Ending the Trade War in Washington: Saving the Trade Agenda by Protecting Workers

Last November, the U.S. electorate sent a clear message to President George W. Bush and the new Democratic congressional leadership: work together to deal with the nation's challenges. Few issues depend on bipartisanship as much as trade policy, an area that has been plagued by bitter disagreement between the Democratic Party and the Republican Party during the first six years of the Bush presidency.

As of this writing, Democrats on the Senate and House trade committees and U.S. Trade Representative Susan Schwab were in the process of negotiating critical trade and labor issues. A breakthrough is possible, but it will require the Bush administration to reevaluate its trade and labor policies, something it is now seriously doing. A trade policy that increases export opportunities for U.S. goods and services while also addressing international labor standards and the needs of those hurt by expanding trade would appeal to mainstream Democrats, who see the value of international trade but want to mitigate the inequities it creates. Such a trade policy should also be acceptable to the U.S. business community, which benefits from increased trade and increasingly applies high labor and environmental standards to its own operations abroad. In short, the well-being of the U.S. economy depends on reaching a political consensus on trade policy.

The value of U.S. trade and earnings on foreign investment increased 32-fold between 1970 and 2005 and 130 percent between 1994 (the year before the successful completion of the Uruguay Round of trade talks) and 2005 in nominal terms. In 2005, the value of U.S. trade in goods and services alone stood at a record 27 percent of GDP, up from a mere 11 percent in 1970 and 22 percent in 1994. Today, at least 12 million Americans owe their jobs to exports to the rest of the world. The United States' role in free trade is so central that were the country to appear to be closing its doors to trade, it would send a dangerous signal to the rest of the world that protectionism is acceptable. Any resulting protectionism would constrict the main arteries of global trade and jeopardize continued economic growth.