Opinion	E-mail PagePrint Version

Washington Post, August 13, 2003

Two times in as many weeks, comfortable majorities in both houses of Congress voted to approve free trade agreements, with Chile and Singapore. These victories for free trade were won despite objections by some union leaders who pledged to oppose pro-trade members of Congress.
 
Writing in this paper, Teamster President James P. Hoffa threatened that Democrats in particular "run the risk of paying a high price."
 
Yet even as some labor leaders lobby against trade agreements on Capitol Hill, many rank-and-file union members are reaping the rewards of economic openness. United Parcel Service, for example, the nation's largest employer of Teamsters, announced during the debates on the Singapore and Chile agreements that soaring trade had boosted international profits by more than 150 percent over the past quarter. The company estimates that every 40 packages shipped overseas create one new job -- usually a union job -- here at home.

Labor leaders urge the United States to "learn the lesson of NAFTA." Well, the lesson NAFTA teaches is that open trade is good for American workers, farmers, businesses and families. After NAFTA was signed in 1993, domestic employment, farm exports, manufacturing output and real wages all increased. From 1993 to 2000, civilian employment in the US economy rose by a net 16 million jobs.
 
During that same period, US agricultural exports to Mexico and Canada grew 57 percent, and US manufacturing output rose by 41 percent -- even as the volume of imported manufactured goods more than doubled. US manufacturing has endured a slump recently, but this has been part of a cyclical downturn, not the result of a structural problem stemming from trade. Economic indicators already show that the sector is recovering.
 
Abandoning open markets on the cusp of an upturn could be disastrous -- a modern repeat of Smoot-Hawley protectionism that helped turn a 1930s recession into the Great Depression.
Free trade generates economic growth through exports, but it also improves the real wages and purchasing power of American families through imports. The two major US trade agreements during the 1990s, NAFTA and the Uruguay Round, increased incomes and provided consumers with a greater choice of goods at better prices, raising living standards for a typical American family of four by up to $2,000 a year.

Imports also boost the productivity of America's businesses. From auto parts to computer parts, they help hold down production costs and make US products more competitive at home and abroad.
Open global markets create investment opportunities, too, and the United States receives more foreign investment than any other nation in the world. International capital flows have helped keep US interest rates low, funded new US business ventures, increased US productivity and wages and created new American jobs.

Of course, free trade is not sustainable when workers' rights are trammeled. That is why strong labor policies are at the core of new US free trade agreements. The Trade Act of 2002 set out a framework under which good labor standards are a principal objective for US trade negotiators.
 
The Bush administration, following guidance from Congress, has successfully pursued these objectives in our new agreements: customized labor obligations, including dispute resolution and enforcement mechanisms, which combine the expansion of trade and growth with a shared commitment to improve labor conditions.

The United States cannot write the laws of other countries and would not want other countries writing ours.
 
But in the Chile and Singapore free trade agreements, both our partners affirmed their obligations as members of the International Labor Organization and pledged to strive to ensure that the core labor standards of the ILO Declaration on Fundamental Principles and Rights at Work are fully protected in domestic labor laws.

In the case of Chile, the government even launched major labor-law reforms during our negotiations, tossing out most of the Pinochet-era code.

Our agreements with Chile and Singapore also contain binding commitments to enforce labor laws. Each of the agreements promises workers and employers access to fair, equitable and transparent proceedings in the administration of domestic labor laws.

The agreements include a dispute-settlement procedure that consists of consultations, fines and -- as a last resort -- the suspension of favored market access. At every level of the process, the goal is to correct problems rather than cut off trade.

These agreements may rankle protectionists, who fear competition, but they are great news for anyone who cares about improving workers' lives through higher income levels, good labor standards and more resources for enforcement.

Fortunately, the anti-trade views of organized labor leaders aren't shared by the general public.

According to a recent survey by the Pew Research Center for People and the Press, 79 percent of Americans believe that growing global trade and business ties are good for the country.
 

Go back, or read the latest opinions:

''The Logic of Trade''

The Cato Institute, August 28, 2003