How Business Can Manage The Backlash

Debate on the General Agreement on Tariffs & Trade can be summed up by three immutable facts: Economic globalization is accelerating--with or without GATT. The trade accord will be a big plus for the U.S. economy. Yet the shift to a free-trade world is terrorizing millions of Americans who fret that their jobs are at risk.

Therein lies GATT's great internal contradiction: good economics, bad politics. No wonder a trade deal that deserves to sail through Congress got stuck in choppy waters.

Free-trade advocates--from President Clinton to GATT backers in Congress to corporate CEOs--have been so confident they're on the right side of the issue that they've underestimated the huge backlash that is being stirred up against this particular accord and the broader concept of free trade. The pro-GATT crowd assumed the debate was settled a year ago by passage of the North American Free Trade Agreement. Instead, it's heating up again. From consumer advocate Ralph Nader on the left to Senator Jesse A. Helms on the right to raging populist Ross Perot in between, opponents are portraying free trade as a threat to the American way of life.

"TOUGH SELL." Why? Because global commerce is claiming plenty of victims, and everyone knows it. While Congress will probably approve GATT because it will mean a net gain of jobs for the U.S., there is no denying that dislocations inherent in the new global economy mean some factories will close and jobs will move to Bolivia or Bangladesh. American workers everywhere feel threatened. Unless these gnawing anxieties are addressed, the march toward open markets could be reversed by a new breed of lawmakers veering toward protectionism.

Much of the opposition to GATT is fed by rage. A growing number of Americans believe their economic concerns are being dismissed by a bunch of elitist politicians, economists, and journalists who have never had to worry about foreign competition in their lines of work. "Free trade is a really tough sell for ordinary Americans," admits GOP pollster Frank I. Luntz. "Viscerally, they've seen the devastation, but they haven't felt the growth."

According to a survey by another GOP pollster, Anthony Fabrizio, three out of every four Americans want consideration of a new world trade pact put off until next year. The reason: Most feel they don't know the issue well enough to express an opinion. True enough, a meager 3% of Americans rank trade as a top concern. But of those who do, opinions are passionate. And the people most uneasy about free trade include white males who feel their jobs are most at risk. "Words like sovereignty and World Trade Organization have a titillating feel to them," worries Texas Instruments Inc. CEO Jerry R. Junkins, who heads a pro-GATT business group.

As Junkins says, "we cannot hide from globalization pressures." But U.S. business must acknowledge that with the lucrative opportunities of globalization come responsibilities, too. Companies must work with federal, state, and local governments to devise more credible, cost-efficient retraining and relocation programs for workers who lose their jobs to foreign competition. Current programs--the feds spend just $200 million a year--have failed to keep pace with the enormous changes that have occurred in the global economy over the past decade. As Labor Secretary Robert B. Reich noted on Nov. 22, if the government can afford to give Corporate America tens of billions a year in tax breaks, it can afford to spend more on worker assistance. Think of it as a cheap insurance policy against the backlash.

DEFEATISM. At the same time, free-trade advocates have got to do a much better job of selling open markets to the public. Privately, White House officials admit that their rhetorical efforts thus far have been a dismal failure, and they see the issue as a loser with the public. "If this weren't so important, we wouldn't go near it," says one official. With a defeatist attitude like that, no wonder the message doesn't come through. Business groups readily admit their failures, too. "When CEOs talk about free trade, people see a greedy mogul out to make a buck," sighs one business lobbyist.

But there's no ducking reality. Like it or not, globalization is here to stay. China is becoming the textile capital of the world. India has a booming telemarketing industry that can service Thailand as well as the U.S. Mexico will become a source of cheap autos. The preachers of free trade had better learn that it's no longer enough to be right. They have to be compelling--and caring, too--or face the consequences.

Douglas Harbrecht and Owen Ullmann

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