A search for answers following failed trade talks

The World Trade Organization negotiations in Seattle collapsed Dec. 3. How come? What will the failure mean to Americans and others working in a globalizing economy? And where next?

Trade experts are asking themselves these questions and offering some answers.

How come?

Harald Malmgren, a Washington trade consultant who helped negotiate trade deals under four American presidents, says the effort to start a new millennium round of trade talks was premature by two years or so.

"It was not prepared properly, either domestically or internationally," he says.

Charlene Barshefsky, the US trade representative, got bogged down with putting out individual trade fires for US corporations - the banana dispute with the European Union, the fight over genetically modified food, slowing steel imports.

Mr. Malmgren calls her approach "a policy of trade complaints."

Ms. Barshefsky is a lawyer, proud of her negotiating skills and her detailed knowledge of trade cases.

But past, more successful, US trade reps, such as William Brock, Robert Strauss, or Christian Herter, were politicians.

They worked to build support for trade talks with farm groups, industry, academics, journalists, and other sectors of US society. They also trotted to the key capitals of the world to persuade politicians there on the merits of reducing trade barriers.

Further, they strived to keep trade issues nonpartisan.

"This administration let party issues dominate policies," says Malmgren. "It is kind of sad."

He sees another mistake by President Clinton: He invited the world's trade ministers to the US for a key meeting where it is relatively easy for Americans who are losing from trade or have other trade-related issues to dramatize their objections.

"Every president since Franklin Roosevelt has thought of inviting trade ministers to the US," says Malmgren. "But they were told never to do this."

Both Malmgren and Richard Cooper, a professor of international economics at Harvard University, Cambridge, Mass., also question the wisdom of Clinton's open invitation to nongovernmental organizations opposed to the WTO talks.

When such groups can't win their position in domestic political battles, they strive to impose it on international organizations, the two economists hold.

Experts question whether this is a proper democratic procedure. "I don't want the Sierra Club representing me," says Mr. Cooper. "I have no voice in it."

What failure means

Probably not much for current trade policy. The final results of the last trade deal, the Uruguay round, have yet to be worked out fully in such areas as services and agriculture.

The trend toward freer trade may be slowed but not stopped.

"We still have to digest things on the plate," says Cooper.

The WTO will be "hard pressed" to handle current trade issues, he says. It needs more staff.

Where next?

The US and some other nations will continue to push for a new round of trade talks. But that's unlikely to happen during Clinton's watch.

"A lot of hard technical work has to be done," says Cooper. "I didn't see the makings of a deal."

Moreover, the opposition of organized labor will make it difficult to advance. The Democratic Party needs the trade unions' army of party activists and their money for the 2000 election.

Malmgren says one reason Vice President Al Gore has trouble raising campaign funds from corporate executives is their fear that a President Gore would give AFL-CIO President John Sweeney a veto in naming a trade rep.

One key complaint of organized labor at Seattle was that freer trade has depressed the wages of US workers. Cooper says free trade can be blamed for 10 to 15 percent of the recent trend in which high school dropouts saw their wages decline while the rich flourished.

Some 20 percent can be accounted for by a flood of poorly educated immigrants. Mostly it is technological changes that demand educated workers, he says.

Another important trade matter is congressional approval to grant China a permanent normal trading relationship with the US to go with admission to the WTO.

This will be difficult politically in the Republican-led Senate if Clinton trumpets it as a presidential achievement, Malmgren says.

If he stays in the background, it might be possible.

(c) Copyright 1999. The Christian Science Publishing Society