Mr. Kirk stated early in his testimony a broad position, ”For all of the challenges in recent years and its imperfections, the world’s trading system and institutions provide a strong foundation for commerce that has expanded the economic pie and bound together nations.” He acknowledged that lower cost imports help U.S. consumers, but local plant closings due to foreign competition grab the attention of many people. He said when trade is fair we can adjust, but when it is not the government should intervene.
The nominee does not come to the task with “deal fever” as he calls it, and recognizes that the WTO has “to call a foul when rules are broken.” Working with our partners to advance the Doha Round of WTO trade talks will be a priority along with the stalled bilateral agreements and new initiatives. Despite the lack of “deal fever,” Mr. Kirk believes President Obama “will require the authority to negotiate new agreements and bring them to Congress for an up or down vote.”
Twice Mr. Kirk mentioned the need for internationally recognized labor and environmental standards in all trade agreements. He believes the May 10, 2007 bipartisan consensus on those issues between President Bush and the Democratic leadership in the House and Senate that was incorporated into the U.S.-Peru trade agreement reflects the values to be promoted as new markets are opened.
To no great surprise Mr. Kirk’s comments generally follow the themes set out late February in “The President’s Trade Policy Agenda.” That agenda included plans to move the Panama Free Trade Agreement relatively quickly while the Columbia and South Korean FTAs need “benchmarks for progress.” Non-tariff barriers are a key priority area as are intellectual property protections. “Improving” NAFTA without having an adverse impact on trade is also part of the agenda. Trade preference programs will be reviewed to help the poorest of developing countries. The trade agenda extends to trade financing availability which has become a major issue in the economic downturn.
At the hearing, some of the strongest words in favor of more open trade came from the Chairman of the Senate Finance Committee, Max Baucus (D-MT), in his opening statement. After raising the usual concerns about trade issues, Senator Baucus laid out an aggressive agenda including: enforcing rules in present trade agreements, reauthorization of trade preference programs, considering the three pending trade agreements starting with Panama and reducing sanitary and phytosanitary barriers.
The Senator gave particular attention to Asia saying that the U.S.-Korea FTA with some changes “could serve as a cornerstone of a broader economic agenda that embraces the dynamism of Asia.” He mentioned bilateral engagement with Japan, China, Vietnam, Malaysia and Taiwan, but also stressed the need for a regional approach. The U.S. will chair the Asian Pacific Economic Cooperation group in 2011, and Chairman Baucus said, “We must start planning now to make our APEC leadership meaningful.” He wants the Obama Administration to commit to leading the Trans-Pacific Partnership to successful negotiation of a trade agreement that would eventually include Japan and other countries with large economies.
U.S. farmers and ranchers can easily see the importance of trade with Asia. Over 95 percent of the world’s consumers live outside the U.S. with the greatest concentration of them in Asia. While they will suffer economic setbacks in the worldwide recession, their middle class will grow when economic growth resumes. Asia countries’ populations in relation to cropland area make them the best opportunity for increased markets of U.S. farm and ranch products.
USTR-designate Kirk is right to be concerned about existing trade agreements that have problems that need to be resolved. Increased trade will naturally lead to disagreements; that is why trade agreements have rules to handle disputes. While conflict resolution is important, it cannot be the central thrust of trade policy. Constantly butting heads over interpretations of trade agreements written ten or 20 years ago will not lead to more harmonious trade relations. It will simply lead to more disagreements over more and more minor issues.
New trade negotiations that open markets should be designed to politically leap over the litter from by past disagreements. That is very much of a two-way street where the U.S. also has to change policies in recognition of the concerns raised by other countries. For every WTO case where the U.S. can point fingers at the failures of others, several other countries can point out our own short comings.
Mr. Kirk noted in his remarks to the Finance Committee that 25 years ago he was an aide to Senator Lloyd Bentsen of Texas who was a member of the Committee and served as Chairman. The Senator was known for his ability to work with diverse interest groups and politicians to find a way to keep the legislative process moving forward. Mr. Kirk has that same challenge to move trade policy forward.
Advocating for trade expansion in a time of economic slowdown is never easy. Some participants in recent trade negotiations may have been too quick to assume that economic growth would always happen and new trade agreements were not necessary. This is the time to move aggressively as Senator Baucus suggested, and nominee Kirk appears to have the background to get the job done.