Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).

“Change a losing game” is a classic adage in the world of sports that progressive trade policy critics inside and outside the Democratic party need to start following fast.  Otherwise, they’ll ruin the best chance in a decade to set America’s globalization strategy straight by defeating a series of new outsourcing-focused trade deals coming before Congress, as well as President Bush’s upcoming request for renewed fast track trade negotiating authority.  

The early signs, however, are discouraging.  With most of the critical details of the new trade policy compromise between House Democratic leaders and the White House now released, the progressive critics should be recognizing the biggest problem with their longstanding strategy: basing opposition to current trade policies overwhelmingly on the narrow demand that future deals require sanctions for mistreating workers and polluting the environment.  

The critics should admit, at least to themselves, that because such symbolic proposals cannot significantly change trade flows, outsourcing multinational companies and their hired hands in Congress have called their bluff and substantially granted their demands. And they should be broadening their critique of current trade policies to target those features most damaging to the workers and domestic companies comprising America’s most economically and strategically critical  industries.  

Instead, too many progressives seem bent on continuing the losing game by (a) inaccurately accusing House Democratic leaders of striking a deal too vague to be meaningful; and (b) holding out for a series of second-tier objections to the new policy that are simply too insignificant to carry the day.  In the process, they have unavoidably exposed trade policy critics across the board to caricature as cranks who simply can’t take “Yes” for an answer.

The labor-environment approach to trade policy has had a certain tactical utility for progressive trade critics.  Essentially, it has created “plausible deniability” against the charge that they are simply fronting for lazy, selfish domestic American companies and workers.  Their demand for strong worker and environmental protections, the critics insisted, was in fact much likelier to bring expanded trade’s benefits to low-income countries and their populations than the version of trickle-down theory peddled by the free-trade establishment.

Nonetheless, from the standpoint of U.S.-based producers, these tactical benefits were quickly overwhelmed by the costs.  Indeed, by the tumultuous 1999 World Trade Organization meeting in Seattle, the plight of American domestic companies and U.S. workers harmed by outsourcing-focused trade policies had almost completely vanished from the screens of both the protestors in the streets and the global elites behind closed doors.  The declared central question for both was whether the global trading system is fair to the so-called Global South.  

Similar concerns also dominated the 2002 debate on renewing fast track authority.  The nail-biter vote turned mainly on whether conventional trade expansion or the labor-environment strategy would create the most economic opportunity for third world populations and therefore innoculate them against the appeal of Al Qaeda and other violent extremists.  Strangely, the only hope held out by both fast track supporters and opponents for Main St. businesses and their employees was another version of trickle-down:  Each trade alternative would eventually enrich third world consumers and thus create vast new markets for U.S.-based producers.  Completely ignored by both sides was how the Latin American peasants, Chinese sweatshop workers, and African cotton farmers portrayed as globalization’s main victims could possibly prosper in the long-run if the American consumer – their biggest customer by far – finally became tapped out by unequal trade deals.

And of course, the Doha round of WTO negotiations, whose fate is linked to fast track, was expressly designed to ensure that developing countries reap the greatest gains from trade expansion.  

As I explained in an AmericanEconomicAlert.org column April 4, the House Democratic leadership’s first proposal to break the labor-environment impasse laid bare for all wishing to see the other main flaws of the labor-environment strategy:
– First is its almost complete lack of enforceability in the real world.
– Second is the strategy’s virtual irrelevance to the pervasive subsidies and other predatory practices that have distorted global trade flows in the capital- and technology-intensive industries comprising America’s industrial backbone, and that represent a much greater threat to America’s future than labor-intensive sweatshop imports.  Significantly and ironically, these subsidies, including currency manipulation, are typically extended to any U.S.-owned companies that manufacture in mercantilist countries.  
– Third is the progressives’ failure to address the very third world focus of recent U.S. trade policy.  By promoting trade – and thus investment – so singlemindedly with developing countries that are  incapable of adequate consumption and therefore reliant on export-led growth, Washington has both encouraged the massive offshoring of manufacturing production and jobs, and supercharged the trade deficit.

On May 10, the outsourcers revealed just how easily they could live with the labor-environment agenda:  They endorsed it.  They approved the inclusion of enforceable protections for workers and the environment in the core (i.e., legally binding) text of pending trade deals with Panama and Peru.  House Democratic trade czars Charles Rangel of New York and Sandy Levin of Michigan agreed with the White House that this new trade framework would also be applied to recently struck deals with Colombia and Korea (pending resolution of major additional problems in each country).  And all touted their expectations that the compromise eventually would permit renewal of fast track.

Since then, numerous progressives in and out of Congress have been objecting furiously – but all that they’ve accomplished has been to paint themselves into an ever tighter and less defensible labor-environment corner.  For example, initially lacking a text they could examine, the critics blasted Rangel, Levin, and House Speaker Nancy Pelosi (D.-CA.) for orchestrating a deal without consulting rank and file House Democrats adequately.  

When this procedural argument quickly reached its limits, another, potentially decisive objection was quickly substituted: The Democratic leaders had betrayed their own caucus and base groups by producing a sham compromise.  Specifically, they charged, Rangel, Levin, and Pelosi were misleading the trade critics.  The labor and environmental provisions were not mandatory after all.  They weren’t even in the core text.  They appeared in side letters or similar documents that the NAFTA experience showed to be legal nothing-burgers.

This charge. however, seems to be flat wrong.  The House Ways and Means Committee, chaired by Rangel, has not posted on its site a legally definitive description of the compromise.  But what has been posted strongly indicates that every major measure that the progressive trade critics sought has been provided.

For example, the critics wanted signatories to trade agreements to be bound by internationally recognized labor and environmental standards, rather than their own national laws and regulations.  On the labor front, the compromise states, “Countries would be required to adopt, maintain, and enforce in their own laws and in practice the five internationally recognized labor standards as stated in the” Declaration on the Fundamental Principles and Rights at Work issued by the International Labor Organization.  In environmental matters, the requirements to “adopt, implement, and effectively enforce” laws and regulations center around various Multilateral Environmental Agreements to which all signatories are parties.  

Several qualifications attach to both sets of requirements.  Regarding worker rights, actionable violations must result from “a sustained or recurring course of action or inaction.” Yet this makes perfect sense.  Or is anyone seriously proposing to sanction an entire economy or industry for a single infraction?  Abuses must affect “trade or investment between the two parties as well,” which could create a loophole, but one that’s unavoidable in a trade agreement – as opposed to a sweeping common market-type arrangement that could even more easily undermine national sovereignty.  And although the labor standard is the nonbinding ILO declaration above rather than binding ILO conventions, the United States hasn’t ratified the vast majority of the latter.  So until the American people’s elected representatives change their minds on that score, proposals to this effect are rightly non-starters.

Actionable environmental offenses also must “affect trade or investment.” Moreover, the critics are disappointed that the Kyoto Protocol on greenhouse gas emissions didn’t make the list of international agreements that create the compromise’s substantive environmental framework.  That measure, however, was rejected almost unanimously by the Senate several years ago; thus demands for its inclusion amount to backdoor policymaking – always a bad, undemocratic practice.

The progressive critics have long insisted as well that protections for labor and for the environment receive the same status as protections valued by business – such as those provided for intellectual property rights.  Accordingly, the compromise states that trade deals’ labor and environmental obligations will be “subject to [the] same dispute settlement, same enforcement mechanisms [remedies], and same criteria for selection of enforcement mechanisms [remedies] as all other FTA [free trade agreement] obligations.”

The critics are correct in observing that these deals contain no guarantees for workers or for the environment.  Yet no regulatory or dispute-settlement system is perfect, or even close.  Clever lawyers and diplomats will always find ways to evade convictions and punishments.  And many violations of even the best written rules will always go undetected.  These weaknesses are obvious even within national systems, where sovereign governments enjoy relatively high degrees of control over people and events.  They inevitably pose even greater difficulties in international contexts like treaties, when other sovereignties by definition have to be dealt with.

It is also indisputably true that the compromise fails to adopt many of the progressive critics’ other longstanding positions.  Its brief treatment of NAFTA’s controversial Chapter 11 provisions that can weirdly give foreign investors in the United States greater rights than their American counterparts does seem nonbinding, and therefore unsatisfactory.  Nor does the new trade policy appear to protect federal and state procurement policies that seek worthy goals such as encouraging recycling and renewable fuel use, “Buying American” goods and services, and boycotting companies doing business with violently repressive countries like Sudan and Burma.  

Yet the politics of U.S. globalization policies clearly will not hinge on these issues, if only because they affect relatively little commerce and therefore relatively few businesses and jobs in this country.    Therefore, these shortcomings will energize few of that large herd of Representatives and Senators lacking any strong convictions about globalization either way, and hoping simply to follow their leaders toward a seemingly reasonable, politically safe middle-ground.

The progressive critics are right to call U.S. trade policy a disaster area.  Yet as the emergence of the trade policy compromise shows beyond reasonable doubt, a failure to understand the principal reasons for a disaster can make needed solutions much harder to reach.  It’s imperative that these critics change their losing game.  They must dramatically shift their focus and start talking about the main realities characterizing U.S. trade policy and world trade flows.  For they comprise and influence a big  voting bloc in Congress.  And the final buzzer is about to sound.

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