When we see a well-executed political event, such as a national convention, it is usually a reflection of significant advance work and meticulous planning. Without such advance work, we can get Clint Eastwood talking to a chair.
In the world of U.S. trade agreements, there is a particular need for such advance work. One part of government -- the executive branch -- attends all the negotiating sessions and conducts the international haggling, while a different part of government -- Congress -- is constitutionally required to set the policies. In recent decades, the two branches have struck legislative deals, known most recently as trade promotion authority (TPA). This authority reassures trading partners that whatever trade accord the White House ultimately agrees to will get a timely vote in Congress without any amendments. If the two branches of government do not work out a plan in advance, it can get ugly.
And that's right where we are. In a short news release on Nov. 13, House Ways and Means Committee Chairman Dave Camp (R-Mich.) effectively warned that the president's trade agenda is in danger. He stated:
The President must do more to make the case about the importance of TPA. He missed a prime opportunity last week to highlight TPA when he spoke in New Orleans about the economic benefits of trade policy. We simply cannot get the high standard, job-creating agreements that we need without TPA.
Barack Obama's administration has for years decided to pursue an ambitious trade agenda without TPA. In September 2011, amid congressional trade debates that led to passage of agreements with South Korea, Colombia, and Panama, Senate Republicans made a push to grant TPA. Democrats rejected the idea.
Why on earth would Obama not want the authority to negotiate agreements he was already in the midst of negotiating, like the Trans-Pacific Partnership (TPP)? Because TPA is the point at which one moves from vague, idealized support for a trade initiative to the controversial specifics of what that agreement will require. Large fractions of Congress are generically in favor of "a new, improved 21st-century trade agreement." In contrast, any particular set of stances on labor, the environment, and intellectual property rights can be much more controversial. In the fall of 2011, the president's supporters in the labor movement were already upset about the passage of the Colombia free trade agreement (supported by only 16 percent of Democrats in the House). Why upset them further, heading into the 2012 election season, with a battle over TPA that would inevitably end up favoring a Republican approach?
Photo: Joe Corrigan/Getty Images
In the United States, the prospects for additional international trade opportunities look dim. The continuing fallout from revelations that the National Security Agency snooped through millions of pieces of European telephone data has cast a pall upon the Trans-Atlantic Trade and Investment Partnership (TTIP) talks. Additionally, the government shutdown forced the cancellation of the second round of negotiations on the pact, as well as forcing President Obama to miss the Asian Pacific Economic Cooperation summit, which squandered an opportunity to push to finalize a similar commercial agreement in Asia. Internally, past and future fiscal fights are likely to further sour the possibility of future collaborative action between President Obama and Congressional Republicans, which will be necessary to pass any trade legislation.
However, it is always darkest before the dawn, and our neighbor to the north provides a light for those interested in promoting international trade.
Canada and the European Union have come to an agreement on a bilateral trade accord that would eliminate tariffs and open new markets to companies on both sides of the Atlantic. Thanks to some shrewd politicking from Canadian Prime Minster Stephen Harper, the measure enjoys overwhelming support from the public and could be finalized by 2015, practically light speed for a trade agreement.
Economists from both sides foresee financial benefits. Canada would join a select coterie of nations that have preferential access to the United States and the European Union, the two largest markets in the world. Increased exports, particularly in the services industry, could help inject some dynamism into a sclerotic European economy.
A leaked EU analysis of the trade agreement with Canada gives the United States a leg up when it comes to negotiating with the continent. If the EU views the recent bilateral accord as a guide, America has the benefit of knowing where the box canyons and strong currents are located.
There will be plenty of challenges and debates with European negotiators, so President Obama should be doing as much as he can to limit friction over the deal at home. That will require a more hands on approach to getting Trade Promotion Authority passed through Congress. In addition to the inside game in Washington, the White House will also have to play a strong outside game with businesses and unions that may not have as much to gain from tariff reductions as other sectors of the economy. A serious breakthrough on trade could provide some spark to a second term that is losing power fast.
If enacted, TTIP has the potential to boost economic output by some $100 billion a year on each side of the Atlantic, according to trade officials. It would offer the prospect of much needed job growth and improve the ability for America and Europe to compete with emerging markets. Additionally the maneuver would go a long way towards setting a global standard for bilateral trade agreements and commerce more generally.
There's no doubt that the task will be difficult, but the United States and Europe have worked together to slay more vicious dragons in the past. The scourge of communism was more formidable than any special interest group could ever dream of becoming.
The United States joined Europe to form the G-6 in 1975 to initiate the idea of global economic cooperation for mutual benefit. Canada followed suit a year later to make it the G-7, and today the pact has evolved into the G-20.
It is now the United States' turn to follow Canada's lead. If both America and Europe can break through gridlock at home and once again join hands, each side will benefit immensely, and the world economy could get a much-needed boost from the transatlantic partners who have long been the twin engines powering global prosperity.
Hon. Mark R. Kennedy (@HonMarkKennedy) leads George Washington University's Graduate School of Political Management and is Chairman of the Economic Club of Minnesota. He previously served three terms in the U.S. House of Representatives and was Senior Vice President and Treasurer of Federated Department Stores (now Macy's).
Uriel Sinai/Getty Images
Yesterday, Pakistani Prime Minister Nawaz Sharif told the U.S. Chamber of Commerce that member companies should invest in Pakistan, where global giants like Colgate-Palmolive and Nestlé have made substantial profits. Today, he will meet with President Barack Obama to discuss an economic program to spark Pakistan's development. This is a nice change of pace from the regular drones/terrorists/Taliban agenda -- vitally important as these issues are.
In fact, many of Pakistan's pathologies -- including Army dominance over civilian institutions, poor governance, pervasive insecurity, and the continuing generation and export of violent extremists -- would be mitigated if Pakistan's political class, and the world, focused more intensely on steepening its growth trajectory. Arguments that Pakistan cannot successfully modernize for cultural or religious reasons should be rejected on their face, so diverse have been the developmental success stories of emerging economies in East Asia, Latin America, Africa, the Persian Gulf, Eastern Europe, Southeast Asia, and South Asia.
It is not impossible to imagine Pakistan's ultimate emergence as an Asian tiger in its own right. In this scenario, the economic miracle that started with postwar Japan and subsequently encompassed Singapore, Hong Kong, Taiwan, South Korea, Southeast Asia, China, and India would finally make its way to Pakistan. That most of these countries are not Muslim should be no cultural barrier; Turkey's modernization into a middle-income country over the past decade and Indonesia's economic transformation into a second-generation BRIC country demonstrate that populous Muslim democracies outside the Arab world are well-positioned to embrace modernity. They have done so not by relying on foreign aid, but through domestic reform and by taking advantage of globalization's enabling environment to welcome foreign trade and investment.
Pakistan's future as an Asian tiger has been predicted before. As early as the 1950s, it was viewed in the West, including by Dwight Eisenhower's administration, as one of the Asian economies most likely to successfully modernize (along with Burma!). As recently as 2005, Goldman Sachs identified Pakistan's then-high rate of economic growth amid the Musharraf reforms, its growing internal market powered by a demographic boom, its advantageous geographical position astride economic hubs in the Gulf, Central Asia, China, and India, and other factors as reasons for global investors to put their money into it as one of the "Next Eleven" (N-11) emerging economies or next-generation BRICs. Goldman's Jim O'Neill, who coined the BRIC acronym, reiterated Pakistan's long-term importance as a key emerging market in his 2011 book The Growth Map.
Pakistan's natural advantages -- a vibrant civil society, a moderate voting majority, an advantageous geographical position between prosperous Asian and Gulf economies, geopolitical allies in the world's superpower and rising stars, a professional and capable armed forces, a youthful demographic, a large internal market of nearly 200 million potential consumers -- suggest that a sustained dose of security and good governance could put it on track toward comfortable middle-income status. This would likely require greater economic integration with India; a diminished Army role in public life; a rate of urbanization that fueled rising demands for reform and economic opportunity; continued assistance from the West, the Gulf, and China; and, critically, the rollback of domestic political violence.
In his meeting with Sharif today, Obama can launch a "new normal" phase of U.S. relations with Pakistan -- one focused not on Afghanistan or India, as in the past, but on the future of Pakistan itself -- by delivering on American commitments to assist with the hard and soft infrastructure of development, from energy to education. Sharif campaigned on a modernization agenda, and America should support him. Even more important than aid would be a trade agreement to drop U.S. tariffs on Pakistani textile imports.
Pakistan need not remain a basket case forever. The economic transformation of countries with Pakistan-scale Muslim populations and their own histories as victims of terrorism, including Indonesia, India, and Turkey, show what is possible.
Photo: RIZWAN TABASSUM/AFP/Getty Images
As the bell rings, signaling the end of the current round of Washington scuffling over the debt ceiling, and as the participants return to their respective corners, we can take a moment to assess the damage. There is plenty, but we can focus on the question of what the last few weeks meant for the Obama administration's effort to conclude a Trans-Pacific Partnership (TPP) trade agreement.
The current incarnation of TPP talks dates back to late 2008; these have been going on a while. The 12 countries now participating have set themselves a notional goal of wrapping things up this year.
The Financial Times concludes that the recent budget standoff took a toll, when President Barack Obama decided to skip the APEC leaders' gathering. It quotes the director of research at the Asian Development Bank Institute as saying, "Obama not coming here means that the TPP probably didn't get the big push it was to get." Instead, the Financial Times story describes how China used the occasion to advance its alternative trade vision -- the Regional Comprehensive Economic Partnership -- which just so happens to exclude the United States (as the TPP excludes China).
There are plenty of reasons to worry about the TPP's prospects, and the budget debacle in Washington likely made things worse. But the main problem was not Obama's absence from the Asian gatherings, nor China's chance to peddle its wares. Had the president used the government downtime to find common ground with Republicans and repair a broken relationship, the TPP's prospects would likely have improved. Had there been a grand bargain on budget matters, as some participants sought, Congress could have moved on to other matters, such as granting the president negotiating authority for the TPP and the agreement with Europe (the TTIP - another casualty of government-shutdown theater).
Instead, the president seemed determined to vanquish his off-balance Republican opponents. The putative deal that emerged from the Senate only provides a few months' respite, guaranteeing that Congress will return to fight over the issue another day.
This matters for the TPP (and TTIP) because it will be virtually impossible for the president to conclude these deals successfully without cooperation from congressional Republicans. As I noted in the wake of our early-fall foreign-policy crisis (over Syria), Congress has the ultimate say over trade policy. With Republicans in the majority in the House, the TPP would need their support to pass.
An optimist might counter that this is hardly a serious concern. Are Republicans really going to vote down a concluded agreement just to spite Obama? The threat hardly seems credible. And that would be right -- if the president already had trade negotiating authority. It is that authority which would give him his negotiating instructions and let him put a completed agreement before Congress for an up-down vote. But he doesn't have any such authority. The last version of trade promotion authority (TPA) expired in 2007. There have been attempts since to revive it, notably in 2011, but the White House didn't back the effort and Senate Democrats blocked it.
The road to successful trade agreements runs through TPA. To get TPA, there has to be agreement on what subjects trade pacts ought to cover. This is not just haggling about tariffs; it involves trickier domestic policy issues such as labor standards, environmental measures, intellectual property rights protection, and regulatory practices. There is substantial opposition to the current approach to trade among House Democrats, represented by the House Trade Working Group. The veteran trade skeptics on the left have recently been joined by a smaller group of novice trade skeptics on the right, who voice concerns about the delegation of congressional power to the executive.
One can still imagine a successful coalition in the House that could back TPA, but it would likely involve Obama working hand in hand with Republican leaders to craft a bill that would embrace Republican principles, enjoy majority Republican support, and win over a minority of internationalist Democrats. At this point, such cooperation seems fanciful. Even if the president could fracture the House Republican caucus and get a group to endorse the principles of the Democratic skeptics, the outcome would likely be unpalatable to the country's TPP trading partners.
The TPP is yet another illustration of the analytical value of political scientist Robert Putnam's idea of two-level games. Those lamenting Obama's absence from recent Asian summitry implicitly give greater weight to the international negotiations as an obstacle. At this point, domestic obstacles may loom larger.
Astute TPP partners will be less worried about the president's decision not to mill about in a colorful shirt and more worried about the implications of the recent fight for comity up and down Pennsylvania Avenue. The president showed not that he could work hand in hand with congressional leaders, but that he could deliver a sharp uppercut. Progress on trade will likely have to await the conclusion of the budget fight, Round 2.
Photo: STR/AFP/Getty Images
Indian Prime Minister Manmohan Singh's meeting with U.S. President Barack Obama on Friday comes at an awkward time. Both India and the United States suffer from unsteady leadership. Ambitions for a wide-ranging strategic partnership were easier to ascribe to when the United States, during George W. Bush's administration, pursued a coherent grand strategy of primacy and a dynamic India was growing at near-double-digit rates. Now that American foreign policy is less assured and India sinks into an economic morass of its own making, neither country is as attractive a partner to the other. The good news is that these trends in each country are temporary and reversible. The bad news is that it may take new political leadership in both to move the relationship to the next level.
In Washington, Obama has pivoted away from his own pivot to Asia, which should have ascribed a central role to India. His administration's 180-degree swings of policy in the Middle East -- supporting Egyptian President Hosni Mubarak until it didn't, engaging the Muslim Brotherhood government in Cairo but not opposing the coup against it, preparing to bomb Syria only to make Bashar al-Assad a partner in disarmament -- inspire little confidence among friendly Asian countries, like India, looking for consistent projections of American power and purpose. Beyond U.S. foreign-policy zigs and zags, American domestic economic mismanagement, for which both political parties are culpable, plays into the hands of Indian skeptics on the left and right who believe their country should go it alone -- and see the United States as a power of the past rather than the future.
Meanwhile, Indian economic growth has plummeted below 5 percent, even as the government implements yet another expensive new welfare scheme that will do little to boost the country's competitiveness. Economic reforms are on hold until national elections next spring. Urban India is transfixed by the phenomenon of Narendra Modi, chief minister of Gujarat, who hopes to replace Singh in the prime minister's office. Superhuman hopes are vested in India's new central bank governor, Raghuram Rajan, given that India's elected leaders seem incapable of implementing even basic economic reforms. In foreign policy, India has taken a pass on Libya, Syria, and the Arab uprisings writ large. It executed a middling performance during a recent stint on the U.N. Security Council, leading many to ascribe a mismatch between India's aspirations to sit at the "high table" of world politics and its leaders' lack of clarity about what to do when it gets there.
To provide ballast to a bilateral relationship that remains important to both countries' strategic futures in a changing world, Obama and Singh should focus on a prosperity agenda. Indo-U.S. relations have been driven by cooperation in defense and strategic issues; today's terrorist attack in Kashmir demonstrates why intelligence and security coordination should remain at the center of the relationship. At the same time, economic malaise in both countries offers an opportunity to put in place a mutually reinforcing set of initiatives to boost growth.
Photo: SAUL LOEB/AFP/Getty Images
Given the wild developments in Syria during the last few weeks, the debacle there has the potential to push all other issues out of the spotlight. Of course, one reason the issue was so important is that the United States relies on its credibility across the full spectrum of foreign policy. When that credibility is dented, it is time to explore the ramifications.
Dan Twining, at the close of his recent Shadow post, draws the connection to Asia:
Finally, the shambles of the president's Syria policy have sent a broader message to the world that the United States is walking away from the role it has played for a century as chief enforcement officer of a liberal international order. This could have explosive consequences everywhere, but especially in Asia. There, worries that the U.S. "pivot" was little more than rhetoric are now compounded by the spectacle of an American president who seems self-deterred from enforcing his own ultimatum against a weak, isolated rogue state.
The pivot to Asia had multiple components. A renewed doubt about the willingness of the United States to use its military might and defend red lines could certainly diminish the value of the attention that Asian partners thought they were getting. But what of the other facets?[[LATEST]]
The other substantive component of the pivot lies in commercial policy. There, Barack Obama's administration revived an effort by George W. Bush's administration to seek a regionwide Trans-Pacific Partnership (TPP) trade agreement. President Obama declared his intention to engage with these talks late in 2009. There was initially hope among participants that the agreement might conclude by the time the United States hosted the APEC meetings in Hawaii in late 2011. Instead, only a framework for discussions emerged.
Photo: STR/AFP/Getty Images
Could a good night's rest, a true flat-bed, and an international wine selection rescue global trade policy? Were U.S. relations with South Korea saved by a lakeside stroll? My esteemed interlocutor, Dan Drezner, raises these questions in the context of looming sequester cuts to the travel budget of the Office of the U.S. Trade Representative.
With the demise of Intrade, it's hard to give precise figures on how severely the odds on the trade policy wager I struck with Dan have swung in my favor, but Dan seems to sense that he may come up just a few million dollars short.
I'm sympathetic. The sequester is no way to set fiscal policy. Ideally, the White House would put forward budget policies that enjoyed a chance on Capitol Hill, and the Senate would pass a budget more often than once every four years. Requisite choices about how to spend scarce (borrowed) dollars could certainly be made in a more sensible way.
I also concur that it is penny-wise and pound-foolish to skimp on diplomatic travel. I'm quite certain it is possible to come up with compelling examples in which the ability of a diplomat to rest or get work done on a long flight had a measurable impact on national well-being.
Yet neither Dan's post nor his citations from the New York Times manage to do so. The Doha trade talks really faltered after prolonged negotiations in Geneva failed in the summer of 2008. Those talks stretched on so long that jet lag cannot be held responsible for their demise.
The other example given is of an informal conversation between Michael Froman, then U.S. deputy national security advisor for international economic affairs, and South Korea's trade minister that helped seal a trade bargain. Imagine what might have happened had Froman's travel budget not allowed him to be there!
Well, then perhaps the administration could just have pushed for passage of the perfectly good U.S.-Korea Free Trade Agreement bequeathed them by George W. Bush's administration. Barack Obama's administration unwisely failed to back that earlier agreement, spent a great deal of time and effort (and travel) making changes that did little to enhance national welfare, and ended up with one of the more awkward outcomes in international relations -- when two leaders stand on a podium at an international gathering and publicly announce they have failed. Closure only came later, when the Koreans flew to the United States.
There is a useful distinction here between necessary and sufficient measures to promote national interests abroad. Diplomatic travel falls into the "necessary but not sufficient category." Dan should rest assured that he will not lose his bet because an assistant U.S. trade representative was asked to travel on frequent-flier miles. He will lose because of the unwillingness of the administration to make politically difficult choices on trade -- an interesting parallel to its aversion to tough budget choices.
To be helpful, though, let me offer a suggestion: Fully restore funding for the Office of the U.S. Trade Representative. In fact, be generous and allow business-class travel more liberally. But attach this funding to a broad, new "trade promotion authority" bill, the sort of measure that senators such as Rob Portman (R-Ohio) have been pushing for years, with no administration support. If done properly, such a bill would grant negotiating authority for the full range of agreements on the U.S. agenda -- the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership, and an international services agreement under the World Trade Organization. It would resolve difficult open issues about the stances negotiators should take on labor, the environment, intellectual property, and regulation.
That's likely to be a fractious debate. But with trade promotion authority in hand, we can have more confidence that U.S. negotiators' intercontinental flights will actually lead somewhere.
MARK RALSTON/AFP/Getty Images
The Transatlantic Trade and Investment Partnership (TTIP) is a real test of whether America and Europe can work together to maintain the economic vibrancy and political will that has long driven the world's economy and formed the nucleus upon which global consensus has been built.
After the devastating conflict of World War II, both sides of the Atlantic joined hands to rebuild a war-ravaged world. This bold action required courage and vision.
They jointly led the formation of global institutions to address global challenges. To secure the peace, Western Europe and North America formed NATO. Soon thereafter the nucleus of what would become the European Union formed a bond that for decades drove economic progress.
The result of these efforts has been a half-century that has been far more prosperous and peaceful than the previous half-century. Yet, this progress has uncovered fault lines that remain unaddressed. Global institutions are in desperate need of reform to remain relevant. The euro experiment affirms the need to match monetary union with fiscal union. The rise of the emerging economies threatens to shift the economic center of gravity to the Pacific.
The Atlantic duo must now decide to undertake a similar decades-shaping effort in the 21st century. Successfully completing the TTIP would re-energize the alliance and enhance the ability of the West to address all other challenges.
No one doubts that completing the TTIP will be difficult. The United States and the European Union are the world's two largest economies and represent nearly half the world's total output. Many special interests on both sides of the pond and beyond will be seeking to advance their positions, complicating an already tricky balancing act.
However, having engaged recently with business, NGO, and political leaders in Brussels, London, Madrid, and Washington, I have found broad agreement that there could be significant benefits from TTIP. The partnership has the potential to reignite economies on both sides of the Atlantic, measurably adding to the prosperity of the regions' citizens and an ability to set the de facto global standards of commerce.
To capture these potential benefits, negotiators on both sides must work as hard as possible at the negotiating table in order to make doing business under the agreement as easy as possible for companies in the United States and European Union. Doing so will improve the efficiency and competitiveness of both economies.
American and European workers are among the world's most productive and innovative. In a future where innovation will become ever more important to economic health, the markets that are most receptive to modernization will prevail. Issues such as attracting the world's talent, encouraging risk-taking, and streamlining regulatory obstacles will be increasingly important to economic success. The latter should be a strong focus of TTIP and will be its greatest challenge.
My son spent the last year teaching English and basketball in Spain and traveled the continent on weekends. He summed up the European view thusly: "If it can be difficult, why make it easy?" There are times when an extra layer of attention or difficulty can be advantageous, perhaps even charming: cuisine, culture, or Versailles. However, when it comes to growing an economy, "difficult" is not a recipe for success.
Finding a solution that makes easy the new norm must be a primary focus for TTIP negotiators. The World Economic Forum's most recent Global Competitiveness Report shows a wide variability within the two regions on the measure of the burden of government regulation. Among the 144 countries rated, Finland has the sixth-highest mark and Italy ranks No. 142. Britain (No. 72) and the United States (No. 76) rank in the middle. France, which has emerged as a key critic of TTIP efforts, falls in at No. 126. To accomplish its aim and deserve the support necessary for passage, the end product must be a result closer to Finland than Italy.
Difficult negotiations will be required with those industries, countries, and states that have a special privilege or onerous restriction they wish to preserve. Reaching an agreement that enhances the competitiveness and global relevance of the West requires that those negotiations succeed.
Negotiators would be wise to keep in mind the words of Winston Churchill, "Success is not final; failure is not fatal. It is the courage to continue that counts."
No one should take the vaunted status of the United States and Europe in world affairs for granted. It can fade unless action is taken. It will require courage. While perhaps harder to come by in a time of peace than during conflict, it is upon the display of such courage that their joint future depends.
Miguel Villagran/Getty Images
This week marked the one-year anniversary of WikiLeaks founder Julian Assange's finding refuge in the Ecuadorean Embassy in London to avoid questioning on sexual misconduct charges in Sweden. In an irony no doubt lost on the self-styled transparency champion, his Ecuadorean patron, President Rafael Correa, commemorated the occasion by ramming through his latest assault on the Ecuadorean media that criminalizes, among other journalistic activity, the very type of leaks for which Assange is best known.
Correa, whose tenure in power has been characterized as one of "widespread repression of the media, pre-empting private news broadcasts, enacting restrictive legal measures, smearing critics, and filing debilitating defamation lawsuits," has capped it off with a new restrictive communications law that has been widely condemned by NGOs and human rights organizations.
The Inter American Press Association called it "the most serious setback for freedom of the press and of expression in the recent history of Latin America." Human Rights Watch described it as "clear attempts to silence criticism." Even the U.S. State Department was compelled to weigh in with a statement of concern.
This is only the latest example of Correa's bullying and heavy-handed rule, and it comes right before the U.S. Congress and Barack Obama's administration must decide by the end of July whether to renew trade preferences for Ecuador under the Andean Trade Promotion and Drug Eradication Act (ATPDEA), an issue I have written on before.
Now, the extent to which freedom of expression is honored in a country may not be an explicit criterion for renewal of ATPDEA benefits, but it certainly cannot be ignored. Unsurprisingly, however, the Correa government doesn't fare any better when considering the criteria on which renewal is based: counternarcotics cooperation and treatment of U.S. businesses.
As I have written, Ecuador's commitment to counternarcotics cooperation has been lackluster and minimalist. After a poor report on Ecuador in 2012, the State Department's 2013 international narcotics report "strongly encourages Ecuador to place a higher priority on the interdiction of illicit drugs, chemical precursors, eradication of coca and poppy, and destruction of cocaine labs." That is diplospeak for the fact that the Correa government places no priority on those activities.
The treatment of U.S. companies in Ecuador under Correa has hardly been stellar either. Several business and trade associations have already weighed in against or expressed reservations about ATPDEA renewal (summaries can be found here) due to Correa's sketchy commitment to rule of law. Others have brought claims against Ecuador at the International Center for Settlement of Investment Disputes.
Reviewing the entirety of the record, it is clear that the Correa government has made a mockery of U.S. attempts to build a mutually beneficial relationship that addresses U.S. concerns about narcotics trafficking while seeking to provide opportunities for Ecuadorean exporters in order to undercut the lure of illicit enterprises.
That is too bad. But it is time that the Rafael Correas of the world understand that they cannot have it both ways: You cannot grandly spurn U.S. interests for political effect on the one hand and then expect to receive concessions on the other. It's time these leaders learned there is a cost to their antagonistic behavior. Congress and the administration can start by sending such an unmistakable message and end undeserved trade concessions to Ecuador.
RODRIGO BUENDIA/AFP/Getty Images
A couple months ago, the New Yorker posted a story and wonderful online video about a master pickpocket. This person was willing to demonstrate his art on camera. Even so, he moved so quickly that it can take multiple viewings to see just how he relived his target of his possessions. The key to it, of course, is misdirection. The pickpocket makes sure your attention is directed somewhere other than where the action is taking place.
This came to mind when reading Dan Drezner's rejoicing about recent polls showing improved U.S. public sentiment about trade. I welcome a new public receptiveness to trade as much as anyone, but Dan, in his euphoria, concludes:
"The spike in public enthusiasm from last year is politically significant. At a minimum, it suggests that President Obama won't face gale-force headwinds in trying to negotiate trade deals. Which means I could win my bet with Shadow Government's Phil Levy. Which is the only thing that matters."
Nor was Dan the only one to wax optimistic about trade prospects this past week. Mike Green thought things had gone rather well with Japanese Prime Minister Shinzo Abe's summit meetings with President Obama in Washington.
"Even on the trans-Pacific Partnership (TPP), where expectations were low, there was much more substance than met the eye.... The Japanese delegation had a quiet spring in their step after the summit and were keen to move on TPP in a matter of weeks..."
This, too, is promising. Peter Feaver had it exactly right when he noted that engagement with Japan could be an essential part of delivering on Obama administration promises of attention to Asia.
So, as far as public wisdom and the Asian pivot are concerned, these are both healthy developments. Yet, when it comes to prospects for trade policy accomplishments over the remainder of President Obama's term, anyone laying odds or taking wagers should pay close attention to where the action is. To that end, here are four questions to help maintain focus:
1. What will Japan's entry do for TPP prospects?
Japanese entry into the TPP, if it happens, will be a good thing. It will dramatically increase the economic significance of the TPP, and it will establish the agreement as the premier accord governing trade liberalization and economic rules in the Asia-Pacific region.
If Japan does not join, we have problems. The administration had previously suggested that Japan could enter in the next round, after this version of TPP concludes. That, however, would pose serious difficulties. Japan is no small economy able to sign on to an agreement with a few innocuous accession talks. If the TPP reaches a successful conclusion soon, after four or more years of negotiation, will there really be an eagerness to reopen the deal in the near future? But the size and complication of Japan's economic relations also mean that the task of concluding the TPP just got much harder. One former USTR recently opined at a conference that if Japan joins the talks the TPP will not be concluded in President Obama's term.
2. What do key interest groups think?
While it does not hurt to have the public embracing trade, U.S. agreements are not decided by referendum. I will leave it to all the political scientists buzzing around this site to provide details, but a more sophisticated approach would focus on the dynamics of the Congress. A more sophisticated approach would still think about the relations with key constituencies, such as organized labor. From the time President Obama first took office, it appeared clear that he had the votes in Congress to pass the pending FTAs with Colombia, Panama, and South Korea. Yet he did not put them forward until late in 2011, despite loud complaints from the business community. This at least suggests that there was something more than vote counting going on.
Along these lines, there was an alarming bit of news in the Hill recently. One promising feature of a trade deal with Europe was that it would seem immune from divisive questions about labor standards that had plagued FTAs with developing countries such as Colombia. The Hill, however, reported that "unions want to use negotiations on a U.S.-European Union (EU) trade deal as leverage to win stronger labor laws here in the United States."
If so, this does not bode well. Those are among the worst trade fears of Republicans on the Hill -- the prospect that labor legislation that could not pass a straight vote could instead be slipped in through the back door of a trade deal.
3. How are Congressional relations these days?
Per the constitution, trade is Congress' domain. Congress can try to delegate some of the negotiating power to the executive branch but ultimately must approve of any deal that is struck. If this is to work through periods of detailed negotiations, there must be good, open communication between the Hill and the White House. In particular, the committees that deal with trade -- House Ways and Means and Senate Finance -- must be on board. As it happens, these are the same committees that deal with the sort of taxation issues that have been a recent struggle. I'll leave it to the reader to grade the degree of comity between branches.
One less subjective measure, however, is whether Congress grants the executive trade negotiating authority (known as TPA -- trade promotion authority). The administration has also been saying for years that the idea of TPA is a reasonable one, but the time is not ripe. In the 2013 trade agenda, released today, the administration said it would work with Congress on obtaining such authority. That will be a contentious fight, since it will raise issues such as the permissible scope of labor provisions in an accord. The document does not set a date.
4. Who's your USTR?
It is also helpful, when negotiating complex trade agreements, to have a representative who will go forth and conduct the negotiations. The incumbent USTR, Ambassador Ron Kirk, reportedly just held his going-away party. Though there have been rumors, the administration has not yet named a new USTR, much less confirmed one. That could prove an obstacle to racing ahead with complex agreements.
So I see the trade policy landscape a little differently than Dan Drezner does. He may want to keep in mind that, if you don't keep your eye on where the action really is, someone may take your lunch money.
In 2007, I published a review essay in Foreign Affairs explaining how then-Prime Minister Shinzo Abe was compensating for Japan's relative economic decline by reducing anachronistic constraints on the Japanese self-defense forces and aligning more closely with other maritime democracies, beginning with the U.S.-Japan alliance. Unfortunately for Japan -- and the shelf life of my piece -- Abe abruptly resigned a few months later after a sudden wave of missteps, political bad luck, and failing health. Over the next five years Japan suffered through multiple leadership transitions, with two Liberal Democratic Party (LDP) prime ministers and three Democratic Party of Japan (DPJ) prime ministers all stumbling at the starting line because they were unable to make any headway with Japan's stagnant economy. Abe, meanwhile, kept a low profile.
But as China upped the pressure on Japan over the contested Senkaku Islands, the LDP turned to the hawkish former prime minister last year to help them retake the government and restore Japan's self-confidence. Learning from his past errors, Abe has focused his early months on jump-starting the economy through "Abenomics" -- a combination of quantitative easing, stimulus spending, and promises of structural reform to increase productivity. Thus far it has worked: The markets and business confidence are up and Abe is the first prime minister in memory to see his personal support rate actually rise in office (now at 75% in some polls). In an energetic speech at the Center for Strategic and International Studies in Washington on Friday, he declared to the audience that "Japan is back."
Abe's return seemed initially to confuse the Obama administration. His values-based, balance of power approach resonated much more with George W. Bush's second inaugural than the minimalist and risk-averse foreign policy vision President Obama has put forth for his second term. The administration also appeared spooked by Abe's intemperate campaign comments about the need to revisit Japan's previous official apologies to China and Korea. Numerous stories emerged before his visit to Washington citing unnamed senior U.S. officials promising to publicly shame Japan if the Abe administration went too far with historical revisionism. The pattern looked eerily reminiscent of what happened between the Obama administration and Bibi Netanyahu in the first term. For its part, the Japanese side was equally uncertain about seeming wobbliness in U.S. declaratory policy on the Senkaku issue since Hillary Clinton's departure and by John Kerry's promise in his confirmation hearings to "grow the rebalance towards Beijing" (it did not help that Chinese official editorials praised Kerry for having the wisdom not to "meddle" in Far Eastern affairs the way his predecessor had).
In the end, though, the Abe-Obama summit on Feb. 22 was a success for both sides. Since coming to office, Abe has moderated his stance on history issues and was firm but gracious towards China and especially South Korea in his CSIS speech. In the Oval Office press availability, President Obama reaffirmed that Japan is the "central foundation" of U.S. security policy toward the Pacific (though he sounded like he was searching for a teleprompter when he said it). The two leaders echoed each other on the need for a UN Security Council Chapter 7 resolution to deal with North Korea's recent nuclear test and there was little outward sign of frustration over the usual irritants on Okinawa base realignment. Even on the trans-Pacific Partnership (TPP), where expectations were low, there was much more substance than met the eye. In a skillfully worded joint statement on Japan's possible participation in TPP, the U.S. side reaffirmed its position that all sectors had to be on the table and Abe restated the LDP campaign pledge that Japan would not commit to opening all sectors. That little piece of kabuki now allows Abe to state that he will seek to protect the rice market in negotiations and the administration to claim that all sectors will indeed be subject to negotiation. The Japanese delegation had a quiet spring in their step after the summit and were keen to move on TPP in a matter of weeks, slowing down mainly to accommodate the administration's need to line up support on its side (though Abe will have his own challenges within the LDP, to be sure). While the U.S. press was generally confused by the language on TPP, Congressional opponents of free trade knew what the joint statement meant right away, expressing their alarm within hours of the bilateral summit.
Abe has a lot to deliver still, and he knows it. "Abenomics" will run out of steam without real deregulation and reform (hence the Japanese business community and bureaucracy's enthusiasm for TPP as an action-forcing agreement). He also has to win the Upper House election scheduled for July, since failure to control both houses of the Diet has done in every prime minister since Koizumi. But Abe has begun to build up a head of steam. I have sat across the table from the last six Japanese prime ministers, and I always watch the faces of the political aides and senior bureaucrats behind them. I haven't seen such confident expressions since Koizumi was in the job.
NICHOLAS KAMM/AFP/Getty Images
Shadow Government is pleased to run thus post from guest-blogger, Mark Kennedy, a former member of congress and former key advisor on trade issues in the Bush Administration. He is currently Director of the Graduate School of Political management at George Washington University.
President Obama's surprise announcement in his State of the Union address that he plans to start talks on a free trade deal between the United States and the European Union could serve as a boon to the nation's economy or a bust for the nation's competitiveness. Though reaching any sort of deal will be difficult, leaders in the United States should avoid a proposal that could make American markets more like their European counterparts and should instead seek a plan that helps introduce the best of the American labor markets to the EU in order to boost growth on both sides of the Atlantic.
A successful free trade agreement (FTA) will achieve the following: expand U.S./EU trade, renew the Atlantic political/economic alliance, improve competitiveness in both markets, and set a benchmark for future trade accords.
In order to walk across the finish line together, the United States and the EU must effectively resolve their differences on two key economic policies.
The EU has several long-standing regulations preventing many U.S. agricultural products from coming to market. America has long argued that European demonization of genetically modified (GMO) crops as "Frankenfood" is not grounded in science. With the pressing need to meet the nutritional needs of a growing planet, the potential of GMO crops should not be set aside so quickly.
The United States' previous treatment of food controversies in free trade agreements can serve as a benchmark in this respect. The terms of the South Korean free trade agreement provided a timeline for when U.S. beef would gain access to Korean markets. A similar time-delayed structure with the EU would allow for officials to adjudicate the safety of American agriculture and for producers to make adjustments necessary to compete in a more open market. Allowing scare tactics to dominate what should be an economic and scientific debate is a loser for consumers on both sides of the Atlantic.
A common stumbling block for free trade agreements concern the differences between nations' labor regulations. American labor unions often balk at FTAs with the countries from the developing world because they fear that their members will be unable to compete with the emerging market's low-wage employees. This time around the shoe is on the other foot.
According to the World Economic Forum's 2012-13 Global Competitiveness Report, the United States' approach to labor flexibility is among the best in the world. EU nations tend to take a more populist and protectionist approach, which can limit productivity and harm young workers. Those protectionist policies have lead to high youth unemployment and unrest in EU nations like Greece and Spain. A final deal should recognize that and center labor arrangements around the idea that a growing economy can provide more job security than government rules.
European Commission President José Manuel Barroso warned at a press conference recently that the EU would not compromise on its "basic legislation" in trade talks.
Rather than approaching these trade discussions in a defensive posture, leaders on both sides should aggressively pursue outcomes that would be highly beneficial to their citizens and the world:
It is critical that those who support lower economic barriers stay engaged in support of a joint accord, but one that fosters openness rather than protectionism. A successful deal will expand Atlantic trade, strengthen the Atlantic alliance, improve competitiveness on both continents, and set a standard that stimulates expanded trade agreements with other regions
CHARLY TRIBALLEAU/AFP/Getty Images
The United States, protected by two oceans and with a global range of allies and interests, has found for a century that it must go abroad to shape and lead a dangerous world. But President Barack Obama seems, in some respects, to prefer to stay home. Whereas George W. Bush's foreign policy was maximalist, Obama's is minimalist. A foreign policy assessment only halfway through his presidency is no doubt unfair -- he may yet vanquish Iran's nuclear weapons program, put an overdue end to Syria's bloody civil war, stand down Chinese aggression in Asian waters, and oversee a historic wave of trade liberalization. But he has not yet. The Obama Doctrine appears less ambitious. Here are its elements to date:
Nation-building at home, not abroad. President Obama took office so determined to "end the war" in Iraq that he failed to negotiate a follow-on force to sustain stability there. In Afghanistan, after a decade of allied sacrifice and real gains, the administration astonishingly is now flirting with the "zero option" of leaving no U.S. forces there after 2014. Obama prefers to focus on "nation-building at home." But will he be able to if Iraq or Afghanistan backslide into civil war, or if Syria's violent spillover engulfs the Middle East? For all the tactical efficacy of drone strikes, the United States cannot possibly defeat terrorism without at the same time working to build free and prosperous societies in countries, like Pakistan, that nurture it.
Resisting transformationalism. Notwithstanding excellent speeches about bridging the gap between America and the Muslim world, President Obama has treaded more gingerly in his policies. He did not support Iran's Green Revolution and has stood back from the opportunities inherent in the Arab Awakening, allowing post-strongman societies in the Middle East to devise new political arrangements for themselves. Obama has a nuanced understanding of the limits of power and the tragedy of international politics from his oft-cited reading of Reinhold Niebuhr. But the greater tragedy may be declining to use America's great power to more actively support Arab and Iranian liberals desperate to build free societies against fierce opposition from Islamist and ancien regime forces.
"Leading from behind." In Libya, Syria, and now Mali, we have seen Washington's European allies push for, or carry out themselves, armed interventions to uphold human rights and regional stability. Americans are used to being the hawks in world affairs, and Europeans the doves -- but those roles have reversed under President Obama. This turns the transatlantic bargain on its head: Europeans now seem more concerned with policing out-of-area crises, with America playing a supporting role. But is such passivity really in Washington's interest? Can Europe really lead in matters of war and peace without America at the front?
Rebalancing American power toward Asia. America's "pivot" has been welcomed in much of Asia and across party lines in Washington. But as Joseph Nye argues, the United States has been pivoting to Asia since the end of the Cold War. It would be more accurate to say that Obama himself pivoted away from seeking a G-2 condominium with China to balancing against it. His administration's support for liberalization in Myanmar has been historic -- but senior U.S. officials say the process is driven by Naypyidaw, not Washington. It is also unclear if the pivot is more than a rhetorical policy; President Obama has already authorized defense budget cuts of nearly $900 million and supports more.
Unsentimentality towards allies. Even amidst the rebalance, Asian allies like Japan and friends like India have felt neglected by this American president. Similarly, Obama's attention to the transatlantic relationship seems inversely proportional to the affection Europeans feel for him. Despite significant defense transfers, the U.S. administration appears as concerned with preventing Israel from attacking Iran as preventing Iran from developing nuclear weapons. Hard-headedness is a virtue in international relations. America's allies, however, expect it to be directed more at U.S. adversaries than at our friends.
A trade policy high in ambition, if not results. President Obama commendably seeks to double U.S. exports as part of an economic recovery program. His administration has sketched out a transformative vision of an Atlantic marketplace and a Trans-Pacific Partnership. But movement on both has been very slow -- at least as slow as the three years it took for Obama to send Congress free trade agreements, with Korea and other countries, negotiated by his predecessor. The potential for an ambitious trade opening is promising -- if Obama can deliver.
President John F. Kennedy said America would pay any price and bear any burden in support of liberty. President Obama has made clear that under his leadership, America will not do quite so much. But strategic minimalism and a focus on the domestic means problems abroad only grow, inevitably pulling America into crises on less favorable terms. The world looks to America for strategic initiative to solve its thorniest problems. At the moment, demand for this leadership is greater than supply.
This article appeared over the weekend in the special Security Times edition prepared for the Munich Conference on Security Policy and published by Germany's Times Media. The paper as it appeared in print is available at www.times-media.de .
John Gurzinski/Getty Images
President Obama's apparent selection of his current chief of staff, Jack Lew, to be the next Treasury secretary reflects some interesting choices. One that has received ample attention is the choice between a denizen of Pennsylvania Avenue versus someone from Wall Street. The Washington Post led with this facet of the selection:
"President Obama recently said he would love to hire a top executive into his administration. But for the job of Treasury secretary, he didn't pick a corporate executive, a famous economist or a former politician -- he has decided to tap a trusted adviser ... an expert on the nation's ongoing budget wars."
Given Lew's budget expertise and his background at State, the president had no need to choose between domestic and international qualifications for the post, but his limited time in the private sector is different from the background of some financial titans who have previously held the job.
The most interesting choice, though, may have been between insider and outsider. Here the choice of Lew stands in contrast to the selection of Sen. John Kerry (D-MA) for State. Whereas Kerry's prominence comes from his chairmanship of the Senate Foreign Relations Committee and his candidacy for president, Lew's top positions (including his directorship of the Office of Management and Budget) have been in the Executive Office of the President, serving the president.
The Treasury secretary job is so broad that any nominee would be lacking experience in some dimension -- financial markets, international dealings, budget and political matters. That can be at least partially offset by a willingness to listen to broadly, and listen closely to the right people. It may be significantly harder to suppress strong tendencies to carry out the president's wishes and risk confrontation through presenting a contrary view. The Wall Street Journal expressed some skepticism about Lew in this regard.
It is not clear how much this independence, or lack thereof, will matter at the margin for international economic policy (loosely defined as those matters on which Dan Drezner and I wager). From the outset of the Obama presidency, Treasury and State officials privately acknowledged the necessity of moving ahead with the three pending free trade agreements. One could hardly doubt Secretary Clinton's independence or willingness to voice her views. Yet the completed agreements took almost three years to pass.
When it comes to the second term agenda of concluding Trans-Pacific Partnership talks, launching and completing a U.S.-EU. free trade agreement, or making progress at the WTO, the next secretaries of Treasury and State will have a major role to play, but the domestic political obstacles loom large. These agreements are broader than the formerly-pending free trade agreements, they are not pre-cooked, they present more challenges in international negotiation, and they may face equal or greater domestic political obstacles. To overcome all this, Lew and Kerry will need to be even more adept than their well-qualified predecessors.
Mark Wilson/Getty Images
A relentlessly-optimistic Dan Drezner has thrown down the gauntlet! (Well, more like a dinner napkin, really, but same idea). He defends the prospects for trade progress in President Obama's second term and descends from generalized good cheer into specifics. With a meal on the line, he writes:
"I'm willing to bet that at least two out of the following four things will happen during Obama's second term:
1) A Trans-Pacific Partnership that is ratified by Congress;
2) Bilateral investment treaties with India and China;
3) A transatlantic integration agreement;
4) A new services deal within the auspices of the WTO."
Now, for those of you wagering at home -- not that Foreign Policy condones such behavior -- the question is not just which of us has the clearer crystal ball; you also want to think about the point spread. Over at Cato, Simon Lester offers some initial guidance to eager bookies:
"I would rate the chances of seeing completed China/India investment treaties or a U.S.-EU FTA at close to zero; a ratified TPP at around 10 percent; and a WTO services agreement at around 25 percent."
While I like the implication -- a 97.5 percent chance that I feast at Drezner's expense -- I would differ a bit on the odds.
The challenge of handicapping these events is that they are not precisely defined. A "transatlantic integration agreement" could run anywhere from an accord that promises modest services integration and regulatory cooperation to a full-fledged free trade agreement between the United States and the European Union. A bilateral investment treaty could range from a new consultation mechanism to adoption of the complete U.S. model BIT.
Thus, a central question: How readily can the Obama administration push through a minimalist version of any of these trade measures? There is a clear incentive to do so. Agreements ought to be easier if you can drop the hard parts. Signed and passed agreements constitute a legacy. Only quibbling trade geeks will ever weight the virtue of those agreements by the extent of their coverage. This is one reason for the long history of bilateral or plurilateral trade agreements around the globe that delivered very modest amounts of liberalization: they all delivered a signing ceremony for leaders.
Yet there are some significant obstacles to "going lite." Here are four:
1. Commercial significance. It would be dramatically easier to negotiate the TPP if issues such as intellectual property or state-owned enterprises were omitted. Those issues are divisive both within the United States and between participating countries. Yet they are on the agenda because key industries care about them and see opportunity in regulating the behavior of trading partners. While the Obama trade legacy will not be significance-weighted, there needs to be a minimum level of business enthusiasm to get an agreement through.
2. Balance. Any agreement has to offer something for each party. The narrower the agreement, the less likely all the participants come away with something they like. This is a problem with a services-only deal within the WTO: Usually developed countries are demandeurs for services market access while developing countries are demandees. Of course, the developed countries could go off on their own and sign a plurilateral services agreement among themselves (still under WTO auspices), but that poses some problems. It does not win domestic services firms the market access they crave, it ticks off the developing countries who have been circumvented, and it may limit negotiating space for any future, broader WTO agreement that might draw the developing countries in.
3. Leverage. In the early days of post-war trade talks, agreements came along every couple years. If your industry's concerns were not taken up in one round, you could be reasonably confident you could push for them in the next. In the last forty years, though, there have been only two completed global trade agreements (the Tokyo and Uruguay Rounds). FTAs have been concluded more frequently, but generally only one per country pair. Now suppose you're a U.S. agricultural producer with longstanding concerns about European agricultural practices. How do you react to the prospects of a limited U.S.-EU trade deal that leaves out agriculture? You hate it. You probably think that this is your moment of maximum leverage to reform EU policies; a limited agreement gives that leverage away. The argument would be similar for a modest BIT with India or China; anyone with investment concerns might see a limited agreement as worse than no agreement at all, since the chances of revisiting the topic would be small.
4. Precedents/Congress. The United States has been relatively formulaic in its approach to trade agreements, moving from the NAFTA model, to "NAFTA+" to "Chile+" - the same basic structure, with a few improvements. No major deviations from the same 'high standards' model of a trade agreement. That was one of the attractions of the TPP -- it was a group of countries who had committed to a fuller, deeper version of trade liberalization, matching the U.S. standard of depth and breadth. A standardized approach solves two particular challenges for U.S. trade policy. First, the country undertakes multiples negotiations, spread over time. Second, any administration must reach an understanding with Congress, which has constitutional authority over trade. A fixed template makes it harder for successive trading partners to try to exempt sensitive sectors. It also means that carefully negotiated understandings with Congress need not be reworked with every agreement. While an FTA- or BIT-lite may ease external negotiations, it can complicate discussions with Congress and with future trading partners.
So a 'lite' approach may be hard to swallow.
There is certainly more to chew on as we think over trade prospects for the next term. I have yet to cook up a full alternative set of odds. But am I confident in my skepticism? You bet.
Alex Wong/Getty Images
There has been a lot of commentary on the Obama administration's "pivot" (or "rebalance") to Asia here at Shadow Government. Most commentators have praised Secretary Clinton's activism towards Southeast Asia, but pointed out that the rhetoric of the pivot will look hollow without a real trade strategy and adequate resourcing for our forward military forces. This past month it looks like the wheels may have started coming off on the trade strategy axle.
In early September regional leaders met at the Asia Pacific Economic Cooperation (APEC) leaders meeting in Vladivostok, sans Barack Obama who was unwilling to skip town in election season, and courtesy of Vladmir Putin who was unwilling to schedule the meeting at a time the U.S. President could attend. President Obama's absence was not the end of the world: Bill Clinton skipped two APEC summits and managed to compensate the next year (for the record, George W. Bush missed none...but that was before we were "back in Asia" as the current White House likes to say). The real problem at Vladivostok was the hallway banter by the other delegates about TPP -- the Trans-Pacific Partnership -- that forms the core of the administration's strategy for building a regional economic architecture that includes us and strives for WTO-consistent trade liberalization and rule-making. The overall critique in Vladivostok was that the U.S. side is playing small ball on TPP, to the frustration of multiple stakeholders. The U.S. business community is worried at the lack of market access in the negotiations; the Australians and Singaporeans are hedging with Asian-only negotiations because of what they see as incrementalism by USTR; and Japanese officials are dismayed by administration signals discouraging Tokyo from expressing readiness to join TPP.
This all matters because of the other summitry gossip that is coming out of Asia. On November 18-20, the Cambodians will be hosting the East Asia Summit, which President Obama joined with great fanfare last year and which the president will be able to attend this year because it is after the U.S. elections. The main deliverable on economics at that summit will be a decision within the region to proceed with the RCEP -- an Asian "Regional Comprehensive Economic Partnership" that includes the ten ASEAN states, Japan, China, Korea, India, Australia and New Zealand -- and does not include the United States. The Cambodians' current plan for the November summit is to hold an RCEP inaugural meeting while President Obama waits outside the room cooling his heels with Vladmir Putin (since Russia is also not included in the regional trade deal). Stunningly, our allies Japan, Australia ,and Korea all appear to be on board with this scenario.
At one level this resembles the silliness of a junior high school prom, but at another level it could be the moment people start writing the obituary for the "pivot." To prevent that, a returning Obama administration or a new Romney administration has to put more oomph into the current anemic U.S. trade strategy. The RCEP launch will be embarrassing, but since those talks have no prospect of hitting a WTO-compliant level of trade liberalization, the United States can retake center stage again by showing that it can form an even more impressive coalition of trade liberalizing states. This means getting Japan in to TPP; leveraging Canada and Mexico in the TPP process (which will also help us counter Brazilian efforts to separate South America from us); and beginning to move on a complementary trans-Atlantic FTA process. The "pivot" was never sustainable without like-minded allies in our hemisphere and Europe and now is the time to recognize that and develop a strategy accordingly.
The next administration will also have to demonstrate credibility by moving to secure trade promotion authority (TPA) from the Congress (just can't get around Article One Section Eight of the Constitution). Finally, the administration had better start thinking about new ways to engage on economic issues within the EAS that keep us in the regional dialogue without requiring a high-standard FTA with countries like Laos or Burma. Bob Zoellick was a master of that art at USTR when he pioneered the Enterprise for ASEAN Initiative -- a flexible framework that allowed a la carte participation by countries ranging from an FTA (Singapore) to establishing very basic economic dialogues (Cambodia).
In short, for trade to continue underpinning U.S. leadership in Asia, we will have to go global, be agile within the region, and give a shot of adrenaline to USTR. Otherwise, the "pivot" will be a minor footnote in the textbooks.
ALEXANDER NEMENOV/AFP/Getty Images
For the past decade, it has been virtually impossible to attend a conference or panel discussion on United Nations reform without someone within the first five minutes making the point that the current lineup of permanent UN Security Council members is a hopelessly archaic snapshot of great powers in 1945 and desperately needs updating. I have long agreed, and even indulged in that talking point myself on numerous occasions. [Sidenote: A tip for students and interns looking for an easy way to get senior policy leaders to notice you and nod in agreement at cocktail receptions -- if there is ever a lull in the policy chatter, just clear your throat and solemnly make this point about U.N. reform. And if one of your friends who read this beats you to it in the conversation, other reliable stand-bys include saying "You know, I really think the US needs to think more strategically" and "I must say, our national security system is broken and really needs a comprehensive interagency reform, just like Goldwater-Nichols." Of such points are blue-ribbon task forces and future conferences made...]
But every now and then -- every four years to be precise -- something happens in world affairs that shows perhaps the current P-5 membership of the U.S., China, UK, Russia, and France isn't necessarily so obsolete after all. Yes, the Olympics. Looking at the medal tables from the just-concluded London Olympics, the top four medal winning countries also happen to be four permanent members of the UNSC: the U.S., China, UK, and Russia. And the fifth permanent UNSC member, France, is not far behind at all at eighth in the medal rankings. Furthermore, the countries ranked fifth and sixth in the medal tables are Germany and Japan, both of whom have for years been making credible claims for permanent UNSC membership. Nor is this year a fluke. The 2008 Beijing Olympics had the same four countries atop the medal tables, with France even closer in sixth place, while Germany and Japan were fifth and eleventh, respectively.
What, if anything, do the Olympics tell us about measurements of national power? This is admittedly a question with a touch of frivolity -- perhaps all that the medal tables tell us is which countries are most devoted to sports. But as Victor Cha and other scholars have pointed out, sports have never been insulated from geopolitics. Even a cursory glance at past Olympics reveals this, whether Jesse Owens' one-man rebuttal of Hitler's racialism at the 1936 Berlin Games, the legendary "Blood in the Water" Hungary-USSR water polo match at the 1956 Olympics in the shadow of the Soviet invasion of Hungary, the reciprocal boycotts staged by the United States and Soviet Union in 1980 and 1984, or even China's use of the 2008 games to assert its global power status. As even a realist like Steve Walt has confessed, the Olympics can tap into and fuel incipient nationalist sentiments among the otherwise unsentimental.
Here I thought it would be interesting to look at Olympic medal counts in comparison with more traditional metrics of national power, such as GDP and defense budgets. (GDP and military expenditures are both admittedly crude proxies for national power; for a more extensive exploration of how power might be measured, see my American Interest article on same.) In putting together the table below, I listed the top 10 countries in total medals won at the London Olympics, and below them for comparison added six other countries that are generally considered "rising powers" in global affairs: India, Brazil, Saudi Arabia, Mexico, Turkey, and South Africa. I then listed each nation's global rank in total GDP (nominal) and in defense spending. This is just a whimsical first cut, of course, so any political scientists out there are quite welcome to apply some methodological rigor and see if there are any genuine findings to be had.
What does this tell us? Overall that wealth, military spending, and Olympic success seem to go together -- not too surprising. The national characteristics necessary to produce Olympic-level elite athletes seem to involve a blend of hard and soft power quotients. The most obvious hard power dimension is economic; nations with more wealth are able to devote more resources to supporting Olympic training and facilities. Population levels are certainly a factor, but in relation to overall wealth. In the domain of soft power, nations with functioning governance can effectively direct their resources for determined purposes, such as developing a system to encourage Olympic athletes. Some dimension of culture is another soft power quotient that may play a part, for the self-evident reason that cultures that value sports in general, and in many cases particular sports, are more likely to produce Olympic athletes. To take just one example, as a former water polo player I've always been fascinated by the tremendously disproportionate number of elite water polo teams who come from south-central Europe, principally Hungary and the former Yugoslavia. The fact that three out of the four final teams in water polo this year were Serbia, Croatia, and Montenegro shows what a powerhouse the remnants of Yugoslavia remain. Or Jamaica in track and field, which despite its meager power measurements on traditional metrics (e.g. military, economy, governance) has produced the world's finest sprinting program. Or Romania in gymnastics, and so on.
The other side of the coin is countries that are ascendant as economic and/or military powers but who still punch below their weight at the Olympics. From the table above, the three countries that stand out the most are India, Turkey, and Saudi Arabia -- all of which rank much higher in GDP and defense spending than in Olympic medal counts. This is understandable given that ascendant powers usually first focus on getting their fundamentals of economic growth, infrastructure, and defense on track before devoting national resources to sports sponsorship. Conversely, Olympic results are often a lagging indicator for declining powers. Nations such as Russia that are otherwise in relative economic and military decline still produce Olympic successes, perhaps partly due to the inherited infrastructure and tradition of supporting elite Russian athletes.
Overall the American successes in London are perhaps another small but telling indicator that American decline is not yet upon us. Now that the Olympics are over, here in Texas we are looking forward to the start of football season. As long as the United States still has football season come around every fall, I won't worry too much about American decline.
The Obama administration's decision to lift the U.S. investment ban on Burma is the first time Washington has publicly broken with the country's democratic opposition since Burma's fragile but consequential political opening began several years ago. The United States has correctly encouraged that opening through a graduated policy of engagement that has rewarded Burma's progress but retained leverage to incentivize further reform over time. This was in keeping with the advice of Aung San Suu Kyi, the Nobel laureate whose party won over 95 percent of open parliamentary seats in elections earlier this year. Given that Burma remains controlled by a military regime in civilian clothing that continues to war against ethnic minorities and retains firm control over the economy and politics, Suu Kyi had urged a measured pace of international engagement that did not succumb to what she described as "reckless optimism" about a country that still has a long way to go on the road to democracy.
An oped I co-authored today in the Washington Post argues that Washington's decision to fully repeal the ban in U.S. investment in Burma, without carve-outs for energy or other economic sectors essentially controlled by the military, goes too far, too fast. In the U.S. Senate, John McCain and Joe Lieberman argued the same point in a July 3 letter to Secretary of State Clinton. Until now, the Obama administration had been smart in pursuing a pace of engagement on Burma that sustained consensus on the policy with Capitol Hill and Burma's democratic opposition. That consensus has been broken, as Josh Rogin authoritatively reported for The Cable. This will make deeper engagement with Burma harder to sustain should the country suffer a political reversal -- a not unlikely scenario given cleavages within its regime about the pace and scale of reform
By Aaron Marr Page, Attorney for the Ecuadorians suing Chevron
It is disappointing that José Cárdenas feels the need to throw in a little gratuitous boosterism for Chevron in the middle of an important foreign policy discussion about trade. Chevron is overtly trying to destabilze U.S.-Ecuador relations as part of a self-serving strategy to escape legal accountability for egregious misconduct in Ecuador's Amazon. Cárdenas uncritically recites Chevron's talking points about being the victim of a judicial "shakedown" when in fact overwhelming scientific evidence produced by Chevron itself (and as found by multiple courts) concluded that the oil giant has committed monstrous environmental abuse in Ecuador, decimating indigenous groups and causing an outbreak of cancer. For a summary of the evidence against Chevron, see this video here and this document here.
It was Chevron that insisted the claims filed by more than 30,000 indigenous people and Amazon residents be heard in the courts of Ecuador, declaring the courts in 14 affidavits fair and just. Once the trial started in 2003 and the evidence pointed to Chevron's guilt, the company started a public relations and diplomatic campaign to taint Ecuador of which trade lobbying is an important component. Ecuador's government estimates that cutting trade preferences could negatively impact 320,000 jobs, but to Chevron that's a small price to pay if it means it can politically engineer the legal outcome it seeks.
Chevron was right about the competence of Ecuadorian courts: they performed admirably, supervising an 8-year trial that included over 50 judicial site inspections and the submission of over 100 detailed expert reports containing over 64,000 scientific results from soil and water samples. Dozens of witnesses testified and each and every one of the company's legal defenses was thoroughly briefed and analyzed in the trial court's 188-page final judgment. Classified State Department cables released by Wikileaks reveal that the company repeatedly admitted to U.S. diplomatic staff in private that it had "no real complaints about the administration of the case." See here. Chevron has tried to undermine the rule of law at every turn. For a summary of Chevron's strategy of harassment, delay, obstruction, and misconduct, see this sworn affidavit.
Chevron is now engaged in an ugly bit of diplomatic theater in an effort to end-run a case that it lost. The last time Chevron stormed Capitol Hill with lobbyists to destabilize the trade relationship with Ecuador, twenty-six members of Congress wrote to ask the USTR to steer clear of the issue. As the Los Angeles Times wrote at the time, "punish[ing] Ecuador because its government refuses to halt a private lawsuit against the oil giant" would "harm broader U.S. interests" and "create needless ill will in a region where President Obama has promised to end North American bullying."
José R. Cárdenas responds: "Examples of judicial misconduct and political interference in the Chevron case have been well-documented. I stand by my comments."
JUAN BARRETO/AFP/Getty Images
Ecuadorean President Rafael Correa has made no secret of his support for Iran's controversial nuclear program. In fact, the fiery leftist revels in flaunting that support before the international community. But the relationship goes even deeper than that. Correa's foreign minister just returned from Tehran, where he blasted the United States and sealed a $400 million deal to purchase Iranian fuel products, a deal that might not be illegal under United Nations sanctions, but certainly violates the spirit of international efforts to isolate the Islamist regime over its rogue nuclear program.
At the same time, Iran's Vice President for International Affairs Ali Saeedlou was visiting President Correa in Quito, saying, "The Islamic Republic of Iran places no limits on the expansion of cooperation with Ecuador." (Iranian leader Mahmoud Ahmadinejad paid a visit to Ecuador just this past January.)
What makes this all worth noting is that the Ecuadorean embassy in Washington has just announced a public campaign to convince the U.S. Congress that Ecuador is deserving of continued trade preferences under the Andean Trade Preferences Act (ATPA).
Where to begin?
ATPA was first passed by Congress in 1991 to provide certain Andean countries market access for key exports to boost alternative industries to the drug trade. Of the four original beneficiaries, only Ecuador remains. Colombia and Peru both now have free trade agreements with the U.S., while Bolivia lost privileges for its expulsion of the Drug Enforcement Administration in 2008.
Obviously, a fundamental prerequisite for ATPA eligibility is that a country shares a commonality of purpose with the U.S. in eradicating illicit narcotics, but such a commitment under President Correa has been nonexistent. In fact, he made a central component of his rise to power to expel a U.S. counter-narcotics unit from the coastal city of Manta, which monitored drug shipments heading north to the United States and beyond.
According to the State Department's 2012 international narcotics report, since the U.S. expulsion from Manta in 2009, drug seizures have gone down and trafficking has gone up. Moreover, last year the U.S. and Ecuador did not carry out a single joint counter-narcotics exercise, even as Mexican, Colombian, Russian, and Chinese transnational criminal organizations have increased their presence and activities in Ecuador.
Beyond counter-narcotics cooperation, ATPA also requires that the beneficiary respect the rights of U.S. companies operating within their borders. On that front, Ecuador has been involved in a high-stakes, multi-billion-dollar shakedown of the U.S. oil company Chevron, which it claims is responsible for the despoilment of a patch of the Ecuadorean rain forest years ago. The case has been replete with rigged judicial proceedings and political interference from the get-go.
Finally, Iran. One would think that extending trade benefits to another country would entitle the U.S. to some expressions of broader good will in return. Instead, the Correa government has responded with a reckless embrace of an international rogue that is pushing the world to a crisis point, for no other reason than to burnish its anti-American credentials.
ATPA does not expire until next year, but the U.S. Trade Representative has already asked for public comments on whether it should be renewed for Ecuador. The case for extension is not even close and the Obama administration ought to convey their opposition to any roll-over. Whether it is a joint commitment to fighting drugs, respecting U.S. investors, or hostility to fundamental U.S. foreign policy goals, Ecuador under the Correa government fails on all counts.
If Ecuadorean exporters are going to be hurt by the end of ATPA benefits, they need to make their case to their own government, not the U.S. Congress. And they need to hold President Correa accountable -- and him alone -- if those benefits are lost.
Late last week, President Obama unveiled his concept for a slimmed-down trade team. He proposed consolidating six existing agencies into one new body focused on global commerce. The headline change was the merging of the United States Trade Representative's office with large chunks of the Department of Commerce.
There are reasons to question how serious the president might be about the plan. A roll-out on the Friday before a three-day weekend in Washington is not so much "prime time" as "wee hour infomercials." The president also seems to have neglected to keep key Congressional leaders apprised of his thinking -- rarely a recipe for successful cooperation. Congress tends to care deeply when reorganizations change the jurisdiction of its committees. Congress also has a particular interest in trade, since Article 1, Section 8 of the Constitution grants the legislature authority over the topic.
This all has led some skeptics to wonder whether this might be simple election-year positioning. It could be a trifecta play for independent voters: reform government, promote trade, and demonstrate Congress' truculence (after deliberately provoking it). Or perhaps it's just a wry, vestigial tribute to departing pro-trade Chief of Staff William Daley.
Whatever the case, the proposal raises at least a couple major concerns:
1. Should there be a White House trade agency?
Once upon a time, trade was handled out of a cabinet agency -- State. There was concern that State might put too much emphasis on striking deals with foreign counterparts and not give enough weight to domestic concerns. So, in the early 1960s, Congress and President Kennedy created USTR's precursor, the Special Trade Representative, as part of the Executive Office of the President. In 1979, the STR grew into USTR.
With the benefit of a few decades experience, is there any good reason to retain a trade agency in the White House, as opposed to nestling it into a cabinet agency? Yes.
In describing its latest proposal, the White House states: "[T]here are six major departments and agencies that focus primarily on business and trade in the federal government." The key word in that claim is primarily. The modern trade agenda involves a significantly larger number of government agencies. When financial services are on the table, Treasury is concerned. When intellectual property questions arise, there's the Patent and Trademark Office. When the discussion turns to beef market access, it's Agriculture. On export control questions, Defense speaks up. Almost every trade agreement raises diplomatic (State) and economic (CEA) questions and could well have an impact on workers (Labor) and business (Commerce). The list goes on.
For this reason, trade issues are commonly hashed out through an interagency process. With the benefit of its position in the White House, USTR serves as an impartial chair of this policy process. If USTR and the trade-related components of Commerce were to merge, how would an administration handle interagency disputes? Of course, a White House body like the National Security Council or the National Economic Council could play the impartial chairing role, but that would require a vastly expanded support staff to cover the broad range of intricate issues. That could effectively mean a re-creation of the current USTR, resulting in minimal savings.
Or the administration may just be arguing that it cares only about export promotion, the traditional domain of the Commerce Department. That would be consistent with the President's mercantilist view of trade, in which exports are good and imports are better left unmentioned. But it would be bad policy.
2. Is this trade process politics in lieu of actual trade progress?
This is not the first trade process reform advocated by the administration. In August 2009, President Obama launched a review to reform the U.S. export control system. Over two years later, progress has been minimal. It is the same sort of issue that requires Congressional action and threatens committee jurisdictions.
To avoid lengthy delays with his latest reform, the president is seeking a version of "fast track" authority from Congress to conduct the reorganization. This request comes just months after refusing to seek new "fast track" authority to pursue actual trade liberalization. When Senate Minority Leader Mitch McConnell (R-KY) tried to attach such authority (Trade Promotion Authority, or TPA) to the September trade package, opponents argued that the issue was too complicated and needed a more thorough rethink. Yet, years after TPA lapsed, no rethink or request has been forthcoming from the White House. TPA not only paves the way for a trade agreement to move through Congress, it also provides crucial signals in the negotiating stage about whether any given White House trade stance will have Congressional backing.
This choice of agency reorganization over trade negotiating authority may sound hopelessly arcane to any but the most devoted Beltway trade devotee. There are some serious foreign policy implications, however.
If history is any guide, the president will devote limited political capital to pushing trade matters through Congress in the foreseeable future (he devoted none over his first two years). He has just declared that his priority will be a contentious organization chart reshuffle. If this is in lieu of TPA, then the president will have no hope of getting trade agreements through Congress in the near future. If that's the case, his vaunted Trans-Pacific Partnership will be little more than endless talk. And, if that's the case, his trumpeted pivot to Asia will have lost its economic pillar.
The president just asked for the wrong fast track. He must hope independent voters don't notice.
Brendan Smialowski/Getty Images
In the wake of this week's progress on advancing the U.S.-Colombia free trade agreement, it was to be expected that critics of such accords would speak up. Most of the U.S. criticism, naturally, argues that the agreement is not in the U.S. interest. Two experts from Third Way nicely dispensed with some of the misperceptions underlying common critiques earlier in the week.
I have to say that I have long wondered why Colombia's leaders have wanted to do this deal. I really don't see much in it for Colombia."
Prestowitz's logic proceeds as follows:
1. Assume free trade agreements are all about tariffs and market access.
2. Note that U.S. preference programs allow 90 percent of goods to enter the United States without paying any tariffs.
3. Conclude that Colombians have naively succumbed to "the same knee-jerk ‘free trade is always win-win' doctrine" espoused in American universities and are acting against their own self interest.
To Foreign Policy's sophisticated readership, it may seem a bit odd that a country like Colombia would devote so much time and effort to negotiating the agreement and seeking its passage without even bothering to assess the country's current market access terms. And yet, how else can we explain their behavior? What could they be thinking?
One radical approach would be to ask. A couple years back I did just that in the wake of the implementation of the U.S. FTA with Peru. There are important differences between Peru and Colombia, of course, but both enjoyed substantial access to the U.S. market under the same preference programs (Andean trade preferences). I conducted a series of interviews in Lima with those who were instrumental in negotiating the agreement, with academics, and with leaders in key sectors such as pharmaceuticals and textiles.
Colombian President Juan Manuel Santos met today with President Obama at the White House to end an impasse blocking adoption of a trade agreement first concluded in November of 2006. The Colombian government has agreed to rewrite parts of their labor law to U.S. specifications.
The resolution came after mounting calls for movement from Capitol Hill. House Republicans had been particularly vocal about the need to advance the pending Colombia and Panama agreements alongside the South Korean accord after years of delay. Of late, though, the calls had grown bipartisan. On Monday, Senate Finance Committee Chairman Max Baucus (D-MT) and Senate Foreign Relations Committee Chairman John Kerry (D-MA) published a joint op-ed in the Wall Street Journal describing the Colombia pact as an important spur to employment:
Each day we fail to act costs American jobs and sales-and sends them elsewhere.
So, 1,091 days after the Bush administration submitted the Colombia FTA to Congress, the Obama administration has found a path to move forward. The plaudits for this move have been rolling in since it was announced yesterday. Not only does the Colombia FTA offer its own array of benefits, but the move has the potential to unblock U.S. trade policy more broadly. To lever the administration into action on the pending FTAs, Republicans had linked the passage of the Korean FTA, renewal of trade adjustment assistance programs, trade preference programs, and even confirmation of a new commerce secretary. It is not clear that all of the timing issues have been worked out between House Republicans and the White House, but the agreement with Colombia significantly enhances prospects for movement on a trade agenda this summer.
Lest there be excessive rejoicing, though, it is worth keeping in mind that passage of the three agreements would partially complete the trade agenda of 2007, and there was a cost to the dithering. The pending FTAs offered benefits in two important dimensions: access to the markets for American exporters and stronger diplomatic ties. On the economic front, this access was originally set to grant American businesses and farmers preferential access to the Korean and Colombian markets, ahead of global competitors. Now, there is a scramble just to keep U.S. exporters on an even footing. While the agreements were stymied by domestic political fights in the United States, our partner countries reached other agreements to open their markets to the world. A prime motivation for the mid-summer deadline on passing the Korea-U.S. FTA is the looming passage into force of Korea's FTA with the European Union.
On the diplomatic front, the FTAs were meant to send a signal of friendship and allegiance. While the partner countries certainly welcome passage now, that signal has been somewhat diminished by years of slapping them around through public criticism.
There is a pending, post-2007 trade agenda out there. The eternal but deeply-troubled global trade talks (the Doha Round) are in desperate need of American leadership. The WTO's director-general, Pascal Lamy, sounded the alarm to members last week:
Now is the time for all of you, and in particular those among you who bear the largest responsibility in the system, to reflect on the consequences of failure ... to think about the consequences of the non-Round to the multilateral trading system which we have so patiently built over the last 70 years. It is the time to think hard about multilateralism, which your leaders, yourselves and myself preach at every occasion. In politics, as in life, there is always a moment when intentions and reality face the test of truth. We are nearly there today.
Then there are the Bush-launched, Obama-embraced talks to expand the Trans-Pacific Partnership (TPP). A number of the participants in those talks are earnestly shooting for a conclusion this November, when the United States hosts the APEC meetings in Hawaii. This seems implausible, since the administration has not yet broached the question of trade negotiating authority for those talks with the Congress. And if labor and human rights issues with Colombia stirred controversy, wait until we start discussing Vietnam, a TPP participant.
The biggest question surrounding this week's breakthrough on the Colombia FTA is where it leaves relations between the White House and the American labor movement, which has been the most outspoken opponent of recent trade agreements. The administration made some inroads with labor through its reworking of the Korea-U.S. FTA at the end of last year. That won the support of the United Auto Workers, though that support did not extend beyond Korea. The AFL-CIO has remained opposed to all of the pending FTAs. Yesterday, it released a statement:
We are deeply disappointed that the Obama administration has signaled that it will move forward to submit the proposed U.S.-Colombia Trade Agreement to Congress for a vote in the near future ... on the basis of the information provided to us at this time, we remain strongly opposed to the Colombia trade agreement.
It remains to be seen whether this opposition will be vigorous or muted. The Obama administration will also need to decide whether, on trade issues, it has now cast its lot with a coalition of pro-trade Republicans and internationalist Democrats, or whether it has pushed its labor allies as far as it dares.
Those are questions for another day, though. Today, Presidents Obama and Santos had cause to celebrate.
Spencer Platt/Getty Images
The State of the Union address offers any president the temptation to revel in the pageantry and splendor of the office. He can sound resonant themes and expound on U.S. values. He can embellish these motifs with the recognition of carefully-placed guests in the balcony.
President Obama is at his best when delivering high-altitude orations about national aspirations. This can be terrifically effective in a campaign or in a moment of national mourning. It can also be a necessary prelude to effective action, a way of rallying the public to support difficult choices.
The problem is that on the key issues of trade and the deficit President Obama's prelude to action has now lasted more than half his term. On each, he has earnestly stressed the national need for action. Yet on trade, he has only moved the country to where it was in mid-2007. On the deficit, he has moved the country backwards.
In his weekly radio address on Saturday, the president said, "Here's the truth about today's economy: If we're serious about fighting for American jobs and American businesses, one of the most important things we can do is open up more markets to American goods around the world."
This has the standard mercantilist twist of the president's trade advocacy, but it's a worthy theme. How does it translate into action?
As the end of the year approaches, along with it comes the ritual end of year evaluations as well as New Year's resolutions. In that spirit, several Shadow Government contributors here offer our thoughts on the Obama administration's foreign policies -- specifically:
1. Advice for the administration in the new year,
2. Suggestions on what policies are working and should be continued, and
3. Suggestions on what policies aren't working and should be consigned to the archives.
Advice: Seize the initiative. This is not about a specific policy but an overall posture. Two years since President Obama's election, the question of an "Obama Doctrine" remains elusive, as the administration's national security policy has mostly been reactive, focused on managing current challenges and crises. This inbox by itself is a substantial challenge to be sure, and one which the administration is handling with varying degrees of success (e.g. decently well with Iran and North Korea, with mixed results with Afghanistan and Iraq, and less well with Pakistan and Israel/Palestinian issues). Missing thus far, however, has been an overarching strategic framework. Hence my advice that the White House seize the initiative for its next two years, and develop a strategic doctrine or at least proactively take advantage of creating some new foreign policy opportunities. Implications for seizing the initiative include:
What might seizing the initiative look like in practice? For specific policy ideas, perhaps a new alliance of democracies in Asia, or a new global free trade initiative, or reinvigorated transatlantic partnerships, or a new strategic outreach in a neglected region such as Latin America or Africa (including an American partnership with the likely new state in southern Sudan, as Andrew Natsios has suggested), or establishing a robust strategic framework for winning the war of ideas against jihadist ideology.
Continue: Rediscovery of the freedom agenda. After its initial woeful neglect of democracy and human rights promotion, earlier this year the Obama administration rediscovered -- rhetorically at least -- the importance of supporting freedom around the world. The White House should build on this, particularly with specific policies and with new resources. As events in just the past few weeks have shown, in places like Belarus, Cote d'Ivoire, Egypt, and China, the demands of citizens for their liberty remain embattled and in need of America support.
Drop: The "reset" with Russia. Now that New START has passed the Senate, and thus completes the centerpiece of the administration's "reset" policy, it is time for a new, realistic look at Russia -- which necessarily means a delete of the reset framework. The original reset framework assumed that U.S.-Russia relations could be put on a sustained positive trajectory based on shared interests and reciprocal good will. But as Bob Kagan wrote earlier this week, "relations with Moscow are about to grow more challenging," as serious issues including Russia's ongoing occupation of Georgia, growing corruption and internal repression, and cynical ambivalence on Iran remain. Defense Secretary Robert Gates's reported description of Russia got it right: "An oligarchy run by the security services." Taking a fresh look at the United States' Russia policy should include strengthening U.S. support for beleaguered Russian reformers, reaffirming U.S. commitments to our allies and partners in Russia's border regions, and jettisoning unrealistic assumptions about shared interests. Ironically, such a reduction in expectations might well enable better cooperation in the areas where our interests do align.
Advice: Be as committed to seeing Iraq and Afghanistan through to success as the President was in pursuing health care "reform." President Obama secured his place in history with the passage of Obamacare. Whether it comes to be seen as a positive legacy like Social Security, or as an overreach and folly like Prohibition, it will always be seen as historic and as the president's own. This was a policy war of choice, not of necessity. There were needful aspects of health care reform, but most of them fell out of the bill or got swamped by far more expensive and consequential optional items. Elections have consequences, and in this case it empowered Obama to doggedly pursue what he considered to be the right thing -- and he showed he was willing to pay a huge electoral price, if necessary.
It is time for him to engage in a policy war of necessity, building a political coalition in support of prevailing in Iraq and Afghanistan. His policy moves in the next two years will likely prove decisive in determining whether U.S. forces leave in success or defeat. Until now, President Obama has not made war leadership a central priority of his administration, and he has devoted very little effort at all to the crucial task of mobilizing political/public support. It is time, past time, to devote the political capital to this effort.
Continue: President Obama and his team proved quite adept in passing New START. To be sure the treaty itself was only of secondary importance for national security. Indeed, the side deals on force modernization and missile defense wrung out of the administration by skeptical senators will likely prove far more consequential in the long run than the modest treaty provisions. Yet the orchestration of lobbying, arm-twisting, bipartisan outreaching, principled deal-making, and even somewhat hyperbolic policy-shilling -- all of that amounted to an impressive effort culminating in what surely is the administration's greatest national security accomplishment to date. If the administration devotes a similar effort to forging bipartisan support for the various wars under its command (see point above), it will be an even more impressive national security accomplishment.
Drop: The silly campaign boasting that "America is back" in Asia. The boast was always a bit absurd but it quickly became an embarrassment when President Obama and Secretary of State Hillary Clinton had to skip regional meetings and postpone long-planned trips to attend to domestic political priorities. The boast also reflected a needless defensiveness on the administration's part. The United States has pursued a common bipartisan grand strategy in Asia for over a decade now, with President George W. Bush building on President Bill Clinton's initial efforts regarding China, India, and Japan, and now President Obama building on Bush's initiatives. Rather than pretend to be offering a bold departure, why not make a virtue out of the truth and note that there are some areas where mainstream Democrats and mainstream Republicans can agree, and one of them is Asia? Both sides recognize that the United States is an Asia-Pacific power and the world will be a better place if the United States remains vitally engaged in this region. No need to pretend that the United States ever left, because it didn't and it won't.
Advice: From a trade perspective, it is remarkable to think how little has been accomplished in the first two years of the Obama presidency. When he took office, President Obama inherited an agenda that included stalled global trade talks (the Doha round of World Trade Organization negotiations), three already-negotiated free trade agreements (South Korea, Colombia, and Panama), and a troubled trade relationship with China. Across all of these items, the only achievement approaching progress was the revision to the Korean free trade agreement, and that came at the very end of 2010. The revision left Ford and the United Auto Workers happier, but came at the expense of other sectors, such as pork producers.
Better late than never, but there were costs to the lost time. Free trade agreements that promised U.S. producers at least a period of privileged access to a trading partner's market are now just offering the prospect of equal access, since our jilted partners went and negotiated agreements with other countries while the United States dallied. Frustration was already high with the lagging global trade talks; it has since mounted. What's more, the repeated empty promises of the G-20 nations to conclude the Doha round undermined that group's credibility.
The ineffectiveness of the G-20 was also revealed in the sad Seoul summit, in which China and Germany objected to any global rebalancing plan that pushed past platitudes. The Obama administration -- Treasury Secretary Timothy Geithner in particular -- deserves credit for putting forth a credible approach; it just didn't seem to gain traction. As with trade liberalization, the administration might have been more credible had it led by example. In trade, it called for a new WTO agreement while condoning "Buy America" protectionism and showing that it would not spend the political capital to push through existing agreements. In international finance, it called for global rebalancing while dramatically increasing spending, creating a significant new entitlement program through its health care plans, and relegating any plans for fiscal restraint to a separate deficit commission (as opposed to using its own Office of Management and Budget).
So what happens when you defer serious action on the international economic front for a couple of years? Institutions (in this case the WTO) deteriorate, problems (resurgent global imbalances) fester and grow, and resolutions to address these issues soon may be undercut by new crises that demand attention.
Looking ahead to the rest of Obama's term, my top candidate for major distracting crisis to come is the bubbling debt trouble in Europe. The leaders of the Euro nations have been working furiously to address problems as they pop up in Greece, then Ireland, then Portugal, with Spain and Belgium starting to simmer. But all of their remedies have done little more than buy time and, in some cases, allow the problems to grow. There are fundamental inconsistencies ripping the euro apart. When that happens, it will not simply be a matter of having to deal with currency exchange at the borders; it will likely involve a significant banking crisis. Those, it turns out, can be nasty.
JEWEL SAMAD/AFP/Getty Images
Congratulations to President Obama and his team for successfully concluding negotiations on the U.S.-South Korea free trade agreement (KORUS) on Friday. Republicans should applaud and support the president when he pursues such a market-friendly policy. So should Democrats, of course, but the early indications are that the agreement will face critics on the left. More on that anon. Herewith eight questions and answers about what just happened.
1) What changed in the agreement?
The original KORUS was signed in the summer of 2007, more than three years ago. Up until late last week, Obama and other critics had derided that accord as unsatisfactory. So what changed?
The headline revisions were in the auto sector. Ford, in particular, was upset about the obstacles it faced trying to sell into the Korean market while Korean producers like Hyundai enjoyed lucrative access to the U.S. market. In the revised agreement, Korea promises changes to emissions and safety restrictions that Ford argued were discriminatory. Tariff schedules were also reworked to slow market access for car producers on each side (i.e., less rapid liberalization).
Korea, in turn, will phase out its tariffs on U.S. pork exports more slowly than previously planned, will get more favorable visa treatment for workers coming to the United States, and will slow down changes to its patent system that U.S. pharmaceutical makers wanted.
2) Is it better than the first version of KORUS in 2007?
One agreement is indisputably better than another if it makes some groups better off and leaves no one worse off (that's "Pareto efficiency" for those who enjoy slinging econ jargon). This revision is not that. Ford is happier while pickup buyers and pork exporters are not. Weighing one group's interests against another's is a political calculation. The answer depends on who your friends are.
3) Was it
worth the wait?
No. The bulk of the benefits of this agreement could have been had years ago and U.S. trade policy has been held hostage ever since.
Chung Sung-Jun/Getty Images
The president's Asia trip is getting mixed reviews, wildly mixed reviews.
Team Obama thought the trip was a huge success. Tom Donilon, the new National Security Advisor, in a fit of extraordinary (jet-lagged?) exuberance told reporters in Yokohama: "I think when historians look back on the trip to India and Indonesia. It will be one of those seminal moments, one of those iconic moments in the relationship between countries when historians look back on it."
Outside observers were less charitable. Some dismissed it as "a trip about nothing." Even charter members of the Obama choir fretted about the optics of the President scurrying out of town so soon after the electoral "shellacking."
The truth is somewhere in the middle. The president made some modest headway, with a solid but not stellar visit to India and a fine visit to Indonesia. It was hardly "iconic," but the visit to Indonesia may have been "seminal." The Obama administration believes they have a real opportunity in Indonesia thanks to the president's personal connection to the country. If they were able to build the foundation of a strategic partnership with Indonesia as Presidents Clinton and Bush were able to do with India, that would indeed be an accomplishment. But they have a long way to go and they clearly had no significant deliverables for this visit.
The rest of the trip went considerably less well. I was inclined to give Team Obama a pass over the failure to close the deal on the Korea-US Free Trade Agreement (KORUS) because I remember how frustrating the Bush Team found negotiating with our allies in Seoul could be. Then I read Phil Levy's blistering analysis and had second thoughts. He makes a convincing case that this was diplomatic malpractice, from the arrogant dismissal of the deal they inherited, to the boastful claim that the deal would be struck on this trip, to the endgame when the staff sent President Obama out to face the cameras with nothing to show for two years of haggling.
Levy leaves unasked the obvious follow-up question that most interests me about this episode: How could the staff leave the president exposed on this fiasco? There may have been errors at the middle-staff level, but my own read is that the point people who owned the issue -- Treasury Under Secretary Lael Brainard and Deputy National Security Advisor for International Economic Affairs (and economic summit "sherpa") Michael Froman -- were not to blame. In fact, were they to blame that would surprise me because they are some of the strongest players on Obama's team. On an issue such as this one, the hardest deals to cut are the ones within one's own team, in particular the deals between the foreign policy and the domestic politics folks. There are only a handful of people who have the heft to force such deals: a strong National Security Advisor, a strong National Economic Council Director, a bold senior political advisor, and the chief of staff, in other words Tom Donilon, Larry Summers, David Axelrod, and Pete Rouse. If those four were not able to forge a deal they could live with that the Koreans would accept -- and manifestly they were not -- then there is only one person who could have, President Obama himself.
Yes, the Koreans deserve some blame for driving such a hard bargain, but they were just exploiting the mistakes of the administration: the mistake of setting the deadline, which weakened our bargaining position; the mistake of not getting the deal done before Air Force One left Washington; and the mistake of not securing (or merely taking) more bargaining space from domestic coalitions. Once the jet lag wears off, I hope the Obama Team will sort this one out.
RICHARD A. BROOKS/AFP/Getty Images
President Obama’s failure to conclude the Korea-United States Free Trade Agreement (KORUS) is a disaster. It reveals a stunning level of ineptitude and seriously undermines America’s leadership in the global economy. The implications extend far beyond selling Buicks in Busan.
Unlike some of the trade agreements the United States has pursued in the last decade, this one is with an economically significant partner. KORUS could bring billions of dollars of new trade opportunities and the Obama administration had cited it as one part of its National Export Initiative, a plan to double U.S. exports in five years.
But there are really two distinct issues in contemplating the significance of the failed talks: the economic merits and questions of diplomatic competence. The latter is really the story of the day.
The economic merits and demerits have been in full public view since the agreement was originally concluded in the spring of 2007. The agreement offered substantial market opening, but left some questions regarding access to the South Korean market, especially for U.S. autos and beef. Those products face barriers other than simple border tariffs. Such non-tariff barriers are harder to negotiate away, though the KORUS agreement certainly tried. There was substantial political opposition to the agreement within both countries, though the Koreans managed to overcome theirs. Influential voices such as Ford Motor Co. and organized labor in the United States criticized the agreement as inadequate.
The well-established opposition just brings us to the stunning, perhaps unprecedented diplomatic incompetence just displayed by the White House. The concerns and obstacles that impede a new KORUS agreement were fully apparent in June when Obama announced he would have an agreement in time for the Seoul G-20 meetings (now underway). The announcement was remarkable at the time because so much of the U.S. president’s statements on trade have been vague, aspirational, and timeless. This was a promise to have a specific agreement concluded by a specific date.
Reflecting on the health care battle, Obama recently told 60 Minutes, "When you're campaigning, I think you're liberated to say things without thinking about, ‘OK, how am I going to actually practically implement this.'" That may be true, but the rules change once a president takes office. Most White Houses are exceedingly careful about making such public commitments. If the president’s credibility is to be put on the line, there is an absolute imperative to deliver. This is at least as true in international diplomacy as in domestic affairs. The debacle in Seoul is a slap in the face of a critical U.S. ally in a critical region, and it will cast doubt on U.S. trade promises in other negotiations elsewhere. But if an American president loses his credibility, the damage spreads beyond the narrow confines of economic deals and Northeast Asia.
Of course, Obama did not admit defeat. He spoke of the setback as a mere postponement. "We don’t want months to pass before we get this done. We want this to be done in a matter of weeks." If the agreement really is just a few weeks' work away, the administration ought to be deeply embarrassed. After the president made his June commitment, no formal talks were held with the Koreans until the end of September. Even then, the Koreans complained that the U.S. negotiators were not being sufficiently specific in their proposals. If the problems really are just technical ones, the Obama team has played the role of the student who procrastinates on a term paper, counting on the ability to have a really productive all-nighter. Such a work program evokes little sympathy when it doesn’t succeed.
More likely, though, the obstacles are not technical but political. The lineup of advocates and opponents for KORUS poses difficult choices for the White House. Traditionally, governments around the world make such tough trade choices when they are right up against a deadline. But if the deal could not be concluded under the pressure of a high-profile bilateral meeting between presidents in Seoul, is it really plausible that it will be wrapped up because negotiators want to be home for Thanksgiving?
The breakdown could not have come at a worse time. The United States has been working to assert its relevance in Asia. Concerns about protectionist pressures amidst economic troubles raise the stakes in bolstering the global trading system. Beyond economic questions, countries around the world are wondering about the strength of a president who just suffered a major political setback.
Though he may not have foreseen all of the difficulties he would be facing at this juncture, last summer Obama named the time and place of his global credibility test. And he just failed it.
Photo by South Korean Presidential House via Getty Images
While U.S. voters were not particularly interested in foreign policy (certainly not Asia policy) during this election, Asia is always interested in U.S. voters. The economic growth of countries such as China and India, and the technological and innovative dynamism of much of the rest of Asia, are significantly impacting the structure of the U.S. economy. Newly elected Republicans have a chance to help the United States continue to benefit from Asia's growing prosperity.
Though the election was not about foreign policy, it is worth noting that former Vice President Dick Cheney's early 2009 critique of Obama's counter-terrorism policies first exposed the chinks in the administration's armor, demonstrating signs of life for a Republican Party declared dead and providing moral support to others in his party who soon voiced their own powerful critiques. Still, this election was about economics and the size and structure of government, not foreign policy. So, I am about to practice economics and politics without a license.
While voters still do not seem to trust the GOP, the party can regain their trust by reclaiming the mantle of economic leadership. Newly-elected Republicans can insist upon free market, pro-free trade policies that can push the president to create a friendlier climate for foreign investment in the United States as well as to ratify a free trade deal with South Korea and pry open other Asian markets for U.S. investment and exports.
By committing to fiscal responsibility, Republicans can provide a more credible case for the global rebalancing that economists agree needs to happen. A collective economic rebalancing, rather than a trade war or legislating punitive tariffs, is the answer to our current economic troubles with China. And a broader commitment to U.S. leadership in trade liberalization throughout Asia will contribute to setting the United States back on the road to economic growth and low unemployment.
But the United States is on the horns of a dilemma in Asia, one that new Republican leaders must resolve. Our huge debt and uncertain fiscal position calls into question our ability to sustain a robust diplomatic and military presence in the region; if fiscal austerity includes cuts to the defense budget, Asians will continue to conclude that we are not going to be present in Asia for the long haul. In the context of Asia policy, then, the key challenge for Republican leaders both in Congress and aspiring to the presidency is to strike the right balance between pursuing long-term measures to restore fiscal health without making short-term cuts on defense spending that create deep regional unease.
The first chance for Republicans to reconcile long and short term goals with respect to Asia is during Obama's trip to the region. They should pledge to work with him if he agrees to ratify the FTA with Korea, hold his feet to the fire if he panders to special interests on the issue of outsourcing to India (or what I like to call trading based on comparative advantage), and pledge to support him if he commits to keeping our alliances strong by making the military investments we need to keep the region stable.
MIKE CLARKE/AFP/Getty Images
It's a bright morning for those of us who favor free trade. Just as fantasy football team owners may follow NFL games with their own peculiar rooting interests, trade aficionados watched certain of yesterday's election races with particular attention.
Depending on which fantasy trade lineup you used, the results fell just short of a clean sweep for trade. The New York Times fantasy team listed Senator-elect Richard Blumenthal (D-CT), Senator Harry Reid (D-NV), and Senator Barbara Boxer (D-CA) as trade skeptics and they all won. Arguably, though, there was a lot more going on in those races. The story was different for Times House players, however. Democrat Rep. Zack Space in Ohio tried to deploy the China card, and lost. In Colorado, Republican challenger Ryan Frazier tried to link incumbent Democrat Rep. Ed Perlmutter to shipping jobs to China and failed to oust him, despite the broader trend of the election.
The results are even starker if you follow a Foreign Policy scorecard from late September. Max Strasser identified five races in the Midwest in which the trade critic played the "red-menace card" and linked his opponent to China trade. That particular Democrat fantasy team: Ohio Lt. Governor Lee Fisher (running for the Senate); Ohio Governor Ted Strickland (running to keep his job), U.S. Rep. Joe Sestak (running for the Senate in Pennsylvania); Lansing Mayor Virgil Bernero (Michigan gubernatorial candidate); and Illinois State Treasurer Alexi Giannoulias (running for the President Obama's old Senate seat). They were swept last night. 0 for 5.
In many of these races, one could quibble about how important the trade issue really was to the outcome. If there were a single race, though, in which trade emerged as the central issue, it was the race for the Senate in Ohio. Rob Portman, former U.S. Trade Representative, was blasted for his role in pursuing trade agreements and supporting open markets. Or, rather, I should say, 'Senator-elect' Portman was blasted; he won with over 57 percent of the vote, compared to Lee Fisher's 39.
JENS SCHLUETER/AFP/Getty Images
Shadow Government is a blog about U.S. foreign policy under the Obama administration, written by experienced policy makers from the loyal opposition and curated by Peter D. Feaver and William Inboden.