Health reform is unhealthy to the global trading system and climate change

NEW YORK CITY — The outcome of the Senate vote on Nov. 22 to invoke cloture which allows the health care reform bill to come to the floor for full Senate debate without filibuster was noted with great interest in many Asian capitals and indeed all over the world. Such interest however had nothing to do with health care. And lest the reader is misled, this column’s topic is not about health care. Rather, the interest was in how the voting evolved and what lies ahead because it has ramifications for many people at different events in several places. Two such places are two cities at the center of ongoing historic and life changing negotiations. One city is Geneva which hosts the WTO and the Doha Negotiations which is not going anywhere anytime soon. The other is Copenhagen which will host the Climate Conference in December the outcome of which is still uncertain even though key participants have lowered down expectations. The key is what is happening in a third city – Washington. And its symptoms were felt in two other cities along the way – Singapore and South Korea.

What happened was a voting that went along party lines. All 60 Democrats voted “yea” and all 39 Republicans voted “nay”. Even with health care reform debate coming to the floor of the Senate, there is no guarantee that a bill is going to be passed or what is going to be in it at this point. Two of the Democrats who voted in favor have said that while they will support debate, they will oppose the bill as it is presently crafted. And they are not alone. The issues of the public option and abortion, that is, how they are put into any potential bill, are things that could turn some Democrats – particularly conservatives or those with constituents that lean that way. Some of them are also coming up for re-election in 2010 like Senator Blanche Lincoln of Arkansas, one of the clinching 60. You can forget the 39 Republicans who smell blood and itching to make up for their shellacking in the last elections. What this means is that President Obama will have his hands full keeping the Democratic majority intact. It can be expected that personal agendas and convictions, political survival, and deal making amongst Democrats are still going to affect any legislation that passes. For better or for worse, but true to his campaign promises, President Obama has been focusing his effort in putting his domestic reform agenda – health care, energy, and repairing the still fragile financial and banking system – in the front burner. And until he can complete that agenda, which will require tremendous amount of political capital, the Obama Administration cannot be counted on to lead the way internationally, be it in strengthening the multilateral trading system or in responding to climate change.

Does Obama’s vocabulary include ‘free trade’

What are we to make then of President Obama’s statement in Singapore of “engaging the Trans-Pacific Partnership countries with the goal of shaping a regional trading agreement that will have a broad-based membership and the high standards worthy of a 21st-century trade agreement.” It was trumpeted by the Trans-Pacific Partnership members, the so-called P4 – a free trade arrangement involving Singapore, Brunei, New Zealand and Chile – as the tipping point for realizing a region-wide free trade agreement. On the surface, this seems an easy call for the Obama Administration. The P4 are small economies where the bulk of trade with the US is already either freely traded or at low tariff levels. In fact the US already has Free Trade Agreements with Singapore, Chile and Australia. Nonetheless, it is expected that it will take some time for negotiations to be completed – assuming they get started right away. But analysts are still unsure if the US really did intend to start negotiations as early as next year. Certainly, there are several members of Congress particularly some Democrats who equate free trade with exporting jobs overseas. President Obama’s statement certainly left room for interpretation.

The real test of whether the Obama Administration already had a firm trade policy in place would have been the trade pact with South Korea which prospectively offers the greatest benefit to the US but which has been languishing in the US Congress for two and a half years. The free trade agreement has bogged down over the issue of how much automobiles the US can sell to Korea and how many cars Korea can ship to the US Despite statements of assurance from President Obama that the US is committed to the pact, he did tell the South Korean President earlier that “Once we have resolved some of the substantive issues, then there is going to be the issue of political timing and when that should be presented to Congress.”

Obama said he was “committed to moving forward on a path that will increase commercial ties that are very strong between our two countries,” but added that, when it comes to pushing Congress, he does not “want to put the cart before the horse.”

I don’t want to be uncharitable but it does remind me of that most common souvenir t-shirt inscription that says “my Leader went to Asia and all I got was this lousy t-shirt”. This is not apocryphal – “Oba-Mao” T-shirts did hit the sidewalks of Beijing during his visit there!

So the negotiators in Geneva and those preparing to leave for Copenhagen should not hold their breath and expect any breakthroughs until the end of the year and maybe even up to the first quarter of 2010. That is how long experts think it will take for the health care reform bill to make its way through Congress and on to President Obama’s desk for signature.

US-Asean summit

This summit was also held in Singapore. I recently had a private breakfast with Singapore Foreign Minister George Yeo. I agree with him: The symbolism that there was a meeting held with ASEAN was a “plus”. The inclusion of Myanmar’s leader enhanced the new US diplomatic posture further. Clearly, US actuations were a manifestation of good intentions. President Obama’s planned visit to Jakarta is another positive manifestation of US interest in ASEAN. ABANGAN!!!