Foreign Affairs
Ending the Trade War in Washington: Saving the Trade Agenda by Protecting Workers
Stuart E. Eizenstat and Marney L. Cheek
Summary: Protectionist sentiment on Capitol Hill threatens to scuttle Washington's free-trade agenda. A bipartisan consensus on trade could emerge, but only if the White House and the Democrats can reach a compromise on labor issues.
Stuart E. Eizenstat, head of the international practice at Covington & Burling LLP, held several senior positions in the Clinton administration, including U.S. Ambassador to the EU, Undersecretary of State, and Deputy Secretary of the Treasury, and he was President Jimmy Carter's Chief Domestic Policy Adviser from 1977 to 1981. Marney L. Cheek is Special Counsel at Covington & Burling LLP and was Associate General Counsel at the Office of the U.S. Trade Representative from 2003 to 2005.
Last November, the U.S. electorate sent a clear message to President George W. Bush and the new Democratic congressional leadership: work together to deal with the nation's challenges. Few issues depend on bipartisanship as much as trade policy, an area that has been plagued by bitter disagreement between the Democratic Party and the Republican Party during the first six years of the Bush presidency.
As of this writing, Democrats on the Senate and House trade committees and U.S. Trade Representative Susan Schwab were in the process of negotiating critical trade and labor issues. A breakthrough is possible, but it will require the Bush administration to reevaluate its trade and labor policies, something it is now seriously doing. A trade policy that increases export opportunities for U.S. goods and services while also addressing international labor standards and the needs of those hurt by expanding trade would appeal to mainstream Democrats, who see the value of international trade but want to mitigate the inequities it creates. Such a trade policy should also be acceptable to the U.S. business community, which benefits from increased trade and increasingly applies high labor and environmental standards to its own operations abroad. In short, the well-being of the U.S. economy depends on reaching a political consensus on trade policy.
The value of U.S. trade and earnings on foreign investment increased 32-fold between 1970 and 2005 and 130 percent between 1994 (the year before the successful completion of the Uruguay Round of trade talks) and 2005 in nominal terms. In 2005, the value of U.S. trade in goods and services alone stood at a record 27 percent of GDP, up from a mere 11 percent in 1970 and 22 percent in 1994. Today, at least 12 million Americans owe their jobs to exports to the rest of the world. The United States' role in free trade is so central that were the country to appear to be closing its doors to trade, it would send a dangerous signal to the rest of the world that protectionism is acceptable. Any resulting protectionism would constrict the main arteries of global trade and jeopardize continued economic growth.
Unfortunately, protectionist sentiments and partisan polarization seem to be on the rise on Capitol Hill. In the 2006 congressional elections, several Democratic Party candidates won on anti-free-trade platforms. The new Democratic House Speaker, Nancy Pelosi, has warned that their views need to be heeded in developing a new trade policy. Many Democrats are stating that they will refuse to renew President Bush's trade-promotion authority (known as "fast-track" authority), which allows the president to negotiate trade agreements and requires Congress to vote on them without amendments, after it expires at the end of June. The White House has relied almost solely on Republican votes to push its trade policy through Congress.
In recent years, Democrats have struggled with the free-trade agenda. President Bill Clinton had to rely heavily on Republican support to pass the North American Free Trade Agreement (NAFTA) in 1993 and to normalize trade relations with China...