Thursday, September 03, 2009

Obama faces crucial test on trade

Should the U.S. government impose tariffs on the China-made tires that are flooding the U.S. market? That’s just the immediate question that President Obama must decide in the next few days.

But the larger question is: Should he begin to reverse a trade policy that, day after day, is bleeding more and more American jobs and enfeebling the American economy?

The President has the legal power to restrict imports under certain conditions. Congress insisted on that restriction – and China agreed to it -- as a critical component of legislation approving China’s joining the World Trade Organization in 2001: the U.S. can put up a barrier against a flood of imports that damaged domestic business.

President Bush rejected every petition – four in all – to enforce that restriction. The tire petition is the first one to reach President Obama.

It was approved in July bv the U.S. agency that reviews such petitions, the International Trade Commission (ITC). The ITC found that the American tire market had indeed been disrupted by a surge of Chinese products, and by a 4-2 vote recommended approval of the petition, brought by the United Steelworkers in April. The deadline for Obama’s decision is September 17.

At stake is more than whether the People’s Republic of China should be permitted to export an unrestricted number of tires into the United States – 46,000,000 of them last year, valued at $1.700,000,000 – whatever the cost to the American tire industry.

In his September 2 Washington Post column, Harold Meyerson spelled out some broader implications of an Obama decision not to enforce U.S. trade policy:

“Why would anyone concerned about American jobs believe such provisions in future trade agreements? Why would U.S. manufacturers maintain their domestic production if they know that none of the legal protections they’ve been promised will ever be invoked?”
The even bigger question: will President Obama show that the U.S. government will no longer be a party to dismantling the economy of the United States?

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