Global Development: Views from the Center
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February 29, 2008
Trade bashing today, but what tomorrow?
Posted by Kimberly Ann Elliott at 01:32 PM
The crucial role of the Ohio primary in deciding the Democratic nominee for president is having a regrettable impact on judgment and rhetoric in this campaign, as noted earlier this week by Lawrence MacDonald. But does this necessarily mean that a Democratic president--either Senator Clinton or Senator Obama--along with a Democratic Congress, which has been stubbornly blocking a vote on the trade agreement negotiated with Colombia, would be bad for trade, especially with developing countries?
Not necessarily, at least not relative to a situation where John McCain is president and facing a Democratic Congress (a Republican majority in either chamber seems unlikely at this stage). That political alignment has led to gridlock for the past two years, since the Democrats recaptured both houses of Congress, and the opposite alignment in the 1990s did the same for the last six years of Bill Clinton's presidency. The problem is the increasing lack of trust between the two parties.
Under "trade promotion authority," the US Congress delegates some of its constitutional authority to regulate trade to the executive branch. It allows the president to negotiate trade agreements that the Congress agrees to vote on expeditiously and without amending it. That process requires a certain level of trust on the part of Congress that the president will use the authority in ways that Congress finds acceptable. But increasing political partisanship--generally as well as over trade--has undermined the trust that underpins that process.
There is an even more fundamental reason why a Democratic president and Congress, working together, might do more to put trade back on track. Democrats, at least in their rhetoric, are more committed to working on the domestic policy agenda that is desperately needed to support globalization--from an expanded Trade Adjustment Act, to unemployment insurance reform, and better education and training for workers. And, of course, expanding health care coverage has been a major issue in the campaign.
Still the recent rhetoric is troubling and it has costs that the candidates ignore to their peril once we get past Ohio. The Financial Times summed them up well in an editorial yesterday:
"The next Democratic administration promises to repair US alliances and standing in the world. A worthy aim. Yet its first act, the party says, will be to tell its closest neighbours that the rules they are all agreed to are defunct – and if they do not like it, tough luck."
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Comments
Using google news I surveyed other governments, more dependent on trade then the US, for their response to this discussion. And I found that Indian, Australian, Brazilian, and European policymakers are deeply disturbed about both the tone and language embedded in this debate. Yet part of the problem is policymakers and proponents rely on a dishonest discussion as to what trade agreements do.
Policymakers generally talk about trade agreements as "opening markets" or freeing trade. In addition, policymakers argue that trade agreements create jobs or help to set a "level playing field" for U.S. producers in foreign markets. These CAN BE side effects of trade agreements. But trade agreements themselves do not free trade. That is a side effect of trade agreements. SO WE SHOULD DEMAGOGUE THEM.
Trade agreements facilitate expanded trade because they allow two or more nations with very different governance systems, funding, will, and expertise to find common ground on the many rules (from health and safety standards to procurement policies) that can affect trade flows. Thus, trade agreements increasingly affect domestic regulations that may, without intent, distort trade. Trade agreements essentially reregulate relations between countries. They set common rules regarding how and when nations can apply regulations that distort trade. They also allow U.S. interests to participate in and influence foreign decision-making in areas related to trade (thus this includes labor conditions in China or environmental conditions in Guatemala). In so doing, they make foreign governments accountable not only to their citizens but to foreign market actors. In countries that have long been opaque and relatively undemocratic such as Saudi Arabia (which just joined the WTO), they create new norms of due process and transparency. Thus they are essential tools to improve governance as well as stimulate economic growth.
But that doesn't fit in a sound bite. And no policymaker is brave enough to try to end this dysfunctional dialogue. Its dismaying.
Susan Ariel Aaronson, Ph.D.
Associate Research Professor, GWU Graduate School of Business and Elliott School of International Affairs.
Posted by: Susan Ariel Aaronson at February 29, 2008 02:46 PM