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EPI: 'Signing Trade Deals Is a Terrible Jobs Strategy'

Photo from the AFL-CIO Now blog.

Signing more trade deals (also known as FTAs) as a way to create jobs? Meh. Seems unlikely, unless there is a radical change to the current trade model. The current model does much more than reduce tariffs (tariffs are taxes on imports). It also puts in place a bunch of rules that have made it advantageous for employers to move jobs offshore—resulting in unemployment, wage suppression and reduced union bargaining power. Instead of helping America's workers and shoring up the middle class, the Economic Policy Institute's Rob Scott describes the United State's current FTAs as "essentially a long menu of giveaways and protections to various corporate sectors" that really do very little to create jobs or raise middle-class wages. (Read Scott's insightful critique here.)

As Scott's work demonstrates, "in the real world, FTAs [like NAFTA] have hurt U.S. employment." 

So...to create more jobs and boost the middle class, U.S. trade policy must change. There really isn't another option. U.S. trade policy must stop guaranteeing special legal privileges to U.S. corporations that take jobs offshore—which only incentivizes more offshoring. It must stop limiting the effectiveness of "Buy American" policies. It must raise the bar for "rules of origin" to encourage putting supply chains in the United States. It must ensure that state-owned and controlled commercial enterprises (known as SOEs) compete fairly—so they cannot behave in a predatory manner to drive U.S. employers out of business. It must ensure that our trading partners effectively secure fundamental labor rights (including the rights to organize and bargain collectively) for their workers—otherwise large employers will just drive down wages and working conditions abroad through labor repression—which hurts workers everywhere. It must address currency manipulation so that countries cannot play currency games that make their products and services artificially less expensive than American products and services.  And, it must improve our trade deficit. 

These changes and more must be made to U.S. trade policy. If they don't, continuing to promote FTAs as a "job creation strategy" will only continue to backfire, leaving America's middle class hanging out to dry. To read more from Scott on how U.S. trade policy has created huge trade deficits that cost jobs, click here

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Tagged under:
EPI
labor
NAFTA
trade
trade deficit

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