The Corner

Obama on Trade

Writing in the Independent on Sunday, Dominic Lawson takes a look at what Obama’s being saying on trade. He’s not impressed:

The most extraordinary thing is that Obama has actually been pandering to the “bitterness” he identified – the “anti-trade sentiment”. In the rust belts of Ohio and Pennsylvania the Senator from Illinois has lost no opportunity to blame America’s economic woes on the free-trade treaty with Canada and Mexico (Nafta) – which had been enacted by President Clinton. Obama is one of three Congressional sponsors of “The Patriot Employer Act”, which seeks to give preferential tax status to American companies that choose not to invest overseas. His anti-globalisation rhetoric goes far beyond criticism of free-trade deals such as Nafta. Obama told voters in New Hampshire:”I would stop the import of all toys from China”. China supplies 80 per cent of the toys sold in the US, so that’s one heck of a pile of embargoed fluffy bunnies. Obama’s electoral calculations, at least, are rational: recent polls suggest that three quarters of voters believe that international trade has “made things worse for Americans”. So as not to appear “protectionist” – perish the thought – Obama graciously concedes that “not every American job lost is due to trade”. Not every job? The true figure – according to the apolitical US Council of Economic Advisors – is that only 3 per cent of US job losses can be attributed to “outsourcing”. Other figures which are never discussed are those measuring the “insourcing” of jobs, when companies from foreign countries have invested in the US. The value of those investments has been staggering – the biggest secret in a debate conducted (at least in the Democrat primaries) at a shocking level of ignorance. The two Democrat candidates have made frequent attacks on the multi-billion dollar US trade deficit with Canada and Mexico: what Mrs Clinton and Mr Obama never acknowledge is that almost 95 per cent of the growth in that deficit since 2000 is entirely attributable to oil and gas imports. Are they seriously suggesting that America would be better off buying oil from countries without preferential trade status, such as Chavez’s Venezuela or Ahmedinejad’s Iran? In fact, over the past year America’s trade deficit has narrowed by $50bn (£25bn), as her exports have risen faster than imports; aided by the dramatic fall in the value of the dollar, international trade is helping the US to fight recession.

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