US: Suffers "Globalphobia" on Trade?; Bonier: Fast Track Doesn't Protect Kids

[Michael Eisenscher <meisenscher@xxxxxxxxxxx>]

On Trade, U.S. Retreating
Into Globalphobia

By Steven Pearlstein
Washington Post Staff Writer
Monday, December 8, 1997; Page A01

Last month, as economic turmoil in Asia
threatened to spread to South Korea and
Japan, Federal Reserve Chairman Alan
Greenspan and Deputy Treasury Secretary
Lawrence H. Summers rushed to Capitol Hill to
explain why it was happening and what could
be done to stop it.

Around the world, financial markets waited
nervously for their testimony. But for an hour,
the two men sat silently as members of the
House Banking Committee lectured them about
human rights violations in Indonesia, the
declining wages of blue-collar workers and the
folly of using money from U.S. taxpayers to bail
out foreign countries that were stealing
American jobs.

When they finally got a chance to speak,
Greenspan and Summers pleaded with
committee members to increase the U.S.
contribution to the International Monetary Fund
as the best way to contain the Asian contagion.
But their pleas fell on deaf ears: Congress
adjourned for a two-month holiday after
stripping the new IMF money from the annual
appropriations bill over an unrelated dispute
over abortion.

This episode is the latest illustration of what
many observers view as a retreat from the
internationalist consensus that has governed
U.S. economic policy for 50 years. No longer, it
seems, is there an unchallenged belief that
Americans are better off when their economy is
open and their government assumes the
burdens of leadership in world affairs.

The recent defeat of "fast track" trade authority
in Congress was the most dramatic evidence
that this consensus may be unwinding, but
there are other indications as well.

The public remains largely opposed to
U.S.-funded financial rescues for foreign
economies. Opposition to the Mexican bailout
two years ago was so intense that the Clinton
administration was reluctant to participate in the
first of this year's Asian rescues in Thailand. In
the wake of Congress's recent refusal to
approve IMF funding led a top Fund official to
warn Friday that the agency could find itself
strapped for resources if it was called upon to
deal with other looming crises.

There also is widespread concern that the
United States has handed over too much
authority to international organizations like the
World Trade Organization, which last week
ruled against Eastman Kodak Co. in its effort to
open Japanese markets to American products.

Impatience with the old internationalism also is
reflected in recent attempts by Congress to
impose economic sanctions on allies that refuse
to follow the U.S. lead on foreign policy issues.

Globalphobia

To Washington veterans, these are signs that
the United States has become increasingly
isolationist, protectionist and nationalistic in its
economic affairs. They even have a name for it:
globalphobia.

"This is a period of unparalleled lack of
understanding and interest in international
economic matters," complains Arden Judd, who
for 28 years has been a lobbyist for Dresser
Industries Inc. "You don't seem to have the
appreciation of the importance of U.S. actions
on the world scene."

James A. Baker, a former Republican secretary
of state and treasury, said the past six months
have evidenced "a regrettable retreat from the
country's internationalist tradition."

One reason the old internationalist consensus
lasted as long as it did is that policymaking was
left to an elite group of Americans -- public
officials, economists, corporate executives and
editorial writers -- who cared deeply about
multilateral institutions, embraced free trade
and never doubted that the world was better off
when the United States took the lead.

But as the globalization of finance and the
dramatic increase in trade touched nearly every
American as a worker, consumer and investor,
the public has become less willing to defer to
policy elites.

A large number of Americans blame that
globalization for slow economic growth or a
decline in their standard of living, even as they
flock to imported goods and shift their
retirement money to overseas investments.

At the same time, a wide range of special
interest groups -- from labor unions,
environmentalists and human rights activists on
the political left to Christian fundamentalists,
anti-abortion activists and isolationists on the
right -- have become unlikely bedfellows in an
emerging coalition that rejects the old
consensus.

In addressing Summers and Greenspan last
month, Rep. Barney Frank (D-Mass.)
complained that, in the past, concerns about
human rights or growing inequality were treated
as mere distractions by policymakers.

"When adults sit down to serious business,
other concerns get brushed off," Frank said. "All
that counts in the end is the mobility of capital.
Well, let me tell you, that's about to end."

A similar warning was issued last week at
Harvard University by House Minority Leader
Richard A. Gephardt (D-Mo.), who called for a
"new internationalism" that adheres as much to
American values as it does to the dictates of the
marketplace.

"In a new era of globalization, the forces of
commerce and technology are weaving the
world closer together but . . . pulling our own
people further part," Gephardt said. "Our
challenge is once again to link capitalism with
values and standards."

Cold War Casualties

Such populist rhetoric on international
economic issues has now become
commonplace, used with equal effect by liberals
such as Frank and Gephardt and conservatives
such as commentator Patrick Buchanan,
Senate Banking Committee Chairman Alfonse
M. D'Amato (R-N.Y.) and Senate Foreign
Relations Committee Chairman Jesse Helms
(R-N.C.).

In the past, presidents and congressional
leaders could justify internationalist policies as
a necessary step to shore up the anticommunist
fire wall during the Cold War, said Pietro
Nivola, a scholar at the Brookings Institution.
"Now, however, that large strategic architecture
is gone, and things like free trade and support
for the IMF are casualties of that," he said.

On Capitol Hill, perhaps no member of
Congress carried the internationalist standard
more proudly than Rep. Lee H. Hamilton
(D-Ind.), a ranking member of the International
Affairs and Joint Economic committees who will
retire next year after 17 terms in the House.

Hamilton attributes the change in attitude to the
passing of the World War II generation of
politicians who "believed things were better
when the U.S. led and we were willing to be the
911 for the rest of the world.

"But that premise is not shared by many people
up here today," Hamilton said. "They are just
much more skeptical of international
involvement."

Erik Peterson, director of the project on the new
global economy at the Center for Strategic and
International Studies, notes that because of
retirements and elections, Congress has lost
most of the centrist Democrats and
Republicans, such as Hamilton, who formed the
nucleus of the internationalist elite.

The House Democratic Caucus, he said, now is
firmly controlled by liberal members from
industrial states who are closely tied to
organized labor, which casts a skeptical eye on
free trade.

On the Republican side, he added, members
attuned to the needs of Corporate America
have given way to Main Street Republicans
who are more focused on economic issues
such as regulatory reform, tax cuts and
balancing the federal budget. For them,
international economic issues become vehicles
by which they can gain leverage for domestic
concerns.

These changes were evident in the recent
defeat of the bill that would have given the
president "fast track" authority to negotiate
trade agreements that could be approved or
vetoed, but not amended, by Congress. When
such authority was first proposed back in 1974,
the vote in favor was 323 to 36. But by 1991,
President George Bush was able to win
renewal by a margin of only 40 votes. President
Clinton, facing the prospect of certain defeat
last month, pulled the bill before a vote could be
counted.

Polling experts say this shift against free trade
in Congress is not because of a change in
public opinion back home. Karlyn Bowman of
the American Enterprise Institute, a Washington
think tank, said public opinion has long been
evenly divided on trade and related issues and
remains so today.

"I don't see this as a measure of new
protectionism or turning inward," said
Democratic pollster Stanley Greenberg. "There
used to be a broad elite consensus that was
strong enough to carry the day on trade, even
in times of economic uncertainty. That's gone
now."

Other analysts blame weak leadership in the
White House and the Congress for the retreat
from internationalism.

Paul Wolfowitz, dean of the School of
Advanced International Studies at Johns
Hopkins University, said that Presidents
Reagan and Bush faced similar skepticism
toward international involvement from the public
and Congress but managed to prevail in the
end. And as recently as four years ago,
Wolfowitz said, Clinton overcame even stronger
opposition when he won approval of the North
American Free Trade Agreement.

"I suspect these recent policy defeats are more
a sign of weakened presidential leadership than
a rise in protectionist or isolationist sentiment,"
said Wolfowitz, an official in both the Reagan
and Bush administrations.

International vs. Inequity

Others argue that the internationalists have
undermined their position by overselling the
importance of international trade issues and the
value of globalism.

Robert Lawrence and Robert Litan, two
Brookings economists, recently chastised fellow
internationalists peddling the idea that trade
increases the number of jobs in the economy
through increased exports. In fact, they wrote,
trade has no impact on the number of jobs but
does improve the quality of jobs.

Some economists, such as William C. Cline of
the Institute for International Finance, have
begun to acknowledge that they were probably
wrong when they argued for years that trade
and immigration have very little to do with
depressing blue-collar wages and widening the
gap between rich and poor. Now, Cline and
others say that if the internationalists are to win
the upper hand, they have to deal with the
inequality that results from globalization --
coming up with realistic policies that transfer
income from winners to losers.

"With our fairly rapid movement to free markets,
we have accumulated a significant inventory of
resentment by the losers in this process," said
Robert Solow, a Nobel Prize-winning economist
at the Massachusetts Institute of Technology.
"And it's perfectly reasonable that we might
decide not to go any further along that path
until we find a way to be more vigilant in taking
care of the losers."

Staff writer Clay Chandler contributed to this
report.

    © Copyright 1997 The Washington Post
               Company
===============================

Fast Track Doesn't Protect
Kids

Sunday, December 7, 1997; Page C06

If we were to believe Fred Hiatt, a 19th-century
laissez-faire market economy would
automatically end sweatshops and child labor
around the world [". . . And the Children," op-ed,
Nov. 16].

This view is based on a dangerous and
wrongheaded rewrite of our history. Unfettered
markets alone didn't eliminate exploitation of
children and other horrendous working
conditions in the United States, and unfettered
markets won't make them disappear overseas,
either. The question is not whether we work to
expand trade -- we all want that -- but what are
the rules going to be and who's going to
benefit?

Perhaps Mr. Hiatt didn't read the fast-track
trade bill that he favors. That bill actually
prohibited the inclusion of meaningful
child-labor standards in our trade agreements.
This was no mere oversight. When an
amendment was offered to include such
standards, it was summarily rejected by the
Republican leadership.

Despite Mr. Hiatt's cavalier treatment of the
issue, eliminating child labor has real
consequences both here and abroad. Over the
past four years, Florida tomato farmers have
found that they can't compete with foreign
growers who use child labor and illegal
pesticides. Hundreds of such farmers have
gone out of business since NAFTA took effect.
Meanwhile, millions of children toiling in the
fields of Mexico are being denied any education
for their future. The only winners here are a few
unscrupulous growers who exploit our lax trade
laws.

If America hopes to harness the power of
markets to improve people's lives both here and
abroad, we must tackle head-on trade issues
like child labor, working conditions, food safety
and the environment. If a fast-track bill prohibits
our trade negotiators from even talking about
these issues, we must say no.

Mr. Hiatt's concerns ring hollow, especially to
those who work on these issues. Among the
opponents of fast track were some 40
nongovernmental organizations that formed the
Child Labor Coalition, the world's leading
confederation of groups against child labor.

DAVID E. BONIOR

U.S. Representative (D-Mich.)

Washington

    © Copyright 1997 The Washington Post
               Company