Trade Disaster as Clinton Fights Lewinsky Legacy
January 4, 2000
by Irwin Stelzer
THE SUNDAY TIMES (LONDON)
December 5, 1999
Blame it on Monica Lewinsky. If President Clinton hadn't succumbed to the charms of his chubby White House intern, lied about it, and gotten himself impeached, he wouldn't have felt it necessary to secure a place in history other than as a philanderer by initiating a new, "Clinton round" of world trade talks.
But, eager to be remembered for more than his sexual escapades, he decided to call the nations of the world to Seattle to discuss new trade-opening measures. Never mind that the political times are out of joint for such a venture. With the American presidential campaign in full swing, and the trade unions eager to let the several candidates know the intensity of their opposition to freer trade, street demonstrations against the World Trade Organization were certain. As was the likelihood that those demonstrations would slip into the hands of a violent minority determined to "make its voice heard" -- and to loot a few television sets along the way. The "sweet reason" approach of the Seattle police proved no match for the well-organized anarchists who use the Internet to organize their riots against modern technology.
The problem now is that the politicians in charge of the trade agenda are just the sort to be most affected by the actions of the demonstrators. Bill Clinton, of course, is an old hand at street theatre, having demonstrated against his government's Vietnam policy while dodging the draft in Britain. And France's delegation, which anyhow has no enthusiasm for free trade, comes from a long tradition of surrendering to whatever group proves able to create mayhem by taking to the streets.
Indeed, Clinton rushed to "feel the pain" of the street folk, and to call for the introduction of labour standards in trade negotiations. Those opposed to freer trade, of course, have long known that the very basis for trade is the differences among nations in, among other things, labour costs. After all, if all nations met a single labour standard, they would have very little reason to trade with each other.
So, too, with environmental standards. Rich America can afford to put a premium on clean air; poorer, development-hungry nations such as China and India quite properly are willing to breath dirtier air if that is the price of the job creation they so desperately need. Require China and India to meet the same environmental standards as the United States, and you deprive them of one of the comparative advantages they have in the competitive international market for goods and services.
Which is why the developing countries are so opposed to having the WTO set labour or environmental standards. Just as Britain and America have assets -- among them, efficient capital markets and highly trained work forces -- so, too, do developing countries. In their case it is a large number of workers willing to work at wages that are low by the standards of developed countries, but often amount to princely sums when compared with what is available on the farm or, in the case of young women, on the streets of their cities.
It is this latter point that the trade unions grasp and the young street demonstrators do not. The unions know that their ability to wrest wage increases is limited by the fact that America's employers face competition from imported goods made by lower-paid workers. So they would bar imports to improve their bargaining power. No matter to them that this will throw poor Asians and Africans out of work.
Their young allies in the streets suffer no such contact with economic reality. They think that a ban on imports of goods made by child laborers in less developed countries will send those youngsters back to school. Never mind that for many of these children begging or prostitution, not the classroom, is their option if they are thrown out of work. The Seattle demonstrators, having downed a ú3 cup or two of that city's famous latte or cappuccino to steel themselves against the drizzle and cold, are determined to bar trade in goods made by child labour -- perhaps out of fear that the practice of having young people work, which surely reduces the time available for demonstrating, might spread to their own country.
The irony of all of this is that Clinton's place in history as a courageous advocate of free trade was assured before Seattle. Now, his instinctual sympathy for the demonstrators, combined with his desire to pander to the unions to help the faltering presidential campaign of Vice President Al Gore, has led him to support measures that can only play into the hands of the protectionists.
Which brings us full circle. For it is Clinton's desire to preserve for himself a place in history other than as a seducer of young (and not-so-young) women that makes him so eager to secure the election of Gore. As the president sees it, a Gore election will represent an endorsement of his own policies, and a signal that the American people, all things considered, regard him as a successful president.
Perhaps the only bright spot in this dreary past week is the fact that little was lost. With an election pending, the Americans are in no position to concede very much in order to make a new negotiating round a success. The French remain opposed to free trade wherever it rears its ugly head, especially in products that compete with the dismal output of their own culture industries. The European Union is unprepared to abandon agricultural protectionism, or its luddite attitude towards genetically modified agricultural products. And the developing countries of Asia and Africa aren't about to allow the richer countries to impose environmental and labor standards on their struggling economies.
Clinton would have served the cause of free trade better had he resisted the urge to convene this meeting, a disaster no matter what hastily cobbled together communiquTs might (mis)lead you to think.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.