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Lockwood Smith: Second-term Bush presidency good for world trade

New Zealand Herald, Auckland

Lockwood Smith: Second-term Bush presidency good for world trade

10 November 2004


While terrorism and security are, for good reason, high in people’s minds right now, global trade developments are critically important for New Zealand over the next two to three years.

It is fair to question how President George W. Bush’s second term will affect that, compared with what might have happened under a Kerry administration.

Some might say it would not make much difference, that while President Bush talks the rhetoric of free trade, actions such as his support for farm subsidies and steel tariffs reveal a lack of conviction.

That view ignores some of the realities of international trade decision-making in the United States.

Had President Bush refused to sign the Farm Bill, with its big farming subsidies, and refused to impose the additional steel tariffs despite their economic absurdity, he probably would never have been granted trade promotion authority by Congress.

Don’t forget Bill Clinton failed to get that authority from the Congress in all his eight years as President.

Without trade promotion authority, American administrations are limited in what they can do in international trade negotiations.

It is that authority which gives an administration the power to negotiate trade agreements and leaves Congress able to say only yes or no to the entire deal and not able to pick it apart line by line.

Were individual members of the House of Representatives or Senate able to object to parts of negotiated agreements involving products or services sensitive to their constituency or state, negotiating trade deals would become impossible.

The Doha trade round at the World Trade Organisation, so important for New Zealand, could go nowhere if the US President did not have negotiating authority from the Congress.

And that’s what hung in the balance in the presidential election. Whoever won the election had to renew that trade promotion authority next year.

Another big vote in the Congress also involves whether or not the US remains in the multilateral trading system of the WTO.

While Senator Kerry’s voting record on trade was supportive, it is highly unlikely a Republican-dominated House and Senate would have granted him trade promotion authority.

A Democratic administration would have insisted on all trade agreements containing chapters on labour standards and the environment.

The Republican Congress would not have approved such agreements and, in recent times, there have not been enough Democrats in either the House or the Senate to grant trade promotion authority to a Democratic president without Republican support. It is clear, then, that the Bush second term is a plus for the Doha trade round that is so vitally important to New Zealand.

But what of New Zealand’s chances for a free trade agreement? That’s where things get complicated.

Some could argue that a Democrat administration under Senator Kerry may have been more willing to initiate a trade negotiation with New Zealand.

They would perhaps have been less beholden to the farming lobbies and perhaps less negative towards Helen Clark’s Government.

After all, she had not insulted them with her excruciatingly badly timed, unwise comments on what a Gore-led White House might have done in relation to the war in Iraq.

Discussions in Washington have made it clear to me, though, that even if a Kerry-led administration were to initiate trade negotiations with New Zealand, any resulting agreement would have struggled to get the necessary support of the Republican-dominated Congress.

Unquestionably, should the second-term Bush Administration decide to enter into negotiations with New Zealand, the resulting agreement would easily gain the support of the Congress.

The billion-dollar question, then, is will the Bush Administration negotiate with us. From my discussion in Washington with key players, just six weeks ago, the message was "don’t hold your breath".

* Dr Lockwood Smith is National Party spokesman on foreign affairs and trade.

 source: New Zealand Herald