The Trade War

The Trade War

The Trade War

How you look at things.
Dec. 3 1999 3:30 AM

The Trade War

Thousands of demonstrators mobbed Seattle this week to protest the Third Ministerial Conference of the World Trade Organization. They argued that the WTO, a 135-nation club in which membership is voluntary but "free trade" rules are mandatory, threatens to dissolve human rights, labor laws, and health and environmental protections in the acid of global capitalism. Tuesday and Wednesday, President Clinton and WTO Director-General Michael Moore fired back. The WTO's advocates, belatedly realizing that it has become a political target, are beginning to counter the principal spins against the organization.

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1. Whether to trade vs. how to trade. The protesters want us to ask first what political terms of trade are being offered, and then to decide, based on how good or bad those terms are, whether or not to trade. By this logic, because the WTO doesn't include labor and environmental regulations in its trade rules (thereby undermining such regulations in many countries, according to the protesters), the WTO should be suspended. "Until the WTO addresses these important issues, there will be no support for a major new round of trade negotiations," declared AFL-CIO President John Sweeney several days before the Seattle meeting. "Hey, hey, ho, ho, the WTO has got to go," protesters chanted in the streets. In a New York Times ad, a coalition of environmentalists said "public interest groups … want the WTO to stop in its tracks. … Many feel the WTO can never be democratically reformed."

William Saletan William Saletan

Will Saletan writes about politics, science, technology, and other stuff for Slate. He’s the author of Bearing Right.

Clinton wants to reverse these two questions. He wants us to ask first whether trading is generally good or bad, and then--only after we've agreed that it's good--to begin discussing on what political terms we should trade. "We are going to have to listen to people who have legitimate economic concerns, legitimate environmental concerns, legitimate labor concerns," Clinton conceded in a speech in Seattle Wednesday. But first, said Clinton, "Everybody has to decide: Do you think we are better off or worse off with an increasingly integrated global economy, where productive Americans have a chance to sell their goods and services and skills around the world? I think we're better off. That's the number one core decision we ought to make up our mind as a country we agree about."

2. What is capitalism destroying? The protesters contrast global capitalism with enlightened national laws. According to the environmentalists' ad, the WTO, by promoting and mandating unfettered trade, is destroying "standards for safety, health and the environment" in "nations … that try to protect the safety of their food, their jobs, small businesses or Nature." The AFL-CIO says the WTO should be reined in to preserve "workers' rights" and to "protect the ability of governments, at all levels, to use their purchasing power to reinforce their values and standards."

The WTO and its defenders argue that the regimes and laws mowed down by global capitalism are more often corrupt than enlightened--in short, that capitalism is an improvement. Clinton says the WTO fosters respect for the "rule of law," which weeds out corruption and discourages war. Francis Fukuyama, writing in the Wall Street Journal, says poor people around the world are dominated by "local companies … interlocked with local political elites in a web of cronyism and corruption. Globalization in the form of foreign direct investment by multinational corporations not only creates employment but directly threatens these local elites by exposing them to competition."

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Addressing the WTO conference Tuesday, Moore argued that global capitalism has replaced not Marxist utopia but warped Marxist totalitarianism and aggression. Free trade "tore down the walls of economic and political oppression," said Moore. "Our parents learnt from the great depression, made deeper and more lethal by rising trade barriers from which came the twin tyrannies of our age, fascism and Marxism, thus war; hot and cold. They swore it would not happen again, and they created an international architecture which included the UN, IMF, World Bank, and the GATT, now the WTO, to achieve that peaceful purpose."

3. Does the WTO permit problems or solutions? The protesters say the WTO is bad because it permits oppressive and environmentally destructive practices and, by liberating greed, promotes these practices. By focusing on the free flow of capital, WTO leaders "are not supporting human rights and workers' rights," said a union official in Seattle. Clinton sees it the other way around: The WTO is good because it permits discussion of these practices. "It is not wrong for the United States to say we don't believe in child labor, or forced labor, or the oppression of our brothers and sisters who work for a living around the world--and [that] we don't believe that growing the economy requires us to undermine the environment," said Clinton. But to make those arguments and resolve those issues with other nations effectively, said Clinton, "You have to have some system to resolve them."

4. Opening the WTO vs. opening world trade. Sweeney blasts "trade accords negotiated behind closed doors" and demands that the WTO become "open" and "accountable." The environmentalists call the WTO an "invisible government" that "was elected by no-one" and "operates in secrecy." Moore replies that the WTO is democratic--"Ministers are here because their people decided so. Our agreements must be agreed by Parliaments"--but Clinton goes further. He frames the issue of openness more broadly, arguing that the WTO has made trade decisions more accountable and more universally beneficial than they used to be. "We do have to open the WTO and the world trading system to greater public scrutiny and to greater public participation," says Clinton. But "what we came here to the WTO meeting in Seattle to do" is "to open markets and expand opportunities."

5. Stability vs. progress. The protesters focus on "stability" and worry that unfettered trade will demolish it. Thanks to world capital flow, says Sweeney, "financial collapses have grown more severe and more frequent." But what the protesters call stability, Moore calls stagnation: "The least-developed countries are not threatened by globalization. They are threatened by de-globalization, falling outside of the world economy and slipping ever further behind." Clinton portrays the instability of big industrial shifts--for example, the loss of American jobs in steel and the simultaneous creation of American jobs in software--as a transition to a world in which "everybody can do what they do best." To mitigate that instability, he promises to give people "time and support and investment to make the transitions into the new economy."

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Human nature puts Clinton at a disadvantage in this debate. Most people would rather keep what they have than risk it for a hypothetical payoff. And while the costs of unrestricted trade tend to be visible because they're nearby and concentrated (e.g., the closure of a local factory), the benefits tend to be invisible because they're faraway or diffuse (e.g., lower prices at the grocery store or higher wages in Latin America). "The people that are going to win will always be somewhat uncertain of their gain, whereas the people who will lose are absolutely sure of what they are going to lose," says Clinton. Therefore, embracing free trade "will require … imagination and trust and humility and flexibility."

6. Bully or protector? Former WTO Director-General Renato Ruggiero once called the WTO a "new constitution for a single global economy," and protesters have seized on this somewhat presumptuous self-characterization to portray the WTO as a police state designed by rich nations to facilitate the exploitation of poor ones. "Unlike other global bodies (including the UN), the WTO enjoys unique enforcement powers," the environmentalists warn in their ad. "Offending countries must conform with WTO rules, or face harsh sanctions."

Moore sees these governmental analogies in a different light. He thinks the WTO's constitution and police powers will protect poor countries, not exploit them. "Developing countries need a secure and stable world trading system," he says. "They need more openness, not less. Stronger rules, not weaker ones. … I'm from a small country [New Zealand], but I don't see what we are doing here as a threat to our sovereignty. I see interdependence as a guarantor of our sovereignty and safety."

7. Imports vs. exports. Some goods are produced more cheaply in the United States than abroad. Others are produced more cheaply abroad than here. Unrestricted trade will help U.S. industries in the first category but will wipe out those in the second category. That's why Clinton talks about the first category, while the protesters talk about the second. Two weeks ago, Sweeney brought a steelworkers union official to the National Press Club to illustrate how the WTO's prohibition against trade barriers facilitates the loss of U.S. manufacturing jobs to "dumped imports" and cheap labor abroad.

Wednesday, Clinton chose to talk about a different industry. "The typical American eats 20 pounds of fresh apples each year," whereas "the typical European consumes about 46 pounds," said Clinton. "So America exported $353 million worth of apples last year." Lowering trade barriers in China, Japan, and Mexico means "more apple sales from Washington" and more help for "family farmers," he observed. Clinton joked that his apple reference was "a pander to Washington state," but it was more than that. The national industries that will lose under global capitalism and the national industries that will win are--to borrow a self-illustrating rhetorical metaphor--apples and oranges. And the key to reassuring Americans about the WTO is to talk about the apples.