Sunday, February 1, 2009

Obama facing dilemma over protectionism

Here's a neat twist. Obama is being attacked in the left wing press for the Patriot Employers Act. Is it possible that American Democrats have a plan to subvert our free trade agreements with Canada and Australia? (Will this lead to a "stronger" contract/court of law in future agreements?) The Act includes using American made steel for the big public works programs Obama is planning. What could be the purpose of that for people openly committed to communitarian principles?

How likely is it that Obama is really a protectionist? Didn't Putin just warn the world against this very thing in his speech at the World Economic Forum? What is protectionism in the US? Who does it protect? How did economist Friedrich List describe it in 1846? Is there any remnant of 19th century protectionism in this Act? And as horrible as this sounds, didn't Hitler also combine his socialism/fascism with protectionism and call it National Socialism? I'm thinking the idea of a protected local economy is a great sell to the general public anywhere, especially to ones who thinks it means local goods and services will benefit from local made and local hire conditions. I've never met an Alaskan who wasn't happy with the local hiring laws up here. I think this Act will contribute to Obama's image in the US, and give the internationalists a great topic for their circular academic debates.
(9) Obama facing dilemma over protectionism

Obama facing dilemma over protectionism


Associated Press January 31, 2009

WASHINGTON (AP) — Protection language in the stimulus bill presents President Barack Obama with a dilemma: Backing the provisions could set off a trade war, but opposing them could mean a backlash from his supporters.

The "buy American" provisions would require major public works projects to favor U.S. steel, iron and manufacturing over imports.

U.S. allies and trading partners warn that favoring U.S. companies would breach Washington's trade commitments and could set off tit-for-tat countermeasures around the world.

The two largest U.S. trading partners have spoken out. On Thursday, Canadian Prime Minister Stephen Harper expressed concern and the European Union warned that it would not "stand idly by" if such measures were passed. On Friday, Brazil's president Luiz Inacio Lula da Silva also made critical comments.

In November, world leaders who gathered in Washington for the G-20 summit to consider how to help the global economy pledged to avoid protectionism. But since taking office Jan. 20, Obama has said little on trade and has yet to nominate a trade representative. While campaigning, he argued that the Bush administration's strong support of free trade agreements should be moderated by including environmental and labor protections.

"The jury is out on how this administration is going on trade policy," said Steven Schrage, an international business analyst at the Center for Strategic and International Studies. "This will be a key test."

Asked about the protective provisions Friday, White House press secretary Robert Gibbs would say only that the administration was reviewing them.

The provisions are likely to find support among Americans outraged that money from a stimulus package likely to top $800 billion could go to foreign competitors of U.S. companies.

"I believe that when taxpayer dollars are used, they should support the things produced here at home," Sen. Byron Dorgan, D-N.D., author of one of the provisions, said in a statement.

Many analysts say the measures reflect the interests of small sectors over the larger economy, which could suffer from reduced trade and higher steel prices.

"The result, according to my calculations, is that the U.S. will lose more jobs than it will gain," said Gary Hufbauer, an economist with the Peterson Institute for International Economics, a Washington think tank. "We are going to poison the wells of world commerce if we do this."

The provisions are in a bill already approved by the House and a different version under consideration in the Senate. The Senate version states that none of the funds from the stimulus may be used for a project "unless all of the iron, steel and manufactured goods used in the projects are produced in the United States." The House version leaves out manufactured goods.

Obama, who has argued that stimulus measures are urgent, is unlikely to block passage of any bill approved by the Congress. But he could press lawmakers to remove the protectionist measures before it is passed.

"The problem is that Obama has not said anything yet," said Dan Ikenson of the libertarian Cato Institute.

Both versions of the bill include language that would allow the president to waive the protectionist measures if he decides that would be in the economic interests of the United States. But passage of the measures could in itself unnerve trading partners and encourage other countries to take similar protective action.
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Copyright © 2009 The Associated Press. All rights reserved.

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