Treaties Are Taxed By Too Much Zeal

If politics in Washington were always sensible, there would be little point in debating the merits of mixing into international trade negotiations provisions for basic environmental and labor standards. After all, who wants to defend doing business as usual with trading partners that employ child labor, kill dolphins and decimate rain forests? But political reality in Washington, as in most places, is not so tidy. What begins as a temperate plea for minimal rules of decency all too often swells into a millennial imperative, with ideologues and special interests tacking on whatever demands they think might stick.

In recent years, the range of foreign competition said to be pernicious has widened with each major piece of U.S. trade legislation. For example, Congress has repeatedly broadened its conception of illegal pricing of imported goods. Whereas “dumping” (low-ball pricing by foreign competitors) was once defined strictly as predation deliberately intended to “injure or destroy” an American industry, U.S. anti-dumping law has gradually come to encompass pricing patterns that are common practice everywhere, including here. At one time, Section 301 of the 1974 Trade Act was only meant to take aim at countries that breached their international trade agreements with the U.S. By 1988 Congress came close to insisting that the provision apply to such offenses as failure to meet standards of minimum wages, hours of work and occupational health and safety, even though the United States had not signed the international agreement that specified those workers’ rights.

During its deliberations on the Clean Air Act of 1990, Congress didn’t just discuss punishing air polluters in this country. The Senate came within an eyelash of adopting an amendment that would have slapped punitive tariffs on “any product imported into the United States that has been subject to processing, or manufactured from a process, which does not comply with the air quality standards of the Clean Air Act.” The sponsors invoked an American obligation to convert the world to clean air policies similar to our own, whether the United States was directly affected or not.

As if this extraterritorial crusade was not zealous enough, another amendment in the same Senate debate proposed to expand the definition of foreign unfair trading to include any practice that “constitutes a failure to establish effective natural resource protection and effective pollution abatement and control standards to protect the air, water, and land.”

Were such proposals mere aberrations? Not exactly. Studying the 48 bills that dealt with environmental matters before Congress in 1990 and 1991, David Vogel of UC Berkeley found that 31 called for trade sanctions against foreign regulatory practices deemed to be objectionable or inadequate.

Besides becoming an irritant to other nations that may regard America’s exportation of moral and legal prescriptions as mostly a novel form of economic imperialism, there are at least two problems with the notion of correcting other countries’ “unfair” cost advantages. The first, of course, is hypocrisy. Not all U.S. anti-pollution efforts and labor protections are exemplary compared to those elsewhere. Sooner or later, scolding other countries for lax regulations or underenforcement will trigger counterclaims. Indeed, only a few years ago the inefficient and discriminatory U.S. regulatory program that tries to control the nation’s famous appetite for gasoline became the subject of an international trade dispute. Or think about dragging the World Trade Organization into the business of enforcing workers’ rights. U.S. trade negotiators labored long and hard to crack the Japanese apple and orange markets. Do we really want to invite more disputes about oranges and apples, perhaps next time involving allegations that the migrant laborers who picked those fruits work under rough conditions at miserable pay, often in antiunion states?

The main difficulty with missionary leveling of the world’s commercial playing field is keeping the game in bounds. Surely, a categorical, universal ban on underage labor, for example, sounds like a modest request. But how modest is it? Will moving underage workers out of factories and onto the streets really improve children’s lives or family living standards in places like Bangladesh or Brunei?

The temptation to ratchet up global standards is potentially boundless because of a natural inclination to equate fairness with familiarity, as if healthy commerce depends on making other economic systems become comparable to one’s own. But trade occurs precisely because national settings differ. Just as differences in national endowments provide a basis for trade, so do variations in savings behavior, industrial organization, social conditions and regulatory environments. The United States and Japan trade with each other (and with Saudi Arabia, for that matter) because each side gains, not because each has the other’s seal of approval.