Date: Thu, 25 Sep 97 12:54:03 CDT
Subject: Fast Track and Free Trade
Tied to The Fast Track
By John Cavanagh and Sarah Anderson, in the Washington Post, Wednesday, September 24, 1997; Page A21
Just as the Clinton administration is launching a battle to expand the North American Free Trade Agreement, The Post (in a Sept. 12 editorial) has lined up solidly with the free trade camp by drawing misleading conclusions about the growing opposition to the administration's proposals.
The emerging fight is not about whether there should be more trade and investment in the world; both sides acknowledge that trade and investment can play positive roles. The debate is whether, in a world of rich and poor nations, the rules governing trade should include strong protections for worker rights and the environment in all nations. The administration, the Fortune 500 and The Post say no. The AFL-CIO, most environmental and other citizen groups -- often called "fair traders" -- along with the majority of Americans, say yes.
The Post's position is based on four fallacies:
1. Fair traders, in The Post's words, "want to impose U.S.-style labor standards on foreign workers." No, fair traders are explicit in proposing that the labor standards that should go into trade agreements be drawn from the conventions of the International Labor Organization, conventions that U.S. corporations, labor representatives, and the U.S. government helped craft with counterparts from around the world. Practically all nations agree in principle that there should be no child or forced labor and that workers ought to be allowed to form unions and bargain collectively and strike. Yet, it is the flagrant violation of these international standards in Mexico, Indonesia, China and elsewhere that allows U.S. firms to bargain down wages and working standards here. Fair traders correctly argue that these international rights should be folded into trade agreements.
2. The economies most open to trade and investment grow fastest and best address their people's needs. Wrong. The most successful economies in the world in recent decades have been the so-called "tiger" economies of Asia that were quite closed to trade and investment at their early stages of growth. After World War II, South Korea and Taiwan focused on fundamental land reform that helped narrow income disparities and create a domestic market for the new goods these nations produced. When the economies later opened up more to the global economy, the benefits of trade and investment were shared more broadly. The problem among most nations today is that rapidly opening up to trade and investment can create new opportunities for better-off workers while creating new downward wage pressure for others.
New training and education can help some, but even Silicon Valley computer programmers are being replaced by Indian software technicians in Bangalore who do the same work for much less, and the best-trained aerospace workers in Seattle are watching Boeing shift their jobs to China.
3. A third of U.S. growth and many high-paying jobs are due to trade. The administration and The Post invariably talk about only one side of the trade picture: rising U.S. exports. They conveniently ignore the fact that U.S. imports from Mexico and the rest of the world have been growing much faster than U.S. exports and that many of these imports are in auto parts, automobiles, textiles and other products that were previously produced here. Since the onset of NAFTA, U.S. trade with Mexico has shifted from a small surplus to a large deficit. Hundreds of thousands of workers have lost jobs from the shifting production and rising imports. These lost jobs, like export jobs, pay better than the average.
4. Stronger labor language in trade agreements "wouldn't erase the competitive advantage that poor countries enjoy in labor costs." This may be true for the poorest countries such as Haiti and Bangladesh, but little of the new competition comes from these countries. In the "big emerging markets" such as Mexico, Brazil, Indonesia, Malaysia, and China -- the favored investment sites of General Motors, General Electric and other large firms -- modern infrastructures permit the production of the same goods with similar levels of productivity to those enjoyed in the United States. Yet, because fundamental worker rights and environmental standards are routinely violated, firms can pay wages that are a fraction of those in the United States.
We live at a vital moment when governments are setting new rules for engagement in the global economy. In a world of rich and poor nations with vastly different standards, new rules are vitally needed to ensure that globe-trotting firms don't use their ability to exploit the forests, minerals and workers of other nations to bargain down U.S. working and environmental conditions. The current debate over expanding NAFTA offers the opportunity to set rules that offer workers, communities and the environment the same rights to prosper in the global economy as they offer corporations.
John Cavanagh is co-director and Sarah Anderson is a fellow at the Institute for Policy Studies.
c Copyright 1997 The Washington Post Company