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When It Comes to Free Trade, Bush Outshines His Predecessors

September 12, 2004|Claude Barfield | Claude Barfield is an American Enterprise Institute scholar.

No administration will ever fully satisfy the free traders, but the Bush White House -- with a few notable lapses -- has established a record of accomplishment in the area of trade negotiations that is stronger than any other recent administration.

From 1994 to 2002, the United States was largely sidelined by the Clinton administration's inability to get Congress to renew so-called trade promotion authority (the authority for the president to conclude trade agreements and have Congress vote them up or down quickly and without amendment). In 2002, the Bush administration broke the seven-year deadlock (by one vote in the House) and reassumed leadership on trade liberalization.

Admittedly, it stumbled out of the blocks when the president disgracefully caved in to protectionist interests and raised tariffs on steel products. He then signed a retrograde farm bill that increased trade-distorting production subsidies. There were, however, mitigating moves: The president lifted the tariffs (to howls from steel executives and labor leaders) after only 20 months, and he subsequently put forward a bold proposal for agricultural trade reform in the World Trade Organization.

Since then, two novel hallmarks have defined President Bush's trade policy: He links U.S. trade policy with other political, diplomatic and security goals, and he will negotiate free-trade agreements with all comers -- individual countries, groups of countries and whole regions -- in pursuit of global free trade.

These policies provoked criticism within the U.S. and international trade policy communities, which argue that introducing extraneous political or diplomatic criteria somehow "pollutes" trade policy and detracts from free-market goals. But the administration counters that the pursuit of national interests has always necessitated a meshing of economic with political -- and even national security -- purposes. This fusion has a particular cogency in the post- 9/11 world, and thus it makes perfect sense for the administration, for strategic reasons, to include Morocco, Bahrain, Jordan and our Iraq ally Australia among its priority trade agreements.

Critics also argue that the "competitive liberalization" strategy -- the willingness to deal with all comers -- reorders U.S. trade priorities away from worldwide trade negotiations in the WTO. At least to this point in time, such criticism is unfounded. The U.S. took the lead in launching the so-called Doha round of trade talks that began in Qatar in 2001 and has advanced bold multilateral liberalization proposals, such as eliminating industrial tariffs by 2015, eliminating agricultural exports subsidies, capping agricultural tariffs at 25% and dramatically reducing internal crop subsidies.

In pursuit of competitive liberalization, the administration has negotiated trade agreements with 12 countries and is pursuing negotiations with 10 others. Although, individually, most of the free-trade agreements represent a small fraction of total U.S. trade, taken together they are the equivalent of the third-largest American export market and a substantial portion of total U.S. trade. If the Free Trade of the Americas agreement is successfully concluded over the next several years, the addition of Latin America will increase this total even more.

All these successes for the administration do not mean, of course, that there still are not challenges to be dealt with during a second Bush term. Three stand out: The administration must fashion compromises on key issues -- agriculture, services and intellectual property -- to bring the Doha round to a successful conclusion; it must reach beyond economically insignificant bilateral free-trade agreements and successfully conclude regional negotiations in Latin America and the Pacific; and it must get ahead of rapidly evolving trends and events in Asia.

The Asia Pacific Economic Cooperation forum, the only vehicle for trans-Pacific trade integration, is basically moribund. At the same time, Japan and Korea have dropped their aversion to bilateral and regional agreements and are negotiating separately with their Asian neighbors. Most significantly, China has emerged as a driving force toward East Asian integration. Over the next four years, it will be important for the U.S. to make it clear that it wants to be represented at any negotiation involving the big East Asian economies.

Though undoubtedly Bush will be challenged on other elements of his economic record, on trade he leads from strength.

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