Global Policy Forum

Neil King Jr.

Robert Zoellick, under orders from President Bush, plans to litter the world with trade agreements. The U.S. trade representative hopes to finalize free-trade deals with Chile and Singapore by year's end. Next up is Central America, followed by possible agreements with Morocco and Australia. There also is talk of regional deals in Southern Africa and, further down the road, possibly the Middle East and Asia.

Trouble is, Mr. Zoellick's crusade to win trade deals from Tierra del Fuego to Botswana to the South China Sea may do little to enhance global free trade. Critics say the strategy complicates the far bigger quest to win international concessions within the World Trade Organization.

Challenges to further lowering barriers to trade will be an issue when Mr. Bush joins 20 other heads of state from Pacific Rim nations in Mexico this weekend. The current round of WTO talks is bogged down, as is the push to create a 34-nation Free Trade Area of the Americas. And anger lingers over the tariffs Mr. Bush slapped on steel imports.

Against all that, some skeptics see a political motive in Mr. Zoellick's quest: Better to land a lot of small deals in the administration's first term than none at all. "Zoellick has to have some accomplishments," says Robert Litan, a Brookings Institution economist. "So the incentive is to make as many deals as possible, even if they're not the big ones."

Mr. Zoellick counters that smaller deals are stepping-stones to big ones. "I'm not slacking off on the WTO at all," he says. "But I tend to believe that action breeds action, and inaction breeds more inaction." Rewarding Chile for making market reforms prompts others to work harder to do the same, he says. Bilateral agreements also can create templates for big issues that are hard to tackle in global talks.

And it isn't all about goods and services, Mr. Zoellick insists. Total U.S. trade with Morocco last year barely topped $700 million, equal to about half a day's trade between the U.S. and Canada. But Mr. Zoellick says he wants an agreement with Morocco "to promote more tolerant, open and prosperous Muslim societies."

Dotting the world with bilateral trade pacts may make sense as foreign policy, but it has its pitfalls. Push the policy to its extreme and the U.S. could end up with a stew of conflicting preferences for different countries that would be hard to administer. Countries left out also risk being slammed as investors seek better access to U.S. markets in neighboring countries. Many Caribbean and South American nations suffered that fate after the 1992 North American Free Trade Agreement made Mexico the place to put factories, prompting the U.S. in turn to give the others another set of preferential deals.

"The worst possible world would be one made up with a string of bilateral agreements," says Claude Barfield, trade specialist at the American Enterprise Institute. Landing all the small trade deals now in the works wouldn't amount to much for the U.S. economically. Trade with Chile, Singapore, Morocco and the five Central American countries combined is less than $60 billion a year, or about 3% of total U.S. trade last year.

Mr. Zoellick says bringing a succession of smaller deals to Congress will keep lawmakers engaged on positive aspects of trade. "Isn't it better to have them debating Chile and Singapore than how we need to close U.S. markets?" he asks.

Others aren't so sure. Charlene Barshefsky, who was President Clinton's trade representative, worries that wrestling with Congress over a Central American deal could later sap lawmakers' enthusiasm for a full Latin America package.

Some big U.S. exporters aren't keen on this small-first approach, either. Chuck Lambert, chief economist for the National Cattlemen's Beef Association, says he understands the strategy and doesn't oppose it. "But our primary objective are the [WTO] talks," he says.

For the beef industry, which racked up $3.4 billion of exports last year, free-trade pacts with Latin America or big agricultural exporters such as Australia would make U.S. ranchers net losers. The real gains come from multilateral deals that reduce tariffs and other barriers around the world, not just in a few countries. "Our primary markets are Korea and Japan, and we can touch those markets only through the big negotiations," says Mr. Lambert.

The quest for deals began in earnest in August after Congress gave Mr. Bush so-called fast-track authority to negotiate trade deals that lawmakers can approve or reject, but not amend. "Go out there and start negotiating free-trade agreements around the world," he told Mr. Zoellick. It was music to Mr. Zoellick's ears: He long has seen trade policy as an appendage of foreign policy. In his view, a trade deal with Australia would promote security, while one with Central America would encourage democracy and stability.

"Zoellick is a true fanatic about this. For him, it's become doctrine that small deals are as good as the multilateral ones," says Jagdish Bhagwati, a trade scholar at Columbia University who long has criticized bilateral trade deals on the grounds that they create a hodgepodge of overlapping deals and contort trade flows.

Mr. Zoellick's diplomacy at Doha, Qatar, last fall was crucial to launching another round of global trade talks among the 144 countries that belong to the WTO. But with the world's economy in the doldrums, negotiators have made limited headway on the stickiest challenges, such as slashing agricultural subsidies. Many observers now doubt the U.S. can seal either a global agreement or an all-Americas agreement by 2005, as long planned.

Mr. Zoellick is more confident. But he is a realist about what will happen in the meantime. "Maybe you live in a world where everybody will all agree at once to open their markets," he says, "but that's not the world that I see out there."

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