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Bush game on trade - but...
Thu, Jan 31, 2008
The Straits Times
UN

ITED States President George W. Bush gave economic matters some welcome emphasis in his final State of the Union speech. But even his free trade commitment, which was strongly reaffirmed, has led to few successes. The going is likely to get tougher. Congress members, seeking re-election amid growing unemployment in a slowing economy, will sound and act protectionistic. Three free trade agreements - including one with South Korea - risk receiving the congressional thumbs-down. Last year Congress ended Mr Bush's 'fast track' authority under which deals were negotiated. He can still force a vote but would likely face prolonged wrangling. The accord with Seoul - the largest trade pact since the 1994 North American Free Trade Agreement (Nafta) - would, like other trade pacts, give US exports a considerable lift. But this by itself is unlikely to carry much weight with those legislators raised on parochial concerns.

Neither, it seems, do many of them - although they are unlikely to admit it - believe in Mr Bush's argument that American workers can compete worldwide. Their instinct is to protect jobs. The irony is that, with increasing globalisation, the US depends more and more for growth and job creation on its ability to sell abroad. Indeed, the Democratic presidential front runner Hillary Clinton implied the contrary recently, arguing that - with globalisation - trade theories may no longer hold. She quoted economist Paul Samuelson, slightly out of context, as saying that 'comparative advantage, as it is classically understood, may not be descriptive of the 21st-century economy'. She has indicated she would vote against the Korea agreement. This would amount to a shift from her previous stand in support of Nafta.

She has asked for 'time out' on the Doha Round that Mr Bush has pushed hard to revive. He and others who fly the free and fair trade banner would find it disappointing if Senator Clinton and her Democratic colleagues succeed in detracting Doha and other pacts with the red herring of labour, environmental and human rights standards. And what if she prevails against her rival, Mr Barack Obama, who is more nuanced on the issue, and the leading Republican candidates John McCain or Mitt Romney, both of whom largely favour free trade? Much sifting is needed to separate electioneering chaff from the economic realities that will confront the next president. But Mr Bush seems to have achieved as much as he could on this front.
 

 
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