Sunday, January 24, 2010

Waiting for B.O.

Foreign criticism of US trade (non)policy continues to mount.  This time, we hear from Jean-Daniel Gerber, Swiss State Secretary for Economic Affairs, who writes in today's WSJ Europe a depressing letter to President Obama beggingadvising the US to get back in the global trade game. The whole op-ed is worth reading, but here's my favorite passage:
In previous multilateral trade rounds, the U.S. took the lead and was an active deal maker. Without its strong involvement, none of the eight previous rounds of trade negotiations would have been concluded successfully. The U.S. co-initiated the Doha Round shortly after the terror attacks of 9/11, and passed legislation granting fast-track negotiating authority to the American president. Washington assumed its responsibility, and aggressively pushed forward the negotiating process. Today, the situation has changed: The White House's special negotiating authority has now elapsed, and the U.S. seems to have other priorities.

The world knows that the U.S. faces significant domestic issues—its budget deficit, foreign and domestic debt, its real estate crisis, its health and tax reforms. Nonetheless, if the U.S. wants to retain its status as the world's most important economic power, it must put trade back at the top of its agenda.

Some time ago, the Obama Administration announced that it would forge a new foreign trade strategy. But its trading partners are still waiting. We speculate on what such a policy would look like. We hope it would stress the unequivocal commitment to the multilateral, rules-based system of the WTO; that it would show U.S. willingness to enter the endgame of the Doha talks; and that it would fully assume American leadership on such crucial debates as industrial goods, agriculture, intellectual property rights, and trade facilitation. Without such a commitment, the multitude of ministerial declarations risk remaining hollow. Many countries, in all parts of the world, are waiting for a clear signal from President Obama in favor of trade liberalization. Concluding the Doha talks would benefit everyone....

Without American leadership, a conclusion of the Doha talks is not feasible. The world needs the U.S.'s active participation, and it needs it now. The first test will come in March, when trade negotiators are due to take stock of their progress since the 7th WTO Ministerial Conference in Geneva last December. This important step is a prerequisite for a successful conclusion of the Doha talks by the end of this year.
Everything that Mr. Gerber says is true, but he fails to consider - at least publicly - that maybe the Obama administration's trade inaction, particularly in the Doha Round, has little to do with an intense focus on America's "significant domestic issues" and much to do with a basic political decision to avoid upsetting its anti-trade base (and a majority of House Democrats) by pursuing an "aggressive" international trade agenda.  If the latter's correct, then no amount of history and logic is going to compel President Obama to act.

Then again, maybe Mr. Gerber's Swiss diplomacy simply prevents him from being so explicit.  I sure hope that's the case, and that he and the rest of the world are trying to use international political pressure - and good ol' fashioned public shaming - to prod the White House into moving on trade.   I doubt that such a  passive approach will be sufficient to counter the labor unions' (and congressional Democrats') Kung-fu deathgrip on US policy, and think that a more aggressive, competitive approach is necessary (see, e.g., the EU-Korea FTA).  But regardless, the passive route is certainly better than the alternative that Gerber lays out in his op-ed: the world naively and quietly waiting and wishing for a US trade policy renaissance that might never come.

(At least until 2012.)

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