What with 9/11 and wars in Afghanistan and Iraq, the Bush administration pushed foreign economic policy onto a back burner in its first term.
But that will have to change in the second term.
So conclude several economists who describe the situation facing the United States as everything from "promising opportunities" to "daunting global economic challenges." Two issues, in particular, demand increasing attention: clinching an international trade deal and finessing the fall in the value of the dollar.
How well President Bush will meet these challenges is hard to predict. But some clues can be gathered from his first term. Those assessing his record so far see a mixed bag of achievements and missteps in foreign economic policy.
Perhaps surprising is that, unlike in other areas of foreign policy, Mr. Bush has not acted unilaterally. He hasn't taken sweeping action without the approval of major allies in Europe or elsewhere.
"Unilateralism is not an option in foreign economic policy," says C. Fred Bergsten, director of the Institute for International Economics (IIE) in Washington. By the very nature of trade and many other foreign economic activities, negotiation with other nations is required.
Like President Clinton, Bush is pushing for success in another round of major negotiations to reduce world trade barriers. It has been a perilous exercise. But by early 2002, actual negotiations of the "Doha Round" began in Geneva within the World Trade Organization (WTO).
"It's hard to assess what is happening there," says Richard Cooper, a Harvard University economist who helped negotiate three previous global trade rounds. "All of them are cliffhangers."
Mr. Bergsten and his colleagues at IIE calculate that globalization, with its freer trade and growing international investment, has increased the US standard of living by about $1 trillion since 1945, or $9,000 for the average American household in today's world. Successful completion of an ambitious Doha Round might add another $100 million to $200 million to that $1 trillion, he estimates.
But the integration of the US economy into the world economy can harm Americans, too. Now, even workers with good salaries, such as computer programmers, find their jobs transferred offshore to India or elsewhere.
That's why Bergsten and other IIE economists urge the administration to substantially expand "trade adjustment assistance" to include service workers harmed by expanding international commerce. The US now spends $1 billion to $2 billion a year on the program, usually to aid manufacturing workers.
Bush has not been wholly averse to sheltering US workers from foreign competition. "There is a discrepancy between Bush [free-trade] rhetoric and his actions," notes Mr. Cooper. Bush has taken protectionist steps to help the US steel and lumber industries. But so did the previous two presidents when faced with intense political pressures.
Bush has been a bilateralist when it comes to cutting trade deals. These relatively small agreements between two nations or regions may benefit the countries that sign them, but they hurt competing nations, Cooper charges.
Since the chief promoter of such deals, Robert Zoellick, has moved on to the State Department, it remains to be seen whether Bush's choice for his replacement, Rep. Rob Portman (R) of Ohio, will continue the bilateral push or throw his energy into the much broader multilateral talks under the WTO with its 148 member nations.
The other key area for the administration is the dollar. Because the US has a massive deficit in trade and international financial flows and because this is being financed mostly by Asian central banks, "the possibility of a financial crisis that forces the Bush administration quickly to reassess its policies cannot be discounted, to say the least," writes Jeffrey Garten, dean of Yale School of Management, in Foreign Affairs magazine.
If foreign lenders decide to shift their investments away from the dollar, its value could plunge and force the US to jack up domestic interest rates to attract and keep foreign lenders and investors. Higher rates could damage the economy.
What's needed, experts say, is a reduction in the huge federal budget deficit. Such action may not shrink the international current account deficit a lot, says Cooper, but it is related.
The deficit under Bush has ballooned, although he has promised to crack down in his second term. On the plus side, the US Treasury has not intervened in the foreign-exchange markets to prop up the dollar. Experts applaud that inaction, especially since the decline in the dollar's value so far has been orderly.