Gnawing Fear Behind Free Trade Talk : Why Clinton was right to emphasize domestic job growth to his colleagues at summit

The world’s seven leading industrial nations did reach an agreement in Tokyo to cut tariffs on some manufactured goods. The feat, predictably, was heralded as a “breakthrough”--and it was, in the sense that a total breakdown in ongoing trade talks, now in an exhausting seventh year, has been averted. At least for now.

Yet trade negotiators will resume talks later this month still butting heads in two of the most difficult and contentious sectors: agriculture and services, which were not covered in the G-7 Tokyo agreement. And adding ominous new clouds to the trade talks is a worldwide “structural unemployment problem,” as it is called, that is making the prospect of liberalized trade a threat to jobs rather than an opportunity to create new ones.

At home, each of the G-7 leaders faces slow growth or a recessionary economy and high unemployment (except for Japan, with its jobless rate at just under 3%).

Many domestic industries and interests, seeking to ride out the difficult period, are putting political heat on their leaders to avoid new trade commitments because of fear that competition from imports may cost jobs at home. Moreover, the argument goes, people without jobs can’t buy goods, imported or homemade, cheaper or not.

President Clinton has recognized that joblessness poses an increasing challenge to global economic interests. Before he left for Tokyo, Clinton described a “troubling” new economic era with stubbornly high unemployment rates. The President called for a meeting of finance and labor ministers from the G-7 nations “to search for the causes and possible remedies for this structural unemployment,” which has been characterized by some as the worst since the 1930s.

Even though they are under strong political pressure from some quarters to protect the status quo, the G-7 leaders must find new approaches to the vexing paradox of low job growth amid productivity gains.

Toward that end, the Administration must put more muscle into pressing for a successful conclusion of the world trade talks, held under the auspices of the General Agreement on Tariffs and Trade. The tariff- cutting pact on manufactured goods helps, but there is a long way to go to wrap up similar agreements on agriculture and services by the Dec. 15 deadline for presenting a proposed treaty to Congress.

Trade and exports have been an engine of U.S. economic growth, and they will continue to be with expanded free trade agreements. The Administration must work at persuading Americans and other nations that their future, jobs and prosperity rest in a global economy. Clinton’s home-front interests are not all that different from his G-7 brethren.