Obama Breaks Promise to G20 and WTO
September 13, 2009
Obama, who planned to be a ‘new kind of American leader’ decided on Friday to go to war with China over tires. The immediate fallout from the fight would be higher costs for America’s poor and middle class, potential loss of thousands of American jobs and a loss of international prestige. I wrote about his decision in a post titled, “Obama: no tax increase on middle class“. After a few comments from John Boyd I decided to do a little more digging into the issue.
Turns out Obama entered into this trade war despite the fact that it violates the rules of the World Trade Organization (WTO). Additionally, in April Obama made specific commitments at the G20 summit promising not to engage in this sort of tariff activity given the global economic crisis. China, for its part, agreed to continue to buy our debt. Why is Obama taking us into a VERY expensive war with China?
China promised to retaliate. They, correctly, viewed this action by Obama as a “grave act of trade protectionism” and indicated it would begin looking to blocking imports of US farm goods and industrial products. Cornell University professor Prasad suggests, “These protectionist measures, some of which amount to domestic political posturing rather than substantive restraints on trade, could easily ratchet up into a full-blown trade war and inflict serious economic damage on both countries.”
What do the experts think? The general consensus suggests the move should make “everyone question his judgment or total lack of experience”. The European Central Bank is very worried, suggesting that Obama’s actions may, “hamper world trade and undermine the global economy’s recovery from recession.” If history is any guide they are right. The protectionist trade policy changes after the 1929 crash prolonged the Great Depression. My advice? Buy NYSE:GT and NYSE:CTB. Ironically, both companies think the tariff is a bad idea. Why? They want to sell into China – don’t think that will happen now. . .
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As far as I can tell, the only people who are saying that the president’s decision violates WTO rules are the Chinese government. Why are you taking sides with a Communist country against the government of the United States?
Comment by Hank Mishkoff — September 13, 2009 @ 8:47 pm
Um, I sorta want to take sides with the Chinese right now too! Cause- One; while they are capitalist they are also still Communist still and Two; if they get pissed and pull the confidence plug on the Dollar right now we’re in for a full world depression like never before. The European Central Bank seems to get this, why Obama does not?
Comment by todd — September 13, 2009 @ 10:50 pm
Hank, when a soldier takes his or her oath, it is to the constitution, not the Commander in Chief. When our president does dumb crap, its important for us to use our right of free speech or he will continue to do so. Also, next election, he may get re-elected if we don’t show his mistakes. Clinton was for free trade, I can’t imagine if Obama or his aides too are idiots here.
Comment by David Mosby — September 14, 2009 @ 12:02 am
I was simply taking issue with Alexander’s contention that Obama’s action “violates the rules of the World Trade Organization,” which he referred to as a “fact.” I certainly don’t understand the intricacies of WTO rules, but neither does Mr. Muse. And when I did some quick research, the only people I could find who were claiming that the Prez had violated WTO rules was the Chinese government.
So, the point I was trying to make is that I think it’s sad that there are people who are so eager to believe anything bad about Obama that they’ll accept any derogatory statement as fact, even if the only people making that claim are officials of the largest Communist country in the world.
If Alexander had said something to the effect that it had been *claimed* that Obama had violated WTC rules, or that Obama *might* have violated WTC rules, I wouldn’t have said a word. But reporting it as a *fact* is disingenuous at best. There are enough valid reasons to oppose the president’s policies, you shouldn’t have to make stuff up.
Comment by Hank Mishkoff — September 14, 2009 @ 10:28 am