For better or worse, China/st1 :country-region> really hasn't been a central issue at any of the presidential debates this year, which has probably spared the American people from bland lines like "China/st1 :country-region>/st1 :country-region> is a rising power and our competitor," which both Republicans and Democrats would agree on. o :p>/span>
Barack Obama blasted China/st1 :country-region>'s currency policy, stating, "we should enforce rules against China/st1 :place>/st1 :place> manipulating its currency to make our exports more expensive and their exports to us cheaper." This wording isn't exactly clear, since it could mean that enforcing the rules against China/st1 :country-region>/st1 :country-region>'s currency would make our exports more expensive, and theirs cheaper. If China/st1 :country-region>/st1 :country-region> revalued its currency, the opposite would be true. o :p>/span>
Giving Sen. Obama, the benefit of the doubt, he probably meant that China/st1 :country-region>'s currency valuation practices today artificially causes Chinese exports to be cheaper, and U.S./st1 :country-region> exports to China/st1 :country-region>/st1 :country-region> to be more expensive. Nobody would deny that the U.S./st1 :country-region> does, in fact, have a trade deficit to China/st1 :country-region>/st1 :country-region>. In 2007, the U.S./st1 :country-region>/st1 :country-region> imported $321.5 billion dollars of Chinese products, while only exporting $65.2 billion. Despite this gap, over the past few years, the percentage of U.S./st1 :country-region> exports into China/st1 :country-region> has been increasing more quickly than U.S./st1 :country-region> imports from China/st1 :country-region>/st1 :country-region>. o :p>/span>
Whether or not China/st1 :country-region>'s currency value is fair, rapidly readjusting it right now wouldn't just be detrimental for the Chinese economy, but it would also have a negative impact on the U.S./st1 :country-region>/st1 :country-region> economy. While American-made goods would be cheaper in China/st1 :country-region>/st1 :country-region>, in a time of financial distress, would increasing the cost of Chinese imports help the average American consumer?o :p>/span>
Beyond the role of China/st1 :country-region>/st1 :country-region>'s currency value in the presidential election, is the more fundamental question: what will the next president's trade policy look like?/span>
At the most basic level, during the debate, Sen. McCain said, "I am a free trader. And I need -- we need to have education and training programs for displaced workers that work, going to our community colleges." Senator Obama favored a more cautious approach, saying "I believe in free trade," but also maintained, "we've got to have a president who understands the benefits of free trade but also is going to enforce unfair trade agreements and is going to stand up to other countries." /span>
In a sense, this difference between the two candidates goes back to the "free trade" versus "fair trade" debate, but the concept of "fair or unfair" agreements could be debated ad nauseum. In terms of the recent Farm Bill, the candidates' opinion on "fairness" differed dramatically. /span>
McCain does not support the bill or the various subsidies for ethanol because he thought the "subsidies are unnecessary." He also questioned "policies that divert over 25 percent of corn out of the food supply and into subsidized ethanol production."
In contrast, Obama praised the bill, stating it "will provide America/st1 :country-region>'s hard-working farmers and ranchers with more predictability." He said that those who opposed the bill and the subsidies "stood against our farmers, and a clean energy future," and that they "are saying no to energy independence, no to the environment, and no to millions of hungry people." But what about the millions of hungry people overseas? /span>
You could either argue that the bill will protect farmers during a time full of economic uncertainty, or divert corn from the food supply, while also giving U.S./st1 :country-region> products an unfair advantage in terms of international trade. On the basis of "fair trade" alone, the subsidies within the Farm Bill definitely give the U.S./st1 :country-region> a significant advantage over farmers in other countries that don't receive any governmental assistance. /span>
So where does that leave someone who wants to support American businesses and the U.S./st1 :country-region> economy? Calling on Americans to buy products "Made in the U.S.A./st1 :country-region>/st1 :country-region>" no longer works, partially due to the fact that we can't even really know what's "foreign" or what's "American." o :p>/span>
Many of the car manufacturers that employ Americans are Japanese, German, and Korean. Toyota, for example, employs 36,000 workers in the U.S./st1 :country-region>, and pumps $28 billion into the U.S./st1 :country-region>/st1 :country-region> economy each year. BMW's plant in Spartanburg/st1 :city>, South Carolina/st1 :state> has 23,050 employees, generated 1.26% of South Carolina/st1 :state>'s gross state product in 2007, and has plans to increase U.S./st1 :country-region>/st1 :country-region> production by 50% over the next four years, which could provide massive benefits for the state.o :p>/span>
While the number of U.S. citizens working for foreign automakers pales in comparison to the more than 142,000 employed by General Motors (which is only half of their total global workforce), the outsourcing to and from America makes distinguishing American-made products from foreign counterparts increasingly difficult. o :p>/span>
Ironically, increased trade, with lower barriers to entry and less protectionism might actually do more to preserve American jobs and boost the economy than the type of protectionism that voters often want to hear. In terms of the debate last night, issues of trade understandably took a backseat to economic issues that are closer to home, but trade also has a direct impact on our economic health as a country./span>
In the history of economics, protectionist policies have not resulted in economic expansion. Just look at China/st1 :country-region> . . . o :p>/span>
