Paying The Price For Obama's Lack Of A Trade Policy

July 24, 2009
Los Angeles Times
Scott S. Lincicome

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The administration has offered little more than ambiguous rhetoric, and that is costing Americans in a variety of ways. President Obama is neither a committed free-trader nor a hard-core protectionist. But his continuing failure to commit to a pro-trade agenda amounts to de facto protectionism and subverts his economic and foreign
policy objectives.

Reacting recently to a provision in the climate change bill that would impose trade penalties against nations that do not limit carbon emissions enough, the president said, "At a time when the economy worldwide is still deep in recession and we've seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals."
In that mild rebuke of protectionism lingers the essence of the administration's nascent trade policy: conditional, ambiguous and not particularly reassuring.

Earlier this year, the president suggested that Congress avoid language in the stimulus bill that could provoke a trade war. Congress responded by pruning the bill's most overtly protectionist provisions. But "buy American" fever has nonetheless permeated the government procurement market. Uncertainty surrounding the arcane rules has caused contractors to render their own judgments about what qualifies. Not only have eligible foreign firms been excluded from the market, but US firms that use imported raw materials (including California's entire steel industry) also have been shut out.