By Jason Lange
WASHINGTON, May 2 (Reuters) – U.S. President Barack Obama
reminded the world on Thursday of the lofty goal set early in
his presidency to double American exports over five years. It
looks like he won’t deliver.
Trade data published earlier in the day underscored the
uphill battle faced by the administration. Weakness in the
global economy is knocking down demand for U.S. exports, which
rose just 3 percent in the 12 months through March.
At that pace, Obama’s mission won’t be accomplished until
around 2024, nearly a decade later than promised.
“The president’s export-doubling goal seems less achievable
than ever,” said Alan Tonelson, a research fellow at the U.S.
Business and Industry Council, a group that represents small
American manufacturers
Unveiling his nominations of Mike Froman to be U.S. trade
representative and Penny Pritzker to be commerce secretary on
Thursday, Obama said one of their key tasks would be meeting the
goal of raking in $3.14 trillion from sales abroad in 2015 –
twice the 2009 level.
That seemed more plausible a year ago when exports were
growing at about four times the current rate.
Now the global economy has taken a turn for the worse, with
the euro zone mired in recession and even China posting slower
rates of economics growth. In the first quarter of 2013, U.S.
exports to the European Union fell 8 percent from a year
earlier.
Also weighing against Obama’s mission, other nations are
ramping up efforts to print money in order re-inflate their
economies, which has put upward pressure on the U.S. dollar.
Japan launched a bold monetary stimulus program in April to
double its money supply, while the European Central Bank lowered
interest rates on Thursday.
So far this year, the dollar has gained about 1.5 percent on
a trade-weighted basis, which could cut into the competitiveness
of U.S. exports.
Still, there are a number of factors that might boost
exports over the long term. Persistently large U.S. trade
deficits could return the dollar to the long-term weakening
trend which began around 2002. A boom in U.S. energy industry
could eventually lead to more exports of natural gas, and
potentially even crude oil.
But analysts point out that the world’s biggest economies
are pressing forward with policies that tend to weaken their
currencies, and it is not clear where that process will end. It
also would take years to build the infrastructure and political
will needed to significantly ramp up energy exports. The Obama
administration so far has shied away from allowing unfettered
exports of natural gas.
Add lackluster global economic growth to the mix, and all
this suggests Obama will be hard pressed to meet his 2015
deadline.
“Unfortunately, I don’t think we are going to make it,” said
Thomas Duesterberg, a manufacturing researcher at the Aspen
Institute in Washington and a former assistant secretary at the
Commerce Department.
A White House official acknowledged there was “more work to
be done,” but said progress was being made. “We’ll continue to
do everything we can to increase exports, promote growth and
create jobs right here at home,” the official said.
Obama set the export goal in 2010 when the United States was
just emerging from its worst recession since the Great
Depression. It wasn’t the only ambitious target set early in his
presidency. One month after taking office in 2009, Obama
promised to halve the federal deficit in four years. That goal
was frustrated by a persistently weak domestic economy.
As part of its trade push, the White House lately has
stepped up efforts to open up overseas markets.
The administration notified Congress in April it will start
free trade talks with Japan, part of America’s efforts to push a
major free-trade deal with Asian and Pacific nations. The United
States and the European Union are also preparing to launch talks
on a free trade pact.
Yet even if Obama strikes these deals to help U.S.
exporters, it could be many more years before Americans notice
there has been a big jump in exports.
Because Obama’s target to double exports is measured in
nominal terms and doesn’t take into account inflation, stronger
growth would be needed for companies and workers to feel twice
as better off.
Duesterberg calculated in March that even if the
Asia-Pacific and European trade deals go through, as well as a
number of export-boosting scenarios like a reduction in
corporate tax rates and a depreciation of the dollar,
inflation-adjusted exports would probably not double until 2020.
“It will take time,” he said.
(Reporting by Jason Lange; Additional reporting by Edward
McAllister in New York and Mark Felsenthal in Mexico City;
Editing by Tim Dobbyn)
