T N C Rajagopalan: Bush's win will impact trade

EXIM MATTERS

The US electorates have not only re-elected President George W Bush but also given him more Republicans in the House of Representatives and the Senate. That could mean a more pushy and assertive US in international trade matters in the coming years.

Bush will find it easier to persuade the Congress to approve the free-trade pact with five central American countries concluded last year.

He can more easily get extension of the fast-track authority from the Congress next year to enable him pursue his liberal trade agenda aggressively.

The Bush Administration has already started talks for free-trade with Thailand, Panama, Colombia, Peru, Ecuador and South Africa. The free-trade agreement with Australia will be effective from January 1. More co-operations on trade matters with the countries in the Latin America and the Asia-Pacific is on the cards. Moves are afoot to start trade talks with countries like Egypt, South Korea, New Zealand, Pakistan, the Philippines, Sri Lanka and Taiwan.

In short, the second term of Bush is likely to see a more aggressive agenda to purse new trade pacts.

In the wake of 9/11 attacks, Bush pushed the members of World Trade Organisation to launch the Doha round of negotiations, with "either you are with us or against us". It is an unfinished agenda that Bush might like to pursue with greater vigour.

In his first term, Bush did not hesitate to impose safeguard duties on steel imports when the domestic producers asked for protection. He may do likewise if the textile quota phase out results in more imports and job losses.

Already his administration has imposed restrictions on Chinese brasseries, dressing gowns and knit fabrics and has set in motion the processes to limit imports of polyester shirts and pants, cotton knit shirts, and men's shirts and underwear from China.

These moves can result in a limit of 7.5 per cent annual growth for each textile product on imports from China. Indian textile exporters will have to watch each US move closely.

Bush did grant liberal subsidies to US farmers and perpetuate the distortions in world trade that such farm subsidies bring about. In his second term, with no re-election considerations, he can afford to be bold and take a closer look at the consequences of such subsidies on the farmers in poorer countries.

Bush will certainly expect strict implementation of the WTO agreement on the intellectual property rights. Any wishful thinking that the challenges of stringent product patent regime will not come about will have to give way to cold realisation that this is one issue on which the pressure from US for strict compliance will be relentless.

Bush has delivered peace and democracy in Afghanistan, at least for now. Hopefully, he will do so in Iraq too. To sustain the peace, he will have to find ways to tackle the Arab-Israeli conflict and reach out to the moderates in the Muslim world.

Now Bush has to only work for a legacy and not re-election. He could pursue his vision for a more democratic West Asia that will also mean greater trade opportunities.

The biggest challenge for Bush would be to curb unbridled spending and huge trade and fiscal deficits, without slowing down the world economy too much or causing too many job losses.

tncr@sify.com