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Between the Lines: Free Trade-OffsAuthor(s): Bruce StokesSource: Foreign Policy, No. 124 (May - Jun., 2001), pp. 62-63Published by: Washingtonpost.Newsweek Interactive, LLCStable URL: http://www.jstor.org/stable/3183191 .
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BETWEEN THE LINES
Free Trade- Offs When newly appointed U.S. Trade Representative Robert B. Zoellick testified before the House of Representa- tives on March 7, 2001, he gave the world a preview of the Bush administration's trade agenda. As a self-described
geoeconomic thinker, Zoellick hopes to create a series of bilateral, regional, and multilateral economic relationships for the United States that parallel America's strategic relationships. But to do so, he must first convince a skep- tical Congress that further trade liberalization is needed now and should not be encumbered by mandates linked
to labor issues, human rights, and environmental standards. I By Bruce Stokes
Statement of Robert B. Zoellick before the Committee on
Ways and Means of the U.S. House of Representatives
Which means that trade policy has one
foot in both camps but no solid political foun-
dation anywhere. Trade ranks lower on Bush's agenda than a tax cut,
deregulation, educa- tion, national missile
defense, tougher poli- cies toward China and
Iraq, and closer security ties with
Europe and Japan.
In the three years before NAFTA, the
United States ran a $5.2 billion average annual trade deficit
with Canada and Mexico. Since
NAFTA, that annual average has grown to
$33.7 billion.
Trade policy is the bridge between the President's international and domestic agendas. As the former governor of a major border state, President Bush has seen that the free exchange of goods and services sparks economic growth, opportunity, dynamism, fresh ideas, and democratic values, both at home and abroad.
In undertaking the President's charge, I know well that the Con- stitution vests the Congress with the authority "to regulate Com- merce with foreign Nations." Frequent, substantive consultation with this Committee is enormously important to me. I look for- ward to working closely with you....
I appreciate that votes for agreements like NAFTA [North Ameri- can Free Trade Agreement] and the Uruguay Round may not have been easy to cast. Yet those agreements contributed to the longest period of economic growth in U.S. history, with levels of full employment, and without inflationary pressures, beyond the fore- casts of any economist. A new commitment to trade liberalization can help boost a vigorous, long-term economic recovery from the present slowdown....
...and you and you... The writing of the final version of the 1974 Trade Act involved two congres- sional committees and 14 members. The leg- islation implementing the results of the Uruguay Round of multilateral trade negotiations involved 23 committees and 200 members.
In NAFTA's first five years, nearly 210,000 U.S. workers qualified for benefits because they lost their jobs due to competition from Canada and Mexico. At the same time, the U.S. unemployment rate dropped to its low- est point in 30 years.
Zoellick goes on to describe trade's power to promote a range of American interests. But Americans remain profoundly ambivalent about trade. Although three out of five Americans tell pollsters they support
free trade, half think imports hurt American jobs, and nearly half would impose higher tariffs to protect those jobs. Such doubt is only likely to grow as the U.S. economy slows.
I recognize, however, that these benefits of open trade can only be achieved if we build public support for trade at home. To do so, the Administration must enforce, vigorously and with dispatch, our trade laws against unfair practices. In the world of global eco- nomics, justice delayed can become justice lost. We also need to do a better job of monitoring compliance with trade agreements and insisting on performance by our trading partners....
Just one week earlier, 11 Democratic sena- tors sternly urged the White House to fund fully U.S. efforts to ensure trading part- ners-notably Japan, China, and the EU- live up to their agree- ments.
62 FOREIGN POLICY
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After acknowledging the need to help Americans weather economic change, Zoellick makes his pitch for greater presidential flexibility in negotiating trade pacts, which Bill Clinton twice failed to secure. George W Bush faces a similar uphill fight. Most Democrats and even moderate Republicans say that the administration
will somehow have to accommodate concerns about labor rights and environmental standards to obtain majority support for wide-ranging presidential trade negotiation powers.
Bush has one ace in the hole: Fearing
recession, the U.S. business community is
even more willing to spend political capital
to obtain fast-track passage because of its interest in opening up
foreign markets.
[T]he President [has] asked the Congress for quick action to give him "the strong hand of presidential trade promotion authority." This authority, as he pointed out, has been granted to each of the previous five presidents. Therefore, I will be following up with this Committee and the Senate Finance Committee to consider how to reestablish trade promotion authority for the President, based on the fast-track precedent and the broadest possible support....
Zoellick notes that without this authority, the United States is in danger of falling behind its competitors: Of 130 global free-trade agreements in force, the United States has only two (one with Canada and Mexico, and one with Israel). With nearly a quarter of new American jobs and a third of economic growth coming from
exports, the cost to the United States of delayed trade liberalization is simply greater than ever before.
No progress is possible without big cutbacks in
U.S. and European farm subsidies. But
Washington and Brussels can't even
agree on how to meas- ure such support.
Americans argue that European support per hectare exceeds U.S.
support. Europeans retort that U.S. support
per farmer exceeds that in Europe. Both are right: Europe has
less farmland; the United States has
fewer farmers.
In considering the grant of trade promotion authority, I also urge you to give the President more leverage by broadening our options: I want to be able to tell my counterparts that we are willing to nego- tiate if they are serious about eliminating barriers, yet also make clear that America will look elsewhere if they delay-that the United States will move forward, and it is up to them to decide to join us or be left behind....
Of course, America's trade and economic interests extend far beyond this hemisphere. We want to launch a new round of global trade negotiations in the WTO [World Trade Organization], empha- sizing a key role for agriculture. We will also seek to negotiate regional and bilateral agreements to open markets around the world....We will start with a free trade agreement with Singapore and will work with you to pass the basic trade agreement with Viet- nam negotiated by the Clinton administration.
This veiled defiance is both a calculated effort to get the atten- tion of America's trad- ing partners and an articulation of the fun- damental shift in U.S. trade strategy away from its exclusive focus on multilateral- ism toward a multifac- eted approach that also embraces bilater- alism and regionalism.
Zoellick closes with a quick world tour of U.S. trade issues, pausing to linger on the U.S.-European economic relationship-the deepest in the world with more than $1 trillion in two-way investment and
more than $500 billion in annual bilateral trade. It is also the most troubled, with bitter disputes over bananas, beef, taxes, aircraft, and other issues of political significance to both sides.
Of vital importance, I will seek to work closely with the European Union and its candidate members in Central and Eastern Europe, both to fulfill the promise of a trans-Atlantic marketplace already being created by business investment and trade, as well as to rein- vigorate, improve and strengthen the WTO processes....We would be remiss to neglect our common interests while working to resolve more immediate disputes.
Brussels and Washington must reinvigorate their eco- nomic relations, not least because the WTO's failure to resolve U.S.-EU dis- putes amicably has undermined public faith in the multilateral trading system.
Bruce Stokes is the international economics correspondent for the National Journal in Washington, D.C.
FP welcomes submissions to Between the Lines. Contributors should consult the writers' guidelines at www.foreignpolicy.com.
MAY I JUNE 2001 63
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