Commentary Type

Balance Trade with Healthcare

C. Fred Bergsten (PIIE) and Raymond C. Offenheiser (Oxfam America)

Op-ed in the Miami Herald


If President-elect Barack Obama and his advisors want to promote bipartisanship to achieve economic progress at a time of crisis, we have a compelling suggestion for an area in which common ground is not only possible but necessary: trade. Take it from two people who, in normal times, are more likely to disagree than agree on large parts of trade policy.

The institutions we lead have customarily been on different sides of the issue. The Peterson Institute for International Economics has long supported lowering trade barriers as crucial for prosperity here and around the globe. Oxfam America, while agreeing that US markets should be as open as possible to exports from poor countries, has championed the argument that too many trade agreements have been struck at the expense of the poor in developing nations.

But these are anything but normal times. The worst economic crisis since the Depression and a historic presidential election open a potential new chapter and an opportunity for new thinking by both sides on this issue. The temptation in tough times is to circle the wagons and curtail trade openings. Polls show that public support for trade agreements has dropped sharply and that half the voters believed trade was a threat to the US economy.

As a result trade agreements negotiated by the Bush administration with Colombia, Panama, and South Korea remain stalled. We both believe that trade can benefit the economy at a time of great stress.

Workers' Safety Net

So we are putting our differences aside to call on Obama and the new Congress to look beyond the emotional way this issue has often been debated on the campaign trail and embrace both trade and the domestic policy reforms that are needed to make openness acceptable to the American public. We fear that the growing financial crisis could deepen the backlash against trade, even as strong export growth has been one of the few bright spots in the economy.

At the same time, the crisis makes the need to strengthen safety nets for workers-whether they are dislocated due to trade, technology, or financial instability-even more urgent. Domestic reforms need to accompany trade deals to help Americans grasp globalization's opportunities and cope with its challenges. The reforms should include modernizing the badly outdated unemployment insurance system, making pensions portable, improving education and training, and making these programs available throughout a worker's lifetime.

One reform stands out above all others: universal access to healthcare. Unlike other wealthy nations, the United States has a system where health insurance is primarily employer-based, meaning that workers can lose their healthcare when they lose their jobs. That fear of losing health insurance is terrifying.

While the probability of losing a job due directly to trade is low, the costs are high and primarily born by individual workers and their families. That is a chief reason many Americans have made it clear they will no longer support trade expansion even if they believe it may on balance be for the greater good of the economy. The potential loss of their jobs is catastrophic for the families affected and frightening to their neighbors and fellow citizens.

Other countries have long realized that their citizens need assurances that they won't lose everything as a result of the adjustments required by trade agreements. From Sweden to Singapore, families across Europe and Asia enjoy government-supported healthcare. Anything less, these countries have argued, would be unfair and create an underclass of citizens, eventually making their countries less competitive. In the past campaign, Senator John McCain, the Republican presidential candidate, voiced his support for freer trade but did not give enough attention to addressing its costs. Obama spoke of the need to open markets overseas but gave trade too little credit for strengthening the economy.

Now, if Obama joins these two issues, from each side of the presidential debate, he can shore up support for universal healthcare and make trade more attractive, underscoring the importance to the US economy and to poorer countries of keeping American markets open. He can lead by making sure that the risks of globalization are shared, rather than ignored. This is the rare moment when such a fundamental change in policy can be debated and then influence the next administration and the next Congress as well.

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