No sooner did I click the “publish” button for my previous post when along comes this article (above link) about Obama’s plan for doubling exports.
President Barack Obama, anxious to spur growth and tackle high unemployment, Thursday laid out a plan for tougher enforcement of trade laws, government advocacy and credit assistance to double U.S. exports in five years.
Obama also prodded China to move to a “more market-oriented exchange rate,” which he said would make a big contribution to putting the global economy on a healthier path after the worst economic downturn in decades.
All of this focus on strengthening the yuan is a complete waste of time. No trade deficit has ever been reversed by changes in exchange rates. Ever. That’s because exchange rates stabilize at a level where unemployment is equal, not at a rate where trade is balanced.
“We have to rebuild our economy on a new, stronger, more balanced foundation for the future, a foundation that will advance the American people’s prosperity at home, and support American leadership in the world,” Obama said in prepared remarks at the U.S. Export-Import Bank’s annual conference.
That means the United States cannot “stand on the sidelines” as other countries are busy negotiating trade deals, said Obama, who first announced his goal of doubling exports in his State of the Union speech in January.
Uh oh. Here comes more trade deals that begin with the U.S. showing good faith by opening our markets first.
High U.S. unemployment is fueling anxiety about trade and trade agreements, which many of the president’s fellow Democrats blame for million of manufacturing job losses. Obama recognized that concern, but said the U.S. economic future depended on producing more to export abroad.
Export? To whom? Whose needs for manufactured goods aren’t already being met by China, Germany, Japan, Korea or a host of others? There’s no untapped markets out there.
“There’s no question that as we compete in that global marketplace, we’ve got to look out for our workers. But to look out for our workers, we’ve got to compete in the global marketplace. Because it’s never been as important an opportunity for America,” he said. “Ninety-five percent of the world’s customers and the world’s fastest-growing markets are outside our borders.”
Right. And those markets are smart enough to insist that American companies build their plants there instead of exporting.
But when the United States negotiates trade deals, it must aggressively enforce those agreements to make sure other countries honor the commitments they make, Obama said.
So we find an unfair issue, file a complaint with the World Trade Organization. A year or so later, the WTO issues a preliminary finding, which is then challenged by the offending nation. Two years later, the WTO issues a final ruling, perhaps authorizing retaliatory measures by the U.S. By then, the offending nation has moved on to other practices that assure their surplus of trade. And the process starts all over. We’ve seen this played out hundreds of times over the past decades. And where has it gotten us?
We’re consistently played for fools in international trade. Obviously, nothing is going to change under this administration.