Epitaph for American Labor / American Trade Policy / Trading Up

...Congressional Republicans would not agree to expanding NAFTA if that meant expanding the side accords on labor and the environment...

...The United States was perhaps the main moving force in the negotiations that led to the establishment of the new World Trade Organization...

...Almost no one can be stirred for a debate about how to reform the U.N...

...Apart from the influence of particular business constituencies seeking protection from international competition, many Republicans are, on other grounds, already quite uneasy that international institutions may pose a threat to sovereignty...

...With the AFL-CIO retaining a big advertisingbudget and a taste for demagogic appeals, labor may be more of a player in future foreign trade disputes too...

...really wanted...

...The skepticism about international commitments became so intense that the Senate would not agree even to American participation in the World Court during the inter-war years, despite the urgings of Presidents Harding, Coolidge and Hoover...

...In fact, this danger is already at hand...

...When the World Trade Organization was established in 1995, these constituencies got only vague promises again...

...Organized labor and many environmental and safety advocacy groups treated this offering as an empty sop and are still demanding major changes in trade arrangements...

...But Green's point is that similar concerns have led labor to support a wide array of government controls on the domestic economy...

...And that question is now deeply entangled in the debate about the way we want to run our economy at home—something we will not tire ofdebating any time soon...

...If unionized wage scales or union-sponsored minimum wage laws end up restricting opportunities for non-union workers or for the unemployed, organized labor has paid no heed...

...One problem with this prescription, as she herself recognizes, is that many Democratic constituencies are quite hostile to trade liberalization, and therefore will support WTO authority only if trade rules embrace their own aspiration for international environmental and labor standards...

...The WTO is supposed to provide more reliable enforcement machinery for the General Agreement on Tariffs and Trade (GATT), which has been the main institutional forum for mutual reduction of trade barriers since its advent in 1947...

...12.95 paper Trading Up: Consumer and Environmental Regulation in a Global Economy David Vogel Harvard University Press 336 pages / $35 REVIEWED BY Jeremy Rabkin When Woodrow Wilson pledged American arms to "make the world safe for democracy," not everyone cheered...

...We not only have championed reciprocal agreements to lower trade barriers in principle, but have been eager to develop formal mechanisms for adjudicating trade disputes to ensure that these agreements are implemented...

...an average effective tariff of 23 percent on imports of manufactured goods (that is, some four times higher than the official 6 percent tariff agreed to under GATT...

...He chided Clinton during the campaign for not being aggressive enough in deploying American trade sanctions (rather than appeals to the GATT) against unfair practices of other nations...

...For all these derelictions, Rustin was virtually drummed out of the civil rights movement...

...Yet increased trade does inevitably pose threats to some domestic industries, and politicians have often been very attentive to their cries of distress...

...ban) to stop bothering with GATT appeals and clean up its fishing practices...

...To influence production methods, it may be necessary to have international agreements...

...or whether to stay in it...

...There is also, as Krueger notes, a flip side to this problem...

...As such, it might seem peripheral to the debate about trade policy...

...In Green's view, organized labor has become more committed to such regulatory stratagems for shoring up its base, as its own capacity to organize workers into unions has declined...

...Many thoughtful Americans worried that involvements in European war—and permanent commitments to Wilson's League of Nations after the Great War—would pose a risk to America's own democratic institutions JEREMY RABKIN is a professor of government at Cornell University...

...L abor insists that it is not opposed to international trade but simply wants to ensure "fair trade...

...Greening the GATT" — making it compatible with international environmental regulation—is thus high on the agenda of the new WTO, though so far it44 Vogel wants to rebut the notion that free trade inevitably erodes regulatory protections in developed countries...

...Patent Office urged the World Intellectual Property Organization to extend copyright protection to the Internet—as a way of pressuring Congress to take steps to amend American copyright laws in ways Congress had previously declined to do...

...Thus she chides the Clinton administration for conditioning ultimate American entry into the WTO on a promise by the organization to study the possibility of incorporating international labor standards into its rules...

...When Vogel finished his study—more than44 Chile finally decided it couldn't negotiate with the U.S...

...04 at home...

...Essentially, his argument is that the benefits of expanded trade are so large and so self-evident that everyone has incentives to accommodate the special sensitivities of particular countries and get on with the larger game...

...the Clinton administration refused to negotiate any expansion that did not include these side accords...

...Most of the protectionist initiatives she chronicles in her study were actually undertaken by Republican administrations...

...The more likely and more immediate problem is that, as some American constituencies pursue this vision and others seek to preempt it, the United States will drift into confused and incoherent postures and end by imposing impossible strains on international trade liberalization...

...The labor movement's vociferous opposition to NAFTA was not a sudden shift or a one-time tactic...

...Environmentalists have already invoked the authority of the Rio conference agreements on global warming to prod the Clinton administration into projects for limiting energy consumption which would have less momentum without this international encouragement...

...71 still more dramatically increased...

...Whether this pattern can be extended outside the European Union is highly questionable...

...Labor leaders were initially concerned that foreign competition would adversely affect unionized industries...

...The unionized portion of the workforce has been in continuous decline since World War II...

...The results aren't likely to be edifying...

...But with all its severity, the book documents a pattern of thought that seems to have deep roots and much staying power...

...Vogel notes that the dynamics of international trade often mean that developed nations, with elaborate regulatory standards, end up exporting their regulatory standards along with their consumer products...

...The most serious danger, however, is not that the United States will be entangled in a web of regulations it does not want to accept...

...The idea has won sympathy from some governments in Western Europe but— predictably— has encountered much resistance from less developed countries...

...Hence, labor fought hard to block NAFTA, an agreement which makes it easier, of course, for goods produced in Mexico to be shipped into the United States...

...The Clinton administration, in a gesture to American labor, has urged that attention be given as well to adding international labor standards, so that countries denying safe or fair working conditions could be subject to trade sanctions within the framework of the GATT system...

...aid] may choose to concentrate on government ownership, control and planning...

...Now organized labor fears that American producers will increasingly shift production to Mexico and other developing nations, not only to escape high wage rates in the United States but also to evade costly American regulatory burdens...

...But the frustrations and delays of the last two years mean that other Latin nations are no longer so eager to follow Chile's example...

...The net effect is to impose a concealed tax on the migration of industry from built-up (and unionized) areas to less developed (non-unionized) regions...

...What it wants is to condition access to American markets on compliance with American regulatory standards —or at least with some internationally accepted minimum standards on wages, working conditions, and safety and environmental norms, so that foreign producers do not compete "unfairly" with American firms shouldering the costs of such requirements here...

...In fact, almost half the book deals with the foreign policy positions of labor leaders...

...On the other hand, Green provides many examples of labor leaders arguing that mandated wage increases will stimulate growth by stimulating purchasing power...

...And unlike ILO standards, which are voluntary and carry no sanctions, standards endorsed by the WTO might be backed up by trade sanctions...

...good fight against Soviet totalitarianism when most liberals had embraced detente and anti-anti-communism...

...He cites precedent and doctrine to suggest that the GATT system, while allowing reasonable challenges to protectionist measures disguised as safety regulation, will still allow a broad margin of discretion for different countries to maintain their own standards...

...He is not blind to the dangers of chicanery—an entire chapter on "Bootleggers and Baptists" details initial coalitions between protectionist industries and environmental crusaders to block certain forms of competition (as bootleggers in dry states regularly contributed to Baptist temperance campaigns in order to suppress legitimate competition...

...In the most well-publicized case, Congress on its own enacted restrictions on the importation of tuna caught with nets dangerous to dolphins, even when the nets were operated by foreign fishing fleets in international waters...

...But then again, he does not focus on the special concerns of organized labor...

...New plants in rural Tennessee, for example, must install the same smokestack scrubbers as new plants around Detroit, where pollution really is a problem (and existing plants in Detroit are often exempted from controls on new plants...

...standards...

...Vogel's main concern is to rebut the notion that free trade inevitably erodes regulatory protections in developed countries...

...Or perhaps, amidst the hardships of the Depression, people had simply stopped paying attention to international organizations...

...As the United States has championed trade liberalization in multilateral forums, we have also repeatedly shown a willingness to go outside GATT to pressure trade partners into voluntary export restraint agreements and other sorts of trade limitations that violate the spirit of the system...

...It does not want to abandon trade agreements, but to reshape them...

...The openly protectionist campaigns of Pat Buchanan and Ross Perot were only the tip of the iceberg...

...Krueger fears that such ambitions for the WTO might entangle free trade with all sorts of unreasonable burdens and end up fracturing support for trade liberalization in other countries...

...Once free trade seemed to threaten serious competition to American production—long before the end of the Cold War—American labor leaders began demanding protectionist controls...

...As Vogel reports, environmental and labor advocates sought parallel arrangements for NAFTA...

...After organized labor's massive advertising campaign against the supposed Gingrich threat to Medicare, even Republicans now pay heed...

...King, a great deal of that money came from the Jewish people...I can't call on other people continuously to help me and mine, unless I give indication that I am willing to help other people in trouble...

...As Max Green notes, the United States offers less protection for labor organizing than most other developed countries and might fall below the standards endorsed by international agreement...

...Even then, however, anti-Communism did not imply a commitment to free enterprise...

...Many of the younger people around him went on to become neo-conservatives, but Rustin remained a socialist to the end...

...Chile finally decided it couldn't negotiate with the United States amidst so much uncertainty about what the U.S...

...But in a trading community where 74 April 1997 • The American Spectator Germany is by far the dominant economic power, other states have ended up trying to accommodate German aims...

...More than two years later, it still hasn't happened...

...A+ The American Spectator • April 1997 77...

...If the product was produced with low-wage labor (or with unsafe or polluting production methods back in the home country), this method of production does not directly limit the product's appeal in an importing country...

...The doctrine was quite popular with the party of General Peron—before it reduced Argentina to economic chaos...

...He became a right-wing social democrat, and along with such other anticommunist stalwarts as Sidney Hook, John Roche, and George Meany, fought the Epitaph for American Labor: How Union Leaders Lost Touch With America Max Green AEI Press / 207pages / $24.95 American Trade Policy: A Tragedy in the Making Anne 0. Krueger AEI Press / 142 pages $29.95...

...Increased trade often has just the opposite effect, as countries importing more products end up exporting their own regulatory standards...

...GATT rules have always sought to confine import restrictions to the actual character of products in trade and correspondingly prohibited restrictions on imports based on their mode of production in the host country...

...government ignored the The American Spectator - April r 997 75 sympathetic murmurings of American safety advocates and successfully pursued a GATT protest to assure the right of Marlboros to compete with the Thai state tobacco monopoly...

...By now, however, the United States, along with most other countries, has signed on to a series of environmental agreements (such as restrictions on the use of chemicals threatening to the ozone layer) that ignore this distinction...

...Thus labor has been a strong backer of environmental controls, even those which most economists denounce as wasteful American Labor Fears the World and Free Enterprise The American Spectator • April 9 9 7 73 and inefficient, such as pollution control requirements of equal stringency in both clean-air states and areas where air pollution really is a major problem...

...President Clinton had announced in December 1994 that Chile would very soon be added to NAFTA...

...Vogel tries to show that such agreements do not always mean a leveling down from the standards set by the most ambitious regulatory states...

...What Vogel also shows, however, is that the United States has been quite active in protesting protective practices in other countries that interfere with our own export trade...

...Since the end of the Cold War, American foreign policy often seems most preoccupied with making the world safe for American exports...

...For reasons that each of these books suggest, the United States is now in the process of exporting its own internal ambivalence into the international trading system...

...Perhaps the ILO's official purpose—developing international standards for the treatment of workers —was not taken seriously enough to be regarded as a threat to American self-government...

...Vogel, a professor at the UC-Berkeley School of Business, is convinced that expanded world trade is, on balance, a good thing for everyone...

...Most recently, the U.S...

...If one adds to this stew of suspicions a WTO program to standardize labor practices and environmental norms, Republican opposition may boil over into open rebellion...

...a year ago—he could still express optimism that NAFTA would soon be expanded to other nations...

...Similarly, we have been extremely quick to impose countervailing duties to penalize what American trade officials regard as unfair practices—again with little attention to the requirements of the GAIT system...

...Such measures wind up protecting older industries in the rust belt from lower cost competition in less developed parts of the country...

...All these decades later, people still find it hard to pay attention...

...then successfully pressured Mexico (the tuna exporter most affected by the U.S...

...In 1963 George Meany, president of the AFL-CIO, told Congress it was wrong to use American foreign aid to encourage free enterprise and economic development through private capital: "The people [in Third World countries receiving U.S...

...People who can believe in this spend-your-way-to-prosperity program may well convince themselves that poor countries can get rich by simply mandating wage increases for their own workers...

...Krueger's main concern is that such end-runs around the established international trading rules will wind up discrediting the official system, as major trading nations get used to the notion that the real game is played in bilateral bullying sessions, offstage from the polite forums of multilateral agreement...

...Her principal advice, therefore, is to adhere faithfully to the norms prescribed by WTO...

...D avid Vogel's book, Trading Up, provides a mixed message for labor—and for everyone else...

...Senator Dole, who was nothing if not attentive to varying Republican constituencies, was himself somewhat ambivalent about liberalizing the trading system...

...In international trade, Vogel reports, European chemical companies have ended up producing for American standards even when not selling in the U.S., so the export trade of American companies is not significantly hobbled by U.S...

...When GATT experts pronounced such import restrictions in violation of GATT norms, the United States simply ignored this ruling...

...industry but not their own...

...Last year a Republican Congress was the first in a decade to raise the minimum wage...

...markets on compliance with U.S...

...Green's book is a quick survey of labor's history and somewhat polemical in its thrust...

...On the one hand, the United States has been one of the most insistent champions of international trade liberalization during the past half century, a guiding force behind the succession of GATT "rounds" by which tariffs (and now various non-tariff barriers) have been dramatically lowered in most countries and global trade44 Most of the protectionist initiatives she chronicles were actually undertaken by Republican administrations...

...He supported WTO only on the understanding that Congress would establish a system for reviewing WTO decisions and force consideration of American withdrawal from WTO if too many of its decisions went against the United States...

...But on the whole, Vogel takes an optimistic view and his larger message is that most sectors of the economy can look to the future with optimism...

...The prospects for Western hemisphere free trade now look much more uncertain than two years ago...

...His prime examples are in Western Europe, where the Common Market (now the European Union) has tended to impose environmental standards closer to those favored by Germany, the "greenest" of the states...

...And all of this makes perfect sense to most economists, because American export industries (now contributing more than twice the proportion of GNP as they did in the 1950's) are among the most profitable and pay higher wages on average than other industries...

...But there is a lot of agitation about whether to expand NAFTA or whether to stay in the new World Trade Organization...

...But he also notes that American labor has never been much concerned, even in the United States, about the spill-over effects of union agreements on non-unionized workers.44 Labor wants to condition access to U.S...

...Krueger is not a sensationalist but a distinguished economist, whose achievements were recognized in her election as 1996 president of the American Economic Association, the main professional organization of academic economists...

...Epitaph for American Labor offers an overview of the public policy aims of the American labor movement...

...Partly as a Cold War gesture, American labor continued through the 1960's to support free trade with other nations in the "free world...

...that is up to them...

...Still, despite his collectivist approach to economic issues, one can say of Rustin what George Orwell famously wrote of Gandhi: "Regarded simply as a politician, and compared with the other leading political figures of our time, how clean a smell he has managed to leave behind...

...Vogel calls this "the California effect...

...The leaders of the American labor movement were (with some exceptions, noted by Green) generally quite staunch in their opposition to Communism...

...Yet when the United States joined the International Labor Organization (ILO) in 1933, there was remarkably little opposition...

...Summing up this "schizophrenia," the Clinton administration, having pressedvery hard for congressional approval of the World Trade Organization, almost immediately turned around and unilaterally threatened trade sanctions against Japan (outside and contrary to the terms of the WTO agreement) unless the Japanese agreed to a quota system guaranteeing American auto parts a fixed share of the Japanese home market...

...amidst so much uncertainty about what the U.S really wants...

...The reason is not that other states admire Germany's environmental standards— indeed, Vogel reports that Germany's obsession with environmental "purity" ended up enraging its partners when an overly ambitious recycling law prompted German manufacturers to gather up waste products and simply arrange for their dumping in neighboring countries...

...Yet, as Vogel describes, the United States has been willing to press ahead with limited ventures in international regulation on an entirely unilateral basis...

...Green is convinced that such a program, if it could be implemented, would be disastrous for workers in poor countries by saddling their economies with regulatory burdens that only rich countries can afford...

...What they got from the Clinton administration was a jeny-rigged and rather half-hearted set of "side accords" by which Mexico, Canada, and the United States promised each other to fully enforce their own domestic regulations on labor and the environment, whatever they might be in each case...

...When Thailand sought to restrict the marketing of American cigarettes, the U.S...

...R epublican or conservative resistance might indeed seem quite reasonable from a certain free market perspective...

...and trade policy is now the aspect of foreign policy that most preoccupies labor leaders...

...The European Union is now firmly committed to a policy of harmonizing a whole array of health, safety, and environmental standards within the member states—even more so, in some respects, than the American federal government does with respect to state policies within the United States...

...77 seems to have made little progress...

...In Max Green's telling, the labor movement is now quite hostile to free trade in the world because it is not much in favor of free enterprise within the United States...

...It is not inconceivable that the WTO might get involved in labor standards, particularly if special exemptions are provided for developing countries that might cheerfully sign off on standards binding on U.S...

...These agreements provide for trade sanctions (i.e., tariffs or restrictions on imports) to penalize environmentally improper production methods in the source country, even if that country's exported products are harmless in themselves...

...The 76 April 19 9 7 • The American Spectator bill was not finally enacted last year but is likely to be resurrected in this session of Congress...

...She describes American trade policy as "dangerously schizophrenic"—not just during the first term of the Clinton administration but for years before that...

...The U.S...

...regulatory standards...

...It has since made a separate agreement with Canada...

...Krueger reports that by 1992 the accumulation of such special sanctions had given the U.S...

...The president of Chile recently came to Washington to urge the United States to reopen the question of Chilean admission to NAFTA...

...Labor's dependence on government has therefore increased continuously...

...As early as 1971, union leaders tried to persuade Congress to enact a systematic program of import controls that would have set import quotas for each major product (to preserve the ratio of imports to domestic production at the levels attained in 1965-69...

...A nne Krueger's American Trade Policy: Tragedy in the Making is much less sanguine, as indicated by its subtitle...

...Three recent books illustrate different currents that will keep the debate going...

...But this sort of thing only works with regulations concerning the characteristics of the product...

...He may be unduly influenced by personal disillusionment: he started his political career as executive director for the Young People's Socialist League, then worked for the New York City teachers union, before ending up with the Reagan administration in the 1980's...

...This debate will not end soon, because it is really a debate about what we want from international trade organizations...

...In practice, he notes, California's more stringent regulatory standards have forced auto makers to design all their cars to meet the state's standards (rather than forfeit the California market or lose economies of scale by having separate production runs for California and elsewhere...