Rethinking Trade - Season 1 Episode 18: Trade Deficit

Candidate Trump pledged he would swiftly eliminate the huge job-killing U.S. trade deficit, end job outsourcing and rebuild manufacturing. Did he? The government collects data on each issue, and it’s been a triple fail.

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Amongst the daily diet of Trump lies, we hear a whole lot about his great trade achievements. Thankfully there’s actually data that tracks these outcomes and we’ve been tracking that data. What are the big numbers you see Lori, and what do they mean on the ground?

Lori:

So, Trump came up with a bunch of pledges that he would transform our trade policies. He said he would get rid of the trade deficit which is ginormous and is a drag on growth but also represents us importing things we used to make here instead of employing people to make the things we buy. He said that he would end job outsourcing meaning US companies relocating production to low wage countries to make things that they then ship back here to sell, that they used to make here, and he said he would do all of this quickly and he also said he would rebuild manufacturing and the government actually tracks every month what US trade balances and flows are. So, we have trade deficit data and it’s the same measure over time so we can compare it to before he was in office, same thing with the jobs data. So, the big top line I would say is that if you compare the trade deficit in Trump’s last year of this term in office and you got 7 months of data by the beginning of September, we had seven months of data for 2020, its almost 13% higher, the trade deficit, than when he entered office. So, not only didn’t he get rid of what he identified as a job-killing trade deficit but in fact the Trump trade deficit is bigger than say the same period in the last year of the Obama administration.

Ryan:

Another data point that we pulled out is that the July 2020 deficit is the largest monthly deficit since July of 2008.

Lori:

In the midst of the financial crisis. Yep. So, not only is that pretty stunning but also, the fact that the 340-billion-dollar trade deficit in the first 7 months of 2020 is larger than the already ginormous 300 billion dollar deficit during the same period during 2016, it’s also in the context of the COVID crisis having crashed trade volumes. So, we see that the actual overall flow in trade is down and as a result we see that if you compare 2020 to 2019 the deficit is down and despite there being a decrease overall in trade of 15%, COVID related, the trade deficit is up almost 13% relative to 2016. That is not what Trump promised. And it’s not what he’s saying. So, the data is his own government’s data and it’s equally compelling when it comes to the issue of outsourcing. Trump said he’d get rid of outsourcing. But the reality is, 300,000 plus more jobs have been certified by the department of labor under the Trump administration as having been lost to trade and that is just under one narrow program called Trade Adjustment Assistance. That’s not even the whole count of the loss because that Trade Adjustment Assistance is basically a system where you can get extended unemployment benefits and retraining money but you have to know about it You have to prove your job was lost to trade and so it is by proponents of our current trade rules considered maybe a 1 out of 10 count of the actual loss. 300,000 certified jobs. So, not the end of outsourcing that Trump promised.

Ryan:

We dig into the trade adjustment assistance numbers in a previous episode so folks should go back and give a listen if you want to get deep into that data.

With the deficit Lori, normally the reduction in trade would create a reduction in the deficit but that hasn’t been happening. Is that due to the inept way Trump has handled the pandemic or the lack of a way to deal with a health crisis of this magnitude or are there other things at first in that

Lori:

So, the economic impact of the COVID crisis certainly is related to our hyper globalization system implemented for the past 25 years agreements like the world trade organization and NAFTA where we have really concentrated supply chains so that we are so reliant on imports from just 1 or 2 countries for things we vitally need every day so that when you have people in the country get sick and the factories get sick so when the factories close down or the ports close down or a country like China where a lot of the personal protective equipment we use and medicine is made decide reasonably, the government decides that they the need the stuff for people in their own country, we end up with both huge worse health impacts we can’t get the things to be healthy and safe but also economic impacts in this over integrated hyper globalized economy. So, it is certainly the case that when we saw the fall off in trade it wasn’t a shock we saw that after the global financial crisis. What’s shocking is that when trade falls off 15% the US trade deficit doesn’t follow. And that is in part because of things that happened way before trump this whole hyper globalized regime of NAFTA and WTO, but it also reflects the things he didn’t do in the 3 and a half year plus he has been president. So, there was a lot of talk about how for instance on day one he would hold China accountable for manipulating currency. We are going to have a future podcast on how this currency manipulation business works. The difference is that if a country holds too many dollars it holds up the value it buys dollars in currency markets it holds up the valley of the dollar or if it basically intentionally takes actions to reduce the value of its currency both things mean that effectively you’re subsidizing exports from your country to the US and you’re making it too expensive for things made here to be sold in your country. Well, trump never dealt with that with China. So, the section 301 tariffs have reduced some imports from China but relative to systematic dealing with some of these structural imbalanced causes, he didn’t take action and he also never took action on the thing that you can do to improve demand in the us which is Buy American. He made a lot of executive orders and announcement and got a lot press about improving buy American but they never actually followed through so instead of having billions more of government purchases of us made stuff were still purchasing with our tax dollars basically outsourcing them to purchase stuff made elsewhere despite having a law if it was being enforced properly that Trump could have done that unilaterally without congress that would have reversed. So some of that dynamic is stuff that needed to get fixed that still needs to get fixed that has not gotten fixed.

Ryan:

Let’s talk more broadly about manufacturing and the purchasing managers index (PMI). Our research director asked me to ask about that and I said sure and then I was like I have no idea what that is. So maybe you can tell me and the listener what this is?

Lori:

PMI is basically an indicator of the health of the manufacturing sector in that it basically is forward orders for inputs for an equipment and so you can see it’s an index in a sense that it is looking forward to what activity is happening now that can project what will be happening in a month or two or six or a year after. So people looked at the PMI index so if its 50% or better its basically constant if it's higher than 50% growth in the sector if it's lower it contracting in a sector and the reality is that the manufacturing sector started to grow in the last couple of years of the Obama administration and that growth continued into the first two years of the Trump administration and you can see that whether you look at the bureau of labor statistics numbers of manufacturing jobs or if you look at the PMI there’s an upward trajectory over a four year period. So, if you start to look in 2019 well before the COVID crisis in the middle of the year you start to see the job numbers but also the PMI flattened then it actually starts to decline. So, the Trump administration likes to say that they were going gang-busters that they were creating so many manufacturing jobs, that they were doing something miraculous then COVID ruined it. Well, actually they were on the same trajectory as the previous administration for 2 years and then they flattened out, and then COVID happened. So, the notion that somehow the administration is the great champion of manufacturing jobs, it is true that a lot of manufacturing jobs were created in the first two years of the Trump administration just like they were in the last 2 years for the Obama administration but that sadly ended well before the time that the COVID crisis hit and in some states there are not net losses in manufacturing jobs it's generally fairly flat and because there’s been mass outsourcing still like in Michigan the rate of outsourcing has been related to trade-related job losses has been two times higher fast than it was in the three years previous to trump in some states the numbers are really not good.

Ryan:

These numbers and this data is all fairly depressing and I guess a bit not surprising do you think that Trump is getting away with selling one story and obviously living another?

Lori:

I think that we have the same problem on issue after issue which is people who want to believe trump has fixed a problem don’t want to hear that factual evidence to the contrary and shut it out and people who think Trump is a disaster are happy to season any evidence reinforcing that. And the big question to me practically is in states where manufacturing and trade really affect day to day the communities top to bottom are people's lived experiences what they’re thinking about. Did those jobs they were promised to happen? Did they stay? Is there still outsourcing? I suggest the big picture data how compelling it is doesn’t actually in most people’s lives have as much impact on what they actually seem. Just a guess. At least what they seem now we have all that data out in front of folks so it’s a pretty compelling and not a great picture

Ryan:

Where can fold find this data?

Lori:

So to make it more accessible we’ve actually taken the trade adjustment assistance database the Department of labor’s database and we have it at tradewatch.org you can go to our trade data center and what we’ve done is made it more accessible because we’ve geomapped is so you can put in your congressional district or your city or your zip code and you can get a list generated of the certified trade-related job loss near you which unfortunately is not a feature of the department of labor’s website or if there is a specific company you want to know what they’ve been up to you can put in a company name and search so that’s act tradewatch.org. as far as this trade data you can also go top tradewatch.org and look at our landing page every month have the new trade data and we basically crunch the numbers so you don’t have to so we do the inflation controlling and we compare it to the previous year to the previous period in the end of Obama administration so we basically do the math so you can see the chase points. So as far as the purchase managers index if you’re really into that you can actually just google PMI and you can see it over time on line but we also talk about the PMI in each of our monthly trade releases which you can once access at tradewatch.org, come one come all, our whole job is to make this information accessible to everyone can see what the actual facts are.

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

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Rethinking Trade - Season 1 Episode 16: Online Retail Giants Sneak Attack by Trade Pact

Online retail giants like Amazon have been quietly stuffing trade agreements with terms that handcuff governments from protecting consumers or breaking up the online behemoths. What these corporations and their government co-conspirators call “digital trade” rules are in fact designed to forbid governments from protecting our privacy, holding the online giants accountable for dangerous or fake products they sell us, and empowering us to control our personal data. 

“Digital trade” rules being pushed in U.S. trade deals give some of the world’s largest corporations further control over our personal data and the online-retail market.

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Lori, it’s not a secret to anyone that the 2016 presidential debate, and now the 2020 one, have made the trade issue politically confusing. Now, you’ve long been part of the movement for alternative trade rules that limit corporate power, protect workers, consumers, and the planet but your adversaries have often been Democratic presidents like Bill Clinton and Barack Obama who presided over significant negotiations of some really bad trade deals. People like Donald Trump have preyed upon this fact and painted themselves as the alternative to the Democrat’s bad trade deals. At the same time, it’s often been Democrats in the House and Senate who’ve been the champions of the alternative trade rules people like you have advocated for — not to mention that all of these bad trade deals were also supported by most of the Republican party. Let’s talk a bit about the Democratic party’s complicated relationship with trade policy. Where do we start?

Lori: 

The story about trade politics is not so much partisan as it is one’s philosophy about the economy and who ought to be prioritized. And there has been a broad dichotomy historically between the presidential wing of the Democratic party, which has quite systematically sided with corporate elites, versus the Congressional wing, which has quite systematically sided with working people. 

So you have a dynamic where Democratic and Republican presidents alike have pushed the same corporate rigged trade agreements, trade policies, trade model, that see the rules of the global economy as an extension of privileges and powers for big companies, including a lot of things that are flat out protectionist. Starting with NAFTA, US trade agreements had literally rent-seeking monopoly protections, anti-free trade for Big Pharma. Why would you put a monopoly patent in a free trade agreement? Because it was for the corporations. And presidents of the Republican and Democratic variety sided with that, but the Congressional situation has been quite different. 

Congressionally, the Democrats have led the opposition to these corporate rigged agreements and have promoted alternatives, whereas the Republicans in Congress have followed their presidential wings and have overwhelmingly supported agreements like NAFTA, the WTO, China’s entry into the WTO. So, if you look historically you’ve got this battle that is Democratic presidents pushing, along with Republican presidents pushing, the same kind of trade agreements for decades. You have Republicans in Congress voting for them overwhelmingly and you have Democrats in Congress voting overwhelmingly against them to the point where with a bunch of these agreements you literally have, you know, five Democrats, fifteen Democrats, when there are hundreds of Democrats in congress and it is always the vast majority of Republicans in Congress voting for, but it might be a Democratic or Republican president pushing the same-old-same-old and that split has led to a lot of political confusion when then Donald Trump comes on the scene, which by the way could have been Bernie Sanders on the scene or could have been Senator Warren on the scene as a president. It had to do with basically breaking that bipartisan presidential consensus in favor of the same-old-same-old.

Unfortunately, the way Trump did it was not to push the progressive alternatives that Democrats in Congress, and unions, and consumer groups like ours, and environmental groups, have been pushing. He did break the old consensus but not necessarily in favor of people or the planet, it was a much more nationalist, corporatist view but a different take.

Ryan:

One of the things Trump did was he really utilized NAFTA, the North American Free Trade Agreement, in 2016 as an example of the “Democrats’ bad trade deals” and while it was signed by Bill Clinton it was introduced by Republican president George HW Bush wasn’t it? And didn’t a lot of Congressional Democrats oppose NAFTA at first?

Lori: 

So, the politics in NAFTA is the perfect example of why this is so jumbled and hard to understand. The concept of NAFTA came from Ronald Reagan. It and the negotiation of the WTO, the so-called GATT Uruguay Round, were Reagan's ideas of how effectively to get around an overwhelming Democratic majority in Congress that was systematically blocking his privatization and deregulation of the service sector and that was blocking the extension of patent giveaways for Big Pharma. The idea was to use this sort of Trojan Horse work-around of the Trade Agreements. So, the history of NAFTA is that Reagan came up with the idea and in fact Reagan initially started the precursor, the US-CAN negations. Then George Bush the first picks up the NAFTA negotiations, he doesn’t just introduce it, he signs it, it’s his deal. It was signed before he was out of office. He negotiated that deal and he signed it. But because of the dynamic I described where the Democratic presidential wings have often been indistinguishable from the Republicans on trade, then Bill Clinton picks up the old NAFTA as a sort of political maneuver and creates some meaningless unenforceable side agreements in the environment and labor and pushes the exact thing that Bush has signed, that Reagan has envisioned, through Congress. But the political dynamic was bloody because while almost every Republican in Congress voted for the NAFTA, the majority of Democrats fought their own Democratic president and voted against. And there was a block, I would say a larger block overtime, of 100 Democrats who voted with Clinton, their president, a lot of goodies were given away, but 160 Democrats voted against. What’s super interesting is that in short order by the time there’s a push for NAFTA extensions to other countries in Latin America, in 1998, and people had seen the effects of three years of NAFTA, the vote had totally shifted. 171 Democrats voted against, only 29 Democrats voted for their own democratic President Bill Clinton having the trade authority called Fast Track to extend NAFTA throughout the Americas because in those three years not only had everything that Democrats in Congress who voted against, and the opposition was led by the Democratic house leadership, Gephardt, the number one Democrat, Bonior, the number two Democrat in the House, they led the fight against NAFTA, against their own president, from the Capital, from the leadership offices of the Congressional Democrats, not only had everything they had warned but an enormous number of worse things had happened. So, by the time the lived experience had caught up to the warnings of the Democratic Congressional leadership to their rank in file members, Congress denied Bill Clinton having trade authority for the rest of his term because there weren’t enough Democrats to go along with the overwhelming number of Republicans who passed it even by a narrow margin. So, from that point on President Clinton never had trade authority again.

Ryan: 

So, another big thing that happened I guess before that under the Clinton presidency and this is as NAFTA had begun taking its devastating effect on US factory workers and Mexican farmers and so many others, there was also the World Trade Organization. And the WTO is widely seen as a Clinton baby because he was president when it was signed, and he was also president when China was brought into it back in the year 2000. Maybe talk a little about how congressional Democrats reacted to these developments at the time.

Lori:

The NAFTA fight helped the Democrats lose the House. The midterm elections 1994 had an enormous fall-off in turnout for union households and working people who just basically saw a Democratic president passing this agreement they knew was going to devastate them and in short order had started to lead to mass outsourcing in Wisconsin, in Michigan, and other states. Democratic base voters basically stayed home in 94 and the Democrats lost the House because of the NAFTA fight and the dynamic of that politics had such damage that on the Congressional wing, as well as the outcomes of these agreements, the opposition tightened up but Clinton continued to push the same bad framework, and the WTO is a perfect example of that as well as China’s entry into it and that would be the 2000 PNTR, Permanent Normal Trade Relations vote, but also in 1999 the US was the leader in trying to push a huge expansion for the WTO to include more corporate rights and powers and to basically impose more non-trade dictates against people on the planet into the WTO and the Democrats in Congress were out there in the front of these marches in Seattle in 1999 during the protest. I have a wonderful picture up in my office of David Bonior, then the number two Democrat, and three or four committee chairs, Maxine Waters and George Miller, all marching arm-in-arm with protesters in Seattle against the Democratic president’s attempt to expand the WTO, but again Clinton’s role really taints the politics because people think of Democrats — Clinton — they don’t realize the Democrats in Congress were leading the fights against these very proposals. Nancy Pelosi as a member of Congress, not yet the Speaker, led the Congressional fight in the house against China PNTR. It was run out of her congressional office to whip the votes to try and get a no vote. And that is another example where more Democrats were induced by Clinton to support it, 73, where 150 voted against, so double were against, but an overwhelming number of the Republicans voted for it. And that was kind of the turning point. Because after that China PNTR vote in 2000, after more cases against important US public interest laws were being ruled against at the WTO, as more and more job outsourcing started under NAFTA and then once China was in the WTO in 2001, 2002, mass outsourcing to China which now had guaranteed access to the US at the very favorable US very low tariff rates established in the WTO, Democratic opposition in Congress really started to consolidate against the model. 

The lived experience of the wreckage both the attacks, and domestic, environment, consumer laws, and also the job loss, and from that point on there was nothing like the big chunks of votes for China PNTR, which, you know, 73 Democrats was a minority but it was not an insignificant number, same thing as the NAFTA minority of the party voted for it but not an insignificant number. From that point on it was super lopsided. So, for instance, when the fast track came up in 2002 and now George Bush the second was president, 190 Democrats voted against it, 21 voted for it. Or with CAFTA, 190 Democrats voted against it, 15 voted for CAFTA. And that shift has basically followed through to the current day where with a Democratic president in 2015, 160 Democrats voted against Fast Track for TPP for their own president and 28 only were willing, for their own president’s key priority of the entire congressional session, to vote for it. But, unfortunately, because Clinton is the guy who is seen as pushing WTO expansion in Seattle, Clinton was the guy who pushed the NAFTA through congress, the WTO through congress, China into the WTO, and then President Obama pushed TPP, it’s super confusing for a lot people who aren’t paying attention to the nitty gritty of the congressional votes. So someone like Trump can exploit that and make it seem like Democrats writ large are for these policies when in fact every single time a president has been derailed from doing more harm: Clinton when he lost his trade authority thanks to Democrats in 1998, Bush when he was not able to get new trade authority after his 2002 authority ran out, Obama when TPP was stopped, that’s all Democrats in congress saving all of our bacon. 

Ryan:

And that’s another thing Trump took a lot of credit for: stopping the TPP. Whereas you’re describing, it was actually dead on arrival when he took office.

Lori:

Yeah, you know, it’s a myth that he stopped TPP. To the extent that he had a role, it was burying the molding corpse that had been left out in the sun rotting dead for a year. So, the 2015 fight on Fast Track where originally, thanks to the Democrats in Congress, Obama lost that vote, he went back and made a deal with the Republicans in Congress threw out a trade assistance program for workers who lose jobs to pay off the Republicans to get them to switch and for more Republicans to vote for it narrowly passed the trade authority that was then used to close the TPP deal. But the TPP deal gets closed and throughout all of 2016, it’s sitting there unable to get within 60 votes of passage in the House of Representatives which is a honking deal because typically, if a trade agreement is stuck, it’s stuck by 10, 15, 20 votes and then the president basically buys those votes by promising a bridge here, or a package there, or a congressional special this-and-that from the president and this was such a wide margin because there was almost no democratic support. 

Even the 28 Democrats who voted for trade authority two years before were not willing to say that they would vote for the TPP. So the agreement sat there for an entire year, couldn’t get through congress and the horrific mistake, I think, of the Obama administration was instead of sending cabinet officials around to campaign for Hillary Clinton in 2016, they were sending cabinet officials all across the country to those very swing states: Wisconsin, Michigan, to try to put pressure on Democrats to support the TPP for a lame-duck vote after the 2016 election. They were so obsessed with TPP. In my home state in Wisconsin, I am convinced, having the Ag Secretary and others running up and down those Mississippi, Minnesota, border state counties pushing TPP was part of how for the first time ever those districts went for Trump. Because people there lost tens of thousands of jobs to NAFTA, WTO, China and so we saw basically even the effort in the lame-duck session after Trump has won, Democratic disaster, the Obama administration is still trying to pass TPP and at that point the Democrats in congress just, you know, were smearing furious and doubled down in their no votes, Trump came in to an agreement that couldn’t get through congress and then officially gave notice it wouldn’t be approved. That’s what he did. We didn’t actually withdraw; we gave notice that we would not be sending notice of approval and the other countries moved on without us.

Ryan: 

Yeah, so that’s a pretty horrific story about the TPP’s role in the 2016 campaign. Do you think anything has changed today?

Lori: 

I think that is the big question. So, Trump is going to try to say that he fixed things — the data show he hasn’t. He campaigned on stopping outsourcing and getting rid of the deficit. His own labor department has certified 300,000 jobs as lost due to trade under the Trump administration and his trade deficit is bigger than when he took office and it remains to be seen if the Democrats at the presidential level and their campaign leaders have learned the sad lesson. Clearly, they see the downside of touting the corporate rigged status quo but whether they’re going to promote the kind of alternatives that we support, I think that remains to be seen, I think that could be important for how this election ends.

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

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Global Corporate Ambulance Chasing: Law Firms Recruiting Corporations to Attack COVID-19 Policies in ISDS ‘Corporate Courts’

By Melanie Foley

Many governments have taken urgent actions to stem the COVID-19 pandemic, save lives, protect jobs, counter economic disaster and ensure people’s basic needs are met.

But now, multinational corporations are poised to launch a wave of attacks against governments to demand compensation from taxpayers for these COVID-19 policies using the Investor-State Dispute Settlement (ISDS) regime.

ISDS grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.

With ISDS included in many trade and investment agreements, more than 1,000 ISDS attacks have been launched against climate, financial, mining, medicine, energy, pollution, water, labor, toxins, development and other non-trade domestic policies. Corporations have been awarded millions or even billions of taxpayer dollars, and some countries have chosen to revoke their democratically enacted policies in order to reduce their payouts. 

How do we know that COVID-19 policies are the next ISDS target?

The law firms that profit enormously from the ISDS system have been advertising to multinational corporations about the lucrative opportunities to use ISDS to attack government actions. And, specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases.

The law firms have specifically targeted pandemic policies such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand washing and sanitation, and more. All of these policies apply equally to domestic and foreign companies. But thanks to ISDS, foreign multinational corporations can launch cases and rake in taxpayer money in compensation.

“It is unfortunately very likely that a whole spate of ISDS attacks on governments’ COVID responses will begin to be filed,” said Lori Wallach, director of Public Citizen’s Global Trade Watch in her weekly Rethinking Trade podcast. “And the reason why is, under this regime, an enormous amount of money can be made by both the lawyers and the corporations. It is a legalized raid on treasuries.”

Public Citizen and more than 600 organizations from around the world are sounding the alarm. These labor, consumer, environmental, development and other civil society organizations sent a letter in July to heads of government worldwide urging action to avoid this new ISDS threat. They outlined an array of practical steps governments could take to immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever.

The powerful and diverse group of organizations from the United States includes the AFL-CIO, CWA, the Presbyterian Church USA, the United Methodist Church, Greenpeace and the Sierra Club. International signers include Oxfam, Doctors Without Borders, Friends of the Earth International and Action Aid.

For many decades, the United States was a leading proponent of this system and forced it on their trading partners. But public outrage over ISDS has been growing for years and was one of the reasons why the Trans-Pacific Partnership (TPP) could not get support to pass in Congress.

And thanks to civil society’s campaigning, ISDS was largely eliminated in the new NAFTA. (The original 1995 NAFTA was the first trade pact to include ISDS.) The unusually large, bipartisan votes in the Senate and House for the new NAFTA set a new standard that to be politically viable, U.S. trade pacts can no longer include extreme ISDS terms.

The agreements the United States is currently negotiating with the United Kingdom and Kenya, while potentially damaging in other ways, are reportedly not going to have ISDS. Other countries also have taken steps to withdraw from ISDS, including Bolivia, Ecuador, South Africa, India and Indonesia.

“These coming COVID cases should be exhibits 1, 2 and 3 of why other countries should also exit the regime,” advised Wallach.

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Rethinking Trade - Season 1 Episode 15: What’s the Real Story With All the “Buy American” Hype?

Since the 1930’s, “Buy American” rules have required that the U.S. government purchase goods – from cars and computers to planes and paper – that are made in the United States. But these rules that recycle our tax dollars to support jobs and promote domestic innovation have been severely undermined by our trade policies in the last few decades.

Today, “Buy American” really means that companies and products from 60 countries must be given the same access to the almost $600 billion spent annually in U.S. government contracts as U.S. firms and products. Effectively, we now outsource our tax dollars to support jobs in other countries.

On this episode, we unpack these policies and examine both Donald Trump and Joe Biden’s recent Buy American policy proposals.

Transcribed by Kaley Joss

Ryan:

Welcome back to Rethinking Trade, where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in-house trade expert Lori Wallach.

Lori, a lot of people may have seen that Trump just issued an executive order on ‘Buy American’ rules. And last month Joe Biden announced his own Buy American plan. Before we dig into both of these, why don’t you just give us a brief overview of what Buy American rules are in general.

Lori: 

So, since Franklin Delano Roosevelt was president, the U.S. has had, as part of its federal law, a preference that when the federal government procures things, from cars and trucks for government fleets, to office furniture and desks and phones to paper, whatever it is, that the purchases are made of goods that are made in America. The idea is two-fold: first is to recycle tax dollars back into the economy, creating jobs and supporting communities in the United States. So, it’s a virtuous circle, where you have a job, you pay your taxes and those taxes come back into your community to buy things that are made in the community for people who paid those taxes.

The second thing is its an industrial policy tool for innovation-- because the government, by making long-term contracts in certain areas and setting certain criteria, can basically help a private market get created. A classic example is fuel-efficiency standards for automobiles. We all think of CAFE when we hear that, the corporate average fuel economy standards, that reference what the average is when you buy a car. But there are also federal requirements that a fleet of cars produced by a maker must have a certain average fuel efficiency standards. But initially, before that became required of all cars sold in the US, the US government fleet had to meet those rules.

So for a number of years, to create a demand, to create a market, to have the companies put the money and research into designing those more fuel efficient, economical cars, the government started setting standards that they had to meet for government purchases. So, if GM or Ford or Chrysler wanted to get a government contract, which of course is very lucrative because the government buys a lot of cars, then they had to have their cars be more fuel efficient and better for the environment. And after a number of years of the government fleet having that requirement and the investment being made, it was made federal law that all cars had to meet those standards. That kind of conditionality is done for various purposes. 

Another thing under that category is called prevailing wage laws, which apply also. Buy American is procurement of goods and services, Buy America is government money for construction, road building, schools and water systems. For Buy America, the contracts have to have prevailing wages, which means basically wages at the prevailing union wage in an area, so you can’t have subcontracts that are trying to cheat good, middle-class union jobs. So those kinds of policies, to reinvest, to innovate and to ensure conduct is rewarded, the conduct we want by government contracts, is what Buy America and Buy American laws are about. Again, Buy American from the thirties, and Buy America since the 1980s.

Ryan: 

So, what’s this executive order all about? We’ve talked about this on the podcast before, but there are already these rules as you’ve just explained. So why do we need an executive order to recognize these rules? Or maybe you can explain what this is and what is it actually doing?

Lori: 

So, there are two things that have been going on. First of all, the Buy American and Buy America rules have waivers. And one of the waivers is a ‘public interest’ or ‘national interest’ waiver, and effectively what that means is price.  And it’s not defined. The rule is not ‘if you can find something that is 25% cheaper, go for the foreign good and bypass the Buy American requirement’. Instead, it’s just open ended. So, a lot of agencies have started to waive Buy American broadly. If they find something that’s even 5% cheaper from another country, they just waive Buy America standards saying that it’s in the ‘national interest’ to do so, without thinking about, for instance what the COVID crisis has made so apparent: we need some production domestically. We need diverse sources of imports, and we need some domestic production so we have a reliable supply of essential goods. We cannot have a situation where we allow an entire sector, like we have in the manufacturing of antibiotics, or we have in a lot of PPE manufacturing, we can’t have that all hollowed out. 

So, by having these waivers we have gutted Buy American. But the biggest waiver is within trade agreements. And there’s a really sad and ugly story behind this. Big multinational manufacturing corporations wanted to outsource production of their cars, or for General Electric of their turbines and generators and lighting systems, of Boeing their airplanes, they still wanted to be able to get government Buy American-required contracts. But if they were doing their work in Mexico or China or wherever, obviously they wouldn’t qualify. So they got the genius idea of trying to ram into trade agreements yet another un-trade-related item, and that is just a made-up rule that any country that has a US trade agreement is considered American for buy-American purposes. So this waiver that’s now in place excuses Buy American rules, so that US government agencies get, basically, to waive Buy American privileges for 60 other countries. So “Buy American” now is Buy American or Japan or Korea or Mexico or Canada or all of Central America or a boatload of other countries- all of our free trade partners. And that waiver has meant practically that Buy American is now basically gutted.

Ryan: 

So, just to be clear, the New NAFTA also contains these waivers, correct?

Lori: 

It does. And this is the hypocrisy in all of this. That waiver system is something that, by statute, any US president can cancel, unilaterally. So for three and a half years, Donald Trump has had the ability, simply by executive order- one of the few things he really could have done legitimately by executive order- to just end that trade agreement waiver. It is a statutory delegation of authority for the President to be able to, basically, just issue what the list of waiver countries are. And it’s something that can be changed at any time. And as well, in the World Trade Organization (WTO), you can get out of those procurement rules that are in the agreement itself, without any penalty. 

Trump did a very early, first year in office, 2017 “Buy American Hire American'' executive order. And instead of fixing this huge exception that eats the rule, that executive order said that we have to have compliance with our international agreements. So basically it was a hoodwink, where I guess Trump hoped no one would realize what he was saying was “Hi! It’s Buy America Hire America, except we won’t!”, because he was saying to follow the current rules, that don’t actually let us buy American.

Now, this most recent order repeats some of that language, but for the first time it has a new thing. And my theory is that it has this new thing because it’s something that actually the Biden presidential campaign did. Which is, before Trump did this latest executive order, about a month ago, the Biden administration issued an order on what they were going to do on trade and domestic supply chains. And the most interesting thing in there in a way was is that they had in there a clause in this policy plan that says ‘we are going to change our trade agreements to make Buy American real,’ instead of saying ‘we’re going to change Buy American, to prioritize trade agreements.’ That is a pretty stunning shift for Biden, because that’s not necessarily a position Biden has had, but is definitely where the country is heading. The COVID crisis has made everyone realize, even people who have been big supporters of these trade agreements, realize we need to have some domestic manufacturing. We need to diversify our imports, but we also need to make some of this stuff for emergencies, like PPE and essential medicines. So that, I am guessing, is why this new Trump Buy American has a clause that orders our top trade official, the US Trade Representative, to renegotiate our trade agreements to allow domestic purchase, only of a variety of essential medicine supplies: PPE, medicines, supplies, etc. It’s sort of a catch-up, so that now both of the contenders in the US presidential race are taking a position that is much more similar to what the public position is. Polling shows repeatedly that people want, at like 80% of the public want Buy American rules strongly enforced, and want to reinvest their tax dollars into having the government buy American-made goods, so now both the Democratic and the Republic contender are suggesting we fix the trade agreement rules so we really do have Buy American. 

Now, whether or not that happens I suspect is going to take a lot of activism, because there are a lot of multinational corporations that have enjoyed having it both ways- they produce in Mexico, China, Vietnam and then they find a way to be able to still be able to get a government contract. Perversely, I actually think some the horror of the COVID-19 crisis could provide an opportunity for more people in this country to demand these kinds of changes with our procurement policy, to reinvest in building some production capacity for essential goods, for medicines, for PPE, for basic communications and electronics equipment, the things that we vitally need just to be healthy and secure, because up until now, unless you lost a job to outsourcing, or you were in a community that was devastated by outsourcing, and there are many of them across the country, but there are also a lot of people who haven't been directly touched, you may not have personally experienced how dangerous and devastating this model of hyperglobalization, under which we have been living, is for all of us. And that system is not from God, it’s one set of policies, one set of corporate rigged rules that incentivize those behaviors, 

So, there’s more of an interest in changing the rules to change the outcomes, because now everyone is facing the experience of “Oh my lord, my family isn’t safe because I can’t get a damn mask!” Or, “what do you mean we simply can’t make ventilators? We created the technology, the patents on the technology are here, what do you mean people could die because they can’t breathe?” Or, “my kid’s going to get infected because they can’t get the pump for the bottle for Purell, because it’s only made in China now, and that injection molding with the metal spring is not possible here?” 

People have lived with the results in a way that I think could build the demand to actually have not just our Buy American policies change, but the trade agreements change. So that yes, we can get the benefits of trade, of which there are many of them, but so we can basically remove the overreach into domestic policy space, in areas like: Why the hell are trade agreements dictating domestic procurement policies? States, through their state legislators, should decide how state dollars are spent when the state procures, not a trade agreement! The federal government, through Congress, should decide what the priorities are. I mean, hell, just think of it as climate policy. We are going to need to create a whole new set of demand for different kinds of technology for climate, or we’re going to kill ourselves and the planet. So how are we going to actually use policy tools to create those incentives if we’re not allowed, through government purchasing, to direct funds for that kind of innovation? So I think through the COVID-19 crisis and the climate crisis, there’s more awareness. So I think, if people get informed and get activated, we can actually see these changes come to fruition. 

Ryan:

Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in the work we are doing to fight for fairer and more equitable trade policies.

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Reps. García, Schakowsky, and 107 Members of Congress Urge Mexican President López Obrador to Drop Charges Against Activist and Protect Labor Rights

Today Reps. Jesús “Chuy” García (IL-04), Jan Schakowsky (IL-09), and 107 Members of Congress sent a letter to Mexican President Andrés Manuel López Obrador urging him to ensure Mexican state governments drop politically motivated charges against labor lawyer Susana Prieto Terrazas. The letter also urges Mexico to ensure states comply with the labor rights guaranteed by the US-Mexico-Canada Agreement (“USMCA”).

The US-Mexico-Canada Agreement, implemented on July 1 of this year, requires each of its signatory countries to respect workers’ rights. Last year, Mexico passed labor law reforms that strengthen collective bargaining and independent unions in the country.

Susana Prieto Terrazas, a Mexican labor rights activist, was imprisoned in June by the state government of Tamaulipas after years of organizing along the US-Mexico border. She was released on conditions that prevent her from continuing labor advocacy and require her to move to the Mexican state of Chihuahua, where the government has issued a warrant for her arrest.

“To protect workers’ rights in the United States, we must defend the rights of workers around the world and in Mexico. I’m sending a letter with more than 100 colleagues to call on Mexican President López Obrador to ensure that Mexico respects workers’ rights and ends its political persecution of labor activist Susana Prieto Terrazas,” said Congressman Jesús “Chuy” García. “American legislators cannot stay silent while corporate interests and corrupt politicians undermine the law to extract profits at the expense of working people. When the US-Mexico-Canada Agreement passed Congress, we were told it would protect workers’ rights and labor standards in the US and Mexico. But if state governments in Mexico can willfully violate basic labor rights provided by Mexican law and affirmed by the USMCA, these protections are meaningless.”

“Mexico must live up to its obligations under the USMCA and enforce labor laws completely and uniformly throughout the country,” Congresswoman Jan Schakowsky said. “Anything less than this is unacceptable, will render these labor protections meaningless, and will require action by U.S. Trade Representative Robert Lighthizer. I look forward to continuing to work with my colleagues in the U.S. as well as my counterparts in Mexico to strengthen workers’ protections across North America.”

 The rights of workers across North America must be enforced, including in Mexico, said Congressman Joaquin Castro, Chair of the Congressional Hispanic Caucus and Vice Chair of the House Foreign Affairs Committee. “The U.S.-Mexico-Canada Agreement (USMCA) has new labor provisions to guarantee worker’s rights to organize for better conditions and higher wages, and must be respected. The United States Congress needs to ensure our trading partners live up to their commitments to expand the rights of workers.”

A PDF of the letter can be found here.

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Trump Trade Deficit 6.5% Higher than Obama’s Last Year, Not Eliminated as Then-Candidate Trump Promised

Trump Trade Deficit Increases Even as Trade Flows Show COVID-19 Effect, Dropping 15% in First Six Months of 2020 Compared to Same Period in 2019

The U.S. trade deficit in the first half of President Donald Trump’s fourth year in office remains 6.5% higher than in the same period in President Barack Obama’s last year, despite a 15% overall fall-off in trade flows related to the global pandemic, new trade data released by the U.S. Census Bureau shows.

“Worldwide COVID-19 has reduced trade flows, so the fact that Trump’s trade deficit is larger than  the same period in the last year of the Obama administration shines a big fat spotlight on Trump’s failure to ‘eliminate’ the trade deficit, which he promised endlessly as a candidate in 2016,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Even as trade flows overall dropped 15%, the U.S. trade deficit in the first six months of 2020 was only down 9% relative to the same period in 2019. This is in part because imports from Mexico have begun to rise significantly. 

The new U.S. Census Bureau trade data showed that:

  • The effects of the COVID-19 pandemic on commerce in general and trade in specific are evident in the six-month 2020 data: Comparing the trade flows in the first 6 months of 2019 to the same period in 2020, U.S. trade has decreased 15%.
    • Total U.S. goods and services exports in the first half of 2020 were $1,066 billion relative to $1,266 billion  in 2019. Imports in the first half of 2020 were $1,341 billion versus $1,563 billion  in 2019.
  • The six-month 2020 trade deficit is 6.5% higher than the deficit for 2016, the year before Trump took office, even as the COVID-19 effect reduced the deficit 9% compared to the first six months of 2019. Comparing the first half of Obama’s last year in office (January to June 2016), the overall trade deficit increased 6.5% rising from $257 billion to $274 billion in inflation-adjusted terms. (The unadjusted figures provided in the government data base show a rise from $238 billion to $274 billion.)
    • The overall U.S. goods and service trade deficit with the world dropped 9% in first half of 2020 relative to the same period in 2019 from $301 billion to $274 billion in inflation-adjusted terms (The unadjusted figures provided in the government data base show a drop from $297 billion to $274 billion.)
    • The U.S. trade deficit in goods decreased 7.5% in inflation-adjusted terms from $446 billion in the first six months of 2019 to $412 billion in the same period of 2020. However, the trade deficit in goods during these months is still 3% higher than the one experienced in the same period of 2016, rising from $399 billion to $412 billion (inflation-adjusted dollars).
  • The China deficit is down relative to Obama’s last year, but there is “trade diversion” effect of imports increasing from other countries. 
    • The trade deficit with China decreased 22% in inflation-adjusted terms going from $169 billion in the first half of 2019 to $132 billion in the first half of 2020. It is also smaller compared to 2016, when in inflation-adjusted dollars, it was $173 billion for January to June.
    • In inflation-adjusted dollars, the goods trade deficit with the rest of the world (excluding China) increased from $277 billion to $280 billion in the first half of 2020 relative to the same period in 2019.
  • The deficit with North American Free Trade Agreement (NAFTA) partners is 11% higher in the first half of 2020 relative to the same period in Obama’s last year in office but down relative to 2019 even as Mexican exports to the U.S. began to expand significantly in June.
    • The NAFTA deficit in the first six months of 2020 was $97 billion, 11% higher than the same period in 2016 when it was equivalent to $88 billion in inflation-adjusted dollars. (In nominal terms the goods trade deficit with NAFTA parties increased by 18%, or $15 billion.)
    • The goods trade deficit with NAFTA parties decreased by $19 billion in inflation adjusted terms compared to the same period in 2019, largely because of measures taken to prevent the spread of COVID-19.
    • Even as the COVID-19 pandemic narrowed the trade deficit with NAFTA parties during the first half of 2020 compared to 2019, the reduction was not as large as expected given the jump of Mexican exports in June. According to the data released by Mexico’s statistics authority Mexico’s statistics authority (the National Institute of Statistics and Geography), Mexican exports, of which more than 80% are destined to U.S. markets, grew 75.5% in June relative to May. This resulted in Mexico posting a six-month January to June surplus of $2.6 billion even as Mexican exports decreased overall 12.8% compared to June 2019, Mexican imports dropped almost 10% more in the same period (22.2%).
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Rethinking Trade - Season 1 Episode 14: Did You Buy PPE Made by Uyghur Forced Labor in China?

China has 1.8 million Uyghurs and other Muslim ethnic-minorities locked up in concentration camps in western China. Others are being shipped all over the country as forced-laborers to a network of factories supplying Nike and a slew of other U.S. companies, including those producing PPE. You may be buying these products thanks to loopholes in U.S. trade laws that are supposed to ban the sale of forced labor goods.

On this episode we discuss efforts currently underway to end the exploitation of China’s Muslim political prisoners, the latest from the Xinjiang Uyghur Autonomous Region, and how good trade policies rooted in human and labor rights could prevent such nightmare scenarios in the first place. Learn more about the campaign at enduyghurforcedlabour.org.

Transcribed by Kaley Joss

Ryan: 

Welcome back to Rethinking Trade, where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in-house trade expert Lori Wallach. 

So Lori, Public Citizen is part of a campaign that was announced last week calling on brands and retailers to stop doing business in the Xinjiang Uyghur Autonomous Region (XUAR) of China. For those who don't know much about the situation, what exactly is going on there and why have 190 organizations across the world signed on to this call?

Lori:

So while a lot of the world is very focused, understandably, on the COVID crisis, an enormous human rights crisis is underway in the western part of China. The Chinese government operating out of Beijing has rounded up almost two million Muslims, many of them Uyghurs, a turkic ethnic group in the western part of China, and locked them up in concentration camps under the ostensible claim that they're ‘countering Islamic extremism.’

But the reality, just like the government in Beijing has attacked Tibetans, has attacked any group that has any notion of autonomy of its own culture, it is really a genocide against the culture and perhaps literally people are being killed. There is torture. These are concentration camps. And there's a lot of forced labor. People are being shipped across China from the camps, but even inside the camps there is forced labor, and horrifically a bunch of it is PPE. The New York Times had an exposé on that just this week. There were five plants in Xinjiang that produced PPE a year ago. There are now 51 plants making face masks, 17 of which officially are part of the forced labor operation. 

Ryan: 

For those of us in the United States, this is especially relevant also because a number of U.S. companies are actually benefiting from this system of forced labor. That is sadly not a new thing. When it comes to the Chinese government's labor abuses, they've often come as a result of collaboration between state and U.S. and other international firms, especially since China's entry into the World Trade Organization, right?

Lori:
Yes, that is unfortunately true. So just to put into perspective what's going on, there was another New York Times exposé in the beginning of March, March 1, that showed how many of these forced labor Uyghur workers are in a plant making Nike shoes. So throughout the supply chain of goods that can come into the U.S., thanks to China's entry into the WTO, without any conditions or any special human rights surveillance and with low tariffs, are goods that are being made by literally millions of political prisoners. 

And this is a crisis of such a scale that the U.S. Holocaust Museum Center for the Prevention of Genocide has recently determined there's a reasonable basis to believe that crimes against humanity are being committed there. Yet many U.S. companies are using this forced labor. The U.S. consumer to a large degree is either unaware, or if aware, has really no way to see that these products are kept out, or are distinguished under the current law since under WTO,  you can't really distinguish a good based on what's happening on a human rights basis, for instance. Now, there is legislation called the Uyghur Forced Labor Prevention Act, that's bipartisan, that is in the House and the Senate, that would just simply assume any goods coming from the Xinjiang part of China, the western part of China,  are likely to have forced labor content. It has a presumption, that can be rebutted, that any such goods from that region cannot come in because they're forced labor products. The company that wants to bring it in has to prove by clear and convincing evidence standard that the entire supply chain, not just their factory, is clean of forced labor. 

Ryan:

So, you kind of answered this but aside from the obvious fact that there's goods being produced in the Uyghur region and then sold elsewhere, what does this all have to do with trade policy and how have trade policies made the situation possible? But also, is this even legal under current trade rules? 

Lori: 

So, there is a chance that that law could get challenged at the WTO. But thank goodness the WTO enforcement system is basically not functioning at the moment because the U.S. is objected to the way it is not very fair or transparent.

So, the back story is that since the 1930s there has been law in the Tariff Act of 1930 that prohibits the import to the United States of goods “mined, produced or manufactured wholly or in part” by convict, forced or indentured labor. And obviously that's a very broad prohibition. The hitch was that the law had an exception called the Consumptive Demand, which basically allowed goods and services even if they were made by forced labor, if the good was not made in the U.S. in a sufficient supply to meet domestic demand, which basically guts the law. In 2016, President Obama signed a piece of legislation that closed that loophole. And as a result, ostensibly, it is now U.S. law that forced labor groups have to be kept out. And that change was actually motivated by child labor in the cocoa industry, in seafood, but also about what was going on in cotton, as well as what was not as extreme repression against Uyghur people, but already was some pretty dire circumstances in China and also in sub-Saharan Africa relating to cotton. So the Customs and Border Patrol has taken a few actions since that law

changed in the beginning of 2016, and it's certainly a lot better. I mean, there are like 40 actions in the 90 years of the original law with the exception and now there have been 15, 20 actions since. But the problem is, you under the law basically have to prove that there is forced labor. What the Uyghur Forced Labor Prevention Act would do is just simply presume— it would flip the burden of proof, so that Customs doesn't have to prove that a particular good, one by one, is made with forced labor and therefore meets the Trade Act of 1930 ban. But rather the presumption becomes, if it is coming from the basically Uyghur Autonomous Region, sometimes called the XUAR, then you presume it is forced labor, and the company has the burden of proving it's not. Which is to say, all that stuff will be stopped until a company can show it is clean. That would really put teeth into the existing law, because if customs had to prove product by product, you would not be able to make much of a dent. But if the Uyghur Forced Labor Prevention Act went into effect, that would just shut down the imports from the area with very few exceptions, and that would send a very strong signal to China, which is the least the U.S. can do, given the horrific circumstances that right now the government in Beijing is largely getting away with.

Ryan: And to close this out maybe, this sounds like policies that are designed to kind of put out fires after they've started. What would be some trade rules and enforcement mechanisms that would prevent these types of things from happening in the first place? You know, it shouldn't take a situation of this magnitude to take action on something as obviously wrong as, you know, forced prison labor. 

Lori:

It is a sad state of affairs that you need two million people in concentration camps being tortured, murdered, forced into labor, indoctrinated, stripped from their homes, young women bundled up onto planes and buses and shipped all over China where they don't actually speak the language of where they've been settled, they’re not allowed to go home. You would assume none of that would have to happen to have some rules of decency in the global economy. But unfortunately the way that the WTO and most of our free trade agreements work, there really is no floor of decency. There's no standard that says, “you can't have the benefits of this trade agreement unless you do X Y or Z.” 

Rather, they're written where, instead of having a floor, there's a ceiling. You can't distinguish between goods based on the human rights of the workers; you can't distinguish with the goods based on how much they're paid; you can't distinguish between the goods, as long as they're physically the same, according to their environmental impacts in the production process. That is a ‘bass-ackwards’ way of thinking about it. So, both for human decency and morality stopping forced labor, but frankly as well for the climate crisis that we face, we need to turn the rules the other way around, where we're seeing the standards for which every company and every country must comply in order to get the benefits of the trade rules and the labor standards in the news.

The labor standards in the new NAFTA make some attempt to do that in a very narrow way. And we will see, as an experiment, it's a baby step. It's certainly a step in the right direction, but it doesn't fix the problem. We will see how effective that approach is. But yeah, you just need to basically condition access into countries on meeting human standards for labor rights, human rights and the environment and safety.

 

And the thing is, those rules exist. It's not a matter of saying “Hey, you can't sell anything here unless you do everything the same way as U.S. law requires.” No, all of the countries that are also partners in trade agreements, are, as sovereign nations, signatories to things like the International Labor Organization's conventions that guarantee basic labor rights. They're all signatories, China included, to the United Nations’s two major human rights treaties, one on economic rights and one on political rights. It basically is going to take changing the rules, to give the human rules the priority over the commercial rules, because right now it's the other way around. And in fact, if the Uyghur Forced Labor Prevention Act were passed and the WTO were working, China probably could have declared an illegal trade barrier. So that makes it pretty clear as well as doing things like passing this emergency ban on these goods, we need to redo the rules of the global economy. 

Ryan:

Thanks so much Lori. If you're listening to this, take a look at the links in the description of this episode. There is a link to the campaign to end Uyghur Forced Labor in China. There's also a link to the house bill, the Uyghur Forced Labor Prevention Act.


Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in the work we are doing to fight for fairer and more equitable trade policies.

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Hyperglobalization Undermines Response to COVID-19 Crisis

Latest Data Reveal Growing U.S. Trade Deficits in Ventilators, Masks and Other Coronavirus-Related Gear as Shortages Reemerge, Reflecting U.S. Overreliance on Imported Goods to Battle Pandemic

Public Citizen's Global Trade Watch released an updated series of trade flow and country-of-origin data infographics on medical goods used to battle COVID-19 ahead of tomorrow’s U.S. House Ways & Means Committee hearing on critical supply chains, trade and manufacturing.

The newest feature is:

In addition, the web feature includes updated data showing:

Decades of hyperglobalization have undermined our resilience against the COVID-19 crisis. Even into summer 2020, the U.S. still cannot make or get critical goods people need with shortages again emerging of personal protective equipment (PPE) as infection rates rise. More than 40,000 U.S. manufacturing facilities have been lost to 25 years of corporate-rigged trade policies that made it easier and less risky to move production overseas to pay workers less and trash the environment.

Having the world’s largest trade deficit year after year means the U.S. is extremely reliant on other countries to provide essential goods. As the COVID-19 crisis emerged in early 2020, U.S. government officials urged U.S. firms to expand exports to China of the limited U.S. domestic production of key medical goods instead of considering U.S. residents’ needs. Effective implementation of the Defense Production Act (DPA) to purchase and domestically allocate PPE, ventilators and more would have preempted the export frenzy we see in the data. Unfortunately, Americans are still in the dark about the extent to which these critical emergency powers have been used to control exports of critical supplies.

After decades of outsourcing and corporations buying up competitors to consolidate control of production sectors and shuttering “redundant” production facilities, many critical goods are now mainly made in one or two countries. When workers there fall ill or governments prioritize their own peoples’ needs before exporting goods away, a worldwide shortage of masks, gloves, medicine and more can quickly develop.

And, under current practices and policies, it’s hard to quickly increase production. Long, thin globalized supply chains mean parts needed to make any one product may come from dozens of countries. If one link in the chain breaks because it is difficult to source inputs and components from a specific country or region, it becomes impossible to scale up domestic production during a crisis. And, monopoly patent protections in many trade agreements expose countries to sanctions if they produce medicine, ventilators and more without approval by and payment to pharmaceutical and other firms.

With policymakers and the public distracted, corporate lobbyists are pushing for more of the same trade policies that hatched the unreliable supply chains now failing us all. Instead, we must fundamentally Rethink Trade. The goals should be healthy, resilient communities and economic well-being for more people – not the current priority of maximizing corporate profits.

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Rethinking Trade - Season 1 Episode 13: Trade-Related Job Losses Have Continued Under Trump

Despite Donald Trump’s 2016 campaign promises to “bring back jobs,” trade-related job losses have continued under the Trump administration. Under the Labor Department’s narrow Trade Adjustment Assistance program alone, 176,982 workers have been certified as losing jobs to trade since 2017. Trade-related job losses have been especially high in California, Michigan, Ohio, Michigan, Virginia, and Washington state.

On this episode we break down these figures and discuss Public Citizen’s Trade Adjustment Assistance Database, the online portal where you can search by zip code, state, company name and more for trade-related job losses across the United States. 

Transcribed by Mariana Lopez and Sarah Grace Spurgin

Ryan: 

Welcoming back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. We are joined once again by our in-house trade expert, Lori Wallach. Despite promises to bring back jobs, trade-related jobs have continued under the Trump administration. Public Citizen just released some data about this, and I wanted to discuss that with you today, Lori, as well as the system through which we obtain this kind of data. Let’s start with the numbers. What’s in this new report?

Lori: 

What we found is that almost 180,000 workers were certified by the U.S. government as having lost their jobs to trade since the beginning of the Trump administration, just through the middle of 2019 (so it’s not even current data). That data is part of what’s called Trade Adjustment Assistance (TAA). It’s really a big undercount relative to what the total job loss to trade has typically been, because it only applies to certain kinds of jobs, and workers have to know to apply, and then you have to fill out a quite detailed form that proves your job loss is trade-related. So just under that TAA program, 167,982 have been certified under the Department of Labor as lost jobs to trade since the 2017 start of the Trump administration. And some states have gotten particularly walloped. The largest by far by number of job losses is California, but Michigan, Pennsylvania, Ohio are in the top five. And Virginia and Washington state are up in the top ones too. 

Ryan: 

These numbers look pretty similar to numbers from past administrations, but Trump of course is running around talking about how he’s bringing the jobs back and keeping jobs here to begin with. Shocking. But why are we still losing just as many jobs as before?

Lori: 

Well I think there are two different things. One is the trade policies themselves. So the new NAFTA, which Trump signed in 2018, was such a disaster—it wouldn’t have stopped job outsourcing and it would have locked in high medicine prices (there were new goodies for pharma)—that the renegotiation had to be renegotiated. So it was much delayed and only went into effect just now, July 1st. So we had, despite the promise of a quick new NAFTA, the old NAFTA in effect. There have been various trade sanctions against China and our trade deficit with China did decline, but unfortunately because of the big systematic problems, like currency cheating (the thing Trump promised to fix on day one of his presidency), well nothing has been done. So as a result, even though the trade deficit with China has gone down, it was kind of like squeezing a balloon. The deficit just moved over to Vietnam and other countries as compared to actually overall us having a smaller deficit and less jobs being lost to trade. So that’s number one on the trade front. 

Number two is that the President promised that they would stop giving government contracts to companies that were outsourcing jobs. And that would have been a huge incentive for a bunch of companies that are notorious job outsources to knock it off. But instead there was a lot of rhetoric about Buy American, hire American, but in reality, the campaign promises by Trump about no more government contracts to outsourcers has totally been ignored. So billions in government contracts have been awarded to Boeing, General Electric, United Technologies, and other firms that have been certified under that narrow database as outsourcing. So Given we know the TAA only covers the tip of the iceberg, it is pretty scary that even under that limited assessment, we seeing Boeing’s outsourced almost 6,000 jobs during the Trump administration (53 billion dollars in contracts), GE outsourced more than 1,000 jobs (6 billion dollars in contracts), United Technologies—that’s the company that Trump made such a big fuss about (“they’re not going to be allowed to outsource”)—1,000 jobs gone. They got 9 billion dollars in contracts. So both on the trade front and on the Buy American front, not a lot has actually changed. 

Ryan: 

Something significant to me in this story, and you just touched on it with the federal contractors that are still receiving federal contracts while continuing to outsource, is the role of Trump donors, meaning companies that have donated to Trump while also outsourcing jobs. Maybe you can talk about some of that stuff. And aren’t there rules against federal contractors outsourcing jobs? 

Lori: 

Well Trump promised there would be new rules that banned companies that got federal contracts from outsourcing jobs, but that’s not what happened actually. So there were things the administration could have done. For instance, Trump didn’t use—he failed to use the authority he already has under existing law to basically stop the throwing away of Buy American for corporations in countries that we have free trade agreements with or that are WTO procurement partners. And he also could have taken administrative action to basically condition, make one of the review topics for getting a government contract, the history of the company with outsourcing. But none of that was done. The result basically is, by not using authority under the Procurement Act of 1949 or the Trade Agreements Act of 1979, Trump didn’t use the authority he had with respect to those procurement outsources. And as a result these companies that, yes may have given him campaign contributions but for sure were outsourcing during his presidency, still got these very lucrative contracts. And that’s part of why you don’t see the numbers changing. 

Ryan:

Can we go back to talking about some of the specific data here? You’ve described the TAA database, you know, you’ve described this as being something as the tip of the iceberg. So there’s probably more, but maybe you could describe again some of the data and how significant it is?

Lori:

You bet. So this program, Trade Adjustment Assistance, if you apply for it and you get accepted, you get an extended unemployment benefits period, you can get retraining money, once it’s been proved you lost your job to trade. You can be trained for a new job. 

And the problem is there is about a two year lag, maybe a year-and-a-half lag when things are quick, so we don’t have the data for any of 2020. And we don't have all of 2019, we have about half of it. But even so, between 2017 and the beginning of 2019, 176,000 workers were certified by the Department of Labor as losing jobs to trade. And again, the reason it’s an undercount is number 1) it only covers certain kinds of jobs. So depending on what role you had in a factory or what sector you were in, but number 2) workers need to know to file, so either if they had a union or the company did it, but it’s kind of a pain in the butt, because there’s a lot of information. 

Now it’s a good program, I suggest people try and file with their State Department of Labor, but you have to provide a certain amount of data to be able prove your case that you’re trade related loss. Yet, even with only really the 2017-2018 data, we see almost 180,000 jobs, but for instance you see 16,000 of those came out of California, but then almost 10,000 from Michigan. Almost 10,000 from Virginia, Washington state 9,000. Pennsylvania almost 9,000. Ohio 8,000+. Illinois 8,000+. Georgia and Texas both around 8,000. And it is North Carolina, 6,000, if that’s the tip of the iceberg of the ongoing job loss to trade under Trump, the prospect of what we’re going to see through 2020, much less just even the full damage of his first 2 years, is a lot bigger.

And that is not what was promised up when Trump said he was going to quickly get rid of the trade deficit and quickly bring back lots of jobs and stop outsourcing. 

Ryan:

That’s a lot of jobs. And it sounds like a lot of data. Maybe you could tell folks how they can access this data? And also I know there's an interesting story of public interest legal success in the fact that we even have access to this data. Maybe you could talk about that for a little bit as well.

Lori:

So the Trade Adjustment Assistance data, anyone can look at. Go to our website, tradewatch.org, go to the Trade Data Center, and you will see a box to click on to get to the TAA database. 

We have gotten the raw data from the Department of Labor under a standing FOIA settlement- Freedom of Information Act settlement, so that we make it searchable. So up until the last couple of years, the data was only available literally on PDFs, scanned in paper copies of often handwritten applications. And so it was impossible to search. You couldn’t aggregate the numbers, you couldn't break it up by state, it was just useless. 

So back in basically 1996 or 1997 we settled the FOIA lawsuit with the Department of Labor trying to get the raw data so we could actually search it, and try and tabulate the trends, and so every quarter since then we’ve received the raw data from the Department of Labor and we hired someone to build a searchable database. So that people can put in your zip code, you can put in your Congressional district, you can put in your town’s name and your state, you can put in the name of a company, you can put in a sector, the economic sector, it’s searchable in lots of different ways. You can do it by map and drag out an area, a town or state where you want to see what happened. You can get all the data mapped, but you can also download, anyone can get an Excel file so you can actually search. That’s how we can basically quickly keep tabs on everything. 

Now again, it’s a year-and-a-half to two years behind when the job loss happens before it goes through the process and gets certified. So if you’re looking and you know in your hometown, ‘I remember that outrageous outsourcing to Mexico that happened right around Christmas 2019-- why isn’t that in there?’ like the Carrier case, the United Technologies case, that Trump made such a big deal about and the jobs went anyway, that’s not in there because it’s such a lag.

So you know if you can remember something that really pissed you off about job outsourcing in 2018, type in the name of the company, type in your town, and you find it. Anyone can use it, it’s free to use, and yes because we basically sued under the Freedom of Information Act, Public Citizen's lawyers were able to make this data not just available but searchable, so useful to everybody. And it basically puts the truth to many president’s, including this one, claims of how these agreements would create jobs, not lose jobs, and you can actually look at the data of what happened and you can look at X town and 100,000 jobs in a state over the period of NAFTA. 

For instance, things you wouldn't expect, El Paso, Texas is the number one NAFTA job loss impact location. You’d expect it to be Detroit. Nope, actually, in small geographic area El Paso has more concentrated job loss. Or you can do it by sector. You can do it by time. So if you know from your town that’s been clobbered by these race-to-the-bottom corporate-rigged trade agreements, you want to go see your member of Congress who has been a little shady on whether or not we should replace our failed trade model, you can run your zip code, you can run your Congressional district, and you can have the list. And the list will say the date, the company, the address. 1,000 jobs, 800 jobs. 5 jobs. 4,000 jobs. And it lets you actually know the real people who were affected by these failed trade agreements and why we have to fight to replace them.

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House Trade Subcommittee Chair Blumenauer Shines Light on Consumer, Environmental, Animal Welfare Threats in U.S.-UK Pact

By Melanie Foley

The June 17, 2020 House Ways and Means Committee of the U.S. House of Representatives hearing with U.S. Trade Representative (USTR) Robert Lighthizer featured a very important exchange on trade pacts and regulatory standards. Ways and Means Trade Subcommittee Chair Earl Blumenauer (D-Ore) said to the USTR:

 

Currently, the United States spends too much money subsidizing large corporations and doesn’t adequately help the majority of small and mid-size farmers. And it subsidizes manufactured food at the expense of fresh, healthy food. We’ve entered into phase two of our agreements with the United Kingdom. I hope that our negotiators can focus on tearing down protections and barriers to trade, like quotas and price control measures, and spend less political capital on areas where our countries may have reasonable policy differences.

I think too often we hide behind requiring “science-based” justifications for other nations’ sanitary or phytosanitary measures without allowing flexibility on values and public inquiry. Many large agricultural interest folks point to scientific studies on pathogen rinses for poultry. You know, maybe we should be asking about our production process that requires us to wash chickens in chlorine in the first place. Can’t reasonable people have concerns about slaughterhouses in the United States? Anybody who has watched the news recently understands that the United States policy on slaughterhouses needs a much closer review.

With pesticides, our regulations do not set a high enough standard to determine their effects on our environment, and how those environmental effects impact our health. Should we really export our weak standards to another country, who has legitimate public policy concerns and may provide better protection? For genetically modified wheat or meat, altered by growth hormones, is it possible in a democracy where consumers have input might choose to restrict these practices other than interfering with American commerce?

As with all negotiations, there are some priorities that we will push harder than others, but I would hope you will focus your attention and that of your team on protectionist hurdles for our farmers, rather than areas of legitimate policy differences. American families need national and international agricultural policies that address our common welfare and allow for targeted regulations that promote health, address climate change, and put people ahead of corporate interests. I would hope that you and your staff would be willing to help us explore these differences to determine where there are legitimate policy differences, rather than simply protectionist impacts. Would it be possible for us to work with your team to explore this?

Rep. Blumenauer described in detail how this FTA could lock in lax U.S. food safety standards — on massive agribusiness subsidies, pesticides, slaughterhouses, chlorinated chicken and more — and export these to the United Kingdom.

This position reflects decades of trade policy that preceded the World Trade Organization (WTO). Namely, if a domestic regulatory policy does not discriminate against foreign goods – by providing less favorable treatment to imports relative to domestic goods – why should trade agreements meddle with that domestic standard?

To put it another way, if citizens in a democratic process decide that they want laying hens or livestock treated humanely or want genetically-modified and non-GMO goods separated and labeled so consumers can choose, why should trade agreements label such policies illegal and require their elimination in the face of trade sanctions?

Lighthizer’s response was unfortunate:

On this issue of agriculture, I’ll repeat what I’ve said before. Number one, agricultural policy is set by the United States Congress, not by the U.S. trade representative. So, the issues you raised I know are difficult issues and are being fought out in Congress. And Congress will come to some conclusion and I’ll be guided by what Congress says. For right now, the reality is that for what we want and what we insist from our trading partners is equal access, fair access based on science. The difference between big and small corporate farmers, I don’t know much about that. I would say that the United States has the best agriculture in the world. It has the safest, highest standards. We shouldn’t confuse science with consumer preference. If consumers have a preference for one thing or another, they should certainly exercise their preference, but it is not the role of the U.S. trade representative to change agriculture policy. I am dictated that by the agriculture department, but mostly by the United States Congress. So, what I’m going to do is try to insist on science-based restrictions and to the extent there are restrictions that are not science-based we will object.

At a Senate Finance Committee hearing later that same day, Lighthizer doubled down on his commitment for so-called “science-based” standards, saying:

They now, in terms of some maximum [pesticide] residue levels, they actually have: if there’s any detection at all, the product is unacceptable. To me, that is just plain protectionism. And making every regulation science-based is the equivalent of getting rid of protectionism. It’s the equivalent of getting rid of any other non-tariff trade barrier, and it's something I’d wish, if anything, I would say Europe is going in the wrong direction, not in the right direction. They’re being controlled by protectionist interests, and well, let me just leave it at that. Protectionist interests.

In my judgement, we have to insist on science-based standards, for our farmers, and I would say this, this standards thing is not just an ag issue, right. I mean they’re using standards in industry too. It’s a higher art in ag, but they use it in industry too. We have to insist on it, and to the extent people deny us access, we shouldn’t give them a trade agreement, and if we don’t have a trade agreement, in my judgment, we ought to be taking trade actions against them. And I’m looking right now at whether or not right now some of these actions, I want to consult with you and your staff, whether or not right now we shouldn’t be looking at a 301 on some of these things. It’s getting so far out of control where they say, literally, if there’s any detectable residue, the product is unacceptable. That’s just nothing to do with science…

One of the things, on the UK, you know on this rinse on poultry, this so-called chlorinated chicken, that these people have, it’s going to be a huge problem. And I’ve made it clear that this is not going to be an agreement, that I’m bringing back an agreement to the United States Congress that excludes our agricultural products on a nonscientific basis.”

Lighthizer’s perspective represents U.S. agribusiness. Blumenauer’s perspective has a much larger base of support – not just his constituents in Oregon, but many U.S. and UK consumers.

In a recent joint letter, dozens of U.S. and UK labor, environmental and other organizations expressed their concerns that an FTA could pose risks food safety, digital privacy, animal welfare, financial regulation and much more.

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