AFL-CIO Report “NAFTA at 20” Sums Up Trade Deals’ Impact

The AFL-CIO today issued a report, NAFTA at 20, which summarizes the unfortunate experiences of workers in Mexico, Canada and the United States in the twenty years following passage of the North American Free Trade Agreement (NAFTA). With the NAFTA model proving to be the template for additional trade deals in the past two decades and the Obama administration negotiating two massive trade deals, this report is particularly timely.

The AFL-CIO’s NAFTA at 20 can be found here: www.aflcio.org/NAFTAat20

This report demonstrates that the high hopes of NAFTA proponents have not been realized. Instead, the report argues that, “On the whole, NAFTA-style agreements have proved to be primarily a vehicle to increase corporate profits at the expense of workers, consumers, farmers, communities, the environment and even democracy itself.”

“There is no success story for workers to be found in North America 20 years after NAFTA,” said AFL-CIO President Richard Trumka. “The NAFTA model focuses on lifting corporations out of reach of democratic governance, rather than solely reducing tariffs.  This report should serve as a cautionary tale to the Obama Administration and Congress as they consider negotiating and implementing new trade deals.”

The report concludes that “the TPP and other forthcoming trade agreements do not have to repeat the mistakes of the past 20 years.”  The choice isn’t between the outdated NAFTA model and no new trade.  It’s between the corporate-rights model and trade that drives shared prosperity and inclusive growth for people and the planet.

The AFL-CIO has available a wide array of experts to elaborate on NAFTA at 20 as well as to discuss negotiations over the Trans-Pacific Partnership (TPP) , Transatlantic Trade and Investment Partnership (TTIP), and Trade Promotion Authority (TPA).

Rebuilding Our Economy By Reducing Our Trade Deficit And Opposing The TPP

Image from CC WikiCommons

Image from CC WikiCommons

Jobs, jobs, jobs! That is what every member of Congress said they were going to create if we elected them.  President Obama said he would create one million new manufacturing jobs.  The President has not met his goal yet, but there are a few things we can do to reduce unemployment, create new good manufacturing jobs, and reduce our trade deficit all at the same time.

Many people say that the problem with the American economy is that ‘America doesn’t make anything anymore.’  Millions of good, mostly union, manufacturing jobs have been shipped overseas.  This has created many problems within our economy.  First, it raised the unemployment rate as workers saw their factories up and disappear.  Second, it created a trade deficit with other countries as we are importing more goods than we are exporting.

The trade deficit is key to rebuilding our economy and getting millions of Americans back to work.  The trade deficit is a little confusing but let me try to explain it in a non-econ major’s interpretation.

Every year the United States exports $212 Billion dollars worth of machinery. This would be cars, trucks, engines, etc.  At the same time the United States imports $314 billion dollars in machinery from other countries.  For the purpose of this example let’s say that all of this trade is with China.  This would create a $102 billion dollar ‘trade deficit’ with China.

The US currently has a $540 Billion dollar annual trade deficit. This means that U.S. exports of $2.194 trillion were less than its imports of $2.73 trillion in goods and services.”  Other countries like Germany are exactly the opposite, they export more than they import. In fact Germany had a 1.5 EUR billion in trade surplus.  This is one of the reasons Germany has one of the strongest economies in the world.

The first step in getting Americans back to work is to balance our trade with other countries. Dean Baker from the Center for Economic Policy Research (CEPR) told me in a phone interview that eliminating the trade deficit would lead to “4 million new jobs directly, and over 6 million new jobs indirectly.”  Not only would we be creating new jobs, many of the new jobs would be good, Middle Class union jobs in the manufacturing sector.

Baker also talked about how by adding these new jobs, the United States would come closed to “full employment”.  Baker stated, “As we climb closer to full employment wages will rise.”  As the unemployment rate drops, employers will have to raise their wages to keep employees or encourage new applicants.

Clyde Prestowitz, President of the Economic Strategy Institute, echoed Baker’s statement by say that “lowering the trade deficit would create 5-6 million new jobs.”

Both Baker and Prestowitz cited ‘currency manipulation’ as a key influencer in our trade deficit.  Again, for those (like me) who are not economic majors, currency manipulation is very complex theory where one country buys another country’s debt to cause changes in the currency rate of exchange.

Robert E. Scott Economic Policy Institute explained currency manipulation the best in his blog:

Currency manipulation lowers the value of foreign currencies, relative to the U.S. dollar, which acts like a subsidy to their exports, and a tax on U.S. exports to China and every other country where the U.S. competes with the exports of currency manipulators.

Matthew McMullan from the Alliance for American Manufacturing explained currency manipulation to me in an email:

“China holds massive amounts of American currency in reserve. They go right to the U.S. Treasury and buy treasury notes. By gobbling up dollars and sitting on them, they make them more scarce. It makes the dollar stronger (or more expensive) and makes its own currency, the yuan, weaker (or cheaper) by comparison. That makes stuff that America exports more expensive, and stuff that China exports cheaper. China effectively subsidizes its exports by putting a tax on America’s.”

Doug Hall also from the EPI breaks it down to its most basic form: currency manipulation “raises the cost of U.S. exports, and lowers the cost of U.S. imports.”

The Economic Policy Institute recently published Robert E. Scott’s massive report on currency manipulation, which spells out exactly how ending currency manipulation will create new jobs and boost America’s exports.

After the report was released AFL-CIO President Richard Trumka said, “U.S. workers can compete with anyone in the world, but they cannot compete successfully on a lopsided playing field.  Currency manipulation allows countries like China to devalue their currency, which artificially makes Chinese goods less expensive and American products more expensive. This is a major contributing factor in our lopsided trade relationship with China. Meanwhile, U.S. manufacturing companies and workers bear the brunt of these unfair policies.”

How do we compete in the global marketplace when countries are gaming the system through currency manipulation?

Robert E. Scott (EPI) recommends several ways of combatting currency manipulation.

First, Congress should pass pending legislation that would allow the Commerce Department to treat currency manipulation as a subsidy in countervailing duty trade cases. Second, the proposed Trans-Pacific Partnership trade agreement should include “strong, enforceable currency manipulation provisions,” as a majority of the House has insisted. Third, the administration should implement strategies to offset purchases of foreign assets by currency manipulating governments, which would make efforts to manipulate the dollar and other currencies costly and/or ineffective.

Both Dean Baker and Clyde Prestowitz also said they were “not fans” of the TPP, and the TPP is not addressing the currency manipulation issue.

Prestowitz went on to say that the TPP will “result in higher unemployment and lower wages for US workers.” He continued by saying that the “there is no such thing as ‘Free-Trade’; the TPP is about regulating trade.”

There is another issue that the TPP is not currently addressing, and that is incentives to move manufacturing plants overseas.  This is similar to states offering huge tax breaks for corporations who choose to move their manufacturing plants into their state.  This is what drew Boeing to South Carolina; and the same thing lures US manufacturers into moving to China and Japan.

These multi-national corporations are reaping huge profits from these so-called ‘free trade agreements’ and benefiting from currency manipulation.  We need to end the currency manipulators and get our trade deficit down to help American workers.

Prestowitz posed this question; “What would our economy look like if China had purchased $1.5 Trillion dollars worth of American products?”

 

TTD Urges Administration to Deliver Strong Message to EC: Keep Aviation and Maritime Out of TTIP

Transportation Trade Department Logo

WASHINGTON, DC—Edward Wytkind, president of the Transportation Trades Department, AFL-CIO (TTD), issues the following statement in response to news accounts of leaked European Commission (EC) proposals to include aviation and maritime services in the Transatlantic Trade and Investment Partnership (TTIP) trade deal currently under negotiation:

“Recent press reports of ‘leaked’ documents confirm what we’ve known for some time: the European Commission (EC) continues to advance a trade agenda that would undermine U.S. airline and maritime jobs and our national and economic security. The Europeans have been pushing a reform agenda through attempts—in defiance of longstanding U.S. trade policy—to include aviation and maritime in U.S.-EU talks on the Transatlantic Trade and Investment Partnership, or TTIP. Specifically, the EC seeks to weaken or eliminate our laws limiting foreign ownership and control of U.S. air carriers and to hollow out Jones Act protections at the expense of U.S. Merchant Marine jobs.

“Air and maritime services have historically been excluded from broad free trade agreements and for good reason: both sectors serve strategic economic and national security purposes for the nation. While America’s long-term economic interests are intrinsically linked to a robust U.S. aviation and maritime sector, the EC would have us hand over the keys to these vital industries. The Obama Administration must reject these efforts.

“Fortunately, U.S. Trade Representative Michael Froman last July removed maritime from TTIP talks by declaring that ‘The Administration has continuously ensured that application of the Jones Act is permitted under each of our trade agreements’ and that it ‘will continue to take this position.’ We urge the Administration to reaffirm those views and to declare that aviation will not be a subject of TTIP negotiations. Instead, aviation trade negotiations should continue to be handled through bilateral negotiations under the auspices of the Department of State and Department of Transportation.

“These leaked documents demonstrate the EC’s resolve to pursue reforms in U.S. transportation policy that have been roundly rejected by the President and by lawmakers on both sides of the aisle. In fact, 158 members of the House have already written Ambassador Froman in opposition to including aviation in TTIP talks.

“Aviation and maritime have no place at the TTIP negotiating table. We urge the Obama Administration to deliver this message unambiguously to its European counterparts.”

Congresswoman Annie Kuster Helps Introduce Trade Adjustment Assistance Act (TAA) to Provide Relief to New Hampshire Workers

Bill would provide benefits and training to workers whose jobs were affected by foreign competition

WASHINGTON, D.C.  – Yesterday, Congresswoman Annie Kuster (NH-02) helped introduce the Trade Adjustment Assistance Act of 2014, which would provide benefits and workforce training to displaced New Hampshire workers whose jobs were affected by foreign trade. The bill would extend for an additional seven years key provisions in the Trade Adjustment Assistance Act of 2009 that lapsed in December.

“I am proud to be an original cosponsor of this legislation, which will extend a key benefits program that many New Hampshire workers rely on,” said Congresswoman Annie Kuster. “This extension will restore access to TAA benefits to service industry employees, which is particularly important to workers in New Hampshire’s North Country who have faced stiff foreign competition in the expanding global marketplace. I am hopeful that Republicans and Democrats can work together in the House to swiftly pass this legislation, and provide relief to these workers.”

Last month, a Berlin, NH consulting firm, Salience Insight, let go of half its workforce.  These workers may have been eligible for essential benefits under the 2009 Trade Adjustment Assistance Act, but when the bill expired last year, service workers were no longer included as a category of workers for TAA benefits. As a result, the Salience Insight workers’ application for benefits was denied. The bill Congresswoman Kuster helped introduce yesterday would restore TAA benefits for service workers like those at Salience Insight.

Trade Adjustment Assistance is a program managed by the U.S. Department of Labor. It provides trade-affected workers with individualized training plans, on-the-job training, allowances for expenses associated with re-employment and relocation, among a host of other benefits. The program has a remarkable track record of success. According to a Department of Labor study, 138,477 workers participated in training via the TAA program over the past five years. In fiscal year 2012, 71% of the workers participating were re-employed, and 91% remained on the job after six months. Congresswoman Kuster is committed to ensuring that every New Hampshire worker who should have access to these benefits can receive them.

*             *              *              *               *

UPDATE 3-7-14 18:45

Statement by AFL-CIO President Richard Trumka on House Introduction of Trade Adjustment Assistance (TAA) Legislation

The Trade Adjustment Assistance program has long helped U.S. workers whose jobs are outsourced or offshored to get back on their feet.  Working people are proud to have leaders like Congressman Adam Smith (D-WA) who champion this critical safety net for Americans who continue to lose their jobs due to imports or outsourcing. We owe it to these workers, who lost their jobs through no fault of their own, to support Congressman Smith’s bill – but without linking it to the undemocratic Baucus-Camp Fast Track legislation.

AFL-CIO Statement on The Proposed Trans-Pacific Partnership

StopTPPOn the eve of the Dec. 7 meeting of trade ministers of the twelve countries involved in the Trans-Pacific Partnership (TPP) trade and investment negotiations, Cathy Feingold, International Department Director of the AFL-CIO, released the following statement:

(Washington, DC) After nearly four years of negotiations, the trade ministers are on the brink of finalizing the TPP.  Government trade negotiators often speak of the importance of “momentum” in such agreements, in order to provide “urgency” to make “needed compromises.”  What they rarely speak of is the urgent need to make trade policy choices that will have immediate, positive impacts on the lives of people they are supposed to be representing.

Critical issues remain outstanding in the TPP, including provisions affecting the free exercise of labor rights, the conservation of natural resources, the affordability of life-saving medicines, and the extraordinary legal privileges that allow global corporations to use private courts to challenge laws and regulations they don’t like.

What American working people—and their counterparts in TPP countries—want to know is whether the TPP will create good, family-supporting jobs.  They want to know if it will help reverse the race to the bottom that has led to wage stagnation and made it easier to suppress worker efforts to achieve fair contracts and a voice in the workplace.  They want to know if the TPP will include strong, enforceable labor and environmental protections. They want to know if the TPP will lock-in austerity policies or if it will actually promote shared prosperity and help address economic injustice.

Unfortunately, America’s workers have seen no evidence that their trade negotiators have focused on these urgent quality of life issues.  Unless the trade ministers can re-focus this agreement on the things that really matter to American families, they are likely to create more failed trade policy in their rush to completion, costing both jobs for workers and business opportunities for U.S. manufacturers.

Richard Trumka Is Glad The President Is Doing Something On Bangladesh

The AFL-CIO welcomes news that the U.S. government will suspend Bangladesh’s trade benefits granted under the Generalized System of Preferences (GSP).  Bangladesh’s egregious labor practices have been under review for more than six years now, and the Bangladesh Government has repeatedly failed to comply with the minimum GSP requirements to afford internationally recognized labor rights to its workers.

The decision to suspend trade benefits sends an important message to our trading partners:  Countries that benefit from preferential trade programs must comply with their terms. Countries that tolerate dangerous – and even deadly — working conditions and deny basic workers’ rights, especially the right to freedom of association, will risk losing preferential access to the U.S. market.

Since 2005, over 1800 workers have died in preventable factory fires and building collapses in the Bangladesh garment industry, including the most recent collapse of the Rana factory. Workers died because the government and industry violated safety standards to cut costs, while global apparel brands demanded production at the lowest prices in the world. The suspension of GSP benefits, together with the binding commitment made by over 50 brands to improve fire and building safety in factories, are important steps to improving dangerous working conditions. The global workplace cannot be a deathtrap for poor workers producing products for the global economy.

Bangladesh’s workers, many of them young women, need good jobs with strong worker protections, a voice at work and safe work places.  The AFL-CIO hopes that the suspension of GSP benefits will be a catalyst to accelerate an effective process involving the government, employers and workers of Bangladesh to achieve these goals. International trade with strong labor rights enforcement plays a key role in ensuring that workers as well as their employers can benefit from increased prosperity and transnational trade and investment. With a demonstrated commitment to defending workers’ rights and improving working conditions, Bangladesh can earn reinstatement of GSP benefits.

Senator Chris Murphy Pushes ‘BUY AMERICA’ Campaign Into The Senate

senator chris murphy

For decades now vulture capitalist like Mitt Romney have been taking good American jobs and shipping them overseas.  Bain Capitol was well known for this and this could have been one of the reasons he ultimately lost the Presidential election.

People overwhelmingly agree that we should increase manufacturing throughout the United States.  During the campaign President Obama said he want to create one million new manufacturing jobs right here at home.

With over 20 million still out of work, bringing jobs back and rebuilding the greatness that once was American Manufacturing should be a top priority.  For Senator Chris Murphy, it is.  He actually ran his campaign for Senate on this very principle.  As a Congressional Representative from Connecticut, Murphy created the “Buy America” Caucus whose sole purpose was to push for policy changes to boost American Manufacturing. 

“I believe our economy cannot recover without a strong manufacturing base” Senator Chris Murphy 

Senator Murphy in partnership with the Alliance for American Manufacturing highlighted four areas that need to be changed that will bring jobs back to the US and help create new long-term jobs

1. Stop the currency manipulation from China by passing Currency Exchange Rate Oversight Reform Act. China continues to manipulate their currency to ensure that their costs are cheaper.  Senator Murphy said “We’re already in a trade war with China, we’re just not fighting it. We need to get more serious.”

2. Tax Reform.  Provide incentives for companies who bring jobs back from overseas and stop subsidizing companies who are outsourcing jobs.

3. Invest in our infrastructure.  One of the issues with American manufacturing is the ability to products to our trade ports.  By building better roads, bridges and trains, manufactures can quickly and easily move their products across the country or around the world.

4. The United States Government needs to practice what it preaches by buying American made products.   Currently the ‘Buy America’ law states that 50% products bought with taxpayer money be made domestically. Senator Murphy says that number should be at a minimum 60% but would like to see it closer to 75%.

Senator Murphy also pointed out that the current ‘Buy America’ law has one very large loophole that must be closed.  If the government buys a product, lets say a gun, but that product is not going to be used within the United States, the law says that it does not have to be made in the USA.   This loophole has been exploited by defense contractors and the DOD. Think of how much money the US Government spent over the last decade fighting two wars.  What would that have done for our economy if we made all of those guns and ammunitions right here at home?  If you remember weapons manufacturing during World War II was one of the way we pulled ourselves out of the Great Depression.

To fight back against this stagnant economy we must start by investing in America, and American Manufacturing.  We need to start building more products and selling them throughout the world.  We need to show that products made right here at home are better quality and economical.  The Alliance for American Manufacturing just opened their new office in Washington D.C. that was built and furnished with American Made products.

Labor unions have taken a beating in the media recently over reduced membership numbers.  Do you want to see unions growing stronger again? If so then we must all start to insist on American Made products.  When American Manufacturing once again flourishes the membership numbers will grow with it.  Oh and that thing that the Republicans are always screaming about, the national debt, that will go away on its own when we increase our GDP.

So if you want to reduce the debt, put millions of people back to work and support labor across the country the answer is simple, BUY AMERICAN!