An article in today’s New York times “When a Populist Stance Meets a Complex Issue” left me a little disappointed in the the Obama campaign. The article talks primarily about American trade in beef and automobiles with Korea and other east Asian natious.
The campaign has come out against a free trade agreement with South Korea for what I think are some pretty dumb reasons (there may well be better a rationale hiding somewhere). First up is trade in automobiles. Newsflash: Koreans don’t buy a lot of American cars. The Korean government taxes engines by displacement size for all vehicles (not just imports) to discourage large gas guzzling vehicles. Korean automakers produce (and sell lots of) cars with small engines, responding to these regulations appropriately, as European and Japanese manufacturers do by importing small engined cars (which their home markets probably strongly incent as well).
American car makers, on the other hand try to push their large-engined gas guzzlers and are penalized by these engine displacement taxes. Instead of adjusting to the market conditions compain about nontarrif barriers.
â€œYou can say that people in Korea donâ€™t like American cars, but then you have to say why in nearby places people do seem to like them,â€ Mr. Goolsbee said. He added, â€œThe Koreans have designed a system that will prevent competition from a segment of the market that is different from what they produce, and that is a nontariff barrier.â€
Really – I think they’ve designed a market that is appropriate to meet the demands of a world dealing with the effects of global warming and rising energy costs. Perhaps if American carmakers acted accordingly, they could compete in these much saner regulatory environments then here in America.
The article also mentions beef production. If the US isn’t willing to test more widely for mad cow, then why should these nations agree to import beef again. In 2004 a farm in Kansas asked for permission to test its cows for mad cow so that it could export them to Japan, and was denied
The department refused, saying such testing would â€œimply a consumer safety aspect that is not scientifically warranted.â€ American consumer groups were apoplectic, but the beef industry which did not want to be pressured to spend $25 or so testing every animal applauded the move. Creekstone is still suing the Agriculture Department for the right to test.
So American producers won’t (in the case of the car industry) or can’t (in the case of this Kansas beef producer) change in the face of reasonable obstacles to trade. Other nations can, and the American government cries about it, and now the Obama campaign is spouting the same nonsence.
I was thinking about ths some more today, and these failures to compete abroad are failures at home. If we had a truly safe food supply for all Americans, instead of the potemkin system in place now, then no nation would refuse to buy our food.Â If we had a government that would disincent large vehicles, then American car companies might finally learn how to make small cars that don’t suck and be able to sell them to Americans at home who currently buy little Japanese cars, as well as legions of people abroad.