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Past Trade Agreements Have Cut Jobs, Wages and Democracy

Monday, 06 June 2011 05:01 By Dave Johnson, Campaign for America's Future | News Analysis
Past Trade Agreements Have Cut Jobs Wages and Democracy

President Barack Obama and President Lee Myung-bak of South Korea, after a joint press conference during the G20 summit in Seoul, South Korea, on November 11, 2010. As Obama considers legislation for a free-trade agreement with South Korea, he is deciding whether to add provisions that renew aid for unemployed workers at home. (Photo: Doug Mills / The New York Times) 

Our trade agreements have pitted working people in countries that do not protect rights or people against the working people here who fought to win the protections of democracy. The result has been devastating to our communities, our economy and our democracy.

America is (was, anyway) a democracy governed by We, the People. As Monday’s Memorial Day ceremonies remind us Americans fought and sacrificed to build and keep the protections and benefits that democracy offers. Those include good jobs with good wages, worker safety laws, rules preventing companies from polluting, and so many other things that companies complain make us less “business-friendly.” But we got involved in “trade” deals that let countries get around democracy’s protections, pitting employees here against people who have no voice, no power and no money. You can see the results all around us.

Korea, Panama, Columbia ... and China

Now we're looking at new trade agreements with Korea, Panama and Columbia. The President is holding out for assistance for all the workers who will be displaced while Republicans say, "Why bother?" Neither side is holding out for agreements that lift workers on both sides of the border.

But these agreements will hurt American workers and communities by lowering wages and killing jobs. For example, the National Council of Textile Organizations, American Manufacturing Trade Action Coalition, National Textile Association, American Fiber Manufacturers Association, U.S. Industrial Fabrics Institute got together to warn that,

    We have analyzed the agreement carefully and come to the unfortunate conclusion that the textile portions of the KORUS agreement are seriously flawed. If passed in its current form, the agreement will open the U.S. market to a massive one-way flow of sensitive textile products from South Korea, as well as illegal Chinese imports, while providing no new export business to our textile manufactures and workers.

And more clearly, there are ...uh ... labor rights "problems" in Columbia, too: Colombian Labor Rights Lawyer in Critical Condition after Assassination Attempt,

    On May 13, 2011, armed men on motorcycles fired five bullets into labor rights lawyer Hernán Darío in the heart of downtown Cali, Colombia. Mr. Darío is the lead attorney in a high-profile case defending the leaders of a group of sugarcane workers who led a labor strike in 2008 from criminal charges. While no one has taken responsibility for this shooting, it is widely believed to be connected with the sugar strike and Mr. Dario’s defense of the sugar workers.

    The shooting comes only weeks after the Colombian government agreed to implement a “U.S.-Colombia Labor Action Plan,” a plan to make improvements in labor rights conditions in Colombia, in connection with U.S. Congressional consideration of a Free Trade Agreement (FTA) between the U.S. and Colombia. The shooting underscores the continuing and serious labor rights problems in Colombia. It also calls into question whether there has been real progress on the labor rights situation in Colombia.

Of course, arguments over these are really proxies for our trade relationship with China, which is the real problem because it is the biggest problem. Our trade deficit with China is in the hundreds of billions - meaning they sell to us and don't buy from us, costing jobs, lowering American wages and increasing our debt. And China not only cheats, they really cheat. This is from Another Reason CEOs Should Rethink Outsourcing and Offshoring,

    Fellowes Inc., one of the world's largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.

    The company's Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.

    The Itasca, Ill.-based company has lost $168 million worth of business and is no longer able to produce personal shredders for the world market. It has taken its case to Chinese courts, to no avail. It has pleaded with members of Congress and federal agencies, with no results.

Wrong Turn On Trade

"Trade" is when you ... uh ... trade with others. A country might be able to grow bananas, and need machine tools, so you set up a deal to trade with them. And you both benefit!

But "trade" is not supposed to mean you just let a company just close their factories here because they don't want to pay reasonable wages or protect worker safety or the environment, or pay taxes to support the communities that provide workers and services and customers. You don't just let them send those jobs across a border to a "business-friendly" country that will let them pollute at will or treat employees like slaves and then think they can just bring the same products they used to make here back here to sell.

Somewhere along the way we made a wrong turn that has taken down a road toward ruin. Somewhere along the way we made a deal with the devil to let a very few people here get extremely wealthy at the expense of the rest of us.

The Cost To Communities

These trade agreements have had a terrible effect on our manufacturing communities, particularly in the midwest. From last year's post, Lorain, OH Keep It Made In America Town Hall Meeting,

    As you drive from town to town in Michigan and Ohio you see one after another a ring of the "big box" stores and national chain stores around each city. You also see the "brownfields" of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.

Click here to get Truthout stories like this one sent straight to your inbox, 365 days a year.

The Cost To Sovereignty

Our trade treaties prevent us from governing our own country with the laws We, the People want to pass, even when we can get them passed around the money of the corporate gatekeepers.

The World Trade Organization (WTO) says says we cannot require Country Of Origin Labeling (COOL)
WTO rules against U.S. COOL program

    A World Trade Organization panel has issued a preliminary ruling on the case that Canada and Mexico filed against the U.S. country-of-origin-labeling law, charging that the mandatory rule violates WTO trade standards.
    Specifically, the WTO ruling upholds that requirements tied to U.S. mandatory COOL violate provisions of WTO's agreement on Technical Barriers to Trade or TBT. The WTO panel also ruled that the mandatory COOL requirements to not meet the United States' stated objective that the labeling law informs and helps U.S. consumers make purchasing decisions regarding the origin of meat, produce and other products covered by the labeling law.

Just over a week ago the WTO ruled that we can’t even make companies tell consumers whether tuna they buy is “dolphin-safe.” David Sirota writes about this in Salon, When "free" trade trumps U.S. law

    ... so-called free trade agreements (i.e., NAFTA, bilateral NAFTA replicas, the WTO regime, etc.) are free only of protections for human beings -- that is, free of provisions that preserve, say, labor rights, human rights and the environment. But those deals' "hundreds of pages" are chock-full of protectionist provisions for multinational companies -- provisions that, for example, allow foreign firms to sue governments for lost profits and empower international panels to unilaterally override a nation's domestic laws if those laws reduce corporate revenues.

According to Public Citizen's Eyes On Trade,

    For the second time in a week, reports have surfaced about the WTO clobbering a U.S. consumer labeling policy. Last week, the U.S. voluntary dolphin-safe tuna label was deemed a WTO violation. This week, Reuters is reporting that the WTO has ruled that U.S. beef labels are a WTO no-no.

    Corporate meatpackers are rejoicing...

    . . . Consumers, ranchers, farmers and legislators worked hard to pass the labeling rules after seeing ground beef horror stories in Schlosser's movie and book Fast Food Nation.

    Heck, even free marketeers will be upset with the WTO ruling, since labeling transparency allows the consumer to make the free choice as to what kind of product they want to buy without the government dictating the outcome.

    [. . . ] Unlike the U.S. Constitution and legal system, the WTO puts maximization of trade volumes first - ahead of consumer safety or the environment. As if corporations needed any more incentive to destroy local food production.

The Cost To Democracy

People watch these trade agreements take away our jobs and lower our standard of living. The see China cheating, taking everything and know that they can’t buy things in stores that are made in the USA. People clearly see this smashing the middle class and don’t understand why our political leaders don’t step in to defend the country. They don’t understand why government is not addressing these things that are costing jobs, and then see government making even more trade deals when it is obvious that trade with China is costing us jobs.

People understand this is big-company corruption buying politicians and making economic change impossible. They watch the big corporations take over the government, telling the Congress and administration what to do while they are unable to do anything about it. They come to believe the game is rigged. The result of all of this is that many people feel powerless and tune out.

The frustration over this is being channeled into a belief that it is government and democracy that are responsible, and that government spending is why they have no money. This loss of faith is dangerous to our society and our political system.

To Fix The Economy And Budget , Fix Trade

We have to fix our trade relationships if we hope to fix our economy and out budget problems. Ian Fletcher explains, in Why the Budget Is the Wrong Thing to Fight About,

    So... what is the solution? What do we have to fix?

    The number one thing is trade. Free trade collapsed a very long time ago. What we have today is not free trade at all, it's ruthlessly manipulated trade -- manipulated by America's big trading partners, starting with China but including many others. And we're doing nothing to stop them.

    America's titanic ($497 billion last year) trade deficit is ripping the guts out of industry after industry, but we have no answer. And you can't gut industry after industry and expect not to reduce your GDP.

    If we didn't have this horrendous trade deficit, we simply wouldn't be fighting many of these budget battles. Why? because we'd have a larger GDP, so tax revenues would be higher. Spending on public benefits would be lower, and painlessly so, because fewer people would be poor and middle-class people would have more money to take care of themselves.

Dave Johnson

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California.

Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


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Past Trade Agreements Have Cut Jobs, Wages and Democracy

Monday, 06 June 2011 05:01 By Dave Johnson, Campaign for America's Future | News Analysis
Past Trade Agreements Have Cut Jobs Wages and Democracy

President Barack Obama and President Lee Myung-bak of South Korea, after a joint press conference during the G20 summit in Seoul, South Korea, on November 11, 2010. As Obama considers legislation for a free-trade agreement with South Korea, he is deciding whether to add provisions that renew aid for unemployed workers at home. (Photo: Doug Mills / The New York Times) 

Our trade agreements have pitted working people in countries that do not protect rights or people against the working people here who fought to win the protections of democracy. The result has been devastating to our communities, our economy and our democracy.

America is (was, anyway) a democracy governed by We, the People. As Monday’s Memorial Day ceremonies remind us Americans fought and sacrificed to build and keep the protections and benefits that democracy offers. Those include good jobs with good wages, worker safety laws, rules preventing companies from polluting, and so many other things that companies complain make us less “business-friendly.” But we got involved in “trade” deals that let countries get around democracy’s protections, pitting employees here against people who have no voice, no power and no money. You can see the results all around us.

Korea, Panama, Columbia ... and China

Now we're looking at new trade agreements with Korea, Panama and Columbia. The President is holding out for assistance for all the workers who will be displaced while Republicans say, "Why bother?" Neither side is holding out for agreements that lift workers on both sides of the border.

But these agreements will hurt American workers and communities by lowering wages and killing jobs. For example, the National Council of Textile Organizations, American Manufacturing Trade Action Coalition, National Textile Association, American Fiber Manufacturers Association, U.S. Industrial Fabrics Institute got together to warn that,

    We have analyzed the agreement carefully and come to the unfortunate conclusion that the textile portions of the KORUS agreement are seriously flawed. If passed in its current form, the agreement will open the U.S. market to a massive one-way flow of sensitive textile products from South Korea, as well as illegal Chinese imports, while providing no new export business to our textile manufactures and workers.

And more clearly, there are ...uh ... labor rights "problems" in Columbia, too: Colombian Labor Rights Lawyer in Critical Condition after Assassination Attempt,

    On May 13, 2011, armed men on motorcycles fired five bullets into labor rights lawyer Hernán Darío in the heart of downtown Cali, Colombia. Mr. Darío is the lead attorney in a high-profile case defending the leaders of a group of sugarcane workers who led a labor strike in 2008 from criminal charges. While no one has taken responsibility for this shooting, it is widely believed to be connected with the sugar strike and Mr. Dario’s defense of the sugar workers.

    The shooting comes only weeks after the Colombian government agreed to implement a “U.S.-Colombia Labor Action Plan,” a plan to make improvements in labor rights conditions in Colombia, in connection with U.S. Congressional consideration of a Free Trade Agreement (FTA) between the U.S. and Colombia. The shooting underscores the continuing and serious labor rights problems in Colombia. It also calls into question whether there has been real progress on the labor rights situation in Colombia.

Of course, arguments over these are really proxies for our trade relationship with China, which is the real problem because it is the biggest problem. Our trade deficit with China is in the hundreds of billions - meaning they sell to us and don't buy from us, costing jobs, lowering American wages and increasing our debt. And China not only cheats, they really cheat. This is from Another Reason CEOs Should Rethink Outsourcing and Offshoring,

    Fellowes Inc., one of the world's largest makers of office and personal paper shredders, is witnessing the destruction of its business, as its large Chinese manufacturing plant has been shut down by its joint venture manufacturing partner.

    The company's Chinese joint venture firm has barred 1,600 employees from entering the plant, stolen all of its proprietary manufacturing production equipment and forced the venture into bankruptcy. The contracts Fellowes signed with its Chinese production company meant nothing. For Fellowes, there is no such thing as rule of law in China.

    The Itasca, Ill.-based company has lost $168 million worth of business and is no longer able to produce personal shredders for the world market. It has taken its case to Chinese courts, to no avail. It has pleaded with members of Congress and federal agencies, with no results.

Wrong Turn On Trade

"Trade" is when you ... uh ... trade with others. A country might be able to grow bananas, and need machine tools, so you set up a deal to trade with them. And you both benefit!

But "trade" is not supposed to mean you just let a company just close their factories here because they don't want to pay reasonable wages or protect worker safety or the environment, or pay taxes to support the communities that provide workers and services and customers. You don't just let them send those jobs across a border to a "business-friendly" country that will let them pollute at will or treat employees like slaves and then think they can just bring the same products they used to make here back here to sell.

Somewhere along the way we made a wrong turn that has taken down a road toward ruin. Somewhere along the way we made a deal with the devil to let a very few people here get extremely wealthy at the expense of the rest of us.

The Cost To Communities

These trade agreements have had a terrible effect on our manufacturing communities, particularly in the midwest. From last year's post, Lorain, OH Keep It Made In America Town Hall Meeting,

    As you drive from town to town in Michigan and Ohio you see one after another a ring of the "big box" stores and national chain stores around each city. You also see the "brownfields" of rusted-out, closed factories, empty, falling-down buildings. Then you go to the downtown and you see boarded up houses, empty storefronts, deteriorating and deteriorated communities, idle people standing on corners. As you drive into these towns you can just see what is happening in a nutshell.

Click here to get Truthout stories like this one sent straight to your inbox, 365 days a year.

The Cost To Sovereignty

Our trade treaties prevent us from governing our own country with the laws We, the People want to pass, even when we can get them passed around the money of the corporate gatekeepers.

The World Trade Organization (WTO) says says we cannot require Country Of Origin Labeling (COOL)
WTO rules against U.S. COOL program

    A World Trade Organization panel has issued a preliminary ruling on the case that Canada and Mexico filed against the U.S. country-of-origin-labeling law, charging that the mandatory rule violates WTO trade standards.
    Specifically, the WTO ruling upholds that requirements tied to U.S. mandatory COOL violate provisions of WTO's agreement on Technical Barriers to Trade or TBT. The WTO panel also ruled that the mandatory COOL requirements to not meet the United States' stated objective that the labeling law informs and helps U.S. consumers make purchasing decisions regarding the origin of meat, produce and other products covered by the labeling law.

Just over a week ago the WTO ruled that we can’t even make companies tell consumers whether tuna they buy is “dolphin-safe.” David Sirota writes about this in Salon, When "free" trade trumps U.S. law

    ... so-called free trade agreements (i.e., NAFTA, bilateral NAFTA replicas, the WTO regime, etc.) are free only of protections for human beings -- that is, free of provisions that preserve, say, labor rights, human rights and the environment. But those deals' "hundreds of pages" are chock-full of protectionist provisions for multinational companies -- provisions that, for example, allow foreign firms to sue governments for lost profits and empower international panels to unilaterally override a nation's domestic laws if those laws reduce corporate revenues.

According to Public Citizen's Eyes On Trade,

    For the second time in a week, reports have surfaced about the WTO clobbering a U.S. consumer labeling policy. Last week, the U.S. voluntary dolphin-safe tuna label was deemed a WTO violation. This week, Reuters is reporting that the WTO has ruled that U.S. beef labels are a WTO no-no.

    Corporate meatpackers are rejoicing...

    . . . Consumers, ranchers, farmers and legislators worked hard to pass the labeling rules after seeing ground beef horror stories in Schlosser's movie and book Fast Food Nation.

    Heck, even free marketeers will be upset with the WTO ruling, since labeling transparency allows the consumer to make the free choice as to what kind of product they want to buy without the government dictating the outcome.

    [. . . ] Unlike the U.S. Constitution and legal system, the WTO puts maximization of trade volumes first - ahead of consumer safety or the environment. As if corporations needed any more incentive to destroy local food production.

The Cost To Democracy

People watch these trade agreements take away our jobs and lower our standard of living. The see China cheating, taking everything and know that they can’t buy things in stores that are made in the USA. People clearly see this smashing the middle class and don’t understand why our political leaders don’t step in to defend the country. They don’t understand why government is not addressing these things that are costing jobs, and then see government making even more trade deals when it is obvious that trade with China is costing us jobs.

People understand this is big-company corruption buying politicians and making economic change impossible. They watch the big corporations take over the government, telling the Congress and administration what to do while they are unable to do anything about it. They come to believe the game is rigged. The result of all of this is that many people feel powerless and tune out.

The frustration over this is being channeled into a belief that it is government and democracy that are responsible, and that government spending is why they have no money. This loss of faith is dangerous to our society and our political system.

To Fix The Economy And Budget , Fix Trade

We have to fix our trade relationships if we hope to fix our economy and out budget problems. Ian Fletcher explains, in Why the Budget Is the Wrong Thing to Fight About,

    So... what is the solution? What do we have to fix?

    The number one thing is trade. Free trade collapsed a very long time ago. What we have today is not free trade at all, it's ruthlessly manipulated trade -- manipulated by America's big trading partners, starting with China but including many others. And we're doing nothing to stop them.

    America's titanic ($497 billion last year) trade deficit is ripping the guts out of industry after industry, but we have no answer. And you can't gut industry after industry and expect not to reduce your GDP.

    If we didn't have this horrendous trade deficit, we simply wouldn't be fighting many of these budget battles. Why? because we'd have a larger GDP, so tax revenues would be higher. Spending on public benefits would be lower, and painlessly so, because fewer people would be poor and middle-class people would have more money to take care of themselves.

Dave Johnson

Dave Johnson (Redwood City, CA) is a Fellow at Campaign for America's Future, writing about American manufacturing, trade and economic/industrial policy. He is also a Senior Fellow with Renew California.

Dave has more than 20 years of technology industry experience including positions as CEO and VP of marketing. His earlier career included technical positions, including video game design at Atari and Imagic. And he was a pioneer in design and development of productivity and educational applications of personal computers. More recently he helped co-found a company developing desktop systems to validate carbon trading in the US.


Hide Comments

blog comments powered by Disqus