Oil Cos. Trying To Use Trade Treaty To Bypass Congress And Raise Prices

You may have heard that there is an oil and gas “boom” happening in the US. You might not know that there is a ban on exporting our own oil. This ban is good for the country but bad for oil companies. And the oil industry is attempting an end run around Congress to do something about it.

There is an ongoing “boom” in oil and natural gas production. Production of natural gas is way up. Imports are down about half since 2007. Texas oil production alone has more than doubled since 2011. This increase in domestic oil production has various consequences. We use much of our rail capacity transporting oil to refineries. The increase in natural gas production is pushing coal use down, and lowering carbon emissions as we fight for a transition away from using fossil fuel at all.

Continue reading

Reagan Set Up The Death Of The Middle Class, But China Was The Clincher

Campaign for America’s Future’s 2010 Reagan Revolution Home To Roost series, especially the post Reagan Revolution Home To Roost — In Charts described the beginning of the great decoupling of the American economy from the middle class.

The summary:

Conservative policies transformed the United States from the largest creditor nation to the largest debtor nation in just a few years, and it has only gotten worse since then.

Continue reading

Corporate Courts — A Big Red Flag On “Trade” Agreements

Think about everything you understood about our system of government here in the United States. We’re  governed under a document that starts with the words, “We the People.” Right? When We the People agree that something should done to make our lives better, it’s supposed to get done. Right?

You didn’t know it, but that whole system thing changed several years ago. Our government, in our name, signed a document that placed corporate profits above our own democracy. The “investor-state dispute settlements” chapter in NAFTA (and similar agreements) places corporate rights on above the rights of people and their governments.

As a result of “NAFTA-style” investor protections that are part of so-called “trade” agreements,  giant corporations can and do sue governments for trying to pass laws that protect their citizens from harmful chemicals, ban harmful products, and protect the rights of working people, among  other things. Corporations even sue governments for passing laws that might cause the investors in the corporations to make a bit less money — like raising the minimum wage.

But wait, there’s more.

Continue reading

Hundreds Of Organizations Ask For Change In Trade Policies

Approximately 600 organizations have sent a formal, public letter to Senate Finance Committee Chairman Ron Wyden (D-Ore.) opposing “fast-track” trade promotion authority and calling for a new system for negotiating and implementing trade agreements. The letter asks for trade pacts that “deliver benefits for most Americans, promote broadly shared prosperity, and safeguard the environment and public health.” Read the letter here.

Campaign for America’s Future is one of the organizations that signed this letter. The letter was led by the Sierra Club, AFL-CIO, the Communications Workers of America, the Citizens Trade Campaign, and Public Citizen. The letter was written because new fast-track trade promotion authority is being drafted by Wyden’s committee. An earlier bill introduced by then-Senator Max Baucus and Rep. Dave Camp (R-Mich.) would keep Congress from debating or altering trade pacts like the Trans-Pacific Partnership (TPP) and other upcoming agreements, even though they are considered one-sided in favor of giant multinational corporations over working people and the environment.

The letter asks for a new process for reaching trade agreements in which Congress has a role in selecting trade partners and in which Congress sets up a set of negotiating objectives that must be achieved. The new process would include more transparency and a way for Congress to certify that negotiating objectives have been met before trade negotiations are wrapped up.

Larry Cohen, President of the Communications Workers of America, said this new process can help us decide what kind of economy we want to have, saying, “A new model of trade authority is the only way to ensure that workers and communities have a voice in these trade decisions. We want to determine what kind of economy we have, not simply accept super-power status for multinational corporations and a snails’ pace for the enforcement issues raised by the rest of us.”

The Hill reports on this letter, in “Hundreds of groups call for new framework to negotiate trade deals,” quoting AFL-CIO President Richard Trumka:

“Only with new trade negotiating authority can we secure new trade rules that can help hard working Americans build a sustainable economy and promote broadly shared prosperity,” said President Richard Trumka of the AFL-CIO.

“Chairman Wyden has a chance to make history by being the architect of a new and democratic trade policy, and we commit to doing all we can to help achieve that goal,” he said.

On fast track,

“There is no ‘acceptable’ version of fast track,” said Robert Weissman, president of Public Citizen. “Fast-track must be replaced so Congress can steer international trade in a new direction and create agreements that actually work for most Americans.”

Our Current Trade Deals Are Rigged Against Citizens By Choice

Our current trade deals are rigged – designed to benefit a few already-wealthy owners of giant multinational corporations. They were set up in order to transfer good-paying jobs out of the U.S. to take away the bargaining power of organized labor. This has forced down American workers’ bargaining power, resulting in stagnant wages, a shrinking middle class and widespread poverty. Meanwhile the rich get vastly richer.

These rigged trade agreements have also massively increased our country’s trade deficits. We currently run an enormous, humongous trade deficit of more than $40 billion a month.

Germany followed a different trade model. Germany worked with its companies and its labor unions to forge trade agreements that benefit businesses, workers and Germany’s economy. CAF’s Robert Borosage did a great job of laying out what happened in a recent interview on Richard Eskow’s The Zero Hour radio program. (Scroll to 5:15.)

Globalization isn’t an act of nature; it’s a set of policies, tax, trade, financial, monetary policies where you make choices and those choices benefit parts of the economy and injure others.

We made choices. Multinationals basically wrote our globalization strategy and they chose to benefit investors, made it easy to ship jobs abroad, made it even easier to threaten to move jobs abroad and dramatically weakened the ability of workers here at home.

But that was a choice.

In Germany they made a very different choice where unions were stronger, and the companies and the unions together navigated a globalization strategy that has made Germany one of the great export powers of the world and allows German workers to sustain middle class incomes and benefits.

Public Citizen has an action you can join: Write your representative to demand a real replacement to Fast Track and put an end to unfair trade deals.

—–

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 and/or for the Progress Breakfast.

A Simple Plan To Balance Trade And Bring Back All Those Jobs

We have an enormous, humongous and ongoing trade deficit. This means we buy more from other countries than they buy from us and we do this every year.

Trade is supposed to be balanced. Instead we have been running continuing trade deficits since the late 1970s. A trade deficit drains our economy and forces consumers, businesses and government to borrow, just to keep going. This means that jobs, factories, entire industries and literal boatloads of money have been leaving the country – it really adds up because we do this every single year. We have to do something about this.

The “Buffett Plan”

In May’s post, Balancing Trade – Remember The “Buffett Plan” I described the 2003 “Buffett Plan” proposed by Warren Buffett, who was very concerned about the damage done to our economy and unemployment caused by our ongoing trade deficit.

The government could issue “Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports.” The number of import certificates determines the level of trade imbalance or balance that we allow.

A few years later Congress tried to address the problem with legislation designed to balance exports and imports.

Senators Russ Feingold and Byron Dorgan proposed the The Balanced Trade Restoration Act of 2006, similar to Buffett’s plan. The bill warned, “The surging trade deficits could soon create a balance of payments crisis for the United States, which could wreak havoc with the economy of the United States.” The bill didn’t go anywhere.

And then (from the same post) someone else brought up the Buffett Plan:

In a 2011 article, “What Would Buffett Do? — A Plan to Balance Trade, Create Jobs and Restore American Manufacturing,” Bill Parks goes into detail on a similar plan, and suggests a mix of private and public sale of the import certificates. He also suggests that the government could adjust the ratio of exports to imports as needed.

A New Stab At This Simple Plan

At the site Economy In Crisis, Kenneth N. Davis, Jr., Former U.S. Assistant Secretary of Commerce writes about the Balanced Trade Restoration Act of 2014. Davis notes that “imports have been the single most damaging blow to our domestic industrial base that we rely on for national security and income as well as for a strong economy and good jobs.”

In the Balanced Trade Restoration Act, Davis has put together a proposal that, while inspired by the original Buffett plan, offers an updated and more specific legislative plan for making it work. Davis writes,

My group, Balanced Trade Associates, believes we have a bold, realistic plan to deal with the import problem. It could eliminate our 700+ billion dollar annual trade deficits within 3 years. Our law would also require 3 years of modest 10% annual reductions in our imports that now run at 2.1 trillion dollars. The answer is our proposed new legislation: “The Balanced Trade Restoration Act.”

With it, the U.S. would restore our practice of maintaining modest annual trade surpluses with the rest of the world. Unlike most competitor nations, we abandoned that sound policy to emphasize globalization in the late 1960’s.

The text of the Balanced Trade Restoration Act of 2014 is included in his post at Economy in Crisis, but put simply, import certificates are issued based on exports, you need a certificate to import:

  • The government would create “a Balanced Trade Import Certificate Program.”
  • The program would issue “import certificates” that act as a license to import “a good with an appraised value that is equal to or less than the face value of the certificate.”
  • Goods cannot be shipped into the country without a certificate issued equal to their import value.
  • The certificates would be issued based on exports. The Commissioner of the program would determine how many such certificates to issue, starting at the current level of imports and tapering down by 10 percent a year for three years.
  • After three years we enter a “Continuous Maintenance of Balanced Trade Period” where certificates are issued equal to the amount we export.
  • Bob’s your uncle; trade is balanced.

It might sound like a lot of paperwork, but actually it’s just an IT/computer problem – setting up a data center with a database of exports, the resulting certificates and issuing certificates for incoming shipments by importers.

Does This Proposal Violate Trade Agreements?

While trade agreements contain measures against import restrictions they also call for balanced trade. This is not an import restriction, it is a balancing measure. The General Agreement on Tariffs and Trade (GATT) allows import restrictions in situations of balance-of-payments. Trade not only should be balanced, it must eventually be balanced because the damage done by unbalanced trade to the economies of countries and ultimately to the world’s economy.

A Cap-And-Trade System To Incentivize Exports?

Davis’ plan calls for issuing certificates to “qualified” importers on a fair basis to prevent giants like Walmart from cornering the market. From the proposal: “Certificates shall be issued by the United States Customs and Border Protection to any qualified importer, as determined by the Commissioner. Certificates are non-transferable. The Commissioner shall determine the fee for Certificates such that all costs of administering the Program are paid by the fees.”

My own thinking is that a regulated (to prevent cornering the market) cap-and-trade (transferable certificate) system that allows exporters to sell those certificates to importers for a market price would still be beneficial. Because we import more than we export the certificates would have an added value, creating an incentive to export. It would also subsidize those exports. Corporations respond to incentives and this would create an incentive to export, which would create jobs. Once trade is balanced, those incentives are reduced, so it is self-correcting.

But either way, this can be worked out as the system is set up. Hopefully experts would provide testimony and a consensus decision would be made based on the best way to proceed to help our economy and fight the enormous, humongous trade deficits.

And So, In Conclusion

I end this post as I ended the May post. The Buffett Plan was just one idea for balancing trade. But balance we must. As Buffett warns, these huge trade deficits cannot be sustained. They are draining our economy. There has to be a reckoning. We have not faced that reckoning yet, but it is inescapable. It has to happen. We have to tackle this as a country, with a national plan.

Petition

While we’re talking about balancing trade, the Coalition for a Prosperous America has petition to Congress: Congress should direct the President to pursue Balanced Trade now as the principal trade policy objective.

We, the undersigned individuals and organizations, request that Congress adopt balanced trade as the primary national trade goal by adding the following language to future trade-related bills:

“The principal national objective for trade in goods, services and agriculture is to achieve an overall balance of payments over a reasonable period of time, eliminate persistent trade deficits and reverse the accumulation of foreign debt.”

Click through to add you name, please.

—–

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 and/or for the Progress Breakfast.

Backed By China? House Republicans Block Critical ‘Make It In America’ Bill

m4s0n501

Last week one more example of Republican obstruction occurred – blockage of an important “Make It In America” bill – and one more time not a single corporate media outlet reported it.

The House Republican leadership last Tuesday blocked a bill to secure for American companies critical minerals used in the production of energy-efficient products, renewable energy systems, electronics and other technologies. The result is companies – and the Defense Department – continue to be forced to turn to China to make or obtain critical electronics components.

The China Problem

Put simply, China undermined most of the world’s other sources of these strategic minerals by such practices as underpricing, putting them out of business. Once an industry leaves a country it becomes enormously difficult to start it up again. The supply chain is gone. The expertise is gone. The educators are gone – and so on. And, of course, with the industry goes the jobs and the ability for a country to make a living in the world. A huge investment is required to rebuild all of this.

Now China is the main source (90 percent) for many critical minerals used in electronics manufacturing. China is using that 90 percent advantage to force other industries to come to China. China has been using export controls and other restrictions to drive up the price of manufacturing outside of China. If you simply cannot make or obtain certain critical electronics products anywhere else you either get them from China or go out of business. And yes, that includes our military.

The Bill

The Securing Energy Critical Elements and American Jobs Act of 2014 (H.R. 1022) from Rep. Eric Swalwell, (D-Calif.) was written “to assure the long-term, secure, and sustainable supply of energy-critical elements to satisfy the national security, economic well-being, and industrial production needs of the United States.” It would have increased exploration, research and development, and other national means to secure these critical minerals by coordinating the actions of federal agencies to:

  1. promote an adequate and stable supply of energy critical elements,
  2. identify energy-critical elements and establish early warning systems for supply problems,
  3. establish a mechanism for the coordination and evaluation of federal programs with energy-critical element needs, and
  4. encourage private enterprise in the development of an economically sound and stable domestic energy-critical elements supply chain.

This bill is one part of the overall Make It In America series of bills from House and Senate Democrats.

The Vote

A majority of the House voted for the bill, but House leadership set it up for failure by requiring a two-thirds vote to pass. It was voted on “under suspension of the rules” requiring the two-thirds instead of the normal majority.

The reason? Heritage Foundation and Club for Growth objected to our government helping American companies compete with China. They said that the American government securing necessary materials for American companies to manufacture is “interference with the free market.”

To some there apparently is no national interest, only “market” interests.

Of course, it is not a “free market” because China subsidizes its companies and uses strategic chokepoints like this to take over entire industries. China sees itself as a country with a national interest. Conservatives say we should not.

Heritage argued that government “interference in a functioning market is self-defeating.” In other words, let China have the business.

It really is time to find out if Heritage Action and Club for Growth receive funding from China as part of China’s national strategy to capture the world’s strategic industries. China would be foolish not to. But, on the other hand, maybe China doesn’t have to.

This is important stuff. Really important. You should help spread the word that this happened.

—–

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 and/or for the Progress Breakfast.

Balancing Trade – Remember The “Buffett Plan”

The enormous, humongous trade deficit is doing incredible damage to our economy. Our country’s elites used to care about that.

In 2003 Warren Buffett wrote a highly-influerntial article, America’s Growing Trade Deficit Is Selling The Nation Out From Under Us. Here’s A Way To Fix The Problem–And We Need To Do It Now. Buffett began, “I’m about to deliver a warning regarding the U.S. trade deficit and also suggest a remedy for the problem.” Then he added, “… our country’s ‘net worth,’ so to speak, is now being transferred abroad at an alarming rate.”

To make his point, Buffett used a hypothetical example of “two isolated, side-by-side islands of equal size, Squanderville and Thriftville.” Thriftville lived off the food they grew, and worked extra time so they could export food. The people in Squanderville stopped working and issued IOUs so they could just buy food from Thriftville, thinking “they can now live their lives free from toil but eat as well as ever.”

Of course, Squanderville couldn’t issue IOUs forever to buy Thriftville’s food. Eventually Thriftville owned all of Squanderville and the people there had to start working 16 hours a day to make up for the work they hadn’t done. And because Thriftville now owned Squanderville, the long hours would continue forever, generation after generation.

Continue reading

Obama’s Asia Trip: Hear What’s At Stake For Workers

I discussed the Trans-Pacific Partnership and what President Obama’s trip to Asia could mean for American workers on “The Sunday Show with Philip Maldari” Sunday morning, on KPFA-FM in Berkeley, Calif.

Listen to the full show here:

With me on the show was Tim Shorrock, a journalist raised in Japan and Korea who’s been writing about Asia and trade; and “War! What Is It Good For? Conflict and the Progress of Civilization from Primates to Robots,” with Ian Morris, Prof. of Classics and History, Stanford University.

Across the board now people are seeing what these trade deals have done to the country – more than 50,000 factories lost, millions of jobs gone, the ability to buy things marked “Made In America” all but obliterated. It is undeniable. I’ve previously written about the recent New York Times editorial on this, which indicates how even the elites are feeling it.

The trade deficit is the number to use to understand the damage done by these trade agreements, of which NAFTA is a symbol.

Imagine $500 billion of orders coming in to American businesses located inside America, in one year – that’s way more than the 2009 Recovery Act “stimulus” was. Then imagine that every year. That is what the current trade deficit represents

So now all the promises made about what these trade deals would bring us have fallen flat. All the propaganda can’t keep us from seeing what these trade deals have done to our economy and our middle class.

Why Would Obama Push A Trade Deal That Would Cut Pay Of 90% Of Workers?

President Obama is in Asia, partly to “reassure” partner countries that the U.S. is a strong ally and partly to push the Trans-Pacific Partnership (TPP). Both are to counter China’s growing influence. While TPP is being sold as a “strategic” countermeasure to China, like other so-called “trade” agreements TPP does not help American workers; it hurts them.

Obama In Asia Pushing TPP

President Obama is in Japan as part of his “pivot to Asia” tour of Pacific countries. He is also visiting South Korea, Malaysia and the Philippines. The trip is meant to demonstrate U.S. diplomatic and economic efforts toward Pacific nations to counterbalance China’s increasing influence in the region. Part of this effort is a big push to get TPP negotiations back on track and completed.

TPP is a massive “trade” treaty between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. “Trade” is in quotes because only five of the treaty’s 29 chapters actually deal with trade. Others set rules on investment, set limits on the ability of governments to regulate corporations, restrict a government’s ability to spend its own tax dollars on goods made in that country (such as “Buy America” procurement policies) and other things well beyond the usual scope of what would be considered a trade agreement. This leads many to claim that the treaty is really about limiting the ability of governments to reign in the giant corporations. (For those not familiar with TPP, read all about it in ourfuture.org’s TPP section.)

Most Workers Likely To Lose

The treaty is being negotiated in secret with lots of corporate involvement and not much involvement by stakeholders like labor, environmental, human rights, consumer and other groups that would be affected. But even though it is secret we know from leaks that TPP as currently negotiated appears to be designed to benefit a few giant corporate interests, while potentially driving the nail into the coffin of America’s middle class.

Since NAFTA our “trade” agreements have gotten a bad reputation with the public. People have come to realize that these “free trade” agreements are causing companies to close American factories and open factories in countries with low wages and that allow companies to pollute. Pitting American workers against low-wage workers has encouraged employers to cut wages and benefits for those who are able to keep their jobs.

A September 2013 study, “Gains from Trade? The Net Effect of the Trans-Pacific Partnership Agreement on U.S. Wages,” by the Center for Economic and Policy Research (CEPR), looked at the effect of past trade agreements and estimated what TPP would do if enacted. The study estimated that the TPP would force wages down (even more) for almost all U.S. workers.

The CEPR study estimated that U.S. economic gains would be only 0.13 percent of gross domestic product by 2025. In exchange for these small gains, according to the study, “… most workers are likely to lose—the exceptions being some of the bottom quarter or so whose earnings are determined by the minimum wage; and those with the highest wages who are more protected from international competition.”

Any workers who don’t lose would not win as a result of the “trade” parts of the treaty. “Rather, many top incomes will rise as a result of TPP expansion of the terms and enforcement of copyrights and patents.” So everybody loses except those who own copyrights and patents.

In “‘Trade’ Deal Would Mean a Pay Cut for 90% of U.S. Workers,” Public Citizen’s Eyes on Trade blog explains just who would lose,

[CEPR's] Rosnick shows that if we assume that trade has contributed just 15% of the recent rise in inequality (a still conservative estimate), then the TPP would mean wage losses for all but the richest 10% of U.S. workers. So if you’re making less than $87,000 per year (the current 90th percentile wage), the TPP would mean a pay cut.

But “everybody losing on wages” is not a bad thing for giant corporations; it’s a good thing. As much as they can squeeze down labor costs, that boosts their bottom line. And they are exactly who is pushing for this treaty.

Enormous, Humongous Trade Deficits

The United States used to try to have balanced trade, often with a surplus. This means we were selling more to the world than we were buying. More money coming in than going our made us comparatively “rich.” But since the free trade agenda that came along in the late 1970s, which was accelerated by the Reagan administration, we have been running continuing trade deficits. Then when we opened up trade with China, the deficit skyrocketed.

Now this trade deficit has reached enormous proportions, more than $700 billion before the recession. (It actually fell last year to $471.5 billion in 2013, from $534.7 billion in 2012.) Our trade deficit with China alone was over $318 billion last year.

In summary: the free-trade legacy so far.

  • Trillions of dollars lost. We have an ongoing trade deficit bleeding money from our economy.
  • Stagnant or falling wages for most of us. Pitting Americans against low-wage workers has forced US wages down.
  • Millions of good-paying jobs lost. Most of these workers are getting paid much less now, if they can find work.
  • Tens of thousands of factories closed, moved out of the country. This costs us our ability to make a living as a country.
  • Entire industries lost. As we lose the factories and supply chains, entire industries disappear.
  • Devastation of entire regions of the country. Nothing has come along to replace manufacturing in much of the country. Go take a look at Detroit, Flint, Cleveland, Lorain, Eria and so many other areas.
  • Massive increase in income and wealth inequality. A few billionaires do great when labor costs decline and profits rise.
  • Destruction of the middle class and maybe even our democracy. Just look around you.

Democracy Or Oligarchy?

The public “gets it” that these trade deals have really, really hurt regular, working Americans and TPP would continue free trade’s devastation of the middle class. There is a revolt going on in both parties in the Congress. House Democratic Leader Rep. Nancy Pelosi and Senate Majority Leader Harry Reid have reaffirmed that they don’t agree with the current process and course of TPP. Tea party conservatives and progressives oppose TPP. Even many American corporations oppose the current TPP!

The public “gets it.” Take a look at the Trade and Manufacturing section of the Populist Majority poll-aggregation website.

  • “95% favor goods manufactured in America.”
  • “73% favor offering companies a tax break for every job they bring from overseas to the US.” But current law gives tax breaks and deferrals for jobs, factories and profit centers shipped out of the country. Republicans are obstructing efforts to change this.
  • 84% of the public “support a concerted plan to make sure that economic, tax, education and trade policies in this country work together to help support manufacturing.” But that would be “government action” and “picking winners and losers” so it is opposed in the Congress.
  • “60% say the US needs to “get tough” with countries like China in order to halt unfair trade practices, including currency manipulation, which will keep undermining our economy.”
  • “65% consider outsourcing, rather than a potential shortage of skilled workers, as the reason for a lack of new manufacturing jobs.”
  • “56% believe trade agreements that allow corporations to sue governments, such as the Trans-Pacific Partnership, should be rejected.”

Democracy would say hold off on TPP. But a few giant, multinational corporations and the billionaires behind them want it. So in our corporate-dominated political system, it’s full speed ahead for TPP.

Trading Our Economy For National Security Fears?

The history of this is that many in government believe that America’s national security interests are served by letting the big corporations cut these trade deals with countries like China and Japan, because security arrangements should have a priority over economic concerns. So they have worked to strengthen South Korea, Japan and even China at the expense of our own economy. This was a Cold War strategy. Now they are using China as a bogeyman to push the TPP, saying we need it to counter China’s influence. Get all of these countries into this agreement and we’ll be stronger than China.

This way of seeing the TPP as a way to strengthen these strategic partners allows those countries to extract concessions in the treaty negotiations that the giant corporations like, but that hurt our own country’s economy. State Department and various National Security interests give this a go-ahead; they say this is good because it will elevate those countries. Meanwhile, our factories close, our own industries suffer.

Of course, even as this argument is used we do nothing about our massive trade deficit with China, we allow them to manipulate their currency and exploit workers.

The reality at this point is that it is now in the security interest of America to rebuild our own middle class, rebuild our infrastructure and competitive position, rebuild our education and research institutions, rebuild our own democracy. Real security comes from having a strong economy and a strong middle class.

We can do trade right. We can elevate the people and economies of other countries without exploiting working people around the world and destroying our own middle class.

Scott Paul of the Alliance for American Manufacturing wrote Thursday that “A Good Trade Deal Is Well Worth the Wait“:

[L]ost in this rush to secure a pact is what the TPP (and every other trade agreement) should actually accomplish: A more balanced U.S. trade account that ultimately benefits the American middle class, which recent reports show could use some help right about now. Unfortunately, America’s track record on trade policy has pushed our trade deficits in the wrong direction and weakened the middle class. And despite the Obama administration bromides that this will be a “21st century trade agreement,” it’s hardly certain that the TPP will be any different, at least when it comes to deterring currency manipulation.

With that in mind, I say a good trade deal is well worth the wait and effort.

We’ve already seen what’s happened when trade policy is inexpertly wielded as a tool of foreign diplomacy. Consider the debacle of permanent normalized trade relations with China in 2000. In exchange for the promises of a more open Chinese society, a Republican Congress and a Democratic president removed the threat of annual review of tariffs on Chinese imports. This resulted in none of the hoped-for democratic reforms (if anything, China has used its funding stream courtesy of our burgeoning trade imbalance to become more belligerent) and ;massive job loss in the U.S. manufacturing sector.

But while China and Japan couldn’t be more different in terms of domestic governance, they share a remarkable similarity in international economic policy: Both regularly distort their currency exchange rates to push their trading surpluses with the U.S. high and keep them higher. Despite that fact, no U.S. action has been taken against China or Japan for manipulating their currency. And though there is much secrecy around the details of the TPP proposal (of which Japan is a potential party and is, as the world’s third largest national economy, the most important negotiator aside from the U.S.), a rule barring currency manipulation has most certainly not been discussed.

We can do so much better. Our government can negotiate for the American people instead of against them, as they have done. Step back, take a breath, wait … Get the giant corporations out of the front seats of the process and go back and make NAFTA work for us and Mexican working people and farmers. Make trade work for the American people and Chinese working people.

—–

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

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.

—–

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.”

—–

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.

Continue reading