How do those of us whose livelihoods are fundamentally tied to international trade come to terms with the debate on trade in the presidential campaign?
Should we be worried about the left-leaning tone of the rhetoric and concerned about what changes in policy it could lead to? Should we be patient, knowing that candidates who vilify free trade during the campaign always become more moderate once in office? Should we question our own free-trade views, acknowledging that the country has shifted over the past decade and that we would be better off being part of the discussion rather than isolated outsiders? Or should we shrug our shoulders, believing that trade volumes are more closely tied to economic growth, retail spending and foreign exchange rates than trade policy, and that the smooth flow of trade is more than anything else a function of infrastructure? In other words, should the trade debate even matter to us?
To address the last question first, perhaps we shouldn't care. Recent history, after all, suggests a tenuous connection between trade flows and policy. There has been no global trade accord since the Uruguay Round was signed in 1994 and the current Doha Round is bogged down over agriculture subsidies. Congress refused to grant the president fast-track authority from 1994 to 2002, and the current fast-track authorization, which expired in July, has no immediate prospects for renewal. Despite all that, trade volumes in the U.S. and worldwide have exploded, and the question for most countries is how to build enough ports and roads keep up.
On the other hand, how could the trade debate not matter? It's the difference between seeing what's inside a container as trade or merely freight. Trade policy may not affect month-to-month port statistics, but the trade flows we witness every day in the U.S. can be attributed to the open trade policy the country has maintained since World War II. The real question, therefore, is whether in the heat of this campaign we are witnessing signs of any real shift in policy.
I don't think so. On the surface, the reality of trade's benefits has certainly gotten lost, if it was ever understood to begin with. With wages stagnating, according to some analyses, the focus on trade has sharpened and the perception of trade has turned negative. Politicians now support the nebulous concept of fair trade. Free trade, long a benign label, is now a term of derision.
But is the debate on trade a true debate about existing policy, or a byproduct of larger issues? No credible economist will argue that the open trade policy of the U.S. has been a net negative for the country. It is a truism in the economic profession that trade contributes to this and other nations' prosperity by opening markets, combating inflation and facilitating a shift to higher-wage economies. Limited segments of workers always get hurt as trade expands, but the overall effect is positive.
That is why members of Congress who represent localized constituencies tend to oppose trade deals while the president, whoever it is at the time, will always push forward on trade in the interests of the nation as a whole.
And that is why trade is a red herring in the campaign. The real issues are different and larger, and trade is merely a scapegoat. The nation is confronting huge internal challenges, and the political system has temporarily lost the ability to tackle them. The end of the Cold War and the notion of the U.S. as the sole remaining superpower has been eclipsed by the emergence of a new multipolar world dominated by powers such as China.
There is concern about a litany of issues - health-care costs, quality of education, influence of special interests, the economy, America's reputation abroad and the war in Iraq. In this jittery environment in which all the candidates to one degree or another are calling for a change in the direction, it's inconceivable that trade will be spared rhetorical abuse.
But that's all it is. Take the question of U.S. sovereignty. This is not a trade issue, but trade has been dragged into it. On his Web site, Ron Paul says, "So-called free-trade deals and world governmental organizations like the International Criminal Court, NAFTA, GATT, WTO and CAFTA are a threat to our independence as a nation. They transfer power from our government to unelected foreign elites."
So trade folks, sit back, relax and enjoy the show. It's already entertaining.