Selling Free Trade
By Sarah Kellogg

The United States is on the verge of an instructive if wrenching debate about free trade, globalization, and the role of this country in the global economy. That the debate comes in 2009 seems fitting. The world is still staggering from last fall’s rollercoaster ride on Wall Street. The future of free trade as a guiding U.S. economic principle is in question. A new administration will take the helm in Washington, and Democrats in Congress are feeling empowered to exercise their muscles. Additionally, some of the U.S.’ trading partners are as iffy about the benefits of open markets and globalization as the American public.

This civic dialogue likely will cover familiar territory. At the top, it will plumb the ill-effects of trade on America’s working-class families and individuals. To no one’s satisfaction, warring economists have debated the financial benefits of free trade for years. Posed in the starkest of terms, the central question of this debate will be: Are free trade and open U.S. markets responsible for sparking an economic renaissance in this country in the last two decades, or are they the ill-conceived products of misty-eyed free traders who inadvertently have torn apart the underpinnings of the American economy?

At first glance, the deck may be stacked against free trade and globalization, largely because of the bruised feelings of Democrats still recovering from eight years of free-market beatings at the hands of George W. Bush. But observers say they wouldn’t bet against trade and open markets. Even free trade doubters in the Democratic leadership in Congress will have a hard time denying the importance of trade to the U.S. financial system, especially at a time when the economy could use a pick-me-up.

And the new president, Barack Obama, likely signaled a moderation of his free trade views when he appointed U.S. Representative Rahm Emanuel (D–Ill.) as his White House chief of staff. Emanuel fought hard for the passage of the North American Free Trade Agreement (NAFTA) when he was an aide to former President Bill Clinton, and he has been a fervent supporter of trade pacts as a member of Congress.

What’s likely to happen, experts predict, is that new trade deals will go forward, but they will be linked to sweeteners to satisfy unions or bills to address worker wage inequality. There will be efforts to reopen trade pacts and insert new labor and environmental standards into pending deals. There will be movement, but it will be ever so slow. The fiery-eyed protectionists may capture the early trade battles in the new administration, but they won’t win the war, many believe. They say it will be impossible to wish away lucrative trade deals as the new president grapples with the worst American economy in decades.

“Global trade is the reality. There’s no going backward, but we have to build up manufacturing in this country,” says Julie Mendoza, practice group leader for international trade at Troutman Sanders LLP. “The whole trick is going to be trying to figure out how we’re going to get industries in this country and people in this country to move forward and to become more competitive. We cannot afford to do what they did in the Depression and pass a Smoot-Hawley-type bill that would raise tariffs and create enormous barriers to trade. That would be a disaster for our own economy and it would also be counterproductive to our efforts to rebuild our international relationships.”

The economics of trade will frame the debate, but it will not deliver a definitive answer. The politics of trade—both good and bad, here and around the world—will be the deciding factor in this great debate, observers say. Over the next year or two, the champions of free trade and its persistent opponents must decide whether the United States will lead, follow, or abstain from the global marketplace, and then, even more importantly, determine whether they and the American public can live with the geopolitical, economic, and national security consequences of their choice.

Trade: 2009 and Beyond
After eight years of the Bush administration being trade’s energetic cheerleader, free trade agreements (FTAs) won’t be winning any popularity contests on Capitol Hill. The financial crisis, revitalized Democratic majorities in both houses of Congress, and the public’s reluctance to trust the hype on free trade will make it difficult for the Obama administration to win approval for trade deals that already are in the pipeline or any new agreements it might consider negotiating.

“There has to be some effort to rehabilitate trade and trade agreements as things that actually have value for Americans,” says Susan G. Esserman, chair of the international department at Steptoe & Johnson LLP and a former deputy U.S. trade representative during the Clinton administration. “Many businesses understand why, but it doesn’t play very well in the media and with the public.”

While the majority of Americans favor trade, that majority has been shrinking. Fifty-three percent of Americans had a positive view of free trade in 2008, according to the Pew Global Attitudes Project, a public opinion survey of the Pew Research Center. That’s down from 59 percent last year and 78 percent in 2002. What’s shocking in the numbers is that the United States ranked last among developed nations in terms of public support for free trade. The next closest nation was Egypt at 57 percent.

Trade’s financial benefits and costs are constantly being debated, but there’s no denying exports play an important role in the U.S. economy. In 2007 exported goods and services accounted for 12 percent of the Gross Domestic Product. One of three U.S. acres is planted for export, and manufacturing exports have increased by 128 percent since the last multilateral- trade round more than a decade ago, according to the Office of the United States Trade Representative.

The Peterson Institute for International Economics, a nonpartisan think tank, estimates that U.S. annual incomes are $1 trillion higher, or about $9,000 per household, thanks to increased trade liberalization since 1945. The institute concluded that if remaining trade obstacles were eliminated, U.S. annual incomes would increase an additional $500 billion.

Yet some fear free trade will be a convenient scapegoat for the global economic collapse and worldwide credit crunch in the next Congress. Trade is inherently linked with globalization, a word more vilified than understood by the masses, and it’s easy to see that a system that encourages global economic integration may become an easy target for those seeking to exact some type of revenge for 2008.

“A lot of people are lumping together the issue of the regulation of the financial sector with the issue of free trade,” says Kevin Casas-Zamora, former vice president of Costa Rica and now a senior fellow in foreign policy at the Brookings Institution. “In some cases they had the same cheerleaders, but they are totally separate. You can have free trade without regulation of the financial sector and a lot of regulation without free trade. The issues should not be confused, although there may be some attempts to do so in the coming months and as Congress looks for scapegoats for the problems we’ve experienced.”

International observers are not the only ones concerned about U.S. lawmakers using free trade as the whipping boy for problems in the financial sector. “As tempting as it is in moments of crises to give our producers comfort that we are shielding them from competition by shutting our borders to imported goods or services, this course of action must not be pursued,” World Trade Organization (WTO) Director- General Pascal Lamy told a WTO Public Forum last September. “In fact, the infamous Smoot-Hawley Tariff Act of the 1930s that raised U.S. tariffs on over 20,000 imported goods to record levels led to nothing but a trade war between nations. In so doing, it ended up impoverishing us all; proving that protectionism, and beggar-thy-neighbor policies, are a dead end.”

“What is needed in times of crises is to enable consumers to purchase more for less,” Lamy added. “The temptation to shut our borders does exactly the opposite. There is no doubt therefore that the current hurricane that has hit financial markets must not dissuade the international community from pursuing greater economic integration and openness.”

Still, the new administration will have little choice but to address the concerns of organized labor which sees international trade as a job killer, slowly draining the life out of the country’s manufacturing sector by depressing wages, marginalizing workers, and causing hundreds of factories to be shuttered in small town America. Some four million jobs have been lost in manufacturing alone in the past decade.

The chairs of the respective House and Senate committees and subcommittees with jurisdiction over trade may count themselves as supporters of free trade, but the leadership in the House, particularly Speaker Nancy Pelosi (D.-Calif.), has been especially fierce in protecting the rights of workers and insisting on enforceable sanctions on labor and environmental standards in every free trade agreement.

“When push comes to shove, you push back because you don’t want to get pushed yourself,” Pelosi said in an interview on PBS’ The Charlie Rose Show last October. “We’re not going to get our workers pushed around. But you have to recognize, we live in a global economy. That is a fact. That is why I said to you before, educate, innovate, compete, prevail. Let’s not get caught in stale arguments about whether we’re going to compete and be number one in the world marketplace. We are.

“In the meantime, taking these individual trade agreements, we have to see what it means in our country and what it means in their country. Most industrialized countries in the world, including those belonging to the [European Union] EU, do not get themselves engaged in trade agreements that are totally to the disadvantage of their workers. There has to be some balance in this, and we’re not seeing that balance come from this president.”

Trade skeptics point to China as a case in point. Manufacturing jobs in the United States dropped by some 2.5 million after China joined the WTO in December 2001. U.S. wages were relatively stagnant since then, and disposable income for 75 percent of American households was steady or shrinking. Even without a trade agreement, China’s tsunami of inexpensive exports to the U.S. swamped local producers, many of whom could not compete against the cheaper Chinese goods.

“Were this simply a problem with our bilateral trade relationship with China, policymakers could focus on resolving that dysfunctional relationship. However, the problem extends to nearly all trade agreements since they are based on the flawed premise that free trade benefits the economy,” Robert Cassidy, director of international trade and services at Kelley Drye & Warren LLP, told the Interstate Commerce, Trade and Tourism Subcommittee of the U.S. Senate’s Committee on Commerce, Science, and Transportation last September. “Let me be clear, the `free trade’ model has a valid theoretical basis. But the premise is flawed and broken since free trade does not exist in a `free market’ Petri dish where there are no barriers to competition.”

With skepticism as the backdrop, the future looks bleak for trade in the short term, experts say. “I don’t see trade being a top priority. That’s unfortunate because overall it would be a catalyst to help us get out of the recession versus allowing us to go deeper into one. There are so many irons in the fire in Congress that it will be hard to use political capital to address the trade issues,” says Stephan E. Becker, leader of the international trade practice at Pillsbury Winthrop Shaw Pittman LLP.

Some worry that the lack of enthusiasm for free trade may be more than a passing fancy, and that the United States may be reversing course after decades of leading the free-trade bandwagon. “Sadly, an increasing number of our elected representatives have embraced what Robert Samuelson has called a new mercantilism—a policy intended to advance one country’s economic and political interests at another country’s expense,” suggested Carla Hills, one of the GOP’s most forceful trade advocates who served as U.S. trade representative between 1989 and 1993, at a forum last May at the Center for Strategic and International Studies. “Mercantilism stands in stark contrast to David Ricardo’s theory of comparative advantage that argues all countries benefit when markets are kept open and each country benefits from what each country sells.”

“That is a theory that has guided our trade policy, which has been bipartisan for more than six decades. I’m not suggesting that those seeking elective office have come suddenly to an epiphany, causing them to reject 60 years of bipartisan consensus favoring open markets. They’ve simply read the polls,” Hills added.

Reopening NAFTA
Passions surrounding free trade are at their most intense when discussion turns to NAFTA, the 1993 trade pact among Mexico, Canada, and the United States. Democratic President Bill Clinton finalized and signed the deal on NAFTA, which eliminated virtually all tariffs and trade barriers among the signatory countries, although his Democratic allies in Congress were never completely sold on the agreement. Whatever doubts they harbored about the pact then have only grown deeper over the years.

NAFTA is both the boon and bane of the American free trade arsenal. Some trace job losses in the manufacturing sector—approximately four million in the past decade—to NAFTA. While the agreement may not be to blame for every job that disappeared, there is near-universal agreement that it triggered the avalanche of plant closures in manufacturing, prompting producers to build plants in Mexico and other cheap-labor countries.

Even so, economists say the economy has grown as a result of NAFTA. Nonfarm payroll employment rose by 12 million jobs between 1998 and 2007 despite manufacturing job losses, according to the U.S. Department of Labor. Unemployment averaged a relatively low 4.9 percent.

Protrade economists say if unions are looking for something to blame for job losses, they should point the finger at new technology, an unpredictable business cycle, and greater efficiency in production. For example, from 1998 to 2007, U.S. manufacturing output rose 22 percent while jobs were leaching from the sector.

“NAFTA is absolutely a lightning rod for discontent on trade,” says Mark Sloan, a partner at DTB Associates, LLP where he provides analysis on agricultural issues related to the WTO and U.S. free trade agreements. “It’s always pointed to first as an agreement that has led to a loss of U.S. jobs. In certain U.S. sectors, there might be some loss of jobs, but if you look at it from a broader perspective, NAFTA has been a big job creator and extremely beneficial to the United States.”

Obama, who many believe is more of a free trader than he lets on, was locked into a more protectionist stance on NAFTA during the Democratic presidential primaries. Facing Senator Hillary Clinton (D-N.Y.) and former Senator John Edwards of North Carolina, both NAFTA skeptics, Obama found himself in a bidding war with his opponents to see who could be tougher on the agreement. Like Clinton and Edwards, Obama agreed early on to push for a reopening of NAFTA on labor issues, hoping to ease the burdens of American workers hit hard by the pact.

In October Obama reiterated that pledge during the presidential debates with GOP candidate John McCain, an unrepentant free trade advocate. “I believe in free trade, but I also believe that for far too long, certainly during the course of the Bush administration, with the support of Senator McCain, the attitude has been that any trade agreement is a good trade agreement. And NAFTA doesn’t have, did not have enforceable labor agreements and environmental agreements. And what I said was we should include those and make them enforceable,” Obama said.

While that view made for good politics in Rust Belt states such as Michigan, Ohio, and Pennsylvania, all hit hard by NAFTA-related layoffs and plant closings, it creates problems for Obama as he looks to manage key trade relationships with Mexico and Canada—economic relationships that have grown significantly over the past 15 years and that have, for the most part, benefited the United States. Canada is the United States’ largest trading partner, with $533 billion in cross-border trade in 2006. Mexico is number three.

“It’s hard for me to believe that the union leadership thinks there is anything it could get out of renegotiating NAFTA,” says Troutman Sander’s Mendoza. “It’s hard to believe they think there are new benefits that would come from renegotiation that would significantly outweigh all the other benefits that we’ve experienced. … I feel like NAFTA has become a whipping horse, serving as an example of what they consider to be bad agreements.”

Additionally, any talk about reopening NAFTA will obviously draw the interest and concern of the other parties to the agreement. Neither Mexico nor Canada has been complete winners under NAFTA, although Mexico has been hit harder when it comes to stagnant wages for its workers. Any new talks could open the door to changing provisions that currently favor the United States.

“Some of the problems with trade agreements are that their benefits have been consistently oversold,” says Casas-Zamora, the senior fellow at Brookings. “In Mexico, NAFTA was sold as the ticket to the developed world. That kind of expectation is just absolutely unfounded. There is no reason to think that any free trade agreement will have that kind of effect. Development is a very complex issue, and you have to do a lot of things right for a free trade agreement to have that positive an impact.”

Opening up the agreement also will bring more than government officials to the table. Nongovernmental organizations and the business community will be there with their own even narrower concerns. “It’s a potentially complex exercise to open up NAFTA. The United States may want to open up NAFTA on some discrete issues, but the Mexicans and Canadians may want to open it up for other issues. A further concern is that once the government moves forward to open up the agreement, then the private sectors from the NAFTA countries may want to get involved and push for changes that would benefit them,” says Steptoe’s Esserman.

In the Pipeline
If a NAFTA rewrite becomes an agenda item, it will have to wait for Congress to deal with the pending FTAs that have been languishing for months, if not years. Democratic leaders played a spoiler role in the last Congress on the regional FTAs, insisting that foreign countries like Columbia address their concerns first about the safety of union organizers or, as in the case of Peru, accept new labor and environmental standards before they would approve the deals.

A reluctant Bush administration did renegotiate pacts to address Democratic concerns, which sealed the trade deal with Peru, but the trickle of trade agreements has slowed to a halt as the president’s term comes to a close. By the time Bush leaves office in January, agreements with Colombia, South Korea, and Panama could remain on hold. For the Colombia deal, that would prove fatal. It expires with the close of Congress’ term on January 4.

Concerns about the three agreements fell into two main categories—political and substantive. While the FTAs with Colombia and Panama required delicate negotiations to address legitimate concerns about the safety of workers and union organizers, by the time they reached Congress, both agreements were considered fairly benign to many observers. However, pending issues on the FTA with Korea were complex and driven by ferocious debates over details of the plan and its potential impact on the American automobile industry.

Three years of negotiations on the Panama FTA had solved all the trade issues, but left a sensitive political and law enforcement obstruction to be removed. Pedro Miguel González Pinzón, who was elected in 2007 to lead Panama’s National Assembly, had been indicted on first-degree murder charges in the United States for the killing of a U.S. Army sergeant and the wounding of another soldier. Acquitted of the charges in Panama, he still was wanted in the United States. Members of Congress had refused to move forward on the trade pact until González Pinzón left the government, which he did last August.

Signed in 2006, the Colombia FTA was renegotiated to accommodate tougher labor standards requested by the Democrats. The concessions weren’t enough, however, to win the favor of congressional leaders. They remained alarmed by the number of union organizers killed in Colombia. Despite a drop in the number of killings in recent years, they felt the government was not doing enough to protect workers and pursue the killers. A frustrated Bush submitted the FTA to Congress in the spring of 2008, triggering the 90-day deadline for an up-or-down vote under Trade Promotion Authority rules. Pelosi changed the House rules to void the deadline, which left congressional–White House relations in tatters and the Colombia FTA in limbo.

Halting the free trade agreement with Colombia made no sense economically, Bush officials argued, since Colombia’s exports enter the United States today tariff-free. Exports from Colombia and other Latin American nations have been duty-free under the 1991 Andean Trade Preference Act, which was renewed last fall by the Democratic Congress as the Colombian deal waited for a vote. At the time, Bush officials argued that the United States was paying a financial penalty for not moving forward on the FTA. U.S. exports to Colombia face severe tariffs—10 percent on computers, 15 percent on tractors, and up to 35 percent on automobiles. Under the new trade agreement, most tariffs would go down to zero.

Finally, the agreement with Korea was problematic because it was opposed by U.S. automakers as well as organized labor. The divisions on Korea were apparent during a Senate hearing on the FTA last fall. Ron Gettelfinger, president of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, objected to the FTA because it didn’t go far enough to protect U.S. auto exports to Korea. “Although this trade deal would require Korea to drop its tariffs on U.S. automotive products, it would allow Korea to maintain a series of nontariff barriers that have effectively kept its market closed to imports of U.S.-built vehicles and parts,” Gettelfinger told the Senate Commerce, Science, and Transportation Subcommittee on Interstate Commerce, Trade, and Tourism. “The United States would not have any effective remedies to challenge a continuation of these Korean trade barriers. As a result, the U.S.-Korea FTA would inevitably lead to an increase in the enormous, unfair automotive trade imbalance between the U.S. and Korea.”

In 2007 Korea limited automobile imports to about 4 percent of its home market, yet exported 70 percent of its production of vehicles. More than 16 percent of its production of automobiles was exported to the United States. The free trade pact would eliminate nearly all tariffs on automobiles, but it would leave in place a number of barriers around safety and other issues that Korea has used to block the entrance of U.S. vehicles to its market.

“Korea’s complex regulatory system and other nontariff barriers have in the past limited opportunities for U.S. manufacturers and others to compete and succeed in Korea market,” Myron Brilliant, president of the U.S.–Korea Business Council and vice president of the Asia division of the U.S. Chamber of Commerce, told senators at the same hearing. “The U.S.– Korea FTA addresses these challenges with strong provisions and protections that open Korea’s market, protect U.S. interests, and set the bar higher for future trade pacts.”

Rewriting the Rules
Setting the bar higher on trade pacts could bring even a reluctant Congress to the table to discuss past and future trade agreements. Lawmakers recognize that the United States wields enormous clout as the world’s largest consumer nation, and that power gives it the ability to press other countries to toe the line on issues such as health, security, labor, and the environment.

Past examples of developing nations compromising critical labor, health, and environmental standards have further emboldened U.S. lawmakers to demand that access to U.S. markets come only in exchange for tougher standards, especially in the areas of labor and the environment. The United States has, in recent years, successfully leveraged its markets to insert enforceable labor and environmental rules in new free trade agreements, requiring the same remedies, procedures, and sanctions for violations of these new rules as for abuses of commercial provisions in the agreements.

“There is an inherent tension here: Should we try to help these countries get to a point, economically and socially, where they can afford to have similar concerns as ours regarding economic regulation and the environment, or should we refuse to deal with them because they’re not already where we are?” says Becker, the international trade agreements expert at Pillsbury Winthrop. “That is the question that is constantly debated. But it’s not an accurate dichotomy, because we already have trade and investment flows with those countries and can’t stop them. Moreover, the United States is a powerful negotiator and usually gets much more in trade agreements than it gives up.”

To appease congressional Democrats, the Bush administration wrote enforceable labor standards into a number of recent FTAs, requiring nations to adopt five basic, internationally recognized labor principles that are found in the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work. Those five principles are:

Under the agreements, only a government can trigger dispute settlement against another government for a labor violation, and those violations are subject to the same dispute settlement procedures and remedies as commercial obligations, including fines and trade sanctions. Ironically, the United States has not adopted most of ILO’s more than 100 founding labor principles.

“Labor laws are generally viewed as a core issue of a nation’s sovereignty. Although there is agreement on basic standards, each country has its own system,” says Becker. “Some other countries actually provide more protections for their workers than we do, such as making it harder to lay off employees. What you hope for is that over time wages will increase and enforcement of laws will improve. But when we’re dealing with poorer countries that are struggling to educate or even feed their people, it is usually not well received when we try to dictate how they should allocate their own scarce resources. Indeed, it’s hard to improve standards of living by fiat, even in a centrally planned economy.”

In terms of environmental standards, the United States has incorporated multilateral environmental agreements (MEAs) in all its recent free trade pacts. Those MEAs include the Convention on the Prevention of Marine Pollution by Dumping of Wastes and Other Matter, the Ramsar Convention on Wetlands, the International Convention for the Regulation of Whaling, the Convention on International Trade in Endangered Species of Wild Fauna and Flora, and the Montreal Protocol on Substances that Deplete the Ozone Layer. For example, the Peru FTA includes an accord to work with the Peruvian government to address illegal logging, including the harvesting of endangered mahogany, and to restrict imports of products that are traded in violation of endangered species regulations.

Attempts by the United States to include these environmental provisions in trade agreements often have raised the ire of other nations, especially given this country’s own track record on certain environmental principles. “There is a lot of suspicion about whether there is real concern about labor and environmental standards or whether they’re being used as a competitive weapon,” says Mendoza of Troutman Sanders. “Most people in the world don’t feel the United States is all that good on the environment, so they get suspicious when they see us making demands.”

Still the trade-off may be worth it. “Given the attempts to put labor and environmental standards into agreements, developing countries are better off taking all the standards than not. The benefits of having a bilateral, free trade agreement with the United States far outweigh any restraints you may have caused by insisting on fairly general and benign labor or environmental standards,” says Gregory C. Dorris, a partner at Pepper Hamilton LLP.

A Turning Point for Trade
As the United States debates its options on free trade, the rest of the world finds itself at a turning point as well. While the ongoing financial crisis has contributed to this new appraisal of trade relationships, the first inkling of these changing attitudes about global trade was already apparent several years ago as developing nations took a more prominent role in multilateral trade negotiations. In fact, it is the growing power of emerging nations such as China and India that has led to this moment of reappraisal.

Since the early 1990s, the developed world’s trade relationships were built through the General Agreement on Tariffs and Trade and the WTO, which was created to serve as a permanent negotiating forum where members could raise trade differences or concerns. While there was success in negotiating agreements on agriculture and services in the Uruguay Round, the first round of multilateral trade talks overseen by the WTO, the second round, known as the Doha Round, has proven less fruitful.

“All of the developed countries got into the WTO early on,” says Sloan from DTB Associates. “What’s happening now is that many more developing countries are looking to participate in the global trade negotiating process, and they have joined the WTO to do that. This tends to make the negotiating process more difficult, especially when you’re looking for a multilateral agreement that all countries must buy into, as is the case with the WTO.”

That explains an effort in recent years to develop bilateral or regional agreements between individual countries or among nations in a region. The best example of that is NAFTA. These regional agreements provided enormous opportunities to the signatory countries, but often included penalties or closed trade doors for outside nations. For many, bilateral agreements and their proliferation in the last five years are causing an already fragmented world to be more so.

“NAFTA helped to stimulate interest and movement toward negotiations of bilateral agreements worldwide,” says Esserman. “We moved forward with NAFTA, and the rest of the world followed with their own agreements. Ironically, while we started the ball rolling, we have moved more slowly than many of these countries. Many countries with parliamentary and other political systems are freer to proceed. We have a far more complex and democratic process, in which the responsibility for trade policy is shared between the executive branch and Congress. A successful U.S. trade policy requires strong bipartisan, bicameral, and public support.”

The Doha Round may be in hibernation after last summer’s talks in Geneva were sidetracked by China and India, both of which felt compelled to press for protections for their respective agriculture industries from imports. Most observers felt key world events—the U.S. election, the nomination of a new U.S. trade representative, changes in the EU presidency, and India’s elections—delayed further talks in 2008 and that a fresh start could occur in 2009.

Advocates for a multilateral trading system say it’s important to keep the Doha talks on track as they build a stronger world economy, continue agricultural reform, and advance developing countries. They concede that the WTO process is a complicated one. Constraints written into the WTO founding documents—such as requiring “consensus” on agreements, which is close to demanding unanimity, and mandating that all topics of each round be completed before the round can be concluded—have hampered negotiations among the WTO’s 153 members.

Like most developed nations, the United States has tended to favor multilateral over regional trade agreements because they set across-the-board rules and make it easier for corporations to trade across multiple borders. Yet Americans’ flagging interest in free trade also has raised some concerns. U.S. officials have played a central role in not only conceiving the WTO and multilateral talks, but also taking the lead in winning the support of developing nations for complex agreements.

Some believe that given the difficulty of bringing the Doha Round to a close, it might be time to look at other options to develop, negotiate, and finalize trade relationships between or among countries. “The Doha Round is in rough shape and on life support for so many reasons,” says Esserman. “There are many different WTO members who have differing views, and it only takes one country to object to block forward movement.

“We have reached the point where we must consider alternative approaches to WTO negotiations. We might consider plurilateral or two-tiered agreements, in which the agreement does not require the consent of every WTO member. We leave these agreements open to any country that wishes to participate but we do not insist that every country be a part of it. The participating countries reap the benefits of the agreements and those that decline to participate do not. This would be a reciprocity-based rather than a most-favored nation approach, which has been the foundation of our WTO agreements.”

It may turn out to be the solution to the WTO’s current problems, but it is not one that is favored by the WTO leadership, which retains an interest in multilateral negotiations.

Finding a Way Forward
As world leaders look for a new way forward at the WTO, the United States has some internal housekeeping of its own to complete—finding a middle ground between trade advocates and protectionists to craft a compelling trade policy for the next four years. Many are hoping that the Obama administration will make the case for trade to the public, encouraging Congress to support more vibrant and activist trade leadership in the future.

If the country hopes to maintain its preeminent position as the world’s top trader, the Obama administration will need to work in tandem with Congress to keep the American reputation for free and unfettered trade alive, while protecting workers from the vagaries of that commerce. The answer may come in a delicate balance of carefully crafted trade pacts and legislative measures that target victims of trade wars. A legislative solution could be a beefier Trade Adjustment Assistance program, providing a well-financed safety net of health, training, and income insurance for workers displaced by free trade.

Additionally, the Obama administration could become the trade warrior congressional Democrats had hoped the Bush administration would be at the WTO—aggressively enforcing agreements and challenging any attacks on U.S. exports through currency manipulation and excessive barriers. In fact, a proactive approach in Geneva—tempered by an understanding of the United States’ foreign policy portfolio—might go a long way toward easing congressional concerns that free trade has run amok.

“I always thought that the European Union was better at working within the WTO than the United States,” says Dorris of Pepper Hamilton. “It is more aware of the power it can wield in it. It seems more focused on strategic issues than the United States, and it looks to use the tools available to get what it wants. The WTO puts a good deal of regulation in place—things that we don’t really recognize or use.”

Ultimately, the debate over trade may reveal that the challenges facing the United States are not predominantly from outside actors who threaten to knock it from its lofty perch as the world’s largest consumer nation. It’s likely the debate will expose that the challenges are internal, calling for structural changes in government and an investment in the nation’s human and physical infrastructure to ensure the vibrancy of the American economy long into the future.

“The goal of our trade policy is to ensure that trade promotes openness, fairness, broad distribution of benefits, and a higher standard of living for our people,” says Esserman. “Trade is not an end in itself.”

Sarah Kellogg, a freelance writer who lives in Washington, D.C., wrote most recently about the future of legal journalism.