Bush’s pointsman has his job cut out

Business Standard, India

Bush’s pointsman has his job cut out

EXIM MATTERS

T N C Rajagopalan / New Delhi

21 March 2005

After weeks of uncertainty, President George W Bush has nominated as US Trade Representative Rob Portman, a Republican Congressman from Ohio, better known for his loyalty to the President than for any experience in international trade negotiations. He takes over from Robert Zoellick, who is now deputy to Secretary of State Condoleeza Rice.

Portman takes over at a time when the US trade deficit is at a record high at 6.3 per cent of the GDP and getting worse every day. The anger over the US trade gap with China-which swelled to a record $162 billion in 2004 -is mounting in US Congress. In his home state, thousands of jobs have been lost to China in the manufacturing sector.

Bush has set out an ambitious free trade agenda for Portman. “I have asked him to take on a bold agenda. We need to continue to open markets abroad by pursuing bilateral free trade agreements with partners around the world. We need to finish our work to establish a free trade area of the Americas, which will become the largest free-trade zone in the world. We need to complete the Doha Round negotiations within the World Trade Organisation to reduce global barriers to trade. We must continue to vigorously enforce the trade laws on the books so that American businesses and workers are competing on a level-playing field.”, said Bush.

All this is more easily said than done. Even as Portman was accepting the nomination, a group of 20 developing countries (G-20) met at New Delhi and called on rich countries to abolish all trade distorting farm subsidies in five years. They blamed the subsidies for artificially driving down prices and making their own produce uncompetitive.

In its own neighbourhood, the US faced a bitter trade war with Canada over high import duties on software lumber exports worth $10 billion to US and resumption of Canada’s cattle export to US. Last week, a US district court had halted import of beef from Canada, leading to a $300 million claim.

Across the Pacific, Japan banned beef imports from the US and across the Atlantic, talks between the EU and the US over subsidies to Airbus and Boeing hit a snag.

Meanwhile, pessimism ruled at the WTO. More countries are rushing into bilateral and regional trade agreements even as apathy and rigid posturing stalled the talks over Doha Development Round.

Last week, India pushed for a preferential trade agreement with Mercosur, a group of Latin American countries, and Australia went ahead with preparation for free trade agreement with the UAE to penetrate the West Asian markets.

Portman’s first challenge will be winning the approval of the Congress for a contentious free trade agreement with five Central American countries and the Dominican Republic.

Most Democrats and some Republicans have raised serious objections to the deal that touched off increasingly violent protests this week in Guatemala, where some fear that the trade agreement will hurt the poor in their country.

Portman seems better equipped to deal with the US Congress. But with his limited experience of international trade issues or negotiations, he seems poorly equipped to deal with the belligerent G-20 or other poor countries hurt by US farm subsidies and to steer the WTO to successful completion of the Doha Development Round.

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