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Robert Strauss Avoids Sharks in the Millenium Round

Author: Bruce Stokes

Council on Foreign Relations

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Former U.S. trade representative and long-time political deal maker Robert Strauss once likened conducting trade talks to steering a canoe through shark-infested waters. As the lead U.S. trade negotiator in the late 1970s, he said he would first feed the sharks on his right, fending them off in order to move the boat forward a bit. Then he would feed the sharks on his left to buy more time. The key to his success was to have enough bait in the boat to satisfy the sharks.

With the next round of multilateral trade negotiations, likely to be dubbed the Millennium Round, slated to be launched in Seattle at the end of November, its time for current U.S. trade representative Charlene Barshefsky to begin thinking about bait. She should abandon any pretense of assembling an idealistic negotiating agenda based on what should be done to improve the functioning of the world trading system. What is needed for Seattle is a hard-headed agenda of goals to satisfy politically well-connected U.S. industries and interest groups. It is their support that will prove critical three or four years from now in getting Congress to go along with the results of the upcoming talks.

"You can't be passive in this process," said Geza Feketekuty, a professor of commercial diplomacy at the Monterey Institute of International Studies in Monterey, California and a former senior U.S. trade official. "You can't build a proactive political coalition in that way."

The success of international trade agreements has always been a function of the political support they muster. The last major talks, the Uruguay Round that began in 1985, were politically wired from the start. The agenda included creating strong, new safeguards for intellectual property— assuring the support of the powerful film, record and software industries— and developing rules of the road for important service industries— such as banks and telecommunications firms.

The current agenda for the Millennium Round lacks such obvious appeal on Capitol Hill. Farm trade liberalization is no longer a sure political winner. The agricultural community, which recent administrations have counted on to help muster Congressional support for trade pacts, is now divided, with many growers fearing that the costs of further opening the U.S. market will outweigh the benefits of market opening abroad. And administration plans to develop international rules governing electronic commerce, a virgin field involving some of the economy's biggest companies, may hurt rather than help the trade round politically, because U.S. industry remains divided over what it wants.

The Seattle agenda needs some old-fashioned goodies— tariff cuts for politically-connected industries— that have been the foundation of international trade agreements for 50 years. Because past negotiations have been so successful, average tariffs are already low. But the chemicals and auto parts industries still face some high duties. And the administration could expand on the existing Information Technology Agreement, which eliminates tariffs on semiconductors and computers.

"Don't underestimate the political punch that will come from addressing the tariffs on manufactured products," said Calman J. Cohen, president of the Emergency Committee for American Trade, a coalition of the countries biggest exporters.

An effort to remove government constraints on energy services— extraction, processing and shipping activities— would garner likely support from companies like Enron and Exxon, that could prove powerful allies in any future Congressional debate.

The administration should also build on widespread business interest in China's joining the World Trade Organization (WTO) by promising to use the new round to expand China's existing commitments to market liberalization, such as getting Beijing to allow majority ownership of securities firms— a goal that would peak the interest of a powerful U.S. constituency.

Labor, environmental and consumer issues must also be on the agenda if the next administration is to get fast track negotiating authority to finish the round and to avoid a bitter Congressional fight on implementation of its results. At the very least the administration has to insist on opening up the WTO to greater participation by non-governmental organizations and to provide some sop for labor, possibly a ban on all trade in products made by children. And it may want to portray the negotiations as the "Consumers' Round", by coming out strongly for privacy in electronic commerce and for labeling of additives in food products, both sure fire winners among voters.

Laying the groundwork for a successful trade negotiation is like any other effort to get something done in a democracy, its one-tenth substance and nine-tenths politics. Reflecting that reality, the political choices the Clinton Administration makes in the next few months on the goals of the Millennium Round— hopefully aided by a Congressional resolution on negotiating objectives later this fall— will do more to determine the talks' success or failure than anything that is likely to occur in the actual negotiations over the next few years.

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