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New NAFTA facts for your brain and heart

The Bush administration is getting restless! The candidates' ongoing campaigning against the NAFTA trade model is putting quite a spotlight on their efforts to expand NAFTA to the union murder capital of the world (Colombia.) Bush's latest counterinformation is here; our latest countercounter is here. Get your facts on! Here's a clip:

CONCLUSION: Can we evaluate the promises on NAFTA? Yes, we can!

An army of think tanks and corporations spends millions every year in an attempt to muddle even the basic facts on NAFTA. We know that under NAFTA, the U.S. trade deficit is up, manufacturing jobs are down, wages are stagnant, Mexican immigration is up, Mexican growth is down, and policy space has been seriously limited. Bush administration officials and pundits can debate whether any of these facts matter, but they cannot make up their own facts, nor serve up irrelevant ones in the hope of distracting policymakers or the public from continuing to demand trade policy change.

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Liability in a globalized world

Much of the U.S. consumer movement has encouraged the development of punitive damages, mostly because of the massive holes in our regulatory and social safety net structure. Now, the New York Times reports that other countries are pushing back when asked to enforce U.S. punitive damage awards.

Still, as Europe rolls back its own social safety net, some European analysts are looking more favorably on the U.S. punitive damages' system as a stopgap measure to protect consumers. Ironically, U.S. courts, as reported in the article, are rolling back and limiting punitive damages claims... but with no social safety net to take its place. Seems like both continents are moving rightward, although in Europe, the frog may be getting so slowly boiled that there's less screaming about this issue. In the U.S., we may already be too boiled to tell.

Actually, we're not just moving back to a neutral place where there are no punitive damages. Through trade deals like NAFTA, corporations are actually creating systems of corporate "punitive damages" where the force of the law is used to their enrichment. Occasionally, they're claiming corporate-style punitive damages at the same time that they're using NAFTA to attack traditional pro-consumer punitive damages. From the NYT:

Foreign lawyers and judges are quick to cite particularly large American awards. Julian Lew, a barrister in London, recalled a Mississippi court’s $400 million punitive award against a Canadian company in 1995 with scorn. “It did bring America into total and utter contempt around the world,” Mr. Lew said.

The Canadian funeral home multinational, Loewen, at the bottom of this case actually used NAFTA to try to collect investor-state damages from the U.S. government for the attitude problems of the Mississippi "jury of your peers," in a case that the U.S. lost on the merits (the overall case was won on a technicality). We document the history here. Whatever one thinks of the tactics used by the Mississippi lawyers and judge, it seems like quite an overreach to make the U.S. government liable under NAFTA for these local problems that are just part of the institutional reality of this country.

Also, as we documented in our toy report, corporations are actually using offshoring as a way to limit their liability to consumers. As even the American Enterprise Institute's Doug Besharov conceded:

“[f]or many American claimants, the full enforceability of products liability laws stops at the shoreline. The situation worsens every year as imports fill more and more of the United States market... [the lack of liability creates an] artificial price advantage [that] will help [foreign producers] build market share, at the expense of United States consumers and insurers as well as competitors.”

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Great read on Mexico under NAFTA

Gabriel Palma is one of the best progressive economists in the world. Originally hailing from Chile, he decamped to Cambridge, currently serving as one of the few Keynesians that the neoliberals that took over his department haven't kicked out. I was in his class for about a week, before I realized that in order to take graduate econometrics, you must know something about math and statistics. At that point, after spending my undergraduate years fighting the man rather than taking the tougher classes, I decided to further postpone the learning. As I take night classes these days, I am kicking myself for not having bitten the bullet while it would have been easier.

Oh well. That doesn't stop me (or you) from getting your learn on with Gabriel's work on NAFTA and Mexico. The paper is a few years old, but it remains one of the better expositions of what went down before and since NAFTA went into effect. Among his findings:

  • Just nine countries account for 90 percent of manufactured exports from developing countries. Mexico is the only one of these to thoroughly go through the neoliberal ringer, courtesy of NAFTA and NAFTA-like policy changes.
  • Oil used to dominate Mexico's exports, but now manufacturing (increasingly high technology) constitutes the vast majority.
  • Like here at home, Mexican wages are scarcely above their 1980s' levels - whether you're looking at the maquila or non-maquila sectors. In the maquilas, you didn't have to pay anyone much of anything, since there was a bottomless pool of rural Mexicans separately getting displaced by Mexico's agriculture rules.
  • Unlike here, where bubbles and debt made up for the loss of demand brought on by the trade deficit, Mexico used export growth to make up for the loss of demand brought on by wage stagnation.
  • The traditional non-export manufacturing sectors have not seen hardly any increase in investment, meaning that the maquilas (which attracted tons of FDI) did not feed back into other sectors of the economy.
  • It turned out to be a weak substitute for real growth, however, since value added in the maquilas and auto sectors remains about where it was before NAFTA, despite the massive increase in both maquila exports and imports.
  • From just 2001-2002, 545 maquilas left Mexico for China, shedding hundreds of thousands of Mexican jobs. So much for that experiment. But as my colleague Carlos Salas shows in an upcoming paper, the few workers that got to keep their jobs have seen their wages bid up somewhat. And with absolutely none of this background, we can now see the Bush administration taking credit for the momentary respite from hell. Oh joy! A rounded development policy proposal is just around the corner, I. Am. Sure.

Now, as Rev. Jeremiah Wright might say, the chickens are coming home to roost. As CEPR documents in a recent paper, Mexico stands to lose an amount equal to 3 percent of their GDP due to the overreliance on the U.S. export market (bloated to massive deficits), which will now come crashing down thanks to our recession. Sustainable growth, anyone?

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"No good answer" on displacement says U.S. ambassador to Colombia

A few highlights from today's presentation by the U.S. ambassador to Colombia, William R. Brownfield, hosted by the Center for Strategic & International Studies and the World Affairs Council of Washington, DC: 

1. The ambassador is really funny. I mean, almost hilarious.

2. He presented an interesting argument about why American taxpayers should support the Colombia FTA which seemed a little bit of a free association experiment rather than a thought out hypothesis. Let's see if you can follow...

  • The U.S. government gives foreign aid to Colombia for Plan Colombia.
  • If the agreement is passed there will be more U.S. investment in Colombia, thereby increasing Colombia's tax revenue base.
  • If Colombia collects more taxes, they will pay for the things U.S. is now paying for in Plan Colombia.
  • U.S. taxpayers will save money.

Of course, this argument relies on many assumptions, but when searching for new last ditch arguments to try to revive an almost buried NAFTA-expansion, it's not a totally terrible one, in contrast to arguments that USTR is making about job creation, etc. I mean still bad, but not as bad.

3.  The ambassador noted that the issue of displacement "causes me more concerns than others," and admitted that he had "no good answer" and this would "have to be addressed." He also went as far to say that he doesn't know "why they are being driven from their home communities," and that this is a "security issue." In fact, as the Colombian government’s own agriculture ministry concluded, displaced people “would have no more than three options: migration to the cities or to other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups.”

When shilling for an expansion of NAFTA's rules which displaced millions in Mexico, some of these answers might be good ones to have on hand. This is especially true in the case of Colombia where displacements will continue to happen and the FTA may exacerbate the problem with investment rules that lock in land seizures and favor corporate privileges over the rights of the displaced.

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Be courageous

Our friend Glenn Hurowitz has recently written a book and founded an organization both called Democratic Courage. It's all about giving our elected officials a needed shot of backbone, and he is reading from the book this Thursday at Books a Million in DC's Dupont Circle, as well as other spots near you (stay tuned here!) Glenn has to say about trade politics, which we'll cite later.

Here is one of the better definitions of courage I've seen, courtesy of Alain Badiou:

I would retain the status of courage as a virtue—that is, not an innate disposition, but something that constructs itself, and which one constructs, in practice. Courage, then, is the virtue which manifests itself through endurance in the impossible. This is not simply a matter of a momentary encounter with the impossible: that would be heroism, not courage. Heroism has always been represented not as a virtue but as a posture: as the moment when one turns to meet the impossible face to face. The virtue of courage constructs itself through endurance within the impossible; time is its raw material. What takes courage is to operate in terms of a different durée to that imposed by the law of the world. The point we are seeking must be one that can connect to another order of time.

This type of courage becomes all the more important in long reactionary periods like the one we find ourselves in now, fairly well detailed in a recent New York Times Magazine profile of corporations' victories at the Supreme Court. (The article discusses Public Citizen at length, although not all that accurately: the underlying premise that we're losing our lawyers is wrong - there hasn't been turnover in 4 years, and we maintain an excellent win-loss ratio that is quite a bit better than the U.S.' ratio at the WTO.) As Jeff Rosen writes in his conclusion to the piece:

What about the executive branch? It seems unlikely that John McCain, if he were elected president, would push back against the court: he has already pledged to appoint “judges of the character and quality of Justices Roberts and Alito,” rather than justices more devoted to states rights, like Scalia and Thomas. As for Barack Obama and Hillary Clinton, both have sounded increasingly populist notes in an effort to attract union and blue-collar supporters, ratcheting up their attacks on corporate wealth and power, singling out the drug, oil and health-insurance industries and promising to renegotiate the North American Free Trade Agreement. But despite their rhetoric, it is not clear that either candidate would actually appoint justices any more populist than Bill Clinton’s nominees. “I would be stunned to find an anti-business appointee from either of them,” Cass Sunstein, who is a constitutional adviser to Obama, told me. “There’s not a strong interest on the part of Obama or Clinton in demonizing business, and you wouldn’t expect to see that in their Supreme Court nominees.”

Again, Badiou points out the task ahead (using terminology only acceptable in France): we are not just fighting for gains as we were in the 20th century, but literally (as in the 19th) defending the idea of social change itself.

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OK, so time to move on...

Yes, Hillary may have been for NAFTA before she was against it, but I'm pretty sure this applies to a large majority of the original NAFTA-boosters. And nevertheless, she voted for some NAFTA expansions, agreements that were almost word for word NAFTA or even worse, with Chile, Singapore, Australia, Morocco, Bahrain and Oman.

Obama has also denounced NAFTA in ads, in stump speeches and more, but he has also wavered, casting NAFTA expansion votes for the Bahrain and Oman FTAs.

So now what? We could, like many other blogs out there from which I'm gradually losing my vision from reading endless comments, speculate about how much of a liar either candidate is or how this is some plot to distract from Obama's "Wright" situation. But instead, it might just be better to move on and ask "what's next?" No, really. I mean I'm as partisan as the next DC partisan, but let's not dwell on this and instead do what progressives do, look ahead to what can happen with our economy, with human rights and with our foreign policy through changes to our trade policy.

And that's what both Obama and Clinton have proposed: substantial changes and new trade policies that address a lot of the problems that exist because of NAFTA and NAFTA-style agreements.

I encourage onlookers to NAFTA-gate and Clinton's records release to take a step back and really ask:

  1. What do they say they will do when they get to the White House? and
  2. How can I make sure they stick to what they say?

This is what economic justice advocates should be thinking about now and every day until Inauguration Day. Instead of debating minute differences and comparing past positions to new better informed trade positions, think about where we are now and what's next for our trade policy. Discuss in comments.

(Disclosure: Global Trade Watch has no preference among the candidates.)

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Whack-a-mole on the wheel-and-deal

Wow. This week, I'm happy to be a blogger-researcher and not a lobbyist. Today's Inside U.S. Trade talked about the high level of wheeling and dealing that is being talked up in the halls of Congress on the trade deal with unionist murder capital Colombia. Apparently, some Democrats

"believe now they they can extract significant concessions from the White House for passing the FTA. A Democratic lobbyist said these members have made it clear the concession has to be “enormous” to offset the negative fallout from passing the Colombia FTA, and the lobbyist said their demands have been further prompted by President Bush’s rejection of programs that were a priority for Democrats, such as the State Children’s Health Insurance (SCHIP) bill."

Sources are suggesting that TAA is not enough to cut a deal, and that it looks like Bush doesn't support the better TAA bills anyway. According to Congress Now:

Moleinside_zoom3_2 "I don't think dealing with the dislocation that comes from trade gets you one additional vote for a trade deal that is flawed," said Bill Samuel, legislative director for the AFL-CIO, a fierce opponent of free trade agreements. "The problem with Colombia - overlay the economic concerns with the human rights issue, the murders, the death squads, the lack of prosecutions. TAA doesn't address any of that."

Unfortunately, Baucus and Grassley are reportedly watering down their TAA proposals as we speak, so that service workers are not covered. Other Dems are wheeling and dealing, but shooting a little higher. From IUT:

According to [a Democratic] aide, a more reasonable trade-off for the Colombia FTA could involve a second economic stimulus package focusing on the middle class, mortgage relief for home owners threatened by foreclosure due to the sub-prime mortgage crisis, increased federal funding for education and the passage of an SCHIP bill... [but] union sources also said they have been assured by the speaker’s staff that no deal is being struck that would allow the FTA to come forward.

While all this air time is getting sucked up by the Colombia FTA - a policy not yet in place - the negative impact of current policy realities like our China trade deficit is not being addressed. But that doesn't mean fair traders aren't having to play whack-a-mole on these other issues as well. According to IUT, AFL-CIO Industrial Union Council Executive Director Bob Baugh "ruled out that administration action on China would make the House leadership more inclined to let the U.S.-Colombia free trade agreement come up for a vote. “We had assurances from leadership that trying to make linkages [to advance the Colombia FTA] is a false start,” he said."

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Let's not bicker and argue about who killed who

One of the funnier Monty Python scenes is in the Holy Grail movie, when a wedding (somewhat accidentally) turns into a blood bath launched by the knight Sir Lancelot of Camelot. The key line, as wedding guest after guest is murdered, is the bride's father, who does his fatherly best to salvage the occasion:

Please! Please! This is supposed to be a happy occasion! Let's not bicker and argue about who killed who. We are here today to witness the union of two young people in the joyful bond of the holy wedlock. Unfortunately, one of them, my son Herbert, has just fallen to his death.

You can see it in this video, about 5:40 minutes in.

A little bit of this quirky logic is at work in Rahm Emanuel's latest piece for the Wall Street Journal, which tries to get people to stop arguing about NAFTA (which he rammed through Congress), and instead focus on other happy things like a new social contract. Pretty heady stuff coming from a guy who ignored the fair trade sweep that happened under his nose as DCCC chair last cycle, costing the party several pick-up seats while inadvertently winning others.

First, he pretends like the end-all of the trade debate is the core labor standards debate, which is far from true. He comes pretty close to suggesting that something like NAFTA that happened in the past (even if it was willfully executed by him and a host of other humans, much like Lancelot in the clip) should not be debated in the present. Pretty odd sentiment for a week when history is in, as the country tries to sort out who got us into the recession, and when Obama's forceful reflection on the history of racism in America is moving hearts and minds.

But more importantly, there is the suggestion that somehow we EITHER focus on the debate about a social contract, or we fight for fair trade policies. Friends, as much as we've been truly moved by the stories of manufacturing decline in our country, Public Citizen simply would not be in this fight if the issue stopped there. We have gotten involved because the very domestic social contract that we've spent decades fighting for - on auto and pharmaceutical regulation, on democratic process, on consumer safety - was threatened by a trade agenda that delved deeply into the domestic sphere, limiting our policy space on domestic issues. Rahm's four domestic suggestions are: expand education, health care, green jobs, and savings. Absolutely sign me up, but first take note that these policies are limited by the WTO and other trade deals, and (though important) will not by themselves solve the problems of our fundamental lack of balance and effective demand in the economy (which will involve balancing trade and making the world safe again for regulation).

If having to talk to people like us about this fact is annoying to Rahm and others as they promise (not the same as deliver, is it?) a new social contract, - if we're the obstacle here - there is a very easy and quick solution: rewrite the rules, and don't waste time expanding them any further. It's not that talking about them is a distraction from the "real" issues, it's that so-called "trade" is a part of a "neoliberal contract" that must be rewritten as we fight for the things we want.

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Reasons 13,456-13,460 to oppose the Colombia FTA

Just when you thought you had enough reasons to oppose the Colombia FTA, the Uribe administration up and greenlights attacks on peaceful protest organizers - in fact, a march that was one million strong yet got no coverage here in the U.S.

Oh, and what the heck, while we're at it, let's list some other reasons for Colombia FTA opposition.

  1. Unlike Ecuador, which has taken measures to ensure that it's fight against narcotics doesn't harm the environment or people, Colombia has done the exact opposite. The Colombian government under Uribe and his predecessor have wrecklessly spent billions of (our) tax dollars on fumigation-oriented strategies that harm the environment (one of the world's most biodiverse), lead to further human displacement, and haven't even reduced the supply of drugs on U.S. streets. Not to mention the harm to public health and Afro-Colombian rights. (From WOLA.)
  2. As Human Rights Watch shows, the latest paramilitary demobilization is more likely a sham actually meant to protect these jerks. In fact, it seems that there's some reverse outsourcing of murder going on, with a "sharp increase in extrajudicial executions of civilians by the army."
  3. As WOLA shows, "evidence suggests that powerful paramilitary structures have utilized the demobilization process to permanently penetrate political groupings." A former paramilitary leader in fact bragged that "paramilitary groups controlled more than 35 percent of Colombia's national congress... As of August 2007, at least 27 Colombian politicians, including 14 current members of Congress, have been arrested for their alleged links to paramilitary structures."

The entire WOLA report, which is on organized crime groups taking over state structures in Latin America, also has very compelling sections on Peru, Guatemala, and El Salvador. Hey, weren't those some of the countries we JUST signed FTAs with?? Oh, and the organized crime presence in the Central American countries has gotten WORSE since then?

Hmm... I think the corporate lobbies need to check to see if their "global engagement and uplift" machine broke down, you know, the one where America engages with the world through the miracle of FTAs, thus controlling and transforming the world in our image. Nope, I guess it's still pretty much about making a buck on the backs of working people, the environment, and a long term development strategy for poor countries.

On a related note, if you're interested in hearing how our political candidates can dodge their vulnerability on the national security issue by reframing the debate in favor of an agenda of REAL growth and engagement, check out this chat between Bob McChesney and Mark Weisbrot.

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Botox protectionism

Defenders of the trade status quo sometimes like to point out that the economic argument in favor of free trade is identical whether you're talking about trade between countries, individuals or state lines. And that's true, so long as you believe the models and are willing to dismiss the notion of a national interest. Some interest gets protected at the expense of another: there may be a surplus created, but who can say where this goes without looking at specific distributions?

In the latest news off of Roll Call, it's Botox that's getting protected:

Those wrinkle-busting Botox injections can cost $500 a squirt, but if you were waiting for the price to come down when a generic version hits the market, well, get used to your frown lines.

That’s if a bill introduced late last week by Reps. Anna Eshoo (D-Calif.) and Joe Barton (R-Texas) makes it into law.

The measure, which would create a pathway for generic versions of biotech drugs, exemptsBotox_2 pharmaceuticals that contain “select agents and toxins,” such as Botox’s botulinum toxin type A, mainly on the the grounds of national security, according to people on both sides of the issue...

A lobbyist for the generics industry said the national security argument doesn’t hold up. “They spin it as a national security issue — that botulism could be used in terrorist plots,” said this lobbyist. “I don’t know how in the hell they justify how generic botox is any more of a terrorist threat than brand-name Botox.”

The fact that this is a protectionist measure that is not free trade that benefits Botox producers at the expense of other segments of society is not discussed in the article. Barton, who voted against fair trade on 19 out of 20 votes, says on his website that "I firmly believe that free and open trade benefits all people." Eshoo claims to have a good trade record because she supports labor standards and trade adjustment assistance, but she was only marginally better and voted against fair trade on 15 out of 19 occasions, including through her votes for NAFTA, WTO, and the Peru FTA. Isn't this discrepancy worth a mention?

On the other hand, as our own Health Research Group at Public Citizen has pointed out, to the extent that Botox is dangerous, maybe it's a good thing that it's made out of reach for more people!

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Freedom from Progress

Unlike many of the Capitol Hill staffers on this fair Saint Patrick's Day, we did not start the morning off with an 8 am beer. So here we are, at work, trying not to let vague feelings of ancestral oppression drive us to drink. But in an effort to come up with something kitschy for the big green day, I was looking around my desk for a hook, and found one in Ed Gresser's new book Freedom from Want. (Which, has a green cover... see?)

Freedom300 This slim volume by the former USTR official and Baucus staffer was put out by Soft Skull Press. For those of you who were graffiti heads in the 1990s, you'll remember that this is the same press that put on William Upski Wimsatt's Bomb the Suburbs. And books by graphic novelist Seth Tobocman, and even a book about the Seattle WTO protests. Which one of these things is not like the other? I am pretty sure Gresser is the only Soft Skull author to have high end Washington think tank book readings, at the Carnegie Endowment and I believe earlier in the year at the Naval Barracks as well. A little editorially confusing, and a little strange why a mainstream publishing house wouldn't publish such an impassioned defense of status quo trade policies.

The basic premise of the book will come as a surprise to anyone who reads editorial pages or fought the Peru FTA last year: namely, that mainstream American liberals applaud the global justice movement. The fact that there is still a near-total consensus among elites in favor of our trade policy is dodged by pointing out the rare exceptions: Senator Bernie Sanders of Vermont, a random quote by Gov. Howard Dean, also of Vermont.

Gresser's mission with the book is to convince the hordes of liberals under the sadistic control of the Citizens Trade Campaign that they should instead embrace the Clinton trade legacy because, in no particular order, countries have traded since the dawn of time, unemployment is low, people in developing countries prefer manufacturing jobs to agriculture jobs, colonialism was really a period of "Victorian Globalization" and freedom, FDR liked to trade with other countries, and Ed knows a distracting amount about Chinese and Greek classic civilization.

Indeed, the book is the 2.0 version of a USTR press release: dodging the major critiques made by the global justice movement in favor of obfuscation, only with tedious historical tangents (i.e. "For two centuries China has been the shape-shifter among the powers. Like the little god Proteus in Homeric legend...") , and chatty asides about the physical appearance of Clinton-era bureaucrats (i.e. "pugnacious, white-haired Bob Cassidy with his boxing-thickened ear").

Ed's book is a useful refresher on the kinds of lines that elite Democrats use when in office, and it will be particularly useful for the many younger folks in the movement who can't remember when we had a Democratic president. Unlike elite Republicans, who tend to ignore the global justice movement's critiques altogether, elite Dems do actually make an attempt to respond, and justify their favored policies with some reference (however strained) to social justice.

So there actually is a chapter on trade and the environment that addresses environmentalists' critique of the WTO dispute settlement system. But it drags you into the weeds pretty quickly in an attempt to create doubt about what environmentalists are saying. The enviro critique doesn't have to be disproved, just rendered sufficiently questionable that an uninformed activist might say, "Oh, I guess it's pretty complicated and the truth is probably somewhere inbetween." There's also the attempt to race and class bait, and suggest that global justice advocates are somehow against the poor at home and abroad because supposedly the sweatshop movement doesn't want there to be factories in developing countries and wants U.S. consumers to pay high prices for imported shoes.

In short, counter-information will be the name of the game to the extent that the 1990s cast of characters on economic policy are revived in a Dem-run D.C. It's tougher to confront this stuff than the simple Bush-bashing and Tom Friedman-dissing than has become de rigeur over the last 8 years. Our side needs to reflect on our own thoughts about working class strategy, about democracy and participation, and about rolling back neo-liberalism in favor of a system that allows policy space at home and abroad. In short, be prepared to hear arguments in favor of child labor cast in progressive-sounding rhetoric, fight the urge to gag, do your homework, and respond as forcefully as possible!

Finally, I'll fight the urge to post some Dropkick Murphy's, and instead get as close to Irish as I'll get today: a cover of U2's excellent activist anthem Sunday Bloody Sunday by slam poet / NIN-protege Saul Williams. Enjoy!

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Trade on the Trail returns

Here are the news highlights from this week with trade on the trail:

Leo Gerard, president of the United Steelworkers, highlighted the trade issue in a conference call with reporters last week.

"It's fundamental that there be a new dialogue on trade that leads to a new consensus on trade and how we negotiate any future trading agreements or review any existing trade agreements," Mr. Gerard said in the conference call, which was arranged by Public Citizen, a consumer group skeptical of recent trade accords.

"I appreciate that the leading Democratic candidates had a spirited discussion about NAFTA, but the fact of the matter is you can't fix NAFTA by putting in environmental rights and labor rights and pretending that that will fix it ... We need to change the whole discussion about investment, about subsidy, about enforcement of trade laws."

Critics blame NAFTA, China's accession to the World Trade Organization, and other trade agreements for many of the roughly three million manufacturing jobs the United States has lost since 2000...

..."The moral of the story, my friends, is we're not going back to the old manufacturing base of the economy," [McCain] said.

"The fundamentals of our economy are still strong" and the U.S. has gotten through similar economic difficulties in the past, he added.

"We know that Americans are hurting; we know that these are difficult times," Mr. McCain said citing rising home foreclosures and the loss of manufacturing jobs, particularly in the Midwest.

  • Timothy R. Homan of Congressional Quarterly in "Congress to Get Trade Pact With Colombia After Recess":

Administration officials said they would continue to work with lawmakers even after the [Colombia free-trade agreement] is sent to the Hill.

But those talks could be complicated by the Democratic presidential candidates’ criticism of free-trade pacts, particularly as the campaign moves to Pennsylvania, a manufacturing stronghold where opposition to the North American Free Trade Agreement runs high among voters. The state holds its primary on April 22.

With rising concerns about the economy and jobs in particular, trade is a prime example of a tricky issue for the candidates, let alone the next president. While most Americans continue to think that global trade is a good thing, the number feeling this way is sharply lower than it was in the past. Just 59 percent of Americans say trade with other countries is having a good effect on the United States, down sharply from 78 percent in 2002.

Opinions about free trade are far less positive than views about trade in general. In December 2006, even before the economy went into its current slide, only 35 percent of respondents in a Pew poll said that free trade agreements like NAFTA had helped their financial situation — 36 percent believed those agreements had hurt them.

Trade is a tougher challenge for John McCain than it is for Hillary Clinton and Barack Obama because a key element in the Republican base — the business class — remains heavily pro-trade. This may explain why, as of this writing, Senator McCain’s official web site does not name trade as one of the 15 issues “of  focus.”

Foreign trade, the globalization of the world's economy and its impact on jobs are clearly on the minds of these students. The jury may still be out on whether trade agreements, like the North American Free Trade Agreement (NAFTA) that became a political hot potato during the March 4 primaries are a good idea, but several were skeptical.

They are well aware of the prospect of an economic slowdown and are already feeling in their own lives. One student saw her work hours cutback at a local store and then her job eliminated. Another spoke of the impact of high gas prices on commuting back and forth to school. Others worried about being prepared for the economy of the future, and the jobs that will be available.

"Many of the jobs that we might get after college don't even exist yet," said Megan Nemlich of BBA. "At the same time, who knows what other person from some other country is more qualified for that job? It should be the person most qualified, but I have to worry about Americans being the most qualified for those jobs."

And if you haven't yet voted in the NAFTA renegotiation or pull out ABC/Facebook poll, click here.

And don't forget to read the candidates' detailed trade positions at www.citizenstrade.org!

Disclosure: Global Trade Watch has no preference among the candidates.

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The Colombia trap

There's been a lot of surprising developments in recent days on the Colombia FTA, most recently with Dem leadership seeming to be suggesting that there could be a vote on the Colombia FTA if there is more trade adjustment assistance. (As we've argued before, it's hard to get all worked up for TAA, because it is highly inadequate to the scope of the problem, but that's for another time.) It's unclear whether this means whether leadership will allow a vote and support the deal, or allow a vote but whip against it. It's also unclear if Bush goes around leadership (as he's threatened to do) whether they would cancel Fast Track's application to the deal.

Without commenting directly on these latest developments, here are the things I've been thinking over the last few weeks on this matter. American politics are classist enough that one can't assume that mere moral outrage will carry the day on labor's agenda. It would simply never happen in this day and age that civil rights or abortion rights would be negotiated away in exchange for legislative favors. There's simply not a strategic argument that could be made that would erase the moral outrage that our society rightfully feels whenever racist or sexist undertones surface in public. (Think Geraldine Ferraro.)

There's simply no equivalent to these kind of widespread norms when it comes to class politics. It is profoundly insulting to working people that a trade deal with Colombia - where workers are systematically targeted for assassination - is even being considered. To not oppose this deal is simply to be a classist. Unfortunately, no politician in America today loses an election or is asked for an apology because they make classist remarks or advocate classist positions.

In 2008, backwards-thinking individuals don't justify opposition to civil rights legislation on the basis that people shouldn't have protected civil rights. But anti-labor legislation is openly supported, and labor has to come up with supplementary arguments as to why it should not be passed. This was why we argued so strongly last year that Bush's Peru NAFTA expansion had to be opposed on the basis that it was bad policy, and would be for ANY country. To not have made this argument last year equals unilateral disarmament. Trying to rally opposition to the Colombia FTA now means that you're relying that our elected officials would not be so classist as to allow it to come up for a vote. This is a HUUUGE gamble, as the heart attacks some of us have experienced over the last few weeks show.

There is another way that an argument could be made against the Colombia FTA, but I don't think that it's really breaking through in the media coverage. That's through the application of readiness criteria. Under a new president, one hopes that trade deals wouldn't even be considered if a country had major social problems (say Colombia, Burma, Sudan, etc.). Much more like the European Union, accession to a common market wouldn't even be contemplated unless the country were broadly similar to the U.S.

But there's two challenges to this. First, it's simply not yet a part of political culture in the U.S. to think broadly about the level of social development of a trading partner country when contemplating market access. This must change. Secondly, such readiness criteria should also play a role when extending measures short of an FTA, such as trade preference programs. Colombia FTA critics are finding it difficult to justify FTA opposition solely on class- or readiness-type arguments if they didn't oppose preference benefits for Colombia as well. Admittedly, in the short term, having preferences for Colombia takes away the argument that one can make in certain quarters about ensuring market access "for a key U.S. ally." This notion of who is our ally in the region needs to be disputed, but, much like the class politics issues, they are more of a medium- to long-term political culture shift that is needed, and it ain't gonna happen overnight.

All that said, at this point, I would still be pretty surprised if the Colombia FTA came up for a vote this year. But the ground is shifting rapidly, and we like you are trying to stay on top of it.

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Why we should care about manufacturing employment and FTAs

There's been some fretting in the blogosphere about the NAFTA job loss numbers cited by the candidates, and generated by our friends at the Economic Policy Institute (EPI). I won't do a full response to the original American Enterprise Institute comment piece that sparked the musing. Suffice it to say that the Trade Diversion site has it right when they say that "trade affects the composition, not the number, of jobs in an economy." That's right, and tradable sectors like manufacturing lose out when there's a trade deficit. A few additional points, in no particular order:

  1. There's things that you can criticize about the EPI methodology. Where people start to sound ridiculous is when they suggest that you wouldn't have more manufacturing jobs with balanced trade. You can debate the numbers, but you can't debate the underlying theory, or the political heart that EPI has after all these years trying to talk about an issue that matters to working people the neoliberal think tanks deny even exists.
  2. I mean, seriously. It is amazing the kind of flak you take in this town for just trying to put a number on something that everyone knows is happening. And all over whether input-output tables like the kind you learned in matrix algebra are the best tools to use in looking at the problem! Seriously! That's what the "fuss" is about.
  3. We've been running a trade deficit since before the Tokyo Round of the GATT, but it grew bigger after NAFTA and the WTO kicked in. To the extent that these deals offer incentives to offshore U.S. production in tradable sectors above and beyond that already promoted by the high dollar policy, then real people's work was affected.
  4. But it's true that if the only thing you care about is reducing the trade deficit, then fights over FTAs are not a first order fight for you. They may be a second order political fight because you know that time spent negotiating and passing FTAs is time not spent fighting the trade deficit, i.e. you may think it's a good indication of absolutely backward political priorities in Washington. And that's right: it seems pretty clear that the 110th Congress will have spent a year working on the Peru FTA, and will have done nothing on the trade deficit. The chief first order reason to oppose FTAs remains that they're atrocious neo-liberal policy that do the wrong things for development, for democracy, and for regulation.
  5. Bosses could use the threat of relocation to hold back wages, which because we have a national labor market, contributes to wage stagnation for everyone, not just manufacturing workers.
  6. There's a startling lack of sympathy in much of the punditry's discussion of blue collar workers. Think to a time when you had a rough personal year - maybe you got fired, had a relationship fall apart, struggled with sickness. These are years that you will remember for the rest of your life, even as you try to forget them. They carry a deep psychic toll that you may never fully recover from. This is just a fraction of what many people who lose manufacturing jobs go through. Its a real cost to our economy and our democracy and civilization, and a major cost to these people's lives. It perpetuates the injuries of class that make progressive movement building very difficult.
  7. Manufacturing is pretty sweet because it - like fast food jobs - doesn't require a lot of advance education. This is good, since most Americans don't have that much education. The thing is, there's simply not that many highly educated workers that the economy needs, with most jobs "of the future" projected to be in hospitality and related services. At a manufacturing plant, you can get on the job training, and have a pretty good shot of making a middle class income and being covered by a union contract. Whether you care about innovation or national security, manufacturing is also pretty important.
  8. Some pundits like to say that manufacturing isn't in crisis because manufacturing output is at high levels. But this stat measures that total value of shipments coming from our manufacturing facilities, and doesn't take into account the value of imported parts. U.S. manufacturing value-added, a more appropriate measure, increased 13 percent between 1993 and 2006 – the exact same rate as between 1980 and 1993.
  9. I have friends in service sector unions that say that it's important for progressives to talk about making bad service sector jobs into good jobs, just like was done with manufacturing. I don't disagree with that (I'm an SEIU member!), and I don't think that this contradicts any of the things that I've said.
  10. If you don't think that manufacturing matters, then you may not care about a small trade deficit. But if you value macroeconomic stability and predictable trade flows (something more important if you've a developing country trying to to figure out the right degree of export orientation), then you should worry about a large trade deficit in the world's largest economy. In fact, you should worry about it a good deal more than the U.S. federal budget deficit, which is about half as large as the trade deficit.
  11. If you think that having 2.3 million Americans or 1 in 100 Americans (and one in nine prime age black males) being behind bars is a national tragedy, then you might think it would be a good idea to have more entry level manufacturing jobs in the inner city. In fact, if we had a trade deficit that was the size of the budget deficit, we could (conservatively) create 1 million jobs. Wouldn't that be a good place to put some of those non-violent offenders?
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USTR On Why I Wanted to Wait, but Now I've Changed My Mind

While Susan Schwab and Sec. Gutierrez are in LOVE with the Colombia NAFTA-expansion, yesterday they still thought they should wait before sending it to the House of Representatives. But now in the heat of the Colombia FTA moment, they seemed to have changed their minds.

What Gutierrez said yesterday on a press call: "We want to send it in a way that is bipartisan, and we do believe we will get even more support if it's viewed as a bipartisan agreement. We've done everything up to now in that spirit, and will continue to do so in that spirit and will continue until it's no longer a viable path."

What Schwab said today: "It's very clear the president has to send up the legislation very
shortly. We cannot let delay transition into inaction.''

Why the change of heart? Who knows? And what does Schwab's "very very soon" timeframe actually mean?

Waiting or not, with widespread resentment for NAFTA-style trade agreements made clear all over the country during this campaign season and Bush's low approval ratings and political impotence as he prepares to leave office, it will all be over pretty quickly with a resounding no way from Congress.

And USTR isn't the only one who's not waiting. Today, Friends of the Earth and Sierra Club released a statement on the Colombia NAFTA-expansion (sorry, not linkable). Here's an excerpt:

Despite the inclusion of some essential environmental and labor safeguards, the Colombia Free Trade Agreement nonetheless adheres to the same failed NAFTA/CAFTA model which encourages industry to relocate in pursuit of the least stringent environmental and social standards.

And as reported in CongressDaily, despite fearmongering efforts from the Bush administration, Bill Samuel of the AFL-CIO reacts,

"The administration has failed to make the case that the failure to enact the Colombian FTA will influence Colombia's relations with its neighbors or the United States," said AFL-CIO legislative director Bill Samuel. "The only reason they are resorting to this line of argument is that they have failed to make the case on economic and human rights grounds."

And from Pelosi in a statement this afternoon,

"A successful trade agenda depends on a joint partnership between the Congress and the Administration, as was the case in the recently approved Peru Free Trade Agreement. The Administration should follow the established protocol of Congressional consultation relating to the submission of any FTA. Any deviation from this normal procedure for the Colombia FTA could prove to be counterproductive and would work against both countries' long-term interests."

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Musings on Spitzer, trade and sex trafficking

The news that Gov. Eliot Spitzer was caught on a wiretap soliciting sex across state lines is shaking the country. If you're like me, the most surprising thing is that politicians think they can get away with this kind of thing, especially when there is a paper and phone trail. My wife informed me at my birthday dinner last night that she would not attend the news conference if I ever attempted something like that!

But the news on this got me thinking about human trafficking, which, as far as I know, is not at all what Gov. Spitzer is being investigated for. No, it's because I recently saw this Kevin Kline movie Trade, which is not the best movie in the world, but which is based on stories of real-life trafficked women in the article "The Girls Next Door" by Peter Landesman. According to estimates in the article, there are as many as 10,000-50,000 individuals kept in sex slavery in the United States every year, mostly trafficked from Eastern Europe and Latin America and then brought across the U.S.-Mexico border.

The whole article is chilling, but this paragraph provided some context:

Donna M. Hughes, a professor of women's studies at the University of Rhode Island and an expert on sex trafficking, says that prostitution barely existed 12 years ago in the Soviet Union. ''It was suppressed by political structures. All the women had jobs.'' But in the first years after the collapse of Soviet Communism, poverty in the former Soviet states soared. Young women -- many of them college-educated and married -- became easy believers in Hollywood-generated images of swaying palm trees in L.A. ''A few of them have an idea that prostitution might be involved,'' Hughes says. ''But their idea of prostitution is 'Pretty Woman,' which is one of the most popular films in Ukraine and Russia. They're thinking, This may not be so bad.''

This recalls the 14 years of Juarez murders, where women that were thought to be trafficked were murdered. A lot of advocacy groups on the border relate this to NAFTA, because of the boom in border maquiladora activity, at the same time of a general decline in rural employment and developmental state strategy in the 1980s and 90s locked in by NAFTA. This of course parallels what has been happening generally in developing countries and the former Soviet Union, where NAFTA-WTO like policies have been adopted over the last several decades.

Mainstream media editorial boards might not have a problem ignoring the men who lose manufacturing jobs as a result of economic restructuring. But these trafficked females are the other side of a move towards more precarious social structures in the NAFTA-WTO period. As everyone from Karl Polanyi to Saul Alinsky recognized, anyone concerned about the majority's economic welfare has an interest in trying to mediate the pace of even otherwise benign economic change. How much more so with our trade policy, which is plainly not benign for the majority? When you read the stories of desperation brought on by restructuring, the call for global full employment and industrial democracy becomes all the more pressing.

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Book Recommendation: Bad Samaritans

I'm pretty sure that I've recommended my prof Ha-Joon Chang's Bad Samaritans' book in the past, based on some advance chapters I had seen. Now that I've read the book fully through, let me double up on that recommendation and say that I think it is the finest and most accessible distillation of his ideas to date, and it's even getting grudging praise from the mainstream press. Thom Hartmann has a much longer review just published, but let me point out a few highlights:

  • This is a book about globalization that you could buy for your parents. Ha-Joon is a very witty guy who has appropriated the best of Thomas Friedman's anecdote-heavy style, and turned the conclusions on their head. For instance, in a chapter on whether the poorest countries should adopt neo-liberal trade policy and compete with the big guys, Ha-Joon darkly muses on whether he would win any parenting awards by subjecting his own son to grinding labor market competition.
  • The examples skew towards the U.S. and Europe, rather than more recently developed countries in Asia, which I think only makes it more accessible for the non-globe trotting audience here in the U.S. There are some great historical examples from the U.S., Europe and Japan about how the popular press and punditry hundreds of years ago (and even more recently in Japan) tried to discourage them from branching out into different production now thoroughly associated with the countries.
  • He doesn't dodge some of the difficult debates in economic development, such as whether democracy is necessary for development, boldly noting that the U.S. was not a democracy in the formal sense until 1965. He also doesn't pander to the anti-corruption line, as he explains that latest neo-liberal trap. Corruption may be wrong, but it's only in certain instances that it retards development.
  • Finally, Ha-Joon makes analysis of imperialism a lot less frightening to your middle-of-the-road reader. It's presented in a factual way related to power in the global economy, with all the best in British political economy as opposed to sectarian tradition (the chapter on FDI has a great line from the Keynesian economist Joan Robinson: the only thing worse than being exploited by capital is not being exploited by capital.) He also clearly exposes the parallels between the unequal treaties of the 19th century, and WTO policies today.
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Fair trader replaces Denny Hastert in special election

Yep, a big surprise over the weekend as former Speaker Dennis Hastert (R-Ill.) - an anti-fair trader in 20-out-of-20 votes over nearly as many years - was replaced in a special election by Democrat Bill Foster in a very GOP-leaning district west of Chicago.

Foster, like so many of the candidates that have run for office in the last few years, campaigned heavily on critique of the trade status quo, even running paid ads on trade, which you can see here.

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Getting into the mud and blood bath and rising sea levels

  • It seems like Hillary may have also been talking to the Canadians on NAFTA.
  • Reading the NAFTA-memo on Goolsbee more closely, we were struck by this passage: Goolsbee "again cautioned that much of the current conversation in the US about the negative impact of free trade is not aimed at Canada. He said the 'blood bath' is over expanding free trade to countries like Peru and Korea." Hmmm... is that a reference to the Peru NAFTA expansion that Obama and Clinton supported? As I recall, a perfectly avoidable blood bath.
  • The Bush administration is using the Colombia-Ecuador-Venezuela tiff as an excuse to further push the Colombia FTA. As BoRev.Net and Just Foreign Policy show, moreover, it looks like Bush and the candidates may need to take a step back from the unflinching support of Colombia in this spat. 
  • The Bush administration and climate change deniers in Congress are saying that not only should we be scared of the WTO preempting our domestic climate change proposals, but also of retaliation from unnamed foreign countries. Schwab confirms some of our findings from our report, but seems to be using the WTO as an excuse to tamp down rather than ramp up climate action. Bad politics, bad policy...
  • Disclosure: Global Trade Watch has no preference among the candidates.
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Reflections on Ohio/Texas; looking ahead to Pa.

We hosted a press call yesterday with Sen. Sherrod Brown (D-Ohio), Rep. Gene Green (D-Texas), and Leo Gerard of the Steelworkers. The topic was the role of trade in the election, which in the wake of NAFTA-memo-gate is even clearer. Green brought up the vital point that trade is not just an Ohio issue - it plays in Texas as well.

And we talked about a lot more too. The Canadian wires reported on the fall out from NAFTA-memo gate:

U.S. Sen. Sherrod Brown, an Ohio Democrat, said the flap probably had only a minor effect on the outcome because both candidates were offering a welcome change on trade policy.

"The Canada thing was much ado about nothing, I think, to most voters," he said in a call with U.S.-based reporters.

Leo Gerard, president of the United Steelworkers Union, said he agreed with Brown. But Lori Wallach, director of Global Trade Watch, part of the Washington-based advocacy group Public Citizen, said it may have helped stop Obama's momentum.

Obama was 24 points behind Clinton when he started campaigning in Ohio and managed to close much of that gap, partly by criticizing her for supporting NAFTA when her husband, Bill Clinton, was president, Wallach said.

The memo helped "blur the distinction" that Obama was trying to make between himself and Clinton on NAFTA and may help explain why he stopped rising in the polls shortly before the vote in Ohio, she said.

The domestic wires reported:

The next U.S. president needs to fundamentally redirect U.S. trade policy to preserve manufacturing jobs and reduce the huge trade deficit -- not just tinker with the North American Free Trade Agreement, critics of U.S. trade deals said on Wednesday.

"We need to change the whole discussion about investment, about subsidies, about enforcement of trade laws," said Leo Gerard, president of the United Steelworkers union. "How does any country continue to prosper when it's accumulating an average annual trade deficit of about $700 billion per year?"...

The two candidates have talked mainly about adding enforceable labor and environmental provisions to the pact.
But Lori Wallach, director of Public Citizen's Global Trade Watch, said it was more important in the short term to change the agreement's investment provisions because they encourage U.S. companies to move jobs to Mexico.
The Hill reports that:

“I appreciate that the leading Democratic candidates had a spirited discussion about NAFTA, but the fact of the matter is you can’t fix NAFTA” by simply adding environmental and labor provisions, [Gerard] said. “We need to sit down and negotiate within the House and Senate a new set of trade rules that will create jobs in America.”

Gerard, who opposes the other pending deals, also said his union and other allies would work to put trade on the top of the issues in the general election in November. He added that he thinks Sen. John McCain (Ariz.), the Republican nominee, has gotten a “free ride” and should be criticized for supporting European company Airbus in a Department of Defense contract for an in-air refueling plane.

On the same phone call, Sen. Sherrod Brown (D-Ohio), a vocal trade critic, said that both Clinton and Obama offer a different trade policy, but McCain is essentially “running for a third Bush term.”

And finally, BNA reports that:

The electorate's focus on the trade issue will grow heading into the April Pennsylvania primary and the general election in November, Public Citizen's Global Trade Watch Director Lori Wallach said March 5.

"There is no way to avoid this issue in the Pennsylvania primary, and it will only become a brighter line wedge issue in the general election," Wallach said...

"NAFTA is just a proxy for the broader set of issues," Wallach said. There are changes not yet being brought up by the candidates that are necessary in the trade regime for the success of a future president's domestic policy priorities, she remarked. 

And you can find out more about those domestic issues here.

(Disclosure: Global Trade Watch has no preference among the candidates.)
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Day before Ohio

Our regular readers will have noticed that we have not been rounding up all the back and forth between Clinton and Obama on the NAFTA issue. Indeed, by sheer number of press hits, NAFTA is the top story in the country.

Part of the void at EOT is that I've got a pretty insane fever and am bedridden, while some of our other contributors are also out. But it's actually for a reason: there's been quite a bit more heat than light in much of the coverage, and it would be exhaustive to try to correct all the errors in the coverage and reporting, as the media grapples with a story that has been all but shut out of the mainstream debate over the last 15 years.

Take the ongoing story about the memo leaked from the Canadian government supposedly showing Obama gave a wink-wink on NAFTA. As the Cleveland Plain Dealer reported, citing one of our own:

Lori Wallach, director of Global Trade Watch, a group that is sharply critical of U.S. trade policy, said she is drawing no conclusions from the memo.

"What it means about any U.S. candidate is really hard to decipher because it's all coming through the lens of a right-wing Canadian government," she said.

Wallach said she sees no difference between the trade votes of Obama and Clinton, and thinks both have moved closer to her group's position during the campaign. "Neither of them started out as great champions of trade reform," she said.

Ohio Democratic Sen. Sherrod Brown, an outspoken opponent of U.S. trade policy who hasn't endorsed a candidate, said he regards the memo as "much ado about nothing" because it comes from a conservative Canadian government.

Brown said he doesn't see much difference on trade between Obama and Clinton despite the two campaigns' fierce fighting over the issue.

"I don't think anybody's going to vote on the difference between Hillary and Barack on trade," he said.

Or take the editorial by Jagdish Bhagwati in the Financial Times, where he lays out the neoliberal case for Obama:

Mr Obama’s main union support comes from the Service Employees International Union and the Teamsters, neither of which is protectionist: the SEIU’s membership is in the non-traded sector and, except on the issue of Mexican trucks coming into the US, Teamsters do well as trade expands. By contrast, Mrs Clinton’s support comes heavily from the AFL-CIO, which holds strong anti-trade views. This matters because the IOUs you sign during campaigns provide a straitjacket that can restrict your policy options.

Uhh, I don't know even know what these terms mean, but I do know that Change to Win was the federation that actively opposed the Peru FTA last year, and the Teamsters are one of THE most active members of the Citizens Trade Campaign, which has been extracting commitments from the candidates all throughout the race. And if you're worried about restricting your policy options, the WTO poses a much bigger threat to Hillary and Barack than do unions, as we showed in a report last week.

What we're seeing is the mainstream press and elite commentators trying to grapple with a perspective that is very common in middle America, but all but shut out from news outlets. They're getting the facts and the players wrong; they're misrepresenting the issues at stake. The fact that the Democratic primary dragged on this long - to the point where people in Wisconsin and Ohio are actually making a difference in selecting the nominee - means that fair trade issues have to be addressed. Is there a way we can make this happen every four years?

(Disclosure: Global Trade Watch has no preference among the candidates.)

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