Rethinking Trade - Season 1 Episode 25: Rethinking Trade in 2021: What Are We For?

With Georgia’s run-off elections shifting control of the Senate to the Democrats, the party will have a lot more room to pursue progressive reforms than in previous years. What does this mean for fixing our rotten trade rules, and what kinds of policies should we be pursuing?

In part one of this episode, we address this question by discussing the TRADE Act of 2009. Co-sponsored by 135 members of the House and developed with a coalition of labor, environmental and other civil society organizations, the TRADE Act laid out a comprehensive vision for trade policies that would promote employment and development while protecting the environment and public health. But a lot has happened since then, from the harsh lessons COVID-19 had taught us about the facilities of hyperglobalization to the growing climate crisis to Big Tech’s monopoly choke hold. So how would progressives build on the vision of a decade ago?

In part two, we look at President-Elect Biden’s commitment to impose a moratorium on new trade deals until major investments are made to protect U.S. workers, and we discuss how important it is that this period also include a process of rethinking and fixing U.S. trade policy to work for people and the planet.

 

Transcribed by Sally King

Ryan: Welcome back to rethinking trade where we don't just talk about trade policy, we fight change it. I'm Ryan and I'm joined once again by our in house trade expert, Lori Wallach. Lorie, it's hard to know exactly how to start this episode, given the shocking things that have happened in the last week and a half in the United States. I'm sure more is to come. One thing that's not changing, however, is the results of the Georgia election and the fight for control of the Senate, which will no doubt have an impact on the fight for good trade policies in the coming year and years. I know many of our listeners are wondering whether these results will help deliver new trade rules that work for working people and the planet. To introduce this new political moment, though, I wanted to do two things. First, I wanted to actually step backwards a bit to just over a decade ago to discuss a comprehensive trade bill that you know a lot about called the TRADE Act. And then I want to talk about the more immediate trade deal moratorium that President-elect Biden has committed to. Let's start with the Trade Reform, Accountability, Development and Employment Act or TRADE Act. What was this bill? Or why is it important for us to be discussing it today?
Lori: So the TRADE Act was a comprehensive vision of a different kind of trade and investment policy that would promote employment, development, accountability, promote the environment and public health. And it was developed from the bottom up from members of Congress who would oppose the old NAFTA/WTO model of trade agreements, and a vast set of citizens groups, family, farm groups and consumer groups, labor unions and environmental groups, faith groups and small business groups. And it basically came out of a process that was a year long, that was basically started with discussions, what would it be? What would we be for? What do we want? What are the outcomes we want, and then some of the trade wonky allies sat down and start writing the technical trade language that would get to those results. And then there was an iterative editing process, until ultimately, with the members of Congress and the outside groups that basically are like the core constituency of the Democratic Party, a fully articulated version of what kinds of trade agreements, how to review the old ones. And if they weren't working, fix them, and how to replace the fast track trade authority with a new process that would put an emergency brake and a steering wheel on the negotiations, to make sure that the substantive vision in the TRADE Act was going to be the outcome for agreements negotiated under this new process. And the thing that's the most amazing about this is a 60, page long, detailed bill ended up with something like 150 c0-sponsors, agreeing that this should be the new way forward on trade.

Ryan: And what is what is this bill mean, now 10 years later, do you think we need a new TRADE Act for today?

Lori: For sure, because at that point, the focus was on a lot of issues that are still around with serious problems, offshoring of jobs, race to the bottom wages, multinational companies, abusing workers and developing countries and effectively violating people's basic human and labor rights to maximize their profits. And really bad environmental practices and attacks on our best existing environmental and health and safety laws. All those issues were issues already. And those issues were dealt with in the TRADE Act. But now there's been a decade more experience of what does and doesn't work as far as the rules and trade agreements and whether they can change the behavior of these dangerous multinational corporations. But then there are a whole set of issues that weren't at the forefront when the TRADE Act was being created. Climate we knew, but we didn't know that it was the do or die crisis of our future. Or at least a lot of people didn't. Some smart people did. The whole sort of issues around the massive digital monopolies, the Amazons, the Googles, Facebook, the platforms that have both become enormous threats it to small businesses to the safety of consumers with their unsafe imported products that sneak around normal tax and other obligations small businesses have to face, but also their monopoly of information and their training and our private information as if it were commodity, those issues were really not engaged then. And those issues are now some of the outrageous tie the hands of government rules that big companies are trying to insert into trade agreements. And then finally, I think the TRADE Act, though it was way ahead of its time, also didn't fully incorporate the degree to which multinational companies would be using the so called trade agreements to dodge things like financial regulation, and anti trust breaking up monopolies broadly, not just the big tech companies, and trying to systematically undermine the space government's had domestically to ensure that the economy works for most people. So all of the outrageous problems that were surfaced with COVID of these hyper brittle globalized supply chains, where the only thought was efficiency, not web and corporate profits, not whether consumers could get goods they needed for their health and safety and to deal with emerging crises. So those are things that any new trade policy going forward is going to need to deal with up front that the TRADE Act did not.

Ryan: And I will drop a link in the description of this podcast episode where you can learn more about the TRADE Act from Public Citizen's website. Laurie, for part two of the podcast, I wanted to talk about President Elect Biden's commitment to impose a moratorium on trade deals, meaning he would not negotiate any new deals until we've, quote, made major investments here at home and our workers and our communities, equipping them to compete and win in the global economy. That includes investing in education, infrastructure and manufacturing, here at home and quote, why is it important that Biden stick to this plan, and maybe you could just tell us a little more about this plan.

Lori: It's important that Biden's stick to his promise about a moratorium on new trade agreements. And that also that that moratorium practically means that they're not going to continue with the negotiations that the Trump administration started. For free trade agreements with the United Kingdom, or with Kenya, or for new rules that big tech wants at the WTO to handcuff all of our governments from protecting our privacy and holding these monopolies accountable. All of that stuff needs to go on hiatus. And a lot of it just needs to get dumped. Because number one, a lot of the existing rules directly conflict with the goals and policies that the Biden administration itself has said it will prioritize as part of its build back better plan. So expanding by American and by America, reinvesting our tax dollars, into creating innovation and jobs, and improving our infrastructure here violates existing trade rules, giving subsidies to create the industries of the future, necessary for our resilience and ability to respond to future crises necessary to improve our economic resilience in this global economy, necessary to address economic injustice by investing in communities of color and poor parts of the country that have not had real investments for decades to create jobs, and move the economies in these regions. Those kinds of subsidies, depending on how they're done will violate WTO and NAFTA rules against subsidies or breaking up the big tech firms regulating the banks making sure we have affordable health care, depending how any of that is done, or all of the most common sense things we need to do with respect to the climate crisis with respect to energy, for instance, a bunch of those violate or conflict with the service sector, corporate guarantees and the WTO and all of our free trade agreements. And that's just serve a sampling of the problem. So to do what the bytom ministration is guaranteeing they're going to do domestically, not about trade, they need to fix the existing rules, they should not be doubling down on damnation and problems they need to fix the existing rules. And then the number two reason why this moratorium is critical is we need to get the rules, right.
So we know what didn't work. We know what the policy disasters of that have been. And we now have seen that political disasters, that these corporate rigged rules that leaves so many Americans clobbered and feeling hurt and aggrieved have caused. So we need to take the damn time to have the conversation in Congress, in the administration, with outside stakeholders in, in labor in the environmental and consumer and small business and family farm and faith communities, everyone who could be engaging needs to be engaging in sorting out what do we want trade policy to do? The new US Trade Representative nominee Catherine Thai said exactly right. trade is not an end until itself. It is a tool to use to promote our values and our goals. So as a country, we need to have a discussion about how do we make a new trade policy for the future that actually promotes not undermine undermines where we want to go with climate and saving the planet; with creating good jobs and improving people's wages, and dealing with racial and economic inequalities that have blighted our nation for decades. What are we going to do? As a nation? How do we want to go building an infrastructure that's not just safe, but creates innovation gets us ready to be part of the climate solution, not part of the disaster? All of those questions need to be thought out in the context of "Oh, that tool that's called trade, the rules we've been using make it worse, how do we actually make it better? How do we harness that tool to promote our goals, not have the old policies undermine the things we care about." And without a moratorium to basically put the steamroller in neutral and pull it off, and park it and have a thoughtful discussion. We're going to just be continuing the disaster, or a lot of us are going to be distracted from being able to put our shoulders to fighting what for what we're for. Because we'll be in these stupid backwards repeated fights to stop the bad stuff. And you know, we'll do it and you know, we can. We stop the TPP, US activist united. But what a dang waste of time as compared to having this hiatus and having time to think about how we're going to go forward together.

Ryan: And how can civil society organizations like the ones that you've mentioned, how can folks like that and grassroots activists, like many of our listeners, helped shape this process to ensure that it results in real progressive changes in our trade policies?

Lori: Well, that's the perfect question. So the first thing is, we have to make sure that the moratorium is real. And that includes those agreements, including the WTO, big tech agreements, the UK and Kenya free trade agreements, and any new investment agreements with ISDS or without are not going forward. First thing to do about that is I recommend folks call members of Congress, email text, right? They're members of Congress with a two part message. Number one, I want this moratorium on trade, and I want to be reliant needs to include all the leftover Trump agreements. And number two, right to me member of Congress, and tell me what the new trade policy is going to be after this moratorium, I want to be part of creating that I want you to be part of creating that we need to replace our old trade policy. You want to get the members of Congress thinking about it, and you want to get them engaged. So open that discussion, you don't have to have the answers. And then number two, to help you think about the answers go to our website, tradewatch.org and rethink trade. Both of those are places where number one, you can see what was in that trade at. But number two, you can start thinking for yourself what's most important to you, in a good trade policy, what things should always be in trade agreements, obviously, they all have to have a floor of decency that companies have to meet if they want to get the benefits of the trade agreements, certain labor and wage standards, certain environmental standards, certain human rights standards, they don't pay, they don't play. And number two, there's certain things trade agreements can never have again, some of them obvious like, for instance, big new protection monopolies for Big Pharma, to jack up medicine prices, the Investor State Dispute Settlement system that has corporations empowered to attack our governments. Basically, the bottom line is all of us progressives, labor unionists, activist, environmentalist, small business people, people of faith, we banded together and we made Trump have to go renegotiate his renegotiate NAFTA. And the deal we got was not perfect. It's not what we're for. We all said it. It's just the floor from which we are going to continue the fight and build onward. So this next piece of business is to remind Congress that NAFTA ain't the fix the new NAFTA is where we start from, and to get them engaged and get your brains engaged. This is that turning around moment, an enormous amount of hard works been done till now. So now, at that point, what do we for? What do we want? We will use this moratorium after winning this moratorium to actually turn around and actually rethink trade. So we get trade policies that support the goals and values that we all support.

Ryan: Rethinking trade is produced by public citizen's global trade watch, I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we're doing to fight for fairer and more equitable trade policies.

Wallach and Tucker in American Prospect: Parties realign on flawed trade deals

Our own Lori Wallach and Todd Tucker have a piece in the American Prospect today. Here’s a snippet:

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As he gears up for a difficult re-election campaign, President Obama risks losing key swing states that he won in 2008 because of a recent flip-flop on trade commitments…
 
Even the government’s own study, produced by the U.S. International Trade Commission (ITC), showed that these pacts would increase U.S. imports by more than exports…
 
Instead of probing such matters, most mainstream press reports over the entire four-plus year debate simply parroted corporate and Obama-administration talking points.

The missed political storyline, too, was equally astounding. Two-thirds of Democratic House members opposed Obama on the Korea pact and 82 percent who opposed him on the Colombia pact. It's his biggest split with House Democrats thus far. The number who voted against the deal is even greater than the percentage of House Dems who opposed the Patriot Act (63 percent) or the war-funding bills (56 percent). And of course, Obama got nothing in return for the capitulation: Republicans advanced the trade pacts while blocking his second stimulus package. So much for negotiation.

It took Bill Clinton nearly eight years of NAFTA job losses, sellouts, and scandals to have about two-thirds of the House Democrats vote against China’s entry into the World Trade Organization in 2000. Obama managed to meet and beat that record with his first trade votes. The percentage of Democratic House votes against these deals even surpassed Democrats’ average level of opposition to Republican presidents’ trade initiatives.

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Click here for the full article.

Lori Wallach Profiled in The Hill

Check out this profile of Lori Wallach in The Hill today:

Agitator by Trade Unhappy with Obama

"Wallach, who was a year ahead of Obama at Harvard Law School, says the administration took up the mantle of George W. Bush by making only negligible changes to the trade deals that were hammered out while he was in office. 'He’s reviving Bush-era agreements and making those his own. It’s inexplicable,” Wallach said. … Win or lose, Wallach says she doesn’t subscribe to inertia, aiming to out-research, outsmart, outwork and out-organize her opponents — the majority of which are corporations. 'There’s a powerful set of special interests on the other side,' she said. 'The public is with us and our case is strong.'”

Read the entire profile here.

Photo Credit: Greg Nash / The Hill Newspaper

Many Blue Dogs and New Dems Survived with Fair Trade

In the wake of the release of our brand new report “Election 2010: The Best Defense Was A Fair Trade Offense,” a lot of folks have asked for more details about how the fair trade electoral advantage played out within certain subgroups of the House Democrats.

Table 1 below shows the win-loss ratios of House Democratic candidates by fair trade position, and sorted by the competitiveness of their races as determined by the Cook Political Report on November 1, 2010.

There are two things to note: first is the sheer breadth of candidates that campaigned on trade in every competitiveness category. Second, for every competitiveness category where Democrats won any seats, fair traders were more likely to win than campaigned against fair trade or that stated no position on fair trade.

Let’s look a little closer at the data. First of all, given the GOP tidal wave that hit Democrats, it is to be expected that Democrats took fewer seats in the Toss-Up category than in the Lean and Likely Democratic categories, in both percent and numerical terms. (And they captured none of the Lean or Likely Republican seats in which they were competing.)

But looking at just the 50 Toss-Up seats in play, a fair trade-oriented candidate was more likely to win their race than a candidate that ran against fair trade or took no position. The same goes if we look at only the Leaning or Likely Democratic seats.

An equally interesting exercise is to look at the shifts and trends within the Democratic Party’s caucus groups most likely to be in a competitive race this year: the Blue Dogs and the New Democrats.

It’s a little known fact that, even though both groups have some members that are very vocally against fair trade, half of the 51 Blue Dogs and a third of the 70 New Democrats are signed onto the TRADE Act, a bill that envisions a fundamentally fairer way of expanding trade and exports.

Still, the New Democrat Trade Task Force is the key group within the House Democratic Caucus pushing status quo trade policies. At least three lost their re-election bids: Reps. Suzanne Kosmas (Fla.), Harry Mitchell (Ariz.) and Bob Etheridge (N.C.); two retired: Artur Davis (Ala.), who lost his primary for the gubernatorial bid, and Vic Snyder (Ark.); and two are in races that have not yet been called: Melissa Bean (Ill.) and Rick Larsen (Wash.). Ironically, Kosmas, Etheridge and Larsen – along with fellow task member Ron Kind (Wisc.) – ran paid ads attacking job offshoring. Adam Smith (Wash.) also of the task force, did not focus on his advocacy of unfair trade, but instead on his work on trade adjustment assistance.

Some voters were not convinced by these battlefield conversions: Etheridge’s successful GOP opponent Renee Elmers attacked his vote for permanent normal trade relations with China, while Kosmas’ GOP opponent Sandy Adams criticized the flow of stimulus dollars overseas.

Table 2 gives a breakdown for just the incumbent New Democrat and Blue Dog candidates. As can be seen, many more chose to run on fair trade than did not. Indeed, savvy fair traders within the New Democrat Caucus such as Rep. David Wu (D-Ore.) campaigned and won on opposition to offshoring. Wu went further and called for trade policy that would require that our trading partners observe democratic and human rights norms – positions that helped Wu bridge both blue collar and social liberal voters within his Portland area district and fight back his toughest electoral challenge in years.

Indeed, those endangered Blue Dogs and New Democrats that campaigned on fair trade were more likely to survive than those that did not.

To read more about the fair trade campaign positions that New Democrats, Blue Dogs and others took in this year’s races, be sure to check out our new report here. We’ll be updating it on a rolling basis as the remaining dozen races are called.

Follow the Climate Reality Tour!

We’re pleased to unveil an exciting new project: the Climate Reality Tour.

You may have caught an earlier post, but in case you didn't, let's fill you in The Climate Reality Tour is a movement-building road trip to promote global economic policies that are fair for workers and shift away from the climate- and job-destroying status quo. The destination? The United Nations Climate Negotiations in Cancun in late November. And to bring home the sustainability point, we decided to go by bike. Yep, by bike!

With the world in the grips of overlapping global crises – food, economic/financial and climate – the stakes are high indeed. To save the planet requires confronting these crises simultaneously, and that means overcoming the false jobs vs. environment trade-off. In truth, corporations benefit from exploiting both while human beings and the earth suffer.

But this requires political will and resolve far beyond what we’ve seen from either political party, and even many leading civil society organizations. At Public Citizen, we’ve long believed our unsustainable global economic order, as etched in the tomes of the WTO and NAFTA-type trade deals, unfairly pits workers and ecosystems against one another. We’ve decried how the status quo sanctifies the rights or multinational corporations to exploit and destroy – even above the democratic rights of a people determine their own economic and eological futures.

The Political Genius of Sarah Palin: How One Facebook Post Sparked a Mass GOP Fair Trade Wave

There is some conventional wisdom that the GOP is more united than Democrats in favor of unfair trade deals. See for instance this ridiculous aside from the White House in the New York Times Magazine this weekend:

Rouse and Messina see areas for possible bipartisan agreement, like reauthorizing the nation’s education laws to include reform measures favored by centrists and conservatives, passing long-pending trade pacts and possibly even producing scaled-back energy legislation.

This is silly. Polls show that GOP and independent voters are at least as opposed to these deals as the Democratic base. (See here and here.) And, nowhere in the "everything and the kitchen sink" 48 page GOP "Pledge to America" unity document do they talk about trade or offshoring - showing that there is not a heckuva lot of GOP unity in support of unfair trade.

GOP candidates are responding to the public support for fairer trade. This cycle, we're seeing a much higher number of GOP running on fair trade than in the last two cycles, including pledging to renegotiate trade deals and end tax loopholes for companies that offshore jobs. Some are even attacking their Democratic incumbents' votes against fair trade (a vote for China PNTR, for instance).

But the message that I have seen probably 100 GOP candidates run on in this cycle is attacking the incumbent Democrat for voting for a stimulus bill with Buy America provisions criticized as weak.

Long-time readers will recall that we covered this issue in detail back in early 2009:

• In one corner, we had Sen. John McCain (R-Ariz.) - who campaigned against Buy America, and then lost a major Senate vote to remove Buy America requirements entirely from the stimulus bill.
• In another corner, we have President Barack Obama, who campaigned in favor of Buy America, but whose adminsitration pushed back on the stronger versions of the requirement.
• In another corner, we have the fair traders and economic justice types - who wanted to pass a stimulus bill, and one with strong Buy America provisions. The price imposed by the trade point people on the Hill and the administration was to ensure that countries we've signed trade deals with would be treated as if they were "American" for the purposes of the legislation.
• Finally, we have the American people: eighty six percent of Americans say that the stimulus should "require that government-funded infrastructure and construction projects use American-made materials and products to the greatest extent possible", including 79 percent of Republicans. The Buy America portion of the stimulus bill was by far more popular than the underlying bill itself.

Enter Sarah Palin. Despite never having clarified her views on trade policy on the VP campaign trail (or in her previous run for governor of Alaska), Palin raised eyebrows earlier this year when she attacked the stimulus bill for not requiring that all money be spent here in America. Palin wrote on her Facebook wall about the stimulus bill:

“We were promised it would provide “green jobs” for Americans, but 80% of the $2 billion they spent on alternative energy went to purchase wind turbines built in China!”

At the time, I figured that this was just an accidental or not fully thought-through Facebook post. Little did I know that Sarah Palin was an absolute genius whose Facebook post would spark a mass GOP fair trade wave: virtually every GOP candidate across the country is today campaigning on this loophole in the stimulus bill.

So, what would be the solution to this problem? Well, for starters, we'd have to revisit the procurement commitments in the World Trade Organization (WTO) and other unfair trade deals in order to get even close to 100% true Buy America rules in government spending.

Even many free traders feel very strongly that there are moral, environmental and economic reasons to ensure that our tax dollars are used to support local jobs and production. But, as we've long argued, the WTO closes off this key, sovereign policy space. (See our book "States' Rights and International Trade" for more.) Luckily,

• there are a number of both Democrats and GOP that are specifically campaigning on this fair trade sub-theme of reforming procurement rules;
• a majority of House Democrats have already signed up to legislation (the TRADE Act) which would bring the procurement provisions of our trade deals up to a fair trade standard; and
• fair traders like Sen. Sherrod Brown (D-Ohio) and the U.S. Steelworkers are working diligently to monitor the stimulus bill and ensure that as much of it as possible is used to Buy American.

But Sarah Palin has pointed out the way forward: rather than falsely assume a bipartisan consensus in favor of Bush's trade deals with Korea and other countries, let's build on the true bipartisan consensus in favor of fair trade in government procurement and in other policy areas.

(Ed note: In the last two election cycles, Public Citizen has brought you detailed analysis of around 100 competitive and open seat congressional races. We found that the role of trade and offshoring increased in 2008 relative to 2006, and by all indications, 2010 will set a new record. Of about 170 races we are tracking, trade is playing in about 90 percent of them (150). That's right, we'll be releasing detailed candidate profiles of over 350 candidates - GOP, Democratic, and some third party.)

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

Find Layoffs Caused by Outsourcing and Imports

The Trade Data Center that we launched last week contains so many data products that they can almost be lost in a blur. Right now I’d like to take some time to zoom in and profile the most exciting new data product – the overhauled Trade Adjustment Assistance (TAA) database. The TAA database, available here, tracks specific layoffs that have occurred due to rising imports or outsourcing, as certified by the Department of Labor.

Some readers may be familiar with the TAA database that Public Citizen has maintained for years.  Our new database is an overhauled version of this.  Whereas the previous database only gave the workplace location in the form of the city and state, you can search the new database by congressional district, county, and metropolitan area!  It also gives information about the foreign country implicated in many of the layoffs.

Plus, the new database consolidates the databases of the regular TAA program and the NAFTA-TAA program, which operated between 1994 and 2002, so we can be sure of exactly how many jobs were lost due to imports or outsourcing in a given locality.  Take a look at the FAQ on the database or the technical documentation for more information on these topics.

I’ll give a few examples of how to use the database.

Last month, the corporate members of the President’s Export Council released a letter advocating for the passage of the Bush-negotiated Korea, Panama, and Colombia Free Trade Agreements (FTAs), claiming that passage would boost exports. They ignored the fact that the growth of exports to FTA partners has lagged behind exports to other countries, as we showed in our recent report.  It is possible that these corporations are pushing for FTAs since it would facilitate the export of American jobs rather than American goods. We can investigate this with the help of the TAA database.

Let’s pick Xerox, one of the corporate members of the President’s Export Council. First, we enter “Xerox” into the “Company” search box.

Uncheck the “Denied Petitions” box under the “Cause” option so that the search results include only layoffs that have been certified by the Department of Labor as occurring due to offshoring or rising imports.

Then click “Search”

The first result is a Xerox copier factory in Webster, NY that laid off 450 workers when it outsourced work to Mexico in 2000.  In total, 1613 Xerox workers have been certified under the TAA program.  Does Xerox support FTAs because it thinks that it can export more products with FTAs or is it chomping at the bit to outsource more jobs, which the FTAs would facilitate?

You can query the database for all trade-impacted workplaces in a certain geographic area, such as congressional district. 

Simply select the state and input the desired district number – with a leading zero if it is a single digit – and it will pull up all the workplaces in that district. Make sure to uncheck the “Denied Petitions” checkbox if you only want the certified workplaces. Let’s pick Connecticut’s 5th district.

There are 79 certifications covering 6,021 laid off workers. Rep. Chris Murphy, who represents Connecticut’s 5th district, should carefully consider becoming a cosponsor of the TRADE Act since unfair trade has been so harmful to his constituents.

Finally, don’t forget to check out our Google map that displays the location of all of the TAA-certified workplaces and gives information about each. Double click a part of the map to zoom into your town and explore how unfair trade has impacted your community.

Trade Deficit Undermines Economic Recovery

“Spectacularly terrible” – that’s how Ian Shepherdson of High Frequency Economics described the surprising trade deficit numbers released yesterday by the Census Bureau. Bloomberg’s survey of 73 economists predicted that the trade deficit would fall by $0.2 billion, but the deficit actually rose by $7.9 billion – 18.8 percent. The trade deficit is now the highest it has been since October 2008.

The very unusual part of the data report is that exports declined by $2.0 billion in June from May exports of $152.4 billion. Yes, we know that the (anemic) U.S. economic recovery is stimulating consumer demand for foreign goods, so we’ll see rising imports, but the decline in exports is very worrisome.

The unexpected widening of the trade deficit was not included in the second quarter advance GDP estimates released by the Bureau of Economic Analysis (BEA) late last month, which showed the economy growing at a 2.4 percent annualized rate, but the data available at the time of the release indicated that imports were a major drag on the GDP:

The deceleration in real GDP in the second quarter primarily reflected an acceleration in imports and a deceleration in private inventory investment…

The advance BEA estimate of second quarter GDP growth of 2.4 percent was based on trade deficit projections that were $4 billion less than the numbers that have just been released. The Wall Street Journal reports on the implications of this discrepancy:

“The wider-than-expected trade gap in itself points to a 0.4 percentage point downward revision to GDP growth, which needs to be added to the 0.8 percentage point estimated downward revision coming from construction and inventories. Added together, these revisions at this point suggest second-quarter real GDP growth will barely be above 1% (call it 1.1%–1.2%),” said John Ryding and Conrad DeQuadros at RDQ Economics.

Wall Street types were so concerned with the prospect of the widening trade deficit stunting the economic recovery that the Dow lost 2 percent of its value once markets opened yesterday morning to the news.

The trade numbers are yet another reminder that the status quo trade policy is broken.  NAFTA-style trade deals are only leading to larger and larger trade deficits: trade with our 17 FTA partners contributed $1.4 billion to the rise in the goods trade deficit in June.  Luckily, 145 members of Congress have cosponsored the TRADE Act, which establishes negotiating objectives for trade pacts that would ensure strong export growth and would prevent the offshoring of jobs associated with high trade deficits.

Lori Wallach's Op-Ed in Today's Edition of The Hill

 

 

Obama’s trade policy opportunity

By Lori Wallach

Contrary to the clamor from the U.S. Chamber of Commerce and newspaper editorials, the Obama trade agenda is not stalled - it is in formation.

This week, negotiations started on President Barack Obama’s first potential trade agreement - the Trans-Pacific Partnership. Will the administration transform the TPP process that Bush initiated in 2008, so as to translate Obama’s campaign trade reform commitments into a new approach that that works for more people and thus rebuild bipartisan consensus for trade expansion? Or, will the administration revert to the Bush-Clinton-Bush trade pact model, and intensify the associated economic and political damage?

Creating a new policy is necessary in this era of globalization, if Americans are to enjoy the economic security of good jobs and an end of the crisis-inducing financial casino, a clean environment, and safe food and products.

Indeed, creating a new trade policy will determine the success of much of the Obama administration’s domestic agenda given that today’s agreements extend far beyond tariffs and quotas to set parameters for numerous non-trade polices. Trade-pact investment and procurement rules will affect whether the billions being invested in the Green Economy will translate into American jobs. Trade-pact service sector rules define the policy space available to re-regulate finance and reform health insurance. Trade-pact rules implicate efforts to combat climate chaos.

The large agribusiness firms and job-offshoring multinationals who claim Obama’s trade agenda is stuck were the few beneficiaries of the 1990s pacts like the North American Free Trade Agreement and World Trade Organization. They oppose establishment of an Obama trade policy. They seek continuation of the status quo, starting with adoption of Bush’s leftover NAFTA-style pacts with Colombia, Korea and Panama. To revive this failed model - most recently rebuffed when a majority of House Democrats opposed Bush’s Peru agreement that mirrors the remaining three - would be a grievous policy and political mistake.

The goods news is that a diverse bloc in Congress has built consensus around a new approach designed to achieve trade expansion that can deliver U.S. job creation, consumer safety and environmental protection. A majority of House Democrats, including 12 full committee and 56 subcommittee chairs, have sponsored the Trade Reform, Accountability, Development and Employment (TRADE) Act, as have 23 Blue Dogs, 19 New Democrats and 30 Congressional Black Caucus members. The bipartisan legislation sponsored by Rep. Mike Michaud (D-Maine) and Sen. Sherrod Brown (D-Ohio) translates Obama’s trade reform commitments into a new trade-pact model - building on the initial reforms Democratic trade committee leaders extracted from Bush in 2007.

The TRADE Act’s provisions on what future pacts should and should not include provide a roadmap for trade expansion at a time when the damage wrought by the NAFTA-WTO model has transformed trade politics. In the past two elections, 72 congressional candidates that campaigned against the trade status quo and for a new approach replaced those who voted for NAFTA, CAFTA, and China’s WTO entry. GOP and Democratic 2008 candidates ran over 140 campaign ads on trade, as did the Democratic House and Senate national campaign committees. This reflects the strong public demand for a new American trade policy.

Not surprisingly, polling shows bipartisan opposition to the old trade regime across diverse demographics. Since NAFTA and WTO went into effect, the U.S. lost net 5 million manufacturing jobs (one out of four in that sector) while American median wages remained stagnant despite productivity gains as corporations used the pacts’ investor protections to relocate and arbitrage their labor costs absent a floor of labor standards. Various environmental and health laws were attacked before trade tribunals. Unsafe food and product imports swelled. The trade deficit exploded from $102 billion to a height of $807 billion, with dire consequences for global economic stability. Quite simply, the old model has not worked for most Americans - nor for most in other nations, as is highlighted by the Doha Round WTO expansion deadlock.

For the Obama administration to succeed, it must not only update the trade-pact model, but also remedy our China trade disaster and update the 2001 Doha Round agenda. Treasury’s April 15 decision on China’s currency manipulation will be critical in determining the success of Obama’s goal of creating 2 million net new jobs from expanded exports. We would suffer net job losses and an enormous trade deficit were imports - to which China is the largest single contributor - to follow their current trend.

Time is overdue to dispense with the claim that critics of the past model are anti-trade. The question is trade under what terms. The bipartisan consensus that marked decades of U.S. trade votes was shattered with the 1990s advent of the NAFTA trade agreement model. Replacing the failed 1990s trade-pact experiments with the new American trade policy Obama promised and Americans expect is the way forward.

Wallach is director of Public Citizen’s Global Trade Watch.

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.

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.


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!

USTR Citing the Chamber of Commerce's Slanted Website?

Given that the Chamber of Commerce is fiercely lobbying against the fairer trade model supported by President Obama and members of Congress (and against almost everything else the Obama administration is trying to achieve), it is shocking that the USTR’s webpage of links to trade data includes the Chamber of Commerce’s slanted “trade benefits” website. The USTR webpage lists all government agencies and then only the Chamber as sources of trade data – no unions, no universities, just the country’s main corporate lobby.

Did they miss the wonderful trade data resources of the Economic Policy Institute (EPI), the AFL-CIO, or our searchable Trade Adjustment Assistance database? Or, maybe the USTR staff just hasn’t had a chance to update the webpage in the 14 months since Bush left?—Actually, no, the page says that it was last updated on July 29, 2009.

On the other hand, maybe it’s not an oversight? While most of the administration is engaged in mortal combat with the Chamber, USTR Ron Kirk seems to be all warm and fuzzy toward the Chamber. Consider his comments at a speech there last year:

I couldn't think of a better, more welcoming environment than being right here at the Chamber….I was really excited about the opportunity to come and be with you today because -- I think I've got this thing figured out now, after 60 days; I've got it all down. But considering some of the audiences that I've been in over the last 60 days, I needed a little bit of home cooking, so to speak. So I feel like I'm very much preaching to the choir, and if so, please don't be offended.

This cuddly view of the Chamber is inconsistent with pursuing a new, fairer trade model, which the Chamber strongly opposes. Over half of Democrats in the House have endorsed this new vision for trade policy – by formally sponsoring the Trade Reform Accountability Development and Employment (TRADE) Act. (The Chamber has launched a campaign against the Democrats’ initiative.)

The Chamber of Commerce’s website purports to show the trade “benefits” for each state. The problem is that the Chamber’s website only covers states’ exports, as if the United States were not being swamped in a flood of job-killing imports.  Imports represent goods that American consumers and businesses have purchased from other countries that they could have purchased from U.S. manufacturers employing U.S. workers.  

The Chamber’s website says virtually nothing about the harmful effects of our massive trade deficit that accrued since the Chamber’s beloved NAFTA, WTO and similar trade deals went into effect. (Indeed, our trade deficit increased from $25 billion in 1993 to $263 billion in 2009 with NAFTA countries alone.)  EPI estimated that if we had balanced trade with Canada and Mexico, the U.S. economy could have supported about one million more jobs in 2004. Yup, the Chamber of Commerce site also makes no mention of the nearly 5 million manufacturing jobs that we've lost since NAFTA and WTO went into effect – that’s one out of every four manufacturing jobs.  Balanced trade could help U.S. businesses, but instead the large U.S. trade deficit is a significant drag on growth that is killing U.S. manufacturers and American jobs.

Plus, the Chamber dodges the wage stagnation that has plagued the U.S. during the era of Fast Track and NAFTA-WTO model trade deals. And it does not even get into all of the horrible import safety problems – tainted food, toys and more – or the trade tribunal attacks on key consumer, toxics and environmental law.

What is even stranger about the USTR linking to the Chamber  is that the Chamber has relentlessly attacked President Obama’s major policy priorities.  The Wall Street Journal has called the Chamber’s assault “the biggest undertaking in the Chamber's 100-year history.” Last year, the Chamber spent $140 million lobbying to prevent the administration from passing  health care reform, financial sector reregulation, and climate change legislation.

Instead of heaping praise on an organization that is attacking his boss’ goals and citing the Chamber as a reliable source of trade information, perhaps USTR Kirk could achieve more progress by  advancing the new trade model that so many members of Congress have endorsed.

New Year’s Resolutions for the Obama Administration

With a number of important and high profile trade battles to be fought this year that will have far-reaching impacts on the U.S economy and domestic policy, we thought we’d suggest some New Year’s resolutions for president Obama to adopt on U.S. trade policy.

These resolutions are solutions that the administration needs to commit to in 2010, based on what's likely to move in the trade sphere this year. They hold President Obama to his campaign promise to deliver trade policy reform, and they’ll also help to fix the economy and keep good jobs in America.

The resolutions are:

1. Push to modify World Trade Organization (WTO) limitations on domestic financial services regulation, in light of the economic crisis. Go here for details.
2. Conduct a comprehensive review of trade agreement policy as promised during the campaign
3. Announce formal new trade agreement approach that brings trade pacts into congruence with the administration’s domestic priorities and goals
4. Pass climate legislation with meaningful border equality measures
5. Pass second major stimulus bill with robust Buy America provisions to create jobs
6. Pass food safety bill with serious import safety protections
7. Use the Trans-Pacific Partnership talks to devise a replacement for the NAFTA model; we either need a new way or no deal
8. Renegotiate remaining Bush trade agreements with South Korea, Colombia, & Panama to fix NAFTA model problems and bring them in line with the TRADE Act.
9. Give the WTO’s “Doha Round” agenda a much needed burial and develop a new agenda related today's challenges aimed at fixing WTO problems, from financial services deregulation to limits on climate crisis redress space
10. Fight for a China trade policy that supports jobs and also ensures product and food safety for both countries

Obama has already resolved to do a lot of these, but just as with most New Year’s resolutions, he’s somewhat fallen off the wagon.  We’re here to help him resolve anew and stick to it!

TRADE Act at the Top!

2009 has been a great year for fair traders. We've seen an upgraded fair trade Congress take office, staved off the leftover Bush deals to expand NAFTA to South Korea, Panama, and Colombia, AND made major headway on flagship reform legislation, the TRADE Act.

As if it weren't enough to have 133 Cosponsors in the House and 7 in the Senate, the Drum Major Institute - a progressive think tank - has named the TRADE Act one of the 10 Best Public Policies of the Year:

This year, Obama had the opportunity to make [his campaign platform's] vision of robust fair trade a reality with the Trade Reform, Accountability, Development and Employment (TRADE) Act. The bill, sponsored by Representative Mike Michaud, sets criteria for reevaluating NAFTA, the WTO, and other trade pacts in the light of urgent national concerns about food and product safety, environmental protection, labor standards, national security, and other issues impacted by trade...

...For setting forth a positive vision of globalization that favors the many, we ratify the TRADE Act as one of the best policies of 2009.

Thanks to the Drum Major Institute for recognizing the leadership and wisdom of the TRADE Act! It's exciting just to ponder what other accolades and milestones the TRADE Act might receive and rack up in 2010. We can't wait to see.

Hodes on TRADE Act: It's about JOBS!

First-thing this week, Rep. Paul Hodes (D-NH) helped lead the charge for a new, fair, sustainable global economy that works for working people everywhere.

Early Monday Hodes announced he had chosen to cosponsor the Trade Reform, Accountability, Development and Employment (TRADE) Act, joining 131 other colleagues in the House of Representatives and 7 in the Senate.

The Manchester Union-Leader reports that the Congressman met with workers directly affected by unfair trade policies and the loss of manufacturing employment:

With New Hampshire's manufacturing economy faltering, U.S. Rep. Paul Hodes announced yesterday he is co-sponsor of a bill in Congress to address the trade imbalance.

Meeting with out-of-state manufacturing workers and labor leaders at the Airport Diner in Manchester yesterday morning, Hodes (D-NH) said the TRADE Act will set tough new standards for trade agreements.

"It's a jobs bill," he said, "We need to recognize we are in a huge transition."

[CORRECTION - workers were real live Granite Staters, NOT out-of-state as reported].

The real human face of the manufacturing crisis was highlighted at the event. The Union-Leader goes on:

Marlie Merrill was there to hear what the congressman had to say. Merrill, a machinist, is on furlough from Kingsbury Corporation in Keene, which used to have 1,200 manufacturing jobs and now has 90. He is a member of the United Auto Workers Local 2232.

He said his employers cannot get loans because they do not have contracts and they cannot get contracts without loans.

"It's a vicious cycle," Hodes said. "We need to take a new approach of rewarding those for creating jobs in America."

The TRADE Act sets tough new standards for trade agreements to make sure that they benefit American workers and businesses, Hodes said. The proposal also calls for a detailed review of every international trade agreement, and their impact on American workers and families.

Merrill said he knows of two fellow employees who have lost their jobs homes. [Correction mine].

He has been struggling to pay health care costs while out on furlough.

And further:

Gail Kinney of Canaan was at the roundtable and listened. She is a member of UAW Local 1981 and goes around the state helping those dealing with unemployment. While the watch word is "re-training," she said, "at this point the question is training for what? There is a sense of quiet desperation."

NH AFL-CIO President Mark McKenzie said in 35 years, he has seen a tremendous change.

In Manchester alone, he said you could walk both sides of the Merrimack River and see thousands working in shoe and sweater manufacturing. Now, those jobs -- which paid enough to keep people buying cars and houses -- are gone, altered by trade agreements such as NAFTA.

Its great to see Hodes getting out in front on the TRADE Act. Hodes is not just cosponsoring the bill, but hitting the streets, and connecting with affected residents and organize for a new model of the global economy that puts people over profit.

Loving the Miami Heat!

No, not that Miami Heat! I'm referring to the Miami Florida heat rising up about Rep. Kendrick Meek (D-Fla.) who pulled his cosponsorship of two bills important to Public Citizen - the Single-Payer Health Care for All bill (HR 646), and the TRADE Act (HR 3012).

Meek waited until he'd wrapped up key labor endorsements, and until his main primary opponent dropped out, then signed off both bills.

Peter Cohn reports for Congress Daily (Oct 30th; subscription only):

On Oct. 21, he withdrew his support from the bill, sparking a conflagration his office is still trying to put out. Meek had a conference call the following day with around 40 Florida labor officials to thank them for their support; instead, the labor officials erupted with anger over his move, according to people on the call.

He spent the afternoon calling them individually, and Meek's office attempted some more damage control Wednesday, sending an e-mail to critics explaining his actions. The explanation does not appear to have had its desired effect.

Labor leaders are furious that Meek would pull such a move. Cohn's report goes on:

"I believe if he doesn't go back as a co-sponsor on that trade bill, he might have some problems, based on the scuttlebutt I've heard," said Pat Emmert, president of the Palm Beach-Treasure Coast chapter of the Florida AFL-CIO.

 

Emmert said the International Machinists and Aerospace Workers union in particular was angry with Meek's move. In fact, while Meek has racked up endorsements and campaign contributions from unions, the Machinists are not one of them, according to FEC records and a list of endorsements on his campaign Web site. The Machinists' PAC donated $5,000 to his 2008 House campaign.

 

Frank Ortis, president of the Florida Machinists, said "all of our jobs are going south" because of trade pacts, and that a once million-strong union is down to 372,000 members.

It remains to be seen whether Meek's siding with corporate interests over his base will be an obvious trend in his campaign. If so you, you can bet it'll be a disappointing November for Florida Democrats.

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

Photo used under Creative Commons License, courtesy of user Miki