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TRADE: Bush’s Bilateral Agenda Swims Against the Current

Analysis - By Emad Mekay

WASHINGTON, Oct 1 2003 (IPS) - The U.S. administration’s newly-minted post-Cancun doctrine favouring bilateral and regional trade deals rather than multilateral pacts is already banging into opposition both at home and abroad.

Two weeks after the collapse of global trade talks in Cancun, Mexico and six weeks before western hemisphere countries are due to start talks in Miami on the Free Trade Area of the Americas (FTAA), U.S. Trade Representative Robert Zoellick was en route Tuesday to Central America to help conclude a regional ”free trade” deal with five nations.

And in another sign the United States is forging ahead on its bilateral path, Chilean officials said Monday their Congress is likely to approve a free trade deal with Washington as early as next month.

The administration already has a packed free trade agenda until 2005, including deals with Singapore, Chile, the Southern Africa Customs Union, Australia, and Morocco, as well as renewal of the African Growth and Opportunity Act, the Enterprise for ASEAN Initiative and conclusion of the FTAA.

Washington’s existing free trade partners are Canada and Mexico (within the North America Free Trade Agreement, NAFTA); Israel and Jordan.

The renewed U.S. effort comes after the trade agenda of the administration of President George W. Bush suffered a major setback during the World Trade Organisation (WTO) negotiations in Cancun.

That is where developing countries banded together to oppose current trade rules they said harm poor nations, especially rich countries’ agricultural subsides for their farmers.

They also opposed extending WTO rules to new issues, such as investment and procurement, when Washington in particular refused to discard its unilateral approach and agree to make world trade a more fair process. The talks collapsed Sep. 14.

Despite the setback for its trade agenda, the administration quickly vowed that it would pursue its policy through a series of ambitious regional and bilateral agreements, with Zoellick boasting that individual countries were lining up to deal with Washington.

In an op-ed article in London’s ‘Financial Times’ last week, the trade representative said the United States will not wait for ”the won’t-do countries” and charged that the Cancun meetings were derailed because of ”increasingly radical rhetoric”.

”As WTO members ponder the future, the U.S. will not wait: we will move towards free trade with can-do countries,” he wrote.

But that approach has so far failed to win public support. On the contrary, it has drawn criticism from politicians, economists, protest groups, labour unions and even business organisations.

Clyde Prestowitz, president of the Economic Strategy Institute, a Washington-based economic think tank, wrote in ‘The Washington Post’ on Monday that the administration’s new tactic was ”ironic” because it was the United States that devoted significant effort and time after the Second World War to promote multilateral free trade.

Prestowitz, who was a trade negotiator in the Reagan administration during the 1980s, said that the Bush team would be better advised to use its unilateral approach to eliminate developing countries’ concerns rather than to strike more trade deals.

The United States, he said, ”should forget about being a shrewd Yankee trader and just cut the (agricultural) subsidies unilaterally”.

”Doing so would not only help U.S. consumers à it would help preserve the principles and framework of non-discriminatory global trade, to which this country has long been committed,” he said.

Under the new approach, Zoellick’s trip to sign the Central American Free Trade Agreement (CAFTA) takes on a new significance. The pact with the five countries of the region would be the U.S.’ first regional free-trade deal since the North American Free Trade Agreement (NAFTA) a decade ago.

But it also comes amid unprecedented criticism of Washington’s trade plans.

The CAFTA deal, which the administration wants done by Dec. 21, could face challenges from the U.S. Congress over concerns about labour and environmental standards in the Central American nations.

At home, there are worries that free trade in general is taking away jobs from Americans.

The loss of U.S. manufacturing jobs has intensified criticism of trade agreements among many of the 10 Democrats competing to win their party’s nomination in next year’s presidential election against Bush.

Many of the hopefuls accuse the administration of putting American families out of business, and say they would want tougher protections for U.S. workers as part of current and future trade agreements.

Perhaps more telling is that the U.S. public has turned against free trade.

An NBC News-‘Wall Street Journal’ poll on the economy and presidential race found the public holding a negative view of free trade.

A majority of those polled (54 percent) said free trade was ”not worth it”, while 35 were in favour.

The poll vindicates another survey in March 2003 by the research firm EPIC/MRA, which showed a majority expressing dissatisfaction with NAFTA.

When given three options for the future of NAFTA, hailed by Washington as a model for other free trade deals, only 21 percent of respondents said the agreement should continue as is.

Nearly 57 percent said NAFTA should continue with changes, while 12 percent wanted it ended entirely.

Free trade plans have also refuelled anger among interest groups and civil society organisations.

Thousands of protesters, from labour unionists to environmentalists to churchgoers, said they plan to travel to South Florida Nov. 16-21 to protest the FTAA meetings.

To compound Zoellick’s concerns, the new approach of unilateral deals has also been criticised by business, which, ironically, is supposed to be one of the deals’ main beneficiaries.

In a Sep. 23 letter to Zoellick, a coalition of business groups urged the administration to “stay the course” and demand a “comprehensive and commercially meaningful” FTAA rather than a watered-down version or small deals.

Internationally, Brazil, one of the developing nations that led the Cancun meeting to a grinding halt – and the co-chair of the FTAA talks – threatened last week that the hemispheric plan must be simplified, and Washington must cut its farm subsides, if the project is not to meet the same fate as the talks in Cancun.