Trade Compliance

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Progressive Think Tank Says Bad Trade Policy Decisions Have Harmed Workers

Posted July 11, 2017

On the same day that the United Autoworkers and Unifor labour unions issued a joint statement on renegotiation of the North American Free Trade Agreement, declaring that the 25 year-old deal “has failed workers” in the United States, Canada and Mexico, a new report from Economic Policy Institute argues that international trade agreements like NAFTA have focused almost exclusively on corporate interests to the detriment of most workers, turning the “damaging effects” of globalization into a “deep economic wound” for the working class and a “political disaster for the country.”

“The past 20 years of trade agreements have not been exercises in good-faith liberalization of trade or expanding access of the world’s poor to U.S. markets,” the report contends. “Instead, these agreements have expanded the rights and power of multinational corporations at the expense of workers at home and abroad. This is not how we should be engaging in the world, and it is not retreating into isolationism to recognize this. We can do better by both America’s workers and the workers of our trading partners.”

While globalization and growing trade has led to small income gains for the American economy as a whole, it has also redistributed income upward and reduced wages for the majority of American workers, according to author Josh Bivens, director of research at the left-leaning think tank.  

“Contrary to popular belief, the damages caused by globalization and regressive trade agreements are widespread, and fall disproportionately on communities of color,” says Bivens. “The effects of globalization and our failed policy response to it are not just a problem for white manufacturing workers in the Rust Belt, but in fact affect the majority of workers and likely fall disproportionately on the wages of nonwhite workers.”

As part of a “progressive response to the challenges posed by globalization” the administration must take steps to address differences in currency and compensate negatively affected workers and should stop pursuing new omnibus trade deals that “provide increased protection for corporate profits while undercutting American wages,” the report says.

While Bivens argues against the pursuit of any additional new trade agreements, he notes that renegotiating existing deals could be helpful for workers, provided that the right approach is taken. “Undoing it rashly, with a simple-minded aim of declaring American victory over Mexico, will most certainly provide no help to American workers,” the report warns.

Modernization updates to NAFTA that would potentially be beneficial to workers, according to Bivens, include scrapping the deal’s existing investor-state dispute settlement provisions and incorporating enforceable labour and environmental standards into the body of the treaty itself, rather than in “toothless” side agreements — two changes that the Trump administration has indicated a willingness to pursue.

“The goal in any reform of NAFTA, and in all trade talks going forward, should be to make access to the U.S. contingent on basic respect for the labor and environmental standards rather than contingent upon the adoption of a range of corporate-friendly domestic policy preferences,” the report says. “How closely the Trump administration’s priorities overlap with this goal will be a key tell as to how much help their trade policy reorientation will actually give American workers.”