The Foundry

In February 2009, President Obama revealed his trade policy agenda in the opening chapter of the 2009 Trade Policy Agenda and 2008 Annual Report. Short on substance, the agenda outlined many of the same broad ideas presented during his presidential campaign: enforcing trade rules and making trade “fairer” rather than freer. While the chapter did provide for America’s commitment to the World Trade Organization, moving forward with at least one of the three pending U.S. free trade agreements awaiting congressional approval and keeping any new climate legislation consistent with America’s international trade obligations, these general objectives lacked the details needed to restore confidence that America would continue to set the standard for liberal international trade policy, or remain a responsible leader of the global economy.

The President promised a more thorough review America’s trade policy over the first half of 2009 and a new road map for U.S. trade relations this summer – a promise that remains unfulfilled as his first year as president comes to a close. Lacking the Administration’s willingness to detail a comprehensive and transparent trade agenda, the nation’s trade regime is instead being shaped and undermined by a slow and steady creep of protectionism in Congressional legislation and in ad hoc measures designed to cater to special interests.

High new tariffs on inexpensive tires from China; Buy American provisions in stimulus and other legislation that restricts import competition; government handouts, cheap loans, and other interventions in the auto industry, financial sector, and other sensitive industries that gives them an artificial competitive advantage over firms not receiving handouts; and, export subsidies to bolster international sales of U.S. dairy products are examples of the measures taken this year that threaten to whittle away at the progress made over the last 6 decades toward dismantling obstacles to the international flow of goods and services – the very engine of growth that has eased poverty and brought prosperity to so many.

The U.S. and others are putting world trade at risk today by implementing a growing number of new protectionist policies. Moreover, world trade is put at risk in the future as the specter of a global trade war looms larger with each new tit-for-tat trade restriction that countries impose on each other.

Because America leads on trade policy by example, U.S. actions need to be clear and consistent with the open market principles America has long promoted, and, indeed, demands from other nations. The long-awaited release of America’s new trade agenda and the dismantling of U.S. trade barriers enacted over the last year would go far to mend the damage done to both America’s economic future and image abroad. The Obama Administration needs to embrace trade policy as a tool for restoring America as a credible global partner for economic growth – a necessary and critical step towards reasserting the rules-based spirit of the international trade system and restoring worldwide prosperity.