Hore-Belisha knew something about tough negotiations. In the 1930s, he tried to convince Prime Minister Neville Chamberlain to increase military spending–without success, and to Europe’s regret.
If he were to look at the way U.S. trade talks have gone lately, he’d certainly want to take a look up our sleeves–and he’d find something there. For all our high-minded rhetoric about the importance of trade liberalization, it seems like we’re holding back whenever we sit down with another country to talk about lowering trade barriers.
That’s a big mistake. In trade negotiations, we need to put all our cards on the table. For good measure, maybe we should wear short-sleeved shirts, too.
We’ve just completed an important trade pact with Australia. I hope that Congress doesn’t allow election-year politics to get in the way of approving a worthwhile deal with one of our top allies. At the same time, I believe the agreement should have been better.
The Australians wanted us to open our markets more than we were willing to expose them. We basically took sugar off the table. You might say we shoved sugar up our sleeves. We almost did the same with beef and dairy products–it’s going to take nearly two decades before our restrictions on Australian products are phased out. A five or six year ‘phasing period’ should be long enough – anything more than ten years is a cop-out.
However, I’d rather take half a loaf than none at all–but that isn’t going to stop me from wishing for a full loaf. We could have had a much better trade agreement with Australia if we weren’t so willing to protect certain industries from foreign competition.
I understand that every country has import-sensitive (politically-sensitive) commodities and that these must be treated with great care in trade talks. I’m a realist–but I’m also a realist who doesn’t like to take no for an answer.
For years we urged Japan to allow American rice growers and beef producers to have access to Japanese consumers. This was a very touchy subject because rice is so central to Japanese culture. It’s virtually part of their religion and a staple crop to boot. Moreover, Japanese rice farmers are high-cost producers. Their beef farmers are also high-cost producers, putting Japanese beef prices in the stratosphere. The Japanese consumers responded by not eating much beef. That’s always a consumer response to very high prices.
The Japanese trade negotiators said rice and beef were non-negotiable —- they were “off the table”. (I know – I was there.) At that point, we might have given up on Japan, chalking up our failure to the country’s national mystique. But we persisted. Our negotiators hung tough and the trade barriers finally started to come down. We’re now selling some rice and beef to Japan.
The Australians probably will say something like that about us, with regard to our beef and dairy sectors. They can’t say the same about sugar, which we took off the table entirely–and which, by the way, is enormously less important to American culture than rice is to Japanese culture.
We’re going to pay for this decision–and I don’t just mean that prices of sugar and sugar-containing products for ordinary American consumers will be higher than they should be — though that is one direct consequence. The big issue is it will give other countries an excuse to keep their own politically-sensitive commodities off the bargaining table. Maybe they’ll keep some of their not-so-sensitive ones off the table as well. Future trade deals with other countries will be impoverished. We may continue to make slow progress in our bilateral talks, but not at the pace we’re capable of setting.
If the worldwide leader in calling for global free trade is willing to block certain of its own commodities from international competition, then it cedes the moral high ground. Suddenly protectionism becomes okay because ‘everybody’s doing it’.
“It’s so ironic that perhaps the biggest challenges to U.S. leadership on global trade liberalization comes from inside–not outside–America,” wrote Supachai Panitchpakdi, director-general of the World Trade Organization, in the Wall Street Journal last week. “The world hears a great deal from those Americans who oppose trade liberalization; we need to hear more from those who not only understand its challenges, but also its opportunities.”
We can begin by assuring the world that, from here foreward, the United States intends to pass the Hore-Belisha test: All our cards are on the table and there’s nothing up our sleeves.