How many bills did Obama pass

Berlin Republic The debate magazine

How protectionist is America becoming?

Stormy-Annika Mildner - President Obama is facing a balancing act: internationally he has to stand up for open markets, but internally he has to accommodate the trade unilateralism of his party. Difficult negotiations threaten

When the American Congress debated an approximately $ 800 billion stimulus package earlier this year, an outcry went through the ranks of the United States' trading partners. Aid for the American economy should be linked to a strict "Buy American" clause in order to prevent money from flowing abroad and possibly promoting competitors of domestic producers there. The bill passed by the House of Representatives at the end of January stipulated that only steel, iron and manufactured products from American production could be used in the planned infrastructure projects. The Senate's proposal even went a step further: all materials and equipment used in government-funded economic recovery projects should come from American production. The vast majority of the population supported this measure. According to the polling institute "Pew Research Center", two-thirds of all respondents were of the opinion that the regulation was "a good idea and safeguards jobs in the US".

Numerous observers who warned against a new American protectionism with a view to the presidential election campaign in 2008 saw themselves confirmed. After all, Barack Obama had struck clear protectionist tones, albeit not as loudly as his rival Hillary Clinton. Among other things, he had campaigned for votes by announcing that all free trade agreements would be scrutinized. He had even announced that he would renegotiate the North American Free Trade Agreement NAFTA and strengthen the sections on environmental and labor standards contained in the agreement.

Several trading partners criticized the "Buy American" clause. Brazil threatened to challenge the provision in the World Trade Organization (WTO) arbitration tribunal. The EU has also announced that it will not stand idly by "when a law is passed that prohibits the purchase of European goods in America".

Can the USA Afford to Foreclose?

It was the first acid test for the trade policy of the new president, who had only been in office for a week. His spokesman Robert Gibbs tried to appease: "The government will review this clause. It understands the concerns that have been raised against it." And Barack Obama himself criticized the proposals of Congress as a potential source of trade wars, which the US cannot afford in times when trade is declining around the world. At the beginning of February, Congress weakened the clause - a success not only for the US trading partners, but also for the Obama administration, which was able to demonstrate its leadership skills as a result. The clause now contains the addition that the USA's international trade policy obligations must not be violated. This refers to both the WTO Agreement on Government Procurement (GPA) and the United States' bilateral trade agreements. And not only that: In numerous speeches, Barack Obama emphasized the importance of open markets, not least at the beginning of April at the G20 financial summit.

As an economic, military and foreign policy superpower, the United States cannot really allow itself to pursue a policy of isolation. The importance of stable trade relationships was shown in the first quarter of 2009 alone: ​​During this period, the American economy would have contracted much more than around six percent if foreign trade had not made a positive contribution to growth. In addition, a policy of foreclosure would contradict one of Obama's central foreign policy goals: the restoration of the leadership role of the USA and a common set of values ​​with allied states. This explains, for example, why the new American government, after initially rattling the saber, is now adopting a much more moderate tone towards its trading partner China. In the current phase of crisis management in particular, the USA is dependent on creditors like China to finance its increasing national debt.

There is currently no talk of new negotiations on NAFTA either: At the first meeting with Mexican President Felipe Calderon on January 12, 2009, Obama only said that he was aiming to "upgrade" the free trade agreement, particularly with regard to labor standards and environmental issues. At the end of April, US trade representative Ron Kirk outlined the Obama administration's focus on NAFTA policy. He reiterated that the agreement could be adapted and improved without renegotiating the entire text. In addition, Barack Obama wants to conclude the Doha Round of the WTO, which, according to Kirk, offers a unique opportunity to promote world trade.

Difficulties with Mexico and China

And yet: the list of new trade restrictions and disputes is long. Among other things, the United States argued with its southern neighbor Mexico over freight forwarding and transport services. With reference to alleged security deficiencies, the US stopped financing a pilot program that allowed up to 100 transport companies from both countries to transport goods directly to their destination (actually, goods have to be reloaded at the border onto trucks from the other country). Mexico responded to this transport restriction by increasing import duties on 90 American products, which account for $ 2.4 billion of the total annual trade volume of $ 367 billion. The tariffs were mainly imposed on products from the states whose MPs had been particularly strong in suspending the pilot project, including Michigan.

Although Barack Obama had spoken out vehemently against the pilot program during his time as Senator, he intervened, as with the "Buy American" clause, soothingly and instructed the relevant government agencies to cooperate with the American Congress and the Mexican federal government to launch a new pilot project. However, negotiations proved difficult after swine flu broke out and major health concerns raised.

There were also initial problems with trading partner China: At the end of March, the United States International Trade Commission (ITC) decided to impose anti-dumping duties on certain Chinese steel tubes of up to 101 percent after American manufacturers accused Chinese competitors of selling their products below the price . In addition, at the end of March, Obama's Energy Secretary Steven Chu asked Congress to raise countervailing tariffs on goods from countries that have not committed to reducing greenhouse gases to protect American manufacturers. The tariffs should create a level playing field for everyone. These measures, too, should primarily be directed against China as a trading partner.

Is the American scrapping bonus coming?

American aid to the automotive industry is also in the crossfire of criticism. Both George W. Bush and Barack Obama helped the ailing sector with billions in aid. For example, automakers GM and Chrysler received $ 17.4 billion from the US federal government in bailout aid last December, and suppliers are now being supported as well. On March 19, the White House Auto Industry Task Force approved a $ 5 billion pledge. In addition, the USA is currently flirting with a scrapping bonus, with which the government wants to provide the automotive sector with a growth impulse and at the same time promote the switch to more fuel-efficient models. This premium would not necessarily be discriminatory, since it would also benefit producers abroad (at least according to the majority of the bills currently being discussed in Congress). On the other hand, a dampening effect on automobile imports would be expected if the law provided for different premiums for domestic and foreign models or even required that the new cars purchased were built in the United States.

Mixed attitudes on trade issues

Finally, the concern about the "Buy American" clause has by no means been completely erased, even if it has been significantly weakened and there is now more clarity about individual provisions, for example when a product is considered to be made in the USA. While the United States cannot discriminate against companies from other GPA member countries in public procurement, the agreement only applies to a small number of countries. So far, only 27 members of the WTO have signed the plurilateral agreement (including the EU). Many emerging and developing countries are not yet members and therefore fear a decline in their exports to the USA.

But even members of the GPA could feel the effects of the clause, because the agreement offers considerable leeway: For the USA, for example, road construction measures and public transport projects are not covered by the GPA. Thus, these areas cannot be challenged in the context of the "Buy American" clause before the arbitration tribunal of the WTO. In addition, the agreement is not applied equally at all state levels of its member states - federal level, state level, local level. In the United States, for example, it only applies to 37 of the 50 states, and each state has defined the scope differently. Exceptions apply, for example, to the procurement of vehicles for public transport (New York), paper, ships and fuels (Washington) or beef (South Dakota).

The examples mentioned are not to be understood as evidence of a change of direction in American trade policy, after all, the measures hardly differ from what can be observed in other countries in the course of the economic and financial crisis.And the Bush administration has repeatedly protected individual sectors, just remember the protective tariffs on steel imports in 2001. However, the measures are also an expression of the government's ambiguous attitude towards trade issues: on the one hand, the Obama administration is trying to counteract protectionist efforts, on the other hand, it has to Take account of demands from your own party. This is also reflected in Ron Kirk's confirmation hearing before the Senate, in which he spoke out in favor of open markets, but at the same time emphasized that other countries "do not always obey the rules".

Now "all tools" are used

Market opening and rule enforcement are at the heart of the American government's trade agenda. Because, according to Ron Kirk, compliance with the trade rules has only been insufficiently demanded; In addition, inadequate labor and environmental standards abroad would have undermined the competitiveness of American exporters. He therefore promised to use all the "tools in the toolbox" of the United States agent, including the WTO dispute settlement process, to punish measures that harm American exports.

In both the trade policy agenda for 2009 and in the annual report on trade barriers, the National Trade Estimate Report on Foreign Trade Barrier in March, Kirk announced that he would be actively demanding existing American rights within a rules-based trading system. Accordingly, trade barriers are to be dismantled and market access, especially for American services and agricultural products abroad, is to be improved. The Doha Round will also only be able to be concluded if American conditions are taken more into account when opening up the market for American products. The emerging countries in particular would have to make major concessions. Kirk therefore sees the possibility of making significant progress in the Doha Round only in autumn or towards the end of the year.

Obama promises more consultations ...

With this, Kirk also responded to demands from Congress, where the reintroduction of the so-called Super 301 is currently being discussed. Under the Omnibus Trade and Competitiveness Act of 1988, the Trade Representative was required to submit an annual report to Congress in the form of a priority list of those trade practices in other countries the elimination of which would help American industry most. If no solution was found with the country concerned in the subsequent consultations, the commercial agent was obliged to impose unilateral measures. The Super 301 was an expression of the aggressive unilateralism of the 1980s and was highly controversial. Even if it is not primarily a protectionist instrument of protection, its arbitrary effect means that it risks triggering countermeasures abroad. The clause had therefore not been used since the WTO was founded in 1996.

In the House of Representatives, 14 democratic MPs spoke out in favor of reintroducing the instrument. MPs warned that without stricter rule enforcement in the face of growing protectionism around the world, both the trade deficit - around $ 820 billion in 2008 - and the United States' external debt would continue to grow. Senate Finance Committee Chairman Max Baucus also advocated legislation to ensure that not only trade treaty violations identified in the annual report are promptly prosecuted, but also mere obstruction of American companies in overseas markets.

Further topics that run through the previous documents and speeches of the new commercial agent are transparency and the participation of all interest groups in the commercial policy process. "We will comply with requests where we can and be respectful where we disagree," Kirk promised repeatedly - in clear delimitation from the Bush administration and the Republicans, who rely on no cooperation on trade issues, but rather a rigid "go-ahead". it-alone "strategy. Barack Obama will ask Congress to renew the Trade Promotion Authority (TPA), but only after extensive consultations. Because the competence over trade policy lies in the hands of Congress, the renewal of the trade authority is a fundamental requirement for a proactive trade policy. The Barack Obama administration will also not initiate new trade agreements without Congress.

... but its scope is limited

Finally, Kirk pledged support to American workers harmed by international competition. One step in this direction was the expansion of the Trade Adjustment Assistance Program (TAA) in the economic stimulus package of February 2009. Background: In 2007, the federal social program for employees who lost their jobs due to import competition expired. The compromise provides for an extension of the TAA up to and including 2010. At the same time, the program is being expanded significantly: in the future, employees in the service sector are also to benefit from the TAA, and funds for professional training are to be increased.

Even if the TAA was a concession to the Democrats (some observers even suspect that it would pave the way for the ratification of the free trade agreements with Colombia, Panama and South Korea), Barack Obama's room for maneuver in trade policy remains very limited. In view of the current economic situation and the mood in Congress, there is hardly any room for a proactive trade policy oriented towards trade liberalization.

The International Monetary Fund estimates that the US gross domestic product will decline by 2.8 percent in 2009 and that unemployment will rise to just under nine percent. No wonder that trade policy has so far not had a central place in the economic policy of the Obama administration. Instead, priority is given to crisis management and reform of the financial market architecture. In addition, most of the conflicts with his party lurk in Obama’s trade policy. The Democrats are not all protectionists, but after eight years of George W. Bush and the conclusion of eleven bilateral trade agreements, they are critical of further trade liberalization. Many of them are considered "fair traders": According to this, free trade agreements should be linked to labor and environmental standards. There have already been numerous critical voices from Congress: Mike Michaud, Democratic MP from Maine, asked something like: "Do we really want to pass the Bush administration's trade deals during a recession?" And Senator Sherrod Brown has already indicated that he will submit a bill that will put all trade agreements on hold until a non-partisan study has analyzed their effects.

If the new president and his trade representative fail to re-establish a free-trade majority coalition in Congress, the United States will increasingly send out contradicting signals on trade issues. Internationally, the president must stand up for open markets, internally he must take into account the concerns and wishes of his party if he does not want to risk losing its support for other important reform projects. This dilemma is likely to make international negotiations very difficult.

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