Salesman in chief
PRESIDENT OBAMA wants to double U.S. exports between now and 2015, and it’s a worthy goal. It won’t be easy: Exports fell from $1.8 trillion in 2008 to $1.5 trillion in 2009, due to the global recession. But, as the president suggested in a speech Thursday, a big boost in sales of U.S. goods and services abroad would support 2 million American jobs. And some of his ideas could help that happen: an additional $2 billion in Export-Import Bank credit; streamlining the review process for sensitive technology exports; high-level support from the President’s Export Council.
Still, we’re impressed by the contrast between the president’s ambitious goal and the modest means by which he proposed to meet it. All the world’s other major economic powers — Germany, Japan, China — are attempting to export themselves back to prosperity, too. That means that the United States will have to go well beyond merely trimming red tape and offering more generous subsidies. It needs to open new markets for its goods and make its economy more competitive.
On the first point, Mr. Obama has proposed a new Trans-Pacific Partnership with Asian economies but has unfortunately continued to send mixed signals on three already-negotiated free-trade agreements — with South Korea, Colombia and Panama — that could boost exports immediately. Then there is the impact of the law that Mr. Obama signed last year that ended access to the United States for Mexican trucks. In response, Mexico slapped tariffs on a range of U.S. farm and factory products.
As for increasing U.S. competitiveness, there is only so much than can be accomplished through the improvements in education and infrastructure that Mr. Obama, quite correctly, supports. More fundamental progress requires correcting the deep imbalances in trade and capital flows between the high-consumption United States and high-saving Asia. China’s undervalued currency, still pegged to the dollar, not only contributes to the U.S. trade deficit with that country but makes American goods less competitive with China’s in other markets around the world.
The president recognizes this but has limited leverage on China. Many in Congress want the administration to declare China a currency manipulator and slap it with sanctions. That could backfire if China, which believes that Japan destroyed its economy by bowing to U.S. currency demands in the 1980s, finds effective ways to retaliate. Correcting China’s currency policy, alas, is probably a long-term effort that the United States can most effectively wage in concert with other trading nations that are also damaged by Chinese mercantilism. In the meantime, the best thing that the United States could do for its international competitiveness would be to cut its own immense long-term fiscal deficits. Unlike China’s exchange rate, that is something over which Americans have complete control.