It’s Time to Start Over on Trade

In a challenge to President-elect Donald Trump, EPI Distinguished Fellow Jeff Faux writes in U.S. trade policy—time to start over that Washington’s fixation with trade agreements has diverted attention from the more important question of how to put American workers back on the historic track of rising wages and opportunities.

Faux warns that, having declared the multinational Trans-Pacific Partnership dead, Trump now says he intends to continue the pursuit of bilateral trade deals, on the grounds that he is a better negotiator. But even if he is, writes Faux, new deals will not solve the problems of off-shored jobs and depressed wages that Trump raised during the presidential campaigns. http://www.epi.org/publication/u-s-trade-policy-time-to-start-over/

Therefore, Faux calls on Trump to announce an indefinite freeze on any new trade negotiations, until his administration and the Congress commit to and implement a credible comprehensive agenda for making American workers competitive and balancing our trade with the rest of the world.

“For two decades Democratic and Republican leaders have had it backwards,” writes Faux. As the Economic Policy Institute has been reporting for decades, trade deals have systematically traded away the income and job security of American workers in exchange for promoting the interests of American international investors. The effect has been to “open up American workers and their communities to brutal global competition for which they have not been prepared. The result is that the costs to American workers of each cycle of expanded trade relentlessly exceed the benefits.”

Faux writes that to successfully compete in the global economy, Americans need massive investments in education, training, infrastructure, and technology aimed at expanding production and product development in the US—and reforms in taxes and macroeconomic policies. He also recommends policies to restore the bargaining rights of American workers including enforcement of trade union rights.

When Congress voted on trade deals, workers were promised that such new investments and job creation programs would come later—after votes on trade treaties. But, says Faux, “later” never comes.

Faux notes that as they continued to promote new trade deals, Republican and Democratic leaders told anxious Americans that simply getting more education would secure their future, but without job-creating policies, growing numbers of younger more educated Americans are finding themselves floundering in a labor market where wages are stagnant. The real wages of young college-educated workers in 2016 were no higher than they were 15 years before. Faux concludes that cheap underwear and cell phones are hardly compensation for the loss of middle class jobs.

In this searing indictment of U.S. trade policies, Faux demonstrates how the economic arguments for them have been thoroughly discredited, leading to even weaker claims, such as the untenable notion that agreements like the Trans-Pacific Partnership would somehow improve national security.

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