Doing their best to defy my earlier predictions, House Democrats and the Bush administration may be nearing a deal to renew trade promotion authority, courtesy of hard work by Treasury Secretary Hank Paulson:

Charles Rangel, chairman of the ways and means committee in the House of Representatives, said the personal involvement of Mr Paulson was instrumental in creating a last-minute opening for a consensus on trade…

His involvement will put pressure on Susan Schwab, the US trade representative, to concede Democrats’ demands…

The reforms are intended to act as a “basic boiler template” for pending and future trade deals and call for “a fair balance between promoting access to medicines and protecting pharmaceutical innovation in developing countries”.

The proposal also includes enforceable international labour standards, enhanced training and assistance for youth and unemployed American workers, and tougher action against China over alleged currency manipulation.

The IHT adds this provocative detail: “Democrats also want to create a new position of U.S. Trade Enforcer.” The Houston Chronicle has more on the labor provision.

Dani Rodrik, perhaps my favorite heretic, writes in the FT:

Which is the greatest threat to globalisation: the protesters on the streets every time the International Monetary Fund or the World Trade Organisation meets, or globalisation’s cheerleaders, who push for continued market opening while denying that the troubles surrounding globalisation are rooted in the policies they advocate?

A good case can be made that the latter camp presents the greater menace… If they get their way, they are more likely to put globalisation at risk than the protesters they condemn for ignorance of sound economics.

That is because the greatest obstacle to sustaining a healthy, globalised economy is no longer insufficient openness…

Consequently, no country’s growth prospects are significantly constrained by a lack of openness in the international economy…

If there is one lesson from the collapse of the 19th century version of globalisation, it is that we cannot leave national governments powerless to respond to their citizens…

Rich and poor nations need breathing space for different reasons. Rich countries need it so they can revive the social compacts that underpinned the success of Bretton Woods. They need flexibility to interfere in trade when trade conflicts with deeply held values at home – as, for example, with child labour or health and safety concerns – or severely weakens the bargaining power of workers. Poor nations need room to engage in exchange rate and industrial policies that will diversify and restructure their economies, without which their ability to benefit from globalisation is circumscribed…

There is always the chance that such an approach would slide into protectionism, pure and simple. But the alternative is, if anything, more risky. Historians teach us that globalisation rests on delicate social and political pillars. The first order of business today is to strengthen these pillars, rather than to push market opening further.

Do read the whole thing. Though I have great respect for Professor Rodrik, I am not persuaded by his assessment. If we want to dig into the history, let’s turn to Douglas Irwin:

[The 19th century version of globalization] did not sow the seeds of its own demise; there was no globalization backlash, but rather war and depression disrupted its continuation…

[I]f we do not wish the current era of globalization to be faced with an ending similar to that of the first era of globalization, then a major global conflict and another economic depression should be avoided. This sounds glib, but it is not meant to be. In particular, economic growth and sound macroeconomic management are fundamental reasons why there has not been a globalization backlash despite the increased integration of the world. Economic growth eases the pain of dislocation, creates new opportunities for those who face the downside risks of globalization, and thereby reduces the pressures on policymakers to close markets or render costly assistance. In addition, social safety nets are a feature of economic policy today that helps mitigate any backlash, and these policies were almost wholly absent in 1913.

Indeed, barring a global war or a major depression, globalization today is probably irreversible as the steady march of technology brings economies together.

I don’t see how globalization’s cheerleaders are threatening to undermine the social safety net established since 1913, as the trade policies negotiated at the WTO don’t intersect unemployment benefits or other social insurance schemes. And I doubt that trade liberalization inhibits sound macroeconomic management or economic growth. Moreover, with regard to the particular interventions that Rodrik identifies, I think the cheerleaders are right that it’s inappropriate to use trade agreements to fight child labor. And if economic openness weakens laborers’ bargaining power, it’s hard to believe that halting further liberalization is the properly tailored remedy.

Trade liberalization may need to be paired with trade adjustment assistance to be politically palatable and equitably beneficial, but that is hardly a startling idea. It certainly doesn’t warrant arguing that overzealous cheerleaders are the greatest threat to globalization.

Richard Howard at the Globalisation Institute thinks Venezuela’s Hugo Chavez is taking a dangerous route:

The Venezuelan government has just seized more than 330,000 hectares of land in order to redistribute them under agrarian reforms. They announced that in the coming weeks they would expropriate thirteen additional farms. In the past five years of Chavez’ presidency, 2 million hectares of land have been seized…

It is important for farms to be in private hands to ensure competition and efficiency in agriculture. Chavez should be careful that he does not harm Venezuela as much as Mugabe has harmed Zimbabwe. However, having praised Mugabe’s land grabs as undoing “ the unfair structures of colonialism” it is unlikely that Chavez will take heed.

The Chronicle of Higher Education reports:

As the United States and other member countries of the World Trade Organization continue negotiations on a new global-trade agreement in Geneva, about two dozen groups representing American colleges are beseeching U.S. officials to avoid making concessions that would threaten the autonomy of higher-education institutions.

I don’t have a subscription, but I assume the objections raised are similar to those documented in this older Chronicle piece by the same author. Applying traditional trade ideas to the services industry is sometimes a bit difficult, but here you get an infant-industry-like argument:

He says he worries that countries struggling to build a
national higher-education system could see large numbers of
middle-class and affluent students enrolling in private
foreign colleges — including distance-learning institutions
— leaving poorer students behind in a decaying public
higher-education system that does not receive enough financial
support from its government. South Africa, which is trying to
educate more black students, is particularly concerned about
this, says Mr. Hayward.

And trade hypocrisy is always in style:

Joseph Duffey, senior vice president of Sylvan Learning
Systems, which is actively establishing educational programs
abroad, says the United States should not ask other countries
to liberalize their policies for granting visas to American
educators when the United States has restrictive visa
policies.

Also check out the description of a book titled The WTO and The University:

The theory of the commodification of higher education—that higher education is increasingly being treated as a commercial product—emerged from the data as an explanation for both the USTR’s decision to include higher education in a major trade agreement, as well as the widespread negative reaction of the higher education industry to free trade in higher education services. This research revealed that American higher education was initially unprepared for the challenges of addressing trade concerns, leaving the USTR to take its cues about higher education from an organization without representative input from the broad higher education community.

I’m not at all familiar with this issue, so I’d be interested in learning what the latest Chronicle article says about the subject. I expect that the debate over education, which is the United States’ sixth-largest export, will be just one of many contentious discussions as more and more services become tradable.