Democratic Leadership Council calls for new direction on trade policy
July 23, 2009
World Trade\Interactive
The Democratic Leadership Council has released a report outlining the new trade policy it hopes the Obama administration will adopt. The report was authored by Ed Gresser, director of the DLC’s Global Economy Project and a longtime supporter of pro-trade policies.
The report argues that U.S. trade policy has made little progress over the last decade and that today’s trade agenda has three major problems. The first is the existence of “archaic tariffs,” primarily on clothing, footwear, luggage and household linens, that do not protect jobs “but are very effective at obstructing growth and job creation in poor countries and large majority-Muslim states.” The second is the emphasis on free trade agreements that has dominated trade debate for the last decade. FTAs are delivering only modest results for the U.S. and poor results for its trading partners, the report states, and their effectiveness seems to be further waning “as companies value the flexibility of global supply chains more than the tariff benefits they receive through compliance with FTA rules of origin.” Third, the intense focus on agriculture in the Doha Round “has not led to multilateral trade progress on farm trade reform, but has nevertheless blocked potential progress on larger industrial sectors.”
While President Obama’s global economic policy has “started out very well” in most ways, the report continues, trade liberalization in particular “has been slower to show progress.” To remedy this, the administration should “clear the decks” by making a “major effort” to conclude the Doha Round and working to pass FTAs with Colombia, Panama and Korea. The report explains that “an abrupt and unilateral decision to drop the three pending FTAs, to say nothing of the Doha Round, would shock important alliances.” In addition, the FTAs “can bring quick benefits to American exporters at a time when exporters badly need help.”
Once this is done, the report states, the administration should shift the trade agenda to directly support its top objectives of recovery from crisis, improved relations with the world generally and Muslim states in particular, and developing new, high-tech sources for future domestic growth, innovation and high-wage employment. According to the report, this new agenda would include the following.
• shelving efforts to promote additional FTAs for the time being
• eliminating tariffs on goods from the low-income countries and large majority-Muslim states now excluded from FTAs and preference programs
• concluding sectoral agreements among the world’s major economies (though not necessarily all World Trade Organization members) to liberalize trade in goods and services in industries such as information and media, health technology and services, clean energy and environmental technologies
• promoting regional initiatives with Europe and Asia, which should be focused not on existing disputes or regulatory issues but on issues likely to emerge in the next decade, including nanotechnology, biotechnology, privacy and other technologically driven issues
• additionally, or alternatively, working to rationalize the existing fragmented FTA networks in Latin America and the Pacific to encourage regional integration and develop a strong and uniform set of labor and environmental rules
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