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Experts Advise Obama on Trade Policy

The third expert panel in a series of three entitled "Transition 2008: Advising America's Next President" with the Council on Foreign Relations, The Economist and NYU Stern convened to discuss US trade policy. The panel included Edward Alden, Bernard L. Schwartz Senior Fellow at the Council on Foreign Relations; Anna Szeternfeld, Latin America Editor, Economist Intelligence Unit; and David Backus, Heinz Riehl Professor and Chair of the Department of Economics at NYU Stern. Jonathan Eaton, Professor of Economics at New York University moderated the discussion.

Professor Eaton asked each panelist to explain which aspects of US policy related to US trade need rethinking.

Edward Alden: US needs a "time out" on trade policy.
Alden would make three suggestions to the new administration with respect to trade. First, he argues for a serious rethinking of the direction of US trade policy and a strategic pause on the issue. For 20 years, he notes, trade policy has focused on openness but Alden suggests pursuing a new direction, particularly since there is a lack of support for the current US trade agenda. Second, he asks that during the time out the US "does no harm," such as a possible example of slapping tariffs on Chinese imports because of the value of the yuan. Finally, the US should refocus trade policy on the World Trade Organization, which is currently underused, versus negotiating bilateral agreements. Bilateral agreements, he says, are politically controversial and not as economically efficient.

Anna Szterenfeld: US policy with Latin America should not be formed in isolation.

Speaking specifically on US/Latin America trade relations, Szterefeld believes that trade policy must be formed in the context of a comprehensive agenda that includes other issues such as energy, poverty reduction and debt relief. She argues that the trade embargo against Cuba should be dismantled because it is old and ineffective, and advises that the US engage and partner with Brazil, a powerhouse economy in the Western Hemisphere and an important player on the world stage.

David Backus: Trade should not be dealt with first.

Citing a love/hate relationship with trade issues, Backus is unsure if he'd urge Obama to make trade policy a primary issue. He explains that there have not been huge gains from increased trade. His biggest fear is moving backwards with trade policy, and encouraged the new administration to watch out for trouble that may surround the issue as a result of the current tough economic climate.