HOPE For Trade (Robert L. Borosage)ˆ

HOPE for TrBy Robert L. Borosage
Friday, June 4, 1999

Over the past two decades, the world’s largest banks and corporations have forged a global economy. They wrote the rules and called the plays. They formed what became known as the “Washington consensus” -- systematically pushing the world’s governments to dismantle controls over corporations, currencies, and capital. In exchange for wide open trade, they promised prosperity.

Now the returns are in. The world is plagued, as Joseph Stiglitz, chief economist for the World Bank, has reported, with financial crises of increasing severity and frequency. Moreover, countries have had to respond with drastic cuts in public spending and other harsh defensive measures. The result has been slower growth and rising inequality in nations large and small, industrial and developing.

Forty percent of the world economy is now in recession. Millions of Asians who thought they were part of a growing middle class have been thrust back into poverty. Russia has gone belly up. The contagion now engulfs Brazil and threatens the rest of Latin America. Even in the United States, an island of prosperity in a sea of trouble, manufacturing industries were in recession for much of last year. Layoff announcements were the worst of the 1990s.

Plainly, the “consensus” policies cannot be sustained -- and neither can the “consensus” itself, which was reached without even inviting workers, consumers, environmentalists, or indeed the national governments of most countries, to the table.

President Clinton has stated that it is time for a new direction. “We must ensure that ordinary citizens in all countries actually benefit from trade,” he said in his State of the Union Address last year. And he is not the only global leader to speak out. Yet the bold rhetoric has not been reflected in policy.

The International Monetary Fund admits that it was a devastating error to enforce harsh austerity measures on the Asian countries in crisis, and then proceeds to do the same to Brazil.

President Clinton calls for a new approach to trade, but then stands behind a Republican-sponsored trade bill for Africa that is indistinguishable from the old approach of the North American Free Trade Agreement (NAFTA).

It’s been left to others from outside the international policy elite to come up with a better model for U.S. trade policy, and now they have. The Africa trade bill proposed by Rep. Jesse Jackson, Jr. (D-IL), and co-sponsored by a growing list of House members, opens the dialogue that the President has called for. Jackson’s “HOPE for Africa” bill starts from a new set of assumptions about trade with the developing world. Its core elements include:

Debt relief. Huge debt burdens not only have crippled poor countries; they also have enabled foreign creditors to impose the “Washington consensus” on them, forcing them to pursue a one-size-fits-all development model that actually fits none of them.

Aid targeted on human needs. Poor nations need investment in education, health care, and infrastructure. The HOPE for Africa bill would provide it, and also provide a guaranteed minimum level of aid, giving the receiving countries a basis for fiscal planning. This contrasts sharply with the Republicans’ NAFTA-for-Africa model, which guarantees nothing and essentially ensures that any aid will end up going to repay foreign creditors.

Preferential access to the U.S. market for countries that adhere to international standards for protecting labor rights, human rights, and the environment. Here, too, the contrast with current policy is stark. Today, the United States offers preferential access to its markets to countries that adopt wide open trade policies, regardless of their record on labor or the environment.

Preferred access to Africa for companies that actually add employment, business opportunity and production within Africa, as opposed to multinationals that use Africa merely as a trans-shipment point for goods made elsewhere.

With the support of the multinational corporate lobby and the Clinton administration, Republican leaders assumed that they could pass an old style trade bill for Africa with a quick bipartisan vote. It isn’t happening. Those left out of the old consensus are no longer willing to sit out in the cold. The HOPE for Africa bill suggests an approach to trade that could actually serve the interests of ordinary people both here and abroad.

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Robert L. Borosage is co-director of the Campaign for America’s Future, a research and education center concerned with making the economy work for
working people. This article is distributed by The American Prospect Syndicate.
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