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USA Swinging Against Free Trade

by Jeremy Hetherington-Gore, Tax-News.com, London

05 October 2007


It's a sad truth that educators bring up children who don't understand free trade and are usually against it, and a new poll conducted by the Wall Street Journal shows that, as expected, 60% even of Republicans think free trade is bad for America.

At election time, senior politicians who privately understand perfectly well that free trade is a Good Thing pretend to be against it in order to get re-elected. What else are they to do?

The Wall Street Journal-NBC News Poll, whose results were announced this week, also shows that while 60% of respondents want the next president and Congress to continue cutting taxes, 32% think it's time for some tax increases on the wealthiest Americans to reduce the budget deficit and pay for health care.

The anti-free-trade 60% said they would agree with a Republican candidate who favored tougher regulations to limit foreign imports. The pollsters say that there has been a shift in opinion during the last ten years, but this is unlikely. The Bush administration has been solidly free-trade, it's true, but its misfortunes in the polls have been due to other factors such as the Iraq war.

Sadly, the future for free trade in the US in the short to medium term does not look bright, regardless of the outcome of the presidential election, due to the Democrat dominance of Congress. The President's fast-track negotiating authority lapsed earlier this year, and hopes that it might be renewed even by the existing Congress were not fulfilled. (The authority requires that Congress can say 'yes' or 'no' to a treaty negotiated by the administration, but cannot change it.) Then, as expected, there is a crescendo of xenophobic rhetoric and matching bills in the Congress. This does largely reflect the imminence of the election, rather than a determination on the part of Democratic leaders to erect yet more walls between the US and the rest of the world. Even they privately understand that free trade is good for a country, but they especially can't admit to it publicly.

Then there is the weasel wording on labour rights and environmental protection measures which has been inserted into the US-Peru free trade agreement in order to get it through Congress, and which will presumably find its way into all future US free trade agreements. No such wording can be found in World Trade Organization rules, and it is a disturbing development that bi-lateral trade agreements may diverge in that way from WTO rules.

Unfortunately, the normally solidly pro-free-trade USTR has come out in favour of the wording. US Trade Representative Susan Schwab welcomed the House Ways and Means Committee's approval of the draft US-Peru free trade agreement.

“I am very pleased the Ways and Means Committee approved draft legislation to implement the Peru Trade Promotion Agreement. This voice vote shows that the May 10 bipartisan agreement, which addressed congressional concerns by incorporating new labor and environment provisions in the four pending free trade agreements created a path that is leading to positive results,” said Schwab.

The US-Peru FTA is the first trade agreement that incorporates the environmental and labor requirements, resulting from the landmark bipartisan trade deal.

Commenting on the new agreement, Ways and Means Trade Subcommittee Chairman Sander Levin (D - MI) said that the Peru FTA signals a dramatic step in a new trade policy - "one that takes on the essential need to expand the sharing of the benefits of expanded trade and addressing its downsides – by including for the first time enforceable worker rights and environmental standards."

"We have broken once and for all the failed NAFTA and CAFTA model and are charting a very different course for US trade policy," he added.

"Trade is about people more than it is about goods and services produced; trade is about the policies and commitment of our great nation to make the world a better place," stated Ways and Means Committee member Jim McDermott (D - WA). "With this agreement today we are leading the world by raising the bar to a new level to protect workers and the environment. This is a defining moment and one we can be proud of."

Oh, dear! You can kiss goodbye to the Doha Round with such rhetoric coming out of the Congress.


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