Trade Issues Prominent On Obama’s Asian Tour

As President Barack Obama visited five Asian nations over the past 10 days, he received plenty of
advice from home and abroad as to how the United States should deal with what have become
increasingly contentious trade issues.

Several leaders in the nations he visited warned the United States may be in danger of moving
toward protectionist trade policies, and there was general agreement that the future lies in free
and open trade. China President Hu Jintao said, “Protectionism will not help any country move out
of the crisis.” At home, manufacturers urged the president to press China, in particular, about
what they see as illegal trade practices that they say are wiping out jobs and hurting the economy.

Just before Obama left on his first tour of the area as president, the government released
data showing that the US trade deficit jumped by 18 percent to $36.5 billion in September, the
second-highest increase for the year, causing industry representatives in Washington to say China
and other Asian economies must stimulate domestic demand and not rely so heavily on consumers.

Perhaps the most significant and most specific comments came from Sen. Max Baucus, D-Mont.,
who as chairman of the Senate Finance Committee overseas trade legislation. Noting that the US
government has pretty much ignored trade because of the preoccupation of his committee, Congress
and the administration with economic recovery issues and health care reform, Baucus said, “It is
time for a new blueprint on trade.”

In remarks before the Washington International Trade Association, he called for a “new and
comprehensive agenda” that places more emphasis on enforcing existing trade agreements and on labor
and environmental practices in other countries. He also said the blueprint cannot ignore workers
whom trade leaves behind, and there must be more programs to help workers train and transition into
new jobs when their jobs are displaced by imports.

Baucus said a new agenda must recognize that the United States can no longer rely on American
consumers alone to fuel economic growth, and there must be more export-driven growth. In that
regard, he said US trade policies have focused for too long on trans-Atlantic trade, and more
emphasis must be placed on trans-Pacific trade. He praised Obama’s commitment during his trip to
participate actively in the Trans-Pacific Strategic Economic Partnership (TPP) with Singapore,
Chile, New Zealand and Brunei; as well as prospective TPP member countries Vietnam, Australia and

Baucus called for congressional approval of the pending free trade agreement (FTA) with South
Korea, but only if Korea lives up to its commitment to abide by scientific standards when
regulating US agriculture exports and addresses the “legitimate concerns regarding trade in autos.”
He did not mention the textile industry’s concerns with the South Korea agreement.

He said his comprehensive approach to trade also must find a way for Congress to approve FTAs
with Panama and Colombia.

With respect to trade with China, Baucus said, “We must continue to encourage China to
rebalance its economy and focus on domestic consumption, and move toward a market-based economy,”
suggestions Obama also has endorsed.

The question is whether Congress and the administration are willing to get into trade issues,
following the contentious debates on economic recovery and health care.

November 17, 2009