A High-Risk Trade Policy
Article Summary and Author Biography
Washington's unwise return to economic "regionalism," evidenced by the many U.S. efforts to build new bilateral or regional free trade agreements, threatens to damage both U.S. foreign and U.S. trade policy. The United States should work instead to strengthen the WTO and the single world trade system it represents.
Bernard K. Gordon is Professor of Political Science Emeritus at the University of New Hampshire and the author, most recently, of America's Trade Follies: Turning Economic Leadership Into Strategic Weakness. An earlier version of this essay was presented to the Cordell Hull Institute in Washington, D.C.
A STEP IN THE WRONG DIRECTION
Robert Zoellick, the U.S. trade representative and the main force shaping U.S. foreign trade policy today, combines prodigious negotiating skills with an equally solid background in realpolitik. Nevertheless, the current American approach to trade, over which he has presided, promises to severely damage U.S. foreign policy and trade. At the heart of the problem is Washington's unwise return to economic "regionalism" -- an approach evident in the many U.S. efforts now underway to build new bilateral or regional trade agreements with a number of small trading partners.
Washington's regionalism aims, in principle, to induce the world's major trade actors, especially Europe and Japan, to complete the broader, multilateral agenda of the World Trade Organization (WTO). This strategy is no secret; in fact, it has been publicly discussed several times. In a letter to the author in late 2001, for example, Zoellick wrote,
I believe a strategy of trade liberalization on multiple fronts -- globally, regionally, and bilaterally -- enhances our leverage and best promotes open markets. As Europeans have pointed out to me, it took the completion of NAFTA [North American Free Trade Agreement] and the first APEC [Asia-Pacific Economic Cooperation] Summit in 1993-94 to persuade the EU to close out the Uruguay Round. I favor a "competition in liberalization" with the U.S. at the center of the network.
Zoellick's description of events in the early 1990s is dead on. That was a time when the former main framework for world trade, the General Agreement on Tariffs and Trade (GATT), was notoriously in trouble -- "GATT is dead," economist Lester Thurow declared at the time -- and its weaknesses led to the establishment of the considerably more institutionalized WTO. American efforts were key to that change, and the WTO's present Doha Round of negotiations likewise owes much to Washington. Two recent and very bold American proposals -- dealing with trade in agricultural goods and industrial products -- could make the Doha Round the most successful round thus far.
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