President Obama delivered a major speech on Thursday promoting U.S. exports, just days after one of America’s largest trading partners, Brazil, threatened retaliatory tariffs against American products.
At a speech before the Export-Import Bank’s annual conference, Obama spoke about a new executive order that creates a cabinet-level commission tasked with implementing his export initiative. The president first mentioned his goal of doubling U.S. exports in the next five years during his State of the Union address on Jan. 27. The commission is meant to hit those targets by focusing on advocacy, education and financing for business.
Meanwhile, Brazil is demanding that the U.S. repeal what it claims are unfair subsidies to U.S. cotton farmers, which keep prices artificially low. In its attempts to curb the inflow of U.S. exports, Brazil has issued retaliatory tariffs — some as high as 100 percent — on more than 100 items. The sanctions Brazil is threatening could cost more than $1 billion in damages to U.S. exports.
It seems that the U.S. government either will have to decrease exports to a major Latin-American country or decrease subsidies to farmers – neither of which would be politically popular.
“We’re certainly all for increasing exports, but I feel like the speech didn’t really get to the trade challenges we face,” said Thea Lee, deputy chief of staff at the AFL-CIO. “Nowhere does he actually mention that we ran an $800 billion trade deficit in 2007 – and that we have a problem which is not only about insufficient exports but also unfair imports.”
“There are some concrete economic obstacles that he didn’t address – I think the biggest one being the $220 billion trade deficit with China last year. The Chinese government has for years intervened in the currency markets to undervalue their own currency, and this creates an enormous problem both for importers and exporters,” she said. “Dealing with currency manipulation should be part of our export strategy and part of what he talks about when he’s addressing an export plan. Right now I would argue that most trade agreements do a better job of protecting large multinational corporations than domestic producers or American workers.”
The president said in his speech today that he hopes to “knock down barriers that unfairly keep American companies from markets we belong in.”
“Ninety-five percent of the world’s customers and the world’s fastest-growing markets are outside our borders. We need to compete for those customers because other nations are competing for them,” the president said in his speech. Trade advocates say the real value lies in untapped markets, and the danger is in letting other countries, like E.U. members, which are close to signing an agreement with South Korea, get there first.
The House Ways and Means Committee has not held a hearing on trade since November, and sources close to the matter say they do not expect any major developments this year. Trade issues have been sidelined by health care, and with the coming appropriations season many on the Hill doubt even the highly anticipated Panama free-trade agreement can pass this year.
Representative Sander Levin of Michigan recently took the helm at the House Ways and Means Committee after Charlie Rangel stepped aside, and his history of opposing trade agreements does not bode well for those who were hoping to find new markets for U.S. exports.
“Creating another institution will not create meaningful American jobs unless that institution has a mandate to create new markets,” said Trade Subcommittee Ranking Member Kevin Brady, Texas Republican. “Passage of the free trade agreements with South Korea, Colombia and Panama are cost-free ways to improve the growth of U.S. goods and services exports without creating new institutions. The president’s speech today did not set out a plan for considering them, which is great news for our competitors in Europe, Asia and Latin America but bad news for U.S. workers.”
“Levin has a lot of people concerned that you have a protectionist wing that is taking over the party — that it will continue to stall action,” said one House Republican who spoke on condition of anonymity. Of the new initiative he said, “We welcome it and it may have some positive impact, but it’s minimal at best.”
Contact Aleksandra at: ak[at]dailycaller[dot]com.