Trade guru Jagdish Bhagwati has a powerful op-ed in today’s WSJ (print edition) dissecting Senator Kerry’s trade stance, and suggesting that Kerry is not likely to be a free trade president if elected.
How does one forgive him his pronouncements on outsourcing, and his strange silences on the Doha Round of multilateral trade negotiations? Indeed, Sen. Kerry, whose views and voting record were almost impeccable on trade, has allowed himself to be forced into such muddled and maddening positions on trade policy that, if one were an honest intellectual as against a party hack, one could only describe them as the voodoo economics of our time.
Bhagwati notes several reasons to be suspicious of Kerry on trade: 1) his “surrender to the hysteria over ‘outsourcing'”; 2) his insistence on the inclusion of enforceable labor and environmental provisions in all future trade agreements; 3) his campaign pledge to review all existing trade agreements (presumably including NAFTA and the WTO) to consider US withdrawal; and 4) his reliance on protectionist and anti-trade constituencies, such as labor unions and environmental groups, that will “insist on their reward” if Kerry is elected. In other words, it may be nice to think that a President Kerry would be a free trader, but the odds are against it. In Bhagwati’s words:
In the end, Sen. Kerry cannot totally jilt his constituencies. He will have to claw his way to freer trade, making him a greater hero in a war more bloody than Vietnam. The unions, in particular, are going to insist on their reward. This is forgotten by the many pro-trade policy advisers and op-ed columnists who argue privately that we should not worry — because Sen. Kerry is a free trader who has merely mounted the protectionist Trojan Horse to get into the White House. The irony of this last position is that it is, in fact, too simplistic. Besides, it suggests that when President Bush does the same thing, he’s lying, but that when Sen. Kerry does it, it’s strategic behavior! Is it not better, instead, for us to tell Sen. Kerry that his trade policy positions are the pits — before he digs himself deeper into a pit from which there is no dignified exit?
Bhagwati is harshly critical of Kerry, but he does not celebrate President Bush’s trade credentials — and with good reason. For its first three years, the Bush Administration was rather pathetic on trade. Only recently, most notably with Bush’s strong support of the WTO Doha Round negotiations, has the administration done much of anything to advance trade liberalization. If reelected, it is reasonable to wonder whether Bush’s trade policy will stay its current course, or revert back to the “fair trade” foolishness of 2001-2003.
If I had to make a prediction, I would say that Bush is more likely to stay true to his current pro-trade liberalization posture in a second term. As I see it, most of the Bush Administration’s missteps in this area were motivated by crass political calculations, not a belief that trade restrictions are good policy. Not only did these political moves largely fail — raising steel tariffs hardly won Bush substantial political support and did little to reduce protectionist opposition to new trade agreements — they also had deleterious economic effects. In a second term, however, there would be little reason to pander for votes, so there should be less pressure within the administration for protectionist policies. Moreover, traditional Republican constituencies — while hardly uniform on the issue — are, as a whole, more supportive of trade liberalization than Democratic constituencies.
For these reasons, I believe that the Bush Administration would be significantly more free trade in a second term than a Kerry Administration. Yet I would also hasten to add that I doubt either administration will satisfy free traders. The current political discourse is simply too hostile to trade liberalization.
Finally, I would note one interesting counter-argument. Many of Senator Kerry’s supporters believe US-European relationships would improve under a Kerry Administration. This raises the possibility that a Kerry Administration might be more successful in trade negotiations than the Bush Administration in a second term. It’s also possible that this difference could outweigh the extent to which a Kerry Administration would be less free trade. I find this scenario unlikely, but I thought it worth mentioning nonetheless.
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