Grading Growth: The Trade Legacy of President Bush

By Hufbauer, Gary C.; Wong, Yee | Harvard International Review, Summer 2004 | Go to article overview

Grading Growth: The Trade Legacy of President Bush


Hufbauer, Gary C., Wong, Yee, Harvard International Review


The defining legacy of the administration of US President George W. Bush will be the Iraq war and its consequences. After that, historians will measure his aggressive tax cuts and his massive Homeland Security Department. Upon evaluation, President Bush's trade legacy will be listed among the aspirations, not the accomplishments.

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Alumni of former US President Bill Clinton's economic team are quick to award Bush a low grade in overall economic policy and more specifically trade policy. White House spokesmen portray the president as a champion of free markets worldwide. A more accurate judgment would be to declare Bush trade policy to be an "incomplete"--not fulfilling the auspicious signs in January 2001, but not as low as the critics claim. This assessment can be justified by examining the Bush legacy in eight arenas: Trade Promotion Authority (TPA), the Doha Development Round launched under the auspices of the World Trade Organization (WTO), the Free Trade Agreement of the Americas (FTAA), bilateral free trade agreements (FTAs), the North American Free Trade Area (NAFTA), trade disputes, exchange rates, and worker and farmer adjustment.

The circumstances of President Bush's election, coupled with a closely divided US Congress, enlarged the influence of industries that favor protection. When a handful of Congressional votes could determine the fate of any trade initiative and a few states shifting from voting Republican to voting Democratic could alter control of the US Senate or the US House of Representatives, any president would be attentive to protectionist voices. But on top of such parochial concerns, the Bush administration faced gathering anti-globalization sentiment nationwide--fueled by massive trade deficits, widespread job losses, and irrational anxiety over outsourcing to China and India. If President Bush had wanted to spend political capital in trade wars, using judgeships and appropriations to round up trade votes, he might have swept the obstacles aside. But for the president, trade liberalization was merely a desirable goal, not a top priority.

Trade Promotion Authority

On taking office, Bush's foremost trade challenge was to secure trade negotiating authority from Congress; without it, the president has little ability to negotiate new agreements. Critics argued that the president should first negotiate with foreign partners and then deliver his handiwork for Congressional approval. This suggestion, of course, was a formula for doing nothing because the prospect of Congressional amendments would deter foreign partners from serious negotiations.

Since the Trade Act of 1974, the essence of trade negotiating authority has been an exchange of promises between the president and the Congress: the president will consult fully with Congress as he negotiates with foreign partners, the president's lieutenants and key Congressional staff will jointly draft implementing legislation, and within a few months Congress will vote the whole package up or down.

Congress passed TPA only in August 2002, and even then by the narrowest margin in the House of Representatives (215 to 214). The price of TPA was predictably steep, largely paid in protectionist coin. To reach the point where a lopsided majority of Republican Congressmen would support the bill (against nearly unanimous Democratic opposition), President Bush put safeguard tariffs on steel and acceded to the Farm Act of 2002. The steel tariffs were legally doubtful, and after an adverse WTO decision and the threat of European sanctions, they were duly revoked in December 2003.

The Farm Act of 2002 was far more damaging because of its size, duration, and orientation. It commits the US government to subsidize nearly all crops in ways that distort prices and production. To the administration's credit, US Trade Representative Ambassador Robert Zoellick promised that the United States would slash its farm subsidies when the Farm Act comes up for renewal in 2007, provided Europe does the same and the rest of the WTO members lower their agricultural barriers. …

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