LIVING WITH FREE TRADE

Politicians suddenly care about free-trade issues again, especially those in an election and especially in Maine. The Bush administration has been conflicted, talking strongly about trade but slapping penalties on certain lumber imports from Canada and managing to offend both manufacturers and consumers by imposing and then lifting penalties on imported steel products.

Democrats are similarly up and down on the issue. Among the party’s presidential candidates, Richard Gephardt voted against the North American Free Trade Agreement commonly known as NAFTA, and agreements with China and the World Trade Organization, and has vowed, if elected, to renegotiate them all. He likes to say, “Our trade policies remind me of the Red Sox sending Babe Ruth to the Yankees.” Some others among the Democratic candidates have supported the agreements. And Dr. Dean has flipped back and forth.

Mainers are similarly divided, but as NAFTA’s 10th anniversary approaches an 80-page report on its impact on Maine’s economy, with a target publication date of Jan. 9, may help clear the air. The state-financed study, by Charles Lawton and Frank O’Hara, of Planning Decisions of South Portland analyzes the matter sector by sector. Early word on their conclusions is, predictably, that there are winners and losers. Some jobs have been lost, of course, and never will come back. But other jobs have been created through the benefits of foreign trade. And consumers generally can buy things more cheaply. Buy American sounds great, but just try to find an American-made shirt or pair of gloves. The report is understood to outline ways in which the state and federal governments can work together to manage the impact on firms and workers that are adversely affected.

Manufacturing jobs in Maine have been declining for several decades – long before NAFTA. Even more Maine jobs have been created in the non-manufacturing sector. That means a net gain in total jobs, although lower wages and fewer benefits also must be considered. Incidentally, don’t worry yet for a while about the new call-center jobs running away to foreign countries. India, for the present at least, is going after high-tech calling such as Microsoft’s customer service department, a minority of the Maine business, those the kinds of jobs Maine would do well to have.

Opponents of free trade rightly object to the low wages paid in manufacturing plants in China, Mexico, Bangladesh and other countries where goods once made in America are now produced. The rightly object, too, to the damage done to the environment by those foreign manufacturing operations. But there is as real question whether a new protectionist economy in the United States could raise living standards and save environments abroad.

Maine’s solution lies in devising new products and services, such as developments in seafood and forestry, and in retraining, as described recently in the BDN’s report on the Katahdin Regional Higher Education Center in East Millinocket.

Ranting against imports isn’t going to change anything. Globalism is here to stay, and Maine’s future lies in adapting rather than fighting it. Perhaps a useful guide would be the old story of Danish King Canute, said to have ordered his courtiers to place his throne on the beach so that he could order the tide to stop coming in. It came in anyhow, of course, and he had to back off or get his feet wet. Later studies have suggested that Canute was not a dummy at all but staged the affair as a lesson to his courtiers that even a king was not all-powerful. Maine could take a tip from Canute.