Bridges Weekly Trade News Digest • Volume 13 • Number 15 • 29th April 2009
Top Obama Trade Official Stresses Need for Openness, Doha Deal
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The Obama administration will reject protectionism and pursue negotiated trade liberalisation including an agreement in the stalled Doha Round of WTO talks, the new US trade representative announced last week.
In his first detailed policy speech since taking office in March, Ron Kirk stressed that open trade would be essential to domestic economic recovery. The US must resist the temptation to turn inward, he said, noting that despite the high media profile given to trade-related job losses, “the truth is that jobs do come when trade policy is done right.”
He outlined the principles that are to underpin the administration’s commercial policy: support for open trade and the rules-based trading system; assistance to American workers harmed by international competition; concluding a Doha Round deal and addressing unratified bilateral trade accords; and greater public scrutiny of Washington’s trade policy processes.
Kirk was critical of US trade policy in recent years, saying that, to many Americans, it “lacked rhyme or reason.” Enforcement of existing obligations was neglected; inadequate labour and environmental protections allowed other countries to undercut US producers. The complaints echoed those expressed by many in the Democratic Party about the George W. Bush administration’s trade policies. Kirk promised to use “all the tools in the USTR’s toolbox,” including WTO dispute settlement, to go after policies that harm US exports.
Nevertheless, the overall tenor of his remarks seemed to confirm suggestions that President Obama is stepping back from trade-sceptic rhetoric he occasionally employed on the campaign trail. Earlier in the week, Kirk had told journalists in Washington that it may not be necessary to re-negotiate the environmental and labour rules in the North American Free Trade Agreement (NAFTA), according to a report from Reuters. Obama himself has publicly questioned the wisdom of re-opening NAFTA at this time, suggesting that it could discourage trade when precisely the opposite is necessary.
Call for Doha accord
Kirk, who was speaking at Georgetown University in Washington, was particularly emphatic about the importance of strengthening the global rules-based trading system, notably through an accord in the Doha Round trade talks.
“President Obama and I are committed to a successful conclusion of Doha,” he said, calling the round a “once-in-a generation opportunity to forge a strong framework for the future of global trade.” He announced that the administration would “in the coming weeks” signal how it thought the struggling negotiations could be moved forward, and that he would be exchanging ideas with the US’s trading partners on how to do so.
In substantive terms, the Obama administration largely shares its predecessor’s prescription for what is necessary to secure a Doha deal: more market-opening concessions by larger developing countries.
It remains to be seen how this will fall on emerging market ears; while many of them would agree with Kirk’s call for ‘levelling the playing field’ in trade relations, they may not share his view on the direction of the current tilt.
“The World’s poorest developing nations have a special place in the Obama trade agenda,” Kirk said. Successful preference schemes, technical assistance, and trade capacity building would help least-developed countries harness trade for growth, he said, and ultimately create new markets for US exports.
With regard to three bilateral free trade agreements (FTAs) that were concluded by the Bush administration but have yet to be approved by Congress, Kirk said that there was “strong bipartisan support” for the FTA with Panama, suggesting that it could be put to a vote once labour and tax-related issues are resolved. He also promised action and dialogue on more controversial accords with Colombia and Korea. The former has been bogged down in some lawmakers’ concerns that the Colombian government has not done enough to reduce violence against union leaders, the latter has been held up by disagreements on automotive and agricultural trade.
Kirk also held out the possibility of negotiating new deals at some point in the future.
Openness, transparency stressed
In keeping with broader goals set out the Obama administration, Kirk promised greater transparency and inclusiveness in the trade policymaking process. He argued that this would result in deals that would find it easier to win support in Congress, and would restore public confidence in the benefits of trade.
“We are seeking to understand what our critics want – on both sides of the aisle.” He invited input from both proponents and sceptics of open markets on how trade policy could contribute to prosperity. “We will be responsive where we can, and we will always be respectful when we disagree.”
Opposition brewing within party
Any moves by Obama to pursue further trade liberalisation are likely to run into opposition from within his own party.
A number of Democratic members of Congress have rejected the Bush administration’s bilateral trade deals, and campaigned last fall for changes to – if not an outright withdrawal from – NAFTA. One of them, Ohio Senator Sherrod Brown, told The Hill newspaper that he was disappointed to hear that the White House no longer wished to re-negotiate NAFTA. “The president needs to understand there is strong opposition to more-of-the-same trade deals.”
Maine Representative Mike Michaud criticised the administration’s pledge to find a way forward on agreements with Panama and Colombia. “People are furious about these trade agreements,” he said on the House floor last week. “During an economic downturn, do we really want to pass Bush-negotiated free trade agreements?”
The Wall Street Journal reported that Brown may table legislation in the Senate that would require all pending trade deals to be put on hold until a non-partisan study of existing trade policies could be carried out.
A divide on bilateral trade deals would not be new to the Democratic Party. In 1993, Bill Clinton’s administration relied on Republican votes to secure Congress’ approval of NAFTA, over the opposition of a majority of House Democrats.
ICTSD reporting; “Intraparty trade war brews,” THE HILL, 21 April 2009; “Lawmaker Moves to Delay Free-Trade Pacts,” WALL STREET JOURNAL, 22 April 2009; “In first speech since taking post, Ron Kirk again pushes for expanded global trade,” DALLAS MORNING NEWS, 24 April 2009; “No need to renegotiate NAFTA to improve it: USTR,” REUTERS, 20 April 2009.
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