to swim upstream.