Tue 10 Mar 2009
It appears most clear from everything I’ve read that efforts by countries to restrict foreign imports during times of economic upheaval is an unwise thing to do. Restricting trade and protecting domestic industries is an understandable instinct when times get bad, but it is apparently precisely the wrong course of action when combating a global recession. It makes things worse, far worse. Yet, we all know that labor organizations the world over, responsive to their domestic clientele, like nothing more than a good trade barrier to protect their particular industry from foreign competition. The most popular trade restriction these days comes in the guise of conditions which must be negotiated into trade agreements to improve labor and environmental conditions in foreign countries. While for labor it serves a very distinct purpose–a means of restraining free trade–for most everyone else, from the comfort of our American homes, it sounds like a very nice thing to insist upon (a close relative of ‘political correctness’). While negotiation of some provisions of this sort would seem to be prudent, it is apparent that the “prudent” end of the spectrum rarely satisfy organized labor, as “prudent” would rarely really significantly alter trade.
So, today comes word that the Obama administration, showing due fealty to a key constituency of the Democratic Party, announces that it is “aggressively reworking U.S. trade policy to more strongly emphasize domestic and social issues, from the displacement of American workers to climate change.” This is according to a story in this morning’s Washington Post (U.S. to Toughen Its Stance on Trade: New Policy Reflects Growing Dissatisfaction With Global Markets). The story is a good one and confirms that countries the world over are “embracing new trade barriers aimed at imported goods and other measures meant to restrict the flow of capital outisde their borders.” Concerning the push in the U.S. for new labor and environmental standards in foreign trade deals, here is an excerpt from the story:
During the campaign, Obama said he generally supports free-trade policies but also signaled a tougher approach that is only now beginning to be outlined. Both in Kirk’s testimony yesterday and in a policy statement issued by new Obama appointees at the Office of the U.S. Trade Representative, the administration vowed to make tougher labor and environmental standards prerequisites for trade deals. Rather than stressing the signing of new agreements, the administration indicated that it will instead prioritize stricter enforcement of existing ones before the World Trade Organization — the Geneva-based body that arbitrates global trade.
I am, of course, suspicous, given the relationship of organized labor and the Democratic Party, that anything approaching reasonable or the “right thing to do” will be the end result of this new policy. This is more politics than sound policy.
Also in today’s Washington Post is an Op-ed arguing the importance of global trade to world economic recovery and offering a “three-pronged agenda [that] can promote growth, and support foreign policy and global stability.” The author is Charlene Barshefsky who was the U.S. trade representative from 1997-2001 (making her a Clinton appointee). The Op-ed is entitled Trading Up to Global Recovery. While the author advocates free trade she also advocates for “disciplines on labor and the environment.”
It appears clear to me that as concerns these “disciplines” to be imposed on other governments, the devil will be in the details: Too lax and organized labor won’t be happy and too strict and the agreements will be have no chance of being agreed to by foreign nations. Good luck on finding reasonable middle ground and a trade policy that helps more than hurts. Good luck indeed.