The US knows how it likes its trade negotiations. It’s a simple rubric: the US puts its proposal on the table, and its interlocutors accept.
In the Doha round of the WTO talks, as we know, this hasn’t worked very well. So the US is signing bilateral preferential trade agreements instead, the latest of which is with South Korea. In turn, these bilateral agreements only serve to weaken the case for global trade agreements. Jagdish Bhagwati says that “the whole world has practically collapsed into bilateralism which is driven by sloppy arguments and failure of leadership by the major powers such as the United States.” And Martin Wolf hates these bilateral agreements as well. So why do they happen? Robert Wade has an interesting take on Wolf’s blog:
Singapore’s prime concern was less with the economics of the agreement than with the military-security impact: the government calculated that the agreement would help to tie the US into the region militarily. Presumably the South Korean government has been making a similar calculation, being only too aware of growing sentiment in the US to “bring our troops home”, including from East Asia, at the same time as North Korea could explode on its doorstep and China-Taiwan could explode to the south.
In other words, this isn’t a trade agreement at all: it’s a trade-for-security agreement. One could even, if one was feeling uncharitable, characterize it as the US extorting trade concessions from the East Asians in return for keeping a military presence in the region.
(Via Mark Thoma)
Felix —
I am not familiar with the specifics of the Singapore deal but this is hardly suprising at least to anyone outside those operating in the World of pure economics as opposed to what every serious thinker from the days of Smith onward have called “political economy”. I think Professor Wade’s response to Wolf is illuminating though I am a bit skeptical about the likelihood of the US changing in any dramatic way its security strategy on the Korean penninsula.
One of the first things that Wolf does is repeat Bhagawati’s comments about how we shouldn’t be talking about “free trade” instead of preferential trade. This is the kind of thing that should strike any non academic as ridiculous. Outside of economic theory there is no such thing as free trade, but there is “freer trade”. As political economists have been arguing for years state intervention is actually the basis for the establishment of “freer markets” and the modern market system more generally even if there is an eventual shift to liberlization. But I digress.
As for the proliferation of bilateral and regional trade arrangements, it is not clear that they make the WTO redundant, but they provide states with the ability to forum shop, develop relationships based on other issues like security or regional dynamics, and they provide a buffer against interests represented most powerfully in the WTO. The old story about the rise of NAFTA is case in point. Americans weren’t sure that the Uruguay round was going anywhere, wanted to hedge their bets, etc. In the 90s everyone debated whether or not the explosion of PTAs and regional agreements would be benign and many scholars decided that they were at least not as bad as the feared pre-Bretton Woods style bloc behavior.
While everyone debates “death” of the WTO because of the Doha round (presentist stupidity like the debates about how the IMF is no longer necessary because we haven’t had a major crisis since Argentina), it is interesting to see that states are heavily utilizing the dispute settlement mechanism at the WTO and are binding themselves to its resolutions — including the US.
Further, Issue-linkages like security and trade or what have you are often necessary to get states passed basic conflicts of interest in any area of diplomacy. Perhaps if more such linkage possibilities existed, it might be more feasible to move passed some of the impasses at the WTO itself. I am more skeptical about what the objective value of further liberalizaton pushes at the WTO actually are for most states anyway. In fact for many countries, many provisions of the provision present an entire mess of conflicting interests (just think of the trade related intellectual property rights bit of the WTO in regards to questions like provision of HIV drugs to African countries).
While normatively I would agree that shedding agricultural protectionism in Europe, the US and Japan would be very helpful to developing countries, I have virtually no faith in the likelihood of that happening. In fact I would be shocked. I am not all that convinced that the Doha debate is as crucial as people have made it all along. In fact, part of what Doha has shown is that major emerging market countries with significant clout are also capable of effectively using the WTO to represent their interests (India, China, Brazil). Presumably this is a good thing in the world of international economic institutions regarding questions of legitimacy.
On the security studies side of things, it is not credible to argue that the US is even concieving of yanking out of the region with regard to security. Wade is correct that there is a ‘bring the troops home’ mentality in the US — but I don’t think there is reason to believe it actually spreads to troops in non-conflict posts like the Korea. So I would be more interested to see specifically what security terms were actually being traded. South Korea may have for example the “send them home” sentiments in its population and reducing the number of the US presence is probably somewhat in the interest of all parties involved (its not clear how useful 35 thousand troops ever were tactically – and the main explanation scholars studying cold war security will give you for their initial presense is as a “hostage” much like American troops presumably were in Berlin to “credibly commit” the Americans to retaliate against any aggressive military action), but it is hardly the case that the US would percieve it to be in its interests at this point to abandon South Korea. Some scholars even argue that their is an “institutionalized” alliance between the 2-countries that has little to do with outright balance of power considersations. One interesting trend is that the US has been encouraging historical alliance partners like Japan to take a more direct and active role in regional security dynamics but this approach has to be closely balanced with worries about the Chinese response. China’s military capacity is becoming much more significant such that now it appears that their submarine capacity might be an important threat in a dispute of the Taiwan straits, but it is still clear they don’t have the ability to actually take territory according to most China security experts.
We might eventually be moving to a system where regional players like South Korea may play the US and China off of each other — anything that the Koreans do not get from the US, they may try to extract from the Chinese instead. The Chinese interest in excercising regional influence is clearly growing with the expanding commercial relationships it has (as it outpaces Japan and eventually the US as a key market for regional exports for example). China will have major stakes in a post-collapse North Korea if that if that variety of contingency plays out, such that the Chinese military will probably be actively engaged across the border from American troops in Korean territory again.
All in all I am not sure about the specifics of the Singapore agreement, but one should not undersell or be suprised by the prominence of security concerns in the most ‘dangerous’ neighborhood in the international system — given the possibility of great power conflict.
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