Trade deals such as NAFTA and the proposed CAFTA provide difficult challenges for Democrats. The essential problem is one of perspective. The US sees a situation through the eyes of the most prosperous country on earth. In contrast, a developing country sees their economy from the perspective of poverty, underdevelopment and perhaps political instability. The vast differences in perception between the countries create the central problem.
First, let me paint a picture with a hypothetical country. Country X is a third world country. Unemployment is high. The average daily salary is 10 cents in US dollars. There is a hodge-podge of infrastructure – roads, water and sewer lines etc…. Like most countries in country X’s position, indigenous natural resources are their primary export. Typically, this is some type of mineral extraction or agriculture.
Let me use wages as an example. Hypothetically, suppose we argue for a wage of 15 cents a day. This sounds reasonable from a US perspective. However, from X’s perspective, it is entirely unreasonable. First, high-unemployment indicates that 10 cents/day may be too high to begin with. Secondly, with an unemployment rate that high there is no practical reason for an employer to offer higher wages. He can simply find another prospective employee willing to work for 10 cents a day and with high unemployment the chances are high he will succeed. Third, an increase of 5 cents a day would increase wages 50%, increasing the possibility of increasing inflation which no country wants in excess.
As Democrats, we would want country X to have labor laws akin to US labor laws – laws that involve child labor standards, minimum wages, safe working condition regulations and maternity leave just to name a few. Out motives are on solid moral ground. Laws of this type are for the worker’s protection. Companies have rarely demonstrated a long-streak of compassion when it comes to their workforce.
Here’s the reality. None of this is going to happen. The government does not have the governmental infrastructure or resources to monitor or prosecute a company’s behavior. More importantly, the government has other priorities like building the country’s physical infrastructure and maintaining political stability. Issues of wage parity and working conditions are simply a low priority in this type of political environment. While it may have something to do with the persons in political power in X, it is also a function of where they are in terms of economic development.
So, how do Democrats approach this issue? First, I think it is important to view this scenario from as many time perspectives as possible. What I mean by this is to look at short, middle and long-term options, problems and solutions when advising and consenting on a trade treaty. For example, by all means include environmental and labor provisions in treaties and attempt to help countries enforce their commitments under these provisions. However, understand if these provisions are not fully prosecuted in the host country for a number of years. That does not mean we should back off on the pressure, but it does mean we should understand that if the host country is attempting to lower unemployment from 50%, they have other priorities for their foreseeable future. In other words, place provisions into the agreement with the understanding the host country will not fully implement them for a number of years or decades.
It is also very important to work with target countries to help them develop viable long-term economic goals. Let me use Taiwan as an example. In the early 1960s, Taiwan was a very poor country that wanted to develop its native economic resources. So this end, they developed a long-term plan. They invited textile companies to invest in Taiwan with the following stipulations. First, the companies would leave physical capital in the country. Secondly, the foreign corporations would train the native Taiwanese population in all aspects of the textile industry. As a result of this plan, Taiwan eventually became an international textile powerhouse. Notice how the domestic government understood its actual negotiating position was in fact pretty weak, but was used to Taiwan’s advantage. This type of long-term planning is endemic to Asian culture; it is something the Democrats should work to develop and implement with other countries involved with international trade treaties.
In summation, international trade is a very complex issue that does not give any easy answers. We have the benefit and gift of seeing the world through the eyes of a country that has many benefits which are the culmination of years of work and progress. We should help other countries achieve the same progress, but understand when they are in the process rather than at the end of a period of growth.
