Monday, August 2, 2004

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Laura Tyson vs... John Kerry

Here's an example of the difficulty in trying to nail down what a Kerry administration's trade policy would look like. On the one hand, Matthew Yglesias has a good American Prospect piece (expanding on this blog post) on what he learned in Boston about the Kerry economic team. The key part is his recount of what Kerry advisor Laura Tyson said:

After briefly singing the praises of liberalized trade and capital flows, recommending Jagdish Bhagwati's In Defense of Globalization for those who wanted to know more, and arguing that trade is "necessary, but not sufficient" for global economic development, Tyson acknowledged that her remarks were somewhat at odds with much of what Kerry's said on the campaign trail.

"When people say, 'well, listen to what the Kerry campaign has said about trade in some of the primaries, we are concerned that Senator Kerry will move the US away from trade integration,'" she said, she tells them to "think about the issue of national campaigns in the US" and to "recognize that what might be said in one primary ... is not an indicator of the future."

Tyson further argued that Kerry would be able to liberalize trade more than Bush has, because Kerry would support policies that help compensate the inevitable losers in globalization -- a step that will allegedly drain the swamp of anti-trade sentiment. Lest it be thought that Tyson's commitment to the multilateral process and to continued trade integration leaves plenty of wriggle room to keep the process but add, say, environmental standards into the mix, she explicitly disavowed this option during a later exchange. Adding environmental issues to the WTO's brief might bog it down and impede progress on further integration.

This is music to my ears -- except that I then checked out the Kerry Edwards position paper on trade. On p. 2, I see this nugget of information:

As president, John Kerry will lead with a firm but even hand on trade, and make clear that when the U.S. enters into trade agreements, we will expect our trading partners to live up to their side of the bargain. He will strongly enforce our trade laws and insist that all new free trade agreements include enforceable, internationally recognized labor and environmental provisions in the core of the agreements.

Strictly speaking, the position paper does not conflict with Tyson's statement -- the former refers to "new free trade agreements," the latter to the WTO. However, Matt's implication that there's no wiggle room in a Kerry trade policy to use regulatory standards as a way of blocking trade liberalization is a bit overstated.

One final thought -- I'd like to see someone ask the Kerry economic team the following question: "It was recently decided to extend the deadline for the Doha round of WTO negotiations to the end of 2005. On p. 9 of your position paper on trade, the following is stated:

As president, John Kerry will order an immediate 120-day review of all existing trade agreements to ensure that our trade partners are living up to their obligations and that trade agreements are being enforced and they are working as anticipated. He will consider necessary steps if they are not. And John Kerry will not sign any new trade agreements until the review is complete.

Does this review apply to Doha as well?"

posted by Dan on 08.02.04 at 12:37 PM




Comments:

Kerry is making noises that he would move faster than Bush on the 9/11 recommendations. Might we hope that his review of Doha convinces him that this is the right thing to do and that he moves to ACCELERATE the move to free trade.

posted by: Harold McClure on 08.02.04 at 12:37 PM [permalink]



It's mighty odd, that's for sure! At the end of the day, though, I don't think there's a real question as to whether or not Kerry and Edwards are free traders. Kerry's record on this is quite clear and Edwards always voted pro-trade when there wasn't a direct North Carolina stake in the protectionist position. Kerry's advisors are uniformly pro-trade. Kerry talks a big protectionist game because it's good politics. The issue is how much political risk would Kerry be comfortable taking for the sake of trade liberalization?

Kerry's not known for acts of monumental political courage, but he really has been a deficit hawk come hell or high water and certainly has been willing to buck his base for the sake of trade in the past. But a President Kerry will probably need to do a lot of base-bucking on Iraq, so maybe there won't be any capital left for the WTO.

posted by: Matthew Yglesias on 08.02.04 at 12:37 PM [permalink]



I don't see the big deal about the 120-day review. I would expect new Presidents to review past negotiations before committing. It's not like a WTO treaty will disappear if the US doesn't sign it for four months.

posted by: Norman Pfyster on 08.02.04 at 12:37 PM [permalink]



Here's the bottom line: the anti-free-traders are fooled by all this protectionist nonsense, so it's just as likely they'd be fooled by something else.

That said, it would be helpful if Kerry started talking more about mitigating the downside risks of trade, like Clinton did.

posted by: praktike on 08.02.04 at 12:37 PM [permalink]



More worrisome than trade, by far, is Kerry's position on offshore outsourcing. At present, his campaign rhetoric has the potential to totally alienate our Asian partners. We need to develop responsible policies (and political messaging) for offshore outsourcing liberalization. If we don't, we will not be able to compete in the long run.

Not only is Asia a major provider of outsourcing services, it is also a major consumer. Its governments and corporations have embraced outsourcing, raising the competitive bar for U.S. companies trying to compete in an increasingly globalized marketplace. The world will not always revolve around a U.S. growth engine. As the engine for economic growth shifts east, the U.S. will need to jump into the fray with companies that can outcompete Asian companies on - dare I say - price.

The U.S. cannot waste time bickering over outsourcing; it needs to proactively find ways to make its labor force more competitive through spending on education, training, research and infrastructure. U.S. corporations need to be lean, mean and competitive, not hamstrung by reactionary politics.

William Wang
Outsourcing.org

posted by: William Wang on 08.02.04 at 12:37 PM [permalink]



Frankly, predicting which way an administration headed by a political weathervane like John Kerry will point on trade involves predicting which way the wind will be blowing beginning on the day after the election.

I don't know enough to do that. I do know this, however: first, movement on the Doha round will require bigger and more painful changes in American policy on agriculture and other matters than Congress has been asked to make recently. The few Democrats in Congress who might be supportive of these changes are also among the Democrats least knowledgable about the sectors they would impact on.

Second, Bill Clinton had the advantage 12 years ago of not having to appeal for the votes of overt protectionists -- those people were locked up by Ross Perot. They are all back in play now, and I would not assume either that Kerry can get away with using protectionist rhetoric to get their votes during the campaign and then pursuing a free trade policy after the election, or that he has the nerve to attempt something like this.

Finally, Kerry has been more supportive of trade liberalization than the average Democrat during his time in the Senate. But so has Massachusetts. Kerry's appealing to a different constituency now, and while I appreciate the free trade credentials of some Kerry trade advisers I doubt their influence in the face of his political advisers.

posted by: Zathras on 08.02.04 at 12:37 PM [permalink]



A William Wang outsourcing ad as part of any discussion?

Have to think a bit before commenting.

posted by: Alex on 08.02.04 at 12:37 PM [permalink]



'Second, Bill Clinton had the advantage 12 years ago of not having to appeal for the votes of overt protectionists -- those people were locked up by Ross Perot. '

Man, I had almost forgotten about the giant sucking sound, and about Perot skits on SNL.

Still, I'm not sure I agree with that. Most Perot votes seemed to be taken from Republicans. Maybe they were Buchananite paleocons, but those wouldnt' be Clinton voters. CLinton managed to get the unions largely on his side while being largely free trade. Kerry should be able to do likewise.

posted by: Jon Juzl on 08.02.04 at 12:37 PM [permalink]



IIRC, the "sucking sound" was the rhetoric in 1996; trade only came on the agenda for Perot once the balanced-budget issue (his 1992 hobby horse) was a non-starter.

posted by: Chris Lawrence on 08.02.04 at 12:37 PM [permalink]



“...recognize that what might be said in one primary ... is not an indicator of the future."

Good grief, is Laura Tyson charging John Kerry with running a dishonest campaign? Did Karl Rove bribe her to say that? I have long contended that the Massachusetts senator is a stealth candidate. It simply never dawned upon me that a top Kerry advisor, however, would concede this point! Tyson, along with Brad DeLong and Robert Rubin subtly argue that they can marginalize the huge number of leftists within the Democratic Party? Are they planning to machine gun them after the election? Is a blood bath being considered? Where is conspiracy theorist Oliver Stone when we need him? Does anybody truly believe that Howard Dean and his ardent supporters will go softly into the dark night never to return? Yup, and Britney Spears will soon send me flowers and love letters.

posted by: David Thomson on 08.02.04 at 12:37 PM [permalink]



Jon Juzl, many Reagan Dems voted for Perot too. He took votes from both sides although more from Bush. Sorry, but Clinton and co. lied: The unions know the effects of WTO and what Clinton elitists and econs. did to them by now.

Agree with D. Thomson (for once) re Dean and left side and no way they will be silenced post any election.

posted by: Alex on 08.02.04 at 12:37 PM [permalink]



Matthew Yglesias wrote:

At the end of the day, though, I don't think there's a real question as to whether or not Kerry and Edwards are free traders.
Well Kerry’s record, much like Clinton’s and Bush 43’s on trade has been mixed at best. Kerry has previously voted for most trade agreements it’s true, but he’s also supported amendments to water them down such as his vote in favor of the Dayton-Craig Amendment before he voted to reauthorize Trade Promotion Authority (which would have gutted it but for the tie-breaking vote for VP Cheney), his support of tariffs/anti-dumping language in the Andean trade agreement and his support of the Byrd Amendment (signed into law by Clinton which Bush is attempting to repeal BTW). Moreover, Kerry has been a consistent advocate for agricultural subsidies and opposed both free trade agreements with Chile and Singapore and CAFTA. Edwards opposed those three agreements (voted against FTA with Chile and Singapore), has also been a consistent supporter of agricultural subsidies, campaigned against NAFTA when he was in the running for the presidential nod, and also supported the duties imposed by the Bush administration.
Kerry's advisors are uniformly pro-trade.

Note true; Warren Buffet, Ted Kennedy, Robert Reich, John Edwards, and John Sweeney are each Kerry advisors and there isn’t a free trader in that bunch. Try again.

posted by: Thorley Winston on 08.02.04 at 12:37 PM [permalink]



'many Reagan Dems voted for Perot too. He took votes from both sides although more from Bush.'

I remember reading that Perot supporters broke 1/3d Dem, 1/3rd Repub, 1/3rd new according to exit polls (that is, without Perot, thats how they would have voted).

'Note true; Warren Buffet, Ted Kennedy, RoFbert Reich, John Edwards, and John Sweeney are each Kerry advisors and there isn’t a free trader in that bunch'

Kerry's economic advisors are Tyson, Altman, Sperling, Rubin, Furman etc. There was a big article on this in the NYT a few weeks back. Almost all are free traders, almost all are Clinton administration appointees.

Kennedy is not an advisor to Kerry (except in general matters of how to run a campaign, etc.).

And Sweeney (to the extent that he is an advisor) is on labor issues, not economic issues.

Incidentally, while Reich is hardly a gung-ho free trader, he is far from being anti-free trade either. He's said that outsourcing is not a matter of concern.

'But it makes no sense for us to try to protect or preserve high-tech jobs in America or block efforts by American companies to outsource. But it makes no sense for us to try to protect or preserve high-tech jobs in America or block efforts by American companies to outsource'

And he's said that protectionism is bad. His prime concern is to say that workers displaced by globalization should get retraining and the like.

As far as Buffett goes, he's expressed concern about the trade deficit and he wrote an article in Fortune about it. Again, that doesn't make him an inveterate protectionist.

The fact is that abstract free trade is a political impossibility unless its accompanied by some ways to cushion the impact for those involved. Also the political implications of foreign not-entirely friendly counries holding our debt needs to be mentioned (nor obsessed over, but it should be a matter for concern. Only people in Ivory Towers assume that there is nothing at all to be concerned with about free trade (despite its many benefits) [ I note in passing too that even Ivory Tower free traders seemed to turn less free trade when their own industries or jobs are threatened]

posted by: Jon Juzlak on 08.02.04 at 12:37 PM [permalink]



"Vote for Kerry: he's lying about being a protectionist!"

posted by: Mitch H. on 08.02.04 at 12:37 PM [permalink]



'Vote For Bush: He lies about everything -- Medicare costs, Iraq war costs, Al Qaeda links, WMDs'

posted by: fisk on 08.02.04 at 12:37 PM [permalink]



Jon Juzlak wrote:

Kerry's economic advisors are Tyson, Altman, Sperling, Rubin, Furman etc. There was a big article on this in the NYT a few weeks back. Almost all are free traders, almost all are Clinton administration appointees.

As Drezner pointed out, Tyson isn’t a free trader (she was the brain trust behind the Clinton administration’s duties on superconductors IIRC) and Altman jumped on the “outsourcing is bad” bandwagon. Moreover the Clinton administration was rather liberal in its use of tariffs and duties on certain items and gave us the Byrd Amendment (supported by Messirs Kerry and Edwards) which the Bush administration is trying (unsuccessfully) to repeal.

Kennedy is not an advisor to Kerry (except in general matters of how to run a campaign, etc.).

Everyone who thinks that Ted Kennedy won’t be advising Kerry on policy matters please signify by saying “yes I would like to buy that bridge.”
And Sweeney (to the extent that he is an advisor) is on labor issues, not economic issues.

Which isn’t much of a distinction in a political party that draws the bulk of its support from labor unions.

Incidentally, while Reich is hardly a gung-ho free trader, he is far from being anti-free trade either. He's said that outsourcing is not a matter of concern.

Then he should provide an interesting counter-weight to Roger Altman who has jumped on the “outsourcing is bad” bandwagon.

posted by: Thorley Winston on 08.02.04 at 12:37 PM [permalink]



Don't know if you read these comments or not Dan, or if you ever respond to them, but I'm curious whether you dislike the idea of environmental standards in trade agreements because you worry they might be misused as a roundabout way of creating protectionist barriers, because you think the environment would be better off in the long-run with a completely unfettered trade system, or because you think the human/development gains from unregulated trade outweigh the environmental costs. Or, if none of the above, do you just hate trees for some reason? ;)

posted by: Dave on 08.02.04 at 12:37 PM [permalink]



Tyson was not seen as a traditional free trader at all early in the Clinton Administration and before -- I remember her justifying a managed trade approach (though nothing extreme along these lines). And let's remember it really was Clinton himself who fired the final shot at the disastrous Seattle WTO Ministerial with his public comments (apparently entirely unexpected by Barshefsky) that he thought we should eventually use trade sanctions to impose labor standards on poor countries. BTW, if Kerry has such good trade advisers, how come he put out such a the silly press release right after announcement of the Doha breakthrough last weekend and how come his campaign site for several months (I haven't checked again in the last two weeks) pushed a trade policy provision that confused corporate tax inversions with outsourcing?

posted by: Laura on 08.02.04 at 12:37 PM [permalink]






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