Monday, January 26, 2015




President Obama Offers Free Trade as Reluctantly as Possible

President Obama has proven once again that he is his own worst enemy on trade policy. Despite expectations that he would make a strong push for trade promotion authority (TPA), President Obama offered only quick mention of trade in this week’s State of the Union address. 

Although he did ask Congress to pass TPA to help him complete free trade agreements, the president backed up that request with some of the weakest arguments possible. I’ll give you the entire two paragraphs here:

21st century businesses, including small businesses, need to sell more American products overseas. Today, our businesses export more than ever, and exporters tend to pay their workers higher wages. But as we speak, China wants to write the rules for the world’s fastest-growing region. That would put our workers and businesses at a disadvantage. Why would we let that happen? We should write those rules. We should level the playing field. That’s why I’m asking both parties to give me trade promotion authority to protect American workers, with strong new trade deals from Asia to Europe that aren’t just free, but fair.

“Look, I’m the first one to admit that past trade deals haven’t always lived up to the hype, and that’s why we’ve gone after countries that break the rules at our expense. But 95 percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities. More than half of manufacturing executives have said they’re actively looking at bringing jobs back from China. Let’s give them one more reason to get it done.

This is essentially a protectionist argument in favor of trade agreements. According to the president, the trade agreements his administration is negotiating will protect American workers from (1) China, (2) unfair competition, and (3) outsourcing. They’ll level the playing field and bring back jobs to America.”

Isn’t that what tariffs and subsidies are for?!

Free trade and free trade agreements are meant to open up the U.S. economy to foreign competition and opportunity. The result is economic growth, innovation, better quality of life, more jobs, higher wages, and international peace. President Obama could have based his argument on any one of those rationales. He instead chose to talk about who makes the rules. I suppose it shouldn’t surprise anyone that this president thinks economic success comes from government writing the best rules.

At the core of this focus on rules is the call for enforcement. The president says “we’ve gone after countries that break the rules at our expense.” He may be referring to bringing cases at the World Trade Organization, where the United States has won nine cases, mostly against China, since Obama took office. During that same period the United States lost 15 cases brought by other members—we are a notorious trade scofflaw, even when we write the rules. Ironically, the most common way the United States breaks the rules is through abusive antidumping measures, which technically count as part of Obama’s “enforcement” efforts. Sometimes, though, breaking the rules simply means selling lots of goods at low prices. For example, in a past address President Obama touted actions taken to protect the U.S. tire industry from mundane Chinese competition.

This enforcement rhetoric appeals to the ranks of trade-skeptic Democrats who routinely use foreign rule-breaking as an excuse for protectionism and a reason to oppose trade agreements. 

To Obama’s credit, perhaps knowing that the president is also a protectionist will convince some of those Democrats to support his trade agenda.

I doubt our negotiating partners overseas find the president’s “pitch” at all reassuring. Calling our trade partners cheaters who need to be reined in with new rules that benefit American companies and keep jobs in America is what protectionists do when arguing against free trade. It is a sad and cynical way to promote free trade agreements. 

Tuesday, January 6, 2015


At a recent trade forum in Washington, a veteran agricultural trade hand shared a panel with some US trade officials.  He said three times in an hour – “DOHA IS DEAD!”

On the same panel a ranking US agriculture official announced – in “meek” terms – new-found US support for a renewed Doha Development Agenda which since 2008 has been in “deep freeze.” The “new” attitude emerges as the United States takes credit for breaking the deadlock in Geneva with India over a much-touted Trade Facilitation Agreement and getting China to go along with restarted Information Trade Agreement talks in Geneva.  The latter talks have gotten stuck again, but most in Geneva say it is only temporary.

The USTR official told WTD that the United States and other Doha “skeptics” are taking another look at the multilateral trade negotiations – which officially got underway in late 2001, stalled in 2003 and again in 2008 and now can only be described as being on life support.

But the official indicated that the re-start must follow US strictures.  Members will have to take a re-look at the new realities of trade on the ground – especially in agriculture.  Washington will not agree to a resumption from where negotiations left off in 2008.  That already is a well espoused public US position made here and in Geneva.

The official, when talking about agriculture, was not specific about whether the talks should start from scratch, whether some controversial issues should be spun off for expedience or whether negotiators should simply set a date for conclusion and get done what can be done in that time-frame.

Developing countries – that see far more immediate and long-lasting benefits from a full multilateral round – are equally insistent on getting a re-start.  Agriculture is essentially squared away in the 2008 Doha modalities, they say.  And getting agreement on what was intended to be the essence of the Doha agreement should not be difficult – if the political momentum exists.

WTO Director General Roberto Azevêdo is sympathetic and has called for a roadmap by next July showing how members can complete the round.  And some are extrapolating that completion of the DDA could happen by the end of next year.  New European Commissioner for Trade Cecilia Malmström said that during a visit to Geneva last week.

Already getting down to work are several long-idled Doha negotiating committees under direction from the Director General.

Mr. Azevêdo appears to be “betting the bank” – and what’s left of the WTO’s reputation along with his own reputation – on success.

But to get back to the “Doha is Dead” proponent.  It is simple reality, he said, adding that “the world has to get over it.”  Bilateral, regional and plurilateral agreements – even those based in Geneva – are working well.  He suggested that abandoning those approaches to global trade liberalization would be counterproductive.

Over the past half decade during the Doha “freeze,”  I have noticed during similar conferences, seminars and simple speeches in a variety of forums an underlying snigger that followed any mention of Doha.  In recent months that rumbling of skepticism has become more pronounced – turning into chuckles.  At the most recent agriculture conference, the grumbling transformed itself into audible laughter.

I don’t know how the Doha renewal effort will work out.  But when the grumbling and giggles turn into full-throated belly laughs, I’ll give in.  

Jim Berger