D. Dowd Muska


The Latest Excuse to Block Free Trade

April 05, 2012

Russia, a Montana stockman told the Senate Committee on Finance last month, was “the U.S.’s fifth largest export market for beef in 2011.”

During the same hearing, the chairman and CEO of Deere & Company testified that the manufacturer was eager to grow its business in the Motherland. The iconic agricultural-equipment supplier exports over a dozen product lines for final assembly in Russia, including “large tractors and engines (Waterloo, IA); combine harvesters (East Moline, IL); motor graders, backhoes, 4WD loaders, and skidders (Dubuque and Davenport, IA); planters (Moline, IL); seeders (Valley City, ND); tillage equipment and sprayers (Des Moines, IA); and precision farming components from Iowa and North Dakota.”

Other corporations seeking expanded relationships with Russian producers and consumers include 3M, Disney, Abbott Laboratories, Xerox, Texas Instruments, Cargill, PepsiCo, Eli Lilly, Ford, Visa, General Electric, International Paper, Wal-Mart, Mattel, Oracle, JPMorgan Chase, United Technologies, and Hormel.

So what in the name of Boris Yeltsin is keeping Congress from lifting restrictions that will soon make it tougher for Americans to do business with Russia?

“Election-year sparring,” explains The Wall Street Journal, is to blame.

Unsatisfied with limiting himself to tapping rancidly populist anti-China sentiments, Mitt Romney has named Russia the top “geopolitical foe” of Washington’s empire-builders. Some fedpols -- the nuttiest neocons, as well as a few liberals -- share the soon-to-be nominee’s crusade against the Russkies. Thus, the repeal of an outdated trade weapon aimed at freeing Jews from Soviet oppression, and the granting of “permanent normal trade relations,” are at risk.

When Russia joins the World Trade Organization this summer, it’s likely that American firms will not receive, in the words of National Chicken Council President Mike Brown, “equal accession to general tariff reductions, market opening measures and the ability of U.S. interests … to seek trade relief, if necessary, through the WTO.”

If the anti-trade movement is anything, it’s adaptable. When scaremongering over the projected loss of jobs doesn’t work, it hypes alleged compensation, workplace-safety and environmental abuses abroad. If needed, attacking a growing trade partner for both being cozy with the Republic’s “enemies” and daring to oppose Washington’s disastrous planet-policing schemes at the UN will do the trick.

But the steady march of globalization doesn’t wait for foreign governments to conform to the behaviors our elites prefer. Bloomberg Businessweek uncovered some revealing numbers on the share of total revenue several of the largest U.S. companies earned overseas in 2010:

• Johnson & Johnson: 52 percent

• Hewlett-Packard: 65 percent

• Coca-Cola: 70 percent

• IBM: 70 percent

• Exxon-Mobil: 74 percent

Airbus, Europe’s corporatist scheme to compete with hoary jet builder Boeing, provides another free-trade mindbender. It represents an existential threat to the American aerospace industry, right? Employees of Airbus’s contractors here would disagree. The company “spends 42 percent of its aircraft-related procurement in the U.S. -- buying more parts, components, tooling and other material from the United States than any other country.”

In just the last three months:

South Korea’s Samsung was granted permission to build a flash-memory plant in China.

Volkswagen announced that in 2011, it doubled the number of vehicles sold to Indian customers in 2010.

• Sweden’s IKEA, already booming in China, declared its intention to enter the Indonesian market.

Jaguar Land Rover (a unit of India’s Tata Motors) formed a joint venture with China’s Chery Automobile.

• The Financial Times reported that “U.S. cinema admissions, which have fallen sharply over the past decade, dipped again in 2011 although sharp growth in international markets, particularly China, kept Hollywood growing.”

Chrysler (majority owned by Italy’s Fiat) prepared to start construction of Jeeps in Russia.

Prada announced that profits are up 72 percent, driven by sales in Asia.

DirecTV outlined a strategy to greatly increase revenue from Latin American customers.

Barring the next World War or a second Great Depression, globalization won’t be rolled back. It’s clear that domestic political shenanigans -- union agitprop, interventionist silliness from the global-hegemony right or aggressive-multilateralism left, etc. -- garner votes. Unfortunately, tactics that secure electoral victories have a tenuous connection to what’s best for the nation’s standard of living.

Adjusted for inflation, exports to Russia grew from $3.4 billion in 2001 to $8.3 billion in 2011. While the country’s population isn’t growing, its middle class is, and that’s why U.S. firms recognize that the onetime Cold War foe now represents a sizable destination for their goods and services.

Increased trade with Russia is a no-brainer. In Washington, brains are in short supply.

D. Dowd Muska (www.dowdmuska.com) writes about government, economics, and technology. Follow him on Twitter @dowdmuska.

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