Chindia Blog Comment

Response to: The Day or Two After: President Obama and China (and India)
What’s in Store for Global Trade?

Cal Poly classrooms entertained a big elephant for the majority of this year… as instructors were warned not to talk about it. That elephant is a sticky topic called politics, or more specifically, our new president-elect Barack Obama. Now, I don’t mean to unveil the elephant or open a big can of worms… but, a question on my mind has been, how will our global business dynamic change with the new trade policies of Barack Obama?

In his campaign, Obama talked about the need to create local U.S. jobs. The United States has relied on countries such as China and India to manufacture products for much less money. Will we see a shift when new policies are put into place? Will new factories in the United States start producing items that have been produced elsewhere?

Relevant to this topic, here are Obama’s trade policies from http://www.barackobama.com/issues/economy/:

Trade
Obama and Biden believe that trade with foreign nations should strengthen the American economy and create more American jobs. He will stand firm against agreements that undermine our economic security.

• Fight for Fair Trade: Obama and Biden will fight for a trade policy that opens up foreign markets to support good American jobs. They will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama and Biden will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

• Amend the North American Free Trade Agreement: Obama and Biden believe that NAFTA and its potential were oversold to the American people. They will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.

• End Tax Breaks for Companies that Send Jobs Overseas: Barack Obama and Joe Biden believe that companies should not get billions of dollars in tax deductions for moving their operations overseas. Obama and Biden will also fight to ensure that public contracts are awarded to companies that are committed to American workers.

• Reward Companies that Support American Workers: Barack Obama introduced the Patriot Employer Act of 2007 with Senators Richard Durbin (D-IL) and Sherrod Brown (D-OH) to reward companies that create good jobs with good benefits for American workers. The legislation would provide a tax credit to companies that maintain or increase the number of full-time workers in America relative to those outside the US; maintain their corporate headquarters in America if it has ever been in America; pay decent wages; prepare workers for retirement; provide health insurance; and support employees who serve in the military.

To say the least, there is going to be re-negotiation! Obama seeks to renegotiate NAFTA as well as put pressure on the WTO. How will the global economy react? He thinks global trade will stimulate our economy but does not want to send jobs overseas.

Where does this leave China and India? Will these requirements change the consumerism mentality of Americans? Will they entice businessmen and women in China and India to produce more products themselves to trade? Will this in turn stimulate their economies?