Obama’s isolationismU.S. President Barack Obama stressed the plight of American workers in the manufacturing sector during his inauguration speech. Offering relief to the staggering Big Three automakers appears to be a manifestation of that concern.
The same can be said about the “Buy American” provision, which forces the use of only American-made steel in economic stimulus projects.
The protectionist inclinations the world had been worrying about are surfacing. The new U.S. government wants to renegotiate the Korea?U.S. free trade agreement, and wants to overhaul the longstanding North American Free Trade Agreement. This represents a contrast from the Bush administration, which focused on liberalism and free trade.
The United States is also pressuring China. During his confirmation hearings, Timothy Geithner, the secretary of the treasury, said China’s currency manipulation remains a grave problem. A bill has been submitted to the U.S. Congress that imposes retaliatory tariffs on countries that manipulate their currency.
China’s Prime Minister Wen Jiabao responded immediately, suggesting that China might stop purchasing U.S. bonds, saying, “Whether we will buy more U.S. Treasury bonds, and if so how many, will be decided in accordance with China’s own needs.”
Obviously, the excessive devaluation of the Chinese yuan is something we have to fix in the global economic scheme. But if the United States and China continue their squabble during the worldwide economic recession, the future can’t be all that bright.
Fortunately, President Obama put the brakes on the Congressional move to extend coverage of the Buy American provision. However, it seemed as though he had been forced into action by domestic and international criticism. And the measure hasn’t been completely taken off the table.
At this juncture, protectionist trade measures and the U.S.?China confrontation can do absolutely no good for anyone. Obama’s recent moves are rather aggressive for someone in the early phase of his administration.
Differences and disagreements in currency and trade matters should be resolved within the framework of the World Trade Organization, not through threats and retaliation. Viewing the world economy through the eyes of the American laborer is a dangerous exercise.
President Obama must return to free trade and international cooperation. That will help the United States and the rest of the world.