Globalization, Free Trade Falter: Advocates Regrouping after String of Setbacks

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Free-trade forces are in a slump.

Advocates of free trade and globalization suffered the latest in a string of defeats recently when the world's most developed economies killed an international investment agreement. To end their slump, free-trade forces need to do a better job explaining the benefits of trade, they say. But free-trade critics say the public has gotten the message and doesn't like it.

In fact, 58 percent of Americans think trade is bad for the U.S. economy because cheap imports hurt wages and jobs, according to a Wall Street Journal/NBC News poll released Thursday.

The free-trade forces lost their their most recent battle Dec. 3, when the major industrial countries decided they could not settle their differences over the Multilateral Agreement on Investment, which would have made it easier for companies to invest overseas.

Last month, the United States, Japan and other Asia-Pacific nations failed to complete a deal to curb tariffs and other barriers to trade worth $1.5 trillion.

And in September, "fast-track" trade legislation died in the House for the second time in two years, denying the president enhanced power to negotiate trade agreements. Every president since Gerald Ford has had the authority, which expired during President Clinton's first term.

Free trade is even being challenged under existing rules, as U.S. steelmakers and other industries seek or consider asking the government for protection from a surge of cheap imports from weak foreign economies.

Experts on both sides of the trade issue agree the developments show that economic problems around the world have strengthened the hand of critics of global integration. In the United States, concern about globalization has grown because declining exports to Asia and rising imports have inflated the trade deficit, U.S. Treasury Secretary Robert E. Rubin said in a speech Dec. 7 to the National Foreign Trade Council, an industry group.

"During the 26 years I spent on Wall Street and the six years in the [Clinton] administration, I witnessed great movement . . . toward a global consensus on market-based policies and integration with the global economy as the best path toward prosperity," Mr. Rubin said. "That consensus is now being more forcefully challenged."

Business groups are mounting education campaigns to explain trade's benefits. The National Association of Manufacturers announced Dec. 4 that it is taking several steps, including encouraging its members to sell their employees and lawmakers on the economic importance of trade. The Business Roundtable and the Emergency Committee for American Trade also are among the groups starting campaigns.

"The manufacturing community needs to do a better job of showing the public - and especially our own workers - what's at stake in this global economy, particularly now when the world economic downturn is starting to hit home and the instinct is to turn protectionist," said Jerry Jasinowski, president of the manufacturers association. …