U.S. Nears a Crossroads on Trade

By SEWELL CHAN

Published: March 10, 2010

WASHINGTON — After a year in which global exports declined 12 percent in the biggest contraction since World War II, trade policy is heating up again.

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Andrew Harrer/Bloomberg News

Ron Kirk, the United States trade representative, said labor unions had “a seat at the table” when discussing free-trade deals.

But the question is whether the United States is prepared to lead the way or whether protectionist pressures will make it all but impossible for the Obama administration to engage fully with the country’s trading partners.

“If you’re serious, as the Obama administration is, about being a leader in the multinational system, you can’t not provide leadership in the international trade arena,” said Robert Z. Lawrence, a professor of international trade and investment at the Harvard Kennedy School.

On Wednesday, the director-general of the World Trade Organization, Pascal Lamy, met with the Treasurysecretary, Timothy F. Geithner, and with the United States trade representative, Ron Kirk, to discuss American misgivings about the long-stalled Doha round of trade accords, which began in 2001.

The Obama administration is also dealing with disputes with Mexico and Brazil over American restrictions on trucking and subsidies for cotton growers.

In the House, Mr. Kirk met with lawmakers on Wednesday to discuss talks on an Asian-Pacific regional trade agreement that are to start Monday in Melbourne, Australia.

And in the Senate, there is interest in completing free-trade agreements that the Bush administration negotiated with Colombia, Panama and South Korea. The deals have languished over concerns about Korean restrictions on auto and appliance imports and worker rights in Colombia, but also because any trade-opening pact faces a struggle in Congress with unemployment so high.

Mr. Obama has announced a goal of doubling exports in five years, and he plans to deliver a speech Thursday outlining steps to achieve that goal.

All told, the developments amount to a new degree of attention on trade. But so far, supporters of freeing up trade say the administration has been slow to move.

“I love what the president said about doubling exports, but we haven’t seen any action to go with it,” Representative Kevin Brady of Texas, the top Republican on the trade subcommittee of the House Ways and Means Committee, said.

Similar sentiments were voiced last week when Mr. Kirk presented the administration’s annual trade agenda to Congress.

Appearing before the Senate Finance Committee, Mr. Kirk was peppered with questions on the proposed bilateral accords with Colombia, Panama and South Korea. PresidentGeorge W. Bush reached an agreement in principle in May 2007 to attach environmental and worker protections to the accords, but progress has stalled.

“Labor has not delayed our move on this, but labor does have a necessary voice and a seat at the table in this administration,” Mr. Kirk told Senator Charles E. Grassley of Iowa, the top Republican on the committee.

He added: “We don’t want trade to become the next wedge issue. So it means that those of us in Texas and Iowa and those at Caterpillar have to care and listen to the concerns of those, whether it’s in Detroit or Pittsburgh or others, that may feel like they haven’t benefited from this.”

Mr. Lamy’s trip to Washington, which was to include meetings with crucial lawmakers and with Richard L. Trumka, the A.F.L.-C.I.O. president, is intended to spur interest in the Doha round before an important “stock-taking exercise” begins in Geneva on March 22.

“The idea is to explain the situation as it is and to listen to people’s views here about possible ways to move the negotiation forward and give it momentum,” a W.T.O. spokesman, Keith Rockwell, said.

But hurdles remain. The nominations of Michael Punke as ambassador to the W.T.O. and Islam A. Siddiqui as chief agricultural negotiator have stalled in the Senate.

More significant, lawmakers in both parties say they believe that large emerging economies like Brazil, China and India need to give ground on opening their markets before the United States can agree to more liberalization.

Senator Blanche Lincoln, an Arkansas Democrat who faces a tough re-election challenge, told Mr. Kirk that the current text of the Doha agreement lacked “the proper balance between the concessions that are demanded of the United States and what we expect our trading partners to demonstrate as their commitment to opening up markets.”

The administration also confronts two trade disputes.

Brazil threatened last week to raise duties on a wide range of American-made imports, including cars and cosmetics, in a confrontation dating to 2002. The dispute concerns subsidies intended to buffer cotton growers from variations in commodity prices. W.T.O. arbitrators last year found the subsidies to be in violation of American agreements, and authorized Brazil to retaliate.

Brazil has not yet imposed the retaliatory measures, which could total $591 million. Gary Locke, the commerce secretary, went to Brasília on Tuesday, along with Michael Froman, deputy national security adviser for international economic affairs, and Francisco J. Sánchez, senior adviser to the International Trade Administration. But they said little afterward about whether a compromise had been reached.

On another front, the United States Chamber of Commerce, the National Association of Manufacturers and other business groups said Tuesday that Mexican tariffs had cost billions of dollars in lost exports and jobs.

Last year, under pressure from unions, Congress moved to cancel a program that allowed Mexican trucks to cross the boundaries of the commercial border zone and move further into the United States, under a provision of the North American Free Trade Agreement. Mexico retaliated by applying $2.4 billion of tariffs on manufactured and agricultural products.

Meanwhile, senators last week hammered away at concerns raised by constituents.

Debbie Ann Stabenow, a Michigan Democrat, accused the Chinese of “cheating” by subsidizing imports. Mrs. Lincoln asked Mr. Kirk about help for catfish farmers; Pat Roberts, a Kansas Republican, about beef; Thomas R. Carper, a Delaware Democrat, about poultry; Michael B. Enzi, a Wyoming Republican, about soda ash; and Maria Cantwell, a Washington Democrat, about European subsidies to Airbus, a chief rival ofBoeing.

Above all, the lawmakers urged action. “The patience of the Congress is getting thin, at least for many of us, on these subjects,” Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, told Mr. Kirk.