Sept. 28 Daily News editorial
President Barack Obama and the leaders of the Group of 20 nations who gathered in Pittsburgh last week might be forgiven for a very muted discussion of one agenda item — international trade. When they last met five months ago in London, they all vowed to resist the political temptation to protect domestic industries by raising barriers to free trade. They all broke that promise.
According to a report issued earlier this month by the London-based Centre for Economic Policy Research, G-20 member nations implemented protectionists measures since last April’s meeting. The CEPR reported that another 134 such measures are in the pipeline.
This can only be called a failure of leadership — at time when strong leadership is most needed — and it should concern us all. CEPR analyst Simon Evenett told Geoffrey T. Smith of Dow Jones Newswires that the protectionist measures implemented in just the past five months have affected more than three-quarters of categories of goods and the vast majority of the world’s countries.
The effect — reducing imports and exports, driving up the cost of food and manufactured products — is just what the still fragile global economy does not need. The impact of this drift toward trade protectionism is compounded by measures implemented earlier in the recession — the “Buy American” provision in the Obama administration’s big stimulus package and our refusal to give Mexican truckers access to U.S. roads, Japan’s restrictions on food imports, China’s insistence on limited stimulus money to Chinese businesses and industry, Russia’s move to impose higher tariffs on most imports.
Washingtonians have particular reason for concern. International trade largely determines this state’s economic well-being. Washington exports more on a per capita basis than any other state, according to Gov. Chris Gregoire’s Global Competitiveness Council. One in three jobs in the state is supported by trade.
Reneging on the North American Free Trade Agreement’s promise to allow long-haul Mexican trucks on U.S. roads threatens considerable damage for Washington’s economy. Mexico, in retaliation for that broken promise, slapped 20 percent tariff’s on U.S. agricultural products. Agriculture represent 13 percent of this state’s economy, and Mexico is a big market for Washington growers. Last year, Washington farmers exported $87 million in goods to Mexico.
Fredrik Erixon, do-director of the Brussels-based European Center for International Political Economy, fears that the drift toward protectionism may actually accelerate in the year ahead. Erixon told Smith that governments will be having to make painful spending cuts as they begin to grapple with the big deficits run up by their attempts to stimulate the economy. “When that happens, you’re going to see protectionist sentiment increasing much more.”
That’s a very troubling prospect. Trade protectionism is one thing that could easily delay or even derail our recovery from this deep recession. It’s time President Obama and other leaders of G-20 nations began to live up to their free-trade rhetoric.
Posted in Editorial on Monday, September 28, 2009 12:00 am
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