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Finding the Right Free-Trade Pitch

By Paul Blustein
Washington Post Staff Writer
Saturday, September 13 1997; Page H01

Call it "NAFTA – The Sequel." Once again, the battle over free trade is being joined in earnest, as President Clinton congressional authority to extend the North American Free Trade Agreement and strike other market-opening deals.

And just as in the 1993 NAFTA fight, the Clinton administration is using the prospect of new jobs as a major selling point.

"Ninety-six percent of the consumers of the world are in other countries, and in virtually all those countries, their tariffs are way higher than ours," Vice President Gore declared Wednesday at a White House ceremony to launch the trade initiative. "And so when they come down, we have an opportunity to provide even more good high-paying jobs for Americans making products and services that can be sold into the world marketplace."

But the administration's trade initiative does not raise the prospect of massive job creation or destruction, according to many mainstream economists and trade specialists, who recall the hyperbolic predictions about job gains and losses that characterized the NAFTA fight.

Rather, they say, the fundamental issue at stake is where economic globalization goes from here – whether the process of ever-increasing international trade and investment continues apace, as Clinton favors, or whether it is halted or altered by new rules to protect workers' rights and the environment, as his foes want.

And more important than the jobs that might be gained from new trade deals, these experts say, is the danger inherent in a U.S. signal of retreat from the worldwide march toward free markets. That could deal a serious blow to global prosperity by setting back the cause of growth-inducing policies that Washington has championed, such as deregulation, privatization and low import barriers.

"In Latin America, for example, the whole process of economic reform is stalling," said David Rothkopf, a former senior official in Clinton's Commerce Department. "And if at this moment the United States declares a 'time out,' the opponents of liberalization will say, 'They've stopped, they're retreating, they don't think this is working.'"

Clinton is submitting only a request for negotiating authority, called "fast track," not an actual trade agreement like NAFTA. Under fast track, the president has the ability to sign trade deals without having to worry that Congress would pick them to pieces, because the accords would be subject to a straight up-or-down vote without amendment.

Even economists who support Clinton's stance say the trade agreements he envisions signing over the next few years – setting up a free-trade zone in the Western Hemisphere, global agreements to lower barriers to services and agricultural products – are unlikely to make a big ripple one way or the other in the $7.5 trillion U.S. economy.

U.S. exports to Latin America are already rising quickly, due to the region's growth and loosening of tight economic controls.

"Frankly, the prospect of new free-trade agreements with Latin America, countries that are fairly small economies and far away, really isn't that enticing," said Greg Mastel, an economist at the Economic Strategy Institute, a Washington think tank.

Mastel hastened to add that "it would be better" if Washington gained additional opportunities to sell U.S. products in Latin America. But "the administration's strongest argument," he said, is that "if the U.S. is seen as abandoning free trade, that would send a powerful message to the entire world."

The administration's opponents, of course, think the 'it's-not-working' message is accurate, and that Washington ought to be insisting on trade deals with drastically revamped rules. If current policies remain in place, "foreign countries will continue to lure corporations abroad through abysmal wages, poor safety standards and tacit permission to pollute the environment," said House Minority Whip David E. Bonior (D-Mich.).

The answer, he said, is to insist on "basic labor and environmental standards in the body of any new trade agreement" – an approach free traders fear would lead to protectionist sanctions against developing countries.

Administration officials have been careful to avoid going overboard in touting the potential for job growth. Such talk came back to haunt them about a year after NAFTA's initiation, when Mexico's economy collapsed and made a mockery of claims that the Mexican market would provide a job-generating bonanza for U.S. exporters.

They are on firmer ground, supporters say, talking about the importance of continuing to lead on globalization.

Paula Stern, a former chairwoman of the International Trade Commission who attended Wednesday's White House ceremony, noted that over the past three years, during which Clinton's fast-track authority has expired, the United States has managed to achieve robust export growth and new market-opening measures that don't require negotiating authority.

"Trade negotiations are just one factor in the fantastic transformation of the U.S. economy; there's also deregulation, the application of new technology, the flexibility of the labor force," she said. "But not doing fast track would be a terrible signal that the United States is not continuing on this path that has made us such a success in the global economy."

© Copyright 1997 The Washington Post Company

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