International Trade Overview

The Clinton administration has widely touted the North American Free Trade Agreement (NAFTA), the new World Trade Organization (WTO), and the initiation of free trade talks in Asia among its proudest foreign policy accomplishments. But these international and regional trade initiatives are not just about foreign relations. Perhaps in no other area is there a greater blurring of foreign and domestic policy. To the extent that the Clinton administration has a jobs policy, it emphasizes the expansion of jobs in the export sector (where work often pays higher than jobs which produce goods or services for the domestic market). These jobs can best be stimulated, the administration argues, by expanding free trade pacts.

Over the next two years the administration plans to expand free trade through initiatives on three fronts:

1. Expand NAFTA: The administration is asking Congress to renew its authority to negotiate trade agreements through a procedure known as “fast track.” This fast track authority allows the administration to negotiate agreements which the Congress cannot amend, but can vote only up or down. Clinton’s goal is to expand NAFTA to include Chile, and then to work with all the governments of the hemisphere (except Cuba) on the blueprints for a Free Trade Area of the Americas by the year 2005.
2. Create a NAFTA-like Agreement in Asia: Clinton has taken the lead in pressing the newly formed Asia-Pacific Economic Cooperation (APEC) group to embrace an agenda of reducing barriers to trade and investment in the world’s most dynamic economic area. The administration will be pressing Asian nations to offer timetables for the liberalization of trade barriers.
3. Expand the Powers of the WTO: The Clinton administration backs a European proposal to expand the powers of the WTO in reducing investment barriers around the world. In addition, the administration would like China to accept certain economic reforms in return for its support for China’s petition to join the WTO.

The Clinton administration embraces this agenda despite opposition from the majority of Democrat representatives in the House and from core Democrat constituencies, including organized labor. Despite his strong support for trade liberalization, Bill Clinton is not an ideologue of free trade. The authors of this section on World Trade encourage the administration to return to words that Clinton uttered in 1992 with respect to NAFTA and apply them to his second term initiatives on trade agreements.

In the heat of the presidential race, Bill Clinton gave a speech in Raleigh, North Carolina in which he critiqued the North American Free Trade Agreement negotiated by President Bush as being “silent with respect to labor laws and the environment.” Clinton called for an “agreement that would require each country to enforce its own environmental and worker standards. Each agreement should contain a wide variety of procedural safeguards and remedies that we take for granted here in our country, such as easy access to the courts, public hearings, the right to present evidence, streamlined procedures and effective remedies.” Had the Clinton administration placed such safeguards at the core of a North American agreement, it would have far better served the needs of the people of all three North American countries.

In addition to these free trade issues, Clinton faces pressure from a number of domestic economic sectors to reverse the slide toward record U.S. trade deficits over the past two years. In mid-1996 China surpassed Japan as the country with which the U.S. suffers the largest trade deficit; this has intensified the demands for a more comprehensive policy toward China. How a nation that has among the highest wages in the world (the U.S.) addresses its relations with a nation that has one of the lowest-paid and most mistreated work forces in the world (China) is likely to emerge as one of the leading U.S. foreign policy issues over the next four years.

With trade issues in general, despite the eroding effects of globalization, it is vital to remember the importance of national governments. As London School of Economics professor Fred Halliday reminds us, it is governments that “direct, stimulate, and assist companies to do what they want to do.” Recognizing the dynamics of economic globalization does not mean accepting that governments and consumers have no role in controlling the process. Governments, after all, are the ones that sign free trade agreements, promote exports, set the rules of the World Trade Organization, and sponsor international financial institutions. The Clinton administration, then, faces the historic challenge of shaping the regulations and boundaries of the globalization process. The reports that follow spell out U.S. policy in the new WTO and address the central concerns of workers and environmentalists as they confront the trade agenda. Overall, several conclusions emerge as to what trade policy should and should not do.

What U.S. Trade Policy Should Not Do

• Revert to Old-Style Protectionism: The U.S. should not, as Pat Buchanan and others counsel, respond to growing trade deficits and declining living standards with nationalistic, protectionist measures. Such a reaction in the 1930s helped deepen the Great Depression, and today would lead to debilitating trade wars and dangerous political tensions.
• Compete Through Deregulation: The Clinton administration should not succumb to the Republican desire to increase the competitiveness of U.S.-based firms by decreasing support for environmental regulations, obligations of employers to employees, the right to organize and bargain collectively, or by decreasing corporate taxes. Corporations, like citizens and governments, need to be held accountable and urged to act in the public welfare.
• Expand Current Trade Agreements: The administration should not expand NAFTA or WTO rules until it explores ways to balance labor, environmental, community and business needs.
• Promote Unsustainable Levels of Agricultural Exports: The administration should not continue to bolster exports by promoting unsustainable levels of agricultural exports by agribusiness firms like Continental Grain, ADM, and Cargill. In so doing, the U.S. is exporting its topsoil, wasting energy, polluting its water supplies through overuse of agrochemicals, and destabilizing rural communities abroad.

What U.S. Trade Policy Should Do

• Lead in Setting New Rules for the Global Economy: Beginning in the 1930s the U.S. government passed a series of laws to protect working people, communities, and the environment from the efforts of corporations to play poor, non-union states against richer, union states. Beginning with the Fair Labor Standards Act in 1938, these laws included protections for a minimum wage, maximum hours of work, and health and safety standards. The U.S. should now take the lead in defining new mechanisms at a global level to enforce internationally recognized labor rights and environmental standards. These can be regional mechanisms for North America or Asia and they can be global mechanisms.
• Support Alternative Trade and Consumer Education: U.S. consumers, as the recipients of a quarter of the world’s goods and services, have a special responsibility in the global trading system to shop responsibly. The U.S. government and corporations are not wholly responsible for steady downward pressure on wages, working conditions, and consumer protection. U.S. consumers who buy goods made under repressive conditions bear some responsibility, too, for this downward harmonization of standards. We need to educate ourselves, shop responsibly, and place pressure on governments and corporations that further such practices. Moreover, we need to question lifestyles that depend on such a never-ending flow of cheap consumer products.