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Even Bush Submits To These Global Tests

By Dan Morgan
Sunday, October 17, 2004; Page B03

Knuckling under to an international institution run by unelected bureaucrats isn't exactly President Bush's style, but in the next few days he will sign important tax legislation crafted expressly to appease just such a body.

The curiously named American Jobs Creation Act, passed by Congress just before its members left town to campaign, will phase out U.S. export subsidies that were ruled illegal by the World Trade Organization (WTO), a United Nations-like organization in Geneva that represents 148 governments. If all goes according to plan, the European Union will then end $4 billion a year of retaliatory tariffs imposed on American products.

No unilateralism here: Microsoft chief counsel Brad Smith sits in the European Union's Court of First Instance in Luxembourg last month before a hearing began on the company's request to suspend sanctions against it. (Francois Lenoir -- Reuters)

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Such pragmatic accommodation to the international economic order contrasts sharply with tough talk by the president and other political leaders about the U.S. right to use its military and political power in its defense, if necessary without foreign constraints. The president, brushing aside the context, has ridiculed Sen. John F. Kerry's comment about how a country's rationale for war must stand up to a "global test," and Bush pledged that decisions affecting U.S. national security will be made "in the Oval Office, not in foreign capitals." During the debates, the president defended his decisions to withdraw from the Kyoto Treaty on climate change and oppose U.S. membership in the International Criminal Court (ICC) in the Hague.

But for all the rhetorical swagger of both candidates -- Kerry pledged again at last Wednesday night's debate that he would "never allow any country to have a veto over our security" -- it's important to remember that on the economic front, the United States has been an obedient participant in a host of global institutions. There the United States not only submits itself to global tests, but embraces them.

Bush said in the debates that American participation in the ICC would subject U.S. troops, diplomats and citizens abroad to "unaccountable judges and prosecutors." But U.S. companies are routinely subject to the actions of just such foreign entities. Despite a go-ahead from the U.S. Justice Department, the proposed $45 billion merger of General Electric Co. and Honeywell International Inc. was blocked in 2001 by the European Union. Last week, an entity with the strikingly mystifying name of the European Court of First Instance in Luxembourg was considering Microsoft Corp.'s appeal of antitrust sanctions imposed by the European Commission. The Bush administration, meanwhile, is attempting to fold the United States into a web of new trade agreements that set terms for labor and environmental regulation as well as trade and investment.

"Americans have adjusted their behavior to the fact that they are part of an international economic community," said Hugo Paemen, the EU's ambassador to the United States from 1995 to 1999. "They have not done that for geopolitics for the simple reason that the U.S. is a superpower and can behave in what is now called the unilateralist way."

This two-track approach to the world -- cooperative and multilateralist where trade and finance are concerned, assertive and unilateralist on other fronts -- raises intriguing questions about the Bush administration's philosophy.

In the post-9/11 world, the line between running the international economy and ensuring national security has become blurry. Following the attacks, financial institutions were recruited to track down terrorists' money and bank accounts. And it became clear that airport security in Zurich was critical to the safety of U.S. cities. Fighting terrorists may require more unglamorous, street-level cooperation between governments -- the very kind used to stabilize international trade and commerce -- and less unilateral action by a superpower armed with jet fighters, submarines and precision weapons.

At the same time, the pull toward more international cooperation is coming from an array of new threats, from global warming to the rapid spread of infectious diseases. It was the World Health Organization, a U.N. affiliate, that took the lead in preventing the further spread of SARS after it was discovered in China and Canada.

Failure to grasp this dynamic may expose the United States to risks in the long run, according to Kenneth Cook, president of the Environmental Working Group, which consults on international environmental and agricultural trade issues. "I don't think you can operate for long under one set of rules in the economic realm if you're constantly eroding multilateralism in other areas. It spills over. It begins to erode trust."

The United States has promoted the WTO, which was established in 1995. Republicans and Democrats alike have seen it as a useful referee in preventing trade wars. Now, the WTO is the arbiter in disputes involving tens of billions of dollars. The U.S. government is using the WTO to seek an end to a European embargo on imports of U.S. beef treated with hormones and of genetically modified soybeans. It is also considering filing an unfair competition complaint against European Airbus on behalf of Boeing Co.

"The whole WTO structure is designed to lead to a diminishment of government-imposed trade barriers and non-tariff barriers," said Michael Franc, vice president for government relations at the Heritage Foundation. "There's a distinction when it comes to U.S. security interests. Bush wants to be in the driver's seat determining what is or isn't in our national interest. He doesn't trust the geostrategic instincts of world bodies."

At the heart of the debate over the proper degree of U.S. international cooperation are ideologically tinged disputes about national interests and sovereignty. "I like the [president's] muscular defense of U.S. sovereignty," says Daniel Mitchell, senior fellow at Heritage. "Kyoto. Tax harmonization proposals. These ideas are coming from countries and international bureaucracies that have less of a laissez-faire approach than we do and view international agreements as a way to let governments rather than markets allocate resources."

Conservatives suggest that the Democratic Party's attachment to "alliances" and "cooperation" springs from a need to be "popular" abroad. "I just think trying to be popular, kind of, in the global sense, it's not in our best interest," Bush said in the first debate. "It makes no sense. I'm interested in working with other nations and I do a lot of it. But I'm not going to make decisions that I think are wrong for America."

Bush administration officials deny that signing trade agreements or joining international financial organizations abrogates American sovereignty. "It's one thing to talk about being a party to the WTO to foster trade and commerce throughout the globe, and another thing entirely to talk about ceding U.S. authority to foreign leaders. We don't cede sovereignty to the WTO," said Scott Stanzel, a spokesman for the Bush-Cheney campaign.

Technically that is the case. The WTO has no enforcement powers and countries are free to ignore its rulings. However, WTO rulings can be used by countries or the EU as the basis for painful retaliatory actions against nations whose trade practices are deemed illegal. Given that reality, most nations, including the United States, strive to pass the global tests posed by WTO decisions.

No one is more aware of that than the U.S. cotton industry, which could face sweeping changes in U.S. government price supports as a result of a WTO panel finding earlier this year that several key cotton subsidies were "trade distorting" -- and therefore illegal.

In the long run, according to Clyde Prestowitz, president of the Washington-based Economic Strategy Institute, the United States will be forced to bend to historic economic and political forces.

"We don't act unilaterally in the world anymore, if we ever did. We are limited by all sorts of international rules in the economic sphere, yet we pretend we still have unilateral freedom of action," he said. "We are totally dependent on the continuing flow of oil into this country from Saudi Arabia, Canada, Mexico and Venezuela. We are dependent on foreign capital -- $2.5 billion a day. We rely on the Bank of China and the Singapore monetary authority. There's a deeply rooted belief in this country that we're special and autonomous from the rest of the world. It's an exercise in infantile American primitivism."

Author's e-mail: morgand@washpost.com

Dan Morgan covers Congress for The Post.

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