Hurdles Facing Obama’s Plan To Double Exports in Five Years

As an exporter, I half-heartedly believed in President Obama’s proposal to double U.S. exports in five years. That pledge was made in his State of the Union address in 2010, which means the clock is ticking on his plan to double American exports from $1 trillion to $2 trillion by 2015. His National Export Initiative (NEI) was supposed to “help farmers and small businesses increase their exports.”

At the core of this plan was the creation of an environment that allows American exporters to compete freely and fairly with other countries. To date, Obama has not initiated a single free-trade agreement, although he likes to take credit for the free-trade agreements signed with Panama, South Korea and Colombia, which were all initiated and negotiated by the previous administration.

Obama soon travels to Europe to work on the Transatlantic Trade and Investment Partnership, which manages trade between the United States and the European Union. The 27-nation European Union and the United States aim to launch negotiations on a transatlantic free-trade deal by the end of June, with discussions set to last at least two years.

How important is this? Trade with Europe accounted for $645 billion last year — about one-third of everything the world imports and exports.

Foreign direct investment between the United States and the European Union was more than $3.7 trillion. So why did it take three years to begin this process, which will create millions of U.S. jobs?

America’s trade policy has been outsourced to the trade unions.

It would be easy to blame this on other priorities, but the truth is American trade unions, threatened by diminished clout, have finally given their tepid approval to Obama to proceed. And as America’s trade policy has been outsourced to the trade unions, Obama would not move without their consent.

So smooth sailing ahead? Not so fast. There are naturally other countries that want a piece of the action and are raising objections.

The first objector is Turkey, which merits special attention. In 2011, bilateral trade reached record levels, increasing by 35 percent year-on-year from $14.8 billion to $19.9 billion, with U.S. exports to Turkey up 39 percent, from $10.5 billion to $14.6 billion. And Turkish exports to the United States, up 24 percent from $4.2 billion to $5.2 billion. Turkey is the third fastest-growing market for U.S. agricultural products, which is an American export priority.

Leaving them out of the EU agreement, according to Turkey, would mean a loss of 2.5 percent of gross domestic product, or $20 billion. That’s not small potatoes for a country that is the world’s 17th largest economy. They also act as buffer against other Muslim countries.

Not to be out-bargained, French Trade Minister Nicole Bricq has said: “The position of France is that we want exclusion from discussion of cultural items. This is non-negotiable. It is not a surprise. I have said it and if we do not have exclusion, we will have no agreement.”

The concept of “cultural exception” is a French bargaining chip that is designed to ensure culture is treated differently from other commercial products. It notably allows France to introduce quotas for local music and film on national TV and radio stations and subsidize its industry. The United States considers this protectionism.

Of course, where would we be on trade if China didn’t get into the mix?

Chinese officials raised the possibility of Beijing negotiating its own free-trade agreement with the European Union, a prospect that an EU official did not rule out “in the medium to longer term.”

Is the Transatlantic Trade and Investment Partnership worth pursuing? You bet it is. Anytime we can bolster free trade between the United States and other countries, the United States wins. Small businesses prosper. American innovation is introduced to more people. And U.S. jobs are created.

To quote The Economic Times: “To realize the huge benefits this deal could bring will take ambition and political will. That means everything is on the table, even the difficult issues, and no exceptions.”

Although Obama hasn’t shown any prowess in negotiating trade agreements, we should hope that he keeps his focus and does not buckle to the whims of his union bosses. At this point, I would not yet bet the farm on it.

 

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