The United States is in talks regarding at least five important new trade and globalization agreements:
- The Trans Pacific Partnership (TPP), being negotiated among the United States and 11 Pacific Rim nations—Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam;
- The Trans-Atlantic Trade and Investment Partnership (TTIP), being negotiated between the United States and the European Union;
- The Trade in Services Agreement (TISA), being negotiated among the United States, the EU and more than 20 other WTO members that call themselves the “Really Good Friends of Services”;
- The U.S.-China Bilateral Investment Treaty (BIT); and
- The Environmental Goods Agreement (EGA), being negotiated among Australia, Canada, China, Costa Rica, the European Union, Hong Kong, Japan, Korea, New Zealand, Norway, Singapore, Switzerland and Chinese Taipei.
There remains the prospect of more agreements on the horizon. However, rather than slowing down, taking stock and measuring the impact of existing agreements and the domestic economic policies that can complement or exacerbate their effects, the U. S. Trade Representative (USTR) is rushing full bore into these agreements—and seeking “Fast Track” trade authority to do so.
Fast Track is an undemocratic, unaccountable process that has been used to shield agreements under negotiation from influence by the American public and to virtually ensure the passage of trade deals that displace jobs, suppress wages, shutter factories, devastate communities and decrease worker bargaining power—all while increasing corporate profits and corporate influence over our economy and other economies worldwide. Thus, Fast Track is a policy that will increase rather than reduce income inequality.
While some would try to deflect the blame of failed U.S. trade and economic policy onto other countries or their workers, the real culprits are the powerful corporations that seek to control the global economic agenda with the clear purpose of lowering wages and diminishing the economic security of working people. Too many politicians support that agenda, choosing capital over labor, property rights over human rights and tax cuts for the wealthiest over investment in our future. And that’s not the worst of it. The NAFTA model agreements put in place standards that new laws and regulations enacted by democratic governments must meet
standards that favor property over people and essentially act as a constraint on the choices that democratic societies like ours can make.
For more than 30 years, powerful people have made economic decisions in this country with the clear purpose of lowering the wages and diminishing the economic security of working people. Policymakers decided to engage with the global economy through trade deals whose real purpose was not trade, but putting downward pressure on wages. This choice has put the American Dream out of reach of too many hard-working Americans.
Since NAFTA, the United States has negotiated trade agreements that both reflected and promoted this rise in corporate power at the expense of working people. The United States has helped create a system of global governance—by global corporations—with no counterbalance or check on growing corporate power.
In 2013, U.S. trade policy—and the corresponding failure of domestic economic and labor policies—caused a $318 billion trade deficit with China and a $456 billion trade deficit with the world for trade in non-petroleum goods. These trade deficits mean fewer jobs and reduced government revenues. This trade policy has contributed to the loss of more than 60,000 factories since 2000 and more than 4 million jobs since NAFTA went into effect (1994). U.S. trade policy has exacerbated the decoupling of wages and productivity that began in the 1970s and contributed to a declining share of the national income that accrues to workers, despite soaring corporate profits, which for many companies have reached record levels in the years since the Great Financial Meltdown.[1] Our nation’s trade policies have been a significant contributor to rising income inequality.
These figures should be serving as an alarm bell that current practice isn’t working. As the United States has entered more trade deals that advance the global corporate agenda, these trends have continued, not abated. When you’re in the hole, it’s time to stop digging. It is time to chart a new course.
The AFL-CIO is committed to being part of a growing, worldwide movement of labor unions and civil society pushing back against this corporate-rights trade model. Those who care about shared prosperity, reducing pollution, making health care affordable, addressing climate change and promoting equality and democratic governance see that at the heart of the corporate trade model is not trade but systematic attacks on workers’ rights, civil society’s ability to regulate corporate power and democracy itself. This is why unions globally continue to work with like-minded groups to change the course of globalization by changing the rules of trade—along with complementary domestic policy—so globalization becomes a constructive force for inclusive, sustainable growth.
And that begins with ending Fast Track as we know it. Fast Track is a trade policy in which Congress cedes its accountability over trade policy (the Constitution calls it “regulat[ing] Commerce with foreign Nations”) to the executive branch and promises to advance all the trade deals the executive branch brings back in an accelerated process that allows no amendments and very limited debate.
From a practical standpoint, while it makes sense to allow the executive branch to negotiate on behalf of Congress, it makes no sense to keep that process out of view of the American public or to commit to advancing in an expedited manner whatever deal is brought back, regardless of its contents. Before being finalized, trade deals must be measured against congressionally developed goals—in particular, the administration must demonstrate that the deal will create jobs, promote domestic production, protect the environment and ensure the ability of the United States and other countries to change laws and policies in the future without having to pay a ransom to corporate interests.
Once a common-sense, open, democratic trade negotiation process is developed and implemented, only then should Congress and the administration proceed to consideration of trade agreements developed under that framework. Unfortunately, none of the agreements under negotiation at this time has been developed under that framework—thus they suffer under a cloud of suspicion that they will simply double down on the fatally flawed deals of the past, like NAFTA. And the draft text—which has been hidden from the U.S. public by our government’s negotiators but leaked by other nations—makes clear that these suspicions are well-founded.
It’s not too late to ensure these agreements adopt a people-first approach, but the biggest challenge arises from the agreement that is the furthest along: The TPP.
We are deeply concerned that the TPP could facilitate the further offshoring of jobs and the export of the American manufacturing sector, in particular by including countries egregiously out of compliance with international labor standards. The USTR has failed to respond to repeated requests for information on how the agreement might actually expand U.S. production and job creation. That’s because the USTR simply appears to have no answers.
To work for families that work, the TPP must: have stronger labor and environment obligations than any prior agreement; include enforceable rules against currency manipulation coupled with access to laws to give injured domestic parties the opportunity to obtain relief; have strong and enforceable disciplines on the behavior of state-owned enterprises, particularly those that invest and operate in the United States; omit the investor-to-state dispute settlement (ISDS) process; ensure reciprocal market access, particularly in traditionally closed markets like Japan; protect economic development policies such as “Buy America”; contain strong and meaningful rules of origin to ensure the benefits of the agreement accrue to countries that have made commitments to each other—not to third parties; protect the provision of public services, as well as the ability to legislate and regulate in the public interest; and prioritize raising the standard of living in the countries involved.
Unfortunately, this is not the TPP as we know it. Certainly, those who support the TPP as currently configured use the right buzzwords and are attempting to create the perception that “this time it’s different.” But workers know it’s not. Once again, the USTR has chosen trading partners that fail to meet the floor criteria of freedom of association and collective bargaining that will allow workers to act collectively to improve their pay, benefits and conditions of work—the minimum required to share in the benefits of trade. Additionally, the USTR has made clear that it is seeking to incorporate the unfair and undemocratic ISDS mechanism, a neo-colonial practice that works to the advantage of global corporations that seek to constrain the choices that democratic peoples can make.
To date, the TPP does not contain the wholesale reforms that are needed.
In contrast, the TTIP, still in the very early stages, presents the administration with another opportunity to create a new model for trade with Europe. The AFL-CIO believes that increasing trade ties with the EU can only be beneficial for American and European workers if the rules lay down a framework for rising standards and shared prosperity. We must abandon the low road.
That is to say, trade negotiators must realize that citizens—on either side of the Atlantic—will not stand by while trade agreements billed as “good for us” are negotiated in our names behind closed doors.
Trade negotiators must distinguish between trade rules that will promote shared prosperity by supporting jobs, domestic growth and economic equity and those that only benefit the Trans-Atlantic elites and drive the race to the bottom. Meaningful and enforceable labor standards, sustainable growth models, respect for the rights to privacy, to health care and to free expression and assembly, and for the choices of democratic societies about how best to keep consumers safe and conserve natural resources, must be guiding principles. The TTIP must respond to the call made by unions and civil society on both sides of the Atlantic and omit the ISDS mechanism. The inclusion of ISDS will signal to workers globally that their interests will continue to be subservient to the interests of capital. We must also ensure that aviation and maritime sectors are not included in TTIP negotiations. Attempts to do so are motivated solely by a desire to weaken or eliminate protections against unfair foreign competition that have served these U.S. industries and its workers well in a difficult and ever-changing international marketplace. If the TTIP is simply more of the same failed trade policies, we will oppose it as destructive to our economy and our democracy.
The U.S.-China BIT, another agreement already well under way, is yet another misguided attempt that will only repeat the same failed model. The AFL-CIO has already made clear that it opposes the current BIT negotiations with China both because of the flaws in the current model BIT and because of specific concerns with respect to labor rights and the overall U.S. trading relationship with China. The U.S. model BIT fails to effectively protect fundamental labor standards reflected by ILO conventions and continues to provide foreign investors with the ability to use the ISDS process to bypass domestic courts and pursue claims in front of undemocratic, unaccountable private arbitration panels. Couple this bad model with a BIT partner that has an extensive record of non-compliance with trade commitments and that uses currency manipulation, state-owned enterprises and other modern mercantilist tools to gain trade advantages, and the U.S.-China BIT is simply a prescription for a further race to the bottom through outsourced U.S. production and jobs.
With regard to the TISA, the primary concerns for working families include whether the agreement will contain Mode IV commitments concerning the movement of persons (which could undermine achievements made in comprehensive immigration reform); the continued ability to robustly regulate services providers at the federal, state and local levels; and to protect the provision of high-quality public services. Unfortunately, there has been too little public discussion of the TISA. Likewise, the recently announced EGA seems of dubious value. Simply dropping tariffs in hopes that this, by itself, will create reciprocity of opportunity has been a failed strategy in China, Japan and many other markets over the years and the “green goods” sector is frankly too important—not just to our short-term economy, but to the long-term sustainability of our planet—to leave its development and maturation to vagaries of ill-functioning markets.
Actual U.S. job and wage growth that will spur demand and lead the United States out of its economic troubles must be the priority of all trade discussions. America’s and the world’s working people deserve a new trade model—and we can make that happen if we get on the right track.
The right track involves people-centered trade, which marries fair trade principles with progressive domestic policies. We know it can work. The Scandinavian countries have open, freely trading economies and high standards of living, high unionization rates, strong social safety nets, highly equal societies and a strong commitment to democracy. They have done this by marrying strong domestic policies that promote shared prosperity to their trade framework. There is no other way.
But even workers in these countries, who have benefitted from trade in ways that American workers never have, are dubious about the benefits of trade based on the U.S. model, which substitutes corporate interests for the national welfare. Without a commitment to making trade work for all, the rhetoric of “free trade” is little more than a slogan that papers over the real effects of corporate privileges such as ISDS and rules that promote deregulation and inequality.
Every election cycle, union members hear from candidates running for office that they are right, that our nation’s trade policies are not working for America’s workers, that there needs to be a full review. While that review has not taken place within the administration, it has taken place in factories and families all across the country. Now is not the time simply to adopt more trade deals based on the old approach, or to enact a new policy permitting the export of crude oil, but to stop, take stock and develop an approach that works for all Americans.
In light of the foregoing statements, the AFL-CIO recommits to the action items delineated in Resolution 12: America and the World Need a New Approach to Trade and Globalization,[2] adopted unanimously at the AFL-CIO quadrennial convention in September 2013. In particular, we already have been working with our trade union and civil society partners in TPP and TTIP countries to oppose trade policies that harm workers, communities, family farms, small businesses and the environment and instead to raise up alternative ideas to promote shared prosperity for all.
In the immediate future, we will continue our domestic work to oppose the outmoded Fast Track policies enshrined in H.R. 3830/S. 1900 and to hold elected officials accountable for creating trade policies that benefit families who work.
[1] For more information on how U.S. trade and economic policies since NAFTA have contributed to the decline of the middle class, worker bargaining power, wages and equality, see Jeff Faux, “NAFTA’s Impact on U.S. Workers,” Working Economics, (The Economic Policy Institute Blog), Dec. 9, 2013, available at: http://www.epi.org/blog/naftas-impact-workers/; Dean Baker., “Trade and Inequality: The Role of Economists,” Real-World Economics Review, Iss. No. 45 (2008), available at: http://paecon.net/PAEReview/issue45/Baker45.pdf; Robert E. Scott, “Trading Away the Manufacturing Advantage: China Trade Drives Down U.S. Wages and Benefits and Eliminates Good Jobs for U.S. Workers,” EPI Briefing Paper #367, Economic Policy Institute, Sep. 30, 2013, available at: http://www.epi.org/publication/trading-manufacturing-advantage-china-trade/.
[2] Available at http://www.aflcio.org/About/Exec-Council/Conventions/2013/Resolutions-and-Amendments/Resolution-12-America-and-the-World-Need-a-New-Approach-to-Trade-and-Globalization.