Back to the future? A trade policy outlook - Brief Article

Trade policy was not a major focus of the latest presidential campaign, but newspaper columnists have taken notice that the future of the United States trade policy is an important matter, especially with signs of economically tougher times ahead. Trade liberalization recently has had a hard time, from the debacle in Seattle to the failure to grant the president fast-track negotiation authority. All eyes are on the new Administration and Congress, watching how some of the trickier trade issues are likely to be handled.

One of the most controversial issues is the debate about the linkage of trade agreements and environmental and labor rights issues. Linking these goals is a bone of contention between rich industrial countries and poor developing countries, who fear that the demands by rich countries are a way to keep unwanted new competition from the world's markets. While some in industrial countries would like to use the threat of trade sanctions and restrictions to enforce societal goals, others warn that reducing economic opportunities for poor countries might turn out to reduce the chances to achieve better environmental protection and better enforcement of political and social rights.

"Anti-dumping" measures--a trade policy evergreen-- are particularly likely to be (mis)used to help protect favored and politically influential industries from foreign competition. Although existing U.S. anti-dumping policies cause major problems with trading partners, such as the European Union, steel and other industries continue to press for even stricter laws. The stubborn refusal by the United States to accommodate international concerns about some of its anti-dumping laws also blocks other countries' willingness to change their positions on trade issues important to the United States, such as agriculture (as seen during the negotiations in Seattle).

Agriculture will continue to be one of the biggest issues during any international trade negotiations. Agricultural markets are still among the most highly protected markets, with consumers and developing countries often paying a high economic price for industrial countries' policies of agricultural protection and subsidies. American farmers increasingly depend on foreign markets to sell their products, and U.S. trade negotiators usually urge other countries to be more open to U.S. agricultural products, especially those agricultural "fortresses" of protectionism such as the EU and Japan. However, the U.S. position would be more convincing if they would undertake serious reform of sectors under its protection, such as sugar and peanuts.

In general, people are more supportive of open trade when the economy is growing, jobs are available, and voters are happy the way things are going. However, during economic downturns, scapegoats in the form of foreign producers are often sought -- a tough time for free traders. Overall economic performance, as well as decisions by the new Administration, will probably influence the public view of what trade policy is best for the United States.

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