Term Paper(Obama27s Trade Policy)

I. IntroductionTrade is traditionally been thought of as an extension of foreign policy and is a significant and increasingly important factor in the U.S. and global economies since it is a large and growing part of daily global commerce. Nevertheless, trade policy today has become intimately intertwined with domestic policy. Thus, among the various schools of international relations theory, one approach that has been quite fruitful in explaining the process by which trade policy is formulated and executed a both the domestic and international level is liberal intergovernmentalism.1 Equally speaking, the trade policy ought to go along with a democratic and liberal administration signing less constraints limit actions on trade when confronting with global competition. Given today worlds agreements extend far beyond tariffs and quotas to set parameters for numerous non-trade police, indeed, creating and stalling suitable trade policy would determine the success of much of Obama administrations domestic agenda which assures if Americans could enjoy the economic security of good jobs and an end of the crisis-inducing financial casino, a clean environment, and safe food and products. Over the past three years, President Barack Obama and his advisors tried to set a course for the reassertion of U.S. leadership in constructing a positive trade vision, either domestically or internationally. However, it turned out that the trade policy was not the high priority for the Obama administration and the administrations new protectionism, though, invited retaliation for the rest of the world. What were the achievements of Obamas trade policy? What essential issues it confronted with in the past and still suffers from? How would it advance and evolve trade policy in the future to defend its leaders role in the globalized world? In explicating the above-mentioned questions, this paper will (1) provide, based upon previous reports and studies, a precise review of Obamas trade policy actions in the past three years; (2) explore, based on the main statements in Obamas trade policy agenda, difficult constraints the administration faces in its trade dealings deteriorating U.S. hegemonic position in the global market; (3) overview what this portends for trade policy this year and in the future as well, thereby sustaining and strengthening its position in the world.Based on above analysis, it is found out that Obamas record on trade policy is still far from complete and should be accompanied by trade-advancing policies to destroy possible trade restrictions in the long run. Barfield C. (2001). Free Trade, Sovereignty, Democracy. Washington D.C.: American Enterprise Institute.II. Obamas Execution of US Trade Policy2.1. Democrats and Obamas Trade PolicySchott J.J. (ed.) (1998). Restarting Fast Track. Washington, D.C.: Institute for International Economics.3 “Clinton, Obama Go at It over Trade,” CNN.com, February 25, 2008As a mature democracy with strong governmental departments surround by many contending interest groups, the US Congress is granted the fundamental power to regulate commerce with foreign nations. In the 1960s, Congress created the position of Special Trade Representative in the office of the president and then later a statutory office of the US Trade Representative (USTR) also within the White House but subject to special congressional oversight.2During President Reagans terms of offices, there was a continuing debate between one group who took as a single goal the reducing of overall tax rates and another group who regarded the fiscal integrity as the top priority. In the George W. Bush administration, differences over approaches to foreign policy were clearly delineated in the differences between the first and second Bush terms. In contrast, for trade policy under Obamas administration, the most fascinating and important events and trends are encapsulated in the evolution of political and policy divisions within the Democratic Party. Democratic majorities took great steps to place a Democratic stamp on US trade policy and the new Democratic era in the arena of trade policy began with the election of President Obama in 2008. 2.2. Obamas Presidential Leadership and Trade PolicyObama, as a candidate, was not considered to be promising in terms of his first statements and stands on trade issues. He, nevertheless, criticized US multinational corporations for investment abroad and proclaimed that the North American Free Trade Agreement (NAFTA) had cost the United States 1 million jobs.3 Obama, no doubtful, was regarded as a follower of strong protectionist, or economic nationalist, elements of the Democratic Party. However, during and after the presidential campaign, he tried to moderate his position and began to express his strong support for open markets.As president, in the beginning, the lack of a clear vision for U.S. trade policy, along with the conflictions between congressional Democrats on trade and globalization, produced a series of contradictory signals in the newly elected Obama administration. Craig VanGrasstek of Harvards Kennedy School of Government, one perceptive observer, labeled Obama a “passive free trader” and concluded that the administration “ has shown that it will take action to avoid being labeled protectionist, but it has yet to demonstrate any eagerness to make trade liberalization an important part of its economic recovery program”.44 Craig VanGrasstek, “ Building without BRICs: Lessons from the Buy American Debate,” Bridges 13, no.1 (February/March 2009), available at /i/news/bridges/44271 (accessed July 28, 2009)5 Inside US. Trade, 20 March, 2009 “USTR Faces Conflicting Pressures On Integrating Existing FTAs Into TPP”6 Claude Barfield, Philip I. Levy, AEI Outlook Series: “In search of an Obama Trade Policy”, August 2009.Awkwardly, though, Obamas disinterest came at a time when the rest of the world needed the U.S. to stand up during the global financial crisis and indicated their eagerness for U.S. actions to sustain the global trading system, when the warmer diplomatic relations that the Obama administration seeks which always depend on upon tighter trade ties with other nations, and worse still, when the congress imported again the protectionism into U.S. trade policy. On a much larger scale, on April 2, 2009, Obama joined with other leaders of the G-20 nations in a strong warning against global protections, along with a call for the successful conclusion of the WTO Doha Round.52.3. Obamas Trade Policy ActionsIn the spring of 2009, Obamas administration has asserted the need in the 2009 economic crisis to avoid creeping protectionism, both on trade and investment. Obama, after taking office, had a range of ambitious economic proposals he wished to pursue, from a stimulus package to health care to combating the greenhouse gas emissions. Those proposals on agenda conveyed obvious information: the trade policy was not one of the top stories in Obamas administration.Obama administration did not afforded leisure moment to ignore the trade, though. In January, 2009, Obama administration included the “Buy America” language that would have limited stimulus spending on certain productsnotably steelto goods made in America, thereby creating more American jobs. This plan soon expanded to include manufactures more generally, however, generated strong opposition abroad meanwhile. In short order, the European Union, Canada, Australia, and Japan all threatened to launch World Trade Organization (WTO) cases against the United States.6 Thereafter, the “Buy America” language altogether has been amended as a policy that should not violate existing U.S. trade commitments which sheltered Obama administration from labeling under the definition of protectionist, in another way, the trade policy in United States were comfortable with less constraint in global trade relationships even though it still has caused significant discontent among trading partners such as Canada and the UK. 2.3.1. Obamas First Trade Agreement - TPPEvaluating trade policy under Obamas administration, mostly, ought to base on the U.S. efforts in constructing the trans-Pacific vision, i.e., U.S.s response to, and participation in, the most possible regional economic architectures. 7 /opinion/op-ed/87459-obamas-trade-policy-opportunityPresident Obamas first potential trade agreement-the Trans-Pacific Partnership (TPP) was initiated in 2008 to replace the failed 1990s advent pacts, the North American Free Trade Agreement and World Trade Organization. However, the few beneficiaries of the 1990s pacts, the large agribusiness firms and job-offshoring multinationals together opposed establishment of so-called Obama trade policy and insisted on the continuation of the status quo, adopting, in the beginning, Bushs leftover NAFTA-style pacts with Colombia, Korea and Panama.It was observed that since NAFTA and WTO went into effect, the U.S. lost net 5 million manufacturing jobs (one out of four in that sector) while American median wages remained stagnant despite productivity gains as corporations used the pacts investor protections to relocate and arbitrage their labor costs absent a floor of labor standards. Various environmental and health laws were attacked before trade tribunals. Unsafe food and product imports swelled. The trade deficit exploded from $102 billion to a height of $807 billion, with dire consequences for global economic stability.7Being put in such situation, Obamas trade policy evolved and aimed at trade expansion that can deliver U.S. job creation, consumer safety and environmental protections which were strongly public demanded for all Americans. On a broader scale, there were a number of proposals for this new trade policy that were being advanced to live up to new congressional rules on labor rights, standards of employment, the environment, human rights, currency manipulation, and food and product safety. In pursuing this vision, the Obama administration took advantage of the U.S.-based free trade agreements among Asia Pacific Economic Cooperation (APEC) nations and the synergistic teamwork with those member nations as well. On 14, December, 2009, United States Trade Representative Ron Kirk notified Congress that President Obama intended to enter into the TPP after Obamas first trip to Asia as President of the United States on November 14, 2009. Kirk announced that “USTR will now intensify consultations with Congress and with American stakeholders to develop objectives for the Trans-Pacific Partnership agreement negotiations, in order to enter already-scheduled talks in March with a robust U.S. view that seeks the highest economic benefit for Americas workers, farmers, ranchers, manufacturers, and service providers, and that reflects our shared values on labor, the environment, and other key issues, and also the goal of “bringing 8 “Trans-Pacific Partnership Announcement” 12/14, 2009. 9 Free Trade Agreements: Impact on U.S. Trade and Implications for U.S. Trade Policy/assets/crs/RL31356.pdf10 Ron Kirk, “Next Steps on the Trade Agenda.” http:/www.amchamchile.cl/node/11116311 Obama to sigh FTA with Columbia-US unions reaction, April 7,2011, Tony Burkehttp:/www.powerinaunion.co.uk/obama-to-sign-fta-with-columbia-us-unions-react/12 Same as 11home the jobs and economic opportunity we want all our trade deals to deliver.82.3.2. FTAs- the Keystone to Obamas Trade PolicyIn the last few years, the United States has engaged or has proposed to engage in negotiations to establish bilateral and regional free trade arrangements with a number of trading partners. Such arrangements among two or more countries to eliminate tariffs and nontariff barriers on trade in goods actually were not new in U.S. trade policy, such as the FTA agreements among Israel, Canada and Mexico which became the North American Free Trade Agreement (NAFTA) in 1994.9After Obama taking office, Obama administration faced the question of whether and when to act on three pending FTAs, namely, with Colombia, Panama, and South Korea. In late April 2009, Kirk stated that Obama wanted both the Panama and Colombia FTAs to move “sooner rather later” even though under the rejections of the majority of House Democrats who wrote to Obama demanding drastic changes in U.S. trade policy, specially towards the pending FTAs. On May 18, however, Kirk gave a comprehensive speech at the U.S. Chamber of Commerce in which he suggested that progress on the Panama, Colombia, and Korea FTAs was within reach.10, so it was clearly that the U.S. free-trade agreement with the above three countries still waited for congressional approval under the Obama administration. . Obamas Trade Policy Opportunities in CFTA and PFTAThe Colombia Free Trade Agreement (CFTA) was actually languished since 2006. Till the year 2011, the President Obama is to sign a free trade agreement with the right wing regime in Columbia which caused US unions great anger as well as scare. Since the Colombia remains the most deadly nation in the world to be a trade unionist. It was said that more than 2,850 trade unionists have been murdered in Colombia;11 therefore, even though the Obama administration negotiated with Columbia a separate Action Plan to address concerns, the US unions still showed their concerns about Obamas sign in CFTA. AFL-CIO President Richard Trumka stating: “We have no doubt that if 51 CEOs had been murdered in Colombia last year, this deal would be on a very slow track indeed.”12Worse still, the losers, after Obamas sign, would primarily be American farmers. Consider, yellow corn, for instance, the US held 80% of the Colombian market, 13 US losing jobs as free trade agreement languishes, Colombia says, By Howard LaFranchi, Staff writer/April, 22, 2010. 14 Proposed U.S.-Colombia Free Trade Agreement: Labor Issues, Mary JAan Bolle, January 19, 201115 “U.S.-Panama FTA Would Allow Offshore Companies to Attack U.S. Anti-Tax Haven Regulations; Meanwhile Panama Has Not Eliminated Financial Secrecy, Tax Haven Problems” March 30, 2011, Todd Tucker Research Director, Public Citizens Global Trade Watchamounting to over 100 million bushels. However, in the year of 2009, the US share of Colombias market went dramatically down by more than half under Colombias trade agreement with Brazil and Argentina from which the tariffs on yellow corn fell to zero, compared to 15% percent tariff on US corn.13 US wheat and soybeans, meanwhile, experienced the same plummet in terms of exports in Colombia due to the postponed confirmation of CFTA which would directly make the U.S. lose jobs at home. Apparently, Obama administration is, to some extent, forced to take steps to approve and enforce CFTA in 2011 which would definitely support increased exports, expand economic growth, create jobs, and open up investment opportunities for the United States.14 As for the impunity issue of high rate of violence against trade unionists in Colombia, some implementation of Obamas Action Plan is urgently needed. Furthermore, Colombia would be the second FTA to have weak Colombian enforcement of International Labor Organization (ILO) core labor standards and labor laws after U.S.s FTA with Peru. The labor issues in Colombia that would result in a threat towards commercial interests which requires Obama administration to consider the final approval of the proposed CFTA in the coming months this year. In the case of Panama which is one of the worlds worst tax havens, with an estimated 400,000 corporations, including offshore corporations and multinational subsidiaries. Although Panama has already made significant progress to achieve greater tax transparency, including the signature of tax information exchange agreements with the United States in November 2010, the primary concerns of pending Free Trade Agreement between the U.S. and Panama still remains on Panamanian tax policy. Regarding to Obama administrations desire to sign the FTA with Panama, a research director wrote in the “Public Citizens Global Trade Watch” the U.S. Panama FTA would allow offshore companies to attack U.S. anti-tax haven regulations due to its tax haven problems. He further asserted that the FTA must be amended to ensure that Panama-registered corporations cannot use the FTA make this happen.15 On the other hand, the FTA with Panama, according to the U.S. Office of Management and Budget, would overall save U.S. taxpayers $210 billion over the coming decade or ever five times as great estimated by the Senate Committee on Homeland Security and Government Affairs.16 Therefore, Corporations in FTA should not have the ability to challenge U.S. anti-tax haven policies under an FTA. Lets wait and see what exact changes would be done under Obama administration in the coming year. 16 Same as 1517 CRS Report RL 34330, The Proposed U.S.-South Korea Free Trade Agreement (KORUS FTA): Provisions and Implications, coordinated by William H. Cooper.18 “Obama Makes Free-Trade Agreement With South Korea” 04 December, 2010/2010/12/04/obama-makes-free-trade-agreement-with-south-korea-new-jobs-created-video/19 Same as . U.S-Korea Relations: The Challenges for President Obama South Korea is Americas seventh-largest trading partner. The South Korean agreement was the most challenging case although the FTA agreement was signed in 2007 and would be largest trade accord ever since the NAFTA in 1994. However, some car manufactures, especially Ford and Chrysler, strongly opposed the agreement. They asserted that the agreement was not adequately efficien