Government needs to steer clear of trade war, U.S. trade rep says

By Michael E. Kanell

The Atlanta Journal-Constitution

The economy needs a resurgence of exports and U.S. exporters need the government to steer away from trade war, U.S. Trade Representative Ron Kirk said in Atlanta Tuesday.

Kirk, in town making the case for Obama administration policies, argued for avoiding confrontation, while resisting unfair measures that undermine American workers.

“It is just not too much to ask for our trading partners to do what they said they were going to do,” he said. “And we are hopeful that it will not lead to trade war.”

That threat has hung in the air since mid-September, when the administration imposed duties on tires from China, arguing that they were artificially cheap. The Chinese government at once warned it would investigate a move against poultry imports — a huge export sector in Georgia.

“Trade is not esoteric,” Kirk said. “It really does come down to creating jobs.”

Kirk, the former mayor of Dallas, Texas, also tossed in a pitch for health care reform. American companies face Asian and European competitors that have national insurance or even government-run health care, which can cut their costs dramatically, he said.

“If we could equalize this a little, that would make a tremendous difference,” Kirk said. “I have to go to business groups and say, ‘you’d better start caring about health care.’ ”

But in a meeting with a small group of executives, a luncheon of several hundred hosted by King & Spalding and a talk with the Atlanta Journal-Constitution, Kirk returned repeatedly to his main theme: As the economy struggles to recover, trade is crucial.

For decades, the nation has been running a deficit in trade — imports have outpaced exports. Partly as a result, the economy has hemorrhaged manufacturing jobs since the late 1990s.

Better technology is one reason for the losses. But also to blame, say economists, is a strong dollar — which made U.S. products more costly overseas and competitors’ imports to the U.S. cheaper.

Most glaring is the deficit with China, where Kirk is headed in two weeks for trade talks. The most recent monthly imbalance of $32 billion was roughly half the peak reached earlier this decade, but China represented roughly $20 billion of that.

Many economists have said that to ease the stress in both economies — as well as in international relations — a manufacturing powerhouse like China must spur internal demand while U.S. consumers shift away from debt-fueled consumption.

Each side has an interest in moving away from past excesses, yet there are limits on both sides of the equation, Kirk said. “As the father of two teen-age daughters and having watched them, I don’t know that we are ever going to turn this next generation into non-consumers.”