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Waiting for Trade Policies That Build the Middle Class and Protect Workers' Rights: Fighting More NAFTAs

March 2, 2011

U.S. trade policies going back to NAFTA have failed.  They have contributed to the hollowing out of our economy and the loss of more than 55,000 U.S. manufacturing plants since 2000.  Now Republicans in Congress have allowed the Trade Adjustment Assistance (TAA) program to expire, showing a shameful lack of concern for the victims of failed U.S. trade and economic policies.  While we do need to reauthorize and strengthen TAA, we need to do much more than that.  We must fundamentally change the global trading system so that it works for working people in the United States and around the globe by promoting robust job growth, respecting workers’ rights and building globally balanced prosperity.

Unfortunately, the three pending Bush-era free trade agreements (FTAs) with Korea, Colombia, and Panama do not take us in this new direction.   On the contrary, they will cost us jobs and perpetuate the NAFTA model that has done so much harm to our country and to workers around the world.  Moreover, there are major concerns about labor rights in all three countries; in fact, Colombia is the most dangerous country in the world to be a trade unionist.  The United States simply cannot do business as usual with—much less reward with an FTA—any country where trade unionists are murdered with impunity.  The AFL-CIO will vigorously oppose all three of these agreements if they are brought to a vote as currently drafted.

The Korea Free Trade Agreement

The South Korea-U.S. Free Trade Agreement (KORUS FTA) is the most economically significant trade agreement the United States has negotiated since NAFTA, and it could cost us tens of thousands of good jobs here in America.  The Economic Policy Institute (EPI) projects the KORUS FTA could displace about 159, 000 U.S.-based jobs—mostly in manufacturing—within seven years of taking effect.  The last thing we need right now, with a weak economy and job creation at unacceptably low levels, is yet another trade deal that puts more manufacturing jobs at risk.

The key problems with the FTA are a weak “rule of origin” that allows cars with 65 percent content from countries other than Korea to qualify for reduced tariffs; the lack of any protection against currency devaluation by Korea, which would put U.S. products at a competitive disadvantage; sweeping new rights for multinational corporations that would allow them to bypass national courts and take their investment disputes directly to secretive international tribunals; and services provisions that would allow foreign service providers to challenge protections for public services in the United States that we take for granted.

While we appreciate President Obama’s renegotiation of key Korea FTA provisions that affect the auto assembly sector, based on our experience with past trade deals we respectfully disagree that this deal will improve the overall U.S. trade performance or create new jobs through increased net exports.  The AFL-CIO has no choice but to oppose the Korea FTA because as a whole it undermines U.S. economic interests and perpetuates the NAFTA template that has so badly harmed working people.

Colombia Free Trade Agreement

The problem with the Colombia FTA is the continued assassination of trade unionists in Colombia and the government’s failure to prosecute the people responsible for planning or carrying out these crimes.  Last year was another bloody year for Colombian trade unionists.  The well-respected National Labor School in Colombia estimates that there were 49 murders and 19 attempted murders in 2010.  Nearly 300 trade unionists received death threats.  Fourteen murders have taken place under the new Santos administration, which took office in August 2010.  In total, more than 2,850 trade unionists have been murdered since records were first collected systematically in 1986.  During this same period, there were 276 attempted murders, 218 forced disappearances, at least 4,935 death threats and 1,721 forced displacements.  Yet no one has been held responsible in 94 percent of these murder cases.  These figures confirm a clear and sustained intention to exterminate trade unionism in Colombia.

In addition, the ILO has identified numerous ways in which Colombia’s labor laws fall short of core labor rights—the international minimum set of rights that are to be guaranteed by all countries regardless of their level of development.  Colombia has made very little progress in passing the laws and regulations necessary to comply with these international norms.

Furthermore, the government of Colombia has an abysmal record of enforcing the labor laws that are currently on the books, and increasingly those laws simply do not cover most workers.  Colombia must bring its laws into compliance with international rights and establish a record of sustained enforcement of its labor laws and regulations.

Colombia must be a place where workers are able to exercise their fundamental rights without fear before the United States should even consider putting a free trade agreement into effect.  Promises and efforts are not good enough.  Results are what counts.

Panama Free Trade Agreement

The Panama FTA is not expected to produce any more job growth in the United States than the trade deals with Korea or Colombia.

Panama has not yet implemented changes to its laws and regulations that are necessary to comply with its labor obligations under the FTA, including addressing limitations on collective bargaining in new companies and in export processing zones.  Furthermore, in 2010 the Panamanian government severely weakened labor rights in a special economic zone that will be used to export goods to the United States, among other countries, where employers can avoid collective bargaining for the first six years of their operation.

Another law weakening the labor code was repealed only after thousands of Panamanians took to the streets in protest.  In the process, at least two were killed and hundreds were wounded or detained by the police. 

With regard to the U.S.-Panama FTA, we believe Panama must take additional steps to bring its laws into compliance with international norms and to demonstrate that labor rights will be enforced once it does come into compliance.

The Trans Pacific Partnership

The Trans Pacific Partnership (TPP) will be the first trade agreement fully negotiated by the Obama administration.  It is President Obama’s great opportunity to make good on his commitment to craft trade policies that make sense for America’s workers and not just for multinational corporations.  It is the administration’s great opportunity to create a trading system that respects workers’ rights and creates quality jobs and broadly shared prosperity.

Unfortunately, negotiations on the TPP have so far consisted of closed-door meetings with industry.  As far as we can tell, the proposals on the table are little different than what we have seen in past trade negotiations in areas such as investment rules and labor rights.

The AFL-CIO continues to look for a trade policy that is focused on creating jobs and expanding growth and equity, and is not merely a continuation of the approach that brought us NAFTA and the Bush-era trade agreements.

Currency Imbalances and Jobs

While the TPP is a long-term process, our nation’s jobs crisis demands immediate action.  Enforcing our trade laws could produce immediate results in terms of both our jobs crisis and our trade deficit.  The most important area for immediate action to enforce our trade laws is currency manipulation by our trading partners.  As trade economist Paul Krugman says, “If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses.  A countervailing duty on Chinese exports would be job-creating; a deal with South Korea, not.”

On Feb. 4, 2011, the Treasury Department once again decided not to name China as a currency manipulator, seriously weakening the department’s credibility on this issue. The AFL-CIO calls upon Congress to immediately pass currency legislation that makes clear that the United States may address currency manipulation by imposing countervailing duties on countries that use currency manipulation to subsidize their exports.

Conclusion

We live in a global economy. We must have a strategy for sustainable prosperity in a global economy that protects workers’ rights and rebuilds our nation’s middle class.  Reproducing NAFTA-style trade agreements with Korea and Panama will only make our problems worse, and doing trade deals with Colombia as the body count of trade unionists inexorably rises is obscene.  The AFL-CIO stands ready to work together with all parties to build a new trade model, but we will vigorously oppose the proposed agreements with Korea, Panama and Colombia, as currently drafted, should they be brought to a vote.

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