Clinton Drawing Visionary Blueprint of Global Economy : He clears path for U.S. to tap into vibrant economies as he heads for hemispheric summit in Miami

With his congressional victory on the world trade treaty behind him and a market-opening hemispheric summit convening Friday in Miami, President Clinton is compiling a more ambitious record of trade liberalization than any President since at least Harry S. Truman.

This record inverts the predictions--common here and even more so abroad--that Clinton’s election would give protectionists the reins over U.S. trade policy. Today, the spearhead of protectionism is a conservative populist movement led by Ross Perot and Patrick J. Buchanan. (Senate Minority Leader Bob Dole’s painful hesitation before finally endorsing GATT was a weather vane of their growing clout in the Republican Party.) And it is Clinton who is sketching the expansive, even visionary, blueprint of a new architecture to guide international economic relations into the next century.

The first piece came last year when Congress approved the North American Free Trade Agreement linking Mexico and Canada with the United States; the second last week, when Congress approved the General Agreement on Tariffs and Trade, which should cut tariffs worldwide by more than a third.

Potentially, the next two steps are even more sweeping. Last month, Clinton--and Indonesian President Suharto--steered 17 Pacific Rim nations, including China and Japan, toward a broad commitment to eliminate trade barriers in the region over the next quarter of a century. This Friday, 33 Caribbean, Central and South American nations will gather at the Summit of the Americas, where they are expected to endorse a free-trade zone stretching through the Western Hemisphere.

Clinton can’t take all the credit for this. The GATT train began chugging under President Ronald Reagan; President George Bush negotiated the heart of NAFTA and fleetingly floated wider arrangements in Asia and Latin America.

But it was Clinton who carried the NAFTA and GATT initiatives past international and congressional hurdles to conclusion. And he has planted the seeds for agreements that, if fulfilled, would reshape our economic dealings with the world’s two fastest growing regions--Asia and Latin America. “It adds up to a pretty substantial achievement,” said I.M. Destler, a trade scholar at the Institute for International Economics.

No one in the Clinton Administration underestimates the practical difficulties of putting flesh on free-trade visions across Asia and the Americas. While Latin American countries are generally enthusiastic about uniting with the United States, the frustration attending U.S. efforts to open markets in China and Japan could foreshadow what’s ahead in Asia. “Integrating the Latin American countries won’t be that hard,” said C. Michael Aho, senior international economist for Prudential Securities Inc. “The real problem is going to be South Korea, Japan, China.”

The United States is not without leverage in these discussions: Most Asian countries want the United States to maintain a strong military presence in the region--partly as an offset to China--and enhanced market access could be at least an implicit quid pro quo. (Secretary of State Warren Christopher suggested as much at the first Asia-Pacific Economic Cooperation meeting in Seattle last year.) And the move toward new trade ties is rooted in the same force that is prompting developing nations around the world to deregulate their domestic economies: hunger for the foreign investment that fuels development. “What’s driving the quest for open trade . . . is a very competitive culture of economic liberalization,” said Commerce Undersecretary Jeffrey E. Garten. “If it wasn’t for that, we never would have gotten to this point.”

But even if the Latin and Asian countries are sincere, enormous difficulties remain in marrying into open trade zones economies and societies built on such divergent principles. The difficulty of bolstering environmental and labor standards in Mexico almost sank NAFTA; but Mexico is practically a workers’ paradise compared to Asian countries like China, which suppresses basic civil liberties, or Malaysia and Indonesia, which deny the rights of workers to establish independent unions in key sectors.

Sorting through all of this will take years. It’s possible that such inevitably prolonged negotiations may become meaningless or even worse: an excuse for deferring action on immediately pressing problems, such as providing greater market access for American firms in Japan or China.

Avoiding such delays is one reason Administration officials understand that these efforts must demonstrate tangible progress along the way. In Asia, they envision advancing “horizontally” with regionwide agreements on questions such as an investment code and harmonizing technical standards; in Latin America they want to proceed “vertically” by adding countries sequentially to NAFTA.

No one can predict whether Clinton’s successors will reach the finish line of free trade throughout this hemisphere, much less across the deeper cultural and economic divides that separate us from Asia. But with America searching for foreign policy principles to replace the obliterated moorings of the Cold War, even setting the goal provides order and direction.

The prospect of an expanding hemispheric free-trade zone through South America could reinforce economic reform and democracy throughout the region.

In Asia, the stakes are even larger. Japanese companies are now better positioned than American firms to profit from dynamic Asian growth; by unmistakably signaling America’s commitment to the market, the APEC negotiations should encourage U.S. firms to follow the flag with investment and trade. At the same time, the project should preempt exclusionary efforts to form an Asia-only bloc, and reassure Asians that America remains committed to the region’s stability and balance.

Ultimately, Clinton’s trade agenda will be judged less for its impact on political stability abroad than its contribution to opportunity at home.

The congressional fights over NAFTA and GATT underscored the skepticism that many Americans feel about lowering trade barriers at a time when wages are already stagnant or slipping. Those fears shouldn’t be dismissed: While economists disagree on the magnitude, it is difficult to deny that absorbing millions of Third World workers into the world economy will intensify the downward pressure on wages, especially for American workers without advanced training and education.

But there’s no turning off the globalization process creating those competitors in Mexico or China; it would continue if the United States voted down GATT and dissolved NAFTA. The real question is how America can prosper in this difficult new world economic order.

Any long-term project to lower trade barriers adds to the urgency of greater public investment in training and education (although Clinton may have difficulty convincing the new Republican Congress). But unless America can export more to the rising nations that are manufacturing products that used to be built here, we are unlikely to generate new jobs to replace those inexorably drifting to lower-wage countries. Today, Asian and Latin American nations are in the market for the ligatures of modernization--telecommunications systems, roads, power plants, hospitals--and eventually a growing middle-class will open its wallets for Jeeps, software and movies. America can’t prosper without securing its share of those sales.

At a time when protectionist pressures are growing, Clinton has grasped that main point. Notwithstanding all the practical and political hurdles that loom ahead, he is clearing a path for the United States to tap into the world’s most vibrant economies. If he has hesitated on other foreign policy challenges, in this contentious arena Clinton is doing precisely what a President is supposed to do: attacking insecurity by confidently defining the future.

Trade Trouble

President Clinton is trying to broaden American access to some of the world’s fastest-growing economies. Our economic relations with many of these nations are seriously unbalanced: The United States is running a cumulative merchandise trade deficit with the APEC nations and those that will gather this week in Miami for the summit. Some examples:

U.S. merchandise trade balances, January-September, 1994 (in millions of dollars) Deficit APEC*: -91,712 Japan: -47,268 China: -21,089 Canada: -9,503 Summit*: -7,100 S. Korea: -1,447 Brazil: -1,212 Surplus Chile: +547 Hong Kong: +1,483 Mexico: +1,796 Argentina: +2,010 Australia: +4,860 * Includes all countries in the prospective trade zone.

Source: U.S. trade representative