Heated debate on trade polarizes U.S. politics

International Herald Tribune
December 12, 2005
By Elizabeth Becker

Email this page

WASHINGTON At a time when the World Trade Organization is hard pressed to come up with a consensus on new global trading rules, the political divisions in the United States over trade are deepening. On one side are proponents of increasing the volume of trade to keep up the pace of globalization rather than risk a global economic slowdown. On the other are those demanding a closer examination of trade agreements to avoid a potential disaster represented by America's record trade deficit and the increasing decline in U.S. manufacturing. As trade negotiators gather in Hong Kong, the world's biggest trading power is feeling the strains of its trade gap, which is set to pass $700 billion this year, shattering last year's record deficit of $666 billion. The Bush administration blames the high savings rate of other countries and increased outsourcing as major contributors to the deficit. But many Democratic lawmakers say that these are partial reasons at best and that the trade gap has cost the United States well-paying jobs in crucial economic sectors while contributing to growing income inequality in the country. This increasingly heated debate could stymie the ability of the United States to make critical concessions during the Hong Kong meeting. Indeed, there will be no official congressional delegation in Hong Kong, a departure from custom. The Republican leadership said the trip was canceled because Congress would be in session. But senior Democratic officials said that since expectations for a major breakthrough in Hong Kong were low and the potential for disputes within a congressional delegation was high, it made sense for lawmakers to stay at home. Representative Benjamin Cardin, Democrat of Maryland, who is a prominent promoter of trade, said the imbalance is the major reason for a new "wariness" about trade among Democrats. He said he was surprised that the U.S. congressional delegation would not be present at the talks, but added: "We wonder whether we're accepting trade at any cost when we don't see the benefits. We're no longer going to believe that opening markets in itself is enough." For politicians looking at next year's elections, this has become a bread-and-butter issue. Republicans and Democrats in Congress have warned the administration that it has very little leeway in offering further reductions in core farm subsidies without greater concessions from Europe or for any changes in the U.S. remedies for unfair trading practices, or anti-dumping measures. Representative Clay Shaw, the Florida Republican who runs a trade panel of the House Ways and Means Committee, is a leading spokesman for increased trade. He describes a "virtuous circle" that helps rich and poor countries alike - but even he warns that America's trading partners must make equally serious concessions at the Hong Kong summit. This view may surprise poorer countries that see the United States as one of the biggest winners in the global trading system. But Democrats and some Republicans are worried that the U.S. position is weakening. They point not only to the ballooning trade deficit but also to a series of losses of major cases the United States has brought before the World Trade Organization's dispute settlement body. Fueling the global economy is the American consumer, laden with credit cards and rising personal debt. When those consumers lose their jobs because of trade-related dislocation, they have far greater problems than their counterparts in other industrial countries. For one thing, losing a job means losing health insurance because the United States does not have a national health insurance program. So far, neither the Bush administration nor Congress has come up with effective trade adjustment assistance for these workers. That has given further pause to Democratic politicians. "Not only are the trade agreements we're negotiating around the world not turning things around," said Senator Byron Dorgan, a Democrat from North Dakota, "they are making things much worse, and doing so at an accelerating pace." Daniel Griswold, a trade expert at the libertarian Cato Institute, believes that Democrats who question trade agreements are modern-day protectionists. "Trade agreements shouldn't be sold for any effect they may have on the trade deficit," he said in an interview. "Advocates and opponents have been exaggerating the importance of trade agreements on the deficit for years."

NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving this information for research and educational purposes.

Subscribe via RSS

Global Food Challenge
IATP explains the policies that have caused the food crisis and the solutions we need.

Green Chemistry
The Green Chemistry revolution is making safer products and protecting human health and the environment.

Local Foods
IATP analyzes the key policy and marketplace issues driving local food systems.

NAFTA
NAFTA leaves a huge footprint on the U.S. and the world. As Washington gears up for the debate, IATP analyzes what's at stake.

Water
From ethanol to privatization, water is a hot issue in trade and agriculture worldwide. Trade Observatory has document and headline collections dedicated to water issues.

Keep up-to-date on the latest trade issues at Think Forward.