Bridges Weekly Trade News Digest • Volume 14 • Number 5 • 10th February 2010

Mixed Messages from the White House amid New Focus on Trade

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The White House appears to have awoken from its year-long slumber on trade matters, but the political climate for liberalising trade in the world’s biggest national economy remains problematic.

The action began on 27 January, when US President Barack Obama, addressing a joint session of Congress for his State of the Union address, highlighted trade as an important tool for economic recovery and job creation, calling for the US to double its exports in five years.

A week later, Commerce Secretary Gary Locke explained how the White House intends to achieve those goals. The administration will create the first-ever “government-wide export-promotion strategy” that will receive “the focused attention” of the president and his cabinet, Locke said in an address at Washington’s National Press Club on 4 February. The new National Export Initiative will work on three fronts: expanding trade advocacy at home and abroad; helping companies, especially small- and medium-sized firms, access the credit they need to export their products; and enforcing trade rules so that US exporters will not be unfairly blocked from foreign markets.

“This initiative will correct an economic blind spot that has allowed other countries to chip away at America’s international competitiveness,” Locke said.

Three FTAs still pending

Turning to new markets, the Commerce Secretary mentioned the work that the US Trade Representative’s Office is doing to open up trade with “key growth areas” in Asia and elsewhere, as well as the USTR’s efforts to strike “an ambitious and balanced” deal to end the WTO’s Doha Round talks. Locke referred briefly to Washington’s three pending bilateral trade deals - with Colombia, Panama and South Korea - noting that the White House aims to address “outstanding concerns” with each of the pacts.

Another major figure in the Obama administration offered a different take on those deals last week. Answering questions before the House of Representatives’ Committee on Ways and Means on 3 February, Treasury Secretary Timothy Geithner responded that the three pending deals are “absolutely” part of the White House’s plans to boost exports this year. However, a statement issued subsequently by the US Treasury Department seemed to backpedal from Geithner’s remark. There are still some “outstanding concerns” with the trade deals now on the table, the statement said, adding, “Once these issues are resolved, the administration looks forward to working with Congress on the best time to move the agreements forward.”

The three deals in question were negotiated by the Bush administration but have yet to win lawmakers’ approval. Each has faced its own set of political hurdles: the pact with Colombia has been opposed by labour unions, who say the country has a bad record of protecting workers’ rights; the US auto industry, fearing an influx of cheap imports, has pushed back against the South Korean deal; and some fair-trade NGOs have warned that an FTA with Panama could increase the flow of US money to shady tax shelters in the Latin American country.

“This administration inherited these three agreements that were controversial and sort of stalled with Congress,” says Chuck Dittrich, Vice President for Regional Trade Initiatives at the National Foreign Trade Council, a Washington-based business lobby group. “My opinion now is that they’ve taken ownership of these agreements. These are no longer Bush administration agreements; these are US agreements at this point,” Dittrich says.

Asked whether the deals might be approved this year, Dittrich said he “would be pleasantly surprised” if any of the agreements were enacted before November’s mid-term elections. But he added that passage of the deals should not be the only “performance measure” for the White House on trade, given that the administration plans to spend this year “laying the groundwork” by building public support for a more liberal trade agenda.

Obama: one year in

On the campaign trail in 2008, candidate Obama wooed voters by promising to reform the North American Free Trade Agreement and to fight for the interests of US farm exporters overseas. But during his first 12 months in office, Obama made little mention of trade and took little action on it - the one notable exception being his announcement in September of new tariffs on Chinese tyre imports. Trade was put on the political backburner as his administration fought domestic battles over healthcare, the economy, and wars in Afghanistan and Iraq.

But since he brought trade back into the spotlight with his State of the Union speech, the president has begun facing calls, largely from within his own party, to take a stronger stand on trade. Senator Arlen Specter, Democrat of Pennsylvania, pressed Obama last week on whether the president would support the revocation of existing trade deals with China, which he accused of “international banditry” in the form of illegal subsidies and dumping.

Obama demurred. “Our future is going to be tied up with our ability to sell products all around the world, and China is going to be one of our biggest markets, and Asia is going to be one of our biggest markets. And for us to close ourselves off from that market would be a mistake,” the president said.

Despite the White House’s new rhetoric on trade engagement, critics point out that more than a year after Obama took office several posts on the administration’s trade team remain empty, most notably the position of US ambassador to the WTO - a fact that is not lost on WTO delegates in Geneva.

But the appointments, which have been held up by partisan and parochial bickering in the Senate, could be finalised soon. Obama threatened on Tuesday to push through some of his nominees during Congress’s week-long February recess, which starts on Monday. Such a move would allow the appointees to serve until the end of 2011 without lawmakers’ approval.

“We can’t afford to allow politics to stand in the way of a well-functioning government,” Obama said.

ICTSD reporting.