Arguments for speeding more-of-the-same trade deals don’t hold up
By STAN SORSCHER
(May 5, 2015) — Thank you very much if you have called your member of Congress to urge him or her to oppose “Fast Track” Trade Promotion Authority. If you haven’t called Congress yet, what are you waiting for? It is an easy toll-free call, 855-712-8441, to get patched through to your member of Congress and tell him/her: “I’m a constituent, and I want you to vote NO on Fast Track.”
If you have already called, you may have received a response from your member of Congress.
Let’s look at one such response letter, which is a good starting point for understanding the talking points from our trade negotiators. That should help us see through some of the fog in the larger discussion around good trade policy and bad trade policy. The actual Congressional letter was edited to remove personal information, so we can focus on the issues. The language in italics is taken directly from the Congressman’s letter. The text in regular font helps us read between the lines.
Thank you for contacting me about President Obama’s trade agenda. I appreciate you taking the time to share your views with me. To be honest, this is complicated stuff. So, let me apologize upfront for what will be a lengthy response. It’s important to me that you understand where I stand and what I’m considering as this debate moves forward.
President Obama has called on Congress to take up legislation that would give him the same authority that every other President over the past 40 years has had to negotiate trade agreements with other countries. This is called Trade Promotion Authority (TPA), which would set the nation’s trade priorities and establish requirements regarding how the Administration must consult with Congress, stakeholders, and the public throughout the negotiations.
Fast Track is Congress’ one chance to set meaningful negotiating objectives. It’s already too late for Congress to influence the TPP — that deal is done.
Sen. Elizabeth Warren (D-Mass.) points out that this Fast Track will be Congress’ only chance for up to six years. We are stuck with the low performance of this version of Fast Track for two new agreements. One huge deal covers Europe and another worldwide deal involves services, including services at the state and local level. The same weak Fast Track covers any deal for the next presidential administration, and possibly the one after that.
TPA legislation also sets procedures for Congressional consideration of trade agreements. In the past, both parties have used this approach to provide direction to the executive branch regarding what they want to see in any trade agreements. Congress uses this avenue to consider trade agreements because they’ve found trying to amend trade agreements in the legislative branch is not an effective way for the United States to engage in international negotiations.
This is a particularly hot topic as the Administration continues negotiations of the Trans-Pacific Partnership, a 12-nation trade agreement that would involve 40% of the world’s economy.
The TPP is nearly complete. New Zealand Canada and Japan have said they can finish the last details in a few days. Our negotiators did not wait for direction from Congress, and they are not required to follow direction from Congress.
Our negotiators have ignored Congressional objectives in the past. TPP says nothing about currency manipulation, in spite of Congressional objectives in Fast Track. Currency manipulation is good for China, Japan, Korea and other countries that practice it, but it costs us billions in exports and encourages producers to move countless jobs overseas.
Suffice it to say, it’s important that America gets this right.
Trade is an essential part of Washington state’s economy. Generally, our state does well when we’re able to sell our apples, our airplanes, our software, our wood products, and other products overseas. Exports from (my district) totaled more than $2.2 billion in 2013, supporting more than 67,000 jobs.
Exports are good. But they are only half the equation. Imports matter, too. The U.S. has accumulated about $10 trillion trade deficits since NAFTA. That’s roughly $500 billion per year. In Washington state, for the top 10 products that Washington exports to Korea – including everything from transportation equipment to agricultural products – our trade deficit worsened by 27 percent in the FTA’s first two years.
Any time a proponent of TPP tells you about exports without mentioning imports, he or she is hiding half the story from you. It’s like saying, “You give me $5 and I’ll give you $3. Boy, did you get a heck of a deal by getting $3!!! We should congratulate each other for negotiating that deal. Let’s do it again. You give me $5 and I’ll give you $3. Now you have $6. You’re doing great!”
Washington state isn’t doing so well even on the export half of the story. U.S. exports to Canada and Mexico of cattle — one of Washington’s top agricultural products — fell 46 percent in the first 21 years of NAFTA. In the first two years of the Korea FTA, U.S. exports to Korea of dairy products, wheat and apples — three more top Washington agricultural products — fell 92, 11 and 8 percent, respectively.
With that in mind, I appreciate President Obama’s suggestion that trade agreements – if done right – could expand opportunities to export our goods to growing markets like those in Asia and benefit Washington state’s employers and workers.
In addition, it’s worth acknowledging that global trade is a reality. The United States makes up just 4% of the world population – so global trade is going to happen regardless of whether Congress passes trade legislation.
We are all in favor of trade. This sounds like we have one choice — trade or no trade. Why aren’t our elected officials talking about good trade policy that works for people and communities or bad trade policy that only works for global companies and the 1%?
In making his case to Congress, the President has asked a key question: do we want America to sit back as China negotiates trade agreements around the world and seeks to set the rules of trade (leading to a race to the bottom on worker standards, environmental standards, and consumer protections) or do we want the United States to be involved in setting the rules and establishing high standards?
What rules would the president set with TPP? We know rules in TPP will expand rights for pharmaceutical companies, patent holders, insurance and financial companies, and other global corporations and investors.
When it comes to labor or environmental standards we hear the same promises we’ve heard for 20 years. This set of standards will be better than the very low standards we have now. Under the current standards, we enforce labor standards in Colombia through diplomacy, while workers continue to face threats and many are murdered. Enforcement through diplomacy in Guatemala runs a similar course, while labor leaders are killed.
When investors enforce their rights, they seek millions or billions in compensation for expected future profits. When workers lose their lives, their families wait years for diplomacy to take effect.
Members of Congress can see the actual language of TPP. Maybe they can tell us, can a typical worker, whose labor rights have been violated, use a mechanism like the one available to investors, to capture potential future lost wages when countries fail to implement living wage standards?
It’s a reasonable concern. Earlier this year, I spoke with a manufacturer in (my district) whose company makes American products made by American workers. But when that company tries to sell goods to Asia, their products consistently face high tariffs.
With or without TPP, a few products will have high tariffs. Overall, tariffs are already low — so low that economists’ best estimate is that TPP will add around one half of one percent to GDP over 20 years. That’s undetectable, within the statistical measurement error.
If our past experience is any guide, exports will go up, and imports will go up even more. (You give me $5 and I’ll give you $3…)
The owner explained to me that he’s been told numerous times that he could avoid tariffs if he would only move his jobs to China.
He will move his work to China, or Vietnam or Peru, just like many other producers have already done, to get access to cheap labor, subsidized resources, and favorable investor protections under the trade agreements. As long as poor countries have millions of workers forced to work at low wages, U.S. producers will move work there.
Trade agreements with adequate protections for American companies could help reduce those tariffs, and boost sales – enabling American companies like this to expand production or hire more workers. But only if they are done right.
With that in mind, I believe that we need better trade deals than the ones we’ve had in the past. I do not want – nor would I support – an agreement that I believe would lead to American jobs going overseas or that would put corporate profits above the rights of workers or the health of our environment.
It’s critically important that we have a trade policy that reflects our region’s priorities and values. Above all, it is important to me that any trade agreement that Congress considers must ensure that we are exporting our products – not exporting our jobs.
Again, the word “imports” is missing. Imports drive out local production, and move our jobs overseas. How is TPP different from previous promises that have costs jobs? In 1995, we were promised more exports and jobs from NAFTA. We lost 700,000 jobs when production moved from the U.S. to Mexico. We lost again, when trade drove Mexican farmers off their land and forced millions to come to the U.S. where they had no labor protections and no bargaining power.
In 2000, we were promised more exports and jobs when China was admitted into the WTO. We lost more than two million jobs and run a trade deficit around $1 billion per day with China. Most recently, we were promised more exports to Korea. We did export 20,000 more cars. We imported 400,000 more cars, and we lost 70,000 jobs, overall.
That also means that any trade agreement needs to meet high labor standards that must be enforced. That’s why in July 2014, I led an effort in Congress urging United States Trade Representative Michael Froman to fully include the May 10, 2007, agreement on labor standards as part of any Trans-Pacific Partnership (TPP). The 2007 agreement requires all countries participating in an agreement to be subject to the same high labor standards, puts in place detailed plans to bring countries into full compliance with their labor obligations, and ensures that we have strong and effective dispute settlement mechanisms and penalties. In my view, no country should benefit from TPP if it is failing to live up to its obligations to its workers, including enabling them to form unions, prohibiting child labor, and establishing worker safety and minimum wage standards.
Members of Congress make a powerful moral statement by signing letters to our negotiators. This particular member of Congress declined the opportunity to sign a different letter, which had already been signed by 150 House Democrats, insisting that Vietnam actually address its labor problems and implement the terms in TPP before TPP could be considered. To date, the “May 10” conditions have been nearly impossible to enforce, and have more meaning to ambassadors and diplomats than they do to workers in any country.
In addition, it is important to me that our trade agreements have high environmental standards… I know that our kids are only as safe as the water they drink, the air they breathe, and the earth we pass on to them. I don’t want to see a race to the bottom – nor anything that would undermine our efforts to protect our planet.
Unlike NAFTA – which failed to include labor or environmental standards as a core, enforceable part of the agreement – future agreements must have high standards that must be enforced.
Our children expect us to deal with income inequality and climate change. Governor Jay Inslee wrote to our trade negotiators that expanded investor rights were more trouble than they were worth, and worried that a new unfavorable standard for regulations would hurt important policy objectives at the state level. Likewise, former Gov. Chris Gregoire also wrote to the U.S. Trade negotiators during her administration about her concerns with our trade agreements.
Our trade policy gives more power and influence to corporations and wealthy individuals who already have plenty of both. The more people see of these agreements, the less they like them.
Sens. Orrin Hatch (Utah) and Ron Wyden (Ore.), along with Rep. Paul Ryan (Wis.) jointly introduced the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. This legislation would establish congressional trade negotiating objectives and enhanced consultation requirements for trade negotiations as well as allow for trade deals to be submitted to Congress for an up-or-down vote should they meet the United States’ objectives and Congress be sufficiently consulted.
This bill appears to be a departure from so-called “fast track” laws of the past. For example, it includes greater transparency, accountability, and Congressional oversight.
Greater transparency than the current top-secret process used to date. Remember that TPP is 95% done. The time for transparency was three years ago, when the negotiators were busy writing the final language.
I’m pleased to see that the public would have at least 60 days to review a trade agreement before the president signs it. Once the president signs it, another 30 days would have to pass before Congress could even begin considering the trade agreement. I strongly believe that the public needs to have adequate time to review, scrutinize, and offer feedback about what’s included in a trade agreement.
This bill also includes stronger labor and environmental standards and unlike previous so-called “fast track” legislation, this bill demands that before countries can expand their trading relationship with the U.S., they have to maintain a core set of international labor and environmental standards.
It’s more than ironic that diplomats who would enforce these standards also set strict rules for negotiating TPP that prevent members of Congress from discussing language in the deal in public. Any member of Congress who explains these new standards to constituents would be violating national security rules, and technically, could be charged with treason. (!!!) Perhaps the new higher standards would apply to members of Congress who tell constituents about these wonderful high-road standards we are expected to enjoy.
This means that, for the first time, failure to comply with labor and environmental standards will come with strong enforcement procedures. That is important if we are going to ensure that American workers can compete on a level playing field.
This proposal would also put in place a mechanism that would allow either the House or the Senate, acting on their own, to stop a bad trade deal from taking advantage of TPA’s streamlined voting procedures.
Of course, Congress could just vote down TPP with much less effort. The bar on suspending Fast Track is higher than the level for rejecting TPP.
Finally, it also would make clear that trade agreements cannot by themselves change U.S. law.
Right. We can do whatever we want to regulate in the public interest ….. as long as we compensate investors for loss of future profits. We can keep the law, as long as U.S. taxpayers pay off investors. That’s not the way our legal tradition works, and is not the legal tradition of Canada, Australia, Japan, or other countries in the TPP.
Under the U.S. Constitution, Congress has a say regarding how our nation’s laws are changed, and I think it’s important that any legislation related to trade agreements makes that very clear.
Under TPP, trade tribunals will render decisions based on the language and priorities in TPP. They will pay absolutely no attention to our Constitution or court decisions, nor will they consider the Constitutions of Canada, Australia or any other TPP country.
The TPA bill has just recently been introduced, and I am reviewing it closely.
As part of a proposed package, another piece of legislation authored by Sen. Wyden would enable swift action to keep foreign bad actors accountable.
Nothing in trade policy is swift. Congress favored action on currency manipulation, which costs the U.S. billions in lost sales, but the president and House leadership blocked action, killing the legislation. The USTR and State Department have accomplished nothing to enforce the Labor Action Plan with Colombia, where labor leaders still risk their lives.
The bill would also make it easier for American companies – particularly small- and medium-sized businesses that have more limited resources – to identify unfair or illegal trade practices when they happen and strengthen our enforcement efforts so that countries that break their promises would face real consequences.
Going forward, I want to be clear about the issues I’m weighing.
First and foremost, I have always said that I believe it is my role as a representative to look thoughtfully at any legislation and determine whether it would create jobs, strengthen our economy, protect our environment and consumers, and maintain strong labor standards to ensure that American workers are competing on a level playing field. If it meets that threshold, it may be something that I can support. If it doesn’t meet that threshold, I won’t.
Second, I don’t want to see a deal railroaded through without adequate transparency or input. Enabling the public to see any agreement and enabling Congress to review it thoroughly will be important.
Third, I’ll be weighing the alternative. The President has pointed out that other nations will not put their best and final offers on the table if they would then have to negotiate further with 435 members of the U.S. House and 100 members of the U.S. Senate. What’s more, if Congress chooses not to grant Trade Promotion Authority to President Obama, I have to ask whether the values that I care about – environmental protection, worker protection, consumer protection – will be better protected by Congress having the capacity to amend any agreement.
Those are excellent values. Why did we let 600 corporate advisers dominate negotiating the terms of the TPP? Did we really expect corporate advisers to honor the values of civil society, or would they more likely strengthen corporate leverage to profit from global integration? A better alternative would be to start over with a more inclusive accountable process and get trade right.
As I review this bill, please know that I greatly appreciate your insight and feedback in this process and your input on how we can strengthen America’s trade policy. Please be sure that I will keep your thoughts and concerns in mind as Congress continues to debate this issue.
Please continue to share your thoughts and concerns with your members of Congress. They are understandably worried about alienating their constituents by voting for more of these destructive trade deals. After decades of experience with corporate-and-investor driven agreements and promises that working families and the environment will be protected, Americans have seen the results. We are understandably dubious about more of the same.
So tell your members of Congress — again — that you support trade that works for all of us. That’s why you urge them to REJECT this Fast Track.
Stan Sorscher, a labor representative at the Society of Professional Engineering Employees in Aerospace (SPEEA), IFPTE 2001, is President of the Washington Fair Trade Coalition. Learn more at washingtonfairtrade.org.