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Is the U.S. Falling Behind on Trade?

By Christine Hilt, Transatlantic Economy Analyst


Recently, Senator Orrin Hatch (R-Utah) addressed the American Enterprise Institute (AEI) in Washington, DC at an event titled, “Are We Falling Behind on Trade?” His talk, which focused on the domestic politics of trade liberalization, included a condemnation of the Obama administration’s attempt to pass the updated Trade Adjustment Assistance (TAA) program by attaching it to the popular U.S.-South Korea Free Trade Agreement.

TAA is essentially a job training and adjustment program for workers who lose their jobs to trade liberalization. The program has divided Congress; Democrats are pushing for the continuation of a new version of TAA, while Republicans think it is a costly and unsuccessful part of the NAFTA deal that should be eliminated. Now, the Obama administration has entered the fight by adding it as an amendment to the U.S.-South Korea FTA – putting strong bipartisan support behind the agreement in jeopardy.

Sen. Hatch’s comments on the TAA were followed by a debate over the merits and drawbacks of the program. The speakers addressed issues of discrimination, government’s role as a provider of services, effectiveness, and cost. Finally, each speaker, including Sen. Hatch, had a different opinion on the domestic effects of free trade. While everyone agreed that globalization has benefitted the nation as a whole, there is still a highly protective attitude toward a number of American industries and unwillingness to allow foreigners to fill American jobs. The intense debate over the domestic effects of trade liberalization prevented any mention of international issues, highlighting the mood of the United States toward the issue; difficult economic times and partisan politics  have brought domestic considerations to the fore.

Are we in fact falling behind on trade? Yes – but it is at least partly our fault. Prominent American trade groups have expressed concerns about the slow pace of American trade policy. Tami Overby, Vice President of Asia for the U.S. Chamber of Commerce, explained that “while America has taken a time out on trade, the rest of the world has moved forward. We need to get [the free trade agreements] all done, and we need to get them all done yesterday.” The BRIC countries and the EU are prime examples of expanding economies that are collecting trade agreements. But in the United States, three new FTAs (Panama, Colombia, and South Korea) have languished for years after being signed without ratification because of political differences. According to the WTO, 230 FTAs were active around the world in 2010, but only 17 involved the United States.


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