Trade depends on America

Source: The Economist

Progress in trade during this year will hugely depend upon America’s desire to push the Doha round along.

If there is any country in the world which sets the tone of the global trading system, then it’s America. It remains the largest trading nation in the world and its leadership has played a major part in many of the major trades since World War II. Although the Doha round is slightly different, and other countries have varying degrees of influence, America is still an essential part of it.

It was George Bush who helped push the Doha round along but it is difficult to assess whether this enthusiasm still exists due to mounting domestic political pressures. Ideally, America would want to keep a low profile in terms of trade in order to fight its battles at home.

Nevertheless, events close to home in the Central America Free Trade Agreement (CAFTA) are stirring up trouble. Despite the talks having been completed last spring, the lawmakers have yet to approve it. If America fails to pass CAFTA, which is a small trade agreement, will it be equipped to have a substantial influence in the Doha round?

Textile safeguards are another important issue in America. Once the textile quota had expired in late 2004, the Bush administration tried to impose quotas on cheap Chinese imports but this was before any import surge had actually occurred. Textile importers filed suit against the government and won, preventing the quota from going into action.

All these domestic issues mean that Mr. Zoellick, one of America’s trade representatives, will need more explicit backing from the White House to push along the Doha round. However, he may no longer be in the job as trade representatives usually only serve for one year.

Despite domestic troubles in Congress and a change in the top trade negotiator, America will still be able to push the Doha round along successfully. But George Bush has to have the desire to push these talks along.