America's Foreign Policy Toolkit by Stevenson Charles A

Author:Stevenson, Charles A.
Language: eng
Format: epub
ISBN: 9781452289908
Publisher: Sage Publications Inc.
Published: 2013-02-15T00:00:00+00:00

Trade

As an instrument of policy—in order to persuade other nations to act in particular ways—trade is most powerful when used negatively through restrictions or suspensions. But, trade relationships are also positive forces for political cooperation and economic growth. The United States seeks trade agreements both for economic benefits and for the political goodwill that can accompany good trading arrangements. On the other hand, trade disputes can exacerbate tensions in other areas, especially because trade is, for many nations, a leading foreign policy concern.

Congress is a necessary player for trade to be a policy instrument. The legislative branch sets tariffs and special trade preferences as well as authorizing negotiations for multilateral agreements. Protrade lawmakers endorse the idea that freer trade has economic benefits for all nations, but they are often held in check by legislators concerned about job losses and industrial decline in their home areas. These parochial concerns, understandably, have weakened some of the political benefits of trade deals as Americans resisted threats to domestic textile and steel companies, for example, and Koreans resisted threats to their automobile and cattle producers.

Trade preference laws are a major way of promoting economic growth in less-developed countries by allowing certain specified imports into the United States. The 1974 Generalized System of Preferences (GSP) provides benefits to more than 130 less-developed countries. Under GSP, the president can grant duty-free status to selected imports from qualifying nations. Certain conditions apply, such as reasonable market access, worker rights, support for U.S. antiterrorism programs, and not engaging in practices that would harm U.S. economic interests. Many agricultural, textile, apparel, and import-sensitive products are excluded. In addition to GSP, several regional trade preference programs have been adopted in recent decades, including ones for the Caribbean Basin, Central America, Andean nations, and Africa. Each law has to be extended periodically.24

Free trade agreements (FTAs), regional and bilateral, have been used frequently in recent years both for their economic benefits and for the associated political benefits. The negotiations generally seek to eliminate tariffs and nontariff barriers on trade in goods and services. Collateral agreements on investment, intellectual property rights, labor practices, and environmental protection are often demanded by Congress and become part of the negotiating agenda. FTAs have been negotiated by the USTR under time-limited power given by Congress to the president, originally called fast track and now renamed Trade Promotion Authority (TPA). From Congress’s perspective, TPA is a self-denying process where legislators surrender their tariff-setting power in order to avoid dismemberment of multilateral agreements by parochial amendments. Under TPA, Congress allows only an up-or-down vote on the package. But, the trade committees insist on, and have been granted by USTR, close consultations during the negotiations process, so they can raise concerns and try to forestall objectionable outcomes.

When major international talks on trade liberalization have stalled, U.S. administrations rushed to sign bilateral or regional free trade agreements. America currently has such pacts in force with Israel, Canada, Mexico, Jordan, Australia, Singapore, Morocco, Oman, Bahrain, Chile, Peru, Dominican Republic–Central America, and—in 2011—Colombia, Panama, and South Korea.

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