THE U.S. ELECTION AND TRADE
By Michael R. Czinkota *
The candidates in the U.S. presidential election have had heated exchanges. Each one of them tries to pick up those few undecided votes which make all the difference. Clever pollsters are using their newest tools to identify and pursue the maybe’s.
For me, as teacher of international business and trade, I wonder what the victory of any one candidate mean for my field – how will international trade be affected? International trade in goods and services comprises now almost 30% of US GDP –making it a vital component of the domestic economy. The fact that exports have been mentioned several times in the various debates, highlights that politics gradually accepts the importance of trade.
How do the candidates stack up?
First , President Obama: He has led for almost four years now and been able to demonstrate his commitments. He has signed three Free Trade Agreements which had been negotiated by President Bush – but there are 193 countries left. He helped conclude long term negotiations to let Russia enter the World Trade Organization this year. The President has taken a number of trade actions, and even declared Chinese car tires to be too cheap and has limited their import. He has also frequently admonished the Chinese government to increase the value of its currency. He has promised in 2009 that he will strive to double US. exports in five years.
Now to Governor Romney: He talks about trade in virtually every speech he gives. Just like the young Japanese mother whispers to little Masaaki “export my baby, export a lot”, the governor tries to inculcate key international trade values and desires in his audience. He recognizes the importance of currency values. Through his work in the private sector he has seen the threats and benefits of the global economy, and has recognized that there is no reason for the United States to play second fiddle. At the same time, his experience gathered abroad allows him to understand the importance of different cultures, and the need to consider issues which, at home might be unexpected, but can be routine abroad. He stresses the importance of helping firms to enter global markets and talks about profits as the key motivator to such market entry. He talks in terms of competitiveness both for firms and their employees – which in turn leads him to stress the importance of an internationalized education.
A second term President Obama would devote some attention to trade issues – but, just like Israel, they are not really a core component of his global posture. The entire issue of competitiveness of firms is seen as something at which one throws money (and loses large amounts of it) – rather than the building process of innovation. Plans like doubling exports don’t portray a vision which is what we need in the international arena. There is a big difference whether one talks about straightening out a road versus offering the vision of a national highway system. There is a lot of earnest belief, that government can drive the export success of the nation. Those in the trenches claim that the real trade volume comes from firms, particularly those who have had the inclination and opportunity to research the requirements of their markets abroad.
A President Romney is likely to upset some long term traditions – be they in currency markets or in trade agreements. He is more likely to link specific performance and assistance. It would not be impossible for President Romney to declare the Doha Round of trade negotiations as a failure, and search for a new approach to an expansion of trade. He might be more in the face of partner governments, but his actions would be more swift and perhaps even more harsh. As a firm believer in markets, a President Romney might encourage students to get ready for a globalized economy, explaining that unmotivated, disinterested, or uneducated members of the work force need to change their attitude dramatically if they wish to do well. Mr. Romney is brimming with excitement to do something about the U.S. trade position in the world. It may bring some pain, but still better than another bursting bubble.
So, where does that leave us? Of course there are many considerations based on which we select our favorite. An increasingly important one is trade. I think both candidates will support trade, but it seems that this support will come with varying intensity. Voters should keep that in mind as they cast their ballot.
*Michael Czinkota teaches international business and trade at Georgetown University. He served in trade policy positions during the Reagan and Bush administration. Contact: email@example.com