A Renewed Push on Trade

Two old trade hands are gearing up to get the Trans-Pacific Partnership approved by Congress this year, but it won’t be easy.

New Zealand Ambassador to the United States Tim Groser (left) and National Foreign Trade Council President Rufus Yerxa at the NFTC office on May 13
Jerry Hagstrom
Jerry Hagstrom
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Jerry Hagstrom
May 24, 2016, 8 p.m.

Tim Groser, New Zea­l­and’s am­bas­sad­or to the United States, and Ru­fus Yer­xa, the new pres­id­ent of the Na­tion­al For­eign Trade Coun­cil, have known each oth­er since they were young dip­lo­mats dur­ing the Ur­uguay Round of mul­ti­lat­er­al trade ne­go­ti­ations in the late 1980s.

Now, after long ca­reers con­nec­ted to the World Trade Or­gan­iz­a­tion in Geneva, they are both in Wash­ing­ton—the trade lions in winter de­fend­ing the WTO and try­ing to con­vince Con­gress to ap­prove the Trans-Pa­cific Part­ner­ship agree­ment, the best thing they can see go­ing in the trade field today.

Yer­xa, who served as deputy dir­ect­or gen­er­al of the WTO from 2002 to 2013, this month be­came pres­id­ent of the NFTC, a pro-free-trade group that goes back to 1914. For his first event, Yer­xa in­vited his old col­league Groser, a former New Zea­l­and am­bas­sad­or to the WTO and New Zea­l­and trade min­is­ter, to sit down with a group of re­port­ers to talk about the TPP and world trade in gen­er­al.

In his in­tro­duc­tion, Yer­xa cred­ited Groser “with put­ting ag­ri­cul­ture back in­to world-trade ne­go­ti­ations in the Ur­uguay Round.” It’s an im­port­ant point. There is now so much trade in food most people don’t re­mem­ber that when the Gen­er­al Agree­ment on Trade and Tar­iffs, the pre­de­cessor to the WTO, was es­tab­lished in 1947, ag­ri­cul­ture was largely left out be­cause world lead­ers con­sidered farm­ing too sens­it­ive to be handled in trade agree­ments.

Groser, in turn, called the Ur­uguay Round “a massive shift in the right dir­ec­tion,” cit­ing Dav­id Ri­cardo’s clas­sic­al ar­gu­ment that in­ter­na­tion­al trade al­lows coun­tries to be­ne­fit from their com­par­at­ive ad­vant­age and in­crease con­sump­tion over­all.

The Ur­uguay Round led to the de­vel­op­ment of the dis­pute-set­tle­ment sys­tem that al­lows coun­tries to bring their trade con­flicts to Geneva for set­tle­ment. It also turned the GATT in­to the WTO, which has the au­thor­ity to en­force trade agree­ments by al­low­ing the im­pos­i­tion of pun­it­ive tar­iffs if a coun­try is found guilty of il­leg­ally sub­sid­iz­ing a product or dump­ing it in oth­er coun­tries.

But the WTO, which has evolved from an or­gan­iz­a­tion of highly de­veloped eco­nom­ies to en­com­pass 162 coun­tries, has struggled to find com­mon ground among the de­veloped coun­tries; the truly poor na­tions, mostly in Africa; and a few oth­er coun­tries in­clud­ing China, Brazil, and In­dia, that are get­ting rich­er.

The WTO is sup­posed to hold “rounds” in which all the mem­ber coun­tries ne­go­ti­ate to re­duce trade bar­ri­ers, but last Decem­ber in Nairobi, trade min­is­ters from the WTO mem­ber coun­tries aban­doned the Doha De­vel­op­ment Round, which had been launched in 2001.

Today, Yer­xa and Groser’s be­loved WTO has been re­duced to the dis­pute-set­tle­ment sys­tem with no clar­ity about its fu­ture as a for­um for ne­go­ti­ations.

“It is a tragedy we have not been able to build on the mo­mentum” that ex­is­ted when the WTO was es­tab­lished, Groser said. The dis­pute-set­tle­ment pro­cess “is the jew­el in the crown” of the WTO, he said, but ad­ded that “the longer it takes for the ne­go­ti­at­ing func­tion to get up to speed, the more pres­sure is be­ing put on the dis­pute-set­tle­ment sys­tem to define po­s­i­tions that should be done through ne­go­ti­ations.”

Groser ac­know­ledged that “the main game is no longer in Geneva.” The real ac­tion, he said, is “con­flat­ing bi­lat­er­al deals in­to lar­ger and lar­ger ag­greg­a­tions” such as TPP, the 12-na­tion agree­ment in­volving the United States, New Zea­l­and, Ja­pan, and oth­er coun­tries in the Pa­cific.

That, too, is dif­fi­cult, even at home. In Feb­ru­ary, New Zea­l­and hos­ted the ce­re­mony for the trade min­is­ters to sign the TPP, but Groser’s Na­tion­al Party has had to push hard to con­vince the Par­lia­ment to ap­prove it. Free trade has long had bi­par­tis­an sup­port in New Zea­l­and be­cause the coun­try pro­duces far more dairy products and lamb than its people can con­sume. But New Zea­l­and’s La­bour Party came out in op­pos­i­tion to TPP on the grounds that it does not pro­tect the coun­try’s sov­er­eignty on tar­iff, copy­right, and pat­ent rules. There’s also a fear that TPP would make it im­possible to stop for­eign­ers from buy­ing up New Zea­l­and land.

Groser is im­pa­tient with people who worry about job losses: “If you want to go and find a loser in New Zea­l­and, we can find you some losers. If you don’t want to lose a single job, you are con­sign­ing your cit­izens to a back­wa­ter.

“Facts are get­ting lost in a num­ber of coun­tries,” he said. Trade uni­ons may op­pose TPP, but U.S. man­u­fac­tur­ing is thriv­ing and Amer­ic­ans need to be aware that the Pa­cific coun­tries will turn more to­ward China and In­dia if the United States does not show lead­er­ship in the Pa­cific re­gion.

Groser main­tains that the TPP can­not be rene­go­ti­ated. Still, when re­minded that Sen­ate Fin­ance Com­mit­tee Chair­man Or­rin Hatch is dis­sat­is­fied with the pat­ent pro­tec­tion on bio­lo­gic drugs, he said the TPP “takes us for­ward” but that Hatch also has a “prin­cipled” po­s­i­tion.

Hatch has also said that the United States has six years to de­cide wheth­er to sign the agree­ment be­cause that’s the amount of time for which Con­gress ap­proved trade-ne­go­ti­at­ing au­thor­ity for Pres­id­ent Obama and his suc­cessors to con­duct trade ne­go­ti­ations without con­gres­sion­al in­ter­fer­ence.

“This is un­ques­tion­ably the year to do it,” Groser said, adding that he would leave it to Amer­ic­ans to fig­ure out “how the next Re­pub­lic­an or Demo­crat­ic pres­id­ent could re­as­semble the pro-trade forces” to get TPP ap­proved.

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