Department of Bogus Jobs Statistics

Last Friday, U.S. Trade Representative (USTR) Ron Kirk was in Pennsylvania to tout the Korea Free Trade Agreement (FTA) where he claimed that “Increased exports due to the Korea deal alone may support as many as 70,000 additional jobs nationwide.”

Most of the time these types of jobs statistics seem to come out of thin air and you never hear how the proponents came up with them. However, with a bit of investigation we can try to trace this number back to its origin.

An earlier mention of this stat in the President’s Progress Report on the National Export Initiative gives a hint as to its origin: “The Korean FTA would increase goods exports by an estimated $10-11 billion, which would support an estimated 70,000 jobs…”

The $10-11 billion exports figure matches the bilateral export figure in Table 2.2 of the U.S. International Trade Commission (USITC) report on the Korea FTA, so it seems that the export figure comes from there. Now, if only we had an exports-to-jobs ratio…

Aha! – a recent report from the International Trade Administration estimated that every $150,000 in exports supports one American job (see Table 1 here). Applying this multiplier to the USITC exports estimate, we get 73,333-66,667 jobs. The 70,000 jobs stat is right in the middle of the range, so there is a high probability that this is the origin of the estimate.

Sure, more exports leads to more jobs, but don’t NAFTA-style FTAs tend to increase imports, which force companies to lay off American workers?  This “70,000 new jobs” stat leaves out any consideration of the effect of imports.  The USITC’s report does contain full estimates of the increased imports that the Korea FTA will bring about, but the USTR chooses to ignore this estimate.

If we were to account for the effects of imports, use this same method of jobs calculation, and consider the effect of the Korea FTA on the U.S. global trade balance (available on Table 2.3 in the USITC report), we would find that the Korea FTA would cost us a net 2,100-2,700 jobs, since the trade deficit will increase by $308-$416 million.

The bottom line is that the “70,000 jobs created” number is just a bogus stat, and USTR should stop using it to promote the Korea FTA.

(And, BTW, as for Kirk's selective invocation of the merely bilateral change in trade, 60 percent of the merely bilateral job estimate is wiped away if you were to also incorporate the USITC's projections on bilateral imports with Korea.)

UPDATE: Lastly, even if the 70,000 jobs figure was correct, the U.S. would have to do the equivalent of signing 29 Korea FTAs to get to Obama's goal of 2 million jobs from exports by 2015, which would be a heavy lift since Korea is the 15th largest economy in the world.

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From Building Cars to Packing Meat

When the Bush administration tried to sell the Panama and Colombia FTAs, it argued that the FTAs would simply make our trade relationship a two-way street with these countries since they already enjoy greater access to the U.S. market through trade preference programs.  (And we have still seen rising deficits with the CAFTA countries even though much of their exports fell under preference programs before CAFTA was implemented). South Korea, though, does not enjoy any preferential market access, so if the FTA were to be implemented as-is and the trade barriers come down, we will most likely see a tremendous surge of imports.

To get a hint of the possible jobs impact of the Korea FTA, we’ll dive more deeply into that U.S. International Trade Commission (USITC) study that we mentioned a few weeks ago. 

The USITC study indicates that jobs will likely be lost in many high-wage industries, including auto manufacturing and electronics manufacturing. The table below displays the USITC’s estimates of impact of the Korea FTA upon employment and the trade deficit in a few sectors of the U.S. economy, available in Tables 2.3 and 2.4 of the report. The USITC gives employment changes in percent terms rather than in numbers of jobs, so to make the loss more tangible we’ve computed the job loss numbers based on the USITC percent change estimates and sector employment data from the Bureau of Labor Statistics

  USITC Korea FTA estimates

According to the USITC study, the auto manufacturing industry may lose about 1,750 workers due to the Korea FTA.*  The average hourly earnings of workers in the auto industry was $23.61 in 2008, which was 9.2 percent greater than the average hourly earnings of all workers employed in the private sector ($21.62). The average hourly earnings of workers in the electronic equipment manufacturing industry, projected to lose about 5,000 workers, was $30.38 in 2008, which was 40.5 percent greater than the average hourly earnings of all workers employed in the private sector.

As the table shows, large rises in the trade deficit in these sectors are driving the employment loss, totaling up to almost $1.7 billion for motor vehicles and parts, other transportation equipment, and electronic equipment alone. Interestingly, the USITC predicted that there would be an absolute decline in the total value of exports in some manufacturing sectors, not just a worsening of the balance. For example, total U.S. exports of electronic equipment are expected to decline by up to $381 million due to the implementation of the Korea FTA (see Table 2.3 in the study).

Continue reading "From Building Cars to Packing Meat" »

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As Obama pushes FTAs, unionists in Colombia & Panama are killed

The same day that Obama pledged to move forward on the leftover Bush FTAs, one unionist was killed and dozens were wounded in Panama during protests over Panama's new law that severely weakens labor rights.

Last month, two trade unionists were killed in Colombia. This AFL-CIO blog post puts it in perspective. 

There are many reasons to oppose the Colombia and Panama FTAs in their present form. The fact that they would give multinational corporations the ability to exploit the horrible human and labor rights situation in these countries is an important one.

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Seattle Employment Not Harmed by NAFTA? O RLY?

Ron Kirk photo Last week U.S. Trade Representative Ron Kirk was in Seattle to meet with Association of Southeast Asian Nations (ASEAN) trade ministers and business executives.  In conversations with reporters, he seemed to imply that Washington workers haven’t experienced the devastating effects of the NAFTA trade policy model like workers in the Midwest have:

"When I'm east of the Mississippi, people think I'm a two-headed monster," he quipped. He said he loves coming here. "For every five trips to Michigan and Illinois I ought to earn one trip to Seattle."

Eh? Is it true that Seattle has escaped the fate that has befallen Michigan and Illinois?

No. The manufacturing base of Seattle has been crippled in the NAFTA/WTO trade policy era.  Since the implementation of NAFTA in 1994, the Seattle area has lost 29,600 manufacturing jobs, a decline of 16 percent, according to the Bureau of Labor Statistics.  Washington as a whole has lost 51,100 manufacturing jobs since NAFTA entered into force. These are prime high-paying jobs with good benefits to support families, and the NAFTA trade model was a contributing factor in their disappearance.  In fact, a study conducted by the Economic Policy Institute (EPI) found that the increase in the deficit with Canada and Mexico alone since NAFTA’s implementation has cost Washington 16,500 jobs.

The Trade Reform, Accountability, Development and Employment (TRADE) Act offers a way to fix the flawed NAFTA model through ensuring that U.S. trade agreements include strong labor, environmental, and consumer protections that would help grow jobs instead of destroy them.  If Seattle-area Representatives Jay Inslee, Jim McDermott, David Reichert, and Adam Smith were to join the 140 cosponsors of the TRADE Act, it would go a long way toward reversing the devastating effects of the NAFTA model on Washington workers.  EPI’s recent study on the effect of the rise in the trade deficit with China since it joined the WTO in 2001 upon jobs should give the members of Congress extra incentive to support the fair trade policy embodied by the TRADE Act.  Here are the EPI-estimated job losses from the China deficit in each of their districts:

1st District (Rep. Jay Inslee): 6,800 jobs lost

7th District (Rep. Jim McDermott): 5,600 jobs lost

8th District (Rep. David Reichert): 7,100 jobs lost

9th District (Rep. Adam Smith): 4,900 jobs lost

For more analysis about why the NAFTA model is bad for Washington workers, see The Real Pirates of the Caribbean: U.S. High Tech Industry’s False CAFTA Promises Disguise Bad Policy by the Washington Alliance of Technology Workers, The Society of Professional Engineering Employees in Aerospace, and The American Ingenuity Alliance (with some help from Global Trade Watch).

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No Labor Rights Protections Harm Exports, Too

Sandylevin Representative Sander Levin, Chairperson of the House Ways and Mean Committee, last week gave a speech at the National Press Club where he discussed the problems with the Colombia FTA, among other things.  As is well documented, the lack of strong labor rights protections in trade agreements promotes the export of dirt cheap goods (made with dirt cheap labor) to the U.S. from our FTA partners, which suppresses wages and destroys jobs in the United States.  Rep. Levin, though, examined a less-discussed consequence of weak worker protections:  low wages hurt the U.S. on the export side of the equation, too, since workers in our FTA partner countries are not paid enough to purchase U.S.-made goods, so our exports suffer.

At the National Press Club, Levin said:

I want to say a word about Colombia….With Colombia and this was the battle we had over CAFTA. Latin American countries in too many cases, essentially, have these deep disparities in terms of income and opportunity. You can't grow middle classes under those circumstances. Middle classes are the ones who buy our goods basically.

So there's a basic point in worker rights and environmental issues, worker rights, it's not because anybody is standing up for any particular interest group in this country. We're standing up for our businesses and workers and for the workers in other countries who need to be part of the mix in order to buy our goods….

I went onto Colombia myself as I did when I went to China myself, went to the CAFTA countries myself to see firsthand what the conditions were.

I met with people who work in the sugar industry. There, essentially workers are totally deprived of their ability to be participants and have a say. They've set up these so-called cooperatives that are essentially dummy outfits and workers go from cooperative to cooperative being paid for by some entity, unable to be able to be a major part of the economy. That has to be fixed for their good and our good.

I fully understand the importance of opening up the Colombian market. I fully understand that for our workers, our businesses and workers. But we need to have trade agreements that essentially reflect our values and in the case of workers, basic international labor values.

Rep. Levin is right to be deeply concerned about the inequality in Colombia.  According to the CIA, Colombia has the 9th highest Gini index in the world. (The Gini index is the most commonly used measure of the gap between the rich and the poor.  It is a number between 0 and 100, with higher numbers indicating greater inequality.)  And the inequality is getting worse over time – in 1996 Colombia’s Gini index was 53.8, but by 2008 it had jumped to 58.5.  In comparison, the United States, which ranks as the 42nd most unequal society, has a Gini index of 45.0.

Another way of looking at inequality in Colombia is the share of income that goes to the poorest 10 percent of the population and the richest 10 percent of the population.  In Colombia, the poorest 10 percent earn only 0.8 percent of all income, while the richest 10 percent earn 45.0 percent of all income. 

By not protecting workers’ rights and allowing the violent suppression of unions, the government of Colombia has allowed its society to become incredibly unequal, preventing the development of a middle class that could buy U.S. goods and boost our economy. 

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China Trade Deficit Toll: 2.4 Million Jobs

Robert Scott of the Economic Policy Institute (EPI) just came out with a terrific new study on the job losses that the U.S. economy has suffered because of the sky-high deficit with China.  It estimates that the rise in the deficit with China since it entered the WTO (2001) has displaced 2.4 million jobs.  

Between December 2007 (when the recession began) and February 2010, the U.S. economy lost 8.4 million jobs.  This means that if our deficit with China reverted back to its level in 2001 instead of being at its current level, the U.S. economy could generate about one-fourth of the jobs that it lost during the Great Recession.

What’s great about this study is that it estimates job losses in each congressional district.  Previous studies from EPI looked at deficit-induced job losses only down to the state level. With this study, Scott uses a different dataset that surveys millions of people per year, so there are enough respondents in each congressional district to get job loss estimates. Check out where your district ranks in job losses here (and here for an alphabetical listing).

Fortunately, there is a lot of movement in Congress to get China to allow its currency to appreciate against the U.S. dollar. Last Monday, 130 members of Congress, led by Representative Mike Michaud, sent a letter to Treasury Secretary Tim Geithner and Commerce Secretary Gary Locke urging them to officially designate China as a currency manipulator in its April 15th report.  Yesterday, the House Ways and Means Committee held a hearing on China’s currency policy, its impact on the U.S. economy, and steps that the U.S. could take to press China to revalue it currency.  Most economists believe that China’s currency is undervalued by about 40 percent, making imports from China artificially cheap for the U.S. and U.S. goods more expensive in China.

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Is There an Outbreak of Amnesia at USTR?

During the presidential campaign, Obama made it clear that he intended to renegotiate NAFTA to include enforceable environmental and labor rights provisions in the main text of the agreement.  The USTR’s 2010 Trade Policy Agenda, released yesterday, entirely lacked any plans to fulfill this crucial campaign promise.

When President Obama was campaigning for office, the only “r” verb he used on NAFTA was “renegotiate,” coupled with a friendly “opt out.” In contrast, USTR's report uses the verbs “review” and “recalibrate,” but then only to refer to actions they promised to take but still haven't taken. On NAFTA’s severe environmental and labor shortcomings, the report only stated that NAFTA’s central oversight body, comprised of officials from each country’s trade negotiating body, would “strengthen its relationship” with the North American Commission for Environmental Cooperation and the North American Commission for Labor Cooperation, which are bodies established under NAFTA whose role is mostly limited to releasing reports about the labor and environmental effects of NAFTA. They have no enforcement capabilities, which Obama heavily criticized.

It’s not like Obama whispered his position on NAFTA to labor unions and environmentalists in private meetings.  He was loud and clear about his plan to renegotiate NAFTA, proclaiming it several times in the televised presidential debates.  In a January 2008 debate, he said that “it is absolutely true that NAFTA was a mistake.” Obama reminded us that his position on NAFTA has been consistent during a February 2008 debate:

MR. RUSSERT: Senator Obama, you did in 2004 talk to farmers and suggest that NAFTA had been helpful. The Associated Press today ran a story about NAFTA, saying that you have been consistently ambivalent towards the issue. Simple question: Will you, as president, say to Canada and Mexico, "This has not worked for us; we are out"? 

SEN. OBAMA: I will make sure that we renegotiate, in the same way that Senator Clinton talked about. And I think actually Senator Clinton's answer on this one is right. I think we should use the hammer of a potential opt-out as leverage to ensure that we actually get labor and environmental standards that are enforced. And that is not what has been happening so far.

That is something that I have been consistent about. I have to say, Tim, with respect to my position on this, when I ran for the United States Senate, the Chicago Tribune, which was adamantly pro-NAFTA, noted that, in their endorsement of me, they were endorsing me despite my strong opposition to NAFTA.

In the Democratic candidates’ debate in August 2007, Obama had a sense of urgency in his voice when he discussed his position on NAFTA:

Continue reading "Is There an Outbreak of Amnesia at USTR?" »

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5,500 is Just the Beginning

Last Friday's rally and protest at the soon-to-close Whirlpool plant in Evansville, Indiana drew a massive crowd. Organizers said 5,500 protesters joined the day's actions against the corporate greediness of Whirlpool's - which just received $19 million in federal stimulus money for job creation! Protesters demanded Whirlpool reverse its plan to shift good 1,100 jobs to Mexico - a move facilitated by unfair trade deal-in-chief: NAFTA.

The AFL-CIO has already produced a short video of highlights from the actions:

And this is only the beginning. Imagine how workers in Evansville would react if the President tried to pass yet another NAFTA-type trade deal - like one with South Korea where the U.S. auto industry takes on it on the chin. Now imagine what happens if they tried to pass one with tax haven Panama or unionist murder capitol Colombia!

Clearly, U.S. workers, facing some of the hardest economic times in memory, won't stand idly by while their families' futures are washed down the drain by corporate greed and bad trade policy. That's why they're mobilizing behind the TRADE Act - the comprehensive trade reform bill - and pressuring to hold President Obama accountable to his campaign promises.

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Fighting To Save Jobs in Evansville

Any minute now, the huge rally to save 1,100 good, family-supporting union manufacturing  jobs will begin. Brother Richard Trumka, president of the national AFL-CIO, will headline the event, along with other local labor and elected officials.

IUE CWA - Whirlpool
Trumka has and Oped in today's Evansville Courier & Press that shows the stakes:

After more than 50 years, Whirlpool is turning its back on Evansville — shipping hundreds of good local jobs to Mexico despite the company's healthy profits and millions of taxpayer dollars in federal economic stimulus money.

We need jobs. And we can't stop in Evansville.

We have to take the fight to every company that wants to cut out on America's workers, to the big banks that ruined our economy and to elected officials who refuse to stand up for working families.

When companies such as Whirlpool choose cheaper labor and lax environmental standards over America's workers, consumers and communities, we're going to let them know we won't stand for it.

There's a lot at stake, both nationally and here in Evansville.

Brother Trumka is right indeed. It's a national policy problem that requires a national policy solution. The fight is not just going on in Evansville, but in towns like Newton, Iowa and Galesburg, Illinois, and all throughout the country where good manufacturing jobs being are lost to lower wage countries like Mexico. Thanks to unfair policies like NAFTA, that's where the Whirlpool jobs will go thanks.

That's why we need to pass forward-looking reforms like the TRADE Act that allow for a sane manufacturing policy that creates good jobs right here in the U.S.

For more on the local buildup to today's rally, check out:

~ WFIE's coverage of the Whirlpool Corporation's threat letter to displaced workers who plan to participate in today's action, and ongoing protest preparations, or

~ The local Fox affiliate's continuing coverage of how the threat letter steeling the union's resolve, or

~ The Evansville Courier & Press Editorial expressing some limited solidarity with displaced workers marching against the 'recommendation' of their unfaithful boss:

Cobern [local Whirlpool manager] said in his letter that the decision to close the Evansville plant is final and will not be reconsidered....

In the meantime, allow these workers the freedom to express their frustration and disappointment at seeing their employer pack up for the trip to Mexico.

It has to hurt.

Hurt must barely begin to describe it. But here's hoping that pain will give way to anger at the unfair trade policies and corporate greed at the root of the problem/ Then that anger can transform into organizing to build another world in which the needs of normal hard-working women and men of the world come first!

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Whirlpool: Taking Tax Dollars, Taking Jobs

It can barely get greedier than this: We're in tough economic times, so Whirlpool receives $19 million in taxpayer funds to create jobs. Then it turns around and announces it will shutter its Evansville, Indiana refrigerator plant and displace the 1,100 workers there. Disgusting.
WHIRLPOOL_8_2009
And where, you might ask, will those jobs go? They'll follow so many other lost family-supporting jobs on the NAFTA train to Mexico.

But workers are hoping to make the planned Evansville closing a turning point in the battle for American manufacturing, and are fighting to keep the plant open. The president of the national AFL-CIO, Richard Trumka, is scheduled to speak tomorrow at a major rally to keep plant open. Many hundreds are expected to join the demonstrations from across the region and the country.

The union representing the Whirlpool workers, IUE-CWA Local 808, is fighting fiercely. Financial Secretary of Local 808, Barbara Reich, lays it bare on evening news of the local Fox affiliate:

We need to bring to the attention of the American public when a so-called - in my opinion - American company gets American tax dollars, $19 million American tax dollars to create jobs, then they should not be taking existing American jobs to Mexico or China... We need those jobs right here in this community.

Sister Reich is right. It's a long shot that the plant will stay open, but workers are rallying to a higher cause. Under the influence of unfair NAFTA/WTO-style trade policies, manufacturing job loss has hobbled the country's economic prospects. Working people in Evansville are fighting not just to keep the plant open, but also to change the policies of "taking these jobs to other countries."

That's why solutions like the TRADE Act that correct our failed trade policies, are a crucial element of this fight. Indiana Representatives Visclosky, Donnelly, and Carson have endorsed the comprehensive reform legislation, but 8th District Rep. Brad Ellsworth, who is expected to speak at the rally and whose hometown is Evansville, has yet to sign on. Hopefully he'll see the light and join the growing reform consensus.

Mobilization and protest are another critical element of the fight. So tomorrow - Friday, February 26th - working families will assemble in Evansville to say, enough!

Continue reading "Whirlpool: Taking Tax Dollars, Taking Jobs" »

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A Year After Implementation of Peru Free Trade Agreement, U.S. and Peru Left with Broken Promises, No New Trade Model

Public Citizen Report Details Decline in Peru’s Labor and Environmental Conditions

On the one-year anniversary of the implementation of the U.S.-Peru Free Trade Agreement (FTA), it has become clear that the hopes and predictions of proponents of the trade deal have failed to materialize, Public Citizen said today. Instead, as critics of the deal had feared, environmental and labor conditions in Peru have deteriorated rapidly since the congressional passage of the FTA in late 2007 and implementation in early 2009. In a brief report released today, Public Citizen outlines some of the broken promises and labor and environmental problems.

The Peru FTA text included several reforms with respect to labor and environmental standards relative to the normal Bush trade pact model, which was based on the North American Free Trade Agreement (NAFTA) and the Central America Free Trade Agreement (CAFTA). These changes were added following a May 2007 deal between the Bush administration and some congressional Democrats.Peru FTA protest

Despite the revised environmental language, the Peruvian government rolled back environmental protections existing prior to the FTA so as to implement the FTA’s foreign investor rights to access forestry, mining and other natural resource concessions. This included access to sensitive Amazonian territories over which indigenous communities had control under pre-FTA Peruvian law. In response to indigenous opposition, including road blocks in the remote northern Amazonia region of Bagua, the Peruvian government dispatched the military, and the resulting confrontation resulted in 34 fatalities – making the Peru FTA the first U.S. trade agreement to result in an immediate body count. 

Despite the revised labor language, in Peru today under the FTA, Peruvian employers can use subcontracting and outsourcing legal loopholes that greatly limit workers’ ability to unionize; child labor and forced labor continue unabated.

“The initial outcomes of the Peru FTA’s implementation demonstrate that major reforms remain to be undertaken if a new American trade agreement model is to be created that can deliver broad benefits to people in the countries involved while protecting the environment,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division.

Starting in 2008, the U.S. House Committee on Ways and Means Chairman Charlie Rangel (D-N.Y.) and Trade Subcommitee Chair Sandy Levin (D-Mich.) protested the Bush administration authorizing the FTA to go into effect despite the García administration failing to implement key labor and environmental reform commitments. A January 2009 letter from Rangel and Levin to Bush U.S. Trade Representative Susan Schwab noted that the García administration adopted new loopholes that could allow enhanced use of company subcontracting to crush unionization drives.

The Peruvian government’s true intentions became clear at a U.S. Chamber of Commerce victory event the
day the Peru FTA was signed into law, when Peruvian President Alan García told the audience of lobbyists for U.S. multinationals: “Come and open your factories in my country so we can sell your own products back to the U.S.” (U.S. Chamber Magazine, December 2007. Accessed July 13, 2009.)

Recent comments filed by unions and other civil society groups concerning the administration’s proposal to initiate Trans-Pacific Partnership (TPP) agreement negotiations focus strongly on the need for major reforms to be made to the trade agreement model used for the Peru FTA. TPP talks, which would include Peru, would provide the Obama administration with the opportunity to implement the president’s trade reform campaign commitments that included the issues unaddressed in the May 2007 deal, and to replace the current damaging Peru FTA text with a new trade pact model.

Read the full report here.

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Americans Say NAFTA-style Agreements = Job Losses

(Disclaimer: Public Citizen has no preference among candidates for office)

A poll conducted by the Pew Research Center in November has found that the public holds deep misgivings about the WTO and trade agreements like NAFTA.

In an atmosphere of 10 percent unemployment, about 52 percent of those surveyed believe that "free trade" agreements lead to job losses, while only 13 percent believe that the agreements create jobs. The remainder of those surveyed didn't have an opinion, refused to answer, or thought trade agreements didn't affect employment.

Only 11 percent of respondents believed that free trade agreements make the wages of Americans higher, but 49 percent believed that trade agreements reduce American wages.

The survey also reveals quite a disconnect between the views of the foreign policy elite and the views of the public at large: 88 percent of the members of the Council on Foreign Relations believe that these trade agreements are a good thing for the United States, which is more than double the proportion of ordinary Americans who believe the same.

Another interesting finding in this poll is the degree of opposition to "free trade" agreements among Republicans and independents. About 36 percent of both Republicans and independents believe that trade agreements are a bad thing, which is a greater degree of opposition that even Democratic voters exhibit.

Democratic candidates for Congress must keep in mind that in order to prevail in the midterm elections they must retain the independent and Republican voters that they gained in 2008, so running on a fair trade platform can only help expand their appeal.

Read the report here


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The Return of the NAFTA Election Cycle?

(Disclaimer: Public Citizen has no preference among the candidates.)

As we throw out the old calendar and enter an election year, Democratic and Republican party leaders are busy figuring out their electoral strategies.  Various Democratic strategists, for their part, are running through the familiar arguments about appealing to independent voters versus rallying the base.  Arguing for a rally-the-base approach, Democratic strategist Steve Rosenthal reminds us that voters punished the members of Congress who pushed though a bad trade pact one fateful election cycle:

In 1994, the year Republicans swept to power in the House and Senate, union members were demoralized and stayed home because the Clinton administration had fought vigorously to pass NAFTA and backed down on health care reform.

Economist Paul Krugman also argues this NAFTA point while discussing the Republican strategy: “The idea that NAFTA was a big plus for Clinton, coming from Rahm Emanuel of all people, is just too bone-headed for words.”

Fortunately for everyone involved, the choice between fair trade and NAFTA-style agreements is not a choice among appealing to liberal, conservative, or moderate voters.  Polls have demonstrated that voters of all stripes are fed up with the NAFTA model, particularly in swing states.  Fair trade candidates elected in 2008 now have the seats in Congress to prove it, which makes clear that support of the NAFTA model is a losing strategy, while supporting the TRADE Act might be a way to win.

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Pokemon Gets Offshored

As if further evidence were needed that offshoring is no longer a pure blue collar phenomenon, the WSJ reports on the latest occupation to get hit:

Anime, Japan's stylized animation that has become hugely popular around the world, helpedPOKEMON OFFHORE reshape the country's image as a cultural trend-setter. But behind the scenes, things aren't so rosy.

Japan's animation industry is struggling. Anime workers are unhappy, toiling long hours at low pay. Sales have been declining. On top of that, there is fast-growing competition from across Asia ....

The Japanese government says it is trying to support the industry, with plans to increase spending on education and training young animators and allocating more funds toward film marketing. But nurturing home-grown talent has become more difficult as Japanese companies increasingly outsource anime drawing to studios in China, South Korea and Vietnam, where labor costs are lower.
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Protesters Counter Government of Colombia’s PR Campaign

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On Tuesday, Public Citizen’s Global Trade Watch division joined with other organizations to host a successful protest of Colombia’s current PR campaign at Union Station. GTW staff worked with several other public interest groups, including Witness for Peace, TransAfrica Forum, International Labor Rights Forum, the Latin American Working Group, and the Colombia Human Rights Committee. The Teamsters also came out in force.

The backstory here is that the government of Colombia has spent almost a million dollars on a PR campaign in Washington, D.C., supposedly to try to change perceptions about the country and boost tourism. A sprawling, elaborate display has been set up at Union Station, with representatives handing out free flowers and coffee. The location is suspicious – Union Station is where congressional staffers flock every day before and after work, staffers whose bosses may have to vote on the pending Colombia FTA. The campaign’s media work is being coordinated by a former Bush administration trade official, and business representatives connect the effort to the Colombian government’s desire to promote the U.S.-Colombia FTA. The agreement would basically expand NAFTA to the country with the highest level of unionist murders in the world.

We came together with other public interest organizations to illustrate how Colombia has earned the reputation it is trying to reverse, through mass discrimination against indigenous peoples, forced displacement, and ongoing violence against union organizers, workers, and human rights defenders. In order to counter the rosy picture being painted inside, protesters used street theater to show how the proposed Colombia FTA would protect Colombian and American business interests while allowing for continued abuse of Colombia’s workers and indigenous population. Protesters marched outside Union Station for several hours, and constructed a memorial to honor the growing list of victims of violence and impunity in Colombia. The protest disrupted foot traffic going in and out of the station, and garnered coverage from several media outlets, including local ABC, FOX, and NBC channels. Stories were also published in Roll Call and the Washington City Paper.

For more information and to learn how you can help to counter the government of Colombia’s campaign, go to http://www.nomorebrokenhearts.net/. Check out more photos from yesterday's protests after the jump.

Continue reading "Protesters Counter Government of Colombia’s PR Campaign" »

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GAO Finds that FTAs Include “Limited Efforts to Promote Progress” on Environmental and Labor Rights

The Government Accountability Office (GAO) released a report this month examining American “free trade” agreements (FTAs) with Morocco, Singapore, Chile, and Jordan, to see if the agreements were advancing U.S. commercial interests and strengthening trading partners’ labor and environmental laws.  While the GAO analysis found positive commercial results, the report faulted U.S. agencies for uneven progress on environmental and labor goals and insufficient American involvement in promoting these goals.  The report lamented the “significant and sometimes worsening systematic deficiencies in certain partner nations” and was conducted at the behest of Senator Finance Committee Chairman Max Baucus (D-MT). 

GAO concludes that, “Notably, USTR’s lack of compliance plans and sporadic monitoring, State’s lax management of environmental projects, and U.S. agencies’ inaction to translate environmental commitments into reliable funding all limited efforts to promote progress.” 

GAO’s study confirms that even the minimal provisions promoting labor and environmental rights in FTAs are not being enforced and further illustrates that all current FTAs need to be reassessed, as proposed in the TRADE Act
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Offshoring Rubbers, Destroying Lives

I have long threatened to start a new Public Citizen division dedicated to the safety of adult products, because, well, no one is bothering to regulate them, as last year's melamine edible underwear scare showed.

Now, this is happening:

In a move expected to cost 300 American jobs, the government is switching to cheaper off-shore condoms, including some made in China...

“Of course, we considered how many U.S. jobs would be affected by this move,” said a USAID official who spoke on the condition that he would not be named. But he said the reasons for the change included lower prices (2 cents versus more than 5 cents for U.S.-made condoms) and the fact that Congress dropped “buy American language” in a recent appropriations bill...

Fannie Thomas, who has been making AIDS-preventing condoms in southeastern Alabama for nearly 40 years in the small town of Eufaula[, says].

“We pay taxes down here, too, and with all this stimulus money going to save jobs, it seems to me like they (the U.S. government) should share this contract so they can save jobs here in America,” Thomas said.

Thomas and others at the Alatech plant said there aren’t many alternatives for them if it closes down, which is a likely result of the contracting switch.

In fact, the government is close to accepting condoms from two offshore companies: Unidus Corp., which makes condoms in South Korea, and Qingdao Double Butterfly Group, which makes them in China.

There's a number of issues here: first, Buy America, last I checked is still intact. But as we pointed out during the debate on the stimulus bill, this can be waived for a lot of reasons, including NAFTA-WTO-style trade agreements. And I believe that the Chinese bid would have to be only 6% cheaper to choose that over the American bid.

Second, given the rampant problems with product safety in China, there are some serious issues about quality control. As the Kansas City Star reports:

Bill Howe, president of PolyTech Synergies in Ohio, a consultant to the condom industry, said China is “learning” to produce better condoms, but their products are still “notoriously suspect.”

Howe, who has consulted for Alatech, acknowledges that the company got a “sweet deal” for years as the only supplier to the U.S. government for international condom distribution. Nonetheless, “they have a high level of integrity, and you don’t get that in China,” he said.

Even Chinese condom makers admit that some of their customers did not care for their products. Chinese buyers have complained their country’s condoms were “too thick, low quality and don’t feel comfortable.”

Problems persisted for some Chinese condom makers as late as 2007. Free Chinese-made condoms passed out by AIDS groups in Washington, D.C., were the subject of numerous complaints about unreadable expiration dates. Sometimes, just opening the packages damaged the condoms, some groups alleged.

Of course, NAFTA-style trade agreements and the WTO put sharp limits on the kinds of product standards and inspections we can apply to imports, while the WTO procurement agreement places limitations on the kinds of product standards or environmental or human-rights qualifications we can put on suppliers to the U.S .government. Read more here, on our section on product safety.

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Congress Passes Buy America in Stimulus

On votes of 246-183 in the House and 60-38 in the Senate, Congress passed the biggest economic stimulus package of all time, which included Buy America provisions. The Washington Post has a truly touching story about how fair-trade champion Sen. Sherrod Brown (D-Ohio) flew from his mother's memorial service to cast the deciding vote. Our hearts and prayers go out to Sen. Brown and his family.

Here's the final version of the language:

    Sec. 1605. Use of American Iron, Steel, and Manufactured Goods. (a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.

    (b) Subsection (a) shall not apply in any case or category of cases in which the head of the Federal department or agency involved finds that--

    (1) applying subsection (a) would be inconsistent with the public interest;

    (2) iron, steel, and the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or

    (3) inclusion of iron, steel, and manufactured goods produced in the United States will increase the cost of the overall project by more than 25 percent.

    (c) If the head of a Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the Federal Register a detailed written justification as to why the provision is being waived.

    (d) This section shall be applied in a manner consistent with United States obligations under international agreements.

The conferees' report made the following note regarding Buy America provisions:

Section 1605 provides for the use of American iron, steel and manufactured goods, except in certain instances. Section 1605(d) is not intended to repeal by implication the President's authority under Title III of the Trade Agreements Act of 1979. The conferees anticipate that the Administration will rely on the authority under 19 U.S.C. 2511(b) to the extent necessary to comply with U.S. obligations under the WTO Agreement on Government Procurement and under U.S. free trade agreements and so that section 1605 will not apply to least developed countries to the same extent that it does not apply to the parties to those international agreements. The conferees also note that waiver authority under section 2511(b)(2) has not been used.


It seems that this last sentence refers to the president's ability to waive Buy America requirements for countries that aren't parties to procurement agreements with the U.S. (i.e. Brazil, India, China, for starters.) It's actually fairly troubling that the president has so much discretion in these matters in the first place. The history of this power is that Congress, in 1979 on a fast-tracked vote, decided to waive much of its authority over procurement, handing it to the president, who could then waive the requirements to comply with flawed trade deals. Clearly, this whole system - born as it was of a kind of double delegation of legislative powers - needs a major rethink.

In other news, our colleagues Terry Stewart and Elizabeth Drake put out a useful paper debunking some of the myths surrounding Buy America perpetrated by corporate-backed think-tanks. It's chock full of useful material. Here is something I did not know:

Myth #5: Insisting on the use of domestic goods will reduce the effectiveness of the recovery plan by imposing unreasonable requirements where U.S. goods are unavailable or prohibitively expensive.33

The Facts: This assertion ignores the language of the recovery bills and U.S. experience applying similar provisions in the past. First, both the House and Senate versions of the Act allow domestic sourcing requirements to be waived where the relevant goods “are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.”34 This waiver provision is also included in the Buy American Act,35 and data relied upon by Hufbauer and Schott indicate that such non-availability waivers were necessary to permit foreign sourcing for only 0.29 percent of all federal contract dollars spent in 2007.36

Moreover, the House and Senate bills permit domestic sourcing requirements to be waived where their application would increase the cost of the overall project by more than 25 percent.37 The 25 percent threshold reflects cost competitiveness standards that currently apply in Buy America requirements attached to federal highway and mass transit funds.38 Similar cost waivers are available for direct federal contracting under the Buy American Act, though they have been set at different levels administratively.39 Such cost waivers were needed to justify 0.20 percent of the federal government’s spending on foreign manufactures for domestic use in 2007 – a mere 0.01 percent of all federal contracting dollars spent.40

Clearly, unavailability and cost differences present obstacles to domestic purchasing in only a tiny portion of contracts, and, where such issues do arise, procurement officials are able to use their waiver authority to address them. The same will be true under the economic recovery plan.
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Buying America; Playing in Peoria

Buyamerica Do you remember this campaign graphic from the Obama campaign in Pennsylvania? Obama promoted Buy American policy in television and radio ads and even committed to renegotiating existing trade agreements to remove their limits on Buy American procurement. We thought you'd be interested in what President Obama had to say about "Buy America" policies on the campaign trail, especially given this Thursday he will be in Peoria visiting a plant operated by Caterpillar, the corporation leading the attack against Buy America provisions in the Stimulus Plan:

When asked in writing: "Do you support renegotiating trade agreements so they will allow us to use "Buy America" and "Buy Local" procurement policies? Obama answered "Yes" in a May 2008 Candidate Questionnaire (PDF) from the Oregon Fair Trade Campaign.

Obama ran paid TV attack ads in North Carolina against John McCain's opposition to Buy American provisions.

Obama also ran a radio ad attacking John McCain's opposition to Buy America after McCain slammed Obama's European trip at a biker rally. At the rally, McCain said he would rather listen to the "roar of 50,000 Harleys" than the cheering of 200,000 Berliners. An Obama ad retorted that McCain was a phony for opposing a requirement that the government buy American-made motorbikes. "But when it comes to his record," the announcer says, "American-made motorcycles like Harleys don't matter to John McCain. Back in Washington, McCain opposed the requirement that the government buy American-made motorcycles."

Finally, check out David Sirota's piece for lots of great details of Obama's commitments to voters to support Buy America policies.

According to a recent poll (PDF), an overwhelming 86 percent of Americans support the Buy America provisions in the stimulus. (See the video embedded below for more on this poll.)

Buy America policies seem to play pretty well in Peoria.

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Canadian Businesses Support "Buy Canada"

We've reported on the disappointing efforts of offshore-happy corporations like Caterpillar to invoke the "Shock Doctrine" and roll back "Buy America" rules already on the books and consistent with our trade obligations. We've reported on the hypocritical campaign by the Canadian government to accomplish the same, even though they committed even fewer types of procurement contracts to the WTO than we did.

But one question has been nagging me: what kinds of "Buy Canada" policies are actually on the books? Turns out there are a few major examples

Another major difference between here and there is that the business and exporters' associations actually support Buy Canadian policies (including the Manufacturers and Exporters of Canada, where my friend Birgit works!)

And a recent USTR report shows that the Europeans are making good use of their flexibilities under the WTO:

In 2004, the EU adopted a revised Utilities Directive (2004/17), covering purchases in the water, transportation, energy, and postal services sectors. Member States were mandated to implement the new Utilities Directive by the end of January 2006, but some EU Member States still have not implemented it. This Directive requires open, objective bidding procedures, but discriminates against bids with less than 50 percent EU content that are not covered by an international or reciprocal bilateral agreement. The EU content requirement applies to U.S suppliers of goods and services in the following sectors: water (production, transport, and distribution of drinking water), energy (gas and heat), urban transport (urban railway, automated systems, tramway, bus, trolley bus, and cable), and postal services.


Congrats EU and Canada!  Nice to see we're all doing what we can to support a local industrial base!

(Please let me know if you know of other local content requirements - especially in transportation infrastructure funding - that we should highlight.)

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Buy America survives Collins-Nelson Fleet Streeting

Paul Krugman points out in today's column that Sens. Susan Collins (R-Maine) and Ben Nelson (D-Neb.) have effectively gutted much of the stimulative impact of the American Recovery and Reinvestment Act.

Luckily, the Buy America provisions survived the Collins-Nelson Fleet Streeting of the Stimulus, as didJohnny_depp_in_2007_sweeney_todd__the_demon_barber_of_fleet_street_wallpaper_4 the Sanders-Grassley amendment, which was passed unanimously by voice vote. For companies receiving TARP funds, it restricts their ability to cite labor shortages in their hiring of H-1B workers from abroad. The idea is that Microsoft shouldn't be able to layoff thousands of workers and then come to Congress citing engineer labor shortages in their quest to import foreign workers that are covered by weaker labor rights. (Text below).

    Sec. 1610. Hiring American workers in companies receiving TARP funding.

    (a) Short Title- This section may be cited as the `Employ American Workers Act'.

    (b) Prohibition-

      (1) IN GENERAL- Notwithstanding any other provision of law, it shall be unlawful for any recipient of funding under title I of the Emergency Economic Stabilization Act of 2008 (Public Law 110-343) or section 13 of the Federal Reserve Act (12 U.S.C. 342 et seq.) to hire any nonimmigrant described in section 101(a)(15)(h)(i)(b) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(h)(i)(b)) unless the recipient is in compliance with the requirements for an H-1B dependent employer (as defined in section 212(n)(3) of such Act (8 U.S.C. 1182(n)(3))), except that the second sentence of section 212(n)(1)(E)(ii) of such Act shall not apply.

      (2) DEFINED TERM- In this subsection, the term `hire' means to permit a new employee to commence a period of employment.

    (c) Sunset Provision- This section shall be effective during the 2-year period beginning on the date of the enactment of this Act.

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Pretending there's a problem

Canada's Globe and Mail had a must read editorial from a few days ago on Buy America. Here's a preview:

This week's horror and hysteria over a U.S. move to “protectionism” like the Smoot-Hawley tariffs of the 1930s, leading to global “trade war” and disaster – was sheer myth. The Buy American clause and the ensuing “backdown” by Congress meant nothing. Those policies have been in place for decades; they still are...

So what's up? Whence the frenzy? Good question, different answers. Stockwell Day and Stephen Harper get to look vigilant and militant, standing on guard for us, while nothing is really at stake. Barack Obama gets to look presidential. He says sternly that he's against bad things, knowing no vetoes or actions will follow. John McCain wants to repeal the offending clause so the world won't think the U.S. has “gone back” to protectionism, which it never left, but maybe the world won't think so now...

Derek Burney, Canadian corporate mouthpiece, calls for even less regulation and protection than we now have, on the grounds, as they say in the Obama White House, that you never let a serious crisis (or a fake one) go to waste. ...

I especially like Michael Ignatieff's demand that Stephen Harper phone Barack Obama on this. I'd like to overhear that one. Uh, I'm calling to pretend there's a problem. … Fine, I'm taking the call to pretend the same thing. [Silence. Silence. Silence.] We agree, then. … Yes, good talking to you...

It's like the murder on the Orient Express: It turned out everyone participated, but they all did it for their own reasons.
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The American People is Ready for a Change with Buy America

I was on Washington Journal this morning opposite Birgit Matthiesen of the Manufacturers and Exporters of Canada. The subject? Buy America, and how it is consistent with existing domestic and international law. And a few digs at the WTO's procurement agreement while we're at it.

Here's the video; let me know what you think.

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McCain Amendment to Prohibit Buy America Crashes and Burns

Back in the general election, Obama bashed McCain for his comment that Buy America provisions were "disgraceful," as in this paid television ad below:

(See this ad and over a hundred others in our online database of paid election trade ads.)

If there was any doubt that McCain was fo' real, an amendment he introduced yesterday to the stimulus bill cleared that up. Senate Amendment 279 to the American Recovery and Reinvestment Act of 2009 (H.R. 1) listed as its purpose: "To prohibit the applicability of Buy American requirements in the Act to the utilization of funds provided by the Act."

This would have gone considerably farther than our current law and WTO commitments, since we have always been allowed to do most if not all of what is in the stimulus package. In essence, had it passed, it would have put the Senate on the record as opposing even the WTO-legal parts of Buy America. It would have also announced to America that, even when domestic policy proposals do NOT violate WTO obligations, we will not pass them if someone might THINK that they do. I'm not a total sovereignty hawk, but, wow...

Luckily, the amendment crashed and burned at around 8:30 pm last night, with only 31 senators (all GOP + Lieberman) supporting. All the Dems plus 9 GOP opposed. Find out how your senator voted! And then let them know what you think about it!

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Harper Gets Hypocritical about Hypotheticals

The hysteria-fest coming out of Ottawa and Brussels over the Buy America/n provisions in the stimulus plan continues. But if Canadian PM Stephen Harper and the EU are getting so bent out of shape over our tiny domestic preferences, what's the state of theirs? As it turns out, we (at least according to the WTO exceptions if not actual practice) our products can't get the contracts benefits in their countries that they claim we will be denying them theirs here.

First, some background. As we keep pointing out, the U.S. excluded Buy America (i.e. requiring U.S.-made iron and steel in transit projects administered by the states but with federal funding) from its WTO commitments. What does this mean? Put simply, the way trade agreements are generally structured is to presume total "free trade" and "free markets," but then allow countries to say "except for" in a certain sensitive sectors. Governments with lots of trade lawyers will typically put in lots of so-called "exceptions," or "carve outs," from our trade-pact obligations to generally pursue totally "free markets." Poor nations with few trade lawyers may put in relatively few "exceptions" or "carve outs." (Often, however, the trade agreements are so complicated that the simple dichotomy doesn't hold: a few years back, the U.S. lost a WTO case brought by the Caribbean island of Antigua against our Internet gambling ban because the U.S. didn't realize it had failed to "exclude" or "carve out" gambling from our WTO commitments.)

So, translated out of trade law language, the iron and steel provisions of the Buy America Act, in effect since 1982, are perfectly compliant with the WTO. The WTO knows that we have these policies on the books, and is not complaining. (Okay, not too loudly.) More importantly, they're nothing new. I'll say it again: the stimulus package is not a change from current U.S. practice, and is perfectly consistent with our WTO commitments.

But as we show in a forthcoming memo, the EU and Canada do not take their own medicine. They wisely excluded considerably broader swaths of their procurement activity from WTO rules (and in the case of Canada, also from NAFTA) than did the United States, and thus have no obligation to provide U.S. firms products with access to preferential treatment under a wide array of their government contracts.

While the United States (only) safeguards its preferences for domestic iron and steel used in federally funded state transportation projects, Canada simply carves out steel, motor vehicles and coal altogether (for all provinces, for all sectors), and also carves out all construction contracts issued by the Department of Transport. The EU carved out of its WTO procurement obligations all EU members’ country contracts awarded by federal governments and subfederal governments in connection with activities in the fields of drinking water, energy, transport or telecommunications. (On the links, just click on Appendix I, Annexes I-II, and the general notes. Some bits will be easy to read, other bits less so.)

Translated out of trade lingo, under their WTO obligations, both Canada and EU reserve the right to give their nations' companies products much more generous preferences than Congress is even considering giving ours. While current U.S. laws (merely extended in the stimulus bill) give U.S. iron and steel a leg up over the foreign competition for transit projects, Canada and the EU 's WTO commitments allow them to give their firms products a leg up over American companies and products on EVERY aspect of transit funding, and many other government purchases besides.

And, we’re not criticizing them for it: why SHOULD decisions by democratically elected parliaments about how to best spend tax dollars on domestic infrastructure be subject to constraints imposed by international trade agreements? There is no “protectionism” at issue here. But, it is certainly hypocrisy -- and perhaps a bit of opportunism -- on the part of Ottawa and Brussels.

[UPDATE: In my effort to speak English rather than trade-law-ese, I got a bit sloppy with some terminology. The Buy America/n preferences refer to the products, not the companies. So, if a Canadian firm wants to make steel in the U.S., that steel could get preferential treatment. Yet another way these rules are not protectionist, but instead about job creation.]

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Gap Between Dems and Corporate "Dem" Think-tanks Grows

The folks over at Third Way - a corporate-backed "think"-tank that claims to be aligned with the Democrats - have put out an anti-Buy America "memo."

Besides raising the tired bogeyman of foreign retaliation and the misleading claims about WTO compatibility, they propose providing "a bonus R&D tax credit that significantly rewards companies based on the percentage of their manufacturing and production that occurs in the United States. This would entice companies to conduct research here and produce here. It would not violate international laws."

Not a bad idea, but unfortunately the Bush administration has pushed to expand the WTO coverage of U.S. R&D measures, which could limit our policy space in this area and something that the Obama administration must act on to reverse.

Third Way also proposes decreasing the taxes that multinationals have to pay on their profits earned overseas. While the group claims that this would entice the big boys to generate U.S. jobs, a comprehensive Congressional Research Service analysis found that the opposite occurred when the same policy was enacted for a year in 2005-06. According to the Washington Post:

A more recent analysis in January by the nonpartisan Congressional Research Service looked at 12 companies that returned significant sums to the United States. Of those companies, at least eight had cut jobs by 2006. Pfizer, for example, received a significant tax break on $37 billion returned to the United States -- more than double the amount returned by any other company -- but cut 10,000 jobs in 2005, according to the CRS report.

"Empirical analyses of the stimulative effects of the repatriation provisions . . . suggests a limited stimulative impact from the provisions," the report says. "They conclude that much of the repatriated earnings were used for cash-flow purposes and little evidence exists that new investment was spurred."

Meanwhile, the nonpartisan Joint Committee on Taxation estimates that the tax holiday produced an initial flood of cash in 2005, increasing tax collections by $2.8 billion. But because some of that money would have been returned to the United States anyway -- and at a much higher tax rate -- congressional tax analysts predict that the 2004 holiday will cost the government $3.3 billion in lost revenue by 2014.

"Uncle Sam missed out on billions in needed tax revenues," Levin said yesterday. "Such tax holidays not only reduce U.S. tax revenue in the long run, but create new incentives for U.S. multinationals to send more jobs, funds and facilities offshore."

I got a chance to look at the report, and here's what the CRS said about the 2005-06 program, citing IRS statistics:

The benefits of the repatriation provision are not evenly spread across industries. The pharmaceutical and medicine industry accounted for $99 billion in repatriations or 32% of the total. The computer and electronic equipment industry accounted for $58 billion or 18% of the total. Thus these two industries accounted for half of the repatriations. Most of the dividends were repatriated from low tax countries or tax havens.

The benefits were also highly concentrated in a few firms. According to a recent study, five firms (Pfizer, Merck, Hewlett-Packard, Johnson & Johnson, and IBM) are responsible for $88 billion, over a quarter (28%) of total repatriations. The top 10 firms (adding Schering-Plough, Du Pont, Bristol-Myers Squibb, Eli Lilly, and PepsiCo) accounted for 42%. The top 15 (adding Procter and Gamble, Intel, Coca-Cola, Altria, and Motorola) accounted for over half (52%).

At least Third Way proposes putting some conditions on the multinational tax cut. But their overall take on Buy America is out of step with the party. As Inside U.S. Trade reported today,

House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) warned today (Feb. 4) in a House Steel Caucus meeting that he would actively work against the passage of the stimulus package if the “Buy America” provisions are removed.

“If it's not in, I'm against this package. Can I be any clearer than that? If it's not in, I'm not supporting it and I'm bringing a lot of votes with me,” he said. “We can't have any of this fluff about being nicey-nicey on foreign trade at time when we're trying to create jobs at home and to have foreign steel come in here and undercut U.S. jobs? No way, not with my help.”

In short, while Dems are running government thanks to a fair-trade platform, the Corporate "Dem" think-tanks are spouting the same old snake oil that got us into this economic mess.

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Double Standards for Banks and Builders

In 2008, Congress passed sweeping bailout legislation for the white-collar financial sector, but failed to take comparable action for the blue-collar manufacturing sector.

As Steelworkers President Leo Gerard said, "The message here could not be more clear: Washington will bailout out those who shower before work but not those who shower afterwards."

Fast forward to 2009. Scare stories on Buy America are being ginned up by a perverse alliance of corporations (who want to deflect attention from the fact that they offshore U.S. jobs) and pro-corporate foreign governments (who want to deflect attention from the fact that they do not allow U.S.-made iron and steel in THEIR countries' transit and procurement projects, as we show in a forthcoming memo.)

That's right: a Buy America provision that affects a tiny fraction of stimulus spending and national income is being used as a pretext to make all sorts of threats: that it violates U.S. trade commitments (it doesn't), that it's some sort of radically new policy (it isn't); and that this offends other nations (news flash: Canadians want job programs just as much as we do).

But where was this perverse alliance when the U.S. financial bailout was going through? As a new document from the WTO shows, the Bush administration's approach to the financial crisis was much more nationalistic than many of our top trading partners. While most nations opened up their financial sector reforms to subsidiaries of foreign companies, the U.S. TARP and other programs are (in practice) geared almost exclusively to domestically owned banks.* (Not to mention that the Bush administration jacked up tariffs on French Roquefort cheese to 300%.)

Where were the cries of trade war then? I think Scott Sinclair, the Canadian writer, had it right when he said:

"As far as I can tell," he says, "the provision included in the stimulus package will not violate U.S. international treaty obligations." ,,,"I think they want to knock Obama off balance and gain influence over his trade policy from the outset," said Sinclair.

The Senate now faces tremendous corporate pressure to weaken the Buy America provisions of the stimulus bill. As I told the Dayton Daily News,  "We need to use all the tools that are available to help put people back to work... This is one of those tools."

Use this link to contact your senators today, and let them know you support Buy America!

(*If you know different, please let me know!)

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Broken Promises from Buy America Opponents

Back in 1992, economist Gary Hufbauer of the Peterson Institute for International Economics famously predicted that NAFTA would create 170,000 new jobs, because the U.S. would be running a $9 billion trade surplus with Mexico.

But, as we know, our Mexican trade surplus instead turned into a raging deficit, now at $91 billion, accounting for an estimated 1 million lost manufacturing jobs.

By 1995, when we were already running a $23 billion deficit with Mexico, Hufbauer famously told Bob Davis at the Wall Street Journal that, "The lesson to me is that I should stay away from job forecasting." (Bob Davis, "Free Trade is Headed for More Debate," WSJ, 4/17/95.)

Unfortunately, Hufbauer has broken his occupational promises like they were so many NAFTA job-creation promises. And while economists like to preach that blue collar workers should lose their jobs when they screw up, there is no such accountability for the neoclassicals.

In a new paper for Peterson, Hufbauer and colleague Jeffrey Schott estimate that the Buy America provisions of the stimulus package would create 1,000 to 1,900 jobs, but destroy 6,500 to 65,000 jobs due to foreign retaliation. While the job creation estimates are based on something approaching a sound methodology, the job destruction estimates are pulled out of a hat, and retaliation is simply assumed.

But as we pointed out this morning, the rumors of retaliation are part of a joint scare campaign by right-wing governments and corporations that have offshored U.S. jobs. For the right-wing Canadian administration in particular, this is a continuation of their attacks on Obama that began in the Ohio primaries.

But the allegations of trade-law violations are misleading, as Hufbauer and Schott at least have the decency to point out:

While US commitments under the [World Trade Organization's Government Procurement Agreement] cover many federal government entities and 37 states, the proponents of Buy American provisions argue that a large portion of the projects funded by the stimulus bills are not covered in the GPA. For example, there is a general exclusion for federal funds destined for mass transit and highway projects. Moreover, many of the 37 states that acceded to the GPA also reserved sensitive procurement areas, such as motor vehicles, construction-grade steel, and construction services... [emphasis added]

Existing laws already provide Buy American preferences for much of the public procurement authorized in the stimulus bill...

Of course the bigger question continues to be why political leaders signed up government procurement rules – a quintessential, non-trade domestic issue – to comply with so-called “trade” agreements in the first place. It's clear that, going forward, these rules need to be changed. But the immediate task is to put America back to work.

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Roquefort trade war, Stimulus Buy America Brouhaha Shows WTO Model Broken

By Lori Wallach and Todd Tucker*

Two developments this week provided further illustration that the current NAFTA-WTO model of trade and globalization is fundamentally flawed.

Exhibit A: One of the most contentious issues surrounding the congressional debate on the massive stimulus bill designed to jump start the sinking U.S. economy was… a provision on “Buy America” rules for iron and steel in public works projects?! Opponents of the measure – which include some of the nation’s leading offshorers of U.S. jobs, such as GE and Caterpillar – decried the plan to invest our tax dollars in the U.S.economy as a declaration of war against “free trade,” and claimed that the measure was WTO-illegal. (As it turns out, on the WTO-legal business, the corporates are lying, as we show here in a detailed memo.)

Exhibit B: The Bush administration, in its final week in office, imposed tariffs of up to 300 percent on French Roquefort cheese, and extended punitive tariffs on truffles, Irish oatmeal, Italian sparkling water and foie gras. The reason? In the 1990s, the Europe Union (EU) had banned the use of artificial hormones for raising beef in response to health concerns. The Clinton administration, at the urging of giant agribusiness companies, challenged this measure at the WTO because it not only banned the chemicals’ use by European farmers, but banned imports of artificial-hormone-raised beef. A WTO tribunal ordered the EU to allow in the U.S. beef, and when EU officials, under threat of a massive consumer revolt, refused, the WTO authorized the U.S. to impose retaliatory sanctions. (Canada also sought and received similar authorization.)

When a country’s state, local or national policy is ruled against at the WTO, federal authorities are required to take all available steps to force a change in the law – otherwise, they risk facing perpetual trade sanctions. It’s a fairly powerful system: in the nearly 15-year history of the WTO, countries have always watered down or eliminated the challenged laws, including in the cases brought against U.S. laws (which we’ve lost nearly 90 percent of, by the way). There’s only been one exception, and that’s the beef-hormone case. The Europeans – in an admirable display of moxie – decided that ensuring consumer safety was their top priority. Although they’ve been paying out their pound of flesh for a decade – at a rate of over $120 million per year since 1999 – the Europeans apparently weren’t suffering enough, and Bush upped the cross-sanctions on his way out the door.

++

The larger question raised by these two conflagrations is why political leaders signed up food-safety and government procurement rules – both quintessential, non-trade domestic issues – to comply with so-called “trade” agreements in the first place. A big part of the answer is that they were pushed by companies like GE and Caterpillar and large agribusiness multinationals, who enjoy wild privileges under these pacts that encourage the offshoring of U.S. jobs. Since then, corporations have used the overreaching “trade” agreement rules to attack an array of important non-trade, public-interest policies. The latest installment is the current scare campaign to water down Congress’ response to the economic crisis, and gin up the attack on important food-safety measures abroad.

Nations – not just the U.S., but all nations – should have a right to invest in themselves, spend their tax dollars in the manner deemed best by their democratically elected officials, and pursue other public-interest policies. President Obama and the last two classes of freshmen members of Congress came to office on pledges to overhaul the failed globalization policies of the past, and pursue global integration and cooperation on fairer terms. Let’s hope that they stand their ground: our future prosperity and security depends on it.

*The writers are director and research director, respectively, of Public Citizen’s Global Trade Watch division. They blog at EyesOnTrade.Org. This was originally posted on Huffington Post.

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Sirota on sociopaths and neocolonialists

It was only a matter of time. Anyone who did antisweatshop work in the 1990s knows that there is a mighty resevoir of pro-sweatshop sentiment lurking just beneath the edifice of the anti-Bush Democratic Party. Back when we could all make fun of Bush's word slop, it was pretty easy to forget that these sociopaths exist, and that they walk amongst us. David Sirota dishes the dirt:

Nicholas Kristof's latest New York Times column makes the case that corporate colonialism and human exploitation aren't just not bad, but actually a great virtue that will save the developing world - and that those working to stop such colonialism and exploitation are the root cause of global poverty. I kid you not:

Mr. Obama and the Democrats who favor labor standards in trade agreements mean well, for they intend to fight back at oppressive sweatshops abroad. But while it shocks Americans to hear it, the central challenge in the poorest countries is not that sweatshops exploit too many people, but that they don't exploit enough...

I'm glad that many Americans are repulsed by the idea of importing products made by barely paid, barely legal workers in dangerous factories. Yet sweatshops are only a symptom of poverty, not a cause, and banning them closes off one route out of poverty...

When I defend sweatshops, people always ask me: But would you want to work in a sweatshop? No, of course not. But I would want even less to pull a rickshaw. In the hierarchy of jobs in poor countries, sweltering at a sewing machine isn't the bottom.

This is quite literally the argument of a sociopath - and the problem is that sociopathy is so prevalent in discussions about trade and globalization that we barely even notice it anymore.

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Offshoring of Child Care Reaches New Heights

The Onion gives satirical coverage to the offshoring of health care debate. (HT to Ben Muse.)

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Rep. Michael Capuano Co-Sponsors T.R.A.D.E. Bill

I wanted to share this note that came from some union members in Massachusetts after an in-district meeting they had with Rep. Michael Capuano (D-Mass.) about the T.R.A.D.E Act. Rep. Capuano's co-sponsorship of the bill brings us to 71 co-sponsors in the House of Representatives!

A hearty thanks to Rep. Capuano for standing with working people and to Rand Wilson, Joe Powers and the others who helped to make this meeting happen. Here's their note:

Capuano_meeting

Rep. Michael Capuano co-sponsors T.R.A.D.E. bill

A small delegation of union members recently met with Rep. Mike Capuano to discuss the merits of the "Trade Reform, Accountability, Development and Employment Act" (T.R.A.D.E.) / House Bill 6180, and the impact of trade and investment treaties on our congressional district.  Picture of the group is attached.

The U.S. trade deficit is greater than ever and hundreds of thousands of family-supporting jobs have been destroyed (many right here in the 8th District of Massachusetts), yet President Bush and many in Congress want more trade as usual. 

It is time for the United States to bring its trade policy in-line with economic reality and our values; the TRADE Act provides just such an opportunity.  For more info and action steps, visit http://www.citizenstrade.org/tradeact.php

Representative Capuano agreed that we need a new model for U.S. trade policy and he will now be a co-sponsor of the bill.

Hats off to Joe Power of Carpenters Local 40 for arranging the meeting with Rep. Capuano!

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Corporate America Wins with Trade!

This is quite the impressive jam by the Oregon Fair Trade Campaign (ORFTC)...

They do a great job of cutting straight to the heart of the the Consumer Electronics Association's silly-ness. US exports grow faster on average with countries when we have no NAFTA-style trade pact. The Colombia FTA can do nothing but wreak more havoc on the US economy and job market. We've already lost more than 3 million good manufacturing jobs since NAFTA, with the electronics industry itself having dealt its fair share of pink-slips. Now they go around highlighting the few jobs their members have not yet sent overseas as a reason to keep paving the way for them by passing unfair trade deals! Do they really expect a "thank you" from the American worker?

The truth is that the Fat Cat CEOs who stand to gain from FTAs would simply love another round of trade deals to make sure they can ship out the rest of the jobs wherever they please, whenever they please. As long as they can escape progressive, pro-worker regulation that ensures shared prosperity and sustainability, they'll be supporting any and every trade deal, no matter how horrendous the abuses of the regimes themselves or the abuses of their paramilitary allies.

Hats off to the Oregon Fair Trade Campaign for this one. World-class spoofing, indeed! My favorite is the part where they slam the bus as being too "low-brow" a mode of transport. Kudos.

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Trade battles on the big screen at national conventions

If the presumptive presidential contenders and their advisors have still not figured out - ahem - the political costs of surrendering to so-called "free trade" policies of the NAFTA/WTO variety against the interest of, well, almost everybody, they might be surprised to find some people getting a little riled up about the issue at convention time: delegates to both the Democratic National Convention (August 25-28 in Denver) and the Republican National Convention (September 1-4 in St Paul) will be treated to a "sneak peak" viewing of the latest Hollywood indie extravaganza...

Stuart Townsend's Battle in Seattle won't open for another month for the rest of us (September 19th and 26th in select cities across the country), but thanks to the folks behind the Impact Film Festival, convention delegates will get an inspiring (and timely) look-in on a rocking film set in Seattle during the WTO protests.

With a star-studded cast (Charlize Theron, Woody Harrelson, Andre-3000, Ray Liotta, Michelle Rodriguez and more), everyone will want to see the story of the 5-day uprising that forced the collapse of the WTO's 1999 Seattle ministerial. The film is sort of like Crash, following the lives of twelve characters during those historic days. Woody plays a cop – no kidding. So does Tatum Channing. Andre Henderson and Michelle Rodriquez are protestors. One of the most powerful "people's" moments in recent U.S. history never looked so beautiful.

Maybe a trip down that particular 'memory lane', to the days when more than 50,000 union members (voters!), environmentalists (also voters!), students (read: youth voters!) and more converged in Seattle to speak truth to power in the face of the world's biggest corporations - and their Washington DC pundits - will keep the politicians just a little more honest when they talk about the looming trade issues of our time?

For the rest of us, now is the time to start booking those advance tickets for the Battle in Seattle showings closer to home. The film will be opening:

  • September 19:   New York, San Francisco and Seattle (of course!)
  • September 26:   Atlanta, Boston, Chicago, Detroit, Los Angeles, Minneapolis, Sacramento and Washington, DC.                        

Groups of 25 or more receive discount tickets. To find a theater near you call 866-758-1258 or visit www.battleinseattlemovie.com/labor

To organize an event around the film's release, contact Michael Crawford at 202-546-4996 or mcrawford@citizen.org

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Latest Bush Move on NAFTA Trucks

See our latest statement here.

Bush Administration Defies Congress, Extends Dangerous Cross-Border Truck Pilot Project for Two More Years

Statement of Lena Pons, Policy Analyst, Public Citizen

In announcing today that it would extend its cross-border trucking pilot project for two more years, the Bush administration continues to flout Congress at the expense of highway safety. This is the latest of many moves by the administration to give Mexico-domiciled carriers operating authority in the United States beyond a limited border zone despite lawmakers’ clear instructions to the contrary.

More at the link.

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No Gold Medal for U.S.-China Trade

Just in time for the Beijing Olympics, Rob Scott from the Economic Policy Institute put out a great paper that updates his numbers on how many jobs could have been supported with balanced China trade.

He figures that an additional 2.3 million jobs could have been supported, and he also looks at some of the wage effects of this trade imbalance: 

Because U.S. exports to China are much more commodity intensive (i.e., comprising products such as grains, steel scrap, and paper scrap) than Chinese imports (99% of which are manufactured products), average wages earned in jobs producing U.S. exports to China paid 4.4% less than the jobs displaced by imports from China. More than one-fourth of U.S. exports to China on a value basis were commodities.

His paper was released with the fine folks over at the Alliance for American Manufacturing.

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Gown joins town in resisting corporate glob

Greg Ip from the Wall Street Journal publishes an interesting finding:

In 1997, 58% of college graduates said globalization had been good for the U.S. while 30% said it had been bad, according to a poll conducted for the Wall Street Journal and NBC News. When the poll asked a similar question this past March, opinion had flipped: 47% of graduates thought globalization was bad and just 33% thought it was good. Respondents with high school educations started out negative on globalization and have become more so...

“The political impact is potentially quite important because it’s just not clear where support for engagement with the world economy is going to come from, if not from college-educated workers,” says Kenneth Scheve, a political scientist at Yale University who studies such attitudes.

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Calling it by its name

Judith Warner of the New York Times blogs a little bit more about the horrific double standard in the way we approach gender and work issues, and the JEC's new report:

This week, Congress issued a report, [that] states categorically that mothers are not leaving the workforce to stay home with their kids. They’re being forced out...

Men, of course, were hit hard by the recession and weak recovery, too; in fact, as Louis Uchitelle of the Times reported earlier this week, the workforce participation rates of men aged 25 through 54 have dropped from 96 percent in 1953 to 86.4 percent today.

But when men in their prime working years drop out of the workforce we don’t say they’ve gone home to be with their kids.

We say they’re unemployed.

The distinction is truly meaningful beyond the neat way it encapsulates our inability to separate ideology from fact when it comes to thinking about mothers and their much-vaunted “choices.” Unemployed people, after all, are entitled to benefits. As a society, we tend to think it’s incumbent upon us to get them working again — for their own good, individually, for the good of their families, and for our collective welfare. Politicians promise to retrain them. Devise policies to retain them. The unemployed still fall under the ever-retracting umbrella of people we consider, to some extent, to be worthy of our care.

Mothers, with their glorious array of post-feminist lifestyle options, have long been seen as something else. They’re individuals, making choices, responsible for the fallout of those choices even if, in point of fact, those choices were made for them by a weak economy, the unaffordability of child care or an inflexible workplace. They don’t need “government handouts” like quality child care, flextime, sick days, family leave and top-notch afterschool programs, because they’ve made their proud choices and, by golly (unless they’re whiners), they’re going to go it alone.

I’m so glad that, at long last, this fiction has been officially acknowledged.

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U.S. State Legislatures Slam Colombia FTA – Again

The pro-Colombia FTA forces are getting more and more desperate. Yesterday they tried again to sneak through a resolution at the National Conference of State Legislatures that already got slammed 3 months ago in the same forum. What gives? Well, this time the reaction against their efforts was so strong that it got shot down on a voice vote that made the prospect of a vote tally embarrassing.

Read the full story on our press release, after the jump.

Continue reading "U.S. State Legislatures Slam Colombia FTA – Again" »

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Offshoring: It's Not (Just) A Dude Thing

Offshoring, downsizing, rightsizing... mention these words, and the image that pops in most people's heads is a hefty Midwestern man grumbling about his economic problems and then voting Republican.

But Lou Uchitelle has a piece today entitled "Women Are Now Equal as Victims of Poor Economy" that shows this view to be fatally flawed:

After moving into virtually every occupation, women are being afflicted on a large scale by the same troubles as men: downturns, layoffs, outsourcing, stagnant wages or the discouraging prospect of an outright pay cut...

Hard times in manufacturing certainly sidelined Tootie Samson of Baxter, Iowa. Nine months after she lost her job on a factory assembly line, Ms. Samson, 48, is still not working. She could be. Jobs that pay $8 or $9 an hour are easy enough to land, she says. But like the men with whom she worked at the Maytag washing machine factory, now closed, near her home, she resists going back to work at less than half her old wage...

The Joint Economic Committee study cites the growing statistical evidence that women are leaving the work force “on par with men,” and the potentially disastrous consequences for families.

“Women bring home about one-third of family income,” said Carolyn Maloney, Democrat of New York and vice chairman of the Joint Economic Committee. “And only those families with a working wife have seen real improvement in their living standards.”

Remember all the wage stagnation that we talk about on this blog? Well, what Maloney is saying is that the only reason there's not rioting in the streets is because BOTH parents are now working for low pay. Mix this with the Alan Greenspan admission that American paychecks only look good when seen through the flood of imported cheap plastic gadgets, and if you get drunk enough after your third shift, you might almost think your living standards are rising.

It's pretty rare in this town that Congress would be on the vanguard of a scarcely examined idea (even one that affects large numbers of Americans). And official feminism doesn't tend to focus on these working-class issues. Fifty years from now, when we're looking back on how America developed a comprehensive approach to class and gender issues, Maloney's report will register as one of the foundational steps: admitting that there's a problem, and one that's not going to go away by just putting a few rich women in high-paying positions and pretending like that's a victory for the movement.

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Who will play that funky music in our electoral future?

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

We don't get into election analysis here beyond the trade issue. But a couple of months ago, my hometown pride swelled as the extra long primary season took candidates into parts of the country like my home Kentucky that rarely figure into national politics.

That was a few months ago. Given the way things have turned out in Appalachian states, however, I now hear the daily quips about from East Coast "liberal" friends, acquaintances and "fr-enemies" that range B00000drbv01lzzzzzzz_2 from ridicule to vitriol about the "backwater's" 15 minutes of fame. There has been a "discovery of the other among us" - the white working class (WWC) - as I get to hear any number of jokes about incest and hicks. Some politicos are choosing to pathologize the WWC, while some suggest than even the whiteys know not the full depth of backwardness that is within them. (And, btw, all the candidates need to leave the amateur sociology to the pros.)

Some of the more sophisticated analysts have taken to asking whether the WWC is even needed for electoral purposes anymore. Alan Abramowitz and Ruy Teixeira have written a paper entitled "The Decline of the White Working Class and the Rise of a Mass Upper Middle Class." This is a useful companion piece to Ruy's 2000 book with Joel Rogers entitled "America's Forgotten Majority: Why the White Working Class Still Matters." They look at the work of Larry Bartels and Thomas Frank, and offer some commentary on an emerging GOP strategy to attract WWC voters authored by Ross Douthat and Reihan Salam. Among the main findings of the more recent paper:

Continue reading "Who will play that funky music in our electoral future?" »

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Oregonians Bring The Pain to the Death Squads

The Oregon Fair Trade Campaign rallies outside of the office of Rep. Darlene Hooley (D-Ore.), who has yet to take a position the Death Free Trade Agreement (aka Colombia FTA).

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How to break a strike

Advocates of NAFTA argued that they pact would help keep consumer prices low and move the economy towards a more efficient allocation of resources. Just one serious drawback: such permanent tariff reductions remove political uncertainty from firms' cost-benefit calculation. Put differently, the price attached to risk was reduced. And manipulating risk levels is one of the few weapons that the working class has to gain concessions from the rich: think strikes, for instance.      

When firms can be certain that they will never have to pay tariffs on the reimportation of their products produced offshore, strikes matter a wee bit less, as this story over the weekend from the NYT summed up:

The auto industry’s longest strike in more than 40 years, a walkout at a parts supplier that disrupted production at 32 General Motors plants, will end within days if the picketing workers ratify a tentative agreement reached late Friday with their employer, American Axle and Manufacturing....

People involved in the negotiations have said they expect the agreement to call for closing two or three plants, offering buyouts worth as much as $140,000, and drastically reducing the wages and benefits of workers who remain with the company...

American Axle has said it needs to cut wages nearly in half, from about $28 an hour to as little as $14, to remain competitive with rivals that have squeezed similar concessions from the U.A.W. During the strike, the company threatened to permanently close the plants where workers were picketing and shift work to Mexico instead.

This is capping off nearly 15 years of NAFTA being used to break labor's back. Our friend Kate Bronfenbrenner did a study for the North American Commission on Labor Cooperation showing that after passage of NAFTA, as many as 62 percent of U.S. union drives faced employer threats to relocate abroad, and the factory shut-down rate following successful union certifications tripled. Such defeats provide the institutional backdrop to a generation of wage stagnation and corporate takeover of government.

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Redundant trade, Larry Summers, NAFTA

This piece in the Times featured an issue that we will be doing a report on soon: redundant trade.

Cod caught off Norway is shipped to China to be turned into filets, then shipped back to Norway for sale. Argentine lemons fill supermarket shelves on the Citrus Coast of Spain, as local lemons rot on the ground. Half of Europe’s peas are grown and packaged in Kenya...

Increasingly efficient global transport networks make it practical to bring food before it spoils from distant places where labor costs are lower. And the penetration of mega-markets in nations from China to Mexico with supply and distribution chains that gird the globe — like Wal-Mart, Carrefour and Tesco — has accelerated the trend.

But the movable feast comes at a cost: pollution — especially carbon dioxide, the main global warming gas — from transporting the food.

Under longstanding trade agreements, fuel for international freight carried by sea and air is not taxed. Now, many economists, environmental advocates and politicians say it is time to make shippers and shoppers pay for the pollution, through taxes or other measures.

“We’re shifting goods around the world in a way that looks really bizarre,” said Paul Watkiss, an Oxford University economist who wrote a recent European Union report on food imports.

He noted that Britain, for example, imports — and exports — 15,000 tons of waffles a year, and similarly exchanges 20 tons of bottled water with Australia. More important, Mr. Watkiss said, “we are not paying the environmental cost of all that travel.”

Larry Summers had a must-read piece in the FT:

growth in the global economy encourages the development of stateless elites whose allegiance is to global economic success and their own prosperity rather than the interests of the nation where they are headquartered. As one prominent chief executive put it in Davos this year: “We will be fine however America does but I hope for its sake that it will cut taxes and reduce regulation and put more pressure on young people to study in the ways that are necessary for it to be able to keep competing successfully.”

The chief executive was sincere and he captured an important truth. Even as globalisation increases inequality and insecurity, it is constantly and often legitimately invoked as an argument against the viability of progressive taxation, support for labour unions, strong regulation and substantial production of public goods that mitigate its adverse impacts.

In a world where Americans can legitimately doubt whether the success of the global economy is good for them, it will be increasingly difficult to mobilise support for economic internationalism.

And Lori makes a point in the WSJ that a lotta folks have been missing:

Regardless of the ebb and flow of concern over free trade, some globalization critics say the dangers to the accord are real.

Next year's North American summit would be "an opportune time for a President Obama or a President Clinton to follow through on their pledge to renegotiate," said Lori Wallach, director of Public Citizen's Global Trade Watch division. She said either leader would be "under enormous pressure to make some changes in those agreements," in part because of the potential impact on domestic-policy priorities such as addressing climate change or the health-care crisis.

"The real issue that could threaten [Nafta] isn't politics, but the agreement's actual outcomes," not just for workers in the U.S. but also in Mexico in particular, she said. "People don't have a problem with trade -- it's this version of the rules."

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Behind the Fast Track Death

I am heading out of town for a week or so for Passover, but here's one last post before I go. Our friends from Human Rights Watch have an excellent post over at the Hill:

Congress is right to delay consideration of the US-Colombia Free Trade Agreement (FTA). What’s at stake here is a fundamental principle: that free trade should be premised on respect for human rights, especially the rights of the workers producing the goods to be traded.

Colombian workers cannot exercise their rights without fear of being killed. Just in the first three months of this year, 17 Colombian trade unionists have been assassinated—a substantial increase over the 10 killed in the same period last year.

Dan Wolfensberger writes in Roll Call:

Pelosi, however, is the first Speaker in the history of the 34-year-old statute to ask the Rules Committee (with House approval) to suspend the expedited timetable for consideration. The House handily endorsed her gambit Thursday, 224-195.

Just as it is unlikely that Congress will grant Bush his requested renewal of fast-track negotiating authority so late in his term, it is even more difficult to imagine a Democratic president even asking for it... It is also highly unlikely that the next Congress, which is likely to contain an even larger Democratic majority in both chambers, will grant whomever is president such authority. All this poses a new challenge to both branches of how to reconfigure our trade relations and processes over the next four to eight years...

The Politico gives the inside scoop on Fast Track death:

Democrats broke more than three decades of precedent by changing trade rules to suspend consideration of the deal. But they also displayed a procedural acumen that was less evident during their first, sometimes bumpy, year in power...

McGovern and other Democrats on the Rules Committee began discussing the possibility of stripping the time requirements from trade rules as early as January, members and aides said.

Those conversations were hypothetical, however, until the White House began to make noise about sending the Colombia agreement to Capitol Hill before Pelosi signed off on it. That prompted McGovern and Rules Committee Chairwoman Louise McIntosh Slaughter (D-N.Y.) to call for a meeting with the speaker.

Slaughter and McGovern oppose the trade deal for different reasons. The Massachusetts Democrat believes Colombia has not gone far enough to rectify its history of violence toward labor leaders.

Slaughter, meanwhile, opposes the measure because she believes it would deal another blow to her upstate New York district, which already suffers from the steady export of jobs.

Both opposed any maneuvering by Bush to force a vote, and both believed that stripping the time requirements was the best way to stop the president in his tracks.

And we got some feedback on a post from earlier this week on Fast Track, and just wanted to point out that Pelosi's action to cancel Fast Track virtually guarantees that the Senate will also not take action.

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Office Park Jobs At Risk in Pennsylvania and What the Candidates Will Do About It

David Brooks asks the candidates in the New York Times:

Aren’t there windows in the vans they use to drive around the state? Don’t they see that most middle-class voters are service workers in suburban office parks, not 1930s-style proletarians in the steel mills?

Interestingly enough, a new analysis finds that it's not just Blue Collar jobs that are at risk anymore, but more than 286,000 Pennsylvania jobs (that's right, we're just talking about Pennsylvania) are highly susceptible to being offshored in the near future - from mathematicians to architectural drafters to editors and writers. Suburban workers, that's right, we're talking about your jobs!

But Brooks also says that many solutions currently offered by the candidates won't have an economic impact - and he's partially right. Without specifics, what will this set of trade-talking candidates actually do when they get to the White House? That's why groups like ours have been calling on the candidates to make real commitments to overhaul our failed NAFTA-WTO trade policies. You can read their most recent campaign commitments to Pennsylvanians on trade issues at the Citizens Trade Campaign here.

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Focusing in on the economics and foreign policy

I had a piece on the record of NAFTA in my hometown paper today, the Courier-Journal, which typically (and today was no exception) is a big supporter of NAFTA-style trade deals.

If NAFTA is so rotten, why does Congress keep passing similar deals? The few special interests benefiting from these pacts have armies of lobbyists, give millions in campaign contributions and are shameless scaremongers. Their latest line, for instance, is that expanding NAFTA will counter the influence of Venezuela. In reality, the damage done to most people in our trade partner countries by NAFTA-like policies has been a major factor in breeding anger against the U.S. and support for populism.

Thankfully, the 2006 elections ushered in a freshmen class full of fair traders. The new political reality was on display in last year's vote on a NAFTA expansion to Peru. Reps. John Yarmuth and Ben Chandler joined a majority of Democrats in opposing the deal, which was also opposed by American and Peruvian unions, church leaders and environmental groups. Yet Indiana's Baron Hill and Brad Ellsworth were among the minority of Democrats who caved to corporate pressure and voted for the NAFTA expansion. This is a bad record to have as Sen. Barack Obama and Sen. Hillary Clinton tour Indiana bashing NAFTA and distancing themselves from their own mixed records on trade.

There are some other great pieces out there circulating now too. Kevin Gallagher has a great piece looking at the economic impact of the deal:

The U.S.-Colombia Free Trade deal is one of the most deeply flawed trade pacts in U.S. history. It will hardly make a dent in the U.S. economy, looks to make the Colombian economy worse off and accentuate a labor and environmental crisis in Colombia. The Democratic majority in Congress is right to oppose this agreement and call for a rethinking of U.S. trade policy.    

According to new estimates by the United Nations Economic Commission for Latin America, the net benefits of the agreement to the U.S. will be a miniscule 0.0000472 percent of GDP or a one-time increase in the level of each American's income by just over one penny. The agreement will actually will make Colombia worse off by up to $75 million or one tenth of one percent of its GDP; losses to Colombia's textiles, apparel, food and heavy manufacturing industries, as they face new competition from U.S. import, will outweigh the gains in Colombian petroleum, mining, and other export sectors, it concludes.

Adam Isacson has an interesting piece tackling the national security argument for the Colombia FTA:

Dealing a blow to small-scale producers in places like Cauca, Nariño, or Putumayo could damage the livelihoods of thousands of farmers who, as it is, are just getting by. It could add to the ranks of rural dwellers who see no other option but to plant coca. It could add to the population of young rural Colombians susceptible to recruitment by guerrillas or "emerging" paramilitary groups.

In the absence of a "Marshall Plan" for Colombia's countryside—which is not forthcoming—the FTA could deal an economic shock to zones that, while sparsely populated, are of central importance to the effort to combat armed groups and the drug trade. Rather than making the Andes safer, the FTA could trigger a more immediate national-security threat.

In other news, support for the free market system is dropping in the US and around the world, according to a new poll from PIPA. Finally, Policy Matters Ohio has a great report out calling for an industrial policy for "green" and "blue"-friendly lightbulbs.

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Bitter fallout, murders, dodges, rules, deals

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

Following Obama's "bitter" comment, most progressives are rallying to his defense: see Sirota here, Jane Smiley here, and Katrina vanden Heuvel here. A lot of progressives I know think that Obama was just channeling Thomas Frank. I dunno, I read the comment as throwing Frank in with the Kansans, and dismissing both. After all, trade criticism was listed right along religion as a seeming opiate of the masses. It seems, however, from yesterday's news cycle that Obama did not intend to send this message. Obama now says:

“Obviously, if I worded things in a way that made people offended, I deeply regret that,” Obama said in a phone interview with the Winston-Salem Journal. “But the underlying truth of what I said remains, which is simply that people who have seen their way of life upended because of economic distress are frustrated and rightfully so.”

On the right, Bill Kristol, no NAFTA opponent, writes in the NYT on the Obama bitter remark:

Obama ascribes their anti-trade sentiment to economic frustration — as if there are no respectable arguments against more free-trade agreements. This is particularly cynical, since he himself has been making those arguments, exploiting and fanning this sentiment that he decries. Aren’t we then entitled to assume Obama’s opposition to Nafta and the Colombian trade pact is merely cynical pandering to frustrated Americans?

But mostly, all was quiet on the trade angle of Obama's remarks from the corporatists, who love to use the Guns-God-Gays wedge issues while also pushing failed trade policies.

In other news, BoRev shows video showing Hillary unwilling to answer questions about her husband's ties to Colombia.

Simon Romero writes on the union killings in Colombia, showing that Citigroup employees are among the unionists targeted for murder just this year - which has seen an uptick of killings relative to 2007:

The case of Leonidas Gómez, Ms. Gómez’s brother, is one of several examples of union officials killed in recent weeks who were involved in organizing rare protest marches last month against paramilitaries. Government investigators here said they were investigating all the recent killings but had not yet identified those responsible.

Carlos Burbano was a vice president in the hospital workers’ union of the municipality of San Vicente del Caguán in southern Colombia who disappeared March 9. His body was found four days later in a garbage dump in an area considered paramilitary territory. Mr. Burbano, who had received threats before from paramilitaries, had been stabbed multiple times and burned with acid.

Like Mr. Burbano, Mr. Gómez, a member of the Bank Workers’ Union here in Bogotá, was an outspoken critic of the paramilitaries. He had also traveled throughout Colombia to speak against the trade deal, which he expected to raise salaries of senior Citigroup executives while eroding the benefits of employees, said Luis Humberto Ortiz, a fellow union official and Citigroup employee.

Mr. Gómez, last seen at a meeting with leftist politicians on the night of March 4, was found dead in his apartment on March 8, with stab wounds and his hands tied behind his back. Missing from his apartment were his laptop computer, U.S.B memory sticks and cash from his pockets, said his sister, Ms. Gómez.

Inside U.S. Trade on Friday had some interesting dissection of what Pelosi's Fast Track move last week means. Here is my paraphrasing of their reporting:

  1. Pelosi - confirmed by Rules Cmte and House vote - removed the Fast Track timeline, as well as the provision that it is highly privileged and cannot be debated. This safeguards against the scenario where Rangel passes it out of Ways and Means Committee but Pelosi remains opposed. It also safeguards against any member of Congress calling for a vote when they want. So leadership will be in control.
  2. The Colombia FTA is still not amendable, however, and the Senate rules remain the same: once the House sends it up, the FTA has up to 15 days in Finance Committee, and up to 15 additional days for a floor vote.
  3. However, if the Senate wants, it can vote under Fast Track rules today, but then would have to formally approve it again after the House sends it up. (This happened on CAFTA, when the Senate GOP leadership just wanted to get some momentum going by passing the pact before the House, and then taking a second vote later.)
  4. Because Bush has already dropped the Colombia FTA, it will have to be voted on this Congress, or it dies. Next year, if the president wanted to resubmit it, they could, but it wouldn't automatically receive Fast Track treatment. A new Fast Track vote would have to be taken if they wanted that to apply. Ed. comment: I'm betting we see Fast Track replaced by a different system, so I wouldn't expect any new Fast Track votes.

Finally, IUT cites an April 4 letter from Rice, Paulson and various cabinet secretaries to Pelosi saying that:

In seeking to identify an agreed path forward for the Colombia FTA, the Administration’s efforts have been guided by three objectives you identified in conversations with several of us that need to be met before the Colombia FTA would have the necessary support to pass the House of Representatives. They are: (1) a strong, bipartisan vote on legislation to implement our FTA with Peru; (2) a solid Trade Adjustment Assistance (TAA) reauthorization package; and (3) progress on labor violence and impunity in Colombia. As noted above, the first objective was satisfied by the strong bipartisan votes on the Peru FTA last year. [emphasis added]

That's the first time I've seen such clear preconditions on the record. Wonder if they're true?

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Fast Track Death - live blogging

The House is doing an hour of debate on Fast Track for Colombia. I'll try to type the basic things that people are saying, and bracket any editorial remarks.

Rep. Slaughter (D-NY): Fast Track outsources our very basic legislative responsibility. We can alter this rule, and it won't affect the FTA or the Senate's actions in any way. We're on the edge of economic ruin, now is not the appropriate time to bring up a flawed agreement. Damage to workers and Afro Colombians too significant to warrant passage of this bill. It is our preregorative to suspend Fast Track if timing necessitates it. WE ARE REESTABLISHING THE HOUSE OF REP AS CO-EQUAL TO THE PRESIDENT

Rep. David Drier (R-Calif.): I've never seen Democrats align with Hugo Chavez and FARC. We are considering the Hugo Chavez RULE. Process is substance. He's reading the Fast Track rules as evidence that it's a Democratic process. Cites number of codels as upholding democratic principles. This is an unprecedented rule change. They are making up this nonsense as they go along. Venezuela threatens not only Colombia but very idea of democracy and free markets.

Rep. Charles Rangel (D-NY): I doubt that there's anyone who has the concern for Colombia. Not only with their political problems, but also their fight against drugs. Mr. President, you forgot to consult with the Ways and Means Committee. I don't remember the last time anyone has talked about the bill, instead they only want to talk about Chavez and Castro. Suggests some kind of a trade off for urban policing technology.

Rep. Diaz Balart (R-Fla.): This day will live in infamy.

Rep. Jim McGovern (D-Mass.): I'm open minded, but I'm not a cheap date.

Rep. Jim McCrery (R-La.): This bill turns off the timeline entirely.

Rep. Doc Hastings (R-Wash.) [- voted against the Peru FTA, but now is supporting an identical deal for Colombia - where unionists are murdered.]

SORRY. FLAKED. TOO MUCH INTOLERABLE RHETORIC ON BOTH SIDES.

Rep. Peter DeFazio (D-Ore.): So this is a rule from 1974. Guess what? we were the manufacturing collosus of the world. Until today, Congress never had a spine to stand up to the president before. Today is a new beginning.

Rep. Jerry Weller (R-Ill.): [Colombia is safer that Washington, DC. Pretty rich coming from a guy married to Guatemalan death squads.]

Rep. Rahm Emanuel (D-Ill.): Talking about globalization's squeeze on middle class Americans. If people don't win, they'll turn against trade per se.

Rep. Roy Blunt (R-Mo.): We didn't have FTAs before Fast Track.

Rep. Kevin Brady (R-Texas): [Calls us chickens.]

Rep. Tom Davis (R-Va.): They call it Fast Track so that we don't have to argue about process.

Measure to kill Fast Track passed: 224-195. On the Dem side, Melissa Bean (Ill.), Dan Boren (Okla.), Allen Boyd (Fla.), Jim Cooper (Tenn.), Bud Cramer (Ala.), Henry Cuellar (Texas), Baron Hill (Ind.), Nick Lampson (Texas), Tim Mahoney (Fla.), and Jim Matheson (Utah) crossed sides. On the GOP side, Bob Aderholt (R-Ala.), Virgil Goode (R-Va.), Robin Hayes (R-N.C.), Walter Jones (R-N.C.), Ron Paul (R-Texas), and Mike Rogers (R-Ala.) crossed party lines. John Tanner (D-Tenn.) voted present. Bob Andrews (D-N.J.), Tim Bishop (D-N.Y.), John Larson (D-Conn.), Bobby Rush (D-Ill.), and Albio Sires (D-N.J.) did not vote.

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Colombia-Congress-Fast Track: What happened, What we will do, and What you should think

Statement of Public Citizen's Global Trade Watch Director Lori Wallach on Decision to Remove Fast Track Treatment from Colombia Free Trade Agreement:

We applaud House Speaker Nancy Pelosi for reasserting congressional authority over trade by removing Fast Track treatment from the Colombia Free Trade Agreement (FTA).

Ftanoes Public Citizen will apply its full resources to ensure that the Colombia Free Trade Agreement is defeated by Congress.

The United States should never have negotiated a trade agreement with Colombia, a country with a shameful record of labor leader assassinations and systematic violence against Afro-Colombian communities whose current government has been linked to deadly right wing paramilitaries.

The Colombia FTA includes the most egregious provisions of NAFTA, including extraordinary foreign investor protections that promote offshoring of U.S. jobs and expose domestic health and environmental laws to attack in foreign tribunals; and agriculture rules that will devastate hundreds of thousands of subsistence farmers in Colombia, making them poorer and undermining U.S. security interests in the region. The deal also replicates NAFTA's  limits Buy America and green procurement policies and on imported food safety and inspection requirements.

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