REVIEW: Article

From Old Politics to New Diplomacy: Toward a Bipartisan Trade Policy for the United States

With their success in winning Congressional approval in both countries in 2003 for the United States (US)-Chile Free Trade Agreement (FTA), President George W. Bush and President Ricardo Lagos have made history in the Americas.

After two years of negotiations, launched on November 27, 2000, with a phone call from President Clinton to President Lagos, the two Presidents can share the credit, when the Chile FTA goes into effect on January 1, 2004, for achieving our first such agreement with a South American country, and one of only six free trade agreements that the United States has entered into with any of the world’s one hundred and ninety one countries.

As Washington moved from the successful completion in December 2002 of two years of substantive FTA negotiations through the political realities that our Congress successfully faced in approving this landmark free trade agreement, the crucial fact that a Republican President succeeded in completing the Chile FTA that a Democratic President began suggests an important breakthrough opportunity for the future.

With the overwhelming Congressional approval of the Chile FTA (270-146 in the House, 67-30 in Senate), both Democrats and Republicans on Capitol Hill moved beyond politics as usual and toward a bipartisan international trade policy for the United States.

In a highly competitive global economy, our national interests were well served when the House and the Senate seized that opportunity by approving the way forward on international trade policy to which, together, these two Presidents of opposing political parties pointed us with Chile.

Clearly, both sides made their December 2002 deal only after satisfying themselves that they had achieved a “win-win” outcome at the negotiating table—an outcome that will result in the ultimate removal of tariffs, quotas, subsidies and other trade barriers that impede, rather than enhance, the free flow of goods, investment, services and ideas between two American democracies that share the same core political and economic values.

The successful conclusion to fourteen rounds of negotiations brings to reality a vision first presented in 1991 by President George H. W. Bush to Patricio Aylwin shortly after his election as President restored democracy to Chile. And this success will breathe continuing new life into the ambitious thirty-four-sided negotiations begun in April 1998 at the Second Summit of the Americas in Santiago aimed at reaching a free trade area of the Americas (FTAA) by 2005, unusually complex negotiations whose original timetable now seems less important than the sustained and pragmatic pursuit of hemispheric economic integration that the negotiations themselves continue to encourage.

In the case of Chile, the eleven-year delay between the thought and the deed of free trade resulted, for the most part, from a failure in US politics that has hindered the ability of our workers and our businesses to succeed in the global economy.

With the advent of globalization, our Congress had yet to figure out how, in general, our labor and environmental concerns should relate to our trade liberalization efforts.

In the recent past, the Congressional debate had taken on a sharply partisan tone. Most Democrats championed the labor and environmental cause, most Republicans the trade liberalization cause. The two parties could not find the common ground on which to advance our national interests in conducting a vigorous and engaged international trade policy.

The Chile FTA offered the new Congress a way out of an old political box.

With labor and the environment provisions in the text of the Chile FTA (no NAFTA-like side agreements this time around) and with both provisions enjoying parity with the seventeen trade-related chapters of the agreement under the legislation that restored the President’s trade promotion authority (TPA) in 2002, this free trade agreement breaks new political ground.

As a result, the Congressional debate in 2003 on the first two post-TPA free trade agreements (the Singapore and Chile FTAs were considered, and approved, together) had the opportunity to focus on the core issue: whether our national interests, geopolitical as well as economic, are better served with or without a comprehensive and state-of-the-art free trade agreement with the most successful and widely admired country in South America today.

When the Congressional debate on the Chile FTA took that direction, Chile passed the test but, what is even more important, it marked a turn for the better in our political life.

As envisioned by Clinton and as forged by Bush, the most striking thing about the Chile FTA was the new opportunity that the 800-page agreement among the trade negotiators presented to our Congress to move beyond old politics, and toward a bipartisan

international trade policy for the United States, and the fact that, on a bipartisan basis, our Congress seized that historic opportunity.

Where should our country now look for opportunities to build on the success story that now is the Chile FTA?

I think that there are now at least two important strategic areas where our national interests can be well served by smart applications of the key lessons for our international trade policy that arise from the ultimate success of the Chile FTA. The Middle East, in the long term, is one. Central America, in the short term, is the other.

The Chile FTA and the Middle East

In December 1994 in Miami, President Clinton set forth a bold vision of free trade in the Americas for 2005.

As that then distant date approaches, the reality of our Chile FTA, our six-way CAFTA negotiations with Central America, and the ongoing progress toward a Free Trade Area of the Americas are key milestones en route to that historic change in economic integration in the Americas.

In June 2003 in South Carolina, President Bush put forth a similarly stirring idea of a better future, built on a long-term move toward free trade elsewhere. His focus: the Middle East. His time frame: 2013.

After our President’s statement of new strategic purpose in our international economic policy in today’s strife-torn Middle East, it is not too soon for all who embrace the principle and promise of free trade to start drawing lessons about how to advance this agenda from Santiago to Cairo, based on the decade-long road from Miami to Santiago.

In a notable column in The Washington Post, published just two weeks after President Bush’s speech, the United States Trade Representative laid out a road map for what he called “a return to the cradle of free trade” in the Middle East. In that essay, Ambassador Robert Zoellick left no doubt that the United States is now committed to a broad trade strategy that, as in the Americas, will include the negotiation of comprehensive free trade agreements. And that, of course, is where Chile comes in.

The Chile FTA, our first in South America and one of only six in the world, is our most comprehensive, state-of-the-art free trade agreement. No country, whether in Central America or the Middle East, can think seriously about moving forward with the United States toward a bilateral or sub-regional free trade agreement, without a thorough understanding of the political history and commercial substance of the breakthrough US-Chile agreement.

While the Middle East enjoys two of the four FTAs that preceded our Chile agreement—Israel in the 1980s and Jordan in the 1990s—neither of these accords comes close to providing the guidance for thinking about a 21st-century free trade pact that the Chilean agreement offers. The negotiators and strategists now working on the US-Morocco FTA cannot help but have the Chile FTA in mind, as they seek to achieve our second such agreement in the Arab and Muslim worlds.

Indeed, in publishing our road map toward free trade in the Middle East, Bob Zoellick made that explicit. “Eventually, these bilateral agreements will be expanded into sub-regional agreements by bringing in willing countries that demonstrate a commitment to openness and reform. Within a decade, we hope to meld these sub-regions into a historic Middle East Free Trade Area…..”

You can begin to connect the Chilean-Middle Eastern dots from there.

Chile (and Chileans in and out of government) has many lessons to share with the Middle East about the benefits of openness and reform in strategically positioning a country as a viable candidate to become a free trade partner of the United States. Chile, with its first-hand experience of fourteen rounds of intensive negotiations, can relate how a developing economy finds common ground with a developed economy through an open and transparent economic relationship involving everything from electronic commerce to intellectual property, from trade in goods to trade in services, from rules of origin to rules of dispute resolution.

And perhaps most importantly, with Middle East countries that embrace the move toward economic freedom, Chile can help share invaluable lessons in the international politics of free trade on pivotal trade-related issues, such as worker rights and environmental protection in a global economy.

You might not have thought that the free trade road from South Carolina to Cairo converged with that from Miami to Santiago. Nonetheless, in quite important ways in the decade ahead, when it comes to choosing free trade routes, Chile’s will be the road most taken.

The Chile FTA and Central America

Recently, I took the winding road through the El Salvadoran countryside from San Salvador to Santa Ana, the country’s second city, with two Chilean friends.

The road we took together signifies, in many ways, the way forward on free trade in the Americas.

Ambassador Daniel Carvallo, Director of North American, Central American and Caribbean Affairs at Chile’s Foreign Ministry, and Edda Rossi, Chile’s chief negotiator on the environmental chapter of its free trade agreement with the United States, made the two hour trip to tell the twelve-year story of how we achieved our first free trade agreement in South America.

They spoke to a public participation forum sponsored by the Government of El Salvador at the Santa Ana Chamber of Commerce.

As they had the night before at a large public gathering in the capital city, they talked of lessons learned from their country’s success that might assist their neighbors in Latin America who seek the economic and political benefits of free trade with the world’s largest economy.

As they did earlier the same week in Costa Rica, they spoke of the need to engage constructively with the United States on sensitive issues of labor and the environment that are central to reaching trade agreements that can pass political muster in both the developed and the developing world.

They answered questions in both countries, from trade negotiators, from economic and environmental ministries, from business and nongovernmental organization (NGO) leaders, from important academic and professional associations, about matters of common interest at the cutting edge of the free trade agenda in the Americas these days.

And they left our neighbors on the isthmus that connects the Americas with a better understanding of the way forward toward a successful negotiation in 2003 of a Central American Free Trade Agreement, the next step en route to the Free Trade Agreement of the Americas.

The most savvy observers of the difficult political issues that always arise at the intersection of international trade and national politics whom I met on this visit to Central America already understood one very important fact. In the United States, Congressional approval of CAFTA in the political year ahead is not going to be an easy task.

The big win on Capitol Hill for the Chile and Singapore FTAs certainly represents the political high water mark for free trade in this Congress just as it offers the promise of the path toward a bipartisan international trade policy for the future. In the midst of a presidential election year, we can expect a CAFTA debate in the United States in 2004 that will be as contentious as the 1993 NAFTA debate, maybe even more so. That analysis is not self-evident.

For example, the day after the US House of Representatives approved the Chile FTA by an overwhelming 270-156 vote, The Wall Street Journal ran an editorial hailing the advent of a new free trade majority in our Congress that would carry over to future consideration of other hemispheric trade deals. The political reality is different.

Much closer to the mark was The Washington Post editorial that followed the similarly lopsided 67-30 Senate vote of approval for the legislation to implement our agreement with Chile. Careful observers, The Post correctly suggested, would look not to the Chile FTA’s vote margins but to the clear voices in that Congressional debate warning that terms of trade, particularly on labor and environmental issues basis that were acceptable on a broad bipartisan in the case of Chile might well be unacceptable in the case of Central America. In The Post’s view, CAFTA now is at risk. And that political risk is not diminishing with millions of lost jobs in the United States on the eve of an election year.

Failing to find the common ground on CAFTA would signal a sharp setback for the political, social and economic cohesion of our hemisphere in a highly competitive global economy. A CAFTA failure, moreover, would inflict incalculable harm on prospects for ultimate success on the FTAA that President Clinton helped launch at the 1994 Summit of the Americas and that President Bush has helped move toward realization in 2005 or thereafter.

In such an unsettled domestic political climate on the trade front in Washington these days, lessons for Central America from Chilean friends about how to shape “win-win” free trade agreements to connect the Americas are welcome lessons for all who seek to secure a bipartisan trade policy for the United States for the years, and decades, ahead.

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United States Ambassador to Chile, 1998-2001