Breaking the deadlock on trade policy

Trade policy in the United States is now deadlocked. Whatever new title is given to the proposal to restore the presidential ability to secure "fast track" treatment of international trade agreements, it is not likely that Congress will go along under present circumstances. Too many interest groups - ranging from labor unions to environmental organizations to traditional protectionist forces - are in opposition.

It will take a combination of strong effort, inventiveness, and goodwill to break the ice. Let's try to start by seeing if we can develop some reasonable responses to the major divisive issues.

One cluster of issues focuses on traditional protectionist concerns. Unfair imports are hurting Americans and our government is asleep at the switch, protectionists argue. It is not adequate merely to identify the shortcomings in such statements. Economists, including me, have done that on many occasions without convincing the people who believe they are hurt by imports. A key positive response would be to help those who lose their jobs as a result of foreign competition, obtain good new jobs. This is not easy.

Various "trade adjustment" programs already are in operation. But they suffer from overlap, complexity, and lack of user friendliness. Streamlining and consolidation are surely in order. Often the most effective aid for newly unemployed persons is simply to show them how to go about locating a new job.

A related concern to be dealt with is the view that other nations consider the US to be a patsy because we are an idealistic island of free trade in a cynical world of protectionism. Of course, there is no shortage of US obstacles to imports, including numerous "buy American" restrictions, import quotas, "antidumping" provisions, and selective high tariffs.

Nevertheless, this nation could do a much better job of enforcing the trade agreements it has entered into, as well as "encouraging" our trading partners to take their own trade agreements more seriously. Responsibility for enforcement should be elevated within the two major trade policy agencies - the Trade Representative's Office and the Department of Commerce. Sufficient numbers of highly qualified staff should be assigned to this task with significant but measured increases in their budgets.

Finally, we need to face the contentious issue of the proposed linkage of labor and environmental standards to trade agreements. Unions and environmental groups say they will oppose fast-track legislation and new trade agreements unless this linkage is firmly in place at the outset. In contrast, major developing nations, notably India, are adamant in opposing such linkage, calling it is a disguised form of protectionism.

To break the deadlock in trade policy, merely saying no to linkage is not adequate. The proper place for labor standards is the International Labor Organization. Unfortunately, the US has little credibility in that regard. Congress has approved only two out of the ILO's eight "core" labor standards. In order to respond to the concerns about worker treatment overseas without creating a new deadlock, the US must take the lead in strengthening the ILO.

There is no counterpart-international organization in the environmental area. Trade officials need to adopt a more environmentally friendly attitude. Priority should be given to the liberalization of trade in environmental goods and services. It is of mutual benefit that the developing countries acquire the environmental cleanup capabilities of the advanced developed nations.

Also, "safe harbors" could be granted for trade actions consistent with provisions of multilateral environmental agreements. Thus, the US and other nations could be allowed to protect endangered species, but not to do so unilaterally.

Hope should not be raised too high for the achievement of a quick breakthrough in US trade policy. A feeling of trust - or at least common understanding - must first be achieved between proponents of open trade and those with other priorities.

Murray Weidenbaum is a scholar in residence at the Jones Graduate School of Management at Rice University. He is on leave from Washington University in St. Louis.

(c) Copyright 2001. The Christian Science Monitor

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