May 09, 2008
Farm bill veto
Every once in a while, President Bush shows some promise. He's opposing the farm bill:
"At a time of record farm income, Congress decided to further increase subsidy rates, qualify more people for taxpayer support and move programs toward more government control," Schafer told reporters today. "The president will veto this bill."
Posted by Dingel at 02:03 PM | TrackBack
May 07, 2008
Clinton: Rising food prices hurt food sellers
American farmers are suffering from rising food prices?!?!
"Rural America is struggling in the face of skyrocketing energy prices, an economic downturn and rising food prices," Clinton said. "Saying no to the farm bill would be saying no to rural America."
Hillary is making good on her promise to not "put [her] lot in with economists."
HT: H&R
Posted by Dingel at 08:47 AM | Comments (1) | TrackBack
April 15, 2008
Tons of talk about tiny trade deals
Barack Obama is a politician, so he's oscillating between what he knows and what brings in votes, says David Brooks:
Barack Obama delivered a speech in Pittsburgh on Monday on the economic stresses facing American workers. In the speech, he devoted one clause in one sentence to the single biggest factor affecting the workplace: technological change. He then devoted 45 sentences to one of the least important: trade deals...He wasn’t even talking about trade in general. He was talking about the Nafta- and Cafta-style trade agreements whose negative effects on the American economy are barely measurable. And, to make matters even more inconsequential, he wasn’t even taking a clear stand on such deals themselves...
He wound up in the no-man’s land between Lou Dobbs-style populism and Bill Clinton-style free trade. He made a series of on-the-one-hand/on-the-other-hand distinctions about which sort of trade deals he’d support and which he wouldn’t. It added up to a vague, watered-down version of economic light beer. In the end, he suggested a few minor tweaks in the U.S. tax code that would have a microscopic effect on outsourcing, and a few health and safety provisions which might have teenie-weenie effects on investment decisions. The ideas he sketched out in the speech aren’t dangerous. They’re just trivial.
We all know why Obama spoke the way he did on Monday. The forces transforming the American economy are big and hard to control. If you think your listeners aren’t sophisticated enough to grasp them, it’s much easier to blame those perfidious foreigners for all economic woes. It’s much more heroic to pretend that, by opposing Nafta, you can improve the lives of middle-class voters. Furthermore, these trade deals have become symbolic bogies for union activists. Instead of concerning themselves with the tidal waves washing overhead, they’ve decided to insist on bended-knee submission in the holy war against Colombia.
Similarly, from the Economist:
Democrats are enduring a six-week pause between their last primaries, on March 4th, and the next contest in Pennsylvania on April 22nd. This big rust-belt state has lost over 200,000 manufacturing jobs since 2001. So it’s just the kind of place where demonising trade with foreigners (particularly China) is likely to prove politically useful.
This hyperinflation of trivial trade deals has resulted in a big political conflict over a proposed PTA with Colombia that will have little to no effect on the US economy.
Please get over it!
Posted by Dingel at 07:51 PM | Comments (2)
April 11, 2008
Fast track in slow motion
Fred Bergsten thinks the US-Colombian PTA collapse is really bad:
Fred Bergsten, director of the Peterson Institute, said the consequences of the Colombia vote were “enormous” nevertheless.“This is a calamity for the world trading system,” he said. “It undermines the whole basis for international confidence in the US as a trading partner.”
The decision to suspend the application of fast track was much worse than not having fast track authority at all, he said. It meant that no future fast track authority would be credible.
Posted by Dingel at 11:08 AM | Comments (0)
April 10, 2008
Two words for Thomas Friedman
This is a classic moment from a few years ago, but I couldn't find it in my archives, so I'm posting it again.
Jagdish Bhagwati in 2005:
I often say that, you know, we should never use the phrase “FTA,” free trade agreement, because politicians cannot go beyond a sound bite, which means they can’t read more than two words one time. So if they read “free trade agreement,” they’ll read only “free trade,” and so they’ll think it’s the same thing.
Tom Friedman in 2006:
Asked at a speaking gig, "Mr. Friedman, is there any free-trade agreement you'd oppose?" Friedman replied, "No, absolutely not," adding, "You know what, sir? I wrote a column supporting the CAFTA, the Caribbean Free Trade initiative. I didn't even know what was in it. I just knew two words: 'free trade.'" (Um, dude, you also didn't know its name: It's the Central American Free Trade Agreement.)
Posted by Dingel at 09:44 PM | Comments (0)
April 09, 2008
The cost of rhetoric
Lane Kenworthy has a great post on why Democrats should embrace economic change, including globalization. It's a long post that's worth reading, but for those already intimately familiar with the economics and politics of trade, this is the punchline:
But once managed trade is introduced as an option, it ends up crowding out discussion of other approaches...Neither Obama nor Clinton is likely to press for serious restrictions on trade or offshoring if elected president. This holds for most Democrats running for Congress too. But that isn’t the point. Even if they did follow through on a managed trade agenda, it probably wouldn’t have much impact on actual import levels. Pacts such as NAFTA seldom dramatically alter the degree of cross-border trade; had it not passed, imports from Mexico would not be much lower than they are today. The problem isn’t that managed trade rhetoric might lead to actual trade restrictions; it’s that it distracts from efforts to advance the scope and generosity of adjustment and cushioning policies...
My argument rests on a hypothesis that Democratic leaders’ trade rhetoric has a significant effect on the political feasibility of more generous and extensive social policies. I could be wrong about this. But given that any trade restrictions they might actually put in place would probably do little to stem globalization, it seems to me the potential costs of abandoning managed trade rhetoric are likely small.
Posted by Dingel at 12:33 PM | Comments (0)
March 30, 2008
Obama on trade: An in-depth look
About a month ago, while the candidates were spending lots of time in Texas and Ohio, the economics blogosphere and press discussed Barack Obama's views on trade liberalisation. Unfortunately, most of the analysis relied on inferring Obama's views from his choice of economic advisers or legislative proposals. Moreover, political speeches tend to be short on details.
But there is one place where Obama has laid out his views on trade in detail: his 2006 book The Audacity of Hope
CAFTA. Viewed in isolation, the agreement posed little threat to American workers -- the combined economies of the Central American countries involved were roughly the same as that of New Haven, Connecticut... There were some problems with the agreement, but overall, CAFTA was probably a net plus for the US economy...stronger labor protections... improved environmental standards... stronger protections for US intellectual property... Like most Democrats, I strongly support all these things. And yet, I felt obliged to say to the union reps that none of those measures would change the underlying realities of globalization... [T]hey won't eliminate the enormous gap in hourly wages between US workers and workers in Honduras, Indonesia, Mozambique, or Bangladesh, countries where work in a dirty factory or overheated sweatshop is often considered a step up on the economic ladder...
And my union brothers and sisters would nod and say that they were interested in talking to me about my ideas -- but in the meantime, could they mark me as a 'no' vote on CAFTA?...
As the pace of globalization has picked up, though, it's not just unions that are worrying about the long-term prospects for US workers. Economists have noted that throughout the world -- including China and India -- it seems to take more economic growth each year to produce the same number of jobs, a consequence of ever-increasing automation and higher productivity...
We can try to slow globalization, but we can't stop it. The US economy is now so integrated with the rest of the world, and digital commerce so widespread, that it's hard to even imagine, much less enforce, an effective regime of protectionism. A tariff on imported steel may give temporary relief to US steel producers, but it will make every US manufacturer that uses steel in its products less competitive on the world market...
I told the President that I believed in the benefits of trade... But I said that resistance to CAFTA had less to do with the specifics of the agreement and more to do with the growing insecurities the American worker. Unless we found strategies to allay those fears, and sent a strong signal to American workers that the federal government was on their side, protectionist sentiment would only grow...
I ended up voting against CAFTA... My vote gave me no satisfaction, but I felt it was the only way to register a protest against what I considered to be the White House's inattention to the losers from free trade.
I think we learn more from these pages than by other attempts to read Obama's mind.
1. Obama is not a protectionist. Obama clearly understands the benefits of globalisation and the infeasibility of economic isolation. While he may not favor liberalisation at high speed, he would still infuriate real protectionists like Lou Dobbs.
2. Obama understands public opinion on trade. Obama realises that popular concerns about economic insecurity and income inequality are projected onto trade, even when trade itself is not the primary cause of such disruptions. This accords with the basic message you'd find from a pro-trade shop like the Peterson Institute.
3. Obama is a politician. In the end, Obama voted against a policy that he thought would be a net plus in order to signal his political commitments.
4. Obama is a politician. These days, Obama's campaign website says that the candidate "will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks." So much for "no satisfaction."
5. Obama is not an economist. Expressing concern about productivity gains -- "it seems to take more economic growth each year to produce the same number of jobs" -- exactly inverts the view of economists, who see output and not input as desirable. This is an age-old fallacy.
Barack Obama's views on trade are far from "reactionary, populist, xenophobic and just plain silly." But they don't inspire great confidence either.
Posted by Dingel at 03:28 PM | Comments (0)
March 06, 2008
Grand Old Protectionists
Today's NYT op-ed column calling for a revival of conservative protectionism is frustrating for numerous reasons.
Free trade has long been popular with liberals, and it remains so with liberal elites today. The editorial pages of major newspapers consistently support free trade. Ted Kennedy supported the advance of free trade.
It's been popular with elite liberals. When was it popular with the liberal base? And are elite liberals not to be trusted by conservatives, regardless of the merits of the issue? When the elites disagree with the populist base, shouldn't that increase their credibility in the eyes of those conservatives who dislike the liberal populists?
And Kennedy?
* Voted NO on free trade agreement with Oman. (Jun 2006)
* Voted NO on implementing CAFTA for Central America free-trade. (Jul 2005)
* Voted NO on establishing free trade between US & Singapore. (Jul 2003)
* Voted NO on establishing free trade between the US and Chile. (Jul 2003)
* Voted NO on extending free trade to Andean nations. (May 2002)
* Voted YES on granting normal trade relations status to Vietnam. (Oct 2001)
* Voted YES on removing common goods from national security export rules. (Sep 2001)
* Voted YES on permanent normal trade relations with China. (Sep 2000)
* Voted NO on expanding trade to the third world. (May 2000)
* Voted NO on renewing 'fast track' presidential trade authority. (Nov 1997)
* Voted YES on imposing trade sanctions on Japan for closed market. (May 1995)
I doubt those 2001 - 2006 votes against PTAs were driven by a strong conviction that free trade must be non-discriminatory.
Back to Robert Lighthizer in the NYT:
President Reagan often broke with free-trade dogma. He arranged for voluntary restraint agreements to limit imports of automobiles and steel (an industry whose interests, by the way, I have represented). He provided temporary import relief for Harley-Davidson. He limited imports of sugar and textiles. His administration pushed for the “Plaza accord” of 1985, an agreement that made Japanese imports more expensive by raising the value of the yen.Each of these measures prompted vociferous criticism from free traders. But they worked. By the early 1990s, doubts about Americans’ ability to compete had been impressively reduced.
Yes, American sugar and textiles have been competitive ever since. That's why those import barriers were pragmatic temporary measures, as opposed to the "ivory tower" "utopian dreams of free traders." It's a down-to-earth conservative principle to hand out welfare to big corporations and influential lobbies for decades rather than letting competitive market pressures determine economic outcomes.
My only consolation is that I don't think Mr Lighthizer's views are representative of most Republicans'.
Addendum: Obviously the rest of the column is equally ridiculous, but I'm short on time, so let's divide up the labor burden by letting Dan Drezner tackle VERs and the Plaza accord.
Posted by Dingel at 09:45 AM | Comments (0)
March 03, 2008
Obama: Protectionist or strategist?
Willem Buiter and Anne Sibert say "Barack Obama’s proposal is reactionary, populist, xenophobic and just plain silly."
Jagdish Bhagwati describes Obama as a saavy strategist:
Mr Obama has smartly seized John Kerry’s proposal to remove the incentive to invest abroad and has gone further by proposing that those who invest at home will be given a tax incentive. It is dubious that this proposal will survive challenges from existing bilateral and World Trade Organisation agreements, or can achieve much when other countries can do the same. It is exactly the sort of policy that a constituency fearful of losing jobs demands but, by meeting that demand, President Obama would be left free to abandon the anti-trade rhetoric and embrace the multilateral free trade that has served the American and the world interest so well.
But won't publishing the machination's workings in the Financial Times spoil the ruse?
HT: Muse
Posted by Dingel at 10:47 PM | Comments (0)
February 28, 2008
Opting out of NAFTA? Nonsense
Clinton: "I will say to Mexico that we will opt out of NAFTA unless we renegotiate it."
Drezner: "Democrats cannot simultaneously talk about improving America's standing abroad while acting like a belligerent unilateralist when it comes to trade policy."
No president will pull out of NAFTA. That would be an unmitigated foreign policy disaster. (It wouldn't be an economic disaster, as the US already has low MFN tariffs on most products it imports from Canada and Mexico.) There simply won't be a belligerent unilateral scuttling of our trade deal. On the other hand, diplomacy is about words, not merely actions. The neighbors may tire of being made scapegoats.
Drezner: "Scary fact of the day: the anti-NAFTA pandering is not the worst trade rhetoric emanating from the candidates. No, for that you'd have to turn to Obama's co-sponsoring of the Patriot Employer Act -- which Willem Buiter and Anne Sibert label, 'reactionary, populist, xenophobic and just plain silly.'"
Pulling out of NAFTA may be worse. The Patriot Employer Act offers a voluntary tax break, not mandated protectionism.
Posted by Dingel at 09:43 PM | Comments (0)
February 26, 2008
Economists are tired of trade bashing
Here comes the (academic) backlash! Lawrence MacDonald tires of the pandering in Ohio:
It was perhaps inevitable but it is nonetheless disappointing to see the Democratic candidates for president engaged in such energetic trade bashing... Of course the stakes are high in Ohio and Texas (and even in Rhode Island and Vermont, which also vote on March 4). But it is precisely when the stakes are high that we would hope that candidates for president show their mettle. Obama in particular tells voters he prefers truth-telling – pointing out to Detroit automakers the dire need for higher auto-fuel economy standards, for instance. It’s too bad that he and Senator Clinton aren’t giving us similarly plain talk on the challenges of globalization, and what should and shouldn’t be done about it. In recent years global trade has helped to lift 100 million Chinese from poverty—the greatest reduction in poverty in the history of the world—and through cheap imports helped to hold down inflation, too. Would America be better-off if this had not happened?
Over at Vox, Willem Buiter and Anne Sibert dissect Obama's Patriot Employer Act:
If the Patriot Employer Act proposal is anything to go by, we are in trouble if Obama wins. The legislation would provide a tax credit equal to one percent of taxable income to employers who fulfill the following conditions:· First, employers must not decrease their ratio of full-time workers in the United States to full-time workers outside the United States and they must maintain corporate headquarters in the United States if the company has ever been headquartered there.
· Second, they must pay a minimum hourly wage sufficient to keep a family of three out of poverty: at least $7.80 per hour.
· Third, they must provide a defined benefit retirement plan or a defined contribution retirement plan that fully matches at least five percent of each worker’s contribution.
· Fourth, they must pay at least sixty percent of each worker’s health care premiums.
· Fifth, they must pay the difference between a worker’s regular salary and military salary and continue the health insurance for all National Guard and Reserve employees who are called for active duty.
· Sixth, they must maintain neutrality in employee organising campaigns.
Only the last of these conditions does not raise serious issues...
Companies ought to decide the location of their headquarters and their domestic and foreign employment levels without being subjected to fiscal incentives. It is also unenforceable. Foreign branches of domestic companies, whose workers count as employees of the parent, would be changed to subsidiaries, whose workers no longer count as employees of the parent. Companies ever headquartered in the United States would be sold to shell companies or shut down and immediately reopened with a different name and legal identity, headquartered abroad. Let Commerce Department lawyers try to use corporate DNA fingerprinting to determine the ancestry of these new corporations! Unfortunately, idiotic legislation that is unenforceable is not harmless – it breeds contempt for laws and institutions...
The Patriot Employer Act seeks to transfer wealth from the truly downtrodden of the world to a limited number of favoured US workers: mainly those in once dominant manufacturing industries that have lost their global competitive edge. It is breathtaking hypocrisy to object to the often appalling conditions of work and employment in developing countries and emerging markets, including sweatshops and child labour, while at the same time trying to prevent the operation of the normal and effective mechanisms for remedying these deplorable circumstances: foreign direct investment, outsourcing, off-shoring and all other manifestations of free trade.
Sen. Barack Obama’s proposal is reactionary, populist, xenophobic and just plain silly. It is time for him to stop pandering and to show the world that hope and reason are not mutually exclusive. Instead of increased protectionism, the United States might increase its competitiveness by sensible investments in infrastructure and education.
Somehow I doubt these objections will alter the candidates' campaign strategies.
Update: The Economist blog defends Obama: "This bill is much less bad than it could be, primarily because the restrictions it contains are optional... There is a case to be made that Mr Obama is the most economist-friendly candidate out there... This bill is bad, but it's not dangerous. It's far less offensive than many of the anti-trade, anti-immigration proposals seen elsewhere in the campaign."
Posted by Dingel at 08:08 AM | Comments (0)
February 20, 2008
NAFTA on the campaign trail
For the next two weeks, we can expect Obama and Clinton to trash NAFTA in Ohio while never mentioning it in Texas. Do we need a better demonstration of how tricky the politics of trade can be?
Posted by Dingel at 06:27 PM | Comments (0)
February 03, 2008
Is Obama better on globalization?
I've previously reported on speculations that Obama is more of a free trader than Clinton. At the Guardian, Daniel Koffler argues that friends of markets, domestic and international, should be attracted to Obama:
Obama's language of personal choice and incentive is a reflection of the ideas of his lead economic advisor, Austin Goolsbee, a behavioural economist at the University of Chicago, who agrees with the liberal consensus on the need to address concerns such as income inequality, disparate educational opportunities and, of course, disparate access to healthcare, but breaks sharply from liberal orthodoxy on both the causes of these social ills and the optimal strategy for ameliorating them...Goolsbee and Obama's understanding of the free market as a useful means of promoting social justice, rather than an obstacle to it, contrasts most starkly with the rest of the Democratic field on issues of competition, free trade and financial liberalism...
Whereas Clinton has recently taken to pulling protectionist stunts and rethinking the fundamental theoretical soundness of free trade, and Edwards is behaving like the love child of Huey Long and Pat Buchanan, Obama instinctively supports free trade and grasps the universe of possibilities that globalisation opens up, and seamlessly integrates it into his "audacity of hope" theme. As he remarked in a recent debate: "Globalisation is here, and I don't think Americans are afraid to compete. And we have the goods and the services and the skills and the innovation to compete anywhere in the world."
At the moment, Obama's and Clinton's positions on trade are roughly equivalent - both deserve credit for taking initial steps toward dismantling the obscene US government-supported agricultural cartels - but the present dynamic is Obama moving more and more in the direction of economic freedom, competition and individual choice, and Clinton wavering if not moving away from it...
Perhaps it goes without saying that Obama's belief in freedom in labour markets and freedom in capital markets, sets him apart from the Republican field as well as the Democrats. Under ordinary circumstances, one would expect Republicans at least to respect free trade, but alas, they are inconsistent at best. As for freedom in immigration, even in politically propitious times, the modern GOP makes tactical concessions toward its xenophobic wing; in this season of famine, the Republican candidates, even those who have supported immigration in the past, have set up their nominating contest as a race to see who can take the most thuggish and contemptuous possible attitude toward Mexicans (the euphemism for this posture is "out-Tancredo-ing Tancredo").
Ironically, the nativist lunacy sweeping through the GOP underscores the conceptual connection between free trade and immigration, as mutually supporting pillars of economic freedom. Obama properly understands economic freedom as the best vehicle for accomplishing the historic goals of the left, which Irving Howe and Lewis Coser long ago described as wanting "simply to do away with those sources of conflict which are the cause of material deprivation and which, in turn, help create psychological and moral suffering."
While this is encouraging, it's hard to verify claims about candidates' motivations. And how much sway does Goolsbee really have?
UPDATE: Emmanuel says Obama is tied to the usual protectionist lobbies: "Obama is as protectionist as they wanna be, especially on corn. His rhetoric and actions do not suggest otherwise."
Posted by Dingel at 11:56 AM | Comments (1)
January 31, 2008
Projecting beliefs
Sallie James writes:
John Edwards had by far the worst trade policy proposals of the front-running Democrats. It says something good about America that Mr Edwards’ brand of populist nonsense has been rejected by the primary voters.
No way. Find me one piece of evidence that voters are choosing to prefer Clinton and Obama due to their trade policy proposals.
Or, as Adam Posen put it:
International economic issues will never be the decisive factor in a US national election, and in fact will be a lower priority on any candidate’s or new president’s agenda than discussions of Iraq withdrawal, broadening health care, tax reform, repairing America’s standing in the world, and decreasing partisanship in Washington.
Posted by Dingel at 06:37 AM | Comments (0)
January 30, 2008
Adam Posen on the next president
Adam Posen writes:
Unfortunately, a new US president of either party is likely to be more antiglobalization, or at least take a more defensive approach to it, than either of her or his predecessors was.There are many reasons why. First, now that unemployment is rising, the US workforce has finally reacted to the economic insecurity caused by its lack of health insurance and job protections, all curtailed further by the Bush administration. Second, both parties have moved away from the center, especially in Congress, and it was always a coalition of moderates from both parties which supported trade liberalization. Third, the foreign policy misadventures of the Bush administration have fed isolationism and fear of the openness among the US electorate. Fourth, in the United States just as in Western Europe, there is a seductive—though fundamentally unfounded—belief that the economic emergence of China, India, Brazil, and the former Soviet Union has shifted the relative advantages of globalization away from the rich countries, so their approach to trade and investment should be more defensive.
American antiglobalization, however, will take different forms depending upon which party captures the White House. If a Democrat wins, there will be proposals to impose “minimum labor and environmental standards” on future trade agreements, and perhaps unilaterally on current trading partners. While these can be benignly motivated, in practice they will likely be hijacked by outright protectionist interests and used as an excuse to block imports or trade deals. In any event, such measures are likely to escalate a number of conflicts with major emerging markets and interfere with economic growth in the developing world...
If a Republican, particularly from the conservative majority wing of the party, wins the White House, then the new American antiglobalization stance will likely first take the form of anti-immigration measures...
Initially, such a Republican anti-immigration stance will be less directly disruptive of the global trading system, and less broadly confrontational with the developing world, than the Democratic labor standards for trade agreements would be. Ultimately, however, it will be more harmful to the US economy, which is increasingly short of labor at both the high- and low-ends of the skills distribution, will be even more encouraging of isolationist sentiment, and will be more likely to divide the United States from the rest of advanced economies as well as from it developing neighbors...
[W]hile outright protectionism and head-on assaults on economic integration thankfully are not in the cards, and whoever succeeds George Bush will inherently be an improvement in most areas, the United States probably will be moving backwards on globalization initially in the next administration.
Posted by Dingel at 04:28 PM | Comments (0)
October 28, 2007
Should TAA expand?
Sallie James thinks there shouldn't be trade adjustment assistance without trade liberalization.
Posted by Dingel at 11:35 AM | Comments (0)
June 20, 2007
Hilary Clinton (D-Punjab)
The Economist has said that Barack Obama has free trade instincts, but his staffers don't seem to be on the same page. Here's a headline they circulated to reporters:
HILLARY CLINTON (D-PUNJAB)’S PERSONAL FINANCIAL AND POLITICAL TIES TO INDIAThe Clintons have reaped significant financial rewards from their relationship with the Indian community, both in their personal finances and Hillary’s campaign fundraising. Hillary Clinton, who is the co-chair of the Senate India Caucus, has drawn criticism from anti-offshoring groups for her vocal support of Indian business and unwillingness to protect American jobs. Bill Clinton has invested tens of thousands of dollars in an Indian bill payment company, while Hillary Clinton has taken tens of thousands from companies that outsource jobs to India. Workers who have been laid off in upstate New York might not think that her recent joke that she could be elected to the Senate seat in Punjab is that funny.
Obama has apologized for the memo, but he ought to also explain why the zero-sum, 'us vs them' perspective on outsourcing embodied in the memo is wrong.
Posted by Dingel at 06:18 PM | Comments (0)
June 14, 2007
Clinton on KORUS FTA
WaPo:
[Hilary Clinton] will oppose the free-trade agreement with South Korea -- and for the narrowest of special-interest reasons... Ms. Clinton objects that South Korean manufacturers sell many more cars here than do American carmakers over there. Never mind that the agreement requires Korea to remove discriminatory tariffs and taxes on U.S. cars; never mind that U.S. tariffs on Korean cars can "snap back" if Korea doesn't keep its word. Not good enough, says Ms. Clinton. What more could she have wanted for Detroit? She won't say.
Via Fredrik Erixon.
Posted by Dingel at 02:51 PM | Comments (0)
May 22, 2007
Bhagwati on the labor standards compromise
Bipartisanship is no guarantor of virtue. The proponents of the compromise also make a serious mistake when they assume that domestic consensus on trade policy is a sufficient condition for further trade liberalisation. Trade needs at least two parties. Unless your trading partners agree with what you propose, your own consensus is well nigh useless. The problem is that, except for bilateral agreements with small countries (or groups of countries, such as Central America) with little political power or with overriding security interests, the developing-country trading partners of the US are generally opposed to the inclusion of labour (and other non-trade-related) requirements in trade treaties, agreements and institutions...[T]he pursuit of labour standards in the American political landscape today reflects not altruism and empathy, but fear and self-interest. The Democrats who swept into Congress on anti-trade platforms typically fought their campaigns by arguing that competition with countries with lower standards was harmful to the working and middle classes in the US...
Was this compromise necessary for the renewal of the president’s fast-track trade authority? I doubt it. Think hard: if fast-track were not renewed by Congress, the US would find it impossible to pursue even bilateral agreements, not just the multilateral Doha round. But every other nation would be free to pursue these bilateral deals. So, the US would be increasingly handicapped in world trade. But if the administration stood firm, rejecting the compromise over labour standards, it is surely possible that a few responsible Democrats could be found who would vote for new fast-track authority, purely in America’s interest. Surely, it is not beyond the capacity of Mr Paulson to play this card with success?
If you lack FT access, Mark Thoma has a longer excerpt.
Posted by Dingel at 07:51 AM | Comments (0)
May 16, 2007
Bush and the Bank
The situation has been complicated by the fact that few people within the Bush administration understand what the World Bank does, says another official. This has meant that the administration’s shifting calculations have been mostly guided by day-to-day political deliberations rather than by an assessment of what would be in the longer-term interest of the US.
Good grief.
Posted by Dingel at 10:49 PM | Comments (0)
May 15, 2007
Obama's free trade instincts
Where do the Democratic frontrunners stand on trade?
To counter this establishment reputation, Mrs Clinton has reached out to the left. Dick Gephardt, a former majority leader of the House of Representatives and a well-known trade sceptic, is an adviser. Mrs Clinton's trade rhetoric has been among the toughest of the candidates. She has talked of “a little timeout” before new trade deals are made—exactly what the party's left has been asking for.Mr Obama has carefully avoided any such rhetoric. His trade strategy, like much else, is still short on details. Like Mrs Clinton, he voted against the free-trade agreement with Central America. But judging by his latest book, Mr Obama is more concerned with helping people deal with globalisation than trying to slow it down. One trade wonk who knows both candidates says that Mr Obama is more of an instinctive free-trader than Mrs Clinton.
Economist story here.
Posted by Dingel at 10:43 PM | Comments (1)