What Trump Gets Wrong About Trade
Pick up a newspaper, turn on cable news — heck, even check out your Facebook feed — and you’re likely to hear dire warnings that Donald Trump is ruining the global economy. Trump’s “Trade Heresies” are “repeating the mistakes of the Great Depression” and “Threaten Millions of Jobs,” scream headline after headline.
These apocalyptic stories, repeated hourly on CNN, seem to have convinced many liberals to start defending status quo trade policies that should rightly disgust them.
In the absence of any voices critiquing Trump’s trade practices from the left, liberal outrage about the president’s vulgar impropriety on the world stage is easily stoked. And to many, it’s obvious that someone who throws school-yard taunts at Canadian Prime Minister Justin Trudeau is not to be trusted on questions of international trade policy.
But, for Trump voters all this liberal anger is just more evidence that Trump is their guy.
It drowns out the reality that strong majorities of Congressional Democrats are the ones who have fought against job-killing Free Trade Agreements for a quarter century now — under Clinton, under Bush, under Obama and under Trump. In the current media narrative about trade, Donald Trump is the one-and-only politician willing to stand up to global elites and defend American jobs.
To set the policy record straight here: the North American Free Trade Agreement (NAFTA) has been awful for most Americans.
The U.S. Labor Department has certified almost a million individual U.S. jobs as lost to NAFTA under just one narrow government program. Millions more livelihoods have been destroyed thanks to the 2000 U.S.-China trade deal that paved the way for China’s entry into the World Trade Organization and subsequent NAFTA-style policies, with more-and-more jobs outsourced every week.
Even for those in professions that can’t easily be outsourced, all this trade-related job loss is driving down the wages in the jobs that are left. One study estimates the net cost in lost income for the majority American workers at $3,300 each year — roughly 12% of their income — even after taking into account the savings from cheaper imported goods.
In addition to being a major driver of income inequality (more than technology), all this outsourcing and wage suppression also erodes the tax base that supports our schools, infrastructure and other public services. To cite one example, Flint, Michigan is still without clean drinking water.
Trump obviously couldn’t give two gold-plated-toilet craps about the people of Flint. But he got into the White House in no small part by being the one major presidential candidate, other than Bernie Sanders, who consistently and credibly spoke to the suffering caused by trade-policy-fueled outsourcing and who promised to do something about it.
What Donald Trump has always gotten wrong about U.S. trade policy and the damage it has caused Americans is that he blames foreigners for it.
Sure, Trump often argues that foreign leaders were smart to look out for their own interests and that past U.S. leaders were stupid. But Trump’s notion that Mexico and Canada pulled a fast one on the United States with NAFTA and that they “won” and we “lost” is absurd.
No doubt, NAFTA is a deal rigged against U.S. workers. Equally so against Mexican and Canadian workers, though. And small farmers throughout North America. And against the environment.
That should be no surprise given that the deal was negotiated behind closed doors with hundreds of official U.S. trade advisors representing corporate interests, and an oversized role for Mexico and Canada’s largest business interests as well.
NAFTA has never been an issue of the United States versus Mexico and Canada. Rather, NAFTA is a stark example of rigged trade rules of, by and for greedy corporations and against the rest of us.
It’s not Mexican maquiladora workers or Canadian dairy farmers who fought for the passage of NAFTA and similar trade agreements. Neither they nor American workers or family farmers have raked in billions from these trade deals. Instead, it’s mainly been American CEOs and other corporate elites, along with Mexico City’s oligarchs and Canada’s mining multinationals, who have pushed for and profited from NAFTA.
The experience of Canadian workers under NAFTA is not dissimilar from the experience of American workers. And, to date, Canadians have seen hundreds of millions of their tax dollars forked over to U.S. corporations who used NAFTA’s infamous Investor State Dispute Settlement (ISDS) tribunals to successfully attack Canadian water, timber and toxic policies.
The experience for poor and working-class Mexicans has been even worse.
Millions of rural Mexicans were forced off their land when cheap, taxpayer-subsidized corn and other agricultural products flooded into Mexico tariff-free after NAFTA was enacted. Approximately 28,000 small- and medium-sized Mexican employers also went under as companies like Walmart moved into the country. Couple all this displacement with the ongoing suppression of labor rights and the average real wage for manufacturing workers in Mexico today is almost ten percent lower than it was the year before NAFTA took effect.
Instead of NAFTA bringing Mexicans’ standards of living closer to ours, as was promised, Mexican manufacturing wages are now down to the levels paid in China. Little surprise that Mexican migration to the United States doubled during NAFTA’s first decade. With NAFTA devastating livelihoods across Mexico, many were forced to risk the dangerous journey north to support their families.
In the current NAFTA renegotiation, U.S. negotiators have proposed some vital changes that could benefit working people, such as eliminating the ISDS system that undermines public interest laws while making outsourcing safer and ending restrictions on “Buy Local” government purchasing preferences.
U.S. proposals to strengthen NAFTA’s Rules of Origin by adding wage standards and to add a sunset clause to force accountability over the pact’s outcomes are also very important.
These changes are necessary parts of stopping NAFTA’s ongoing damage. But they are by no means sufficient.
Thus far, U.S. trade officials have not been nearly as outspoken about the single most important long-term solution to preventing corporations from shipping jobs around the globe to wherever workers are the most exploited and environmental regulations are the weakest — namely, the need for strong labor and environmental standards with swift and certain enforcement.
You wouldn’t know it from the media, but nearly every Democrat in the U.S. House of Representatives gets this and has called for these type of changes.
The simple truth is that so long as large employers can continue taking advantage of sweatshop working conditions and the ability to dump toxins abroad, they will seek out opportunities to do so, padding their profits at the expense of working people everywhere. Pegging access to the U.S. market to real, on-the-ground improvements for workers and the environment within our trade partner countries is an absolute necessity for protecting American workers in the global economy.
For all his talk about stopping job outsourcing, Donald Trump still doesn’t seem to fully grasp that this is the way to do it.
Of course, understanding and prioritizing the need for strong, powerfully-enforced labor and environmental rights would probably be much easier if one possessed a worldview centered on respect for human rights and cross-border cooperation rather than an authoritarian worldview centered on xenophobia and racism.
It’s up to those with global justice at heart to build demand for alternatives to both business-as-usual trade policy and Trump’s ugly economic nationalism. The stakes are far too high to let the range of debate over trade policy remain just what we see on TV.
Arthur Stamoulis is the executive director of Citizens Trade Campaign, a national coalition of labor, environmental, family farm, faith and consumer organizations working together to improve trade policy.