NAFTA II: Bill vs. Dick
Drama in the making: A struggle touching some of the most important issues of our times, with a cast of top political stars, has been taking shape during the August doldrums. It's heading toward a mid- September run in Washington.
The drama: President Clinton's plan to expand the North America Free Trade Agreement (NAFTA) to Chile - and other hemisphere nations.
The plot: Clinton twists arms among Democrats in Congress to win votes for so-called "fast track" legislation. He'll have support of many Republicans. But he needs more backing from his own party, whose labor union funders plan a major assault on NAFTA expansion.
The lead characters: Bill Clinton, seeking credit in history books as the leader who jump-started hemispheric trade. Al Gore, faithful sidekick and aspiring successor, who needs to woo activist labor leaders. Dick Gephardt, chief congressional foe of NAFTA and its expansion, and a big beneficiary of labor support. Also a frequent opponent of Clinton and a future rival to Gore for the presidency.
The big issues: Jobs and wages of US union members. Consumers' price tag for retail goods, food, cars, household equipment. Also environment protection, immigration, drugs.
The action: Democrat majority leader Gephardt flew south in mid-August to visit Chile, Argentina, and Brazil. Explored trade, wages, working conditions, factory pollution. Gathered ammunition for congressional debate on super-NAFTA. Made pilgrimage before Clinton, who will visit same nations later, with much greater fanfare.
The plot twists: Clinton will probably ask Congress in mid-September for fast-track trade authorization. He wants it for other trade negotiations as well. Fast track allows Congress only a yes-or-no vote; no pet amendments. Despite the president's lean toward labor in the UPS strike, he still needs to portray himself (and his supporters) as feeling labor's pain on wage competition south of the border. Ditto Gore. The VP also will seek to toughen environmental rules for Latin factories to reassure environmentalists worried by his recent wavering. Gephardt, eyeing the presidency, will want to appear less obstructionist than he did in his losing stand against NAFTA (and Clinton) in 1993.
A desirable ending: There should be no doubt that much of the growing US and world prosperity in the past two decades - indeed in the past half century - is a result of global trade expansion. The US, with its huge internal market, was one of the last nations to "need" more trade to improve growth, jobs, profits, and standard of living. But the trade portion of Americans' prosperity continues to grow, particularly as US research and entrepreneurship create more of the idea-based technologies and services that are sweeping the world.
For this growing US export economy, NAFTA expansion makes sense. There has been no "giant sucking sound" of jobs going south to Mexico. In the still-fledgling years of NAFTA, jobs lost and jobs gained have netted out to a slight US gain. Job creation south of the border has been a factor in Mexico's gradual climb back from its economic plunge of two years ago.
No one can run economic experiments two ways to compare results. But it's logical to believe that job growth in Mexico helps curtail migration to the US. And the jobless in Mexico make ready foot soldiers for drug lords.
Are there lessons to be learned from NAFTA's brief existence? Should tougher regulations be required? Look at three areas: (1) work conditions, (2) wages, (3) environment impact.
1. It's in the interest of each nation to protect workers' well-being by legislating standards for safety, hours, ventilation, sanitation, work breaks, age, etc. A treaty cannot micromanage such standards. It can, and should, establish minimum goals.
2. NAFTA-type treaties shouldn't mandate pay scales. Wages relate to local cost of living and buying power. You can't equate Los Angeles and a Chiapas village. As in all good deals, both parties need to win. In trade, US consumers gain cheaper products. The US gains a reduction of illegal border crossing. US workers win some limit on wage competitors at home. Developing nations win a gradual rise in wages and standard of living. Citizens can afford more imports from the developed world - consumer goods, education, and, yes, entertainment. That's happened in much of Asia. It's happening in parts of Latin America.
3. Clinton has, in effect, already offered Gephardt a way to back off his argument about NAFTA factory pollution. The president recently indicated he would agree to a global warming treaty only if it demanded the same pollution restraints from developing nations' industries as from those in developed nations. That approach would avert a mass flight of industry (and jobs) heading south to escape pollution regulation. It should remove pollution arguments as a super-NAFTA stumbling block.
Synopsis: Learning from his 1993 cliffhanger role supporting NAFTA, President Clinton should press ahead decisively now. Benefits outweigh drawbacks. History is on his side.