Obama puts trade at heart of agenda

The Obama administration is readying several new cabinet appointments which will put the president’s seal on what is likely to be a significantly expanded second-term agenda for trade and the international economy.

After a first term in which domestic priorities largely shunted aside an activist international economic policy, the administration already has two potentially large trade negotiations on its plate this year.

The US and the EU are trying to finalise the announcement as early as next month of the formal launch of negotiations to reach a bilateral transatlantic trade deal.

The US and Asian countries are also aiming to conclude a deal over the Trans Pacific Partnership, which aims to knit together an association of Asia-Pacific countries, by September, ahead of a regional summit in Indonesia.

In coming weeks, Mr Obama will appoint a US Trade Representative to replace the outgoing Ron Kirk, and also a head for the Commerce Department, which covers export promotion and administration of trade rules.

Jeffrey Zients, the acting director of the White House’s budget office, is the leading contender to head the USTR. Other candidates interviewed for the post include Lael Brainard, Treasury undersecretary for international affairs.

Mr Zients has been a proponent of creating a superministry, to take in trade and business promotion as well as the Ex-Im Bank, an initiative that was initially sidelined by opposition in Congress.

An expanded international agenda will also mean a higher profile for Michael Froman, who is staying on as Mr Obama’s deputy national security adviser for international economic affairs.

On top of trade, Mr Froman is responsible for development, energy, climate change and international finance in the White House, all issues with the potential to demand more of the president's time in his second term.

Late in his first term, in October 2011, Congress passed trade agreements with Colombia, South Korea and Panama, but all three had been signed under George W. Bush, before they were renegotiated.

“They did not have a proactive trade agenda in their first-term – it took them a long time to work out what to do with [those agreements],” said Edward Alden, of the Council on Foreign Relations in Washington.

Joe Biden, the vice-president, who concludes a five-day trip to Europe on Tuesday, is attempting to assess whether the US is comfortable with the level of political commitment in the EU to negotiations.

The sides have already had extensive talks about how to approach talks which have moved on from simple tariffs to more complicated issues of domestic regulation in everything from food to medical services and electronics.

“Both sides want to be sure they have put together the best conditions for negotiations,” said Joao Vale de Almeida, the EU ambassador to Washington. “No one wants to get into this and be frustrated.”

The TPP also faces substantial hurdles, not just to reach a deal before September, but to go beyond the present negotiating partners, southeast Asian nations and other countries such as Canada and Australia, to include Japan.

Japan is Asia’s second-largest economy after China and the world’s third largest but its trade agenda is still hamstrung by an entrenched protectionist farm lobby.

Japanese officials said domestic sensitivities mean any announcement about Tokyo joining the TPP talks was unlikely during the visit to Washington next month by Shinzo Abe, Japan’s Prime Minister.

The US car industry, despite the presence of many Japanese transplant factories in America, also has reservations about the implications of TPP for more imports from Japan.

In any US talks with the EU and Asia, the rise of China is a significant factor.

A transatlantic deal is being sold in both markets as a way to set trade rules worldwide for a significant part of the global economy in such a way that China would be under pressure to follow.

“I think the EU and US trade deal has many benefits beyond trade,” said David Rothkopf of Foreign Policy magazine.

Likewise, TPP is about bringing together regional economies in Asia into an agreement which the Chinese economy, with its size and vast disparities in development, would struggle to sign on to.