Monthly Archives: April 2018

NAFTA overhaul must address visa issues for Canadian workers who work across the border

While the primary focus during a critical stage of NAFTA negotiations this week is rightfully on auto manufacturing, the visa issue for thousands of Canadian commuters employed in the U.S. must be addressed in any potential agreement in principle, said local MP Tracey Ramsey.

imagesTalks are ramping up as representatives from the three nations involved in the NAFTA trade negotiations hope to have a tentative new deal soon.

Canadian Foreign Minister Chrystia Freeland is in Washington this week — her third visit in a month — where negotiations have ramped up and suggestions have been made a deal might be possible in the next week or two.

It is not expected any new NAFTA agreement would be filled with details — those would be worked out by bureaucrats over the next year or two — but hopes are high some type of announcement can be made.

“They are moving forward on auto, but the visa issue is not something they can push this through without,” Ramsey said on Wednesday.

“They need to ensure working people are protected and head in the direction of improving those (visa) standards and not regress to lower standards.”

Up to 7,000 people locally cross the border daily into Michigan for work — primarily in the health and auto sectors.

“Are they going to rush into an agreement-in-principle and what are they sacrificing to achieve that?” said Ramsey, adding that potential impacts on the local agriculture and winery sectors are also of concern.

Reaching an agreement by June is viewed by all three countries as essential since a federal election in Mexico is scheduled July 1 and midterm elections will be held this fall in the United States. Political changes are considered problematic to achieving a NAFTA agreement after months of talks.

There are also threats from U.S. President Donald Trump of imposing tariffs on steel against Canada, among other trade penalties, if a new NAFTA deal can’t be achieved soon. Given the heightened pressures on negotiators, the “labour mobility issue,” despite being important to Canadians — especially in Windsor — may have to be dealt with in another forum, said Maryscott “Scotty” Greenwood, CEO of the Canadian American Business Council based in Washington.

“There is so much else they are talking about and the clock is running out,” she said. “It is a really important issue, and I agree not enough attention has been paid to that during these talks.”

Greenwood described the current state of negotiations this week as a “delicate time” with all three nations doing everything possible to achieve some sort of agreement. Part of the problem in reaching a deal in the auto manufacturing sector is how the U.S. government’s goals are different, despite industry officials from all three nations basically on the same page “on what the future should look like,” she said.

“They are trying to get the U.S. government, in particular, to fit the industry point of view and that’s not usually how it goes,” Greenwood said. Flavio Volpe, president of the Automotive Parts Manufacturers Association in Canada, believes there is “real positive momentum” being made this week, especially around the auto sector which bodes well for Windsor.

But he remains nervous about an agreement-in-principle by the chief negotiators, saying “we need the terms, you can’t sign on a handshake.” Volpe believes securing a phase-in period for any radical changes in the auto sector under a new NAFTA deal must be a “five- to seven-year program.”

Without that, auto part suppliers could be hit hard — and jobs in the Windsor area would be impacted, he said. U.S. officials have pushed for a phase-in period as low as two years. “If (manufacturers) have to change their supply dynamic there will be a cost for everybody,” Volpe said.

Contracts are secured long in advance between automakers and their suppliers — often up to seven years — and there may be penalties to pay or tariffs if compliance requirements change vehicle content, he said. The U.S. has pushed for North American content to be raised to 75 per cent, up from the current 62.5 per cent, in hopes of creating more jobs within its own borders, according to reports.

“For a city like Windsor, with such a concentration in the (auto) supply sector and amount of business tied to the Detroit 3, that would not be good to have the U.S. impose a two-year transition,” Volpe said. “You will have manufacturers deciding whether they want to pay penalties or break contracts with their local suppliers.”

 

From the  WINDSOR STAR

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NAFTA CRUNCH TIME: LOTS OF ACTION, LITTLE PROGRESS

Top-level NAFTA meetings among Canadian, Mexican and U.S. officials are expected to continue today as the three sides continue to push for any sort of agreement in principle to announce in the coming days.

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But with the parties still clashing over a number of the most controversial issues, auto rules chief among them, it remains as unclear as ever what a preliminary deal would really look like.

“The U.S. hasn’t changed its position on anything, on any of the poison pills,” an international trade lawyer closely following the negotiations told Morning Trade. “It seems like there’s a lot of action and not a lot of progress.”

As the window for passing any agreement through the U.S. Congress this year narrows, and the deadline by which steel and aluminum tariffs are slated to take effect on Canadian and Mexican imports approaches on May 1, urgency for the three sides to reach at least a skeleton agreement in principle is reaching a peak. With deadlines looming, an increasingly common view among several sources closely following the talks is that ministers may in the coming days announce a NAFTA framework that outlines specifics of modernized automotive rules of origin while leaving the details of other high-profile issues – dispute settlement, for example, and government procurement – somewhat vague.

Defining ‘agreement in principle’: Reaching agreement at least on automotive rules would mark a major step forward in the negotiations and likely give U.S. Trade Representative Robert Lighthizer reason enough to extend temporary exemptions on steel and aluminum tariffs for Canada and Mexico. But what’s less clear is how much detail the preliminary agreement would have to go into in order to start the clock on Trade Promotion Authority legislation that the U.S. administration must follow to submit the deal to Congress for an up-or-down vote.

To start that clock, USTR must give Congress a formal 90 days’ notice before signing the agreement. But it is not statutorily required to release the final text until 60 days before signing, giving negotiators some wiggle room to continue nailing down specifics even after the agreement in principle is reached.

“The Lighthizer clock for what is needed to start the clock is lower than what Congress perhaps thinks and what is in Trade Promotion Authority,” a private-sector source said. “I gotta believe that even if there is some agreement in principle, there’s still going to be a lot of details left to be worked out.”

NAFTA TALKS STAY FOCUSED ON AUTOS

Meetings between the NAFTA nations’ trade ministers remain focused on ironing out details on automotive rules of origin, Canadian Foreign Minister Chrystia Freeland said Wednesday evening. After two full days of bilateral talks, Freeland told reporters that 90 percent of her Wednesday talks with Lighthizer were about “getting into the real detail of a meaty issue, which is at the heart of this negotiation.”

“It was really a roll up your sleeves, less a negotiation today, and more an iterative process of tossing ideas back and forth across the table,” she said outside the Winder Building.

The three countries are taking a shared approach to “devote the lion’s share of our time right now to rules of origin,” she added. On Tuesday, Freeland had signaled that Wednesday’s talks would start to dig into “a number of other significant issues” that remain to be resolved – but she instead said on Wednesday evening that “no one should understate the complexity of the issue we’re facing” on getting the rules of origin right.

She reiterated Wednesday that negotiators are seeing “good, constructive progress,” as they are working on “a set of proposals based on the creative ideas the U.S. came up with in March.”

NEW DEM COALITION MEMBERS SEND A NAFTA WARNING: A group of pro-trade Democrats is warning Lighthizer that his approach toward NAFTA negotiations may not get the bipartisan support he wants, at least from a bloc of 68 moderate Democrats who have provided the only reliable Democratic votes on trade deals in recent years. In a letter to Lighthizer today, a dozen members of the New Democrat Coalition stressed the need for enforceable labor and environment rules and strong digital trade provisions.

“We are increasingly concerned, however, that in a rush to conclude an agreement, the administration is putting its focus in the wrong places,” the members wrote.

The lawmakers also blast what they view as inattention toward pressing Canada to get rid of a controversial milk ingredient pricing policy, getting Canada and Mexico to raise their de minimis thresholds and provisions that would increase the competitiveness of the North American auto industry. Instead, the members argue that USTR’s attention is misplaced on a seasonal trade remedy proposal, a government procurement proposal that could cut U.S. access into Canada and Mexico, and auto rules that “are expected to drive American auto jobs overseas.”

The members also accuse the administration of failing to meet its consultation obligations under TPA legislation. Members that signed the letter include Reps. Ron Kind (D-Wis.), Terri Sewell (D-Ala.), Suzan DelBene (D-Wash.), Rick Larsen (D-Wash.), Gregory Meeks (D-N.Y.), Jim Himes (D-Conn.), Don Beyer (D-Va.), Derek Kilmer (D-Wash.), Jim Cooper (D-Tenn.), Kathleen Rice (D-N.Y.), Ami Bera (D-Calif.) and Scott Peters (D-Calif.).

A missed meeting: The letter comes the same morning that a meeting was supposed to take place between Lighthizer and members of the coalition. An aide told Morning Trade that the meeting was canceled and may not be rescheduled until after next week’s recess, when it’s possible that the NAFTA countries might have already struck a preliminary deal.

A USTR spokeswoman confirmed that Lighthizer’s Thursday meetings with members of the New Democrat Coalition as well as other Republican and Democratic lawmakers will be rescheduled due to the ongoing NAFTA negotiations taking place this week with top Canadian and Mexican trade officials.

LAWMAKERS WANT LIGHTHIZER TO GET SERIOUS ON NAFTA DAIRY: A bipartisan group of House members kept the pressure on Lighthizer over NAFTA dairy issues. The group of 68 lawmakers said a good outcome on dairy will “remain an essential element of a positive result.” The members put specific focus on getting Canada to eliminate a controversial dairy ingredient pricing policy that U.S. producers say effectively blocked U.S. exports north of the border.

“These results are critical to securing a modernized NAFTA worth of congressional support that addresses today’s top trade concerns with our NAFTA partners and fills the gaps in the existing agreement,” said the letter, spearheaded by Kind and Rep. Lloyd Smucker (R-Pa.).

 

From the Politico Pro newsletter

NAFTA ministers aim for agreement in principle by May 4

Negotiators from the three NAFTA countries will be working continuously through May 4, when the countries aim to announce an agreement in principle.

mediadc.brightspotcdnU.S. Trade Representative Robert Lighthizer and his team are starting to game out strategies for how to maneuver the new deal through the current U.S. Congress, sources briefed on the plans said.

The White House and USTR have ramped up their engagement with Capitol Hill ahead of what many expect will be an attempt to ram the new agreement through Congress by either initiating a withdrawal from the existing deal; relying on a majority of Republican support despite advancing proposals GOP members publicly opposed; or potentially bypassing Congress altogether.

While circumventing Congress is a strategy that is seen as less likely to be employed or succeed, congressional aides say they expected lawmakers — especially Republicans — to cave in a gun-to-the-head scenario if they had to choose between Lighthizer’s new NAFTA or no NAFTA at all.

Sources briefed on the status of the talks said USTR officials were hopeful the remaining roadblocks could be resolved in the next two weeks — and that they expected Canada and Mexico to respond with flexibility to the willingness to compromise that USTR has shown in the auto talks since an initial proposal was tabled last October.

One area where Lighthizer has not shown much flexibility is investor protections. He told reporters in October that he believed investor-state dispute settlement was akin to the U.S. government buying companies political risk insurance and incentivizing outsourcing, and that he opposed that mechanism because it was not market-based.

Republican lawmakers, most notably the chairmen of the committees of jurisdiction, warned the USTR that his insistence on hampering ISDS could jeopardize congressional passage of the agreement.

During a hearing before the House Ways & Means Committee last month, Lighthizer got into a heated back-and-forth with chairman Kevin Brady (R-TX), who once again warned Lighthizer that ISDS was part of the negotiating objectives laid out in the Trade Promotion Authority law and for that reason must be part of the renegotiated agreement. Lighthizer made clear he was unmoved by Brady’s criticism.

“The strongest argument in favor of ISDS, Mr. Chairman, is that you’re in favor of it,” Lighthizer told Brady. “That’s the strongest argument in my opinion.”

“Some would disagree with that, Mr. Ambassador,” Brady replied, adding a clear warning: “Your client is Congress.”

Sources briefed on private conversations between Lighthizer and key lawmakers, including House Speaker Paul Ryan (R-WI), said the USTR has heard similar arguments from other members — and has been equally dismissive. The conversation between Lighthizer and Ryan was described as “heated” and, according to people with direct knowledge of the exchange, Ryan at one point challenged Lighthizer by asking several times: “Bob, how many [free trade agreements] have you passed?”

Neither Ryan’s office nor USTR responded to requests for comment.

Several congressional aides, private-sector sources and former trade officials said Lighthizer’s performance during the House hearing, as well as his testimony at a Senate Finance Committee hearing the next day, was poor, and suggested he could have lost some votes because of what they perceived as an arrogant tone and posture toward key lawmakers’ views.

“I’ve never seen a USTR so dismissive of Congress’ role in this area,” a former trade official said of Lighthizer’s testimony.

Sources said the White House legislative affairs team recently began working on its whip operation for the new agreement — a month before the talks are set to wrap up. A private-sector source with experience in maneuvering trade bills through Congress said it was “such amateur hour that they are just now thinking about that.”

A congressional aide said that while Lighthizer and his team were “laser-focused” on how to move the new deal through Congress this year, the strategy was still lacking details.

President Trump is widely expected to submit a notice of withdrawal along with an implementing bill for the new deal or shortly before NAFTA 2.0 is submitted to Congress to pressure lawmakers to pass it. That strategy would force both sides of the aisle to weigh the prospect of losing two major export markets against voting for a new deal they do not favor.

“If you think a new NAFTA is better than no NAFTA you don’t think about a whip operation until the end,” the congressional source said. “It’s all about the dynamic. The threat of withdrawal hovers over everything.”

Another private-sector source said the thinking in the White House and at USTR from the beginning was that the administration would deal with ratification “once we have an agreement.”

Last September, Lighthizer told reporters that congressional approval was “of course” the “fundamental question” but said he would not concern himself with it until he reached a deal that the other countries agreed to — and that President Trump backed.

“First I want to get it through Canada and Mexico, and then I have to get it through the White House, and then I have to get it through Congress. So I guess I’m going to do it in that order, right?” he said on the sidelines of the second NAFTA round.

In a closed-door meeting a month later, he told lawmakers on the Ways & Means Committee that he would not abandon his controversial proposals even if the GOP majority was not in favor of them, stressing that he had an “audience of one” — the president. Lighthizer also said he envisioned a “new paradigm” in which his NAFTA agreement won support from a majority of lawmakers, including many Democrats.

Republican and Democratic congressional aides believe Lighthizer is confident he will win an overwhelming majority of Republican support because most GOP members would not vote against an agreement the president backed or vote down a trade deal that on balance would be good for their constituents, especially when compared with the alternative of no NAFTA.

The “landscape” for a vote “looks good” but only if autos and ISDS can be resolved favorably, a GOP aide said. “Everything else is smaller potatoes compared to those two,” the aide continued.

A Democratic aide countered that Republican members “would scream about ISDS at a mock markup” but were unlikely to make their vote contingent on that outcome.

“They will all line up, hold their noses and vote for it,” a private-sector source said.

Congressional aides told Inside U.S. Trade Lighthizer was relying on labor groups to deliver Democratic support for the new agreement, eying the backing of the United Steelworkers — which has members in both the U.S. and Canada — and potentially the United Automobile Workers to shepherd the deal through Congress.

A former trade official said he was “not sure that this administration has prepared for a trade vote.”

“I don’t think there’s a formula to get the right votes together,” the former official said. “That’s why there’s all this talk about getting it through otherwise.”

Some fear USTR is considering ways to get a new agreement implemented without bringing it back to Congress for a vote. There is disagreement among lawyers about whether the executive branch has the authority to make certain alterations to the agreement that would not require changes in U.S. law without having lawmakers approve them.

“It wouldn’t surprise me if they’re going through some kind of thought process on that,” one aide said. “If [Lighthizer] is thinking about a way to strike a deal where key elements that are popular are included, they can do that right away,” the aide continued, saying rules of origin were arguably the biggest focus for Lighthizer.

“Republicans let them off the hook on KORUS,” the aide said, referring to the U.S.-Korea Free Trade Agreement that the Trump administration has worked to amend without congressional approval.

“Maybe they’ll use the precedent there,” the aide said.

Congressional staff members said it was not clear that Lighthizer and his team were actually considering such a strategy but one said it could explain why there was a significant lack of consultation with the key committees on trade. Congressional aides also quietly warned that anything that does not involve Capitol Hill would be unpalatable and would backfire on the administration.

“Congress has been very clear that any changes to NAFTA — that they want to be part of that,” a former trade official said. “Initially USTR was following TPA requirements until it got to a point where it got too difficult and time-consuming.”

The former trade official said it seemed like Lighthizer in his approach to NAFTA and Congress — and whether or to what extent to involve lawmakers — was trying to “have it both ways.”

Lighthizer and his counterparts face pressure on multiple fronts to wrap up the talks — most notably the TPA time lines and the Mexican elections this summer.

Temporary exemptions for Canada and Mexico from Trump’s global steel and aluminum tariffs, which are set to expire on May 1, are also looming over the negotiations, though one source briefed on the status of the talks said there was “no evidence” USTR was linking NAFTA to the tariffs.

Sources say it was likely the Trump administration would extend the exemptions for Canada and Mexico until a deal is finalized. Many expect the tariff exemptions to be a tradeoff for concessions the other countries make on auto rules of origin, with Lighthizer demanding that a certain amount of steel and aluminum be sourced from North America.

Ministerial meetings between Lighthizer and his Canadian and Mexican counterparts were held Thursday and will continue Friday. Ministers are prepared to meet on Saturday as well, if necessary, sources said, before Canadian Foreign Affairs Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo have to leave town for commitments in Canada and Europe on Sunday.

Guajardo last week said the teams were aiming for an agreement in principle by the first week of May but downplayed expectations for this week, saying on Monday that he did not expect a major announcement to come out of the trilateral meeting on Friday.

USTR is aiming for an agreement in principle by May 4 and hopes to have the text finalized one month later, during the first week of June, sources briefed on the plan said.

Mexican private-sector sources told Inside U.S. Trade they had been summoned to Washington for meetings beginning April 23 and set to last until May 4 because USTR wants to wrap up the agreement early enough to ensure it can meet all Trade Promotion Authority requirements in time to put the deal to a vote in December, during a lame-duck session.

On Thursday, Guajardo said 70 to 80 percent of the modernized deal had been “drafted” but that the “most complex issues are still pending.” He suggested the ministers could announce the closing of four additional chapters on Friday, which would mean 10 out of approximately 30 chapters would be finished.

The automotive content rules are among the most complex outstanding issues — as are government procurement, labor and intellectual property. Another key issue that has gained attention in recent days is agriculture, particularly dairy — with many lawmakers urging Lighthizer not to trade away U.S. interests in dairy for other priorities in the talks.

According to people briefed on a private conversation between House Speaker Ryan and President Trump, Ryan demanded that a new NAFTA agreement should not be closed without expanding dairy market access and addressing Canada’s so-called class 7 pricing scheme, which critics say favors Canadian products by restricting access for U.S. exports.

Agriculture Secretary Sonny Perdue told a Senate panel last week that Lighthizer “has some larger issues” in the talks with Canada and Mexico and called upon lawmakers to “help in impressing upon the ambassador how important it is to make sure the dairy situation in regard to Canada is also resolved.”

A private-sector source briefed on the dairy talks said it was not clear that USTR even knew what it was asking of Canada or had settled on a potential landing zone.

NAFTA’s Legacy for Mexico: Economic Displacement, Lower Wages for Most, Increased Migration

NAFTA Devastated Mexico’s Rural Sector and Increased Poverty

Screen Shot 2018-04-14 at 9.45.29 AMThe North American Free Trade Agreement (NAFTA) was sold to the people of all three countries with grand promises. Mexicans were promised NAFTA would raise their wages and bring Mexicans’ standards of living closer to the United States and Canada. Instead, after 24 years, real wages in Mexico are down from already low pre-NAFTA wages, two million Mexicans engaged in farming lost their livelihoods and lands, tens of thousands of small businesses have gone bankrupt as American big-box retailers moved in, and poverty remains widespread.

Mexican taxpayers have paid foreign investors more than $204 million in compensation following Investor-State Dispute Settlement attacks. Prior to NAFTA, 21.4 percent of Mexico’s population earned less than the minimum income needed for food, a share that has barely budged in the 24 years since NAFTA’s implementation. Today, over half of the Mexican population and over 60 percent of the rural population still fall below the poverty line, contrary to the promises made by NAFTA’s proponents.

On the 10-year anniversary of NAFTA, the Washington Post reported: “19 million more Mexicans are living in poverty than 20 years ago, according to the Mexican government and international organizations.” Before NAFTA, Mexico only imported corn and other basic food commodities if local production did not meet domestic needs. NAFTA eliminated Mexican tariffs on corn and other commodities. NAFTA terms also required revocation of programs supporting small farmers. But NAFTA did not discipline U.S. subsidies on agriculture. The result was disastrous for millions of people in the Mexican countryside whose livelihoods relied on agriculture.

Amid a NAFTA-spurred influx of cheap U.S. corn, the price paid to Mexican farmers for the corn that they grew fell by 66 percent, forcing many to abandon farming. From 1991 to 2007, about 2 million Mexicans engaged in farming and related work lost their livelihoods. Mexico’s participation in NAFTA was conditioned on changing its revolutionary-era Constitution’s land reforms, undoing provisions that guaranteed small plots (“ejidos”) to millions of Mexicans living in rural villages. As corn prices plummeted, indebted farmers lost their land, which newly could be acquired by foreign firms that consolidated prime acres into large plantations.

2.5 million farm sector workers driven out of work between 1993 and 2005

According to a New Republic exposé: “as cheap American foodstuffs flooded Mexico’s markets and as U.S. agribusiness moved in, 1.1 million small farmers – and 1.4 million other Mexicans dependent upon the farm sector – were driven out of work between 1993 and 2005. Wages dropped so precipitously that today the income of a farm laborer is one-third that of what it was before NAFTA.” The exposé noted that, as jobs and wages fell, many rural Mexicans joined the ranks of the 12 million undocumented immigrants competing for low-wage jobs in the United States. Though the price paid to Mexican farmers plummeted after NAFTA, the newly deregulated retail price of tortillas – Mexico’s staple food – shot up 279 percent in the pact’s first 10 years.

This contradicts free trade theory, which predicts that gains from liberalization come on the import side as all consumers enjoy lower prices, while injury only occurs to those in sectors directly displaced by imports. But, NAFTA included service sector and investment rules that facilitated consolidation of grain trading, milling, baking and retail. So in short order the relatively few remaining large firms dominating these activities were able to raise the prices paid by Mexican consumers and reap extra profits as corn costs simultaneously declined. This problem is ongoing; Recent reports show that U.S. exports of corn, wheat, soybeans and rice are all sold below production costs, devastating Mexico’s agricultural sector.

After NAFTA, Mexican Wages Shrank, Poorly Paid Temporary Employment Grew

Wages in Mexico have fallen below pre-NAFTA levels, contrary to the promises by NAFTA supporters that the pact would raise Mexicans’ living standards. According to government statistics, real average annual wages have declined in Mexico under NAFTA, and those making the least have been hurt the most, with the minimum wage declining 16.7 percent. One comprehensive study found that inflation-adjusted wages for virtually every category of Mexican worker decreased over NAFTA’s first six years, even as hundreds of thousands of manufacturing jobs were being shifted from the United States to Mexico. With millions of Mexicans displaced from rural communities competing for the hundreds of thousands of manufacturing jobs, and a lack of independent unions in Mexico to bargain for better wages, employers could keep wages reprehensibly low. The workers who experienced the highest losses of real earnings were employed women with basic education (-16.1 percent) and employed men with advanced education (-15.6 percent). Since NAFTA, there has been a shift from formal employment to informal, non-wage- and benefit-earning employment. Even formal employment provides fewer benefits than in the pre-NAFTA era. Maquiladora (sweatshop) employment, where wages are almost 40 percent lower than in heavy non-maquila manufacturing, surged in NAFTA’s first six years. But since 2001, hundreds of factories and hundreds of thousands of jobs in this sector have been displaced as China joined the World Trade Organization and Chinese sweatshop exports gained global market share. Meanwhile, workers in new, high-tech manufacturing facilities, including many outsourced from the United States, are paid less than $2 per hour.

Fake unions

With “protection unions” endemic, workers arrive at a new plant to find that a fake union has already agreed with the company what wages and benefits will be. The result is Mexican wages that are now lower than those paid to workers in coastal China. One example: Workers represented by the independent Steelworkers union in Goodyear’s American plant earn $26.63 hourly. But when Goodyear decided to open a new plant in North America, it chose Mexico, where it pays workers $1.88 per hour. And an estimated 28,000 small- and medium-sized Mexican businesses were also destroyed in NAFTA’s first four years alone, spurring the El Barzon movement of formerly middle-class Mexican entrepreneurs protesting NAFTA. Losses included many retail, food processing and light manufacturing firms that were displaced by NAFTA’s new opening for U.S. big-box retailers that sold goods imported from Asia.

NAFTA Led to Surge in Migration and Dangerous U.S.-Mexico Border Crossings

NAFTA’s boosters claimed that the pact would improve Mexican living standards and thus limit migration to the United States. Former Mexican President Carlos Salinas infamously declared that the U.S. decision over NAFTA was a choice between “accepting Mexican tomatoes or Mexican migrants that will harvest them in the United States.” According to the Pew Hispanic Center, the number of people migrating to the United States from Mexico remained steady in the three years preceding NAFTA’s implementation.

However, during NAFTA’s first six years, the number of annual immigrants from Mexico had more than doubled, coinciding with a flood of U.S. subsidized corn into Mexico. The total number of undocumented immigrants from Mexico who are living in the United States increased from about 2 million in 1990 to a peak of 6.9 million in 2007, just prior to the financial crisis. This number sharply declined when the number of available jobs plummeted as the economy fell into the Recession.

As the U.S. economy has slowly recovered, the number of undocumented immigrants from Mexico in the United States has leveled off at 5.7 million. Under NAFTA, Mexico Missed Chance to Achieve European-level Living Standards NAFTA supporters promised the deal would yield strong growth rates for Mexico. Yet, between 1994 and 2016, Mexico’s real gross domestic product (GDP) per capita growth rate has been a paltry 1 percent. In contrast, from 1960 through 1980, Mexico’s per capita GDP grew 98.7 percent. Indeed, Mexico’s GDP per capita growth under NAFTA ranked 15th out of the 20 countries of Central and South America. Mexico would be close to European living standards today if it had continued its previous growth rates. Income inequality has also remained a problem. The richest 20 percent of Mexico’s population collect over half of the nation’s income while the poorest 20 percent earn just 5 percent. Despite the promises of NAFTA proponents, the nation’s income inequality index remains among the highest in the world.

For more information, please visit Public Citizen’s Global Trade Watch 

Here We Go Again: Why the Trans-Pacific Partnership Won’t Fix Anything

On Thursday, President Trump flipped his position on the Trans-Pacific Partnership trade agreement, suggesting the U.S. might want to rejoin the pact.

Senator Bernie Sanders Speaks at a RallyHis announcement sent Wall Street indices shooting upward in jubilation and angered labor leaders. It left China—which has been sorting out how to respond to Trump’s announced steel and aluminum tariffs— even more bewildered as criticism grows of its “Made in China 2025” initiative to dominate the high-technology sector.

Trump’s about-face is especially striking given that exiting the TPP was a crucial plank in his economic agenda on the campaign trail and one of his first acts as president. That pledge played well to the frustrations of people who know the global economy is ripping them off and are understandably angry.

Trump was right in his claim that trade agreements such as the TPP are bad for American workers. They are not written by or for workers. The key players in their negotiation are transnational corporations that are looking to increase their profits by guaranteeing their unimpeded access to cheap labor, resources, and consumer markets, and freedom from taxes and regulations.

Trump is convinced that other nations are not playing fair. There too he is right. But they are not playing to benefit their workers, either.

Let’s look at China. Are Chinese workers ripping off American workers? Chinese workers work long hours under often grueling and dangerous conditions. The pay is miniscule, and sometimes workers toil in conditions akin to modern slavery. The air in many major Chinese cities is dangerously polluted.

Adding insult to injury, few Chinese workers can afford to buy the products they make. These products are produced for the benefit of wealthier consumers, including those in the United States. Ironically, many Americans can only afford to buy cheaper Chinese goods, because their jobs have been eliminated by automation or shipped overseas to low-wage markets, including China.

So who is benefitting? According to Forbes, China now has more billionaires than the United States, and is creating two new ones every week.

Current trade agreements work great if the goal is to create new billionaires. They fail dismally if we assume their goal is to benefit working people—regardless of nationality. We have a desperate need to agree on new rules. Pitting nation against nation in trade wars is not the answer. We need more cooperation, not more competition.

How might that work?

Try this thought experiment: Imagine the world’s leaders all wake up one day and realize that they should work to meet the needs of people everywhere and repair the damage to the Earth and the environment. They would realize quickly that they would have to reorganize the economic rules and structures that put corporate interests above people’s needs and bar national and local governments from acting otherwise.

Imagine these insights lead them to work out a plan aimed at framing international agreements that allow nations to meet these new targets within their respective jurisdictions: a healthy and secure environment, full employment with living wages and high health and safety standards, robust social safety nets, modern energy-efficient infrastructure, human rights protections for all people, political transparency, and democratic accountability.

Nations can only achieve such goals if they have sufficient control of their own economies. Fair and mutually agreed-to tariffs that promote local ownership and give preference to local businesses that pay local taxes, provide good jobs to local workers, and secure the health of local ecosystems will surely play an important role.

“Made in China 2025” can be positive for everyone if it means China prioritizes the use by Chinese people of their own labor and resources to meet their own needs while honoring the right and responsibility of other countries to do the same for their people. Given the current reality, an assumption that such a conversation among world leaders might occur of its own volition is pure fantasy. It is less fanciful, however, to imagine ever-expanding circles of ordinary citizens joining in such conversations throughout the world supported and connected by the communications technologies now in place. As the ideas gain momentum from the bottom up, leaders eventually will be compelled to follow or become displaced themselves.

The president’s ever-changing positions on trade won’t get us there. Only we the people, organized and active, can build the momentum to restructure the world’s economies to work for everyone.

From YES Magazine

Trump Proposes Rejoining Trans-Pacific Partnership

President Trump, in a sharp reversal, told a gathering of farm-state lawmakers and governors on Thursday morning that the United States was looking into rejoining a multi-country trade agreement known as the Trans-Pacific Partnership, a deal he pulled out of days after assuming the presidency.

13dc-trade-1-master768Mr. Trump’s reconsideration of an agreement he once denounced as a “rape of our country” caught even his closest advisers by surprise and came as his administration faces stiff pushback from Republican lawmakers, farmers and other businesses concerned that the president’s threat of tariffs and other trade barriers will hurt them economically.

Larry Kudlow, Mr. Trump’s top economic adviser, said in an interview on Thursday with The New York Times that the request to revisit the deal was somewhat spontaneous. “This whole trade thing has exploded,” Mr. Kudlow said. “There’s no deadline. We’ll pull a team together, but we haven’t even done — I mean, it just happened a couple hours ago.”

Mr. Trump’s decision to throw out the Trans-Pacific Partnership and his pledge to tear up the North American Free Trade Agreement were bedrock promises of his populist campaign, which centered heavily on unfair trade practices that he said had robbed American manufacturers and workers.

As he often does, the president started to change gears after hearing complaints from important constituents — in this case, Republican lawmakers who said farmers and other businesses in their states would suffer from his trade approach since they send many of their products abroad.

Even longtime American allies expressed skepticism about the United States returning to the trade pact. Read about current members’ reactions to President Trump’s remarks.

The discussion on the trade deal began at the White House meeting earlier on Thursday, when Senator John Thune, Republican of South Dakota, questioned Mr. Trump about returning to the pact, arguing that the Trans-Pacific Partnership was the best way to put pressure on China.

Mr. Trump, who has put China’s “unfair” trade practices in his cross hairs, turned to Mr. Kudlow and Robert Lighthizer, his trade negotiator, and asked them to look into re-entering the agreement.

Rejoining the pact could be a significant change in fortune for many American industries that stood to benefit from the trade accord and for Republican lawmakers who supported it. The deal, which was negotiated by the Obama administration, was largely intended as a tool to prod China into making the type of economic changes that the United States and others have long wanted. Many economists say the best way to combat a rising China and pressure it to open its market is through multilateral trade deals like the Trans-Pacific Partnership, which create favorable trading terms for participants.

“The idea was to set a framework that eventually China would have to accommodate,” said David Autor, an economist at M.I.T.

Farmers would stand to benefit from new access to markets, especially Japan, if Mr. Trump rejoins the pact. For instance, ranchers in Australia can currently send beef to Japan more cheaply than ranchers in the United States.

Michael Miller, the chairman of U.S. Wheat Associates and a farmer in Washington, said rejoining the deal would allow his industry to compete on a level playing field with competitors in Australia and Canada, which both remained in the accord.

But rejoining it could be a complex task. The remaining countries, like Japan, moved ahead without the United States, and spent months renegotiating a pact before finally agreeing to a sweeping multinational deal this year. Mr. Trump, who has demanded that any such deal benefit the United States, is unlikely to rejoin the Trans-Pacific Partnership without further concessions for what he has criticized as a terrible agreement. That could complicate talks, since Japan maintains that it has already given all the concessions it could, said William A. Reinsch, a trade expert at the Center for Strategic and International Studies.

Yoshihide Suga, Japan’s chief cabinet secretary, on Friday cautioned against any efforts to change the agreement to accommodate Mr. Trump, calling it a “well-balanced pact” that addressed the needs of the 11 nations that signed the deal.

It is also unclear how serious Mr. Trump is about rejoining. In the past, the president has floated policies that appeared to run counter to his earlier positions, like cooperating with Democrats on legislation governing immigration and gun rights, then quickly abandoned them.

“What he tells people in a room to make them happy does not always translate into administration policy,” said Phil Levy, a senior fellow at the Chicago Council on Global Affairs.

In a statement, a deputy White House press secretary, Lindsay Walters, pushed back on the notion that Mr. Trump was reversing his promises.

The president had “kept his promise to end the TPP deal negotiated by the Obama administration because it was unfair to American workers and farmers,” she said. “The president has consistently said he would be open to a substantially better deal.”

But the White House is in somewhat of a box when it comes to prodding China to fall in line with global trade rules. The administration is trying to use tariffs to force Beijing to open its markets, but many of his supporters, including business groups and farmers, fear the fallout from an escalating trade war will be even more damaging. China has responded to Mr. Trump’s threat of tariffs on as much as $150 billion worth of its goods by placing its own tariffs on American pork, and threatening taxes on soybeans, sorghum, corn and beef.

Some advisers, including Mr. Kudlow, have indicated that those tariffs may never go into effect, and that they are mainly a prelude to negotiations with the Chinese, statements that have helped calm volatile stock markets. In a recent note to clients, the ratings agency Fitch said that the most likely outcome to the conflict remained a “negotiated solution” and that it was therefore not changing its primary economic forecast.

Mr. Kudlow, in the interview, said that farmers had “a legitimate concern” but added that it would be “at least two months before final decisions will be made.”

“I’m not here to say we won’t use tariffs — everything’s on the table in these negotiations — but I am here to say we don’t know yet,” he said.

Still, White House officials suggest that little to no progress has yet been made in bridging contentious gaps with the Chinese. Administration officials say that back-channel talks have occurred, but they would not characterize them as official negotiations. The Chinese appear impassable on some of the issues that the White House is most concerned about, including their subsidies to cutting-edge industries like robotics, aerospace and artificial intelligence.

The Trump administration says it has ordered the Agriculture Department to create a program to help farmers should the two nations find themselves in a trade war. Trade advisers say the department could draw on the financial resources of a program known as the Commodity Credit Corporation, which provides up to $30 billion to help shore up American farmers by buying their crops.

“Stay with us while we go through this difficult process,” Mr. Kudlow told farm-state representatives during the meeting, according to a White House transcript. He added, “And at the end, if the worst case has come out as the president said, you will be helped. That’s a promise.”

But such a program would be time-consuming and costly and would come as the budget deficit continues to increase. Farmers say that Mr. Trump’s threats have already hurt them by causing the price of futures contracts to fall. They maintain that the easiest way to help them is to avoid a trade war with China in the first place.

Senator Joni Ernst, Republican of Iowa, described the meeting with the president as “productive” and said that she had urged him to re-engage in discussions with countries in the Trans-Pacific Partnership. “Iowa farmers aren’t looking for another subsidy program; rather they want new and improved market access,” she said.

“The best thing the United States can do to push back against Chinese cheating now is to lead the other 11 Pacific nations that believe in free trade and the rule of law,” Senator Ben Sasse, Republican of Nebraska, who attended the meeting, said in a statement. “It is good news that today the president directed Larry Kudlow and Ambassador Lighthizer to negotiate U.S. entry into TPP.”

From the New York Times

Renegotiating NAFTA for Working Families

A Fair Trade Agenda: Renegotiating NAFTA for Working Families

Screen Shot 2018-04-13 at 9.45.48 AMUsing just one narrow classification, almost one million American jobs already have been certified by the U.S. government as lost due to NAFTA.  Many Americans have not seen a pay increase in years, cannot find better-paying jobs and have seen good jobs outsourced due in part to unfair trade deals like the North American Free Trade Agreement (NAFTA). Unfortunately, American trade policy currently rewards corporations that o shore jobs, drive down wages, and increase unemployment and underemployment. These wide-ranging trade agreements, including NAFTA, were negotiated in secret with hundreds of corporate advisors on the inside, while the public and Congress were shut out.

At the heart of NAFTA are special protections for corporations that make it easier for them to out- source jobs and empower them to attack our laws before panels of corporate lawyers that can order unlimited payments of our tax dollars to multinational corporations. Instead of leveling the playing eld, NAFTA has made it easy for companies to continue outsourcing jobs to Mexico so they can spend less on workers and pollute more. Using just one narrow classification, almost one million American jobs already have been certified by the U.S. government as lost due to NAFTA.

Since NAFTA was implemented, U.S. wages have remained at and Mexico’s already-low wages are down 9 percent. We must replace NAFTA with a deal that raises wages and eliminates NAFTA’s incentives to outsource American jobs. Essential to preventing outsourcing is the addition of strong, binding labor and environmental provisions that meet fundamental international standards and that have swift and certain enforcement, as well as the elimination of NAFTA’s investor protections that make it less risky and cheaper to outsource jobs. If NAFTA renegotiations lack enforceable labor and environmental standards, corporations will continue to outsource U.S. jobs in order to pay foreign workers poverty wages and dump toxins, only to then import products back into the U.S. – damaging the health and economic wellbeing of communities here and abroad.

The Trump Administration has stated that the goal of renegotiating NAFTA is to get a much better deal for American workers. Yet, given that the Trump Administration has implemented so many policies that blatantly attack workers by undermining their wages, bene ts, health and safety, many Americans are skeptical that helping workers is the real goal of President Trump’s NAFTA renegotia- tions. Moreover, President Trump’s view of NAFTA is that somehow Mexican workers have bene tted at the expense of U.S. workers. In reality, the main bene ciaries have been the large corporations that shaped NAFTA’s terms, not Mexican workers. Since NAFTA was implemented, real wages in Mexico are down 9 percent and 1.9 million Mexicans engaged in farming and related work have lost their live- lihoods. Mexico’s poverty rate two decades into NAFTA – 55.1 percent in 2014 – was higher than the 52.4 percent when NAFTA began in 1994, meaning 20.5 million more Mexicans now live in poverty.

The process by which the Trump Administration is renegotiating NAFTA does little to instill con – dence that a new deal will stop putting corporations before people. Hundreds of trade advisors rep- resenting corporate interests continue to have special access to U.S. proposals and draft negotiating agreement texts, while these documents are kept secret from the public and are largely inaccessible to most Members of Congress. Without input from the American people and their elected representa- tives, the Trump Administration could make NAFTA even worse for workers.

Read the full article and list of demands CPC Fair Trade Agenda (1)

 

 

Civil Society Priorities in the NAFTA Renegotiation

Too many Americans haven’t seen a pay increase in years and can’t find better-paying jobs in part because of trade deals like the North American Free Trade Agreement (NAFTA).

Screen Shot 2018-04-12 at 8.02.06 PMInstead of leveling the playing field, NAFTA makes it easier for big corporations to outsource jobs to Mexico to take advantage of poverty wages and lax environmental standards.

To date, more than 930,000 American jobs have been certified as lost to NAFTA under just one narrow government program. Meanwhile, Mexican median wages are down 9 percent in real terms since NAFTA and below $2 per hour, while American wages have remained flat. The status quo of NAFTA helping corporations outsource more middle-class American jobs every week, while exposing critical health and environmental safeguards to attack in investor-state tribunals, is obviously unacceptable. But simply withdrawing from NAFTA is not enough to reverse the pact’s economic and environmental damage.

We ask that you please demand that NAFTA be replaced with a fair new trade agreement that, among other things, meets the following basic criteria: • Stop outsourcing and raise wages by adding strong labor and environmental standards with swift and certain enforcement. Congress must not vote on a NAFTA replacement until each party adopts, maintains, implements — and enforces — domestic laws that provide the labor rights and protections included in the International Labor Organization’s Core Conventions and policies that fulfill the Paris climate accord and other core multilateral environmental agreements.

New measures must specifically help raise wages, reduce pollution and put an end to existing “protection contracts” that lack majority support of the workers they cover. New tools must be added to ensure that independent monitoring and enforcement will occur, and preferential market access must be conditioned on sustained evidence of on-the-ground improvements, with social and environmental dumping tariffs imposed for backsliding.

• Eliminate NAFTA terms that promote the outsourcing of Americans’ jobs. This means eliminating the Investor-State Dispute Settlement (ISDS) system and the special investor protections it enforces that make it less risky and cheaper to outsource jobs, and that also empower corporations to attack environmental and health laws before tribunals of three corporate lawyers and get unlimited payouts of our tax dollars. Likewise, NAFTA procurement rules limiting the ability to direct our tax dollar investments must also be eliminated to further the creation and retention of American jobs by promoting the purchase of pro-worker, pro-environment American goods.

• Protect consumers and the environment and ensure a level playing field for U.S. businesses, farmers and workers by ending NAFTA rules that threaten food safety and food labeling. Imported food must be required to meet U.S. safety standards, not the safety and inspection standards of Mexico and Canada, and enhanced border inspection must be added. The right to require food labeling — including mandatory country-of-origin labels for meat and dolphin-safe labels for tuna — must be explicitly affirmed and protected so consumers can make informed choices.

• Make medicine more affordable by eliminating NAFTA rules that increase costs. No terms that extend beyond the existing World Trade Organization patent rules or that limit countries’ abilities to negotiate lower prices for government health programs like Medicare or Medicaid are acceptable.

• Ensure a fair playing field for American job creation by adding strong, enforceable disciplines against currency manipulation and misalignment. New binding disciplines against currency manipulation and misalignment must be added to NAFTA’s core text along with a commitment to cooperate tri-nationally to confront harmful currency manipulation and misalignment by trading partners around the world.

• Create American jobs and reinforce improved labor and environmental standards by strengthening “rules of origin” and stopping transshipment. Strengthened rules of origin to incentivize production in North America in general and the United States in particular must go hand-in-hand with significantly improving labor rights, wages, environmental standards and enforcement to effectively address American job loss and wage stagnation.

• Protect our health and the environment by requiring that all imported goods and all services and service providers meet U.S. standards and add a specific safeguard for domestic environmental, health, labor and other public interest policies. A broad “carve-out” must be added that exempts from the entire revised agreement’s terms all non-discriminatory domestic policies so as to provide a strong deterrent and defense to “trade” challenges to policies that governments use to protect workers, promote public health and highway safety, tackle climate change and otherwise advance broadly-shared goals.

• Boost the rural economy by overhauling NAFTA rules that harm family farmers. The right to establish domestic farm policies that ensure that farmers are paid fairly for their crops and livestock must be safeguarded. NAFTA rules that forbid countries to establish and implement many farm and food policies — such as inventory management, strategic food reserves, import surge protections and other anti-dumping mechanisms — must be eliminated. Maintaining market access and avoiding market disruption is also important. New tariffs on U.S. exports could cause serious harm to fragile family farms already suffering from below cost of production prices, as well as to other sectors of employment relating to food production.

• The NAFTA renegotiation process must be transparent and participatory. The original NAFTA was negotiated in a closed-door process dominated by hundreds of corporate trade advisors and, to date, much the same process has been used for NAFTA renegotiations. Moving forward, the public and all members of Congress must be invited to help formulate U.S. positions and comment on draft U.S. proposals. And negotiated texts must be made publicly available, with opportunity for comment, after each negotiating round. In the absence of a binding and easily-enforced agreement based on these critical measures, Mexican workers will continue to be horribly exploited, American jobs will continue to be outsourced, the environment will continue to be degraded and the wages for workers in all three NAFTA countries will continue to decline. We’re counting on your leadership in support of fair trade.

the Citizen’s Trade Campaign organized the signing of the letter.  Read the full list of the signatories here.

 

Trump’s Trade Rhetoric Is Unhinged. His Tariffs Aren’t.

Before Donald Trump was elected president, the large and expanding American trade deficit with China was widely recognized as a problem. China’s entry into the World Trade Organization in 2001 had destroyed millions of good jobs in the United States, eroded the earning power of American workers, and left many towns and communities economically gutted.

download

U.S. manufacturing jobs began disappearing almost immediately, and growing evidence suggests the “China shock” never really ended. Sustained U.S. trade deficits made the Great Recession worse and put a drag on economic recovery. Even today, with the unemployment rate down to 4.1 percent, the trade deficit with China continues to put downward pressure on U.S. wages, and many who lost their jobs never re-entered the labor force.

Tougher enforcement against unfair trade practices has long enjoyed bipartisan support in Congress, and when U.S. Trade Representative Robert Lighthizer announced a review of Chinese policies in August 2017, even top Democrats applauded the decision as long overdue.

Yet suddenly, Republicans and Democrats alike seem to be hailing the WTO and two decades of obvious failure as a smashing success. When Lighthizer announced a very modest slate of tariffs targeting Chinese-made goods last month, liberals and right-wing libertarians alike began tearing their hair out, while apocalyptic warnings about the supposedly devastating consequences of an imminent trade war began getting headlines. “China Just Gut-Punched Trump On Trade. Is It Time To Get Worried?” asked The Washington Post“US-China trade war fears: How bad could this get?” mused CNN.

It would be nice to believe the intensity of the freakout is a result of the bizarre, needlessly inflammatory rhetoric Trump has invoked on trade. Last month he declared on Twitter that ”trade wars are good, and easy to win,” a statement which doesn’t seem to gel with today’s entry, “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” to which Trump added the head-scratcher, “When you’re already $500 Billion DOWN, you can’t lose!” These are not the words of a stable and competent negotiator. The self-dealing and corruption that permeate his administration do not inspire confidence that trade talks with China, or anyone else, will generate results in the national interest.

But the truth is that Trump’s idiocy is being used to rehabilitate a lot of failed doctrines from the past few decades, and Democrats, eager to score partisan points against a racist and cruel opponent, are gleefully embracing discredited ideas and individuals.

Architects of the Iraq War and apologists for the CIA’s torture program have been transformed into sage foreign policy experts on liberal television programs. The WTO is receiving a similar makeover from the libertarian Cato Institute, The New York Times and The Washington Post ― all of which have recently offered paeans to globalization’s most powerful engine as the ideal venue for settling legitimate trade disputes. Instead of threatening tariffs, they argue, Trump should complain to the WTO.

But the WTO doesn’t work. If it did, we wouldn’t be where we are.

Trade policy is a diplomatic tool. The setbacks globalization has created for many American communities ― tragic as they have been ― could well have been justified if they secured other strategic goals. In the late 1990s, the Clinton administration pitchedChina’s entry into the WTO as a way to advance human rights causes. More trade with the United States, it was hoped, would encourage China to become more democratic. After more than 16 years, a verdict is long overdue. The WTO failed because it is structured to prioritize corporate profit and investment over human rights, the environment and worker wages. It isn’t equipped to alleviate tensions between an authoritarian government and a democracy.

These inadequacies were well understood before Trump took office. In September 2016, the New America Foundation held a majorconference on American foreign policy and China, effectively acknowledging that the past 20 years had been a mistake. “The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation,” Paul Krugman wrote on New Year’s Eve 2009. Even the free-trading Obama administration believed the WTO was largely obsolete and ineffective, which was why it spent eight years negotiating the Trans-Pacific Partnership (which the U.S. ultimately failed to approve) with 11 other nations.

However outrageous Trump’s Twitter comments may be, the scope of what both his administration and the Chinese government are proposing just isn’t very big. Last year, U.S. imports from China increased by over $43 billion, to $505 billion. In that context, slapping tariffs on $50 billion worth of imports shouldn’t be terrifying, and neither should the prospect of a $50 billion retaliation from China. Our $130 billion in exports to China amounts to less than seven-tenths of one percent of the U.S. economy.

Trump has taken a few other, smaller trade enforcement actions that affect China, and it’s hard to predict where the back-and-forth will end. Trump, of all people, is perfectly capable of screwing the whole thing up. Effectively negotiating with China is a long game that will require reorganizing some supply chains, a process that will create its own winners and losers. Human rights, national security and political stability must be vital considerations ―  not just consumer prices and gross domestic product. Trump doesn’t seem to be very good at managing any of that.

But he isn’t starting a trade war ― he’s grappling with a failed foreign policy. And on trade, at least, his critics are defending the indefensible.

http://www.populist.com/24.07.bybee.html

Before Donald Trump was elected president, the large and expanding American trade deficit with China was widely recognized as a problem. China’s entry into the World Trade Organization in 2001 had destroyed millions of good jobs in the United States, eroded the earning power of American workers, and left many towns and communities economically gutted.

U.S. manufacturing jobs began disappearing almost immediately, and growing evidence suggests the “China shock” never really ended. Sustained U.S. trade deficits made the Great Recession worse and put a drag on economic recovery. Even today, with the unemployment rate down to 4.1 percent, the trade deficit with China continues to put downward pressure on U.S. wages, and many who lost their jobs never re-entered the labor force.

Tougher enforcement against unfair trade practices has long enjoyed bipartisan support in Congress, and when U.S. Trade Representative Robert Lighthizer announced a review of Chinese policies in August 2017, even top Democrats applauded the decision as long overdue.

Yet suddenly, Republicans and Democrats alike seem to be hailing the WTO and two decades of obvious failure as a smashing success. When Lighthizer announced a very modest slate of tariffs targeting Chinese-made goods last month, liberals and right-wing libertarians alike began tearing their hair out, while apocalyptic warnings about the supposedly devastating consequences of an imminent trade war began getting headlines. “China Just Gut-Punched Trump On Trade. Is It Time To Get Worried?” asked The Washington Post. “US-China trade war fears: How bad could this get?” mused CNN.

It would be nice to believe the intensity of the freakout is a result of the bizarre, needlessly inflammatory rhetoric Trump has invoked on trade. Last month he declared on Twitter that ”trade wars are good, and easy to win,” a statement which doesn’t seem to gel with today’s entry, “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” to which Trump added the head-scratcher, “When you’re already $500 Billion DOWN, you can’t lose!” These are not the words of a stable and competent negotiator. The self-dealing and corruption that permeate his administration do not inspire confidence that trade talks with China, or anyone else, will generate results in the national interest.

But the truth is that Trump’s idiocy is being used to rehabilitate a lot of failed doctrines from the past few decades, and Democrats, eager to score partisan points against a racist and cruel opponent, are gleefully embracing discredited ideas and individuals.

Architects of the Iraq War and apologists for the CIA’s torture program have been transformed into sage foreign policy experts on liberal television programs. The WTO is receiving a similar makeover from the libertarian Cato Institute, The New York Times and The Washington Post ― all of which have recently offered paeans to globalization’s most powerful engine as the ideal venue for settling legitimate trade disputes. Instead of threatening tariffs, they argue, Trump should complain to the WTO.

But the WTO doesn’t work. If it did, we wouldn’t be where we are.

Trade policy is a diplomatic tool. The setbacks globalization has created for many American communities ― tragic as they have been ― could well have been justified if they secured other strategic goals. In the late 1990s, the Clinton administration pitchedChina’s entry into the WTO as a way to advance human rights causes. More trade with the United States, it was hoped, would encourage China to become more democratic. After more than 16 years, a verdict is long overdue. The WTO failed because it is structured to prioritize corporate profit and investment over human rights, the environment and worker wages. It isn’t equipped to alleviate tensions between an authoritarian government and a democracy.

These inadequacies were well understood before Trump took office. In September 2016, the New America Foundation held a majorconference on American foreign policy and China, effectively acknowledging that the past 20 years had been a mistake. “The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation,” Paul Krugman wrote on New Year’s Eve 2009. Even the free-trading Obama administration believed the WTO was largely obsolete and ineffective, which was why it spent eight years negotiating the Trans-Pacific Partnership (which the U.S. ultimately failed to approve) with 11 other nations.

However outrageous Trump’s Twitter comments may be, the scope of what both his administration and the Chinese government are proposing just isn’t very big. Last year, U.S. imports from China increased by over $43 billion, to $505 billion. In that context, slapping tariffs on $50 billion worth of imports shouldn’t be terrifying, and neither should the prospect of a $50 billion retaliation from China. Our $130 billion in exports to China amounts to less than seven-tenths of one percent of the U.S. economy.

Trump has taken a few other, smaller trade enforcement actions that affect China, and it’s hard to predict where the back-and-forth will end. Trump, of all people, is perfectly capable of screwing the whole thing up. Effectively negotiating with China is a long game that will require reorganizing some supply chains, a process that will create its own winners and losers. Human rights, national security and political stability must be vital considerations ― not just consumer prices and gross domestic product. Trump doesn’t seem to be very good at managing any of that.

But he isn’t starting a trade war ― he’s grappling with a failed foreign policy. And on trade, at least, his critics are defending the indefensible.

http://www.populist.com/24.07.bybee.html

The Unhinged and Ignorant vs. Clueless and Complacent on Tariffs

No room to debate bigger questions of globalization

trade_ship_1A mindless debate between two discredited sets of opponents obscures the real meaning of Trump’s call for imposing a 25% tariff on imported steel and 10% on aluminum.

It pits the ignorant and impetuous Trump and allies against the complacent and clueless clique of unbridled “free trade” among America’s elite corporate and government officials, and the donor class for both major parties.

As a result of this spurious interchange, it becomes almost impossible for Americans to make any sense of the tariff issue or much more importantly, understand how corporate globalization has greatly intensified US inequality, severely hollowed out the American middle class, and devastated industrial communities in both the North and South. Tariffs are a blunt, primitive weapon that offer no long-term solution for US industries and workers.

Instead, America desperately needs a thorough discussion of a set of the central issues kept off the radar screen by corporate and political elites. We need to contemplate why the torrential offshoring of US jobs by Corporate America continues, while just 11% of Americans defend this practice. We must confront the continuing downward spiral of discarded American workers, their families, and their communities if present trends are not reversed and a new American industrial base is not created.

The public must fully repudiate the counsel of the elites and their technocrats who blithely ignore the human costs of de-industrialization. “Don’t trust your own experience of shuttered factories and broken unions, let the experts who got us this far lead us deeper into the abyss,” as Robert McChesney and John Nichols have insightfully summarized this pitch from free traders in People Get Ready.

Yet none of the fundamental issues at stake—the offshoring of jobs, the shrinking middle class, and sharply rising inequality — are part of the current debate.

In one corner of this unproductive battle, we have Trump, who suddenly unleashed his tariff plan while in a fit of pique that left the erratic always-impulsive president particularly “unhinged” by unrelated issues. But even if the self-described “very stable genius” was capable of rational consideration, he would have been blinded by his 19th century view of tariffs and his obliviousness to how the corporate-dominated world economy actually works. In an interview, international economist William K. Tabb, professor emeritus of economics at Queens College, says the Trump’s plan would likely raise prices on a variety of goods while failing to render any serious help to steelworkers and others whom Trump claims to care about.

More broadly, Trump, lacks any awareness that nations as unified entities are not “winners” or “losers” in global trade. Transnational corporations have almost exclusively been the big winners. But Trump instead places the Fortune 500 — who have richly profited from their globalization — in the same boat as the Unfortunate Five Million — those who have lost jobs since the acceleration of offshoring over the past two decades. In the same fashion, he shows no awareness that his massive new tax bill contains massive incentives for US corporations to export more jobs.

However, in his crude way, Trump at least connects government and corporate policy with the suffering felt across numerous traditional industries and in fading factory towns and rural areas.

In the other corner, we have most US CEOs, leading Republicans like House Speaker Paul Ryan, the Koch brothers, and most economists decrying the violation of sacred “free trade” doctrine by tariffs. But the current tariff debate is largely a mere distraction in steering the public discussion away from the real fundamentals of corporate globalization.

For example, free traders are loathe to admit that fully 80% of global trade occurs within transnational corporations and their global supply chains. In other words, four-fifths of “trade” involves transactions like GE shipping parts and machinery back and forth with Mexico, or Apple obtaining iPhones from the notorious factories of their supplier Foxconn.

Nor are “free traders” eager to acknowledge that the offshoring of US jobs have been key in driving down US incomes for the vast majority and been a central factor in the closing of 56,190 factories — 15 a day — between 2001 and 2012. During the 2000-2010 period, Commerce Dept. data show that major US firms created 2.4 million jobs overseas while vaporizing 2.9 million in America.

These job losses have taken an enormous toll on workers and families. Collectively, the free-trade advocates have shown a cruel indifference to how the large-scale offshoring of US jobs has hollowed out America’s middle class and devastated industrial communities wracked by low wages, poverty, falling property values, high rates of domestic and street violence, and afflictions like opioid and alcohol abuse. When the free trade establishment reluctantly admits that a huge problem exists, leaders of both parties airily prescribe “re-training” as a cure-all despite the almost-universal failure of these programs in the US to restore decent living standards and healthy communities.

Moving toward meaningful solutions for America’s disposable workers and communities will require rejecting both Trump’s reckless and unfocused tariffs and the conventional wisdom of the “free trade” chorus of elites and most pundits. Restoring our manufacturing base will demand moving toward democratizing the economy and establishing a broad “industrial policy” coordinating economic, trade, environmental, enforcement of widely-trampled labor rights, and manpower strategies.

We will also need to challenge the very purpose of the US economy and the global economy it dominates. The late British billionaire Sir James Goldsmith sharply outlined the current phase of turbo-capitalism which intensifies the subjugation of the vast majority to maximize profits for the top 1%. As Goldsmith observed, “Today we are proud of the fact that we pay low wages.

This reflects a shift from the paternalistic capitalism exemplified by Henry Ford to an ever-more ruthless neo-liberal capitalism where society increasingly geared solely toward ever-larger profits. “We have forgotten that the economy is a tool to serve the needs of society,” said Goldsmith. “The ultimate purpose of the economy is to create prosperity … and not the reverse. The ultimate purpose of the economy is to create prosperity with stability.”

Progressives need urgently to offer an alternative replacing the current system— where people are simply servants of the economic machinery— with a new vision where a democratic, decentralized economic system is instead dedicated to serving human needs.

Roger Bybee is a Milwaukee-based labor studies instructor and longtime progressive activist and writer who edited the Racine Labor weekly for 14 years. Email winterbybee@gmail.com. A version of this appeared at Progressive.org.