When she served as U.S. trade representative from June, 2006 to January, 2009, the rap against Sue Schwab — a former foreign service officer, congressional aide, corporate consultant, and academic — was that she lacked the requisite political savvy to pry open markets for American exporters. So when President Barack Obama tapped Texas politician Ron Kirk for the job, the nomination was generally well-received. Kirk is a former mayor of Dallas whose ambition is to serve in the U.S. Senate. It’s reassuring that a man with real political smarts, a man who knows how to produce concrete results, will follow technocrat Schwab — or so the conventional wisdom has it.
But is it right?
Sue Schwab came into office with a deep appreciation of how the politics of international trade fit into the real world of diplomacy. As U.S. trade representative, technocrat Schwab had more successes than she is given credit for — notably including difficult issues involving China. As a former diplomat, Schwab understood the importance of using the right tone when addressing America’s trading partners. By contrast, neophyte Kirk seems inclined to adopt the old-style tone of Uncle Sam, the hectoring world’s trade policeman, always on the lookout to score political points against U.S. trading partners (China heads the list) whose word can’t be trusted. And on substance, Kirk has already blundered in the eyes of some foreign policy heavyweights by threatening to re-negotiate a pending trade deal with a major American ally: South Korea.
While Kirk may grow in his job — think of Robert Strauss, another politically minded Texan who performed admirably as U.S. trade representative in the 1970s — Obama’s new chief trade negotiator comes into office facing a very steep learning curve. At least, that was the thrust of concerns that were raised about Kirk last week at a well-attended conference of senior foreign-policy experts who convened at Washington’s famous Willard hotel to discuss U.S. national security strategies for Asia. One old Asia hand who was in the audience quipped that Kirk’s touting of his foreign policy credentials regarding Mexico reminds him of Alaska Gov. Sarah Palin’s deep insights into neighboring Russia.
The March 11 conference rolled out a new 82-page study of various national security concerns that will face the incoming Obama administration across the Asia-Pacific region, and also a analysis of the U.S.-South Korea alliance that ran to 88 pages. The studies were written by seasoned Asia experts who are affiliated with an array of respected think tanks: the Center for Naval Analyses, the Institute for Defense Analyses, the Institute for National Strategic Studies at the National Defense University, Pacific Forum CSIS (the Honolulu-based affiliate of the Center for Strategic and International Studies), and the Center for a New American Security.
While Kirk’s performance two days earlier at his March 9 confirmation hearing before the Senate Finance Committee went over well with the lawmakers, the foreign policy heavyweights who convened at the Willard weren’t as impressed. The main source driving the concerns that the new administration’s trade agenda could be heading into rough political waters: Kirk’s own words to explain how he intends to go about his new job.
“The first order of business for the [Obama] administration on trade is to ensure strong enforcement of the rules,” the nominee told the Finance Committee members. He added that when U.S. trading partners did not play fair, Uncle Sam would “insist that everyone plays by the agreed upon rules.”
Later in his testimony, Kirk declared that he wanted to re-negotiate the pending U.S.-South Korea trade accord, because he did not like the rules that American and Korean negotiators had negotiated. “The agreement as it is just simply isn’t fair, and if we don’t get that right we’ll be prepared to step away from that,” Kirk said. He did not bring a “deal fever” to his new job, the nominee explained.
Kirk’s promise to be America’s new global trade policeman who would be willing to walk away from previously negotiated international trade agreements was (predictably) well-received by the senators — but not by the experienced Asia hands who gathered at the Willard. The criticisms that pointed the fingers at Kirk were hardly partisan. Secretary of State Hillary Clinton’s early performance in her new job, for example, was widely praised.
During her inaugural tour of Asia last month, Clinton had struck “absolutely the right tone” in her visits to Japan, Indonesia, South Korea, and China, said Patrick Cronin, the director of the National Defense University’s Institute for National Strategic Studies, to the Willard audience. Ralph Cossa, the president of Pacific Forum CSIS, who appeared on the same panel with Cronin, agreed.
Cossa also praised Clinton for her wise diplomatic touch when she participated in a Feb. 20 news conference in Seoul with South Korea’s president, Lee Myung-Bak. As a presidential candidate last year, Clinton had been critical of the U.S.-Korea preferential trade accord. But when she flew to Seoul as America’s top diplomat, the secretary did not undercut President Lee politically by threatening in public to re-negotiate the deal. Cossa told his audience that it “would have been an absolute disaster” had Clinton used the “R” word — for re-negotiate — when she met the South Korean leader.
“But I still see that R-word popping up in congressional testimony,” Cossa added, the obvious reference being to Kirk’s confirmation hearing. The study that was released at the Willard event — The United States and the Asia-Pacific Region: Security Strategy for the Obama Administration — highlighted the importance of ratification the U.S.-Korea trade agreement, warning that “its failure risks major setbacks to the alliance.”
“The bottom line” for the new administration’s security policies across the board, Cossa concluded: “We need to listen.”
The range of U.S. issues that U.S. security policies for the Asia-Pacific region included addressed concerns about North Korea’s nuclear ambitions, China’s aspirations to project naval power, the bedrock importance of the U.S.-Japanese security relationship, and other issues that are always discussed when national security experts get together.
But noting Asia’s rising economic importance, the study also considered how U.S. trade diplomacy fits into the broader national security equation — warning of the adverse consequences, should America walk away from its international economic leadership. “Free trade and open markets are key pillars for stability and security in the Asia-Pacific — and for long-term American prosperity,” the study concluded. “Efforts to address the impact of the global economic slowdown must not produce a lapse into protectionism that exacerbates the crisis.”
So what should America’s new self-styled trade policeman do when U.S. trading partners do lapse into protectionism? It happens that Ron Kirk won’t have to look far to see an enforcement model that works.
During her time as U.S. trade representative, Schwab pursued six cases against China with the World Trade Organization’s dispute resolution system. She challenged Chinese discrimination against foreign books, music and films. She further challenged Chinese restrictions on foreign-owned financial information service providers like Dow Jones, Bloomberg, and Reuters. She brought a case that documented China’s discrimination against imported auto parts. The Middle Kingdom’s legal regime’s weak enforcement of copyrights and trademarks got the same treatment. And as she was headed out the door last December, Schwab filed a new case that targeted Chinese export subsidies, on grounds they were WTO-inconsistent.
And by restraining her political rhetoric, instead using the legal tools at the WTO, Schwab got results by way of real market-opening opportunities. The latest came on Jan. 26, 2009, just six days after President Obama was sworn into office. Schwab was by then a private citizen. But that day, acting U.S. Trade Representative Peter Allgeier announced that a WTO dispute settlement panel had “found important aspects of China’s intellectual property rights regime to be inconsistent with China’s obligations” as a WTO member. China will, sooner or later, have to comply.
The Senate Finance Committee approved Kirk’s nomination on March 13 (a Friday). As this goes to press, no date for sending the nomination to the Senate floor had been set, but no serious opposition is expected.
As he prepares to assume office, Ron Kirk knows this much about trade politics: foreign-bashing rhetoric plays well with the Democratic Party’s anti-trade base during political campaigns — and perhaps in a future U.S. Senate race in Texas. But if achieving genuine economic results is also the goal, it’s the WTO’s legal process that, at the end of the day, works.
As for his initial foreign policy blunder in his confirmation testimony, will the Obama White House (and perhaps State Department) allow Kirk to carry through on his threat to walk away from the pending bilateral trade deal with South Korea? Beyond that, when it comes to demonstrating real U.S. international economic leadership, what will the new U.S. trade representative have to say when America’s trading partners win cases against discriminatory U.S. trading practices at the WTO — and will then expect Uncle Sam to comply? Will President Barack Obama and his trade regime demonstrate a clear willingness to “play by the rules?”