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... is the world's largest importer and exporter. Trade accounts for 11 % of the U. S.
economy and about 30 % of economic growth in recent years, the Clinton administration says. Trade-related jobs typically pay 13 % to 16 % more than other jobs. Exports alone have accounted for 30 % of the more than 20 million jobs created since 1986. Current WTO agreements -- to free up trade in everything from clothes to computers -- give the average family of four $ 1, 500 to $ 3, 000 in additional purchasing power every year, the Clinton administration says. Economists argue that imports give consumers a wider range of choices and keep inflation in check, a huge factor in U. S.
economic growth. The World Trade Organization (WTO) is the only international organization dealing with the global rules of trade between nations. Its main function is to ensure that trade flows as smoothly, predictably and freely as possible. The result is assurance. Consumers and producers know that they can enjoy secure supplies and greater choice of the finished products, components, raw materials and services that they use. Producers and exporters know that foreign markets will remain open to them.
The result is also a more prosperous, peaceful and accountable economic world. Decisions in the WTO are typically taken by consensus among all member countries and they are ratified by members parliaments. Trade friction is channeled into the Wto's dispute settlement process where the focus is on interpreting agreements and commitments, and how to ensure that countries trade policies conform with them. That way, the risk of disputes spilling over into political or military conflict is reduced. By lowering trade barriers, the Wto's system also breaks down other barriers between peoples and nations. At the heart of the system, known as the multilateral trading system, are the Wto's agreements, negotiated and signed by a large majority of the worlds trading nations, and ratified in their parliaments.
These agreements are the legal ground-rules for international commerce. Essentially, they are contracts, guaranteeing member countries important trade rights. They also bind governments to keep their trade policies within agreed limits to everybody's benefit. The agreements were negotiated and signed by governments. But their purpose is to help producers of goods and services, exporters, and importers conduct their business. The goal is to improve the welfare of the peoples of the member countries.
Critics of the WTO often charge that the process lacks transparency and that the most important debates and decisions take place in secret without the knowledge of or participation of member nations and civil society. Transparency is the degree to which trade policies and practices, and the process by which they are established, are open and predictable. The United States has many sources of power in the pursuit of its goals. The global economy demands economic liberalization, greater openness and transparency, and at the very least, accesses to information technology. International economic policies that leverage the advantages of the American economy and expand free trade are the decisive tools in shaping international politics. They permit us to reach out to states as varied as South Africa and India and to engage our neighbors in the Western Hemisphere in a shared interest in economic prosperity.
Before any advances in free trade can take place, the WTO itself needs reform. It has to become more open and transparent. It is increasingly asked to adjudicate on sensitive issues such as food safety and environmental protection that have become the subject of trade disputes in a globalizing economy. It must explain its decisions or risk undermining support for free trade in general. To further boost its legitimacy, the WTO could do with an executive committee, modeled on the IMF's executive committee, as proposed by Sylvia Ostry, a former Canadian trade negotiator. Such a forum could eliminate difficult policy issues and help forge agreement on how far the WTO should trespass on countries's overeignty for the sake of free trade.
These are critical times for the WTO, and for free trade in general. The world is turning towards protectionism. More than ever, it needs a WTO that works. Even so, the WTO is not a substitute for political courage. Governments must steel themselves to fend off protectionist lobbies. And since the surest form of defense is attack, a broad new push towards freer trade is a must.
The United States is the world's loudest champion of free trade and open markets. At the same time, it has held fast to protectionist policies in clothing, shipping, sugar, broadcasting and other industries. For consumers, the price is steep. The U. S. has hit imports of frozen orange juice concentrate with a 30 % customs duty, even though the average U.
S. tariff is only about 3 %. Duties on imported glassware, porcelain and china have been as high as 38 %. Rubber boots and shoes, 20 %; luggage, 16 %; canned tuna, 12. 5 %.
Trade experts say tariffs and other protectionism make the economy less efficient and force consumers to pay higher prices and taxes to subsidize jobs. Stiff U. S. tariffs on imported ball bearings, for instance, has shielded jobs in domestic manufacturing. But Americans pay $ 438, 356 for every job saved, according to research by economists Gary Hufbauer and Kimberly Elliott. In other industries, protectionism has been even more costly: $ 758, 678 per job in softwood lumber; $ 933, 628 in luggage making; and more than $ 1 million in benzenoid chemical manufacturing, by the economists' calculations.
Overall, they reckon, protectionism costs the U. S. economy more than $ 70 billion a year, or 0. 8 % of gross domestic product. In principle, the U.
S. government is committed to promoting free trade around the world-a policy supported by an overwhelming consensus of economists. Yet politicians, not economists, make trade policy, and so the principle of free trade often loses out to the practice of protectionism. Free trade is in Americas interest and it would help many of its industries become more efficient. The only industries that will not benefit from world trade are those industries that are inherently inefficient and are perpetuated only though protective measures such as tariffs, quotas, subsidies or other non-tariff barriers. Bibliography:
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