During his State of the Union address in January, President Obama made an improbable promise: The United States will double its exports by 2015. History overflows with failed five-year plans for the economy — and the president’s habit of locating all performance metrics on the far side of November 6, 2012, is exasperating — but his new attention to trade is welcome, as is news that the administration will take up stalled trade pacts with Colombia, Panama, and South Korea, the better to facilitate those exports.
Barack Obama is no economist, but he’s no fool, either: He knows that his No. 1 threat in the next election is not going to be Sarah Palin or Mitt Romney, but the specter of double-digit unemployment. The official unemployment rate currently is 9.5 percent; add in those “discouraged workers,” who would like jobs but have given up searching for them, and the rate is much higher. In the backyards of powerful Democrats, the story is even worse: Harry Reid’s Nevada has the worst unemployment in the country. Trade creates businesses, helps existing businesses grow, and thereby creates jobs. The SEIU and the Change to Win gang are going to hate it, but Obama is at this point spooked enough about the jobs numbers to do almost anything — even the smart thing.
We hope this represents a change in the administration’s economic strategy, which thus far has been captive to feckless attempts at stimulus through spending — a failed project that is set to cost American taxpayers more than the wars in Iraq and Afghanistan, combined — and by efforts to disguise venerable items on the Democratic wish list (green jobs and related chimeras) as elements of a progressive and responsible economic policy. The president, as is his habit, already is claiming credit, touting a 17 percent increase in exports this year over last. The obvious emptiness of that boast inspired some amusing hedging on the part of the president: “Part of this, of course, is due to the global recovery.” You think?
In fact, while U.S. exports grew by $19 billion from July 2009 to April 2010, U.S. imports grew even more, by $26 billion, during the same months. What this suggests is that practically all of the export growth in the United States is a result of the global recovery, which is to say, the result of something other than President Obama’s plan to manage trade, “to keep the playing field level,” as he inevitably puts it. The U.S. trade deficit has grown under Obama’s administration, a result that is the opposite of the one he seeks. In that there is a lesson: Obama should worry less about trying to oversee trade and more about simply making it free.
American exports are a sundry lot, high-tech and low-tech, sold to near neighbors in Canada and Mexico and to far-flung lands. American exporters move a lot of aerospace technology and semiconductors — Boeing, Intel, and Texas Instruments are major exporters — but they also sell a lot of pork and chicken to hungry Asians and Latin Americans, and grain all over the world. The United States is the world’s largest exporter of manufactured goods. It’s the world’s largest exporter of services. It’s the world’s largest exporter of food. U.S. firms do not need special protection from the Obama administration, and neither do the U.S. consumers who benefit from access to inexpensive imports. The volume of American trade says at least as much about the health of our economy as does our balance of payments with China. (China, incidentally, imports goods worth about 25 percent of its GDP, compared to 10 percent in the United States. If the guys in Beijing really are the Machiavellian trade exploiters they’re made out to be, then our guys in Washington are 2.5 times as smart and ruthless, which seems unlikely.)
Much too much is made of the U.S. trade deficit, and our trading relationships with Panama, Colombia, and South Korea are deeply beneficial to all parties. Democrats have used dishonest tactics to prevent a free-trade deal’s being signed with Colombia while its president is Álvaro Uribe, whom they wish to punish for his stalwart support of the United States during the Bush presidency. But President Uribe is on his way out this year, and so Democrats’ protests that the proposed free-trade agreement lacks adequate protections for Colombia’s workers and its environment are fading — as they should: The labor and environmental protections in the Colombia pact are identical to those in the Peru free-trade agreement, which met with much less resistance from Democrats. In any case, Colombian goods already enjoy unrestricted access to the U.S. market; the Colombia deal would mainly benefit U.S. exporters seeking better market access. That it has been stalled this long is an unhappy example of narrow partisan politics trumping Americans’ real economic interests.
Obama’s goal of doubling U.S. exports in five years is a nice pie-in-the-sky target, but it is not going to happen. The United States never has doubled its exports in any five-year period. The current value of our exports is about 13 percent of GDP. It is unlikely that in 2015 our exports will be worth 26 percent of GDP. Even in raw dollar terms, expanding our exports from their current level of about $2 trillion a year to $4 trillion a year — the size of the entire planet’s telecommunications industry — is unlikely. But if exports are to grow, free trade — freer trade, anyway — is the way to make that happen.
Candidate Obama mocked John McCain mercilessly for proposing to appoint a presidential commission on the 2008 financial crisis, but now the president has become an appointer of commissions himself, naming a new panel to advise him on exports — it’s not the Trade Council, it’s the Export Council, as though imports were not part of the equation, too. (Hint: That’s why they call it “trade.”) The unspoken assumption at work here — exports good, imports bad – suggest that the president’s thinking on the subject of trade could stand some further enlightenment. Particularly worrisome is the fact that the commission is dominated by Fortune 500 executives with particular financial interests that are not necessarily identical with the national interest, and who may be less interested in liberalizing trade and more interested in seeking self-serving dispensations. This is a commission that should have a wary eye kept upon it.
“We don’t need a commission to study this crisis,” Obama thundered at John McCain, “we need a president who will solve it — and that’s the kind of president I intend to be.” We don’t need a commission to study our free-trade pacts with Colombia, South Korea, or Panama, either. We have good agreements ready to go, and the government can “solve” trade by getting out of the way. We need a president who can get moving on this issue. Is that the kind of president Obama intends to be? We are glad to see President Obama coming around, but it is time for the chief executive to execute.