Almost all of these
"free trade" arrangements are partial-sector or
"low quality" deals, and all fly in the face of
a supposed WTO "rule," known as GATT's Article
24. That rule allows for regional and bilateral
trade agreements -- so long as they cover
"substantially all" trade among the partners.
But that of course is not what is going on here,
and it certainly does not apply to last week's Asean-India FTA.
In that arrangement
India's Commerce Minister
Kamal Nath played the
hero. The Telegraph in Kolkata reported that Mr.
Nath "persuaded Asean that India should not have
to cut duties at all on 489 items, and only
partially on 606." Moreover, any tea, coffee or
pepper that originates in the Asean states will
face sufficiently high Indian duties to assure
that none gets through!
While Mr. Nath may
be today's Indian hero, that was hardly his
image in other capitals during the now-stalled
WTO negotiations earlier this summer. Along with
Brazil's Foreign Minister
Celso Amorim, Mr. Nath
had long insisted that a successful Doha Round
would require severe European Union and U.S.
cuts both in their agricultural subsidies and
their farm-import restrictions. That posed high
hurdles to Washington and Brussels, and EU Trade
Peter Mandelson was sharply
criticized, especially in France, when he
ultimately agreed to significant changes in EU
Likewise in the
U.S., where Trade Representative
needed to consult very closely with
Congressional leaders to get their support for
farm-sector reductions. To his credit, President
George W. Bush then vetoed this year's
bill, precisely because of its high agricultural
his veto was quickly overridden
by a Congress heavily influenced by America's
always-powerful farm lobbies.
Those European and
American domestic factors, and similar ones in
India and Brazil, seemed at the time to be the
main causes -- along with the WTO's unwieldy
size -- of the stalled Doha Round. But then
Brazil gave its assent to the farm-sector cuts
to which the U.S. and the EU had agreed, a
development which appeared to leave only India
standing in the way of a successful outcome.
That's when China --
which until this year and since its WTO
accession had kept its head down in these
negotiations -- entered the fray. Allegedly
acting as "spokesmen" for the WTO's developing
nations, though many of the poorest of the poor
were decidedly unhappy with their "leader's"
decision, China joined with India to oppose a
Doha deal. That Doha collapse seemingly set the
stage for last week's FTA announcements in
Singapore, although Prime Minister Lee Hsien
Loong dutifully reminded everybody that a
"rules-based" global system is still the best
Were those India-Asean
announcements in fact the inevitable consequence
of the seeming Doha failure? Not quite. Instead,
the desire for more "small-scale" deals might
have been the cause of Doha's failure.
India appears to have decided its best option
may be to bargain hard at smaller, bilateral,
negotiating tables. The Telegraph reported that
"when he became commerce minister," Mr. Nath set
a goal of "60% of India's foreign trade [that]
would be covered by FTAs."
In that light, his
intransigence in the Doha talks' final hours did
not grow primarily from his concern with the
electoral power of India's poor farmers. It grew
instead from his belief, as the glowing
Telegraph editorial put it earlier this week,
that FTAs must be a core part of India's trade
policy: "He sabotaged the WTO negotiations
because he was so intent on using India's trade
barriers as bargaining chips in negotiating FTAs."
Quite likely none of
this could or would have happened had the U.S.
retained its moral and political weight in the
global economy and in world affairs more
generally. It was, after all, the U.S., led by
Secretary of State Cordell Hull in the 1930s and
'40s, which had insisted on the postwar
multilateral trade system and kept it going
through much of the postwar era. Hull's cause
was not only open trade as a path to many
nations' prosperity, but even more important as
a key means by which to avoid future conflicts
That America is no
more, at least on present indications. In this
era, as former Treasury Secretary and Harvard
President Lawrence Summers has recently reminded
us, "much of the momentum in the global economy
is coming from countries . . . pursuing economic
strategies directed towards wealth accumulation
and building up geopolitical strength rather
than improving living standards for their
From all this
America has been distracted, and in the
Asia-Pacific region in particular it has not
paid attention to its own vital political
interests. Indeed, as former Japanese Finance
Minister and Prime Minister Ryutaro Hashimoto
warned Henry Kissinger a decade ago, if America
"expands NAFTA, blockading itself within the
North and South American continents . . . we
will be forced to focus on Japan as an
Asia-Pacific nation . . . I hope you won't push
us that far." That in fact is what has
transpired, as first Japan, then China, and now
India, Asean and Australia, have each looked to
their "own" interests.
Those are the
implications and warning signs that emanated
from last week's "free trade" announcements in
Singapore, and they must not be ignored. Yet
from 2000 to 2007, even as the dollar-value of
America's global export growth more than doubled
in those years, in the Asean region they grew by
only 30%, and to Japan -- amazingly -- they
declined. Those export-centered facts lend
support to warnings by former Secretary of State
James Baker and others that lines are being
drawn "down the center of the Pacific" from
which the U.S. is being excluded. Last week's
Singapore meetings show that troubling process
- * -
By BERNARD K.
GORDON | FROM TODAY'S WALL STREET JOURNAL ASIA.
Sept. 5, 2008.
classroom use only.
Mr. Gordon is professor emeritus of political
science at the University of New Hampshire. His
most recent book is "America's Trade Follies:
Turning Economic Leadership into Strategic
Weakness" (Routledge, 2001).