Trade
The Challenge
WE KNOW that NAFTA and similar trade agreements have shipped jobs abroad and undermined wages at home. Americans are now concerned about the risks of globalization. Yet no one thinks we can build walls around our economy. So don’t attack trade. Frame the issue by agreeing with Americans that we need to promote fair trade.
WE SHOULD SAY: Our trade policies are weakening America. Corporations are getting tax breaks to move good American jobs—especially manufacturing jobs—to countries with cheap labor costs and low product standards. Simply put, this is un-American. Conservatives promise more of the same disastrous policies. We need change. Let’s end tax breaks for companies that move jobs overseas, renegotiate NAFTA, challenge China and others to play by the rules, and create global standards that protect worker rights, consumers, and the environment.
The Argument
The current Wall Street trade policy has undermined our economic security. These trade deficits cannot be sustained. Those who call for more of the same have to explain how they plan to get us out of the hole we are in. Platitudes about level playing fields aren't enough anymore. We need a new national strategy to sustain America's middle class in a global economy. Without a new strategy, we simply cannot compete successfully against foreign businesses that pay their workers less than one dollar an hour. [U.S. Bureau of Labor Statistics]
More of the same will only continue to benefit multinational corporations at the expense of working families. The current global economic strategy was designed by and for the multinational corporations and banks-a strategy for Wall Street, not for Main Street. Our laws and trade agreements encourage companies to ship our inventions, technologies and jobs abroad where they can take advantage of minimal safety, environmental and labor standards. That needs to change.
It isn't about free trade or protectionism. It's about whether our trade strategy is designed to benefit global corporations or to help secure a broad middle class. As Barack Obama points out, "allowing subsidized and unfairly traded products to flood our markets is not free trade." Opening our markets to countries like China and Japan that manipulate their currencies and control access to their own markets is not free trade. America's trade deficits have driven down the value of the dollar in Europe, so our exports are rising there. But our deficits with China are still rising, because the Chinese policy is to control the value of its currency to sustain its export-led growth strategy. Thus, "free trade" doesn't work. The only way to achieve a relative trade balance is by adopting an aggressive national strategy.
Progressive Solution
No more flawed trade agreements like NAFTA. When you're in a hole, stop digging. It's time to stop approving trade agreements modeled after NAFTA. It's time to renegotiate our current trade agreements so that they work for American workers.
Move to energy independence and capture the green markets of the future. The cost of imported oil now amounts to about half our trade deficit. We need to launch a concerted drive for energy independence, investing in conversation and renewable energy, developing the new machines and appliances of the future. We will create jobs now, reduce our trade deficits, limit the transfer of wealth to often hostile oil producing nations, and capture the lead in the green industries that must grow in the future.
Invest in America. In order to restore our position as the best country in the world for both business and labor, we need to invest in ourselves. That means fixing our nation's bridges and roads, expanding mass transit and broadband access, becoming energy independent, developing new "green" technologies. It means major efforts to provide every child with high quality education, and every worker with the opportunity for advanced training. To sustain a high wage policy, we need to insure that our country is the most efficient, and our workers the best educated.
Champion new global rules that lift standards up, not drive them down. We need rules that help raise up safety, environmental, and labor standards abroad, rather than driving them down here. In addition, we need to pressure the World Trade Organization to enforce existing rules against export subsidies and import barriers that foreign governments use against the U.S. And we must repeal federal laws that give tax breaks to multinational corporations that move jobs abroad.
Fast Facts
America has lost millions of jobs due to trade policies designed for multinationals, not for the nation. Every year, about 400,000 American jobs are lost because of our foreign trade policy—and that number takes into account employment created by increased exports. [Dean Baker, The American Prospect; Associated Press] The manufacturing sector has been hit the hardest, with 3.4 million jobs—one out of every five manufacturing jobs—shipped overseas over the past seven years. Under current policies, as many as 40 million more jobs will be at risk over the next 10 to 20 years. [Associated Press]
America's trade deficit has nearly doubled during the Bush presidency. Last year's trade deficit was $711 billion compared to $365 billion in 2001. [U.S. Census Bureau] In 2007, the trade deficit with China alone hit a record $256 billion. [U.S. Census Bureau] Almost half of our trade deficit—$327 billion—is attributable to oil imports. [Petroleum Intelligence Weekly] To finance this debt, we must either borrow from countries like China or sell off American assets at the rate of $2 billion every single day.
The American economy is increasingly in hock to foreign governments. Led by Japan, China, the United Kingdom and the oil exporting nations of OPEC, foreign governments now own more than $2 trillion in American debt. China and the OPEC nations are setting up sovereign investment funds to buy up pieces of America. China recently bought a $5 billion stake in Morgan Stanley. Abu Dhabi bought $7.5 billion of Citigroup. Singapore paid $4.4 billion for a part of Merrill Lynch. [The New York Times]
American consumers are at risk from toxic imports. Just last year: 20 million toys from China were recalled, including more than 1.5 million toys covered with lead paint; 450,000 unsafe tires were recalled; four brands of toothpaste were recalled because of a toxic ingredient; and 5,300 product lines of pet food were recalled because they contained deadly chemicals that killed more than 4,000 pets. [USA Today]
Public Pulse
Uneasiness persists concerning the impact of globalization.
- 87% of voters are concerned about outsourcing. [Foreign Affairs, May/June 2006]
- 81% of voters gave the government a C, D, or F in its handling of outsourcing. [Foreign Affairs, May/June 2006]
- 63% believe international trade has “made things worse” for the U.S. and causes job loss and low wages. [Fortune Magazine, January 2008]
- The public rates protecting American jobs as nearly as important as defending the country against terrorism (86% terrorism, 84% jobs). [The Pew Research Center for People and the Press, November 2005]
- 52% of Americans believe it is unrealistic to think that the government can do anything to stop corporations from sending jobs abroad. [Foreign Affairs, May/June 2006]
- 44% said they believe the U.S. government could do a lot to prevent jobs from moving overseas if it really tried.18 [Foreign Affairs, May/June 2006]
- 84% favor tax incentives for companies that relocate to where jobs have been lost to trade.
- 82% favor trading only with countries that ban child labor.
- 78% favor trading only with countries that meet clean air and water standards.
- 51% favor trading only with countries where workers can organize. [Fortune Magazine, January 2008]
- 59% of Republican primary voters say “Foreign trade has been bad for the U.S. economy”. [Wall Street Journal, October 2007]
- Republican voters considering a vote for a Democratic candidate cite “trade agreements” as the top reason not to vote Republican. [“Re: The Meltdown Election,” memo to “Friends of Democracy Corps”, November 2006]
Resources
AFL-CIO: An Economy That Works For All
Campaign for America’s Future: An Economy for All
EPI Policy Center's The Bush Legacy: Job Loss Due to President Bush's Trade Policy
“Costly Trade With China: Millions of U.S. jobs displaced with net job loss in every state,” Robert E. Scott, Economic Policy Institute“Documenting the Evidence of the Failed NAFTA-WTO ‘Trade’ Model,” Public Citizen
“Globalization and American Wages,” L. Josh Bivens, EPI “Off-Shore Outsourcing Rising Rapidly Up the Income and Skill Ladder,” Public Citizen
“NAFTA & the US: Facts & Figures,” Economic Policy Institute
“Revisiting NAFTA: Still not working for North America's workers,” EPI
Polling Report data on trade
Bob Kuttner, The Squandering of America. New York: Alfred A. Knopf, 2007
Stories
Despite assuring local employees just over a year ago that the approval of the Central American Free Trade Agreement (CAFTA) would secure their jobs, Jockey International announced last week that sewing operations at the Millen facility would be permanently terminated. Approximately 203 workers will lose their jobs to overseas counterparts.
The company's decision to terminate the local sewing operation drew the wrath of 12th District Congressman John Barrow who issued a statement last week slamming Jockey executives for the action.
"It's outrageous to see that after 55 years, Jockey has decided to turn its back on Millen, Jenkins County, and eastern Georgia – leaving 203 hard working families to pick up the pieces. Adding insult to injury, Jockey plans to outsource jobs to Jamaica, Honduras, Costa Rica and El Salvador, many of the countries included in the CAFTA," said Cong. Barrow.
The congressman went on to explain that top executives from Jockey came to his office just last year and lobbied for his approval of CAFTA, which was coming up for a House vote.
"They looked me in the eye, and told me that a vote for CAFTA was a vote to protect jobs in Millen. Now the very same people whose jobs they claimed to be protecting will be out of work," Cong. Barrow said.
Ed Emma, Jockey president and chief operating officer, explained the impact of the Congressional CAFTA vote on the Millen plant: "The free trade agreements allow this plant to stay here." Emma said, "Jockey International currently has two plants operating in Jamaica, one in Honduras and one in Costa Rica. The local plant provides cut parts to these offshore plants duty-free under the Caribbean Basin Trade Pact (CBTP). These plants then return the finished goods to the U.S., also duty-free. The CBTP expires in 2008 at which time Jockey would begin paying tariffs on its goods exported to the area."
"CAFTA would make the duty-free trading permanent," said Emma. "This agreement is very important for this plant, Georgia and the U.S." [Millen News (Millen, GA), July 26, 2006]
