Baucus on Trade

Max Baucus, Democratic Senator from Montana and Chair of the Senate Finance Committee, gave a speech on trade early this month: Senator Max Baucus Delivers Major Speech to NDN on U.S. Trade Policy (Oct 2). 

Unlike some of the Democratic Presidential candidates, and unlike the party's populist/economic nationalist wing, Baucus describes trade and globalization in very positive terms, characterizes anti-globalization politicians negatively, and reminds his audience about the Democratic party's great internationalist traditions.  There's an enormous difference between this, and Clinton's recent rhetoric: What Clinton Said About Trade on Monday (Ben Muse, October 11, 2007)  Granted, Baucus doesn't have to face Iowa caucuses this winter.

Policy recommendations include:

• It is our responsibility to back up our companies engaged in global markets with vigorous and innovative trade enforcement.... As Chairman of the Finance Committee, I have worked to infuse such responsibility into our trade policy. I introduced legislation to encourage foreign governments to adopt currency exchange rate policies that are responsible and foster stability. I will work with my good friend Chris Dodd to bring a bill to the floor this year. I introduced robust trade enforcement legislation that the Finance Committee will take up this fall.
• It is our responsibility to support our workers, firms, and farmers with a Trade Adjustment Assistance program... I have... rethought Trade Adjustment Assistance and introduced a bill that aligns this program with today’s economy. I intend to mark up that bill this month as well. 
• ...it is our responsibility to do our utmost to protect our consumers, no matter the origin of our imports.... We will also strengthen import safety in our customs reauthorization bill that we will consider in this Congress....
• Let us build on this success [the May 10th bipartisan trade deal to include "binding environmental and labor norms" in trade deals - Ben]. Let us prove to skeptics that these provisions do indeed work. By helping our partners adhere to these labor and environmental obligations, we export not just our world-class products but also our fundamental values.
• ...While we have successfully lowered most of our tariffs, the tariff schedule remains inherently regressive. It taxes necessities like baby clothes, T-shirts, and sneakers at far higher rates than luxury goods. That’s not in line with our values, and it’s not right. We should fix it.
• We do have real problems with China....  But we cannot disengage. We must move forward with a realistic approach that shifts away from today’s two extreme camps. We cannot hold with the camp that denies anything is wrong in our relationship with China. Nor can we hold with the other camp that denies that anything is right.  Instead, we must renew the proven approach. We must use all of our means, bilateral and multilateral, within and outside the WTO, to move our relationship forward.
• I have long called for negotiations with commercially significant economies. The Korean Free Trade Agreement is a good start. But we should not be afraid to think bigger. We should continue to pursue negotiations with Malaysia, Taiwan, Indonesia, India, and Japan. We should not shy away from more daunting measures like regional agreements with ASEAN or APEC.
• Let us also align our ambitions with our economy’s strengths. America is the world’s largest and most competitive services economy. Let’s lead while we’re ahead. Let’s initiate bilateral services agreements with the European Union, Japan, and other large economies. It is time that we begin engaging in exploratory talks.
• Behind every American strength and success are American ideas. We should take ambitious measures to enhance their protection and enforcement domestically and globally. We should begin to negotiate a plurilateral intellectual property agreement in the World Trade Organization that goes beyond our existing TRIPS obligations. Willing parties could sign on to give their entrepreneurial ideas enhanced protection and agree to bolster enforcement. Interested parties not ready to step up yet can join as observers. They can join as their intellectual regime improves and reaches an enhanced standard.
• America should lead the way in negotiating in the World Trade Organization a sectoral agreement in environmental goods and services. We should work to cut all tariffs on these goods and services to zero. We should eliminate barriers to the provision of environmental services. Doing so will help our environment and our economy. Here, as with all of our initiatives, we may have to start small....
• ...perhaps most challenging, we must begin to rethink our policies to embrace and predict changing global dynamics, rather than simply react to them.... We must imagine seamless policies that embrace the environment, economic growth, and public health. We must craft policies that view education, innovation, and intellectual property rights protection as the many sides of the same valuable economic gem. We must craft our competition and investment policies knowing that companies, policies, and policy outcomes have global consequences, whether we like it or not.

Some observations: 

• Baucus emphasizes bilateral and regional trade agreements, but not multilateral agreements - such as the Doha Round. 
• The details are going to matter when it comes to enforcement.  I'm uneasy about the potential for abuse of trade agreement enforcement measures - especially those targeted at exchange rates we don't like, and of enforceable labor and environmental conditions in trade agreements.  Daniel Ikenson describes some of the things Baucus has been thinking about here: Summoning the Ghosts of Smoot and Hawley (Cato@Liberty, August 22, 2007).
• Baucus doesn't hammer on the trade deficit.  He doesn't mention it.  Clinton treated it as obvious evidence of the failure of current trade policies. 
• I'm not sure what "rethink our policies to embrace and predict changing global dynamics, rather than simply react to them" actually means in concrete terms.
• While many of their policy recommendations are similar, Clinton and Baucus have different perspectives on bilateral and regional trade agreements.  Clinton is skeptical, uses the words "China" and "NAFTA" to tell her audience that she shares their resentments, and wants to review agreements every five years; Baucus has a much more nuanced view on China, doesn't say "NAFTA," and thinks we need to pursue new trade agreements.