COUNTERPOINT: Should Congress pass the TPP trade agreement?
No, trade pact will mean more lost jobs, deserves to be sunk
By ARTHUR STAMOULIS
Trade is a critical part of Illinois’ economy. That doesn’t mean that all trade policies are smart ones, however. The proposed Trans-Pacific Partnership trade agreement is bad policy that should be rejected.
Many Americans have come to view U.S. trade policy as a way for big corporations to ship jobs overseas and to drive down wages. They’re not wrong.
Since the North American Free Trade Agreement and World Trade Organization deals ushered in a new era of trade policy in the mid-1990s, Illinois has lost approximately 300,000 manufacturing jobs — about one out of every three. Not every one of those job losses was due to trade policy, but a lot of them were. One narrow Labor Department program has individually certified 109,655 Illinois livelihoods as lost to either direct offshoring or competition from imports.
It’s not just the manufacturing sector. During a brief 16-month window in 2009 and 2010 when the Labor Department also providing job-retraining benefits to workers whose service sector jobs were offshored, more than 6,000 displaced Illinois workers qualified.
Even the agriculture sector has taken its licks. Exports to Canada and Mexico of two of Illinois’ biggest agricultural products — cattle and hogs — fell by 46 and 76 percent respectively under the first 21 years of NAFTA.
The legacy of U.S. trade policy since the ‘90s has been one of increasing trade deficits, lost jobs and depressed wages. Less acknowledged is that even U.S. export growth has been slower to countries with which we have Free Trade Agreements in comparison to ones with which we do not.
TPP proponents claim that this agreement will somehow magically reverse the awful lived experience of the trade agreements it is modeled after. That’s highly unlikely given both the countries selected as TPP partners and the way the pact was negotiated.
To start, the U.S. already has free trade agreements with the majority of the countries in the TPP, meaning that Illinois business’ new market access benefits to most of the countries to the TPP would be somewhere between negligible and nonexistent.
Among the countries left in the TPP, many are known for their intense human rights abuses, such as the ongoing human trafficking epidemic in Malaysia or the death-by-stoning laws for gays and lesbians in Brunei. What they’re not known for is their purchasing power. Most of these nations are either tiny or have highly impoverished citizenry.
Are workers making less than 65 cents an hour in a country like Vietnam really going to buy U.S.-made cars, solar panels and microchips? Or is the point of the TPP really to gain access to Vietnamese, not as customers, but as workers whose minimum wage is less than half of that found in China’s manufacturing centers?
While the market access benefits of the TPP are questionable at best, the pact would make it undeniably easier for transnational corporations to exploit low-paid foreign workers’ labor and get a tax cut while doing so.
It’s telling that President Obama’s biggest speech on the TPP to date took place, not at a U.S. exporter, but at Nike’s world headquarters. Nike is company that not only made its founder billions by pioneering the offshoring of production to Asia, but that also has a notorious track record of evading responsibility for the horrendous human rights abuses suffered by the people who make its running shoes and apparel.
The administration claims that the TPP has new labor and environmental standards to prevent a race to the bottom. Actual labor and environmental groups say those standards are grossly inadequate. In fact, the TPP even rolls back the number of environmental treaties that countries are required to adopt, maintain and implement to just one of the seven required under George W. Bush-era trade agreements.
Even if the TPP’s labor and environmental provisions were up to the task of protecting jobs at home and rights abroad, the TPP is so poorly negotiated as to provide importers with an easy way around them. The pact’s weaker-than-NAFTA “rules of origin” allow for products — like, say, automobiles — that are made primarily out of parts from third-party nations with no labor, environmental or reciprocal market access obligations under the TPP whatsoever to enter the U.S. duty-free.
From top to bottom, the TPP is written to benefit offshorers more than exporters. That’s also evident in the fact that U.S. negotiators refused to include enforceable rules against currency manipulation in the agreement, despite a request from a bipartisan group of 60 U.S. senators and 230 representatives back in 2013.
Without currency safeguards, the one country that offers any real market access benefits in the TPP — Japan — is now able to erase any tariff cuts it makes with a currency devaluation, something that U.S. exporters have experienced under past trade deals with other countries. This issue is so serious that, despite its wonkiness, presidential candidates have been speaking out about it on the campaign trail.
Honestly, is there another issue that Hillary Clinton, Ted Cruz, Bernie Sanders and Donald Trump agree on as much as that the TPP is a bad deal for the majority of Americans? I doubt you could find as much unanimity among them on the proposition that it’s important to eat a healthy breakfast.
More impressive than the politicians calling for a change in trade policy are some of the once die-hard advocates of the NAFTA model admitting that it’s at least time for a closer look.
In March, the Wall Street Journal published an article with the sub-heading, “The benefits of open markets of open markets are more uneven than economic theories had assumed.” Then earlier this month, Larry Summers — one of the staunchest defenders of neoliberal trade deals for decades — argued that the era of trade policy “by elites for elites” is over.
I never thought I’d say this, but let’s hope Larry Summers is right. The TPP deserves to be sunk, not only to protect Illinois jobs, but to create room for a more-balanced type of trade policy to flourish.
Arthur Stamoulis is executive director of Citizens Trade Campaign, a national coalition of labor, environmental, family farm, consumer and faith organizations working to improve U.S. trade policy.