3 - The Sources of Opposition

Summary

For many Americans the opening of United States markets to imports represents a threat (Scheve and Slaughter 2001, 13–45). They believe that expanded trade, particularly with poor nations, results in job loss, downward pressure on wages, and the undermining of environmental protection. Through the 1970s these concerns remained largely muted. But in the 1980s, when imports as a percentage of this country's gross domestic product started to rise dramatically, opposition to trade increased (Aaronson 2001, 3).

While the claim for a “race to the bottom” in environmental standards lacks empirical support (Dasgupta et al. 1995; Fredriksson and Millimet 2000; World Bank 2000), there is validity to the argument that trade with poor counties puts downward pressure on wages and employment in at least some industries in the United States. This is because for potentially mobile firms the supply of labor includes overseas workers. Open markets in conjunction with the new technologies of globalization mean that an increasing number of United States workers do find themselves in competition with third world workers. The result is that it has become more difficult for this segment of the United States labor force to secure wage increases (Rodrik 1997, 16). Firms can resist demands for wage increases by threatening to move production and if pressed sufficiently might actually do so.