What Has Happened To Bush's Trade Agenda?

Nov. 21, 2006
The Bush Administration came into office with high hopes for an ambitious expansion of international trade, and a new round of trade negotiations.

Vice President-Government Relations
AMT - The Association For Manufacturing Technology

The Bush Administration came into office with high hopes for an ambitious expansion of international trade, and a new round of trade negotiations.

It was launched in an obscure location—protected from antiglobalist demonstrations—in Doha, the capital of the Arab Emirate of Qatar.

It was decided that the best way to expand trade would be to induce the less developed world to join the developed world and declare the new round to be the "development round," with particular emphasis on measures to expand markets for the poorer, developing countries. This sounded noble and promising.

Let's take a look at how things have worked out so far and why we, as manufacturers, should care.

The important point to realize is that trade expansion has always been positive for U.S. manufacturers, since we have the most efficient and competitive companies in the world. This means we have always been able to compete, so long as trade expansion has been subject to clear and fair rules. U.S. manufacturing is currently at its highest levels in history, in part because trade has allowed us to reach into rich, new markets.

Thus, despite the fact that the emphasis in the "Doha Round" was to be concerned with opening agricultural markets to allow the poorer countries to take their place at the trade table, there would be a real benefit to our service industries in gaining access to billions of new customers and to our manufacturers in having access to customers in the developing world. At least that was the premise of the new Round, if we could induce agricultural interests in the industrialized world to give up protective tariffs and subsidies.

What has happened? The simple answer is that the Doha Round, suspended since late July, seems to be on life-support, while Susan Schwab, the U.S. Trade Representative, flies around the world trying to gain support to revive it.

The United States has put a very generous offer on the table, with a promise to eliminate all trade-distorting subsidies within 15 years if other nations would join us in getting rid of agricultural subsidies and quotas. But the European Union has been unwilling (or unable) to match the U.S. offer, and countries such as France and Italy are even trying to rein in their negotiators and ensure that the benefits of the Common Agricultural Policy are not taken away from their farmers.

What is likely to happen now? The U.S. manufacturing sector has made it clear that it is not interested in anything that could be called "Doha Lite." No deal is better than a bad deal.

There is the hope that India, Brazil, and China, which were not particularly helpful during the negotiations, will realize that they can gain from a successful trade round. With such a realization, they might be able to rally the rest of the developing world to put enough on the table with regard to market access that the EU and Japan would be able to convince their internal constituencies that further agricultural concessions would be in order. Then the talks could resume.

It is also possible, of course, that the Doha Round could fail. If it is true that the age of large scale trade negotiations has ended, then it would be time for the U.S. government to turn its attention to reaching the best regional trade agreements possible.

It would be very much in the interests of U.S. manufacturers, for example, to reach a regional agreement with Latin America that would lock in a very profitable manufacturing relationship with markets in which we have traditionally been very competitive. If that could be concluded within the next two years, then the Bush trade agenda could still be deemed a success.

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