Opinions and Editorials
Obama Must Seek Change in Trade Policies
Next month President Obama will meet with Chinese leaders to discuss, among other things, trade. If he tries to negotiate anything other than a typical free-wheeling North American Free Trade Agreement (NAFTA) style contract, his critics will predict doom and call him a protectionist.
Of course, that’s the first thing they say upon waking up each morning. Our $2 billion per day trade deficit shows that we have been ineffective protectionists. The truth is that we have been ineffective negotiators.
Our existing trade model is one designed to maximize profit for corporate investors while exploiting workers and facilitating the movement of jobs to locations where wages are lowest and where consumer, regulatory and environmental laws are weakest. It’s like a Wal-Mart version of the world economy.
What that means for us is higher unemployment and a larger deficit. Globally, it means rampant pollution, the proliferation of sweat shops and cheap, sometimes dangerous, goods that are then sold back to Americans. The kicker is NAFTA-style agreements include provisions giving a corporation the right to sue a foreign country in the event that its government regulations impinge on investor profits, real or estimated. Thus, product safety standards or prevailing wage laws may be considered “barriers to trade” and challenged in closed tribunals, where judgments in such cases are based ¬only on language of trade agreements; federal, state and local laws of the “offending” country are ignored.
China has consistently been one of our most disingenuous trading partners, manipulating its currency and using World Trade Organization trade rules to their advantage. Earlier this year China filed a complaint with the WTO because U.S. officials halted chicken imports they worried could be unhealthy. Under current trade rules, U.S. taxpayers could be forced to pay a fine for refusing to import tainted chicken.
But NAFTA-style trade agreements are not our only option. Instead of agreements that protect only corporate profits, we can seek to craft agreements that enforce labor practices and raise living standards for all workers. These pacts can establish safety standards and environmental protections vital to survival of the planet. They can create jobs for Americans rather than send them overseas. The most important card in our deck when we negotiate is the American middle class. Every nation – and every company – wants access to the American market so that they can sell to our consumers. Well, our consumers are also workers. Our challenge is to use our market power to raise standards, so that consumers in other nations can purchase our products. It’s not as hard as it sounds.
Henry Ford didn’t pay auto workers the then-outrageous sum of $5 a day out of charity. He was helping to build a consumer market for automobiles. Later, when UAW president (and ADA cofounder) Walter Reuther toured an automated plant with an auto executive who was bragging about a robot which would never go on strike, Reuther also pointed out that it would “never buy a car.”
Some economists have a progressive view, that trade agreements don’t have to be win-lose. We can have win-win agreements that lift international standards and protect consumers. Paying an additional dime on a toy or a garment would make a world’s worth of difference for a worker in China. And there would be less incentive to cut corners with safety or use child labor. Think of it as the new and improved Trade 2.0
It was prior administrations who approached China largely on the NAFTA model and ignored Chinese market and labor exploitation. Now President Obama has a choice. He can either follow that same failed model or take us in a new direction. He came to power on the promise of change. Given our trade deficit and unemployment rate, we need change. Even if they call him names.Opinion and Editorial Archive