A letter sent by the Obama campaign to the National Council of Textile Organizations:

National Council of Textile Organizations

Dear President Johnson,

I write in response to your request for my views on trade policy, particularly as it affects the textile industry. As I hope has become clear during this campaign, my entire economic platform is built on my belief that we must change the policies that have been pursued in this country in the past eight years and instead adopt policies that put the needs of the middle class first. This is why I have proposed tax cuts for the middle class and a health care system that will make insurance affordable for everyone. I have also proposed policies specifically intended to support jobs for American workers in the manufacturing sector, like ending tax breaks that encourage outsourcing.

My trade policy rests on that same belief in change. Our country can benefit from trade, but I will insist on a trade policy that will work for all Americans. That means opening markets abroad for our manufactured exports, and including enforceable labor and environmental standards in free trade agreements.

It also means strong enforcement of our trade remedy laws at home and of our trade rights abroad. I will make clear the priority I attach to enforcement and increase the resources of the Office of the United States Trade Representative devoted to this mission. When domestic industries make use of trade remedy laws that call for Presidential determinations, such as the section 421 provision applicable to imports from China, I will decide those cases on their merits, not on the basis of an ideological rejection of import relief like that of the current Administration.

A fair trading system requires fairness in each country’s foreign exchange practices. The massive current account surpluses accumulated by China are directly related to its manipulation of its currency’s value. The result is a large imbalance that is not good for the United States, not good for the global economy, and likely to create problems in China itself. China must change its policies, including its foreign exchange policies, so that it relies less on exports and more on domestic demand for its growth. That is why I have said that I will use all diplomatic means at my disposal to induce China to make these changes.

The trade policies I have just described are important for all American industries, including yours. But I am especially aware of the trade challenges faced by those working in our textile industries. When safeguards on textile imports from China expired in 2004, imports surged and thousands of jobs were lost. I support Chairman Rangel’s call for the United States International Trade Commission to monitor textile imports from China. As President, I would use monitoring to help ensure that imports from China do not violate applicable laws and treaties. I support the requirement in the Berry Amendment that the Defense Department procure only textiles made in the United States. I also support inclusion of the yarn forward rule in free trade agreements, to ensure that countries with which we enter special trade relationships do not become conduits for source yarn outside those countries.

Thank you for providing me with the views of your members on trade and competitiveness issues. I look forward to a productive working relationship with your industry.


Barack Obama

There are a number of troubling passages in this letter, but basically it reveals Obama’s hostility to free trade. There is nothing we could do that would harm our economy or the world economy more than to turn our backs on free trade.

Obama says “our country can benefit from trade” and in that short phrase we see his economic ignorance. Trade is not somethiing we can benefit from. Trade is beneficial to both sides of the transaction or it would not happen. There are not some times when we benefit and some times when we don’t. Trade is always beneficial. What the textile industry is worried about is that their members may not be among the ones that benefit and that may be true. The beneficiaries of the lower prices are dispersed while the victims are concentrated and easily seen. That does not mean that we should protect the small number of victims at the expense of the vast number of beneficiaries.

The Chinese no doubt are guilty of manipulating their currency but then so are we. To ask the Chinese to take the brunt of the pain of a currency readjustment is not realistic. What we need is comprehensive currency reform that includes a return to a gold standard. Then countries like China and the US could not manipulate their currencies in an attempt to gain a trade advantage. Competitive devaluations were all the rage in the 1930s and that didn’t work out too well.

The scariest part of Obama’s campaign to me was his rhetoric on trade. The experience of the Smoot Hawley years should be enough to convince anyone that protectionism, especially at a time of economic uncertainty, is not the answer. The Bretton Woods agreement set up after WWII was intended to prevent that from ever happening again. Bretton Woods was flawed and didn’t survive the profligate spending of our politicians, but the goal of the conference was noble. Unfortunately, Obama seems oblivious to the consequences of pandering to anti trade elements.

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