Free trading social democrats

The Democratic Leadership Council offers some observations on US trade policy that are surprisingly apt here too.

While the president has always been rhetorically pro-trade, he’s presided over a long series of blunders and lost opportunities for trade expansion.

He was granted Trade Promotion Authority — basically the ability to submit trade agreements to Congress for an up-or-down vote — in 2002 in hopes that he would negotiate big agreements, including the partially negotiated Free Trade Area of the Americas and the World Trade Organization’s newly launched Doha Round. Five years later, the FTAA is moribund and the Doha Round is clinging to life, in no small part due to U.S. negligence. The string of smaller bilateral FTAs the administration negotiated instead has galvanized anti-trade sentiment without producing any significant expansion of U.S. economic opportunities. …

We must also remember the stakes involved in getting trade policy right. Expanded trade was undeniably a key part of the high-growth, low-inflation, high-wage economic expansion of the 1990s; even now it plays a key role in keeping inflation and unemployment at historically impressive levels. “Fair trade” policies that in effect restrict trade hurt far more workers than they purport to help.

While many Democrats find it tempting to “Just Say No” to Bush trade policies and refuse to offer a progressive alternative strategy, this would squander real opportunities to boost U.S. exports, create jobs for middle-class workers, provide tangible help to some of the world’s poorest and most unstable regions, and keep this country competitive in a global marketplace from which we cannot possibly isolate ourselves. …

Here’s what we recommend they accomplish this year: First, a short-term renewal of Trade Promotion Authority for the sole purpose of concluding the Doha Round. This is the only opportunity to deal with the five major partners — Canada, Mexico, China, the EU, and Japan — which account for two-thirds of American trade, along with big developing countries like Brazil and India. In conjunction with a progressive farm bill, completing Doha is the best opportunity to capture new markets and jobs, while providing critical economic help to poor and often unstable countries. ….

While it’s unlikely that a Rudd-led ALP will make the mistake of taking the fair trade path, it’s unfortunate that one doesn’t hear Labor talking about trade very often. As part of claiming the economic centre ground, it would be good to hear Labor asking frequently and forcefully why the country that formed the Cairns Group has done so little to bring home the Doha round.

Unlike bilateral trade agreements, WTO deals don’t typically get the Australian PM a photogenic press conference on the south lawn of the White House. But in economic terms, they matter a heck of a lot more – both for Australians, and for the world’s poorest.

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3 Responses to Free trading social democrats

  1. Seneca says:

    Good that the DLC is taking this line. In this morning’s Australian, there’s an account of a meeting with the new Democrat Chair of the House Committee on Agriculture; not promising. On the whole I would have thought Democrat congress reps would be more not less protectionist than Republicans because of immediate consequences on employment in manufacturing.

    As for Australia, I have felt the same way as you about hearing so little from the ALP on trade but we probably should have a bit of a think about whether Australia has in fact not been doing enough – what strategies have not been used that Labor could sensibly put forward?

  2. Sacha says:

    Like Seneca, I read the article on the new Democrat Chair of the House Agriculture Committee and was a bit disappointed – he came across as a self-described old-style politician with a strong dose of scepticism about free-trade.

    The ALP here (have to say I’m an ALP member) seems to be in a funny position for what I summise to be similar reasons, partly due to a desire to ensure people, who might be at risk of having their jobs exported, retain their existing jobs. I asked Tanya Plibersek late last year what the Caucus was thinking, in terms of both and electoral and a considered policy response, to the export of jobs overseas, and after firstly saying (from memory) that you could try to exert moral pressure on companies to not export jobs, she said that there was very little one could do to stop jobs being exported and eventually started talking about Australians focussing on what they were good at.

    The benefits of trade aren’t widely appreciated in the Australian electorate at large, which together with the fear of jobs being exported leads the major political parties to not really focus on trade hugely – although there has been some discussion by federal govt ministers on the Doha Round. The ALP appears to not have a clear idea as to its position on trade – on the one hand trade is positive, but on the other, it’s bad for jobs to be exported. The ALP seems electorally caught.

    The ALP could make a strong stand on trade by emphasising its benefits and acknowledging any downsides – but remember, it’s electorally relying a lot on the IR changes and doesn’t want to put off voters attracted to it through its opposition to the IR changes.

    By discussing trade properly, the ALP could strengthen its economic credentials which it needs to do.

  3. derrida derider says:

    If I was Rudd I’d say little on trade, too. Whatever his own views, and however sensibly an ALP goverment would act in practice, he’s got a lot of anti-globalists and union-based outright protectionists in his party. Howard would wedge him in a flash.

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