US fears of globalisation

In a speech just before his recent Asia trip, Treasury Secretary Henry Paulson Jr. cited a poll showing that only a third of Americans view free trade as an economic plus, while nearly half say it is bad for jobs and wages. Unless Paulson and the administration do a lot more to counter that anxiety President George W. Bush stands to lose his fast-track authority to negotiate trade deals and will find it hard to block protectionist laws.

Paulson has tried to explain away Americans' fears by stressing that technology, not trade, is most to blame for lost jobs. But the opposition is not only about lost jobs. It's also about the downward pressure on wages and the concentration of income at the top that have gone hand in hand with globalization. And it's about the erosion of the social safety net — from inadequate unemployment compensation to subpar public schools — which makes many Americans view economic transitions like globalization as risks not worth taking.

As America's top economic official, Paulson should push for policies to strengthen the political foundation for free trade. That would start with a significant upgrading of the Labor Department's Trade Adjustment Assistance program, which helps workers who lose jobs because of trade. Congress expanded the program in 2002 in exchange for granting Bush fast-track negotiating authority on trade deals. But the administration has made little effort to publicize the program, and many eligible workers do not even know it exists.

In the wake of Paulson's trip to China, Beijing made another comment about liberalizing its currency exchange rate, a move that would help make American exports more competitive. But the greatest threats to free trade are Americans' fears about globalization and their doubts that the government will do anything to help them. It's time for Paulson to use his powers of persuasion — starting with Bush —to solve the domestic side of the trade problem.