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Seeing the Big Picture on Trade

by Joanna Klonsky
December 3, 2008

An expert panel addressed potential new directions for trade policy Tuesday night at New York University. contributing writer Julie Ginsberg filed this report from the event.

It’s time to chart a new course in U.S. trade policy, experts agreed at the final panel discussion in a series on the presidential transition co-hosted by CFR, the Economist, and New York University’s Stern School of Business on Dec. 2.

But rethinking trade policy doesn’t mean plowing ahead with new bilateral agreements, said panelists Edward Alden, CFR’s Bernard L. Schwartz Senior Fellow; David Backus, Heinz Riehl Professor Chair of NYU Stern’s Department of Economics; and Anna Szterenfeld, Latin America editor for Economist Intelligence Unit. Instead, Alden said, the U.S. should take a “strategic pause” to reexamine priorities, strengthen relationships with trading partners, and focus on actively participating in the World Trade Organization’s Doha Round rather than on seeking new bilateral agreements.

Given the developed state of the U.S. economy, more trade is unlikely to result in significant gains, Backus said. Unlike the economies of Mexico, China, or India, the U.S. economy is not undergoing transformation, he said; rather, it’s in need of repair. What’s more, Alden added, in these circumstances, trade advancement is unlikely because barriers that have long prevented trade liberalization, such as agricultural subsidies or dumping suits, are now even more entrenched.

Instead of increasing trade, Szterenfeld said, the administration of President-elect Barack Obama should re-envision trade as “part and parcel of a comprehensive agenda” and thereby repair and strengthen diplomatic relations. The Bush administration has alienated leftist leaders in Latin America by assigning them “bad guy, good guy” labels, Szterenfeld asserted, so Obama will have to prove that the United States can be sensitive to Latin American interests. By addressing formerly ignored aspects of trade, such as migrant workers’ remittances, labor laws, and the U.S. role in the drug trade, the Obama administration can make headway toward smoothing over tensions between the U.S. and Latin America.

The focus of this trade lull should be on doing no harm, Alden said. While the global economic crisis has inspired a “we’re all in it together attitude,” taking steps backward on existing trade relationships could quickly sour the mood, he warned. He posited that diplomatic concerns would motivate Congress to pass the pending free trade deal with Colombia, fostering goodwill and positioning the U.S. within an increasingly open market.

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