The paradoxes and pitfalls of Trump’s trade agenda

Whether President Trump’s trade policy can deliver on his stated goals of reducing the U.S. trade deficit and creating American jobs remains to be seen. Whether he can build congressional support for his trade agenda is also uncertain.

flags173212826.jpgMany congressional Republicans support the status quo. Many congressional Democrats oppose pacts like the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP). But the trade policy alternatives that Democrats have demanded for decades do not align with Trump’s nationalist, protectionist vision.

In this context, it’s worth considering Trump’s first days. He took horrifyingly overreaching actions on immigration, but did not employ authority he actually has over the trade issues that propelled him to victory in Michigan, Ohio, Pennsylvania and Wisconsin, and thus into the White House.

He did not deliver on a prominent “first-day” promised action—declaring China a currency manipulator. China accounts for $367 billion, or about half, of the massive U.S. trade deficit.

Despite the “buy American, hire American” slogan featured during and since Trump’s inaugural speech, also notably missing was an executive order reversing the waiver of Buy American policies provided by past presidents.

The waiver affords favored access to U.S. government contracts for all firms and goods from 45 World Trade Organization (WTO) nations and 16 additional U.S. free trade agreement (FTA) partner countries. By undermining the Buy Americanpreferences for government purchase of U.S.-made goods in place since the Roosevelt administration, this policy offshores U.S. tax dollars rather than reinvesting them to create manufacturing jobs here.

 Shockingly, a recent executive order ostensibly requiring U.S.-made pipe to be used in all pipelines projects actually includes language reinforcing this trade-agreement Buy American waiver.

Trump did follow through on formally withdrawing from TPP. But burying the moldering corpse of a dead deal that couldn’t gain a majority in Congress since it was signed a year ago despite the Obama administration’s best efforts does not create jobs or reduce the deficit.

What Trump does with the live agreements he inherited, most notably the U.S.-China Bilateral Investment Treaty (BIT), will be telling. The Obama administration failed to quite finalize that deal, but at its heart are the investor protections found in NAFTA and included in TPP that make it easier for U.S. firms to offshore jobs.

The pact also grants new rights for Chinese firms to acquire U.S. companies, land and more, and operate them under privileged terms. It would also empower Chinese firms operating here to sue the U.S. government outside of our court system to demand taxpayer compensation via the controversial investor-state dispute settlement regime Trump says he opposes. Given the pact’s terms and China’s role as a top target of Trump trade wrath, the absence of a first-week executive order terminating these negotiations was conspicuous. More so given the other major trade negotiations Trump inherited, both of the multi-country variety Trump opposes, seem fated to end. The Transatlantic Trade and Investment Partnership (TTIP) already was all but derailed by European public opposition.

And if continued, the Trade in Services Agreement (TISA) would become Exhibit #1 of Trump self-dealing after refusing to divest his business holdings. There are Trump investments in many countries involved in TISA, which deregulates the real estate, construction, property management, retail, and finance sectors.

Meanwhile, Trump missed the Jan. 30 deadline to give Congress the notice needed to start NAFTA renegotiations within his first 100 days, as promised. Regardless, revisiting NAFTA  could be an opportunity to create a new trade pact model that benefits more people. Given it’s packed with incentives for job offshoring, NAFTA must be replaced, not tweaked.

If done wrong, renegotiations could increase job offshoring and our current $169 billion NAFTA goods trade deficit, push down wages, and expand the protections NAFTA provides to the corporate interests that shaped the original deal. This bad outcome is likely if the 500 official U.S. trade advisersrepresenting corporate interests who have called the shots on past trade deals remain in place and talks occur behind closed doors without opportunities for the public to weigh in.

There are many possible pitfalls. Commerce secretary nominee Wilbur Ross says the administration will increase the amount of North American content that must be in goods to earn NAFTA benefits. But doing so without adding terms that raise Mexico’s wages—now 40 percent below labor costs in China—would likely trigger another wave of American job offshoring.

And the corporate interests that have rigged past trade deals view NAFTA renegotiation as a means to revive elements of TPP, including limits on competition from generic drugs so pharmaceutical firms can keep medicine prices high.

Starting with a clean slate and creating a new deal designed to deliver the desired outcomes is the best policy approach. It’s also how to avoid having a deal, like TPP,  that cannot get through Congress.

Even given the grand irony that Trump is the beneficiary of the fast-track authority narrowly delivered by GOP congressional leaders who oppose his trade agenda, enacting a NAFTA replacement will require House and Senate majorities.

And replacing NAFTA and rebalancing China trade will be vital to improving the relentless monthly U.S. trade deficit and jobs data that will show if Trump’s trade policies deliver.

Lori Wallach is the director of Global Trade Watch at Public Citizen.

The New Rules of the Road: A Progressive Approach to Globalization

The New Rules of the Road: A Progressive Approach to Globalization By Jared Bernstein and Lori Wallach

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The emergence of trade as a top election issue shows that the economic and social costs imposed by our current trade policy model have reached a tipping point. For purveyors of the status quo, this is a crisis, as the inherent inequities in their approach to trade have finally surfaced. For those of us who have long recognized such inequities, the current moment presents an opportunity to craft a new model, a new set of “rules of the road.” Far from trying to set back the clock on globalization, it is only through this new, far more inclusive, non-corporate-centric approach that we can rebuild American support for expanded trade. This will not occur by continuing to assert that, despite their experiences, those who perceive themselves and their communities as having been hurt by exposure to the forces of globalization are just plain wrong. Or that the next trade agreement will be the one that fixes everything. Or by offering the increasingly large portion of the population who find themselves on the losing side of the current rules some temporary adjustment assistance.

It will only change if we change the content of our trade agreements and, in turn, the process by which we negotiate them. The “new rules of the road” must reflect the economic realities and needs of a much broader group of stakeholders. Crucially, to achieve such rules will require much greater transparency and inclusiveness in the policymaking process, helping to ensure that the resulting substantive rules represent the needs of the majority. This memo focuses on the substantive and procedural changes needed to realize these goals. Globalization will surely proceed apace. Neither Donald Trump, Brexit voters, nor anyone else can put that toothpaste back in the tube. Nor should they.

It is through expanded trade that we seek new markets for U.S. products, expand the supply of goods and services, and provide emerging countries with opportunities to grow by trading with wealthy countries. But trade and contemporary free trade agreements (FTAs) are far from synonymous. The recent U.S. International Trade Commission (ITC) report on the “likely impacts” of the Trans-Pacific Partnership (TPP) underscores that these agreements are not mainly about cutting tariffs to expand trade nor about jobs, growth, and incomes here in the United States. Rather, they’re about setting expansive rules that determine who wins and who loses. For years, those advocating for the “winners” that have been able to capture the negotiating process essentially said to those hurt by the resulting agreements: “Don’t worry, this will be great for you too. And, hey, if it isn’t, we will make it all better with adjustment assistance and some training.” The hollowness of these false promises is finally evident to the broad electorate. The rules must be written for all the cars on the road, not just the Lamborghinis.

Our new framework starts from the premise that the current “trade” agreement process has been co-opted by corporate interests whose goal is to establish binding, enforceable global rules that protect their investments and profits. This corporate capture comes at the expense of both peoples’ rights to democratically govern their own affairs and the ability of sovereign governments to effectively enforce worker, consumer, and environmental safeguards. What follows describes a new set of rules of the road, one that puts the economic needs of working families at its core while excising corporate, protectionist influences from the rules. Achieving such inclusive policies will require a new policymaking process to replace the current system of opaque negotiations, a system heavily influenced by hundreds of official corporate trade advisors while the Fast Track process limits Congress’ role and the public is largely shut out.

Initiatives That Must Be Part of the “New Rules of the Road for Trade”

Enforceable currency disciplines
When the rules are fair, Americans can benefit from expanded trade. But when trade partners are free to lower the value of their currencies to gain trade advantages, the negative effects are twofold.

Enforceable and substantive labor and environmental rights
Global corporations engaging in global commerce absent a floor of enforceable international labor and environmental standards incentivize a race to the bottom between nations in wages, working conditions, and environmental and health safeguards. Globally accepted labor and environmental standards exist, but they lack effective enforcement and should also be strengthened. Trade partners’ implementation and consistent enforcement of domestic laws that provide the labor standards set forth in the International Labor Organization Conventions and the environmental standards provided by a more robust list of Multilateral Environmental Agreements must be the minimum requirement that is included in the core text of our trade agreements.

Tighter terms regarding “rules of origin”
In order for the benefits of our trade agreements to flow to the workers in the countries that sign the pacts and play by the rules, we must have clear “rules of origin” that can’t be easily gamed. Under the TPP, a majority of a car’s parts could come from China, but a car assembled in a TPP country still could enter the United States with the duty-free privileges reserved for those in the TPP. By tightening “rules of origin” such that only goods with a solid majority of member-country content are treated as originating from member countries, the benefits of the deal will more appropriately flow to its signatories and their workers.

Facilitating export opportunities and combatting transshipment
Trade agreements should focus on the basic logistics of trading goods and services across borders rather than investor protections that subsidize job offshoring, extended patents and other rent-seeking devices that increase consumer prices, and/or other elements of the agendas of large multinational corporations. This includes facilitating trade flows with rules to standardize and reduce unnecessary Customs paperwork. Currently, even with average tariff rates at a historic low, only 3 percent of U.S. small and medium enterprises export any good to any country. In contrast, 38 percent of large U.S. firms are exporters. And under past FTAs, small businesses – which are least able to deal with Customs complications – have lost export share.

Selecting appropriate trade partners
The goal of U.S. trade agreements should be to facilitate trade flows, create jobs, and raise wages. Having the right trade partners is as important as having the right rules of the road. Moreover, sequencing matters. We reject the notion that bad actors that violate workers’ and human rights will become good actors if we simply invite them to trade more with us. Sadly, there is considerable empirical evidence on past U.S. trade initiatives with China, Vietnam, Russia and other nations that supports our view.

This is an edited excerpt. Read the whole article here

Mainstreaming Fair Trade and resulting Turmoil: Where Should the Movement Go from Here

Fair Trade is an important tool in the pursuit of sustainability. It is a way of doing business that builds equitable, long-term partnerships between consumers and producers throughout the world. Fair Trade provides a stepping stone toward a just and sustainable economic system that ensures that people get paid a fair wage for their work. In short, Fair Trade moves businesses along the path toward sustainability. The Fair Trade movement has grown substantially in recent years, bringing both blessings and challenges.

An article by PAULETTE L. STENZEL

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The good news is that Fair Trade is becoming more widely known and sought out by consumers, and Fair Trade goods are offered by increasing numbers of companies, including multinationals. However, this has led to a major split among Fair Trade advocates.The “transformers” focus on the needs of producers and want to stay close to the origins of Fair Trade. Their goal is to link farmers to eaters and craftspeople to purchasers through non-corporate partnerships.

A second view is that of the “reformers,” who prefer to work within existing business structures. They focus on building volume so that Fair Trade can help as many producers as possible.

Part I
The need for Fair Trade, definition and its value in pursuit of sustainability defines Fair Trade, provides a brief history of Fair Trade, and discusses its value.

Part II
Discusses the motives of companies that sell Fair Trade, including original mission-driven companies as well as major corporations that have recently added Fair Trade goods to their product lines. Corporate participation is a step toward the mainstreaming of Fair Trade. However, it also contributes to a splintering of the Fair Trade movement. Fair Trade USA has separated from the Fairtrade Labelling Organization (“FLO”) because Fair Trade USA is choosing a different approach to the entry of conventional sellers into Fair Trade. Additionally, competing programs called Direct Trade, Direct Fair Trade, and others have entered the marketplace.Some of them avoid certification programs while promoting goals similar to those of Fair Trade. A few have created their own certification programs. Therefore, this section discusses the problems that arise from this divergence from the original mission-based model for sellers.

Part III
Identifies problems in Fair Trade and discusses possible new directions for the movement. Those possibilities include action by producers, consumers, non-governmental organizations, and government.

Part IV
This examines possible new directions, explains why some options should be rejected, and recommends steps to help Fair Trade progress. The Fair Trade movement needs time to develop. Therefore, consumer education should be expanded and transparency should be increased. All Fair Trade organizations should follow the example of those that currently provide complete information about their supply chains, including the identities of all suppliers and intermediaries. They should also reveal exactly how much of the purchase price goes to each member of the supply chain. While the government should support Fair Trade, it should refrain from creating its own certification program.

The various participants in Fair Trade have important roles to play as the Fair Trade movement develops: consumers, producers, businesses of all sizes, and even government. The government’s role, at this point, should be limited to facilitating the development of Fair Trade and similar programs. Fair Trade has come a long way since its post–World War II origins, and, if its development is facilitated and nurtured, it has the potential to help make trade more just and fair for millions of people throughout the world.

This is a long and scholarly article but of great interest to those interested in Fair Trade. Read the whole article here.

Letter to Trump – social and environmental justice in trade policies.

Opposition to status-quo trade agreements has grown during the two decades that Americans have lived with the negative consequences of numerous trade deals premised on the model set in the North American Free Trade Agreement (NAFTA).

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The more than 12 million Americans represented by the diverse member groups of the Citizens Trade Campaign represent a broad demand in this country for policies that create good jobs, raise wages, reduce inequality, protect the environment and ensure healthy communities. You made criticism of America’s trade agreements a central focus of your campaign. It is all well and good that you have announced that you will not revive the Trans-Pacific Partnership (TPP) that already had no chance of passing Congress. But will you end negotiations now underway to establish more TPP-style agreements — including the Trans-Atlantic Trade and Investment Partnership, the Trade in Services Agreement and the U.S.-China Bilateral Investment Treaty — and will you replace NAFTA and other existing agreements with trade policies that put working people and healthy communities first? NAFTA has been a disaster for working people, healthy communities and a clean environment in the United States, Mexico and Canada.

For more than two decades, the deal has prioritized corporate profits while offshoring jobs, eroding working class wages, displacing family farmers, fueling forced migration, increasing medicine costs, rendering food unsafe, polluting our air and water and destabilizing our climate. Millions of people across the United States, Canada and Mexico have long pushed for a NAFTA renegotiation that would halt the deal’s damage to the majority. Calling NAFTA “the worst trade deal in history,” you said you would “tell our NAFTA partners that I intend to immediately renegotiate the terms,” pledging to withdraw from it if you could not make it “a lot better” for working people.

This will require your administration to immediately notify Mexico and Canada that the United States will withdraw from the agreement as provided in NAFTA Article 2205, unless the deal’s many harmful provisions can be eliminated and critical additions made through a transparent Citizens Trade Campaign renegotiation process during the first year of your presidency. The rubric for assessing a NAFTA renegotiation is clear: Does it put the needs of people and the planet over corporate profits? Does it support — not undermine — good jobs, public health and a more stable climate? If your administration fails to achieve these fundamental goals, or delivers yet another corporate-favoring deal that threatens such priorities, we will oppose it at every step.

To create good-paying jobs, eliminate threats to our communities and otherwise benefit the majority, NAFTA must be replaced with an agreement that includes these essential changes:

  • Eliminate rules that incentivize the offshoring of jobs and that empower corporations to
    attack democratic policies in unaccountable tribunals
  • Defend jobs and human rights by adding strong, binding and enforceable labor and
    environmental standards to the agreement’s core text and requiring that they are
    enforced.
  • Overhaul NAFTA rules that harm family farmers and feed a destructive agribusiness
    model
  • End NAFTA rules that threaten the safety of our food.
  • Eliminate NAFTA rules that drive up the cost of medicines.
  • Eliminate NAFTA rules that undermine job-creating programs like Buy American.
  • Add strong, enforceable disciplines against currency manipulation to ensure a fair
    playing field for job creation.
  • Strengthen “rules of origin” and stop transshipment so as to create jobs and reinforce
    labor and environmental standards.
  • Require imported goods and services to meet domestic safety and environmental rules
  • Add a broad protection for environmental, health, labor and other public interest
    policies.

PO Box 77077 Washington, DC 20013 phone: 202-494-8826 http://www.citizenstrade.org Citizens Trade Campaign is a coalition of labor, environmental, religious, family farm and consumer organizations united in the pursuit of social and environmental justice in trade policy working together for social and environmental justice in trade policy

Read the whole letter here.

Trump Missed Deadline for Promised Start of NAFTA Renegotiation.

Trump Missed Deadline for Promised Start of NAFTA Renegotiation in 100 Days, But Whenever Talks Begin, It’s the Content, Not Speed, That Counts. Statement by Lori Wallach, Director, Public Citizen’s Global Trade Watch

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The Trump administration can rename NAFTA the North American Free and Most Fairest of Them All Trade Agreement, but given that NAFTA is packed with incentives to offshore jobs and special protectionist goodies for various industries, NAFTA must be replaced – not tweaked – to actually deliver better outcomes for working people. Monthly government data will show whether a NAFTA replacement delivers on the trade deficit reduction and job creation Trump has promised and to move those numbers will require a new deal that raises Mexican wage levels and environmental standards and eliminates NAFTA’s job and investment offshoring incentives and ban on Buy American procurement.

Replacing NAFTA is important, but with China counting for half of the U.S. trade deficit, it is odd that Trump has not announced an end to negotiations almost completed by the Obama administration for a U.S.-China bilateral agreement that includes the job offshoring incentives at the heart of NAFTA or declared China a currency manipulator on his first day as promised. It’s ironic that Trump is the beneficiary of the “Fast Track” trade authority narrowly enacted by congressional supporters of NAFTA. By delegating away its constitution trade authority, Congress has empowered Trump to unilaterally launch NAFTA renegotiations or create new bilateral deals with Mexico and Canada; determine the contents, sign and enter into deals before Congress gets a vote; and then write implementing legislation and force congressional consideration in 90 days with amendments forbidden and Senate supermajority rules suspended.

Under the Fast Track rules, Trump needed to have given notice on Monday, Jan. 31, to be able to start NAFTA renegotiations within his first 100 days as promised. If the 500 official U.S. trade advisers representing corporate interests who have had a privileged role in developing our past trade deals, including NAFTA, remain in place to shape NAFTA renegotiations, the resulting deal not only could be more damaging to working people, but – like the Trans-Pacific Partnership (TPP) – become impossible to enact. Even with Fast Track, Trump requires House and Senate majorities to enact a NAFTA redo. Most congressional GOP and their corporate allies support the offshoring incentives and other terms that must be eliminated if Trump is to deliver on his deficit reduction and job growth goals.

Building a congressional majority requires that a NAFTA replacement exclude terms that would alienate congressional Democrats who for decades have promoted NAFTA alternatives to expand trade without undermining American jobs and wages, access to affordable medicine, food safety or environmental protections. (See Citizens Trade Campaign’s Jan. 13 letter to Trump and U.S. Rep. Rosa DeLauro’s Jan. 3 letter to Trump on what must be in a NAFTA replacement for it to provide broad benefits.) Many congressional Republicans and the corporations that have rigged past deals view NAFTA renegotiation as a means to revive aspects of the TPP. This includes limits on generic competition that bring down medicine prices for consume

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.

http://www.reuters.com/article/us-usa-canada-idUSKBN15N268

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.

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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.

http://www.theecologist.org/blogs_and_comments/commentators/2988603/a_marriage_made_in_hell_trumps_ukus_trade_deal.html

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.

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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.

https://bangordailynews.com/2017/02/07/opinion/contributors/trump-promises-better-trade-deals-he-should-also-make-them-more-democratic/

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.

http://www.aljazeera.com/indepth/opinion/2017/02/free-truths-free-trade-tpp-nafta-170202101303370.html

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.

http://thehill.com/policy/finance/317681-nine-dem-senators-say-hiring-freeze-hurting-trade-enforcementites