Trade Retreat Has Left Dems Behind Curve

By Daniel T. Griswold

Daniel Griswold is director of the Center for Trade Policy Studies at the Cato Institute in Washington.

May 24, 2005

When four "New Democrats" in the U.S. House announced their opposition to the Central American Free Trade Agreement at a press conference earlier this month, it marked another milestone in the party's long retreat from its historical commitment to openness, competition, and global engagement.

Two or three generations ago, Republicans and their big-business allies were the champions of trade protection and its foreign-policy cousin isolationism. Democratic leaders such as Franklin Roosevelt and John Kennedy championed trade expansion and global engagement.

Those "Old Democrats" understood that trade delivered lower prices for working families by increasing foreign competition as a check on the domestic market power of big business. They also knew that trade spread prosperity, strengthened alliances between market economies and promoted peace in Western Europe and East Asia.

Today only a remnant of congressional Democrats embraces the party's traditional adherence to free trade.

In the 1950s and '60s, a majority of Democrats in Congress supported trade-expanding agreements. That support eroded in the 1970s and '80s to the point where, by 1993, only 40% of House Democrats joined President Clinton in supporting the North American Free Trade Agreement.

Today only a handful of Democrats in the House are expected to vote for the Central American Free Trade Agreement.

Democratic opposition to free trade partly reflects the skepticism toward markets in general that many in the party's base share. It also reflects the political reality that labor unions such as the AFL-CIO oppose virtually all trade agreements, and those unions carry disproportionate weight within the Democratic Party.

Sadly, those political and ideological pressures have put the party on the wrong side of progress. In the past three decades, as trade and globalization have spread to more and more nations, so too have democracy, respect for human rights, and higher labor and environmental standards--accompanied by a sharp drop in global poverty rates.

Instead of welcoming this wave of progress, most Democrats in Congress have cast their lot with protected domestic interests at the expense of the general interest, and especially the poorest participants in the global economy.

America's highest remaining trade barriers today are aimed at products made by poor people abroad and disproportionately consumed by poor people at home. Those products include shoes, clothing and farm products, which make up a disproportionate share of a low-income family's budget.

The Progressive Policy Institute, a pro-trade think tank run by New Democrats, has pointed out that a single mother of two on a low income pays an effective tariff rate on the goods she buys that is three times higher than the rate paid by a single executive earning six figures.

Beyond our borders, those same regressive tariff rates that congressional Democrats are loathe to lower fall most heavily on the very products in which poor countries enjoy a comparative advantage.

U.S. tariffs are typically much higher on imports from countries such as Bangladesh and Cambodia than from rich European nations. Insisting on keeping those tariffs high until poor countries adopt stricter labor and environmental laws is tantamount to punishing poor countries for being poor.

In Central America, the same free-trade policies Democrats now criticize have helped raise incomes and improved working conditions. Today all six CAFTA-DR countries are multiparty democracies at peace internally and with their neighbors. All have pursued market and trade liberalization. Since 1980, adult literacy rates have climbed significantly and child labor rates have dropped from 17.4% to 10%.

Democratic opposition to trade liberalization is bad politics as well as bad policy. Opposing trade agreements may score populist points on talk radio and cable TV land, but it has not been a winner among swing voters.

Richard Gephardt and Pat Buchanan sought to ride protectionism to national success, but both are mere footnotes in presidential politics. John Kerry chucked aside his generally pro-trade record in the Senate to rail against outsourcing and traitorous CEOs, but there is scant evidence it helped him in the 2004 general election.

In contrast, trade liberalization was a central plank of President Clinton's politically successful centrist economic policies. Clinton not only talked about the benefits of trade and globalization. He also worked with Republicans to enact the North American Free Trade Agreement, the Uruguay Round Agreements Act, and Permanent Normal Trade Relations with China.

Apparently Democrats today are more comfortable with the trade policies of Pat Buchanan and Herbert Hoover than those of the only two-term Democratic president since FDR.

This article appeared in Investor's Business Daily on May 24, 2005