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A trade fix for Obama's stimulus

He can't afford to equivocate on free trade. US exports can help end this recession.

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The last thing this US recession needs is a wall of trade barriers in the name of protecting jobs. It's unclear, though, if Barack Obama, in his early meetings with leaders of Mexico and Canada, will try to "amend" NAFTA, as he promises. If anything, the economy needs more trade, not less.

Mr. Obama's package of economic incentives, or "stimulus," won't ensure a strong recovery. It may only ease the recession. The best locomotive for job creation lies in US exports, which requires the incoming president to end his equivocal stance on trade – reflected in his cabinet nominees. He can start by leaving the North American Free Trade Agreement alone.

A third of everything produced in the world is now traded across borders, up from one-fifth two decades ago. More nations rely on trade than ever, reflected in a fourfold explosion of open-trade agreements during the same period.

Such economic reality, however, is easily forgotten in many countries when domestic industries, such as Detroit carmakers, ask for handouts or import tariffs during a recession, suggesting they've lost their edge against foreign brands.

In China, India, Europe, and many other places, leaders are scrambling to protect or boost industries with trade-distorting moves. It is as if a key lesson of the Great Depression – which was prolonged by protectionist steps such as America's Smoot-Hawley law – are simply being ignored.


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