TCS Daily


Trading the Devil We Know...

By Pejman Yousefzadeh - May 18, 2007 12:00 AM

There has been lots of noise recently about a new agreement reached last Thursday between the White House and Congress over the substance of future trade legislation. The new agreement guarantees that the White House will attach conditions to pending trade agreements that are designed to safeguard labor and environmental standards, including guaranteeing workers the right to organize, banning child labor and coercing compliance with existing environmental laws and international environmental agreements on the part of trading partners. Additionally, the White House has pledged to make these conditions part of all future trade deals. These concessions were made in the hope that Congressional Democrats will be more willing to grant approval on trade deals and, perhaps, to extend or renew the President's "fast track" negotiating authority, which allows deals to be presented for a single up or down vote in Congress without amendments.

But the deal is not a cure-all for moving trade agreements forward. As House Speaker Nancy Pelosi ominously warned, the deal does nothing "for trade agreements where we have other obstacles." In terms of allowing the President fast track authority, House Ways and Means Chairman Charlie Rangel has only promised "a limited extension of such negotiating authority if the Doha round talks looked as if they were shaping up to be a good deal for the United States." What "a good deal" constitutes is anyone's guess and even if Chairman Rangel believes "a good deal" is in the offing, the decision to only offer the President "a limited extension" of fast track authority shows that the White House gave up far more than it will get from its deal with Congress.

Furthermore, it is more than likely that all the White House achieved on a procedural level is to make it perfectly valid for protectionists to slow down trade deals by claiming that labor and environmental standards are at risk every time a new trade deal is announced. Former United States Trade Representative (and former Deputy Secretary of State) Robert Zoellick once pointed out that "economic isolationists" make it a practice to undermine trade agreements by arguing that labor standards have been compromised. He was right and the same tactic is used with regard to environmental issues. With each submission of a future trade deal, protectionists will argue that the deal does not protect the right to join a union, that it promotes child labor, that it helps foster unfair working conditions and that it harms the environment. And thanks to last week's deal, they can now cry hypocrisy if the Republican administration does not slow down or put a halt to the implementation of future trade deals on these grounds.

It would be far better for the United States to respect the autonomy of other countries in setting their own labor standards. Talk of "child labor" raises the image of children forced to work in slave camp conditions. While no one endorses or supports such treatment, it is important to note the many factual misconceptions that plague the issue. As Milton Friedman argued, contrary to popular opinion, industrialization helped reduce child labor, not increase it, and it is likely that the prosperity brought about by free trade will reduce child labor further. Moreover, Friedman pointed out that most poor countries cannot afford to be without child labor and that if children do not work, parents will be forced to take time away from work in order to care for those children, thus reducing family income still further. By and large, children in other countries do not work because they are forced to. They work because they have to in order to help support their families. Thanks to the cookie cutter approach to child labor that appears to be part of the agreement on terms between the White House and Congress, however, the United States will engage in blanket condemnations of child labor without understanding the deep-seated reasons behind the phenomenon.

As for the issue of unionization, maybe it is high time that we recognize that in large part, unions have outlived their stated purposes. Unions make little difference in the protection of worker interests, their presence does great harm to economic growth and performance and unions are historically prone to corruption. But unionization remains a sacred cow whose presence cannot be questioned or reconsidered. Instead of engaging in a serious examination or debate over the continuing relevance and value of unions, the White House has chosen to further solidify their role.

The White House and Congress sell their deal as one that will pave the way toward greater trade liberalization. But proponents of free trade have every reason to be skeptical since the deal does very little to actually promote current and future free trade agreements. If the deal between the White House and Congress is the best instrument for getting trade liberalization back on the front burner, then free trade is in very dire straits indeed.

Pejman Yousefzadeh is an attorney living in Illinois. He blogs at A Chequer-board of Nights and Days, and Red State.


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4 Comments

Enforcement...
These trade agreement issues are political window dressing. If adding such language into any trade agreement allows the government to more easily open up global markets for US companies then it is a good thing.

Such rules about who is allowed to perform which jobs and how they are to be treated in a foreign country are completely unenforcible by the US government.

For example, we cannot keep illegal immigrants from taking jobs "off the books" here in America when our precious tax revenues are exposed. Why does anyone think we will do any better inside Malaysia?

Of course, if the opponents of such treaties have another obstructionist weapon then the "forces of reason" simply have more work to do marginalizing the radicals.

In the end it should make little difference to our economy. If any actual harm does result then it should be directly measurable and the government would respond accordingly. Anything that hurts our economy does damage to the tax base. If the government is clearly causing those phenomena then that foolishness will stop fast.

Won't hurt?

It will make it easy for a protectionist-minded executive (any president beholden to Big Labor or Big Agra, or to a nativist base) to act: all hse will need is a pretext to invoke the existing act.

trading with everybody
Isn't there some kind of mistake? I thought that this was supposed to have been sorted out by the Founding Fathers already when they said something like; 'trade with everybody and fight with nobody", or whatever to that effect. So why not a free trade agreement with the whole world? But then if it's the default setting, why even have an agreement? What business could it be of any snivveling beaurocrat if say NOKIA has its head office in Finland, makes its products in China, but most share holders are Americans? Why would some people not want to have free trade with everybody?

Again...enforcement...
The government has lots of laws that they routinely ignore...only to bring them out for selective enforcement in pursuit of any such agenda.

If a President really wanted to become particularly protectionist then there are plenty of laws already in his tool kit to deploy through his various agencies...or he could task his guys to write fresh policies engaging a liberal interpretation of some law...and then let the Federal courts decide (years later) if he was over-reaching.

He probably would not get himself impeached for any of this...although he might not get reelected if the economy was measurably damaged.

They have been doing whatever they want for over 200 years. They are very good at it.

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