Dialogue: Protectionist Prozac a killer

By FRAN O'SULLIVAN

President George Bush may have the guts to push for the United States Congress to toughen up and expose its economy to free trade.

But the habit of doling out protectionist Prozac is still ingrained with many US politicians - witness the current Teamsters fiasco - particularly with Congressional elections in sway next year.

That is what made Congressman Henry Hyde's visit to Auckland this weekend so fascinating.

The Republican chair of the House International Relations Committee was here as a member of a Congressional delegation for discussions with ministers and MPs.

Hyde is one of the chairmen of five powerful congressional committees who wrote to Bush urging him to launch negotiations for a free-trade agreement with New Zealand.

"With your commitment to reassert our global leadership in expanding trade [we] hope you will agree that we should begin a dialogue with New Zealand for a comprehensive free-trade agreement," the letter said.

The letter was thick on the virtues of patriotism and moral allegiances.

"In all the major conflicts of the past century, New Zealand stood as one of our strongest allies. They share our commitment to democratic values and are a partner in expanding trade liberalisation."

The Congressional delegation's visit was a low-profile affair. There was a wreath-laying ceremony - but no other public meetings.

The opportunities for New Zealand business players to touch base were limited, but opportunities were made for US companies based here to give their insights into local relationships.

Hyde's schedule was focused on meeting Defence Minister Mark Burton and Foreign Affairs Minister Phil Goff. Regional security, trade and political ties were top of the agenda for the Congressional members.

Speaker Jonathan Hunt, unfairly maligned over his US trip, also hosted a lunch for the group.

This is all seen as part and parcel of the necessary relationship-building to help future negotiations.

But the US Embassy deliberately kept the visit low key, citing Hyde's age - he is 75 - as the reason for deflecting interview requests.

Despite the positive nature of the Congressional letter, there are sticking points to advancing New Zealand's cause.

Not the least of which is the habit of New Zealand politicians of grandstanding on international issues - even when they do not affect this country.

When our politicians sounded off about Bush's plan to create a national defence missile system - as a return to Star Wars - they struck a discordant note in Washington.

Treading on US turf was not thought to be an adept move by politicians wanting to strike a free-trade deal - particularly as such statements are usually accompanied by all the moral pomposity that only a country which has never been invaded can muster.

A position made even more hypocritical as New Zealand politicians hold true to their desire for this country to run its own defence plan and budget without having to bow and scrape to the dictate of its allies.

As chairman of the international relations committee, Hyde could have been expected to share his insights into the Bush Administration's stance with the New Zealand politicians.

Hyde is a frequent newspaper commentator in this area.

As he wrote in the Chicago Tribune: "For eight years, the Clinton Administration blocked progress, dismantling the programmes it inherited from the Reagan and Bush Administrations and dragging its feet until its own intelligence assessments sounded alarm bells about the rising threat of missile attack.

"My own position is that it is not only reckless but profoundly immoral to leave the American population totally undefended. Our own history will not allow us to claim ignorance of the consequences. As the new movie Pearl Harbor graphically reminds us once again, complacency plus a mistaken sense of invulnerability all too often add up to catastrophe."

But the progress of free trade sometimes seems to have more ups and downs than a roller coaster filled with manic depressives.

Just when Bush seemed on the verge of building Congressional approval for his authority to negotiate free-trade deals, he got hit by a double whammy.

Unfortunately for the "land of the free", the United States faces a prospective penalty of $US4 billion ($9.13 billion) in punitive tariffs through its long-standing dispute with Europe over tax breaks awarded to American exporters.

If the Administration cannot stave off the threatened penalty, the biggest action taken against any World Trade Organisation member is bound to ensue.

This will have a big effect.

New Zealand and Australia won a WTO action against the US over lamb protection, but have opted to try for a negotiated settlement. Neither country wants to push the US too hard, as each is seeking a free-trade deal with the US.

But the European stoush is of a different order.

It has the potential to undermine the launch of the new global round of WTO talks - and derail Bush's hopes for trade promotion authority.

On top of that, the Teamsters union is lobbying Congress to stop Mexican trucks from using US roads as permitted by the North American Free Trade Agreement (Nafta).

Top US policy-makers are now struggling to come up with a game plan for dealing with the situation - but New Zealand and Australia will struggle to make progress if the protectionist instinct gains ground.

Also in the equation is the length of the US economic slowdown.

There are worries that unless America recovers soon, the world economy may slip into recession.

There is no other "engine" than the United States which has the sheer capacity to pull the rest of the world out of its slump.

The $US10 trillion economy accounts for one-quarter of gross global domestic product.

Europe is in a worsening slowdown, Asia is feeling the effects of the computer industry slump and Japan is mired in a recession.

The global economy is now likely to grow by only 1.9 per cent this year, less than half the 4.8 per cent rise last year, says credit rating agency Standard and Poor's.

The impact of the slowdown has been intensified by globalisation.

Trade flows are greater and US supply chains cover the globe.

Add this to the mix and there is a potential for US protectionist instincts to strongly re-emerge next year.

Would that many more of the Congress mirrored Henry Hyde.