Today’s Heritage Foundation Morning Bell analyzes Obama’s recent trip to Asia and sets the record straight about our trade agreement with South Korea, the balance of trade with the G-20 nations, and Obama’s failures all the way around. What. A. Loser.
President Barack Obama returned from Asia yesterday, and the headlines greeting him home are not kind. “Obama’s economic view is rejected on world stage,” reads The New York Times; “Obama, weakened after midterms, reveals limited leverage in failed S. Korea deal,” says The Washington Post; and ABC News declares, “President Obama Falls Short on G-20 Goals: Failure to Deliver on Key Trade Goals Reveals Limits of American Influence.” These headlines are only half-right: Yes, President Obama did fail to deliver on his agenda in Asia, but the culprit is not declining American influence. The problem is a losing agenda set by the President himself.
Let’s start with the South Korea–U.S. free trade agreement (KORUS). Typical among media outlets, The Washington Postreferred to KORUS as “the nearly complete South Korea deal, which Obama inherited from the George W. Bush administration.” This is just plain false. KORUS was completed and signed three years ago. All the agreement needs is leadership from President Obama to get it approved in the Senate. But free trade is not a priority of President Obama. Instead, he unilaterally reopened negotiations on two items: beef and autos.
Yes, South Korea did temporarily close its market to U.S. beef after a mad cow scare, American beef has been back in South Korea for two years, and sales are rapidly climbing. The major U.S. beef exporter groups have publicly declared they are satisfied with the existing KORUS agreement, but President Obama is demanding more changes anyway.
While there is pressure from domestic automakers for more concessions from South Korea, their demands keep changing. In 2007, U.S. automakers were demanding that South Korea adopt stricter environmental standards on their cars. But now, three years later, President Obama is demanding the opposite: that U.S. cars be exempt from Korea’s more stringent emissions standards. The only consistent principle here is hostility to free trade.
And hostility to trade will cost an already ailing U.S. economy.The U.S. International Trade Commission estimates that U.S. exports would increase $10–11 billion annually if KORUS passed, and the U.S. Chamber of Commerce estimates that KORUS would lead to an increase of 250,000 jobs. Meanwhile, failure to enact the agreement would lead to a loss of $35 billion in exports and 345,000 jobs.
After he failed to get a new deal with South Korea on trade, President Obama then failed to get the G-20 to take any action limiting trade imbalances. Again, policy was the problem:Efforts to limit global imbalances run headlong into huge American budget deficits and extremely loose money that are explicitly intended to increase American demand, which is the single biggest factor in imbalances in the first place.
Heritage Foundation analyst Bruce Klingner comments: “Obama’s decision to allow the talks to collapse—and make no mistake, the decision was made at the presidential level—was a colossal blunder. It reflects serious shortcomings in his strategic thinking since it will have dramatic repercussions for U.S. foreign policy. Not only does it show the emperor has no clothes when claiming he favors free trade, but unless he can get this back in the very quick order he referenced in Seoul, the U.S. will lose all credibility in pushing other trade issues, such as the nine-nation Trans-Pacific Partnership trade deal. Walking away from the KORUS will hurt U.S. economic recovery, strain relations with a key U.S. ally, and undermine American trade objectives—a true trifecta of failure.”
And, then, there is that pesky little matter of “competitive devaluation” between the American dollar and the Chinese yuan. (After an initial flurry of headlines last week, that “gorilla in the room” seems to have quickly vanished from the news.)
The US owes China an enormous debt load, and Obama has decided to monetize it by printing billions of “worth-less” dollars.
It’s not a good idea to pick such a fight with a nation that has a 4,000-year written history and billion-person population (that is one out of every six people on the planet). This ain’t their first prom. And, their weapons technology is nearly par with ours (thanks to Bill Clinton and his contributor-pal Bernie Schwartz of the Loral Corporation).
The electronic crippling of that cruise ship last week was only a “shot across the bow”. They have the technology to do likewise to Los Angeles, New York, etc. And, I think they want the loan payments to which Uncle Sam foolishly agreed.
Never mind the “knife to a gunfight” analogy, Obama is bringing a Barbie doll to a Kung-Fu fight. The only move that he is likely to get in would be striking the floor with his nose.
The problem is that the rest of us get hurt for his mistakes.