Push Fight for Open Trade
The trade figures have come in for July, and once again they show that consumers’ insatiable appetite for imported products has driven the trade deficit to record levels. That’s bad news. Not economically speaking, but because statistics like these make it increasingly difficult for the government to pursue market-opening trade agreements with other countries and to defend its open-trade policies against growing U.S. protectionism.
The bulging trade deficit is part and parcel of America’s economic success story of the 1990s. The administration should stick to its open-trade policy and redouble its support of trade legislation languishing in Congress. Among the key bills that should be enacted are those extending trade privileges to the Caribbean Basin, Central America and Africa. Opening U.S. markets to the poor countries should go together with the administration’s effort to force foreign markets to open up to American exporters in the new round of global trade liberalization negotiations scheduled in Seattle in late November.
For the past eight years, the United States has enjoyed uninterrupted economic growth. Inflation is subdued and unemployment stands at record lows. With manufacturing up 38% since 1992, American workers are making more products today than ever before. But, with consumers on a buying tear, the 1990s have seen a tripling of the trade deficit, the value of imports over exports.
Opposition to the trade bills for the Caribbean and Africa comes mainly from textile companies and labor unions that feel threatened by the inflow of cheap clothing from those regions. Southern California’s flourishing new textile industry serving Mexican garment manufacturers is among the most vocal opponents of those measures, claiming that thousands of jobs will be lost here if U.S.-based companies are forced to move production overseas to compete. This industry already owes its existence to the North American Free Trade Agreement. U.S. companies make and dye cloth for garment factories that have sprung up in Mexico as a result of NAFTA.
The benefits of opening U.S. markets to the poorest countries extend beyond economics. Trade helps to generate legitimate wealth in these countries, stabilize their governments and create new opportunities for U.S. exporters.
The 1990s have shown that America’s open markets are a key ingredient of its economic prosperity. The administration should continue to fight to keep them open.
