President George W. Bush and his chief of staff, Josh Bolten, are determined to do everything in their power to wrap up the World Trade Organization’s Doha Round of trade liberalizing negotiations before the president leaves office in January 2009, only ten months away. The possible good news, at least for incorrigible optimists, is that there are signs emanating from the WTO’s headquarters in Geneva that the long-troubled negotiations, now in their seventh year, may be rousing from their familiar torpor. So now the president is hoping to set the Doha agenda for the next likely occupant of the Oval Office, who would recognize soon enough that failing to push the deal through Congress would risk serious damage to America’s international economic prestige.
Toward this end, Bush and Bolten brought a new negotiating weapon into the National Security Council last May, in the name of Dan Price. As the deputy national security advisor for international economic affairs, Price’s NSC portfolio ranges from dealing with global warming to energy security issues. But increasingly, Price is playing an important behind-the-scenes White House role as a would-be closer in the Doha negotiations. When he speaks to WTO Director-General Pascal Lamy, EU Trade Commissioner Peter Mandelson, and other top-level representatives of key WTO members from New Delhi to Sao Paulo, the foreigners are made to understand clearly that Price is speaking for the president of the United States. The news about Price’s powerful role, which has received scant publicity, comes from a series of off-the-record interviews with diplomats from Europe and Asia who have spoken with Price, and a handful of Washington lobbyists who have been made privy to the White House’s inside game on Doha. It is confirmed by well-connected administration officials who shrugged and said while they usually don’t talk about their inside strategy, they saw no reason to deny a (rare) story that portrays the Bush White House in a positive light.
Naturally — Washington being gossipy Washington, where perceptions shape all policy discussions — the first question that arises is whether by placing such confidence in Price, the White House is undercutting the president’s top trade negotiator, U.S. Trade Representative Sue Schwab. After all, that’s what sometimes happened during the predecessor Clinton administration, when President Clinton’s White House chief of staff John Podesta and economic adviser Gene Sperling at times famously undercut the negotiating authority of U.S. Trade Representative Charlene Barshefsky.
The short answer to the present question about whether Schwab is being sidelined is…
Not at all. Like Price and other important Bush officials with international trade responsibilities like Henry Paulson at the Treasury Department, Schwab’s role in bringing home a Doha deal remains critical. Indeed, it is difficult to imagine a Doha agreement that would lack the major input of Schwab, and also other key USTR officials like Schwab’s man in Geneva, Deputy USTR Peter Allgeier. Although the fact is often overlooked, the Office of the U.S. Trade Representative remains within the Executive Office of the President, and Schwab is in the Cabinet. Moreover, the official who is pushing the Bush trade team the hardest to make Doha work — and making sure that the team sings in harmony from the same political and economic hymnal — is the man who did the most to put it together: Josh Bolten.
It was Bolten, who became White House chief of staff in April 2006, who shuffled the deck’s international economic staff chairs, one of the major purposes of which was to advance the Doha process.
Bolten has been close to Schwab since they worked, respectively, for Republican finance committee powers Sens. Bob Packwood and John Danforth in the mid-1980s. And when Bolten was executive director of Goldman Sachs International in London from 1994 to 1999, Henry Paulson was with the New York head office of the investment bank, first as the chief operating officer and then its chief executive officer.
Shortly after Bolten became chief of staff, he and Bush moved former Ohio Republican congressman Rob Portman from USTR to the Office of Management and Budget. Schwab, who had been Portman’s deputy, was confirmed as USTR in June. That same month, Bolten also oversaw the confirmation of Paulson as Treasury Secretary.
Price and Bolten had worked together at the State Department in the early 1980s. Later in the decade, when Bolten was the USTR’s general counsel, Price was Bolten’s deputy (Schwab was then involved with international trade at the Commerce Department). And last year, with the Doha negotiations stalled, Price — then a highly regarded Washington trade lawyer who had played an important closing role in negotiating the U.S.-Vietnam bilateral trade agreement, which was signed in December 2001 — Bolten brought his old friend onto the team.
The Bolten-Schwab-Paulson-Price team consists of people who like each other, who have worked together for a long time, and who sing from the same hymnal on Doha.
They stick together — and on Doha, all speak for Bush.
The second question that also quickly arises concerning the long-troubled Doha negotiations, which are now in their seventh acrimonious year is: do they have a chance of succeeding? Certainly in Washington, many observers seem to have written Doha off long ago. Considering the importance of reducing global trade barriers to U.S. prosperity, one would think that the business lobby would have been in full throat to sing the praises of the WTO and the multilateral trading system. Not so.
Since the round was launched by then USTR Robert Zoellick in the aftermath of Sept. 11, 2001, the well-heeled Business Roundtable, for instance, has done almost nothing to build public support for the Doha process, turning its attention instead to a series of U.S. trade deals with junior trading partners. When I recently called to ask a BRT spokesman what the lobby group meant by declaring on its website that it conducts a “grassroots” campaign to promote the public’s trade awareness, the question was quickly rebuffed. “We don’t do grassroots education; we deal at the CEO level,” the spokesman shot back, adding — two clauses too late — “this is off the record.” BRT president John Castellani did not respond to a follow-up telephone inquiry asking for clarification. With this attitude, no wonder that voters in key electoral states like Ohio and Michigan — who hear from nativists ranging from cable television’s Lou Dobbs to stalwarts in the protectionist labor unions all the time — remain confused and fearful of trade.
Still, in Geneva where the Doha negotiations are actually centered, there currently is renewed hope that for the long-troubled talks, the diplomatic stars might at last be coming into alignment.
For several months, there have been cautiously optimistic diplomatic vibrations emanating from inside the World Trade Organization’s headquarters along the Rue de Lausanne in Geneva. The subtle vibes have suggested that Doha’s end game could finally be near. Pascal Lamy, the politically attuned WTO director-general, has been telling anyone who will listen that he sees the shape of a deal that could be wrapped up this year.
Will it? It is difficult for outsiders — and even insiders, who disagree whether difficult-but-essential key players like India and Brazil even want a deal — to be confident in predicting the outcome, one way or the other. Brazil, clearly frightened of competing with China, is moving to raise tariffs while negotiations to cut them continue in Geneva. And while India complains loudly about the trade-distorting costs associated with the $19 billion annual U.S. farm bill, the Indians have just quietly announced their own $15 billion loan rescue program for the subcontinent’s uncompetitive farmers (and their banks).
India, at least, has been cutting its own applied industrial tariffs steadily, a process that Indian officials say will continue unilaterally regardless of Doha, when officials in New Delhi think the political timing is right for them. If the Indians intend to signal that they really don’t care much about the Doha process, they are succeeding. The hope, for those who unmistakably do want Doha to succeed, is that the Indian rhetoric masks an intention to negotiate responsibly to make that happen.
Whatever will happen with the end games of WTO members who are vital to the success of Doha, it won’t take much longer to get a more realistic sense of how they will play out. One Doha measuring stick to watch for could surface within the next month, where anyone can see it.
If Lamy summons the trade ministers from the WTO’s 151-member countries to Geneva by mid-April, or perhaps early May, that will signal that he believes that a deal very well could be shaping up. Lamy says that he will not convene another ministerial meeting that would only fail. If such a meeting doesn’t materialize this Spring, the odds on the Doha process being successfully wrapped up by the end of this year — or even in the next two years — would appear highly unlikely.
One favorable straw in the wind could be associated with the ambitions of Peter Mandelson, the European Union’s trade commissioner, to wrap up a deal this year as his legacy. Mandelson’s term of office runs out in October. British Prime Minister Gordon Brown has announced that Mandelson — a Labour Party ally of former PM Tony Blair who has a record of intra-party maneuvering against Brown dating to the mid-1990s — won’t get a second term. (Brown deftly accomplished this by making public Mandelson’s private assurances to him — probably just defensive spin – that the EU trade chief did not want a second term. Brown’s announcement would pretty much seem to end any further maneuvering room beyond October for the now-outgoing trade commissioner.) The upside is that from his current perch, and with just over seven months left in Brussels, Mandelson clearly has an important incentive to make Doha work.
But Mandelson hasn’t worked very well with USTR Schwab. When she came in, Mandelson acted as if it were beneath his dignity as a senior British politician to work with a former congressional staffer like Schwab instead of a high-powered former congressman like Rob Portman. This is where Dan Price comes in. Whenever diplomats representing this-or-that WTO member country — Mandelson’s name is mentioned the most in this context — try to make an end run around Schwab, or Paulson, they quickly hit the wall with Price, who reminds them that both the USTR and Treasury secretary also speak for the president. Secretary of State Condi Rice responds with the same message.
While history can’t ever be written in advance, clearly George W. Bush is mindful that his successor will inherit a number of unprecedented headaches: Iraq, the current financial frights associated with a recession, plummeting U.S. prestige internationally, and so on. But on the Doha process, at least, the president sees an opportunity to hand on part of his legacy that would clearly be win-win. After all, the health of the U.S. economy is linked to that of the global trading system that the WTO oversees. There is no problem with getting Republican John McCain to grasp this. The Doha problem is chiefly a Democratic one. Bush figures that even a Barack Obama or a Hillary Clinton in the White House next year would feel compelled to push a completed — or nearly completed — Doha agreement through Congress. To do otherwise would risk America’s international prestige, and at a particularly sensitive moment for the international economy. Indeed, no U.S. president of either party would have dared to risk such a thing since the days of Franklin D. Roosevelt in the 1940s.
In more recent history, in his last year of office in 1992, the first President Bush set the international economic stage for successor Bill Clinton. The senior Bush was able to negotiate all but the final trappings of the Doha Round’s predecessor trade talks, the multilateral Uruguay Round. When President Clinton came into the Oval Office in 1993, the stage was set for him to finalize Uruguay, which he did. Like today’s Democratic front-runners Barack Obama and Hillary Clinton, Bill Clinton had expressed a studied ambivalence regarding trade on the 1992 hustings.
Clinton also refused to walk away from Nafta, the other major trade deal with Mexico and Canada that Bush left on his plate. This is, of course, the same Nafta that now, both Obama and Clinton have threatened to kill.
Perhaps candidates Barack Obama and Hillary Clinton — neither of whom currently wants to say anything intelligent about the benefits of trade that would offend their supporters in organized labor — might reflect upon an observation offered a few years ago by Bill Clinton’s 1992 campaign strategist. James Carville told a national television audience in 2004 that important parts of President Clinton’s own legacy involved pushing through both Nafta and the Uruguay Round, over the strenuous objections of the AFL-CIO. By showing that he could put the country’s interests above parochial advantage, Bill Clinton ensured part of his own legacy, Carville said.
There was, however, another part of Clinton’s trade legacy that Carville wasn’t interested in stressing. In April 1999, Chinese Premier Zhu Rongji came to Washington to sign a deal to normalize U.S.-China trade relations that had been skillfully negotiated by USTR Charlene Barshefsky (a woman whose political savvy was frequently underestimated during the 1990s, as Sue Schwab’s is often these days). Everyone who was in Washington nine years ago remembers the embarrassment when Barshefsky was undercut in the White House chief of staff John Podesta, economic strategist Gene Sperling, and by Clinton, who sent Zhu packing with no deal. Shortly before year’s end, an awkward-looking Sperling accompanied Barshefsky to Beijing, where they concluded the same basic deal — but one which the still-fuming Chinese made sure had terms in it that were somewhat less favorable to Uncle Sam than Barshefsky had first negotiated.
Now, when it comes to the Doha Round, if George W. Bush and Josh Bolten have their way, they will present the next man or woman in the Oval Office with an international economic deal that will require them to summon their best political instincts to advance American international economic leadership by moving a Doha agreement through Congress. The familiar irony for veteran trade observers is that we are talking about decent instincts that the two Democratic candidates are currently trying their very best to conceal.
The message for U.S. trading partners in the WTO’s 151 member countries who might wonder if they have an economic incentive to run out the clock on lame-duck George W. Bush: there is none. There is no reason to believe that either the inexperienced Obama, or the experienced-but-hostile Hillary Clinton would, on their own, do much except leave a still-unfinished Doha deal hanging into the indefinite future. If your goal is trade expansion and rising prosperity, better to help the otherwise detested George W. Bush and his trade team present the next U.S. president with a Doha deal that no president could ignore. As Pascal Lamy has said, the clock is running.