Don't Muddy The Waters Of Free Trade
Zero green, zero blue. Sound like the score of a football game? Actually it's the Clinton Administration whispering to the U.S. business community that it will delete environmental and labor standards from the enabling legislation on the latest round of GATT, the General Agreement on Tariffs & Trade. The Administration should follow through in Congress. It would do right to keep free trade free of entangling social and political issues.
The same bizarre coalition of Sierra Clubbers, Naderites, and isolationists that nearly killed NAFTA did succeed in setting a dangerous precedent. For the first time, they injected labor and environmental issues into trade negotiations. Now, they are hoping to repeat their success with GATT.
These GATT-bashers, of course, believe that open trade threatens U.S. living standards. Some even see a foreign conspiracy that undermines U.S. laws and safeguards on food safety and environmental protection. They warn that the new World Trade Organization, created by GATT, will force the U.S. to lower its consumer and worker standards.
This is simple hogwash. It's not that labor and environmental issues are unimportant. In an economically integrated world, there is a real danger that the high living standards of the U.S., Europe, and Japan can be dragged down as they compete against such up-and-comers as China and India. A low-wage labor pool is a market advantage.
But the competitive answer is not to try to force U.S. labor and environmental standards down the throats of Latin Americans and Asians. India, the largest market democracy in the world, has correctly objected to this attempt in GATT as a form of American protectionism. It believes the U.S. may punish it for its low-wage competitive advantage.
The best U.S. response to the changing world economy lies in industry and workers moving up the value-added scale. That calls for better products made by more highly skilled employees. Growth is the only real answer to the problems of both the high-wage and low-wage countries. It is only in the context of high growth that the problems of income and environment find a solution.