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Trade missionary

"Trade is about more than economic efficiency. It promotes the values at the heart of this struggle." So wrote U.S. Trade Representative Robert Zoellick in a Washington Post op-ed piece days after September 11. By fostering democracy along with prosperity, he contended, free trade can work as a powerful tool to erase the resentments that breed terrorists.

Coupled with a host of other geopolitical policy solutions propounded in the 1990s, that proposition -- the bright promise of a world without commercial borders -- constituted the Washington consensus. Liberalization. Privatization. Deregulation. Free trade. All have come under sharp attack from many quarters -- antiglobalization activists, poor-country political leaders, rich-country union officials.

Now, as the war on terrorism has morphed into an all-out military campaign against Iraq, the nearly universal solidarity with the U.S. that prevailed post­September 11 has been sundered. Long-standing partnerships with France and Germany, as well as more recently crafted strategic relationships with Russia and China, are fraying. And many worry that these diplomatic rifts might spread into the commercial realm, provoking reprisals that would risk a dangerous backsliding on free trade at a time when the global economy is in a precarious state.

The Iraq war is proving deeply divisive, fueling jingoistic displays of outrage on both sides of the Atlantic, from the "freedom fries" that have replaced French fries in the U.S. Congress's lunchroom, to boycotts of Starbucks, McDonald's and other U.S. brands in Germany. U.S. House Republican leader Dennis Hastert has called for restrictions on imports of French wine and water.

"The big question is whether the transatlantic split is so severe that it spills over and affects the World Trade Organization, or whether there is a high-level effort by the U.S. and EU to cooperate," says trade expert Gary Hufbauer of the Institute of International Economics in Washington. In the carefully understated language of diplomacy, European Union Trade Commissioner Pascal Lamy cautions that "the present geopolitical circumstances make it even more necessary that the EU-U.S. trade agenda is handled with care and a lot of cooperation."

Bitter feelings across the Atlantic come at a critical time for trade negotiations. The so-called Doha round of global trade talks -- which Zoellick played a big part in initiating -- is close to collapsing over rich-country farm subsidies. Europe and most developing countries, meanwhile, are fiercely resisting U.S. exports of genetically modified foods. Zoellick may not have helped matters by saying that the Europeans were "immoral" because their moratorium on bioengineered foods encouraged poor countries with starving citizens to reject them as well. The U.S. is planning to challenge an EU ban on the foods.

"The positions between the U.S. and the EU are right now quite far apart," acknowledges Supachai Panitchpakdi, director general of the World Trade Organization.

A multilateralist, Zoellick is confident that the Iraq-related political differences between the U.S. and Europe won't overflow into trade policy -- their mutual self-interest is too great. "The U.S. and Europe are joined at the hip economically," he says. "We have about $700 billion of trade and $800 billion of investment." (See interview, page 54.)

Key trading partners echo his confidence. France's minister-delegate for foreign trade, François Loos, says: "I do not believe that the current political tensions can lastingly affect trade relations between our two countries. Our friendship is held together by strong bonds which have withstood the test of time." Adds Germany's Guenter Burghardt, EU ambassador to Washington: "We are not talking about how things were in the Middle Ages. We are in a situation where economic cooperation is our lifeline."

Nevertheless, many of the U.S.'s trading partners in Europe and Asia remain deeply upset with the Bush administration not only for aiding farmers but also for imposing stiff tariffs to help American steelmakers. The WTO ruled the tariff increases illegal on March 26, setting the stage for a global showdown over trade in steel. Meanwhile, Europe is mulling $4 billion in duties to pressure Congress to eliminate tax breaks for American exporters that both the EU and the WTO also consider illegal.

The WTO and the U.S.'s trading partners are also irritated with the U.S. for negotiating bilateral trade deals that they believe undercut progress toward global free trade. (Zoellick argues the opposite.) And the trade representative is being personally pilloried for blocking a WTO program that would allow poor countries to override patents so that they could produce or import generic copies of lifesaving drugs. As if this weren't enough to make Zoellick feel like he's under siege, much of the world seems to have developed antiglobal, anti-American and anti­free trade attitudes.

In short, Zoellick will need all his considerable political acumen to advance the cause of free trade in a world that is wracked by war and terrorism, mired in economic stagnation, increasingly hostile to globalization and splitting into mutually suspicious factions -- Europe versus the U.S., poor countries versus rich ones. Free trade may never have been so vital, or so tough a sell.

Zoellick, a brilliant strategist and tactician, sees ground for hope. The war on Iraq has fortified his conviction that trade is, in effect, the ultimate antiterrorism weapon. During the mid-March countdown to invasion, Zoellick reaffirmed his commitment -- and that of the Bush administration -- to push forward an agenda of removing trade barriers. "In the aftermath of conflict, trade will remain an important component of the international economic and political agenda," he told Institutional Investor in an extensive interview. "Just as after 9/11, we will focus on trade both for a healthy international economy and for the purpose of linking trade to development" as a way, ultimately, to discourage terrorism.

But it's also clear that the Bush administration sees free trade not as some abstract economic ideal but as a potent tool to reward allies. Zoellick confided that Washington has entered into serious negotiations over a bilateral trade agreement with Australia, one of its core coalition partners on Iraq. "I have always recommended that the U.S. be attentive to its friends," he says. "Australia is an example of a country that has been a stalwart supporter of ours, and trade has helped build the economic relationship that supports the political and security ties."

Zoellick has also been busy championing free trade much closer to the war zone. The trade representative told II on March 18: "We are moving ahead on a free trade agreement with Morocco, and we've had discussions with the Egyptians, who would like a free trade agreement. We're trying to move them closer to it, as that would involve a key part of the Arab world. I had the Saudis in yesterday to talk about the importance of World Trade Organization membership. So I would see trade as a key part of what I call the development vanguard that I hope will follow a conflict."

What about countries like Chile and Mexico that are prominent U.S. trading partners but were conspicuously absent from the list of those backing President George W. Bush on Iraq? "I can't speak for Congress, and the Congress has expressed frustration," granted Zoellick. "But the U.S. will ultimately recognize the larger stakes and interests in trade agreements," even with countries that were not allies on Iraq. As a source close to Zoellick emphasizes, the trade representative prefers "looking for carrots" to brandishing sticks.

It's hard to imagine a U.S. trade representative better qualified to be trade's advocate, at home as well as abroad, than Zoellick. Sometimes brash, always focused and intense, he has at times alienated both congressmen and trading partners with his hard-driving manner. Yet he has arguably achieved more on the economic front than any other Bush cabinet member.

"I am here to serve the president as a market policy person, and in that sense, I let the chips fall where they may," Zoellick says. "People aren't always happy all the time with what we do. It is not a formula for achieving [personal ambition], but I can tell you it is a formula for achieving your goals."

In his 26 months on the job, he has advanced the president's free trade agenda by instigating the the latest round of global trade negotiations, which began in November 2001 at Doha, Qatar; secured so-called fast-track, or trade promotion, authority for the president, allowing him to force Congress to vote yea or nay on trade bills without cluttering them up with amendments (president Bill Clinton tried and failed three times to get fast-track passed); and completed bilateral trade deals with Singapore and Chile.

Zoellick's accomplishments are all the more dramatic considering that the last attempt to launch a global trade round, in Seattle in 1999, collapsed amid violent protests that signified the emergence of the antiglobalization movement. Moreover, protectionists have been emboldened by the combination of the war in Iraq, September 11, the global economic turndown and a postbubble reassessment of unfettered capitalism.

"Bob Zoellick pulled miracles out of hats, considering what he was up against," says Republican Senator Chuck Hagel of Nebraska. "To have had as many successes as he's had at this time in the administration is pretty amazing."

Zoellick's urgent task now is to surmount the anger and divisiveness engendered by the Iraq war and prove that the administration's step backward into protectionism will allow it to take two steps forward toward freer trade. The steel tariffs and farm subsidies were "necessary evils to deliver the greater good," contends influential trade theorist C. Fred Bergsten, head of the Institute of International Economics. "The question is if Robert Zoellick can deliver that greater good."

ZOELLICK'S PERSONAL style typifies the balance a trade representative must strike between hard-nosed negotiator and conciliatory diplomat. "U.S. trade representatives are the Green Berets of government," says former Wisconsin senator William Brock, who held the post under president Ronald Reagan.

Friends say Zoellick, 49, is well suited to be a commando of commerce. He was raised in Napierville, Illinois, where his father, a World War II and Korean War veteran, worked as a manager for Illinois Bell Telephone Co. His widowed mother is a Republican Party organizer in Florida. A scholarship student at liberal Swarthmore College, Zoellick stood out for being unusually methodical and organized; he took notes in a ring binder with color-coded dividers. After graduating Phi Beta Kappa in history and economics, he earned a law degree (magna cum laude) from Harvard Law School and a master's in public policy from Harvard's John F. Kennedy School of Government, both in 1981.

Zoellick went on to hold a series of government-related jobs. In 1985, as an aide to deputy Treasury secretary Richard Darman, for whom he'd worked as a teaching assistant at Harvard, Zoellick came to the attention of Treasury secretary James Baker, who tapped him to be his right-hand man. For the next seven years, Zoellick followed his peripatetic boss from one post to another, rising from deputy assistant Treasury secretary to undersecretary of State to deputy White House chief of staff.

"He's intellectually very strong and understands the intersection between politics and policy," says Baker. "He is resourceful in coming up with new ideas and solutions."

Zoellick was conspicuously one of the quickest of the bright young strivers Baker sought out to be his assistants. "Zoellick is usually the smartest, best-read and best-prepared person in the room," says Philip Zelikow, director of the Miller Center of Public Affairs at the University of Virginia, who has co-edited several books with Zoellick -- notably, America and the Balkans and America and Russia: Memos to a President. His greatest accomplishment during the Baker period was developing the template for reunifying Germany, which later awarded him the Knight Commander's Cross.

Not only was Zoellick assertively brainy, he showed a capacity for hard work and for getting things done, sometimes at the price of running his staff ragged. "Bob was all work, all the time. He was the first one in to work and the last to leave -- we would look to see if the battered old American gas-guzzler he drove was in the garage, to see if he was in," recalls Janet Mullins-Grisham, who worked with Zoellick at State and at the White House, where she was political director under the senior George Bush. "I never had one memory of him not being the giant brain," recalls Mary Matalin, who worked with Zoellick on Bush senior's second presidential campaign (he helped draft the economic platform) and was until recently a top adviser to Vice President Dick Cheney.

When Clinton took office, Zoellick decamped to government-chartered mortgage lender Fannie Mae, where as general counsel he ramped up an outreach program to legislators that considerably enhanced the agency's clout with Congress. In 1997 he left to teach national security issues at the U.S. Naval Academy; the following year he was tapped to head Washington's Center for Strategic and International Studies. But he left in 1999 to join the Bush presidential campaign. There he emerged as a key issues person, drafting policy papers and prepping the candidate for debates.

Zoellick was a logical choice for the policy-crafting job of trade representative. But in that cabinet-level post he was initially hampered by a reputation for arrogance and prickliness. "Zoellick is just a very intelligent, focused man who occasionally speaks some unpleasant truths, and that sometimes rubs people in Washington the wrong way," acknowledges Daniel Griswold, a trade expert for the Cato Institute. Zoellick offended New York Congressman Charles Rangel and other Democrats with his post-9/11 Washington Post op-ed piece. In the supercharged atmosphere of the time, calling free trade an antidote to terrorism was seen as an indirect attack on Democrats, because it implied that their traditional concern with trade-related job losses was unpatriotic. "I was concerned about Zoellick's comments," says Rangel now. "But Zoellick has reached out to Democrats. He's done a good job." (For one thing, Zoellick eased Rangel's anxiety that the trade representative's office wasn't sensitive to Central American trade concerns.)

Zoellick annoyed many in Congress when he brashly put antidumping laws on the agenda to get the Doha trade round going. Developing countries see antidumping as a ploy to freeze out their most competitive exports, and they were adamant that the provisions be opened to negotiation. Zoellick felt that he had no other choice.

"When Zoellick dared to enter the inner temple of trade policy and put antidumping on the table to get Doha, it confirmed suspicions among some Democrats that he would sacrifice everything for trade," says Cato's Griswold.

The growing rap on Zoellick -- ironic given his success at wooing congressmen while at Fannie Mae -- was that he didn't know how to play the Washington game. He had never developed the all-important art of stroking egos, critics said. One former senior economic official in the Clinton administration complains that Zoellick didn't call or even send a courtesy note to thank him after he offered to help the trade representative through his confirmation hearings. "He's not a socializer in the Washington sense -- he's not a good schmoozer," grants his co-editor, Zelikow.

Still, Zoellick doesn't purport to be out to please everybody. "If you look at my career, I've actually taken more risks than an ambitious person. If you think pushing trade promotion authority through Congress or doing some other things in the world are done without raising hackles, think again," he says.

MUCH OF THE EARLY, INSIDE-THE-BELTWAY criticism of Zoellick has faded since he launched the Doha round and gained trade promotion authority for Bush. Success, of course, sells in the capital.

"Until he was able to get one or both achievements on his résumé, he was bound to have been evaluated with some harshness," says Clayton Yeutter, a trade representative for Bush senior who is now a partner at Washington law firm Hogan & Hartson. "Now people have begun to back off."

Some notable Democrats laud Zoellick. "Bob is very much all business in his approach to things, but he is very kind and generous to his friends and is respected by Democrats and Republicans alike," says Stuart Eizenstat, an undersecretary of State for economic, business and agricultural affairs in the Clinton administration. "Trade promotion authority wouldn't have passed without Bob. It was his initiative, and it was he who encouraged the president to do it."

Zoellick approached the goal of winning trade promotion authority as if it were a political campaign. He was constantly on the phone with White House Director of Legislative Affairs Nicholas Calio and Deputy Chief of Staff for Policy Joshua Bolten as well as with Commerce Secretary Donald Evans and Agriculture Secretary Ann Veneman to build support for the bill within the administration. Though Calio sometimes clashed with Zoellick over tactics, he credits the trade representative with keeping trade promotion authority on the White House agenda. "Bob is extraordinarily dogged in his approach," says Calio. "He pushed trade promotion authority -- and pushed it and pushed it."

Zoellick had help from the Oval Office. Bush called wavering congressmen; administration aides and allies in Congress -- particularly Republican House Ways and Means Committee chairman Bill Thomas -- twisted arms and helped shape strategy.

Zoellick, who believes that he pulled trade back from an abyss of protectionism, may now have to do it again. "When we took office in 2001, the trade agenda was frankly not on the world's radar screen," he notes. "It was suffering from the shock of Seattle. It was used as a symbol by the antiglobalization movement of all that was terrible with market economics." Yet he managed to get a new round of global trade negotiations going, despite being told by other trade ministers not to bother lest a failure doom the WTO itself.

The war in Iraq threatens to revive smoldering political and even cultural resentments that could deliver the coup de grâce to the Doha negotiations -- and to prospects for a reduction in global trade barriers anytime soon. Indeed, some fear that a prolonged war could actually foment a new protectionist spirit.

"The war on terror and the war on Iraq will have a knock-on effect on trade," says Cato's Griswold. "It will complicate things at a time when we have rough relationships with the Europeans and other trading partners." He notes that Chile's opposition to the U.S. invasion of Iraq "will make the job of selling a U.S.-Chile free trade agreement to Congress that much harder."

In today's ultratouchy trade climate, once-manageable disputes can be blown out of proportion. The U.S.'s steel tariffs, for instance, provoked widespread condemnation, but Zoellick was able to quiet the uproar by granting selective tariff exclusions for steel products exported by countries that the U.S. didn't want to alienate, such as India. "The action on steel was largely protectionist, but in hindsight its bark was bigger than its bite," says Singapore Trade and Industry Minister George Yeo.

Indeed, the tariffs might have been allowed to quietly lapse at their midpoint review in September. But now Congress might just dig in its heels -- French steelmakers have been among the chief complainers about the tariffs -- and insist upon preserving them, despite (or even because of) the WTO's ruling that the duties violate global trade rules.

Under such circumstances, Zoellick's good relationship with EU Trade Commissioner Lamy could be critical to staving off a trade war. The pair first worked together in 1986, preparing Group of Seven economic summits, and they share common interests. Both are distance runners, for example. Last May during a retreat in Gettysburg, Pennsylvania, to discuss trade issues, the pair spent an hour jogging around Little Round Top, site of an important Civil War battle. Both men take an intellectual, pragmatic approach to policy.

In the case of the steel tariffs, Zoellick carefully set aside exemptions for the most profitable EU steel products, and although the EU threatened retaliation against such politically sensitive U.S. exports as Florida oranges, Lamy avoided a wider dispute. "Bob's unique personal relationship with Lamy is all that prevents a U.S.-EU trade war," contends former undersecretary of State Eizenstat.

"Zoellick and I know each other, and that may sometimes make things quicker and less complex, because the learning curve is smaller," says Lamy, who is quick to warn that "whatever the quality of the personal relationship, if there are disputes, we will manage them to the best of our interests."

WITH TRADE PROMOTION AUTHORITY IN HAND, Zoellick has embarked on a strategy of what he calls "competitive liberalization," moving ahead not only on the Doha round but also on bilateral and regional trade deals. Progress on one, he reasons, will stimulate progress on the others, advancing overall trade liberalization, the war in Iraq notwithstanding. Zoellick wants to set up a Central American free trade area by year-end. He aims to complete the Doha negotiations and establish a Free Trade Area of the Americas by 2005. And to underscore the U.S.'s commitment to free trade, he has made a far-reaching proposal for all countries to slash tariffs on manufactured goods to zero and substantially liberalize trade in services, all by 2015.

Iraq aside, the biggest stumbling block to freer trade is agricultural policy. Developing countries demand that their farmers be given easier access to food markets in developed countries and that subsidies for food producers in those countries be reduced or eliminated; developed countries fear that any such actions would antagonize politically powerful domestic farm lobbies. The result has been a standoff.

"Much will depend," says Zoellick, "on whether in the course of the next year the EU makes a serious effort at agricultural reform." He derides a recent EU proposal on agriculture liberalization as "shuffling the numbers under CAP" -- the Common Agricultural Policy. Lamy, in turn, accuses his old colleague of playing politics. "Zoellick knows that what we tabled is substantial, and he knows that the U.S. subsidies in the farm bill are the same as the EU's," he says. "We all have to take tactical positions during such a complex negotiation." Still, the WTO's Supachai says, "I want to emphasize that they are working the same direction."

Fairly or not, Zoellick's critics blame him for delays in the Doha negotiations over drug patents and farm subsidies. Trade observers assert that his pursuit of side trade deals saps energy and political capital that would be better spent on keeping Doha in motion. "Most academic commentators honestly believe that if Zoellick stopped chasing bilaterals and focused on Doha, it would go faster," asserts the IIE's Hufbauer. Says economist Jadgish Bhagwati, an influential free trade theorist at Columbia University: "Zoellick is buying votes at the WTO by giving [certain countries] preferential access to the U.S. market. The problem is, as soon as one country gets preferential access to the most important market, it takes the heat off its going the multilateral route."

Zoellick, however, insists that arranging bilateral and regional trade deals helps to build coalitions and set precedents that are useful for negotiating a global deal. "When you've got 145 countries in the WTO, any one of which can block progress, bilaterals give us additional leverage," he points out. "Second, we find ourselves at a competitive disadvantage. The EU had 30 bilaterals already and another three in negotiation. We have Israel, Jordan, Nafta, Chile and Singapore. Third, many of these agreements become models for reform."

Arguably, Zoellick has a greater opportunity to foster global free trade than any U.S. trade representative before him. Despite the antagonism among so many nations -- East and West, rich and poor -- the post-Iraq world could prove to be receptive to the halcyon effect of free trade. The potential benefits are incalculable. "A trade negotiation process is not a zero-sum game," says Zoellick. "Openness of markets is a win-win venture." A lasting peace might hang in the balance.

Zoellick: Trade can avoid collateral damage

A s befits a history buff, U.S. Trade Representative Robert Zoellick's Washington office is decorated with Civil War­era paintings and located in the 155-year-old Winder House, site of the Lincoln-assassination inquiry. The setting is apt: Few political issues have the capacity to divide nations, regions, parties and even members of the same party the way that trade does. Named trade representative in February 2001, Zoellick has not escaped controversy, but the consensus is that he has been highly effective at advancing the Bush administration's free trade agenda under trying circumstances. Last month he talked trade with Institutional Investor Senior Writer Deepak Gopinath.

Institutional Investor: Does the war in Iraq threaten global trade?

Zoellick: No. Trade will remain an important component of the international and economic political agenda. Just as after 9/11, in the aftermath of the Iraq conflict, we will focus on the importance of trade both for a healthy international economy and for the purpose of linking trade to development. In discussions with individual trade ministers and others across the trade agenda, I sense no slackening of interest. But of course we all recognize that we've got tough issues to work through.

Will America's trading relationships change because of the war? Might you be inclined to speed up bilateral deals with allies and be less accommodating of countries that didn't support the U.S. on Iraq?

The nature of a trade strategy is that you don't change it day by day. So we will continue to focus on global, regional and bilateral trade arrangements in the fashion that we have thus far. There is no doubt that the past months have been tremendously difficult [in assembling a coalition]. But in the area of trade, the U.S. will ultimately recognize the larger stakes and interests. At the same time, I have always recommended that the U.S. be attentive to its friends.

You've said that openness to trade is one of America's great strengths. Yet the U.S. mood toward French and German products in particular is increasingly hostile because those countries don't support the Iraq war.

No doubt this has been a tremendously difficult period with big disappointments [among erstwhile allies], and that reflects itself in the political system. Look, I was one of the key representatives who did the negotiations for German unification, so I am deeply disappointed with the Schröder government. But the combination of American pragmatism and openness has led it to pursue what it believes are its ideals and its self-interest. And we lead the world in the direction of openness. The U.S. recognizes that it will have to play a critical role in the Middle East after the conflict and that to have successful negotiations between Israelis and Palestinians requires a more open, transparent political system among Palestinians.

Frankly, some countries have been slow to recognize the new dangers of the world -- the combination of weapons of mass destruction and terrorism and rogue states. And they haven't had to deal with the responsibility because it has fallen upon the U.S. But one has to be careful in evaluating Europe. Look at the point of view of the British and the Spanish, the Portuguese and the Polish and the Baltics versus the French and German viewpoint. It is a fluid time in the global system, and the U.S. is not going to succeed in that system by withdrawing.

What was uppermost on your agenda when you entered office?

Our No. 1 goal was to regain momentum on trade liberalization, and that required action on multiple fronts -- international but also domestic. We needed to make the case at home for the importance of trade in the global system as part of sustaining America's values abroad. On the international side, the key priority was to get China and Taiwan into the World Trade Organization. That we accomplished -- and it will have huge ramifications for their economies and for the international system.

Next came launching the global trade round at Doha [Qatar]. Almost all the trade ministers that I talked to -- other than [European Union Trade Commissioner] Pascal Lamy -- said, Don't even try. But in my view, it was rather significant to get that done, particularly after 9/11. Then, obviously, we could combine that initiative with the strategy of competitive trade liberalization, where you turn to bilateral trade deals [to foster broader negotiations].

Was support for U.S. steel tariffs and farm subsidies necessary to implement your agenda?

We had to demonstrate that we could get support in Congress for this activist trade agenda to strengthen our hand internationally. But that required a fine intersection, because many thought that if we got the Doha trade round launched, we'd have to make concessions to trading partners that would undermine our ability to get Congress to give us trade promotion authority. Or vice versa -- that concessions on trade issues would undermine our ability to get Doha.

On the farm bill, keep in mind that it is totally within our WTO obligations. Frankly, it is a little hard to argue to Congress that the U.S. shouldn't be able to spend up to the $19.1 billion limit supporting farmers when the Europeans have a limit of between $50 billion and $60 billion. We announced an extremely aggressive agricultural liberalization proposal even before we had won trade promotion authority, and, indeed, we used that program to help get support for TPA. The argument of the farm community and of farm-state congressmen was, Look, if you get others to cut their subsidies, we'll cut ours.

What about the steel tariffs?

The international steel market is hardly one that you can approach as remotely free trade. Look at Japan. From 1970 to 1997 or even later, it had five steel companies that didn't change their market share in any year by even 1 percent. This is one area where it is justified to use the safeguard provisions [under WTO], which are also available to all other countries, to give our steel industry breathing space. I was an ardent advocate of this from the start.

There is a political component, too. When we came into office, there was a steel quota bill that had over half the members of the House as co-sponsors. Rather than expend our time fighting it, our strategy was to enlist the aid of congressmen who had an interest in steel in supporting overall trade liberalization. In turn, we agreed to breathing space on steel. We wouldn't have won trade promotion authority if we didn't have their support.

How do bilateral trade deals fit into your strategy of liberalizing trade on a global basis?

That concern is always raised. I would ask, Who has been more aggressive than the U.S. in moving forward the global trade? Secondly, I would point out that these agreements help us build a coalition that allows us to be more effective in regional and global negotiations.

What are the prospects of working with Brazil on the Free Trade Area of the Americas agreement?

Brazilian President Luiz Inácio Lula da Silva understands that for Brazil to achieve its enormous growth potential, it will have to become a larger exporter. It is not yet clear to me, however, whether Brazilians recognize that their efficiency would be enhanced by more imports as well. As Lula has said, there are millions and millions of hungry people in Brazil. But frankly, if the country were a little less protectionist in its agricultural trade policies, Brazilians would have lower-cost food.

It appears that last month's deadline for agreeing to a framework for negotiating agricultural trade issues won't be met. What can you do to keep the Doha trade round alive?

To get us where we need to go by the time of Cancún [the September trade summit in Mexico], the EU will need to make some headway with the Common Agricultural Policy reforms that they've outlined. The EU has recommended changes in the CAP that would at least reduce some domestic subsidies and, hopefully, eliminate export subsidies. Then it is a question of whether the EU member states will support that. We hope that in the aftermath of conflict in the Gulf, the Europeans will see the larger stakes here for the international economy.