U.S. business prods Obama on trade with jobs study

U.S. President Barack Obama talks with workers about the economy as he visits the Lordstown Complex General Motors Plant in Warren, Ohio, September 15, 2009.

WASHINGTON (Reuters) - The United States risks losing more than 500,000 jobs unless President Barack Obama steps up effort to pass trade deals and fix disputes that threaten U.S. exports, a top business group said on Tuesday.

"We need stronger trade leadership from the administration," Tom Donohue, president of the U.S. Chamber of Commerce said in a speech in East Lansing, Michigan.

"Several months ago, we were told that President Obama would shortly make a major speech and outline his vision for 'a new framework for trade.' We're still waiting," Donohue said, according to a text of his remarks.

The business group released a new study on Tuesday estimating the United States could lose more than 380,000 jobs and $40 billion in export sales if it fails to approve a pair of trade deals with Colombia and South Korea.

A trade spat with Canada and other trading partners over "Buy American" provisions of the U.S. economic stimulus threatens another 170,000 or more jobs if foreign governments retaliate by locking U.S. companies out of just one percent of their own domestic stimulus plans, the study said.

The Obama administration's failure to resolve a long-festering cross-border trucking dispute with Mexico threatens another 25,600 U.S. jobs, the study said.

It based that on the impact of retaliatory duties imposed by Mexico in March and higher shipping costs associating with transferring cargo from Mexican to U.S. trucks.

Trade Partnership Worldwide, an economic consulting firm that specializes in estimating the impact of trade policies, prepared the report for the business group.

ONE HUNDRED TIMES BIGGER THAN CHINA TIRES

The business group's call came just a few days after Obama slapped tariffs on Chinese tires in response to a petition filed by union workers who blamed the imports for more than 5,000 lost jobs over the last five years.

"Our study contemplates and foresees in the very near term the number of American lost jobs if America fails to move forward on trade could be 100 times larger" than the more than 5,000 lost to tire imports, Chamber Vice President John Murphy said.

Obama, who has promised to create or save 3.5 million jobs by the end of 2010, often stresses the importance of exports to U.S. economic growth. But he has been slow to move from that "theoretical" position to concrete action, Murphy said.

In contrast to the business group's criticism, Obama received a hero's welcome on Tuesday when he spoke at the AFL-CIO's annual convention in Pittsburgh.

The 11-million member labor group's strong opposition to free trade deals with Colombia and South Korea is one of the main reasons Obama has not yet submitted them to Congress.

Democrats who control Congress argue Colombia has not done enough to reduce violence against trade unionists and say the South Korea pact leaves in place barriers that have kept U.S. cars out of that market.

The U.S. Chamber, who had a strong ally in former President George W. Bush on business-friendly initiatives, has faced a more challenging environment under Obama, who has placed greater emphasis on labor group concerns.

TRADE DIVERSION

U.S. Trade Representative Ron Kirk, in a statement, said the Obama administration will carefully review a new batch of public comments it has received on the two pacts "to help us determine how best to move forward."

The U.S.-Colombia free trade agreement was signed nearly three years ago in November 2006. The pact with South Korea was signed in July 2007, as was a third deal with Panama that Obama also has not yet sent to Congress for a vote.

Since then, Canada has completed its own free trade agreement with Colombia and the European Union has reached a free trade pact with South Korea, both of which could be implemented in the coming year.

The EU also is in talks with Colombia on a deal.

U.S. failure to approve the deals with Colombia and South Korea could "lead to a decline of $40.2 billion in U.S. exports of goods and services and U.S. national output failing to grow by $44.8 billion" in the next year or two as Canada and the EU fill the trade gap left by the United States, the study said.

Carol Guthrie, a spokeswoman for Kirk, said the Obama administration was working with Congress and other stakeholders "to make sure that Buy American is implemented in a manner consistent with our international obligations, and to craft an appropriate solution on Mexican trucking issues."

(Reporting by Doug Palmer; editing by Philip Barbara)