Category Archives: Trade

Three big problems with Trump’s new NAFTA plan

Source: Iván Farías Pelcastre, Scott Lucas, The Conversation, July 25, 2017

The Trump administration has outlined its plans to renegotiate the North American Free Trade Agreement (NAFTA). It says the US will seek a “much better” agreement that reduces the trade deficit between the US and its partners, Canada and Mexico. In response, the two countries released brief statements welcoming the proposal. They say they consider a possible renegotiation as a step towards modernising NAFTA to address the new realities and challenges of the 21st century.

Despite these good intentions and purported goodwill, the US objectives for a revised NAFTA are unachievable. Three problems with the US negotiating position reveal the limited understanding of Donald Trump, the US trade representative, Robert Lighthizer (who will lead the negotiations), and their advisers about NAFTA and its side agreements…..

The United States Withdraws from the TPP

Source: Brock R. Williams, Ian F. Fergusson, Congressional Research Service. CRS Insight, IN10646, May 23, 2017

On January 23, President Trump directed the United States Trade Representative (USTR) to withdraw the United States as a signatory to the Trans-Pacific Partnership (TPP) agreement; the acting USTR gave notification to that effect on January 30. The TPP is a proposed free trade agreement (FTA), signed by the United States and 11 Asia-Pacific countries on February 4, 2016. The agreement requires ratification by the member countries before it can become effective. Implementing legislation, the vehicle for U.S. ratification, was not submitted by the President or considered by Congress, in part due to the contentious debate over the agreement. Because the TPP had not taken effect, U.S. withdrawal does not immediately affect U.S. tariffs or other trade commitments. The United States also has existing FTAs with six of the TPP countries (Australia, Canada, Chile, Mexico, Peru, and Singapore), which this announcement does not affect.

TPP supporters argue that the withdrawal could damage U.S. negotiating credibility, undermine U.S. economic leadership in the region, hurt U.S. firms’ competitiveness abroad, and give China greater leverage to set regional trade rules. TPP opponents see the withdrawal as preventing greater U.S. import competition and potential job losses. Beyond the trade realm, some analysts also argue the withdrawal may signal declining U.S. engagement in the region and inability to assert leadership at a time when China’s rise and North Korea’s growing nuclear and missile capabilities are testing the U.S.-led rules system and challenging U.S. influence….

The Globalization of Production and Income Inequality in Rich Democracies

Source: Matthew C. Mahutga, Anthony Roberts, Ronald Kwon, Social Forces, Advance Articles, May 25, 2017
(subscription required)

From the abstract:
Despite prominent and compelling theoretical arguments linking manufacturing imports from the global South to rising income inequality in the global North, the literature has produced decidedly mixed support for such arguments. We explain this mixed support by introducing intervening processes at the global and national levels. At the global level, evolving characteristics of global production networks (GPNs) amplify the effect of Southern imports. At the national level, wage coordination and welfare state generosity counteract the mechanisms by which Southern imports increase inequality, and thereby mitigate their effects. We conduct a time-series cross-section regression analyses of income inequality among eighteen advanced capitalist countries to test these propositions. Our analysis addresses alternative explanations, as well as validity threats related to model specification, sample composition, and measurement. We find substantial variation in the effect of Southern imports across global and national contexts. Southern imports have no systematic effect on income inequality until the magnitude of GPN activity surpasses its world-historical average, or in states with above-average levels of wage coordination and welfare state generosity. With counterfactual analyses, we show that Southern imports would have led to much different inequality trajectories in the North if there were fewer GPNs, and if the prevailing degrees of wage coordination and welfare state generosity were higher. The countervailing effects of GPNs and institutional context call for theories of inequality at the intersection of the global and the national, and raise important questions about distributional politics in the years to come.

The Trump administration formally launched NAFTA renegotiations — here’s what you need to know

Source: Elena Holodny, Business Insider, May 18, 2017

The Trump administration on Thursday formally launched efforts to renegotiate the North American Free Trade Agreement with Mexico and Canada….

…..With the trade agreement now up in the air, we put together a guide to everything NAFTA — past, present, and future…..
Related:
Will NAFTA Renegotiation Produce TPP 2.0 and Intensify Damage? Or Fulfill Trump Promise of a ‘Much Better’ Deal for Working Americans? Maintaining Secretive Process With 500 Official Corporate Advisers Does Not Bode Well
Source: Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch, May 18, 2017

….Trump’s conflicts of interest and self-dealing opportunities with NAFTA renegotiation are not hypothetical; the sprawling Trump business empire has 14 Canadian and two Mexican investments. Some of Trump’s clothing line is made in Mexico. Trump won’t divest his business holdings or release his tax returns, so unless he reveals his full Mexican and Canadian business dealings, we won’t even know in whose interest these NAFTA talks are being conducted.

Trump’s broken promises on trade are piling up. Instead of punishing firms that offshore American jobs, he has awarded United Technologies 15 lucrative new government contracts even after they proceeded to offshore 1,200 of their 2,000 Indiana Carrier jobs. Instead of enacting the promised “get tough on China” trade policy, he flip-flopped on his pledge to declare China a currency manipulator on Day One and has done nothing to counter our massive $347 billion China trade deficit…..

Renegotiation of the North American Free Trade Agreement (NAFTA): What Actions Do Not Require Congressional Approval?

Source: Congressional Research Service, CRS Legal Sidebar, April 27, 2017

On April 26, news outlets reported that the Trump administration was drafting an executive order addressing the potential withdrawal by the United States from the North American Free Trade Agreement (NAFTA) among the United States, Canada, and Mexico. However, later that day, President Trump announced that he had decided not to terminate NAFTA “at this time” but would instead seek a renegotiation of the agreement.

NAFTA entered into force on January 1, 1994 and governs the imposition of tariffs on imported products, as well as nontariff trade barriers (e.g., customs procedures or government procurement practices). The President’s announcement raises questions about the extent to which the executive branch may unilaterally renegotiate the agreement—and implement amendments to the agreement in domestic law—without further action from Congress. This Sidebar post briefly addresses these questions. It does not discuss presidential authority to withdraw from NAFTA or policy implications of U.S. renegotiation of NAFTA (e.g., economic or labor consequences that might result from U.S. action).

The nature and scope of modifications to NAFTA by the Trump Administration that are under consideration are currently unclear. ….

Don’t Curse, Organize

Source: Michael Kazin, Dissent, Winter 2017

A cruel irony lurks beneath the debacle of the 2016 election: Donald Trump may have won the roughly 80,000 voters he needed in the Rust Belt at least in part because he vowed to fix a massive problem of twenty-first-century capitalism that the left had propelled into national prominence: economic inequality. The insurgents of Occupy, the fighters for $15, and Bernie Sanders and his young apostles had all drawn the media’s attention to the nagging wage gap, bad trade deals, and lousy, non-union jobs. Barack Obama won reelection in 2012 partly because he stoked this discontent when he ran against a businessman who wrote off nearly half the population of his own country. But last fall, it was Trump, not the uninspiring Democratic nominee, who made an effective, albeit classically demagogic, appeal to white working people to change a system “rigged” against them. “He stoked his base’s fears,” observed Gary Younge in the Guardian; “she failed to give her base hope.”

So how should radicals and liberals resist and help defeat an administration hostile to every principle and policy that makes a decent society possible? Several contributors to this issue offer sharp, sensible views about those burning questions. …. Leftists, in and out of social movements, should instead seize the opportunity that Hillary Clinton’s defeat has given them—by transforming the Democratic Party from inside.

Articles include:
The Fight Ahead:

Tomorrow’s Fight
Jedediah Purdy
Trump has put us where he put his followers all year: frightened, in a besieged place, a country we do not feel we recognize, in need of a champion. Now we all have to be one another’s champions.

Left Foot Forward
Sarah Leonard
….Now that our enemies are in power, what comes next? For starters, if the Democrats stand a chance in the near future, Republicans have conveniently demonstrated for them what they did not believe coming from the left: economic populism works….

The Next Democratic Party
Timothy Shenk
Parties recover from defeat in two ways. They can try to beat the opposition at their own game, or they can try to change the rules of the game. Donald Trump did the latter. Now it’s the Democrats’ turn.

A Call for Sanctuary
Mae Ngai
The American public does not support mass removal of immigrants. And by turning cities and campuses into sanctuaries against raids and deportations, we have the power to stop it.

Prepare For Regime Change, Not Policy Change
N. Turkuler Isiksel
Lessons from the autocrats’ toolkit. …. Confidence in the exceptional resilience of American democracy is particularly misplaced in the face of today’s illiberal populist movements, whose leaders are constantly learning from each other. Trump has a wide variety of tried and tested techniques on which to draw; already, he has vowed to take pages out of Putin’s playbook. Defenders of liberal democracy, too, must learn from each other’s victories and defeats. Below are some hard-earned lessons from countries that have been overrun by the contemporary wave of illiberal democracy. They could be essential for preserving the American republic in the dark years to come…..

A Devil We Know
Robert Greene
Frightening as it is, Trumpism has many precedents in U.S. history—and the social movements of the last century, from the Southern Tenant Farmers Union to ACT UP, offer important lessons for how to fight it.

Texas’s New Ground Game
Michelle Chen
….The Texas Organizing Project (TOP), a gritty grassroots network linking three rapidly browning cities—San Antonio, Dallas, and Houston—has fought and won enough local battles to demonstrate the value of seeding incremental progressive wins on the neighborhood level in order to build a grassroots people’s movement. And they know better than to take anything about Texas for granted. For TOP’s communications director Mary Moreno, giving people a reason to believe voting still makes a difference in a politically predictable state starts with talking about them, not their vote…..

The Future of Work:

Introduction: No Retreat
Sarah Jaffe and Natasha Lewis
….When we sat down to consider the future of work, then, we decided to set aside the debate over whether, how many, and how fast the robots are coming and concentrate on these questions of politics, of power. Which workers have it, and how do they wield it? Whose work is valued, and how much? Who is a member of the working class these days, and how is that likely to change?

And we decided to think big. Though it might be hard to imagine a more dire political reality than the one we currently face, the shock of the recent election shows there is space for new political ideas. The authors in the following pages set out provocations and strategies to win the future we want, and warn of the futures we might get if we lose these fights…..

Thank God It’s Monday
Kate Aronoff
….Reverence for hard work is not simply a decorative gimmick, but core to the WeWork philosophy. The imperative to hustle reflects the way the founders see (and wish to shape) the future of work. Meanwhile, WeWork’s popularity is driven—in part—by the increasing atomization of labor, across income brackets. By offering workers an alternative to days spent alone behind a computer, Neumann and McKelvey discovered they could turn a profit by exploiting one of the defining features of work’s so-called future: isolation….

A Strike Against the New Jim Crow
Janaé Bonsu
(subscription required)
….Last September, inmates around the nation boldly resisted as exploited workers have often done in the past. They staged the largest prison strike in U.S. history. It was organized by the Free Alabama Movement, a group of prisoners and allies, and the Incarcerated Workers Organizing Committee, a segment of the Industrial Workers of the World…..

Love’s Labor Earned
J.C. Pan
(subscription required)
….To most women today who find themselves exhausted by unwaged, unappreciated emotion work, receiving payment for it probably seems like a pretty delightful idea. Why continue to coddle and counsel men without getting something in return? Why work as therapists without charging therapist rates?….

Learning from the Rank and File: An Interview with Barbara Madeloni
Sarah Jaffe and Barbara Madeloni
On November 8, as the electoral map turned redder and redder, Massachusetts and the surrounding northeastern states began to look like a little blue island. Reliably Democratic in presidential elections even after a Republican took the governor’s office in the state two years ago, Massachusetts was still the site of significant election-night drama, as an initiative that would have drastically expanded the reach of charter schools was on the ballot—and went down, sixty-two to thirty-eight. Barbara Madeloni is the president of the Massachusetts Teachers Association and helped build the No on Two coalition that defeated the initiative. She spoke with Dissent about the lessons from that fight for the future of the labor movement as it prepares for the attacks that will likely come from a Trump administration.

An Economist’s Case for Open Borders
Atossa Araxia Abrahamian
…..Last April, an economist named Branko Milanovic published a proposal to reduce global economic inequality in the Financial Times. The best way to help the world’s poor, he wrote, is to encourage movement of labor and get countries to open up their borders. But of course, that’s easier said than done: many citizens of rich host countries balk at the idea of increased migration. When they imagine foreigners settling down within their borders, they fear that their jobs, their benefits, and their idea of national (and, let’s face it, ethnic) unity will be threatened. The campaigning around the British initiative to leave the EU and Donald Trump’s victory in the U.S. presidential election will endure as the consequences of this talk in action. Milanovic’s suggestion is as follows: what if we make some concessions to these concerns and fears, and formally reduce the rights and benefits foreigners are entitled to, so long as they are welcome to come, work, and get a shot at improving their economic situation, at least for a limited time?….

Bargaining with Silicon Valley
Rebecca Burns
(subscription required)
…..At this rate, it’s unlikely that all of us will be working on online platforms anytime soon. But the defining feature of the gig economy isn’t really that workers accept jobs through an app on their phone: it’s that they work with no benefits, no job security, and no unions. And it’s this model of the future, in which workers are fully fungible, that is being embraced not only by tech acolytes, but also by traditional employers and the broader right. Under the guise of inevitability, a host of tech, business, and anti-union groups appear eager to use the gig economy as a Trojan horse for changes that affect far more workers: privatizing what remains of the social safety net, “modernizing” (read: gutting) key labor laws, and further hobbling unions…..

A Left Vision for Trade
Erik Loomis
(subscription required)
….Both Trump and Clinton explained their objection to the TPP in terms of the very real threat it posed to American jobs. But globalization is not going away, with or without the TPP. So how can we make it fairer?….

Trade Liberalization and Mortality: Evidence from U.S. Counties

Source: Justin R. Pierce, Peter K. Schott, National Bureau of Economic Research, NBER Working Paper No. 22849, November 2016
(subscription required)

From the abstract:
We investigate the impact of a large economic shock on mortality. We find that counties more exposed to a plausibly exogenous trade liberalization exhibit higher rates of suicide and related causes of death, concentrated among whites, especially white males. These trends are consistent with our finding that more-exposed counties experience relative declines in manufacturing employment, a sector in which whites and males are disproportionately employed. We also examine other causes of death that might be related to labor market disruption and find both positive and negative relationships. More-exposed counties, for example, exhibit lower rates of fatal heart attacks.

Findings on the Worst Forms of Child Labor

Source: U.S. Department of Labor, 2016

From the summary:
The Department of Labor’s annual Findings on the Worst Forms of Child Labor focuses on the efforts of certain U.S. trade beneficiary countries and territories to eliminate the worst forms of child labor through legislation, enforcement mechanisms, policies and social programs.

The Report presents:
– Findings on the prevalence and sectoral distribution of the worst forms of child labor in each country.
– Country-specific suggestions for government action (since 2009).
– Individual country assessments that identify where Significant, Moderate, Minimal, or No Advancement has been made (since 2011).

The Report serves as a resource to foreign governments, NGOs, academics and policymakers working on labor and human rights issues. It helps inform Congress and Executive Branch agencies that formulate labor and trade policy and is an important resource for the Department in assessing future technical assistance and research priorities as it seeks to combat child labor around the world.

The Department’s Bureau of International Labor Affairs (ILAB) has published the Findings each year since 2002, as mandated by the Trade and Development Act of 2000 (TDA). The TDA requires that countries fulfill commitments to eliminate the worst forms of child labor to be eligible for certain U.S. trade preference programs. It also requires the U.S. Secretary of Labor to issue annual findings on beneficiary country initiatives to implement these commitments.
Related:
Report Magazine

Want to help free trade’s losers? Make ‘adjustment assistance’ more than just burial insurance

Source: Marina v. N. Whitman, The Conversation, October 24, 2016

…So what has made free trade – which still gets the support of most Americans – such a political pariah?

A major explanation is that there are losers as well as winners from its effects. The winners may be far more numerous, yet the impact on the losers, from lost jobs and lower wages, is more intense and personal….

….In other words, while the overall welfare effects of trade liberalization are generally positive, the impact on some subgroups, particularly the less well-educated, are negative and much larger.

And the United States is less generous than other rich countries in providing both reemployment assistance and income support to workers hurt by these changes.

The primary U.S. program aimed at mitigating this negative impact is known as trade adjustment assistance (TAA). That its intended recipients call it “burial insurance” sort of sums up its image problem…..