August, 2001: Players

By Greg Rushford
Published in The Rushford Report

Looking to Doha: The business lobby finds its voice

If you know a CEO, clip this and send it on.

What a change two years can make.

Remember how the business community’s ambivalent attitude on trade helped sink the launch of a “Seattle Round” when the World Trade Organization’s ministers met there in November, 1999? By contrast, in recent weeks there has been a significant shift in attitude and actions. The business community is finding its voice, and is now beginning to explain the benefits of trade to the American public clearly.

This enhances considerably the chances that Congress (finally!) will give President George W. Bush the fast-track authority that he needs to negotiate trade deals. And getting America back on the right track will obviously help the successful launch of a new round of WTO liberalizations when ministers next meet in Doha, Qatar this November.

The question then is: Will the corporate types go back to sleep next year, and the year(s) after that, while Doha is negotiated? Or will the CEOs believe that it is important to keep up the trade-education efforts in the next several years of the Doha negotiations? Do the leaders of the business community realize how seriously the core of America’s political and intellectual support for free trade has been eroded in recent years — dating to the early 1980s, Richard Gephardt, the Japan bashers, and, above all, the destructive notion of “fair” trade? It will take years of patient, low-key (but cost effective, compared to late-hour lobbying) work to put America’s free-trade coalition back together. If that happens, the big payoff to the investment will come when the Doha negotiations come back to Congress for a vote. Remember, Gephardt could be Speaker by then.

In the summer of 1999, the business lobby prepared for that November’s WTO ministerial in Seattle by following Clinton administration officials like Commerce Secretary William Daley, who tried to sell trade to the American public basically in dishonest, mercantilist terms. Corporate America swallowed Daley’s line that exports are good, but imports are “problematic.”

Some influential members of the Business Roundtable even made common cause in import bashing with Clinton allies in organized labor like the United Steelworkers of America (see, Uh Oh: The Clinton administration, the Business Roundtable and other leading lights of corporate America team up to ‘educate’ Americans on the benefits of international trade,” Rushford Report, May 1999, Page one). It was embarrassing, to think that some CEOs actually thought that the Steelworkers would help them explain trade to Americans.

The business community did not protest when President Clinton, Daley, and U.S. Trade Representative Charlene Barshefsky went to Seattle with an agenda that asked other countries to do politically difficult things to open their markets to American exports, while refusing to do the same.

The United States asked the Europeans to negotiate their agriculture subsidies, while insisting that U.S. agriculture protectionism for commodities like peanuts and sugar should not be on the table. The United States asked other countries to reform their antidumping regimes, while insisting that widespread complaints about the U.S. (draconian) antidumping regime were off limits.

Corporate America went along with all of this and more — right up to the moment that the “Seattle Round” imploded.

“Big mistake,” acknowledges Christopher Padilla, Eastman Kodak’s top international relations man in Washington. “We were wrong. If we didn’t learn from Seattle, we would be doomed to repeat it.”

Padilla is now communications director for U.S. Trade, shorthand for the US Alliance for Trade Expansion. The business coalition is co-chaired by Bill Lane, Caterpillar’s top international trade executive in Washington; Procter & Gamble’s Scott Miller; and Ted Austell of Boeing. The group’s blue-chip members include the McGraw-Hill Companies, Texas Instruments, Ford Motor Co., and the National Retail Federation. By contrast to the pre-Seattle days two years ago, this group is focused.

Kodak’s Padilla is busy putting out wonderful lines like these:

We want every Wal-Mart in America to become a duty-free shop for working families.

Although overall average U.S. import tariffs are quite low, our highest import taxes are on everyday necessities like food and clothing. The poorest 20% of families in this country pay 52% of after-tax income on just two things: good and clothing.

In the last decade more than 100 million people have risen out of abject poverty through economic growth fueled by trade. That’s the largest and fastest absolute reduction in poverty in human history.

Now that’s how to sell trade. The U.S. Trade line is intellectually honest, and is expressed in terms that ordinary Americans can easily understand. Moreover, it is politically shrewd to explain free trade in terms that are designed to enhance the support of the influential New Democrat bloc in Congress.

There’s more good news to report. Calman Cohen, the president of the Emergency Committee for American Trade and a longtime veteran of Washington’s trade wars, has also been busy getting the business community to press for a coherent trade agenda to take to Doha. Last month , Cohen’s ECAT sparked an important letter to President Bush and other senior administration and congressional officials.

Trade Promotion Authority (or fast track authority) that had been granted to presidents dating to 1974 had never “been made contingent on either the inclusion or the exclusion of any particular provisions in a final trade agreement,” the letter pointed out. “To change course and mandate or proscribe any particular outcome would tie the hands of U.S. negotiators and would undermine our ability to even launch negotiations as other governments may well adopt a similar approach, trying to rule out or rule in certain issues before the negotiations even begin.”

In other words, put antidumping, sugar quotas, etc. on the table along with European and Japanese agriculture subsidies. Six major trade groups signed the letter, including the Business Roundtable, the Chamber of Commerce of the United States, and the National Association of Manufacturers. Only a few weeks ago, it had looked like these influential trade associations would remain on the anti-dumping sidelines forever, in deference to the handful of their more protectionist-minded members (like steel).

BRT has taken out advertisements in newspapers in Montana and South Dakota, putting the pressure on two key Senate Democrats: Max Baucus, who chairs the Finance Committee, and Majority Leader Tom Daschle. The ads picture a young couple holding shopping bags and looking with concern at their bill. “PRICES RAISED!” the ads say. “Taxes on imported goods impact all of us. They hit working families especially hard — families that spend more than half their incomes on food and clothing.” Those ads — which will soon appear in other key congressional districts — put lawmakers on notice to think of the vast majority of their own constituents before cozying up to protectionist lobbies.

Of course, newspaper advertisements are only one (expensive) part of trade education. While the business community has not been putting much resources into trade education in recent years, there now seems to be a new buzz around town.

CaseNewHolland Inc. is a major exporter of tractors, combines, and construction equipment that employs more than 11,000 Americans in places like Racine, Wis. And New Holland, Pa. In recent years, CNH has launched several innovative trade-education programs to educate its employees and others who do business with the company. For instance, CNH has given more than 15,000 Trade Activity Books to the company’s U.S. employees. The booklets are geared to young people, and teach trade through crossword puzzles and other games that are designed to be informative as well as fun. If more companies did this sort of thing, you would soon see a ripple effect in local schools and even universities, where trade education also often lags badly. (I’m also proud to relate that the Rushford Report is read in more than 200 universities; where it has been known to inspire classroom discussions and research papers).

The latest CNH innovation is www.cnhtrade.com. The Internet site has several educational games — puzzles and such that are designed to make trade less puzzling to young people. Last month, Steve Nadhemy, CNH’s government affairs manager, briefed a receptive audience of other corporate representatives in ECAT’s Washington office on Connecticut Avenue.

There is another embryonic effort underway at the National Association of Manufacturers. This is a speaker’s bureau called the Trade Ambassador Program. Frank Vargo, NAM’s top trade official in Washington, is working with Bill Canis, who is the director of NAM’s think tank, the Manufacturing Institute.

Canis recently dispatched Procter & Gamble’s Scott Miller — an entertaining speaker who made mincemeat out of Ralph Nader in a debate during the 1999 Seattle WTO ministerial — to Wilmington, Delaware. There, Miller spoke to a luncheon hosted by the World Trade Center. “I talked about the connection between free trade and economic and political freedom,” says Miller.

Canis has also sent speakers to World Affairs Council affiliates in Minneapolis, Northern Virginia’s high-tech corridor, and Anchorage. This summer, a group of executive MBA students from the University of North Carolina at Chapel Hill met in NAM’s Washington offices for a trade briefing. (Two years ago, respected academic circles shunned Bill Daley’s mercantilist traveling trade “education” road show).

As Caterpillar’s Bill Lane rightly sums up, “This time around, trade education is being built on a sound foundation.”

Will the corporate types decide that it would be a wise investment to build upon that foundation in the coming years?

Stay tuned.

Mike Moore’s WTO wise men

Another sign that cooler heads are helping lay the groundwork for the successful launch of a new WTO round at Doha this November came on July 5. Then, WTO Director-General Mike Moore announced that he had appointed a “panel of experts” to advise him “both before and after” the Doha conference.

Usually, the announcement of another group of “wise men” would hardly be worth reporting. Such groupings often attract people whose main talents lie in networking and in projecting the image of seriousness.

But Moore’s group of twelve includes some people who really are serious thinkers. Jagdish Bhagwati, who is University Professor at Columbia University, is one of America’s great trade educators. Robert Baldwin, an emeritus economics professor at the University of Wisconsin, has long been respected as a first-rate thinker. (Baldwin is so good, in fact, that when President Jimmy Carter tried to put him on the International Trade Commission, Congressional protectionists shot down the nomination). Sylvia Ostry, of the Munk Centre for International Studies in Toronto, is also widely respected for her experience. And Patrick Messerlin, of the Institute of Political Studies in Paris, has long been one of the most principled and persistent critics of antidumping laws. Messerlin is probably the only free trader in the City of Light, but Mike Moore has found him.

Only a couple of months ago, the prospects for Doha really looked uncertain. But now at least, the vibes are good.

TOP