- The Washington Times - Monday, May 13, 2002

The struggle to get trade promotion authority through Congress shows why we need some straight talk about an issue that is clouded by myths and misconceptions.
Until Bill Clinton's stormy tenure, Congress routinely gave presidents "fast track" authority to negotiate trade agreements with other countries to lower or eliminate tariff barriers. Under fast-track authority, Congress can either approve or reject a trade agreement, but cannot amend it.
Now it is becoming enormously difficult to regain such authority. President Bush's trade bill squeaked through the House by a single vote, but only after arm-twisting by the White House. The bill has been stuck in the Senate, where there will be votes this week to break the impasse.
The reason why remains somewhat of a mystery given the huge global expansion of trade over the past two decades that has brought increased prosperity to America and to other countries, from China to Mexico, that have reduced tariffs and other obstacles to foreign investment and imports.
Even India, where socialism and protectionism (the two seem to go hand-in-hand) have submerged that country in a swamp of poverty, is beginning to open its doors to increased trade with remarkable results.
The protectionists who rail against the trade bill in Congress cannot point to a single example anywhere in the world where trade tariffs have led to strong economy, low unemployment and robust new business creation and investment. Not one.
Opponents of the administration's bill have been using the seemingly weak argument that imports kill jobs, that the higher the trade deficit rises the more jobs are lost here at home.
Just the opposite is true. Unemployment fell dramatically to nearly 5 percent during the trade expansion of the 1980s when the trade deficit skyrocketed. Similarly, as the U.S. trade deficit rose even higher in the 1990s, our economy grew stronger and the unemployment rate fell further to nearly 4 percent.
When we are talking about trade-related jobs, these are among the best paying jobs in the country. U.S. Trade Representative Robert Zoellick says workers in export-related industries are paid up to 18 percent more than workers in nonexport jobs.
There are many ways to create jobs. Cutting taxes on capital and labor, for example, encourages new business formation, expansion, work and increased investment. But limiting trade does not create any jobs. On the contrary, it reduces job opportunities.
A cogent analysis in this month's American Spectator points out that, "Protectionism shrinks national output more than it increases businesses in the protected industry; it costs more American jobs in related industries than it saves in the protected industry; it ultimately loses more votes than it garners, because it adversely affects so many more people than it benefits."
Consider the president's tariff increase against imported steel. Those higher steel prices "will cost domestic steel users and foreign steel companies $25.5 billion over the next four years, or $500,000 for every steelworker's job that might be saved."
Higher steel prices will also drive up the price of everything else that is made with steel, which will reduce demand for things like cars, machinery and appliances. "As many as eight jobs will be lost in companies manufacturing and selling steel products for every steelworker's job saved," the Spectator says.
The steel industry blames cheaper imports for their troubles. It was the Fed's deflationary policies, raising interest rates to battle imaginary inflation that has caused the 30 percent drop in steel prices since 1996. Deregulation and generous tax cuts on labor, plant equipment and capital investment would help U.S. steel compete far more aggressively with their foreign rivals.
"America needs more trade, not less," writes Sara Fitzgerald in a recent analysis for the Heritage Foundation. "With 96 percent of the world's consumers living outside of the United States, the U.S. economy depends to a significant extent on international trade. Agricultural products from one out of every three acres planted in the United States are exported."
But instead of working to pass the trade bill so our farmers can sell more of their commodities abroad, Congress spent its time passing a farm bill that will encourage more production which will drive down farm prices that will require bailing out more farmers with more subsidies. The taxpayers will foot the bill for all this to the tune of $83 billion over the next 10 years.
It is sad to say that throughout the battle over trade and jobs, there has not been an articulate champion in Congress who has led the fight against the growing forces of protectionism.
Throughout the 1980s, Ronald Reagan persistently and eloquently made the case for free market capitalism and global free trade. Unfortunately, Mr. Bush has not given the free trade battle the same attention it deserves.
There's no time to waste. The United States "is a party to only three of the world's 150 trade and investment agreements. It is falling behind," Ms. Fitzgerald warns us. This is an issue and a cause that cries out for an aggressive advocate. And only George W. Bush can fill that role.

Donald Lambro , chief political correspondent for The Washington Times, is a nationally syndicated columnist.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide