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Will Obama Give Entrepreneurs Protection or Free Trade?

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WHAT THE EXPERTS SAY

Most experts believe that on balance trade has delivered much more good than harm to the U.S. Still, some question the free trade agreements that have proliferated in recent years. Writing in the World Policy Journal, journalist Paul Blustein claims the bilateral deals are usually oversold: Their benefits are likely to be modest, because trade barriers are for the most part already pretty low, and, more importantly, the extensive rules of origin add needless complexity. "Partly for this reason," he writes, "only about five percent of the goods Singapore ships to the United States come in under the terms of the U.S.-Singapore Free Trade Agreement." In the case of Colombia, even if U.S. exports to the South American nation somehow were to double in the year after a trade agreement was approved, he notes, it still "would add less than .07 of 1 percent to the U.S. gross domestic product." Worse, he concludes, these pacts undermine the World Trade Organization, which is a better and fairer avenue for trade.

On the other hand, it's much easier in bilateral talks to negotiate a meaningful agreement on corollary issues like intellectual property rules and food safety standards -- or labor and environmental protections. According to Lael Brainard, a vice president at the independent Brookings Institution (where Blustein is a journalist in residence), the provisions that Barack Obama wants to strengthen are a "natural fit" in modern trade deals. Trade pacts "are not just about tariffs any more," she says. "They have come to encompass deep reforms of economic integration." Still, Brainard says trade agreements can only do so much. "We have to think more broadly about how we engage with developing countries on economic integration. Our primary instrument can't be a trade agreement."

Obama promises vigilance when it comes to protecting U.S. trading interests. Brainard says that's a shift from current policy. "It was a big priority in the Bush Administration to get new agreements, but it was just not a priority to enforce -- there was a big diminution in the enforcement." The Bush Administration typically brings three cases to the WTO annually, she says, far fewer than the 11 cases the Clinton Administration normally pursued each year. (Given the growth in trade, and trading partners, Brainard estimates that Clintonian aggressiveness today would result in 17 complaints a year.)

Dislocated workers.

On the other hand, the efforts to blunt trade's sharp edge have a mixed record. The Government Accountability Office, the investigative arm of Congress, has concluded, in a string of reports dating back to the 1970s, that Trade Adjustment Assistance has often failed to deliver training to dislocated workers, for a variety of reasons. Even today, says Brainard, it's administered with indifference: a large number of workers are disqualified from participation, while only a small portion of those eligible actually obtain services. (In 2007, for instance, 77 percent of the workers who petitioned received certification; of these, only about a third entered training, and slightly fewer collected income support.) Often, they say, states lack the resources to provide training to everyone who wants it.

Obama's reforms would address some of these concerns, but as conservative critics point out, a larger question still looms: Does trade adjustment training help workers find higher-paying new jobs? There's no way to know -- this specific program has never been studied. The most Brainard can say is that there are "broader studies that show that training programs under certain circumstances are associated with modest improvements in earnings." And Brainard argues that worker retraining is only part of solution. The current program has a community assistance component, she says, but it's very small. Yet "the community or the regional affect is hugely important. You need to have leaders of the community come together and figure out how to reorient themselves in the global landscape, which needs special help at these critical junctures."

Last updated: Nov 18, 2008




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