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Obama — a Weak Advocate for Free Trade

Obama’s international endeavors are going about as well as his party’s electoral efforts. The latest flop: “The presidents of the U.S. and South Korea were unable to overcome disputes over cars, cattle and domestic politics, potentially killing the biggest bilateral trade deal the U.S. has taken up in more than a decade.” It is worth examining why the president couldn’t make a deal.

In essence, Obama has refused to stand up to domestic advocates of protectionism — a failure that stands in contrast to the actions of past presidents from both parties. And, no doubt, the South Koreans calculated that they might as well try to wait him out. It sure doesn’t seem that Obama was on the side of the angels — or of free trade. This tells you all you need to know:

Labor leaders and some powerful politicians from both parties praised Mr. Obama for not going ahead with a deal they characterized as bad for U.S. workers. “President Obama is exactly right in holding out for a deal that puts working people’s interests first,” said Richard Trumka, president of the AFL-CIO.

Translation: Obama caved to protectionist elements in the U.S.

As a result of this and Ben Bernanke’s printing press, we are increasingly isolated and becoming the object of our trading partners’ criticism:

The trade-talk failure came on top of criticism from other G-20 nations concerning the Federal Reserve’s move to pump billions into the U.S. economy, potentially weakening the dollar.

“This reinforces the opinion of many key global and business leaders that the U.S. isn’t really committed to global engagement and is instead pushing mercantilist, beggar-thy-neighbor policies,” said Matthew Slaughter, a former member of George W. Bush’s Council of Economic Advisers.

As for the particulars, it seems as though Obama wanted to hang on to some protectionist provisions just a little longer. (“One stumbling block was Korea’s refusal to change a provision in the 2007 pact that provided an immediate end to a 2.5% tariff the U.S. levies on imports of Korean cars. … The U.S. wanted the tariff reduced gradually, while Korea eliminates safety and environmental rules that U.S. auto makers, led by Ford, said help keep Korea the world’s most closed car market.”)

Congress has traditionally been more protectionist than the White House, the result of intense lobbying by both U.S. businesses and Big Labor. A strong presidential hand has been required to rebuff protectionist sentiment and negotiate free-trade agreements that are essential to America’s prosperity. To his credit, Bill Clinton did just that. But Obama has neither the will nor the interest in following this approach. This spells trouble for the U.S.:

Meanwhile, the European Union and other nations have signed far more bilateral deals than the U.S. since 1994 when the North American Free Trade Agreement came into effect, displeasing some U.S. industrial companies. “We as a country have essentially taken two years off” from pursuing trade agreements while the rest of the world goes full speed ahead, said Eaton Corp. Chief Executive Alexander Cutler on Thursday. “If you want to have a vibrant economy, you have to have access to the fastest-growing parts of the world.”

You would think a president who ran on the promise to “restore our standing” in the world and end the supposed cowboy unilateralism of his predecessor would understand this.


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