Commerce's Evans on Expanding World Trade

The Secretary talks about Russia and the WTO, fast-track trade authority, the Bush stimulus plan, and the rules for a global economy

Commerce Secretary Donald L. Evans has had his hands full since moving from the oil patch of Midland, Tex., to Washington, D.C. His focus has been on persuading other countries to support the U.S. bid for another round of global negotiations within the World Trade Organization, trying to talk Congress into granting expedited trade-negotiating authority to the Administration, and looking after U.S. commercial relations with Russia as it seeks U.S. support for joining the WTO. BusinessWeek Washington Correspondent Paul Magnusson caught up with Evans in his Commerce office on Nov. 13. Here are edited excerpts from their conversation:

Q: You've been to Russia a lot. What is the U.S. offering the Russians for their cooperation in the war against terrorism?

A: We're supporting their desire to become a member of the WTO. I've been taking U.S. businesses to Russia and introducing them to a dramatically improving environment for foreign investment. And in a number of areas the Russians have asked for technical assistance...banking reform and corporate governance and international accounting standards and commercial law and dispute resolutions.

We are trying to bring our expertise to bear on the fundamentals and principals of a market-based economy and creating a friendly environment for American capital. There's still a lot to be done in Russia on rule of law, for example.

We are also giving some attention to reviewing their status as a market-based economy. We'll be in a position to do something about that sometime after the first of the year.

Q: The Administration, while professing to support free trade in theory, has been garnering congressional support for the Administration's trade program by providing some protection for U.S. steel, softwood lumber, and textiles. Is there a contradiction in this -- having to look after U.S. industrial sectors such as textiles in order to get a broader trade agreement?

A: The important principle is always the importance of a level playing field as we expand trade around the world. Opening up trade is certainly essential to the ongoing economic growth of America as well as the world, but as we do that, it's important to preserve the level playing field. America is the greatest competitor in the world. But I don't think there's anything that dispirits the American worker or businessman more than to think that he's not on the same level playing field. We want to make sure we're all playing by the same economic rules.

Q: How would that relate to textiles? There's a quota on textile imports and some fairly high tariffs. That would indicate the playing field might be tilted in the direction of U.S. industry.

A: I would say that country by country, you've just got to go look at how the industry is being run in the individual countries. Also, as we continue to expand trade, it's important there be a transition. We open markets around the world, and industries make adjustments. That's what tariffs and quotas are about, a transition. And everyone accepts that. Over time the tariffs and quotas will come down.

Q: Why do you think it's so hard to get Congress to agree on granting the Administration trade-negotiating authority? In the last few years we've had the Archer-Crane bill, the Thomas bill, the Levin bill, various bills in the Senate. All the iterations of a "fast-track" trade bill haven't passed.

A: It's granting the President the authority to negotiate a trade agreement -- and you've got 535 congressmen and senators who will have their views on what should be in a trade agreement. And they are not always the same. Quota levels and tariff levels, and what we do about labor rights and protecting the environment, and how fast we open our markets, and what our position should be -- there are a whole host of issues.

When Congress grants authority to the President, they say "we are going to trust you to negotiate these agreements and bring them back to us for an up or down vote." Among the farming and small-business community, the big and small corporations, and the high-tech industry, there is a terrific amount of support for [fast-track]. But it is granting authority to the President for something Congress realizes belongs to them until they grant it to him.

Q: So will fast-track pass this year?

A: I'm optimistic -- but I'm an optimist. It's part of continuing to improve the economic environment. It ultimately leads to higher quality of life. A lot of these things weren't issues 20 years ago. Then it was tariffs and quotas. Now we talk about a lot more things in these agreements.

Q: I'm hearing some sharp criticism of some of the aspects of the stimulus package, specifically the portion that would get rid of the corporate minimum tax that would benefit the biggest corporations. Critics say eliminating the tax now amounts to war profiteering -- that it's an attempt by multinationals to get something to which they are not entitled. Your response?

A: My view is that the President laid out a well-balanced and thoughtful plan. The President, having thought through the appropriate balance, presented to American people a reasonable plan, which is to provide important relief to workers who have been dislocated in this period and also provide 50% of the package in tax relief.

Beyond that, I know Congress goes through the process. The House bill leans toward tax relief. The Senate leans toward spending. So what I am hopeful of is that [they] will come together and come back to where the President is. Half spending and half tax relief is what makes sense here, and we shouldn't damage the long-term fundamentals of this economy. We shouldn't do anything fiscally irresponsible. We need to maintain fiscal discipline.

Q: It looks like the agreement in Doha (Qatar) to start a new round of trade talks will be a modest step forward. Many of the talks will be carried over to the next ministerial meeting in two years. If the WTO process stalls, then what?

A: We'd redirect our attention to regional agreements. We've got a global economy becoming more interconnected every day, and we have to have standards that apply to that global economy. These are negotiations that take years, not months. Then you have to get them signed and ratified -- and then have to get them implemented.

We are in a unique period. The Cold War is over. Information technology is real. It seems to me this world is ready and positioned to rapidly increase trade, and it's important to help shape the environment and the framework for that to happen. It's important for these governments to understand that they don't create wealth. What the governments are supposed to do it is to create the environment in which the workers and the entrepreneurs can create wealth.

Q: Developing countries argue they've been left behind, that the developed world hasn't accepted their goods -- their food and textiles and shoes, for example. And that the shift to an export economy has hurt their population -- subsistence farmers. What can the developed world do to persuade developing nations to go along with further trade expansion?

A: Just what we are doing -- allowing them to expand into our markets and sell into our markets. I was in Quebec City last year. Many of the 34 countries [there] were developing nations, and they were betting their futures on free and open markets. You have to bring them into the world trading system and continue opening up our markets and their markets.

Edited by Douglas Harbrecht

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