President Obama’s visit to India was telling for many reasons, especially when he said Washington’s relationship with New Dehli would be a “defining relationship” of the 21st Century. He rejected the notion espoused by unions and political progressives that India was destroying jobs and pledged to help the country gain a seat on The United Nations Security Council.
Remember when Democrats campaigned against companies who moved jobs overseas? Those arguments were resoundingly rejected in the midterm elections. Unions, who regularly rail against free trade agreements, have not had much to say about Obama’s India trip. What can they say? The White House said $10 billion in trade deals which will create 54,000 U.S. jobs were finished ahead of the visit. That’s hardly enough to improve in the U.S. unemployment rate, but it’s better than nothing.
Punishing companies for exporting jobs overseas always was going to be harder to do than its advocates claimed. For instance, what about a manufacturer which is being undercut by foreign competitors with access to cheap labor? Why should it be penalized for moving jobs overseas to stay in business? Businesses forced to comply with such a policy would inevitably file suit against it and win.
Like it or not, free trade is a fact of life. Obama is pushing for a Free Trade Agreement with South Korea, which was signed in 2007 and has yet to be approved by Congress. The case for closer trade ties with India is compelling. Boeing Co. (BA) , General Electric Co.(NYSE: GE) and Harley-Davidson Co. (NYSE: HOG) were among the beneficiaries of the Administration’s efforts in India.
“The magnitude and diversity of the trade agreements between U.S. and Indian companies reflects the maturity of the bilateral trade relationship, and the enormous mutual benefits it provides,” says Sanjay Puri, Chairman Alliance for US India Business.
India has traditionally been a tough market for U.S. companies to crack given its history of protectionism. The U.S. has also agreed to lift some curbs on the export of sensitive technology, underscoring the importance the Obama administration places on the market. U.S. industry has plenty to gain. Morgan Stanley expects India’s GDP growth to outpace China’s by 2013. India’s working age population may rise 17 percent over the next 10 years, versus 2 percent growth forecasted for China. In 2009, India had a GDP of $1.23 trillion. GDP growth adjusted for inflation was 7.4%.
Last year, U.S. companies exported $16.4 billion worth of goods to the subcontinent while America imported $21 billion in Indian merchandise. During that same time, the U.S. imported more than $296 billion worth of Chinese goods and exported $69.5 billion worth of products to the world’s most populous country. India, though, continues to have serious social problems that would benefit from American investment.
“India’s long-term challenges include widespread poverty, inadequate physical and social infrastructure, limited employment opportunities, and insufficient access to basic and higher education,” according to the CIA’s World Factbook. “Over the long-term, a growing population and changing demographics will only exacerbate social, economic, and environmental problems.”
Instead of decrying the global economy, progressives and unions should try to make the best of its potential to create more jobs.
–Jonathan Berr
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