Tuesday, January 10, 2012

An Accounting

An Accounting

Washington Trade Daily – now in its 21st year of publication – seems to be leveling off after a significant drop in altitude over the past three years. I’m talking of its subscription base.

Since 1988, when the publication began, subscriptions climbed every year until the economic crisis of mid-2008 and the election of Barack Obama as President. Why? Seems to be a number of reasons –

1. Mid-2008 brought "fears" of a serious recession – even a depression – with commercial banks pulling back loans over a domestic housing financing disaster. What WTD experienced in the last three months of that year was a hesitancy of subscribers to use their credit cards to pay for renewals, which has become a favored way to renew because of the relatively low price of the publication.

(Myself and Mary had planned a long anticipated trip to the Grand Canyon that October. The big ticket items were paid for, but we had no ready cash. So we offered a full five-year renewal to the first subscriber to pay $1,570 via credit card to get ready cash for the trip. The vacation worked out fine.)

(Another instance at the time involved a deposit of a Treasury check from one of our government agency subscribers. My small credit union put an unusual two-week hold on the check until the amount cleared.)

2. By the time the new Administration took office and US Trade Representative Ron Kirk settled into office – around mid-2009 – it was clear that trade policy would not be a priority, despite the crucial effort in Geneva to wrap up a long-overdue Doha Development Agenda trade negotiation and the pending three free trade agreements with South Korea, Colombia and Panama.

Instead, the Administration took its eye off those important agreements and USTR Kirk made his first major trade policy announcement by asking the International Trade Commission to do a series of reports on how the government could improve small business exports.

That decision led to a White House National Export Initiative to double exports in five years from a low point in 2009 – due mostly to the recession. Exports are up, but that is mostly due to a conscious effort on the part of the Federal Reserve to keep the dollar undervalued.

Generally, a greater number of subscribers did not renew during the period because there was nothing major going on in trade in Washington.

(During the time we received more than one e-mail from once loyal subscribers who praised us for our good work in the past, but indicated they would renew should anything happen in Washington. "Let us know," said one email.)

3. While in the economic doldrums of 2009 and 2010, USTR Kirk – apparently via instructions from the President himself – started to downplay the importance of the nearly decade-old Doha Development Agenda negotiations. The United States simply isolated itself from the hard struggles to keep the talks alive – culminating in US insistence that negotiations start again sometime in the future on a difference base.

(WTD was told by a senior US trade official at last year’s Asia-Pacific Economic Cooperation trade ministers’ meeting in Montana to write that the Doha round was over – despite what USTR Kirk told his trade ministers colleagues.)

4. Last year saw an up-tick in activity related to the nine-nation TransPacific Partnership negotiations – about the only game in town.

The fact is the Administration may be too late, especially when it comes to building and maintaining a private-sector coalition that will be needed to lobby Congress and build public confidence in any new trade initiative.

(WTD started to lose US-corporation subscriptions over the past two years. What I found out, since the newsletter goes out on a daily basis via e-mail, is that those email addresses were simply return to us unopened. Corporate headquarters long ago started to downgrade trade staffs and, in some instances, get rid of the only employee in Washington that had responsibility to follow trade matters.)

That will be a serious problem when the Obama Administration attempts to gain Congressional approval for the TPP later this year or next. Except for a few die-hard multilateral corporations, such as Proctor and Gamble and Caterpillar, along with big groups like the US Chamber of Commerce and the National Association of Manufacturers, the Washington foundation for freer trade has simply disappeared.

In real terms, WTD has learned in recent months, the TPP does not matter much to the corporate balance sheet level. Of the eight other nations involved in the free trade negotiations, the United States already has FTAs with half of them – Peru, Chile, Australia and Singapore. New Zealand is well-entrenched in an open trade policy. The other three – Vietnam, Brunei and Malaysia – are developing countries and should fall more properly within a built-up US preferential mechanism.

As one senior corporate executive told WTD recently, there is simply not that much added-value there for his company.

5. The worsening Euro crisis also sis not helping us. Recently, the French embassy had to delay its payment to WTD for several months – actually seeing a lapse in service. WTD found out that it was commanded by Paris not to pay any bills – including its local electric bill. One embassy official told WTD that his office came very close to working in the dark.

I recently told this story to an ambassador of an African country, who laughed heartily, saying he never though such a rich country like France would experience the same problems that African countries face everyday.

Several US- and Geneva- based European offices have had to quit WTD due to their own budget situations.

6. As for the future. Everyone in the corporate world is convinced that either a second Obama Administration or a new Republican presidency will focus on trade and international economic issues. History has shown that the second term of Presidents since the Second World War has focused on foreign affairs – because that is the only way a sitting President can establish his name in the history book.

For Mr. Obama it would be a choice of finding another war to fight somewhere or pursue the international trade agenda – even a transformed international trade round in Geneva.

For Republicans, a basic tenant has always focused on trade.

(ps – President Obama remains a loose cannon on deck and if reelected might continue to pursue a domestic agenda to the detriment of the US standing in the world. "Don’t count it out" is our warning.)

Despite it all, the editors of WTD are optimistic and look forward to a better year – but they don’t believe it will be a fantastic one.

Happy New Year! I hope.

Jim Berger

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