A New Tack on Trade Issues

Last year in Seattle a dispute between the poor and developed countries over labor and environmental rules sparked riots against globalization and scuttled a World Trade Organization attempt to launch a new round of liberalization talks. The issue still divides the rich countries from the poor, and new global trade talks won’t start any time soon. But the debate has yielded promising ideas that may help bridge the divide.

President Clinton virtually assured the collapse of the Seattle talks when he said trade sanctions should be imposed on countries that did not meet minimum labor or environmental standards. The White House has been backtracking ever since, notably by taking a much more conciliatory tack in its recent free-trade agreement with Jordan. That deal provides that both sides enforce their own labor and environmental laws. This approach, which the administration now is taking in free-trade talks with Singapore and Chile, does not dictate social or environmental standards to U.S. trading partners, but it does address concerns that developing countries might be excluded from world trade because they will not or cannot play by Western rules.

On the downside, trade accords that merely bind signatories to abide by their own laws provide no incentives to improve for countries with poor labor or environmental practices.

Clearly, it is in the interests of all countries to improve the living conditions of workers and to sustain the environment. The solution: Developing countries will have to combine open trade with market incentives and financial aid. For example, creatively labeling imports that used no child labor would give importers a powerful marketing tool.

The concern over labor conditions and environmental practices long predates the Seattle meeting, but that gathering’s failure rightly helped to focus governments on finding just solutions.