CUELLAR: TRADE IS THE LIFEBLOOD OF THE GLOBAL ECONOMY

By Congressman Henry Cuellar

Herbert Hoover is back in the news lately.

Everywhere you turn, journalists and lawmakers and pundits are referencing the former president -- such a recession cliché that Google News reveals earlier spikes in Hoover references 1974, 1980, 1992, and 2000 as the economy plumbed the depths of our most recent recessions.

Now, in the midst of a deeper and more troubling recession, we find Hoover once again in the newspapers, not only in references to the past but, more disturbingly, in proposals for our future.  We are witnessing the embrace by some lawmakers of a “new Hooverism,” a set of trade beliefs that suggests a troubling return to Depression-era policy.

In 1929, as the economy entered its long recessionary tailspin, then-President Hoover proclaimed the need to protect the agricultural industry with stringent tariff provisions that Congress later codified in the Smoot-Hawley Tariff Act.   These protectionist measures would, Hoover said, “lay the foundation for a new day in agriculture, from which we shall preserve to the Nation the great value of its individuality and strengthen our whole national fabric.”

The “new day” that dawned failed to live up to Hoover’s expectations.  Foreign nations quickly imposed retaliatory tariffs.  U.S. exports to Europe plunged from $2.3 billion in 1929 to just $784 million in 1932.  Many economists consider Smoot-Hawley a major contributing factor to the Great Depression and one of the gravest warnings that economic history offers to modern-day lawmakers.

If history is our teacher, then some lawmakers are not learning the lesson.  In the recently enacted 2009 appropriations bill, legislators terminated a pilot program that had permitted a small number of Mexican trucking companies to drive cargo to American destinations.  The provision’s supporters cloaked their argument as a defense of road safety, but thanks to the program’s strict safety standards, Mexico-domiciled trucks in the pilot program were significantly safer than commercial American traffic.  In 2008, U.S.-based trucks averaged a 21.6% out-of-service rate due to safety or other violations.  Carriers in the Mexican trucking pilot program averaged just a 7.3% out-of-service rate.

The aftermath of this spat has proven both deeply regrettable and entirely predictable.  Mexico is claiming a violation of NAFTA and slapping tariffs on 90 American agricultural products.  Now, some in America are proposing our own retaliatory tariffs, raising the specter of a Smoot-Hawley-style, eye-for-an-eye trade war that could leave the whole world blind.

As the Congressional representative for a border district that includes America’s largest land port of entry, I know firsthand the importance of our trade partnership with Mexico.  Along with other members of Congress who recognize the risks of modern-day Hooverism, I have founded the new Congressional Pro-Trade Caucus.  We are Democrats and Republicans from all across the country, united by the belief that trade is the lifeblood of the global economy and that healthy trade is a prerequisite for economic recovery.

Last year, trade accounted for 30% of America’s GDP, and U.S. exports grew to 13% of GDP.  In these challenging economic times, we cannot afford to undermine this crucial sector of our economy or to listen to the siren song of protectionism any longer.

I hope that President Obama will retool the trucking pilot program before his upcoming visit to Mexico.  It is time to stop merely invoking the name of Herbert Hoover and to begin learning the lessons of the past.