Commentary

Bush Re-election Will Benefit Trade with East Asia

By Daniel Griswold
This article appeared in Apple Daily, November 10, 2004.

President Bush’s re-election should send a calming signal to America’s trading partners in East Asia that the United States remains fully committed to trade liberalization.

Bush and his Democratic challenger, Sen. John Kerry, differed sharply during the campaign on a number of trade issues concerning China and East Asia. Bush affirmed his commitment to trade expansion and its importance to American prosperity. He refused to blame free trade for the loss of jobs in the United States during the recent recession. Regrettably, the Bush administration did impose some so-called “safeguards” on Chinese-made furniture and clothing items in the run-up to the election, but those actions were the exception and not the rule.

In contrast, Sen. Kerry tried to exploit anxieties about trade throughout the campaign — despite his pro-trade record in the Senate. To satisfy his labor-union base, the senator spoke frequently about jobs losses because of manufacturing imports from China and “outsourcing” of some technology jobs to India. He criticized Bush for not pursuing more special safeguard actions against Chinese imports and Section 301 cases against China for alleged currency manipulation and labor rights violations. Kerry also criticized Bush for going easy on China in the World Trade Organization and for not pursuing a special WTO session to discuss prolonging the global textile and apparel quotas that are due to expire at the end of this year.

Bush’s victory demonstrates once again that protectionism doesn’t pay in U.S. presidential politics. His victory gives him a mandate to continue aggressively pursuing bilateral, regional and multilateral trade agreements.

A second Bush administration can be expected to work hard to bring the Doha Development Round to a successful conclusion. The round was launched in large part because of the hard work of Bush’s tireless U.S. trade representative, Robert Zoellick. Many in Washington expect Zoellick to step aside for a new trade representative; if that happens, it is vitally important that President Bush choose a successor who will be equally committed to negotiating lower trade barriers.

A major priority of the administration should be a successful WTO ministerial in Hong Kong in December 2005, where much of the work of concluding the Doha Round may be accomplished. For the round to be successful, a second Bush administration must demonstrate leadership by resisting protectionist pressures from such domestic industries as steel and textiles. The administration must also be willing to negotiate curbs on “antidumping” law abuses in the WTO, despite widespread support in Congress for those laws.

The president should oppose any efforts by Congress to restrict the outsourcing of government or private sector service work to developing countries. Such restrictions would hurt the competitiveness of U.S. companies, deprive consumers of cost savings and jeopardize U.S. service exports to the rest of the world.

A major test of a second Bush administration’s commitment to the Doha Round will be how it handles re-authorization of the farm bill, which is due in 2006. Bush signed a huge increase in U.S. farm subsidies in 2002, but a successful WTO round will be unthinkable unless he is willing to impose discipline on a more pro-subsidy Congress this time around.

The administration should also work aggressively with Congress to enact the Central American Free Trade Agreement, which has already been signed. Bush trade officials need to negotiate bilateral and regional agreements with Thailand, the Andean countries of South America, and South Africa and its neighbors. Some Republican members of Congress want a free trade agreement with Taiwan, but such an agreement is unlikely given the sensitivities that would provoke with China.

Bigger GOP majorities in the U.S. Congress will make passage of future trade agreements a bit easier. The Democratic Party has practically abandoned its historical commitment to expanding international trade, especially in the House of Representatives, but now it will be more difficult for Democrats and their union and environmentalist allies to block future agreements. One of the most symbolically important changes in Congress occurred in South Carolina, where one of the most vocal protectionists in the Senate, Democrat Fritz Hollings, will be replaced in January by free-trade Republican Jim DeMint.

Even if Sen. Kerry had won, U.S. trade policy would not have shifted dramatically away from America’s post-war commitment to global economic engagement. But the re-election of President Bush promises faster progress in bilateral and multilateral negotiations and a diminished danger that America’s mutually beneficial trade with China and the rest of East Asia will fall victim to domestic political pressures.

Dan Griswold is director of the Center for Trade Policy Studies at the Cato Institute.