President Obama is neither a committed free-trader nor a hard-core protectionist. But his continuing failure to commit to a pro-trade agenda amounts to de facto protectionism and subverts his economic and foreign policy objectives.
Reacting recently to a provision in the climate change bill that would impose trade penalties against nations that do not limit carbon emissions enough, the president said, "At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals."
In that mild rebuke of protectionism lingers the essence of the administration's nascent trade policy: conditional, ambiguous and not particularly reassuring.
Earlier this year, the president suggested that Congress avoid language in the stimulus bill that could provoke a trade war. Congress responded by pruning the bill's most overtly protectionist provisions. But "buy American" fever has nonetheless permeated the government procurement market. Uncertainty surrounding the arcane rules has caused contractors to render their own judgments about what qualifies. Not only have eligible foreign firms been excluded from the market, but U.S. firms that use imported raw materials (including California's entire steel industry) also have been shut out.
Canadian municipalities have responded with "don't buy American" rules, while the Chinese and others have introduced their own buy-local provisions, all to the chagrin of U.S. exporters and the general economy.
One would expect the president to respond with dispatch, at the very least issuing clear implementing guidelines. Instead, the Obama administration has done nothing but "seek comment." Our comment is this: The president's disregard for the matter is slowing economic recovery, tempting further escalation by our trade partners and cementing the United States' reputation as an international trade scofflaw.
Likewise, when Congress defunded a program that enabled Mexican trucks to operate on our roads -- placing the U.S. in violation of the North American Free Trade Agreement, Obama offered assurances of a quick resolution. Five months later, there is no fix in sight. To hasten a resolution, the Mexican government imposed $2.4 billion in retaliatory duties on about 90 U.S. exports, and a Mexican trucking association filed a $6-billion lawsuit against the U.S. government.
