May 24, 2018
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Can free trade be fair?

By Brewster Grace and Charles Graham, Special to the BDN

In preparing for a Dec. 7 talk on the U.S. foreign trade deficit at Bangor Public Library, we were pleased to discover that Bangor’s congressional representatives have traditionally voiced concerns similar to ours about the problems created by America’s pursuit of more and more free trade agreements.

In our current era of divisive politics, it’s not surprising that critics of so-called “free trade” are immediately branded as protectionists. It is our contention that they are just trying to bring more fairness for American workers and businesses into our trade agreements.

And we need fairer agreements.

In 1994 both Olympia Snowe (then 2nd District congresswoman) and Sen. Bill Cohen voted against NAFTA, predicting that it would not be enforced in a way that would protect Maine jobs and industry and would lead to U.S. trade deficits with Mexico. Today, union economic analysts claim a net U.S. job loss to Mexico of 850,000 since 1994, and the U.S. Trade Representative’s Office reports a trade-goods deficit with Mexico of $58 billion last year.

Similar “fair-trade” arguments were made this year by Maine’s current representatives, Pingree and Michaud, and Sen. Snowe before they voted against the free-trade agreements with Colombia and Korea signed in July.

Since 1945, the U.S. has championed freer trade that lowers tariffs and reduces import quotas and nontariff barriers through our participation in international trade organizations such as the GATT and WTO, and in regional or bilateral treaties such as NAFTA and the recently ratified agreements with South Korea and Colombia. But there is no “free trade” in real life because all countries have important interests that can be devastated by absolute free trade, interests that they try to protect through various open or surreptitious restrictions.

As both Sen. Cohen and Rep. Michaud have realized, our government has not successfully defended our basic trade interests against such tactics, and our unrelenting trade deficits prove it.

There are several historical factors behind our deficit problem. A major one was the use of access to the American market as a foreign relations tool, both after World War II, in rebuilding war-torn Europe and Japan, and then in the Cold War, to wean other nations away from communism. We believed that our economy was strong and broad enough to support such generosity and that the displaced workers and industries could easily find other opportunities.

But it was also during this easy-going period that many Washington politicians began supporting legislation that weakened our trade laws in exchange for campaign contributions. Such legislation was often sought by U.S. multinational corporations seeking to evade the cost of U.S. labor and environmental regulations and to supply their U.S. markets from their cheaper, less-regulated foreign production facilities. Because these practices have tended to produce cheaper prices here, they are often also supported by consumer advocates, academic economists and even some labor unions.

Today, the Obama administration and certain export industries are pushing free-trade agreements with Colombia and Korea as deficit reducers and job creators. Congressman Michaud and Senator Snowe disagree.

Rep. Michaud argues convincingly that the Colombia agreement would be a job loser. In a “race to the bottom,” U.S. jobs would move to Colombia where only 3 percent of the Colombia work force of 20 million is unionized and labor protection virtually nonexistent. In the past 25 years 2,700 labor leaders have been assassinated — 40 in 2010.

In March, Michaud asked President Obama to assure Congress “that Colombia’s long track record of repression, violence and murder of labor unionists has truly changed and that trade between our countries can take place on an even playing field for both nations’ workers.” However, the ensuing “Labor Action Plan” signed by Colombia and the U.S. failed to assure Michaud and many others in Congress that it did enough to prevent violence or comply with core international labor standards — notably the right to organize unions.

Sen. Snowe’s rejection of the Korea deal was based less on labor standard disparities than on U.S. failure to stand up against Korean trade practices that hurt our industry’s competitiveness, including currency valuations, government procurement and export subsidies. In so doing, Snowe was the sole Republican voting against an agreement vigorously supported by major industrial interests.

In summary, we in Maine should celebrate our congressional representatives’ support of fair trade and their moderation in the face of free trade and protectionist extremism. And readers interested in trade issues should also attend our upcoming presentations on the subject at the public libraries in Bangor (Dec. 7), Belfast (Jan. 17) and Bar Harbor (Jan. 29).

Brewster Grace if a former director of the Quaker UN Office in Geneva and was its representative to the World Trade Organization. He also worked in Southeast Asia and the Middle East. Charles Graham is a retired international banker and marketing consultant, working with leading U.S. companies doing business in Europe, Middle East, Africa and Canada.

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