Trump to Visit Michigan, Iowa: His Zeal to Tout His Trade Agenda Complicated by Agricultural Export Declines, Ongoing Auto Sector Job Outsourcing and New Federal Contracts to Serial Job-Outsourcing Firms

President Donald Trump is very keen to talk trade to distract from his impeachment trial. Central to his victory in key Midwest swing states were his pledges to stop job outsourcing, rebuild American manufacturing and end the job-killing trade deficit. He’s off to Michigan and Iowa after yesterday’s signing ceremony for the new North American Free Trade Agreement (NAFTA) and last week’s preliminary China trade deal. But his impeachment-distraction trade mission is complicated by some inconvenient facts:  

• Tens of thousands more U.S. jobs have been government-certified as lost to outsourcing during the Trump era. This includes outsourcing by General Motors, Boeing, Honeywell, Siemens, IBM, Hewlett Packard, United Technologies, Caterpillar, Electrolux, General Electric, Harley-Davidson, Honeywell, Kohler and Intel Thompson Reuters, AT&T, Dun & Bradstreet, Verizon and Ministry Health. Verizon, Ford and Nabisco also have outsourced under Trump, but have not yet been processed on the certified list.
• Manufacturing sector job growth hit a wall in 2019, as the sector slid into recession. Manufacturing job creation nearly stopped after a job growth boom that started two years before Trump was elected, while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since the June 2009 financial crisis days. The U.S. manufacturing sector has been in a technical recession for the past two quarters.
• The overall U.S. trade deficit increased 14% in Trump’s first two years. Despite expectations that the 2019 deficit will be smaller, the manufacturing sector deficit will be up again, while the overall decline reflects a jump in U.S. exports of oil and gas and lower oil imports. During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.
• The new NAFTA will not bring back hundreds of thousands of jobs, as Trump nonsensically claims. Nothing makes this clearer than recent developments in the U.S. auto sector. Post-NAFTA renegotiation, U.S. auto companies have announced plans to expand production in Mexico. GM is closing numerous U.S. plants while making popular models in Mexico. Ford is even making its new Mustang electric SUV in Mexico – the first Mustang not to be made here. Over time, the labor standards and enhanced enforcement terms Democrats forced into the new NAFTA may help raise wages in Mexico, and this also may reduce U.S. corporations’ incentives to outsource more U.S. jobs to Mexico to pay workers less.
• Contrary to his campaign promises, Trump has rewarded firms that have outsourced jobs with lucrative government contracts. Sadly there are many instances, but consider a state on today’s trip: In December 2018, the Siemens plant in Burlington, Iowa, closed after 148 years of operation. The plant closure eliminated 107 jobs, as part of a nationwide loss to outsourcing of 1,800 jobs by Siemens. During 2019, contracts for $877,354,618 were granted to Siemens.

Firms That Have Caused TAA-Certified Job Losses in Iowa	Value of Federal Contracts Received in Last 12 Months
Siemens	$877,354,618
Verizon Communications	$754,077,723
United Parcel Service (UPS)	$637,292,359
Hewlett Packard	$265,824,579
Cummins	$255,917,252
Cargill	$184,535,591
Delta Air Lines	$141,014,806
John Deere	$18,517,349
Bayer Pharmaceuticals	$6,578,386

 

• Trump’s tax bill promotes more outsourcing. If a firm shuts production in the United States and moves to Mexico, their U.S. federal tax rate is cut in half. (A firm in the U.S. would pay a 21% corporate tax rate, while offshore income is taxed at a 10.5% rate.)
• On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies, and the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive.
  • Chinese purchasing agency commodity orders in early January did not reflect a shift to U.S. purchases, while Chinese officials have said they will not increase agricultural import quotas.
  • The China agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs.
• The government has certified tens of thousands of Michigan workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that the TAA certified for China job loss in Michigan are Yale Lift-Technologies, Lear Corporation, Chrysler, Ameriwood Industries, and A123 Systems LLC. The top five firms certified for NAFTA job loss in Michigan are Tyco Electronics, Lear Corporation, Copper Range Co., Collins and Aikman and Kraft Foods. As well, Chrysler, Ford and General Motors all have extensive Michigan TAA certifications for production relocation that do not specify to what country the work has been relocated.
• The government has certified tens of thousands of Iowa workers as trade job-loss victims under TAA. The top five firms that the TAA certified for China job loss in Iowa are Maytag, Ocwen Loan Servicing, TMK-IPSCO, Lands’ End, and IMI Cornelius. The top five firms certified for NAFTA job loss in Iowa are Eaton Corporation, John Deere, GFSI, Intier Automotive Seating of America and International Automotive Components.

Data Notes: Deficit figures are adjusted for inflation to the base month of December 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to December 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. The TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, the TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here. The federal contract data is sourced from usaspending.gov.

For more information visit State-by-State Outcomes of NAFTA.

New NAFTA Signed Into Law Only After Democrats Force Trump to Rewrite His 2018 NAFTA 2.0 Deal to Remove Big Pharma Giveaways, Add Better Labor and Environmental Terms

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: Today, President Donald Trump signed the implementing legislation for the revised North American Free Trade Agreement (NAFTA). This follows passage in the U.S. Senate by a margin of 89-10 and in the U.S. House of Representatives by a margin of 385-41 with 193 Democrats and 192 Republicans supporting. The White House did not invite any congressional Democrats to the 400-person signing event. By gaslighting the Democrats central role in creating a new NAFTA, Trump has generated new attention to the reality that the revised NAFTA deal he signed in 2018 was DoA in Congress and Democrats forced Trump to reopen that deal and rewrite it so that it might actually counteract some of NAFTA’s ongoing damage.

Donald Trump has a new NAFTA to sign into law today only because congressional Democrats forced him to reopen the NAFTA 2.0 deal he signed in 2018 to remove Big Pharma giveaways that would have locked in high medicine prices and to strengthen labor and environmental terms so a new NAFTA might counter outsourcing.

The corporate-rigged NAFTA 2.0 deal that Trump signed in 2018 betrayed his campaign promise to fix NAFTA and was “dead on arrival” in Congress. It included new Big Pharma giveaways that would have locked in high drug prices, making it worse than the original, and labor and environmental terms too weak to counteract NAFTA’s outsourcing of jobs and pollution.

Trump is desperate to pretend that this is his victory, but Public Citizen’s new Timeline of #ReplaceNAFTA Advocacy shows that the new NAFTA exists only thanks to relentless work by House Democrats, unions, consumer and faith groups, and activists nationwide who forced improvements to the 2018 deal Trump signed.

The unusually large, bipartisan congressional votes for the “revised revised” NAFTA show that to be politically viable, U.S. trade pacts no longer can include broad monopoly protections for Big Pharma or extreme corporate investor privileges and must have enforceable labor and environmental standards.

After congressional Democrats, unions and consumer groups forced Trump to remove Big Pharma giveaways and improve labor and environmental terms, the final revised deal is better than the original and might reduce some of NAFTA’s ongoing damage to workers and the environment.

But this new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump nonsensically claims, despite U.S. auto manufacturers’ recent announcements that they plan to increase production in Mexico. This includes Ford’s decision to make its new Mustang electric SUV in Mexico. while GM has closed U.S. auto plants even as it has shifted production of its most popular vehicles to Mexico.

One important win for consumers, workers and the environment is the gutting of NAFTA’s Investor-State Dispute Settlement (ISDS) regime. ISDS empowers multinational corporations to go before panels of three corporate lawyers to demand unlimited compensation from taxpayers over claims that domestic policies or actions violate special investor privileges. The lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies. Largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other safeguards and bolster countries worldwide seeking to exit the illegitimate ISDS regime. 

The new NAFTA is not a template for future agreements; rather, it sets the floor from which we will fight for good trade policies that put working people and the planet first. Trying to fix an existing bad deal like NAFTA to reduce its ongoing damage is very different from creating a truly good trade deal that generates jobs, raises wages and protects the environment and public health.

Any new trade deals, including with the European Union and United Kingdom, must additionally include binding climate standards, even stronger rules to stop race-to-the-bottom outsourcing of jobs and pollution, and enforceable rules against currency cheating. And any new deals must not limit the protections needed to ensure our food and products are safe, our privacy is protected and monopolistic online firms are held accountable, and big banks do not crash the economy again.

Broad Bipartisan Congressional Votes on Revised NAFTA Cement New Floor for Trade Pacts: Pharma Giveaways, Extreme Investor Rights in Past Pacts Are Out, Better Labor and Environmental Terms In After Democrats Forced Trump to Redo His 2018 NAFTA 2.0 Deal

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Note: The U.S. Senate today passed the revised North American Free Trade Agreement (NAFTA) by a margin of 89 to 10. This follows passage in the U.S. House of Representatives by a margin of 385 to 41 in December 2019.

The unusually large, bipartisan votes in the Senate and House on the revised NAFTA set a new standard that to be politically viable, U.S. trade pacts no longer can include extreme corporate investor privileges or broad monopoly protections for Big Pharma and must have enforceable labor and environmental standards, in contrast to the 2016 Trans-Pacific Partnership, which never got close to congressional majority support.

Renegotiating the existing NAFTA to try to reduce its ongoing damage is not the same as creating a good trade agreement that creates jobs, raises wages and protects the environment and public health. That would additionally require climate provisions, stronger labor and environmental terms, and truly enforceable currency disciplines, and not limit consumer protections for food and product safety and labeling, the service sector, online platforms and more.

The NAFTA 2.0 deal that President Donald Trump initially signed in 2018 betrayed his campaign promise to fix NAFTA: It included new Big Pharma giveaways that lock in high drug prices, making it worse than the original, and its labor and environmental terms were too weak to counteract NAFTA’s outsourcing of jobs and pollution.

However, after congressional Democrats, unions and consumer groups forced Trump to remove Big Pharma giveaways and improve labor and environmental terms, the final revised deal is better than the original and might reduce some of NAFTA’s ongoing damage to workers and the environment. Although the new deal still includes problematic terms, the alternative is status quo NAFTA, not a more improved deal.

But this new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump nonsensically claims. Nothing makes that clearer than U.S. auto manufacturers’ recent announcements that they plan to increase production in Mexico – from Ford’s decision to make its new Mustang electric SUV in Mexico to GM closing U.S. auto plants while expanding production in Mexico.

One clear and important win for consumers, workers and the environment is the gutting of NAFTA’s Investor-State Dispute Settlement (ISDS) regime. ISDS empowers multinational corporations to go before panels of three corporate lawyers to demand unlimited compensation from taxpayers over claims that domestic laws, regulations and court rulings violate special investor privileges. The lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits. To date, corporations have extracted almost $400 million from North American taxpayers after attacks on energy, water, timber and toxics policies. Largely eliminating ISDS will foreclose numerous corporate attacks on environmental, health and other public interest policies and send a signal worldwide to the many countries also eager to exit the illegitimate ISDS regime. 

The new NAFTA is not a template for future agreements; rather, it sets the floor from which we will fight for good trade policies that put working people and the planet first.

Trump Visits Milwaukee: The Data on Wisconsin’s Ongoing Trade Job Loss, Decline in Ag Exports to China

With U.S. agricultural exports down, the White House touting a signing ceremony on a preliminary China trade text and the new North American Free Trade Agreement (NAFTA) up for a vote soon in the U.S. Senate, Trump is likely to talk trade during his Tuesday rally in Milwaukee. Below are key trade data points relating to Wisconsin.

On the China front, it remains to be seen if what the White House is selling as a “phase 1” China trade agreement will translate into changes in trade flows or China policies. The agreement does not cover the mass subsidies or other “China 2025” policies that the White House has spotlighted as a threat to U.S. manufacturing and geopolitical interests. Indeed, policy changes China has made that are reflected in the agreement, including more access for foreign investors and protections for their intellectual property, may promote more outsourcing of U.S. investment and jobs. Meanwhile, the promise of one-time increased Chinese purchases of U.S. goods, including agricultural exports, that the administration is touting may provide elusive. Chinese purchasing agency commodity orders last week did not reflect a shift to U.S. purchases while Chinese officials have said they will not increase ag import quotas.

• U.S. Department of Agriculture data show that Wisconsin’s agricultural exports to China have decreased 22% this year relative to last year –from $106 million in the first 11 months of 2018 to $82.7 million in the first 11 months of 2019.
  
  
• Wisconsin agricultural exports to China are down 27% in the 11 months of 2019 for which there is U.S. government data relative to the same 11 months of 2016, Obama’s last year in office. 

With respect to NAFTA, Donald Trump’s campaign promise to quickly replace the pact was stalled by his year-long refusal to remove new Big Pharma giveaways that would lock in high drug prices from the NAFTA 2.0 deal he signed in 2018. NAFTA 2.0 labor and environment terms also were too weak to counteract NAFTA’s outsourcing of jobs. Even after congressional Democrats and unions forced Trump to rewrite the 2018 deal, the new NAFTA won’t bring back hundreds of thousands of manufacturing jobs, as Trump claims. The recent announcements by U.S. automakers of increased production in Mexico make that clear.

• The government has certified 83,047 Wisconsin workers as trade job-loss victims under just one narrow program called Trade Adjustment Assistance (TAA). This government program represents a significant undercount: Workers must know to apply and meet the TAA’s narrow criteria, which exclude many types of jobs lost to trade. The top five firms that TAA certified for trade-related job loss in Wisconsin are Briggs & Stratton, Honeywell, Master Lock, NewPage Corporation and Humana Insurance Company.
  
  
• Some Wisconsin metro areas’ Department of Labor-certified trade jobs loss numbers:
  Milwaukee-Waukesha (22,856)                      Appleton (8,172)
  Green Bay (4,235)                                          Oshkosh-Neenah (3,722)
  Manitowoc (3,676)
• During the Trump administration, the NAFTA trade deficit has grown 30% relative to the year before Trump took office.
  
  
• Meanwhile, the manufacturing sector has hit a wall in 2019: Manufacturing job creation nearly stopped while an important indicator of manufacturing sector health – the Purchasing Managers Index – registered its lowest reading since June 2009 financial crisis days.
  
  
• Tens of thousands more U.S. jobs have been government-certified as lost to NAFTA during the Trump era. Nationwide, the United States has had a net loss of 4.5 million manufacturing jobs – about 27% – since NAFTA and the WTO went into effect.
  
  
• According to the U.S. Department of Labor, manufacturing workers who lose jobs and find reemployment are typically forced to take pay cuts. Two of every five rehired in 2018 were paid less in their new jobs. One in six lost greater than 20% of their income. That means a $8,955 pay cut for the median-wage worker earning $44,800.
  
  
• During NAFTA’s 25 years in force, the U.S. goods trade deficit with Canada of $33.2 billion and the $2.9 billion surplus with Mexico in 1993 (the year before NAFTA) turned into a combined NAFTA goods trade deficit of $220 billion in 2018. Before NAFTA, the U.S. had a goods trade surplus with Mexico and Canada in the top 10 products that Wisconsin exports to the NAFTA nations. We now have a $146 billion deficit in trade of those goods to NAFTA nations.
  
  
• The $2.5 billion U.S. agriculture trade surplus with Canada and Mexico before NAFTA reversed to a $9 billion deficit in 2018. Nearly 250,000 small- to medium-scale farmers have been driven out of agriculture since the original NAFTA went into effect. Nationwide, $15 billion has been lost in U.S. agriculture exports just to China in the past year. Trump’s new NAFTA cannot fix this or stop future erratic and unpredictable Trump trade actions. Months after the deal was signed, and boosters claimed it would lock in a new era of certainty in North American trade, Trump threatened to impose new tariffs on all Mexican imports for immigration-related reasons. Because the new NAFTA would simply continue NAFTA’s existing duty-free treatment with very modest increased access for U.S. dairy, poultry, eggs and wine to the Canadian market (around $400 million), it wouldn’t make a dent.
  
  
• Growing NAFTA trade deficit under Trump: The nearly 10% growth in the NAFTA goods deficit over the past 11-month period compared to that same period in 2018 continues a Trump-era trend: The 2018 annual U.S. NAFTA goods deficit was up 11% relative to 2017, an increase from $197 billion to $218 billion, and up 19% ($34 billion) in 2018 relative to the U.S. annual NAFTA goods deficit in 2016.

Data Notes: Deficit figures are adjusted for inflation to the base month of November 2019. Thus, the figures represent changes in trade balances expressed in constant dollars. So, for months prior to November 2019, the numbers are different than the data unadjusted for inflation that is provided by the U.S. Census Bureau. The U.S. Department of Labor certifies trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

For more information visit State-by-State Outcomes of NAFTA.