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G8 Calls For Lower Tariffs

Jul. 11, 2009 5:13 PM ET
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always hesitate to proclaim any pronouncement from gatherings such as the G8 as being promising or of

interest or a positive step forward. Most of the time political reality pretty quickly neuters any good intentions they may have held. So I'll go against my instincts and say that the communique on restarting the Doha round of trade negotiations was a welcome outcome.

President Obama put himself squarely in the free trade column by endorsing the pronouncements which call for a comprehensive agreement by the end of 2010. Here's how the FT reports the news:

The world’s biggest economies agreed on Thursday to conclude a comprehensive trade deal in 2010, in the latest attempt to revive the stalled Doha round and give a shot in the arm to the world economy.

Rich countries gathered for the G8 summit signed a deal with 10 other large economies – including India, China and Brazil – that trade talks must resume urgently, with a deadline set for completion next year.

The agreement in the Italian town of L’Aquila will be hailed by world leaders as a decisive moment in reviving the global economy and a statement of intent to conclude a trade round which began in Doha in 2001.

But there will be widespread cynicism over whether such commitments are credible. Every G8 summit – not to mention other international summits – ends with leaders paying lip service to finalising a trade round.

When leaders of the G20 rich and developing countries met in Washington last November, they called for such a deal to be struck by the end of the year.

Nevertheless, there was renewed optimism on Thursday that prospects for a deal were improving, particularly with the completion of elections in India and an apparently more open approach by Anand Sharma, the country’s commerce minister.

As the Times points out, Obama is scheduled to host a G20 meeting in November, so he has put himself somewhat in the cross hairs here. The subject will come up with more urgency at that meeting since many of the countries that belong to that group are export dependent. If he dawdles or backs off in the face of Congressional pressure then he could be in for a rough go of it.

Regardless, it's going to be a very tough sell with Congress and the Democrats in particular. Obama may have enough chits from the GM and Chrysler bailouts to keep the unions in line but I'm not sure he will be able to get Congress to play ball. Trade bills are gathering dust on their shelves right now and there isn't any evidence to indicate that's going to change.

He's also going to be bucking a public that has grown increasingly skeptical of lowering trade barriers. Rightly or wrongly it perceives the current situation to be partly caused by the movement of manufacturing out of the country and I'm not sure wouldn't support restrictive legislation that forced manufacturing back into the country.

I salute Obama for the move and hope that he backs up his words with some action. So far he hasn't shown much of a taste for taking on Congress and he certainly didn't campaign as a free trader. He wouldn't be the first president to have the office and events reshape some of his core beliefs. We'll see shortly if that's happened this time.

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