Miami, FL
The financial crisis that began in Asia more than a year-and-a-half ago continues and spreads. The countries hit first struggle to recover, and new countries succumb to the contagion. Millions of workers have lost their livelihoods in the crisis countries, and hunger and poverty have grown alarmingly. The United States is not immune, and many American workers are already paying a high price for global turmoil.
It is clear that the crisis is neither temporary, nor easily fixed. The cause of the crisis is systemic, and solutions must go straight to the heart of a global trade and investment regime that is fundamentally flawed. Deregulated global markets, whether for capital and currencies, or for labor and goods, are not sustainable. They produce speculative, hot money explosions and a relentless search for lower costs that devastate people, overturn national economies and threaten the global economy itself. The so-called Washington consensus on "economic reform"--trade and investment liberalization, privatization, deregulation, and extreme austerity--is a recipe for instability, social strife, environmental degradation, and growing inequality, not long-term growth, development, and broadly shared prosperity.
The combination of the global financial crisis and long-term trends in trade and investment have inflicted deep wounds in the U.S. manufacturing sector. The United States has lost 285,000 manufacturing jobs since March of 1998. Trade-related job loss will likely grow in 1999, as the trade deficit in goods is projected to climb from about $240 billion in 1998 to close to $300 billion this year.
This trade imbalance is accelerating deindustrialization in a broad array of industries--steel, textile, apparel, auto, electronics, and aerospace. No region has escaped the ravages of the crisis. The impact is not only job loss, but also the quality and composition of jobs, and therefore the distribution of income. Despite the recent growth in wages, the typical American worker's real hourly compensation is lower today than it was almost a decade ago--even as productivity grew by 9 percent.
We must address these problems by insisting upon a set of principles that will guide our trade, investment, and development policies at home and in all of the multilateral fora. We will strenuously oppose any new trade or investment agreements that do not reflect these principles, and we will work to remedy the deep flaws in our current policies.
First, excessive volatility in international flows of goods, services, or capital must be controlled. Countries must retain the ability to regulate the flow of speculative capital in order to protect their economies from this volatility.
Second, we must not allow international trade and investment agreements to be tools which businesses use to force down wages and working conditions or weaken unions, here or abroad.
Third, we need to pay more attention to the kind of development we aim to encourage with our trade policy. Our current policies reward lower barriers to trade and investment, and encourage developing countries to dismantle domestic regulation. These policies encourage developing countries to grow by tapping rich export markets abroad, while keeping wages low at home. This focus on export-led growth short-changes developing countries and places undue burden on our market.
As Congress considers trade initiatives this year, and as the Administration prepares to host the World Trade Organization (WTO) ministerial in November, they must adhere rigorously to these principles. This requires that:
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The U.S. government must radically reorder its priorities, so that our trading partners understand that enforceable worker rights and environmental protection are essential elements in the core of any trade and investment agreements. Unilateral grants of preferential trade benefits must also meet this standard. The African Growth and Opportunity Act and the proposed extension of NAFTA benefits to the Caribbean and Central America fall far short and are unacceptable.
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We should strengthen worker rights provisions in existing U.S. trade laws and enforce these provisions more aggressively and unambiguously to signal our trading partners that failure to comply will not be tolerated.
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The U.S. government must enforce the agreements it is currently party to, before looking to conclude more deals. China's failure to abide by the 1992 memorandum of understanding and the 1994 market-opening agreement must not go unchallenged, and China's recent jailing of trade unionists is yet more evidence that WTO accession should be denied. Congressional approval should be required for China's accession to the WTO.
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Current safeguard provisions in U.S. law are clumsy and ineffective. We must strengthen and streamline Section 201 and the NAFTA safeguards provisions, so that we can respond quickly and effectively when import surges cause injury to domestic industries. Until this can be accomplished, we should be ready to take unilateral action to protect against import surges when necessary.
- Immediate steps must be taken to address the flood of under-priced imported steel coming into our market. US workers must not be the victims of international financial collapse.
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Fast track--the traditional approach to trade negotiating authority--has been decisively rejected by Congress and the American people. Trade negotiations are increasingly complex, and Congress must have a stronger consultative role. Congressional certification that objectives have been met at each stage must be required before the negotiations can proceed. Both the process of negotiation and the international institutions that implement these agreements need to be more transparent and accessible to non-governmental organizations.
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We need to address the problems faced by developing countries more directly, by offering deep debt relief and development funds as part of an overall program of engagement and trade. Trade preferences linked to improved labor rights and environmental standards change the financial incentives for countries seeking market access and increased foreign direct investment; debt relief and aid can help provide the resources necessary to implement higher standards.
- The US government needs to address the problems of chronic trade imbalances and offset agreements, whereby US technology and jobs are traded for market access.
But before Congress and the Administration craft fundamentally different trade policies, we must take urgent steps to fix problems in our current trade agreements. NAFTA has been in place for five years now and has been a failure.
We must strengthen the labor rights protections in NAFTA, so that violations of core labor standards come under the same strict dispute settlement provisions as the business-related aspects of the agreement.
We must renegotiate the provisions on cross-border trucking access. It is clear that fundamental safety issues are far from being satisfactorily addressed. The safety of our highways must not be compromised for the sake of compliance with a flawed trade agreement.
The safeguard provisions in NAFTA have proven ineffective in the cases of auto and apparel imports, which have surged unacceptably since NAFTA's implementation in 1994. These provisions must be corrected. We must insist on an equitable sharing of automotive production among the three North American countries, so that all three countries can benefit from growth in the North American market, as well as sharing in its downturns. And we must ensure that the investment provisions of NAFTA, which grant new powers to corporations in their disputes with governments, are fixed and not used as a model for any future agreements.
In addition to fixing trade policy, we have to make sure that our policies toward investment, development, taxation, and the international financial institutions support economically rational, humane, and worker-friendly rules of competition. We must change the rules of the international economy, not so we can have more trade, but so we can build a better world, for working families here and abroad.
Finally, it is important to remember that the United States has the right to withdraw from trade agreements to which it is a party. The US government should undertake an aggressive review of existing trade agreements to determine whether they adequately protect US interests or whether the US should exercise its withdrawal rights.