Chicago
AFL-CIO Executive Council statement
America continues to run up a mounting international debt as we face a flood of unfairly priced imports. Meanwhile, American products often are blocked from sale abroad, and too many American companies choose to compete globally by off-shoring both production and services. Since 2000, we have lost more than 3 million manufacturing jobs and almost 40,000 facilities have shut down operations, many due to flawed trade policies. The dramatic deterioration in our trade balance has contributed significantly to the huge structural changes that have taken place in the domestic economy. These changes have caused real pain for tens of millions of workers and their families: declining wages, erosion of health care and retirement benefits, increasing poverty, devastated communities and dramatic increases in income inequality. Sadly, we are repeating the so-called gilded age of the last century, with the super-rich getting richer and everyone else getting poorer.
The past 15 years of trade liberalization have had less to do with opening markets for U.S. exports than with securing protections for U.S. foreign investment that encourages companies to send productive capacity offshore in order to send products back to the world’s largest consumer market. In this way, the so-called free trade agenda allows companies to avoid the whole panoply of domestic laws and regulations—affecting clean air and water, the minimum wage, the abolition of child labor, the right to organize and bargain collectively, a safe and healthy workplace, safe consumer products and safe food, to note just a few—that we as a nation have long decided are important to promote the common welfare and temper the worst excesses of a free market economy. Corporate profits have skyrocketed, executive compensation has gone through the roof and working Americans have paid the price.
It has become clear to all but the most devoted ideologues that the current trade system is in need of dramatic reform.
Earlier this year, Democratic House of Representative leaders capitalized on their return to power by forcing their Republican colleagues and the Bush White House to agree to include international labor standards and environmental provisions in the core text of new trade agreements with the same enforcement mechanisms available to traditional commercial concerns. Their efforts represent progress and form one part of a new agenda to help reform our nation’s trade policy to create growth with equity, both here at home and abroad. More remains to be done to ensure that these labor rights and environmental concerns are appropriately dealt with and effectively enforced in trade agreements.
The congressional leaders made clear they don't share the view that success is measured simply by the number of trade agreements signed. Rather, they emphasized that results in terms of jobs, a rising standard of living and opportunity are the true measures of success. That is why they took a firm position in opposition to the proposed free trade agreements with Colombia and South Korea and renewal of Fast Track trade negotiating authority.
Colombia continues to lead the world in murders of trade unionists—a shameful record. More than 2,000 trade unionists have been murdered in Colombia since 1991, including more than 400 since President Uribe took office in 2002. Fewer than 2 percent of the perpetrators of these murders have been brought to justice, indicating the inability or unwillingness of the Uribe government to end the impunity. The majority of these murders have been committed by paramilitary groups, some of which have been shown to have connections to high-ranking members of the Uribe government. We stand in solidarity with Colombian workers and will continue to oppose this FTA until concrete progress is made in Colombia to: 1) end the violence and threats against trade unionists; 2) bring the perpetrators of the violence to justice; 3) sever the ties between the paramilitary groups and the government; and 4) ensure that Colombian workers can exercise their rights to organize and bargain, free of threats and intimidation.
The Korea-U.S. Free Trade Agreement, as negotiated, would decimate our auto sector and increase pressure on other key industrial sectors, potentially costing tens of thousands of good U.S. jobs—jobs we can ill afford to jeopardize. The FTA fails to adequately address the numerous non-tariff barriers to U.S. goods in the Korean market, while opening our market quickly. This could dramatically exacerbate our already-lopsided trade relationship with Korea. Our brothers and sisters in South Korean labor unions also are strongly opposed to the FTA, as their government and employers have recently cracked down on union activities and exploited irregular worker loopholes in Korean labor law. We stand with them in demanding that both of our governments respect all the International Labor Organization's core labor standards, in both law and practice. In addition, in the proposed FTA, our negotiators agreed to consider granting trade preferences to products made in the Kaesong Industrial Zone, an industrial park located in North Korea. The North Korean workers in this zone cannot exercise any of their fundamental workers’ rights—including the freedom of association and the right to strike. In fact, these workers are not even paid directly by their employers, in a situation close to indentured servitude. We strongly oppose the Korea-U.S. FTA in its current form and call on both governments to renegotiate this flawed deal.
Advancing labor rights and environmental protection in trade agreements must be coupled with aggressive proposals to maintain, enforce and enhance our trade laws to fight unfair and predatory trade practices. We also need to ensure that we have the tools to eliminate trade-distorting activities, like the demand by other countries that U.S. jobs and technology be transferred in return for a sale. Our nation’s laws designed to guard against unfair trade are under attack, not only by our trading partners, but also by many multinational corporations. These are the same companies that have offshored and outsourced their production as they seek to have workers around the globe bid against other workers for a piece of the pie while the companies rake in the profits from their hard work. And the World Trade Organization (WTO) often become the venue not to enforce U.S. rights but to undermine them, as numerous panels have sought to impose new obligations on the United States that never were agreed to in negotiations.
WTO rules must not continue to ignore the competitive advantage enjoyed by our competitors who rebate their value-added taxes at the border while we have been denied the ability to match this tax rebate through a comparable system. Perhaps 60 years ago the United States could look the other way as countries rebuilt their economies after World War II. Today, we no longer can afford to allow our competitors to subsidize their exports through tax rebates while imposing huge taxes on our exports to them.
Fair trade requires consistent and effective enforcement of basic rules and standards of engagement. The U.S. plays by those rules while our competitors all too often do not. Rather than continuing to weaken our trade laws, the administration should make clear that it intends to enforce existing rules and strengthen them where necessary. Indeed, enforcing the rules, according to a recent study done for the Alliance for American Manufacturing, yields substantial benefits by stopping the hemorrhage of lost profits and income for our manufacturers and the communities in which they operate.
But we also need to expand our toolbox to give officials new tools to fight unfair trade. We need to end currency manipulation by our trading partners, ensure that countervailing duties can be applied when non-market economies use subsidies to gain an unfair advantage and limit the president’s discretion to refuse to enforce Section 421 and other trade laws. Finally, we must make sure that our unions and their members, as well as small business owners and farmers, have access to using our trade laws effectively. No one should have to see their jobs shipped overseas or watch their markets dry up because they don’t have the resources to utilize the laws that are on the books.
Section 421, a safeguard provision designed to defend domestic producers against import surges from communist China after its accession to the WTO, is emblematic of the serious problems with the implementation of U.S. trade law. This provision was used to sell an unpopular grant of “permanent normal trade relations” with China in 2001 to the American people. Essentially, it was argued, “Don’t worry, if there are large increases in imports from China, we can use Section 421 provisions to protect American jobs.” Yet, despite a dramatic growth in imports from China since 2001 and several strong findings from the U.S. International Trade Commission, the White House repeatedly has refused to take the action allowed under the law. The patience of the American people is nearing the end.
The president has repeatedly used the discretion provided to him under the law not to act. That discretion needs to be severely curtailed or eliminated. Workers deserve to know that if our trading partners violate their obligations they will be held accountable.
Trade agreements must not undermine the ability of the United States to pursue new and better Buy America programs or to limit the ability of the government to stop the outsourcing of government jobs. Taxpayers should not have their hard-earned money used to promote outsourcing and offshoring of their own jobs or jobs of their fellow citizens. Trade pacts must not promote the privatization or deregulation of essential services; they should not contain investor-state enforcement provisions that give foreign investors operating in the United States greater rights than U.S. property owners have under U.S. law; and they should not leave worker and environmental protections vulnerable to challenges from foreign investors.
We must also ensure that we protect the health, welfare and basic dignity of people here and abroad, and our trade laws must be fundamental tools to achieve those goals. Expanded trade must not result in unsafe products ending up on our kitchen tables or anywhere else. Goods made by sweatshop labor must be barred from entering our markets.
In addition to these steps, and many others, we need to ensure that those who work hard and play by the rules can not only survive, but prosper. At times, there is no doubt that trade will have adverse consequences, and we must develop adequate infrastructure and programs to address the impact on workers, their families, their companies and their communities.
Reauthorizing Trade Adjustment Assistance and expanding its benefits is vital. America's workers deserve a well-funded, intelligently designed and competently administered dislocated worker adjustment assistance program. But the reauthorization should be considered and adopted on its own merits and should not be held hostage to other trade proposals.
The House leadership’s recent announcement indicated that the renewal of Fast Track trade negotiating authority is not one of its priorities. Indeed, the leadership indicated that “before that debate can even begin, we must expand the benefits of globalization to all Americans.”
Now is the time to conduct a strategic review of all trade agreements, as we begin to build a comprehensive new trade policy that will support the creation of good jobs at home. Developing a new trade and domestic policy that expands the benefits of globalization to all Americans will take much time and effort. Results will not be achieved overnight, as America’s trade deficit has reached historic proportions. The answer is not to simply do more of what we’ve been doing, but to chart a new course.
Trade policy is our link to the world economy, and we need to ensure that our policies and our actions improve the standard of living for workers at home and around the world. Only by implementing a trade policy based on fairness, transparency and democratic principles can the United States begin to reclaim a leadership position in the world. But reforming our trade policy alone can only create fairer rules of competition. It is but one component of a wider policy agenda that is in dramatic need of updating.
We also need to recognize that it is vital to develop and adopt new policies that will strengthen our manufacturing base.
Strategic Targeted Investment in Manufacturing
There is a fundamental lesson for the United States in the actions of our major trading partners. They value manufacturing for the jobs, income, economic diversity and innovation it brings to their economies. They aggressively pursue national strategies to support their manufacturing base. With rare exceptions, we do not. As a result, critical opportunities have been missed. For example, in the early 1980s, the United States led the world in renewable energy technologies such as solar, battery, biomass and wind turbine technology, but we failed to maintain our commitment to develop them. Germany, Japan and Brazil, as a matter of industrial and energy policy, targeted those technologies and invested in them. Today they lead the world in production and development, and export these products around the globe.
The international competitive manufacturing environment requires that the United States have a strategic set of investment, technology and tax policies to support a dynamic, diverse and innovative manufacturing base. We need new investment policies in support of manufacturing, in addition to new trade policies.
U.S. tax policy needs to be turned upside down and structured to encourage domestic investment in production. The first step is to abolish the current system of deferrals, tax credits and accounting rules that encourage outsourcing. New tax policies also should ensure that investments made directly with public funds and indirectly through tax credits result in domestic manufacturing employment. For example, to be able to take advantage of the research and development tax credit, companies must be held accountable for domestic production that occurs as a result of the R&D.
The United States also needs a manufacturing investment strategy based on addressing important national needs, including energy independence and rebuilding the nation’s decaying physical infrastructure. Three years ago, the AFL-CIO began working with the Apollo Alliance to highlight the job creation opportunities tied to energy policy. In the current energy/environment debate under way in Congress, the AFL-CIO has fought for major targeted investments in technology, innovation and manufacturing that create and retain good jobs while seeking a balanced approach to CAFE and carbon emission standards. It makes sense to seek energy independence through investments in infrastructure, clean coal/carbon sequestration, advanced technology vehicles and their key components, alternative energy resources (solar, thermal, wind, biomass, etc.) and energy efficient buildings and appliances. Each of these should be linked to domestic investment and production.
Another approach is looking at manufacturing through the lens of basic industries, critical technologies, worker skills and education. Our competitors target strategic technologies and sectors. Domestically, advanced materials (metals, ceramics, composites, etc.), aerospace, autos, computers, electronics and machine tools are manufacturing sectors vital for maintaining America’s innovative and technological edge. Policies may include changes in trade and tax policy to encourage domestic investment, programs for helping small and medium-sized manufacturers become more competitive and greater R&D investments, including direct research investments across an industry, like Sematech in the semiconductor industry in the 1980s.
It is time for policymakers to develop and adopt a broad range of policies to take the two important steps of reforming our flawed trade policy and strengthening our manufacturing sector. These two steps are necessary to promote growth with equity and ensure a high and rising standard of living for our people.