Tag: G-20

From Korea and on to Japan

From the joint news conference held Thursday by President Obama and President Lee Myung-Bak of South Korea.

President Lee:

Now, with regards to the Korea-U.S. free trade agreement, President Obama and I agreed that we will give my trade minister and the U.S. Trade Representative more time so that they can finalize the technical issues. And President Obama and I will continue to work together so that we can have a mutually acceptable agreement at the earliest possible date.

President Obama:

As President Lee just noted, we discussed the need to keep moving forward towards a U.S.-Korea free trade agreement, which would create jobs and prosperity in both our countries.  We believe that such an agreement, if done right, can be a win-win for our people.  It could be a win for the United States because it would increase the export of American goods by some $10 billion, and billions more in services, supporting more than 70,000 jobs back home.

It could be a win for South Korea, with more access to the American economy, which would support jobs, raise living standards, and offer more choices for Korean consumers.  And it could be a win for the overall economic partnership between our two countries by bringing us closer together, allowing us to benefit from each other’s innovations, and ensuring strong protections for workers’ rights and the environment.

So we have asked our teams to work tirelessly in the coming days and weeks to get this completed, and we are confident that we will do so.  And President Lee in fact asked his team to come to Washington in the near future to continue these discussions.  So I appreciate all the efforts that he’s making on this issue.

And here’s a selection of reading to catch up on the President’s trip to Asia and negotiations over the U.S.-Korea FTA:

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Wishing the G-20 Well, but U.S. First Needs Growth Strategy

The leaders of the G-20 meeting in Pittsburgh might make headway in promoting world prosperity by reducing trade barriers and encouraging aggressive exporters like Germany and China to focus more on consumption, but after they have come and gone, our domestic challenges will remain. We are struggling to emerge from the longest and deepest recession since The Great Depression, and though there are signs of recovery, we are not out of the woods yet.

Manufacturing as always is a bellwether for the economy. The manufacturing dynamic where raw materials are forged into finished products is where our economy creates wealth. When the economy turns down and consumers lose confidence, manufacturing is first to feel the contraction. To date, one half of the jobs lost in the recession have been in manufacturing and construction, with most in manufacturing. Right now, the manufacturing capacity utilization rate is 65 percent, which means 35 percent of our capacity is idle. Until our factories are working full throttle again, the economy will continue to struggle.

Of course, when the economy comes out of recession, employment is the last thing to turn around. The unemployment rate is still climbing, albeit at a slower rate, and will likely top 10 percent by mid-2010. We don’t expect to start seeing meaningful improvement in employment until 2011. And consumers without jobs are unlikely to return to the marketplace. (See the NAM’s 2009 Labor Day report.)

In the long term, between now and 2014, we expect to see up to a million manufacturing jobs return, but that will depend at least in part on decisions made in Washington that will have tremendous impact on our ability to grow our economy and put people back to work.

Regrettably, our government today is focused not on making manufacturing more competitive and encouraging growth, but rather on priorities that – so far at least – seem likely to increase the cost of production. As currently being discussed, reforms to our health care system and climate change legislation would greatly increase the cost burdens of manufacturers who already shoulder a 17 percent disadvantage compared to our major trading partners.

Our greatest opportunities for growth lie beyond our borders. A full 95 percent of the world’s consumers are not in the U.S. To grow and prosper, we need a much larger commitment to increasing exports. Yet our government cannot bring itself to enact the free trade agreements with Panama, Colombia and South Korea that would greatly expand exports and create jobs.

We can all wish the G-20 attendees in Pittsburgh well. But in the final analysis, our economic future will not be determined in Brussels or Beijing, it will be determined in Washington. And so far, our leaders are not rising to the challenge.

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Friday Factory Tune: Work

Finally, a Friday Factory Tune with the word “factory” actually in it. And a timely one, too, since the G-20 is in Pittsburgh, the home of Andy Warhol ( Warhola), the subject of this song and live performance by Lou Reed and John Cale, part of the excellent 1990 tribute album, “Songs for Drella.”

Inspirational lyrics:

He was a lot of things, what I remember most
He’d say, “I’ve got to bring home the bacon, someone’s got to bring home the roast.”
He’d get to the factory early
If you’d ask him he’d tell you straight out
It’s just work, the most important thing is work

Clever, too, in that “The Factory” was the name of Warhol’s famous studio in New York City, where Reed and Cale performed in The Velvet Underground. Here’s a good video of Warhol, the band, and the looks-pretty-silly goings on from February 1967.

John Cale last month discussed Warhol’s contributions to work last month on the radio show, “Studio 360,” and performed another Drella song, “Style it Takes.”

Returning to Pittsburgh, we see the wives of dignitaries visited the Andy Warhol Museum. It’s just work. The most important thing is work.

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President Obama’s Message for G-20 Hits the Right Points

A good lead editorial in today’s Washington Post, acknowledging the temptation to dismiss the G-20 confab in Pittsburgh as another “multilateral gabfest,” but finding merit in President Obama’s message about “rebalancing” the global economy. From “Balancing Act — Mr. Obama’s wise message for the Group of 20“:

His interest in a “framework for sustainable and balanced growth” is rooted in reality: For many years, Germany, Japan and China have grown by producing more than they consume and by exporting their goods to the United States, which has chronically consumed more than it produces. Oil-exporting nations have had a similar unbalanced relationship with the United States. The result is exporters’ accumulation of dollar reserves and their investment in the United States — subject to occasional bubbles and busts, an especially damaging example of which we have just experienced. You could say that the recession, which has spurred a major increase in U.S. household savings, was nature’s way of smoothing out these imbalances — albeit at tremendous financial and human cost.

U.S. consumers will need years to recover from the impact — and may never again drive global growth as they have in the recent past. It is therefore in both this country’s interest and that of its trading partners to adjust their growth models. The United States must save a bit more and become less dependent on imports; Germany, Japan and China must consume a bit more and reduce their export dependence. As Mr. Obama told CNN on Sunday: “We can’t go back to the era where the Chinese or the Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them.”

Agreed. The test for the Administration is to match its wise message with wise action. We’ve yet to see much action to support U.S. exports, such as pushing Congress to enact the pending free trade agreemens with Colombia, Panama or South Korea. And some of the proposed tax policies — ending deferral, for example — would undermine U.S. global investment.

Then there’s this from Reuters, “U.S. issues $7 trillion debt, supply to stabilize“: “NEW YORK (Reuters) – The U.S. government will have issued $7 trillion in bonds by the time the current fiscal year ends next week, but it expects the debt deluge to stabilize by mid 2010, a Treasury official said on Wednesday.”

All this government borrowing, all the government spending, doesn’t it invite inflation? Americans aren’t going to save more if they anticipate rising inflation.

(Hat tip: Glenn Reynolds.)

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Working Up to the G-20 Summit

From Reuters:

WASHINGTON (Reuters) – The United States wants world leaders to agree this week to launch a major rethink of the world economy in November as they try to strengthen the global economy after its near meltdown.

Documents outlining the U.S. position ahead of the September 24-25 Pittsburgh summit of Group of 20 leaders said exporters, which include China, Germany and Japan, should consume more, while debtors like the United States must boost savings.

“The world will face anemic growth if adjustments in one part of the global economy are not matched by offsetting adjustments in other parts of the global economy,” said the document obtained by Reuters.

Or, as President Obama said on one of the Sunday talk shows, “We can’t go back to the era where the Chinese or Germans or other countries just are selling everything to us, we’re taking out a bunch of credit card debt or home equity loans, but we’re not selling anything to them.”

Exactly so.

Unfortunately, history tells us that one should not expect a G-20 or G-8 or G-Whiz summits to produce anything other than white papers, memoranda, communiques and firm statements of commitment to principles of engagement. Looks like it’s “frameworks” this go-around.

Maybe Pittsburgh will be different. But do you remember the last G-20 Summit, where it occurred or what it accomplished? Which is to say that the United States must be the master of its own fate.

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Doha, the Preconditions for Success

From Reuters, “Business Groups tell Lamy need more for Doha“:

WASHINGTON (Reuters) – Leading U.S. business groups told World Trade Organization Director General Pascal Lamy on Tuesday they can not support current proposals for finishing seven years of talks on a global trade deal.

“We stressed repeatedly that our three organizations want this to work. We’re not throwing up roadblocks,” said Frank Vargo, vice president for international economic affairs at the National Association of Manufacturers.

“But what we want is for it to produce results (by increasing trade). We’re the organizations that are going to have to get this through Congress,” Vargo told reporters.

Lamy met with leaders from the manufacturers groups, the American Farm Bureau Federation and the Coalition of Service Industries near the end of two days of meetings with members of Congress and Obama administration officials.

NAM President John Engler, Bob Stallman of the AFBF and Bob Vastine of the services group sent a joint leter to President Obama last month providing more detail on the steps and substance necessary to revive the Doha negotiations and anticipating next month’s meeting of the G-20. Key excerpt:

[In] order to realize some tangible benefits from the efforts to date, we recommend that your Administration consider alternative paths forward, including whether some parts of the Round should be considered for a separate agreement in the near-term, rather than waiting for an overall conclusion. In particular, the ongoing trade facilitation negotiations enjoy broad support by developed and developing countries – including the least developed countries. A trade facilitation and capacity building deal in the near-term could bring much needed benefits to all nations if rapidly implemented on a separate track. Industrial non-tariff barrier negotiations have also languished and need renewed emphasis.

Trade has been a crucial component of U.S. and global economic growth, and will be central to the recovery of both. U.S. leadership is essential to bringing the Round to a successful conclusion, and the United States must continue to press for the ambitious outcome that would create new trade flows that will stimulate growth. Similarly, at the April G-20 meeting in London the United States must take a strong position against the global slide toward protectionism.

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