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Trade Issues

November 19, 2009

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TRADE IMPASSE HINDERS ECONOMIC PROGRESS

Despite President Obama's pledge to listen more carefully to foreign countries, his Administration has ignored pleas to move forward on trade issues, a refusal that drew strong criticism from several foreign leaders during Obama's recent Asia trip. Although the Obama Administration pays lip service to free trade, it has allowed a strategically important trade agreement with South Korea to be held hostage to a single industrial sector: automotives, says Bruce Klingner, a Senior Research Fellow for Northeast Asia in the Asian Studies Center at the Heritage Foundation.

The Free Trade Agreement (FTA) would increase U.S. gross domestic product (GDP) by at least $10 billion. It would be both an economic stimulus package and a jobs creation program without requiring any additional government spending or adding to the U.S. deficit. Yet the Obama Administration and Congress continue to allow the agreement to languish in limbo, says Klingner.

U.S. Trade Representative Ron Kirk and Commerce Secretary Gary Locke extolled the virtues of the South Korea FTA, but both declared that it would have to wait in favor of pursuing President Obama's domestic political agenda:

* The Obama Administration and Congress have complained about an unequal playing field for sales of U.S. autos to South Korea but reject the very agreement that would remedy the problem.
* However, the two years since the June 2007 signing of the FTA exposed the falsehoods of the auto sector's blaming others for its poor competitiveness: GM and Chrysler did not go bankrupt as the result of South Korean non-tariff barriers.

As the Obama Administration and Congress have dithered, the world has not stood still, says Klingner:

* South Korea ratified an FTA with India and initialed an agreement with the European Union.
* In recent years, China, Japan and the European Union (EU) have all surpassed the United States as South Korea's major trading partners.
* Even Democratic Senator Max Baucus (D-Mont.) lambasted the Obama Administration for lacking a "comprehensive trade agenda."
* The U.S. Chamber of Commerce estimated that failure to implement the FTA while America's trading partners go forward with their Korean FTAs would lead to a decline of $35.1 billion in U.S. exports and a loss of 345,000 jobs.

Source: Bruce Klingner, "Trade Dispute Undercuts Obama's Korea Trip," Heritage Foundation, WebMemo No. 2702, November 17, 2009.

For text:

http://www.heritage.org/Research/AsiaandthePacific/wm2702.cfm

For more on Trade Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=42

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Daily Policy Digest

November 19, 2009

TO REVIVE NEW YORK'S ECONOMY, ATTACK LAWSUIT ABUSE

Tort law is intended to fairly compensate those who have been wrongly harmed. But according to "An Empire Disaster," a report released this week by the Pacific Research Institute, lawsuit abuse is rampant in New York State. For too long, New York's tort system has been exploited by personal-injury lawyers and plaintiffs looking for a big payday no matter how crazy the claim, say Lawrence J. McQuillan, director of business and economic studies at the Pacific Research Institute, and Mark Kriss, executive director of New Yorkers for Lawsuit Reform.

According to the U.S. Tort Liability Index, New York has the second-highest annual tort losses of any state, the fourth-worst tort-litigation risks, and the third-worst tort system in the country. Tort lawsuits cost the state's economy more than $16 billion in 2006. In 2008, New York City alone spent more than half a billion dollars in tort payments.

The need for tort reform in New York is undeniable, say McQuillan and Kriss:

* A good place to start would be to cap jury awards for impossible to quantify noneconomic damages for "mental distress" and "pain and suffering."
* New York also needs structural reforms that target appeal bonds, class actions, labor law sections 240 and 241 regarding elevation-related accidents, and attorney/state contracts.
* Other key reform areas include juries, e-discovery, product liability, design liability, asbestos, "venue shopping" (gaming the system by filing suit in a friendly jurisdiction), frivolous lawsuits, and evidence and witness standards.

Lawsuit reform would jump-start the state's economy and make it more competitive. According to the Pacific Research Institute, if such reforms were put in place, New York would:

* Create at least 86,000 new jobs.
* Increase state output $17 billion annually.
* Boost state tax revenues by more than $1 billion a year.
* Raise the income of every New Yorker by more than $2,600 a year.
* Attract new customers and entrepreneurs to the state.
* Cut insurance premiums up to 16 percent per annum.

Source: Lawrence J. McQuillan and Mark Kriss, "To revive New York's economy, attack lawsuit abuse," New York Daily News, November 18, 2009.

For text:

http://www.nydailynews.com/opinions/2009/11/18/2009-11-18_to_revive_new_yorks_economy_attack_lawsuit_abuse.html

For more on Legal Issues:

http://www.ncpa.org/sub/dpd/index.php?Article_Category=35