President Obama says he is for free and fair trade. Yet amidst an economic downturn, his trade policy in action is a mix of nice rhetoric, small protectionist payoffs for political supporters and inexcusable inertia that together hobble prospects for a strong global recovery.
His administration’s internal debate over whether to participate in an Asian-Pacific free-trade partnership with seven nations is the latest bad news. The deal, called the Trans-Pacific Strategic Economic Partnership Agreement (TPP), hatched late in the Bush administration, is to extend America’s network of regional free-trade areas beyond North America and Central America into the Pacific.
It would build on existing free-trade deals with Singapore, Peru, Chile and Australia by entering into a regional trade pact with those nations and Vietnam, New Zealand and Brunei. Most important, it would help ensure U.S. economic vitality in the region at a time when China is stepping up its efforts to open free trade with regional and worldwide partners.
The proposal also could be a springboard to wider economic integration in the Pacific with the potential to add in existing U.S. free-trade partners Canada, Mexico, Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica as well as countries with pending U.S. trade deals - South Korea, Panama and Colombia.
TPP should appeal to the administration’s desire to act in concert with other nations as part of multilateral groups, but parochial political interests remain in the way. Mr. Obama has consistently bowed to political pressure from Big Labor allies and liberals in Congress. He has let important free-trade deals with Colombia, Panama and South Korea negotiated by President George W. Bush falter.
While the U.S. Trade Representative continues to push for an agreement in the long-stalled Doha round of world trade discussions, Mr. Obama imposed strict tariffs on Chinese tires as a present to union interests after vowing with other G-20 nation leaders to not increase trade barriers in the worldwide downturn.
The delayed deals are winners for the U.S. economy. The South Korean deal alone could boost the $80 billion in annual trade with our seventh-largest trading partner by as much as $20 billion. The Panama free-trade deal completes a Pacific Rim free-trade area running from Alaska to the Antarctic and helps enhance U.S. security by solidifying our relationship with a key Latin American trading nation that controls the Panama Canal. The Colombian trade deal offers a chance to further shore up relations with a nation that is invaluable in defending U.S. interests in a region where drug cartels, Marxist guerrillas and Venezuelan strongman Hugo Chavez threaten U.S. national security.
Strong U.S. leadership on trade could be an important signal to the global economy that international commerce is on the upswing and that new investment in the U.S. and abroad will be profitable. In both the short and the long run, news that the United States will unleash the free market can do more to support an economic recovery than any stimulus plan.