Getting Trade Right

There are few issues on which mainstream U.S. media coverage is less adequate than trade. The standard framing for reporting on trade is that U.S. environmental and labor organizations are trying to impose U.S. standards on third-world countries (which don't feel they can afford them), and that the U.S. public faces a hard choice -- retreat into protectionism, which denies these countries a chance to develop, or lower our own standards.

Occasionally, however, a different underlying dynamic pops through the surface as it did this week. China announced a major revision of its labor laws, a change that, if enforced, would eliminate many of the worst workplace abuses in the Chinese system. Among other changes, it would require employers to provide written contracts for their workers, restrict the use of temporary laborers, and make it harder to lay off employees.

There are some serious questions about enforcement here -- but passage of this law leaves no doubt that the government of China favors better conditions and wages for its workers. And one would think this would be a cause for common celebration, especially among those who have sadly told us that we simply cannot impose our standards on the world, and that if we want to compete with China, we will need to lower our expectations.

But what is surprising is that the advocates of free trade, far from welcoming this Chinese effort to "harmonize" American and Chinese standards, have been viciously lobbying China not to enact these laws and saying that, if China raises its standards, they will move their factories elsewhere. Companies like Wal-Mart, Microsoft, and AT&T, acting through the American Chamber of Commerce in Shanghai and the U.S.-China Business Council, have been working for months to block this new law.

So the very voices that in the U.S say, "we can't have high labor and environmental standards because we must compete with China's lower rules" are also working to prevent the Chinese from raising their own standards. If there is any doubt that the real story is that these companies want to use trade as tool to lower environmental standards and worker protections, this incident should put that doubt to rest. It is not the reality of globalization that is forcing environmental and labor standards down -- globalization is simply the pretext for the race to the bottom.

And that dynamic, in turn, explains why the Democrats in Congress announced this week that they would oppose pending trade agreements with Colombia and South Korea,and delay votes on parallel agreements with Peru and Panama, in spite of having extracted substantial concessions on labor and the environment from the U.S. Trade Representative with regard to the latter deals.

The reality is that neither the major multinational corporations involved in trade nor the U.S Trade Representative has accepted that if we are to move forward into a stable era of expanded trade and growth, we must do so on the basis of ground rules designed to raise all boats, not framed as a race to the bottom. The European Union has demonstrated that trade agreements can reduce disparities of income and raise the standards of the poor. That neither NAFTA nor the World Trade Organization can point to similar successes is not an accident, nor is it the result of bad luck. NAFTA and the WTO were designed to benefit the fortunate and to afflict the desperate -- and that is still the course that U.S. trade policy is following. The issue is not trade (free or fair) or no trade -- it is what kind of world we are trying to build. And when the Chinese decide it is time to provide their workers with more rights, and affluent American companies oppose this tiny step forward, we should all recognize that what we are seeing is nothing more or less than a desperate effort to keep trade from benefiting either the poor or the environment.