Bill Day: Bring back the multilateral pact
San Antonio Express-News
Bill Day: Bring back the multilateral pact
15 January 2005
Now that Trade Representative Robert Zoellick is moving to the State Department as Condoleezza Rice’s deputy, U.S. trade policy may see a shift from small bilateral pacts back to big, sweeping multilateral trade agreements.
Such a switch, if it happens, couldn’t come at a more opportune time. U.S. trade policy is in limbo. Congress is awaiting the expiration of presidential trade promotion authority, and the so-called Doha Round of trade talks has been stalled since a conference in Cancun abruptly collapsed last September.
That stuff isn’t Zoellick’s fault, and I don’t mean to suggest that he has hindered trade. Under his watch, the U.S. has signed a number of trade agreements with other countries.
But that’s sort of what needs to be changed. Zoellick has been a big fan of bilateral agreements - such as a recent deal between the U.S. and Singapore - but hasn’t done nearly as much to promote big multination pacts.
We’ve been waiting several years to see a Free Trade Area of the Americas, for instance. Congress is supposedly deliberating the Central American Free Trade Agreement. But neither pact is going anywhere.
One of the few things that nearly all economists agree on is free trade. And most economists would prefer to see big multilateral pacts - something along the lines of the North American Free Trade Agreement, or the European Union. Small bilateral agreements bother them because they create a tangle of regulations and just don’t accomplish that much.
Renowned economist Jagdish Bhagwati, author of the book "In Defense of Globalization," criticized Zoellick and his bilateral approach during a trade conference in Dallas last fall.
"We’re probably going to do the world a lot of harm through bilaterals," Bhagwati said. "They’re destroying the world trade system."
A year earlier, Bhagwati had written an article in the Financial Times saying that Zoellick’s zeal to sign bilateral agreements fragmented developing countries’ bargaining power.
So why did Zoellick and the rest of the Bush team favor bilateral pacts? For one thing, they’re lots easier to achieve than a big multinational agreement. Look what happened at Cancun: Smaller countries banded together to demand changes from rich countries. The rich countries refused. Now they’re not even negotiating.
Bilateral agreements "provide an important safety valve if multilateral negotiations become stuck - an all-too-real possibility," wrote the Cato Institute’s Daniel Griswold, in response to Bhagwati’s Financial Times piece.
They also provide more political bang for the buck. It looks like you’re accomplishing something, and a trade pact with Jordan, for instance, probably wouldn’t cost you electoral votes in the Rust Belt.
But Bhagwati and the other bilateral skeptics are right. Multilateral agreements, as difficult as they may be to hammer out, are infinitely better than a jumble of individual agreements between nations.
I hope the Bush administration selects Zoellick’s replacement with that in mind. It’s time to get FTAA and CAFTA back on track.
