In the event you aren’t paying lots of attention to international trade, here’s an update: The world is busily signing bilateral trade treaties that each signing country sees as in their favor… and American Democrats in Congress and the White House, in thrall to their union compatriots, are not signing anything, dragging America farther and farther behind in international trade and the prosperity that ALWAYS comes from such trade.
Anyone who actually thinks other countries will pay attention to our bleats about human rights, women’s rights, the environment, nuclear weapons, etc., when we are totally disengaging from that world is just plain stupid. There is just no other word for it. And these people – Democrats – are in charge. Great.
Democrats in control and Obama in the WH – change for the worse that you can believe in.
Democrats – always a couple centuries behind, in education, trade, business, freedom, understanding….
Question: How long will it take for America to recover the lost economic opportunities and the lost wealth and the lost freedom from just a few short months of Obama, and one Democrat Congress?
Here’s an update from the Wall St Journal:
A world of trade deals without the U.S.
President Obama heads for Asia this week to talk about U.S. economic recovery and reform, and one theme that we expect he’ll hear from Asian leaders is this: America is leaving itself behind as the rest of the world tries to liberalize trade.
The numbers tell the story. At least 266 bilateral or regional trade deals are in force, according to the World Trade Organization, and there are roughly 100 more of which the WTO has not yet been formally informed. The U.S. is a party to only five of the 64 trade pacts that have taken effect since 2005—with Australia, Morocco, Bahrain, Oman and Peru.
In contrast, eight of those 64 deals involve the European Union (plus a round of EU expansion) and Japan has signed nine. Overall the U.S. has trade deals with only 17 countries including Canada and Mexico under Nafta. The EU has struck 29 deals on trade ranging from customs unions to larger free-trade agreements with 40 economies.
Of the deals the WTO knows about, an average of seven took effect each year in the five years after the WTO’s founding in 1995. For 2004-2008, the annual average rose to 15. Another 12 have kicked in this year. New Zealand and Malaysia signed a pact last week, for instance, and China and India are in talks. Oh, and there’s also the newly signed EU-Korea trade deal, and the one signed last year between Canada and Colombia.
These deals are proliferating for many reasons. Some countries are losing patience with the Doha round of global trade talks that has dragged on for eight years. Others view bilateral deals as a way of liberalizing beyond what Doha would accomplish—including areas like intellectual-property protection. These deals can also firm up alliances or build political influence, which is one reason China is aggressively pursuing trade deals with its neighbors.
The danger is that U.S. companies could find themselves on the wrong side of deals negotiated among other countries. The EU-South Korea pact, for example, will tear down almost all remaining tariff barriers between the two sides. It will also address such technical barriers as the excessive safety standards that Seoul has long used to block imports, and it will open Korea to European services. The U.S. has long tried to address these hurdles so American companies could gain better access to the world’s 13th-largest economy. The EU is now beating Washington to the punch—largely by copying the trade deal the Bush Administration negotiated with Seoul but that Congress refuses to ratify.
The same holds for Canada’s deal with Colombia. That deal eliminates Colombia’s average 12% tariffs on nonagricultural goods from Canada; U.S. exporters will still have to pay those tariffs even as Colombians keep tariff-free access to the U.S. under an earlier agreement. Over time Canadian farmers will gain tariff-free access to Colombia for most of their agricultural exports while farmers in Iowa or Nebraska will be stuck with tariffs of between 5% and 80%.
Bilateral trade deals are far from ideal as a way to promote global growth. Far better for governments to lower their own trade barriers unilaterally to all comers, or for all governments to sign a multilateral deal like the Doha round. A complex web of bilateral and regional trade deals can saddle businesses with the costs of complying with multiple sets of rules. This “spaghetti bowl” approach also distorts economies to the extent that businesses make trade and investment decisions based more on where they can get trade preferences than on the highest return on capital.
But when the U.S. sits on the sidelines, the rest of the world is going to find its own trading way, however imperfect. The nearby table shows some of the benefits U.S. companies will be missing.
A start to getting the U.S. back in the game would be for Congress to ratify the pending deals with South Korea, Colombia and Panama. Mr. Obama and U.S. Trade Representative Ron Kirk need to rethink their emphasis on trade “enforcement,” which is code for introducing higher barriers, and instead renew the push for more deals. Mr. Obama could also become a leading voice pushing for progress on Doha. Especially as other countries expand their own trading opportunities, the costs of Washington dithering are growing every day.