by Bernard K. Gordon
IT'S BEEN WELL over a year since Korus-the proposed U.S一Korea Free Trade Agreement-was signed, sealed and delivered. But it has yet to be approved by the United States Congress, and as of this writing, it has also not yet been approved by Seoul's National Assembly, though supposedly it was to have an easier ride there.
The alleged obstacles in both capitals are well一known. From Washington, the complaints include not enough beef and cars, while Seoul is focused on too much supposedly tainted American beef today and fears of too much rice tomorrow. But those specifics mask the real story, espe cially in Washington, of what's wrong with these FTA5 and why they've already hit so many rough spots on the road to passage.
Large as well as small obstacles are in- volved, and the small ones are a perfect il lustration of the devil living in the details. Every FTA negotiation already undertaken, as well as those still in process, has been affected by those "details." In the Austra hia-U.S. FTA for example, a sticking point was Washington's concern to ensure access for American pharmaceutical firms, while in the FTA negotiations with Singa pore and Chile, negotiators were anxious to maintain controls over currency move- ments. As a result it was the U.S. Treasury Department whose nose was out of joint. Similar sticking points, though in quite different sectors, have come up in the talks with potential U.S. FTA partners Thailand and Malaysia. Particularly in Kuala Lum pur, issues of government procurement are just one of the problems complicating a deal with the U.S.
But far larger issues of geopolitics al ways intrude on FTA negotiations, though they've too seldom been recognized and even less often openly mentioned. That si lence is no more, as U.S. Defense Secre tary Robert Gates made very clear when he spoke in May at the annual Asian secu rity conference in Singapore.“…We stand for openness, and against exclusivity… there is little room for a separate 'East Asian' order."
Considering that since 2002 China has devoted much effort to building special trade deals with the Association of South- east Asian Nations and its members, and has gone well beyond that in promoting the "East Asian Summit" idea, a fair read- ing of Secretary Gates's words opposing "exclusivity" and a "separate East Asian order" is that they were directed toward Beijing. After all, as economists and law- yers often remind us, any FTA is in reality a "PTA'，一a preferential trade agreement, and in today's East Asia, China has been most successful in building a network of just such preferential trade agreements.
Not that China is responsible for start- ing the trend一as U.S.Senator Lisa Murkowski reminded a Washington audi- ence last December. The senior Republican on the Senate's Subcommittee on East Asian and Pacific Affairs, Ms. Murkowski made two notable points. First, she sharply criticized the spate of special trade arrange- ments that now characterizes the region, in many of which the United States is left out- side looking in. But more importantly, she traced the roots of these developments to America's own post-North American Free Trade Agreement expansion of the FTA concept. America's new trade-policy prob lem, she concluded, is of its "own doing."
Her analysis is backed by the historical record. In 1991 Ryutaro Hashimoto, then Japan's finance minister and not long af terward its prime minister, warned the U.S. not to go down the FTA road. His om inous warning was that problems would flow to the U.S. if Washington persisted in chinking away at the multilateral trade system by promoting bilateral and region- al trade deals.
That's precisely what has happened, in a chain of FTA-generated events that has brought American policy makers first to worry about being "left out" of Asia's burgeoning trade agreement network; then to recommend tactical shifts that would al low the U.S. to create more such agree- ments; and now-as reflected in Secretary Gates's pointed remarks一to warn that what he called "exclusivist" steps are not on. Yet exclusivity is precisely the underly ing reality of what these FTA5 represent, although as with the Singapore and Aus tralia FTA5, each such trade arrangement could be and has been defended on its own terms.
These points might be dismissed as ex aggerated or even irrelevant, because many believe that America's FTA5 have achieved their purpose: to improve U.S. exports. But in fact they have not. Accord- ing to trade data from the International Monetary Fund, the U.S.FTA partners Australia, Singapore and Chile, as well as Mexico and Canada, their imports from the United States grew far more slowly from 2000 to 2006 than their overall im ports. Their U.S.imports also grew far more slowly than their imports from the European Union, despite the fact that none, aside from Mexico, has an FTA with the EU.
One example is Australia. From 2000 to 2006, despite its new FTA with the U.S., Australian imports from the EU rose at more than double the rate of its U.S. im ports, and in 2006 they reached $28 bil lion. That was almost 50% greater than Australia's imports from America. Like- wise by 1998, when Singapore一U.S. FTA talks began to gather momentum, the U.S. had become Singapore's largest source of imports. But since the January 2003 agree- ment, the U.S. has lost the top spot to Chi na and Hong Kong. From 2000 to 2006 Singapore's imports overall rose by 77%, from the EU by 69%, from the U.S. by 50%, and from the China-Hong Kong combina tion by a remarkable 195%.
It's worth noting that in four of these five U.S. FTA cases, the growth-rate of each partner's China-Hong Kong imports was roughly 200%, and in Mexico a startling 600%.The dollar consequence of such rates is that not only in Singapore, but in Australia as well, imports from China now exceed those from the U.S. Even in Chile, where a decade ago Chinese imports hard- ly figured at all, by 2006 they were at $3.6 billion, an amount that approaches the val ue of Chile's U.S. imports.
Against the background of these trade data from America's principal FTA5, now let's return to the still-pending Korus deal. It was the subject of a day-long Washing- ton meeting a year ago that produced sur prising results. They centered on a study prepared by Robert M. Stern, one ofAmer ica's best-known trade economists, and while the meeting's sponsors may have ex pected his study to provide clear support for the agreement, it did not. While Korus doubtless would bring advantages一 mainly to Korea一Prof. Stern concluded that for both Washington and Seoul a multilateral agreement was the much better option: "the effects of global [multilateral] free trade were calculated and shown to be far greater for Korea and the United States compared with the bilateral FTA5."
Those findings reaffirmed a long-held consensus about the qualitative difference between the multilateral World Trade Or- ganization system and the system of pref erential trade agreements that FTAS represent. Despite that consensus and the findings that continue to support it, not only has the Korus pact continued to be supported-amid sharply growing prob lems in Washington and especially in Seoul-but another FTA proposal has now been bruited, this time with Taiwan.
Of course "strategic" and foreign-pol icy justifications are cited in support of the idea, but it is far from clear that on bal ance Taiwan should welcome the propos al. Some informed views suggest instead that Taipei will be looking for an arrange- ment with China along the lines of Hong Kong's. But even aside from those consid erations, the more basic question is wheth er, in the light of several FTA experiences so far, yet another one now makes sense.
As in the Korean case, issues in bilat eral FTA talks can aggravate and reignite each partner's perceptual and historical baggage. Seoul's angry anti一U.S. beef pro- tests are a perfect illustration of how FTA issues can worsen rather than improve an existing political and strategic alignment, and serve the interests of neither.
These are among the many reasons why there is special relevance to Pascal Lamy's warning at the WTO this summer that the "time of truth" has arrived. It means that in each capital where the keys to a successful Doha outcome are held, the political and trade leaderships have a gen uinely unique opportunity and challenge. U.S .President George Bush's veto of America's egregious farm bill demonstrat ed an American awareness of the stakes involved. Yes, the always一powerful agri cultural interests successfully overrode his veto, but hopefully those others in each capital will do no less.
No comments:
Post a Comment