Sunday, November 16, 2008

Obama, free trade and outsourcing

Now that Barack Obama is president-elect, some nations are worried about his policies on foreign economic relations.

Latin nations are worried about Obama's free trade policies, while many Asian nations are more concerned about his views on outsourcing.

Conservative protesters, holding pictures of U.S. President-elect Barack Obama (L) and South Korean President Lee Myung-bak, shout slogans during a rally supporting the U.S.-South Korea free trade agreement (FTA) talks in Seoul November 11, 2008. Obama has said he opposes the free-trade deal with South Korea unless it is renegotiated to grant greater access to the Asian market for U.S. automakers. REUTERS/Jo Yong-Hak (SOUTH KOREA)

However, given the current jittery world economy, it would appear unlikely that Obama would take any moves seen as drastic on either front. Realistically, many American corporations just will not be able to compete if they are forced to manufacture or provide services in the United States. This is a reality facing all developed countries competing in the global market place.

At the same time, Obama has voiced concern about the lack of environmental and labor standards in some countries that want "free trade."

A trade war, of course, would be very detrimental at this time. The start of the Great Depression was characterized by many nations of the world drawing inward to "protect" their economies. This stifiled trade and the flow of capital and resources worsening the situation according to most historians.

One such American policy was the protectionist 1930 Smoot-Hawley Tariff Act that raised import fees on some 20,000 items to record levels.

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