Bush will trade only with friends

Observations on US power

There may come a day when the protesters who daubed graffiti on the Geneva headquarters of the World Trade Organisation find them-selves pining for the WTO. As the Doha round of world trade talks teeters on the verge of collapse, the United States is already making plans for life without it.

Robert Zoellick, the Bush administration's point-man on trade relations, has said that the US is building a "coalition of liberalisers" in case the Doha round fails to reach fruition. With newly acquired authority from Congress, the president is free to consummate relationships with multiple trading partners. In the past nine months, talks have been launched with Chile, Singapore, Australia, El Salvador, Guatemala, Costa Rica, Honduras, Nicaragua, Panama and Morocco. They are being explored with a number of other Asian, African and South American nations. This is partly why the Doha round is in trouble. US enthusiasm for the multilateral forum flags as the administration recognises that it can extract much deeper concessions from trading partners by playing them off against each other in one-on-one negotiations.

And Zoellick has indicated what it takes for countries to win this competition for a favourable trade deal: a willingness to prostrate themselves to US foreign policy and national security goals. In a speech at the Washington-based Institute for International Economics last month, Zoellick warned: "[A free trade agreement] is not something one has a right to. It's a privilege." He noted that the Bush administration expects "co-operation - or better - on foreign policy and security issues".

Indeed, Zoellick conceded that this new litmus test would make it difficult for the US to consider a free trade deal with New Zealand, a nation that failed to support the US-led war on Iraq and has long refused to allow nuclear-powered vessels into its waters. That must be music to the ears of neighbouring Australia. A loyal member of the "coalition of the willing", Australia recently saw its trade negotiations with the US placed on a fast track, by order of the president.

Chile, on the other hand, which had concluded negotiations on a trade pact with the US late last year, saw that agreement (which needed only to be translated and signed) placed in jeopardy when it declined to use its United Nations Security Council vote for a second resolution on Iraq. For several months, the agreement's fate remained as uncertain as that of a Guantanamo Bay prisoner. Only a concerted lobbying campaign by business and key US senators encouraged the administration to break its sullen silence last month, and to announce that the agreement will be signed after all. Other countries are less likely to squeeze through the door.

Meanwhile, more compliant nations such as Bahrain are moving up the queue. Although trade in oil between the US and Bahrain is already largely free, and the US can expect few other serious economic benefits from the tiny Gulf state, the administration views it as a testing ground for broader trade deals with other Middle Eastern nations.

So the administration's approach to trade liberalisation no longer appears to be guided by economic considerations. The long-standing theory of comparative advantage - the notion that countries should focus on producing what they produce best, and trade with others for their other needs - seems to have been supplanted by a theory of comparative sycophantage as countries jostle with one another to pledge their allegiance to US foreign policy goals.

Yet despite the heavy economic price of being freezed out of America's preferential trade circle, not all nations are rushing to hand the keys of their foreign departments over to Washington. New Zealand's prime minister, Helen Clark, has been unapologetic in the face of the US rebuff: "We have to be free as a sovereign country to make our own foreign policy." At least some western nations are showing backbone, instead of pursed lips.

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