Commentary

FasTrack to Prosperity: California Economy Stands to Benefit in Jobs, Growth From Trade Legislation


By Jon Haveman, research fellow, Public Policy Institute of California
This opinion article appeared in the Orange County Register on August 14, 2002

Last Tuesday, President Bush signed a bill restoring Fast Track or Trade Promotion Authority to the presidency, giving him the ability to submit trade agreements to Congress for an up-or-down vote without alteration or amendment.

As trade-related legislation often is, this bill was complicated and controversial, and it did not have much support from the California delegation in Washington. But, despite the delegation's resistance, if Fast Track revives the possibility of freer trade, it is vitally important for California.

What this president will do with Fast Track Authority remains to be seen, but there are many options available to him. In particular, trade agreements with Chile, Singapore and Taiwan appear to be real possibilities. Of even greater importance, the president may push liberalization through multi-country initiatives, such as the Free Trade Area of the Americas, which is currently scheduled for completion in 2005.

Without Fast Track, none of these initiatives is possible, because in most cases our trading partners are unwilling to negotiate a document with the president only to have it altered by Congress. Trade liberalization would languish in the limbo it has been in since 1994, when a president last had this authority.

Why has it taken nearly a decade for Congress to restore trade promotion authority to the presidency? For many, resistance is not about what agreements might be struck under that authority, but about what sorts of protections for labor and the environment will be written into these agreements. But even with the valid reasons for uneasiness with trade promotion authority and trade liberalization, in general, California stand to benefit from increased trade - more than almost any other state.

California is a major processing center for goods. In fact, one-third of all goods imported into and exported out of the United States flow through the Golden State.

More trade leads to an increase in the workforce in and around port facilities as more labor is needed to handle the growing demand for warehousing, brokerage services, and cargo handling. This is a reality for imports as well as exports: 85 out of every 100 people employed in and around California's seaports owe their jobs to the fact that we import goods from abroad.

This means new and better jobs for many workers in California, above and beyond the increased employment opportunities that result from trade liberalization generally.

It is also important to recognize that Fast Track and any subsequent liberalization bring important opportunities for California exporters to gain access to many major foreign markets. In particular, future multi-country negotiations are likely to address the issue of access to agriculture markets for imported products. Two of the largest markets in Asia - China and Japan - remain protected through the widespread use of barriers to agricultural and other imports.

Increased trade is admittedly a frightening prospect for many workers. But on balance, trade liberalization generally creates more and better jobs than it destroys. And very important sectors of the state's economy depend on free and open access to foreign markets for their continued growth, including high technology products, agricultural products and shipping-related services.

Californians should recognize the potential for our state and for the long-run increase in jobs and economic opportunities.

Publications

California and the World Economy: Exports, Foreign Direct Investment and U.S. Trade Policy

California's Vested Interest in U.S. Trade Liberalization Initiatives