President Bush called on Congress to pass the Korean trade agreement in his State of the Union speech Monday night (along with the Columbian and Panamanian agreements). The key trade paragraphs are printed at the end of this post. He argued that the agreements would open new overseas markets, leveling the trading field by getting foreign countries to lower their barriers to our levels. He argued that the agreements would support U.S. strategic interests. He also endorsed reform and reauthorization of trade adjustment assistance.
Bush followed up and elaborated his arguments in a speech on trade to employees of the Robinson Helicopter Company in Torrance California on Wednesday: President Bush Discusses Trade and Economy . This should have been a receptive audience. Robinson earns significant revenues from overseas sales. Bush argued (my summary, not necessarily his words):
Trade is good for us - it provides opportunities for workers to exploit their relative strengths and increases the options available to consumers. Trade contributes significantly to growth. Free trade means jobs. And good paying jobs - companies that export pay higher wages.
Again, he argued that the agreements "level the playing field". Our tariffs are low and theirs are high - so an agreement that brings their barriers towards ours levels the playing field.
There are strategic arguments for these agreements. Specifically, if we turn down the agreement with Columbia, "it will hurt our relations in South America. It will give the voices of false populism something to say."
Encouraging foreign progress through trade (here he spoke specifically about the Doha Round) will help relieve poverty, and as a consequence, will also relieve the strategic threats to the U.S. bred by poverty.
We need to reform and reauthorize trade adjustment assistance to ease the burdens on people who lose jobs because of imports and foreign competition. He focused here on job training elements of the trade adjustment assistance law, and the complementary relationship between the law and community college system.
The job training elements of trade adjustment assistance are only one of many components in that program (Strengthening Trade Adjustment Assistance, Howard Rosen, Peterson Institute, January 2008). This vision of assistance reform is a long way from the vision laid out by Senate Finance Chair Max Baucus at a Peterson Institute speech on the same day (Baucus's New Condition for Approving Trade Agreements, The Custom-House, January 30).
Finally, he made a pitch to keep the U.S. open to foreign investment, taking due consideration of security issues.
And finally I want to say something about investment. It's very important for our country to be open for investment without sacrificing our national security. There's some countries around the world that have accumulated large amounts of money. Sometimes it's our money. And it makes sense to say to somebody, sure you can invest in America. I noticed the other day one of these Wall Street firms had a big chunk of foreign money invest on their -- in their balance sheet. We ought to say, you bet, absolutely, you're welcome to invest in the United States of America. Investment means jobs and productivity increases.
Gregg Hitt of the Wall Street Journal interviewed Bush on the flight to California. Selected excerpts mainly dealing with trade and FDI issues may be found here: Excerpts from Interview with President Bush (January 30).
I've found two very different Democratic responses this week. Max Baucus, Chair of the Senate Finance Committee, laid down a condition for taking up the three trade agreements - satisfactory progress on a more extensive list of trade adjustment assistance reforms than Bush mentioned in California (link to the post above).
There was also hints that the Democratic Congress may simply not take up trade adjustment assistance this year. Steny Hoyer, the House Majority Leader, said he was doubtful the agreements would even come up this calendar year (Doubtful U.S. will pass trade deals: lawmaker, Doug Palmer, Reuters, January 29).
Here are the key paragraphs from the State of the Union:
On trade, we must trust American workers to compete with anyone in the world and empower them by opening up new markets overseas. Today, our economic growth increasingly depends on our ability to sell American goods and crops and services all over the world. So we're working to break down barriers to trade and investment wherever we can. We're working for a successful Doha Round of trade talks, and we must complete a good agreement this year. At the same time, we're pursuing opportunities to open up new markets by passing free trade agreements.
I thank the Congress for approving a good agreement with Peru. And now I ask you to approve agreements with Colombia and Panama and South Korea. (Applause.) Many products from these nations now enter America duty-free, yet many of our products face steep tariffs in their markets. These agreements will level the playing field. They will give us better access to nearly 100 million customers. They will support good jobs for the finest workers in the world: those whose products say "Made in the USA." (Applause.)
These agreements also promote America's strategic interests. The first agreement that will come before you is with Colombia, a friend of America that is confronting violence and terror, and fighting drug traffickers. If we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life. (Applause.)
Trade brings better jobs and better choices and better prices. Yet for some Americans, trade can mean losing a job, and the federal government has a responsibility to help. (Applause.) I ask Congress to reauthorize and reform trade adjustment assistance, so we can help these displaced workers learn new skills and find new jobs. (Applause.)
Cross-posted from Korea-U.S. FTA.
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