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Former USTRs Talk Trade

Ex-Government Officials Call for New Policies

WASHINGTON — The path of international trade, cast in a new light following the failure of the Doha Round of talks and global financial problems, will largely rely on future U.S. policies.

In that context, four former architects of U.S. trade policy, sharing nearly 20 years of negotiating experience between them and spanning three administrations, laid out to Congress their blueprints for a future agenda.

Amid rising antitrade sentiment on Capitol Hill and across the country, the quartet of former U.S. Trade Representatives — two who served under Republican administrations and two who worked for a Democratic president — defended the push for opening markets to global trade and offered their visions on trade at a Senate Finance Committee hearing last week.

While it was notable their individual policy prescriptions all included the successful completion of the Doha Round of global trade talks aimed at lowering tariffs worldwide, those talks collapsed in Geneva on July 29 — the day of the hearing — underscoring the complexities of accomplishing such an objective.

The former USTRs were also unified on many other areas on the future of trade policy, including the need for direct negotiations with China and more bilateral and regional pacts.

Apparel importers that shipped $32.1 billion worth of apparel and textiles from China in the past year, and the U.S. textile industry, which has lost tens of thousands of jobs over the past decade, have put U.S. trade policy with China high on their priority watch list. Both sectors are engaged in a battle over imports from China and quotas on 34 categories of apparel and textile imports that will be lifted at the end of the year.

The textile industry has turned up the pressure on the Bush administration and Congress in recent weeks to begin monitoring apparel imports from China for dumping, the practice of selling goods in the U.S. below market value or for less than the cost of manufacturing. Wholesale and retail importers are moving to block any legislative or administrative attempts to restrain or monitor imports from China or Vietnam beyond this year, when such a program for Vietnam also expires.

Mickey Kantor, USTR under President Bill Clinton from 1993 to 1996, recommended to the Senate panel the launch of comprehensive trade negotiations with China to “ensure full compliance with international trade commitments.”

“China has implemented much of its accession agreement reached with the U.S. in 2000, but the enforcement of the resulting rules and regulations has been sporadic at best,” said Kantor, referring to stipulations to which China agreed when it joined the World Trade Organization.

Kantor, now a partner at the Washington law firm Mayer Brown, pointed to unresolved issues such as China’s failure to enforce intellectual property rights and “questions of currency manipulation” as major areas of concern and said the U.S. needs to be more “resolute” in pursuing its interests.

To help enforce trade rules, Kantor called for the establishment of a trade prosecutor in the USTR Office.

Charlene Barshefsky, USTR in the Clinton administration from 1997 to 2001, acknowledged the need for a more “well-honed” agenda with China. But the focus should be on the negotiation of a bilateral investment treaty with the world’s most populous country and largest producer of apparel, which the Bush administration recently launched, and a broader economic agenda around macroeconomic and policy change, said Barshefsky, a partner at the Wilmer Hale law firm here.

Carla Hills, USTR under President George H.W. Bush from 1989 to 1993, warned against pursuing more restrictive legislation aimed at curtailing Chinese imports that’s pending in Congress.

William Brock, USTR under President Ronald Reagan from 1981 to 1985, called for a more comprehensive federal assistance and training program for workers who lose their jobs because of trade and for other reasons.

Hills, now chairwoman and chief executive officer of Hills & Co., an international consulting firm, also called for an overhaul and expansion of the Trade Adjustment Assistance program to include service workers.

Another recommendation topping the former trade chiefs’ list was shifting from negotiating bilateral trade deals with small countries with marginal purchasing power to forging trade deals with industrialized countries such as Japan or regional pacts with blocs of countries.

“Small bilateral agreements…have absolutely minor effect,” said Barshefsky. “We should rebuild our economic trade policy in the Asia-Pacific by passing the [South] Korean free trade agreement, undertake a similar agreement with Japan and hone the agenda, not expand it, with China, India, ASEAN and APEC.”

ASEAN is the 10-member Association of Southeast Asian Nations and APEC is the Asia-Pacific Economic Cooperation organization made up of 21 member nations, including the U.S. and China.

A completed trade deal with South Korea has stalled this year because of opposition by lawmakers who argue the country continues to maintain high barriers to U.S. auto exports.

Kantor said the U.S. should negotiate a bilateral trade deal with Japan or an expanded agreement involving Canada, the European Union and Japan.

“Bilateral initiatives of diminished economic consequence were pursued to the detriment of a larger agenda,” said Kantor.

On another issue that has divided the fashion industry — tariffs on imports — Barshefsky and Hills recommended the elimination of tariffs on apparel and footwear imports, while Kantor urged the duty elimination on “products no longer produced” in the U.S.

“Tariffs on clothes, shoes, household linens, luggage, watches, silverware and a few other light goods raise half of our $26 billion in tariff revenue, on about 5 percent of imports,” said Barshefsky. “They protect few if any jobs, but do noticeable damage to hopes for poverty reduction in the United States and overseas.”