Obama Administration Delays Trade Negotiations For Now

The Obama administrations message on trade negotiations inherited from its predecessor is emerging and it clearly says: we'll get back to you when we have the necessary cabinet officials in place, such as a U.S. Trade Representative, and have had time to review our trade policy.
 
So far, the administration has sought a delay in negotiating sessions for two new trade agreements that were scheduled to take place next month, and has opted to refrain from pushing a bilateral investment treaty (BIT) with China during Secretary of State Hillary Clintons trip to Asia.
 
Delayed from March is the first comprehensive round of trade negotiations for the Trans-Pacific Partnership (TPP), which initially would mean a free trade agreement between the U.S. and New Zealand as well as a U.S.-Brunei FTA. The TPP meeting was scheduled for the week of March 30, and will be the subject of a March 4 interagency hearing chaired by USTR.
 
The key issue to watch is what position agriculture groups will take on the new agreement, which may hold some promises in the long-term if the TPP were expanded to include Japan, but provides few U.S. export benefits in the near-term.
 
The U.S. also successfully requested a delay in the March negotiations of a controversial intellectual property rights agreement known as the Anti-Counterfeiting Trade Agreement.
 
Similarly, Clinton did not press during her visit to China the need for a bilateral investment treaty, though sources emphasize that is a temporary delay.
 
This pause on trade could last a while longer since it now looks that the Senate Finance Committee hearing for USTR nominee Ron Kirk could slip to the week of March 9 after signals late last week that it could may happen in the first week of March. Finance Committee staff met with Kirk last Thursday (Feb. 19) and discussed Kirk's questionnaire and other submitted documents, according to a committee aide.
 
When the nomination hearing takes place, it will be interesting to see if Kirk offers more than the typical nominee responses on how the administration will proceed on the controversial pending U.S.-Colombia FTA and what additional steps Colombia has to take to address Democratic objections on labor violence in that country.
 
One congressional aide said this week he expected Finance Committee members to press Kirk on these specific issues, which Democrats so far have avoided answering detail.
 
 
There is also a policy void at the Commerce Dept., because there is no formal nomination for a Commerce Secretary. Former Washington Governor Gary Locke is clearly being vetted for that spot and many seem to hope the third-time nomination will be the charm.
 
The U.S. postponements of negotiations may well be temporary and driven by the fact there that there is simply no one home at USTR or Commerce to make necessary decisions and vet them with the White House, where key officials are preoccupied with the economic crisis.
 
But we will not know whether and how the Obama administration wants to deal with this inherited trade agenda until it has undergone an internal trade policy review, which could take roughly two months after Kirks confirmation.
 
Trade critics in Congress such as Rep. Mike Michaud (D-ME) are clearly hoping this pause by the Obama administration is more than temporary. These members of Congress are poised to call on President Obama to work with them on a new model for trade and investment negotiations before proceeding to any new negotiations.
 
In a draft letter, these members are pressing the administration to call off BIT talks with China and TPP talks with Chile, Singapore, Brunei and New Zealand because they reflect the bad policies of the past.
 
The TPP seems to have little exposure so far in Congress judging by the fact that fewer than 20 members signed a draft letter to Obama urging U.S. participation in the March TPP session. One trade skeptic speculated that it is likely the letter, which was championed by Reps. Ellen Tauscher (D-CA) and Ways and Means Ranking Member Kevin Brady (R-TX), will not even be sent in light of that scant response.
 
The perennially lagging Doha round of trade negotiations will likely come into the spotlight on April 2 when G20 leaders gather in London to tackle the global financial crisis. Obama is likely to face pressure to agree to a political pledge on recommitting to the successful conclusion of the Doha round from U.K. Prime Minister Gordon Brown and others.
 
The outcome could be bold policy pronouncements on the need to complete the Doha round quickly and to avoid trade-restricting measures in the face of the global economic crisis. But it is unlikely that these statements will translate into Geneva efforts aimed at reviving the stalled negotiations until USTR and the White House decide how they want to proceed on the talks.
 
Such a review on Doha could lead to a change in the agenda as well as the negotiating approach. The talks are currently deadlocked over negotiating modalities for non-agricultural market access and agriculture.
 
Leading U.S. lobbying groups in services, industrial goods and agriculture are poised to send a letter to Obama this week reiterating their belief that what is on the negotiating table in Geneva now is simply not good enough. But key trading partners have taken the position that the Doha round is stuck unless the U.S. digs into its pocket for more concessions.
 
The U.S. delay is not the only political problem the Doha round faces: India will have elections in April, Japan faces elections this year and the European Union is poised to name a new commission in the fall.