Thursday, October 13, 2011

A bit more about those free trade agreements:

CBS Evening News did a good job of explaining why it is a good thing. Presented to the viewer were cases where exports would grow. A firm that lost to Germany a contract for $100,000 and would have meant three jobs. Increased beef exports. And drilling machinery to Columbia. Those were the examples. To counter, they had Richard Trumka of the AFL/CIO who said he didn't like it and that he disagreed with Obama on the policy.

The vote triggered an essay at Salon by Andrew Leonard. Excerpts: (emp add)
After five years of squabbling, the U.S. Senate and House of Representatives finally passed free trade agreements with South Korea, Colombia and Panama on Wednesday. The Hill described the news as a “win” for President Obama. At first glance, the terminology seems a bit odd. The free trade agreements were originally negotiated by President George Bush, have been a high priority for Republicans ever since, and are considered extremely suspect by many Democrats ...

What’s more, in 2008, Obama campaigned in Ohio and Michigan against free trade agreements like NAFTA, for blatantly political reasons. But now it’s a victory for him to get the biggest free trade deal since NAFTA — the South Korean FTA — through Congress? ...

Whatever one thinks of Korea’s regulatory environment, the deal cut by Obama’s negotiators assuaged the U.S. auto industry’s concerns about the FTA, thus explaining the support from Michigan Democrats. But whether the changes will boost car imports significantly is still highly open to question. A study conducted by U.S. International Trade Council concluded that Korea’s carmakers would end up benefiting more from the deal in the long run than Detroit’s Big 3. ...

... anyone who has ever been to South Korea — or any other East Asian nation — understands immediately that, engine tax or no engine tax, big American cars just don’t make sense in crowded Asian cities where the cost of a gallon of gas is several dollars higher than in the U.S. And there is nothing that a free trade agreement can do to change that basic truth.

So there’s your big win for Obama: a legislative victory that upsets big swaths of his own party, won’t materially improve the fortunes of the domestic auto industry, and is unlikely to make a significant difference in states that are critical to his election.
Of course this will be a loser for those in the bottom half of society, since they will be pitted against even more low-wage workers overseas. Interesting that CBS chose only to present businesses that would gain (including cattle ranchers!) and not any that would lose.


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