On one issue, the world really likes Bush

Cowboy diplomacy. Unilateralism. Foreign governments have sharply criticized President Bush's foreign policy in many ways. But on one issue, international trade, you could almost hear a collective sigh of relief over his reelection.

Because of the administration's strong commitment to free trade, the United States looks ready to push for even more international agreements that trim barriers to commerce.

The first tests of Mr. Bush's second-term outlook will come shortly as he makes decisions on two key issues: world trade talks and import quotas on clothing. These decisions will help shape commercial relations with other nations in the years ahead.

Of course, the president's free-trade rhetoric has always been strong. He has concluded trade agreements with 12 countries and is negotiating with 12 more. But he has made some protectionist moves, such as helping the steel industry early in his first term and imposing barriers on Canadian lumber.

Looking ahead, observers expect no substantial changes in White House policy. "Most likely Bush will order a 'review' of present trade tactics and strategies and seek a shift in priorities from international negotiations to consensus building with Congress on trade and currency policy," states Harald Malmgren, a veteran trade economist in Washington.

One of his first major decisions: what to do with a worldwide system of quotas on textile and clothing imports, which expires Jan. 1. It involves 700,000 US workers, largely in Southern states that supported Bush's reelection. The quotas also affect 2.7 million workers in Europe, and millions more in dozens of developing countries. The great concern is that China, with its cheap labor and market power, will capture most of the world's textile business, wiping out jobs and businesses in many other nations, including the US.

A coalition of American textile trade associations and the industry's labor union has filed nine "safeguard petitions" with the administration that seek to limit the growth in imports of various garments (trousers, knit shirts, underwear, sheets, and so on) and yarns from China to 7.5 percent in 2005. The industry suspects that early in the new year Bush will decide whether to accept the petitions and launch talks with China for restraint on its textile exports.

In categories where quotas were removed, the Chinese share of the market has risen from an average 9 percent to 72 percent in short order, notes Robert DuPree, a vice president of the National Council of Textile Organizations. For instance, in the case of down-filled coats made with synthetic fiber, China now has 90 percent of the market.

The US imported in 2003 more than $77 billion of textiles and clothing under the Multi-Fiber Arrangement that set up quotas 10 years ago. Of that amount, about $61 billion is in categories with quotas that expire Jan 1.

The other key issue facing the administration is an extension of its trade promotion authority (TPA). It must be requested of Congress by March in order for the US to continue with the current Doha round of world trade talks. This "fast-track" authority, considered essential for trade negotiations, specifies that Congress must take an up or down vote on any trade deal the administration reaches. It can't alter any part of the deal.

Unless Congress votes to turn down the extension within 90 days, TPA will automatically renew and last through Bush's second term. But renewal "is not a slam dunk," notes Frank Vargo, trade economist at the National Association of Manufacturers in Washington.

Many members of Congress are unhappy that the World Trade Organization (WTO) has ruled against the US in several recent trade disputes, such as a ruling supporting a complaint by Brazil over US subsidies to its cotton growers.

The Doha round is the eighth round of world trade negotiations under the WTO or its predecessor body, the General Agreement on Tariffs and Trade (GATT). Partly as a result of their reduction in trade barriers, the world has changed.

Global output has more than quadrupled since 1960. Global trade has grown even faster, up more than ninefold to $7.3 trillion last year. Since the end of the previous round of trade talks in 1994, the global marketplace has exploded from 1 billion to more than 6 billion people, driven in large part by the deeper integration of China and India into the world's economic system.

That makes the potential effects of a new trade deal much more widespread. It also complicates negotiations because more nations than ever will be sitting at the table. No formal date for a conclusion of the Doha round has been set. But it could happen in early 2007, experts say.

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