Clinton Drops the Free-Trade Flag

President Clinton entered office eight years ago as a firm believer in free trade, using his formidable political skills to push through Congress some difficult trade expansion agreements. No longer. Trying to please important Democratic constituencies--mainly labor--in an election year, he has yielded to some of the most protectionist elements, diminishing his free-trade legacy. More important, his position is undermining the World Trade Organization, an important ally in Washington’s push for open markets, and endangering the congressional approval of the trade pact with China.

Last December’s WTO meeting in Seattle, aimed at kicking off a new round of trade liberalization talks, did not fail because of street demonstrations by opponents. Rather, the collapse came on Clinton’s insistence that labor and environment standards be included in trade agreements, a position that a vast majority of WTO member countries see as protectionist. Clinton is far too skilled a politician not to have known that his position--since reinforced by his speech in Davos, Switzerland, last month--will scuttle WTO talks for the rest of his term. He has clearly decided that electing Al Gore president is more important than free trade at this time.

Arguably, the world can do without a new trade round. Trade, cross-border investment and communications are expanding without it. But the world needs the WTO. With its basic rules of fairness and equal treatment, along with reams of specific regulations and a system to enforce them, the WTO acts as the only referee in the global economy. By playing to political elements at home, Clinton has planted the seed of discord, suspicion and downright hostility within the organization.

The United States, with most of its markets wide open, has used the WTO effectively to force other countries to open theirs. Using WTO membership as a lure, Washington has been able to sway China to agree to some radical reforms of its economy.

But now Clinton’s coddling of labor and an array of pressure groups opposed to trade has endangered the China agreement. The forces that demonstrated in Seattle are also opposed to the WTO agreement with China, and they will do all they can to defeat its ratification. Clinton himself has staked considerable political capital on its passage. This could tempt many congressional Republicans, even those favoring trade with China, to humiliate Clinton by joining the opposition and voting the deal down.

That would only compound Clinton’s mistake and endanger U.S.-China relations. The president has already forfeited his credentials as a free trader.