Working Paper: NBER ID: w13831
Authors: Barry Eichengreen; Douglas A. Irwin
Abstract: While many political scientists and diplomatic historians see the Bush presidency as a distinctive epoch in American foreign policy, we argue that there was no Bush Doctrine in foreign economic policy. The Bush administration sought to advance a free trade agenda but could not avoid the use of protectionist measures at home -- just like its predecessors. It foreswore bailouts of financially-distressed developing countries yet ultimately yielded to the perceived necessity of lending assistance -- just like its predecessors. Not unlike previous presidents, President Bush also maintained a stance of benign neglect toward the country's current account deficit. These continuities reflect long-standing structures and deeply embedded interests that the administration found impossible to resist. \n \nWe see the next administration as having to address many of the same problems subject to the same constraints. The trade policy agenda will evolve slowly, with questions about the viability of multilateral liberalization under the WTO and the degree to which labor and environmental conditions can be included in trade agreements. Policy toward China will continue to confront difficult choices: even if it succeeds in pressuring the country to reduce its accumulation of dollar reserves, thereby easing the current account imbalance with the United States, this may only imply a more difficult market for U.S. Treasury debt and higher interest rates at home. Continuity will therefore remain the rule.
Keywords: Bush Doctrine; Foreign Economic Policy; Free Trade; Protectionism; WTO
JEL Codes: F0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| desire for free trade (F10) | protectionist measures (F13) |
| political pressures (D72) | protectionist measures (F13) |
| special interests (D72) | protectionist measures (F13) |
| external shocks (9/11) (F69) | administration's ability to adhere to economic principles (E64) |
| WTO structures (F13) | administration's trade policies (F13) |