2012 will be the year of two major decisions that will shape the global economy for the next decade. First, it’s crunch time for Congress to make the difficult decisions about the national debt to put the U.S. on a sustainable fiscal trajectory. The second big decision will be the American people's reaction to Congress's action or inaction.
How will these two decisions affect trade? Automatic budget cuts to the Department of Homeland Security and Customs and Border Protection could have a significant impact on major programs, such as the Automated Commercial Environment, validations in the Customs-Trade Partnership Against Terrorism, verification of free trade agreements and trade outreach that requires travel.
We’ll see whether the DHS (and Customs) escapes the budget axe under national security exception many people believe will spare the Defense Department from enormous cuts. The international trade community should watch for its shared sacrifice in the form of user fees — yes, you will pay more to be regulated more.
The more interesting decision will come as a result of the presidential election. Free trade will be a significant issue because it reflects the nation’s economic anxiety. Much of the income inequality that has developed over the last 30 years results from the result of two powerful forces that coincided: rapid technological change and globalization.
Nonetheless, Americans of every stripe (except the top 1 percent) are angry that many institutions (political, religious, and financial) have failed them.
A big casualty could be the National Export Initiative and export control reform if President Obama loses re-election. We could see the American voters say throws the bums out including incumbents of both parties. Because the allocation of congressional chairs and ranking members is done on a seniority basis, we could see a major shift in the existing power centers; most current chairs were elected in the mid-1970s or early 1980s.
Although the Mayan calendar predicts the end of the world on May 21, 2012, let's all hope the violability in the economy is a temporary crisis in governance that democracy can solve.