The first 100 days of the Obama administration have come and gone with no clear picture of the president's trade policy. The bank examiner-, auto mechanic-, and most recently pandemic flu expert-in-chief has been a bit busy during his first four months in office, so he probably deserves some slack for failing to outline his vision of globalization.
So far, the president's trade stance is largely defined by what he is against: trade deals with South Korea and Colombia, and foreigners who fail to live up to their commitments. It is not yet clear what the Obama administration is for in trade policy.
President Obama has pledged to incorporate commitments to meet tougher labor and environmental standards in future trade agreements, and to make those commitments enforceable. But such blue and green concerns are hardly new; they have been part of Democratic talking points for two decades.
For the administration to put its stamp on trade policy, it needs to demonstrate to skeptical Americans that globalization can work for them, not only by saving them money but also by improving the quality of their lives. In an integrated world market, where American parents put raspberries grown in Chile on their children's cereal and feed the family fish from China for dinner, consumers need greater assurances that a global market is safe.
The best way for the White House to do this would be to link access to the U.S. market to our trading partners' willingness to meet rigorous health and safety standards for the food and other products they export to us. Economists have long argued that such standards will improve automatically as national incomes, and the middle classes, grow in the countries we import from -- and thus, we need not push the issue.
But in a world where more and more of what people put in their bodies comes from abroad, consumers need safety now, not in a generation. And to demonstrate that the United States has no interest in using such health and safety benchmarks as excuses for protectionism, Obama should commit his administration to impose similarly high standards on domestic food and pharmaceutical producers.
By reframing the trade issue in this manner, he can demonstrate that globalization need not be a race to the bottom, as many of its critics charge. It can be a race to the top.
In the old days, most of the food and drugs that Americans consumed were grown or produced locally. Today we are all global consumers. More than four-fifths of the shrimp that Americans eat is raised outside this country. A huge proportion of the active pharmaceutical ingredients used to make drugs sold in the United States comes from abroad. We import an estimated two-fifths of our finished drugs. Consumers worry about this trend. In 2008, the Pew Global Attitudes Survey found that three-quarters of Americans feared that products made in China were less safe than those made elsewhere.
The volume of imports has become too great for U.S. inspectors to examine each and every shipment. So Obama's trade policy should put the onus on foreign producers to improve their quality control and on foreign governments to strengthen their own regulatory regimes. To encourage such cooperation, the administration should step up both American inspections of foreign-made products and the rejection of tainted imports.
The problems associated with seafood imports from China illustrate the challenges that such a policy would pose, however. China has 4.5 million fish farmers, and many of them are exporters. Chinese farmers typically crowd as many fish as possible into polluted ponds and holding pens, and to forestall epidemic diseases, they add antibacterial and other potentially carcinogenic agents. In the first four months of 2009, such practices led the U.S. Food and Drug Administration to reject 839 shipments of Chinese products, including fish.
But no one knows how many tainted products have slipped through porous U.S. borders. Foreign producers often engage in "port shopping," taking a shipment of food rejected at one port, for example, and resubmitting it at another in the hope it will be admitted, thanks to inadequate inspection.
The number of categories of foods subject to potential inspection at the border has tripled in the past 10 years as we import more diverse types of food. But the FDA has fewer than 2,000 food inspectors, and they are spread thinly between ports and domestic production facilities. In 2006, FDA inspectors visually inspected only 115,000 of the 8.9 million-plus food shipments imported into the United States.
Whatever the failings of the American inspection system, regulatory systems are even weaker in China and India, which accounted for a quarter of the FDA's total number of food rejections in the last quarter of 2008. Yet the FDA inspected fewer than 100 of the 190,000 foreign firms that produced food for the U.S. market in fiscal 2007, down from 211 in 2001.
In a world where more and more of what people put in their bodies comes from abroad, consumers need safety now, not in a generation.
Donald W. Kraemer, deputy director of the Office of Food Safety in the FDA's Center for Food Safety and Applied Nutrition, said in congressional testimony in April 2008, "Right now, we know very little about the 868,000 entries of seafood that are coming into the United States. We may know that it came from a company that we once had trouble with, but we don't know what conditions it was produced under."
Dramatically increasing U.S. inspections of imported food would energize foreign authorities to improve their quality-control systems. And because the FDA already uses risk-assessment techniques to target products from certain countries or problem exporters, a stepped-up focus need not contravene international trade law.
The Obama administration could also require that countries exporting food products to the United States have equivalent safety systems to gain entry to our markets. To obtain certification, all foreign food producers would have to meet U.S. safety standards. Foreign pork-, beef-, and poultry-processing plants already face this requirement, and the 2008 farm bill extended that prerequisite to imported catfish.
"If we create certification systems," Kraemer said, "we might be able to shift the world to where we know something about 80 percent of the product coming in. We can then shift our relatively small resources to verification work on the remaining."
Some economists will object to a standards-oriented trade policy because of the added cost. But in many cases cost is, well, a red herring. Seafood can be tested for compliance with FDA standards for about a penny a pound. When Chinese catfish began arriving in the United States in 2004, the retail prices for catfish sold here dropped by $1 per pound. If consumers have to pay a few pennies more for inspections but the overall price of the product declines considerably, that makes good economic sense. Requiring all imported fish to be tested, as imported tuna is now, would have no appreciable economic impact on consumers, would ensure their health and safety, and would make certain that free trade raises standards rather than lowering them.
A standards-based trade policy would pose other challenges, to be sure. Industries can use standards to protect themselves from foreign competition, as the U.S. catfish industry clearly tried to do by inserting into the farm bill last year the requirement that foreign producers of catfish -- but not other kinds of fish -- be inspected. To limit the spread of such fishy protectionism, the Obama administration would probably want to negotiate a "special-safeguards" clause in international trade law that would require governments to demonstrate that the testing was needed, that there was widespread public support for such a measure, and that restricting trade was less costly than other efforts to meet the standard.
International trade rules already allow countries to adopt rules that limit market liberalization to protect public health, so standards-based trade actions could be justified.
Obama was elected on a platform of change. There is no reason why his trade policy should not break new ground. Without some recognition of the need for a more broadly based trade policy, public opposition to globalization is only likely to grow, as Americans are asked to sacrifice their concerns about the safety of the food they feed their children to a goal of economic efficiency. If trade debates come to be framed in that manner, globalization and the benefits it brings will come out the loser.
This article appears in the May 16, 2009, edition of National Journal.