Tillerson meeting with Canadian, Mexican foreign ministers

U.S. Secretary of State Rex Tillerson met his Canadian counterpart for the first time on Wednesday for talks that touched on the trilateral NAFTA trade agreement, which President Donald Trump wants to renegotiate.

Secretary of State Tillerson meets with Canadian Foreign Minister FreelandAs well as talking to Foreign Minister Chrystia Freeland, Tillerson is also due to meet with Mexican Foreign Minister Luis Videgaray, according to a statement from the Mexican government.

Both Canada and Mexico send the bulk of their exports to the United States and could be crippled by major changes to the North American Free Trade Agreement, which Trump has called “a disaster”.

Asked about the possibility that the United States could push for new border tariffs on Canadian goods in the NAFTA talks, Freeland said she had made clear her strong opposition to the idea during her discussions with U.S. officials.

“If such an idea were ever to come into being, Canada would respond appropriately,” she told reporters on a conference call, stressing Ottawa did not yet know what the U.S. opening position would be.

The Mexican statement said that in his meetings with Tillerson and U.S. Secretary of Homeland Security John Kelly on Wednesday, Videgaray would address issues including the protection of Mexicans in the United States, migration, and security and border infrastructure.

Trump made free trade deals a major target during his campaign for the presidency. He says NAFTA, formally signed in 1994, has harmed American workers.

The deal aimed at removing tariff barriers between Canada, Mexico and the United States.

Canada is trying to persuade the new administration and senior politicians that its especially close ties with the United States mean the country should be spared protectionist measures.

“In making the case for how balanced and mutually beneficial our economic relationship was, I really felt I was pushing on an open door with everyone I spoke to,” said Freeland.


A marriage made in hell: Trump’s UK-US trade deal

The impending US-UK trade deal threatens the irreversible loss of public protections on health, safety, labour and environment in both countries, writes Stephen Devlin. Last week Trump signed an executive order forcing systemic corporate deregulation – and the UK’s ‘pro-business’ government is all too keen to go along with it.


Rules that require business to keep rivers clean and protect workers from accidents are not ‘red tape’. These regulations are highly popular with the public. This is not about reducing form-filling. This is about ripping up the laws that protect us.

President Trump’s shocking travel ban and the legal battle that followed have justifiably dominated headlines.

But a second executive order was also slipped out last week – and one with major implications for the UK economy.

While many of us were on the streets protesting his offensive ban on refugees, the new president signed an executive order authorising a rule dubbed ‘One In, Two Out’.

What sounds like a nursery school game is actually the starting gun to a miserable race to the bottom for the USA and UK. It puts legal protections we all depend on – to be able to eat food safely, or go to work without fear of unfair dismissal – on the line.

One In, Two Out means that if the US government wants to implement new laws it has to get rid of twice as many other laws, based on their cost to business. Economically it’s entirely illogical because it ignores the benefits of laws to society, environment and, yes, even business.

If you think that’s madness you’ll be horrified to learn that Trump copied it from us. In fact, Trump looks positively moderate when compared to our own government: in the UK we have One In, Three Out.

No health, safety, labour, environment protections are safe

What this means is that the UK and now the USA have installed an automatic regulation shredder that will gradually tear through the law book until we’re left with the bare minimum.

Trump’s order exempted regulations relating to national security, but nothing else will be safe: not our rights at work, not the safeguarding of our environment, not the safety standards of our toys, clothes and food. The consequences will affect us all.

The coalition government began the process of the UK’s assault on our legal protections in 2010 and it’s just one element of much more systemic deregulation. What’s more, it’s being increasingly scaled up: since 2010, the rule in the UK has increased from One In, One Out, to its current standing of One In, Three Out.

Each year the civil service publishes a league table of which government departments have done the best based on these deregulatory rules, as a sort of perverse incentive to keep up the good work of scrapping environmental and social protections.

The rhetoric in the UK will have you believe that this is all just a question of getting rid of ‘red tape’ – an abstract concept of frustrating bureaucracy that practically everyone instinctively detests. But rules that require business to keep rivers clean and protect workers from accidents are not ‘red tape’. These individual regulations and protections are highly popular with the public.

Here at the New Economics Foundation we looked into this system of deregulation (which has been given the Orwellian name ‘Better Regulation’) and found that it has led to the delay, weakening or repeal of numerous substantive legal protections.

For instance, the UK government raised the speed limit for lorries because its priority was to cut costs for haulage companies – despite acknowledging that this move could cause additional fatal road accidents. Don’t be fooled: this is not about reducing form-filling. This is about ripping up the laws that protect us.

UK Ministers were quite honest about what this is all supposed to achieve – in the words of then-business minister Michael Fallon: “Whitehall is increasingly putting the needs of businesses centre stage.” Trump’s motivation for adopting the One In, Two Out rule is undoubtedly similar.

Next, the US-UK trade deal could cement the dergulation in for good

But why does Trump’s copycat move spell any further disaster for the UK, given that we already have a worse policy? Because it’s likely that we’re on the verge of signing a hastily negotiated trade deal with the USA when we leave the European Union.

Trade deals aim to level out regulatory standards between two countries so as to facilitate the exchange of goods and services with fewer checks. In theory, this could mean that both countries choose to raise their standards to make them equal. But with the current One In, Two Out rules, the direction of regulatory standards overall can only be downwards.

We were promised that Brexit would restore parliamentary sovereignty and allow us to take back control of our laws. A new trade deal with Trump will do precisely the opposite.

Brexit has driven a wedge between the UK and its closest allies, and Theresa May’s current strategy is to seek protection from the playground’s biggest bully. But that unpleasant pact cannot end well.

Trump’s protection comes with a price: locking in a downward spiral of regulatory standards in order to appease the interests of corporate power.


Trump promises better trade deals. He should also make them more democratic

Donald Trump has formally withdrawn the U.S. from the Trans-Pacific Partnership. But the fact is the TPP was dead in the water well before Trump set foot in the Oval Office. He didn’t kill it. Millions of Americans, including thousands of Mainers, did by holding our elected representatives accountable.


Now advocates of fair trade policies are anxiously waiting to see whether President Trump will embrace transparency during future trade negotiations and allow many groups to participate that have been largely shut out of the process under previous administrations.

Trump’s official withdrawal from the free trade agreement was another staged victory lap for our 45th president. The TPP could have been approved by a simple majority vote in Congress after Michael Froman, the chief U.S. trade representative under President Barack Obama, signed it last February, but there was never enough support to bring it to a vote.

Throughout the TPP’s secret negotiations, there were 500 corporate advisers on hand, but the people were largely shut out of the process. A broad coalition of environmental, family farm, labor, labor, social justice and other organizations worked hard to stop it. Countless letters, phone calls, emails and meetings with members of Congress turned TPP into the “Toxic-Pacific Partnership.” So toxic, in fact, that Trump and Hillary Clinton ran on platforms opposing it.

Columnist Gwynne Dyer recently suggested that for Obama and many U.S. officials the deal was really about our strategic rivalry with China. Maybe so, but for most of us it was about the devastating effects these unfair trade deals can have on the environment, food safety, workers, internet freedom, access to medicine and countless other areas that touch our everyday lives.

In reality, much of the TPP had very little to do with trade. Most of its chapters were designed to shift the balance of power away from people and their governments and over to multinational corporations. Perhaps the most onerous parts of the TPP had to do with the Investor State Dispute Settlement provision. This gives corporations rights to damage payments if a law, regulation or rule is found to be in violation of the corporation’s rights under the trade agreement.

The dispute settlement provision circumvents domestic courts and grants new rights to corporations from other countries to sue our government before a tribunal panel of three corporate lawyers, who can award the multinational corporations unlimited sums of American taxpayer money.

Dyer correctly pointed out that automation is responsible for significant job loss in U.S. manufacturing industries, and that will continue regardless of the fate of TPP and other trade deals, a fact that Trump neglected to mention during a campaign in which trade policy played a significant role. Trump’s rhetoric scapegoating foreigners for stealing American jobs is an oversimplification at best and xenophobic at worst.

But the TPP would have incentivized the offshoring of jobs and sped up the race to the bottom for American workers forced to compete with workers in countries such as Vietnam earning just pennies to their dollar. This fact isn’t lost on the hundreds of Maine workers making shoes at New Balance who faced an uncertain future if the TPP was ratified by Congress.

Now that the TPP is behind us, what comes next?

There’s already talk of replacing the TPP with a series of bilateral trade deals with countries such as Japan, Australia and New Zealand to avoid strengthening China, according to Peter Navarro, director of Trump’s newly-created National Trade Council. Trump’s pick for commerce secretary, Wilbur Ross, will lead accelerated talks with Mexico and Canada on renegotiating the North American Free Trade Agreement, the president has said.

The NAFTA renegotiation process and any bilateral deal negotiations must be transparent and participatory — the opposite of the secretive and corporate-dominated talks that produced NAFTA and the TPP. Members of the public must be invited to help craft U.S. positions and comment on draft proposals before negotiations. Negotiated texts also must be available to all, with opportunity for comment, after each round of negotiations.

The U.S. must adopt the longstanding demands of consumer, environmental, faith, family farm and labor organizations on what to include and not include in trade agreements. If not, trade deals under Trump could just be more of the same — or they could even be much worse.

Matthew Beck is the vice president of Maine Fair Trade Campaign, a coalition of labor, environmental, human rights, family farm and community groups working together for a new vision on trade policy and economic justice.


Some free Truths About Free Trade

The reality is that all successful economies grew up behind walls of protectionism.

3a5dbc446212481baffa5a51b2751976_18.jpgPaul Krugman, the Nobel Prize-winning economist and columnist for The New York Times, whose academic specialty was free trade, wrote that, “If there were an Economist’s Creed, it would surely contain the affirmations ‘I understand the Principle of Comparative Advantage’ and ‘I advocate Free Trade.'” He puts it in that order because one rests on the other.

The concept of “comparative advantage” imagines everything as closed and static – nations, industries, technology, and methods of doing business – and also, as very, very simple. Then it says that a nation should determine what it can produce most efficiently, give up anything it does less efficiently, and put all its resources into the thing it does best.

This refers to opportunity cost and it implies that putting effort into anything except its most efficient product diverts capital and labour, thus losing the “opportunity” to invest in its most super-special product.

Then they make lots of their special commodity and trade it for the things they gave up on, which they can now buy for less than what it would have cost them to make it themselves. There’s more of everything and everything is cheaper and everyone makes out.

Why the theory cannot always work

The original example, from David Ricardo in 1817, used two countries to illustrate the principle of comparative advantage, England and Portugal, and two products, wine and cloth. He concluded that England should just make cloth and Portugal should concentrate on wine.

At first glance, that seems to make sense. As ordinary thinkers, we rather automatically put that into our more general vision of the economic universe. Wine production depends on natural resources of a special kind, sun and soil, which can’t be imported. Since it was lacking those, England should have never been competitive, although the English seemed to be a more “industrial” sort of people.

However, as soon as we insert the example into the real history of the real world, it ceases to work. England’s textile industry – once upon a time a giant – has virtually disappeared. (It currently ranks behind Zimbabwe.) So it would have been a very bad bet indeed.

However, the Portuguese either had the wisdom to ignore classical economists, or had the luck of the less literate and failed to read Ricardo, and they’re still making money from wine today.

In Ricardo’s time, England did have a comparative advantage in textiles. In his illustration it’s simply there, in much the same way that Portugal’s come from geography.

But it wasn’t either an accident of location or a gift from God. That advantage was manufactured by technology, domestic infrastructure, naval supremacy, and imperialism.

The reality is that all successful economies grew up behind walls of protectionism. Alexander Hamilton and Abraham Lincoln were great advocates of tariffs, government spending on infrastructure, and support of domestic industries.


When we look at the actualities of history, theory shatters on the rocks of reality. Yes, there are moments when comparative advantage seems to exist. But if a nation throws all its resources into the best industry, it will, in the long term, be a disaster.

Also, and this is more important, comparative advantage – and absolute advantage versus other nations – can be, and is, manufactured.

In the 19th and 20th centuries, natural resources were presumed to be the key to economic dominance. The fight was on, in particular, for coal and iron, for fuel and steel. Yet Japan, which had neither, emerged as one of the great manufacturing powers in the world. Through policy, intent, and war.

Bad logic, sloppy science.

The reality

Nonetheless, free trade became dogma in economics and among the political and financial elites. It was virtually unchallenged in politics and business.

Until Donald Trump. With a nod to Bernie Sanders.

This immediately prompts two very provocative questions.

Can Donald Trump be right about anything?

Can virtually the entire economics profession be wrong about something? Not just for a few years, or a couple of decades, but for somewhere between 70 years (since the end of World War II) and 240 years (since the publication of Adam Smith’s The Wealth of Nations).

The reality is that all successful economies grew up behind walls of protectionism. Alexander Hamilton and Abraham Lincoln were great advocates of tariffs, government spending on infrastructure, and support of domestic industries.


Nine Dem senators say hiring freeze hurting trade enforcement

Nine Democratic senators urged the White House on Thursday to end a federal hiring freeze for employees working on U.S. trade enforcement efforts.

tradeThe Senate Finance Committee members sent a letter to President Trump calling on him to reverse course for federal government employees responsible for improving the nation’s trade enforcement. 

“During your campaign you described trade enforcement as the center of your plan for trade reform,” they wrote.

“Freezing hiring for the very agencies that will be essential to fulfilling this objective runs contrary to your own campaign promises and undermines long-running bipartisan efforts to enhance trade enforcement throughout the federal government.”

The letter was sent by Finance ranking member Sen. Ron Wyden (Ore.) and Sens. Sherrod Brown (Ohio), Bob Casey (Pa.), Debbie Stabenow(Mich.), Ben Cardin (Md.), Bob Menendez (N.J.), Tom Carper (Del.), Michael Bennet (Colo.), and Maria Cantwell (Wash.).

Trump announced the federal hiring freeze on Jan. 23. 

Congress cleared a customs enforcement measure in 2015 aimed a tackling many issues within the system. 

The lawmakers said that, for example, producers of steel and softwood lumber are relying on investigators and attorneys at the Commerce Department to address unfair trade practices harming U.S. workers and communities.

They also pointed to the need for trade specialists and border agents at Customs and Border Protection to investigate companies that are failing to pay import duties

The senators said “the timing of the freeze is particularly problematic given that several of these agencies are implementing new enforcement tools” that were in the customs enforcement measure.


Trump and trade: Five things to watch

All eyes are turning to see whether Trump will fulfill his promise to overhaul U.S. trade policy.  The president-elect has vowed to rewrite global trade agreements to better protect American jobs and businesses, but has yet to provide much detail on what steps he will take.

Yet it’s clear that Trump’s presidency will usher in a new era of trade dealings, one that could churn up new tensions with major trading partners like China, Mexico and Japan.
Here are five trade policies to watch in the Trump administration.

Withdrawal from the Trans-Pacific Partnership
Trump is withdrawing the United States from a sweeping Asia-Pacific trade agreement as his first order of business in the White House. Trump has called the TPP “a potential disaster for our country” and has said he prefers bilateral trade deals. To remove the United States from the deal, Trump would only have to send a letter to New Zealand, which acts as the deal’s administrator. The move will probably be denounced by business groups, which have aggressively pushed for passage of the TPP even as they’ve praised Trump for his Cabinet nominations. TPP was President Obama’s signature trade deal and the one he had hoped to push through Congress before leaving office. Withdrawing from it would unravel years of work and inject fresh uncertainty into global relations. Many trade advocates argue that abandoning TPP hands China the economic and strategic reins in the rapidly growing Pacific. The 11 other nations that are party to the deal say U.S. involvement was critical to creating a more equitable trading zone across the Pacific Rim.

Renegotiating the North American Free Trade Agreement   
Soon after he takes office, Trump is expected to start the process of reworking the 22-year-old NAFTA trade agreement. Trump and his team are gunning for sweeping changes to the deal with Mexico and Canada; both countries have said they are willing to discuss modernizing NAFTA.  Wilbur Ross, Trump’s pick for Commerce secretary, is a vocal critic of NAFTA who has made a renegotiation of the deal a top trade priority.  Ross and Peter Navarro, a University of California at Irvine economics professor who has been tapped to lead the newly created White House National Trade Council, co-authored a paper in September criticizing the use of “backdoor tariffs” they argue give Mexico a competitive advantage.  “It is thus not surprising that U.S. corporations want to move their factories offshore and then export their products back to the U.S.,” the paper said.  Any shake up of the trio of North American countries could upset a complex supply chain system because many products cross borders several times before they are ready for customers.   If Trump is not satisfied with the results of any future talks, he could still potentially pull the United States out of NAFTA, setting up the possibility for bilateral trade agreements with the northern and southern neighbors.

Realigning trade power 
Trump has said he would consolidate trade policy decisions in the hands of a few select members of his administration, mostly Ross and Navarro.  Trump also recently named his longtime attorney Jason Greenblatt to the position of special representative for international negotiations, where he could assist with global trade agreements.  The core of trade power appears to be shifting away from the Office of the U.S. Trade Representative, an agency that has led negotiations on a series of complex trade deals, including the TPP and a deal between the United States and the European Union.
Ross is expected to lead the charge on trade policy going forward, with Navarro serving as a liaison to Trump, who is expected to play a more personal role in negotiating trade policies with countries like China.  There is still plenty of uncertainty around whether Greenblatt would work with USTR or supersede that agency’s role.  Trump has yet to choose anyone to head up the USTR. He has criticized the trade agency in the past, saying it negotiates bad agreements.   Navarro, an outspoken China trade critic who has said past trade deals have hurt the nation, will helm the new trade council aimed at advising Trump on trade talks. He’s written two books critical of Chinese foreign and economic policy. He backs Trump’s idea of levying a 45 percent tax on Chinese goods.

Tariffs on countries and companies
Trump has repeatedly called for double-digit tariffs on imports from Mexico and China to reduce the trade deficit, which he and several of his nominees have linked to the nation’s shedding of manufacturing jobs. He is employing the threat of high tariffs to prevent companies from moving jobs and production out of the United States. Punishing companies for sending jobs overseas would represent a major shift in U.S. trade policy, and one that would have unpredictable effects on economic growth.  Trump has floated a tariff of 35 percent for off-shoring jobs, but it’s unclear whether he could move to punish individual companies without action from Congress. He also has vowed to slap a 45 percent tariff on Chinese imports if Beijing doesn’t change its trade practices.
Congress has given presidents the ability to levy tariffs in an emergency, but even those could eventually be challenged at the World Trade Organization. Under existing laws, Trump could impose tariffs on certain industries but not on individual companies or countries like Mexico and China.

China currency  
Trump says the United States is “being hurt very badly by China with devaluation” of its currency, the yuan. To that end, he may call for the Treasury Department to label Beijing a currency manipulator early in his presidency, a move that would rile Chinese leaders.
Republicans in Congress could also take action.  Republican Sen. Lindsey Graham (S.C.) said recently that next year he would revive currency legislation aimed at levying harsher penalties on China for deliberately lowering the value of their currency to gain an advantage in international trade.   While Congress has expressed support for cracking down on China’s currency, the Treasury Department determined in an October report that no world economy, including Beijing, met the three-stage criteria to be labeled a currency manipulator.   China has actually been selling dollars to keep the yuan’s value steady.
Still, Trump has continued hammering China as manipulating its currency.
In a recent speech he said that “China and others, they just knock the hell out of the value of their currency, and we have to go back and back. And it just doesn’t work, folks.”

By Vicky Needham for The Hill.

Trump to withdraw from the TPP

Donald Trump has signed a notice starting withdrawal from the proposed Trans-Pacific Partnership trade deal.

Trump called the move “a great thing for the American workers.”

It remains unclear if Trump would seek individual deals with the 11 other countries in the TPP, a group that includes Canada and represents roughly 13.5 per cent of the global economy, according to World Bank figures.

Trump has blamed past trade deals such as the North American Free Trade Agreement and China’s entrance into the World Trade Organization for a decline in U.S. factory jobs.

Withdrawing from TPP should come as no surprise, Trump vowed to withdraw from the 12-nation deal on his first day in office, calling it “a potential disaster for our country.”

Even the new White House website makes mention of the administration’s plans of dumping TPP.

“This strategy starts by withdrawing from the Trans-Pacific Partnership and making certain that any new trade deals are in the interests of American workers,” the website reads.

The TPP, which aims to cut trade barriers in some of Asia’s fastest-growing economies and stretch from Canada to Vietnam, can’t take effect without the United States. It requires the ratification of at least six countries accounting for 85 percent of the combined gross domestic product of the member nations.

READ MORE: John Kerry defends Trans Pacific Partnership on last trip as top US diplomat

Japanese Prime Minister Shinzo Abe said “the TPP would be meaningless without the United States,” even as parliament continued debating ratification and his government vowed to lobby other members to approve it.

However, other members of the 12-nation grouping could conceivably work around a U.S. withdrawal. Australian Trade Minister Steven Ciobo has said countries could push ahead with the TPP without the United States by amending the agreement and possibly adding new members.

READ MORE: Donald Trump to meet with labour executives on first full day in office

Danger Still Lurks in TiSA Under Trump

Fair Traders who are celebrating the defeat of the Trans-Pacific Partnership (TPP) may see their hard work undone if the talks towards the proposed Trade in Services Agreement (TiSA) continue under Trump.

tisa-620xauto-1Many Democrats who minimized the importance of the negative impacts of corporate trade deals on working class Americans have now paid the price in the recent elections. As my colleagues at the Center for Economic and Policy Research have pointed out, racists and xenophobes were always going to vote for Trump but the key voters the Democrats were counting on that they lost were largely working class voters, many of them union members, in states hit hard by trade deals (supported by both parties) that put working class people in competition with lower-income manufacturing workers in other countries whilepreserving protections for intellectual property-holders and high income professions.

While these working class voters may have voted against their economic interests in terms of workers’ rights, social security, work/life balance, and other pro-worker provisions in the Democratic platform, they were right that both parties have become too aligned with corporate interests — and trade agreements is one of several instances where that is the case.

It is yet to be seen how or if President-elect Trump will make good on his pledges on trade to these voters, but in the initial preview of his first days in office, he has promised to withdraw from the TPP. Likewise the talks with the EU on a Transatlantic Trade and Investment Partnership (TTIP) are on hold. In the EU, the EU-Canada agreement, known as CETA, is in limbo while the European Court of Justice decides whether the dispute settlement mechanism in the agreement complies with EU law.

Fair trade advocates are rightly celebrating important victories and noting that, thanks to successful grassroots campaigning, President Obama did not ever have the votes to send the TPP to Congress for approval, and won’t be able to do so in the lame duck session as he had originally intended.

Unfortunately there is still a corporate trade agreement under negotiation that has so far received scant attention: the proposed Trade in Services Agreement (TiSA). Trump has not commented about the TiSA, so we really don’t know his views. But there are three reasons why we’re not “out of the woods” with the TiSA, and why the TiSA isn’t in the same category as the TPP and TTIP for now, despite media reports that the deal is on hold until US negotiators get new instructions:

1. Trump is not against corporate-driven trade agreements; he has said that he thinks US negotiators did a bad job negotiating and that they’ve gotten bad deals, and that he’s going to renegotiate and get good deals. So he could very well take up the TiSA as an agreement that’s still under negotiation, put his stamp on it, and then claim that “this is what happens when you negotiate a good agreement!” And you can bet that the corporations are doing their best to talk with him now about doing this, because they are not going to abandon the project when he has yet to state his position.

2. The TiSA is about locking in further deregulation and privatization, and Trump loves deregulation and privatization.

3. The TiSA is focused on services, so it may not speak to the working class in his base in the same way that agreements that result in the transfer of manufacturing jobs to low-wage, worker-unfriendly countries like Vietnam do.

Thus, there is an urgent need in the United States to not only ensure that Trump does not take up a re-packaged TPP or TTIP (and possibly negotiate an even worse deal for ordinary citizens), but also to use the short window of time before he announces his opinion on the deal to ensure that the TiSA is permanently sidelined as well.

However, it’s important not to think of TiSA as “only about services.” Now that nearly every chapter of the agreement has been leaked, a more complete picture has emerged: that the TiSA is fundamentally an offshoring and outsourcing charter.* The TiSA is intended to lock in a system of rules to allow multinational companies to operate in a borderless digitized environment with minimal regulation and maximum rights regarding the treatment of labor, capital, inputs, and the new key element of data. As promoted by the multinational financial, logistics, and big data corporations through Team TiSA, the agreement would set severe limits on the ways that governments can regulate domestic economies, removing key tools of economic management and the ability to shape the service economy while providing an extensive corporate bill of rights for multinational companies’ operations across the globe. Given the shift in employment patterns from high-paying manufacturing jobs to low-wage services jobs, and given the potential offshorability of millions more services jobs, the danger posed by TiSA is daunting.

Read on for ten ways that the TiSA could fundamentally affect jobs and the labor market, based on provisions in the leaked texts, some of which have been accepted by all parties and some of which are under negotiation.

Trump And Trade: A Plus For Workers?


On a good day, Donald Trump can fool some people into thinking that he will be a change for the better on trade policy, and by extension on American jobs.


He’s for keeping more jobs in the US, renegotiating NAFTA, and taking a tougher line with China.He did a cute publicity stunt, strong-arming Greg Hayes, the CEO of Carrier’s parent corporation into keeping several hundred jobs in Indiana (lubricated by tax breaks).

Progressives were on the verge of killing the misconceived Trans-Pacific Partnership, when Donald Trump administered the coup de grace—and took the credit.

Trade deals like TPP, and NAFTA before it, signaled American workers that trade policy was mainly for corporate and financial elites, not for regular people. Despite the repeated claims that these deals would produce expanded benefits for all, the benefits went to the top.

The fact that Bill Clinton, Barack Obama, and Hillary Clinton all promoted NAFTA and TPP (until Hillary awkwardly tried to walk back her support), split the progressive coalition and helped Trump. Some pro-business economic nationalists, such as Alan Tonelson, have contended that progressives, therefore, ought to be applauding Trump’s trade initiatives.

Should they?

Trump’s top adviser on trade, Dan DiMicco, is former CEO of Nucor Steel, a very successful (and viciously anti-union) mini-mill producer, which has on occasion filed trade complaints against China. It’s not clear whether DiMicco will get a job in the administration, but DiMicco supports U.S. manufacturing and is very familiar with the games that China plays.  Trump’s Commerce Secretary-designate Wilbur Ross is also a longtime critic of the U.S. government’s failure to get tougher with China.

Trump’s people are already reaching out to some progressive activists on trade. It makes sense to listen, even to make suggestions, but then to be very, very skeptical of the results.

If we go back to first principles, what’s wrong with U.S. trade policy? For one thing, it has promoted a set of global rules that define ordinary forms of financial, labor, health, safety and environmental regulation as violations of free trade.Secondly, trade policy has promoted deals like NAFTA that not only make it easier to export and outsource jobs, but create extra-legal private tribunals to which corporations and banks can file complaints and not have the decisions subject to court review. Third, trade policy has failed to challenge the mercantilist practices of other nations that close foreign markets to U.S. exports and leave American producers vulnerable to subsidized imports. That has caused the Midwest to hemorrhage jobs—and again, opened the door to Trump.

In the 1970s and 1980s, U.S. trade policy displayed these odd indulgences because state-led economies like Japan and Korea were good Cold War allies. More recently, American presidents have failed to get tough with China—no ally―in part because China cut a deal with American financiers to give them a piece of the action (thank you, Robert Rubin) and in part because U.S.-based multinationals are quite happy to produce in China’s low-wage, subsidized factories. In other words, trade policies under both Democratic and Republican presidents have helped American industry and finance sell out American workers. This was the year that somebody called them on it, and workers noticed.

But what will Trump do now, and where, if anywhere, is there common ground with progressives?

Photo-ops with executives pressured into keeping a few more jobs at home may be smart politics for Trump, but they don’t add up to a trade policy.

It helps to remember that America’s misguided trade policies are part of a suite of policies that have been bad for workers. The others include financial deregulation, inadequate labor regulation, tax policies that promote outsourcing, insufficient public investment and a war on unions.

Trump’s policies in all of these other areas are likely to make things worse, not better. Just look at who he is appointing to key labor, environmental and regulatory posts.

It also helps to remember that Trump’s administration is turning out to be corporatist. If Trump tries to tell his business allies where to produce at more than token levels, the corporate pushback will be yuge.

Photo-ops with executives pressured into keeping a few more jobs at home may be smart politics for Trump, but they don’t add up to a trade policy. That said, Trump has decided to ally with Russia and get tougher with China. You could imagine Trump taking a harder line against China’s subsidized exports. The U.S. government has the authority to initiate anti-dumping trade cases, but with America’s kid-gloves policy towards China, that not has been done since the 1980s. In industry after industry, complaints and the cost of pursuing them have had to come from private parties―unions and companies. If Trump were to change that policy, it would be hard for progressives not to applaud, even while holding their noses. For instance, New York City just signed a contract to use public money give a Chinese state-owned company, the China Railway Rolling Stock Corporation (CRRC) the contract to build at least 1,025 new subway cars. CRRC has already built about 1,000 subway cars for Boston and Chicago. As part of the New York deal, the Chinese state company gets to acquire a U.S. producer of rail cars. That aspect of the deal required the approval of President Obama, and certification that the deal did not have national security implications, over the objections of a rare bipartisan group of 42 senators.

Deals like this happen all the time. If would not be hard for Trump, as a good New Yorker, to insist that this contract go to an American producer. That would be a nice symbolic demonstration of concern for U.S. industry and jobs, as well as a way of showing up the Democrats. Trump is a master of the symbolic stunt, and on trade he actually has some advisers who know what they are doing.

Trump may try to keep more jobs at home―but by destroying social standards he assures that they will be low-wage jobs. For decades, progressives have been calling for a new global trade regime that helps raise rather than lower social standards, in labor, the environment, health, and human rights. Whatever else Trump delivers, he will not deliver that. What he might deliver, though, is a form of economic nationalism that helps his corporate allies, while doing little if anything for American workers, with the exception of workers in extractive industries, a relative handful of production workers, and some construction jobs if he gets serious about infrastructure (though he also supports killing the Davis Bacon Act which supports construction wages).

As the outlines of his policies become clearer, there may be occasional points of convergence, such as the mercy-killing of TPP, and the retention of some jobs at Carrier (though it only took Trump a little while to trash the president of the union local), and some get-tough stuff with China. Here is the real risk. A moderately tougher trade policy could take the spotlight off the net effect on workers. Regulatory relief and lower taxes for industry plus the trashing of unions and labor standards may create more jobs, but with wages and career horizons that are even lower.

As Trump goes through the motions of a pursuing a trade policy that serves the people who voted for him, our job is to be very careful not to be gulled or co-opted, to keep pointing out what a real pro-worker trade policy looks like, and to challenge Trump to support one.

Robert Kuttner is co-editor of The American Prospect and professor at Brandeis University’s Heller School. His latest book is Debtors’ Prison: The Politics of Austerity Versus Possibility

Six Ways We Could Improve Nafta

For years we’ve talked about the shortcomings of the North American Free Trade Agreement (we even released this detailed report on its 20th anniversary) and how trade deals created behind closed doors with corporate CEOs harm working people.

6-ways-we-could-improve-nafta-for-working-people_blog_post_fullwidthToday we released a blueprint for how to rewrite NAFTA to benefit working families. This past election there was much-needed discussion on the impact of corporate trade deals on our manufacturing sector and on working-class communities. The outline below puts forward real solutions that should garner bipartisan support if lawmakers are truly serious about realigning our trade policies to help workers.

We need a different direction on trade. This movement has been largely driven by working people. As we approach the inauguration of a new president, it is important that everyday working people’s perspectives lead the debate, starting with how to rewrite NAFTA.

The AFL-CIO has long supported rewriting the rules of NAFTA to provide more equitable outcomes for working families. To date, the biggest beneficiaries of NAFTA have been multinational corporations, which have gained by destroying middle-class jobs in the U.S. and Canada and replacing them with exploitative, sweatshop jobs in Mexico. It doesn’t have to be this way. With different rules, NAFTA could become a tool to raise wages and working conditions in all three North American countries, rather than to lower them.

Read the full key areas for improvement.