Here's one "change" presidential candidate Barack Obama apparently believes in: higher prices. Witness his letter last week urging President George W. Bush not to submit the U.S.-South Korea free-trade agreement to Congress for ratification.
Mr. Obama's objection, as stated in his letter, is that the deal "would give Korean exports essentially unfettered access to the U.S. market and would eliminate our best opportunity for obtaining genuinely reciprocal market access in one of the world's largest economies." In other words, ordinary American consumers would get too good a deal.
For an idea of how good, look at automobiles, about which Mr. Obama professes particular concern. The free-trade agreement would eliminate America's 2.5% tariff on most Korean car imports. Even better, it would phase out the 25% tariff on pick-ups and light trucks. Overall, the Korean trade deal would boost the U.S. economy by $10 billion to $12 billion.
Mr. Obama thinks this benefit to U.S. consumers isn't worth the risk that South Korea might not live up to its promise to eliminate its own 8% tariff on U.S. autos and cut its bewildering array of nontariff barriers, such as arcane safety standards. This despite the fact that the deal includes enforcement provisions if Korea backtracks.
On the record so far, Mr. Obama is the most protectionist U.S. presidential candidate in decades. In February he inserted a statement opposing the Korean trade deal into the Congressional record only days before securing the endorsement of the powerful Teamsters union. He also opposes the U.S.-Colombia pact, and he has called for rewriting Nafta – unilaterally if Canada and Mexico don't play along. Mr. Obama's economic adviser, Austan Goolsbee, told Canadian officials this was all for primary show, but the candidate is backing himself into a political corner should he win the White House.
Mr. Obama is promising change you can believe in. But on trade, it is closer to the status quo Americans will be paying for.
DKK
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