Think-tanks and their influence in the trade policy agenda

Transcription

1 USA trade policy Eliza Patterson Jakobine Janucek 03/10/2010 Think-tanks and their influence in the trade policy agenda The Brookings Institution and the Heritage Foundation, and the debate of the WTO standstill Introduction In democracies, several actors besides the political representatives are involved in the policy making process. Among those are NGOs, consumer protection organizations, industrial and other lobbies and also the so-called think tanks. These latter institutions are normally independent organizations, delivering policy analyses, forecasts and recommendations. Especially in the United States of America, where the policy environment, despite political bipartisanship, is very diverse these players have traditionally been present at all stages of the policy making process. But what is their real impact on the final policy decided upon? This paper will illustrate the answer by looking into a recent example, this of the US approach to the current World Trade Organization's (WTO) Doha Round. From November 20 th to December 2 nd 2009 was held the WTO s Seventh Ministerial Conference in Geneva. The general theme for discussion was The WTO, the Multilateral Trading System and the Current Global Economic Environment. Though this meeting was not intended as a real negotiation round, many hoped (in vain) for it to produce a substantive assessment of where the round stood and how it could possibly proceed. According to the Director-General Pascal Lamy, this very large topic should offer a platform for ministers to review the functioning of this house, including the Doha Round, and an occasion to send a number of strong signals to the world with respect to the entire WTO waterfront of issues from monitoring and surveillance to disputes, accessions, Aid for Trade, technical assistance and international governance. What can be the US-American position on this revision? We will take a look on the reactions of two of the most important US-think tanks, party-affiliated: The Brookings Institution (close to the ideas of the Democratic Party) and the Heritage Foundation (close to the Republican Party). When it comes to perceived influence, the Heritage Foundation is by far leading: 42% of interviewed people consider it as the single most important think tank in the United States, followed by the Brookings Institution with 28% 1. Both institutions edited a publication on this topic, in December, soon after the conference. Referring to these publications, we will glance at the possible outcome and influence of think tank work on trade policy topics can be. 1. International trade and the WTO a. Why international trade is domestically difficult for politicians Trade in general is an essential yet very sensitive topic in politics. It is linked at the same time to several, international and domestic, issues: to international politics and development, to 1 Abelson, D. E. Do Think Tanks Matter? Assessing the Impact of Public Policy Institutes. Kingston and Montreal: McGill-Queen's University Press, P.94

2 social welfare goals, to labor questions and the interests of national or multinational enterprises. Sometimes the interests of the different stakeholders are conflicting. Trade, and free trade even more, makes the world s overall welfare and gains increase. Yet, the distribution of the benefits is neither automatically equal nor just. First, not all countries have get the same advantages or gains out of the same trade deal or even trade in general. Secondly, within one single country, the impact of a certain trade deal or even trade in general is not the same for all professional or social groups. For example, low-skilled local workforce in the US might loose out in a trade deal with China whereas a the directors of the multinational firm which has formerly been employing these domestic workers, would make important profits for their firm and get richer themselves. The specificity about trade in the domestic discourse and impression is virtually all benefit from international free trade in some way (easier access to more products at this at the most competitive price), but without noticing notable are only the disadvantages people get through trade (e.g. losing one s job) even though they are more indirect. As a consequence, people often think of free trade as harmful to their personal life. This is becoming an issue as politicians have to take such views into account in democracies, where voters and elections decide about their political subsistence. Therefore, lobbying for free trade is very important, but also quite difficult. Many public opinion groups and NGOs have adopted a negative point of view towards open trade, and often they are very active and innovative in promoting their vision. One of the current burning issues is the WTO reform, implying important evolution for international trade. b. The WTO and the need for reform The WTO reform is a crucial issue for world trade in general. It is also interesting because it mixes economical problems with the larger question of shared and just world governance. Many different current issues are somewhat related to WTO responsibilities, and the organization could strengthen its relevance in international politics by taking a firm stand on these, which would give it more leverage for continuing the Doha round negotiations. To say it with Uri Dadush s words: Urgent issues have come to the fore with the crisis, including government procurement and financial regulation, and these are issues on which the WTO could be making major contributions 2. Indeed, in times of international economic crises the WTO ought to become even more important, as countries eager to preserve their own economies might cede to protectionist measures and the overall tendency to cut back on free trade. This would consistently weaken a valuable and necessary instrument of international economic co-operation. Countering the growing opposition to further and deeper multilateral trade liberalization in industrialized countries is one of the first challenges for WTO reform. The developed countries have been the motor force for trade liberalization since the signature even of the GATT in years later, when founding the WTO, the input also came very much from the developed world. Today they are more and more reluctant, especially as agriculture and the abolition of subsidies in this sector are high on the agenda. This topic happens to crystallize the confrontation of US domestic interest groups, settling the stake on agriculture vs. services industry interests. For the US, according to the official conception, 2 Dadush E., WTO Reform: The Time to Start Is Now, Policy Brief, The Carnegie Endowment for International Peace, September 2009

3 The World Trade Organization (WTO) continues to serve as the multilateral foundation of U.S. trade policy, playing a vital role as a vehicle for ensuring the ability of American farmers, ranchers, manufacturers and service providers to pursue new economic opportunities while also enabling global growth and development. The United States continues to operate in a leadership role at the WTO, working to ensure that trade fulfills its potential as a powerful contributor to the revival of the global economy and the renewal of growth in which benefits are broadly shared. The WTO provides a forum for enforcing U.S. rights under the WTO agreements to ensure that Americans receive the many benefits of WTO membership. The WTO Agreements also provide a foundation for high standard U.S. bilateral and regional agreements that make a positive contribution to a dynamic and open global trading system based on the rule of law. 3 In this sense, the WTO seems to be seen as a vehicle for promoting US interests within a larger framework of global economic growth, yet to be re-launched. This official conception does not focus on reform of the organization as crucial for advancing the Doha Round the international trade liberalizations as a whole. It appears that the current US administration, which since having taken office in late 2009 has been rather timid on trade so far, is not interested once again in making trade or the WTO improvement one of its political battleships. Changing nothing and keeping a winning team, even though one match went badly, might come across as the most secure option for the US government, struggling with thorny domestic issues, in the prevailing deadlock situation the Doha round is in. Yet this passiveness sets the US further behind on global scale, and widens the gap unfolding between developing and developed countries, but also between the US and the European Union. The need of addressing these major challenges is urgent for the US both its economic and political standing. As the administration shows consistent signs of passivity, other actors in the US-American political landscape may have larger scope for action, and an incumbent responsibility to take action. Think tanks are a type of actor to whom this would actually apply, and we will see that they are indeed actively working on trade topics and trying to aliment the national debate. 2. What thinks tanks propose a. The Heritage Foundation 4 At Heritage, they say about think tanks that their aim is to link knowledge and power and to transform ideas into political influence 5. This sounds like a direct and forward mission, but let us see what is their actual impact on concrete trade policy issues. Regularly, the Foundation publishes briefings, web-memos and more in-depth analyses, organizes conferences, debates and other meetings. When it comes to the WTO and international trade, this conservative think tank states that international criticism against the U.S. for hindering progress within the WTO in 2009 is valid. Very directly, they tackle the origin of the problem within the new administration, qualifying its agenda as short of substance : While the Obama Administration has asserted its support for multilateral trade talks, it has yet to formulate a comprehensive and transparent trade policy. Indeed, Obama has not exactly put Trade Policy Agenda and 2009 Annual Report, 4 All quotes, except otherwise stated, from : Markheim D., Time for Obama Administration to Get Serious About Trade Policy, Heritage Foundation WebMemo #2729, 12/10/ Joslain, E. L Amérique des think tanks, Paris : L Harmattan, p.135

4 his emphasis on trade policy, as also the appointment of rather the pale Ron Kirk as US Representative of Trade makes clear. Moreover, the Heritage analysts see a danger of slow and steady creep of protectionism in congressional legislation and in ad hoc measures catering to special interests. It is true that domestic interests of certain groups in the US (agriculture lobby, services industry, or the Teamsters for NAFTA) are very powerful especially in trade decisions in the US. Basically, every agreement comes down to a trade-off between different domestic interest groups, then finally allowing Congress through lobbying to vote in favor of a certain agreement negotiated. Obama, being very much under political pressure as he is trying to push through the monumental health care reform, effectively stopped the pilot program for allowing Mexican trucks into US territory (in theory a clause negotiated and approved within NAFTA), which his predecessor launched. It is interesting how the Heritage Foundation, itself very active on Capitol Hill, does not hesitate to blame the very system it is itself an accustomed cornerstone of. Heritage is an advocacy think-tank pushing for its ideas in the very moment of actual policy making, for example by delivering short briefing notes on key issues to Congress 6. Yet, it also provides scientific research and analyses to executives and a general public. In this thematic of wellfunded analyses, Heritage, though an advocacy think tank, surprises when deploring that The traditional multilateral approach of negotiating tariff and subsidy cuts with the WTO membership as a whole the best way to get all of the WTO behind a final agreement has apparently been abandoned by the U.S. in favor of a slower pace of bilateral negotiations. Though in the publications there is no mention of it, the fact is that these latter bilateral trade agreement negotiations have mostly been conducted by George W. Bush (President Obama does even dispose of Fast Track yet, the transfer from Congress of negotiation competencies in trade and would therefore not even be able to conclude a bilateral agreement), a Republican and hence to be associated with the Heritage Foundation. This can really make us understand that think tanks are not government- or party-agencies but indeed factories of thought, where experts assess existent and develop new policies and also criticize if need be. The Heritage Foundation obviously embraces the preservation of free market principles 7, both on the domestic and international market and wants a much more proactive approach to international trade of the US-American administration than what we can currently observe it should be leading by example. b. The Brookings Institution Can we say the same about its Democrat-inclined counterpart, the research oriented Brookings Institution, which is renown for its independence? First of all, we should understand that Brookings, as a multidisciplinary research center, is much more oriented towards giving scientific foundations to long-term policy orientations than the Heritage Foundation, providing concrete input for the current agenda. 8 In line with this, the Brookings publication on the WTO is very different from Heritage s memo. It is evident that it has been prepared long before the conference, and that the launching date has been chosen consequently in order to get the most attention possible (think-tanks, though non-profit 6 Abelson, D. E., p.32 7 Abelson, D. E., p.12 ; 8 Abelson, D. E., p.23

5 organizations, are always competing on the market places of ideas). The report of 36 pages adopts a data 9 based scientific approach, also attacks the problem from an innovative angle. Instead of treating the Doha negotiation round as most analyses do, it focuses on a different aspect of developing country participation in the WTO: use of the WTO dispute settlement system to enforce foreign market access rights already negotiated in earlier rounds of multilateral negotiations 10. As opposed to the Heritage Foundation, Brookings does not take the US-American interest as starting point for its analysis, but examines the possibilities the of the Dispute Settlement mechanism and a changed understanding and use of it might offer to developing countries for guaranteeing them a factual better position in international trade. The Dispute Settlement Body (DSB) is quite cost intensive and was therefore until recently mostly used by the richer states. Though recently, the Brazilian example 11 has shown that efforts on bringing a well-founded case will be appreciated, and that the DSB really is an unbiased legal entity, ruling without preferences for or against a certain group of countries. A more frequent and more effective use of the DSB, eventually in groups, therefore gives developing countries a real opportunity for enforcing their rights. In general, developing countries are more likely to bring WTO disputes when the cause of lost market access is readily apparent to exporting firms and government officials, i.e., foreign governments implementation of antidumping policies, countervailing duties, or safeguards. Often enough, these conditions are given, for example in the problem with Mexican Trucks. Elevating developing countries to a higher level of more post-negotiation power and the possibility of retaliation through formal and binding decisions by the DSB could thereby help unlocking the deadlock the WTO negotiations are currently in. It would make negotiation possibilities more equal, so that developed countries like the US would have difficulties to tough their specific interests out for a very long time. Yet, according to the report, many problems remain, notably funding and the access to information. The Brookings paper is obviously not a direct policy recommendation to the administration, but rather an invitation to look at the possible perspectives WTO-affiliated mechanisms and their leverage, in a situation where reform will be necessary. Brookings Paul Blustein writes, somewhat hopelessly about how The deal on the table has been so watered down by negotiations that it cannot be credibly said to work wonders for the poor, or even effect much change in how global trade takes place. The gap between the result and the initial aspirations will prompt legitimate questions about why so much time was required and whether the WTO has any future as a negotiating forum. 12 Here it becomes clear that the vision this liberal think-tank has of the WTO, working for the poor, goes way beyond the conservatives claim to defend American interest. The influence of Brookings papers on the administration and US American policy more broadly hence will be very different and less direct than that, Heritage can achieve. 9 From 1995 to 3008, thereby giving an almost complete picture and a very accurate assessment of the evolution. 10 Bown C.P., McCulloch R., Developing countries, dispute settlement and the advisory centre on WTO law., Brookings global economy and development, Working Paper 37, December Brazil vs. United States, DS267, initiated on September 27 th, On subsidies to Upland Cotton. 12 Blustein P., R.I.P, WTO Why 2010 could mark the death of the global trade system as we know it, Foreign Policy, January/February 2010

6 Conclusion Ultimately, both think tanks serve their cause and their State very well and effectively. The US-American political system heavily relies on third-party information, analyses and intelligence. This is true for international trade as for other domestic or global policy fields. The Brookings Institution and the Heritage Foundation have different political inclinations and adopt different methods to spread their thoughts, but both are influential and successful. Their party-affiliation does not abate their credibility, and policy makers from both camps refer to the findings of both institutions. Broadening knowledge, which is necessary for successful policies, includes plurality. Liberalizing world trade is an ambitious goal and very complex process, as it is virtually all parts of society in all participating countries and can have cross-sector or even cross-society impacts politicians and economists are not yet able to foresee in all cases. very This is why interdisciplinary organizations such as these think tanks delivering both direct policy advice and long-term scenarios are so important for progressing in the current crisis of negotiations. The actual impact of think tanks on the real policy decisions is difficult to assess without topic related field research and interviews, but the US-American trade policy would probably look different, and suffer lack of foundation and commitment without these institutions and their input. The Brookings Institution and the Heritage Foundation are the most renown and actively contributing think tanks in Washington and the policy debate all over the country, and even the world. Their analyses and findings are not only read in the United States of America, but are also relevant and appreciated overseas and by their neighbors. They actually help those to better understand the US-American point of view, internal debate and official stand in negotiations. As a result of all this, the think tanks are allover beneficial to fruitful development of international policy making. With the mostly recent proliferation of think tanks also outside the US, we can hope that trade negotiations might soon enter a new, and successful, state.