On How Not to
Get a New U.S. Trade Bill
By JONATHAN
POWER
JUNE 2, 1999
WASHINGTON DC - U.S. trade policy is in the doldrums and
that is, at the least, missing an opportunity and, arguably,
politically unsettling and dangerous. The Senate Finance
Committee has now decided to effectively shelve its plan to
debate a new draft fast-track trade bill and it is an open
question whether the stalemate of the last couple of years
can be broken during the Clinton presidency.
Two years ago President Bill Clinton lost the battle with
Congress for fast track authority to expand the North
Atlantic Free Trade Area, which would have quickly brought
in Chile to join Mexico and Canada along with the U.S.
itself. Even when less constrained, Cinton has failed to
marshal his forces to reach for new openings. His most
recent fumble was the opportunity presented during Chinese
premier Zhu Rongji's recent visit to Washington. Then the
Chinese leader made sufficient compromises in his bid for
China to enter the World Trade Organization for a deal to be
had.
A price is being paid for this lack of momentum. It has
undermined Zhu in his effort to keep China's politics
moderate. It has prompted Latin American governments to seek
trade expansion agreements with the European Union. But,
most important, Clinton's loss of touch has made it
impossible to pursue urgently needed across the board trade
liberalization deals with developing countries
everywhere.
The political problem that inhibits progress, however, is
not just Clinton having been consumed with other matters for
too long or, as in China's case, lack of political courage,
it is a fundamental, so far irreconcilable, divide between
free traders and those concerned for the poor and the
environment. They have check-mated each other. And the
president has not had the singlemindedness necessary to bang
heads together.
On the left, trade union and environmental activists
campaign for labour and environmental standards to be at the
heart of new trade agreements. Otherwise, they believe,
Third World workers are exploited and the jobs of
low-skilled American workers undermined by too-cheap
competition.
On the right, free trade advocates who want open doors
say that more furious economic competition will work over
time to raise labour and environmental standards.
It is stalemate. Both sides in the U.S. Congress are
equally balanced. Neither can get their way, but they can
make sure that the other side doesn't get its. The
Administration ends up with nothing--neither further
liberalization nor a raising of standards.
Until both sides are prepared to do a little more
homework and mature their extremists views, progress is
simply stymied.
Hard line free traders make the mistake of insisting
there is a direct causal link between trade liberalization,
growth and improved labour and environmental standards. This
is to ignore all the evidence that suggests that these
relationships in real life are much more complex. Much
recent research, says David Weiner of the Washington-based
Overseas Development Council, shows that government
intervention is often needed to ensure that growth does not
increase inequality. Moreover, if free traders can argue
that intellectual property rights--the recognition of
copyright--must be part and parcel of trade deals, why
shouldn't there be other standards? What is sauce for the
goose must be sauce for the gander.
The labour and environmentalist lobbies make a mistake of
different proportions. Theoretically right, they have no
sense of dynamic, and their eanestness ends up damning the
poor twice over--once for being poor and then a second time
by closing the door to better opportunities incrementally
gained.
Rightly, many developing countries see this as a form of
protectionism, less as a policy to help the poor make
progress, more to protect rich country workers from being
competitively undermined. Understandably, few developing
countries are anxious for a new trade round.
If the stalemate that confronts the Senate Finance
Committee is to be broken some new thinking must be called
for. U.S. business could usefully take a step to clear the
air by being more forthcoming by agreeing to promote higher
standards in their overseas bailiwicks. Similarly, free
traders could give a little more support to the Clinton
Administration's effort to strengthen International Labour
Office (a UN body) monitoring of compliance with core labour
standards--many of them on issues like child labour agreed
to in principle years ago.
For their part labour and environmental activists should
recognize that a rising tide can lift all boats, but if you
build a causeway across the bay it will take far longer to
happen. It would be more farsighted if these activists
diverted their resources to encouraging local groups,
including trade unions, inside the developing countries to
battle for higher standards, rather than persuading
Washington to use the sledgehammer of sanctions from
outside. They should realize too that the U.S. doesn't have
such immense leverage. Globalization has reduced the
relative importance of the U.S. market for many developing
countries.
More free trade, especially if developing countries are
creatively active, is beneficial to all. That this bill has
an uncertain future does nobody any good. A stronger
president would effect a compromise.
Copyright © 1999 By JONATHAN POWER
I can be reached by phone +44 385 351172 and e-mail:
JonatPower@aol.com
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