The trade negotiations at Doha will help shape the global economy. Which is one reason the Bush administration is after separate, bilateral free trade agreements.
12:00 AM, Jul 15, 2003 • By IRWIN M. STELZER
So on one side of the table we have American negotiators willing to consider policy imperatives other than the extension of free trade, and on the other Europeans determined to maintain protection in the three A's that are so important to America: Agriculture, by subsidizing inefficient farmers; Aircraft, by subsidizing AirBus; and Audiovisual products, by imposing direct quotas.
In that atmosphere, Zoellick has quite sensibly decided that the half-loaf of a series of bilateral deals is better than the no-loaf of a possibly unattainable worldwide deal at the Doha round. Press on for a worldwide deal, using FTAs as a stick with which to prod the reluctant to sign on, but don't lock America into an all-or-nothing bet.
To add to this stew we have Japan and China. Both countries have refused to allow their currencies to rise relative to the declining dollar, instead holding down the value of the yen and renminbi, respectively, to stimulate exports. This antagonizes America, which wants to see its trade deficit come down, and the euro area, which is forced to bear the brunt of the fall in the dollar's value.
Put all of these problem together, and they spell trouble for the system of more-or-less open trade that has contributed so much to progress since World War II. Zoellick, however, remains optimistic: "Every country wants freer trade. We'll get there."
Irwin M. Stelzer is director of economic policy studies at the Hudson Institute, a columnist for the Sunday Times (London), a contributing editor to The Weekly Standard, and a contributing writer to The Daily Standard.