Trade experts warm Gephardt's wage plan

US REPRESENTATIVE Richard Gephardt is nothing if not a plugger -- and trade is an issue he has been determinedly plugging away at for years.

There, the challenge for the Democratic Party has long been this: How to advance the interests of blue-collar Americans without lapsing into protectionism. Gephardt sometimes flirts with outright trade barriers, but as he campaigns for the Democratic presidential nomination, the Missourian has an interesting new idea: an international minimum wage specific to each country.

Gephardt's plan would work this way. Prodded by the World Trade Organization and the United Nations International Labor Organization, each country would set a minimum wage, based on its level of development and ability to support that living standard. Under his scheme, being a member of the WTO and enjoying the benefits of further trade liberalization would ultimately be contingent on a nation's willingness to adopt the international minimum wage, or IMW.

As Gephardt sees it, those wage floors would raise the standard of living worldwide, create new demand for products, and make it easier for American workers to compete with their foreign counterparts.

"The IMW would be different for each country, but always high enough so we do not compete with slave, sweatshop, and child labor around the world," Gephardt said in a recent speech outlining his proposal.

In an interview, the congressman said the establishment -- and enforcement -- of minimum wages in less developed countries could begin to reverse a situation where a country's trade advantage often depends on slashing labor costs.

"It would stop the headlong race to the bottom," Gephardt said. "It sets the right precedent: It gets everybody thinking about where do we need to go."

So what do trade experts think of the notion?

Interestingly, the reviews are relatively good from both sides of the ideological aisle. "I think it is a creative idea," says Clyde Prestowitz, president of the Economic Strategy Institute and the man who conducted most of the Reagan administration's trade negotiations with Japan in the early 1980s. "It is a lot better than imposing tariffs or beating governments over the head on their exchanges rates," two methods the Bush administration has employed in its effort to bump up the price of foreign goods.

Indeed, Prestowitz thinks such a strategy could even begin to nudge countries that have embraced an explicit export-led economic strategy toward more domestic consumption. Which in turn, says Prestowitz, could help to redress the current international economic situation, in which the United States is the only major center of net economic demand in the world.

If Gephardt were trying to impose one uniform minimum wage standard worldwide, that would erase any trade advantage lower-wage countries have. But James Galbraith, an economist at the LBJ School of Public Affairs at the University of Texas, says that as long as Gephardt's plan sets individual minimums for each country, it's economically plausible. "I don't think there is any good reason in economics why you couldn't make it work," he said.

Galbraith, however, offers this qualification. In poor countries, export industry pay already tends to be higher than average wages. Thus if the minimum wage were set below the current average wage, the new floor might raise a nation's general standard of living without appreciably altering export sector wages.

Asked about that caveat, Gephardt demurs.

"When you talk about China you are talking about really low wages, even in the export sector," he says. "The same in India. You're talking about countries that are way low, way different than in any halfway developed country."

Finally, there's this practical objection from I.M. Destler, a visiting fellow at the Institute for International Economics. The WTO, reluctant even to make a general declaration on labor standards, would never go that far. "I don't think many countries would agree," says Destler.

Concedes Gephardt: "This is not going to be an easy thing to do. I never said it was." But Gephardt notes that his long years of persistence on trade have led more and more people to embrace his view that labor and environmental standards should be part of trade deals.

"I think I've brought the Democratic Party to a different place," he said. "It's taken 25 years, but I think I've made some progress."

Scot Lehigh's e-mail address is lehigh@globe.com.