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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