Trade specialists at an April 3 AEI panel discussion considered the future of U.S. trade policy. Topics included the ineffectiveness of the Doha round of World Trade Organization negotiations, the need to renew the president’s trade promotion authority, the use of bilateral and regional free trade agreements, and domestic and international attitudes toward globalization.
Representative Bill Thomas (R-Calif.), chairman of the House Ways and Means Committee, warned of a dangerous trend toward protectionism that he saw in recent debates over trade and immigration. Calling the 2006 elections pivotal for the future of U.S. trade policy, he warned of a potential victory for anti-free trade forces. He criticized Congress for the way it responded to the proposed deal under which Dubai Ports World would have operated six U.S. ports--an incident he considered illustrative of the anti-globalization and anti-free trade sentiments in Congress.
Chairman Thomas also criticized the European Union for its unwillingness to agree to increased trade liberalization. In fact, he stated that if irreconcilable differences on trade continue to persist between the United States and the European Union, the United States should part ways and pursue further liberalization in spite of Europe. Given the standstill at the multilateral level, Chairman Thomas advocated the use of bilateral trade agreements under which those countries offering the best access to U.S. goods in their domestic markets would be rewarded with similar access to U.S. markets, particularly for the least developed countries. He argued that bilateral agreements can lead to regional free trade agreements, citing how U.S. negotiations with Bahrain, Oman, and the United Arab Emirates have motivated Saudi Arabia to consider liberalizing its trade policies.
Finally, the chairman responded to a question on immigration reform by noting that the problem will only be resolved when immigrants come to the United States because they want to, not because they feel compelled to by the lack of economic opportunity within their own countries. Trade liberalization in immigrants’ home countries, according to Chairman Thomas, can encourage the development of profitable domestic industries and adequate employment.
AEI’s James K. Glassman discussed problems in global trade, including the stalled Doha round of the WTO, which he blamed in part on the unwillingness of developed countries to lower trade barriers that protect domestic agriculture and the counter-refusal by developing countries to lower their own barriers until the developed countries act. Citing a recent World Bank study, he noted that if developing countries would unilaterally reduce their own barriers, they would stand to gain $111 billion.
Jeffrey Schott of the Institute for International Economics praised U.S. efforts to tie trade policy to broader foreign policy goals, noting that in the era of globalization, one cannot separate the two. AEI’s Claude Barfield likewise emphasized the efforts of the Bush administration to utilize trade to accomplish broader diplomatic, security, and political goals. Schott further proposed that Congress must reauthorize trade promotion authority in order for the United States “to carry on an effective trade policy in the future.”
Panelists also considered the importance of free trade agreements. Glassman saw a surge of protectionism in the Congressional response to the Central American Free Trade Agreement, which passed by only two votes. Lael Brainard of the Brookings Institution warned that it is difficult to conduct trade policy with such slim vote margins. She criticized U.S. bilateral trade arrangements for failing to lead to broader regional agreements or to multilateral liberalization, and she warned that the United States is losing ground by not participating in regional trade agreements.