SUNS 4363 Friday 29 January 1999

Washington, Jan 27 (IPS/Jim Lobe) -- Top officials of U.S. President Bill Clinton's administration have laid out an ambitious trade agenda for 1999, but key parts of it will depend on an increasingly partisan Congress.

While Clinton can rely on Senate support for his 1999 initiatives, which range from new trade preferences for Africa and the Caribbean Basin to the opening of a new round of global trade negotiations to reduce tariffs in Seattle next November, the fractious House of Representatives is another matter.

A key test will be the fate of his request for "fast-track" authority to negotiate new trade agreements. Amid rising concern about the impact of economic globalisation, Clinton's previous efforts to obtain
fast-track authority, which was routinely granted to his four predecessors over the last 25 years, were defeated in the House in both of the last two years.

If Clinton cannot get fast track - which ensures that Congress cannot amend major agreements negotiated by the administration - his credibility both as a negotiator with U.S. trading partners and as a leader in a new global round of negotiations will be seriously undermined, according to most analysts.

Despite continuing strong economic growth and the lowest inflation and unemployment levels in more than 30 years, polls show that most of the public remain very sceptical of new trade accords. Last month, for example, a NBC/Wall Street Journal poll found that almost 60 percent of respondents believed trade has been bad for the U.S. economy.

While the administration admits that recent trade trends have harmed some domestic industries, especially steel, U.S. prosperity has become more dependent than ever on open markets abroad. "Nearly a third of our growth over the past six years has been the result of trade," Commerce Secretary William Daley told the Senate Finance Committee here Tuesday.

U.S. officials insist that 1999 is shaping up as a critical year for the future of international trade, as for economic globalisation generally.

Citing the Asian financial crisis, last summer's Russian default, Malaysia's move to insulate itself from the global financial system, and most recently Brazil's decision to devalue the real, Washington fears that the post-Cold War momentum for an open and integrated world economy has run out.

"If the United States, with its very healthy economy, is seen as moving toward restricting markets, that could well reinforce the newly vibrant voices of protectionism in many countries around the world whose economies are struggling or less vibrant than ours," warned Treasury Secretary Robert Rubin at the same hearing. "That is enormously against our interest."

But trade boosters are on the defensive. An explosion of steel imports from Japan, Russia, Korea, and Brazil have hit the domestic industry - a powerful political constituency - especially hard. The administration has already warned Japan that it will retaliate if its steel exports to the United States, which grew 500 percent in one year, are not restrained.

Adding to protectionist pressures here is the ballooning U.S. trade deficit. The 1998 deficit will likely break all records at more than 170 billion dollars, and some analysts believe the deficit for 1999
could approach $300 billion.

Rising concern about the deficit is not only hardening the labour union's opposition to fast track of labour unions - whose influence over a majority of House Democrats is considered decisive. Analysts worry it may also spark a sharp fall in the dollar, thus spurring the Federal Reserve to raise interest rates, ending what Clinton last week called "the longest-running peacetime economic expansion in our history."

Yet another source of scepticism arises from impatience with the European Union (EU) over what Washington says is its refusal to comply with World Trade Organisation (WTO) decisions against its rules affecting the banana trade and imports of U.S.-produced beef.

"Recent experience has called into question the ability of victorious parties to gain any timely or meaningful relief from the WTO," Senate Majority Leader Trent Lott said Tuesday. "If we don't succeed (in these cases), "it's all over," said Lott, who has generally supported Clinton on trade matters.

In the face of all this, the administration has cobbled together an ambitious agenda designed to satisfy both sides of the trade debate. In his State of the Union address last week, Clinton himself stressed the need to build a "new consensus on trade."

For those sceptical of open trade, the administration will seek a substantial increase in export financing for U.S. manufacturers.  In addition, it is promising to enforce aggressively trade laws against importers accused of dumping products on the U.S. market and more rigorously track compliance by other nations with international accords.

Heeding complaints from labour and environmental activists, the administration says it will also push hard for greater openness in the WTO and related global institutions and for greater involvement by the International Labour Organisation (ILO) - which is supposed to protect
workers' rights - in international trade negotiations. So far, however, the administration has been somewhat vague about how this will be done.

Finally, Clinton says he wants to find "common ground" between business and free-trade boosters on the one hand and labour and environmental groups on the other on appropriate wording for fast-track authority.

Fast track was defeated last year when a heavy majority of Democrats complained that it did not include guarantees that new trade accords would include strong and enforceable safeguards on worker rights and the environment. Those Democrats were joined by a decisive minority of
isolationist Republicans.

On the other hand, business interests and the Republican leadership have strongly opposed any tough worker and environmental conditions in the past, and there is little indication so far - apart from the Republican-controlled Finance Committee's willingness to take testimony from environmental and union groups - that its position has changed.

As for the new global round to reduce trade barriers, US officials are pushing a focus in sectors in which the United States is especially strong, including service industries, such as express delivery,
financial services, and telecommunications; agriculture; intellectual property; government procurement, and information technology.

Trade Representative Charlene Barshefsky said Tuesday Washington wants an expedited process that could last as little as three years.