Requiem or Revival?: The Promise of North American Integration

Chapter 9. U.S. Trade Politics During the Doha Round

166 On July 24, 2006, Pascal Lamy, director-general of the World Trade Organization (WTO), declared the Doha Development Round of global trade talks “suspended” because of the failure of the principal parties to reach agreement on agricultural trade. Then, on November 7, 2006, the domestic political context for U.S. trade was transformed as Democrats won control of the Senate and the House of Representatives in the midterm elections . No longer could President George W. Bush rely on partisan majorities and Republican control of congressional procedures to sustain his trade policy . Thus both abroad and at home, U.S. trade policy was entering a challenging new era. The preceding years had featured important changes as well. On March 17, 2005, Bush had announced the appointment of Representative Rob Portman (R-Ohio) to serve in the Office of the United States Trade Representative (USTR) during his second term. This designation ended months of anxiety in the trade policy community, which watched as all other cabinetlevel positions were filled and no word emerged about this key position. The choice was warmly received: “You couldn’t have a person with a better relationship with Congress and the President,” declared Benjamin L. Cardin U.S. Trade Politics during the Doha Round I. M. (“Mac”) Destler 9 09-8201-8 ch9.qxd 7/13/07 4:33 PM Page 166 U.S. Trade Politics during the Doha Round 167 (D-Md.), ranking Democrat on the House Ways and Means Trade Subcommittee . A trade lawyer before his election to Congress in 1992, Portman easily won Senate confirmation. Portman succeeded Robert B. Zoellick, who compiled a formidable record of achievement despite having a suboptimal relationship with both Congress and the White House. Neither a confidant of the president nor popular on Capitol Hill, Zoellick still won broad respect for his trade expertise and international negotiating skills. Pursuing a strategy of “competitive liberalization” during his tenure as USTR, Zoellick had negotiated free trade agreements (FTAs) with Singapore, Chile, Australia, Morocco, Central America/ Dominican Republic, and Bahrain, with the first four winning easy congressional approval. He also played a key role in launching and advancing the Doha Round of multilateral trade talks under the WTO. Zoellick became deputy secretary of state in the second Bush administration. His successor inherited a full plate. Record U.S. trade imbalances—worldwide and with China—had heightened congressional concerns about the performance of U.S. trade. Portman’s first challenge was to secure congressional approval of the Central American Free Trade Agreement (CAFTA)— actually CAFTA-DR, since its broadening to include the Dominican Republic —which passed narrowly after a very acrimonious debate on Capitol Hill. Decade-long negotiations for a Free Trade Area of the Americas (FTAA) remained stalled, with the January 2005 deadline for agreement now history. Most important for U.S. interests, the Doha Round talks needed major additional attention and effort—including the offering of important new concessions by the United States. In the fall of 2005 Portman responded to this need with a substantial offer to break the deadlock in the Doha agricultural negotiations and with an impressive performance at the December 2005 WTO Ministerial Meeting in Hong Kong. But other major trader states met him less than halfway, and Doha remained in jeopardy when President Bush, desperate to reinvigorate his flagging administration, announced in April 2006 that he was moving Portman from the trade office to the key position of director of the Office of Management and Budget.1 Chosen to replace Portman was Deputy USTR Susan Schwab, a seasoned trade professional with senior staff experience on Capitol Hill. Both Portman and Schwab undertook their responsibilities in a U.S. trade policy environment that had changed in fundamental ways over the past fifteen years. 09-8201-8 ch9.qxd 7/13/07 4:33 PM Page 167 168 I. M. Destler Where’s the New Protectionism? In the 1980s, driven by a strong dollar, the U.S. merchandise trade deficit soared to unprecedented, twelve-digit dimensions. Industry after industry was hit and demanded new trade protection: textiles, steel, autos, shoes, machine tools, semiconductors, and so on. The Reagan administration resisted to some degree but also granted some form of trade relief to most of them. The trade deficit receded late in that decade, facilitating compromises in (and enactment of) comprehensive trade legislation in 1988. The trade deficit dropped below U.S.$100 billion in 1991...