USTR defends free-trade strategy

USTR defends free-trade strategy

U.S. Trade Representative Robert B. Zoellick just returned from a 14-day, 10-country trip to drum up interest in the World Trade Organization's Doha Round of negotiations. But the most visible activity by U.S. trade negotiators in recent years has involved smaller-gauge deals with countries such as Jordan and Chile.

The attention paid to bilateral and regional trade agreements has forced the Bush administration to defend itself against complaints that its trade negotiators are hunting for rabbits when they should be tracking bigger game. The flurry of bilateral trade talks stems from passage of the Trade Promotion Authority Act of 2002, which gave the administration broad authority to negotiate trade agreements.

Appearing before the Senate Finance Committee, Zoellick defended bilateral agreements. "By pursuing multiple free-trade initiatives, we are creating a 'competition for liberalization' that provides leverage for openness in all negotiations, establishes models of success that can be used on many fronts and develops a fresh dynamic that puts America in a leadership role."

Committee members did not question the administration's pursuit of bilateral free-trade agreements. But some wondered whether so much energy should be spent negotiating agreements with countries such as Morocco and Bahrain, which may be politically important but are minuscule economically compared with Taiwan, Malaysia and the other 19 members of the Asia-Pacific Economic Cooperation.

"We need to re-examine how we choose partners for free-trade agreements. American workers, farmers and businesses deserve the most bang for the buck that we can get them. They deserve trade deals with commercially significant markets that will generate job growth at home," said Sen. Max Baucus, D-Mont. "Instead, as the General Accounting Office recently concluded, foreign policy considerations now dominate this administration's selection of trade partners."

In a report requested by Baucus, the GAO reported in January that although the USTR's selection process for choosing partners in free-trade negotiations has become more systematic in the last year, the administration might want to consider the costs of pursuing bilateral and regional accords so aggressively.

The report's finding on foreign policy's role in selecting potential partners was not surprising to Greg Mastel, chief international trade adviser at the Washington law firm of Miller and Chevalier and the top trade adviser for the Senate Finance Committee during the last Congress. "Foreign policy has always played a role in trade. That's why Israel was our first FTA," Mastel said.

Like Baucus, Mastel questioned the administration's choice of potential trade-agreement partners. "In general, the focus on bilateral agreements is appropriate now, in view that multilateral trade agreements have stalled. I do think, though, the administration has chosen poorly on where it's focusing its resources," Mastel said.

Coincidentally, the GAO study was released the same day that Zoellick released a letter to trade ministers across the globe urging them to put the failures of Doha Round negotiations in Cancun behind them.

Baucus said multilateral talks should take precedence over other trade talks. "Everyone knows that a Doha agreement would pack more economic punch than any bilateral or regional free-trade agreement," Baucus said when the letter was released.

The WTO's director general, Supachai Panitchpakdi, agreed. "How can bilateral deals - even dozens of them - come close to matching the economic impact of agreeing to free global trade among 146 countries?" he asked in a speech last month. "Bilateral and regional deals can sometimes be a complement to the multilateral system, but they can never be a substitute."

Bilateral agreements are not detracting from the USTR's pursuit of the Doha Round, said Christopher A. Padilla, assistant U.S. trade representative. "I reject the criticism entirely," Padilla said. "No country is doing more than the United States to move the Doha Round."