Is Obama walking his talk about protectionism?
www.chinaview.cn 2009-09-17 13:13:19   Print

    WASHINGTON, Sept. 16 (Xinhua) -- Barack Obama has been both doing and talking a lot about trade protectionism lately. However, his words don't match his deeds. Is the U.S. president walking his talk?

    This discrepancy has heightened concerns that Obama is talking about free trade on the one hand while erecting trade barriers on the other, according to economic experts who cite protectionism as one of the driving forces behind the 1930s Great Depression.

    Obama's promise of a free-trade stimulus at the upcoming Pittsburgh G20 summit was broken after the president himself signed into action a three-year tariff package aimed at curbing tire imports from China.

    "(The tires decision) was an instance where the facts all lined up in favor of maintaining free trade ... and the administration opted for ... protectionist ideology," Philip Levy, resident scholar at the Washington D.C.-based American Enterprise Institute, observed.

    China has denounced the decision, which followed on the heels of a U.S. Commerce Department decision to slap duties on steel pipe imports from China. The tire dispute threatened an economic arrangement critical to China's growth, U.S. analysts warned.

    Chinese economists believed that such trade barriers could slowdown the global economic recovery, which in China is expected to provide vital domestic employment.

    American political analysts countered that Obama needed the support of organized labor to push through a number of domestic initiatives. Among them was a health care bill that was the focus of his administration's first-year plan.

    The president also needed support from congressional Democrats - for whom labor represents an important voice - to pass his health care legislation, which is seeing considerable opposition.

    U.S. analysts reasoned that the Commerce Department's action was no barometer of Obama's view on trade because it was out of the presidential jurisdiction.

    The tire decision, however, suggested that Obama was more of a protectionist regarding trade issues than his predecessor, Levy concluded.

    By contrast, former U.S. president George W. Bush mostly devoted himself to launching and pushing the Doha Round, which promoted global free trade and sought bilateral and regional liberalization accords, Levy added. Yet he conceded that Bush at times did erect trade barriers by supporting steel tariffs and showering farm states with billions in subsidies.

    Obama for his part had done little to advance global trade talks and had instead announced that his focus would be on trade agreement enforcement - something that Bush was criticized for taking too lightly.

    "In practice, this enforcement emphasis seems to mean dubious actions like the tire tariffs," Levy concluded.

    In a speech shortly after the tire tariff decision, Obama again vowed to avoid protectionism and said his administration was committed to expanding trade. However, the president repeated his stance on enforcement.

    "(Expanded trade) is absolutely essential to our economic future," he said. "No trading system will work if we fail to enforce our trade agreements."

    Jennifer Richmond, China director at Stratfor, a global intelligence company, said while the tariffs could define trade relations between the two countries for the next year, a full-blown trade war was unlikely.

    China on Monday expressed its willingness to settle the dispute through the World Trade Organization instead of taking matters into its own hands.

    "Obama will try to massage relations with China, despite this new tariff," Richmond said, referring to Obama's awareness that picking a trade war with China would not help the United States emerge from the ongoing economic crisis.

    Richmond noted that the discrepancy between words and deeds had led to a drop in Obama's approval ratings and that he needed to boost his image both internationally and domestically.

    But now that he had made his decision he would have to stick with it or risk appearing weak.

    Robert E. Scott, an economist from the Washington D.C.-based Economic Policy Institute, explained that surging imports from China were "decimating U.S. jobs and production." More than 5,000 tire industry jobs had been lost since 2004, he said, with an additional 3,000 job cuts expected this year.

    Retirees - about 35,000 of them - and their families also depended on the U.S. tire industry for health benefits, and every tire and rubber industry job supported an additional 2.4 jobs in supplier industries, he noted.

    Other economists, however, said the tariff verdict would hurt U.S. consumers and was unlikely to increase U.S. tire production as cheaper tire imports from other countries like Mexico, Brazil and India might easily replace the Chinese ones.

    Analysts from across the Pacific are now looking forward to the Sept. 24-25 G20 Summit in Pittsburgh, where U.S. and Chinese officials are expected to settle their tire tariff dispute amid Obama's promises on free trade commitment.

    Some have even likened the expected U.S.-China meeting in the context of the Pittsburgh summit to another round of Strategic Economic Dialogue - a meeting aimed at cooperation on a number of bilateral issues.

Special Report:  Global Financial Crisis

Editor: Li Xianzhi
Related Stories
Chinese official stresses need to fight protectionism
Canadian PM to voice opposition to US protectionism
Protectionism no good to anyone
Analysis: U.S. tariffs on Chinese tires cast protectionism shadow over world economy
Efforts against protectionism: Wen
Home World
  Back to Top