Obama has settled on Timonthy Geithner, President of the New York Fed, as his choice for Secretary of the Treasury.
Geithner rose in the Clinton Treasury under Robert Rubin and Larry Summers, eventually serving as Undersecretary of the Treasury for International Affairs.
In 2001, while he was a senior fellow in international economics at the Council on Foreign Relations (CFR), he served as director for a CFR task force on: Building Support for More Open Trade. Geithner's Duputy in this project was Daniel R. Lucich. Lucich had worked for Geithner at the Treasury as Deputy Assistant Secretary forTrade and Investment Policy.
Robert Rubin (Clinton Treasury Secretary) and Kenneth Duberstein (a former chief of Staff to President Reagan) chaired the task force. Its other members included: Charlene Barshefsky (former Clinton USTR), I.M. Destler (Academic and Peterson Institute), Carla A. Hills (former Bush USTR), Lewis Kaden (at the time, a partner at the law firm of Davis Polk & Wardwell - moved to become Vice-Chairman at Citigroup in 2005), and Andrew Kohut (Director of the Pew Center for the People and the Press).
Geithner was the director for the task force, not one of its members, and not technically one of the authors of the report. But he certainly played a role in composition, and his association with the project implies sympathy with it.
The task force made seven recommendations:
1. Confidence Building
Building a more durable base of political support will require a sustained effort designed to build confidence across the political spectrum. One approach, which has already begun in negotiations between Congress and the president, would be to adopt a “building block” strategy. The executive branch could ask the Congress for separate votes, spread out over time, on a series of individual agreements and trade programs, each of which could comfortably enjoy significant bipartisan majorities of support. Cumulative votes in support of trade, without long gaps between, might reduce some of the political and partisan heat around the issue. An additional advantage of this sequenced strategy is that by passing a number of agreements that contain different approaches to labor and environmental concerns, Congress and the executive branch would build a stronger case for maintaining flexibility on these issues. Such flexibility is key, particularly since labor and environmental provisions that might be acceptable in one context could prove unworkable in others. The risk that damaging or constraining precedents may be set in individual agreements is more limited if a variety of approaches are pursued and adopted, and no particular model is deemed the dominant precedent.
There are several such opportunities illustrating this strategy that are already in various stages of consideration in Congress, including:
· The Jordan Free Trade Agreement.
· The bilateral agreement that makes it possible to apply most- favored nation
status to Vietnam.
· The renewal of the Generalized System of Preferences for the poorest
developing countries.
· The renewal and possible expansion of the benefits in the Andean preference
agreement.
Looking ahead, potential free-trade agreements with Chile and Singapore provide additional opportunities for building pro-trade coalitions.
2. Increased Congressional Involvement in the Trade Policy Process
Congress has a necessary role to play in national trade policy. At the same time, the national interest is well served when the president has sufficient capacity to deal effectively and efficiently with other governments, including the reasonable expectation that the agreements negotiated by the executive branch will be promptly considered and approved. In this spirit, the executive branch could agree to support a variety of steps that would give Congress a greater voice in trade negotiations, including:
· Increased consultation with key congressional committees in addition to the Senate Finance Committee and House Ways and Means Committee before the executive branch initiates new negotiations.
· More frequent interim reports on progress during the negotiations.
· Formal mid-term reviews.
· Consult and brief relevant committees as negotiations proceed.
3. Reforms to Programs for Displaced Workers
Our nation should find ways to deal more effectively with the plight of displaced workers. According to the Department of Labor, one in sixteen working Americans (eight million workers) were displaced between January 1995 and December 1997, years of historically low U.S. unemployment. Of those, 3.6 million workers had been with their employers three or more years. These numbers provide some indication of the scale of labor mobility in the United States, but it is important to note that most of these job changes had little to do with trade. Technological change and other factors are likely to play a much larger role in explaining job loss than increased imports. The United States should take a careful look at whether and how sensible programs could be designed to help deal with the adjustment costs faced by workers displaced by trade.
Among the issues worth considering are the following:
· The appropriate level and duration of any financial benefit;
· Whether and how to provide temporary health care benefits; and
· How best to provide support for education and training to help move people up the skill ladder so that the U.S. work force can obtain the higher pay, better benefits, and greater job security available in our increasingly knowledge based economy.
4. Enforcing U.S. Trade Remedy Laws
The laws now on the books to protect U.S. industries against unfair practices by our trading partners are important to the credibility of the system. Indeed, more effective and timely enforcement of current laws in a manner consistent with our WTO obligations could bolster domestic support for more open trade.
There are some who argue that the United States should make it easier for industries to obtain protection from imported products by relaxing the requirements in antidumping, countervailing duty, and Section 201 “safeguards” laws.
Whatever the political appeal of such a strategy, it would cause substantial economic damage. The prospect of increased protection in the United States would invite a race to protection by other countries around the world, with all the attendant economic costs. We would lose the capacity to deter other countries from resorting (as U.S. industries have done) to greater use of countervailing duty and antidumping laws. We would be less able to make a credible case that emerging and developing economies would benefit from greater openness. This would be a terribly negative signal, particularly in the context of the present global slowdown.
There may be small changes—such as conforming the Section 201 injury standard to the WTO Safeguards Agreement standard—that may make sense as part of the implementing legislation for a multilateral trade agreement down the road. However, even limited changes that may be consistent with our international obligations would need to be considered carefully. In addition to the economic costs that necessarily accompany an increase in protection, an effort to modify Section 201, for example, might be hard to contain. It could possibly lead to changes in Congress going well beyond the WTO standard, increasing pressure to introduce a broader scope for trade protection in other areas of U.S. trade law.
5. Addressing Labor and Environmental Concerns
Labor and environmental objectives already have an established place in U.S. trade law. Labor rights were part of the 1988 Trade Act that authorized fast-track for the Uruguay Round of GATT and the North American Free Trade Agreement (NAFTA). The Generalized System of Preferences, African Growth and Opportunity Act, and Caribbean Basin Initiative all include provisions for denying benefits to countries that fail to make progress enforcing laws against child or forced labor, as well as internationally recognized worker rights or domestic environmental laws. The original GATT agreement also includes provisions that countries cannot be forced to import products made with slave labor, and that they can restrict imports for health and safety reasons if domestic products are similarly restricted.
Labor and environmental issues have become at once too important to be excluded and too controversial for legislation to dictate specific outcomes in advance of difficult international negotiations. Recognizing these issues is necessary for any effort to build a majority in favor of trade negotiating authority in Congress. But a U.S. effort to accommodate these concerns by conditioning future trade agreements on commitments by other countries to change their domestic laws to raise labor and environmental standards is only likely to end in a further international stalemate. Similarly, an approach that mandates sanctions to enforce labor and environmental provisions is likely to be viewed by many countries, especially in the developing world, as simply a new form of protectionism, and would simply ensure lesser U.S. ability to negotiate any new trade agreements. Sanctions are problematic for other reasons as well. Most importantly, because of the way in which trade sanctions are levied in the WTO, the companies or industries that violate labor or environmental standards would not be the ones punished. Rather, because sanctions would fall on exports, they would almost inevitably be levied against companies that actually meet international standards. There would thus be little deterrent effect on poor labor or environmental practices.
Elements of a reasonable compromise on labor and environmental issues might include:
· Support U.S. and international efforts to strengthen the capacity of our developing country trading partners to enforce protections against slave labor and exploitative child labor, and to strengthen environmental safeguards.
· Support efforts to strengthen the International Labor Organization’s (ILO) capacity to promote adherence to its conventions, highlight substantial enforcement problems in the application of domestic laws, and other appropriate actions within its scope of authority.
· Explore ways to expand multilateral cooperation on environmental issues and to establish new multilateral environmental agreements where there is a compelling case for collective action.
· Establish general negotiating objectives in TPA that recognize the importance of promoting broader international adherence to internationally recognized labor rights and stronger safeguards for the environment.
· Establish as priority negotiating objectives in TPA commitments to enforce domestic laws relating to labor and the environment. There should be no deviation from those laws to attract investment and gain trade advantage.
· Require that trade-related labor and environmental commitments be subject to an effective dispute settlement and enforcement mechanism that could comprise a range of possible instruments to increase compliance, but that neither mandates nor forecloses the possibility of trade sanctions. Of course, for this to be a viable solution to the proponents of a more forcefulenforcement regime there has to be a realistic prospect that the executive branch would be willing to invoke sanctions in some circumstances.
· Enter into cooperative agreements (not subject to enforcement or sanctions) aimed at helping count ries strengthen their labor and environmental standards.
· Avoid agreements that limit the capacity of a country to preserve existing labor and environmental standards or strengthen them over time.
· Explore the possibility of clarifying the relationship between WTO rules and ILO and multilateral environmental agreements, so that the former would not impede enforcement of the latter.
6. Improving Transparency
Measures should be taken to help improve confidence, particularly among consumer and environmental groups, that U.S. consumer and environmental protection would not be undermined by trade negotiations. To that end, Congress and the administration could agree to procedural reforms that, for example, would ensure that trade agreements affecting domestic regulations would be subject to the same public notice, comment, and review process that now exist domestically.
The perceived lack of transparency of WTO procedures has helped fuel opposition to further trade expansion. The United States should continue to urge:
· Opening up WTO dispute settlement hearings to the public.
· Allowing amicus briefs from nongovernmental organizations.
· Making public any government submissions before dispute resolution panels.
· Substantially reducing the number of restricted WTO documents and shortening the length of time it takes to remove documents from restricted status.
7. Broadening the Constituency for Trade
A successful strategy to support passage of Trade Promotion Authority will require a broader constituency than the traditional core supporters among globally-oriented American businesses. The apparent increase in congressional interest in the development problems of the poorest countries may offer the prospect of support from new sources. But before this support can be mobilized, TPA supporters will need to do a better job of publicizing the pro-development impact of open markets. In particular, there will need tobe a concerted effort to explain how TPA would work to further the broader prodevelopment initiative. In addition, consideration should be given to combining TPA with other legislative initiatives that might be responsive to some of the concerns about trade.
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