9 Things You Didn’t Know About Our Trade Deficit with China

Photo courtesy bitzcelt

In 2001, China joined the World Trade Organization (WTO). America’s workers have felt the consequences ever since.

A new report from the Economic Policy Institute examines the primary result in the United States of China’s entry into the WTO, a massive increase in the trade deficit between the two countries, favoring China. The report’s author, Robert E. Scott, concludes that the trade deficit with China drives down wages and benefits in the United States and eliminates good jobs for U.S. workers.

Here are nine facts from the study you might not know about.

Good Trade Policy: Three ‘Thought Experiments’

by Stan Sorscher

Stan Sorscher

Stan Sorscher

The U.S. and 10 other countries are negotiating our next big trade agreement, called TPP. It’s time to re-examine what works and what doesn’t work.

Imagine a thought experiment, where we put environmentalists in each country in charge of negotiating the next trade agreement. Preposterous! I know. Stick with me. This is a thought experiment.

So, in this thought experiment our environmental negotiators would prioritize their interests — CO2 in the atmosphere, deforestation, endangered species, renewable energy, safe food, clean air and clean water.

Continue reading

Trade that Hurts

by Leo Gerard

USW President Leo Gerard

USW President Leo Gerard

“Uncertainty” is the pitchfork that corporations now effectively wield to prod politicians into action. It’s a threat, as in, if Congress doesn’t do this or that, such as avoid the fiscal cliff or raise the debt ceiling, then corporations will suffer the unbearable pain of “uncertainty.”

Uncertainty is really, really bad, business lobbyists lament. It’s a terrible thing to do to corporations, business commentators contend on talk shows.

They’re unconcerned, however, when the American middle class suffers uncertainty. Or when government action shifts uncertainty to the middle class. Trade is the perfect example of that. In 2000, Congress ended China’s uncertainty about trade with the United States by transferring that pain to America’s middle class. It was an excruciating loss of certainty for American workers because over the next seven years, millions of U.S. manufacturing jobs disappeared. That’s trade that hurts.

Continue reading

So-Called Free Trade — Bad Policy and Wrong Debate

by Stan Sorscher

Stan Sorscher

An editorial in my local paper is a good example of how we trivialize our public discussion of globalization and trade policy.

The editorial follows this logic: Trade is good. All trade is good. More trade is better than less trade. Maximum possible trade! Anyone who disagrees is protectionist or resentful.

I can immediately correct one misunderstanding. Everyone I know is in favor of trade. I am 100 percent in favor of trade. The issue is not “trade.” The issue is good trade policy, which raises my standard of living, or bad trade policy, which lowers it.

Similarly, I am in favor of capitalism. Even so, we can have real, significant, meaningful, legitimate debates about good rules for capitalism and bad rules for capitalism.

I am in favor of banks. We deserve serious policy debates about banking.

I am 100 percent in favor manufacturing. China’s manufacturing capacity is prodigious. It grows on the misguided principle of maximum possible output. As a result, air pollution in China is legendary, causing 750,000 premature deaths per year. In America, we debated clean air and clean water. Our public health and living standards are better for that debate.

I am in favor of copper, iron ore and titanium. However, it is bad trade policy for international trade tribunals to compel El Salvador to expose their people to unsafe mining practices, threatening more than a third of their clean water. Maximum possible mining threatens public health and safety in El Salvador.

It is bad public policy for a trade tribunal to overturn Ecuador’s $18 billion environmental penalties against Exxon, compelling the national courts to back down in the face of trade sanctions. Exxon has already damaged the environment, and been found guilty in court. Bad trade policy punishes Ecuador instead of Exxon.

These concerns are not new. Past trade negotiations identified them in writing, but dealt with them ineffectually.

For instance, when China entered the WTO in 2001, it signed an “accession agreement” with several conditions designed to make trade a two-way deal. China’s national policies flagrantly violate those conditions. China openly manipulates its currency. China demands that U.S. companies transfer technology to Chinese domestic producers. Foreign companies are discouraged or prevented from selling to China’s domestic consumers, and Chinese producers receive subsidies and incentives that drive our producers from the market.

Free speech, free press and labor standards are notoriously weak in China. China has a rich history and amazing culture. However, they lack the institutions of civil society for democratic debate about serious policy issues.

This harms workers and producers in America.

In our NAFTA and WTO debates, advocates of so-called free trade promised us a rising standard of living, balanced trade and millions of good new jobs. Instead, U.S. companies shifted 2.4 million jobs abroad, while eliminating 2.9 million jobs in America. Our cumulative trade deficit since NAFTA is over $7 trillion. Our economy is de-industrializing, and we are losing strategic opportunities to produce the next generations of products.

These are fundamental flaws in our trade policy that lower our standard of living — well worth a serious public discussion. Nineteenth century “free trade” theory may work well in a textbook, but it has profound conceptual, economic, social, environmental, and political shortcomings in our real 21st century global economy.

Challenging bad policy is the way democracy works.

Both Barack Obama and Mitt Romney found fault with aspects of our trade policy (at least during election campaigns). Candidate Obama recognized the weaknesses in our trade theory, and promised better trade agreements all through the campaign. Candidate Romney says action on China’s currency manipulation will be a top priority.

In at least one respect, our so-called free trade policy is fabulously successful. It’s really about putting investor and business interests at the highest priority, while sweeping aside the environment, labor rights, human rights, public health and reasonable regulations. Investors go first; civil society comes after. Maximum possible trade! It’s great for companies who move production to countries with low-wages and weak democracies.

Dave Johnson says this in plain language:

The business advantage China offers is not low wages — it is that in China the people do not have a say, and here people have a say. When people have a say they say they want better pay, health care, retirement, vacations, sick pay, protections, worker safety, clean environment and taxes to support the country — things like that — the very things China offers to let our businesses escape from.So what China offers is that China is “business-friendly.” Because people there do not have a say, so they can’t ask for the things people should have.

When our newspapers and policy-makers trivialize globalization and dismiss legitimate public concerns as “resentment” or protectionism, they weaken our democracy.

The Trans-Pacific Partnership (TPP) is the Obama administration’s signature trade agreement, which is being negotiated in total secret. Text was leaked recently, showing that TPP will be worse than the past agreements. A crummy deal, negotiated in secrecy is not saying much for democracy.

Popular disillusionment with so-called free trade is real. It is based on personal experience, rational analysis, and looking out the window.

Voters, workers, families and Main Street businesses sense serious problems with our domestic economy. Whatever those problems are, they are made worse by so-called free trade. We won’t solve either unless we deal with both.

Stan Sorscher is Labor Representative at the Society for Professional Engineering Employees in Aerospace (SPEEA), a union representing over 24,000 scientists, engineers, technical and professional employees in the aerospace industry. He has been with SPEEA since 2000.

China’s Unfair Trade Puts U.S. Jobs at Risk

by Mike Hall, Jan 31, 2012. AFL-CIO

More than 1.6 million American jobs in the nation’s auto supply chain are at risk unless China’s illegal trade practices are curtailed, according to three new reports released today. In a conference call with reporters this afternoon, United Steelworkers (USW) President Leo Gerard said:

China is cheating unmercifully in this sector and we are saying to China—and asking our government to stand up to China and say—“enough is enough.” It is time to enforce our trade policies.

Two reports from the Economic Policy Institute (EPI) and one from Stewart and Stewart, a law firm that has won cases challenging China’s unfair trade practices, detail China’s persistent and growing violations of World Trade Organization (WTO) rules and outline plans by China’s government to use these same tactics to boost their auto parts exports even further. Continue reading

Northwesterners Demonstrate Against the WTO Again, 10 Years After the Historic “Battle in Seattle”

by Arthur Stamoulis

photo by Bette Lee

Over 2,000 people across the Pacific Northwest converged in downtown Portland on Saturday to voice their opposition to new attempts to expand the World Trade Organization (WTO), an international body that negotiates and enforces global economic agreements for the benefit of large corporations. More than 75 labor, environmental, immigrant rights and social justice organizations participated in the march and rally, coordinated by the Oregon Fair Trade Campaign. The demonstration was one of hundreds around the globe in recent weeks, and comes on the 10-year anniversary of the historic “Battle in Seattle” WTO protests.

Continue reading

Unions tell WTO: Jobs come first

International Trade Union Confederation
Image via Wikipedia

ITUC

As the 7th WTO Ministerial Conference opens in Geneva, a 60-strong trade union delegation at the talks have issued a 6-point set of demands for the negotiatiors, drawn up following a Trade Union Conference on 29 November addressed by WTO Director-General Pascal Lamy, Trade Ministers of Brazil, South Africa, Argentina, the EU’s lead negotiator and ILO Executive Director Kari Tapiola.

“At this time of near-record levels of unemployment in many countries, it would be foolhardy to promote accelerated trade liberalisation without taking into account its implications for jobs and growth”, said ITUC General Secretary Guy Ryder. “The priority for all countries is escaping the jobs crisis and the Doha WTO Round must be judged on the basis of the impact it would make on that objective. Its future will be determined in that light.” Continue reading

Follow

Get every new post delivered to your Inbox.

Join 1,218 other followers