USTR - Remember Seattle: Mixed Signals Are Bad for Trade
                 
The Office of the United States Trade Representative

Remember Seattle: Mixed Signals Are Bad for Trade
10/05/2004

A president must fight for an open trading system to help American workers, farmers and businesses, as well as to lead the international economy. The Constitution grants authority over trade to the Congress, whose representatives reflect local interests. It takes presidential willpower to look across and beyond individual interests, to build coalitions for openness, and to help people adjust to change.

The starting point for a president's commitment to open trade is his readiness to lead the fight for trade negotiating authority. President Clinton tried but failed to renew this authority, which dates back in various forms to the 1930s, and since the 1970s has made trade agreements subject to Congress's approval but not amendment. President Bush knew his first priority was to restore this Trade Promotion Authority; his one-vote victory revived America's power to negotiate a more level playing field after an eight-year lapse. Even after nearly two decades in the Senate, John Kerry is uncertain whether he is for or against TPA, even though it must be renewed early next year. Instead, Mr. Kerry wants a long study that would conveniently extend months beyond when this hard-fought authority is due to expire. The lesson of the past 30 years is that presidents must fight for trade negotiating authority; if they are not certain they want it they assuredly will not get it.

Mr. Kerry's vacillation on trade extends further. His campaign has signaled the abandonment of America's successful drive for Free Trade Agreements. The Bush administration has completed FTAs with 12 countries, is negotiating with 10 others, and is preparing for more. Together, these new deals amount to America's third largest export market. U.S. manufacturers forecast that our new FTA with Australia alone will boost U.S. manufacturing exports $2 billion a year. These cutting-edge agreements carry an importance beyond the size of newly opened markets, because they set high, enforceable standards in newer areas of importance to America -- such as services, intellectual property, transparency and anti-corruption, and e-commerce. U.S. FTAs are the only ones in the world that also include enforceable commitments on labor and environmental laws, combined with aid programs that help developing countries improve conditions cooperatively -- contradicting Mr. Kerry's excuse for jettisoning FTAs.

The revived U.S. momentum for free trade with fair enforcement is attracting new reformist partners in Latin America, Asia, Africa and the Middle East. As the 9/11 Commission recognized, integrating trade and foreign policy must be part of America's strategy to reduce poverty, open markets and minds, and support democracy. But Mr. Kerry opposes free and enforceable trade with poor Central Americans. He has backtracked on free trade that he once supported within North America. His retreat would leave developing-country reformers abandoned by the U.S. Economic isolationism would not build the multilateralism Mr. Kerry preaches.

President Bush came to office determined to erase the stain of the World Trade Organization meeting in Seattle, where the global trading system nearly collapsed in 1999 amid violent protests in the streets and mixed signals from President Clinton. The Bush administration led the drive to launch new global trade negotiations in 2001 and then to get them back on track this year. These Doha negotiations in the WTO are now close to producing successful results in agriculture, goods and services over the next year or so. A major lowering of global trade barriers could combine with an upswing in global growth to deepen and extend world-wide recovery. Yet while President Bush has been leading, Mr. Kerry has called for the U.S. to renege on the last stage of its commitments from the prior global trade round, even though Mr. Kerry had voted for those very terms in 1994.

The rest of Mr. Kerry's trade policy amounts to little more than additional litigation in the WTO. In contrast, the administration has focused its enforcement work on achieving commercial results, not just counting lawsuits. This April, for example, we solved seven potential WTO cases with China -- covering technology standards, agriculture, services, and distribution rights -- without the delay and uncertainty of WTO litigation. Yet when needed, we have not hesitated to press for legal action in the WTO, such as our case against China over a tax policy that threatened $2 billion of U.S. semiconductor sales. Even then, we pushed successfully for an early result without waiting for formal legal panels. When we have litigated, the administration's winning record of 54% is the same as that of our predecessor. While Mr. Kerry calls for more cases, he undermines his own argument by saying the U.S. should not comply with unfavorable rulings.

Mr. Kerry's attacks on "Benedict Arnold CEOs" who do business abroad suggest he either does not grasp the workings of the global economy or is being duplicitous to curry favor with economic isolationists. Foreign companies recognize the quality of American workers, and that is one of the reasons why so many have chosen to locate plants in our country. Would Mr. Kerry forgo the 6.4 million jobs in the U.S. created by CEOs of foreign companies? U.S. companies with operations overseas account for 58% of U.S. exports. America's services industries earn a more than $50 billion surplus by operating around the world. More open markets for trade and investment create opportunities by lowering costs, increasing productivity, adding to families' standard of living, connecting more businesses together, and enlarging America's influence. Attacks on business across borders and calls for raising barriers reflect a defeatism that would cripple America's vitality. President Bush is committed to creating the jobs that trade brings.

To keep America ahead in the international economy, a president must know his mind on trade and be willing to build coalitions for openness at home and abroad. President Bush has complemented his aggressive trade strategy with initiatives to help Americans better manage change in the global economy. He is seeking to modernize worker training, education, pensions and health care by encouraging empowerment of families, ownership and accountability, flexibility and choice. Mr. Kerry's profile on trade -- hand-wringing on TPA, retreating from existing and new FTAs, hiding behind bureaucratic reviews, welshing on our obligations, and relying on rhetorical toughness without substance -- does not auger well for leadership, either his own or America's.

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Mr. Zoellick is the U.S. trade representative.

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