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December 22, 2006
Trading places
Although the Iraq war was the main driver behind the Democrats’ victory in the mid-term elections, it was not the only issue that fueled the change of power in Congress. Democrats also relied on the issue of international trade, linking it with the outsourcing of U.S. jobs and the struggles of certain vital industries. In their construction, Democrats stood for “fair” trade while Republicans advocated “free” trade. The success of this message fueled Democratic victories in several key races, which means that the new Democratic majority in Congress is not likely to ignore their campaign promises on the issue. But although changes to U.S. trade policy are likely, translating popular electoral slogans into a coherent policy may prove more difficult.
Democrats’ opposition to “free” trade is by no means a new phenomenon, and it is rooted in the party’s robust history of support for labor. Opponents of “free” trade generally emphasize the destructive aspect of the unrestrained market forces it unleashes. They often argue that such forces enable large, multinational companies to outsource good-paying jobs from the United States to other countries where labor is cheaper, and thus more likely to be mistreated. They also argue that lower tariffs on imported goods threaten the health of vital U.S. industries. Likewise, multinational corporations will tend to relocate dirty production processes to countries that lack rigorous environmental regulations if it results in lower costs and higher profits. Opponents of “free” trade, then, see it as a cynical and rapacious vehicle for maximizing profits at the expense of workers—in the United States and abroad—as well as the environment.
Republicans, by contrast, have traditionally been more supportive of “free” trade, as befits their history as the party of capital. Supporters of “free” trade often rely on traditional liberal economic theory, as exemplified by Adam Smith’s “invisible hand” and David Ricardo’s work on comparative advantage. Fundamentally, “free” trade proponents feel that market forces will naturally benefit most people, if allowed to operate free of government intervention. The market determines where products and services can be produced most efficiently, and the resulting savings will benefit producers and consumers alike, around the world. Excessive taxes, tariffs, trade barriers, and other government involvement in the process only corrupt these natural market forces, hurting efficiency and, ultimately, harming the livelihoods of producers and consumers. For “free” traders, the less government involvement, the better.
For the most part, President Bush has lived up to the “free” trade traditions of the Republican Party. He has been greatly aided in this pursuit by his “fast track” authority to negotiate foreign trade deals, meaning that the agreements negotiated by his administration can only be accepted or rejected by Congress, not amended. This is important for a number of reasons. Bilateral trade agreements can be immensely complicated, with separate provisions, tariffs, and regulations for each area of commerce between the United States and a given country. Such agreements commonly entail years of meticulous negotiation. If other countries know that such agreements can be quickly undone by a single U.S. senator or congressman defending the interests of their own preferred constituency or industry, they will be far less likely to enter into such negotiations in the first place. Multilateral trade negotiations can be even more complicated than bilateral ones. “Fast track” authority thus acts as a source of reassurance for U.S. negotiating partners, and it helps to ensure that any agreement negotiated will get a straight up-or-down vote in the U.S. Congress. Since securing “fast track” authority in 2002, Bush has negotiated—and Congress has approved—trade agreements with Chile, Australia, Oman, the states of Central America, and other countries.
It is in the Congressional voting records for these trade agreements that the simplistic electoral distinction between “free” and “fair” trade breaks down, and where party discipline loses out to constituent services. The 2005 vote to approve the Central American Free Trade Agreement (CAFTA) in the House of Representatives was 217-215, with the majority of Republicans voting in favor of the agreement and the majority of Democrats voting in opposition. But 27 Republicans voted against the agreement, while 15 Democrats voted for it. Although these numbers seem modest, they represent a striking breakdown of party discipline, especially considering that the final roll call was separated by only 2 votes out of 432. As one might expect, many of the Republicans who opposed CAFTA represented districts that stood to lose jobs or business to cheap Central American competitors; this apparently was reason enough to vote against their party line. The 2004 trade agreement with Australia differed slightly in that passed the House with a comfortable 314-109 majority. But even in that clear passage, the final roll call comprised a remarkable blend of party votes—116 Democrats and 198 Republicans voted in favor of the agreement, while 83 Democrats and 25 Republicans opposed it. This tendency to buck the parties’ electoral line extends to the executive branch, as well. In the 1990s, Democrat Bill Clinton famously (and controversially) championed the North American Free Trade Agreement (NAFTA), and in 2002, Republican Bush introduced steep tariffs on imported steel in an effort to protect domestic producers.
The electoral perception that Republicans and Democrats have clear and consistent positions on trade, then, is not entirely true. This perception is encouraged for a number of reasons. For one thing, the immensely complicated nature of trade agreements is not easily portrayed in campaign advertisements or candidate stump speeches. More broadly, however, the major political parties (and many of their members) have had difficulty in defining their fundamental conceptions of the purpose of trade. Is the main goal of trade to promote economic growth? And if so, should such growth be measured on a national scale or a global one? The same question must be asked of job creation, as well. Should the primary objective of trade deals be the protection of existing jobs or the creation of new ones? Should such jobs be in an already-wealthy United States, as most elected politicians would likely agree, or in developing countries wracked with extreme poverty and unemployment? By simplifying trade as a choice between the “free” and the “fair” varieties, many politicians craftily avoid these difficult questions. The incoming Democratic majorities in Congress, flush off its electoral successes and ever mindful of its “fair” trade campaign promises, may not be inclined to give these important questions the consideration they deserve.
President Bush’s “fast track” authority is due to expire in June 2007, and given the current political climate, it is exceedingly unlikely that the Democratic-controlled Congress will renew this authority. This does not bode well for progress on new or ongoing trade negotiations, especially when the executive and the legislature promise to be at odds over many other contentious issues and with a presidential election less than two short years away. In the face of such tough odds, perhaps Democrats and Republicans will finally be forced to reconsider their fundamental conceptions of the purpose of trade.
Foreign Policy Association, 21 December 2006
Posted by Daniel Widome at 12:28 AM to Trans-geographical, U. S. Politics
