- NBR - The National Bureau of Asian Research

U.S. Trade Policy and The Public Discourse: a Postscript

Geza Feketekuty

Since World War II, the United States has pursued a trade policy focused on the worldwide reduction of barriers to trade and investment within a framework of global, market-oriented, and enforceable rules. This policy not only aided the growth of the U.S. economy and American consumer welfare, but also advanced U.S. foreign policy and security interests by encouraging peace based on prosperity. Until recently, this policy had broad public support: it was perceived to be in the national interest.

Since the end of the Cold War, however, the emphasis on building peace through prosperity has become less compelling. Americans face increasingly fierce global economic competition, both "fair" and "unfair." At the same time, they are less willing to overlook apparently inequitable policies on the part of trading partners. In the post-Cold War era, peace seems assured: national prosperity and individual economic security do not. As a result, a significant sector of the American public has begun to question the accomplishments and wisdom of postwar American trade policies, and there is growing concern that the United States has not equipped itself with the policy tools needed to remedy the injurious effects of foreign industrial policies on the growth and development of key U.S. industries.

Much of the current concern involves conspicuous trade disputes with the countries of East Asia. The Japanese market is difficult to penetrate, leading to accusations of discrimination against foreign products. Chinese exports, made by low-paid workers and occasionally prison labor, com-pete with American products; and Chinese factories illegally reproduce products developed by

America’s leading entertainment and software companies. Throughout Asia, governments support export-oriented industries to a greater degree than in the United States. These methods include preferential access to credit, authorization for foreign currency transactions, assistance with research and development, and protection of the local market to increase the local price, thereby subsidizing export sales. Of course, the perceived sources of threat to American economic security lie not only in East Asia. In various parts of the country, Canadian softwood, Mexican immigrants, Indian textiles, and European airplanes also contribute to the public’s sense of anxiety.

The United States must undertake a critical and comprehensive review of its trade policies, not only because it needs to chart new strategic objectives after having completed major negotiations such as the North American Free Trade Agreement (NAFTA) and the Uruguay Round of negotiations of the General Agreement on Tariffs and Trade (GATT), but also because the American public is no longer sure that U.S. trade policy adequately serves the national interest.