TRADE WINNERS, LOSERS

At a recent debate, Democratic presidential candidates Barack Obama and Hillary Clinton argued about the efficacy of NAFTA, the North American Free Trade Agreement, with each trying to paint the other as favoring the agreement. The debate was in Ohio, a state whose Democrats include many union members. Unions generally oppose trade agreements such as NAFTA because they believe the deals facilitate moving manufacturing jobs overseas.

In addition to illustrating how Democrats are backing away from NAFTA, a measure that was passed by a Democratic Congress and signed into law by President Clinton in 1993, the debate shows the public and political ambivalence about free trade.

According to a piece on Politico.com, a 2002 Pew Global Attitudes survey showed 78 percent of Americans supported expanding free trade. Last year, that dropped to 58 percent. “Even more striking,” writer John Fortier notes, “the strongest voices against trade have gotten louder.” Five years ago only 4 percent thought expanding global trade was “very bad,” while last year, 15 percent held that view.

John Snow, a former Bush administration treasury secretary, infamously told a newspaper in 2004 that the practice of shipping jobs to countries with lower labor costs “is part of trade.” The remark was repeated mercilessly by Democrats who argued it illustrated the Bush administration’s insensitivity to the plight of blue-collar workers. While Secretary Snow’s remarks were not what a president seeking re-election wanted to read in the paper, the statement is essentially true.

Exporting jobs bolsters the economies of developing nations. As those economies expand, the assumption is that those workers will be able to afford to buy more things, including those made in the U.S. The problem with the move to a global economy is, like any transition to a new paradigm, in the short term it creates winners and losers; if a call center or assembly plant moves to India, the immediate losers are U.S. workers, and that’s not to be minimized.

Robert Reich, who was President Clinton’s treasury secretary, remains an advocate of expanding global trade. In an e-mail response to questions from the Bangor Daily News, he noted: “The benefits from free trade far exceed the costs, and the winners from trade (including all of us consumers who get cheaper goods and services because of it) far exceed the losers. The problem is, the costs fall disproportionately on the losers – mostly blue-collar workers who lose their jobs because someone abroad can do them more cheaply.” So far, a fair system for compensating the “losers” has not been developed, Mr. Reich said. “We have no national retraining system. Unemployment insurance reaches fewer than 40 percent of people who lose their jobs.”

Though Mr. Reich continues to support free trade, he predicts opposition to it will grow, because “it has taken a terrible toll on at least 20 percent of American workers.”

Future free trade agreements, or renegotiated ones, need to twist more arms so developing nations treat workers and the environment better. And policymakers need to work to ensure that the segments of the economy that replace manufacturing – biotech, information technology, alternative energy – are nurtured and grown, and that more workers have an opportunity to break into those businesses.