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Rx for trade policy
It is time for a new approach to trade policy — or more accurately, to return to bipartisanship, the approach that worked so well from the end of World War II until the mid-‘90s.
Trade legislation once passed Congress with overwhelming majorities. The Tokyo Round agreement passed the House in 1979 by a 395-7 vote. As recent as 1994, the Uruguay Round Trade Agreement passed by 288-146. Contrast that with this year, when the House passed the Central American Free Trade Agreement (CAFTA) by the narrowest of margins (217-215) on July 27.
To get that razor-thin victory, enormous effort was required by the administration, and a number of questionable deals were needed to get the votes. In addition to agreeing to amend the CAFTA agreement to further limit textile trade with the Central American countries, the administration reportedly found it necessary to agree on curbing textile imports from China, limiting sugar imports, and adding pork to the highway bill. Not only were these add-ons bad trade policy; they also could have damaging foreign-policy implications.
And support came almost exclusively from Republicans. Only 15 of 202 House Democrats voted for CAFTA, or only 7.4 percent. In contrast, 65.2 percent of House Democrats voted for the 1994 Uruguay Round agreement.
The breakdown of bipartisanship on trade policy since 1995 has many causes. One factor is diminished civility in the Congress and politics more broadly. A second is the reaction to the suddenly expanded reach of the World Trade Organization, or GATT as it was known until the Uruguay Round agreement.
Now, however, it is time to a rebuilt bipartisan coalition to support trade policy. The WTO is here to stay, and civil society needs to re-engage rather than throw stones from the outside.
The administration and the Republican Congress need to reach across the aisle and listen to other views. U.S. trade policies especially need to better meet the needs of environmental and labor groups to gain support from Democrats who would like to support open trade.
Most mainstream environmental groups supported U.S. trade policy through the North American Free Trade Agreement (NAFTA). In 1993, World Wildlife Fund, the Natural Resources Defense Council, the Environmental Defense Fund, National Wildlife Federation, the National Audubon Society and Conservation International all backed NAFTA. Now these groups are quiet, and environmentalists mostly opposed CAFTA.
One of the environmental community’s major objections to current trade policy is the provision, both in NAFTA and CAFTA, allowing foreign investors to sue in U.S. courts for compensation that can chill environmental regulations. While no regulations have been overturned, there have been too many close calls to suit the environmental community.
If more Americans understood this element of trade policy, opposition would probably be far broader than now. Many Americans would question why foreign firms should have rights to bring cases that cannot be filed by Americans in the U.S. under these trade agreements. The objective of this provision — to ensure U.S. firms can pursue their investment rights in our trade partners — can be achieved less objectionably.
The negotiations now under way in Geneva on a new multilateral trade agreement — the so-called Doha Round — present a good opportunity to develop a trade policy that the environmental community can again support. Several elements of these negotiations can help the world better manage our environment, as well as promote freer and fairer trade.
Successful negotiations could end fishing subsidies that endanger embattled fish, such as swordfish and tuna. They could limit agricultural subsidies that have a perverse side effect damaging to the environment and eliminate trade barriers on goods and services that promote good environmental stewardship, such as solar energy.
However, to gain environmentalist support, the administration needs to reach out more proactively, and above all ensure no provisions weaken the governments’ ability to protect their environments and ecosystems.
Labor is unlikely to support trade agreements for the foreseeable future. However, were its issues better addressed, labor’s opposition might be less active. Specifically, we could work with labor to better help workers whose jobs are displaced by trade. Current adjustment aid is minimalist. Better measures could help displaced workers find new work that will not bust the budget and conform with our free-market principles.
Another step would ensure our trade partners recognize the five core International Labor Organization standards, with adequate labor enforcement mechanisms. Most countries recognize the core standards, but enforcement is tricky.
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