WASHINGTON– The shift to Republican control in the House of Representatives may bode well for international trade policy, where the United States is lagging behind its global counterparts.
“We are falling behind. Our competitors such as the Europeans and the Japanese are forming free trade agreements, especially with the Asian nations,” said Thomas Duesterberg, president and chief executive officer of the Manufacturers Alliance/MAPI, a public policy and economics research organization in Arlington, Va. “I’m hopeful that the new environment will lead to bi-partisan cooperation.”
Traditionally, Republicans have pushed for free trade agreements while Democrats have argued that free trade hurts Americans because of cheaper labor abroad.
The three major pacts that were created by President George W. Bush in 2007 — South Korea, Panama and Colombia — haven’t been enacted under the Democrat congressional majority. There is speculation that next year will be an opportunity moment to carry out those pacts.
According to the most recent data from the U.S. Bureau of Economic Analysis, total exports from August were $153.9 billion and imports were $200.2 billion, resulting in a $46.3 billion deficit, up 8.7 percent from the month prior.
In July, China’s trade surplus hit an 18-month high at $28.7 billion, although it fell to a five-month low at $16.9 billion in September.
“Even if one has an unfavorable view in isolation of free trade agreements between rich and poor nations, the Prisoner’s Dilemma nature of the game being played would indicate that the U.S. is indeed falling behind,” said Alberto Salvo, assistant professor of management and strategy at Northwestern University’s Kellogg School of Management.
An anti-trader may prefer that none of the United States, Canada or European Union governments sign a free trade agreement with Colombia, Salvo said. But given this joint commitment isn’t possible, and that Canada and the EU are already negotiating agreements with Colombia, the United States should enter into its own agreement as well, or risk losing market share, he said.
The U.S.-Colombian Trade Promotion Agreement was approved by Colombia’s Congress in 2007. Its constitutional court completed its review in July 2008 and accepted the agreement in conformity with the Columbia’s Constitution. The agreement has been awaiting approval in the U.S. Congress before it could be enacted.
“I’m hopeful for change. Because it’s unknown territory, progress is going to take some cooperation,” said Duesterberg, who also raised concern about future tax and carbon emissions policy. “It’s been a bad atmosphere in the last couple of years.”
U.S. President Barack Obama has set a goal of doubling U.S. exports by 2015. Earlier this year, he contacted the president of South Korea to try to finalize details of its free-trade agreements before the Group of 20 summit Nov. 11-12 in South Korea.
“We will not create jobs if we shut ourselves out of the global market,” Salvo said.