by James Bacchus, former chairman of the Appellate Body of the WTO | Published February 6, 2009 at 1:06 PM
International trade does not seem to be high on the economic agenda of the new president of the United States.
Soon it will be. The World Bank recently forecast that world trade will shrink by about 2% in 2009 -- the first such contraction since 1982.
As president of the world's leading trading nation, Barack Obama will have no choice but to address trade.
When he does, he will discover that many of the questions he will face on trade as president will not be those he was asked about in his campaign.
Here are just a few of the many questions President Obama will need to answer.
The U.S. is busy printing money to pay for bailouts of struggling
industries. The auto industry has already received a down payment on a
bailout. Other industries are lining up. What the U.S. calls bailouts
are, under World Trade Organization rules, called subsidies. Illegal
subsidies are subject to countervailing duties and other trade
sanctions. Will subsidies provided to U.S. auto or other industries be
consistent with WTO rules?
While the world strives, belatedly, to conclude a new global
agreement on climate change, congressional Democrats will wish to move
forward quickly with national climate change legislation. Any such
national measures by the U.S. will surely be challenged in the WTO. How
can the measures on climate change contemplated by Congress be shaped
to be consistent with WTO rules?
Congressional Democrats are eager to bring a complaint against
China in the WTO for currency manipulation. Without doubt, Chinese
currency manipulation has been harming U.S. trade. But do Chinese
exchange actions meet the WTO legal test in that they "frustrate" the
intent of the General Agreement on Tariffs and Trade? If so, can the
U.S. prove it? And could the exchange actions of the U.S. later
withstand the same scrutiny in the WTO?
Many Democrats are determined to include labor and environmental
standards in all international trade agreements. Worker rights and
environmental resources are certainly deserving of international
protection. But is the U.S. willing to be judged by the same labor and
environmental standards it would establish for others?
Obama is committed to a review of the North American Free Trade
Agreement with Canada and Mexico. After he concludes that he does not
really want to retreat from Nafta, how will he then be able to persuade
the American people of the national need to advance Nafta toward
further regional economic integration to meet the challenge of Chinese
and other global competition?
The U.S. has spent much of this decade concluding bilateral free
trade agreements, while the multilateral Doha Development Round of WTO
negotiations has stalled. Free trade agreements among WTO members are
permitted under the GATT as an exception to the WTO's
most-favored-nation rule of nondiscrimination. Is the U.S. prepared
with a defense if some WTO member claims in WTO dispute settlement that
one of these FTAs -- such as, say, the Nafta -- is not eligible for
Congress recently passed a farm bill that increases
trade-distorting agricultural subsidies. Developing countries with a
comparative advantage in agricultural trade seek significant cuts in
agricultural subsidies from both the U.S. and the European Union in the
Doha negotiations. Without offering such cuts, how will the U.S. secure
concessions from developing countries in manufacturing and other
sectors vital to American competitiveness?
Developing countries are hoping that, somehow, a successful
conclusion to the multilateral trade negotiations will resolve their
agricultural disputes with the U.S. If Doha fails, the U.S. is likely
to face a series of new WTO cases challenging its entire agricultural
subsidy regime. Is the U.S. ready to defend -- and to win -- WTO cases
on cotton, rice and perhaps other U.S. farm products?
The rest of the world is waiting for Obama to decide whether the
U.S. will make a serious effort to conclude the Doha Development Round
successfully. As important as it is, Doha reflects a traditional
20th-century trade agenda -- largely limited to tariff cuts and
conventional market access. If the U.S. is unwilling to spend the
political capital needed to conclude Doha, then what hope is there that
the WTO-based trading system can go on from Doha to address a
21st-century trade agenda -- including high technology, technical
standards, intellectual property, Internet commerce, investment, labor,
environment, energy, financial regulation, currency exchange rates and
James Bacchus is a former Democratic member of the U.S. Congress
from Florida, a former chairman of the Appellate Body of the World
Trade Organization and the author of the book "Trade and Freedom." He
practices law in Washington.