Business and Foreign Policy

DESTINATION UNKNOWN

Throughout most of American history, commercial interests have played a central role in foreign policy, and vice versa. During the next few decades the interaction between them will become more intense, more important, more difficult to manage, and more complicated for the American public to understand. The second Clinton administration should lay out a framework for this interaction to provide the necessary guide for setting priorities, making difficult tradeoffs between economic and foreign policy issues, and gaining popular support.

In mid-1997 it is not clear where either Washington or the American business community is headed. The president's first term ended on a note of ambiguity. The early enthusiasm for aggressive trade negotiations -- for NAFTA and GATT and with Japan -- was absent in the 1996 election as trade liberalization, possibly the administration's greatest accomplishment, was nowhere on the political agenda. High-profile trade missions had wound down even before the death of Secretary of Commerce Ronald H. Brown in a plane crash while on a mission to Bosnia in early 1996. A Republican Congress made it a high priority to eviscerate the Department of Commerce, the Overseas Private Investment Corporation, and the Export-Import Bank in the name of slashing "corporate welfare," and campaign contributions from abroad raised a host of questions about whether America's commercial diplomacy, particularly in Asia, was for sale. The administration's efforts to save the export promotion agencies seemed hollow, and the president's defense of aggressive commercial engagement was less than resounding. Perhaps this was just a hiatus while a new administration and Congress got organized. But it was likely more than that: the executive branch had lost its laser-like focus on the importance of foreign markets to the United States, and a business community that since 1995 had been distracted by tax cuts and deregulation had become complacent about its long-term competitive position in the world economy.