Obama Pivots Slightly Towards Fair Trade In Time For The Election

Like many progressives, we haven't been too thrilled with Obama's corporate-friendly economic agenda in general and we've been especially critical of his trade policies-- virtually the same devastating globalization trade policies pushed by the Bushes and Clinton. Economist David Korten summed them up nicely-- without even trying (or mentioning Obama)-- here in his book, Agenda For A New Economy:

The elimination of national borders as barriers to the expansion of corporate control of world markets and resources didn't happen as a result of some inexorable law of nature. It came about over a period of some thirty years through the relentless effort of Wall Street interests using every political tool at their disposal to remove legal barriers to their expansion.

Wall Street did not expend all this effort to improve the health of people and the biosphere. It figured out that its ability to generate profits would be best served by a system that maximized each locality's dependence on distant resources and markets.

Take the system by which we produce, process, transport, and market our food. A farmers' market where local producers and consumers gather to engage in direct exchange offers many benefits from a community perspective. The food is fresh, the energy costs of transport are minimal, the personal exchanges enhance community ties, farmers can adapt rapidly to changing local preferences and conditions, and the local economy is cushioned from food shocks elsewhere in the world.

Wall Street has a different perspective. It observes this scene and says in effect:

What's the profit here? We need a global food system in which producers in Chile depend on customers in New York and vice versa. Then both are dependent on us to serve as middlemen. We can monopolize global markets, set prices for both producers and consumers, and force producers either to buy our seeds, fertilizers, and insecticides at whatever price we choose or to lose their market access. The greater our success in convincing local producers that they will have greater selection at lower prices when everything is traded globally, the more they will depend on us as intermediaries, the greater will be our hold on people's lives everywhere, and the more profit we can extract.

When the world's agricultural land is organized on the model of industrialized monocropping, both producers and consumers depend on the global agricultural conglomerates for their survival. Until a crisis strikes, few notice that the resulting increase in global food interdependence increases the real costs of food production and reduces food security for everyone. This in turn creates lucrative opportunities for Wall Street speculators who profit from volatile commodity prices as a weather disruption on one side of the world creates food shortages on the other.

That said, when Obama does something right about trade, it's worth noting... and patting him on the head. This week his administration announced they had filed a request for consultations at the World Trade Organization regarding China’s export restrictions of rare earth metals, as well as tungsten and molybdenum, minerals used in a broad range of manufactured products, from auto parts and lighting to wind turbines and, ominously, advanced weapons technology. The European Union and Japan have filed suit against China as well. Then Tuesday Obama signed a bill that allows the Department of Commerce to continue to apply countervailing duties against non-market economies. Scott Paul, Executive Director of the Alliance for American Manufacturing, who has been a steady critic of Obama's trade agenda, seemed very pleased with these moves.

“It’s clear that the Administration’s trade agenda is shifting to more aggressive enforcement, which is welcome news for America’s workers and businesses as they face both subsidized Chinese competition in America and restricted access to China’s marketplace.

“Over the past few years, our activists having been working hard to make sure their elected officials know just what is at stake on trade laws, surging auto parts imports from China, and China’s unfair trade practices such as rare earth mineral export restrictions. It appears that our leaders are finally beginning to listen.

“We are pleased that the Obama Administration and Congress are cracking down on China’s cheating, but there is much more work to do. Our trade deficit with China is growing, not shrinking. China has devalued the Yuan again this year. And, the subsidies Beijing is lavishing on its auto parts sector are threatening the very heart of our manufacturing recovery in America."

Now, as Dean Baker pointed out in his excellent post of why dangerous Obama crony Larry Summers is the wrong person for the World Bank presidency, it would be a mistake for progressives to sit back and support whatever Obama and his team dish out.

According to the rumor mills and betting lines, Summers is now the top contender for World Bank president. If track records mattered, Summers would be nowhere in contention.

Just looking at the economics (i.e. ignoring his stormy tenure as president of Harvard), Summers would not seem to be the sort of person who should be given another position of responsibility. In the 90s, Summers was a top advisor and eventually Treasury Secretary in the Clinton administration as it rushed full speed down the road of financial deregulation. He was among the loud voices dismissing then head of the Commodity Futures Trading Commission Brooksley Born’s concerns about unregulated derivatives.

Summer’s was also a central figure in the engineering of the bailout from the East Asian financial crisis. This bailout sent the dollar and the trade deficit soaring. The resulting build up of reserves by developing countries created the fundamental imbalance in the U.S. and world economy, which still has not been corrected.

Summers completely bought into the Great Moderation myth that Alan Greenspan had somehow ended economic instability for all time. At the famous Greenspanfest held at Jackson Hole in 2005, Summers derided the skeptics as financial “Luddites.” ... Summers’ record as an economic adviser has provided a trail of disasters that few can match. Does it make sense to give him yet another opportunity to do even more damage?

As for Obama, this is what he had to say about the fair trade component of his usually toxic trade agenda (conventional, Republican "Free" trade):

[O]ne of the things that I talked about during the State of the Union address was making America more competitive in the global economy. The good news is that we have the best workers and the best businesses in the world. They turn out the best products. And when the playing field is level, they’ll always be able to compete and succeed against every other country on Earth. 

But the key is to make sure that the playing field is level. And frankly, sometimes it’s not. I will always try to work our differences through with other countries. We prefer dialogue. That’s especially true when it comes to key trading partners like China. We've got a constructive economic relationship with China, and whenever possible, we are committed to working with them to addressing our concerns. But when it is necessary, I will take action if our workers and our businesses are being subjected to unfair practices.
 
Since I took office, we’ve brought trade cases against China at nearly twice the rate as the last administration, and these actions are making a difference. For example, we halted an unfair surge in Chinese tires, which has helped put over 1,000 American workers back on the job. But we haven't stopped there. 

Two weeks ago, I created a Trade Enforcement Unit to aggressively investigate any unfair trade practices taking place anywhere in the world. And as they ramp up their efforts, our competitors should be on notice: You will not get away with skirting the rules. When we can, we will rally support from our allies. And when it makes sense to act on our own, we will. 
 
I just signed a bill to help American companies that are facing unfair foreign competition. These companies employ tens of thousands of Americans in nearly 40 states. Because of subsidies from foreign governments, some of their foreign competitors are selling products at an artificially low price. That needs to stop.

This morning, we’re taking an additional step forward.  We’re bringing a new trade case against China-- and we’re being joined by Japan and some of our European allies. This case involves something called rare earth materials, which are used by American manufacturers to make high-tech products like advanced batteries that power everything from hybrid cars to cell phones. 

We want our companies building those products right here in America. But to do that, American manufacturers need to have access to rare earth materials-- which China supplies. Now, if China would simply let the market work on its own, we’d have no objections. But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow. 
 
Being able to manufacture advanced batteries and hybrid cars in America is too important for us to stand by and do nothing. We've got to take control of our energy future, and we can’t let that energy industry take root in some other country because they were allowed to break the rules. So our administration will bring this case against China today, and we will keep working every single day to give American workers and American businesses a fair shot in the global economy. 
 
We're going to make sure that this isn’t a country that’s just known for what we consume. America needs to get back to doing what it's always done best-- a country that builds and sells products all over the world that are stamped with the proud words: "Made in America." That’s how we create good, middle-class jobs at home, and that’s how we're going to create an economy that’s built to last.

Damn, I wish we had more Democrats like David Gill in office! Take a look at his new video. Then let it sink in and see if you can see your way clear to contributing to his campaign: