It's Politics, Stupid!

April 1, 2009

This Thursday, for a second time, the G-20 leaders in London will embrace free trade and commit themselves to avoiding protectionist measures, just as they did four months ago in Washington.

Their efforts will likely fail.

Not that they haven’t failed already, mind you. According to a report by the World Bank, several countries implemented trade-restricting measures after the G-20 November meeting, including 17 countries that were in the meeting. And although the scope and depth of these measures is small relative to the size of the world market, they bode poorly for the near future.

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The Costs of Economic Nationalism

February 6, 2009

In the midst of the financial crisis and job insecurity, economic nationalism has resurfaced in its most unproductive and dangerous form, having implications not just for U.S. producers but for Latin American markets as well.

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Expanded Trade is Essential for the Hemisphere’s Economic Recovery

January 27, 2009

As Barack Obama begins to define his presidency, one pending question is what shape the new administration’s trade policy will take. For that, we’re sure to get more answers at the confirmation hearings for U.S. Trade Representative-designate Ron Kirk. But, one thing is certain. Over the past several years, trade has become something of a four-letter word for many, and Americans tend to place some of the blame for our current economic woes on trade agreements.

Despite what the Lou Dobbs’ of the world say, free trade is not the enemy. Trade critics often argue that job loss in the United States is the direct result of our trade agreements. But new data show the trade deficit decreased from $208 billion in October 2008 to $183 billion in November 2008—a $25 billion drop in just a month—even as the unemployment rate rose above 7 percent. In fact, Department of Commerce numbers show that the United States has a $10.3 billion trade surplus with its 14 free-trade agreement (FTA) partners. This should argue in favor of more trade agreements, not against.

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Economic Stimulus in the Digital Era

December 23, 2008

With the scope of the recession looming larger with the release of each new gloomy statistic, talk of the New Deal-style package (and it’s potential scope) grows with it. But today in the digital age there’s a significant new component to stimulating the economy (including state investment in infrastructure that recalls the historic images of WPA). Today in the information economy it also means investment in digital infrastructure.

Although the U.S. invented the Internet and much of the soft and hardware that made it possible and led to its exponential growth it is now 15th in the world in access to high-speed Internet connections. In a recent speech President-elect Obama talked about his goal of getting every child connected to the Internet and promised to use a portion of the stimulus money to connect libraries and schools.

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The Colombia FTA is an Economic Stimulus that Doesn’t Cost $25 Billion

November 20, 2008

The election campaign has ended, but Commerce Secretary Gutierrez is still on the campaign trail for the Colombia free-trade agreement (FTA). This week, he was on the hustings at the Small Business Administration trade symposium.  The message: we must pass the Colombia free-trade agreement “with the same sense of urgency that we passed a stimulus package several months ago.” He’s right.

And these small businesses owners certainly understand that our economy would benefit. Approximately 10,000 U.S. companies export to Colombia, and of that about 8,500 are small and medium-sized firms—the engine for economic growth in the United States. With this FTA in place, the U.S. trade relationship with Colombia would shift from one of unilateral preferences granted to Colombia through the Andean Trade Promotion and Drug Eradication Act to a relationship where U.S. industry enjoys the same benefits already granted to Colombia. The Colombian market would open on a reciprocal basis to U.S. goods, allowing 80 percent of U.S. products to immediately enter Colombia duty-free. Without an FTA, the high tariffs levied on U.S. products means that a Caterpillar truck, for example, faces more than $200,000 in taxes when sold in Colombia. Clearly, this is not good for either country.

In these unsettling economic times, it is mystifying how Congress could shy away from passing an agreement that—combined with the already-in-place Peru FTA—would increase U.S. farm exports by $1.39 billion and provide over 18,000 new jobs.

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