Getting Tough, Real, and Smart on Trade

By Jonathan Jacoby | April 5, 2007

Though not a fan of timetables lately, the Bush administration managed to sign a free trade agreement with South Korea sometime around the 11th hour this past Sunday night, barely meeting a deadline for sending proposed trade deals for congressional consideration under fast-track rules. The president faces an even bigger deadline at the end of June when his current trade negotiating authority expires.

With the perceived closing of the negotiating window, Congress has ample leverage to ensure that any new trade deals distribute both the benefits and the inevitable costs of trade more equitably at home and abroad. Leaders on Capitol Hill have seized this opportunity to take U.S. trade policy in a more progressive direction while re-establishing a bipartisan consensus on this thorny issue.  

Finding common ground on trade is critical to continued domestic and global economic growth. A recent analysis of polling data shows that Americans support globalization in principle but are concerned that free trade agreements do not adequately protect their interests or reflect their values. No wonder U.S. trade policy became a hot-button issue in the 2006 elections, tapping into the very real and justifiable pocket-book anxiety that many American workers face in an era of increasing global economic integration.

Now, Congress and the Bush administration are trying to hash out those hopes and anxieties. Earlier this week, Reps. Charlie Rangel (D-NY) and Sander Levin (D-MI), chairmen of the House Ways and Means Committee and its trade subcommittee, respectively, released a brief summary of their most recent proposal to the administration that reasserts Congress’ constitutional authority over trade matters and demands an active partnership with the executive branch in the realm of trade policymaking.

The Rangel-Levin proposal contains many common sense positions that should govern free trade deals, among them the enforcement of basic international labor standards—rights that most of the world’s nations have already committed to respect through International Labor Organization conventions. These congressional leaders also lay down important markers on areas of national concern that are substantially affected by global trade, such as environmental protection, port security, investor rights, and developing countries’ access to life-saving medicines.

Given the recent openness of the Bush administration to congressional input on trade policy, the forward-looking proposal summary shared with the public could become the basis for a robust bipartisan consensus on new trading accords. The consensus that might emerge can be summed up with three messages: “get tough on trade,” “get real on trade,” and “get smart on trade.”

Get Tough on Trade

The Rangel-Levin proposal signals a sensibly tough and aggressive approach to trade. It is certainly a good move to prod the U.S. Trade Representative to ensure that goods and services traded between the U.S. and major overseas markets flow freely in both directions. The proposal summary itself observes the current administration has filed an average of three WTO cases per year, compared to 11 per year by the Clinton administration.

Persistent worries about the ballooning U.S. trade deficit, which exceeded $750 billion in 2006, have fueled congressional pressure to address indirect subsidies and trade barriers among our major trading partners, especially China. Recognizing that an un-level playing field in trading arrangements violates Americans’ basic sense of fairness, the proposal summary calls for a new Trade Enforcer to hold other countries to their commitments.

Get Real on Trade

Employing some equally colorful super-hero language, the Rangel-Levin proposal also calls for a new SWAT (short for Strategic Workers Assistance and Training) Initiative to get real about the negative impact of trade on the livelihoods of some Americans and their communities. Momentum for such an initiative is building, what with members of both parties in Congress calling for expansion of the current Trade Adjustment Assistance program to provide wider and more effective coverage. It is encouraging that the White House has promised legislation to “extend and improve” the program.

The summary also hints at a comprehensive and nuanced approach to the multiple forces that challenge the economic security of American working families. While international trade is often most easily identified as a culprit for job loss, breadwinners’ vulnerability comes in large measure from rapidly changing technology and the declining bargaining power of unions amid rising health care costs and flat real earnings growth.

Any long-term bipartisan approach must address all sources of U.S. worker anxiety, including declining income mobility, heightened financial insecurity, and the systematic shift of economic risk from business and government onto working families.

Get Smart on Trade

Finally, Congress is pushing the administration to get smarter on trade, taking a broader view of how U.S. international economic policy (of which trade policy is just one component) relates to our national security. Of the 3 “D’s” highlighted in President Bush’s National Security Strategy—defense, diplomacy, and development—defense has dwarfed the other two commitments in terms of emphasis and resources. This disparity underscores the need for consistent presidential leadership to complete the Doha Round of multilateral trade negotiations, which he recently referred to as “the Darfur round.”

President Bush has frequently overlooked economic diplomacy as a means of demonstrating to our allies that the U.S. is committed to multilateralism. He has taken some positive steps recently but must do more to address the Doha-related concerns of developing countries, whose broad-based economic development is ostensibly at the heart of these negotiations and a key objective of our own foreign policy.

Congress must also do its part to realize the objectives of these important multilateral negotiations, first by exhibiting greater sensitivity to trade-related economic insecurity as a global phenomenon, not just a national one. The Rangel-Levin proposal takes a good step toward harnessing trade for global development and poverty reduction by committing to strengthen the trade and aid partnership with the world’s poorest nations.

As a down payment, these congressional leaders have called for an immediate extension of trade preferences for Colombia and Peru (with which the U.S. has signed but not ratified trade pacts) and their Andean neighbors to shore up opportunities for working families there to improve their standard of living.

But Congress should go beyond the traditional sticks of enforcement to incorporate carrots for building the capacity of developing countries to promote decent work and address labor rights abuses effectively in their fields and factories. One example of this cooperative approach is the 1998 textile accord that the U.S. negotiated with Cambodia. This win-win agreement offered incentives to Cambodia—in the form of increased access to the U.S. clothing market—in return for demonstrated improvements in compliance with core international labor rights.

The innovative design of the Cambodia agreement (respect for basic workers’ rights coupled with positive incentives and capacity building) makes it a strong model for future agreements. If Cambodia can enforce core global standards, there is no reason why U.S. trade deals with other nations should not require the same, rather than requiring them merely to enforce their own laws (which can be weaker than global norms) or follow the administration’s misguided push for labor laws equivalent to U.S. laws.

Likewise, any new trade pacts should uphold parity of enforcement, whereby labor provisions are enforced in the same way as commercial provisions.  

The second-class status of the labor provisions in pending bilateral trade deals with Colombia, Peru, and Panama is fueling skepticism about congressional ratification. Given the President’s recent too-little, too-late trip to Latin America, it is noteworthy that the leaders of the Western Hemisphere in November 2005 promoted a decent work agenda as an alternative to the U.S.-backed Free Trade Area of the Americas.

Cultivating opportunities globally for decent work—through job creation, core labor rights, and robust social safety nets—will expand the global middle class. A growing global consumer base for U.S. goods and services, coupled with other domestic policy, can expand opportunity for U.S. workers, farmers, and businesses. Congress and the administration should use all the tools of economic diplomacy, including a tough, smart trade policy, to sustain this virtuous circle by promoting decent work around the world.

Jonathan Jacoby is Associate Director for International Economic Policy at the Center for American Progress. To speak with him, please contact:

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