Baucus Criticizes Administration Failure to Negotiate Free Trade Agreements in Asia

December 8, 2004. Sen. Max Baucus (D-MT), the ranking Democrat on the Senate Finance Committee, gave a speech [PDF] to the Institute of International Economics in which he criticized the Bush administration's failure to more actively pursue free trade agreements (FTAs) with Asian nations.

He said that most of the Bush administration's negotiation of trade agreements is with countries outside of Asia, and it appears "content to leave Asia to the Asians". He said that this is a "mistake".

Baucus (at right) said that "This Administration's trade policy is dictated largely by its foreign policy, not by economics. And as a result, Asian countries are increasingly looking to China as their primary economic partner, just as they once looked to America."

The U.S. did recently enter into a FTA with Singapore. It has also negotiated FTA's with many small economies with which the U.S. trades little, including Jordan, Israel, Morocco, Bahrain, and Panama. Sen. Baucus made the point that "During its first term, the Administration started free trade talks with twenty countries around the globe. But only one of those is with an Asian nation -- Thailand." In contrast, said Baucus, Asian nations are actively pursuing trade agreements with each other.

See, the U.S. Trade Representative's (USTR) web section on bilateral trade agreements.

Baucus suggested that instead, the U.S. "should consider negotiating more free trade agreements in Asia. In particular, we should consider negotiating agreements with Malaysia, Japan, Korea, and Taiwan."

Sen. Baucus wants a U.S. Japan FTA. "Japan, of course, is the world’s second largest economy, and by far the largest in Asia. An FTA with the United States could help pull Japan -- once and for all -- out of its economic doldrums. It could also provide just the political impetus Prime Minister Koizumi needs to push through his long-planned -- and long-stalled -- economic reforms. When I visited Japan earlier this year and mentioned the possibility of a U.S.-Japan FTA, Japanese businesspeople were excited about the prospect."

Sen. Baucus also advocated FTAs with Malaysia ("the easiest of these to negotiate"), Korea ("a huge market for U.S. products, many of which now face high hurdles"), and Taiwan. He said that "Taiwan recently made great strides in improving protections for intellectual property. That prompted the United States to restart long delayed talks on a Trade and Investment Framework Agreement."

He conceded that a FTA with Japan "would certainly be an ambitious and difficult agreement." But, he added, "We should negotiate these agreements not because it would be easy, but because it would be hard. And because it would focus our attention and efforts where the greatest benefits lie -- Asia."

Baucus also argued that "We should also consider further sectoral initiatives like the Information Technology Agreement", and that "we should devote more resources to enforcing our rights in Asia more aggressively. Many Asian countries have terrible records protecting intellectual property, for instance. Each year, U.S. companies lose billions of dollars to piracy in Asia alone."

He concluded that "we should never forget what the conversation is really all about -- jobs and the health of the U.S. economy, now and in the future. Regional integration in Asia without the United States means U.S. farmers and companies will have to compete in Asia on unattractive terms with their Asian competitors, particularly those in China. That means fewer sales, fewer American jobs, and a slower U.S. economy."