There was a blue moon last night
and today the Washington Post ran
an op-ed critical of free trade. The
column nicely encapsulates the left's
position.
MBS
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Tied to The Fast Track
By John Cavanagh and Sarah Anderson
Wednesday, September 24, 1997; Page A21
The Washington Post
Just as the Clinton administration is
launching a battle to expand the North
American Free Trade Agreement, The Post (in a
Sept. 12 editorial) has lined up solidly with
the free trade camp by drawing misleading
conclusions about the growing opposition to
the administration's proposals.
The emerging fight is not about whether there
should be more trade and investment in the
world; both sides acknowledge that trade and
investment can play positive roles. The
debate is whether, in a world of rich and
poor nations, the rules governing trade
should include strong protections for worker
rights and the environment in all nations.
The administration, the Fortune 500 and The
Post say no. The AFL-CIO, most environmental
and other citizen groups -- often called
"fair traders" -- along with the majority of
Americans, say yes.
The Post's position is based on four
fallacies:
1. Fair traders, in The Post's words, "want
to impose U.S.-style labor standards on
foreign workers." No, fair traders are
explicit in proposing that the labor
standards that should go into trade
agreements be drawn from the conventions of
the International Labor Organization,
conventions that U.S. corporations, labor
representatives, and the U.S. government
helped craft with counterparts from around
the world. Practically all nations agree in
principle that there should be no child or
forced labor and that workers ought to be
allowed to form unions and bargain
collectively and strike. Yet, it is the
flagrant violation of these international
standards in Mexico, Indonesia, China and
elsewhere that allows U.S. firms to bargain
down wages and working standards here. Fair
traders correctly argue that these
international rights should be folded into
trade agreements.
2. The economies most open to trade and
investment grow fastest and best address
their people's needs. Wrong. The most
successful economies in the world in recent
decades have been the so-called "tiger"
economies of Asia that were quite closed to
trade and investment at their early stages of
growth. After World War II, South Korea and
Taiwan focused on fundamental land reform
that helped narrow income disparities and
create a domestic market for the new goods
these nations produced. When the economies
later opened up more to the global economy,
the benefits of trade and investment were
shared more broadly. The problem among most
nations today is that rapidly opening up to
trade and investment can create new
opportunities for better-off workers while
creating new downward wage pressure for
others.
New training and education can help some, but
even Silicon Valley computer programmers are
being replaced by Indian software technicians
in Bangalore who do the same work for much
less, and the best-trained aerospace workers
in Seattle are watching Boeing shift their
jobs to China.
3. A third of U.S. growth and many
high-paying jobs are due to trade. The
administration and The Post invariably talk
about only one side of the trade picture:
rising U.S. exports. They conveniently ignore
the fact that U.S. imports from Mexico and
the rest of the world have been growing much
faster than U.S. exports and that many of
these imports are in auto parts, automobiles,
textiles and other products that were
previously produced here. Since the onset of
NAFTA, U.S. trade with Mexico has shifted
from a small surplus to a large deficit.
Hundreds of thousands of workers have lost
jobs from the shifting production and rising
imports. These lost jobs, like export jobs,
pay better than the average.
4. Stronger labor language in trade
agreements "wouldn't erase the competitive
advantage that poor countries enjoy in labor
costs." This may be true for the poorest
countries such as Haiti and Bangladesh, but
little of the new competition comes from
these countries. In the "big emerging
markets" such as Mexico, Brazil, Indonesia,
Malaysia, and China -- the favored investment
sites of General Motors, General Electric and
other large firms -- modern infrastructures
permit the production of the same goods with
similar levels of productivity to those
enjoyed in the United States. Yet, because
fundamental worker rights and environmental
standards are routinely violated, firms can
pay wages that are a fraction of those in the
United States.
We live at a vital moment when governments
are setting new rules for engagement in the
global economy. In a world of rich and poor
nations with vastly different standards, new
rules are vitally needed to ensure that
globe-trotting firms don't use their ability
to exploit the forests, minerals and workers
of other nations to bargain down U.S. working
and environmental conditions. The current
debate over expanding NAFTA offers the
opportunity to set rules that offer workers,
communities and the environment the same
rights to prosper in the global economy as
they offer corporations.
John Cavanagh is co-director and Sarah
Anderson is a fellow at the Institute for
Policy Studies.
c Copyright 1997 The Washington Post
Company
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Max B. Sawicky Economic Policy Institute
[EMAIL PROTECTED] 1660 L Street, NW
202-775-8810 (voice) Ste. 1200
202-775-0819 (fax) Washington, DC 20036
http://tap.epn.org/sawicky
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