Why Fast-Track Lost
LIND, MICHAEL
Thinking Aloud WHY FAST-TRACK LOST By Michael Lind Whatever one thinks about free trade agreements, it should be obvious that Congressional Democrats were wrong to block the granting of...
...He notes that the number of consumers in a Western Hemisphere Free Trade Area (WHFTA) sounds impressive, yet once you factor in per capita purchasing power "those 433 million might convert into an effective market of 35 million, less than the population of Spam...
...In these circumstances, we must accept two realities...
...or by American exports to Europe...
...Is President Bush's National Security Adviser a World Federalist...
...86 million Mexicans convert into perhaps 8 million, about the population of Sweden...
...The global collapse in demand that caused the Great Depression could not have been cured by European exports to the U.S...
...The latter inevitably will be subordinate to the former...
...market in the world economy is diminishing, by announcing an American commitment to free trade no matter what others may do, is something that a general, of all people, should understand to be strategic folly...
...Should a cold war with China unite the U.S., Japan and some of the countries in the Association of Southeast Asian Nations (ASEAN), trade patterns will be quite different from those that would emerge if we ceded East Asia to China as a sphere of influence and withdrew to Guam and Hawaii...
...The British dominions of Canada and Australia acquired national industries only when they kept out British and American goods, forcing their citizens to buy Canadian or Australian...
...But in contrast to most specimens of the genre his Op-Ed piece deserves an autopsy, because it illuminates a new, muddleheaded consensus on trade among America's foreign policy elite...
...One can spend years in the Washington-New York think tankconference loop listening to after-dinner speakers treat forward defense, human rights campaigns and free trade as inseparable components of "American leadership"—without ever hearing a dissenting word...
...It is all a fm-de-siècle hallucination, like the fantasies that prompted the scramble for Africa and the race for Chinese concessions a century ago...
...The second reality to be borne in mind is that even where trade can be debated on its merits, without considering its implications for an overarching national security strategy, policymakers should take into account both national needs and the policies of other governments...
...and Canada with the high-wage, relatively open European market...
...From Davos to Aspen, government officials and business executives breathlessly tell each other that the great market of the future is China, or Brazil, or Indonesia...
...Does he favor surrendering American sovereignty to a supranational government with military and police powers, the way the American states surrendered the conduct of foreign affairs to the Federal government...
...I happen to agree that U.S...
...Ditto Mexico: "In terms of an effective market for U.S...
...average in the 20th century...
...might be served best by some sort of managed trade regime with the low-wage, mercantilist nations of Asia...
...What Scowcroft derides as "à la carte leadership" is precisely what was practiced by the Republican administrations he served...
...and China depended on the outcome of SinoAmerican trade negotiations...
...The majority of mercantilists and protectionists in the U.S...
...Perhaps Scowcroft was drawing a parallel between the sacrifice of economic policy-making by the states of the Union to the Federal government and similar sacrifices by present-day nation-states to—what authority...
...was instrumental in turning the 1929 stock market crash into the worst depression in history...
...A skeptic might find an explanation in the fact that the retired White House official is now a consultant to multinational firms like Pennzoil, but the skeptic would be wrong...
...The General's case for fasttrack, though, also alluded to strategic considerations: "The European Union wishes to conclude a free trade agreement with the leading economies of Latin America by 1999...
...The first is that power politics and trade politics are distinct...
...exports...
...protectionism in the 1920s and '30s was a mistake, but its consequences should not be exaggerated...
...Whether our aim is free trade or managed trade with a particular country or bloc, our only leverage in negotiations comes from the plausible threat of closing America's market to those who do not agree to our terms...
...Consumers pay the price for import-substitution industrialization—but that is a different issue...
...In any event, General Scowcroft notwithstanding, the Founding Fathers were not dogmatic free traders...
...Or that the antiSoviet alliance between the U.S...
...The recovery of Europe and Japan, however, made America's postwar policy of unilateral free trade obsolete by 1973...
...that it holds the key to world power and riches for investors...
...To his patriotic, economic history and grand strategy arguments, Scowcroft added the argument that American alliance leadership requires the U.S...
...Economic historian Barry Eichengreen thinks Smoot-Hawley "most likely ameliorated rather than exacerbated the initial slump...
...Not surprisingly...
...General Scowcroft's "Say Yes to FastTrack" failed to achieve its objective...
...Possibly the General was suggesting that no one can favor national market protection without also favoring the protection of subnational markets...
...to push for global free trade: "We cannot say we will lead on NATO and regional security but not on trade...
...The Tariff Act of 1789, passed by Congress less than four months after it convened under the new Constitution, imposed an average 8.5 per cent duty on imports, with the goal of "encouragement and protection of manufactures...
...For example, Scowcroft informed us that supporting free trade is a patriotic duty: "For me, and for most Americans, the economic choice is clear and easy, as it was for our Founding Fathers...
...soon we may be Number Three, after Greater Europe and Greater China...
...Exactly how worried should we be by the prospect that the Germans and French will take the Brazilian market away from us...
...Constitution and international trading arrangements breaks down...
...What is more, if we choose, we can lead on trade but not on human rights and NATO, or we can lead on human rights and trade but not on NATO...
...and elsewhere would eliminate domestic trade barriers but protect the unified national market from foreign competition...
...According to him, "if the protectionists were correct, we ourselves might not have drawn up a constitution, a primary impetus for which was to ban the tariff barriers that were springing up between the states under the Articles of Confederation...
...All of this raises an interesting question...
...In that case, he was attributing to proponents of managed trade views they do not hold...
...Scowcro ft claimed, incorrectly, that "the Smoot-Hawley tariff...
...A few weeks before Clinton was forced to recognize he could not rally the support he needed from his own party for passage of the pending fast-track bill, former National Security Adviser Brent Scowcroft correctly declared in a Washington Post Op-Ed article that House and Senate opponents of a particular trade pact should have the courage to vote against it on its merits...
...If the United States accounted for half of the world economy, and had an effective monopoly of global markets, as it did in the years immediately following World War II, this we-are-the-world rhetoric would be harmless...
...Why not just write: "Unlike Benedict Arnold, I believe in fast-track...
...It is hard to tell what that awkward sentence means...
...The question is not whether we should have free trade or managed trade, but when we should use one expedient and when we should use the other...
...To repudiate this instrument of leverage at the very moment that the relative weight of the U.S...
...Otherwise potential partners would think twice even about an agreement bound to please advocates of organized labor and environmental protection like House Minority Leader Richard A. Gephardt of Missouri...
...The US...
...Given current conditions, it can be argued that America's national interest would be promoted by a Transatlantic Free Trade Area (TAFTA) uniting the U.S...
...Two years later, in his Report on Mam factures, Alexander Hamilton set forth what became the program of 19th- and 20th-century American (and German and Japanese) mercantilism when he called for government-sponsored indusnialization by means of high levies on manufactured imports...
...So much for the idea that protectionism stifles economic growth...
...Another economist, Gertrud Fremling, writes that "the United States cannot possibly have generated a downswing in the rest of the world through the balance of trade...
...tariff on dutiable imports never fell below 38 per cent...
...And he warned that "other countries are unlikely to negotiate without the assurance that agreements will not be changed during the ratification process...
...And we cannot say we will lead on the environment but not on trade...
...In The Pan-American Dream Lawrence E. Harrison, using 1995 government statistics, demonstrates that the great Southern Cone market is a mirage...
...Although Scowcroft was right to back fast-track, with the solitary exception of the practical argument quoted above, all of his reasons for doing so were unconvincing, and in some instances absurd...
...Thinking Aloud WHY FAST-TRACK LOST By Michael Lind Whatever one thinks about free trade agreements, it should be obvious that Congressional Democrats were wrong to block the granting of "fast-track" authority to President Clinton...
...Most members of the foreign policy establishment who treat trade liberalization as a patriotic crusade instead of a mundane expedient are sincere about what they are saying...
...If we want untapped pools of consumers who can afford to buy what we make, we should be looking to Europe or the still-protected Japanese market of 120 million, not south of the Rio Grande...
...At the same time, the U.S...
...Did this retard our industrialization...
...Moreover, no country has ever developed its own infant industries without protecting them from existing competition abroad, either by tariffs or by more subtle restrictions...
...The highest levy in American history was not the notorious 1930 Smoot-Hawley Tariff Act, it was the 1828 impost that raised the average rate on dutiable goods to 61.7 percent...
...A one-size-fits-all trade policy is as misguided as a theory of national defense that rejects air forces or navies as a matter of principle...
...From George Washington's Administration until Harry S. Truman's, the United States was one of the world's most protectionist countries...
...Britain adopted free trade in the 19th century only after it already was the world's dominant manufacturing power...
...European leaders tell attentive audiences in Latin America that their future is with Europe, not America...
...The idea that Smoot-Hawley caused or worsened the Depression is a myth recycled by political figures like Vice President Al Gore and Scowcroft, not by knowledgeable economists...
...Why did an American statesman of Brent Scowcroft's stature feel obliged to use such preposterous arguments in favor of legislation that could be defended on more plausible grounds...
...In 10 or 20 years, a different approach might be appropriate...
...Quite the contrary...
...Neither Ronald Reagan nor George Bush felt that "leading on NATO" required "leading on human rights"—for instance, by encouraging the overthrow of the brutal and corrupt Saudi monarchy and the proclamation of a constitutional republic in Riyadh...
...and that free trade and e-mail will make war obsolete...
...Editorial writers, Op-Ed page editors and other gatekeepers of elite discourse tend to screen out challenges to this comfortable consensus, or to stigmatize critics of Utopian free market globahsm as "Buchananites" or "nativists" or "protectionists...
...Well, I can say it: We can lead on NATO and human rights but not on trade...
...We cannot say we will lead on democracy and human rights but not on trade...
...From 1871 to 1913," economic historian Alfred Eckes writes in Opening America's Markets, "the average U.S...
...Gross National Product grew 4.3 per cent annually, twice the pace in free trade Britain and well above the U.S...
...If not, his analogy between the U.S...
...now has the second largest market in the world, after the European Union...
...Every President must be able to negotiate trade treaties that can then only be approved or rejected by the Legislative Branch, not amended...
Vol. 80 • December 1997 • No. 18
