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| Prepared by: | Lee Hudson Teslik |
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Farm subsidies are a sticking point in trade negotiations. (AP)
If Democrats take back both houses of Congress in November, one of the first legislative casualties could be President Bush’s power to negotiate free trade agreements without congressional review. That power, known as fast track trade promotion authority, was granted to Bush in 2002 amid bitter congressional debate and expires in July 2007. Under a Democratic Congress it seems unlikely to be renewed; asked if a Democratic-controlled legislature would extend Bush’s fast track authority, former Democratic Congressman Tom Downey told the Washington Post, “There's not a chance in hell.”
Beyond simply denting the president’s power, the evaporation of trade-promotion authority could sound a death knell for the sweeping global trade reforms targeted by the World Trade Organization in 2001 in Doha, Qatar. After five years of false starts, negotiations in Doha were suspended indefinitely this past July. Experts say the U.S. delegation was partly to blame for the breakdown, for resisting a deal that would have set a strict limit on its agricultural subsidies. In an interview with CFR.org, Richard T. Crowder, the chief agricultural negotiator for the U.S. Trade Representative, said EU member states and countries in the developing world needed to improve access to their agricultural markets for the United States to extend a more generous proposal. But Rep. Jim Kolbe (R-AZ) lambasted the American tendency to cling to farm subsidies in a Washington Post op-ed: “It makes zero sense to wipe out the benefits of U.S. foreign assistance in order to keep paying our farmers to be inefficient.”
The president’s fast track authority is seen as an important tool in the effort to push through a meaningful Doha agreement, as this Business Roundtable briefing explains. Without it, any proposal agreed to at Doha would have to be approved by Congress—always a tall order given America’s divided legislature. Now, with the sands of American politics shifting and the new Congress almost certain to be more protectionist than the current one (even if the Democrats don’t regain control), the overwhelming sentiment is that Doha’s window of opportunity may have come and gone. “At best it looks likely to be years before the sun rises again on the WTO talks,” according to the Economist .
With broader global talks mothballed, the United States seems set on a new tack—bilateral free trade agreements, particularly in strategically important areas like the Middle East, Pacific Rim, and Latin America. This Backgrounder outlines these efforts, and discusses their broader implications on the Doha negotiations. There is heated debate, however, on the best course forward. A CFR Critical Policy Choice outlines trade policy options, and questions whether lowering trade barriers is the only prudent option. But another report, the 2006 Index of Economic Freedom, which was co-produced by the Heritage Foundation and Wall Street Journal, argues countries that are friendly to free trade have higher per-capita growth than protectionist nations.
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