Rabkin, Jeremy, The American Spectator
President Clinton's State of the Union address offered so many goodies to so many constituencies that some proposals escaped scrutiny. One deserving a closer look is the president's recommendation on world trade, which would commit the United States to a whole new venture in global governance.
Clinton's rhetoric was typically grandiose: "Now that the world economy is becoming more and more integrated, we have to do in the world what we spent the better part of this century doing here at home. We have got to put a human face on the global economy." Having claimed four years before that "the era of Big Government is over," he now called for Really Big Government: a global New Deal.
The analogy is apt. Earlier in the century, labor leaders and social reformers feared that states that adopted overly generous welfare measures would lose jobs to states with fewer restrictions. They demanded federal programs, binding on all states, to "level the playing field." The Constitution has always prohibited barriers to interstate trade. Now that international trade agreements are bringing down trade barriers between countries, labor leaders and environmentalists are demanding international regulations to prevent countries from "competing unfairly." Otherwise, they warn, if some countries are allowed to exploit their workers and despoil their environment to lower production costs, other countries will feel pressured to do the same to stay competitive.
The problem with this "race to the bottom" scenario is that it argues against any trade with poor countries, which will always have lower labor costs. But the Clinton administration, along with most serious economists, supports international trade, even with low-wage countries like China and Mexico. After all, if they produce goods more cheaply, they offer lower prices to American consumers (and to American producers using imported components). In turn, as poor countries gain wealth through trade, they can offer better markets for American exports.
But Clinton is in a genuine political fix. He did persuade Congress to endorse NAFTA in 1993 and U.S. entry into the new World Trade Organization (WTO) in 1994. But votes in the House were very close, and Congress has since declined to authorize new trade negotiations. For the first time in a quarter century, a U.S. president has been denied "fast track" negotiating authority that commits Congress to an up-or-down vote on new trade agreements. As a result, other countries are reluctant to negotiate seriously with the U.S. on trade matters. When fast track came up again in the House last September, it was overwhelmingly defeated (180-243)-with only 29 Democrats voting in favor, and 171 opposed.
Most Democrats in Congress remain opposed to fast-track authorization because unions and most environmental groups want no new trade agreements. To bring these critics around, Clinton has been promising that new trade pacts will include special protections for labor and the environment. But then Republicans refuse to include them in fast-track negotiating authority. The president now seeks to persuade business groups that some provisions along these lines are the price that must be paid to build adequate political support for new trade agreements.
It is a hard sell. Until now, global trade agreements have focused almost entirely on reducing barriers to the entry of goods and services, while prohibiting any import restrictions based on the way goods are produced, even if it is known that they are produced at low wages or under local laws that prohibit workers from organizing. Less-developed countries and many business groups fear that any relaxation on this score would open the way to endless trade disputes, in which protectionist industries in one country would cite poor labor conditions in others as a pretext for denying easy entry to their products.
So Clinton has proposed a classic Clintonian compromise. …