Tuesday, April 18, 2006

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So I'm thinking Doha is dead

This morning George W. Bush announced a new director of the Office of Management and Budget:

President Bush today selected U.S. Trade Representative Rob Portman to be the new director of the Office of Management and Budget, moving quickly to revamp his team now that his new chief of staff is in place....

Bush, at a morning announcement at the White House, said Portman would "have a leading roll on my economic team."

As Portman's replacement as trade representative, Bush chose deputy trade representative Susan Schwab, a veteran from the administration of George H.W. Bush who has also worked in the private sector for Motorola, among other companies. Schwab was president and chief executive officer of University System of Maryland Foundation before joining the current Bush administration.

Here's a link to the transcript of the announcement.

Portman has done an excellent job at USTR for the brief time he was there, and his move to OMB might be, on the whole, a good thing for fiscal policy. That said, Bush and Bolten have decided to switch teams at USTR in the weeks before various deadlines for the Doha round of trade talks come up. This is a bad, bad sign for the likelihood of those negotiations to succeed.

UPDATE: Many commenters point out that Schwab will likely preserve continuity on trade talks. This may be true, but the optics look very bad to other countries and to Congress.

Two FT reports -- one by Alan Beattie and one by Caroline Daniel -- make this point.

Beattie first:

Rob Portman’s unexpected removal from the post of US trade representative on Tuesday evoked concern among governments and trade experts that the US was downgrading the importance of the so-called “Doha round” of World Trade Organisation talks....

Peter Mandelson, the EU trade commissioner, issued a barbed statement that qualified praise of Mr Portman and Susan Schwab, currently deputy trade representative and Mr Portman’s nominated replacement, with implied criticism about the timing of the move. “I have very much enjoyed working with Rob Portman and I shall be sorry to see him go from this post,” Mr Mandelson said. “We will of course manage without him, but at this stage in the round, it would have been easier to manage with him.”

Privately, other EU officials were less diplomatic, suggesting that the move sent out a clear signal that the US regarded the Doha round as dispensable. “On the face of it, this looks like bad news for the talks at a time when negotiations are at a fragile point and it is bound to lead to further uncertainty,” one official said. The official said that the one bright spot could be that the US would use the change of personnel as cover to moderate its demands for wholesale farm liberalisation in the Doha round....

Lobbyists and trade experts in Washington said that Ms Schwab was technically very well qualified to succeed Mr Portman. But several said that although she had good contacts on Capitol Hill, she would not enter the job with the same political influence as her predecessor....

Tom Buis, president of the National Farmers Union, said: “To me it sends a signal that things aren’t moving as smoothly as anticipated on the trade deal. It may be a realisation that Doha is not going to be the success that the administration hoped it would be.”

The European carping should be taken with a small grain of salt -- they'll jump on any excuse to evade blame for Doha collapsing.

Now Daniel:

The US on Tuesday named Rob Portman, the politically savvy trade representative, to head the White House budget office, a move that signals growing concern over runaway federal spending and a downgrading of trade policy in the administration’s second term....

“There is an awful lot of negativism now about the prospect of trade liberalisation and a backsliding on trade,” a leading Republican strategist confirmed. “There is a sense of giving up on bilateral trade deals and on Doha.”

Clay Shaw, a Florida Republican and chairman of the House Ways and Means Trade Subcommittee, told Congress Daily: “If the Doha round is doomed for failure ... this may be a case of looking for where [Portman’s] talents, which are extraordinary, can best be used.”

posted by Dan on 04.18.06 at 10:57 AM


That's about par for the course w/ recent WTO talks. Frankly, I'm not sure the politics of the agenda will allow much more progress. Once we get back trade in goods and some services, we're in sacred cow territory.

posted by: jpe on 04.18.06 at 10:57 AM [permalink]

that should be "Once we get past trade in goods...."

posted by: jpe on 04.18.06 at 10:57 AM [permalink]

I've been fretting over this since Delay left. Without him and Bill Thomas it seems like it'll be tougher to get close trade bills through Congress.

Rob Portman has been a serious star of the administration and is still one of the politicians I'd most like to have lunch with. That said, Schwab appears to have been the person running much of the WTO preparations, so it's not like she'll take much time to get up to speed, and she seems to be sound (although it's tough to tell just from press conferences and such). Is she less impressive than I'd hoped? Or is it just about not changing horses in mid-stream?

posted by: James of England on 04.18.06 at 10:57 AM [permalink]

If Doha does die, it won't be because of this.

Sue Schwab actually has a much deeper trade background than Rob Portman does; she has been well known within the international trade community going back to her days as Sen. Danforth's trade sherpa on the Finance Committee in the late 1980s. She is very, very good, which probably won't help rescue the Doha round but could help us get through whatever comes next.

Incidentally, it's at least a little bit interesting that the rising stars in this allegedly most ideological of conservative Republican administrations are a former Danforth person (Schwab), a former Packwood person (Josh Bolten), and the former moderate candidate to succeed Bill Gradison as Congressman for the Ohio 2nd (Portman).

posted by: Zathras on 04.18.06 at 10:57 AM [permalink]


One could just as easily conclude that Bush sees that DOHA is going nowhere with the current US negociating team and decided to shake it up in an effort to get movement. Or that moving Portman and appointing his successor is a purely neutral move on Bush's part (which is the most likely hypothesis).

The trouble is that when one constructics syllogisms which start with 'Bush is the devil' ones conclusions tend to be depressingly similar.....

posted by: Don S on 04.18.06 at 10:57 AM [permalink]

Well, I hope he'll have a leading "role", not a leading "roll".

posted by: Jim Miller on 04.18.06 at 10:57 AM [permalink]

I love a snarky post pointing out a typo that contains its own mistake as well. (Periods go inside quotes Jim.)

Don't waste space on the board with these posts.

posted by: RZ on 04.18.06 at 10:57 AM [permalink]

We need to clean up the mess from NAFTA and other agreements before we move on with this.

Of course it could be no one in the ogvernment or academia much cares about American blue collar workers.

"Do you need a cart today?"

posted by: save_the_rustbelt on 04.18.06 at 10:57 AM [permalink]

Yeah, that NAFTA deal really worked out well for all involved. All I can say is, Thank God this crap is crashing.

posted by: Dan on 04.18.06 at 10:57 AM [permalink]

Sounds like things will get much worse before they get better.

posted by: Trade-Monkey on 04.18.06 at 10:57 AM [permalink]

RZ - Actually, it's not a mistake. It's a different style, common in Britain but not in the United States. It's sometimes called the "logical" style of quoting. I have been using it ever since reading Eric Raymond's "The New Hacker's Dictionary", which makes a good case for the style, especially in technical writing.

As for mentioning "roll", I did that just because I chuckled at the picture it brought to my mind -- and hoped that others would be as amused as I was.

posted by: Jim Miller on 04.18.06 at 10:57 AM [permalink]

Schwab isn't just a former Danforth person. She's a former Carter person (maybe more precisely a Strauss person).

Trade Policy Officer, U.S. Foreign Service, American Embassy, Tokyo, 1979-81;
U.S. Trade Negotiator, Office of the U.S. Trade Representative, 1977-79.

Hopefully she'll be more Volcker than Mondale.

Sadly, I've not been into trade law long enough to know if her book on the negotiation of the Omnibus Trade act of 1988 is a big deal. Has anyone read it? Is it good? Should I read it?

posted by: James of England on 04.18.06 at 10:57 AM [permalink]

Jim, if it's any help, I read it in the light you meant it.

posted by: James of England on 04.18.06 at 10:57 AM [permalink]


We need to clean up the mess from NAFTA and other agreements before we move on with this.

Of course it could be no one in the ogvernment or academia much cares about American blue collar workers.

"Do you need a cart today?"

Posted by save_the_rustbelt


There are a very few limited "wrongs" with NAFTA.

There are a great many SPECIAL INTERESTS and lobbies that see "shitting on the deal" as a way to generate cash for their cause (mostly for their own pockets).

About only the negative would be in strategic war materials. But these when manufactured outside the USA, are made in China not within NAFTA.

As for Doda, the Agricultural lobbies of The Americas and Europe will not give ground. It is dead and will likely remain dead for next 20 years

posted by: Luc_V_Autour on 04.18.06 at 10:57 AM [permalink]

Luc, I was speaking to a Democrat running for Congress a couple of weeks ago who said that the NAFTA was a poorly worded treaty because it forced Mexico to compete with cheap chinese labor, so made Mexico poorer. Educated person (law degree, and generally smart), ex-banking exec, very pro-business in a lot of areas, totally unable to apply basic economics to the NAFTA, totally unaware of the details of any of the post NAFTA FTAs. Happens all the time. Somehow NAFTA has become like the JFK assassination, an area where everyone who talks loudly is crazy.

Fortunately, like the shooting, there's not much practical to be done about it. Even if the PRD wins in July, there's no real movement to renegotiate NAFTA. Congress isn't going to repeal it. The other FTAs generally have different debates, so there's no need to try to persuade people not to be crazy about the NAFTA. Some FTAs are about people much poorer than Mexicans (the 5 states of the South African CU, CAFTA), so the argument that protectionist tariffs designed to keep 'em out are unbearably cruel is easier to make. Some FTAs are about Arabs, so the need to build bridges is clearer (the Bahrain FTA passed the House 327-95, even after people had said that CAFTA showed FTAs were dead). Some FTAs are with wealthier countries (the Australian FTA went through by a landslide without a whisper, the Canadians got theirs pretty easily, the Koreans may have some more difficulty, but it seems to be easier for non-economists to accept that trade with economic peers is not about exploitation). Some are adaptations of existing schemes, like the dying Andean Trade Preference Act, which might not become FTAs with Colombia, Peru, and Ecuador. I've a fear that these might be the first US FTAs to fall in Congress, but I think the odds are still on their succeeding since the US isn't giving up much (it already offers preferences) and it seems hard to believe there's many votes in protecting Peruvians from being able to give jobs to Americans. Korea's also a little scary (it's big, and a lot of people can't tell the difference between Korea and China), and it's always possible that Bahrain only avoided trouble because we hadn't had the ports scandal to remind us that we hate Arabs, but I still can't see Bahrain getting 327 and the UAE failing.

As for Doha, the negotiation strategies used mean that most of the GATT rounds have looked like failing until they were nearly over. This looks worse than most, but we're not really in a position to see who is bluffing. Just need to keep working those worry dolls and hope for the best. ;-)

posted by: James of England on 04.18.06 at 10:57 AM [permalink]

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