News and Analysis • Volume 13 • Number 2 • June 2009

26 - Insights into US Trade Policy

The Obama administration's top priorities are the economy, energy reform/climate change and healthcare. Trade, for the moment at least, is far from the top of the list.

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This message served as a starting point for a series of conversations on US trade policy between a group of Geneva-based developing country ambassadors and a wide range of high-ranking US politicians and civil servants, trade analysts and civil society representatives during an ICTSD-sponsored visit to Washington in May.

Once the political and economic situation has stabilised, several sources suggested that it could be possible to move the agenda forward. Both President Obama and Trade Representative Ron Kirk are internationalists by temperament; they favour the multilateral arena and appreciate the legal framework provided by the WTO.

Democrats, now firmly in control in both the House and the Senate, are also likely to be more sympathetic to a multilateral trade deal than to bilateral agreements, for which momentum - such as it ever was - is waning rapidly. In contrast, the renewal of preference programmes, such as the African Growth and Opportunity Act and the Andean Trade Promotion and Drug Eradication Act, will probably be approved more easily than was the case under the Bush administration.

Not Much Appetite for Doha

However, convincing a trade-sceptical Congress to buy into the Doha Round will be an uphill battle. Despite a growing awareness about the value of a Doha accord as an insurance policy against WTO-legal protectionism, dissatisfaction with the package currently on the table is simply too widespread for either lawmakers or the public to accept it with minor tinkering.

That explains both the administration and the business community’s interest in the proposal to skip a formal agreement on modalities and proceed directly to scheduling commitments. A clear picture on future market access concessions could galvanise interest, as well as allow concrete discussions on services to start, the thinking goes. In Geneva, however, many developing countries have taken strong stance against this approach (see page 2).

Farm Subsidy Reform

President Obama has pointed to farm payments as one possible area of savings, and there is some recognition in Congress that the subsidies should come down (provided they do so in the EU as well). On the other hand, the payments remain politically popular and represent a drop in the ocean of the US budget deficit right now - and an extremely well-connected drop, at that: 50 percent of all commodity payments in the US go to the districts of the members of the House agriculture committee, a civil society representative said.

That being the case, it is unlikely that that the administration will take on subsidy reform as an end in itself. It would have to be part of a broader narrative incorporating one or more of the following: global food security, the Doha Round, climate change, improved nutrition and food safety for Americans, fiscal prudence and benefits for rural America.

Climate Change

The Obama administration seems to recognise that border tax adjustments (BTAs) are an especially loaded way to encourage trading partners to rein in their greenhouse gas emissions, although a number of members of Congress take a more favourable view of such measures (see related article on page 21).

Some analysts cautioned that there was a legitimate risk of a de facto alliance between greens who support BTAs out of genuine environmental principle, and people who simply want to raise tariffs and are grateful for any justification they can get.