A Conversation with White House Chiefs of Staff on the Politics of Trade Policy

Participants:
The Honorable Andrew Card, Chief of Staff to President George W. Bush
The Honorable John Podesta, Chief of Staff to President William J. Clinton
The Honorable Thomas McLarty, Chief of Staff to President William J. Clinton
The Honorable John Sununu, Chief of Staff to President George H.W. Bush
The Honorable James Jones, Chief of Staff to President Lyndon Johnson
Moderator:
Zanny Minton-Beddoes, The Economist

On Monday, May 10, 2004 The Latin American Program of the Woodrow Wilson International Center for Scholars joined with the Council of the Americas to host "A Conversation with While House Chiefs of Staff on the Politics of Trade." Michael Van Dusen, Deputy Director of the Woodrow Wilson International Center for Scholars, and Eric Farnsworth, Vice-President of the Council of the Americas, gave the welcoming remarks and stressed the importance of analyzing the political dynamics of trade.

Chief of Staff for President George W. Bush, Andrew Card, opened the discussion by describing President Bush's goal to create a better and safer America. The President feels that opening markets and encouraging free trade will accomplish this goal by strengthening the economy and creating jobs for the American people. In a climate of isolationism where World Trade Organization (WTO) negotiations stalled and efforts to renew Trade Promotion Authority (TPA) failed, President Bush was able to reverse these trends, renew trade negotiations and pass TPA through his personal involvement and resolve on the issue of trade. Card emphasized that the President is determined to expand free trade in the hemisphere and has pursued the expansion of NAFTA, CAFTA, the FTAA, and agreements with Chile, the Dominican Republic, Panama and the Andean countries, all of which represent over 2/3 of GDP of the hemisphere. The President is also determined to ensure that those workers who are forced to make adjustments due to the expansion of free trade receive the assistance they need. Card stressed that respect for the rule of law is essential for the success of free trade and noted that the President is dedicated to enforcing America's trade laws. While placing tariffs on steel was a controversial move, once the domestic industry improved, the President removed these tariffs. Card used China as an example of a country that has benefited from the expansion of free trade. Since China joined the WTO, it has become the 7th largest economy in the world and has extended prosperity throughout the country, demonstrating the benefits of economic opening. While China has been making an effort to comply with WTO regulations it still must focus on protecting intellectual property rights. Bush is determined to assist countries such as China who are making the transition to join the global economy. Card reiterated the President's opinion that economic isolationism will cheat the United States out of an opportunity for economic growth, job expansion and hope for the future. He said it is our challenge to communicate with the American people and others around the world about the importance of free trade in achieving economic prosperity and freedom.

Moderator Zanny Minton-Beddoes, The Economist, talked about U.S. leadership in the trading system and the increased complexity of trade policy today. She noted that as a result of trade liberalization there are both beneficiaries and losers. However, the losers are more mobilized in their efforts to confront trade liberalization, while the benefits are less visible. Several factors are contributing to the increased complexity of negotiating trade legislation in the United States including: globalization, that has spread the effects of trade policy throughout the world; new issues such as intellectual property that have become part of the trade policy agenda; and, the presence of a "new referee" in the WTO dispute settlement mechanism.

James R. Jones, former Chief of Staff to President Lyndon Johnson, made important observations regarding the politics of trade in the United States. First, he asserted that it is essential to consider the domestic politics with regard to trade policy. As Tip O'Neil once said, all politics are local, including trade policy. Second, he observed that bipartisanship on the issue of trade policy is missing. What is needed is a dialogue between both parties in Congress so that legislation reflects the concerns of both. Third, There is a lack of outside coalitions pushing for the expansion of free trade. There is a need for business associations and other civic groups that feel that free trade is important to become more active on the issue. Fourth, there is a lack of communication between policy makers and local governments. Jones pointed out that it is easier for policymakers to support free trade legislation when they are able to quantify the impact of the policies with regard to job creation and economic development in various parts of the country. Finally, Jones argued that it would be helpful to organize trips for Members of Congress to the places with which the United States is pursuing free trade agreements. Trips to Mexico by undecided Members of Congress convinced most of them that pursuing the agreement was the right way to move forward. Jones added that is important to integrate labor and environmental protections into the trade negotiations to ensure that the benefits of free trade are better distributed. He also noted that there is a strong link between strengthening democracy and opening markets and that these two should be promoted together.

John Sununu, former Chief of Staff to President George H. W. Bush, outlined the framework for the discussion of trade policy. He noted that trade is both an important and complicated issue and circumstances in the United States are often not conducive to the promotion of free trade. Losses due to trade are felt strongly by specific groups of people while the benefits are distributed in modest amounts among many, making it difficult to obtain domestic support for trade liberalization. Sununu argued that the relationship between the executive and legislative branches further complicates the issue. While it is the President that defines trade policy, Congress has an important constitutional role in trade, making it difficult for the Executive branch to further its agenda without Congressional cooperation. Often it is necessary to grant concessions and determine and convey the specific impacts on various groups in order to obtain the votes needed for passage of free trade legislation. Sununu also commented that Republicans used to be more protectionist but now that position is held more by Democrats. Something that further complicates the trade issue is that it cuts across many governmental departments, many of which have conflicting positions. The Chief of Staff is responsible for compiling these inputs and presenting them to the President. In this regard, he noted that trade policy is a second order political issue and not a top priority. For example, the United States main concern regarding South America is not trade but drug trafficking.

Thomas McLarty, former Chief of Staff to President William J. Clinton, stated that the emphasis under the Clinton Administration shifted from a focus on traditional foreign policy issues to a focus on economic development and trade. Healthy trade relationships, the increase in exports and the prevalence of imports were part of the strong economic performance of the 90s. McLarty asserted that open markets and democracy mutually reinforce each other as is demonstrated by Mexico after the passage of NAFTA. He added that opening trade with China is important not only in terms of economic development but also because it has brought China into world relations. He agreed with Sununu that local politics and sequencing play a big role in determining trade policy. Any effective trade policy should have bipartisan support. With so many issues on the legislative agenda the President has to spend valuable political capital to pass trade legislation. The loss of fast-track (TPA) was due to the fact that so much political capital had already been used in negotiating trade agreements and it was harder to sell a theoretical point to Members of Congress. Some challenges that remain are: opening communication on the issue of trade and dealing with dislocations that occur as a result of trade liberalization. In closing, McLarty insisted, "the key to peace and prosperity is clearly linked to effective trade."

John Podesta, former Chief of Staff to President William J. Clinton, argued that budget and trade deficits are troublesome for maintaining consensus on trade policy. During the Clinton Administration, Congress and the American public were skeptical about the administration's trade policy, and it was a constant challenge to make the case on trade liberalization. He added that the American people's frustration with trade policy is still evident as was demonstrated in the Democratic primary this year. Skepticism extends throughout Latin America where 40 % to 60 % of people feel they have not benefited from free trade. Podesta stated that promoting free trade is more than just reducing barriers; fostering economic opportunities and encouraging good labor, environment and democratic practices are also involved.

When asked about the effectiveness of trade adjustment assistance programs, both Sununu and Jones agreed that trade assistance funds are needed to obtain Congressional support for trade legislation. Jones added that these programs would be more easily implemented at a local level, rather than trying to apply them nationally.

Sununu responded to a question regarding the role of the private sector in promoting free trade by criticizing the private sector for a lack of foresight regarding the needs of their particular industry. Companies often seek government assistance when they are faced with crises and government officials, faced with politically impossible situations, may be unable to offer any assistance.

Podesta disagreed with a member of the audience's characterization that the Democratic political leaders have a negative view of foreign governments, globalization and free trade saying that Presidential candidate John Kerry has shown a great appreciation for our alliances and a determination to build support around the world. He added that Kerry has been a supporter of free trade because he recognizes the economic benefits involved. Jones reiterated the importance of bipartisanship on the issue of trade. He commented that our leaders are simply reflecting the sentiments of a country that is severely divided on this issue and noted that it is a challenge for politicians to convince the American public of its importance.