New Congress Must Revitalize U.S. Trade Policy, Senator Baucus Says

The following commentary by U.S. Senator Max Baucus appeared January 4 in The Wall Street Journal and is in the public domain.  There are no republication restrictions:

A Democratic Trade Agenda
By Max Baucus

Forty-five years ago, President Kennedy challenged America to confront competitive challenges in Europe and Asia with a new, expansive trade policy. In response, Congress passed a landmark bill creating the forerunner of the U.S. Trade Representative and trade adjustment assistance for workers hurt by international trade. Today we face another crossroads.

At a time when our country's competitive strength depends increasingly on an aggressive trade policy, Americans are far less willing to embrace one. Many equate trade and globalization with ballooning deficits, stagnating wages and layoffs. Meanwhile, even as China and India have continued their economic reawakening, America has lacked the leadership to tackle the associated challenges through trade. U.S. policy has lurched frantically from one trade agreement to the next, eking out just enough votes to push each one through Congress.

Some think that the new Democratic congressional majority will be bad for trade policy. While it is true that some candidates criticized trade in their campaigns, I believe that the new Congress will have both the desire and opportunity to renew U.S. trade policy, with a unifying purpose that Americans can understand and support. Through trade, we must bolster the nation's innovative economy in an increasingly global marketplace. At the same time, we must tackle with equal vigor the negative domestic consequences of globalization, from trade deficits to job losses.

Congress should begin by renewing the administration's fast-track negotiating authority for trade agreements. The current grant expires in June, and trading partners will not negotiate trade agreements with us unless Congress gives the president the ability to bring these agreements to fruition. The success of America's ranches and farms, as well as the success of businesses big and small, requires that the president have this ability. Exports account for 10 percent of GDP [gross domestic product]; our $62.4 billion in agriculture exports alone generated an additional $92 billion in additional economic activity last year. My home state of Montana exports fully 60 percent of the wheat grown there.

Fast-track authority should be improved as it is renewed, with better trade enforcement capability and better environmental and labor provisions. By making those changes, we can protect American interests, project America's values, and help to create consumer classes capable of purchasing more U.S.-made goods. And as we address expiring fast-track authority, we must take on - head-on - globalization's downsides, especially worker displacement and the unsustainable trade deficit.

The trade deficit requires action on several fronts, which include beefing up U.S. export promotion programs and dedicating more time and resources to trade enforcement. We must also recognize that the trade deficit has causes closer to home, especially Americans' negative savings rate.

When it comes to helping workers, we must make the Trade Adjustment Assistance (TAA) program, which expires in September, more reflective of today's innovative economy.

TAA is our commitment that America will provide wage and health benefits while trade-displaced workers retool, retrain, and find better jobs. And a renewed TAA must do what today's program does not. TAA must be available to the eight out of 10 American workers who make their money in services professions; and it must apply to all workers displaced by trade, not just those affected by free-trade agreements. In fact, we should seriously examine the idea of expanding TAA into "GAA" - Globalization Adjustment Assistance that would offer benefits not only to workers displaced by trade, but to those displaced by all aspects of globalization.

In addition to these new priorities, we must refocus current trade efforts. The Doha round is of obvious importance, but the world's economies do not appear ready to make the hard choices necessary to bring the round to an ambitious conclusion. Doha may yet progress in time, as the Uruguay round did after 1990. But until then, America should move forward on commercially significant initiatives with our largest trading partners. We should lay the foundations for a future free-trade agreement with the European Union and Japan by concluding a first ever free-trade agreement in services. We should stitch our current patchwork quilt of free-trade agreements into a seamless, coherent network that we can later open to other countries. Even more immediately, we must enforce China's trade and investment commitments. Doing that will help to boost the U.S. gross domestic product by $86.5 billion over the next three years.

President Kennedy's free-trade challenge helped to cement the nation's role as a global economic leader, and engaging with the world has helped Americans prosper at home. Twelve million American jobs depend on trade today - and the right trade policy improvements will create more jobs and better opportunities for American workers and businesses in the future.

(The writer is a Democratic senator from Montana and the incoming chairman of the Finance Committee.)