U.S. Trade Negotiators Aren't Cutting It in Asia

So we want to increase our international competitive position. Great! So, what is holding us back? If you look at recent events, you'll see that our trade negotiators are not getting the job done. Read on.

It was a week of stark contrasts in the changing fortunes of East and West. On February 16, Robert Zoellick, the chief trade negotiator of the United States, landed in dusty New Delhi with a mission—to convince India to break down its barriers so that more American goods could compete in the local market. The following day, Praveen Kadle, the CFO of Tata Motors, hopped on a flight from Bombay to Seoul to complete the acquisition of a South Korean company. After days of preaching the virtues of free trade, Zoellick left India empty-handed and perhaps a little embarrassed. Kadle, meanwhile, returned with a deal that gives India's largest automaker a 26 percent share in the Korean heavy trucks market.

Seemingly unrelated, the two events are in fact key indicators of a power shift in the subtle game of global trade. By all appearances, US trade negotiators have lost their footing. Fretting over a record trade deficit of US$542 billion, they call for Asian governments to remove trade barriers. At the same time, Congress introduces protectionist policies at home. Treasury Secretary John Snow presses Beijing's leaders to revalue the yuan. Yet the Bush administration relies on China and Asia to finance its budget deficit by snatching up US Treasury bills, mass investments that keep interest rates soothingly low. In sum, the US needs Asia more than ever before, but its leverage is diminishing and its policies are all over the map.

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