In the midst of the final round of the Central America Free Trade Agreement negotiations in 2003, U.S. Trade Representative Bob Zoellick called my cell. “Get back here,” Zoellick said. The apparel and agriculture negotiations were the only remaining “open” tables in the CAFTA talks, and Zoellick wanted an update and he wanted it now. So, running out of the Mayflower hotel, which was hosting the negotiations, I flung open the door of a cab. The door bounced back. It whacked me in the forehead. Blood dribbled onto my white dress shirt as the cabbie, driving, flung tissues into the backseat. Back at USTR, Zoellick didn’t comment on my blood-stained shirt as he launched into questions about the CAFTA endgame, grilling me on possible compromises.
It was this kind of pressure — not only from Zoellick (the best boss I’ve ever had), but also from his Central American trade minister colleagues — that pushed the negotiations over the finish line.
This story first appeared in the May 27, 2015 issue of WWD. Subscribe Today.
It was also an important lesson. Negotiators must get the policy right, but any tough negotiation, in business or government, requires a boss who is pushing his or her employees relentlessly, at the appropriate moment, to wrap things up. In CAFTA, this meant the agriculture negotiator and I got a couple hours of sleep every night and were pushed to make tough compromises and to be creative. We were going to finish a free-trade agreement with Central America that week, and we were going to do whatever it took to do it.
I hear that the current U.S. Trade Representative, Michael Froman, is a lot like Bob Zoellick. I hope he is. As the Obama administration seeks to wrap up the Trans-Pacific Partnership trade agreement, it will require a hard-charging U.S. trade representative, a trade representative who knows the policy as well as the negotiators themselves and who can challenge the negotiators to move beyond their comfort zones.
The TPP talks are seven years in the making. It is high time we finished. The TPP would eliminate tariffs and dramatically lower nontariff barriers between the U.S. and 12 Pacific Rim nations — from Japan, Vietnam and Australia in Asia, to Mexico and Canada closer to home. These countries account for a whopping 39 percent of the world’s gross domestic product. At a time when we are struggling at home with anemic economic growth and worrying about declining U.S. influence abroad, we need an agreement that opens markets to the U.S. throughout the Pacific Rim and that fosters transparency and good governance. Once the TPP goes into effect, it will be a shot in the arm to the U.S. economy.
While senators such as Elizabeth Warren (D., Mass.) decry “job-killing” trade agreements, the facts belie their rhetoric. Other countries maintain much higher trade barriers than the U.S., so free-trade agreements level the playing field for American companies. In the dairy sector, to cite just one example, the U.S. applies a 19 percent tariff on imports, while Canada applies a 247 percent tariff and Japan applies a 179 percent tariff. Putting aside import taxes, other countries also maintain a host of nontariff barriers (think Japanese autos) that exclude our products from their markets. It doesn’t hurt middle-class Americans to eliminate these disparities. It helps our struggling farmers and blue-collar workers.
It is for this reason that the U.S. runs a significant trade surplus with our free-trade agreement partners. In 2014, the U.S. enjoyed a $55 billion surplus in manufactured goods trade with our free-trade partners, and ran a $579 billion deficit with countries with which the U.S. does not have a trade agreement. The U.S. has free-trade agreements with 20 countries. We run a trade surplus with 15 of these 20 countries. These facts are astounding. They should put to rest the cries of “job-sucking” trade agreements from protectionist naysayers in Congress.
Now, the TPP’s apparel provisions are far from perfect. As things stand, the provisions are so restrictive that, in the short term, knowledgeable brands and retailers are skeptical they will be of much benefit. Often, the TPP will require apparel producers to ship yarns and fabrics from the U.S. to places like Vietnam. Most alarmingly, the TPP’s apparel provisions may lack an amendment provision which would permit future governments to adapt the agreement to changing circumstances. The negotiations are not over, and there is still time to craft commercially meaningful apparel provisions. Hopefully, in the end, the TPP will include apparel provisions that complement the agreement’s other, more forward-looking provisions for other sectors.
So, as the TPP countries recently gathered in South Asia, let’s hope that current trade representative Froman mercilessly browbeat a couple of beleaguered U.S. negotiators, absent the bloodied shirt, and that the other TPP trade ministers do the same. America will be better off for it. It has been eight years since the U.S. last entered into a trade agreement, and our economy, and our standing in the world, could use a boost.
David Spooner, a partner at Barnes & Thornburg LLP, was the chief textile and apparel negotiator at the Office of the U.S. Trade Representative from 2002 to 2006.