All valid points, and well articulated. But then what to make of the other Richard Gephardt, the one who declared two weeks earlier that he would insist that any future trade agreement signed by the United States force developing countries to adopt labor standards of Washington’s devising, or else face sanctions. The effect of such standards would be to impede entrepreneurship and employment in the very poorest countries in the world. But leave that aside for a moment. Just in terms of the international opposition it would produce, linking trade to labor standards is probably the single most polarizing policy position that the United States could adopt. It would make missile defense look like a crowd pleaser.
Gephardt’s insistence on dictating labor standards to the world is particularly hypocritical given that the United States refuses to ratify such standards itself. The International Labor Organization has four “core standards”: freedom to unionize, no child labor, no prison labor, freedom of association. The United States has ratified only one of them! It’s not that we don’t believe in or adhere to such standards, but we don’t think it proper for international law to trump our national and state laws on something as complex and local as the rights and responsibilities of employers and workers. And yet we would be asking countries such as India, Mexico and Malaysia to do what we will not do ourselves.
“How would Americans feel,” asks Robert Zoellick, the U.S. trade representative, “if Europeans were to decide that we fell short of their labor standards because all our workers don’t have universal health care? Should they then be able to levy sanctions on us? Labor standards are part of a debate about a country’s social policies. It’s an important discussion that every country must have. But to stop expanding trade because of our preferences on this issue would be disastrous. We will break down the world trading system if we insist on it.”
Zoellick is not a man known for melodrama. In fact, trade talks have been deadlocked ever since Bill Clinton, in a fit of empathy with the demonstrators at the Seattle WTO meeting, suggested that maybe trade and labor standards should be linked after all–contradicting his own administration’s policy. Developing countries are now wary of attempts to start a new round of tariff reductions, because they see the labor-standards cry as an attempt to place new burdens on their companies and make them less competitive.
In this climate, if the U.S. Congress requires that any new trade round contain binding labor standards, the upcoming WTO meeting in Doha, Qatar, will end in failure. And to have the second world-trade meeting–Seattle being the first–collapse as the world moves into a global recession is pretty dispiriting.
To top it all off, labor standards won’t even help American labor. Harvard economist Robert Lawrence explains that “even if we were to get poor countries to adopt some labor standards, what would that do? Raise the wages of a Chinese worker from $1 an hour to $1.15. Is that going to make American workers able to compete?” If low wages were the chief magnet for industry, Haiti would be the manufacturing hub of the world. Jobs stay in America because of our workers’ high productivity, not their low wages.
We have had this debate before. In 1993, during the battle over the North American Free Trade Agreement, Gephardt and others paraded across the country prophesying that NAFTA would suck jobs out of America and turn Mexico into a cheap-labor hellhole. In fact, jobs on both sides of the border expanded–high-wage ones in the United States, lower-wage ones in Mexico–and Mexico opened up its politics and it economics. Oh, and its labor standards are higher now than before NAFTA. This pattern of growth and openness producing progress on labor standards has taken place in South Korea, Taiwan, Malaysia, Chile–virtually every country in the world.
In a way. You have to admire Gephardt’s consistency. In the late 1980s he warned that Japan was going to take over the world economy. (Oops!) In the early 1990s, as the U.S. economy slumped, he saw the threat coming from Mexico. In the late 1990s, as America boomed, he began worrying about China. But whatever our imagined ailment, Gephardt’s prescription has always been the same: protectionism.
If this is bad economics, Gephardt obviously thinks it’s good politics. Labor unions are at the heart of today’s Democratic Party. But even here he is wrong. It took Bill Clinton eight years of hard work to make the Democrats credible on economics and trade–this after 20 years of disrepute. Indeed, this is Clinton’s greatest achievement, which has transformed the party’s image in the country. Now, for dubious political gain and at great economic cost, Richard Gephardt is steadily undermining that legacy.
