The Bush administration has a secret multilateral side. Did you know that it routinely allows an international organization to make crucial decisions affecting the lives of all Americans? That it allows foreigners--unelected bureaucrats in Geneva!--to overrule laws passed by Congress and signed by the president? No, I haven't gone crazy. This is pretty much the approach taken by the administration to the World Trade Organization. Last week a WTO panel ruled that U.S. cotton subsidies violated international trade rules. Washington will almost certainly appeal the finding. But if the past is any guide, it will also almost certainly abide by the WTO's final decision. All of which, in my view, is exactly right.
The Bush administration has been careful not to undermine the WTO because it understands that if the biggest player on the block doesn't abide by the rules, the entire framework of multilateral trade could be destroyed. Even when the administration has pandered to protectionists, it has done so without overturning the rules of the game. "I know it's fashionable to condemn the Bush administration on trade. But the truth is that it has been extremely good," says Jagdish Bhagwati, one of the world's most distinguished economists and a fervent free-trader. "It's my party, the Democrats, who are embracing voodoo trade policies," he added ruefully, pointing to a number of John Kerry's campaign proposals.
The administration keeps quiet about the reality that trade organizations infringe on a country's sovereignty. NAFTA, for example, provides for tribunals that can overrule American laws and even court decisions. But the American government freely--and after democratic debate--enters into trade deals. In doing so it agrees that, like all other parties to the treaty, it will adhere to certain procedures. The tribunals simply ensure that everyone plays by the rules. Washington can always withdraw from the treaty; it just can't sign on and then break the rules. That is, after all, what the Soviet Union used to do with arms-control treaties.
If a tribunal rules against it, the United States does not have to change its laws. But the country that wins the case can retaliate with its own tariffs on U.S. products. Last year the European Union threatened massive tariffs on U.S. goods unless Washington accepted a WTO ruling and ended its subsidies on steel. This year the EU will levy up to $4 billion in tariffs unless Congress rewrites its laws allowing overseas tax shelters for American corporations. (Of course, the United States gets its way often as well.)
The threats will only grow stronger because the European Union just got a lot more powerful. Its expansion last week, adding 10 countries, will make it an economic trading zone of 450 million people, 50 percent larger than the North American free-trade area. And in this arena Europe has a reasonably unified decision-making process. The trade world is not unipolar, it's bipolar--and the United States might not be the most powerful pole anymore. Washington adheres to trade rules because it wants the 900-pound gorilla to adhere to them as well.
If we want rising standards of living, we need access to other markets and cheap imports. While U.S. cotton farmers might lose their subsidies, they now have access to China's market, where their sales have risen from $46 million three years ago to an estimated $1 billion this year. In its core area of strength, services, U.S. exports have grown to $264 billion annually. Access to low-cost foreign goods has increased the American family's purchasing power by about $2,000. And these gains have in turn fueled growth in other countries' raising their standards of living.
The Bush administration accepts the loss of sovereignty on trade, but it rejects it almost everywhere else. For conservatives, trade is somehow different from all other activities. Actually there are lots of areas where an agreement among several countries will produce benefits for all. No one country has an incentive to act alone to tackle environmental problems. But a collective approach would reduce the dangers for all. The same is true of the spread of diseases, which can disrupt countries far away from the places where the virus originates. Again, only a regional or global approach can produce a "win-win" solution.
Even on a national-security issue like global terrorism, a crucial solution involves creating common standards and procedures across the world to search people and goods, share information, shut down bank accounts and make arrests. Otherwise terrorists will simply relocate to the weak point in the system.
"In an increasingly globalized world where everything--people, drugs, money--travels freely across borders, there is a need for global solutions," says Moises Naim, editor of Foreign Policy. "But few global solutions are being proposed. This gap between demand and supply is being filled by instability."
The Bush administration wants to apply economic solutions to many areas of life. If only it would practice what it preaches.Newsweek:
