Clinton Knows Domestic Policy, Not Trade Policy, Is Key to Prosperity

Last week, Ross Perot spent hundreds of thousands of dollars to tell most Americans what they had already figured out for themselves: Our economy is in serious trouble. The Bush Administration has compiled the worst economic record in 50 years, with the slowest output growth, the slowest jobs growth and the slowest income growth since the Great Depression.

Since President Bush assumed office, America has lost 1.3 million manufacturing jobs. Many of these jobs have migrated abroad--some, we now learn, in response to incentives generously offered by the Agency for International Development, an arm of the U.S. government. Others have been destroyed by the collapse of demand at home.

This year, for the first time ever, more Americans work in government jobs than in manufacturing jobs. And the unemployment rate is at an eight-year high.

The income gains of the roaring 1980s were captured by the richest 2% of Americans. Small wonder that Ross Perot’s pleas for fair-shared pain to reduce the federal deficit ring hollow. The rewards weren’t shared equally. Why should the pain be?

Until quite recently, international trade was the one relatively bright spot in the nation’s dismal economic performance. In 1987, our merchandise trade deficit peaked at about $160 billion. It then began to decline steadily and sharply, falling to about $66 billion in 1991. But now it is on the rise again and may well hit $80 billion by the end of the year. In other words, despite the economy’s prolonged stagnation, which has held imports at bay, and despite the dollar’s fall, which has made our exports cheaper, the trade deficit is growing. This is ominous news. Imagine what will happen if and when the economy begins to recover.

Most of the improvement in the trade imbalance during the last four years resulted not from an aggressive trade policy but from our slow growth, the economic expansion of our trading partners--who grew three to four times as fast as we did--and the 50% decline in the dollar’s value since the mid-1980s. Exports accounted for 70% of what growth we did manage to eke out. But now that the rest of the world is slowing down, our exports are stagnating. We can no longer count on export-led growth.

President Bush has worked on only one side of the competitiveness equation. Exports have indeed increased under his stewardship. But as President Reagan’s own commission on industrial competitiveness argued nearly a decade ago, competitiveness means more than exports. Competitiveness is a nation’s ability to meet the test of international competition in the global marketplace while simultaneously increasing the living standards of its citizens. According to this definition, the Bush Administration has been a failure.

In contrast to Bush, Gov. Bill Clinton understands that competitiveness begins at home. Trade policy is not an adequate substitute for domestic policy. Rather we need both a trade strategy that will open markets abroad and a domestic strategy that will create high-wage manufacturing jobs and increase living standards at home.

Clinton’s comprehensive approach to competitiveness is apparent in his positions on specific trade issues. Last week, for example, Clinton expressed his support for the North American Free Trade Agreement.

At the same time, he argued that the agreement is merely one of several initiatives that together constitute an integrated approach to the formation of a North American free trade area, one that will benefit all Americans, not just a lucky few, and one that will honor our standards of environmental and labor protection.

To realize this objective, Clinton said the agreement must be complemented by new legislation to help workers, farmers and communities dislocated by freer trade with Mexico and to clean up the U.S.-Mexico border, and by supplemental agreements with Mexico and Canada to enforce environmental and labor standards.

Bush maintains that the current NAFTA agreement already addresses Clinton’s concerns. But there are grounds for skepticism. For example, the Administration recently proposed a fund of $335 million a year to retrain workers adversely affected by the agreement. But this campaign promise is hardly comforting given the long history of Bush Administration efforts to eliminate the Trade Adjustment Assistance Act. On this issue, as on so many others, the President’s record is a better guide to his ultimate intentions than what comes out of his lips.

The President is also working with Canada and Mexico to establish a supplemental commission to deal with border pollution and to encourage the enforcement of each country’s environmental laws. But so far there has been only an agreement in principle to create such a commission, and according to the Administration’s own timetable it will not be formalized until after the NAFTA treaty is signed.

In other words, the environmental agreement is on a slow track while the trade agreement is on a fast one. But this is self-defeating: Once the trade agreement is signed, we will have tossed away all of our carrots and most of our sticks.

For the President, both the worker and the environmental concerns raised in conjunction with NAFTA have consistently been an afterthought, grudgingly acknowledged in response to uninvited and unappreciated congressional pressure.

In contrast, Clinton has consistently argued that these concerns must be addressed as a condition for his support of the agreement. Which candidate is waffling? Who is more credible? The answer seems obvious.

Other Clinton trade policy proposals also reveal his belief that the nation’s trade successes must build on a solid domestic foundation. The governor recognizes that most of our trading partners still promote and protect many of their industries, especially those producing high-technology goods, which account for at least 40% of our exports.

As a result, the United States must actively use its own trading laws to improve the access of American companies to lucrative foreign markets. That’s why Clinton supports renewal of the so-called Super 301 clause of American trade law which requires the United States Trade Representative to identify foreign trading practices that impede such access and negotiate their elimination. Clinton also is a firm supporter of the Uruguay negotiations to strengthen the General Agreement on Tariffs and Trade. But he is opposed to a GATT agreement that would require us to waken or discard our trade laws in return for vague multilateral rules that are not enforceable.

Under a Clinton presidency, trade policy will be an extension of domestic policy by other means.

Only with such a comprehensive approach can we revitalize the American economy, reverse the glaring inequities of the 1980s, control protectionist pressures at home, and exercise economic leadership abroad.