Trading Up

Three words found on more and more imported goods - Made in China - have added up to something big in the great game of geo-economics.

Last year, China overtook Japan as the country with the largest trade gap with the United States. It exported six times more goods to the American market than it imported from the US.

China has thus become the latest export powerhouse to take advantage of a relatively open American market, while only promising to further open its largely closed market. This historic event serves as a reminder that world trade still remains out of kilter, not just for the US with its huge trade deficit, but for many nations.

Despite the lip service often paid to free trade, efforts to open up global markets are stalling. That's largely because the world's traditional champion of free trade, the US, is stuck in a domestic argument over whether trade should be a tool to save the environment and impose US labor standards on poor countries.

That debate exploded - literally - on the streets of Seattle in 1999 when the World Trade Organization met to further open markets. President Clinton called the meeting, but then helped scuttle it by raising labor issues that most nations didn't want to hear. They see such nontrade issues as simply disguised protectionism.

Tacking on other concerns

Trade issues have gone from Wall Street to Main Street because exports and imports play an ever-more-vital role in the economies of even the smallest US towns. During the cold war, free trade was Washington's weapon to roll back communism. The WTO and NAFTA were hatched in the 1980s. Since then, however, the special interests of Washington have captured free trade for their own ends.

In 1994, Congress let lapse the most effective tool to open markets: the ability of the president to negotiate deals with other countries and then present them for a vote without lawmakers being able to amend them.

Without "fast track" authority, few countries want to enter trade talks with the US for fear Congress would tack on deal-breaking conditions.

Before the April summit

With a new Congress and a new president, however, Washington has a fresh opportunity to regain its unique leadership in promoting the kind of free trade that benefits both poor nations and developed nations.

Congress should grant fast-track authority to President Bush before his first trade meeting in April, when 34 nations of the Americas meet to design a NAFTA-like pact for the Western Hemisphere.

Tectonic trade blocs

But that's just a start. Without the US leading the way to a new multilateral trade agreement, the world could drift into warring trade blocs.

In Asia, the Americas, and of course Europe, regional trade pacts are being formed out of exasperation over lack of progress toward greater global free trade. This only sets up new discriminatory trade patterns between continents. Already, the US and the European Union are engaging in dangerous trade disputes.

Mr. Bush's purpose in creating a free-trade area for the Americas should only be to pressure Europe and Asia into global trade negotiations. Regional blocs are often easier to negotiate and usually better at protecting US interests, such as intellectual property and financial services. But they are rigged to mainly help competitive nations, leaving out many less-developed nations. In recent years, trade has grown faster for richer nations than for poorer ones.

This trade gap can only be reduced if the president, with fast-track authority, can go to the WTO meeting in November and do some serious horse-trading that will create an expanded global trade pact. That would require the US to bend on such issues as labor, environment, and especially its antidumping laws that now restrict imports.

More Americans are concerned about how products are made in other countries. But US lawmakers should keep in mind where global free trade is the best way over the long term to help poorer countries reach the point of development that they can correct their labor practices and clean up their environment. Trade sanctions just won't work in those two areas.

In the meantime, outside of any trade deals, the US can push for better working conditions, such as through the International Labor Organization, and support the World Bank and other groups in helping nations clean up their air, land, and water.

Before the world breaks into trade blocs that leave many out, it's time for Congress to act now.

(c) Copyright 2001. The Christian Science Monitor

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