Trading Away America: Time For a Trade Policy That Works for Main Street, Not Just Wall Street

THE POLITICS

Today, Sen. John McCain will travel to Canada to celebrate the North American Free Trade Agreement and pledge to pursue more of the same corporate trade agreements. He will criticize Sen. Barack Obama for calling for renegotiating NAFTA and similar agreements. This echoes the position of President Bush and most Republicans in Congress.

Americans, however, overwhelmingly believe that current trade policies have "subjected American companies and employees to unfair competition and cheap labor" [Rasmussen Reports [1]; NBC News/Wall Street Journal Poll [2]]. They are looking for a different course. This is a golden opportunity for progressives to speak out against the unfair trade policies of Bush, McCain and their congressional enablers, and to lay out a progressive trade strategy that works for working people.

THE 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 [3]; Associated Press [4]]. 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 [5]].

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 [6]]. In 2007, the trade deficit with China alone hit a record $256 billion [U.S. Census Bureau [7]]. Almost half of our trade deficit—$327 billion—is attributable to oil imports [Petroleum Intelligence Weekly [8]]. 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 [9]].

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 [10]].

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 corporataions 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 SOLUTIONS

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.

LINKS

For Robert Borosage's article about a progressive strategy for global trade, click here [11].

For Damon Silvers' article in The American Prospect on how to turn around the economy, click here [12].

For more progressive trade policy, click here [13].

To subscribe to future CAF Making Sense 2008 talking points, click here [14].