Friday, June 29, 2012

WTD's Friday Afternon podcast for June 29, 2012.


Always Too Little And Too Late For Africa

It’s not unusual in Washington trade policymaking to address the needs of the poorest countries of Africa – that also happen to be the biggest growing economies – too little and too late.

Last week a large delegation – for its size – of trade ministers, Geneva ambassadors and embassy officials from the so-called "Cotton-Four" countries of Burkina Faso, Benin, Mali and Chad were in Washington to lobby against subsidies to US cotton growers. Those contend – and the World Trade Organization agrees – that government subsidies contribute enormously to falling world prices for cotton. The result for growers in the four African countries is less income – and, by extrapolation – less national revenue to support infrastructure, health care and education.

The delegation held a press conference at the embassy of Chad to talk about the results of their mission. It came just as the full Senate was putting the finishing touches on a five-year farm bill – that extended the US cotton program, but changed its nature to an insurance program in which US cotton growers would pay to participate.

Observers, members of the Senate Agriculture Committee and the National Cotton Council say the change addresses WTO concerns as outlined in a case against the United State brought by Brazil.

But the Africans don’t see the difference. The old system was a combination of price supports and direct payments to cotton growers. The new program, they agree, is an insurance program, but they cite a Congressional Budget Office report that scores costs for both programs at about the same. If it walks like a duck and quacks like a duck, it must be a duck.

The delegation said over and over again that all they want is for governments around the world to stop subsidizing their cotton growers and give African farmers a chance to compete. It is that simple.

While waiting for questions and answers to be translated into English from French, this reporter indulged in the munchies placed around the table. One was a bowl of peanuts – another problem for Africa. Obviously, the peanuts were from Virginia, not groundnuts from West Africa. It is illegal to import peanuts into this country from anywhere in the world – another aspect of the old farm bill that was continued unchanged for another five years.

(p.s. – also on the table was a bowl of animal crackers – lions, elephants, etc. Nice touch.)

Jim Berger

Monday, June 18, 2012


Let me just start out by saying I'm a lifelong bleeding heart liberal Democrat and proud of it.

But after recently sitting down for an interview with Republican Presidential contender Mitt Romney's chief trade policy advisor I'm feeling tempted to cross over to the dark side.

Listening to former Commerce Secretary Carlos Gutierrez talk thoughtfully and with depth about Gov. Romney's visions for a new trade agenda frankly had me a little excited, at least on a professional level. Naming China as a currency manipulator, multiple free trade agreements, trade promotion authority. At last, there would be something to write about.

Let’s face it, when it comes to trade, the Obama Administration has been a bore.

That’s because President Obama has never really developed his own trade agenda. Yes, he came into office in the midst of a recession of historical proportions that took his attention. Yes, he inherited three "hot potato" free trade agreements that the Bush Administration had never been able to get through Congress – and while there were purely political reasons why a then-Democratic controlled Congress refused to deal with the pacts, each FTA had its own problems that needed to be resolved.

After letting those FTAs sit on a shelf for three years, the White House last year did have a sudden burst of activity – albeit a somewhat reluctant one. The story told in business community circles – and by House Speaker John Boehner (R-Ohio) – is that President Obama only wanted to spend his political capital on the Korea FTA. But Republicans – and business – said it had to be all three or nothing and that meant there would be no renewal of Trade Adjustment Assistance for workers.

So all three FTAs – along with TAA and renewal of the Generalized System of Preferences program – were approved last October in what Administration officials now like to tout as an "historic" day for US trade policy.

Okay, so we had one exciting day. But what’s happened since then?

President Obama still has not enunciated a clear trade agenda. And of course, now that the campaign is in full swing, trade is the last thing he wants to talk about. Yes, he does talk about the importance of exports to the US economy and jobs. But I found myself agreeing with Mr. Gutierrez that the touting of exports seems to be mostly an "applause line", since it’s not being backed up by any major efforts to open new markets.

The White House has embraced the TransPacific Partnership as its big trade initiative. And the TPP certainly holds promise – but only when and if more and bigger economies join.

The Administration is eying a big prize – a trade deal with the European Union. But I also have to agree with Mr. Gutierrez that it’s probably the wrong time for those negotiations, given Europe’s growing economic woes.

And then? What else is out there on the Administration’s agenda?

Gov. Romney, on the other hand, is claiming he will keep multiple balls in the air when it comes to the trade agenda. He’ll be looking for FTAs with the Association of Southeast Asian Countries – a move that Mr. Gutierrez both will open new markets and makes sure China doesn’t dominate Asia.

Mr. Gutierrez suggested a Romney Administration would also resurrect the Bush Administration’s idea for a Middle East free trade arrangement – helping to provide economic stability to a volatile region as well as open markets for US exporters. He also would stitch the existing FTAs in this hemisphere together to essentially create the moribund Free Trade Area of the Americas.

I am a not a Republican.

But it sure would be interesting to have something to write about...

(You can listen to my interview with Mr. Gutierrez on this page).

Mary Berger

Friday, June 15, 2012

WTD interview with Carlos Gutierrez

Here's an mp3 sound file of an exclusive interview with Carlos Gutierrez -- Republican Presidential candidate George Romney's chief trade advisor.  It was made on June 11 and published in Washington Trade Daily on June 12.  Enjoy.

Ex-Im Bank's Continuing Woes -- No Toilet Paper

The greatness of a man’s leadership is often measured in his ability to think and act on his feet.

What happened in the admittedly convoluted procedure of getting multi-year renewal of the US Export-Import Bank charter last month was a case in point. After nearly a year’s delay, Congress finally approved a compromise reauthorization bill for the Bank – which was finally deemed essential by everyone involved, including many of its critics.

Months before, the original deadline for renewal went by on October 2011. Congress extended the Bank’s charter through a series of short-term actions and did not take up full renewal until nearly May 30 this year. I was talking to Ex-Im Bank President Fred Hochberg well before the October 2011 deadline, congratulating him for his and his staff’s work in being available to members of Congress and working the process early on.

But I also cautioned him, informally, that he should not be overconfident when it comes to Congressional debates on international trade/aid agencies like his own. I remember telling him not to be surprised to see something unanticipated come at him "out of left field."

At that time there was a growing caucus of conservative Republicans in the House – known as the Tea Party – looking for some high-profile issue to pursue. They argued successfully that the government should not be using taxpayers’ money to fund an official export bank – essentially funding a welfare program for big American corporations.

I mentioned the Tea Party issue. He quickly dismissed my advice, saying – "not a problem."

Then another "left fielder" emerged in the debate. Domestic airline carriers – and their American Transport Association – had for a long time criticized the Bank for providing subsidized loans to foreign carriers without providing similar treatment for domestic carriers that buy Boeing aircraft.

But this year the debate took hold. The group and their Congressional backers – led by Delta Airlines – continued their criticism in the renewal debate saying the dual treatment undercut their bottom line and created an un-level playing field.

In combination with the Tea Party action, critics now had real traction in the debate.

It reminded me of the decades-ago coalition of US steel and textile sectors that successfully derailed Congressional consideration of some major trade-liberalization efforts in the 1980s and early 1990s.

The final Ex-Im Bank bill ended up with a number of "strings" attached relating to closer Congressional and public scrutiny of its activities and loans as well as a directive to the Administration to negotiate a global end to official export financing altogether.

All the while, Ex-Im chief Hochberg – (I think following political directives from the White House) – started up a highly vocal effort to blame the Republicans for the stalemate, instead of admitting to the Administration’s own dismal record of working with Congress on almost any issue.

Mr. Hochberg made it all worse – first by giving a series of interviews with Reuter news service blasting Republicans for trying to kill the Bank and put hundreds of thousands of American workers out of their jobs. He even participated in a couple of high-profile and well-publicized Capitol Hill press conferences with staunch Obama Democrats also anxious to score political points by blaming the Republicans.

Economically, it was a serious issue. So responsible House Republican and Democrat leaders joined hands to try to end the whole unnecessary brouhaha. Chief House Republican Leader, Rep. Eric Cantor of Virginia – whose conservative Southern Virginia district was one of birthplaces of the Tea Party movement – and liberal Democrat House Majority Whip Rep. Steny Hoyer (Md) – whose suburban Washington D.C. district has much invested in high technology manufacturing and exports – both worked hard and responsibly behind the scene to come up with a face-saving compromise.

Mr. Hochberg and his Congressional staff were left aside so as not to do any further damage.

So both sides reached a compromise only days before a final deadline when the Bank was sure to go out of business – at least temporarily.

The bottom line was that Mr. Hochberg was a simple White House soldier, following orders from the politico generals in the White House – with little concern for this own 80–year-old institution.

The Ex-Im Bank’s chief shortcomings in leadership showed up again just recently – at least in the view of this reporter.

Last week, at the occasion of a quarterly meeting of the Bank private-sector advisory committee, it was discovered – first hand by this reporter – that the men’s room on the 11th floor had no toilet paper. (Sources also told me that there was none in the ladies’s room).

In my opinion this situation was just as serious as renewal of the Bank’s charter.

Someone had the foresight to post written signs in the rest rooms that there was no toilet paper – a classic example of Washington bureaucratic theory in practice. It suggested using paper hand towels to do the job. (Obviously whoever wrote that message had no knowledge of plumbing.)

Not that my opinion means anything, but it seems to me that the President and Chairman of the Board of Directors of the US Export-Import Bank – wrapped into the personage of Fred Hochberg – should have had the authority, the foresight and the loose change in his pocket to direct one of his staff to visit the convenience store across the street to buy a couple of packages of paper to relieve the crisis, especially on the day the Bank’s advisory committee members would be using the restrooms. But for Washington, that was too easy of a solution and probably would have violated General Services Administration guidelines.

(An aside – If the Bank had been a union shop, there would have been no toilet paper crisis at all.)

Jim Berger