Bush tied to protectionist votewinner

Despite President George Bush’s decision this week to lift his controversial steel tariffs, US trade analysts say they are sceptical he has made a clean break from protectionism.

The US president has his eye on next year's elections
The US president has his eye on next year's elections

Heading into next year’s presidential election, Bush could easily be pushed by political winds to impose import curbs for special interests ranging from textile producers to sugar growers, the analysts said on Friday.

Clyde Prestowitz, president of the Economic Strategic Institute and a trade negotiator in the Reagan administration, said Bush’s trade policy was driven more by a desire for votes than a strong ideological commitment.

“They’re for free trade if it works politically and they’re for protectionism if it works politically,” he said.

‘Cynical’ move

Nothing demonstrates this more clearly than the steel tariffs, which Bush imposed in March 2002 to shield domestic producers from intense foreign competition, he said.

“They introduced these measures knowing full well that they were illegal, but they’d have a couple of years to work it through the World Trade Organization. Now, they’re getting marks for being good international citizens and yielding to the WTO,” Prestowitz said. “It was a cynical political move.”

Dan Ikenson, a trade analyst with the libertarian Cato Institute, said he was troubled by US Trade Representative Robert Zoellick’s insistence that lifting the tariffs had nothing to do with the November WTO ruling that they were illegal. Bush and Zoellick insisted they scrapped the duties because US economic circumstances had changed.

“That is akin to United States saying it would just as soon ignore its WTO commitments,” Ikenson said. “What in the world is the top US trade diplomat doing suggesting that?”

In the coming week, the administration hopes to complete a trade pact with Central American nations that will again test its readiness to stand up to influential special interests.

Growing pressure

US sugar growers are pleading with the White House to exclude sugar, saying the future of their industry is at stake. That raises political concerns for Bush, who risks alienating the key state of Florida if he guts the US sugar program.

“They’re for free trade if it works politically and they’re for protectionism if it works politically”

Clyde Prestowitz,
president of the Economic Strategic Institute

The Bush team’s reluctance to tinker with US farm subsidies and import curbs for sugar and citrus and other crops ahead of the election has hampered efforts to reach a new world trade pact under the WTO and the proposed Free Trade Area of the Americas pact stretching from Canada to Argentina.

Farm subsidies total about $19 billion this year, down from a peak of $26 billion in the late 1990s.

In lieu of those pacts, Zoellick has embarked on a series of bilateral free trade agreements with countries in Asia, Latin America and Africa that pale against a WTO or a FTAA pact, said Ed Gresser, director of the Democratic-leaning Progressive Policy Institute’s trade project.

Selective stats

The lack of progress in the larger negotiations has led Zoellick to use some creative arithmetic to argue that Bush trade policy was yielding substantial results.

Earlier this week, he told the Coalition of Service Industries the United States “has completed or launched (free trade agreements) with countries representing 73% of US exports and 69% of our two-way trade.”

To get those figures, he excluded the European Union, Japan, Korea and China because he said they were unlikely to negotiate bilateral trade pacts with the United States.

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