It's Time America Begins Looking at Three-Dimensional Foreign Trade Barriers Without Rose-Colored Glasses

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America needs a bipartisan coalition on trade


Leo Hindery and Shanker Singham

Financial Times

November 6, 2008


In the past 15 years we have seen the almost complete unravelling of the bipartisan coalition on trade policy that once productively defined the modern free trade movement in the US. For many in each political party, this unravelling is welcome – progressives believe there has been too much wage stagnation and offshoring of jobs; conservatives that US companies have faced too much opposition to their international growth. Yet without another bipartisan coalition, the prospects for negotiating further trade barrier reductions around the world will be dim.


While the two of us approach trade from different political persuasions, we agree that America’s trade deals need to follow three principles. They must provide clear and measurable benefits for American workers; they must be explicitly designed also to lift up workers around the world, which is the right thing to do morally and economically; and they must be realistic about country differences in terms of the rule of law and state of development – that is, one size does not fit all when it comes to trade policy.


We also agree that there are at least four planks on which the administration of Barack Obama, Congress, labour and business should have consensus.


First, that trade liberalisation, if fairly carried out, continues to hold enormous promise for the world’s poor and for companies and workers, including American workers.


Second, that trade liberalisation is not fairly carried out if countries are allowed to distort markets through public sector restraints on trade, illegal subsidies or the anti-competitive operation of state-supported enterprises.


Third, that businesses must have maximum protection for their physical and intellectual property.


Fourth, that the US needs to invest substantial resources in clean energy, education and infrastructure to ensure that we keep our competitive edge and that our workers have the skills they need to fill the jobs of the future.


In the world today, there are two sets of business and trade rules. One set resides in the developed countries, such as the US and Europe, where companies compete largely on the basis of business acumen. The other set resides in the world’s largest emerging markets, where national champions are chosen to be global competitors and the full power of the state is deployed to assist and sometimes own them. US workers are suffering because our open competition approach is being swamped by some of our competitors’ more mercantilist, often unfair and sometimes even illegal practices.


Emerging market countries, especially Brazil, Russia, India and China (the Brics), and some Asian countries, have economic policies to retain and improve the quality of their existing jobs and induce foreign corporations to shift production facilities and technology to them. Faced with these practices, foreign companies cannot be successful on their merits, even when they are given so-called “market access”.


It is imperative – way past time, in fact – for America to be as aggressive in defending its economic interests as our trading partners are in advancing theirs. Specifically, the US trade representative should supplement the annual survey of foreign country trade barriers to include market distortions of any sort. Also, the World Trade Organisation must confront market distortions as aggressively as it addresses tariffs and other border measures and it must enforce vigorously our trade agreements, including demanding “parity of enforcement” among all parties.


Domestically, we must encourage new jobs through enlightened corporate tax policies and stop encouraging the offshoring of millions of US jobs through misguided ones. Also, by eliminating the tax deferral incentives for corporations to relocate production overseas, we can mitigate government complicity in aiding offshoring.


Finally, we should cut taxes for all US manufacturers and give tax credits to US companies that invest in the skills of American workers, in research and development for jobs here at home, and in new machinery, equipment and software.


Leo Hindery Jr is a Democratic party trade and economic policy adviser and chairs the Smart Globalisation Initiative at the New America Foundation. He is managing partner of a media industry private equity fund. Shanker Singham was a senior trade adviser to Republican presidential candidate Mitt Romney. He is chair of the International Round Table on Trade and Competition Policy, and leads the Market Access/WTO group of Squire, Sanders & Dempsey