Obama Needs to Take On Labor Allies in Trade Fight: Albert Hunt

The Obama administration last month targeted villains impeding international commerce, especially China.

The Chinese, in the United States Trade Representative’s report, were criticized for import and procurement restrictions that discriminate against foreign competitors. The Chinese currency valuation wasn’t specifically mentioned, though that’s the context of the overall complaint. The U.S. also chastised the Europeans, Japan and South Korea.

These all are valid, particularly the case against China. Last week, Bloomberg BusinessWeek magazine chronicled China’s recent pattern of protectionism. “Every year, China issues more than 10,000 new standards governing industries from mobile phones to autos,” the article said, more than the rest of the world combined.

One villain was omitted: the U.S.

President Barack Obama tapped a capable trade ambassador, former Dallas Mayor Ron Kirk, has assembled a globally oriented economic team and has vowed to pursue an aggressive policy of open trade.

Yet 15 months into Obama’s presidency, free-trade agreements with South Korea, Colombia and Panama languish and the administration hasn’t wrapped up the so-called Doha Round of trade talks and moved to other negotiations.

Doubling Exports

An essential ingredient in creating a more robust economy, Obama has said repeatedly, is to double U.S. exports over the next five years. Ambassador Kirk says that “with our renewed focus on job creation and our export initiative as a way to do that, there is a critical role for passing these three pending agreements and helping us create those jobs.”

Continued inaction will doom those hopes. “It would be very hard to achieve this without these trade agreements,” says Charlene Barshefsky, who was U.S. trade representative in the Clinton administration.

Obama says he wants to push ahead with the Korean, Colombian and Panamanian trade accords as soon as a few “glitches” or “kinks” are resolved.

The real “glitches” are U.S. unions, major Obama political supporters. The new AFL-CIO president, Rich Trumka, is more protectionist than his predecessor, John Sweeney. Other influential labor leaders, such as Jim Hoffa of the Teamsters, are as adamant.

Reluctance in Congress

The “kinks” are congressional Democrats; Senate Majority Leader Harry Reid of Nevada likes to boast he never supports free-trade deals, and House Speaker Nancy Pelosi has let the White House know that after the wrenching health-care battle she doesn’t want to put her members through other tough votes.

There are consequences to inaction.

Over the past eight years, there have been few leaders as supportive of the U.S. as outgoing Colombian President Alvaro Uribe; he has courageously taken on the drug gangs and leftist terrorists. The country is far safer and more stable for its citizens and investors.

Obama’s National Security Council considers Colombia an important strategic counterforce to Hugo Chavez, the leader of neighboring Venezuela and an American nemesis who harbors some of the Colombian FARC terrorists. Most experts agree the Colombian agreement would result in more U.S. exports than imports.

Opponents say labor leaders are still getting bumped off in Colombia. Although violence hasn’t disappeared, it is far less severe than in the past because of the courage of Uribe, who the courts stopped from running for a third term. For the Obama administration to continue to sit on this agreement before the Colombia presidential elections next month is a slap in the face to an important American friend.

South Korea Trade

The Korean considerations are geopolitical and economic. South Korea has the fourth-largest economy in Asia. The European Union has signed a trade agreement with Korea. The International Monetary Fund projects that more than half the global economic growth in the next dozen years or so will come from the Asian Pacific region.

If the U.S. wants China to dominate the region then stiffing trade agreements with Korea and others is good strategy. That’s not the Obama objective.

The auto and steel industries, and unions, complain about Korean import barriers in opposing the agreement. Yet overall Korean tariffs that would be affected by the deal are about three times greater than the U.S. tariffs.

Political Climate

Ambassador Kirk, who believes the U.S. can’t “sit on the sidelines as others lower tariffs and conclude trade deals,” nevertheless says the political climate has to improve.

“We’re not going to be able to move forward if we have a poisoned political environment in Washington in which every issue that comes up becomes the next health care,” he said in an interview April 2. “We don’t want that for trade.”

While the dynamics will be different -- support and opposition will be bipartisan -- a non-poisonous, Kumbaya epiphany on trade isn’t on the horizon

Beyond the economics there even are some political reasons the White House should seize the moment and seek approval of these treaties. A month ago the labor movement was demoralized, denied legislative victories and appointments. Over the last few weeks, health care, a labor priority, was passed and Obama tapped union counsel Craig Becker to the National Labor Relations Board, reversing years of an anti-union tilt on the panel, and infuriating much of the business community. With these victories, will labor really wage a war with Obama and other Democrats in this fall’s elections over trade?

One more point: The Obama team loves to contrast their leader and his willingness to take on tough battles with the last Democratic president -- remember Bill Clinton’s triangulation? (The tension between top Obama and top Clinton advisers is as raw as ever.)

Seventeen years ago, over the opposition of labor and reservations from Capitol Hill Democrats, President Clinton rallied support to pass the North American Free Trade Agreement. Is Obama not up to the same?

(Albert R. Hunt is the executive editor for Washington at Bloomberg News. The opinions expressed are his own.)

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To contact the writer of this column: Albert R. Hunt in Washington at ahunt1@bloomberg.net.

To contact the editor responsible for this column: Max Berley at mberley@bloomberg.net.

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