Robert Zoellick, Protectionist

Destroying free trade in order to save it.

“The U.S. should demonstrate its ongoing commitment to an open trading system. Without dynamism in world trade, the countries of East Asia, and developing economies around the world, will have a hard or impossible recovery task. In terms of growth, price stability, employment, innovation, and national wealth and power, the United States has benefited enormously from the liberalized global trading system. If the U.S. now hesitates, or worse, retreats, how can we expect others to stand up to those who oppose competition?”

—Robert Zoellick, testifying before the House Banking Committee on Jan. 30, 1998, three years before he became U.S. trade representative.

Chatterbox hereby retires his “death watch” feature, which attempted to identify Bush officials on the verge of losing their jobs. The Bush administration’s personnel practices are simply too difficult to predict. Under the “death watch” rubric, Chatterbox wrote three columns prior to 9/11 predicting the imminent demise of Defense Secretary Donald Rumsfeld, who today has more job security than anyone else in Bush’s Cabinet. After 9/11, Chatterbox hastily refocused his death watch on Treasury Secretary Paul O’Neill, whose disloyalty and lack of support on Wall Street seemed to doom him. Chatterbox still wouldn’t bet serious money that O’Neill will be around six months from now. But after predicting O’Neill’s departure seven times, and being wrong seven times, he thinks it’s time to retire the O’Neill-in-peril theme.

The New York Times seems to feel differently. On March 16 it ran a lead story by Joseph Kahn and Richard W. Stevenson spotlighting O’Neill’s latest betise, which was to tell the Council on Foreign Relations (a blabby bunch if ever there was one) that Bush was unwise to impose tariffs on foreign steel because they will cost more jobs than they create. “Mr. O’Neill has regularly expressed opinions that diverge to a surprising degree from administration policy,” the Times piece noted, before reminding readers that just one week before, the Army Corps of Engineers chief, Michael Parker, had lost his job for telling Congress he opposed the budget cuts Bush had slated for his agency. But of course, O’Neill had it exactly right about the tariffs, which call seriously into question Bush’s much-touted commitment to free trade. To the no-longer-jaded Chatterbox, the story’s real interest wasn’t that O’Neill had made yet another in a long string of gaffes, but that U.S. Trade Representative Robert Zoellick, previously known as a free-trade stalwart, had praised the tariffs during a visit to Brazil. “We are committed to moving forward with free trade, but, like Brazil, we have to manage political support for free trade at home,” the Times reported Zoellick saying. “We have to create coalitions.” Zoellick wasn’t just being a team player. Zoellick himself had pushed for the tariffs, just as, a few weeks earlier, Zoellick had defeated the State Department’s attempt to suspend tariffs on textiles imported from Pakistan, our ally in the war against terrorism (at least until the growing anarchy there, no doubt worsened by a failing economy, ushers in an Islamic-fundamentalist regime). Shouldn’t the U.S. trade representative’s surprising protectionism on these two supremely important trade issues have been the real story?

Zoellick’s motive for pushing steel tariffs, according a March 8 Business Week story about the decision by Paul Magnusson and Michael Arndt, mixed political opportunism with an urgent concern that protectionists in Congress would kill fast-track trade legislation (which has cleared the House but not the Senate) if they weren’t mollified:

In Cabinet debates, Zoellick argued that President Clinton had made a critical mistake in 2000 by not granting the industry similar relief. Instead of taking action, he said, the Clinton Administration had responded to union appeals for help with a study that concluded the U.S. industry was the victim of foreign subsidies and other unfair trade practices. Disappointed steelworkers in West Virginia probably threw their votes to Bush, providing his margin of victory over Al Gore in 2000, Zoellick said. He also argued that “to sustain the support for free trade, we have to be willing to help some of the victims of unfair trading practices.” Translation: To get a bill through Congress authorizing the Administration to conduct future trade negotiations, the White House needed to win friends among steel-state Republicans.

It was much the same when Zoellick opposed Pakistan’s plea that the U.S. give Pakistan a break on textile tariffs at a time when U.S. clothing companies were reducing purchases there because of 9/11 disruptions. This token sacrifice for the war on terrorism was one Zoellick was unwilling to make. A Page One story by Helene Cooper in the Oct. 30 Wall Street Journal, prior to the decision, noted that Zoellick “urged a more cautious approach” that “saw the tariff question as part of a broader fight over the president’s authority to negotiate trade deals. … Neither [Zoellick nor Commerce Undersecretary Grant Aldonis] wanted to jeopardize their chances by alienating congressional representative from textile states.” Three months later, Cooper’s friend and Journal colleague Daniel Pearl fell victim to the mayhem in Pakistan.

Zoellick’s fervor to keep West Virginia for Bush in 2004 is, in this context, beneath contempt. Zoellick’s argument that compromises are necessary in order to pass the fast-track bill (which would restore to the executive branch the power, absent since 1994, to negotiate trade treaties on which Congress could vote yea or nay, but not amend) is more principled, but nonetheless faulty. As Franklin Foer pointed out in the March 4 New Republic, the Bush White House could probably pick up sufficient votes to pass fast-track legislation if it would only compromise with Democrats on a few labor and environment issues. But

House Republican leaders wanted to pass TPA without Democratic support. “They wanted to prove to the high-tech community that the Democratic Party is still controlled by unions,” one lobbyist close to the House leadership told me. “They smelled a chance to prove that they’re retrograde on economics and not really New Democrats.” Or, as a December e-mail from the National Republican Congressional Committee taunted, “Will the New Democrats deliver …?” Rather than welcome Democrats into a pro-trade coalition, the Republicans ignored them.

When the House voted in December, fast-track had the support of only seven Democrats. It cleared by one vote.

More broadly, it’s worth asking whether Zoellick, in placing fast-track above all other considerations, is destroying the free-trade village in order to save it. Zoellick’s predecessor, Charlene Barshevsky, wanted Congress to pass fast-track legislation, too, but eventually figured that the compromises required to do so would do too much damage to free trade. Instead, she advised Zoellick to forget about fast-track and simply present Congress with treaties whose concrete benefits would make them hard to kill. That is, after all, what a trade negotiator is supposed to do: negotiate trade treaties, not dream up ways to undermine them.