http://www.newsweek.com/id/117841?from=rss
What the World Is Hearing
A senior Latin American diplomat says, 'We might find ourselves nostalgic for Bush, who is brave on trade.'
By Fareed Zakaria
NEWSWEEK
Updated: 1:01 PM ET Mar 1, 2008
Despite their spirited squabbling, the two Democratic candidates are united in the view that one of the big benefits of electing either of them would be an improvement in America's reputation and relations with the world. Hillary Clinton promises to send special envoys to foreign capitals the day after she's elected. Barack Obama offers to reach out to America's foes as well as friends. Unfortunately none of this will matter if they continue to spout dangerous and ill-informed rhetoric about trade.
For the rest of the world—particularly poorer countries—nice speeches about multilateralism are well and good. But what they really want is for the United States to continue its historic role in opening up the world economy. For a struggling farmer in Kenya, access to world markets is far more important than foreign aid or U.N. programs. If the candidates think they will charm the world while adopting protectionist policies, they are in for a surprise.
Already the mood is shifting abroad. Listening to the Democrats on trade "is enough to send jitters down the spine of most in India," says the Times Now TV channel in New Delhi. The Canadian press has shared in the global swoon for Obama, but is now beginning to ask questions. "What he is actually saying—and how it might affect Canada—may come as a surprise to otherwise devout Barack boosters," writes Greg Weston in the Edmonton Sun. The African press has been reporting on George W. Bush's visit there with affection and, in some cases, by contrasting his views on trade with the Democratic candidates'. The Bangkok Post has compared the Democrats unfavorably with John McCain and his vision of an East Asia bound together, and to the United States, by expanding trade ties.
For Obama, the backlash could be greatest because he's raised the highest hopes. A senior Latin American diplomat, who asked to remain unnamed because of the sensitivity of the topic, says, "Look, we're all watching Obama with bated breath and hoping [his election] will be a transforming moment for the world. But now that we're listening to him on trade—the issue that affects us so deeply—we realize that maybe he doesn't wish us well. In fact, we might find ourselves nostalgic for Bush, who is brave and courageous on trade and immigration."
The facts about trade have been too well rehearsed to go into them in any great detail, but let me point out that NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy. And, in Lawrence Summers's words, "[it] didn't cost the United States a penny. It contributed to the strength of our economy because of more exports and because imports helped to reduce inflation." Trade between the NAFTA countries has boomed since 1993, growing by about $700 billion.
There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.
An argument one often hears from the candidates' supporters is that they don't really mean what they say, that their actual proposals on trade agreements involve only minor tinkering. It is an odd defense of candidates promising change, honesty and a new approach to politics to say that they are being cynical and hypocritical. Besides, both candidates are proposing to renegotiate NAFTA, which is a terrible idea. (And one that has prompted the Canadian prime minister to retort that if that happens, his country, too, would like to get more concessions from the United States.) Hillary Clinton has proposed that free-trade deals be re-evaluated every five years, which is absurd. The benefits of trade deals rest on the fact that they are permanent.
But both candidates surely know that no one is really paying attention to their policy papers on the topic. It is their general attitude and rhetoric that matter. And on this crucial topic they are pandering to the worst instincts of Americans, encouraging a form of xenophobia and chauvinism and validating the utterly self-defeating idea of protectionism.
I know, I know. This is all about the Democratic primaries in states like Ohio and the support of unions. But you can't target these messages so easily anymore. What is said in Ohio is heard in Ghana and Bangladesh and Colombia as well. And isn't the point of leadership to educate and elevate people, not to pander and drag them into the swamp of ignorance and fear? There is a way to speak about the pain of globalization—and about the need for investments in retraining, education, health care and infrastructure—so that we can both compete but also absorb the shocks of a changing global economy. Unfortunately that is not what the Democratic candidates are talking about.
I'm not even sure that protectionist rhetoric works that well in a general election. Americans like optimists. They want leaders who look out at the world and see broad, sunlit uplands. Railing against Mexicans, Chinese and Indians for stealing American jobs smacks of anger, paranoia and fear of the future. Americans want hope, as Obama says, "hope in the face of difficulty, hope in the face of uncertainty, the audacity of hope." Where is that courage now?
URL: http://www.newsweek.com/id/117841
http://news.yahoo.com/s/mcclatchy/20080303/wl_mcclatchy/2867869
Mexicans say changing NAFTA may force them to move to U.S.
By Franco Ordonez, McClatchy Newspapers
Mon Mar 3, 6:17 PM ET
MEXICO CITY — Jesus Velasquez doesn't want to move to the United States. He fears, however, that he may have to if he loses his job selling avocados. Velasquez, 36, says he and his family have benefited from the North American Free Trade Agreement. For him, the alternative is to immigrate to the United States.
"The trade act is good because we have jobs," he said Sunday, speaking loudly over the clamor of hundreds of workers hauling fruits and vegetables off rumbling trucks. "If there are no jobs, more people are going to go to the U.S. I have so many friends who can't find jobs and leave."
As voters in Ohio , Texas , Rhode Island and Vermont prepare to go to the polls Tuesday, some workers and distributors at this 800-acre food market, one of the biggest in the world, are expressing concern about presidential candidates Hillary Clinton's and Barack Obama's threats to pull out of NAFTA unless it's renegotiated.
NAFTA is unpopular in Ohio, a key battleground state for Clinton and Obama, where thousands of manufacturing workers have lost jobs.
Several vendors at the Central de Abasto food market said NAFTA isn't perfect. Prices on many products have risen, and many corn farmers said they've been run out of business because of the influx of cheaper American grown corn. But overall, they say, NAFTA has been good for the country, and they worry what changes the U.S. would seek should it return to the negotiating table with Mexico and Canada.
"People are worried," said Gerardo Peralta, 55, who sells rice, nuts and condiments. "If the U.S. tries to renegotiate, they are going to do what's best for them. That could be bad for Mexico."
Some Mexican leaders sought to downplay the candidates' statements as political rhetoric and "campaign talk."
Sen. Ricardo Garcia Cervantes said that any renegotiation of NAFTA would be based on the issues and not on the "heated statements" made by the American political candidates in hopes of gaining their party's nomination.
"In this electoral environment, one that we have to be very attentive to, we also have to be aware that many of these declarations by the Democratic candidates and Republicans are made for gaining votes," Garcia Cervantes , chairman of the Mexican Foreign Relations Commission for North America , said in a statement.
Mexico has gained because of NAFTA, according to Mexican Economy Secretary Eduardo Soto. He told a gathering last week of U.S., Canadian, and Mexican representatives that the Mexican economy has grown 51 percent because of NAFTA, that nearly 5 million jobs have been generated and that exports to the U.S. and Canada have multiplied five times.
"As representatives of the Mexican government, we do not want to insert ourselves into the U.S. political campaigns," he said. "However, we are convinced that what North America needs is more integration and not less integration. North America needs to look to the future and not return to the past."
Avocados have flourished under NAFTA, but not everyone is in favor of the trade agreement. Last month, hundreds of thousands of farmers clogged Mexico City streets with tractors to protest lifting corn tariffs under the free-trade agreement.
Corn farmers said the entry of cheap imported corn has undermined their profits, and towns are emptying because thousands of small farms have gone out of business. Many head to the U.S. illegally looking for better pay.
"It's not that we're against free trade," said Victor Suarez, the executive director of ANEC, a farmers' coalition, who helped organize the Mexico City rally. "We're in favor of free trade that is balanced— not one that is for corporations and monopolies. We want free trade that is fair for all parties involved."
(Ordonez reports for The Charlotte Observer.)
Showing posts with label trade adjustment assistance. Show all posts
Showing posts with label trade adjustment assistance. Show all posts
Tuesday, March 4, 2008
Monday, February 4, 2008
2008: Trade Barriers or Trade Liberalization??
2008: Trade Barriers or Trade Liberalization??
Trade Disputes Will Mark 2008
http://www.forbes.com/opinions/2008/01/28/doha-trade-talks-oped-cx_ccp_0129doha.html
FORBES
C. Christopher Parlin
January 28, 2008
Washington, D.C. -
The trade policy outlook for this year is grim, though a concerted effort and a change in approach by many businesspeople could stem backsliding into protectionism.
In the U.S., worsening economic news coupled with the upcoming elections guarantee slow, if any, progress in reducing worldwide trade barriers and increasing market access for U.S. companies. Around the world, these negatives are reinforced by fear of ever-expanding Chinese exports, lack of political will in the World Trade Organization's (WTO) Doha negotiators, and reluctance by trading partners to make concessions to the U.S. in the absence of the president's fast track negotiating authority (aka trade promotion authority).
There will be tensions this year because of the economic and political climate and the lack of breakthroughs in the Doha negotiations. There will be disagreements regarding actions taken (and not taken) as a result of this tension. The question is how these disagreements will be managed and whether they will lead to trade disputes.
The default option is a significant increase in disputes, as the focus of the U.S. and its trading partners leads to protectionist and discriminatory policies. Most will lose in the long run if this happens. The challenge now is to analyze the difficulties that the multilateral trading system will face and develop strategies to limit the resulting harm and serve as stepping stones for resumed progress when the worldwide economic and political climate improves.
Historically, trade liberalization efforts have succeeded only in a healthy worldwide economic climate (the Uruguay Round negotiations creating the WTO in the early 1990s) or after an economic cataclysm (the General Agreement on Tariffs and Trade, or GATT, after World War II). At such times, governments and businesses focus on the horse trading necessary to achieve greater worldwide liberalization. The concept of giving in order to get--of reducing some of your trade barriers to secure reductions from others in areas of greater interest to you--is recognized and acted on. Those losing protection don't like it, but the pro-liberalization forces are stronger.
By contrast, in problematic economic climates, fear of giving predominates. Politicians hear more from constituents condemning adverse effects of imports (and now globalization) on income and jobs than they do from those seeking to give or receive expanded market access. In the U.S., this shift was apparent in the 2006 congressional elections. And it becomes more evident every day as signs of an economic slowdown grow. Bipartisan efforts to enact a stimulus package are welcome, but they are extremely unlikely to improve the trade policy picture.
At the same time, the prospects for a pro-trade congressional majority are nil, and, although much of the protectionist rhetoric of U.S. presidential candidates is just talk, the prospects for a trade-friendly administration are uncertain, at best. The systemic concern caused by a weakening economy is bolstered by particularized fear of a continued Chinese economic juggernaut. No amount of learned discourse, or administration exhortation about the economic benefits of further trade liberalization for the country as a whole, can counteract the present fearful mood in the U.S.
Since the end of the Second World War, the U.S. has been described as the locomotive of world trade liberalization. A very solid argument can be made that GATT was created and the WTO evolved from it as a result of U.S. willingness to make the market-opening concessions necessary to drive other countries to agree to ever greater reductions of trade barriers and increases in market access opportunities.
Despite valiant efforts by the U.S. trade representative, Susan C. Schwab, the country now is stopped on a siding. The public does not accept pro-trade rhetoric, and the administration is unable to credibly promise trading partners that Congress will enact trade-liberalizing measures such as reducing agricultural support (enhancing the competitiveness of other agricultural exporters) or changing certain U.S. anti-dumping rules that most of our trading partners view as blatantly protectionist.
A replacement locomotive is needed, but none has appeared. Neither the European Union, Japan nor any collection of countries has stepped forward to provide leadership in the WTO's Doha negotiations. Instead, the goal seems to be to ensure that blame for failure is attributed to someone else. This is intensified by the inability of the administration to secure renewal of trade promotion authority (under which Congress agrees to an up or down vote on trade agreements, ceding its normal ability to condition ratification on amendments to the negotiated text). Not surprisingly, many of our trading partners will use the absence of fast track as an excuse for not making concessions sought by the U.S., asserting that Congress would demand additional concessions beyond those ultimately negotiated by the administration.
What is to be done? One possibility is to hunker down and wait for better times. That would ensure at best a standstill, but more likely a worldwide increase in protectionism throughout 2008. There is a better option, though. This could be a bad year for forward-looking trade policy, but it need not be a disaster. Rather than ceding the field to those advocating policies of increased protection and unilateralism, the proponents of multilateral liberalization could seek to preserve the positive aspects of the Doha negotiations. Even though significant breakthroughs leading to a successful conclusion will not occur in 2008, the negotiations need not collapse.
Experience during the Uruguay Round is instructive. There was a three-year period when none of the major negotiating parties was able to move on politically sensitive issues such as agriculture, services and textiles. Despite this high-level paralysis, all of the 15 subject matter negotiating groups continued to plug away. As a result, when worldwide political will re-emerged in mid-1993, most of the technical underbrush had been cleared away. A similar scenario could occur this year. The negotiating gains achieved to date could be preserved and steps taken to make technical progress where possible.
On the domestic front, too, 2008 need not be a disaster. Here, the keys will be education and understanding.
To avoid significant backsliding, those supporting multilateral liberalization must emerge from their foxholes and engage more actively and effectively in the globalization debate, educating politicians and opinion makers about the benefits of additional liberalization. At the same time, they must not ignore the dark side of globalization: It has not benefited all Americans. Many have legitimate concerns about their income and jobs.
Economics 101 lectures about the overall benefits of free trade may be sound economically, but will not be politically successful, especially given the worsening economic climate. To strengthen their presentation, advocates of trade liberalization must work to reformulate, advocate and implement policies that will assist those whose lives are negatively affected by globalization. The choice is theoretical purity and political defeat, or creative solutions that recognize the political climate.
Effectively, the course of trade policy today is dependent on what is done by those supporting increased trade liberalization. If they do nothing, the year will see significantly increased international economic tensions, disagreements and disputes. The challenge is to develop a new model in support of liberalization, one that accepts reality and proposes solutions for those who are harmed by globalization. By doing so, we may limit protectionist backsliding so progress can resume when the worldwide economic and political climate improves.
Trade Disputes Will Mark 2008
http://www.forbes.com/opinions/2008/01/28/doha-trade-talks-oped-cx_ccp_0129doha.html
FORBES
C. Christopher Parlin
January 28, 2008
Washington, D.C. -
The trade policy outlook for this year is grim, though a concerted effort and a change in approach by many businesspeople could stem backsliding into protectionism.
In the U.S., worsening economic news coupled with the upcoming elections guarantee slow, if any, progress in reducing worldwide trade barriers and increasing market access for U.S. companies. Around the world, these negatives are reinforced by fear of ever-expanding Chinese exports, lack of political will in the World Trade Organization's (WTO) Doha negotiators, and reluctance by trading partners to make concessions to the U.S. in the absence of the president's fast track negotiating authority (aka trade promotion authority).
There will be tensions this year because of the economic and political climate and the lack of breakthroughs in the Doha negotiations. There will be disagreements regarding actions taken (and not taken) as a result of this tension. The question is how these disagreements will be managed and whether they will lead to trade disputes.
The default option is a significant increase in disputes, as the focus of the U.S. and its trading partners leads to protectionist and discriminatory policies. Most will lose in the long run if this happens. The challenge now is to analyze the difficulties that the multilateral trading system will face and develop strategies to limit the resulting harm and serve as stepping stones for resumed progress when the worldwide economic and political climate improves.
Historically, trade liberalization efforts have succeeded only in a healthy worldwide economic climate (the Uruguay Round negotiations creating the WTO in the early 1990s) or after an economic cataclysm (the General Agreement on Tariffs and Trade, or GATT, after World War II). At such times, governments and businesses focus on the horse trading necessary to achieve greater worldwide liberalization. The concept of giving in order to get--of reducing some of your trade barriers to secure reductions from others in areas of greater interest to you--is recognized and acted on. Those losing protection don't like it, but the pro-liberalization forces are stronger.
By contrast, in problematic economic climates, fear of giving predominates. Politicians hear more from constituents condemning adverse effects of imports (and now globalization) on income and jobs than they do from those seeking to give or receive expanded market access. In the U.S., this shift was apparent in the 2006 congressional elections. And it becomes more evident every day as signs of an economic slowdown grow. Bipartisan efforts to enact a stimulus package are welcome, but they are extremely unlikely to improve the trade policy picture.
At the same time, the prospects for a pro-trade congressional majority are nil, and, although much of the protectionist rhetoric of U.S. presidential candidates is just talk, the prospects for a trade-friendly administration are uncertain, at best. The systemic concern caused by a weakening economy is bolstered by particularized fear of a continued Chinese economic juggernaut. No amount of learned discourse, or administration exhortation about the economic benefits of further trade liberalization for the country as a whole, can counteract the present fearful mood in the U.S.
Since the end of the Second World War, the U.S. has been described as the locomotive of world trade liberalization. A very solid argument can be made that GATT was created and the WTO evolved from it as a result of U.S. willingness to make the market-opening concessions necessary to drive other countries to agree to ever greater reductions of trade barriers and increases in market access opportunities.
Despite valiant efforts by the U.S. trade representative, Susan C. Schwab, the country now is stopped on a siding. The public does not accept pro-trade rhetoric, and the administration is unable to credibly promise trading partners that Congress will enact trade-liberalizing measures such as reducing agricultural support (enhancing the competitiveness of other agricultural exporters) or changing certain U.S. anti-dumping rules that most of our trading partners view as blatantly protectionist.
A replacement locomotive is needed, but none has appeared. Neither the European Union, Japan nor any collection of countries has stepped forward to provide leadership in the WTO's Doha negotiations. Instead, the goal seems to be to ensure that blame for failure is attributed to someone else. This is intensified by the inability of the administration to secure renewal of trade promotion authority (under which Congress agrees to an up or down vote on trade agreements, ceding its normal ability to condition ratification on amendments to the negotiated text). Not surprisingly, many of our trading partners will use the absence of fast track as an excuse for not making concessions sought by the U.S., asserting that Congress would demand additional concessions beyond those ultimately negotiated by the administration.
What is to be done? One possibility is to hunker down and wait for better times. That would ensure at best a standstill, but more likely a worldwide increase in protectionism throughout 2008. There is a better option, though. This could be a bad year for forward-looking trade policy, but it need not be a disaster. Rather than ceding the field to those advocating policies of increased protection and unilateralism, the proponents of multilateral liberalization could seek to preserve the positive aspects of the Doha negotiations. Even though significant breakthroughs leading to a successful conclusion will not occur in 2008, the negotiations need not collapse.
Experience during the Uruguay Round is instructive. There was a three-year period when none of the major negotiating parties was able to move on politically sensitive issues such as agriculture, services and textiles. Despite this high-level paralysis, all of the 15 subject matter negotiating groups continued to plug away. As a result, when worldwide political will re-emerged in mid-1993, most of the technical underbrush had been cleared away. A similar scenario could occur this year. The negotiating gains achieved to date could be preserved and steps taken to make technical progress where possible.
On the domestic front, too, 2008 need not be a disaster. Here, the keys will be education and understanding.
To avoid significant backsliding, those supporting multilateral liberalization must emerge from their foxholes and engage more actively and effectively in the globalization debate, educating politicians and opinion makers about the benefits of additional liberalization. At the same time, they must not ignore the dark side of globalization: It has not benefited all Americans. Many have legitimate concerns about their income and jobs.
Economics 101 lectures about the overall benefits of free trade may be sound economically, but will not be politically successful, especially given the worsening economic climate. To strengthen their presentation, advocates of trade liberalization must work to reformulate, advocate and implement policies that will assist those whose lives are negatively affected by globalization. The choice is theoretical purity and political defeat, or creative solutions that recognize the political climate.
Effectively, the course of trade policy today is dependent on what is done by those supporting increased trade liberalization. If they do nothing, the year will see significantly increased international economic tensions, disagreements and disputes. The challenge is to develop a new model in support of liberalization, one that accepts reality and proposes solutions for those who are harmed by globalization. By doing so, we may limit protectionist backsliding so progress can resume when the worldwide economic and political climate improves.
State of the Union address: President Bush discusses Free Trade, Protectionism and Doha
State of the Union address: President Bush discusses Free Trade, Protectionism and Doha
Excerpt from Bush's final State of the Union address - Jan. 28, 2008:
"On trade, we must trust American workers to compete with anyone in the world and empower them by opening up new markets overseas. Today, our economic growth increasingly depends on our ability to sell American goods, crops, and services all over the world. So we are working to break down barriers to trade and investment wherever we can. We are working for a successful Doha round of trade talks, and we must complete a good agreement this year. At the same time, we are pursuing opportunities to open up new markets by passing free trade agreements.
I thank the Congress for approving a good agreement with Peru. Now I ask you to approve agreements with Colombia, Panama, and South Korea. Many products from these nations now enter America duty-free, yet many of our products face steep tariffs in their markets. These agreements will level the playing field. They will give us better access to nearly 100 million customers. And they will support good jobs for the finest workers in the world: those whose products say 'Made in the USA.'
These agreements also promote America's strategic interests. The first agreement that will come before you is with Colombia, a friend of America that is confronting violence and terror and fighting drug traffickers. If we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life.
Trade brings better jobs, better choices, and better prices. Yet for some Americans, trade can mean losing a job, and the Federal Government has a responsibility to help. I ask the Congress to reauthorize and reform trade adjustment assistance, so we can help these displaced workers learn new skills and find new jobs."
Excerpt from Bush's final State of the Union address - Jan. 28, 2008:
"On trade, we must trust American workers to compete with anyone in the world and empower them by opening up new markets overseas. Today, our economic growth increasingly depends on our ability to sell American goods, crops, and services all over the world. So we are working to break down barriers to trade and investment wherever we can. We are working for a successful Doha round of trade talks, and we must complete a good agreement this year. At the same time, we are pursuing opportunities to open up new markets by passing free trade agreements.
I thank the Congress for approving a good agreement with Peru. Now I ask you to approve agreements with Colombia, Panama, and South Korea. Many products from these nations now enter America duty-free, yet many of our products face steep tariffs in their markets. These agreements will level the playing field. They will give us better access to nearly 100 million customers. And they will support good jobs for the finest workers in the world: those whose products say 'Made in the USA.'
These agreements also promote America's strategic interests. The first agreement that will come before you is with Colombia, a friend of America that is confronting violence and terror and fighting drug traffickers. If we fail to pass this agreement, we will embolden the purveyors of false populism in our hemisphere. So we must come together, pass this agreement, and show our neighbors in the region that democracy leads to a better life.
Trade brings better jobs, better choices, and better prices. Yet for some Americans, trade can mean losing a job, and the Federal Government has a responsibility to help. I ask the Congress to reauthorize and reform trade adjustment assistance, so we can help these displaced workers learn new skills and find new jobs."
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