Negotiating in a Volatile World

 

When South Korea President Lee Myung-bak came to the United States earlier this week, he made sure that he met two high-powered Washington officials during his three-day state visit. At the top of Lee’s agenda, of course, was a meeting with President Barack Obama. At their summit, Obama reaffirmed his pledge to protect South Korea from North Korea’s nuclear threat.

The other person high on Lee’s list was U.S. Trade Representative Ron Kirk. In the session with Kirk, the talk focused on international commerce. Both agreed to work together for a speedy ratification of the Korea-U.S. free trade agreement and that such an accord would serve as an economic boon for both countries. The trade deal was signed in 2007 during the two nation’s previous administrations but ratification in U.S. had been stalled, in part, due to concerns of its impact on American businesses, especially the auto industry. Kirk reportedly said he would push for the deal to both Congressmen and American citizens alike, citing how it would help the nation’s recovery through job creation. The two closed their meeting by sharing their mutual admiration for their political trajectory: Lee, a former mayor of Seoul, had become head of state while Kirk, a former mayor of Dallas, had made the ascension to the nation’s ambassador of trade.

Kirk is the Obama administration’s point man on international trade. In his cabinet-level position, Kirk develops and recommends trade policy to President Obama; conducts bilateral and multilateral negotiations; and seeks to open up new markets for American products and services. At his confirmation hearing, he maintained he didn’t come to the job with “deal fever,” seeking to fine-tune existing agreements and holding a philosophy that “when trade deals are done right, America’s businesses and workers will be able to successfully compete with those anywhere in the world.”

His task has been made tougher by the weakening of the global economy. In the first quarter, U.S. gross domestic product fell at an annualized rate of 6.3% (trade represents roughly 13%) while three of its largest trading partners — Mexico, Japan and Germany — plunged 21.5%, 15.2% and 14.4%, respectively. Kirk seeks to stave off isolationist and protectionist trade policies that will lead to higher tariffs and choke economic growth.

Although he runs the smallest office within the Executive Office of the President — more than 200 staffers with offices in Geneva, Switzerland and Brussels, Belgium — he says “we blended very quickly to build a great, unified team of political and career people so I’ve got a lot of help. We have to stay focused on our mission.” He spoke to Black Enterprise magazine Editor-In-Chief Derek T. Dingle about how he plans to accomplish this objective.

Black Enterprise: In your role as the nation’s chief trade negotiator, how will your actions impact President Obama’s overall economic program?

Ron Kirk: The United States represents about 5% of the world’s consuming population now. So that means as a practical matter, 95% of our opportunities for expanding growth lie outside of our own borders. So whatever we can do to create new opportunities for America’s goods, services and agricultural products is a way that we help to grow our economy and create jobs here at home. By having reciprocal trade agreements, we help consumers because you’re now getting products that come to you from all over the world in a very competitive market and the price of those goods have come down.

Specifically, how does the Obama administration’s trade policy differ from the Bush administration’s?

I think people can readily see that President Obama’s extraordinary popularity extends beyond our shores. The reception he received at the G-20 Summit in London and the Summit of the Americas in South America demonstrates that the world, even though they’ve been frustrated with the arrogance of our foreign policy over the last several years, very much wants to engage America in a thoughtful, collaborative way.

You stated as USTR you wanted to ensure entrepreneurs got an opportunity to be involved in global trade in a bigger way. How are you going to achieve this goal?

What a lot of people don’t know is that 95% of our exporters are small to medium-sized businesses. Ninety-seven percent of our exporters in America employ fewer than five hundred people. Unfortunately, they now represent only about 20% of our exports. I think that gives us an extraordinary amount of room for growth by reaching out to small and medium-sized businesses which tend to be disproportionately, for us, women- and minority-owned.

So in which area does small businesses need the most help?

Since we deal more so with government-to-government, the practical thing we’re going to do is educate businesses to how much they can grow by reaching out to this 95% that’s not the United States. Secondly, we’ll work with SBA to make sure that if it’s an issue of finance, which it always is for us, there are opportunities that I think we can look at creatively to make sure that the financing mechanisms are there. There’s a great Website, Export.gov, which is pretty simple to plug into to find out more information about how to get involved in international trade.

Right now, we’re seeing the world economy at its weakest and worldwide trade has taken a big hit. [As of February,] exports are down year-to-date 16.7%; imports are down 25.8%. Is this an indication that there will be a rise in protectionism across the globe? What specifically is your office going to do to boost exports?

The numbers that you gave are troubling but I think they represent two realities. One, just how interconnected the global economy has become. Secondly, I think in a way it makes the case for why trade is so important. When trade goes down then our overall economy suffers. When our economy is stalling here at home, it’s a great opportunity for us to create jobs and investment opening markets for Americans’ goods and services through direct negotiations and what we call bilateral agreements with other countries [as well as}through our multilateral agreements such as NAFTA and the ones with some Caribbean countries, CARICOM.

How do you reconcile trade policy and resistance from labor and Congressmen who represent industrial districts who say NAFTA is taking American jobs?

I think

those of us who believe in trade have to accept the reality that its benefits tend to be broadly dispersed. All of us benefit from having cheaper goods and services [and] that’s a good thing. But the pain tends to be concentrated as manifest by what we see going through in Detroit. So what the President has tasked me to do is see if we can’t find a way to recalibrate our trade policy in a way that we don’t sacrifice the interests of America’s workers. One element of trade doesn’t reside in our office: Trade adjustment assistance [administered through the Department of Labor] is a way we can help workers. It was put in place recognizing that there are going to be winners and losers. One of the administration’s goals is use trade as a means of improving workers’ rights and environmental standards across the globe. How do you get countries to comply? How will those standards be reflected in the new benchmarks for agreements with Colombia, Panama and South Korea?

One of the strongest means to achieve progress on improving worker rights and environmental standards is through free trade agreements. The provisions included in our free trade agreements with Peru, Panama, Colombia, and South Korea are the result of work with Congress and contain enforceable provisions requiring our partners to adopt and maintain the core principles of the International Labor Organization, comply with a number of multilateral environmental agreements, and address key environmental concerns. A key change in these FTAs is that the dispute settlement provisions apply to the labor and environment obligations in the same manner as they apply to commercial obligations thus strengthening our ability to enforce them.

What is your trade agenda with respect to African nations?

Expanded trade is an important catalyst that can help boost economic growth in African countries and lift people out of poverty. It is a priority of the Obama administration to promote trade policies, including technical assistance for capacity building, which will help African countries to integrate successfully into the global economy. Our trade preference programs assist African and other developing countries compete more effectively by providing preferential access to the $14 trillion U.S. market

What can be done to beef up programs under the African Growth and Opportunity Act?

The African Growth and Opportunity Act (AGOA) has significantly enhanced our trade with sub-Saharan Africa. More than 98% of products Africa exports to the United States enter duty-free under AGOA or other preference programs. AGOA has spawned jobs, investment, and economic growth in Africa and helped to diversify our trade with the continent. AGOA has also strengthened and diversified the relationship between small and minority-owned U.S. businesses and many African entrepreneurs — something which we hope to build on during this administration.

In August, a gathering of U.S. cabinet officials and African Ministers from AGOA-eligible countries, the private sector and civil society representatives, will meet at the 2009 AGOA Forum in Kenya to discuss ways we can improve African countries’ utilization of AGOA and their competitiveness.

What will you do to bolster trade in the Caribbean Basin?

We will continue to support CARICOM’s efforts to enhance economic development and regional integration. I attended the President’s meeting with CARICOM leaders at the Summit of the Americas. We had an excellent discussion–not only about trade, but other issues of common interest. We proposed a meeting of the Trade and Investment Council [the body responsible for monitoring trade and investment relations between the United States and CARICOM] in the second half of 2009 to discuss trade and investment matters and examine ways to expand trade.

In your role, what can you do to bring together African American entrepreneurs and Caribbean and African governments?

The AGOA Forum will encourage interaction among senior representatives from African and American businesses, civil society, and governments to foster closer economic ties, address challenges to bilateral relationships, and establish a way forward to expanding our trade and investment relationship. The administration also provides technical support to businesses in Africa, including through four US AID-managed regional trade hubs located in Botswana, Kenya, Ghana and Senegal, to help U.S. and African business realize trade and investment opportunities under AGOA.