We're on the cusp of achieving significant new breakthroughs in freer trade, and many signs suggest that we're not going to succeed. Ratification of the Central America Free Trade Agreement (CAFTA) fell deeper in doubt as May turned into June. And concluding the Doha Round, the latest in a series of global trade negotiations since the late 1940s, awaits yet another jump-start after repeated attempts to complete it. The free-trade backlash is gaining strength. What's gone wrong in the global march toward increasingly open markets? And, more important, how can we fix it? Your involvement in how those questions are answered could determine whether the effort to liberalize trade moves forward, is slowed or stopped in its tracks.
First let's put the challenges in perspective. Creating multilateral freer-trade agreements has never been easy. The Free Trade Agreement of the Americas, linking economies from the Arctic to Argentina (excluding Cuba), is still pending after nearly a decade of talks. And earlier rounds of global trade negotiations under the Global Agreement on Tariffs and Trade (GATT), predecessor to the World Trade Organization (WTO), endured delays and missed deadlines on their completion.
Still, CAFTA and the Doha Round face many challenges, too numerous to detail here, that previous efforts did not. Among the most significant are the following:
- We know the results of previous agreements, and the losers have become better organized and more vocal. Industry groups (such as the United States Business and Industry Council,American Manufacturing Trade Action Coalition and Save American Manufacturing) made up of (mostly small) companies in industries hurt most by existing free trade agreements have formed to highlight the negatives. Their message is getting through to legislators.
The effectiveness of safeguard provisions remains unknown. To win approval of earlier free trade agreements, including -- not insignificantly -- the entry of China into the WTO, U.S. negotiators built into the contracts special provisions designed to shield U.S. manufacturers from market-disrupting market surges. With the lifting of quotas in the apparel industry this past January, the effectiveness of those provisions is only now becoming known. What is all-too apparent, however, is that import surges have devastated many U.S. manufacturers, some industries, and the communities that depended upon them.
The Importance of Trade Remedes to the U.S. Trade Relationship with China (.pdf)
A Report to the US-China Economic and Security Review Commission bythe Trade Lawyers Advisory Group
- The evidence that those safeguards are being weakened and questions about U.S. leadership's commitment to enforce them are growing. Meanwhile, the Bush Administration can't seem to make up its mind on how tough to be with China on its currency manipulation and its failure to enforce intellectual property laws, as well as how to consistently address other trade disputes.
Perceived broken promises. Supporters of current trade policy claim freer trade will lift millions of people in developing countries out of poverty while creating many more jobs in the U.S. Further, they say that those new jobs will be the higher-paying, higher value-added jobs. Unfortunately, the growing numbers of citizens willing to risk dying in the desert for a series of low-paying, back-breaking day jobs is a constant and visible reminder that free trade has hardly made a dent in Mexico's cycle of poverty. Meanwhile, in the U.S., the era of freer trade has coincided with a period in which inflation-adjusted wages have fallen for U.S. workers, and those high-technology jobs, once the information-technology bubble burst, have been coming too slowly to quell dissent.
A State-By-State Overview of the High-Technology Industry
by the American Electronic Association
Unless we can address these challenges, future trade agreements will face increasing resistance and delays. The standard rebuttals that supporters of the current free-trade policy will make to counter these concerns are not working. We need to come up with something better.
Let me have your suggestions. But more important, let President Bush, Commerce Secretary Carlos Gutierrez, U.S. Trade Representative Rob Portman, and your representatives and senators have them.
Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.