Trade Policy Failures

by Pejman Yousefzadeh on July 24, 2011

I have written before, and will write again that one of the best ways to get the U.S. economy moving again is for the Obama Administration to take a strong pro-free trade stance, and to back up its stance with substantive efforts to promote trade liberalization throughout the world.

Instead of doing so, however, the Obama Administration has chosen to punt on the issue of free trade. This has led World Bank President Robert Zoellick to issue a justified condemnation of American trade policy:

World Bank President Robert Zoellick launched a blunt critique of the Obama administration’s trade policy Sunday and in a separate interview said the United States was failing to assert its natural leadership in the global economy.

In an address to be delivered at a World Trade Organization meeting in Geneva on Monday, Zoellick cites the United States by name as “dumbing down” the ongoing and largely stalled Doha round of world trade talks.

He elaborated in an interview, saying he was concerned that none of the major trading nations are talking ambitiously about how to lower global trade barriers — putting economic growth at risk, particularly for the less-developed countries on which the bank’s work focuses.

“The whole discussion has become very defeatist,” he said. “I draw out the U.S. because the U.S. should still be the world leader.”

His comments reflect the near-moribund state of the Doha talks and a background feud in Washington over who is to blame for the lack of results after a decade of negotiations. They also come as Zoellick nears the end of his term — with no clear statement of his plans and no clear sign from President Obama about whether he wants the former George W. Bush administration trade representative to stay in the job.

Naturally, the Obama Administration–not being willing to accept responsibility when things go wrong–tried to blame Zoellick for the Doha impasse, stating that Zoellick’s “structuring” of the Doha talks when he was the United States Trade Representative under President George W. Bush, is the reason why the Doha talks are stalemated. No one knows how this supposed “initial structuring” of the talks has led to the Doha round being at a dead end; the article gives us no specifics, and while the criticism over structuring is echoed by Susan Schwab, herself a former Bush Administration USTR, there are no specifics concerning her critique either. Additionally, doesn’t the Obama Administration have any power whatsoever to restructure the Doha talks, if it objects so strenuously to Zoellick’s structuring? Or is it content to sit back and continue to blame the Bush Administration when things go bad?

Of course criticisms of the Obama Administration’s trade policy need not be confined to the Administration’s stance regarding the Doha round. The Administration should also be criticized for allowing trade pacts to be held up over Trade Adjustment Assistance programs–despite the fact that Trade Adjustment Assistance does not work. Indeed, in general, the Administration’s trade policy has been awful both in terms of design and implementation. I am sure that even as I write this, someone in the Administration is looking for ways to pin all of these failures on Robert Zoellick. But this attempt to pass the buck should not convince anyone.

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