4th March 2009, ICTSD

Obama Trade Agenda Cites ‘Imbalance’ in Doha Talks, Urges Focus on Environment, Labour Standards

The Obama administration will push to “correct the imbalance” in the Doha Round trade talks at the WTO and strive to incorporate stricter requirements on labour and the environment in pending and future US trade deals, according to a trade agenda that was released by the new US leadership on Monday.

The 467-page document, available here, provides a snapshot of current US trade policy and outlines the “underlying goals and priorities” of the new administration on everything from investment treaties to bilateral free trade agreements to the Doha Round of trade talks at the WTO.

“Simply lowering tariffs and eliminating tariffs will not produce a successful trade policy,” the administration said in the document. Other priorities identified include helping US workers adjust to the changes brought about by shifts in the global economy and taking into account how increased liberalisation might affect people in developing countries.

“Fundamentally, our trade policy needs a keen appreciation of its economic consequences for our workers, their families, and their communities, a fact recognised in the progress our Congress is making to upgrade our existing adjustment assistance programs for workers.”

“We particularly recognise the need to pay special attention to how our policies influence the well being of people struggling both at home and in the poorest regions of the world,” the report said.

In line with pledges that Obama had made on the campaign trail, the trade agenda promises that environmental and workers’ rights issues will be front and centre in the administration’s thinking on trade policy. But the report does not go so far as to propose drastic new approaches on either subject; rather, it appears as though the new administration will work to include environment and labour provisions in pending and future trade deals, and, at the multilateral level, work within the bounds of existing institutions.

‘Imbalance’ at the WTO

One thing is certainly made clear in the report: the Obama team will be an active, if potentially controversial, player at the multilateral level. Indeed, the administration is fully prepared to engage with its trading partners to achieve a Doha Round deal at the WTO, the report said, but only if the US stands to get more out of the agreement.

“It will be necessary to correct the imbalance in the current negotiations in which the value of what the United States would be expected to give is well-known and easily calculable, whereas the broad flexibilities available to others leaves unclear the value of new opportunities for our workers, farmers, ranchers, and businesses,” the report said.

The report singled out major emerging economies, most likely a reference to countries such as Brazil, China and India, as prime candidates for WTO Members that Washington says could offer deeper concessions in the talks.

“The linchpin to Doha Round success will remain securing meaningful market access commitments in agriculture, NAMA and services, particularly from key advanced developing countries that have been the fastest growing economies and are increasingly key players in the global economy,” the report said.

“Key emerging markets must take on the additional responsibilities that come with their increased influence in the global economy and make commitments that result in meaningful new trade flows.”

Responding to the proposed agenda, a Brazilian official said he was not surprised by the Obama administration’s stance.

“I can say exactly the same: I expect others to make more contributions – what is in the package is not enough for Brazil, we would like a lot more from others,” Roberto Azevedo, Brazil’s ambassador to the WTO, said in an interview with Reuters.

But Azevedo added that Brazil would not agree to completely re-work the package of tariff and subsidy cuts that trade negotiators have so carefully constructed in the more than seven years since the Doha Round was launched. 

Environment and labour issues key to NAFTA, FTAs

At the regional level, the administration said in the report that it will work with fellow NAFTA members Canada and Mexico “to identify ways in which [the North American Free Trade Agreement] could be improved without having an adverse effect on trade.”

Obama had promised on the campaign trail to make NAFTA more beneficial for US workers and manufacturers, a pledge that inspired unease to both the north and south of the US border (see Bridges Weekly, 6 November 2008, http://ictsd.net/i/news/bridgesweekly/32652/). 

“I will start with a re-evaluation of NAFTA and a renegotiation effort to fix it, and I will ensure that US products are treated on a level playing field with those of other countries,” Obama said in a response to a questionnaire on trade during the campaign.

One potential ‘NAFTA fix’ that the Obama administration has already put forward is to incorporate existing side agreements on environment and labour into the core text of the 15-year-old trade deal. Obama raised this possibility with Canadian Prime Minister Stephen Harper last month (see Bridges Weekly, 25 February 2009, http://ictsd.net/i/news/bridgesweekly/41648/).  

“My argument has always been that we might as well incorporate [the side agreements] into the full agreement so that they’re fully enforceable,” Obama said in an interview with Canadian television during his visit.

The administration’s trade agenda also stresses the importance of including stricter environmental and labour standards in the US’ bilateral free trade deals.

“We need to ensure that expanded trade is not at the expense of workers’ welfare and that competitiveness is not based on the exploitation of workers. Building on the provisions concerning labour in some of our FTAs is a way forward in this regard,” the report said.

The report makes clear that the administration does not intend to let already-negotiated agreements that have yet to win Senate approval gather dust in the corners of the Capitol building.
“We hope to move on the Panama Free Trade Agreement (FTA) relatively quickly. And we plan to establish benchmarks for progress on the Colombian and South Korean FTAs,” the report said.

While the Panama deal is considered to have a good chance of winning the Senate’s approval, the Colombian FTA faces greater challenges, as it has been censured by US labour groups and some congressional Democrats who argue that the agreement does not go far enough to address workers’ rights abuses in Colombia. The South Korean FTA also faces an uphill battle in Congress, as the US auto industry has announced that it strongly opposes the deal. 

Obama to pursue TPA ‘with the proper constraints’

Whether at the bilateral, regional or multilateral level, a critical trade tool for any US president is the authority to negotiate trade deals and present them to lawmakers for an up-or-down vote, without the possibility of amendments or filibuster.

But this power, known as fast-track or trade promotion authority (TPA), does not come automatically; a majority of members of the House and Senate must vote to grant it to the president. And while TPA is considered a critical tool for achieving breakthroughs in trade liberalisation, some lawmakers hesitate to give the executive that much authority in international negotiations.

Obama’s trade agenda shows that he intends to urge Congress to grant him TPA, but within limits.

“We will only ask for renewed trade negotiating authority after engaging in extensive consultation with Congress to establish the proper constraints on that authority and after we have assessed our priorities and made clear to this body and the American people what we intend to do with it,” the document said.

History clearly shows that TPA can jump-start the pace of trade talks. Using TPA, then-President Bill Clinton pushed through Congress the legislation that authorised the North American Free Trade Agreement, as well as the Uruguay Round legislation that created the WTO. 

The Bush administration had TPA authority for five years, from 2002 to 2007, during which it won congressional approval of free trade deals with Chile, Singapore, Australia, Morocco, Bahrain and Oman, as well as a regional deal with Central America and the Dominican Republic.

But TPA expired on 1 July 2007, and Congress did not renew it. At the time, WTO Director-General Pascal Lamy said that the lapse of fast-track signalled that the US had “lost faith” in the Doha Round negotiations.

ICTSD reporting. “Poor countries say trade deal must promote development,” REUTERS, 4 March 2009; “Obama wants to reopen NAFTA but keep trade flowing,” REUTERS, 18 February 2009.