Any government pursuing trade negotiations abroad must have a solid trade constituency at home. This is especially true for the United States, which has not only led global trade liberalization, but also has a global constituency to keep in mind. In recent years, however, the American trade debate has taken a deeply polarized turn–a frightening and ironic twist for the world’s largest economy.
What can President Obama do to restore his trade constituency at home and renew U.S. trade leadership abroad? Support from four key pillars—the public, the private sector, Congress, and the White House—must be reinvigorated.
The Public Pillar
The public plays a significant role in how U.S. leaders construct trade policy; therefore, it must be actively engaged. Citizens need to know how trade impacts them and their families as well as the international community. They need to recall how their nation developed into the most powerful economy in world history: with an open and competitive spirit.
U.S. citizens need to remember the consequences of retreating from trade. The Great Depression provides the most painful example.
Without public awareness, misconceptions harden into false realities. The results of a recent Pew Global Attitudes poll, which surveyed 25 countries on whether trade ties “are very or somewhat good” for them, speak to the problem. The U.S. response, at 65 percent, was the third lowest.
U.S. citizens also need to remember the consequences of retreating from trade. The Great Depression, the most painful example, was greatly aggravated by U.S. tariffs and the retaliation they triggered. Intended to be a short-term response to domestic pressures, the tariffs instead contributed to a 66 percent drop in world trade and a surge from 9 percent to 25 percent in U.S. unemployment over a three year period. Today’s debate must highlight those numbers, and it must also emphasize that they occurred in a world not nearly as globalized as ours is today.
How should citizens of the world’s only superpower relate to others, especially those in developing countries?
Like any other public, U.S. citizens have the right to consider restricting trade. However, in addition to calculating the dire economic consequences of such action, they must also consider the ethical ramifications. How should citizens of the world’s only superpower relate to others, especially those in developing countries, where poverty, disease, and war battle human progress? Moreover, any systemic U.S. hostility toward trade could encourage emerging economies to ignore institutions that the United States worked hard to build.
While American opposition would prove fatal for the multilateral system, sustained opposition is avoidable. Not only is liberalization in the economic interest of the United States, but the principle of open trade is also deeply intertwined with that of free enterprise, a concept at the center of the American way of life.
The Private Sector Pillar
The U.S. private sector has historically played a central role in promoting open trade. It has helped shape agreements and has also built the resolve of the political community, both domestically and abroad.
However, business has not engaged seriously in the WTO’s Doha Round, nor has it pushed governments for a breakthrough. This must change, and not only in the United States. U.S. business must work with private sectors around the world and must also be present in international forums where trade decisions are made.
Rekindling private sector support for trade should be possible. After all, trade liberalization is pursued so that the private sector can move its merchandise more easily across borders, helping to create profits, economic growth, and work opportunities in the process.
The Congressional Pillar
Because the public needs to understand the value of trade, Congressional leaders must work to situate it locally: district by district, state by state, and nationally.
Thomas Donahue, President and CEO of the U.S. Chamber of Commerce, did exactly that when speaking in Michigan recently. He discussed how Michigan is becoming globally competitive in several sectors, how 10,000 companies there export $45 billion in goods and services, and how that export sector sustains more than 500,000 local jobs. Surely, most of the other 49 states have similarly compelling statistics, and they must be shared.
Local politics cannot afford to undermine U.S. global leadership.
At the same time, because of America’s superpower status, its political constituency is a global one: its trade policy matters for international prosperity as well. To better measure the impact of U.S. engagement—or lack thereof—more U.S. congressional leaders should get outside Washington and experience the trade realities facing other countries, especially the poorer ones.
If the United States ignores its global obligations, there will certainly be global ramifications, and those could lead to a nastier political scene at home. Local politics cannot afford to undermine U.S. global leadership.
In addition, in determining its policy, Congress must consider a special class of American exports: creativity, freedom, tolerance, democracy, and hope—in other words, the export of American values.
International trade should engender a bipartisan spirit in Washington. Both Republican and Democratic presidents have liberalized trade. For instance, Bill Clinton’s work in realizing NAFTA followed on Ronald Reagan’s leadership on the Canada–U.S. Free Trade Agreement. With this in mind, the two parties must once again rally the country around a strong multilateral trade mandate—one that includes a development dividend for poorer nations, which would render the global economy more equitable and sustainable.
The White House Pillar
The Obama White House must articulate its trade vision soon. Every day that goes by without one is another day lost on the trade front, and people increasingly suspect the worst—that the administration is a captive of protectionist forces, or that it is willing to barter trade in pursuit of other domestic issues.
Obama cannot view trade through a domestic lens alone. His trade policy will, in part, define his global leadership.
Today, trade has become a take it or leave it proposition in the United States. The president should reposition it within a broader package of political objectives—health care reform, pensions, unemployment insurance, wages, and education, for example. Because such issues strategically complement each other, the administration would have additional negotiating space as a result. In addition, Americans desperately need to embrace such a package if they are to prepare for global competition.
However, Obama cannot view trade through a domestic lens alone. His trade policy will, in part, define his global leadership, as well as his success in re-engaging America internationally. It will also provide insight into whether or not multilateralism can, in fact, trump unilateralism.
With this in mind, Obama could reframe his trade message by promoting governance reforms in global and regional trade systems. The WTO, for one, urgently needs to grow stronger and more relevant. A commitment from President Obama to provide the necessary leadership would be most welcome and would also appeal to some of his domestic constituencies.
The pillars of U.S. decision making must be reinvigorated soon to once again provide a visionary U.S. trade policy.
Obama must also encourage his G20 colleagues to expend political capital on the multilateral trading system. Indeed, they should dedicate the better part of a meeting to it, with a focus on providing the political will currently missing from Doha. They should consider a few central questions: How can the G20 develop common ground to overcome the remaining obstacles in Doha? In what specific ways can each contribute? What should come after the Round? And how can they keep protectionism in check?
Of course, the G20 is not a formal or universal body and so it cannot—and should not—dictate to others. Nonetheless, it is a valuable North-South political nexus with the potential to build a balanced and viable leadership—the lack of which often prevents institutions like the WTO from moving forward. Obama can and should harness this potential, while also reinvigorating domestic support.
In short, the world cannot afford the poisonous trade politics currently holding Washington hostage, nor can U.S. citizens. The pillars of U.S. decision making must be reinvigorated soon to once again provide a visionary U.S. trade policy that will serve the economic interests of America, as well as meet the aspirations of our global village.
Ambassador Sergio Marchi, former Canadian Minister for International Trade and Ambassador to the World Trade Organization (WTO) and former Chairman of the WTO General Council, is a Senior Fellow at the International Centre for Trade and Sustainable Development, in Geneva.
.jpg)
