IBD:
President Obama vowed to double exports in five years, but June's record trade deficit shows U.S. exports dropping. Trade requires new markets, so why do three finished free-trade pacts sit without a vote?
The U.S. trade deficit unexpectedly widened by a record $7.9 billion to $49.9 billion, with U.S. shipments abroad tumbling the most since October 2008. The reason that sticks out is President Obama's failure to open a single new market to U.S. exports in the 18 months of his presidency.
Trade pacts, more than anything, are express highways to exports and jobs. Not surprisingly, the U.S.' biggest markets are those like Mexico and Canada that have free-trade accords with the U.S.
By contrast, Obama's National Export Initiative, announced in March, consists mainly of subsidies and loans — not free trade.
No great shock then that exports are falling and trade deficits growing. True, monthly deficits are little more than accounting tools, but their components — such as exports — say a lot about the state of an economy.
For those who worry about trade deficits, rising exports from free trade clearly help to shrink them. The U.S. boasts surpluses with most of the countries with which it has free-trade agreements — as of 2009, it's 12 of 17 countries — an affirmation of the competitive power of U.S. goods in foreign markets once trade pacts level the field.
Free-trade countries in general are growth engines, and countries like Chile have propelled themselves straight into the First World and Organization of Economic Cooperation and Development membership through a free-trade strategy.
So it makes sense to think the U.S., with its weak economy and high joblessness, would sign as many free-trade deals as possible.
Unfortunately, it hasn't. Colombia, Panama and South Korea have finished free-trade pacts ready to sign, if the president would just submit them to a vote in Congress.
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Labor thugs are responsible for these agreements not coming to a vote. Even though labor would benefit from the agreements, the labor bosses are too short sighted to see it. A prime example is Caterpillar which would be able to sell its heavy equipment for 40 percent less in Colombia if the agreement is signed. All of the reasons given for not doing the deal are no longer relevant since the situation in Colombia has changed for the better.
Image via Wikipedia
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