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Free Trade = American Jobs

Obama on American Competitiveness
28 January 2010

by Daniel Michaeli

Obama State of the Union

Obama speaks, and Biden is impressed

The 0verall success or failure of President Obama’s State of the Union address last night won’t be known for some time. Dan Balz of the Washington Post reports that the real issue coming out of the speech is whether Congressional Democrats and Republicans will or won’t change their behavior in the coming months.

But an aspect of the speech that certainly deserves praise was the president’s focus on American competitiveness, including comparisons to China, Germany, and India. It was unusually honest for a president to acknowledge that the U.S. could end up playing second fiddle to another economy if it doesn’t “get serious about fixing the problems that are hampering our growth.” This kind of honesty is welcome and overdue.

Unfortunately, trade is arguably the area this administration has ignored most since taking office, though joining negotiations on the Trans-Pacific Partnership last month was a good first step. In the speech, however, Obama identified growing exports as one of his four priorities for increasing America’s competitiveness. The question is: how aggressively will or can the president move to make this happen?

Obama laid out the goal that “we will double our exports over the next five years, an increase that will support two million jobs in America.” He proposed a “National Export Initiative”–something no one seems able to pin down details about. He called for a long-awaited overhaul of the national security export controls, which could be a boon to defense and high tech companies. He talked about Doha.

And he alluded to the free trade agreements that have not yet been submitted to Congress, for South Korea, Panama, and Colombia. On trade negotiations, Obama said:

We have to seek new markets aggressively, just as our competitors are.  If America sits on the sidelines while other nations sign trade deals, we will lose the chance to create jobs on our shores.  (Applause.)  But realizing those benefits also means enforcing those agreements so our trading partners play by the rules.  (Applause.)  And that’s why we’ll continue to shape a Doha trade agreement that opens global markets, and why we will strengthen our trade relations in Asia and with key partners like South Korea and Panama and Colombia.  (Applause.)

This section of the speech finally linked the free trade agreements (FTAs) languishing in Washington to American jobs, the strongest political argument for trade agreements. But missing was the acknowledgment that these agreements, and American competitiveness, are strategically essential for continued U.S. global leadership. And missing, too, was an indication that the president intends to move on these agreements any time soon (indeed, a lay-person reading the speech might not realize this was code for three FTAs).

In the end, my greatest criticism of the speech was that Obama failed to identify the priorities of his agenda. The White House blog post after the speech was a bulleted list of 23 initiatives listed in no meaningful order or hierarchy. Even if the White House is talking about trade a little more, achieving the goal of doubling American exports will require a great deal more attention to lowering trade barriers. Hoping for salvation from a weaker dollar will not be enough.

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