Trade

FAST-TRACK HELD HOSTAGE

President Clinton has asked Congress to renew lapsed "fast-track" legislation allowing him to negotiate international trade agreements on which Congress would then vote up or down. The critical issue in the debate will be whether or not fast-track authority should require that all future trade agreements include environmental and labor standards.

Fast-track was instrumental in the 1993 passage of the Uruguay Round of major international trade liberalization and the 1993 North American Free Trade Agreement. But in 1994 the Clinton administration proposed including the requirement for environmental and labor standards in renewal of the authority.

Economists say the arguments in favor of including the mandate for standards in trade agreements are flawed:

  • It is argued that trade is unfair if countries have different pollution control and labor standards -- but economists say that is only natural, since circumstances differ among nations.

  • Labor unions argue that countries will lower their standards to attract multinational corporations in a "race to the bottom" -- but there is no evidence this has occurred, and economist Arik Levinson has shown that multinationals mostly use the most environmentally friendly technology.

  • Unions also say products made with such low labor standards that sweatshops are permitted are morally unacceptable -- but such value-based denials of market access will encourage others to impose their values on the U.S.

  • Finally, it is claimed that trade with poor countries is driving down U.S. workers' wages -- but economists say the impact is negligible since wages aren't determined by the price of imported goods but by U.S. workers' productivity.

There are international agencies to monitor and advance labor, environmental and child welfare objectives, say economists, and trade agreements should reduce trade barriers, not raise new ones.

Source: Jagdish Bhagwati, "Fast Track: Not so Fast," Wall Street Journal, September 10, 1997.

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