International Trade, a Bush Legacy

ONE part of the economy has been robust on George Bush's watch. Fittingly, it is the part where the economy meets Mr. Bush's keen interest in foreign affairs - international trade.

At least 80 percent of what growth the economy has produced in the past couple of years, is from growth in exports.

Only a very small share of that growth is credited to the efforts of the Bush administration.

Yet trade policy in the Bush White House offers a glimpse of some of the president's critical strengths and weaknesses in a world where money is fast surpassing missiles as the currency of power.

Bush is clearly a genuine believer in benefits of full and unencumbered commerce between nations. His pursuit of a free-trade zone that encompasses the Western Hemisphere even amounts, by most accounts, to vision.

His conviction, however, is not always strong enough for him to hew to his own principles. When domestic politics pushes him off his course, as it did in his Japan trip in January, he stumbles.

Further, his heart, like those of his closest advisers, beats not to the meter of trade but to the cold-war pulse of national security, according to former associates and close outside observers.

Still, President Bush's most enduring legacy could be the international trading system he helps build and not the dramatic lessons of the Gulf war. This legacy rides on such eye-glazing negotiations as the General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), and the Enterprise for the Americas Initiative (EAI).

If Bush has pursued any idea far-away enough to be called a vision, it is probably his vision of a free-trade zone encompassing the Western Hemisphere from "Hudson Bay to the Strait of Magellan."

"His hemispheric vision of trade in the Americas is really brilliant, the best that any president has come up with to date," says Bill Frenzel, until last year a Republican congressman from Minnesota and now a trade expert at the Brookings Institution.

Bush is a man with a deep sense of how dangerous the world can be, rooted as he is in his World War II experiences. But his view toward Latin America is now sharply defined by economics and trade, not the threat of creeping communism in Chile or Central America. "On Latin America, the lens of the Cold Warrior is definitely shattered," says Inter-American Dialogue associate Dan Weiss of the Bush outlook.

"It is one of the most important, if not the most important, policy initiatives by this government" toward Latin America in history, says Otto Reich, a trade consultant and former US ambassador to Venezuela.

Bush argues that trade is why his abiding interest in global diplomacy matters to American pocketbooks. "Make no mistake," Bush said in February, "the future growth of the United States economy depends on expanding mutual investment and trade with our neighbors in the Americas." It will "create new jobs and raise the quality of life for people in Syracuse and St. Louis as well as Sao Paulo and Santiago."

US exports worldwide have in fact risen throughout the current recession, 7.2 percent last year, cushioning Americans against the fall in domestic demand.

The Bush administration can claim a little credit for the export boom, driven mostly by low dollar value. Trade negotiators may have cut several hundred million dollars from the $43 billion-and-still-growing US trade deficit with Japan, says William Cline of the Institute for International Economics.

Many of the closest observers of trade policy credit Bush with strong free-trade rhetoric and genuine free-trade instincts, but note that his convictions are not strong enough to resist distraction and drift under political pressure.

Gary Clyde Hufbauer, a trade economist at Georgetown University, cites Bush for a policy of drift that has not gone unnoticed by US trading partners. Bush is for free trade when the political costs are not too high, he says. In the years when Bush's popularity was invincible, he adds, "he had chits to burn, and he did not burn them on the international trading system."

Even on his Enterprise for the Americas Initiative for knitting together the hemisphere through commerce, Bush draws complaints about his lack of follow-through. If global support for liberalizing trade falters, notes Anne Krueger, a Duke University economist, "the NAFTA thing [freeing trade between the US and Mexico] could drive the world into trading blocs, and that's scary."

"The president has not invested very much of himself in the programs he would like to see enacted," says Mr. Frenzel.

When Bush attends a summit meeting, he "almost never" takes along trade negotiators or his Commerce secretary, says Frenzel. But geopolitical advisers and defense experts usually accompany him.

When Bush shifted his Asia trip from its original diplomatic purpose to a commercial, trade-oriented purpose, "he didn't really seem to have a feel for what the trip was about," says I. M. Destler, a trade expert and political scientist at the University of Maryland.

Although Bush is a genuine free-trader, says Professor Destler, trade matters are "not really where his heart is." Under political pressure in the US, the White House decided to give the Japanese shorter, tougher deadlines to open their markets. In asking Japanese bureaucrats to guarantee more purchases of American goods, Bush heavily moderated his own free-trade principles in favor of government-managed trade deals.

The White House also decided to raise the profile of the trip's commercial mission by bringing a group of executives, including the chief executives of the major American auto companies. The auto executives, promoting protectionist measures for American cars, severely undercut the president's message.

"He can't fathom how powerfully economics can function as a force in shaping the post-cold-war world," says Henry Nau of George Washington University. Bush is a vigorous diplomat, Dr. Nau says, but not a strategic thinker.

On the other hand, Bush has managed to control some of the most protectionist impulses of Congress, according to Robert Z. Lawrence, a Harvard economist.

George Bush has always been a liberal internationalist of the old Republican school - free trade and activist American diplomacy.

The economics department at Yale, where he was a Phi Beta Kappa student, was dominated by very conservative, 19th-century-type free traders. He also cut his teeth in the oil business. Although he started only a small-scale drilling company, the oil business is thoroughly international in outlook.

The theory behind free trade is that it raises the real income of Americans by tapping global efficiencies and forcing the economy to specialize in the best jobs.

But the immediate impact appears to be the loss of American markets to foreign competition. Free trade is a hard sell in a slow economy.

Nevertheless, the NAFTA negotiations with Mexico have "changed Latin American perceptions of the US," says Dr. Lawrence.