Clinton's Three Marketeers
Richard W. Fisher outperformed the market two-to-one when he managed a $170 million hedge fund in Dallas. His forte: finding failing companies and then helping to turn them around. "I'm a distress guy, going into situations others view as hopeless," he explains.
Nowadays Fisher's business cards read Deputy U.S. Trade Representative--and the parallels couldn't be more striking. Once again, he's trying to reverse the fortunes of a troubled enterprise: the Clinton trade agenda. Fisher, 48, is one of "the Carter Kids"--three Washington veterans of the 1970s on a mission to salvage trade policy, under-water since the death of fast-track trade legislation last fall. The others are David Aaron, 58, new Commerce Under Secretary for international trade, and Stuart E. Eizenstat, 55, Under Secretary of State for economics, business, and agricultural affairs.
With U.S. trade-liberalization initiatives floundering in Asia, Europe, and South America, the new team has no lack of challenges (table). On Capitol Hill, the Administration must work to reassemble a 50-year congressional consensus for free trade that disintegrated with Clinton's failure to win fast-track negotiating authority. So when the three aren't flying off to world capitals, they will be wearing out the chairs in congressional hearing rooms, explaining why the U.S., now so dependent on exports, must push for freer markets at home and abroad.
"CRITICAL MASS." Foreign leaders will be an even tougher sell. But the Carter Kids have a strategy: Persuade a "critical mass" of countries to voluntarily liberalize in one market sector--as was done in 1996 and 1997 with multilateral agreements on information technology and financial services. Talks are now aimed at environmental services, chemicals, medical equipment, fish, toys, and jewelry, among others. And many deals can be cut without congressional approval since they won't affect U.S. law.
Groups of nations will also be enlisted to pressure recalcitrant governments to free up their markets. That's the current game plan being used against Japan, which is under joint attack by Europe, Canada, and the U.S. to open its doors wider and stimulate its economy. "Leadership today means rallying others to our cause," says Eizenstat.
The first big test of the team's powers of persuasion comes on Apr. 17 when Clinton travels to Santiago, Chile, to begin talks on the Free Trade Area in the Americas (FTAA), his plan for a tariff-free zone embracing the entire Western Hemisphere. Latin Americans see Congress' fast-track vote as a repudiation of further trade deals. "The leadership in South America is deeply disappointed--devastated, really, over the loss of fast track," says Richard E. Feinberg, a University of California at San Diego expert on Latin America.
Failure of the FTAA would be a win for Brazil: South America's largest economy fears a free-trade area dominated by the U.S. and has urged a go-slow approach. With no FTAA, Brazil could negotiate smaller, South American free-trade zones that exclude the U.S. The Carter Kids' plan: Convince the Latin Americans in preliminary talks in Costa Rica on Mar. 18-20 that Clinton will win fast track in time for FTAA approval by 2005. If they fail, Clinton's Santiago trip may prove to be the biggest trade embarrassment of his tenure.
The clock is also ticking on China, which desperately wants Washington to approve its membership in the World Trade Organization. The U.S. business lobby thinks that dropping opposition to China's membership will induce Beijing to buy American. And China's corporate supporters are weary of the yearly battle in Congress for Most Favored Nation trading status. But before allowing WTO membership, the Administration wants a promise from Beijing to lower barriers to imports, end its subsidies to favored industries, and dismantle state-owned enterprises, which employ 100 million workers.
An invitation to join the WTO would guarantee Clinton a warm welcome in Beijing if, as tentatively planned, he travels there this fall. The Administration also wants to reward China for not devaluing its currency. Devualation would worsen the Asian financial crisis while inflating the U.S. trade deficit. That puts the trade trio and their bosses, U.S. Trade Representative Charlene Barshefsky and Commerce Secretary William M. Daley, on the hot seat. They will have to wheedle the best possible terms from Beijing first. Yes, admits Aaron, Chinese officials "have shown a great deal of responsibility in not devaluing, and they deserve credit for it...but we are not going to suddenly cave in."
Rescuing Clinton's trade agenda will require more than persistence in Congress and diplomacy abroad, however. The members of the new trade troika will also have to keep their often-warring bureaucracies in check. The three agencies "have always viewed each other with some suspicion, but since the three of us know each other so well, that shouldn't be a problem," says Aaron. Maybe not, but the Carter Kids are about to test the depth of their friendship.