WITA Panelists Discuss Managed Trade

Sandra Polaski, former deputy director-general for policy at the International Labor Organization, argued, "All countries manage their trade," and that more trade is not an end in itself. Rather, trade is useful because it increases productivity and can lead to higher living standards. Polaski said the Biden administration's emphasis on worker-centered trade only seems new because from the 1980s until 2016, the U.S. negotiated free trade agreements for corporate interests, either their desire to protect overseas investments, or to open markets for services and pharmaceuticals.

The panel, hosted Sept. 23, featured Edward Alden, a senior fellow at the Council on Foreign Relations, along with three other panelists.

Alden said that labor standards and using trade to advance environmental aims are good, but, he said, the World Trade Organization's foundational value of non-discrimination is slipping "further and further down the list of priorities and I worry about that."

Polaski, who credited former President Donald Trump with the shift in trade policy in the U.S., also criticized his use of Section 232. "Conflating economic security with military security is very dangerous," she said. "The more you make the economic security of your people into a zero-sum game, that you have to win and others have to be contained, the less likely to you are to have economic security."

She also said that the narrative Trump pushed, "that somebody is trying to steal our lunch, making enemies of countries that export to us," is wrong-headed. "Trade is good, it’s not going to go away," she said. But, she said, "We have to make sure it increases living standards. We have to make sure wages go up in Mexico in order to see wages to continue to go up in the U.S." She said she thinks the rapid response mechanism in the USMCA could do that.

Alden said it's easier to negotiate lower tariffs than it is to negotiate a way to raise living standards.

Katrin Kuhlmann, founder of New Markets Lab, said, "This kind of skepticism and disenchantment with trade is not global," and said the U.S. should negotiate new trade deals in Africa, where countries are eager to tap into globalization.

In response to a question from International Trade Today, Polaski and Kuhlmann said continuing to protect a shrunken apparel sector in the U.S. isn't logical with the U.S.'s current priorities.

Polaski said her earliest negotiating experience was when textile imports were still under a global quota system, and in that system, it worked really well to give Cambodia a larger quota in return for improving their labor laws, with reviews based on average wages in the sector rising.

"Managing that trade intelligently, it seems to me, is a worthy goal," she said. She said that with the emphasis that the administration is putting on development in Central America to dissuade irregular migration, it seems like a good time to rewrite CAFTA, the Dominican Republic-Central America Free Trade Agreement.

"I think CAFTA was a very weak and flawed agreement from the very beginning," she said. "Not just on textile and apparel, but also on labor."

Kuhlmann said that while the U.S. has changed what is manufactured here, the politics are as if there is still an apparel industry that needs protection in both preference programs and in trade agreements. She said it's a really good time to change the approach to apparel in the Generalized System of Preferences benefits program, as the eligibility requirements for countries may expand.

"I think it’s time to take a fresh look at the product coverage as well and make sure it’s reflecting the way the global economy is working today," she said.