The Bush administration took an important step yesterday toward its goal of striking a slew of free-trade agreements with countries around the world, as Trade Representative Robert B. Zoellick announced that the United States and Singapore had "completed the substance" of negotiations for a trade deal.
The accord with Singapore -- which was final except for one financial issue -- is the first of many the administration intends to forge in months and years to come. Having won special authorization in August from Congress giving it greater power to negotiate trade pacts, the administration is pressing to complete long-running talks with Chile, and it is also pursuing discussions with five Central American nations, Morocco, and several southern African states -- not to mention its high-priority aim of establishing a free-trade zone among the 34 democracies of the Western Hemisphere. Last week, Zoellick added Australia to the list of countries with which the United States will negotiate.
Most of these deals, which are subject to congressional approval, are unlikely to have a major impact on the gigantic U.S. economy; given the amount of additional trade at stake; Singapore, for example, is a city-state of more than 4 million whose dynamic economy is already largely open.
But Washington is aggressively pursuing bilateral and regional trade talks nonetheless, both to cement ties with strategically important nations and as part of its overall trade strategy. The administration's zeal has stirred unease among some trade experts and policymakers, who contend that special arrangements are multiplying so rapidly that they threaten to undermine the global trading system supervised by the World Trade Organization.
The rules of the WTO allow its 144 member countries to form such pacts, the most prominent examples of which are the European Union and the North American Free Trade Agreement. But critics say that bilateral and regional deals create bureaucratic complications that discriminate against goods and companies from countries that aren't members. Another fear is that the efforts to strike more specialized pacts will divert energy and attention from the Doha Round of trade talks, an ambitious drive to reach an agreement by 2005 for lower barriers among all WTO member nations.
At a news conference in Singapore yesterday, Zoellick strongly rejected such concerns, reiterating his long-held view that Washington should pursue negotiations on bilateral, regional and global levels simultaneously. His strategy, which he calls "competitive liberalization," is based on the belief that countries are more likely to accept the terms of broad, multilateral trade agreements -- in particular the Doha Round -- if they are worried about being excluded from narrower deals.
"While I appreciate those economists that are fully committed to the multilateral system, most of them have never had to negotiate anything," Zoellick said. "And so I firmly believe that a process of trying to have competitive liberalization will enhance our ability to get Doha done."
Zoellick also dismissed suggestions that the sheer number of negotiations poses a problem. "We can walk and chew gum at the same time," he said, in a humorous reference to Singapore's ban on the sale of chewing gum.
His position was heartily endorsed by Singaporean officials, who along with the Japanese have become enthusiasts for free-trade agreements after years of resisting them. "Our bilateral free-trade initiatives have created a certain competitive dynamic in Southeast Asia toward trade liberalization," said George Yeo, Singapore's trade and industry minister.
Asked whether the pact will enable U.S. chewing-gum firms to sell their wares in Singapore, Zoellick said, "as you'll see in the final text, there has been some additional opening on that issue," but he declined to elaborate, noting that the text is not yet public.
The one outstanding issue concerns whether Singapore would have the right to prevent foreign firms from withdrawing capital in the event of a financial crisis. "I believe we should be able to resolve this in good time," Yeo said.
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