Americans Trade Uneasiness for a Chance to Profit Overseas
It is a paradox of the 1990s: Americans are growing ever more uneasy about the globalization of the U.S. economy, even as they are profiting handsomely from it. Christine and Mark Michelson of Peoria, Ill., are no exception.
Both work for companies that rely partly on overseas business. Christine, an executive secretary for a firm that manufactures communications towers, just got a big promotion. The couple, both in their mid-40s, recently bought a computer and new furniture. And for the first time in years, they are saving a bit.
“For us, this is the best it’s ever been,” said Mark, a truck driver for a sheet metal firm. He gives some of the credit to foreign competition. It “has made U.S. companies and workers more productive,” he mused during an interview.
Yet the Michelsons are vaguely uncomfortable with the rush toward more open global markets.
Mark, in principle an enthusiastic supporter of free trade, suspects reducing trade barriers is often “better for other countries than it is for us.” His wife has “mixed emotions” about the 1994 North American Free Trade Agreement.
A spate of polls taken over the last two years shows that their doubts are widely shared, not only in the United States but also in other major industrial countries--a backlash to globalization.
The anxiety has made its mark on several fronts. Last August, widespread opposition forced President Clinton to withdraw a critical “fast-track” trade bill that a few years ago would have moved through Congress routinely.
The administration also has had to shelve an international investment treaty that was being negotiated with 28 other countries. And a previously noncontroversial bill to bolster the resources of the International Monetary Fund is in serious trouble in Congress.
Even more stunning, when ministers of the 132-country World Trade Organization met last month to celebrate the 50th anniversary of the post-World War II global trading system, they failed to launch new talks to further liberalize trade rules.
“There simply wasn’t enough political will among WTO members to take another step right now,” said Geza Feketekuty, a former U.S. trade strategist who was instrumental in launching the last big round of global trade talks.
The angst is ironic. There is little dispute that the dramatic opening of markets and new freedom for capital flows worldwide has helped spur global economic growth--and spread wealth and prosperity--both in the United States and around the world.
Partly because of soaring exports, the U.S. economy is booming. Jobs are being created so fast that openings can be found in much of the country. In head-to-head competition with foreign firms, U.S. businesses are winning more customers than ever.
Moreover, all this is happening just as America had planned. Virtually all the major global trade accords over the last 50 years have come in good measure at the insistence of the United States.
Indeed, the WTO--established in 1995 to replace the post-war General Agreement on Tariffs and Trade--is modeled on U.S. trade law. And while Washington has lost some trade disputes with other countries, by and large the United States has fared well at its hands.
The issue is important, policymakers and private trade experts argue, because the United States must continue to maintain leadership in shaping the global trading system or it will find itself losing out to countries that want to shut out American exports.
C. Fred Bergsten, director of the Institute for International Economics, said the United States must keep global trade liberalization moving forward constantly or the effort will collapse.
Ed Sarpolus, a Lansing, Mich., pollster, said many surveys on international economic issues are skewed both by widespread public ignorance about trade and because of the loaded way in which questions are often phrased.
Sarpolus’ polling suggests that Americans believe globalization is here to stay and are ready to take on whatever competition is out there. Most also believe that the United States is faring well, he said.
Sarpolus’ findings were supported in interviews by The Times with Americans in several Midwestern cities in recent months.
“Globalization is inevitable,” said Don Crow, a 45-year-old Peoria-area assembly-line foreman whose wife, Karol, is a nurse. Asked about the impact of NAFTA, Crow shrugged. “I don’t think personally that it’s affecting our job market that much.”
Brian Buford, a 23-year-old machinist, agreed. “We’ve branched out here,” Buford said, referring to Peoria’s visible economic diversification over the last 15 years. “The more trade we have, the better off we are.”
Merrill Parsons, chairman of Excel Foundry and Machine Co., which manufactures shovels and draglines for mining operations, recalls that when domestic mining operations began to fall off, his firm found new buyers in Australia, Singapore and Peru.
This year, astonishing even himself, he is posting a full-time sales representative in Santiago, where the company has struck it rich by tapping Chile’s copper-mining boom. “We look at ourselves as a world competitor,” Parsons said.
The Clinton administration has created its own problems. Although Clinton campaigned as a free trader in 1992, he has not plugged the issue very hard, and he has been timid in defending free-trade policies against opposition.
Moreover, the administration has alienated union leaders and conservationists by first pledging to push U.S. trading partners to adopt tougher labor and environmental standards and then failing to follow through in the face of opposition from conservatives.
On the fast-track bill, some say he started too late to build a consensus, allowing labor activists and environmentalists to capture the public’s attention and set the terms of the debate. The bill would have given the president the authority to negotiate trade deals and would have only allowed Congress to accept or reject the deals in their entirety.
To Feketekuty, the administration’s biggest failing is that it never put together a proposal for another round of global trade-liberalization talks that it could use to rally free-trade and investment backers.
Instead, the White House has opted for a more piecemeal approach, seeking narrower worldwide pacts that cover trade in information technology, telecommunications and financial services--important, but not designed to forge a broad consensus.
It also has launched initiatives aimed at fashioning some regional trade-liberalization accords--one that potentially could cover the entire Western Hemisphere and another involving Asian-Pacific countries. But both are still in the early stages.
The administration’s continuing indecision on the issue was reflected at last month’s WTO meeting. While some aides had suggested beforehand that the president would propose a major new trade round, the administration instead asked lower-level trade officials from each country to compile a laundry list of current proposals to be sifted through at a ministerial-level meeting to be held in the United States in 1999.
U.S. Trade Representative Charlene Barshefsky believes the piecemeal approach still is best because it enables negotiators to push through accords quickly in such fast-moving areas as computer technology without waiting years for a full-scale trade round to be completed.
The Uruguay Round, the sweeping trade negotiations that expanded the world’s trading rules and set up the WTO, was eight years in the making. By contrast, Barshefsky won agreement on an accord governing trade in information technology in just months.
Trade tensions in the United States, already stiff, are showing signs of intensifying. Partly because of the slump in Asia, the U.S. export boom is beginning to wane. The strong dollar is cutting into American competitiveness, and the U.S. trade deficit is soaring.
Alan Wm. Wolff, a former U.S. trade official, warned that if the United States goes into even a modest slump, there could be strong pressures for protectionist policies. Already, some U.S. lawmakers have begun calling for tougher trade policies.
Harvard trade expert Dani Rodrik said Clinton’s biggest trade challenge may be here at home, “maintaining political legitimacy for open economic borders.” Without that, he said, “global capitalism becomes simply unsustainable. It’s a truth we ignore at our own peril.”
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Selling to the World
U.S. exports of goods and services to the rest of the world are rising as a share of total U.S. economic production.
U.S. jobs that depend on overseas sales are also on the rise.
Source: President’s Council of Economic Advisors