Debate revs up over fast-track trade measures

Presidential trade representative Robert Zoellick last week called for the House of Representatives to set a date for a vote on "fast track" legislation.

"The eyes of the world will be on Congress," he said.

But getting what is now called Trade Promotion Authority (TPA) won't be easy. The bill would enable the White House to negotiate a global trade-liberalizing deal or a less ambitious trade package and present it to Congress for an up-or-down vote without any complicating amendments.

"It will be a close vote," says Harald Malmgren, a Washington trade consultant who helped draft the first fast-track bill in 1974.

A survey of House members by CongressDaily shows 178 members publicly undeclared or on the fence on the issue.

It's unlikely the House leadership will call a vote if it has no chance of passage.

The White House would love to have TPA before Nov. 9, when the World Trade Organization opens a ministerial meeting in Doha, Qatar. The goal of those talks is to launch another global trade round such as the Kennedy Round that Mr. Malmgren helped negotiate, or the latest, the Uruguay Round.

Earlier rounds didn't have fast track before getting going. Nor is it essential this time, Malmgren says.

Behind the battle over TPA passage is greater uncertainty of the merits of more free trade and international investment, especially with poor nations.

Prior to all postwar trade rounds, there were struggles between groups striving to protect special interests and those seeing great benefits from freer trade for the nation as a whole.

That's true again today.

But now, some analysts maintain that most Americans have been hurt economically from past trade treaties.

For instance, economists Dean Baker and Mark Weisbrot note that trade liberalization in the past two decades has led to a net loss in real income for three quarters of the American labor force lacking college degrees. Those wages, say the Center for Economic and Policy Research economists, have been redistributed to workers with college and advanced degrees.

Liberalized trade has also shifted income from wages generally to business profits. Hourly wages fell as much as 12.6 percent - or as little as 1.6 percent, they maintain.

Wait a minute, says an independent task force sponsored by the Council on Foreign Relations. Since 1990, as the US has become significantly more open to trade, real average household incomes have grown by at least 10 percent.

Indeed, the poorest fifth of Americans has enjoyed slightly bigger gains than the richest fifth, figures the group co-chaired by Kenneth Duberstein, President Reagan's chief of staff, and Robert Rubin, Treasury Secretary under President Clinton.

A similar debate has been going on between economists over the impact of trade on the world's poor.

The globalization agenda, which includes trade and international investment, is a "scourge" on the poor, maintains a briefing paper of the Economic Policy Institute. It has widened the gap between the rich and poor both within and between nations on this globe.

Any gains in poverty reduction have been "relatively small," not keeping up with inflation. The world's poorest 400 million people lived on an average of just 78 cents a day or less in 1999, 79 cents or less in 1990 and 72 cents in 1980.

In 1980, median income in the richest 10 percent of countries was 77 times greater than in the poorest 10 percent. This gap reached 122 times by 1999.

"It's a clash of [economic] ideology versus experience," charges one author of the paper, Robert Scott. "The economics profession would like to keep its eyes closed to the facts."

On the other side, World Bank economist David Dollar calculates that there are 200 million fewer extremely poor people on earth than there were 20 years ago.

In a paper written with colleague Aart Kraay, he finds that the world economy grew well during the 1990s, despite the financial crisis in East Asia. And a study of 137 countries shows that the poor benefited proportionately from such growth - they weren't undermined by globalization.

But "good" policies - openness to trade, stable economies, moderate size of government, strong property rights, and rule of law - don't systematically add to the incomes of the poorest fifth.

Sorting out the contrary economic claims is hard. Columbia University economist Donald Davis says too often the intellectual framework of a trade study guarantees an expected result.

Sometimes the differences stem from the choice of statistics. For example, since 1980, individual wages haven't advanced much for most Americans. But households have done better as more family members work.

In general, trade gives Americans more choice in goods. It can boost the nation's economy as a whole. But it hurts some Americans. And they get little help.

Congress has a difficult balancing act ahead on the subject.