New Deals Give Bush Building Blocks for Trade

Although overshadowed by the presidential contest, two little-noticed initiatives have breathed new life into U.S. trade policy. The outgoing Clinton administration has launched fresh negotiations that the Bush team can commandeer to move its free-trade agenda forward in two vital regions of the world.

Specifically, the proposed trade deals with Singapore and Chile could reinvigorate visions of liberal trade and capital flows throughout the Asian Pacific and the Western Hemisphere.

After a golf game at the November meeting in Brunei of the annual Asia Pacific Economic Cooperation summit, Prime Minister Goh Chok Tong of Singapore and President Bill Clinton agreed to negotiate a bilateral free-trade area.

When it heard the U.S.-Singapore announcement, the Chilean government was outraged. During the 1990s, the U.S. had repeatedly led Chile to believe that a free-trade agreement was in the offing, only to pull back in the face of domestic political complications.

From the perspective of the proud Chileans, the Clinton administration was showing preference for an authoritarian Asian state over their own Western Hemisphere social democracy.

The Chileans quickly pressed the U.S. government to place Chile back in the trade queue. On Nov. 29, within two weeks of the U.S.-Singapore bombshell, the U.S. and Chile announced an agreement to start negotiations on a bilateral free-trade accord.

These two sudden initiatives come on the heels of the Oct. 24 signing of a free-trade accord between the U.S. and Jordan. While driven mainly by U.S. strategic concerns in the Middle East, this accord suggested that the United States might be open to bilateral trade deals.

Singapore and Chile have been pursuing bilateral trade accords with numerous partners. Both economies are very open to international trade and investment flows and are always on the lookout for new markets.

As is often the case, U.S. trade policy is responding to initiatives pressed upon it from smaller countries. This reality belies the common view that it is the U.S. that imposes its agenda on the rest of the world.

The proposed trade deals do serve to jump-start a dead-in-the-water U.S. trade policy. Other than the no-brainer congressional decision to support China’s entry into the World Trade Organization, U.S. trade negotiators have faced one frustration after another.

Intended to launch a major global trade round, the 1999 Seattle ministerial meeting dramatically collapsed (and arguably stoked Ralph Nader’s presidential campaign and thereby contributed to Al Gore’s defeat).

The Clinton administration’s two big regional economic initiatives--to create free-trade zones in the Asian Pacific and in the Western Hemisphere--have floundered because of foot-dragging at home and in key regional nations.

Trade liberalization in APEC was harpooned by Japan two years ago when it refused to expose its domestic fish and forestry interests to international competition. In the Western Hemisphere, Brazil has hoped to consolidate its own South American trade bloc before engaging the U.S. in designing a free-trade area for the entire Americas.

At home, U.S. trade policy also has been derailed by the controversy around the treatment of labor rights and the environment in trade accords. Here, the U.S.-Jordan trade deal may signal a way out: signatories essentially pledge simply to implement their own national labor and environmental laws.

The Clinton administration has said that it will seek labor and environmental provisions along the lines of the U.S.-Jordan deal in the Chilean and Singaporean negotiations. At least some congressional Republicans and Democrats welcome such a compromise approach.

The new Bush team will face two early foreign policy tests where the new bilateral trade talks could be very useful.

In April, Bush will attend the third Summit of the Americas in Quebec City, where the vision of a regional free-trade zone will be revisited. He could build on the momentum generated by the U.S.-Chile negotiations to embrace the Canadian proposal to wrap up the talks by 2003.

Then, in October, Bush will attend the next APEC summit in Shanghai. The U.S.-Singapore deal will give him ammunition to reaffirm the APEC vision of open trade and investment flows throughout the Asian Pacific.

Fearful that Singapore and Chile will gain preferential access to the large U.S. market, other nations in the Asian Pacific and the Americas will likely find renewed interest in regional trade liberalization. And Asian and Latin American nations will again compete with each other to negotiate access to the lucrative U.S. economy.

Taken on their own merits, U.S. trade deals with Singapore and Chile can have some economic value. But the real opportunity for the Bush administration is to transform those accords into building blocks for more ambitious regional trade agendas throughout the Asian Pacific and the Americas.