Rethinking Global Trade
It was a birthday that even the parents found hard to celebrate. The North
American Free Trade Agreement (NAFTA) turned five this year.
At its birth, Congressional ratification of NAFTA was an occasion for much
trumpeting of the prosperity this agreement would bring to North America.
Today, however, the treaty's academic and journalistic defenders are more
They suggest that both proponents and opponents of the treaty were guilty
of exaggeration but, on balance, free trade has helped workers and consumers
in Mexico, Canada, and the United States. They argue that all three economies
are better off than in 1995.
Yet in a U.S. economy now eight years into a "boom," working-class
wages started to rise only in the last 18 months. President Clinton is justifiably
pleased at recent job growth, but he is at least honest--or politically
sophisticated enough--to realize that attributing economic gains to NAFTA
Job growth has been made possible by the Federal Reserve's belated willingness
to stop fighting the last war: the battle against virtually nonexistent
inflationary demons. And even this growth is heavily dependent on the continued
willingness of foreign central banks to accept the large U.S. trade deficits
NAFTA was supposed to end.
Unregulated global markets are a hard sell these days, and for good reason.
Even if the U. S. economy has started to make some gains, much of the rest
of the world is in tatters. Sixty percent of the Mexican labor force now
lives in poverty, up from 34 percent in the pre-NAFTA decade. Free trade
in goods and capital has played a major role in speculative attacks on currencies
throughout the world, with Brazil the latest major victim.
Despite NAFTA's lackluster results, however, the Clinton administration
is once again seeking fast-track authority to extend the treaty's principles
to the rest of the hemisphere. Some groups may be tempted to grant a chastened
president more latitude in order to work out new agreements more favorable
to labor, but such a course would be a mistake. Yet, after making a virtually
identical commitment during the 1992 campaign, he later used every ounce
of his considerable political skills to drive anti-labor trade initiatives
Hoping to appease his labor and liberal critics, the president offered his
listeners another noble promise during his State of the Union message: "We
have got to put a human face on the global economy,'' Clinton urged. He
endorsed a new International Labor Organization initiative "to raise
labor standards around the world,'' pledged to work for a treaty "to
ban abusive child labor everywhere in the world,'' and promised trade rules
that would promote "the dignity of work and the rights of workers.''
But despite talk about the need for a new "architecture'' for international
commerce, the administration continues to stonewall even the most moderate
measures to curb speculation in global currency markets. Equally significant,
it has rejected pleas from major domestic steel manufacturers to address
the employment crisis occasioned by Asian devaluations and the dumping of
unfairly priced steel.
In perhaps the clearest indication of its real intentions for trade, the
Clinton administration is currently pushing the Africa Growth and Opportunity
Act. This legislation would extend the principles of NAFTA to Africa.
African states that refused to sell valuable mineral resources to private
multinational corporations would lose access to western markets. Worse still,
these multinational corporations would receive extensive protection of their
corporate assets, but would not be required to observe even minimal labor
and environmental standards.
In the United States, a coalition of environmental and labor activists have
united behind an alternative to the dangerous NAFTA for Africa legislation.
Led by Democratic Representative Jesse Jackson Jr. of Illinois, they have
proposed a HOPE for Africa Act.
This legislation would, among other things, grant extensive debt relief
to African nations and provide support for a modernized educational and
communication infrastructure for Africa. It would grant African nations
extensive access to U. S. markets, but would also condition all such benefits
on full adherence to labor and environmental standards. In short, the HOPE
for Africa Act would encourage the forms of trade that genuinely benefit
workers and the environment in all nations.
Many business and political leaders insist that U.S. businesses and workers
can compete in the global economy and don't need to hide behind protectionist
walls. And, fortunately, protectionism or unregulated corporate trade are
not our only options.
Encouraging is the fact that national leaders committed in varying degrees
to internationalism with a human face have recently been elected in Europe.
They will not wall off Europe, but they will insist that trade partners
accept certain minimal standards regarding child labor, wages, and the rights
of labor to organize. They also advocate some limits on speculative currency
Were Clinton serious about an equitable framework for trade, he could find
many allies at home and abroad today. If his administration negotiates trade
agreements that ensure fair competition, he will have no trouble getting
them through Congress. For competition without rules is a race to barbarism.
Labor and environmental activists need to push Congress to recognize this.
And Congress should stand firm against the renewed push for fast-track authority
and the extension of NAFTA.
John Buell lives in Southwest Harbor, Maine and writes on labor and environmental
issues. Email firstname.lastname@example.org
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