Trade as an Engine of Peace
The cold war did have one thing going for it. It turned the US into a champion of free trade, if only to keep its allies onboard.Skip to next paragraph
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But in 1994, Congress decided that a key tool for expanding global markets wasn't worth keeping. Only this month did it finally restore presidential power to negotiate trade deals needing only straight up-or-down votes by Congress.
President Bush had to win this "fast-track" authority by essentially bribing Congress with trade barriers that protect American steel, textiles, lumber, and farms. That's a hefty price to pay for a distant promise of future trade pacts.
Lawmakers also gave the president "negotiating objectives" on labor and environmental rules to be written into trade deals, requiring poor countries to match rich-country standards.
Congress passed this bill only because many incumbents didn't want to be blamed just before an election for not trying to revive the economy. And an antiglobalization mood won't help the US win allies in its war on terrorism or achieve a "regime change" in Iraq.
A new round of global trade talks starts in November and, while the president now has more authority to strike a deal, US leadership on trade is greatly diminished. That may force it to seek bilateral deals with Chile, Australia, Singapore, and others, even though global deals spread economic benefits more widely.
Despite the progress, the biggest drag on liberalization remains the huge farm subsides in Europe and the US. Fortunately, Mr. Bush and the European Union recently laid out possible cuts in those trade-skewing practices. Unless rich-nation farmers give way to global trends, poor-nation farmers will be denied the benefits of higher exports.
In Latin America, especially, where economies are lagging and protectionist sentiments are rising, the US needs to quickly cement a Western Hemisphere trade pact, based on the success of the 1995 NAFTA accord.
American consumers and exporters have benefited greatly from trade. The US must regain its leadership as an open-market champion a goal that doesn't need a war to justify it.