For U.S. trade policy, the past quarter-century is not without irony. Its first 20 years were replete with economic troubles, real and perceived: “oil shocks” and double-digit inflation in the 1970s; the “twin deficits” of budget and trade in the 1980s; unemployment, the productivity slowdown, and stagnation in workers’ take home pay; the growing challenge from Japan. Yet over these same two decades, the United States maintained and reinforced its open-market international trade policies, with two unprecedented global agreements (the Tokyo Round and the Uruguay Round under the General Agreement on Tariffs and Trade), the North American Free Trade Agreement, and other liberalization initiatives.
In the past five years, by contrast, the U.S. economic situation has turned astonishingly rosy. Inflation and unemployment are both at or near their 25-year lows. Productivity is rising, as are workers’ real incomes. The budget deficit and the Japanese threat are both history. Yet since the beginning of 1995, U.S. trade policy has been on hold. For the better part of three years President Bill Clinton sent no proposal to Congress to renew the “fast-track” negotiating authority granted to all his predecessors since Gerald Ford. When he finally did so, and lobbied hard for it in the fall of 1997, his overture was spurned. When House Speaker Newt Gingrich pressed for approval last September, the vote was negative.