President Bush Runs on a Pro-Trade Platform

by Daniel T. Griswold

Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute.

August 25, 2004

President George W. Bush speaks often of the benefits of trade for the U.S. economy and its broader foreign policy interests. But his administration has also retreated from free trade principles in the face of political pressure, casting a cloud of uncertainty over the trade policy of a second Bush term.

Nowhere has this tension between principle and politics been more evident than in U.S. trade with China. The Bush administration strongly supported China's entry into the World Trade Organization, and has worked constructively with China on a range of trade issue. It rejected a string of Section 421 requests by U.S. industries to restrict imports of Chinese-made wire hangers, pedestal actuators and brake parts.

The Bush administration also dismissed two Section 301 petitions that would have imposed tariffs on Chinese imports in retaliation for alleged labor abuses and currency manipulation. The president's able trade representative, Robert Zoellick, negotiated settlement of a WTO dispute over China's tax treatment of imported semiconductors. During the administration's tenure, two-way trade between the United States and China has continued its spectacular growth, from $116 billion in 2000 to $181 billion in 2003.

And yet President Bush has not been immune to protectionist pressures. He imposed special safeguard duties on Chinese-made brassieres, dressing gowns, and knit fabrics. His Commerce Department has rejected arguments to designate China a "market economy" for purposes of antidumping calculations. And a steady parade of administration officials have pressured China to revalue or float its currency to supposedly boost U.S. exports to China, which have already grown by 75 percent since 2000.

Like his policy toward China, President Bush's overall record on trade is one of unsteady progress. On the plus side, the administration and USTR Zoellick were instrumental in launching the Doha Development Round and in keeping it alive with serious proposals to liberalize trade in industrial products, services, and farm commodities. The administration persuaded Congress to pass trade promotion authority after an eight-year lapse, allowing the president to negotiate market-opening agreements with Singapore, Chile, Australia, Morocco, the Dominican Republic, and five nations in Central America.

On the minus side, President Bush in 2002 imposed temporary tariffs as high as 30 percent on imported steel through the Section 201 safeguards provision. He also signed the trade-distorting farm bill that year that locked in subsidies at a level 80 percent higher than under the previous farm bill. Besides being costly to taxpayers and consumers alike, the farm bill undercuts the U.S. government's moral authority to argue for free trade in other countries. So the Bush record on trade can be described as one of good intentions and genuine progress compromised by tactical retreats in the face of political pressure.

A huge piece of unfinished business for the next president will be the ongoing Doha Development Round. A comprehensive agreement could be hammered out as soon as December 2005 at the planned ministerial meeting in Hong Kong. Whoever is president would then need to shepherd any final agreement through Congress before trade promotion authority expires in 2007. Either a Bush or Kerry administration could bring the round to a successful conclusion, but Bush would probably have more flexibility to negotiate real limits on antidumping abuses.

Where Bush would differ most from Kerry on trade would be in more aggressively seeking bilateral and regional agreements. Nowhere will the contrast be sharper than on the Central American Free Trade Agreement. The Bush administration negotiated the agreement and strongly supports it in its current form, while Kerry has pronounced it unacceptable because it supposedly lacks adequate labor and environmental protections. A re-elected President Bush would also pursue a U.S.-Thailand Free Trade Agreement, while a President Kerry would be more likely to heed the objections of the United Auto Workers union, which fears competition from the Thai light-truck industry.

No matter who wins in November, it is unlikely that the United States will deviate much from its post-war commitment to a more open global trading system. But judging by both his rhetoric and his record, George W. Bush would be more likely to build and expand upon that legacy than his opponent.

This article appeared in the Apple Daily on August 25, 2004.