A previous column reported on the government’s new initiative to encourage businesses to sell their goods and services on the global market. Exports are seen as a way to stimulate economic growth and create new jobs. Recently a bill was proposed in Congress to reform trade policy by adding protections for American jobs that it claims are lost from free trade agreements. This new protectionist approach ironically could make exporting more difficult as other countries respond with more restrictive policies on imports of U.S. goods.

The bill, called the Trade Reform Accountability, Development and Employment Act, would change current U.S. trade policy by requiring that all proposed trade agreements be reviewed and overseen by

congress. Up until now the president negotiated trade agreements with foreign countries without consulting Congress. This process, known as Fast Track, allowed the executive branch to determine the terms of the agreement and write the legislation.

Trade agreements give special considerations to specific countries, usually allowing duty-free status for goods imported into the U.S. Such agreements have been opposed by labor leaders because they say cheaper goods can enter the U.S. market, giving an unfair advantage to foreign producers. The end result, they claim, is lower pay for U.S. workers and the loss of jobs.

The North American Free Trade Agreement (NAFTA) between Mexico, the U.S. and Canada was signed by President Clinton in 1992 and took effect in 1994. It allowed most products imported from Canada and Mexico into the U.S. to be duty free. It was heralded as a means of stimulating the economy by tripling the trade with Canada and Mexico. Proponents of free trade claimed that it would reduce the cost of trade, and result in investments and growth. It is estimated that NAFTA has increased the Gross Domestic Product (GDP) by as much as .5% yearly. Critics point out that NAFTA has made it possible for U.S. manufacturers to outsource jobs to Mexico, with its cheaper labor costs. This, in turn, lowered domestic wages to compete with these industries. It was the subject of debate in the 2008 campaign as presidential candidates urged amending or getting rid of the treaty altogether.

There are many other trade agreements the U.S. has made with foreign countries. The Generalized System of Preferences affects 112 countries that have been designated as beneficiary developing countries that are eligible for duty-free status. A total of 19 more free trade agreements have been negotiated with over 75 additional countries.

Public Citizen, a non-profit consumer advocacy group, is urging Congress to pass the Trade Act. They say the bill “outlines a way forward to a new trade and globalization agenda that could benefit more Americans.” They add: “One of our nation’s greatest challenges is to create new rules for globalization that ensure economic security and the creation of quality jobs here, while offering opportunities for sustainable development in poor countries. Such rules would counter rising income inequality and the threats our current policies pose to national security, our shared global environment, public health and safety, and democratic accountability.”

The Trade Act will require the Government Accountability Office (GAO) to conduct a review of existing major trade agreements and report on how they meet the criteria set forth in the Act. These criteria will include food and product safety, environmental and labor standards, agriculture rules and prohibiting currency manipulation. The president will be required to renegotiate any trade agreements that do not meet the criteria. Future trade agreements must not include any bans on Buy American, anti-sweat shop, or environmental responsible procurement policies.

Those who oppose the Trade Act see it as a detriment to free trade which will prevent economic growth. Daniella Markhei of the Heritage Foundation writes: “Though cloaked as a measure designed to ‘ensure that trade is fair for our workers and economy,’ in reality such ‘fairness’ means special breaks and government handouts for the politically connected and powerful, with the rest of America paying the bill. The real intent of the legislation is clear: to erect costly, protectionist walls around America’s economy. In the process, it is likely to sound the death knell for the international trade system as a whole.”

The bill has been referred to the House Ways and Means Committee but quick action on it is not expected as Congress is distracted with other more pressing legislation. The debate on free trade and its impact on U.S. jobs will continue as the economy struggles to recover.