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THE FREE-TRADE DILEMMA
BY WALTER CRONKITE
The candidates for the Democratic nomination clashed head-on in last week's debate on an issue that threatens party unity, foreign trade and the jobs it affects. The only good news for them is that this issue is bound to cause George Bush headaches as well.
Specifically at issue are the North American Free Trade Agreement and the work of the World Trade Organization. The political dilemma for both parties will be whether to press ahead with free-trade liberalization or to either slow it down or abandon it in response to growing concern over trade-related job losses in this country.
Free trade won bipartisan support during the Clinton administration, with liberal internationalists joining free-market Republicans in pursuit of a truly global economy. Liberals were excited by the idea that free trade could be the tide that "lifts all boats," creating jobs here and at the same time helping poorer countries develop faster a win/win proposition.
Free trade seeks to eliminate the various barriers to trade, such as tariffs on imported goods, bilateral agreements between two nations (discriminating against others) and subsidies or price supports that allow producers to sell their goods below even the cost of production.
For labor and the Democrats, the dream of free trade began to fade as American companies started shifting well-paying jobs in manufacturing and elsewhere to countries where wages, working conditions and environmental standards are well below our own.
For Republicans, it was steel that caused the first big crack in the free-trade dream last year, when President Bush, an avowed free-trader, imposed tariffs of up to 30 percent on steel imports. That made both steelworkers and steel owners happy and probably helped the Republicans in the 2002 congressional elections. And Bush added to that free-trade apostasy by getting major increases in agricultural subsidies into the Farm Bill.
Altogether, the wealthy, industrialized countries, including the United States, annually spend some $300 billion on agricultural subsidies, driving down world prices and making it impossible for farmers in poorer nations to compete. The poor countries, unable to afford subsidies, erect other barriers, such as tariffs and bilateral agreements, to protect their farmers. The poor countries won't drop their own barriers unless the rich abandon their subsidies.
The administration now is considering a relaxation of the steel tariffs, saying conditions have changed. Indeed they have. The WTO has ruled the tariffs illegal, and our trading partners have promised severe retaliation. Sen. Lamar Alexander, R-Tenn., claims the tariffs have destroyed nearly as many jobs in steel-consuming companies as exist in the entire steel-producing industry. And he warns that threatened sanctions on other American exports will cost many more.
In the Democrats' debate last week, no other issue produced such sharp words or so much vitriol as free trade.
Richard Gephardt, Dennis Kucinich and Howard Dean say we should not trade with countries that do not meet our standards. John Kerry says that would mean we won't have anyone to trade with. Gephardt did not disown remarks by his spokesman that Kerry was a "knee-jerk supporter of free trade." Gephardt went on to say that, as opposed to himself, "most everybody here voted for NAFTA ..." as though that were a kind of original sin. Prior to the debate, Joe Lieberman had warned that Dean's fair trade and tax policies would produce a "Dean Depression."
Unemployment and Iraq loom as the major issues in next year's election. Iraq's role will depend to a large degree on the state of the U.S. involvement at that time. Unemployment's role will be affected by how both Democrats and Republicans shape their policies on free trade. Both issues might well have serious consequences for the nation's foreign policy and for its economic future.
Write to Walter Cronkite c/o King Features Syndicate, 888 Seventh Ave., New York, NY 10019, or e-mail him at firstname.lastname@example.org.
(c) 2003 Walter Cronkite
Distributed by King Features Syndicate