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Poll Indicates Americans Wary of New Trade Agreements - 2003-07-07

Recent polling data suggests the American public's enthusiasm for new trade agreements with other nations is waning amid concerns about job losses and a sluggish economy. A group of trade experts and economists recently gathered in Washington to discuss the trend and how America's appetite for expanding trade might be boosted.

Celinda Lake heads a polling firm that conducts research for several major U.S. publications, as well as the Democratic Party. Ms. Lake says a recent survey points to one conclusion: Americans are wary of any trade agreements that might expose them to economic risk.

"Sixty-four percent say we [the United States] should protect jobs before we have more trade agreements," she said. "[Only] 33 percent say we should pursue more trade agreements, and there is a 'go-cautious' approach here that is quite salient with the public."

Given a slow-growth U.S. economy, said Ms. Lake, it is no surprise that Americans are feeling vulnerable and protective of their wallets.

"People think that their economic lives are largely out of control," she said. "And trade definitely fits into that emotion. And people think that the globalization of the economy and trade is one of the major factors leading to an out-of-control economy and a loss of control over their personal economic situation."

If, indeed, America's collective faith in international trade is waning, it would constitute a shift of historic proportions. Since World War II, the United States has arguably been the world's leading proponent of trade, having played a major role in the creation of the former General Agreement on Tariffs and Trade, and its successor, the World Trade Organization.

For decades, the United States has advocated expanded trade as a means of boosting global prosperity and drawing nations together based on mutual interest. Yet it has been 10 years since the United States completed a blockbuster trade deal, the last one being the North American Free Trade Agreement, known as NAFTA. A proposed Free Trade Area of the Americas has been debated for years with little progress.

One hopeful sign for trade advocates: last year Congress granted President Bush enhanced trade negotiating authority known as "fast track." Even so, the measure passed by razor-thin margins.

Former U.S. trade negotiator Peter Scher says trade supporters, himself included, are partly to blame for what he sees as an increasing reluctance to expose the United States to foreign economic competition.

"Each time we have gone to Congress to sell the benefits of a trade agreement [look for congressional support], we talk about all the benefits and we do not want to talk about the downside [negative impact]. And there is a downside," he said. "The fact is that greater competition means that some sectors and some industries will not compete as effectively, that some people will be forced to relocate [look for new jobs]."

Economic theory has long held that there are clear benefits to trade. The idea goes like this: if country "A" can produce corn more efficiently than country "B", while country "B" can manufacture cars more efficiently than country "A", it makes sense for both countries to specialize in the sectors where they enjoy a comparative advantage and trade for each other's goods. That way, consumers in both countries get corn and cars at the lowest prices.

Gary Litman, vice president at the U.S. Chamber of Commerce in Washington, says the bottom line is that trade spurs economic growth and boosts living standards.

"Trade creates jobs. We [Americans] are not in the business of protecting jobs. We are in the business of creating jobs," he said. "Our largest trading partners are Canada and the European Union, which dwarfs any trade we have with low-wage markets. We buy a lot of sophisticated stuff and we sell a lot of sophisticated products. The United States is the largest exporter in the world."

But Mr. Litman admits that the benefits of trade tend to be generalized while the costs are not.

Returning to cars and corn, if a country imports low-cost agricultural goods while specializing in automobile production, its farmers will suffer as a result of foreign competition.

University of California at Santa Cruz Economics Professor Lori Kletzer puts it this way.

"Increasing imports actually play a fairly small role in aggregate job losses, but there will be a narrow, but significant, and highly visible band of industries, workers, and communities for whom import-competing job loss is very real and very costly," she said.

Ms. Kletzer said that the United States must do more to provide a safety net for those displaced by foreign competition if the public is to embrace new trade accords. She adds that, during prosperous times, it is easier for displaced workers to find new jobs, and that America's attitude towards trade might improve if economic growth accelerates in the months and years to come.