Trade talk is not all discord
The subject of international trade generates a great deal of policy controversy. This was illustrated recently with the issuance of the congressional report of the Commission to Review the Trade Deficit (which I chaired).
Individual members took a variety of positions on topics ranging from the sustainability of large trade deficits to the composition of programs to aid workers adversely affected by imports.
Nevertheless, the commission reached common ground on the approaches that should be taken in dealing with trade-policy issues. These important areas of agreement - which too often are taken for granted - are likely representative of a large segment of public opinion:
1. The United States has benefited greatly from international trade. An open economy has enhanced living standards and helped to contain inflation.
But increased links to the rest of the world generate disruptions to individuals and communities. It is essential that we address these consequences in order to develop and maintain a national consensus that focuses on opening markets instead of imposing trade restrictions.
2. Trying to stop the global economy is counterproductive.
The challenge is to take advantage of opportunities created by the flow of trade, while assisting those who bear the cost of adjusting to changes it brings. In dealing with these matters, our moral values as well as our economic interests should govern our policies and our actions.
3. Large trade deficits are neither desirable nor likely sustainable for the extended future. However, there is no way to determine how long the deficit trend will continue or whether it will end with a soft or hard landing.
Nevertheless, the combination of low household savings, large trade deficits, and substantial foreign debt are reasons to favor a fiscal policy that substantially increases national savings.
4. Foreign trade barriers offend the sense of fairness of Americans who see the greater openness of our economy. A vigorous policy to break down trade barriers is essential. We need to fully enforce the trade agreements we have entered and ensure the nations we trade with fully enforce the agreements they have entered.
5. The United States should strengthen its efforts to monitor and enforce trade agreements. Responsibility for enforcement should be elevated within the current trade-policy agencies. Sufficient numbers of highly qualified staff should be assigned for this task.
6. Planning should start for a new round of multilateral trade negotiations, as well as efforts to make the World Trade Organization more open and transparent. Public support for a new round will be strengthened by securing greater compliance with existing trade agreements as well as reforming the WTO.
7. The United States should update export-control policies for civilian technologies with both military and commercial uses.
The cold war is over. The purpose of this review should be to relax these policies whenever we can in light of current national security and economic considerations.
Unilateral imposition of export sanctions should be limited to those cases in which a high-level national interest is clearly at stake and where their effectiveness is likely.
8. Gathering and disseminating of basic data on international trade must be improved. More detailed and up-to-date information is essential to an informed citizenry and to more enlightened decisionmaking. An increase in the currently depressed funding for international statistics is surely justified.
9. Worker adjustment assistance should be strengthened. Such aid should be extended to all workers bearing the costs of adjustment to economic change, whether they have lost their jobs due to imports or other reasons. Labor mobility should be promoted by removing barriers to retraining and taking new jobs. The focus of adjustment policy should be on positive approaches that help more people participate in economic prosperity, rather than providing relief from or seeking to halt economic change.
10. The most fundamental aspect of an effective, long-run adjustment policy is to do a much better job of educating and training Americans to become more productive and higher-wage members of the nation's workforce. A more productive workforce is the key to long-term international competitiveness.
Murray Weidenbaum is chairman of the Center for the Study of American Business at Washington University.
(c) Copyright 2000. The Christian Science Publishing Society