While visiting the FT more recently, I clicked on an interesting section entitled "Protectionism." It is a sign of the times when probably the world's most renowned outlet for financial journalism devotes an entire section to the Smoot-Hawleyization of world trade (or something like that). Lo and behold, what else did I find other than another op-ed by Bhagwati on his favorite subject matter. It is not so much that Bhagwati has lightened up on Obama. Rather, the full implications of Obamanite protectionism seem to be getting to him. From the Financial Times:
President Barack Obama faces protectionist pressures. These are not just from the labour lobbies that have led Joe Biden, US vice-president, to chide “pure free traders” and to ask for “fair trade”; and which, astonishingly, have also led the US president to use his first meeting with President Felipe Calderón of Mexico – overwhelmed by the brutal fight against drug cartels caused by the US failure to legalise drugs – to urge on him tougher labour standards, a protectionist demand that is clearly aimed at raising Mexican costs of production. The pressures come also from the lobbies pushing for a Detroit bail-out that is inconsistent with the World Trade Organisation...Wait till Bhagwati gets a load of the latest stimulus provisions dealing with not assisting firms that hire foreigners on H-1B visas, particularly Indian workers.
Yet, protectionism is a dangerous virus that requires a passionate response. Indeed, Mr Obama faces his two most serious protectionist challenges from the Buy American provisions that have infiltrated his stimulus package and from the China-bashing on “currency manipulation” that surfaced in the confirmation hearings of Tim Geithner, Treasury secretary...
President Bill Clinton marred the first year of his presidency by indulging the Japan-bashers whom he had cultivated in his campaign. President George W. Bush succumbed also to steel protectionism in his first year. They had time to change, however. But Mr Obama, in the midst of a historic economic crisis, can ill afford to repeat this pattern: he has to fight protectionism right away or live to see the virus spread beyond control.
