by M. Ulric Killion.

Ron Kirk, a former mayor of Dallas, won Senate confirmation Wednesday (March 18, 2009), to be the nation's top trade official.

As reported by the Associated Press, “Former Dallas Mayor Ron Kirk won Senate confirmation Wednesday to be the nation's top trade official with responsibilities for advancing free trade at a time when many Americans see foreign competition as a threat to their livelihoods. The Senate voted 92-5 to confirm Kirk as U.S. trade representative, setting aside a tax problem revealed after he was nominated and concerns raised by some Republicans that the Obama administration was putting the country on a path to protectionism. Kirk, at his confirmation hearing, said he would work to expand trade but did not come to the job with deal fever. He said he would try to help American workers hit by the negative aspects of trade and would put more effort into ensuring that trade partners aren't violating existing agreements on open trade.” (AP Photo/Lawrence Jackson, December 19, 2008).

Perhaps according to one’s political preferences, such as Rightist or Leftist, Kirk’s confirmation is a good or bad consequence. This is because, as observed by the Associated Press, his confirmation “would signal a shift from the Bush administration, which championed the benefits of free trade and endeavored to negotiate new bilateral agreements.”

While Kirk announced that he “will chart the right course by looking out for American workers and shining a spotlight on trade violations,” there are the critical observations of Senator John McCain that deserve our attention.  As the Associated Press reported, “On the other side, Sen. John McCain, R-Ariz., said he was voting for Kirk with some reluctance. Senator McCain said, “that while Kirk supported international trade in a broad sense, he has also made comments suggesting that protectionism might not be so bad after all."

Kirk’s public comments or statements are problematic for obvious reasons, especially for proponents of free and fair trade. 

For instance, Senator McCain “cited Kirk's opposition to a negotiated trade agreement with South Korea and his objections to a pending agreement with Colombia. Kirk has said that a third negotiated trade deal left over from the Bush administration, with Panama, could be ready for a congressional vote soon.”      

Senator McCain also rightly “took aim at a buy American provision in the economic stimulus bill and a provision in a just-passed spending bill killing a NAFTA program allowing Mexican trucks to operate in the United States. Such measures, he said, invite retaliation from trading partners and send a signal to the world that America is going down a path of protectionism."  

When campaigning for the US presidency, Obama declared that he would attempt to renegotiation key trade agreements, such as NAFTA, while, allegedly, advising Canadian officials that this would not be the case. In the interim, and in the post-election administration of Obama, the global subprime crisis appears to be promoting protectionist trade policies in the United States and other countries.                            

It bears mentioning, and constant reiteration, that free and fair trade is good for the US economy, as also true of its key trade agreements such as NAFTA.  While many find a variety of reasons (i.e., the war in Iraq) to criticize the former Bush administration, the Bush administration did promote free and fair trade, and this should not be one of the grounds for criticizing the former administration.  

Once more it should be reiterated, and perhaps even continuously reiterated, that protectionist trade policies and barriers threaten the future growth and prosperity of a US economy and the world multilateral trade system. Whereas, “Free trade and free trade agreements, on the other hand, produce bi-directional benefits; promote growth and prosperity in U.S.-China trade; promote transparency, fairness and openness in trade regimes across the board; make a positive contribution to strengthening the rule of law; and enhance the national welfare of all nations” (Killion, 2004). This is because, “The benefits of multilateralism are many, especially in terms of multilateral and liberalized trade.”

“For example, multilateral trade agreements ensure a non-discriminatory approach with potential mutual benefits for all parties. ‘They reduce trade distortions and simplify administration.’ Furthermore, reduction in tariff and non-tariff barriers brings significant benefits to nations. Multilateral reductions in tariffs allow domestic-produced products to compete more effectively in foreign markets and reduce the prices that domestic consumers pay for foreign imports. Under this model, foreign competition can also put pressure on domestic producers to reduce prices. Similarly, measures easing non-tariff restrictions on international trade expand domestic access to foreign markets and allow more foreign-produced goods to reach domestic industries and consumers. Increased international specialization allows for larger-scale and more efficient production in some industries. Increased competition also encourages technological development. Increased availability of lower-priced foreign goods reduces inflationary pressures and allows governments to pursue expansionary economic policies. Multilateral trade also brings the direct benefits of increased exports and cheaper imports. Without multilateral trade governed by a strong WTO regime, nations are ‘forced to deal with [each other] individually.’ In addition, multilateral trade creates even more direct political benefits. Multilateralism, not unilateralism, encourages highly visible, cooperative efforts on the part of the world's market-oriented economies to devise solutions to joint problems. A successful multilateral trade regime encourages cooperation among nations in solving other problems. New geopolitical and economic realties are forcing actors in the international arena to see the common interests in harnessing the benefits of globalization” (Killion, 2004).

Concerning the values of the multilateral trading system, as Pascal Lamy (WTO, 2009) explained, “We have recently heard ideas for a Global Economic Charter — an occasion for the international community to  re-build a consensus over the basic principles and values that would underlie their economic relations, emulating the founding fathers of the United Nations Charter of 1945.” Lamy further observed:

“The WTO and its predecessor, the GATT, can provide a source of inspiration in this regard. Let me briefly mention some of the WTO principles which could help formulate a new global economic consensus. First among them is openness through the gradual reduction of obstacles to trade. This is accompanied by flanking regulations aimed at ensuring a level playing field and avoiding excesses. A third element is transparency and monitoring: processes ensuring a brighter spotlight to foster compliance with the rules and avoid the eruption of disputes. The fourth element that I would mention is non-discrimination, which in the WTO is embodied in the principles of most-favoured nation and national treatment. The fifth element is fairness, as enshrined in the special and differential treatment for developing countries. All of this with the overriding objectives of raising standards of living, ensuring full employment and achieving sustainable development as described in the preamble of the Marrakesh Agreement establishing the World Trade Organization” (WTO, 2009).

It is, admittedly, too early to judge the US presidency of Obama and his administration, including Ron Kirk, and equally naïve to suggest that the campaign rhetoric of professional politicians must and will transform post-election political realities of the United States and the world. In the present situation of a US economy and world economies, it is actually a comfort to know that campaign rhetoric will not in fact transform the political realties of the United States and the world at large; otherwise, the world multilateral trade system and its goals and aspirations are assuredly a failure, as are the hopes of the future growth and prosperity of a US economy and the world multilateral trade system.

For these reasons, we should, though after allowing the Obama administration a sufficient period for transition to office, eventually judge the US presidency of Obama and his administration, including Ron Kirk, not by their political rhetoric, but rather by their deeds (i.e., trade policies). Such as how the Obama administration handles key and sensitive trade-related issues, how they manage the critical and pending finalization (or ratification) of the Korea-US FTA (KORUS FTA), how they handle pending trade agreement (FTA) with Columbia, and, especially, how they resolve the pending disputes concerning NAFTA.

For now, Senator McCain, as earlier mentioned, rightly observed Kirk’s comments on key trade-related issues as problematic. Such as, “Kirk's opposition to a negotiated trade agreement with South Korea and his objections to a pending agreement with Colombia” (AP, 2009).

All of this occurring at a time when, “South Korea and the European Union on Tuesday [March 23, 200] reached a tentative agreement to scrap tariffs on goods traded between them, a deal that, if ratified, would send a strong signal on free trade at a time of rising protectionist tendencies” (Wassenger, 2009).

When concluding the deal, which is expected to be finalized on April 2, in London, “South Korea and the EU tackled various sensitive issues, such as eliminating or phasing out tariffs on manufactured goods and automobiles, and acknowledging goods from Kaeosong Industrial Complex, an inter- Korean industrial complex in DPRK, as duty-free items. The EU stood as South Korea's second-largest trading partner after China last year, with two-way trade reaching over US$90 billion” (Bernama, 2009).

Nonetheless, it is fair that the proponents of free and fair trade, and the goals and aspirations embodied in the WTO agreement, should wait and see whether the professional politicians will attempt to transform the political realities of the United States and the world, or pursue, instead, genuine multilateralism in trade-related issues. Despite the hope of many, the United States may still be straddling a wall between genuine multilateralism and a Hobbesian variety of  multilateralism.

If the United States elects to pursue a Hobbesian variety of multilateralism rather then genuine multilateralism, the United States, by default, actually denies the greater good and elects to take the path to protectionist trade policies and barriers. All of this threatens the world multilateral trade system, and the goals and aspirations embodied in the WTO agreement. For the aforementioned reasons, the political posturing (i.e., public comments, campaign rhetoric, etc.) of the Obama administration, if pursued in the real reality of global trade, poses a danger and challenge to the world multilateral trade system.

For these reasons, the US Senate confirmation of former Dallas Mayor Ron Kirk may dangerously signal a firm commitment of the United States to greater American protectionism. We will wait and see.

Sources:

Jim Abrams, Former Dallas Mayor Ron Kirk confirmed as US trade representative, AP, March 18, 2009, (Chicago Tribune). 

Killion, M. Ulric. 2004. China’s Foreign Currency Regime: The Kagan Thesis and Legalification of the WTO Agreement, 14 Minn. J. Global Trade 43, (Winter).  

WTO NEWS: SPEECHES — DG PASCAL LAMY, March 2, 2009.

Bettina Wassenger, Tentative Free Trade Deal for S. Korea and Europe, NY Times, March 24, 2009.

South Korea, EU Reach Agreement On FTA, Bernama (Malaysian news agency), March 24, 2009.

The articles and essays may be cited and quoted as: M. Ulric Killion, [Essay Title], [Essay Posting Date], available at [URL or http address].