“America, I believe we can build on the progress we’ve made,” said President Obama early in the morning on Wednesday, during his victory speech in Chicago.
Let’s hope he’s right, especially in the area of free trade. Success will require a renewed commitment to helping Americans sell their goods and services abroad.
It will also take some creative thinking.
Maybe there’s even a special job in it for Republican presidential candidate Mitt Romney. More on that in a moment.
For voters, the top issue in 2012 has been unemployment and the economy. If the United States ever recovers from its current doldrums, exports will have to lead the way–and the Obama administration must open new opportunities for Americans to sell their goods and services around the globe.
Obama’s first term included several notable accomplishments. In the darkest days of the recession, the president promised that exports would double by 2015. Right now, the United States is on track to meet this goal.
That’s the good news. The bad news is that we’re using the wrong yardstick. If exports double by 2015, they’ll double in dollar value only. This is not the best measure of economic health because so much of it depends on currency, inflation, and commodity markets. Export volume matters more–and going by this indicator, we’re nowhere near doubling our exports.
We’re also seeing a slowdown in global trade. The World Trade Organization recently reported that trade in goods probably will grow by only 2.5 percent this year, down from 5 percent last year and 14 percent in 2010. This discouraging trend could erode Obama’s export aspirations.
A poor business cycle explains part of the problem, but policy choices play a large role as well. “Increased protectionism may also be starting to drag on trade,” observed The Economist recently.
In the wake of the global financial crisis, most countries avoided the temptation to turn inward. They seemed to have learned the lesson from the 1930s, when deliberate economic isolationism took a bad situation and made it much worse.
Yet now it seems that many governments are flirting with these misguided policies–and the United States is guilty of it too, judging from ongoing trade disputes over everything from steel to tomatoes.
There are a few bright spots, however. Amid all the attention focused on the presidential election, most Americans didn’t notice what happened on October 31, besides Halloween.
On that day, the Panama Free Trade Agreement went into full force, wiping out hundreds of tariffs that made it harder for Americans to do business with Panamanians. Obama formally signed it a year ago, along with a pair of larger and more significant deals involving Colombia and South Korea. The approval of these three pacts–negotiated by the Bush administration but not fully completed until Obama gave them a final push–probably represent Obama’s main legacy of free trade.
At least so far. In his second term, Obama hopes to conclude the Trans Pacific Partnership, which holds the potential to boost trade around the region. The president shouldn’t stop there. He should ask Congress for Trade Promotion Authority and use this vital tool to start new talks with other partners.
Perhaps Romney can help.
During the campaign, he praised the huge potential of increased trade with Latin America.
Would it be crazy to think that Romney could become a special trade diplomat?
“In the weeks ahead,” said Obama in the wee hours after his re-election, “I also look forward to sitting down with Governor Romney to talk about where we can work together to move this country forward.”
If the 2012 election results tell us anything, it’s that Americans don’t trust single-party rule in Washington and expect their elected leaders to work together for the good of the country. Nothing could send a more powerful signal along these lines than Obama and Romney agreeing to collaborate on trade for the economic good of the United States.
Now that would be progress everyone can believe in.
John Rigolizzo, Jr. is a fifth generation farmer, raising fresh vegetables and field corn in southern New Jersey. The family farm produces for retail and wholesale markets. John is a volunteer board member of Truth About Trade & Technology (www.truthabouttrrade.org)