When it comes to trade policy, Senator John Kerry and President George W. Bush share many similarities. But differences do exist. If elected president of the United States, what trade policies is Kerry likely to push? What trade deals is a Bush second term likely to generate? And how is either candidate likely to impact international business?

John Kerry’s Senate Trade Record

As a four-term Democratic senator from Massachusetts, Kerry has compiled an impressive record of support for free trade. He voted in favor of every major trade bill to come before Congress: the Uruguay Round Agreements Act, the North American Free Trade Agreement, normal trade relations (NTR) with China and then permanent NTR in 2000, more generous market access for imports from Africa and the Caribbean, and trade promotion authority for Presidents Clinton and Bush. He was one of a minority of his party in the Senate to reject steel quotas in 1999.

Yet, Kerry’s record on trade has its blemishes. He voted for the huge farm subsidy bill in 2002 that President Bush signed. He voted for more restrictive language on labor, environmental and human rights standards in trade agreements. He voted to make it more difficult to reform America’s much abused antidumping laws in World Trade Organization negotiations. But those deviations aside, Kerry’s record in Congress has been pro-trade, especially for a Democrat.

Election Rhetoric?

As a presidential candidate, however, John Kerry has staked out a more skeptical line on trade. While paying lip service to the need to trade, he has ratcheted up his call for “enforceable labor and environmental standards at the core of every trade agreement,” skipping over the fact that most developing countries in the WTO have made it perfectly clear they will not sign agreements that contain such language.

In his July speech, Kerry said, “We will trade and compete in the world. But our plan calls for a fair playing field”—whatever that would mean in practice—“because if you give the American worker a fair playing field, there’s nobody in the world the American worker can’t compete against.” To deliver that “fair” playing field, Kerry has proposed reviewing and even re-opening existing agreements and aggressive use of the Super 301 trade law that threatens other countries with unilateral U.S. sanctions. To slow “outsourcing,” he wants to impose new regulations on U.S. companies and restrict government contracts to companies that promise to do all the work in the United States.

Equally disturbing has been Kerry’s attacks on the patriotism of his fellow Americans. He’s described executives who have tried to control costs by moving some operations overseas as “Benedict Arnold CEOs”—as if trying to stay competitive in global markets is somehow un-American. He’s promised to “appoint a U.S. Trade Representative who is an American patriot and who will put American jobs first”—as if past and present USTRs have not been good, decent Americans committed to the same bi-partisan, post-war trade expansion that has brought so much peace and prosperity to the United States and its trading partners.

His choice of Sen. John Edwards of North Carolina as a running mate only reinforces this retreat from free trade. In contrast to Kerry, Edwards voted in favor of steel quotas and against opening the U.S. market to apparel imports from Africa and against final passage of trade promotion authority. Edwards ran against NAFTA during his 1998 campaign and even voted against free trade agreements with Chile and Singapore last summer. (Kerry missed those votes.) The one bright spot on the Edwards record has been his support in the past for normal trade relations with China.

What Would President Kerry Do?

What would all this mean for trade policy in a Kerry administration? Probably not as much as the campaign sound bites indicate. The anti-trade noise generated in U.S. elections is always worse than any legislation the politicians finally enact. John Kerry’s swipes at trade are popular with the Democratic Party’s core constituencies of organized labor and environmental activists, but trade has simply not been a decisive issue in recent presidential or congressional campaigns.

Nonetheless, trade policy would change under a Kerry presidency. If he wins what everyone expects will be a close race, his anti-trade constituencies will want to collect on their victory. The price may be fewer bilateral and regional trade agreements, and probably none with less developed countries where labor and environmental standards would be an issue. The first casualty would likely be the Central American Free Trade Agreement, which Kerry has vowed to either renegotiate or veto.

Fortunately for the global trading system, economic and foreign-policy realities, as well as what is likely to be another Republican Congress, will probably block any sharp turns toward protectionism by a Democratic administration.

President Bush on Trade

As U.S. president, George W. Bush speaks often of the benefits of trade for the U.S. economy and its broader foreign policy interests. But his administration has also retreated from free trade principles in the face of political pressure, casting a cloud of uncertainty over the trade policy of a second Bush term.

Nowhere has this tension between principle and politics been more evident than in U.S. trade with China. The Bush administration strongly supported China’s entry into the World Trade Organization, and has worked constructively with China on a range of trade issues. It rejected a string of Section 421 requests by U.S. industries to restrict imports of Chinese-made wire hangers, pedestal actuators and brake parts.

The Bush administration also dismissed two Section 301 petitions that would have imposed tariffs on Chinese imports in retaliation for alleged labor abuses and currency manipulation. The president’s able trade representative, Robert Zoellick, negotiated settlement of a WTO dispute over China’s tax treatment of imported semiconductors. During the administration’s tenure, two-way trade between the United States and China has continued its spectacular growth, from $116 billion in 2000 to $181 billion in 2003.

And yet President Bush has not been immune to protectionist pressures. He imposed special safeguard duties on Chinese-made brassieres, dressing gowns and knit fabrics. His Commerce Department has rejected arguments to designate China a “market economy” for purposes of antidumping calculations. And a steady parade of administration officials have pressured China to revalue or float its currency to supposedly boost U.S. exports to China, which have already grown by 75 percent since 2000.

The president overlooked his own lapses from free trade in a recent campaign speech in New Mexico, declaring, “Good public policy and good trade policy say to places like China and elsewhere, open up your markets. Ours are open. You open up yours. We can compete with anybody, anytime, anyplace, so long as the rules are fair.”

Like his policy toward China, President Bush’s overall record on trade is one of unsteady progress. On the plus side, the administration and USTR Zoellick were instrumental in launching the Doha Development Round and in keeping it alive with serious proposals to liberalize trade in industrial products, services and farm commodities. The administration persuaded Congress to pass trade promotion authority after an eight-year lapse, allowing the president to negotiate market-opening agreements with Singapore, Chile, Australia, Morocco, the Dominican Republic, and five nations in Central America.

On the minus side, President Bush in 2002 imposed temporary tariffs as high as 30 percent on imported steel through the Section 201 safeguards provision. He also signed the trade-distorting farm bill that year that locked in subsidies at a level 80 percent higher than under the previous farm bill. Besides being costly to taxpayers and consumers alike, the farm bill undercuts the U.S. government’s moral authority to argue for free trade in other countries. So the Bush record on trade can be described as one of good intentions and genuine progress compromised by tactical retreats in the face of political pressure.

Fortunately, President Bush seems to have rediscovered his free trade principles on the campaign trail. He speaks openly of the blessings of free trade and the dangers of protectionism and isolationism. He has been eager to sharpen the differences between the two parties on trade rather than blur them.

Business in the Next Four Years

A huge piece of unfinished business for the next president will be the ongoing Doha Development Round. A comprehensive agreement could be hammered out as soon as December 2005 at the planned ministerial meeting in Hong Kong. Whoever is president would then need to shepherd any final agreement through Congress before trade promotion authority expires in 2007.

Either a Bush or Kerry administration could bring the round to a successful conclusion, but Bush would probably have more flexibility to negotiate real limits on antidumping abuses.

Where Bush differs most from Kerry on trade would be in more aggressively seeking bilateral and regional agreements. Nowhere will the contrast be sharper than on the Central American Free Trade Agreement. The Bush administration negotiated the agreement and strongly supports it in its current form, while Kerry has pronounced it unacceptable because it supposedly lacks adequate labor and environmental protections.

A re-elected President Bush would also pursue a U.S.-Thailand Free Trade Agreement, while a President Kerry would be more likely to heed the objections of the United Auto Workers union, which fears competition from the Thai light-truck industry.

No matter who wins in November, it is unlikely that the United States will deviate much from its post-war commitment to a more open global trading system. But judging by both his rhetoric and his record, George W. Bush would be more likely to build and expand upon that legacy than his opponent.

About The Author Daniel Griswold [Full Bio]

Daniel Griswold is senior research fellow and co-director of the Program on the American Economy and Globalization at the Mercatus Center.




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