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Debate Draws Distinctions in Candidates' Trade Policies

By Paul Blustein
Washington Post Staff Writer
Thursday, September 9, 2004; Page E01

The differences between President Bush and Democratic challenger John F. Kerry over trade policy have been relatively muted, at least compared with hot-button topics such as tax cuts and Iraq. But that didn't stop the two protagonists at a "Bush-Kerry trade debate" yesterday from underscoring distinctions between their candidates on issues that included outsourcing, Chinese currency policy and a proposed Central American Free Trade Agreement.

Clayton Yeutter, a former U.S. trade representative who served as unofficial surrogate for Bush, took a strongly free-trade stance. He was particularly outspoken on outsourcing, asserting that the shift of service jobs overseas "makes genuine sense as any economist knows," because it increases efficiency and productivity.


Lael Brainard, right, represented John F. Kerry and Clayton Yeutter unofficially spoke for President Bush at a trade debate. (James M. Thresher -- The Washington Post)

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Lael Brainard, a Kerry trade adviser who represented the Democratic candidate, attacked such arguments as insensitive to the interests of U.S. workers -- though in keeping with Kerry's position, the changes in trade policy she urged were far from radical. Highlighting Kerry's proposal to change tax laws so U.S. companies have less incentive to move operations abroad, Brainard said, "John Kerry doesn't want to end outsourcing. But he does want to end the kind of outsourcing that results from distortions in the tax code."

So it went at the debate, which was held at a downtown hotel under the auspices of two pro-trade groups, the Consumers for World Trade and the WIIT Charitable Trust. Since Kerry has generally voted in favor of free trade during his Senate career, Brainard's criticisms of Bush mainly involved complaints that the administration hasn't championed U.S. economic interests aggressively enough.

And Yeutter's rebuttal, rather than a slashing assault of the sort featured at the recent Republican convention, often consisted of warnings that Kerry might be seeking "too much" in trade agreements. He also said Kerry, for all his attacks on "Benedict Arnold CEOs" who move operations to other countries, might have much narrower differences with Bush on trade than most other issues. "It's a little hard to assess," he said. "There's always a little hyperbole in campaigns."

Still, both sides emphasized substantive points on which their views diverge.

Disputing Yeutter's assertion that Bush has "produced a heck of a lot of leadership" on trade, Brainard scorned the free-trade agreements that the administration has negotiated as producing "negligible" benefits. The nations involved -- Chile, Singapore, Australia and Morocco, among others -- account for "a tiny fraction of overall U.S. exports," she said.

More significant was the disparity over the proposed free-trade pact that administration trade negotiators struck with five Central American nations and the Dominican Republic. Kerry has said he would oppose the deal as negotiated because it does not do enough to protect workers' rights and the environment in Central America.

Brainard, elaborating on the candidate's position, said a Kerry White House would insist on redrafting the deal to include protections of "internationally recognized core labor standards," such as the right to form unions. That drew an admonition from Yeutter that "if you try to get too much done in any trade agreement, you get nothing done," because provisions on controversial issues such as labor rights would induce opposition from the countries involved, as well as other parties.

The two sides sparred as well over whether the administration has been tough enough in prodding China on a number of trade disputes -- a topic on which Kerry often chides Bush.

Brainard, a Brookings Institution economist, faulted the U.S. Treasury and other agencies for failing to "use tools at their disposal" that could induce Beijing to stop holding the exchange rate of its currency at a low level, which helps keep Chinese products cheap. Although "no one would suggest that this is a very easy issue to fix overnight," she said, one possible remedy would be to bring a case to the World Trade Organization. But Yeutter scoffed: "That depends if you want an issue or a result. It seems to me a WTO case is not going to lead to an outcome," because Washington would probably lose.

Yeutter dismissed outsourcing as having a minor impact on the U.S. economy, saying, "My personal view is that that issue has had more attention than it really deserves."

He defended outsourcing in terms similar to those advanced this year by N. Gregory Mankiw, the chairman of Bush's Council of Economic Advisers, whose words stirred a political tempest. "We outsource when we ask our neighbor across the street to do a job we don't want to do," Yeutter said. "It's just now we're outsourcing on a global basis. That's just the way the world is. . . . We ought to ease the pain [of those who lose their jobs], but should we try to stop it? The Russians tried that with communism."

Yeutter said, however, that he was speaking in a personal capacity -- he is now a partner with the law firm of Hogan & Hartson LLP -- and organizers of the debate said that although the Bush campaign was aware of his participation, he had not been selected as an official representative.

That didn't stop Brainard from pouncing. "The choice between candidates is extremely clear," she said. "President Bush has an economic plan . . . telling the American people that offshoring is good."


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