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(02/27/00 - Szamosszegi) The Next President Faces Tough Trade Issues

The Next President Faces Tough Trade Issues
Special to The News
822 words
27 February 2000
Buffalo News
(Copyright 2000)

Caption: Associated Press Rioting at last fall's WTO talks in Seattle had little to do with the conference's collapse. Rather, there were critical differences in policy goals among the participating nations.

Contrary to the media sound bites that hype the character issue, the presidential primary season has not been void of substance. Voters can hear differences on health care, taxes, campaign finance reform and race relations among the candidates.

These issues warrant concern, and thoughtful exchanges during political campaigns are always a welcome surprise. However, voters in New York should take the opportunity tomore deeply probe the candidates' views on another issue that will influence the lives of nearly all Americans -- U.S. trade policy.

At first glance, the remaining contenders (with the exception of the iconoclastic Alan Keyes) in both major political parties agree on the basics of trade. Opening markets abroad is good for U.S. exporters, keeping markets open at home benefits American consumers, and free trade provides an overall boost for the economy. However, the candidates' views on the all-important details of U.S. trade policy remain a mystery.

Voters, and also the media, must demand more of the candidates. The failure of last December's World Trade Organization meeting in Seattle ensures that the next president will have to make important decisions regarding arcane, but important, trade laws that affect American businesses and consumers.

Trade accounts for nearly 25 percent of the nation's GDP, and trade-dependent firms are a valuable source of high-wage jobs in our economy. The next president's views on issues such asagricultural subsidies, anti-dumping laws and environmental protections in the international trading system will have a significant impact on the U.S. economy.

The collapse of the WTO conference was not the result of the dramatic clashes between demonstrators and riot police. Rather, negotiators failed to launch a new round of world trade negotiations because of critical differences in policy goals among the United States, the European Union, Japan and developing countries.

Differences in agriculture and unfair trade laws illustrate the challenge of resolving international trade disputes. Japan is unlikely to significantly reduce barriers protecting its agricultural sector unless the U.S. agrees to renegotiate WTO rules on anti- dumping and government subsidies. These laws enable U.S. industries to seek remedies in the form of higher tariffs if foreign firms sell products in the U.S. at prices below what they charge in their own country, or if they benefit from government subsidies.

The next president risks being forced to choose between American farmers, whose exports have been depressed by the Asian crisis and the strong dollar, and American manufacturers of goods that were faced with a debilitating surge of imports for the same reasons.

This choice, however, is a false one. The problems facing both U.S. agricultural interests and manufacturers are the same -- namely, market distortions in other countries. Foreign governments are keeping market forces at bay with subsidies, quotas, tariffs, discriminatoryprocurement practices and sham antitrust enforcement.

Rather than choosing between domestic industries, the U.S. should articulate an unflinching free trade stance. We must condemn foreign government subsidies that depress U.S. exports in Europe and other markets, as well as the Byzantine system of regulation, price supports and quotas that limit access to Japan. Simultaneously, Washington should remain steadfast in its support of U.S. laws that punish unfair trade practices and allow American firms to compete on a level playing field.

Western New Yorkers have witnessed the impact of market distortions abroad. Makers of machine tools suffered at the hands of subsidized and protected Japanese manufacturers during the 1970s and 1980s. During the late 1990s, the U.S. steel industry suffered the brunt of global market distortions. Producers in the European Union receive $1 billion annuallyin subsidies and use safeguards to limit imports of Russian steel.

Japan has an airtight production cartel that has depressed imports for decades. Thus, when the Asian financial crisis slowed global demand for steel, excess capacity was channeled into the U.S. market at dumped prices, forcing wrenching adjustments on the U.S. steel industry during the midst of an unprecedented economic expansion in the United States.

American producers of steel and other manufactured goods deserve better.

Conventional wisdom holds that the resolution of these conflicts will be put off until after the presidential election. Thus, the next occupant of the White House will be called on to restart global trade talks. It seems prudent to ask prospective candidates for the nation's highest office for more detailed positions on trade policy. Furthermore, voters should make certain that the next president has the mettle to support America's economic interests and protect our laws against unfair trade.

ANDREW Z. SZAMOSSZEGi is a fellow at the Economic Strategy Institute in Washington, D.C.

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