Do Free-Trade Agreements Create Jobs?

global deal free trade

Written by Dave Johnson (Senior Fellow at Our Future)
Originally posted on OurFuture.Org

global deal free trade

The corporate push to get Congress to approve the Trans-Pacific Partnership (TPP) trade agreement is about to begin. Again and again we have been promised that these trade agreements “create jobs” and grow the economy. So do they?

“Free-Trade” Claims

Proponents of current corporate-negotiated trade agreements claim that the agreements increase jobs and boost economies. For example Time today has a column, Voters Won’t Like It, but We Have to Bring Back Free Trade, by Michael Schuman. Schuman claims that these agreements are “beneficial for economies overall — boosting exports, enhancing efficiency and reducing prices for consumers.”

Is this what actually happens? Let’s look at what has happened as a result of past agreements.

NAFTA

Negotiated by the George HW Bush administration and pushed by President Clinton, the North American Free Trade Agreement (NAFTA) went into effect January 1, 1994.

Ross Perot famously said we would hear a “giant sucking sound” as NAFTA took jobs from the US and he was right. According to the Economic Policy Institute (EPI) briefing paper Heading South: U.S.-Mexico trade and job displacement after NAFTA, “As of 2010, U.S. trade deficits with Mexico totaling $97.2 billion had displaced 682,900 U.S. jobs.” (That is net jobs, taking into account jobs gained.)

The EPI study did not look into NAFTA’s effect on US wages (but a 2001 EPI study found wage decreases). Clearly, however, NAFTA enabled companies to close American factories and move production to low-wage factories, putting downward pressure on everyone’swages.

Public Citizen’s document, NAFTA’s Broken Promises 1994-2013: Outcomes of the North American Free Trade Agreement points out that over one million Mexican campesino farmers were driven out of business (and likely driven north to the US) by subsidized US corn from our giant industrialized farms.

China

China became a member of the World Trade Organization (WTO) in 2001. Americans were promised this would expand market opportunities for U.S. companies, thereby increasing jobs and American prosperity. How has this worked out?

In August, 2012 EPI estimated that the US lost 2.7 million jobs as a result of the U.S.-China trade deficit between 2001 and 2011, 2.1 million of them in manufacturing. Aside from job losses wages US wages fell due to the competition with cheap Chinese labor costing a typical household with two wage-earners around $2,500 per year.

Last month our country’s humongous trade deficit with China was $30.1 billion. That translates to a yearly deficit of more than $360 billion drained straight out of our economy.

Korea

In spite of the obvious problems with these trade agreements, the US approved an agreement with Korea that took effect March 15, 2012.

EPI reported in July, 2013 that the US-Korea free trade agreement had already cost the US 40,000 jobs and increased our trade deficit by $5.8 billion. According to EPI,

The tendency to distort trade model results was evident in the Obama administration’s insistence that increasing exports under KORUS would support 70,000 U.S. jobs. The administration neglected to consider jobs lost from the increasing imports and a growing bilateral trade deficit. In the year after KORUS took effect, the U.S. trade deficit with South Korea increased by $5.8 billion, costing more than 40,000 U.S. jobs. Most of the 40,000 jobs lost were good jobs in manufacturing.

So How Did They Work Out?

Again and again these trade agreements resulted in loss of jobs, particularly in higher-wage sectors of our economy like manufacturing, and big increases in the trade deficit. Yes, exports increased adding jobs in some sectors but imports increased more, costing more jobs than those gained. And the sectors that lost jobs tended to be higher-wage, like manufacturing.

While honest and fair trade is a good thing, these trade agreements are written to promote the interests of the giant and powerful multinational corporations over the interests of working people, smaller competing corporations, citizens groups, democracy and the environment. These “free-trade” deals increase unemployment, drive down wages and harm the environment while dramatically increasing the wealth and power of the 1%.

Again, fair trade is great. But trade deals written of by and for a few giant, multinational corporations are good for those corporations and the billionaires behind them — and onlythose corporations and the billionaires behind them.

The Worst Effect: Widespread Job Fear

When our government just lets companies close a factory here and move production to a country where people have few rights and can’t do anything to make their situation better, what do you think that will do to wages and rights here? When your boss can threaten to lay you off and move your job out of the country, what are you going to say? Are you going to complain about the job and demand a raise?

Job fear is rampant in today’s economy, so everything is sold as a promise to create jobs. Heck if eating bugs will “create jobs” I’ll try it. And you can be sure that the fried bug industry lobbyists are going to promise just that.

So these giant-corporate-promoting trade deals are sold with the promise that they will “create jobs” even though we see again and again that the opposite occurs. Ironically, the job fear so many of us experience is the result of these trade agreements that enabled corporations to close factories here, ship the equipment out of the country, make the same stuff there and bring it back here to sell in the same stores to the same customers. (For some reason that is called “trade.”)

These Agreements Reign In Our Democracy

Now the giant corporations are working on the Trans-Pacific Partnership (TPP). Only a small part of this agreement covers “trade.” Much of it is about “investor rights.” This means that countries that enter into the agreement will not be able to do things that limit the profits of corporations. This includes trying to enforce environmental regulations, trying to get low-cost medicine to sick people, etc. It won’t matter if we call ourselves a sovereign country and a democracy — we will not be allowed to pass the laws that we want to if they interfere with the “rights” of the owners of the giant corporations.

These trade agreements are negotiated by giant multinational corporations along with government officials who understand they will get lucrative jobs with those corporations. They benefit only the 1% and the billionaires behind these corporations. They have not helped our economy and have not increased jobs. In fact they have led to massive trade deficits that are draining our economy, massive job loss and wage loss, and job fear for those still working.

We must insist that trade from now on agreements be negotiated with all of the stakeholders at the table in a process that guarantees their interests have equal weight with the interests of the giant corporations. Representatives of environmental organizations, human rights groups, labor groups, consumer groups and all other stakeholders must be included in these negotiations.

We must also insist that existing agreements be renegotiated so that We the People benefit, instead of just the billionaires behind the giant corporations.

Race to the Bottom: another view of what “cheap labor” looks like

Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY
Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY

Patients working in a compound at the Kunming Municipal Compulsory Rehabilitation Center in China Photo: GETTY

Today’s New York Times has another tale of “cheap labor” in China:

The cry for help, a neatly folded letter stuffed inside a package of Halloween decorations sold at Kmart, traveled 5,000 miles from China into the hands of a mother of two in Oregon.  Scrawling in wobbly English on a sheet of onionskin paper, the writer said he was imprisoned at a labor camp in this northeastern Chinese town, where he said inmates toiled seven days a week, their 15-hour days haunted by sadistic guards.

[Prison officials] buy small-time offenders from other cities on a sliding scale that begins at 800 renminbi, or about $130, for six months of labor.

Do the math.  The Chinese prison buys their labor for $5 a week.  And those inmates are working 105 hours a week.

How on earth can US workers compete with that?

The really bad news is: prison labor isn’t just a problem in China.  It’s a problem here in the US, too.  Read “The Hidden History of ALEC and Prison Labor” in The Nation here.

Just one example:  Arizona inmates working for private agricultural companies are paid a “whopping fee” of “more than 50 cents an hour.”  Read “How US prison labour pads corporate profits at taxpayers’ expense” in The Guardian here.

How on earth can US workers compete with that?

AFL-CIO President Trumka On Currency Exchange Reform Act

Richard_Trumka

Statement by AFL-CIO President Richard Trumka on the Currency Exchange Rate Oversight Reform Act of 2013

The Currency Exchange Rate Oversight Reform Act of 2013 sends an important message that this nation will no longer tolerate currency manipulation by other governments. This wrongful and unfair practice distorts the global economy and disadvantages countries like the United States that follow international trade rules. The growth of these illegal actions has cost far too many jobs over the past several years. We call on the House and Senate to take action on this issue without delay.

Working people are proud of the leadership from Senators Sherrod Brown (D-OH), Jeff Sessions (R-AL), Charles Schumer (D-NY), Richard Burr (R-NC), Debbie Stabenow (D-MI), Bob Casey (D-PA), Lindsey Graham (R-SC) and Susan Collins (R-ME) to introduce this important the bipartisan legislation.

In addition to supporting this bill, the AFL-CIO supports companion legislation in the House, The Currency Reform for Fair Trade Act of 2013 (H.R. 1276). Considering the continuing job-destroying impacts of currency manipulation, there should be strong bi-partisan support in both the House and Senate.

When foreign governments manipulate currency, they give producers in their country an unfair advantage.  When a country’s currency is devalued by 25 percent, that means US exports are 25 percent overpriced by comparison, while our imports from that country are underpriced by the same amount. Not only does this unfair practice severely damage the US manufacturing sector, it also means that workers in those countries suffer from reduced purchasing power themselves.  The result on the U.S. trade deficit has been devastating—last year, the U.S. ran a trade deficit of more $315 billion dollar in trade in goods with China alone.

Congress must stand up for American manufacturing and put an end to the trade war being waged against the working families and communities. Our country needs to create millions of good jobs now. We can no longer afford to be passive in the face of these illegal job-killing practices.

NH Congresswomen Weigh In On The So-Called “Full Faith and Credit Act”

Ann kuster head shot LG

Carol Shea-Porter_Official.2010-300x288WASHINGTON, D.C. – Today, the House of Representatives voted on H.R. 807, a bill that would ensure Chinese bondholders are paid before American soldiers in the case of a government default.

After the vote, Congresswoman Carol Shea-Porter issued the following statement:

“I strongly oppose this deeply irresponsible legislation. Middle class families can’t pick and choose which bills to pay, and neither should Congress. 

“H.R. 807 guarantees that if Republicans push our nation into default, bondholders from China and the Cayman Islands would be paid before America’s veterans, Medicare providers, and small businesses. 

“Instead of playing chicken with our nation’s credit rating, Congress should act responsibly and pay the bills that it has incurred.  I, once again, call on Speaker Boehner to appoint budget conferees so Congress can compromise on a sensible budget that ends sequestration, helps create jobs, and responsibly reduces the deficit.”

Congresswoman Annie Kuster also released a statement after her vote:

Ann kuster head shot LG“This bill is nothing more than a plan to default on our nation’s obligations, plain and simple,” Kuster said. “It sets the stage for yet another manufactured crisis that would prioritize payments to China and other foreign creditors over our obligations to seniors on Medicare, veterans, and the men and women of our Armed Forces.”

“Rather than simply bracing for default, both parties need to work together to reduce the deficit in a balanced way that will help create jobs, grow the economy, and strengthen the middle class,” Kuster added. “As we do, Congress must reassure creditors and the American people that our government will continue to meet its obligations and avoid a catastrophic default. Any suggestion that we would even consider doing otherwise would be irresponsible, undermine confidence in our government, and put our credit rating at risk.”

 

Telling the Truth About Unions And Hurricane Sandy

photo by Dan DeLuca via Flikr

photo by Dan DeLuca via Flikr
Have you heard the story about non-union utility crews getting turned away, after Hurricane Sandy?

The story isn’t true – but it’s still being spread.

It started before the election.  The story spread so far and so fast that five utility companies issued public statements saying it wasn’t true.

A full week later, the story was still being spread – by an anti-union newspaper, the Las Vegas Review-Journal.

Does this remind you of anything?  Maybe Mitt Romney’s infamous allegations about Jeep moving production to China?  Again, that story was immediately and thoroughly debunked – by the company – but Romney’s campaign kept spreading it, through television and radio ads.

Truth? Romney’s pollster said it didn’t matter:  “We’re not going to let our campaign be dictated by fact checkers.”

Yes, there’s a connection here.  Romney’s campaign was funded by many of the same people and corporations that have invested millions in the “union avoidance” industry.  Take a few minutes and read this analysis of the 2010 electionsIt’s the very same players, now:

  • Karl Rove, of election night meltdown fame, toured the country in 2009 opposing the Employee Free Choice Act;
  •  “Americans for Job Security” is a secretive group run out of a mail-drop box in a UPS store, but they spend millions on false advertising attacking candidates who support labor unions;
  •  “Americans for Prosperity” is run by the Koch brothers, spends tens of millions on misleading ads; and in 2009 sponsored a multi-state publicity tour opposing the Employee Free Choice Act;
  • and the list goes on, and on.

The “union-avoidance” industry doesn’t care about the truth – it just cares about results.  Haven’t heard of the industry before?  Read more about it here and here.


Looking for the truth about how labor unions responded to Hurricane Sandy?
  Read more here and here, and updates on the Teamster’s blog here.

 

[Top image of ConEd workers is by Dan DeLuca via Flickr/Creative Commons]

 

Slave Labor a Thing of the Past, Or Is It????

Most of us are familiar with Union and Labor history.  In the industrial revolution people were treated terribly and forced to work 12-16 hours a day for pennies.  Most of the people could not afford to live on the pay they were given and were forced to live in mill housing, and buy from mill grocery store.  By the end of the month workers ended up with a fraction of the money they earned.  Last week we talked about the Bread and Roses Strike, this was a big part in that strike.

In America we have grown and thanks to the Labor Unions strength over the years workers are no longer forced into these conditions.  This is not the case in other parts of the world.  This video is from the Daily Show with John Steward.  It is a Comedy News program however the information they are talking about is true.  Workers in China, are essentially what Americans endured in the early 1900s.

This is what deregulated industry without unions looks like.