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Sunday, December 21, 2008

Ron Kirk, Hilda Solis, and the Hope for a Grand Bargain on Trade

To the relief of free trade fans like myself (who feared the nomination of Xavier Becarra), but to the ire of anti-globalization constituencies, Obama nominated Ron Kirk, mayor of Dallas, as U.S. Trade Rep. As I noted in an earlier post, the appointment of trade rep is Obama's single most revealing appointment, because Obama's position on trade policy is so obscure.

I have no desire to open up an exchange of epithets among those who support and oppose tariff-free trade. The topic obviously inspires heated emotion on both sides, but I doubt that anything new will be said on the topic on this blog. Instead, I want to ask a question: Does Obama's simultaneous appointment of Ron Kirk as USTR and Hilda Solis as Secretary of Labor signal the possibility of a grand bargain on trade? The two nominees have diametrically opposed views on trade agreements. But rather than signaling schizophrenia in the Obama cabinet, the dual choices might indicate that Obama is going to take Barney Frank up on the grand bargain that he has been long offering -- "fast track" authority for negotiating reduction of tariffs in exchange for protection of domestic labor against the shock of cheap imports. The protection could take several forms -- high levels of transition relief, job training, longer and higher levels of unemployment insurance, or, controversially, enforcement of ILO standards -- but the basic idea would be secure votes for tariff reductions (Kirk's job) by supporting compensation to those who lose out from freer trade (Solis's job).

It seems to me that such a bargain is critical for trade liberalization. Bush likely failed to advance tariff reduction, because Republicans refused to offer protections for labor in return for votes on fast track authority. With the current focus on economic stimulation, the political atmosphere has never been better for a bill to give labor a cushion against the costs of tariff reduction. As a matter of justice and prudence, such a deal seems both just and prudent: Trade increases wealth, so why not compensate those who lose from trade with some of the bounty? Since the losers will likely have a veto over any effort to liberalize trade, compensation is good politics as well as moral economics.

If Obama can secure such a deal, then he will be the second Democratic President (the first was Clinton) to advance the agenda of free trade as or more effectively than the Republican Presidents who are that agenda's most vocal champions.

Posted by Rick Hills on December 21, 2008 at 11:24 AM | Permalink

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One last thing, I promise. It seems Obama himself said the following (accdg. to a post at the International Economic Law and Policy Blog):

From the press conference that followed [the announcement of Ron Kirk's appointment and policy formulation of 'a progressive pro-trade agenda'] (my rough transcription):

Q: How do we keep jobs from going overseas?

Obama: Rebuild our infrastructure; get financial system working with strong regulation; education; ensure there is reciprocity in trade agreements (that is, make sure we can sell American goods abroad if our trading partners can sell here); make sure we have enforceable labor and environmental laws here and abroad.

Posted by: Patrick S. O'Donnell | Dec 21, 2008 1:19:16 PM

BTW, to my Leftist colleagues who might be scandalized by a Marxist supporter of "free trade" they might well consider the reasons Marx himself, in the words of the economist Meghnad Desai, "was a supporter of free trade, and no friend of tariff barriers" (See, for example, Desai's Marx's Revenge: The Resurgence of Capitalism and the Death of Statist Socialism, London, Verso, 2002). Indeed, I think those on the Left who are truly concerned about global distributive justice should seriously entertain fresh-thinking proposals on the subject, such as Robert Hockett's "Three (Potential) Pillars of Transnational Economic Justice: The Bretton Woods Institutions as Guarantors of Global Equal Treatment and Market Completion," in Christian Barry and Thomas W. Pogge, eds., Global Institutions and Responsibilities: Achieving Global Justice (Malden, MA: Blackwell, 2005): 90-123. The Bretton Woods institutions referred to in the title are of course the International Monetary Fund, the World Bank, and GATT/WTO.

Posted by: Patrick S. O'Donnell | Dec 21, 2008 12:36:46 PM

And then, if we could complete the Doha Round of negotiations at the WTO....

Speaking from the vantage point of legal theory, and at the domestic level, I think it would be nice if we had some theoretical municipal equivalent of "constitutional justice" that is emerging on the international plane to guide us in a principled manner on these issues and which would certainly allow for things like "Barney Frank's grand bargain." See, for instance, Ernst-Ulrich Petersmann, "Bridging Foundations: Human Rights and International Trade Law: Defining and Connecting the Two Fields," in Thomas Cottier, Joost Pauwelyn, and Elisabeth Burgi, eds., Human Rights and International Trade (New York: Oxford University Press, 2005): 29-94, and another recent piece by Petersmann that is quite intriguing: "Human Rights, International Economic Law and ‘Constitutional Justice,’" The European Journal of International Law, Vol. 19, No. 4, 2008: 769-798, and freely available online: http://ejil.oxfordjournals.org/cgi/reprint/19/4/769

A helpful book on these issues as they relate to ILO standards, again on the international level, is Bob Hepple's Labour Laws and Global Trade (Portland, OR: Hart, 2005).

And pardon me if I can't help but mentioning a book that looks at these topics from the perspective of organized labor: Jeffrey Harrod and Robert O'Brien, eds., Global Unions? Theory and Strategies of Organized Labour in the Global Politial Economy (London: Routledge, 2002).

Posted by: Patrick S. O'Donnell | Dec 21, 2008 12:16:50 PM

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