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CNN Novak, Hunt & Shields

Robert Zoellick Discusses International Trade Environment

Aired June 23, 2001 - 17:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From Washington: EVANS, NOVAK, HUNT & SHIELDS. Now, Robert Novak and Al Hunt.

AL HUNT, CO-HOST: I'm Al Hunt. Robert Novak and I are in Washington's historic Winder Building to question President Bush's top trade negotiator.

ROBERT NOVAK, CO-HOST: He is Robert B. Zoellick, U.S. Trade Representative.

(BEGIN VIDEOTAPE)

NOVAK (voice-over): The Bush administration this week renewed its call for a new round of trade negotiations.

COLIN POWELL, U.S. SECRETARY OF STATE: President Bush and his European Union counterparts are committed to launching an ambitious new round of multilateral trade negotiations at the World Trade Organization ministerial meeting in Doha later this year.

NOVAK: But legislation to give the president bargaining authority has run into Democratic demands for environmental and labor restrictions.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I explained to the critics in Congress -- there are some who are legitimately concerned about the environment and labor, but I remind them that if you believe in trade, you believe that prosperity will spread.

NOVAK: In charge of winning the legislation and guiding the negotiations is Robert Zoellick, the 13th U.S. trade representative. In the first Bush administration, he was a top lieutenant of James A. Baker III, serving with him as deputy assistant secretary of the Treasury, undersecretary of state and White House deputy chief of staff.

(END VIDEOTAPE)

NOVAK: Ambassador Zoellick, President Clinton for eight years was unable to get fast track authority for negotiations on trade necessary to assure congressional approval. Is it going to be a requirement to get fast track authority in order to begin global trade negotiations with the rest of the world? ROBERT ZOELLICK, U.S. TRADE REPRESENTATIVE: It's very important to get what we now call Trade Promotion Authority, trying to emphasize the essence of it, which is the ability to go ahead and negotiate these trade agreements. Because frankly, after the debacle in Seattle in 1999, the attitude around the world about trade has gone downhill.

And the United States has to play a leadership role if we're going to succeed. And many countries now know the president is interested, the administration is committed. And they want to know whether Congress will back us by giving us that negotiating authority.

NOVAK: So I take that as a yes, that you really need that authority.

What are your prospects right now, Mr. Ambassador, with the closely divided Congress?

ZOELLICK: Good, but it's going to take a lot of hard work. This is an issue that has broken down differently in the Senate than the House. The Senate's support is usually stronger, both Democrats and Republicans, because they represent broader constituencies, see the benefits of trade.

In the House, it's been harder. And frankly on the Democratic side, it's been the hardest. Even President Clinton in '97, when he last really tried at this, probably only could get about 40 members out of over 200 in his own party to support him on the issue.

NOVAK: And it would be presumed that with a Republican president, that it would be even more difficult to get Democratic votes.

Have you considered the possibility of bringing in a prominent Democrat such as William Daley, not necessarily him but somebody like that, who negotiated, who managed the successful approval of the NAFTA agreement? Are you considering bringing in a Democrat to try to usher this proposal through Congress?

ZOELLICK: Well, first, let me just question your premise just a little bit, because the key point about those 40 or so Democrats in '97 were those people that, by basis of strong beliefs or districts, were pretty committed to trade. So, frankly, we expect to pick up more Republican votes with a Republican president and try to hold as many of those Democratic votes as possible.

On the idea of a Democrat, frankly, we're working Democrats on the inside and the outside. And this has been something that I've been doing since day one in terms of spending a lot of time up on the Hill, finding the Democrats up there that can be of great support.

And frankly, Bill Daley has already been helping me in terms of some of my outreach with the New Democrats. Bob Rubin has been leading the effort with the Council on Foreign Relations and others.

So there's a lot of people out there going back to Ambassador Bob Strauss, who held this job before me, who know the importance of trade and I think will be there to help us.

HUNT: Mr. Ambassador, to win sufficient Democrats, you may have to make some concessions on labor and environmental issues. Would you be wiling to agree to impose trade sanctions on countries that violate labor laws, to get Democratic votes?

ZOELLICK: Well, I think your question hits one part of this issue directly on the head, and it's where we've been trying to sort of expand the terms of the debate.

What I mean by this is -- and I think everybody acknowledges that it would be good if trade and growth can help promote environment and labor conditions. But what happened in the debate, frankly, at the last part of the Clinton administration, was all of a sudden the ideas of labor and environment got linked to sanctions with negative ideas.

And we're trying to expand that and talk about how openness helps in terms of environment and labor conditions, how some of the things that the United States does through aid programs, how we do it, the International Labor Organization. There's a lot of things one can do of a positive variety to build on the best aspects for labor and environment, which is an open, growing economy and, frankly, one that moves toward rule of law.

HUNT: So basically, trade sanctions for so-called labor violations would be ruled out under your reign, is that correct?

ZOELLICK: Well, it's something that Republicans, as a broad group, strongly resist for good reason.

HUNT: You said a few weeks ago that some Democrats used labor and environmental measures really as a camouflage for protectionism and isolationism. Are House Democratic Leader Gephardt and Senate Democratic Leader Daschle among those who do that, sir?

ZOELLICK: I don't necessarily think so. I've have a chance to talk to Mr. Gephardt. I've had some contacts with Senator Daschle in the past. I think, you know, both of them, frankly, have constituencies they have to deal with. And, look, what partly drives this is the politics. What partly drives it for both of them is labor unions.

And, frankly, one of the other things that I've been trying to do is reach out to the labor unions to try to deal with some of their concerns abroad dealing with basic, core labor standards, but also, frankly, trying to deal with real problems like those of the steel industry. You know, so I think we now have a better relationship with the steelworkers than we did before by trying to help with what they've called this safeguard process, the 201 process, for the steel industries.

NOVAK: Speaking of reaching out, Ambassador Zoellick, the president of AFL-CIO, John Sweeney, has publicly complained that he's been cut out of the process. Now, I know that you can't speak for the entire Bush administration, but have you ever sat down with John Sweeney to discuss this problem? ZOELLICK: Yes, in fact I talked to him this week. And I've gone over to see him at the AFL-CIO at least two, possibly three, times, and he and I have actually talked frequently. And I'll let him speak for himself, but I was told by a third party that he actually felt that, in his relations with me, there is an open door. And we don't obviously agree on many things, but there's points where we can try to work together.

NOVAK: In regard to the outreach to steel, there's been a great deal of alarm in the free trade community about trying to buy Democratic votes by having a steady on the so-called question of "dumping" of foreign steel in the United States, which has always been a camouflage word for protectionism. "The Wall Street Journal" has editorialized that this could start a trade war involving China and Japan, which are hitting each other on steel.

Aren't you playing with very dangerous medicine when you talk about steel dumping to try to get this trade bill through?

ZOELLICK: Let me distinguish two different things. First, dumping is part of our laws, which are accepted under the WTO system, to deal with unfair practices. And those are widely accepted, and we use those, and other countries use them.

What we did, particularly, on steel was something slightly different. It's called a safeguard mechanism, it goes by this name, Section 201. It doesn't require a finding of an unfair practice. It is also acceptable under the WTO rules, the World Trade Organization international rules, if you follow certain procedures.

And what the president directed is that we initiate an investigation with something called the International Trade Commission to see whether there's been serious injury that is the cause of these problems for the steel industry through imports.

If they make these findings during the course of the year, then the president has options to take certain actions to try to help get a breathing space to help the steel industry get back on its feet.

HUNT: But Mr. Zoellick...

(CROSSTALK)

ZOELLICK: ... what Secretary Evans and Secretary O'Neill and I did is we spent a lot of time looking at this issue, both the international aspects and the domestic aspects, and felt that this is an industry that has had to deal with some unfair issues, but was worthwhile investigating whether these problems were such that they did not this breathing space.

HUNT: But Mr. Zoellick, the Clinton administration said -- they had this option too. They just said it would be too protectionist to do that. They rejected this. Isn't it hard for you to preach to other countries about the virtues of free trade when you're engaged in such a sweeping, potentially protectionist measure at home? ZOELLICK: Well, first, I think the Clinton administration made a mistake on this, and I believe that these 201 safeguard provisions in this and other areas are actually important.

Let me give you the reason why. You know, I've been in financial and other business markets during the time that the public, in its wisdom, decided that we shouldn't be in public service. And it's quite clear that while financial markets and information markets move instantaneously, that's not true in the manufacturing sector, and it's certainly not true in all communities.

So this is part of U.S. law in an international system, and it's only protection is, frankly, you erect barriers that don't lead to the restructuring that companies need to be able to compete. And so, that's not our approach.

And as for the international aspect of this, I've talked about this with the Japanese, the Europeans, the Koreans. Frankly, none of these countries have clean hands in terms of the steel industry issue. And as part of the president's initiative, we also want to try to negotiate some of the problems internationally.

HUNT: Mr. Zoellick, we're going to take a break.

But we'll back in just a minute to talk to Ambassador Zoellick more and ask, are Europeans running U.S. antitrust policy?

(COMMERCIAL BREAK)

NOVAK: Ambassador Zoellick, a long-negotiated deal proved by American antitrust between General Electric and Honeywell, looks like it's been ruined by a veto from the European Union. Have we reached the state where the European bureaucrats now are going to determine antitrust policy in this country? And isn't that a sort of protectionism?

ZOELLICK: Certainly the decision is a disappointment. But the reason for this really reflects the type of global business environment you're now in; is that GE and Honeywell are American companies, but they also operate in Europe. And so, it is natural, and there has been a lot of cooperation between our antitrust authorities with those of Europe of trying to look at these issues about mergers and the competition it creates.

Now in this case, frankly, our antitrust authorities, and I certainly agree with them, believe that the European approach is wrong.

It's not totally clear where the deal is going to finally end up in this process, so I have to be a little bit careful about it. But it's all the more reason, frankly, why in that area and others, it's frankly more important to try to talk with people abroad about some of these issues because they're not going to go away given the nature of the global economy.

NOVAK: You know and I know, sir, that a lot of the critics, of free trade, in labor and even some in business, are saying that we are really patsies, that we were taken by the Europeans. Doesn't this really add fuel to that fire?

ZOELLICK: Well, there's not doubt there will be criticism. I would like to think that Americans aren't patsies, but I will leave that for you to determine. We certainly feel that on a lot of issues we're able to win our way, or, frankly, when there are disputes -- we just won a big today dealing with high fructose corn syrup. There's another one that we talked a little bit about before with the Europeans, we were able to resolve, with bananas that was nine years long.

So, you know, you're always going to get those charges. My job is try to resolve these problems and open markets for both American consumers in the United States and exporters abroad.

HUNT: Mr. Ambassador, do you think that what the EU has done so far on this case reflects a rather narrow action that reflects a nationalism -- anything that's aircraft-related? Or do you think it's a broader, more profound difference with the U.S. on antitrust policy?

ZOELLICK: Well, I'm not an antitrust expert, and because the case is still going on, I'm going to be a little careful on this.

But I think that, frankly, there is a difference view about antitrust theory that was reflected in this determination. And, at heart, it goes to the fact that today most U.S. antitrust focuses on the consumers of the product and whether they feel they're disadvantaged by the merger. And at least in this antitrust case, the Europeans were looking more at how the competitors related to one another in more of a theoretical position.

I do think it's telling that, in this case, the people who would be buying the product from the GE-Honeywell both thought the merger was fine.

HUNT: And you are someone who understands real politic. Do you think that the involvement, the heavy involvement of GE Chairman Jack Welch was a help or hindrance?

ZOELLICK: You know, I can't make a judgment in terms of the details of how that worked. I think that any time you have a big transaction, you're going to expect the chairman and CEO to get involved.

From everything that I was able to see, I think GE did it's best to try to accommodate the European Commission's rules. The question is still open about whether they will be able to do so.

As I said, it's frustrating, but I also think one has to not blow this out of proportion. I do not believe this was an attack on the United States. I do believe it was a set of differences. I believe the Europeans were wrong on those differences. And, frankly, it's all the more reason why something that the Clinton administration started and the Bush administration will follow-up on, and that, is we need to have some pretty serious discussions between U.S. and European antitrust authorities about these issues. Because as I said to Bob, they're not going away.

NOVAK: Ambassador Zoellick, the United States is running a huge trade deficit. It has been for some time. But there is less and less said about it, certainly in the administration and not even very much on Capitol Hill.

Is the United States reaching the point where it agrees with the editor of the Wall Street Journal, Robert Bartley, that the best way to eliminate the trade deficit is to stop calculating it?

ZOELLICK: Well, I do think what Bob Bartley is focusing on there is that, you know, one of the reasons -- this gets a little complicated -- but the trade account is the reverse of what they call the capital account. So it's the inflow of capital that also reflects itself in those trade numbers. And we don't have time to go through all the to-ing and fro-ing of that. But it does reflect the fact the United States remains a very strong place to invest.

Now, I think the other reason you don't get the same amount of complaints is we've had a relatively good economy. And I do think it's going to make all of our jobs tougher because, with the economic slowdown, until the president's growth package picks back up in terms of tax cuts and also the things we're trying to do in trade, it's going to be hard.

NOVAK: Put simply for the ordinary viewer, it isn't a very major -- you're saying that the trade deficit is not a major statistic?

ZOELLICK: Well, I won't go that far, Bob, simply because, you know, I think that where it's important is it goes to this question of capital flows coming into the United States. I've always believed that the best way to ensure capital flow is coming is to have an open environment, a good investment climate, low taxes. I believe the Bush administration will do that. And so I believe, you know, we should be able to maintain healthy conditions.

But, you know, the trade deficit is an issue that starts to have symbolic effect for a lot of people, and we can't ignore that.

The problem is, for many people, they mix it up with trade barriers.

ZOELLICK: We want to try to attack trade barriers, but that doesn't necessarily mean you have to just focus on the trade deficit numbers. And the clearest example is, the last time I was in government, we had a very low trade deficit. And the way we did that in '91-'92 was to have a recession. I wouldn't suggest it again.

HUNT: Mr. Ambassador, in a short time, you've clearly been an activist trade ambassador. Yet, why have you been so seemingly passive on trying to resolve the issue with our biggest trading partner, Canada, of the fight over lumber?

ZOELLICK: We haven't been passive. What we did early on was to talk to the industry here about the approach that they would like to take, and we agreed with them. They filed a series of, what Bob was talking about, these antidumping and also, what they call, countervailing duty cases. These go at the question of whether the lumber has been subsidized given the fact that it's grown on provincial land. We've supported that, and that process is going forward with the Commerce.

HUNT: Will you have some sort of final resolution in the next couple months?

ZOELLICK: I think the cases are going to have to go through the process of the ITC and the Commerce Department to find whatever subsidies are there, and that would give us the basis for some negotiation.

HUNT: We're going to take a break now, but we'll be back in a minute with "The Big Question" for Ambassador Zoellick.

(COMMERCIAL BREAK)

HUNT: "The Big Question" for Ambassador Zoellick: You recently complained about the Koreans imposing higher tariffs on cigarette imports. Is it going to be the policy of this administration to go along with big tobacco and actively promote U.S. tobacco around the world?

ZOELLICK: I don't think that's a very accurate description of what we've done.

What we did was that the U.S. had signed an agreement with the Koreans on cigarettes years ago, and the Koreans had put in some policies that, frankly, would discriminate against the United States, against other countries.

So with full attention to public health issues, as we are required by law to do, we frankly just wanted to make sure that American companies and American producers weren't treated worse than others around the world. And I think most Americans will agree with that.

NOVAK: Ambassador Zoellick, it's been the conscious policy of this administration not to be nearly as critical as the Clinton administration was of Japan on a variety of matters. Does that mean that we're not going to hear very much from you and your colleagues about the trade barriers that still exist in Japan?

ZOELLICK: No, and let me tell you why. I think what we're trying to do is take a different approach to try to build on some of the pro-reform policies I'll hope we'll see from Prime Minister Koizumi, in particular, deregulation, structure reform, improving the environment for private investment.

Those are the steps, in addition to some of the things in particular sectors, that create a win-win. They create opportunities for growth in Japan, and God knows they need it, but also create an opportunity for opening for our businesses.

NOVAK: Ambassador Robert Zoellick, thank you very much. ZOELLICK: My pleasure.

NOVAK: Al Hunt and I will be back with a comment after these messages.

(COMMERCIAL BREAK)

HUNT: Robert, you know, four years ago here were about 160 Republicans who were for Fast Track. They may be able to get 175, 180 this time. That means you've got to get 40 Democrats. Do-able, but it's going to be tough.

NOVAK: You know, Al, we've been interviewing U.S. trade representatives on this program for a long time. About eight years ago Mickey Cantor, who was a very able person, alluded there was a lot of talk about, is there going to be a trade war, a lot of bad rhetoric. I think the level of rhetoric has certainly been lowered around the world on trade wars. And the question is whether the reality is going to comport to that.

HUNT: Well, on this one thing, I hope you're right Bob Novak.

Bob Zoellick doesn't have the political background of Brock, of a Bob Strauss, of a Mickey Cantor even, but, boy, he wins high praise from an awful lot of people. I talked to the British ambassador the other night who said he did a heck of a job in ending a long simmering feud over bananas. I think he's a very qualified appointment.

NOVAK: You know, he kind of walked up to the water but didn't jump in when I invited him to say that trade deficits are really a meaningless statistic because they are because of the revenue that comes in. But it does have an emotional quality, but I think it's been a long time since anybody in the U.S. government really thought that the trade deficit was one of the serious problems or even a minor problem to the United States.

I'm Robert Novak.

HUNT: And I'm Al Hunt.

NOVAK: Coming up in one-half hour on "RELIABLE SOURCES," how are the media handling the case of the missing Washington intern? And is the president's honeymoon with the press over?

And at 7:00 p.m. on CAPITAL GANG, Senator Christopher Dodd of Connecticut joins the gang to talk about the patients' bill of rights and the Bush-Putin relationship, and our "Newsmaker of the Week" interview with Pat Robertson.

HUNT: Thanks for joining us.

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