Topic Category: Trade & Finance

President Barack Obama took office with a record of skepticism toward free trade, including several free trade agreements negotiated by the Bush administration. The Democratic Congress was even more hostile to liberalizing international commerce.

Now that the president has made trade promotion an administration priority—one of the surest strategies to grow the economy and increase higher-paying employment—he has endorsed the free trade agreement with South Korea. The deal, which has support from many Republicans as well as some Democrats, will soon be submitted for a vote.

A recent " Street Journal" headline screamed: “Americans Sour on Trade.” And why shouldn’t they? After all, the public is routinely bombarded with misleading or simplistic trade coverage that too often relies on cliché, innuendo and regurgitated conventional wisdom: it’s Team America versus the world. Without the war metaphor, trade is just a peaceful, mutually enriching endeavor between consenting parties. But that’s too boring.

Between July 2005-July 2008, the Chinese currency, the renminbi, also known as the yuan, appreciated 21 percent against the dollar. But due to a variety of factors, the price of Chinese goods exported to the United States only rose by single digits. Today, again, the Chinese currency is on the rise, but six factors are expected to keep Chinese prices from rising significantly or will have little upward impact.

In our ultra-competitive world of globalization, nations are increasingly teaming up to achieve higher levels of competitiveness and greater economic growth. And as the deepest and longest recession since the Great Depression recedes—creating new economic realities—this is even more important. Unfortunately, the U.S. isn’t keeping pace with other countries. In fact, it’s significantly falling behind.

Currently, the United States is a party to only 11 active free trade agreements involving 17 countries. Today, there are well over 300 existing free trade agreements in force around the world without U.S. participation. And dozens more are being negotiated at a swift pace while the U.S. sits on the sidelines. This is putting American companies at a competitive disadvantage.

The global economic crisis may have left many companies in China and elsewhere struggling to shore up their bottom lines, but this has not ruined their appetite for mergers and acquisitions (M&As).

M&As To Remain Strong in 2009

China had a record $164.3 billion M&A deals announced in 2008, up 18 percent from a year earlier. And this was the case even though China’s gross domestic product growth rate fell from 13 percent in 2007 to 8 percent in 2008.

Since the establishment of diplomatic ties 18 years ago, Singapore and China have developed one of the strongest and most dynamic trading relationships in the world. The signing of the Singapore-China Free Trade Agreement (SCFTA) on October 23rd, 2008 not only marked a significant milestone in the evolution of trade relations between these flourishing economic heavyweights, but also created a plethora of opportunities for countries that trade with Singapore or China or both.

From 2002 through late 2007, the U.S. dollar declined 39 percent against the Canadian dollar, 38 percent against the euro, and 30 percent against the British pound, according to Deloitte Research. Interestingly, the impact is different than it would have been years earlier.

The most important and contentious trade vote in Congress this year will probably be the free trade agreement the United States has signed with its South American neighbor and ally, Colombia. In his January 28, 2008, State of the Union speech, President Bush called on Congress to approve the agreement this year.

Calling Colombia “a friend of America that is confronting violence and terror, and fighting drug traffickers,” the president warned Congress that “if we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life.”

If all significant trade barriers were unilaterally removed on foreign products, U.S. welfare — as defined by public and private consumption — would increase by approximately $3.7 billion annually. Additionally, U.S. gross domestic product would rise by $1.6 billion, according to a 2007 study by the United States International Trade Commission.