Free Trade: Why America Is Needed but Americans Are Not So Sure

Susan A. Aaronson
Susan A. Aaronson Research Professor - George Washington University, Director - Digital Trade and Data Governance Hub

December 10, 1996

Officials from some 125 nations have converged on Singapore, a nation booming because of trade. Their objective is to review the status and plot the future of the World Trade Organization (WTO). But they should have headed to the United States, because American support is essential to the organization’s continued success.

The WTO was designed to provide a permanent forum for member governments to develop and refine trade rules, and to help settle trade disputes among members.

But the two-year-old WTO, like its predecessor, the General Agreement on Tariffs and Trade (GATT), is a “work in progress.” Its effectiveness is reflected in its ability to (a) meet changing economic conditions and (b) govern the wide range of policies that nations use to protect domestic consumers and producers. To succeed in both tasks, the WTO must gradually expand its purview.

The GATT’s 50th anniversary could stimulate debate on costs and benefits of economic interdependence.

There is a catch to the expansion process:

On the one hand, for nations to prosper and improve their people’s lives, policymakers must develop shared global as well as national rules.

On the other hand, adoption of global rules may affect domestic objectives such as preserving high-wage jobs from lower-wage foreign competition.

In many countries this conflict has created opposition to additional global rules. In the US it has fostered a growing protectionist and isolationist constituency among people of the left and right.

Many of these individuals have demonized the WTO. They have brought to the fore of the public agenda concerns about national sovereignty, American workers’ ability to compete with their foreign counterparts, trade’s impact on the environment and human rights, and America’s ability to compete with different forms of capitalism.

‘Good for corporations’

There is growing evidence that US citizens and policymakers are concerned about the course of trade policy.

A February poll by Time Magazine found about 58 percent of 1,000 polled thought that “free trade agreements like NAFTA and GATT are mostly good for corporations,” while 51 percent thought such agreements “mostly bad” for workers.

In a November poll by Bank of Boston, 52 percent said that, because of what they now know about the GATT, they felt less favorable toward free trade than they did a year before. About 54 percent believed trade accords do more to increase foreign imports than US exports. Public concerns about trade were reflected in the November election outcome. In the Oct. 16 presidential debate, two of 20 questions by undecided voters were about trade policy.

How would freshmen vote?

On Capitol Hill, Democratic officials report that there are now more members who voted against rather than for the GATT and the North American Free Trade Agreement (NAFTA). Freshman and sophomore Republican members who have not voted on a major trade agreement outnumber the returning 124 Republican members who voted for congressional approval of the GATT’s Uruguay Round (which concluded with a provision to change the name to the World Trade Organization).

Without congressional support, the executive branch cannot obtain new authority to negotiate trade agreements or expand the WTO’s purview.

An October study funded by the Kaiser Foundation found that many Americans trained in economics (such as economists, business leaders, and many policymakers) tended to see trade’s benefits to local, national, and global economic efficiency, but the general public tended to focus on trade’s costs to jobs, wages, and communities. The public’s more local perspective may make it difficult to gain public approval for enhancing the GATT/WTO system. Moreover, it has skewed the political debate.

Many Americans will remain ignorant, ambivalent, or opposed to the WTO unless they gain an understanding of how global economic interdependence may affect the US economy and democracy. Yet proponents have done little to further public understanding. They have tended to talk about trade’s “macroeconomic” benefits instead of addressing fears about its effects on jobs, sovereignty, and environment.

Next year will be the 50th anniversary of the first trade negotiations held under the GATT. American policymakers should work to create understanding by sponsoring the next ministerial meeting in the United States.

With the addition of teach-ins and educational projects in churches, schools, and workplaces, the anniversary celebration could stimulate debate about the costs and benefits of global economic interdependence. Proponents need to make trade policy interesting, to relate it to people’s daily lives.

Americans are simultaneously citizens, taxpayers, producers, shareholders, and friends of the environment, as well as consumers of traded goods and services. Their conclusions about trade policy may turn out differently if they examine the costs and benefits of trade from each of these perspectives.

They may learn that international economic institutions such as the WTO may serve as a counterweight to the growing power of multinational corporations – just as national institutions such as the Justice Department or the Interstate Commerce Commission provided a counterweight to the rise of big business in the first decades of the 20th century.

A test of democracy

US membership in the GATT/WTO is a test of our democracy’s ability to adapt to a world where transactions, corporations, and technology are global but where institutions, political allegiance, and culture remain national.

It is unfortunate that a nation that cherishes the belief that informed citizens are a requisite for democracy has done such a poor job of informing its citizens about GATT/WTO. Proponents should seize the opportunity of the 50th anniversary to begin a thorough discussion.