Fast-track impasse - failures of US trade policy

Reason, Feb, 1999 by Brink Lindsey

U.S. trade policy is dead in the water. Here's how to get it moving again.

"Fast track" trade negotiating authority has become anything but. Nearly five years have passed since the last grant of authority expired - years of wrangling, posturing, and ultimately stalemate.

Without fast track, U.S. trade policy is dead in the water. Current policy consists of negotiating agreements in which we swap reductions in trade barriers with other countries. Our trading partners, though, won't negotiate seriously as long as they fear that any deals could wind up rewritten on Capitol Hill. Fast track bridges that confidence gap by requiring Congress to vote up or down on trade agreements without amendments and within a specified time period.

But fast track has failed twice in Congress. In November 1997, the bill was yanked at the last minute because it faced certain defeat in the House; last September, supporters forced a House vote and lost ugly, 243 to 180. In the first go-round, President Clinton actively supported the bill but could convince only some 20 percent of Democrats to go along. Republican leaders cooked up the second fiasco to embarrass Democrats prior to last year's midterm elections, but a third of their own caucus broke ranks and voted no.

Such failures are especially depressing given their timing. During these years of paralysis, conditions could hardly have been more favorable for liberalizing initiatives: The economy has been booming, with unemployment and inflation their combined lowest in decades; since the "competitiveness" scares of the 1980s, major U.S. industries have staged dramatic comebacks. If free traders couldn't prevail under these circumstances, when could they?

Not, in all likelihood, for the foreseeable future. As economic crises grip Asia, Russia, and Latin America, and as prospects for continued growth at home appear uncertain, a window of opportunity may have closed. Free traders must face the facts: They blew it.

Even worse than the current predicament is the likeliest "solution" to it. Since fast track authority expired at the conclusion of the Uruguay Round of trade talks in 1994, reauthorization has been snagged on the question of whether labor and environmental issues belong on the trade agenda. Most Democrats have refused to support new trade negotiations unless these issues are on the table; they believe that international rules on labor rights and environmental protection are necessary to prevent economic globalization from prompting a woeful "race to the bottom." Most Republicans, meanwhile, steadfastly oppose such international rules, and many in the GOP would regard any trade agreement that includes them as worse than no agreement at all.

The two failed fast track bills were relatively "clean" - that is, they excluded labor and environmental agreements from the scope of fast track procedures. Thus, the bills were designed to appeal to a center-right political coalition. Since that coalition has been unable to muster a majority, momentum is building for a move to the center-left. That means repackaging fast track to put labor and environmental issues squarely on the trade negotiating agenda.

It's unclear whether decorating fast track with "blue" and "green" trim would gain more Democratic supporters than it lost Republicans. What is clear, though, is that doing so would mark a radical departure from free trade principles. For the first time, the stated goal of trade negotiations would be to increase rather than decrease government intervention in trade and investment flows.

What a choice for free traders: futility or apostasy. On the bright side, the good thing about reaching a dead end is that you no longer have to wonder whether you're on the wrong road. For free traders, now is a time of clarity: The only viable option is to strike out in a new direction.

The way out of the impasse starts with a proposition that, once stated plainly, seems embarrassingly obvious: The prospects for opening markets here and abroad would brighten considerably if more Americans believed that open markets here are a good idea. Unfortunately, free traders have not been making the case for free trade at home. On the contrary, they have steadfastly avoided any head-on confrontations with protectionist forces. Instead, they have sought to hold and gain ground by alternately diverting and appeasing those forces. This strategy is no longer working, and must be abandoned in favor of a more principled approach.

Before free traders can figure out their next move, they need to understand how they wound up in the present mess. In a time of unrivaled prosperity, what has made trade liberalization so bitterly controversial?

The answer lies in an emerging nervous disorder known as "globalphobia." Many Americans are deeply skeptical of the much-hyped global economy and its effects on the U.S. economy. According to a Business Week/Harris poll conducted in September 1997, 56 percent of Americans believe that expanded trade decreases the number of U.S. jobs, while only 17 percent believe that expanded trade increases wages.