America's Trade Debate: Commentary from a Free Trader

To follow up on Martin Wolf's post in last week's FT discussed below, Jagdish Bhagwati argued in today's FT that 1) U.S. economic policy geared toward signing bilateral trade deals as a second best alternative to multilateral trade is undermining progress on the Doha Round of multilateral trade talks, and 2) That opponents of free trade who support minimum environmental and labor standards are actually economic protectionists using the environment and labor rights to justify mask their self-interested economic motives for reducing import competition.

In his own words, argument #1:

"First, they (bilateral deals) have diverted the attention of top policymakers from multilateral negotiations. Second, they have helped to undermine political support for trade liberalization in the U.S. Congress, chiefly among the democrats. Amid anxiety over wages and jobs, wrongly blamed on trade and globalisation, it makes no political sense to take one piffling PTA (preferential trade agreement) after another to Congress...Each time a congressman votes for it, he expends scarce political goodwill. This applies particularly to Democrats whose constituents include a high proportion of workers. Asking Congress members to go repeatedly to a poisoned well has reduced their willingness to do so."

Argument #2

"...the democrats insist on inclusion in trade treaties of labour and environmental standards as elements of "fair trade" in a tougher way than ever before. The old Democrats, previously more sympathetic to free trade, are playing along, some from changed conviction and others from changed circumstances. Such standards may be demanded out of empathy for others or they may be required because of fear and self interest. The latter motive is clearly at play. It is hoped by those terrified by competition from poor countries that raising standards and therefore costs abroad will moderate the competitive ability of foreign companies...But, instead of admitting that this is their game, they want to mask their demands behind the language of altruism.; oh, we are doing it for your workers. The hypocrisy is astonishing and offensive..."