Two months ago, President Clinton asked Congress to renew his "fast track" authority to negotiate trade agreements. But "fast track", the ability of the President to send to Congress a trade agreement only for a simple up or down vote, is facing stiff opposition from members of his own party. After a background report by Tom Bearden, Margaret Warner discusses the "fast track" debate with four experts.
MARGARET WARNER: And we continue the debate now with Fred Bergsten, director of the Institute for International Economics--he was assistant treasury secretary for international affairs in the Carter administration; Harley Shaiken, a labor and global economics professor at the University of California, Berkeley, who's been advising members of Congress opposed to fast track; George Harris, chairman and CEO of Harris Chemical Group, a multinational chemical and minerals company--he served on trade policy advisory committees for Presidents Bush and Clinton; and Jay Taylor, president of Taylor & Fulton, a tomato and cucumber-growing company. He also serves on the board of the Florida Fruit & Vegetable Association. Welcome all.
Fred Bergsten, all right make the case more fully. Why do you think it's important for the American economy to give the President this authority?
The benefits of "fast track".
FRED BERGSTEN, Institute for International Economics: I think virtually every American will benefit from the trade agreements that can be negotiated if the President has fast track authority. American consumers gain because they get lower-priced, better products from around the world. Practically every American worker gains because we create lots of jobs in the export sector. Those are high paying, good wage jobs, jobs with a big future. The economy as a whole gains because more trade with more international competition we're able to have lower rates of inflation. That permits us to run much lower rates of unemployment, without worrying about the Fed raising interest rates, the economy going off the rail. Practically every American gains. And there's one more crucial point. If fast track gets turned down, we'll have another black Monday in the exchange markets.
The crucial point is that the world economy proceeds on the assumption of international cooperation with active participation, leadership from the United States. A vote against fast track would represent a United States withdrawal essentially from the world economy. In the shaky financial markets we got today that would cause a huge reassessment of economic expectations around the world. The dollar would drop sharply in the exchange markets. Our interest rates would shoot up, and we'd have big, big problems in financial markets, stock markets, in the countries around the world that depend on our market, but here as well because of interdependence. The cost of this one would just be huge, both in the short run and in the long run.
MARGARET WARNER: All right. And explain briefly, though, why can't the President negotiate these trade deals without fast track?
FRED BERGSTEN: The President has to have fast track to negotiate trade deals. Other countries would simply not be willing to talk with us if they thought a deal made with the President could then be torn up, amended, changed in manner after manner by the Congress. The Europeans have said it flatly. The Americans have said it flatly. Even little Chile has said it flatly. If we don't have fast track, there are no more trade deals with the United States, the rest of the world will go ahead without us, and we'll lose, we'll be discriminated against, we'll be hurt.
MARGARET WARNER: All right. Harley Shaiken, you see it differently. Why?
"Fast track" = NAFTA?
HARLEY SHAIKEN, University of California, Berkeley: Yes, I do. I think Fred makes a very compelling case, but if we substituted NAFTA for fast track is precisely the arguments that were made four years ago. The problem with those arguments is none of that came to pass. I think expanding trade is very important for this country. It can bring real benefits. The issue isn't expanding trade. The issue really isn't expanding trade. The issue really isn't even fast track. Many members of Congress who are voting no accept the principle of fast track. The real issue is the rules of the game by which we expand trade and whether labor and environmental standards ought to be part of those rules. In effect, I think we have an opportunity here for real leadership in the world, to promote economic growth and to promote democratic values, and, in fact, they're really intertwined. If minimal labor rights are met as part of trade agreements, if the environment is respected, then I think what we wind up with is people who can buy what they produce, earn a fairer share of what they do, and trade expands. And I think that's what's healthy.
MARGARET WARNER: What exactly would you want to see in the fast track bill that would make it acceptable?
HARLEY SHAIKEN: I think the fast track bill really needs two things. It needs labor standards and environmental standards. And by labor standards I don't mean superimposing what exists in the U.S. but rather that a country agree to certain minimal standards, so workers can organize freely and have collective bargaining, and also that they agree to enforce their own laws. On this minimal basis we can really see trade grow, engage with the world in a way that ordinary people in the country we trade with and in the United States benefit.
MARGARET WARNER: All right. Jay Taylor, take us to the real world for us. What's at stake for growers like yourself?
JAY TAYLOR, Florida Fruit & Vegetable Association: Well, what we've seen since the implementation of NAFTA is a 50 percent reduction in the number of tomato farmers in the state of Florida alone, much more across the United States. What we've had is a very poorly negotiated trade agreement that we've had to live with ever since. What we need now is the ability for our Congress to go in and amend agreements that the administration might try to enter into.
MARGARET WARNER: All right. And George Harris, why is it important to your company to have fast track? I apologize for my voice. I have a cold, but--
GEORGE HARRIS, Harris Chemical Group: (New York) Well, actually, I can't talk about all this theoretical thing that we've been hearing about, but our company employs--Harris Chemical Group employs about 2400 people in the United States. About a third of our sales are international. We produce things like soda ash and boron, which go into making glass. And those industries are very flat. There's no growth in North America, or in Europe. And the growth really is in Asia and in Latin America. And what we've done is our two major markets, for instance, for especially fertilizers, another one of our products, are places like China and Japan and, for instance, the need for glass in places like China was indicated a few years ago when there wasn't enough glass, and the people who wanted to drink beer actually had to have their own buckets over to pick up beer in China. When--
MARGARET WARNER: Just let me interrupt you one minute. So what it would mean then if the President had fast track authority? Why would that make it--would the tariffs go down for you? What exactly?
What "fast track" would mean?
GEORGE HARRIS: Basically, we have tariffs, for instance in India, which are--were about 100 percent. They're now down to a little less than 50 percent, but those are still prohibitive. We have people, places in Merkasur, which essentially are talking about putting in a 25 percent tariff to prevent soda ash, one of our major products, from going into there. Since NAFTA, our sales to Mexico have increased from the chemical industry by about 238 percent, over 200 percent. Since the Uruguay Round it's about 140 percent. So these things have been very influential in increasing the amount of employment in the United States. We have spent $100 million in California and $25 million in Utah to increase our capacity in order to be able to meet the kind of shipments that we need to the Far East and to Latin America.
MARGARET WARNER: Okay. Jay Taylor, come back in on this now. Have you seen or growers like yourself seen any of the benefits that a company like George Harris's has?
JAY TAYLOR: Well, you know, agriculture and fruit & vegetable industry specifically in Florida are huge exporters. We've exported to Japan, citrus to Japan, tomatoes to Canada. I probably ship 25 percent of my tomatoes to Canada. But he wants to talk about real world. Let's talk about a farmer in Amaklee, Florida. Billy Darn Grant--a thousand employees--they're not open this year. They have been for the last fifteen or twenty. They're gone, and it's directly died to the ill effects of NAFTA. We don't need to get back into that trap again.
The issue of environmental and labor standards.
MARGARET WARNER: All right. And from your perspective, if in certain environmental and labor standards were included, such as the ones Harley Shaiken talked about, would that make it acceptable to you?
JAY TAYLOR: It would go a long way towards it. I mean, remember, as we go into these developing countries and into these trade agreements, the very first thing that they have to offer to our market is agricultural products, just by nature of the development of their country. So at that point they are impacting American agriculture across the border--not just Florida--but everywhere in the United States. By putting some of these things into place we're protecting the farmers in America, and I think that that's a wise thing to do. I don't think that we want to export the production of our food products overseas.
MARGARET WARNER: Fred Bergsten, why not include standards like this?
FRED BERGSTEN: I'm all for better labor standards. I'm all for better environmental standards. But you can't put everything together in a trade bill; you can't put everything together in a trade negotiation. Listen to Congressman Gephardt. He doesn't want just environment and labor. He wants human rights. He wants native citizens rights. He wants everything lumped into trade. And the reason is clear. He wants to block future trade agreements. It's a smoke screen. The issue is essentially a red herring. There are lots of ways to pursue those other objectives; they should be pursued; they are being pursued. But to link them to trade is a red herring because we know other countries won't agree to change the standards in the way that the advocates want. You know that even if they did change them, they would provide very minimal effects for our own workers. Suppose we got everything that Harley and others want by way of improvement in labor standards in other countries. What would be the impact on wages, living standards, jobs in the United States? Very, very modest, very, very minimal. My belief is that we do have to worry about the people who lose from trade expansion. And there are losers. They should be helped through worker training, through relocation allowances, through all the kinds of things that the administration belatedly and inadequately is now talking about. That is a healthy response to the real problems that do occur from trade expansion. But I must admit when I hear a representative of American agriculture complain about trade legislation, it boggles the mind. American agriculture is hugely competitive in world markets. American agriculture exports a third to a quarter--to a third to a half of its total production. As Mr. Taylor was saying, his own people export huge amounts. So how can they oppose a free trade agreement when they're big beneficiaries from those trade agreements?
MARGARET WARNER: All right. Mr. Taylor.
JAY TAYLOR: We're not talking about Archer Daniels Midland here. We're talking about a family farmer in Amakalee, Florida, or in the Eastern Shore, Virginia.
FRED BERGSTEN: And your own citrus exporters you talked about.
JAY TAYLOR: Fred, I think you're being--
FRED BERGSTEN: --own citrus exporters.
JAY TAYLOR: They talk about a 50 percent reduction in the number of tomato farmers in the state of Florida.
FRED BERGSTEN: How many--
JAY TAYLOR: --in four years.
FRED BERGSTEN: How many tomato farmers lost their jobs?
JAY TAYLOR: Over 100 tomato farmers, but, more importantly than that--
FRED BERGSTEN: A hundred?
JAY TAYLOR: More importantly than that we're talking about over ten thousand jobs lost in the state of Florida alone. And those are not people--those are not jobs that are easily replaced.
MARGARET WARNER: All right. Let me let Harley Shaiken back in this. I mean, Fred's saying it's just a smokescreen, red herring; Gephardt and others just want to kill the bill, period.
HARLEY SHAIKEN: I don't think he's been listening to Mr. Gephardt or Mr. Bonior. This isn't a smokescreen. I think what you're raising is a bit disingenuous. Trade has made tomato juice out of the tomato industry in Florida. But the real issue here is that there's a double standard you're talking about. On the one level if the impact were so minimal that it would just do it, but on another level, let me make the following proposal.
Let's talk about China and the ability to get high quality, pirated disks in China. In Beijing, you can buy Microsoft Word for $5 a copy. I did an informal poll of my friends. They're anxious to get disks like this. The consumer benefits; the market works. Why don't we simply say let's have a free trade agreement with China; let's not worry about all this copyright stuff now. Patent protection will come later. Bill Gates just needs a little patience. Now he's got the money to have patience. In effect, Bill Gates nor anyone else in the business community that I know would accept that, and they're right not to accept it, because we need rules of the game for trade, and if we need rules of the game for patents, and if we need to protect investment, and we do and we've all benefitted as a result, then I think to say that we need protection for labor standards and the environment is the least we can do. This is hardly a smokescreen. These are very minimal proposals that would ensure ordinary people benefit from trade.
Mr. Harris spoke about trade with Mexico and it going up 238 percent for his company. Well, overall, since NAFTA, trade with Mexico has gone up; U.S. exports have gone up almost 40 percent. That's great until we look at the character of that trade. Almost 2/3 of what we ship to Mexico comes right back for sale in the United States. It's industrial tourists. Our shipments to Mexico stay there just long enough to be assembled so they can be sold in Peoria or Bakersfield or Chicago. That's not trade. That's corporations and the small elite in Mexico benefitting. What we want is engagement with the world, where ordinary Americans who are working families benefit, where our economy grows, and where trade results in benefits for the most amount of people, not for a small group. That's real trade.
MARGARET WARNER: Go ahead, Mr. Harris.
The goal of global free markets.
GEORGE HARRIS: We need to stay true to the U.S. goal of global free markets, which helps the standard of living and the wealth everywhere, so that we can help the people's of the world into greater affluence so they can actually buy our products, so they can actually raise their standard of living, so they can have the same concerns that we do about the environment and about working.
MARGARET WARNER: Mr. Harris, would you--let me ask--would you have any difficulty if some labor and environmental standards were added to these negotiations?
GEORGE HARRIS: I certainly agree with the gentleman who said you cannot--you don't want to put something else into a labor--into a trade negotiation. Trade negotiation had to be concerned with trade and opening up the kind of liberal trade that we've had over the last 50 years, which have increased our standard of living and increased the standard of living of the rest of the world.
HARLEY SHAIKEN: Mr. Harris, could I ask a question. Would you accept a trade agreement with Mexico that refused to guarantee your investment in Mexico, or said that any copyrights you had with Mexico were really unimportant; that what was at stake is simply trade, would you accept an agreement like that?
GEORGE HARRIS: What does that have to do with the things that we're discussing? I really fail to follow your line of reasoning.
HARLEY SHAIKEN: NAFTA is 1200 pages long, and it really lays out some fairly detailed--
MARGARET WARNER: Let me ask Fred Bergsten on this point--the point I think Harley Shaiken is making is certain things have been deemed includable, like intellectual property, and other things are deemed unincludable, like labor and safety standards. Why the distinctions?
FRED BERGSTEN: I think there are two reasons for the distinction. One is the linkage between intellectual property rights, the patents and such, is much clearer to trade than some of the labor and environmental questions. And second, related to that, there's an international consensus that you can and should deal with those sets of questions. They had been negotiated successfully in the GATT, in the NAFTA, elsewhere. We know because the U.S. has tried it now on several occasions that the labor and environmental issues cannot be. A final point: all this discussion about loss of jobs, it's also a red herring. The United States economy is at full employment. We've been creating tens of millions of jobs. Yes, there's a dynamic, a few hundred people lose a job here, a couple of thousand lose it there, but they gain it elsewhere. More than that, in fact, gain it, because we've been reducing the unemployment level for seven years and trade has been a major factor in achieving that.
MARGARET WARNER: All right.
FRED BERGSTEN: We can create jobs more in the future, with more trade.
MARGARET WARNER: I'm sorry, gentlemen. We have to leave it there. He has the last word. Thanks.
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