Elites Discover So-Called “Free-Trade” Is Killing Economy, Middle Class

The New York Times editorial board finally gets it right about trade in its Sunday editorial, “This Time, Get Global Trade Right.” Some excerpts:

Many Americans have watched their neighbors lose good-paying jobs as their employers sent their livelihoods to China. Over the last 20 years, the United States has lost nearly five million manufacturing jobs.

People in the Midwest, the “rust belt” and elsewhere noticed this a long time ago as people were laid off, “the plant” closed, the downtowns slowly boarded up and the rest of us felt pressure on wages and working hours. How many towns — entire regions of the country — are like this now? Have you even seen Detroit?

“This page has long argued that removing barriers to trade benefits the economy and consumers, and some of those gains can be used to help the minority of people who lose their jobs because of increased imports,” the editors write. “But those gains have not been as widespread as we hoped, and they have not been adequate to assist those who were harmed.”

So acknowledging that our trade deals have hurt the country, they say maybe we could try to do it right with coming agreements. They write:

If done right, these agreements could improve the ground rules of global trade, as even critics of Nafta like Representative Sander Levin, Democrat of Michigan, have argued. They could reduce abuses like sweatshop labor, currency manipulation and the senseless destruction of forests. They could weaken protectionism against American goods and services in countries like Japan, which have sheltered such industries as agriculture and automobiles.

They write that one problem is that these agreements are negotiated of, by and for the giant corporations:

One of the biggest fears of lawmakers and public interest groups is that only a few insiders know what is in these trade agreements, particularly the Pacific pact.

The Obama administration has revealed so few details about the negotiations, even to members of Congress and their staffs, that it is impossible to fully analyze the Pacific partnership. Negotiators have argued that it’s impossible to conduct trade talks in public because opponents to the deal would try to derail them.

But the administration’s rationale for secrecy seems to apply only to the public. Big corporations are playing an active role in shaping the American position because they are on industry advisory committees to the United States trade representative, Michael Froman. By contrast, public interest groups have seats on only a handful of committees that negotiators do not consult closely.

The current trade-negotiation process is a system designed to rig the game for the giant multinationals against everyone else:

That lopsided influence is dangerous, because companies are using trade agreements to get special benefits that they would find much more difficult to get through the standard legislative process. For example, draft chapters from the Pacific agreement that have been leaked in recent months reveal that most countries involved in the talks, except the United States, do not want the agreement to include enforceable environmental standards. Business interests in the United States, which would benefit from weaker rules by placing their operations in countries with lower protections, have aligned themselves with the position of foreign governments. Another chapter, on intellectual property, is said to contain language favorable to the pharmaceutical industry that could make it harder for poor people in countries like Peru to get generic medicines.

These trade agreements place corporate rights over national sovereignty:

Another big issue is whether these trade agreements will give investors unnecessary power to sue foreign governments over policies they dislike, including health and environmental regulations. Philip Morris, for example, is trying to overturn Australian rules that require cigarette packs to be sold only in plain packaging. If these treaties are written too loosely, big banks could use them to challenge new financial regulations or, perhaps, block European lawmakers from enacting a financial-transaction tax.

And they’re asking, like the rest of us are asking, why in the world won’t they do something about currency?

It’s easy to point the finger at Nafta and other trade agreements for job losses, but there is a far bigger culprit: currency manipulation. A 2012 paper from the Peterson Institute for International Economics found that the American trade deficit has increased by up to $500 billion a year and the country has lost up to five million jobs because China, South Korea, Malaysia and other countries have boosted their exports by suppressing the value of their currency.

What So-Called “Free Trade” Agreements Did To The Economy

A trade deficit means that we buy more from the rest of the world than we sell to it. This means that jobs making and doing things here migrate to there. Before the mid-70s the United States ran generally balanced trade, with a bias toward surplus. Look at this chart to see what happened, beginning in the ’80s, and then … wham.

Now we have an enormous, humongous, ongoing trade deficit that over the years has added up to trillions and trillions of dollars drained from our economy. We have lost millions and millions of jobs as tens of thousands of factories closed. We have lost entire industries. We are losing our entire middle class to the resulting wage stagnation and inequality.

Here is what happened when the trade deficit took off. First, look at this chart of the “decoupling” of wages with productivity. In other words, as productivity goes up, what happens to the share of those gains that go to labor:

In case you don’t see the correlation, this chart shows both the trade deficit and labor’s share of the benefits of our economy:

Most people understand the damage that so-called “free trade” has done to the economy, much of our country and the middle class. Millions of people have outright lost their jobs because of corporate CEOs who conclude, “It’s cheaper to manufacture where they pay 50 cents an hour and let us pollute all we want.”

Many others have felt the resulting job fear: “If I so much as hint that I want a raise or weekends off they’ll move my job to China, too.” Entire regions have lost their economic base as factories and entire industries closed and moved.

But We Globalized And Expanded Trade

The basic pro-free-trade argument is that all trade is good and these agreements increase trade. NAFTA negotiator Carla Hills, defending NAFTA, says, “our trade with Mexico and Canada has soared 400 percent, and our investment is up fivefold.”

Of course, this is like proudly telling people that the Broncos scored 8 points in the 2014 Super Bowl*. (Hint: the Seahawks scored 43 points.)

Yes, trade is up and exports are up, but imports are up even more, which costs us jobs, factories and industries. What happened was NAFTA “expanded” trade against American workers and our economy, costing about a million jobs and increasing our trade deficit 480 percent. And don’t even ask what happened with our China trade. (Hint: our 2013 trade deficit with China was 318.4 billion dollars.)

How Would The N.Y. Times Fix Trade?

The Times editorial says we should “press countries to stop manipulating their currencies” and “the president also needs to make clear to America’s trading partners that they need to adhere to enforceable labor and environmental regulations.”

OK, but why would the giant multinationals participate? The point of the free-trade regime up to now has been to accomplish the opposite: to free the giants from the pesky laws and regulations imposed by governments, especially from labor and environmental regulations. The negotiations have been a rigged game designed to transfer the wealth of entire nations to a few billionaires (including Chinese billionaires) and giant, multinational corporations. It worked.

Meanwhile … In The L.A. Times

Meanwhile in the Los Angeles Times, representatives George Miller (D-Calif.), Rosa DeLauro (D-Conn.) and Louise Slaughter (D-N.Y.) have written an op-ed, “Free trade on steroids: The threat of the Trans-Pacific Partnership,” talk about NAFTA as a “model for additional agreements, and its deeply flawed approach has resulted in the outsourcing of jobs, downward pressure on wages and a meteoric rise in income inequality,” and ask us not to “blindly endorse any more unfair NAFTA-style trade agreements, negotiated behind closed doors, that threaten to sell out American workers, offshore our manufacturing sector and accelerate the downward spiral of wages and benefits.”

In 1993, before NAFTA, the U.S. had a $2.5-billion trade surplus with Mexico and a $29-billion deficit with Canada. By 2012, that had exploded into a combined NAFTA trade deficit of $181 billion. Since NAFTA, more than 845,000 U.S. workers in the manufacturing sector — and this is likely an undercount — have been certified under just one narrow program for trade adjustment assistance. They qualified because they lost their jobs due to increased imports from Canada and Mexico, or the relocation of factories to those nations.

The recent Korea free trade agreement followed the NAFTA model and the results have already proven terrible for American workers:

Obama said it would support “70,000 American jobs from increased goods exports alone.” In reality, U.S. monthly exports to South Korea fell 11% in the pact’s first two years, imports rose and the U.S. trade deficit exploded by 47%. This led to a net loss of tens of thousands of U.S. jobs in this pact’s first two years.

They conclude:

There are many things we can do to enhance our competitiveness with China and in the global economy.

We can invest in our own infrastructure, manufacturing and job training. We can work harder to address issues like currency manipulation, unfair subsidies for state-owned enterprises in other nations and global labor protections. We can enter deals that increase U.S. exports while doing right by our workers and our priorities, and we can address the real foreign policy challenges in Asia with appropriate policies instead of through a commercial agreement that could weaken the United States and its allies.

What we should not do is blindly endorse any more unfair NAFTA-style trade agreements, negotiated behind closed doors, that threaten to sell out American workers, offshore our manufacturing sector and accelerate the downward spiral of wages and benefits.

No New Trade Agreements, Instead Fix The Ones We Have

Of course, as we reach consensus that we got trade wrong, and realize how these “NAFTA-style” agreements have done so much damage to our economy and middle class, doesn’t this mean it is time to back up and renegotiate NAFTA and others?

*P.S. The 2014 Super Bowl started at 6:30 p.m. on Sunday, February 2, 2014.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Just Listen To The First 5 Minutes

Before I tell you what the subject is, just click this to listen to the first five minutes of Sunday night’s Virtually Speaking: (Actually skip in about 1:35 and then listen to five minutes.)

Listen To Politics Progressive Internet Radio Stations with Jay Ackroyd on BlogTalkRadio

If you are like me (and who isn’t?) you’ll be hooked. Now that you’re into it, how about the first five minutes of this press call yesterday:

OK, now that the cat is out of the bag, these audio tracks are about one of the most interesting, exciting subjects there is: trade agreements and trade deficits.

Here’s the thing. We have a trade deficit of up to $500 billion each year. That’s upwards of $500 billion worth of orders that should be going to businesses that make or do things inside the U.S. That’s up to $500 billion worth of hiring and businesses and factories (re)opening, and all their suppliers booming, and the stores around those businesses and factories and suppliers booming, too.

So call and ask your member of Congress and your senators what they are going to do about this enormous, humongous trade deficit. This is the deficit that people should be worried about, not the budget deficit. And especially ask candidates this fall. Get this on the agenda, because getting it on the agenda will bring back jobs and businesses and factories and higher wages and all the things that go with that.

Now, for something totally unrelated, “Between Two Ferns with Zach Galifianakis: President Barack Obama.”

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

No Fast Track To TPP: Fix NAFTA First

The big corporations and the Obama administration are trying to push through a giant new trade treaty that gives corporations even more power, and which will send even more jobs, factories, industries and money out of the country. This is the Trans-Pacific Partnership (TPP) and they are pushing something called “fast track” in Congress to help push it through.

We have to stop this, and we should take the momentum we have generated in our push-back on this to demand Congress and President Obama instead fix NAFTA first. Then fix all of our trade relationships to help working people on all sides of our borders.

TPP, Fast Track And NAFTA

There has been a lot of news about the upcoming TPP trade agreement. The agreement is being negotiated in extreme secrecy in a corporate-dominated process that appears to be leading to an agreement that would give corporations even more power than they already have. Now there is a push to pass a process called fast track through Congress in order to enable the large corporations to strong-arm TPP into law mobilized organizations around the country to sound the alarm.

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Are ‘Globalization’s’ Costs Inevitable?

You hear often that we “live in a global world now.” You hear that “globalization” means we have to drop our wages and standards to match those in impoverished, Third-World countries. You hear that the “cost” of controlling pollution makes us uncompetitive in the world. Etc. Etc. Etc. It’s inevitable – a force of nature – so don’t fight it, they say. This is endlessly repeated as if we weren’t in a “global” world when the first camel crossed a border or the first sailing ship crossed a sea. But since that first camel countries have enacted policies to make things better for their people.

Sunday’s New York Times published an op-ed, “The Myth of Industrial Rebound,” by Steven Rattner, one more wealthy Wall Street executive who revolved through the door from being an Obama administration official after he revolved through the door from being a Wall Street executive. In his op-ed Rattner accurately describes many of our economy’s problems but concludes that we should let these things just happen to us because, “In a flattened world, there will always be another China.”

Rattner points out that many of the new manufacturing jobs are low-wage. “This disturbing trend is particularly pronounced in the automobile industry. When Volkswagen opened a plant in Chattanooga … the beginning wage for assembly line workers was $14.50 per hour, about half of what traditional, unionized workers employed by General Motors or Ford received.” Meanwhile, “in Germany, the average autoworker earns $67 per hour. … Volkswagen has moved production from a high-wage country (Germany) to a low-wage country (the United States).”

Rattner is correct that falling wages are slowing economic recovery. “These dispiriting wage trends are a central reason for the slow economic recovery; without sustained income growth, consumers can’t spend.”

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Watch: What One-Sided Trade Pacts Are Doing To Our Jobs

I was on “The Nicole Sandler Show” recently talking about the one-sided trade agreements we’ve been tricked into and the damage they do to the economy. It’s also quite entertaining. Seriously, it is. Bad puns, jokes and, of course, Nicole!!

On the show I talk about what the 2012 $540 billion trade deficit means. “Imagine if factories in America got orders for $540 billion of goods… the economy would be booming. … that was just one year of our trade deficit.”

The show was partly based on my recent post, New Fast-Track Bill Means Higher Trade Deficits and Lost Jobs.

And check out RadioOrNot.com.

PS Nicole and I are buddies and I’m on the show once in a while, so I can get away with terrible jokes and puns.
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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

NAFTA At 20: 1 Million Lost Jobs, 580% Increase In Trade Deficit

Public Citizen’s Global Trade Watch has issued a new report, NAFTA at 20: One Million U.S. Jobs Lost, Mass Displacement and Instability in Mexico, Record Income Inequality, Scores of Corporate Attacks on Environmental and Health Laws. The report compares the promises with which NAFTA was sold with the results we can measure 20 years later.

NAFTA was not just a “trade” agreement. Trade agreements focus on cutting tariffs and easing quotas and barriers to goods moving across borders. The report points out that NAFTA was much more, giving corporations special rights, incentivizing offshoring and limiting regulation. As the report puts it,

“NAFTA created new privileges and protections for foreign investors that incentivized the offshoring of investment and jobs by eliminating many of the risks normally associated with moving production to low-wage countries. NAFTA allowed foreign investors to directly challenge before foreign tribunals domestic policies and actions, demanding government compensation for policies that they claimed undermined their expected future profits. NAFTA also contained chapters that required the three countries to limit regulation of services, such as trucking and banking; extend medicine patent monopolies; limit food and product safety standards and border inspection; and waive domestic procurement preferences, such as Buy American.”

Some of the effects of NAFTA that are highlighted in the report include,

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On TPP Call USW’s Leo Gerard Nails A Key Point

I joined a conference call yesterday that talked about the upcoming Trans-Pacific Partnership (TPP) trade agreement and the “Fast Track” process that the big corporations are trying to push on Congress to smooth the way for them to push this “trade’ deal through.

The call was hosted by Lori Wallach of Public Citizen’s Global Trade Watch. Also on the call were:
U.S. Representative Rosa DeLauro (D-Conn.)
U.S. Representative Louise Slaughter (D-NY)
Leo Gerard, President, United Steelworkers (USW)
Larry Cohen, President, Communication Workers of America (CWA)
James Hoffa, President, Intl Brotherhood of Teamsters
Michael Brune, Executive Director, Sierra Club

This was an involved, comprehensive discussion with a lot of information, and I will write more about the issues covered in future posts. But there was one statement that I think just nails the key point about the results of previous agreements that our country has managed to get itself into. It was made by USW’s Leo Gerard and I’ll let his words make the point:

In all the trade deals we’ve done since 1994, for those of you on the call from the press and friends in the political process, I think these are important numbers you should take a very close look at: in the period of time from 1994 to October 2013, America has accumulated an overall trade deficit of $8.3 trillion. And, if you subtract goods and services where we’ve been able to export certain services like accounting and stuff like that – that we have a slight surplus in – if you subtract that, the deficit in manufactured goods is over $10 trillion.

This should be the deficit that we’re looking at, rather than the one that keeps getting thrown up by some Democrats and rightwing Republicans.

And then if you go through this deal, before you look at this deal you have to look at all of the previous deals and ask “which one of these that we’ve done has resulted in net job gains and net trade surplus for America?” And you know what the answer is? None.

So in this deal, they’re looking at what are we going to do about state-owned enterprises that we’re supposed to compete with? We’ve got workers that can compete with any company, but they can’t compete with countries. What are they going to do about rules of origin? Put things in perspective: for example in NAFTA, to be country of origin you need 62.5% domestic content. The U.S.-Australia deal went 50%. The U.S.-South Korea deal went to 35%. Where will this one take us? We’re supposed to compete with countries that are getting their parts from China, Vietnam, Brunei, and exporting materials to here, when if they have 35% of material from their country they’re called ‘a domestic product’? That’s crazy.”

Later in the call Leo said, “The politicians keep telling us the same song and dance that turns out not to be the truth. We’ve lost five million manufacturing jobs. The public gets it, and the politicians don’t.”

What This Says

Leo nailed the key point about the trade deals we have gotten ourselves into. We have not yet found ourselves in a good, balanced trade deal that helps the country instead of just a few billionaires. In all of the trade deals we have made, the country has lost money and has lost jobs.

And why is this? Because these deals are not being negotiated to help the country, they are being negotiated to help a few giant corporations and the billionaires these corporations represent. The process leads to deals that dramatically enrich the 1% while they kill off the economic participation of the rest of us in our economy.

The trade deals we have entered into allow companies to move jobs and factories to countries with low democracy and therefore low wages and little if any environmental protection. So things made there cost less than things made here. This undermines our country and our democracy — but it enriches the few who own and/or run these giant corporations. Because it opens them up to move jobs wherever they want our unions are broken, unemployment is kept high (on purpose) and employers can threaten the remaining workers with moving their jobs, too, if they don’t accept cuts.

You can listen to the audio recording of this call: http://www.conferenceplayback.com/stream/98120468/48264901.mp3

And now for your entertainment: All our trade deal are belong to them.

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This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Why Do We The People Have To Read TPP On Wikileaks?

We the People finally get to read one chapter of the 29-chapter Trans-Pacific Partnership (TPP) “trade” agreement. If this agreement becomes law it will fundamentally alter the relationship between our government, other governments and giant multinational corporations, so you’d think America’s citizens would want to have a say in the negotiations. But the only reason We the People get to even read it at all is because it was leaked to Wikileaks.

Wikileaks Obtains TPP Chapter

Wikileaks has obtained one of the chapters of the Trans-Pacific Partnership (TPP) “trade” agreement that is being negotiated in secret. This leaked section is the chapter about patents, copyrights, trademarks, industrial design and other “intellectual property.” Note that this has little or nothing to do with “trade.”

This chapter is from August, and it is unknown how the chapter may have changed between then and now. The chapter indicates that the US is pushing hard to get strong “protections” for giant telecommunications companies and pharmaceutical patent-holders.

WikiLeaks’ Editor-in-Chief Julian Assange said this in the announcement that Wikileaks had obtained the chapter text,

“If instituted, the TPP’s IP regime would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons. If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you’re ill now or might one day be ill, the TPP has you in its crosshairs.”

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TPP And Wikileaks

Wikileaks has obtained one of the chapters of the Trans-Pacific Partnership (TPP) “trade” agreement that is being negotiated in secret. This leaked section is the about patents and intellectual property. Note that this has little or nothing to do with “trade.”

The TPP process is set up to lead to a certain kind of agreement that favors corporate interests against the interests of most of us. Groups representing non-corporate stakeholders were kept out of the process. This section of TPP was negotiated with companies that hold patents and copyrights and profit from doing so at the table, while groups like the Electronic Frontier Foundation, consumer groups, patient protection groups etc. were NOT at the table. So it isn’t a surprise to see here the one-sided result of those negotiations.

Here are two examples of what results from this one-sided process.

First, you might remember that efforts to get rid of Net Neutrality and pass the Stop Online Piracy Act (SOPA) failed to make it through our democratic, Constitutional process because people were able to become informed, rally opposition and make their case to stop these terrible things from happening. but this meant that the giant telecommunications corporations lost some power sand profit potential. So TPP becomes a treaty that accomplishes these same corporate goals by going around our democratic, Constitutional process.

Second, there is an argument going on inside TPP negotiations about whether to “carve out” tobacco from the treaty. The way the treaty is currently shaping up tobacco companies will be able to sue governments that try to protect their citizens with anti-smoking efforts. So some countries are trying to “carve out” tobacco from those rules in TPP. Never mind other corporate products that harm people, tobacco gets attention because it kills so many people. But the corporations are resisting this because it sets a precedent of allowing governments to set limits on things corporations can profit from.

I think this second thing should tell people all they need to know about this and similar “trade” agreements. They are really about setting certain giant corporations above government — and other corporations — restricting competition and innovation so these giants can stay dominant, and keep democracies and their citizens from meddling in the profit stream.

Fast Track

So if citizens were able to use democracy to fight SOPA and keep Net Neutrality and other things, how can they get TPP through? Here is how: they are trying to convince Congress to pass something called “Fast Track.” Fast Track limits the objections Congress can make to this treaty, forces them to vote “up or down” in a hurry, and this will of course happen in the middle of biggest corporate-funded campaign you have ever seen. If you think there is a lot of anti-Obamacare in the news today, or if you think there was a well-orchestrated “run up” to sell the Iraq war, well those are nothing compared to what they will do to sell this one.

Key point: They will try to push through “fast track” and then launch a massively-funded campaign to pass the treaty. If we can block Fast Track we might have a chance to head off this corporate takeover of the world.