Enforcing Flawed Trade Deals

http://www.reuters.com/article/idUSTRE6131YM20100204

No sooner do I announce plans to scale back on posting articles when along comes something I can’t resist.  The above-linked Reuters article reports on an announcement by Commerce Secretary Gary Locke of plans to boost enforcement of trade deals in an effort to achieve Obama’s promised doubling of exports in five years.   There are a couple of key points that need to be made here. 

First of all, I have spent virtually my whole adult life listening to presidents, Commerce secretaries and U.S. Trade Representatives vowing to get tough on trade deal enforcement.  This effort will turn out no differently.  If anything, exporting nations are relieved to have the focus drawn away from the import side of the equation.

Secondly, the following passage from the article can’t pass without comment:

“While the U.S. is a major exporter, we are underperforming,” Locke said in the excerpts given to reporters. “U.S. exports as a percentage of GDP are still well below nearly all of our major economic competitors.”

The competitors Locke speaks of are primarily China, Japan and Germany.  Back in early November, Obama challenged his economic team with the question, “If Germany can build an economy on exports, why can’t we?”  (See Obama on Trade: “If Germany can do it, why can’t we?”.)  America is not “underperforming.”  It’s not about “competing.”  The problem is that the field of economics doesn’t yet recognize or understand the role of population density disparities in driving global trade imbalances.  Boosting our exports means that nations like China, Japan and Germany have to boost their imports – their domestic consumption.  If they were capable of such domestic consumption, they wouldn’t have the need to export so much in the first place, nor would they have the excess production capacity to do so. 

I don’t doubt the president’s sincerity.  Every president for the past 30 years has understood the need to restore a balance of trade.  But Obama is the first post-global economic collapse president and, as such, the first to have an added sense of urgency brought on by a realization of the ultimate consequences of sustained trade imbalances.  Unfortunately, he’s fallen back on the same worn out approach of enforcing trade deals when it’s the deals themselves, lacking population density-leveling mechanicsms,  that are the problem. 

But this time, time is not on his side.  The era of sweeping trade imbalances and their consequences under the rug has ended.  The U.S. is economically boxed in on all sides by high unemployment, global demands to rein in our budget deficit and a Federal Reserve with an empty tool box.  So the only question is how soon the president will run out of patience with the export-focused approach and turn his attention to imports.

Advertisements

3 Responses to Enforcing Flawed Trade Deals

  1. hungry4food says:

    You cannot claim there were no violations against the American people , read these examples of warnings that were told to our leaders as they did the opposite ;
    Giant Sucking Sound Ross Perot talked about in the 1992 Presidential Campaign

    http://www.thenation.com/doc/20011231/greider

    The High Cost of the China-WTO Deal

    http://www.epi.org/publications/entry/issuebriefs_ib137/

    But if you always follow the money it will tell the truth about Why they Did the wrong things , its the same ones we are bailout that were the beneficiaries of the Free Trade agreements , the to big to fail industries of the Financial and Retail sectors ….. read the names in this donors list and you will see they are the same CEOs and affiliates of your Financial and Retail Giants . Fascism pure and simple .
    the architect of the Free Trade agreement that was rule less in terms of maintaining dollar value
    http://www.nytimes.com/2008/12/19/us/politics/w19clinton.html

    voices.washingtonpost.com/…/2008/12/clinton_donor_list.html

  2. Mark A. Hall says:

    Pete:

    And so your “I’ll Be Tracking” begins!

    Lots of luck with this one!

  3. ClydeB says:

    Pete,

    At there is no shortage of work at your place. Lots of us depend on your regular analysis. Can’t you work two shifts?

    Best of luck with your white paper plans. Your theory is sound and hopefully this plan will get it sufficiently exposed so that it will be implemented.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: