Fair Trade

Fair trade has taken a central role in the presidential campaign as the season began coming through the Rust Belt states hardest hit by bad trade policy.  Fair trade isn't only about protecting jobs, industries, and the environment however.  It is also about preserving farms and farmer in other countries, especially third world nations in Central and South America devastated by American subsidies for agriculture.  It means we must be fair on both sides of the ball.

Federal welfare subsidies for agribusiness are driving family farmers off the land both here in America and in countless other countries.  Coffee growers and rice farmers are unable to compete with huge agricultural companies in America who are subsidized with tax money.  Fair trade has to be fair for everyone.  Unfair trade has resulted in a flood of illegal immigration as we have driven people off the land.  They are emigrating here in an attempt to survive.

Every time you buy a cup of  coffee ask if it is fair trade coffee if you really want to fight the battle against undocumented workers.  If these coffee growers hadn't been forced off their farms and into desperation they wouldn't be here taking your job at lower wages.

Unfettered free trade is bad for workers, the environment and is leading to unsafe products.  It drives wages down and profits up.  The only entities who benefit are global corporations and it is they who are pushing these deals.

John Edwards brought these issues to the campaign and they largely disappeared after his withdrawal until Wisconsin.  As the campaign has centered in Ohio and Pennsylvania these issues have come front and center.  The Pennsylvania Fair Trade Coalition sent questionaires to each of the remaining candidates about these issues.  It is part of the Citizens Trade Campaign.  As such they issued this press release in late February:

To Implement Domestic Campaign Policy Priorities on Health Care and
Global Warming, Future Presidents Must Alter Existing U.S. Trade
Commitments

New Public Citizen Report Identifies Changes to WTO, NAFTA Rules Needed
to Facilitate Candidates' Proposals on Health and Climate

WASHINGTON, D.C. - Public Citizen today identified changes needed to
World Trade Organization (WTO) rules and the investment provisions of
the North American Free Trade Agreement (NAFTA) to implement a dozen of
the presidential candidates' key health and climate policy proposals.

The changes were detailed in a report, "Presidential Candidates'
Key Proposals on Health Care and Climate Will Require WTO Modifications,
Overreach of WTO Highlighted by Potential Conflicts with Candidates'
Non-Trade Proposals," released today, available at
http://www.citizen.org/documents/PresidentialWTOreport.pdf

"Growing public ire about our current trade and globalization
policies' damage to Americans' economic prospects has played an
enormously important role in this election, with most candidates
committing to reform NAFTA," said Lori Wallach, director of Public
Citizen's Global Trade Watch division. "But candidates and voters
have little idea that some of the candidates' domestic policy
priorities on health care and climate change could be limited by the
overreach of so-called trade agreements like the World Trade
Organization. The need for a comprehensive overhaul of the WTO could not
be more urgent."

Although they have nothing to do with trade, key health care cost
containment proposals on the creation of health insurance risk pooling
mechanisms, reduction of pharmaceutical prices and electronic medical
record-keeping, a proposal to expand coverage by requiring large
employers to provide health insurance and a proposal to establish tax
credits for small employers as an incentive to provide health insurance
fall within WTO jurisdiction. In addition, proposals that address
climate policy, such as increasing CAFE (Corporate Average Fuel
Efficiency) standards, banning incandescent light bulbs, establishing
new regulation of coal-fired electric plants and establishing national
renewable portfolio standards (RPS), green procurement proposals and
gree
n industry subsidies come under the jurisdiction of existing U.S.
WTO commitments.

"Corporate lobbyists, previous U.S. presidents, and 'free market'
think tanks worked hand-in-hand to lock in corporate privileges on
health care, energy and other domestic policies and shield them from
small 'd' democratic reforms of the kinds proposed by Clinton,
McCain and Obama," said Todd Tucker, research director for Public
Citizen's Global Trade Watch division and an author of the report.
"Now is the moment presidential candidates must stand up for their
important domestic platform priorities and commit to renegotiate the WTO
and other flawed trade deals."

Moreover, the candidates haven't addressed the need to renegotiate
other provisions in trade deals like the WTO, NAFTA and other
NAFTA-style trade deals that severely limit future presidents' policy
space to enact legislation on non-trade issues.

"Trying to work within the tiny policy space permitted by existing
WTO rules would result in the challenges surrounding America's health
care debacle and the global climate crisis being defined so narrowly as
to ensure real redress is impossible," said Wallach. "The candidates
must reject corporate calls for watering down their proposals and
instead emphasize opening up the much-needed policy space to provide
real solutions to pressing domestic concerns."

Hillary Clinton responded to the Pennsylvania Fair Trade Coalition with this statement:

Hillary Clinton’s Trade Agenda

            

Making Trade Work for Working Families             

With the middle class squeezed and the economy slipping into recession,       American families need a President who will fight for their economic     interests from day one. Americans need a President who will fight  for fair, pro-American trade policies that will not trap them in a race to the bottom.   Low wages in other countries are costing America jobs and putting pressure on wages here at home.   With approximately one quarter of our gross domestic product linked to international trade, we need trade policies that better manage globalization.  As President, Hillary will make trade work for working families.   

            

Fixing NAFTA.  NAFTA was negotiated more than 14 years ago, and Hillary believes it has not lived up to its promises. Hillary is the only candidate with a detailed plan to fix NAFTA—one that addresses its shortcomings and brings the agreement up to date.   As President, she will work with our trade partners to:             

            

 

            

  1)   Dramatically strengthen NAFTA’s labor and environmental provisions. Strengthening these provisions will elevate labor and environmental standards around the world, protecting our workers from a race to the bottom. It will also make it harder for companies to move jobs to countries where workers have fewer protections than in America. NAFTA’s labor and environmental provisions are now in a side agreement rather than in the core text.  The requirements are weaker than those Hillary will demand in future trade agreements, and weaker than those the Democratic leadership recently crafted. As President, Hillary will bring NAFTA’s labor and environmental protections up to date. She will make the standards far tougher and absolutely binding, and she will place them in the core agreement so that we are working to raise living standards around the world.   

            

 

            

  2)  Change NAFTA’s  investment provisions that grant special rights to foreign companies. Under NAFTA, foreign companies can challenge American laws before special tribunals and outside of our court system. The laws that foreign companies can challenge include regulations intended to protect workers and protect the environment.  Hillary believes that trade agreements must elevate standards of living around the world, not empower corporations to hold them down.             

            

 

            

  3)  Strengthen NAFTA’s enforcement mechanisms. Stronger enforcement mechanisms will ensure strict compliance with the agreement and it will help remove trade barriers our companies may still encounter.  Hillary will apply the stronger enforcement mechanisms not only to NAFTA’s commercial provisions, but to its labor and environmental provisions as well.             

            

 

            

 4)  Review NAFTA regularly. Regular reviews will enable us to measure whether our workers and communities are reaping benefits, will ensure that labor and environmental standards are improving, and will allow us to assess whether the agreement requires additional  changes going forward. 

            

 

Strong Labor and Environmental Provisions in All Trade Agreements. Hillary will require that all future trade agreements contain strong and enforceable labor and environmental provisions in the core of the agreement. These provisions will elevate labor and environmental standards around the world, protecting our workers from a race to the bottom. These provisions will also make it harder for companies to ship jobs to countries where workers have less protection than they do in America.  Hillary opposed CAFTA in part because the labor and environmental provisions were inadequate.             

 

A Trade “Timeout.” As President, Hillary will take a “timeout” from new trade agreements until her administration has formulated a  comprehensive trade policy for the 21st Century—one that is genuinely pro-worker, pro-American, and vigorously enforced.    Reviewing existing trade deals, strengthening enforcement, and formulating a smart trade policy will be her priories.                          

 

Regular Review of Trade Agreements. As President, Hillary will review all of our trade agreements to determine their economic effects and ensure they are working for America. As Senator, she has introduced the Trade Agreement Assessment Act to review all agreements in their 2^nd year, 5^th year, and every 5 years after that. The reviews will assess whether the agreements are benefiting our workers and economy and whether our trade partners are improving their labor and environmental standards.              

 

            

A New Trade “Prosecutor.”  As President, Hillary will vigorously enforce our trade agreements. To that end, she will appoint a trade enforcement officer and double the enforcement staff at USTR.  The current staff is too small to monitor and enforce the increasingly complex trade agreements.  Vigorous enforcement of our trade agreements has not been a priority for President Bush—but it will be for Hillary.

            

Cracking Down on China’s Currency Manipulation. Foreign countries manipulate their currencies to make American goods look expensive on the world market and to make their own goods look inexpensive. This practice hurts American workers and it must end. Hillary is a co-sponsor of legislation that will require the administration to take definitive steps to stop China and other countries from harming American interests by undervaluing their currencies. Currency manipulation by our trading partners is also contributing to our trade deficit.  Hillary has co-sponsored the Foreign Debt Ceiling Act, legislation that will require the administration to draw up an action plan to address our large trade imbalance.              

 

            

Strengthening Support for Workers Adversely Affected by Trade.  The Trade Adjustment  Assistance Program provides job training, income support, a health care tax credit, and job placement assistance.   Hillary will modernize the program to ensure that it is truly helping workers hurt by global trade. First, Hillary will broaden TAA to cover all workers whose plants have moved abroad. Workers are currently ineligible for TAA if their plants relocated to countries with which we have not signed free trade or trade preferences agreements. This outdated rule means that when plants shift from   America to low-wage countries like India and China, laid-off workers are ineligible for TAA. Second, she will extend TAA benefits to service workers. Today, workers who produce a service rather than a product are ineligible for TAA, and therefore call-center operators and other workers are left without assistance. Third, Hillary will double funding for TAA’s job training program to $440 million. And  fourth, she will overhaul the Health Coverage Tax Credit (HCTC) to ensure that it is actually making health care affordable for laid-off workers. She will increase the tax credit to 90% of premiums from the current 65%. And Hillary will fight for a universal health care plan that provides all Americans with quality,  affordable health care.

            

Opposing Trade Agreements That Harm American Workers. President Bush hastily signed the Korea free trade agreement before his fast track authority expired, and the consequence was a deal that will cost America jobs.  Korea has a long history of blocking access to its car market, and yet the agreement has weak provisions for prying that market open.    At the same time, the agreement further opens our own car market to Korean vehicles. Hillary strongly opposed the Korea free trade agreement for these reasons. She also strongly opposed fast track authority for President Bush because he has misused the authority and failed to enforce our agreements.  Hillary opposes the Bush         administration’s trade agreement with Colombia because of the country’s history of violence against union members. She opposes the trade agreement with Panama because the head of the country’s National Assembly is a fugitive from justice in America. And Hillary strongly believes that the President should not rush to sign other trade agreements on his way out of office.

Barack Obama's campaign didn't respond to the Pennsylvania questionaire but his responses to Texas' queries are found here.    

Comments

[Steve Bac]

Doesn't seem like Obama is trying that hard to win over Pennsylvania. Considering that he believes he has the winning majority and nomination secured at this moment, does it really matter if he fills out the questionnaire?

http://questionbarackobama.blogspot.com

[Pete Murphy]

Our enormous trade deficit is rightly of growing concern to Americans. Since leading the global drive toward trade liberalization by signing the Global Agreement on Tariffs and Trade in 1947, America has been transformed from the weathiest nation on earth - its preeminent industrial power - into a skid row bum, literally begging the rest of the world for cash to keep us afloat. It's a disgusting spectacle. Our cumulative trade deficit since 1976, financed by a sell-off of American assets, is now approaching $9 trillion. What will happen when those assets are depleted? Today's recession may be just a preview of what's to come.

Why? The American work force is the most productive on earth. Our product quality, though it may have fallen short at one time, is now on a par with the Japanese. Our workers have labored tirelessly to improve our competitiveness. Yet our deficit continues to grow. Our median wages and net worth have declined for decades. Our debt has soared.

Clearly, there is something amiss with "free trade." The concept of free trade is rooted in Ricardo's principle of comparative advantage. In 1817, Ricardo hypothesized that every nation benefits when it trades what it makes best for products made best by other nations. On the surface, it seems to make sense. But is it possible that this theory is flawed in some way? Is there something that Ricardo didn't consider?

At this point, I should introduce myself. I am author of a book titled "Five Short Blasts: A New Economic Theory Exposes The Fatal Flaw in Globalization and Its Consequences for America." To make a long story short, my theory is that, as population density rises beyond some optimum level, per capita consumption begins to decline. This occurs because, as people are forced to crowd together and conserve space, it becomes ever more impractical to own many products. Falling per capita consumption, in the face of rising productivity (per capita output, which always rises), inevitably yields rising unemployment and poverty.

This theory has huge ramifications for U.S. policy toward population management (especially immigration policy) and trade. The implications for population policy may be obvious, but why trade? It's because these effects of an excessive population density - rising unemployment and poverty - are actually imported when we attempt to engage in free trade in manufactured goods with a nation that is much more densely populated. Our economies combine. The work of manufacturing is spread evenly across the combined labor force. But, while the more densely populated nation gets free access to a healthy market, all we get in return is access to a market emaciated by over-crowding and low per capita consumption. The result is an automatic, irreversible trade deficit and loss of jobs, tantamount to economic suicide.

One need look no further than the U.S.'s trade data for proof of this effect. Using 2006 data, an in-depth analysis reveals that, of our top twenty per capita trade deficits in manufactured goods (the trade deficit divided by the population of the country in question), eighteen are with nations much more densely populated than our own. Even more revealing, if the nations of the world are divided equally around the median population density, the U.S. had a trade surplus in manufactured goods of $17 billion with the half of nations below the median population density. With the half above the median, we had a $480 billion deficit!

Our trade deficit with China is getting all of the attention these days. But, when expressed in per capita terms, our deficit with China in manufactured goods is rather unremarkable - nineteenth on the list. Our per capita deficit with other nations such as Japan, Germany, Mexico, Korea and others (all much more densely populated than the U.S.) is worse. In fact, our largest per capita trade deficit in manufactured goods is with Ireland, a nation twice as densely populated as the U.S. Our per capita deficit with Ireland is twenty-five times worse than China's. My point is not that our deficit with China isn't a problem, but rather that it's exactly what we should have expected when we suddenly applied a trade policy that was a proven failure around the world to a country with one sixth of the world's population.

Ricardo's principle of comparative advantage is overly simplistic and flawed because it does not take into consideration this population density effect and what happens when two nations grossly disparate in population density attempt to trade freely in manufactured goods. While free trade in natural resources and free trade in manufactured goods between nations of roughly equal population density is indeed beneficial, just as Ricardo predicts, it’s a sure-fire loser when attempting to trade freely in manufactured goods with a nation with an excessive population density.

If you‘re interested in learning more about this important new economic theory, then I invite you to visit my web site at OpenWindowPublishingCo.com where you can read the preface for free, join in the blog discussion and, of course, buy the book if you like. (It's also available at Amazon.com.)

Please forgive me for the somewhat "spammish" nature of the previous paragraph, but I don't know how else to inject this new theory into the debate about trade without drawing attention to the book that explains the theory.

Pete Murphy
Author, Five Short Blasts

[John Morgan]

Very interesting and a possible theory. One other item I forgot to include in the article is something Bill Clinton points out on the campaign trail. Because our largest trading partners (those who we have massive deficits with) are also our largest lenders, in effect our bankers. We cannot enforce our trade agreements with these nations because they are financing our budget deficits and the war in Iraq. It means we have no leverage whatsoever to protect our jobs and incomes.

Deficits do matter.