Trade Trumps Aid
May 07, 2009
Ralph Waldo Emerson said that a foolish consistency is the hobgoblin of little minds.
As a White House candidate, Barack Obama declared a willingness to renegotiate NAFTA and possibly even quit the continental trade accord. He also opposed a modest free-trade agreement with Colombia, our closest Latin American ally.
Last week, however, President Obama reversed course. His administration announced that it does not intend to reopen NAFTA talks, and the president himself signaled an interest in passing a trade pact with Colombia.
These are two very welcome developments. He has corrected a wrongheaded position, and his decision will deliver economic benefits to Americans.
A year ago, Obama’s attacks on NAFTA were blatantly protectionist. “I think we should use the hammer of a potential opt-out,” he threatened. One of his chief economic advisors, Austan Goolsbee, privately told Canadian officials not to worry: This was just overheated campaign-trail rhetoric. When Goolsbee’s assurances were leaked to the press, he was all but fired for contradicting his boss.
Now Obama has backed away from his public pronouncements and embraced the views of his subordinate. NAFTA is safe, for now.
Up to this point, Obama has done nothing but toss up roadblocks to the trade agreement with Colombia--a deal that our trade negotiators informally completed during the Bush years. Colombia is a country of 45 million people. A deal now waits congressional approval before it can become official. But Congress has refused even to give it an up-or-down vote.
Obama has recently ordered U.S. Trade Representative Ron Kirk to make the agreement become a reality. Perhaps the controversy surrounding the president’s handshake with Venezuelan strongman Hugo Chavez had something to do with it. The particular motive hardly matters. If all goes well, we can expect a few minor amendments that will allow Obama and a few fence-sitting members of Congress to say their concerns about environmental and labor conditions in Colombia have been met, and finally seal a deal that should have been done long ago.
In the current financial climate, any measure that stalls trade or makes it more difficult for capital to flow across borders is equivalent to tearing up roads and ripping out railroad tracks: They deliver serious blows to the world’s economic infrastructure, and hurt American workers whose jobs depend upon foreign markets.
Russia recently announced a range of new tariffs, including special fees on equipment built by Caterpillar and Deere. This is exactly the type of protectionism we must defeat. One of the hard lessons of the Depression is that protectionism, such as the notorious Smoot-Hawley Tariff Act, can take a bad economic situation and make it even worse.
Encouraging Russia to act responsibly may be a challenge. But the symbolism and reality of the US reaching out to a Colombia on trade has far reaching effects. Resuming growth in jobs is a process that will be built incrementally; with foreign trade being a key. Farmers will profit, too, because suddenly a range of products will receive duty-free access to Colombian buyers: high-quality beef, wheat, cotton, soybeans, and a variety of fruits.
As we open our minds to what trade means, always remember that there are jobs in handling and distribution of goods both incoming and outgoing. Foreign trade is always much more than the production of raw materials and goods. That’s why the president shouldn’t stop with Colombia. Next, he ought to call for the successful passage of existing trade deals with Panama and South Korea. And he should order Kirk to identify new countries that will offer economic opportunities to Americans, if only their markets can be opened to products made in the USA.
When it comes to improving our prosperity, trade always trumps aid.
The hobgoblins are at bay, at least for the time being. While we have a chance, let’s run them into extinction.
Reg Clause raises cattle, corn and soybeans on a fourth generation family farm in central Iowa. He is a Truth About Trade and Technology board member (www.truthabouttrrade.org)