WTO: US Must Drop Protectionism for Trade Deal

Barack Obama campaigned on a promise of ‘restoring good relations’ with key US partners, but it’s hard to tell from the way he’s governed so far. From evicting the bust of Winston Churchill from the Oval Office, to sacrificing East European allies for better relations with Russia and Iran, to starting trade wars with Canada and Mexico, Obama has done nothing but go renege on this commitment.

And now more pressure is being applied by the Secretary General of the World Trade Organization, Pascal Lamy. Lamy recognizes that a deal in the Doha Round of global trade talks could help many economies move toward growth. He also believes that US agricultural subsidies are a critical stumbling block:

Norway, Colombia, Singapore and Pakistan have banded together to push for an “urgently needed” Doha global trade deal, and to urge their trading partners to keep markets open in spite of the world recession.

“World trade has become one of the victims of the downturn,” the export-dependent countries and their economic allies said in a communique circulated to World Trade Organisation members on Monday, a copy of which was obtained by Reuters.

The text urges governments to avoid the impulse to shut out foreign competition in response to economic pressures that have destroyed jobs and hurt industries worldwide, especially since last year. Doing so would pinch global output even more, it says.

Wrapping up the nearly eight-year-old negotiations on a WTO accord, which ran aground last July, would help ensure countries avoid panicked or “protectionist” measures to block imports, the signatories including Mexico, New Zealand, Peru, Malaysia, Costa Rica, Hong Kong, Turkey and Uruguay said…

WTO Director-General Pascal Lamy, who has since tried to edge countries back to the table for full-fledged negotiations, said in Muscat on Sunday that enough time had passed to have another shot at a global free trade deal.

“The U.S. and India are at odds with protectionism in agriculture. Now the elections of both countries are over, we expect them to start engaging in talks,” Lamy said.

Eliminating barriers to trade allows businesses to produce their goods more efficiently (by lowering the price of inputs) and to market their products for less. It increases competition, thereby improving the return to consumers. And since advanced western nations such as the United States are more likely successfully to protect critical markets, the benefits of trade liberalization are felt to a greatest degree by the world’s poorest. Therefore when the U.S. refuses to make concessions, the pain is felt most directly by those that Barack Obama has promised to help.

With all this in mind, it makes sense for Obama to make good on his commitment to be a better world neighbor, by agreeing to open protected U.S. farm markets. For now, he appears unlikely to do so – if only because Democrats in Congress love their protectionism. If he does end up embracing unilateralism and the status quo, that will be one more campaign promise tossed overboard.