Bridges Weekly Trade News Digest • Volume 8 • Number 8 • 3rd March 2004
Trade Debate Heating Up In The US
In a speech to the National Press Club in Washington DC on 26 February, WTO Director-General Supachai Panitchpakdi touched on a number of hot topics, highlighting the importance of the US’s role within the WTO and cautioning that the belief that there is an alternative to the organisation is "naïve and dangerous". The address was delivered as the US faces a crucial impasse in its trade policy stance. With many jobs moving overseas, concerned workers are likely to be a key component of the voters in the upcoming presidential election.
Message to the US
In his speech (available at http://www.wto.org/english/news_e/spsp_e/spsp22_e.htm), Supachai highlighted the challenges facing the US in the current Doha negotiations, as well as the round’s significance. He stressed the economic benefits that would flow from a deal, however placing even greater significance on the institutional ramifications of the negotiations. A successful conclusion of the Doha round would give the WTO enhanced credibility as the principal forum for global trade negotiations, he said, while failure to do so would cast a shadow of doubt over the future of multilateral trade and the effectiveness of the institution.
The Director-General went on to discuss the dangers of a global trading system based on bilateral and regional arrangements, stressing that "bilateral deals inevitably beget more bilateral deals, as countries left outside are forced to seek their own preferential arrangements, or risk further marginalisation". Supachai said a system should be avoided for two main reasons. First, the integration of the US economy with that of the rest of the world is higher than at any level in history and is dependent on international trade. Thus it is paramount that the US attempts to broaden the multilateral system because it cannot seek prosperity on its own. Second, a strong global trading system would coincide with many of the US’s global objectives, such as "fighting terrorism, reducing poverty, improving health, [and] integrating China and other countries in the global economy". The US has recently concluded and is currently involved in negotiating a number of bilateral and regional trade negotiations (see related articles on the US-SACU FTA and the US-Morocco FTA in this issue of BRIDGES Weekly).
An uneasy situation in the States
The Director-General’s comments came at a critical time for the future of trade policy in the US. Americans have lost 2.9 million manufacturing jobs since January 2001, though it is unclear exactly what proportion of these were due to the effects of trade as opposed to factors such as increased productivity. In addition, there is growing concern over the outsourcing of employment in the service and high tech sectors. As a result, with presidential elections looming, international trade has risen as a significant campaign issue, with much support to be gained from unions clamouring for the restoration of job growth in the manufacturing sector and many white collar workers uneasy about the future. Incumbent George W. Bush intends to campaign as a proponent of free trade, arguing for the economic benefits of an open economy as well as the political benefits of encouraging democracy in countries that otherwise might threaten the US. Further trade concessions would, however, be politically costly given the large number of jobs already lost under the guise of his administration.
Democrats have recognised this dilemma, with many accusing President Bush of selling out US interests in deals that benefit low-wage economies at the expense of high-wage American workers. At a recent poverty forum held in South Carolina, Senator John Edwards of North Carolina expressed what seems to be the sentiment of the Democratic position for the upcoming elections: "We’ve been so focused on free trade we don’t ask for fair trade". Even formerly vocal proponents of free trade recognise that it has become an important question. Mickey Kantor, former trade representative under President Bill Clinton, said, "There may be a lot of heated rhetoric out there, but this is a serious issue, and the Democrats have the correct position to challenge some of the rules".
In his speech, Director-General Supachai acknowledged the controversy brewing within the US by recommending that policymakers stress the gains to be had from liberalisation rather than its costs. "We need to be reminded of the advantages of America’s openness and its trade with the world — about the economic growth tied to exports; the inflation-fighting role of imports, the innovative stimulus of global competition," he remarked. Still, recent surveys suggest American public opinion is less than satisfied with the Bush administration’s trade policy, leaving the door open for challengers to exploit this sentiment (see BRIDGES WEEKLY, 4 February 2004).
ICTSD reporting; "American Leadership and the World Trade Organisation: What is the Alternative?" WTO RELEASE, 26 February 2004; "Outsourcing ban would put trade talks at risk," FINANCIAL TIMES, 17 February 2004; "Globalism minus jobs equals campaign issue," NEW YORK TIMES, 31 January 2004; "Bush caught in dilemma over jobs and free trade," FINANCIAL TIMES, 13 January 2004; "Americans on Globalization, Trade, and Farm Subsidies," PIPA SURVEY, 22 January 2004; "Help not wanted," NEWSWEEK, 1 March 2004.