Trade Issues Complex, Heated

Experts, diplomats say US officials must move to define goals, avoid trading blocs

By , Staff writer of The Christian Science Monitor

UPON President-elect Bill Clinton's inauguration, his administration will face a most prickly problem: negotiating lucrative trade agreements in foreign markets that have produced adversaries more often than partners in world commerce.

But before working any deals abroad, the White House must get through what could be rough congressional confirmation hearings to win approval for Mickey Kantor, the lawyer/lobbyist who Mr. Clinton has tapped to be the new US trade representative.

Clinton officials must contend with increasing world recession. While stepped-up US exports have accounted for much of the nation's economic growth during the past several years, economies that have been the biggest outlets for US output - in Europe, Latin America, and Japan - are either slowing down or have reached a standstill. Shrinking world demand forces the United States to push more aggressively for export sales and counter strong competition from foreign suppliers anxious to sell to the US.

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Now, more than ever, say trade watchers, multilateral accords effectively regulating free and fair commerce must be reached before nations erect more barriers and the globe sections into regional trade blocs.

US officials are in the throes of completing the most comprehensive trade talks to date, the Uruguay Round of the General Agreement on Tariffs and Trade (GATT). Involving more than 100 nations and covering a broad range of areas from farm subsidies to intellectual property rights, it has been more than six years in the making.

President Bush just signed the North American Free Trade Agreement (NAFTA) with his Mexican and Canadian counterparts, although the new Clinton administration can expect to encounter strong opposition to the pact from many US interest groups. And Washington has been in protracted negotiations with Tokyo over Japan's huge trade surplus with the US.

These are the flash points in US trade policy, but there are endless, complex issues that arise with a variety of governments and companies every day. The new administration may not be prepared, says Alan Tonelson, research director of the Economic Strategy Institute. Kantor "doesn't know a thing about trade policy," he says, "and now is really no time for on-the-job training."

On Capitol Hill, Kantor's unexpected appointment is likely to be challenged by lawmakers who are uncomfortable with Manatt, Phelps, Phillips & Kantor, the California law firm that has registered as a foreign agent to lobby in the US on behalf of foreign companies and governments. But despite Clinton's earlier disavowal of lobbyists and influence-peddlers in government, he selected Kantor, his good friend and campaign chairman, to be the next trade representative.

Ki Ho Chang, the economic counselor at the Korean Embassy in Washington, echoes the concerns of many diplomats who are quizzing specialists about possible changes in US trade policy.

WHILE US-Korean trade relations have improved in recent years - Mr. Chang proudly recalled Clinton's comments at the Little Rock Economic Conference that Korea is an exemplary trade partner because of Seoul's efforts to reduce its trade surplus with the US - the Korean official says he has profound concerns about the US`s ability to conclude GATT. Unless Kantor succeeds in negotiations, Chang warns, costly trade regionalism, with blocs in Asia, Europe, and the Americas, will prevail.

Chang is encouraged by Kantor's "very personal relationship with Bill Clinton - it means he will have the full confidence of the president in his job as [trade representative]," he says.

But it is unclear just what direction Kantor's new boss will take. Unlike Mr. Bush, who was broadly known as a free-trader when he entered the Oval Office, Clinton has been hazy. He calls for free trade but has voiced support for government intervention, for rapid action against trade-agreement violators and for reciprocity in market access. He was criticized during the campaign for vacillating on NAFTA, and eventually endorsed the pact with the caveat that additional labor and environmental legislation and agreements would have to accompany it.

"Trade is one area where you can't be on all sides of the question," says John Macomber, chairman of the US Export-Import Bank during the Bush administration. "You're in negotiations all the time, and you have to define and defend your position." Because Bush's trade negotiators had a strong sense of the White House trade policy, "this administration and particularly the trade agencies have worked well with Congress, while there were obviously real problems in the broader White House-Congress relationshi p," Mr. Macomber says.

"There were strong voices on the extreme ends" of the trade debate, he says. "We worked hard at listening to and understanding what was on the congressional leadership's agenda, and our positions were very clear to them."

The more time the new Clinton administration takes to articulate its trade approach, the more "pressure groups in Congress" will water down Washington's ability to help resolve the all-important GATT accord and other trade agreements, Chang says.

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