Deep Dive

America's Free Trade Moment

Why the United States must sign three pending free trade agreements -- or risk losing its place in the global economy.

Emerging from the most severe economic downturn in a generation, the United States has a choice: Do we continue to be a global beacon for open markets and economic advancement? Or do we turn inward and abandon our leadership on trade policies, which has been a hallmark of economic growth since the end of World War II? The U.S. Congress will soon have an opportunity to make this choice when President Barack Obama seeks formal approval of our pending free trade agreements with Colombia, Panama, and South Korea.

The United States' unemployment rate has hovered between 8 and 10 percent for more than two years. Economic insecurity is being felt across the country, with home foreclosures at record highs. Our national debate is centered on the size and scope of federal power and how to confront record spending and debt. In such a context, many view international trade as an assault on American workers rather than the job creator it has historically proved to be.

But the cost of failing to approve these trade agreements is high. It would send a signal that the United States is abandoning the core principles of trade that have helped make it an exemplar of economic freedom and growth. At the same time, these agreements will strengthen America's international competitiveness and spur job creation here at home, without adding to the federal debt.

The opportunity to demonstrate our continued leadership on international trade is now. We need to work together to advance our long-stalled agreements with Colombia, Panama, and South Korea. We can no longer afford to sit on the sidelines. If we don't act now, we risk falling further behind other countries that are forging deals to expand opportunities for their farmers, workers, and job creators.

Our agreement with Colombia is a prime example. In 2008, the United States was the primary supplier of corn, wheat, and soybeans to Colombia, accounting for 71 percent of the market. Today, our market share has dropped to 27 percent. The reason is simple: While our trade pact, first signed in 2006, was collecting dust, other countries stepped in to fill our void.

According to the U.S. International Trade Commission (ITC), fully implementing the trade agreements with Colombia and Panama would expand U.S. exports by more than $1 billion a year. Moreover, since the tariffs of Colombia and Panama are significantly higher than those of the United States, these agreements would level the playing field for U.S. exporters. Today, almost all Colombian and Panamanian products enter the United States duty-free through preference programs. In contrast, U.S. products entering the Colombian market face high tariffs of up to 35 percent for industrial goods and up to 388 percent for agricultural products. In Panama, U.S. industrial products get hit with tariffs of up to 81 percent while U.S. agricultural products face tariffs as high as 260 percent. Once entered into force, our trade agreements will eliminate this tariff asymmetry and provide duty-free access for American-made products into Colombia and Panama. This means more jobs for American workers and business expansion for American employers.

The U.S.-Korea free trade agreement (KORUS), the largest agreement negotiated in over two decades, offers substantial new economic opportunities as well. The ITC estimates that the tariff cuts alone in KORUS will increase exports of American goods by $10 billion. It also includes the strongest intellectual property rights provisions in any U.S. free trade agreement negotiated to date.

But as with Colombia and Panama, we risk falling behind and losing out for American businesses and farmers. The United States used to be South Korea's biggest trading partner. We are now in fourth place -- behind China, Japan, and the European Union. Potential benefits for jobs and our economy are in jeopardy if we do nothing while South Korea moves forward on agreements with the European Union, Australia, Canada, and others, further leaving the United States behind.

There are, however, some signs that the United States may finally be ready to get back in the game and open markets for American businesses and workers in a meaningful way. Earlier this month, Barack Obama's administration announced a new Action Plan on labor issues between the United States and Colombia that should clear the path for advancing the Colombia agreement. The White House also appears poised to soon seek approval of the pact with Panama. And while there are some residual issues over U.S. beef, the agreement with Korea is likely to receive a vote as well.

We must now capitalize on this newfound momentum and advance all three agreements. Implementation of these three free trade agreements will yield new economic opportunities for Americans, strengthen our international alliances, and preserve the United States' role as the single greatest economy in the world and the leader of the global trading system.

SAUL LOEB/AFP/Getty Images

Deep Dive

Finish Doha, Save the Fish

How global trade talks could replenish our overfished seas.

For the past 10 years, the 153 nations of the World Trade Organization have tried again and again to modernize the global trading body, particularly by lifting farm subsidies and lessening trade barriers for food and other crops. But if the world can finally wrap up these arduous discussions -- known as the Doha round -- we won't just succeed in opening up new markets for wheat and mangoes. We can also do quite a lot of good for the planet, and particularly for the world's dangerously overfished oceans and seas.

Since the Doha talks began in 2001, one of the biggest issues at stake has been whether the WTO can develop enforceable trade rules to protect our environment and natural resources. The WTO's trade ministers agreed that year to negotiate rules limiting subsidies for ocean fishing. This was not just a commercial objective; it was also a historic decision to use trade rules to save a rapidly depleting natural resource: the world's fish. Unfortunately, we are in danger of failing to reach this goal as key players continue to wrangle over other issues, namely agriculture and market access for industrial goods. It is time for the United States to assert its historical leadership role to bring the overall negotiations to a successful conclusion and insist that the WTO prohibit the subsidies that are depleting the world's fisheries and robbing millions of fishermen and their families of their livelihoods.

According to the U.N. Food and Agriculture Organization, more than 85 percent of the world's fisheries are now overexploited, fully exploited, significantly depleted, or recovering from overexploitation. In other words, the vast majority are in dire need of conservation. And despite the international consensus to that effect, many governments, including the European Union, China, and Brazil, continue to provide major subsidies to their fishing sectors. These subsidies promote overfishing by pushing fleets to fish for longer periods, using more aggressive techniques farther away from shore than would otherwise be economically feasible.

Trade negotiations used to be fairly narrow in their focus, dealing primarily with tariffs, quotas, and basic rules on subsidies, dumping, and safeguard action. During the Uruguay round of trade talks in the late 1980s, issues like services, government procurement, intellectual property, and agricultural subsidies started to appear on the negotiating agenda. While new in subject matter, these topics remained within negotiators' comfort zone of commercial issues. But in the early 1990s, things became complicated as the United States began to press for inclusion of workers' rights and environmental issues in its regional and bilateral trade agreements.

Early on, many of us in the trade-negotiations business resisted this intrusion into our universe. The reaction of our counterparts in other countries, especially in the developing world, was even stronger. In their view, these issues were Trojan horses, non-tariff barriers intended to prevent competition. Political rhetoric in the United States helped reinforce this impression. Proponents of adding environmental and human rights clauses laced their arguments with dire warnings that American jobs would be undercut by low-wage, union-hostile, polluting countries. Failure to include measures to promote better labor and environmental practices by America's trading partners, it was argued, would set off a proverbial "race to the bottom."

Despite strong resistance, however, the United States prevailed and included labor and environmental agreements in the North American Free Trade Agreement (NAFTA), which went into effect in 1994. Under NAFTA, the parties recognized that it would be inappropriate to encourage investment by relaxing domestic health, safety, or environmental measures. The North American Agreement on Environmental Cooperation, also going into force in 1994, went well beyond the original trade deal's environmental provisions and established additional obligations such as ensuring the signing countries' laws provided for high levels of environmental protection and the creation of a permanent secretariat to implement the provisions of the side agreement.

Following the Miami Summit of the Americas in 1994, Bill Clinton's administration insisted that similar labor and environment issues be made part of the negotiations for the Free Trade Area of the Americas (FTAA), the proposed free trade zone for the entire Western Hemisphere. Latin American and Caribbean countries strenuously opposed this initiative on the grounds that it was an unfair (and protectionist) effort to impose developed-country standards on developing countries and undermine their comparative advantage. The FTAA collapsed for other reasons, so we will never know which ride would have prevailed or whether labor standards and the environment would have been the deal-breaking issues that both sides claimed. However, my experience as the chief U.S. negotiator for the FTAA at the time left me feeling very skeptical about the usefulness of pressing such acrimonious positions, which often seemed more ideological than practical.

In any event, the United States continued to press its negotiating partners to include labor and environmental standards in their bilateral free trade agreements, as doing so became an essential ingredient to obtain congressional approval of subsequent trade pacts, beginning with Chile and including the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), and similar agreements with Jordan (2010), Morocco (2006), and Singapore (2004).

Although the environmental provisions of the FTAs have established mechanisms for enhanced cooperation and capacity building, there is scant evidence of actually changing people's or enterprises' behaviors in a way that improves the environment in concrete, measurable ways. The environmental provisions in these trade agreements have been "soft" at best, taking the form of ongoing negotiations in most cases as opposed to firm and binding agreements.

But at the WTO, such provisions may yield real results. When the Doha round began, the ministers agreed to launch negotiations to discipline the subsidies that governments give to their fishing fleets. This was a more tangible and specifically trade-related negotiating topic, launched primarily for its potential environmental benefits. I must admit, at first I did not pay a lot of attention to this item on the Doha negotiating agenda. The big-ticket items were tariffs, agricultural subsidies, services, and access to medicines. There would have to be "something" on fish subsidies, but that would be for later.

Then, in 2007, things changed. Actor Ted Danson showed up in Geneva with a 6-foot-long red fish known as Finley to make a point. The act was the brainchild of Oceana, the international NGO devoted to the sustainability of the oceans and their marine life. As Finley "shook fins and made friends," the character acted as a catalyst to bring the issue of fishing subsidies to the foreground. Oceana argued that if WTO members could agree to significantly reduce fishing subsidies, it would be the single most significant step toward reversing overfishing. A conversation started, and we realized just how high the stakes were for the world's oceans. Fishing subsidies became a genuine trade issue, not some extraneous environmental side note that was being foisted on trade negotiators. According to Oceana, at that time, government subsidies had helped produce a worldwide fishing fleet that was up to 250 percent larger than what fish stocks could sustain.

If we succeed with Doha, the agreement on fishing would be the first case of a global trade agreement that would directly change the behavior of commercial actors in the trading system for both economic and environmental ends. That is worth working for -- for its ability to protect a valuable resource but also to show that the WTO and trade agreements more generally can make significant contributions to protecting the global commons.