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Why Fast Track Failed

By Sander M. Levin
Monday, November 24, 1997; Page A25

Why did fast track go down in flames? Most pundits have been focusing on political factors: the role of labor, big business and campaign dollars; the tension between the president and congressional Democrats amid jockeying for the 2000 presidential election; an overly partisan GOP bill; or broken NAFTA side deals.

Some of these political factors provided dry tinder, but there would not have been a fire without the spark of a major policy issue. Fast track failed principally because the administration tried to finesse the underlying issue rather than address it head on.

"It's the global economy, stupid!" The nature of U.S. trade has undergone a dramatic shift at the same time as growing income inequality and rising job insecurity in this country. The basic issue is whether trade agreements should address this convergence.

In the first decades after World War II, our trade was mainly with other industrialized nations whose economic and political systems were similar to our own. As a result, trade negotiations focused on the relatively straightforward task of lowering tariffs and non-tariff barriers.

But more and more of our trade is with industrial-izing nations with far lower labor costs and in most cases tight control over labor markets, including direct involvement by the government in the determination of wages and the absence of a meaningful right for workers to organize and bargain for increased wages. Their share of imports into the United States has skyrocketed from just one-third to almost one-half in the past decade alone, and they represent an increasing portion of our trade deficit.

Some downplay the significance of this shift in the composition of trade, saying imports from low-wage countries are mainly toys and footwear. But increasingly the toy maker of today is the automaker of tomorrow, and footwear soon gives way to hardware and software. Take China. It exports a lot of toys to the United States, but three of its other top-five exports are data-processing equipment, electrical machinery and telecommunications equipment.

It's no longer enough to respond to this stunning change in the nature of trade by pointing to the 13 million new jobs, one-third from exports. Many of the middle- and lower-income families affected by stagnating wages already hold most of those jobs.

Setting the ground rules. Trade agreements have to establish ground rules so that the benefits of trade are spread more evenly. If the rules allow developing nations to continue artificially suppressing wages – even as productivity climbs up the ladder toward American levels – it will encourage downward pressure on wages and salaries in the United States, a persistently wide gap in labor costs between rich and poor nations, and the absence in Third World nations of a growing middle class that has a stake in democratic government and free markets. In the long run, this dynamic undermines support for global trade both at home and abroad.

The debate has important parallels with the proposed global warming treaty, which would require industrialized, but not developing, nations to reduce carbon dioxide and other "greenhouse" gases. The U.S. business community and others have argued correctly that this would give developing nations an unfair competitive advantage. If this is true in the context of global warming, surely it's true in the context of trade agreements.

These issues are not as paramount when it comes to trade negotiations targeted at specific sectors such as agriculture, telecommunications, information technology or government procurement. A fast track limited to such narrow subjects would have passed.

But these issues cannot be ducked when it comes to broader proposals for expanding the concept of NAFTA to all of Latin America or creating a free-trade area in the Asia-Pacific region. And they clearly must be confronted in what may be the most troublesome and significant negotiations over China's accession to the World Trade Organization, which would have to include permanent Most Favored Nation status granted by Congress.

Yet a review of the preliminary negotiating documents for the Free Trade Agreement of the Americas reveals not a single reference to labor market or environmental issues. And the administration accepted fast-track language that tied its hands on how far it could raise these issues, indeed whether in a meaningful way ity could pursue them at all in any trade negotiations. The administration knew that leaving these critical issues behind would please many Republicans and alienate most Democrats. But it decided that with the emblem of free trade, the fast-track banner would make it up the flagpole.

It wasn't enough. In a desperate, last-minute scramble for votes, supporters promised to pump more money into training and retraining programs here at home. But this effort only drew greater attention to the question of whether domestic programs alone are sufficient to respond to dislocations from international trade, or whether we must also shape our trade negotiations to reduce the number of dislocations themselves.

The fate of fast track is uncertain. But what has sprung to life is a vital debate over the role of international trade in the lives of Americans. If we can seize this as an opportunity rather than use it as an occasion for opprobrium, the efforts of the past weeks will not have been for naught.

The writer is a Democratic representative from Michigan.

© Copyright 1997 The Washington Post Company

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