President Obama is now in the midst of an Asia trip designed to produce more balanced trade so that American exports to Asia would jump start the U.S. economic recovery. Currently, China only lets its people buy about 25¢ for every $1 we buy from them, and other Asian countries recently resumed their currency manipulations so as not to lose market share to China.
In his speech at Suntory Hall in Tokyo on November 14, Obama said that the topic of balanced growth (i.e., balanced trade) would be discussed in Singapore the next day. He described his dream that balanced trade would benefit all sides. Specifically:
So we have now reached one of those rare inflection points in history where we have the opportunity to take a different path. And that must begin with the G20 pledge that we made in Pittsburgh to pursue a new strategy for balanced economic growth.
I'll be saying more about this in Singapore, but in the United States, this new strategy will mean that we save more and spend less, reform our financial systems, reduce our long-term deficit and borrowing. It will also mean a greater emphasis on exports that we can build, produce, and sell all over the world. For America, this is a jobs strategy. Right now, our exports support millions upon millions of well-paying American jobs. Increasing those exports by just a small amount has the potential to create millions more. These are jobs making everything from wind turbines and solar panels to the technology that you use every day.
For Asia, striking this better balance will provide an opportunity for workers and consumers to enjoy higher standards of living that their remarkable increases in productivity have made possible. It will allow for greater investments in housing and infrastructure and the service sector. And a more balanced global economy will lead to prosperity that reaches further and deeper.
For decades, the United States has had one of the most open markets in the world, and that openness has helped to fuel the success of so many countries in this region and others over the last century. In this new era, opening other markets around the globe will be critical not just to America's prosperity, but to the world's, as well.
An integral part of this new strategy is working towards an ambitious and balanced Doha agreement -- not any agreement, but an agreement that will open up markets and increase exports around the world. We are ready to work with our Asian partners to see if we can achieve that objective in a timely fashion -- and we invite our regional trading partners to join us at the table....
Then the next day, Obama flew to Singapore to join the meeting of Asian leaders at the APEC (Asia Pacific Economic Cooperation) forum. At the end of two days of discussion, Reuters reported that China and United States could not even agree to the mention of "market oriented exchange rates" in the final communique:
SINGAPORE (Reuters) - The United States and China sparred over exchange rates at a meeting of Asia Pacific leaders on Sunday, pointing to tricky talks ahead for President Barack Obama when he flies to China to address economic tensions.
The discord surfaced at a summit of the Asia Pacific Economic Cooperation (APEC) forum in Singapore when a reference to "market-oriented exchange rates" was cut from a communique issued at the end of two days of talks. An APEC delegation official said Washington and Beijing could not agree on the wording.
President Obama would have received a very different reaction from China were he to mention that America is thinking of adopting import restrictions to balance trade with China under the special WTO rule for trade deficit countries. If he were to auction Import Certificates allowing the same amount of imports from China as China imports from us, he could balance trade with or without Chinese cooperation.
China would not be able to respond with new tariffs on American products, as they did with tariffs on American nylon following Obama's tariffs on Chinese tires. Any new import restrictions that they would try would further reduce their exports to the United States.
But China does not think that they need to cooperate with this President. Are they correct?
Disclosure: No positions
