PROSPERITY LINKED TO LOWERING OF INTERNATIONAL TRADE BARRIERS

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, February 27, 1993                   TAG: 9303010225
SECTION: EDITORIAL                    PAGE: A-11   EDITION: METRO 
SOURCE: WALTER J. CAMPER
DATELINE:                                 LENGTH: Long
PROSPERITY LINKED TO LOWERING OF INTERNATIONAL TRADE BARRIERS
AFTER READING March Schonbeck's Feb. 9 letter, "Exploitation under guise of `free trade'," I am compelled to respond to his many misconceptions about the North America Free Trade Agreement and latest Uruguay round of talks on the General Agreement on Tariffs and Trade.
The article falsely alleges that NAFTA and a new GATT would result in a deterioration in each signatory nation's power to set environmental, labor and consumer-health standards. Uninformed fears about job flight resulting from NAFTA are also expressed. Schonbeck seems to conclude that the world would be a better place if we could regress back in a nostalgic fantasy to the time when small communities relied on local small businesses and surrounding farms.
Contrary to allegations, NAFTA allows the United States to maintain its environmental, health and safety standards. It also permits states to enact tougher standards in these areas. While promoting a progressive harmonizing of national regulations that benefit all signatories, the agreement also prohibits the lowering of standards to attract investment.
Mexico's comprehensive 1988 environmental law is largely based on that of the United States and is stricter in some cases. President Salinas has demonstrated his commitment to these laws by shutting down more than 1,000 polluting firms and increasing the environmental-enforcement budget by more than twelvefold. The U.S.-Mexico border-environment plan jointly allocates millions of dollars for the cleanup and ecological management of contaminated border areas.
A recent World Bank study has shown that a close correlation between economic growth and environmental improvement exists in developing countries. Therefore, an improvement in the Mexican standard of living resulting from NAFTA would correspond with an increased demand for better environmental policy. By allowing us to maintain and even strengthen our environmental, safety and health standards, while encouraging our partners to strengthen their own, NAFTA does more to improve the environment than any other trade agreement in history.
Many fear that NAFTA will cause a mass exodus of U.S. firms (and thus jobs) to Mexico to seek cheap labor and lenient environmental regulation. However, if these are the major factors determining plant location, it is puzzling why countries such as Somalia and Haitia are not rivaling economic superpowers.
Other important factors affecting a business' investment decisions include productivity, infrastructure and education of the work force. Such factors help American workers remain at least five times more productive than their Mexican counterparts. Some low-paying, unskilled and low-value-added jobs will be lost to Mexico under NAFTA, but they will be more than equally replaced by better export-related jobs, which pay an average 17 percent more than the average hourly American wage. The U.S. International Trade Commission, as well as many private-sector "think tanks," estimates that the agreement will result in a net of 175,000 new jobs for Americans.
Since its start in 1948, GATT has played a vital role in economic growth for industrial and developing countries alike. The multilateral format of GATT allows developing countries equal access to economic concessions, which would not be available to them in bilateral negotiations because of their lack of economic leverage. In its efforts to further promote global economic growth and prosperity, the GATT's latest round of talks is pursuing goals including a further reduction of tariff and non-tariff barriers, reduction of agricultural subsidies, rules to protect intellectual property and rules covering trade in services. The efforts to reduce non-tariff barriers are not intended to threaten an erosion of environmental and consumer-health standards but to eliminate barriers that do not find their rationale in such concerns.
According to Article III of GATT, such standards and regulations can be applied to an import as long as it is not treated any differently than a domestic good. If an agreement is reached in the reduction of agricultural subsidies, it will be a huge boost for American farmers who are the most productive in the world. A successful conclusion to these talks will also be of huge benefit to the highly efficient U.S. services sector and American intellectual-property industries such as computer software. The Department of Commerce estimates that an agreement of the Uruguay round could increase total U.S. output by $1 trillion over the 10-year span following its conclusion.
While many larger U.S. companies have been exporting for decades, only recently have most small and medium-sized firms begun to realize the profits and growth (job creation) to be obtained through international trade. The continued reduction of trade barriers facilitated by GATT can only increase the opportunities available to American companies.
These opportunities can be realized because, contrary to what was pounded in our heads by President Clinton and Vice President Gore during the recent campaign, American business as a whole remains the most productive and entrepreneurally effective in the world. With a little hard work and the courage to confront change, we can more than offset the job losses in inefficient industries created by freer trade.
A rejection of NAFTA and a successfully completed GATT agreement would be a triumph for ignorance and an extremely severe blow to the future prosperity of not only the United States but also the world.

Walter J. Camper lives in Buchanan.

by Archana Subramaniam by CNB