Bush Vows Push On Trade, Chides Boards on Pay
By: Wall Street Journal
By JOHN D. MCKINNON and GREG HITT
October 12, 2007
WASHINGTON — President Bush, saying many Americans have lost faith in their ability to compete in the global economy, vowed to revive the country’s free-trade agenda, and he chastised corporate America for behavior that is adding to the public’s anxiety.
“I am concerned about isolationism and protectionism in both parties. One of the concerns I talked about in the State of the Union was that this country has got to make sure that we don’t isolate ourselves or try to wall ourselves off from the world.”
“We have lost sight of what it means to be a nation willing to be aggressive in the world, and spread freedom or deal with disease,” he said in an interview with The Wall Street Journal. “We have lost our confidence in the ability to compete internationally.”
Mr. Bush pledged to turn the situation around.
In yesterday’s interview, Mr. Bush said that some executive compensation is excessive, and that some corporate boards fail to ensure that shareholders know how company funds are being spent. Those practices, he said, can give rise to feelings the economy isn’t working fairly for all Americans.
“Do I think some of the salaries are excessive at the top? I do,” the president said. “I don’t think it’s the role of government to regulate salary. But I do believe it’s a role of boards of directors to be very transparent with shareholders about these different packages, the employment packages that these executives get.”
Excessive executive compensation “just sends a signal of unfairness, and people in America want…fairness,” Mr. Bush said, adding that he has raised the issue with both Treasury Secretary Henry Paulson and Securities and Exchange Commission Chairman Christopher Cox. Mr. Bush raised some concerns about executive compensation in late January in a speech in New York, but yesterday’s comments went further.
The president’s remarks came amid recent polls showing declining voter support for globalization and free trade, even within his own Republican Party, where such support traditionally has been strongest. His statements reflect a new White House strategy of acknowledging economic imbalances as a way of gaining credibility to push a final handful of free-trade agreements through a skeptical Democratic-controlled Congress. Those agreements include trade deals with Colombia, Panama, Peru and South Korea. The White House also is seeking a breakthrough in the long-stalled Doha Round of global trade talks.
The administration is stressing the strategic importance of the pending Latin American trade deals, especially the pact with Colombia. The country is a close ally of the U.S. in a region where anti-American sentiment is on the rise, and where populist Venezuelan President Hugo ChÃ¡vez is trying to extend his influence.
While not mentioning Mr. ChÃ¡vez, Mr. Bush stressed the importance of securing approval of the Colombia deal, which he said will face a “tough” vote in Congress, which has concerns about violence against labor organizers and others in that country. “It’s very important this trade bill pass for economic reasons as well as national-security reasons,” Mr. Bush said.
The president’s efforts to make Americans feel better about the economy come at a time when he is struggling against strong crosscurrents. By most standards, the economy’s performance is solid.
But a Wall Street Journal/NBC News poll conducted earlier this month showed a surprising level of unease among Mr. Bush’s supporters despite the solid economy. Among Republicans surveyed, six in 10 said trade has been bad for America, a sign of concern about job losses to overseas competitors. At the same time, some conservatives in the Republican coalition Mr. Bush helped build are drifting away from the party because of heavy federal spending under Republican rule.
In response, the president has been talking up the economy’s strength, as well as lower federal budget deficits, while vowing to veto spending bills from Congress that he considers irresponsible.
More immediately, he faces the problem of getting the pending free-trade deals through Congress. The president is to travel to Miami today for a speech aimed at renewing the trade debate and putting pressure on Congress to approve the deals. His target audience will include not only lawmakers and the American public, but leaders of emerging economic powers like Brazil and India that hold a lot of influence over the long-stalled Doha talks.
In the interview, Mr. Bush repeated his belief that free trade and globalization are good for Americans. “There’s a lot of high-paying jobs as a result of trade,” he said, noting that the current strength of U.S. exports is helping to pump up overall domestic growth. He also reiterated his often-stated belief that trade helps lift poor nations out of poverty. That, in turn, could help relieve the pressures that create illegal immigration to the U.S., he said.
But Mr. Bush also observed that skepticism toward free trade and globalization appears to be growing. “The United States has been through these trends in the past,” he said, noting that tariffs levied before the Great Depression and in its early days exacerbated the nation’s economic decline. “This country has got to make sure that we don’t isolate ourselves or try to wall ourselves off from the world.”
Democrats won control of Congress in 2006, in part on the strength of antitrade and antiglobalization sentiment among voters, and similar feelings are already roiling the unfolding 2008 campaign.
In a reflection of the new political climate for trade, the White House earlier this year agreed to elevate the importance in trade policy of some Democratic priorities, such as labor rights and environmental protections. In the interview, Mr. Bush suggested he is willing to go even further, and will work with Democrats to bolster “trade adjustment” assistance to American workers who lose their jobs as a result of foreign competition.
At the same time, he said debate on the trade deals awaiting congressional approval should focus on whether they benefit workers and consumers. Those deals, by and large, are designed to lower tariffs and other trade barriers, creating new markets for American farmers and manufacturers and widening access for American consumers to low-cost goods made abroad.
The proposed pact with Peru appears to be inching forward, but the outlook is uncertain for the deals with Panama and Colombia.
In the case of Panama, action on the deal has been delayed because of U.S. alarm over the recently elected leader of the nation’s legislature, who is wanted in the U.S. on charges of killing an American soldier.
Colombia’s history of drug-related and political violence is complicating consideration of that trade deal. In particular, Democrats have raised concerns about violence against labor activists, and whether the government in Colombia has done enough to protect them and prosecute past attacks. The deal with South Korea is also mired, amid concerns among lawmakers that American beef producers don’t have full access to that market.
Mr. Bush said he is still confident a deal can be reached in the Doha Round of global trade talks, despite new doubts raised this week about the prospects for the talks, which were started six years ago and have never gained much momentum.
On executive compensation, the White House said Mr. Bush spoke with SEC Chairman Cox some months ago.
The SEC itself has found problems with the way corporations disclose executive compensation. The agency, which passed a rule in 2006 requiring improved disclosure, recently sent letters to nearly 350 companies critiquing their financial reports and demanding more information. In addition, Mr. Cox has made revamping executive compensation one of his key goals, in particular making it easier for investors to understand the pay and benefits that corporate officials take home.
–Deborah Solomon contributed to this article.
Write to John D. McKinnon at firstname.lastname@example.org and Greg Hitt at email@example.com
* Content From the Wall Street Journal supplied by Elva Ramirez:
200 Liberty Street, 12th Floor
NY NY 10281
212. 416. 4260