logo logo

Political issues weigh on trade talks

China Post, Taiwan

Political issues weigh on trade talks

By Evelyn Iritani, Los Angeles Times

6 September 2006

At issue are commodities as varied as rice, apparel and automobiles, as well as lucrative new markets in banking and other financial services, with potentially billions of dollars in commerce at stake.

But for several countries negotiating trade pacts with the U.S., the outcome may have less to do with economics than with American election-year politics.

A last-minute push by the Bush administration to expand exports and strengthen alliances in Asia, Latin America and the Middle East could be derailed by the crowded congressional calendar and other political issues, trade experts say.

At stake are dealings with some of the United States’ largest trade partners. U.S. Trade Representative Susan C. Schwab just returned from Asia, where she pressed officials in Beijing to help restart global trade negotiations that were suspended last summer.

Trade officials from the U.S. are meeting with their South Korean counterparts in Seattle on Wednesday to work on a bilateral deal that would be the biggest of its kind since the North American Free Trade Agreement took effect in 1994. Among other provisions, the pact would ease barriers for American beef, rice and autos in South Korea, which conducted US$72 billion last year in two-way trade with the U.S.

But observers say time is running out for the Bush administration, which has already acknowledged that it is unrealistic to expect that a global trade deal will be completed before next summer. That’s when the president loses the so-called trade promotion authority that allows his administration to negotiate complex pacts and put them before Congress for up-or-down votes without amendments.

Advocates of the deal with South Korea also are pushing to make that deadline. They say the U.S. needs to bolster its presence in the region, given the growing influence of China as well as North Korea’s nuclear ambitions. Although the trade pact has strong support from U.S. industries such as banking, aircraft manufacturing and farming, officials in Seoul face fierce opposition from a powerful farm lobby that warns of an influx of cheap U.S. rice and other commodities.

"There just isn’t enough time to bring home a U.S.-Korea free-trade agreement absent some dramatic, unforeseen breakthrough," said Daniel Griswold, director of the Center for Trade Policy Studies at the Cato Institute in Washington.

Domestic politics also play a big role in the trade agenda in Washington. When members of Congress return from their summer break Tuesday, the agenda will be packed with pressing budget issues.

Republican leaders are reluctant to call for votes on contentious trade issues when they have so many hotly contested seats in the Nov. 7 election, said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. The Washington-based group, which represents the domestic textile industry, is sharply critical of U.S. trade policies with China.

Congress, which is scheduled to adjourn in early October, is expected to reconvene after the election for a lame-duck session. The potential change in leadership in the House of Representatives from Republican to Democratic could aggravate trade tensions, experts say.

In recent years, Democratic leaders have criticized the Bush administration’s trade policies, saying they do not provide enough protections for labor and the environment. It took last-minute lobbying by the White House to pass the Central American Free Trade Agreement last year.

Economist Jagdish Bhagwati, a senior fellow at the Council on Foreign Relations in Washington, believes that a strong push from President Bush could get the so-called Doha round of global trade talks — named for the city in Qatar where they were authorized — back on track, possibly even in time for completion before he leaves office. But Bhagwati acknowledged that it would be politically risky, given the president’s low public approval ratings. It also would require fence mending with officials in Europe, India and Brazil.

Deputy U.S. Trade Representative Karan Bhatia said the administration had not eased up on its "aggressive" agenda He expressed confidence that Congress would tackle legislation removing the final barriers in the U.S.-Vietnam trade relationship and approve bilateral pacts with Peru, Colombia and Oman this year. He also said his agency was on track to complete the deal with South Korea by next summer.

"I do believe we can do these deals before TPA expires," he said, referring to the administration’s trade promotion authority.

Trade observers say the bill granting Vietnam permanent normal trade status has a good chance of passage because it has strong bipartisan support. Approval would smooth the way for Vietnam’s entry into the World Trade Organization in the fall. Bush is scheduled to visit Hanoi in November for the Asia Pacific Economic Cooperation forum.

Smooth sailing is far from assured for the other agreements, whose importance is more strategic than economic, trade experts say.

The Oman trade pact is part of the administration’s plan to promote the economies of the Middle East, which have been hurt by the worsening violence in the region, while encouraging the opening of closed industries and the privatizing of state-owned companies.

Deals with Peru and Colombia are an effort to bolster the U.S. position in Latin America, where growing resistance to U.S.-led trade liberalization has prevented the administration from pursuing a free-trade area stretching from Alaska to the southern tip of South America.

Peru is eager to complete its deal before year’s end, when Andean nations will lose the trade preferences they were granted under an agreement aimed at helping them diversify their economies away from coca leaf, the raw ingredient in cocaine.

Peru’s new president, Alan Garcia, is expected to visit Washington next month. He recently appointed developmental economist Hernando de Soto as a special envoy to lobby for the deal in the United States.

Renzo Villa, a commercial secretary in the Peruvian Embassy in Washington, said the agreement had "a lot of support" from the Peruvian people. He said part of De Soto’s job was to ensure that the country’s poorest citizens enjoyed the benefits of any agreement.

But as in the other cases, accord between the White House and its foreign counterparts is not enough to ensure that a deal can be completed.

Democratic leaders, notably Rep. Sander M. Levin of Michigan, have criticized the Peru agreement, citing labor and human rights abuses in that country. Congressional aides say that could make it very difficult for the administration to push for a vote this fall.