One issue thats going to come up this fall that you havent heard much about is trade. Or at least I hope its going to come up. The Bush administration has submitted four free-trade agreements for approval by Congress -- with Peru, Colombia, Panama and South Korea. At the moment, their chances dont look very good. Democrats have taken to opposing FTAs almost unanimously. In July 2006, the House voted by only a 217-215 margin for the CAFTA, the FTA with four Central American countries and the Dominican Republic. House Democrats voted 188-15 against, House Republicans 202-27 for. In the Senate the vote was 54-45, with Democrats voting 33-10 against and Republicans 43-12 for. Those numbers suggest that the four pending FTAs are in severe trouble unless some votes are switched.
The administrations special trade representatives, Rob Portman and then Susan Schwab, responded to the CAFTA vote by obtaining more concessions on labor and environmental standards -- the reason (or pretext) many Democrats cited for voting against CAFTA. They worked closely with Charles Rangel, now Chairman of the House Ways and Means Committee, who has looked favorably on previous FTAs and sees such agreements as a means for poorer countries to improve the lot of their people. Which of course they are. As you learn in Economics 101, or in Adam Smiths Wealth of Nations if you want to go back farther, free trade benefits workers and consumers in both countries. Freer trade accounts for billions in improvement of the standards of living in the United States.
FTAs with countries like Peru, Colombia, Panama and South Korea benefits us more than them. They tend to place barriers on our manufactured products and not to honor our intellectual property rights. We let most of their stuff in with little or no duty. Approving these FTAs would open up fairly large markets to us. Colombia, with 46 million people, is the second-largest Spanish-speaking country after Mexico. Peru has 28 million and Panama, with a sizzlingly growing economy, 3 million. South Korea, with 48 million people, has the eleventh or twelfth largest economy in the world. Many politicians who have been voting against FTAs are drooling over the possibility of selling things to impoverished Cuba, which has only 11 million people. Someone might want to ask them why they havent shown similar enthusiasm for selling things to the CAFTA nations, which have 39 million, or the four nations with pending FTAs, which have 125 million.You can sum up the reason why most congressional Democrats are voting against FTAs in six letters: AFL-CIO. The AFL-CIO did a splendid job raising money and turning out voters for Democrats in 2006. Their efforts were highly sophisticated and they may very well have made the difference in Democrats gaining their majorities. And the AFL-CIO is dead set against free trade. It was unhappy with the Clinton administration when it pushed through the NAFTA with Mexico in 1993 and predicted big job losses, and is not phased by the fact that the United States has produced nearly 30 million new jobs net since that time.
This is a classic example of interests of the past trumping interests of the future. Nearly half of all union members today are public employees, almost none of whom are likely to be replaced by workers abroad. But the union movement is still in mourning for the hundreds of thousands of jobs in auto factories, steel mills and other industries that disappeared in the recession of 1979-1982. The denunciations of NAFTA and the votes against CAFTA and the pending FTAs are protests against what happened in Detroit, Cleveland and Pittsburgh a quarter century ago.