Trade policy making in the United States is at an impasse. In more specific terms, the ability of the U.S. government to exert effective leadership to continue reducing both foreign and U.S. barriers to trade and investment is restricted due to the inability of the Congress and the Administration to agree on new presidential trade negotiating authority. The opponents of free trade agreements are also unable to condition renewed negotiating authority and new trade agreements on explicit protection of labor rights and environmental, health and safety standards through trade sanctions. The impasse is rooted in domestic politics, and pro-trade supporters, including the Bush Administration, have not devised an effective way to break the impasse.

The recent vote on Trade Promotion Authority (TPA) in the House of Representatives demonstrates that the U.S. President and the United States Trade Representative cannot now guarantee that bargains made for market access with U.S. trading partners under new trade agreements like FTAA will be approved unaltered by the U.S. Congress. This changes the terms on which the U.S. will be required to negotiate on the FTAA/ALCA and the WTO Doha Round. The global market moves on in those areas that are not significantly restrained by government intervention and regulation - protection for domestic sectors - but policy-making and negotiating authority to remove the rest of the barriers is at a stalemate.²

The cause of the impasse is inadequate political consensus in the United States on how to deal with the benefits and losses from trade - fairness between winners and losers. While it is heresy for a Washington trade lobbyist to say it, the traditional lobbying strategies and tactics of the business community and a succession of Administrations over the last decade to push trade agreements through Congress no longer work. That strategy requires the existence of an inherent pro-trade majority in the Congress, and the House of Representatives in particular, to work. Uncommitted members that usually lean in favor of free trade, when added to the hard core supporters of free trade, have made up that pro-trade majority for over forty years. The old strategy holds that those "swing votes" can be activated to vote for new trade agreements if the President, major business groups and pro-trade opinion leaders, including the media, make a public case for the benefits. Lobbyists refer to this as "cover." Efforts by business groups to generate support from businesses in a Representative's home district is more "astroturf" than grassroots. There is no real and vocal public support at the local level for free trade. There is vocal opposition. The opponents have done a much better job since NAFTA of getting their message out that imports cost jobs and "No more NAFTAs!."

The TPA votes indicates that this inherent pro-trade majority no longer exists in the House. There are not enough votes in the House of Representatives in this Congress - and most likely the next - to pass a TPA that is sufficiently unencumbered with protectionist requirements to be an effective tool for the Bush Administration to negotiate and gain approval of a liberalizing FTAA or a new WTO Round before 2005. I review briefly how this majority was lost; and conclude with a few suggestions on what is needed in public education and policy reform to reverse the trend. It is possible to re-establish a reliable majority of public and Congressional support for a workable and realistic liberal trade policy apparatus in the United States by 2005.

The House Vote on TPA

The U. S. House of Representatives voted 215-214 to pass HR 3005, the "Bipartisan Trade Promotion Authority Act," referred to as the "TPA Bill," on December 6, 2001.³ Previous efforts in 1995, 1997 and 1998 had failed after fast track authority expired in 1994. This vote was probably a tie of 217-217 when the five absent members are counted. (There was one vacancy at the time due to resignation of a Florida republican who normally voted against free trade and fast track.) The vote was on near party lines with 194 republicans and only 21 democrats voting for the bill.

Moreover, the commitments made to get the last five republican votes needed to pass the bill were overt protection of U.S. textile interests which would, in fact, remove concessions already granted to CBI countries by the Congress and the Customs Service.⁴ Without those specific commitments by the Administration and the House republican leadership, the TPA Bill would have been voted down. At least four of those republicans will most likely shift their votes back to "nay" when the bill comes back from conference with the Senate if those CBI concessions are not delivered and protected in free trade negotiations with Central America and the FTAA.⁵ The opponents clearly had, and retain, the majority.

There are always last minute deals to get votes on trade agreements under the U.S. congressional system, even with "fast track," and this bill was no exception. There were other explicit and implicit deals made that protected other interests, notably steel and agricultural. The steel interests received a commitment from President Bush that he would impose significant tariffs on steel imports under a pending trade case. The President was going to do that anyway for other political reasons; and he has since done so and locked up the steel votes. The agriculture commitments were more of the "cover" variety - they sound good but don't do much. Up to seven of those agricultural republican votes could shift back to "nay" as a result. The affirmative votes of several anti-trade, Buchanan-Perot type Republican House members were in direct response to the President's attack on terrorism and the need for temporary foreign policy support from members of his own party.⁶ There are at least three of those republican votes that are likely to shift back to "nay" as the time beyond 9/11 lengthens. Thus, there are a total of 14 republican votes out of 194 that could slip. That leaves only 180 republicans for the bill and it would take 38 democrats to make up the difference - 17 more than the 21 that voted for it in December.

About a dozen moderate House democrats who normally support free trade agreements, voted against the TPA Bill because nothing had been done to directly assist people who lost jobs after 9/11. ⁷ The House republican majority had pushed through a package of tax cuts to stimulate economic recovery, but included nothing that the democrats wanted in the way of unemployment benefits and health care for those that lost jobs. It remains to be seen whether the watered down economic stimulus package that passed a couple of weeks ago, and that was signed by the President, will be enough to get those votes back. It had only a few tax cuts, extended unemployment benefits and some health care coverage for a scaled down package. But that could be enough to get back five to ten democratic votes.

Only two democrats on the Ways & Means Committee, the committee with trade jurisdiction, voted for the bill. Rep. Charles Rangel (D-NY) from Harlem is the ranking democrat on the committee and could have been persuaded, perhaps, to support the bill, if it had been handled differently by the committee Chairman, Rep. Bill Thomas (R-CA). If Rangel can be persuaded to support it next time, he might bring seven or eight more votes with him. That would total 20-21 more votes, but no more than half of those are in reach at this point. The problem with Rangel is he was a strong supporter of the CBI bill, and the textile deal made to get the republican votes infuriated him. Even Rep. Thomas, the committee chair objected. So there may be a trade there if Rangel can come up with more democratic switches than the republican losses.

The upshot is that last December's House vote - which required an overtly protectionist deal to pass - cannot be replicated if it comes back to the House for a second vote this Summer. A different majority would have to be constructed, but that gets more difficult the closer it comes to the election. (Assuming that the Senate passes a somewhat different bill in April or May, a conference will be required to resolve the differences and send the revised bill back to both houses for final approval.) The problem is how to gain more democratic votes, without losing more republican votes. The republican total of 194 and 88 percent is well beyond the normal percentage of pro-trade republicans which ranges from 66 to 75 percent.⁸ If republican votes drop to 180 that is still above the norm. The marginal votes to make up a pro-trade majority in the House must be found among the democrats, and the conundrum is what will it take to turn enough democrats around on TPA.

There is still an inherent, bipartisan, pro-trade majority in the Senate, but there you need 60 votes to cut off filibusters and pass a controversial bill. Key democratic Senators are trying to increase democratic support by increasing coverage of Trade Adjustment Assistance (TAA) programs in a companion bill. This is "cover" for moderate democrats that don't want to offend organized labor too much by supporting the TPA Bill. Increased TAA alone will probably not gain many democratic votes in the House because organized labor has more influence there and will still oppose the TPA Bill even with increased TAA. The Administration has proposed something less on TAA than the Senate democrats, so increasing the coverage and funding for TAA in the conference may well cost more republican votes in the House without gaining democratic ones.

Pro-trade support in the U.S. House of Representative has now become so fragile, partisan, and in fact opposed to TPA, that it will restrain, and could prevent, the U.S. from negotiating new free trade agreements for the Western Hemisphere, or in the Doha Development Round of the WTO, that will substantially overcome remaining trade barriers. In fact, liberalizing agreements that ignore these constraints, as was done at Doha with regard to putting antidumping rules in the negotiating agenda, may not be approved under this TPA if the attitudes in the Congress and among the public remain the same. Thus, if the TPA is passed by using a lot of anti-trade deals, it may be impossible to get a truly liberalizing trade agreement like FTAA approved by the Congress under the rule. If the U.S. negotiators respect the restraints imposed by opponents, then we don't get a truly liberalizing agreement. It is a "Catch-22."

How Fast Track and the Inherent Pro-Trade Majority in Congress was Lost

The issues that currently plague TPA, and negotiation of FTAA and a new WTO Round, are founded in opposition to NAFTA and the attempts by the Clinton Administration to include labor rights and environmental, health and safety standards in future trade agreements enforced by trade sanctions.⁹ These issues are championed by the AFL-CIO and its industrial unions, most environmental organizations, Public Citizen (a Ralph Nader organization), and a host of religious, human rights and other non-governmental organizations. We have seen them in the streets of Seattle, Washington, Prague and Quebec City over the last few years. But the debate started in 1991 over the renewal of fast track to negotiate NAFTA and finish the Uruguay Round of the GATT. It became more focused during the NAFTA debate and has grown stronger since.

Fast track had been periodically renewed as a part of larger trade bills since 1972. It was mixed in with specific trade agreements and benefits and was not particularly controversial, except for the few members who objected on principle simply because they could not amend a bill. It should have been included in the authorizing legislation for the GATT Uruguay Round in December 1994. There were a lot of political reasons and miscalculations for why it was not. As a result it expired in 1994 and various attempts to revive it since have failed. Part of the difficulty is that considering fast track or TPA by itself in Congress requires members to vote on whether they favor free trade in the abstract. There are no specific trade benefits to support. ¹⁰ It is, in effect, a fragile political compact between the Congress and the President, and invites a heated debate in the abstract over whether trade is good or bad. It has been described as the "Moby Dick of American trade politics."¹¹ The authors of this Brookings policy paper note,

"the hunt for this elusive quarry at times has come close to capsizing the ship of American trade policy. But is fast track the prize that its proponents claim it to be? Would its reenactment indeed bridge the chasm on trade? Or is the protracted stalemate a symptom of a more profound divide in American public opinion? The answers lie somewhere in the middle. Fast track is important precisely because it has become a political symbol of America's commitment to free trade."¹²

The opponents of fast track/TPA and expanding trade through free trade agreements have formed a strong coalition and have developed the techniques and organization to mount an ongoing battle to thwart fast track and stall progress on new trade agreements not to their liking. The proponents on the other hand, "mount a full counter-offensive only when there are concrete benefits in the offing." This difference in lobbying approach was evident in the NAFTA vote in 1993, the Uruguay Round vote in 1994, and the vote on permanent normal trade relations (PNTR) with China in 2000. Contrast that with the 1991 renewal of fast track, the 1998 fast track vote that lost, and the recent TPA vote. [See Table 1.] There were also two attempts in 1995 and 1997 to come to a vote on fast track that were deferred due to insufficient support.

Table 1

Since 1991, the debate over fast track and the support for it has become highly partisan and polarized. The 1991 vote was about 60 percent republican and 40 percent democratic support. In 1998 it was 84 percent republican and 16 percent democrat. The TPA vote last December was over 90 percent republican and democratic support fell to less than 10 percent.¹⁴ In 1991 a deal was made for a separate resolution to accompany the vote that addressed labor rights and environmental protection.¹⁵ That made the vote much easier for House democrats. The coalition of opponents did not get organized until three years later after the bill authorizing the Uruguay Round was passed. The TPA bill went a long way toward inclusion of labor and environment standards as negotiating objectives in trade negotiations, albeit without enforcement through trade sanctions, but got less democratic support than 1991.¹⁶

NAFTA was the galvanizing event that organized the opposition. At that time the environmental groups had split over support of the environmental side agreement. The labor side agreement did not gain any labor union support, but it did provide a lot of cover for some moderate democrats. The author was a consultant to the Mexican Ministry of Trade and Commerce (SECOFI) during the NAFTA negotiations and approval process. One of my principal responsibilities was tracking the votes in the House. At a point about three weeks before the vote on November 17, 1993, the count was about 15 votes short with a little over 30 undecided members.

Ten days before the vote there was a debate of sorts between Vice President Al Gore and Ross Perot on Larry King Live, a TV talk show on CNN. Perot had coined the phrase "the giant sucking sound" to describe the effect of NAFTA on U.S. jobs going to Mexico. The Vice President clearly won the debate and virtually all of the undecided members declared support and a few republicans even switched positions. Public opinion in support of NAFTA increased dramatically and the Congress responded accordingly. The result was a vote for NAFTA of 234 consisting of 132 republicans and 102 democrats, a margin of 16 over a bare majority.¹⁷ That was probably the high point of democratic support for free trade in the face of overt labor opposition over the last decade. Democratic support has declined significantly since 1994.

A year later in December 1994, the political climate had changed. The republicans had just gained control of the House and Senate in the off-year elections. The Clinton Administration had concluded the GATT Uruguay Round, but without specific provisions on labor and environment. The Administration and the democrats in the Senate had delayed consideration of the authorizing legislation until after the election, which was a serious political miscalculation. The soon to be republican leaders, Newt Gingrich in the House and Bob Dole in the Senate, had to come up with a process to get republican support for the vote in a "lame duck session." The vote was deemed necessary in the lame duck session due to the expiration of fast track and the uncertainty of whether the application of the rule to the Uruguay Round legislation would carry over into the new Congress.

The unions did not mount an all out offensive against the bill because there were specific provisions on antidumping rules that the steel industry and the steelworkers wanted. The AFL-CIO essentially took a walk and left the democrats free to support President Clinton. That was all that saved the bill because the business community had withheld support trying to get additional concessions and had not mounted the expected lobbying blitz. In addition, many republicans were reluctant to give President Clinton a victory so soon after a humiliating defeat in the election.¹⁸ It is virtually the only instance where democrats produced more votes than the republicans on a major trade bill in the last decade.¹⁹

The lobbying strategy and tactics used by the last five Administrations and the major business organizations since 1979 are based on the "insider" approach by pro-trade elites. Those elites include CEOs of major companies of the Business Roundtable, the leadership of the U.S. Chamber of Commerce, the National Association of Manufacturers, a host of smaller business organizations oriented to trade, all the major farm organizations, former Presidents, former Secretaries of State, Treasury and Commerce, former U.S. Trade Representatives, and prominent economists and academics. They write joint letters to Congress and put advertisements in the Washington Post, New York Times, Wall Street Journal, the two weekly papers distributed on Capitol Hill, and occasionally the Los Angeles Times.

The lobbying and public relations firms generate anecdotes and success stories of smaller companies, and compile lists of companies on letters to members from swing states and districts. The Department of Commerce produces special updates of export totals by state and metropolitan area. Some of this information is put on web sites for the key organizations or ad hoc groups organized for the vote. It is a blitz approach focused on the three to six weeks before the vote. As noted before, with regard to changing public opinion, it is more an "astroturf" or "grasstops" approach, than it is a true grassroots campaign. The problem with the insider blitz approach is it does not significantly alter public opinion and attitudes at the local level. It does not engage state and local opinion leaders on an ongoing basis. There is no continuous program with the media either by the Administration or the private sector. The blitz leaves no lasting impression on a majority of Americans.

The opponents, starting in 1995, did launch a permanent campaign against free trade in general, and NAFTA and fast track in particular. These groups utilize their organized grass roots structure with union locals, local chapters and activists with environmental groups and Public Citizen, and others. They get a constant message out that imports cost jobs, that NAFTA and trade with low-wage countries is bad for Americans who can't compete with foreigners that work for $1 or $2 a day. They repeat their message constantly and get it out to the media nationally and locally. These groups also use e-mail and the Internet effectively to coordinate and communicate their message and organize their activities. Security forces for the WTO, World Bank and IMF, and local police finally figured out they could find out in advance where demonstrators would be and when by simply logging on to their web sites and getting on their "listservs" to receive e-mails.

There are both winners and losers in expanding trade and globalization. The opponents are doing a very good job of getting the story about the losers out at the national and local level. More importantly, they are doing it on a continuous basis as a permanent part of their advocacy. Proponents are doing virtually nothing to demonstrate who the winners are. They never had to before except during the lobbying blitz. In addition, trade supporters have a single minded preoccupation with the value of exports in creating good jobs and saying virtually nothing about the value of imports for all working families. It is the latter that is the core of public support for trade. Proponents' message about exports tends to reinforce the opponents' message that imports from low-wage countries cost jobs, harm the environment in those countries, and send unsafe food to the U.S.

In 1992, the Canadian government of Brian Mulroney held an election which was a virtual referendum on the U.S./Canada Free Trade Agreement and NAFTA. While Mulroney won, it was close. That government and all Canadian governments since have engaged in a comprehensive and continuous program to educate the Canadian people about their dependence on and the value of expanded trade. While it has not eliminated opposition by some groups to free trade, and NAFTA in particular, a majority of Canadians understand and support the government's trade policies. The concern of most Canadians is not free trade but their dependence on trade with the United States for a significant portion of Canada's GDP.

In contrast to Canada, no U.S. administration has made any effort, until just recently, to replicate that effort, in spite of its obvious success. When NAFTA was passed, it required a third year review and report by the Administration of its costs and benefits in July 1997. That report downplayed the benefits in an effort to lower the attention on NAFTA by opponents in preparation for a vote on fast track in the Fall of 1997. NAFTA was viewed as a liability when the Canadian experience should have dictated the opposite approach.

That fast track vote scheduled in the House in November 1997 was cancelled at the last minute by Speaker Newt Gingrich and President Clinton because they didn't have the votes. The author's conversations with key legislators indicated that the most republican votes were 165-166 and the best the democrats could do was 45-46. They were six to eight votes short. Key members of the republican House leadership contended they could have "whipped" together a majority had they been allowed to do so. That would have required some protectionist deal making that the Speaker and the President did not want to do. That experience played a significant role in the TPA vote last year when the House leadership and the White House staff allowed the republican whip, Tom DeLay (R-TX) to get the votes any way he could get them.

Significantly, the Bush Administration, in anticipation of the TPA vote in 2001, undertook an effort to sing the praises of NAFTA.²⁰ Unfortunately, this was a short lived effort that was overtaken by the events of 9/11. Still it was a step in the right direction and a recognition by the government at the highest level that a significant economic policy of the United States needs better public understanding and support.

In summary, there are two fundamental causes for the decline in congressional support of fast track/TPA and the disappearance of the inherent pro-trade majority:

Opponents are both articulate and organized at the grass roots level; they are getting their message into the media and to the general public. More importantly, the proponents are not offering a rebuttal on a continuous, effective basis at the local level. This campaign is targeted at democrats since the opponents are largely democratic constituencies. It is easy to chart the drop in pro-trade democratic votes since 1994.²¹

A last minute blitz in Washington before a vote, by elites of CEOs of multinational corporations, business trade associations, former government officials and eminent economists and academic experts is no match for the perception of the Congressman that his or her constituents do not support free trade. It does not give democrats in particular any effective cover. That perception is fueled by the opponents' grassroots message, polls and the media. During the World Bank meeting in Prague in 2000, the Washington Post quoted a consumer activist from Reading, Pa. who made the pilgrimage to Prague to demonstrate because of what he called the devastating impact wrought by globalization on his community. "We've lost 7,000 jobs over the last five years that can be directly attributed to NAFTA," he stated, and he attributed the local suicide rate and domestic violence to the resulting high unemployment.²² This was undoubtedly an exaggeration, but there was no response by pro-trade forces and the media did not seek out a response. (2) The proponents of free trade and TPA have not effectively addressed the issues being raised by the opponents. We must concede that the opponents have defined the issues and dominate the debate. Furthermore, they have done so during one of the more remarkable periods of prosperity in the U.S. They have succeeded in dramatically reducing democratic votes for trade bills and fast track/TPA in particular. Their issues and messages clearly resonate with someone. The democrats in Congress think it resonates with the American people.

Even Alan Greenspan, Chairman of the Federal Reserve Board has stated that, "despite extraordinary prosperity, the ability to move forward on various trade initiatives has clearly come to a remarkable stall." That report also stated that policy makers at the conference of the Federal Reserve Bank of Kansas City, "were clearly concerned that the issues behind the protests surrounding globalization and trade - lost jobs and wages, threats to labor and environmental standards, accusations that economic policy is being conducted for the haves rather than the have-nots - could undermine support for the steady spread of free markets and democratic capitalism." ²³

Opponents are organized and are using every tool available, including the Internet, to communicate their message continuously to the media and the American public. They are playing on public anxieties about trade with developing economies. Proponents are simply not responding on an effective and continuous basis to educate the public about the benefits and trade-offs in expanding trade. They are not providing any real, permanent cover for Congress with their anxious constituents back home. Pro-trade forces must find an effective, affordable way to make a case for trade on a continuous basis at the local level. That process is available.

The pro-trade messages and rebuttals to opponents issues are also known and available. Realistic solutions are available to develop a consensus position on TPA, free trade and globalization.²⁴ Most Americans are prepared to compete in a global economy, but they have to be convinced that realistic solutions will be adopted by their political leaders that address both their legitimate concerns and their anxieties. They want the government to help the losers find equal or better jobs. On balance, the pro-trade facts and arguments can still dominate and win the debate - but they have to be made by the right people to the right people.

Business leaders, and many in the Congress and the Administration, believe they can still win when there is an actual, advantageous trade agreement, like FTAA, before the Congress for a vote. They think that if they can only get fast track/TPA passed, in almost any form, they can negotiate advantageous agreements regardless of any restrictions placed in the TPA. That is a flawed strategy. The problem is those very same leaders cannot currently negotiate and deliver that "good" agreement to the Congress, unencumbered by protection and half-measures to open markets; or if they do deliver a good agreement it is highly doubtful they can get it passed. They need the American public on their side to get a good TPA and get approval of a good agreement. The bad news is that the inherent congressional majority in the House of Representatives is now opposed to free trade and FTAs - the good news is that can be reversed.

The Core Issues that Opponents Have Raised

Opponents first argue that imports cost jobs, particularly those from low-wage countries. Apparel workers in Guatemala and China are putting low-skilled, low-wage workers in South Carolina out of work. That is unfair because we simply cannot compete with those wages. Imports are not bad per se. Any economist will quickly recognize that as mercantilism rebutted decisively by Adam Smith over two centuries ago.²⁵ The problem is most Americans are not economists and the opponents argument sounds logical. Americans also want to be fair.

Most Americans understand the value of imports in their household budget, and aren't willing to give them up or pay a lot more to buy American.²⁶ And it is low-income Americans that benefit most from imports. It costs too much to protect those jobs so the only solution is to help those who lost their jobs get training and better jobs. That is more difficult for older workers. Trade Adjustment Assistance programs were intended to do that but they haven't worked very well. Also, more Americans lose jobs every year by several orders of magnitude from purely domestic competition.²⁷ Why shouldn't they get the same assistance? The simplest answer is it costs too much, at least as measured by current government job training programs; but there are alternatives.

Opponents measure jobs lost by the size of the trade deficit. That of course is a spurious argument. Between 1993 and 2000 more than a net 20 million new jobs were created in the U.S. at the same time that trade deficits were growing. The numbers clearly don't add up. But opponents point out specific plants that closed and real people that lost jobs. Those are powerful images and messages. Statistics and economists alone can't compete.

The other side of this coin is that U.S. firms are shutting plants here and running off to low-wage countries to make apparel, auto parts and consumer electronics, then shipping them back here. This is the "giant sucking sound" of Ross Perot and NAFTA fame - one of the most potent political and advertising slogans of all time. The facts are, of course, very different. Most U.S. investment by multinational firms is in developed economies and sales from those plants go to other countries, but there are enough examples of U.S. companies moving to countries like Mexico, to give the opponents' argument credence and raise the anxiety level of many Americans.

Also, the issue of "unfair" imports is a knotty one and puts us on treacherous ground. It is one thing to keep out imports made with slave labor or forced child labor, but something else again to exclude those products that sell for less than the cost of production in the U.S.²⁸ That leads us into the antidumping laws, which are much beloved by the steel industry and a few others. However, most of our trading partners strongly object to the way in which the U.S. enforces its dumping laws and would dearly love to restrict or eliminate them. "Safeguards" actions to deal with temporary surges that injure a domestic industry are viewed as much less distorting by economists. However, it was just such a safeguards case approved by President Bush a couple of weeks ago that has put our trading partners into a frenzy.

The second major argument of opponents is that basic labor rights and the environment in the countries of our trading partners must be protected and laws enforced. They argue that the standard of living of developing economies will rise faster if this is done. They also argue that American workers will be less at risk. They argue that these countries have an inherent cost advantage by not having or enforcing the same environmental standards, and increased trade, therefore, is causing environmental degradation. Americans do think that is wrong.²⁹ We should also protect our health and safety from imports of unsafe food and products. Moreover, these opponents want these protections written into trade agreements and enforced with trade sanctions. That means we block a variety of imports from a country that does not enforce its child labor laws.

This is the argument that has the most political traction here at home because of the political clout of the labor unions and environmental groups. We see it in the decline of democratic support for trade in the House of representatives since NAFTA and the Uruguay Round was approved.³⁰ It is also the issue that most concerns our trading partners with whom we want to negotiate free trade agreements. Governments of developing countries see use of trade sanctions to enforce labor and environmental standards as an insidious form of protectionism that the U.S. will use to block their imports. They also view it as an attempt by the rich countries to impose their higher standards on poor countries that simply cannot yet afford them. There are legitimate concerns over use of trade sanctions to enforce labor rights because they will be discriminatory. The exporting industries in developing countries, for the most part, are paying higher wages and have the higher labor standards, yet are penalized for the lower standards of non-trading sectors.³¹ There are excellent proposals to address enforcement of labor and environmental standards without resort to trade sanctions, which are discussed below.

The third major argument of opponents is that more trade is benefitting the multinational firms and developed economies but harming the poor and underdeveloped countries. This is the haves vs. have nots argument - the rich are getting richer and the poor poorer. Again there are excellent rebuttals to these arguments. Some poor countries are growing very rapidly economically. Others clearly are not. While there is a growing consensus to explain this in terms of differences in governance, democracy and rule of law, the fact remains that some countries are not benefiting from globalization.³² It is a significant element in anxiety about the effects of globalization. A recent poll was reported to show a majority of people around the world believe globalization of trade and finance will raise personal living standards, but also see it as increasing world poverty and hurting the environment.³³ So, Americans are not unique in their anxieties.

Solutions for Consensus and How to Get the Support of the American People

The opponents have set the terms of the debate and the issues they raise must be answered. Proponents must also have a way to get their message out and educate people better about the benefits and costs of trade. As stated at the outset, the cause of the trade policy impasse is lack of political consensus on how to deal with the benefits and losses from trade - fairness between winners and losers.

There is an excellent summary of some of the solutions to build a consensus on trade policy in the monograph by Dr. Weidenbaum, "Looking for Common Ground on U.S. Trade Policy" published by CSIS.³⁴ Another summary that is more detailed is in another CSIS publication called "Trade Liberalization: Fears and Facts."³⁵ This publication also has an excellent bibliography on these issues.

In order to deal with concerns about imports and unfair trade the U.S. needs to work harder to open foreign markets and be seen to be doing so. Reciprocity is a critical perception in the trade battle. We need to monitor and enforce existing trade agreements and be seen to be doing so. We need to put more effort in getting other countries we trade with to comply with and enforce the trade agreements we have with them, and that includes WTO agreements. WTO procedures need to be more transparent and the dispute resolution process needs to be opened up. There are ways the critics can participate in open sessions and hearings while the essential bargaining is done in Executive Session, much as is done in the U.S. Congress. We need to revise and relax export controls so we don't simply shoot our own industries in the foot. Where there are dual-use technologies and foreign firms are offering competitive products in the world market, it makes no sense to restrict our exports. Finally, there is the economists' lament that we should eliminate the antidumping laws and rely instead on temporary relief under the "safeguards" rules.³⁶

While I can agree about elimination of the dumping law in principle, it is virtually impossible to do politically in the short run. We need to do all the other things first, retaining this ultimate ad hoc protection mechanism for some industries that cannot adjust to global competition quickly. Steel and world excess steel capacity is an example of such a sector. The problem is how to reduce capacity where virtually all governments protect their steel production. The free market will not function to weed out the least efficient when governments intervene. We could provide an exception to the dumping law to deny standing to bring a case where it can be shown there is unrestricted, reciprocal access to the two markets in question. That would start to weed out the excessive use of dumping, and provide an incentive for our trading partners to eliminate protection for their industries.

The key element in dealing with the impact of global competition is worker adjustment and assistance. This addresses the plight of those who lose out in trade competition. If people think that there is a way to help those losing jobs to find equal or better jobs, the support for free trade goes way up.³⁷ The objective must be to develop efficient worker retraining and adjustment programs, not protect low-skill, low-pay jobs in non-competitive sectors. Imports into the U.S. don't cost jobs directly, but they do shift jobs from low-skill, low-pay sectors to higher skill, higher pay sectors that are more competitive in global markets. The easy worker entry/exit attributes of the U.S. market add to efficiency, in contrast to EU rules, but that also increases workforce disruption and anxiety. It is the disruption and anxiety that has to be addressed.

There are two excellent approaches that are developing. The first is expanded use of community colleges to deal with remedial education and training for new skills, including how to set up and run your own small business.³⁸ The government needs to focus job training and retraining on these resources, particularly for younger people. The programs need to apply to all displaced workers whether from domestic or foreign competition.

The problem is more difficult to solve with older workers. There is a proposal for a more effective adjustment assistance program that would cover all workers, not just those who lose their jobs to trade. It is particularly helpful for older workers. It is wage insurance, and would replace unemployment insurance in part. Amazingly, it is not much more expensive than the total of current federal expenditures on all worker retraining and adjustment programs.³⁹ It provides timely assistance and training by subsidizing up to half of a worker's prior earnings when taking a new job. This deals with the loss of earnings problem. It addresses the reluctance of the unemployed worker to take an entry level job requiring new skills, provides an incentive to take a job sooner, and provides an incentive to the employer to hire these workers. It is more complicated than that, but that is the general concept.⁴⁰

The problem with wage insurance is it is very hard to sell a new entitlement program, and is much easier to do in a period of budget surplus and minimal concern about Social Security and health care. Obviously the best solution to worker adjustment, proven over the last few years, is a "growing economy creating new jobs at a rapid rate."⁴¹

The protection of labor rights and the environment is the major political flash point causing the impasse on fast track/TPA and new trade agreements like FTAA in the Congress. There is a very useful summary of the labor rights issue by Dr. Weidenbaum.⁴² There are excellent reasons not to enforce labor rights with trade sanctions, including the "law of unintended consequences." A bill introduced in Congress to ban imports of products made with child labor resulted in thousands of children being fired by garment makers in Bangladesh. The children ended up in more dangerous jobs or prostitutes, not in school.

The general response to dealing with labor rights is turn it over to the ILO and keep it out of trade agreements. The labor unions simply won't buy that, so it is hardly an effective approach to building a political consensus. The main criticism of the ILO is that it has no effective enforcement mechanism. The U.S. needs to give greater support to the ILO and adopt the basic conventions that it has not up to now, but also needs to offer a more constructive alternative. One suggestion is to publicize, particularly through the Internet, instances where countries and companies violate the core labor standards of the ILO.⁴³ This allows consumers to vote with their dollars to punish countries that don't follow core labor standards.

There is a very specific proposal to have a parallel negotiation in the FTAA on labor standards. The author of this paper, along with others, developed a proposal for a Western Hemisphere Work Program on Core Labor Standards and submitted it to the FTAA Secretariat and the USTR.⁴⁴ There is already a structure in place under the authority of the Summit of the Americas and subsequent Ministerials. These established the Inter-American Conference of Ministers of Labor with authority to develop a program to promote and enforce the core labor standards already recognized by the Summit heads of state. The proposal specifically eschews the use of trade sanctions, but proposes a system of fines or other "compensation" to gain enforcement.⁴⁵ Everything is already in place to initiate the formal parallel process and start to build the consensus required. It just needs to be initiated.

Finally there is a proposal to amend GATT Article XX, that allows members to ban the import of goods made with prison labor, to cover forced child labor and possibly other egregious labor practices.⁴⁶ It is noted that the WTO could declare forced labor violates fundamental market principles, which provides a rationale for limited WTO involvement in labor stnadards.

There is also an innovative proposal on how to address environmental protection in a trade context. Article XX of the GATT could be amended to also include "safe harbors" for trade actions consistent with provisions of multilateral environmental agreements.⁴⁷ The most famous case brought under the GATT involved a U.S. law to protect dolphins caught and killed while fishing for tuna. Mexico took the U.S. to the GATT during the negotiation of NAFTA, causing great turmoil in the U.S. environmental community. Mexico won when a GATT panel ruled the U.S. law was discriminatory under trade rules. The safe harbor approach serves two purposes: it allows some nations to protect endangered species and other environmental standards; and it provides incentives for multilateral environmental agreements by making them enforceable. The safe harbor provision makes explicit what is already implicit under WTO and GATT rules.

The issues of whether imports are good or bad and whether globalization helps the rich, but hurts the poor have to be addressed through better education about the real effects of trade. The NAFTA Institute has developed a program to use the power of the Internet and new web-based technology to educate people about the effects of trade at the local level. It is efficient and affordable so it can be operated on a permanent basis, thus overcoming one of the shortfalls of the lobbying blitz approach used by the business community for the last decade.

The Trade Information and Education Network allows us to compile information about trade effects on a geographical, sectoral and issue-oriented basis. It organizes that information and puts it into special reports and formats that makes specific information easy to find and use. It provides two-way communication with targeted audiences, opinion leaders, academics and trade experts and the media, giving a range of leaders and experts the instant ability to comment on any trade development in their sphere of interest. It also allows groups of users to be linked together on the web to share information and organize activities to promote trade and economic development in their state or community. The system is custom designed to meet the needs of various users such as Members of Congress and staff, large and small businesses, state governors and local elected officials, media, academics and experts in universities and think tanks, non-governmental organizations, and others.⁴⁸

The objective is to provide both a strategy and a program for pro-trade supporters to collaborate and get their message out on a continuous basis to the local audiences that count. Those local opinion leaders and organizations multiply and amplify the message into millions of messages a year to the American public. There are also more specific educational programs for schools and other community organizations. The focus is at the local level, not Washington. The network is currently under development, and when completed will be provided at cost or less to non-profits that want to promote free trade policy.

Endnotes

1. Author's note: "fast track" or TPA is a binding rule legislated in advance by the House and the Senate that allows expedited consideration of a trade agreement negotiated by the President. It will be considered on the floor by each body within specific time periods, and on a simple majority vote without amendment. Such agreements normally require changes in existing law and are subject to the Constitutional authority of the President to conduct foreign affairs and the authority of the Congress to regulate interstate and foreign commerce.

2. Murray Weidenbaum, Looking for Common Ground on U.S. Trade Policy (Washington, DC: CSIS International Business Infrastructure Initiative, Center for Strategic and Intl. Studies, 2001), pages 1, 4.

3. HR 3005,"Final Vote Results for Roll Call 481" (Dec. 6, 2001). See Cong. Record, Dec. 6, 2001, pp. H8972-H9044.

4. "Congress Stuck Over CBI Textiles"(Washington, DC: Washington Trade Daily, Trade Reports International Group, Mar. 16, 2002), page 4, and "Sen. Lott Pressures for ATPA" (ibid., Mar. 22, 2002), page 2.

5. Ibid.

6. Rep. Duncan Hunter (R-CA), Congressional Record, Dec. 6, 2001, page H9004.

7. Rep. Anna Eshoo (D-CA), Congressional Record, Dec. 6, 2001, page H9007.

8. See Table 1 and Chart 2.

9. I. M. Destler, American Trade Politics, 3rd Ed., (Institute for International Economics and The Twentieth Century Fund, Washington, DC, 1986, 1992, 1995), pages 244-245.

10. Ibid., pages 244-255.

11. Lael Brainard and Hal Shapiro, Fast Track Trade Promotion Authority Brookings Policy Brief # 91 (Washington, DC, Brookings Institution, December 2001)

12. Ibid.

13. Ibid.

14. See Chart 1.

15. H Res 146, Congressional Record, May 23, 1991; see also: http://thomas.loc.gov/home/r102query.html

16. HR 3005, Congressional Record, Dec. 6, 2001, pp. H8981-H8993. See also Table 1.

17. HR 3450, "Final Vote Results for Roll Call 575". See also Congressional Record, Nov. 17, 2001, page H10048.

18. Destler, supra note 9, pp. 244-255.

19. See Chart 1.

20. Washington Times, "NAFTA Hard Sell Meets Resistance," August 6, 2001.

21. See Table 1.

22. Washington Post, "Protestors Paralyze Prague," September 27, 2000.

23. Richard W. Stevenson, New York Times, "Trade Support is Dwindling, Fed Chief Says," Aug. 26, 2000.

24. Weidenbaum, supra note 2, pp. 25-29.

25. Weidenbaum, supra note 2, page 10.

26. EPIC-MRA, "Fifth Annual Survey of Public Opinion on International Trade," WIIT Charitable Trust, Washington, DC Nov. 2001.

27. Lori G. Kletzer and Robert E. Litan, Policy Brief #73, "A Prescription to Relieve Worker Anxiety," Brookings Institution, Washington, DC, Mar. 2001, page 5.

28. Weidenbaum, supra note 2, page 11.

29. Americans and the World, "International Trade," Program on International Policy Attitudes, Feb. 2002.

30. See Chart 1.

31. Working Papers No. 17, "Breaking the Labor-Trade Deadlock," Inter-American Dialogue and Carnegie Endowment for International Peace, February 2001, page 6.

32. Paul Collier and David Dollar, Globalization, Growth, and Poverty, (A World Bank Policy Research Report, World Bank and Oxford University Press, Washington, DC, 2002), pp. 3-7,13,19.

33. World Economic Forum Poll as reported by Reuters Limited, Feb. 1, 2002.

34. Weidenbaum, supra note 2, pp. 25-29.

35.Robert A. Rogowsky, Linda A. Linkins, Karl S. Tsuji, Trade Liberalization, Fears and Facts, (The Washington Papers, Center for Strategic and International Studies, Washington, DC, 2001), page 3.

36. Weidenbaum, supra note 2, pp. 25-29.

37. Americans and the World Poll, supra note 29.

38. Weidenbaum, supra note 2, pp. 27-28.

39. Gary Burless, Robert Z. Lawrence, Robert E. Litan, and Robert J. Shapiro, "Globaphobia," (Washington, DC; Brookings Institute, 1998), pp. 143-145.

40. Kletzer and Litan, supra, pp. 3-4.

41. Weidenbaum, supra note 2, page 28.

42. Weidenbaum, supra note 2, pp. 18-24.

43. Robert E. Litan, "Trade Policy: What Next?" (Brookings Review, Fall 2000), page 43.

44. Working Paper No. 17, "Breaking the Labor-Trade Deadlock", supra, pp. 9-14.

45. Ibid., pp. 12-13.

46. Weidenbaum, supra note 2, page 29.

47. Jeffrey Schott, "The WTO After Seattle," Schott, The WTO, Institute for International Economics, p.28.

48. Annual Report 1999, The NAFTA Institute, Washington, DC.

Charts

Chart 2