President George W. Bush’s remarks on trade to the Council of America’s early last week and his request to Congress for Trade Promotion Authority (formerly called “Fast Track”) later in the week signal an important new step in expanding the trade relationship between Japan and the United States, and with the rest of the world.
Clearly, Bush has an uphill battle before him, with organized labor opposed to any attempt to expand trade, much of America in fear of what trade might bring, and some key environmental groups opposed to any agreement that does not impose environmental restrictions on the countries with which we trade.
The encouraging part of all this is that Bush is taking risks because he, like President Clinton, knows how important trade is to the U.S. economy and to the world. Unlike his predecessor, he is making this one of his highest priorities. If he gets the authority he is asking for it is incumbent upon Japan to start taking a greater leadership role in the World Trade Organization and the talks continuing from the meetings in Singapore and Seattle.
Last week Bush said: “Free trade agreements are being negotiated all over the world, and we’re not a party to them. And this has got to change. Americans are the world’s pre-eminent inventor of new technology and the world’s biggest inventor. We’re the world’s most efficient food producer, and the world’s leading source of information and entertainment. For our farmers and our inventors, for our artists and for ordinary savers open trade pays off in the form of higher incomes and higher returns.”
These facts are indisputable. No knowledgeable person could disagree. When the President asks for Trade Promotion Authority, however, fear seems to come to some Americans and opposition begins to form. Trade Promotion Authority, unfortunately termed “Fast Track” in the past, simply gives the President and the Executive branch the authority to negotiate trade agreements with our trading partners around the world, and then bring them to Congress for a simple “yes” or “no” vote, without amendments.
Why is it necessary? Because no foreign power will negotiate with another country if they know the person they are negotiating with in fact has no power to put the treaty into effect. To put it another way, without Trade Promotion Authority, the administration could negotiate a Free Trade Agreement with the European Union, for example, and then bring it to the Congress for approval only to have it totally amended in Congress. Then it would have to go back again to the EU, bouncing back and forth in an endless series of negotiations.
Under the Trade Promotion Authority, the administration brings it to Congress for an up or down vote. As the agreement is being negotiated, the administration would already be counting the votes in Congress and drafting the agreement so as to insure passage.
All modern-day presidents (Clinton until 1994) have had this authority, and the benefits to the U.S. economy and employment have been enormous. The U.S. is in no position to cede all of these benefits to other countries around the world and ignore its own citizens. What is even more important, from an international standpoint, is the need for the U.S. to be totally involved and play a leadership role in the WTO’s effort to expand world markets and trade.
Free trade is good for American farmers, because when the world buys America’s food, both the world and America benefit. One in three U.S. farm acres is planted for export, and 25 percent of gross farm income comes from exports. In many California crops, such as almonds, raisins, walnuts and citrus the percentage going to export is much higher. Close to seventy percent, for example, in the case of almonds.
Free trade is good for American workers. Twelve million U.S. jobs depend on exports, and pay on average 13-18 percent more than nonexport jobs. Finally, free trade is good for Japanese workers and American consumers and businesses because it allows America to shop the world for the best prices and highest-quality goods.
Free trade allows consumers all over the U.S. (and the world) to buy Toyota, Nissan, Mitsubishi, Sony, Panasonic, Acura, Shiseido, etc. There is ample economic evidence to show that the North American Free Trade Agreement and the Uruguay round of trade talks that created the World Trade Organization have provided an average savings of about $1,500 to each U.S. family. At the same time, these agreements and others have created jobs in Japan, Mexico, Canada, the EU and elsewhere.
The risk we take, if the U.S. and Japan do not take leadership roles in trade, is that protectionism will take over. Just as it did in the 1930’s. Then, rather than expanding, world economies will start to contract by prohibiting all goods not produced domestically. Worldwide economic depression will follow. No nation has more to lose, in such a scenario, than Japan.
While Japan has no role in securing Trade Promotion Authority for President Bush from Congress, it does have a major role in helping the U.S. promote free trade. It also has a very important role in exerting leadership in the World Trade Organization rather than acting as a Third World country trying to protect only its domestic interests. We can only hope that the new leadership in Japan will rise to the occasion.
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