Triple Jeopardy On The Trade Front

December is shaping up as a triple witching hour for trade. Congress is scheduled to vote on the North American Free Trade Agreement and fast-tracking the General Agreement on Tariffs & Trade, while the White House is expected to finalize a new results-oriented export agreement with Japan. The stakes are high. With Europe and Japan mired in recession and the U.S. in slow motion, freer markets are needed to spur the weak global economy.

But just weeks before the action starts, there is a serious chance that all three initiatives will go down in flames, boosting the forces of protectionism and isolationism. For an Administration trying to redefine America's foreign policy in terms of economics, failure on this scale would be a big blow.

The Clinton Administration can't help that France and Japan have new governments that are resisting the trade deals their predecessors made. France's new Prime Minister, Edouard Balladur, hates the "Blair House" deal signed with the Bush Administration to cut French farm subsidies and is threatening to walk out and kill the latest Uruguay Round of GATT talks to open markets.

Japanese trade negotiators have warned the U.S that the new government of Japanese Prime Minister Morihiro Hmsokawa would have nothing to do with the agreement made between the Clinton Administration and the previous Liberal Democratic Party government. That understanding attempted to create measurable export and market-access targets, patterned after the successful 1986 Semiconductor Agreement that gave foreign companies 20% of the Japanese market. Hosokawa has pledged that he would work for de-regulation, open construction bidding to foreigners, and enforce antitrust laws--but only after new elections in late 1994, assuming his coalition wins. Any relief to America's yawning $50 billion trade deficit with Japan will have to wait.

While France and Japan blindsided Washington on trade, the Administration has only itself to blame on NAFTA. The White House decision to focus on health care and neglect the market-opening trade pact with Mexico and Canada until November makes passage of the bill in December iffy at best. Led by Ross Perot and labor unions, anti-NAFTA forces around the country are mobilizing in every congressional district.

Over the next 12 weeks, three initiatives should be taken to rebuild momentum for free trade. U.S. Trade Representative Mickey Kantor should warn the French that reopening the Blair House accord would mean renegotiating the entire GATT agreement, an unacceptable development.

Washington should also make clear to Hosokawa that the U.S. has already waited a decade for Japan to redress the trade balance. It should insist on moving ahead with results-oriented performance targets and remind the new Hosokawa government that backing off from an international deal with the U.S. erodes its credibility.

While President Clinton has finally become a vocal backer of NAFTA, words are not enough. The White House must mobilize local companies and congressional supporters in every district to bring the message of open markets, greater growth, and more jobs to the community level. Time is running out on free trade. A retreat to nationalism and protectionism is the miserable alternative.