Rubin Defends Open Trade
As the U.S. trade gap and current account deficit soar to record levels and steelworkers and farmers face bankruptcy, the Clinton administration has a plan to protect U.S. prosperity and restore global growth: More trade.
Top officials - including Treasury Secretary Robert Rubin, Commerce Secretary William Daley and U.S. Trade Representative Charlene Barshefsky - told a group of senators Tuesday that they'll maintain the current U.S. policy of encouraging more trade while threatening to punish nations that try to exploit America's open borders.
"More open economies enjoy stronger growth," Rubin said. "What we must not do is pull away from the global economy."
The Senate Finance Committee will hear another side of the story on Wednesday when representatives of U.S. steel producers and workers complain that Washington hasn't done enough to keep below-cost Japanese, Russian and Brazilian steel from flooding the U.S. market.
The administration officials were quick to point out Tuesday that they're still examining the steel complaint. Their larger point, however, was that trade has been a great boon to the U.S. economy, leading to lower prices and higher productivity. They said the troubles in the steel mills and on the farms are isolated to those sectors.
Daley said a decision on steel will come by mid-February. The administration could impose punitive tariffs on Japan, Russia and Brazil if they are found to have dumped steel in the United States.
The White House is reluctant to punish Japan, Russia or Brazil, because they are the three weakest links in the global economy. They've boosted their steel exports to the United States precisely because their domestic economies are so weak and they're desperate for dollars. Punishment by the United States could lead them to adopt even more desperate measures.
On the other hand, the United States doesn't want to be taken for a patsy.
The steel issue has divided the administration from some of its staunchest allies, including organized labor and some powerful senators, like Jay Rockefeller, D-W.Va.
Rockefeller wondered if Rubin weren't really saying "don't enforce the trade laws" when he said "for the United States to reduce access to our markets, even on what might appear to be a limited basis, could well be very damaging to us."
"If the United States ... is seen as moving toward restricting markets, that could well reinforce the newly vibrant voices of protectionism in many countries around the world," Rubin warned.
Rubin had left the hearing room by the time Rockefeller spoke. Rubin's loyal deputy, Lawrence Summers, defended the boss by quoting from another paragraph in his testimony: "This administration is committed to fully enforcing our trade laws to deal with unlawful practices."
It fell to Daley and Barshefsky to adopt the tough cop stance. "President Clinton and I have made it very clear that we will not stand by and alow U.S. workers, communities and companies to bear the brunt of other nations' unfair trade policies," Daley said.
Rubin also said the White House is "particularly focused on helping those who are adversely affected by the dynamic change," but that didn't placate Rockefeller or Sen. Kent Conrad, D-N.D., who said trade agreements with Canada have ruined wheat farmers in his state.
Written By Rex Nutting, CBS MarketWatch