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U.S. STRIKES BACK | TRADE

U.S. Battles Terrorism With Trade, but Conflicts Loom

October 18, 2001|EVELYN IRITANI JAMES F. SMITH and WARREN VIETH | TIMES STAFF WRITERS

The House Ways and Means Committee approved fast-track authority legislation last week, clearing the way for House Republicans to schedule a vote before next month's WTO meeting. But it's not clear whether there are enough votes to pass it. Opponents say many Democrats don't buy the administration's claim that Bush needs trade-promotion authority to wage war on terrorists.

Some skeptics have labeled the Bush administration's efforts to tie trade to terrorism opportunistic and even counter-productive, since the anti-terrorism campaign injects security issues and political concerns into a trading system already strained by divisions between the rich and poor.

They say the slowing economy is likely to heighten protectionist pressures, making it harder for WTO members to compromise on contentious issues such as agricultural subsidies and labor standards. These are of particular concern to developing countries such as India, which have opposed launching a new round of trade talks.

"I don't think Congress is going to let the president give away the store on trade," said Peter Morici, senior fellow at the Economic Strategy Institute in Washington. "It's not going to take much in the way of an economic downturn for people to start viewing jobs as precious again, and trade is about jobs."

But Anupam Srivastava, director of the South Asia program at the University of Georgia's Center for International Trade and Security, said the Bush administration has softened India's resistance to the proposed trade round by seeking that government's help in addressing Third World concerns.

Other players argue that the response to last month's terrorist attacks should be more equitable global development, not just more free trade. Export-dependent countries in Asia and Latin America have been hit particularly hard by the slowdown in trade caused by heightened security. The United Nations last week drastically reduced its forecast for world growth for 2001 from 2.4% to 1.4%. But its forecast was cut far more severely for Latin America--from 3.1% to just 0.8%. The same was true for South and East Asia, where the forecast was slashed from 4.1% to 1.7%.

Sebastian Edwards, a former World Bank chief economist, said the post-Sept. 11 challenge "goes to the heart of development policy and the whole strategy toward poverty." Edwards, a professor at UCLA, said obstacles to free trade raised by rich countries have aggravated poverty and undermined economic security.

"Nicaragua, the second-poorest country in the hemisphere, which has the second-highest debt burden in the world, is a very efficient producer of peanuts," he noted. "But they cannot sell peanuts to the United States. There is an 8,000-ton import quota, and it is filled 10 minutes after it is open. The fact that we allow luxury goods in from advanced countries is good, but it certainly does not help Nicaragua."

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Iritani reported from Los Angeles, Smith from Mexico City and Vieth from Washington.

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