Workers Need Better Trade Deals, Not More Talk
President Donald Trump, author of “The Art of the Deal,” said this week that China is giving American workers and companies a crummy deal. He promised to do something about it. This occurred within days of his commerce secretary, Wilbur Ross, demanding “fair, free and reciprocal” trade in an op-ed in the Wall Street Journal.
At the same time, congressional Democrats offered a seven-point plan to give workers what they called “A Better Deal on Trade and Jobs.”
American workers want all of these proposals achieved. They’ve heard this stuff before and supported it then. That includes ending tax breaks for corporations that offshore jobs—something that never happened. It includes the promise to confront China over its steel and aluminum overcapacity—a pledge followed by delay. Talk is cheap. Jobs are not. The factory anchoring a community’s tax base is not. America’s industrial strength in times of uncertainty is not. All the talk is useless unless workers get some action.
President Trump is expected to announce within days the launch of an investigation into China forcing American corporations to transfer technology to the Asian giant’s companies as a price of doing business there. The technology transfer boosts China’s goal of becoming the leading manufacturer within a decade in high-tech areas such as semiconductors, robots, and artificial intelligence. In addition to seizing American research and know-how, Beijing advantages its technology companies by granting them government cash.
This is the kind of unfair competition Secretary Ross talks about in his Wall Street Journal op-ed. Under so-called free trade rules, governments aren’t supposed to subsidize industry or demand that foreign investors fork over research.
These kinds of violations, not just with China but with other trading partners as well, have occurred for decades now. And the upshot for American workers is lost jobs and stagnant wages.
More than 5 million American manufacturing jobs disappeared between 1997 and 2014. Most of these vanished, according to the Economic Policy Institute, because of growing U.S. trade deficits with countries like Mexico and China that had negotiated trade and investment deals with the United States.
The United States’ massive trade deficit with China alone accounted for 3.4 million jobs lost between 2001 and 2015, with 2.6 million of those in manufacturing, according to EPI research.
While offshoring manufacturing has often padded corporate profits, it has suppressed wages in the United States and in trading partner countries like Mexico. United Technologies is a good example. UT moved to Mexico this year its Electronic Controls unit, which manufactures microprocessors for heating, ventilation and air conditioning (HVAC) equipment. UT did this even though its 700 American workers had produced consistent profits for UT at a factory in Huntington, Ind. UT also moved a big chunk of its profitable Carrier HVAC manufacturing from Indianapolis to Mexico this year. UT’s stock price rose, so the already-rich who have cash to invest, made out.
They did it on the backs of workers in the United States and Mexico, however. The move to Mexico rendered jobless more than 1,000 skilled American workers. Studies show that if they’re lucky enough to land new employment, the pay will be substantially less.
Mexican workers gained the jobs, but the pay they’re getting is little better than before NAFTA. More than half of Mexicans still live below the poverty line, a figure no different than before NAFTA. The New York Times cited this case: “For 10 years, Jorge AugustÃn MartÃnez has driven a forklift for Prolec, a joint venture with General Electric that makes transformers. A father of two, he earns about $100 for a six-day workweek.”
Mexican wages have remained stagnant for a decade. In the United States, wages have been flat for longer—several decades. This as corporate profits rise, the stock market skyrockets and CEO pay surges limitlessly.
Trade deals worked great for the already rich CEOs and corporations. They’ve crushed workers. So it’s encouraging that both President Trump and the Democrats are talking about solutions.
The president is right. American corporations shouldn’t have to transfer technology to China to operate there. The United States doesn’t require that of Chinese companies manufacturing here. No such demand was made of Foxconn when it agreed to build a $10 billion factory in Wisconsin last week—though it is true that Wisconsin Republicans plan to force the state’s taxpayers to contribute $3 billion toward the plant, nearly a third of the total cost.
And the Democrats are right about every point in their “Better Deal” plan. Workers need an independent trade cop they can turn to for quick results to combat trade violations before they cost Americans jobs. Corporations like UT and Rexnord should be penalized when they offshore and when they seek government contracts. Corporations that restore jobs to the United States should be rewarded.
So do it. And don’t procrastinate like the administration is doing on its investigation of the national security threat posed to the United States by steel and aluminum overproduction in China. The report in that case originally promised for June 30 now has been indefinitely delayed. Each day’s wait means more American workers without jobs as illegally subsidized, grossly underpriced Chinese steel and aluminum floods the international market.
America’s highly skilled, dedicated steel and aluminum workers perform their jobs faithfully every day with the expectation that their government will enforce international trade regulations. They also expect their government to support their right to join together and collectively bargain for better wages and benefits. As right-wingers have eroded workers’ bargaining rights over the past half century, unions have declined, and with them, workers’ ability to secure raises. This is true in Mexico too, where there are virtually no legitimate, worker-run unions.
Timothy A. Wise, a research fellow at Tufts University, put it this way to the New York Times: “Mexico is seeing exactly the same phenomenon as in the United States. Workers have declining bargaining power on both sides of the border.”
To ensure there are no more crummy trade deals, workers must be at the table when these pacts are negotiated. To get better wages, workers in all the countries involved in these deals, from China to Mexico to the United States, must be able to form real, worker-controlled labor organizations to bargain with corporations.