Thursday, December 12, 2002

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THE PATH TO FREE TRADE: Among trade policy wonks, there is a ongoing debate about whether the pursuit of bilateral or regional trade liberalization augments or diverts efforts to liberalize trade at the global level. This question comes up today because the U.S. just announced a free-trade pact with Chile. This comes after last month's announcement that the United States and Singapore had "completed the substance" of a free-trade arrangement. This is an ongoing strategy -- the story notes, "U.S. negotiators turn next to discussions with five Central American nations, Morocco, Australia and several southern African states."

This U.S. strategy has some international policymakers worried that these bilateral deals are slowing momentum for the Doha round of WTO negotiations. However, the evidence points to the opposite conclusion -- this is a crafty way for Bob Zoellick to push trade liberalization on multiple fronts -- what he and Fred Bergsten call competitive liberalization.. The Post story notes, "Some trade experts say the burgeoning number of bilateral deals is undermining the WTO, but the administration's theory is just the opposite. According to Zoellick, countries will be more willing to join broader deals if rival nations sign free-trade pacts with Washington, because they will fear losing access to the lucrative U.S. market."

There's no question that Zoellick's strategy is beginning to pay off. Following a meeting between Bush and President Lula of Brazil, the Free Trade Area of the Americas just gained momentum. [Sure, it works in practice, but does it work in theory?--ed. Yes, it does! Click here to read more.]

One suggestion -- add Turkey to the list of countries for such a deal. Despite U.S. pressure, I'm dubious that the European Union will ever admit the country as a full member. Surely, if Jordan qualifies for a free-trade agreement with the U.S., Turkey -- as a more democratic regime, a more reliable ally, and a more market-friendly economy than Jordan -- deserves the same treatment. For both economic and strategic reasons, if the EU falls down on the job, the U.S. has to be prepared to step up.

posted by Dan on 12.12.02 at 10:39 AM