Guest Contributor William Krist- Obama’s Goal to Double Exports: A Midterm Analysis

Today’s report on the U.S. trade performance for May 2012 shows that the Obama Administration is roughly on track to achieve the President’s lofty goal of doubling U.S. exports over the five year period ending in 2014.  President Obama made this commitment, which would mean increasing exports from the 2009 level of $1.56 trillion to over $3 trillion, in his 2010 State of the Union address.  The objective of expanding exports is to promote U.S. employment, particularly in high paying manufacturing jobs.

To put this goal in perspective, exports just barely doubled in the ten years from 1999 to 2008. In fact, exports have not doubled over a five year period since the 1970s, and even then the doubling was mostly due to inflation.

Shortly after his 2010 State of the Union speech, Obama created the National Export Initiative and an Export Promotion Cabinet by executive order, giving them the responsibility of increasing U.S. exports.  While the Administration deserves a lot of credit for progress made to date, it needs to be noted that it is difficult to untangle the effects of U.S. export promotion activities from other uncontrollable effects such as changes in foreign demand and global business cycles, and the import policies of other countries.

Additionally, even as our exports have increased rapidly, U.S. imports have grown at an even faster rate. This means that the overall net effect of trade on our economy continues to be negative.  While doubling U.S. exports is a worthy goal, a better goal would be to achieve a balance of our exports and imports over the course of the business cycle.

For a more in-depth analysis of the Administration’s export initiative click here.

William K. Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment. Anthony Gausepohl is a Research Assistant at the Woodrow Wilson Center.

Guest Contributor William Krist: Implement the US-Colombia Free Trade Agreement

President Obama announced this weekend that the U.S.-Colombia Free Trade Agreement will finally go into force this coming May 15^th, more than five years after the agreement was originally signed in November 2006 by U.S. and Colombian trade negotiators.  This agreement is very much in both our commercial and foreign policy interests.  We have kept this important friend waiting long enough and it is now time to move forward.

From a commercial perspective, Colombia, which is the third largest economy in South America, already has free trade agreements with some of our trade competitors including Canada and Mexico.  With average tariffs of 17.2% on agricultural goods and 11.8% on non-agricultural goods, U.S. exporters would be at a substantial disadvantage vis-à-vis exporters from these countries.  However, as a result of this agreement, Colombia will immediately eliminate duties on over 80 percent of imports from the U.S., putting us on a level playing field with these countries, and giving us preferred access vis-a-vis other countries, such as India and China, that do not have free trade agreements with Colombia.

Our foreign policy interests may be even more important than our commercial interests, and it is very important to us that Colombia grow economically.  Colombia is one of the major suppliers of cocaine to the U.S. and an important tool in curbing this trade is to provide alternative livelihoods to drug trafficking.  Additionally, Colombia has been facing an insurgency from the Marxist Revolutionary Armed Forces of Colombia (FARC), and the pro-American government needs our support in this fight.  Finally, Colombia is the sixth largest supplier of oil to the U.S.  and so far this year there have been more than 15 attacks by FARC and the drug cartels on the oil pipelines needed for exporting Colombia’s oil.

The AFL-CIO has been adamantly opposed to this agreement and has successfully demanded that Colombia reduce murders of labor organizers and implement improved labor standards.  The AFL-CIO continues to oppose implementation, arguing that improvements to date are inadequate.   AFL-CIO President Richard Trumka notes that some two dozen trade union leaders were killed last year.  But this is only a small percent of the more than 15,000 murders.  The AFL-CIO’s concerns are important but should not hold up implementation.  Instead, the U.S. should vigorously use the dispute settlement mechanism in the agreement to press for continued improvements and should provide funding for building the capacity of Colombia’s government to reduce violence and improve labor standards.

Sources: White House, AFL-CIO

William K. Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment. Takanori Hayashi is a Research Assistant at the Woodrow Wilson Center.

Guest Contributor William Krist: Silence on the U.S.-Korean Trade Agreement

Expectations are high that the U.S. and Korea will implement their Free Trade Agreement in the not very distant future.  While trade wonks are aware of this agreement, the general public is uninformed and the mainstream press has largely ignored the issues being debated.  Contrast this with the debate in 1992 over our trade agreement with Mexico when the North American Free Trade Agreement was the centerpiece of Ross Perot’s run for President.

Korea and Mexico are just about the same size economically; in fact the World Bank ranks Korea as the world’s fifteenth largest economy, just slightly smaller than number fourteen Mexico.  No one expects “a giant sucking sound” of lost jobs to result from this agreement, and in fact some studies, such as the one by the U.S. International Trade Commission, project that the U.S. economy will benefit over the long term.

However, some industries, particularly autos and beef, have raised serious concerns that need to be taken into account.  President Obama has given trade negotiators until November to resolve all outstanding issues, so that he can sign the agreement during his trip to Korea for the G-20 meeting.  There is still an opportunity to improve this agreement in a way that will better promote our economic interests and strengthen our relationship with this important ally.

William K Krist is a Senior Policy Scholar at the Woodrow Wilson Center.  He is a former Senior Vice President of the American Electronics Association.  He has written extensively on trade, development, and the environment.  For more information on this topic read his paper ‘Improve then Approve the U.S. – Korean Trade Deal.‘

Sources: USTR.gov, World Bank, USITC.gov

Photo credit: Morning Calm Weekly Newspaper – Korea Region – US Army Korea – IMCOM – November 20, 2009 courtesy of flickr user US Army Korea- IMCOM