Barack Obama: master and commander of the world economy, or merely peripatetic salesman-in-chief?
So far, it looks more like the latter. During the president’s Asia tour, he has spent more time touting US exports than battering down trade barriers. Mr Obama says the export deal he proudly announced in India, with the spurious mathematical precision often attached to such estimates, would create 54,000 jobs. The US economy generated nearly three times that number last month alone.
In South Korea, where he arrived late on Wednesday for a meeting of G20 leaders, Mr Obama can rescue something of real economic substance from this tour. Faced with a trade-sceptical Congress, US trade officials have done precious little negotiating over the past two years. But this week they have been in Seoul, locked in talks with their famously intransigent South Korean counterparts to get the US-South Korea bilateral trade deal – agreed in 2007 by George W. Bush’s administration but not ratified – into a state acceptable to the South Korean assembly and Capitol Hill.
Thus is revealed the striking weakness of US administrations in trade policy. US negotiators operate with small but vocal lobbies peering over their shoulders. Moreover, the new Congress’s views on trade are unusually and unhelpfully uncertain.
Of three pending trade deals that Mr Obama inherited from Mr Bush – the others being Colombia and Panama – South Korea has the least number of enemies in Washington. South Korea is America’s seventh biggest trading partner, though still representing just 3 per cent of US trade.
American business executives complain that the EU is outflanking the US, since Brussels has recently agreed its own trade pact with Seoul.
South Korea is among the US’s closest allies in a region where Washington needs them, and since it has an advanced economy with high wages and fairly free trade unions, the US labour movement’s usual race-to-the-bottom objections are less relevant.
But in spite of all this weight behind it, a small but vocal lobby has managed to hold it up. The naysayers are essentially two companies, Ford and Chrysler, backed by a single union, the Union of Automobile Workers, in a single industry, autos, with a single complaint, that technical standards are used as a de facto form of protectionism.
Negotiators are trying to thrash out some side agreement reassuring US carmakers that South Korea will not allow auto standards to become barriers. But enthusiasm for the deal in the new US Congress is still uncertain.
In theory, a House of Representatives controlled by the traditionally liberalisation-friendly Republicans should be more willing to drive a deal through. But along with the defeat or retirement of several centrist pro-trade deal Democrats in the recent midterm elections, isolationist and anti-corporate rhetoric from the Tea Party movement has some free traders worried. Officials from the National Foreign Trade Council, a business association, bluntly describe the new Congress as “all over the place” on trade issues.
In truth, Tea Party opposition is probably more of a challenge for the multilateral so-called “Doha round” of talks than bilateral deals like South Korea. Jim DeMint, the South Carolina senator regarded as the godfather of the Tea Partiers, is a strong free-trader and previously supported trade pacts with Central America.
Other conservative favourites such as the senators Rand Paul from Kentucky and the rising star from Florida, Marco Rubio, have spoken kindly of bilateral trade deals.
Rather than the substance, the case is likely to turn on the purely partisan issue of whether Republicans on Capitol Hill are prepared to hand Mr Obama a victory, any victory – even one on a traditionally Republican issue first negotiated by a Republican president. If they oppose it, then hopes of taking Doha out of the deep freeze and concluding a proposed trans-Pacific trade pact will shrink yet further.
In that case, Mr Obama’s position will be weaker than ever on the trade front – and his officials will go back to spending most of their time flogging US exports to existing markets rather than prising open new ones.
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