If free trade were a feline, the fur would be flying after the collapse of the Cancun World Trade Organization’s negotiations in Cancun. Many believe the demise of these talks was a serious blow to global trade liberalization, a harbinger of the growing worldwide muscle of protectionism. Yet, in the rough and tumble world of forging international trade agreements, U.S. Trade Representative (USTR) Bob Zoellick knows one thing for sure — there is more than one way to skin a cat.
Mr. Zoellick has been a long-time advocate of pursuing a multifaceted and simultaneous trade liberalization strategy — including global, regional and bilateral agreements. He calls this strategy the “competition of liberalization.” His approach is like a free-trade insurance policy — if one set of agreements stalls, we can pursue alternatives. “Bob Zoellick operates like a three-dimensional chess master in the international trade field,” said Rep. David Dreier, California Republican. Rather than a dead end for free trade, Mr. Zoellick’s post-Cancun plan and strategy means moving down different paths. This pragmatic approach promotes free trade at several levels.
First, securing regional and bilateral pacts gives the U.S. maximum leverage in broader global talks. This mutually reinforcing approach means better trade outcomes for the United States and more leverage at the bargaining table. “We all had high hopes for Cancun,” said Mr. Dreier, “but even though progress on the Doha development round has been delayed for now, Zoellick’s approach affords us the opportunity to advance our overall trade liberalization agenda through bilateral and regional agreements while we work to get global talks back on track.”
Second, engaging in global, regional and bilateral negotiations helps maneuver around obstinate trading partners. One administration official suggested this approach could show real promise with countries like Brazil. “The Brazilians were a problem in Cancun, and they might be in the Free Trade Agreement of the Americas, but if they are, we are poised to deal with their neighbors — putting significant pressure on them to not get left out in the cold.” Isolating Brazil from robust trading relationships hurts them, both in South America and globally.
Third, executing numerous bilateral agreements, when combined, can have as positive an impact on the U.S. economy as one big deal. Some academics questioned the significance of pursuing many smaller bilateral agreements. Yet, other evidence suggests the combined impact of these deals is significant. According to information from the Cato Institute and the USTR, combining the recently completed Chile and Singapore Free Trade Agreements (FTAs), along with the ongoing Morocco, Central America (CAFTA), South African, Australian and Bahrain FTAs, constitutes the fourth largest U.S. export market.
Finally, completing specific bilateral or regional agreements builds positive political support for free trade by knocking down bogus arguments difficult to refute in preliminary or proposed agreements. In the grammar of modern political discourse, it is common for opponents of free trade to posit exaggerated claims about how these agreements might “hurt the environment” or “kill jobs” in certain sectors. Mr. Dreier agrees. “The passage of Trade Promotion Authority has allowed the administration to successfully negotiate bilateral agreements that demonstrate the benefits of trade liberalization, which are evident even in areas pointed to by critics as free trade’s ‘failures,’ ” he said. Moreover, once citizens realize the tangible benefits of one free- trade agreement, it builds momentum for additional steps toward liberalization.
Over the last decade, the coalition in favor of free trade in the Congress has frayed. Free-trade advocates work harder each year, yet face a declining number of solidly free-trade votes, particularly in the House. At the same time, the chorus of neo-protectionists grows more vocal and militant, both in and out of government. Mr. Zoellick’s vision is to rebuild a positive, bipartisan consensus for trade liberalization, much like what used to exist in Washington following the Great Depression. Analyzing the votes on the recent Chile and Singapore Free Trade Agreements suggests the he’s having some success. Both passed with healthy bipartisan majorities, a pleasant outcome given the rising torrent of protectionism.
Rebuilding a bipartisan consensus for free trade isn’t easy: It demands a combination of political acumen, sound economic philosophy and diplomacy. Given his background in the White House, the Treasury Department and the State Department, Mr. Zoellick’s resume and strategies fit today’s complicated world environment. The cat may be out of the bag in terms of an expedited conclusion of the next global round, yet Mr. Zoellick’s multi-tiered approach may mean more purring and progress than hissing and rhetoric toward new momentum for trade liberalization.