Public Citizen’s Global Trade Watch
United Brotherhood of Carpenters and Joiners of America
Public Citizen’s Global Trade Watch,
Political and Legislative Director,
United Brotherhood of Carpenters and Joiners of America,
The Biden administration will inherit a U.S. trade policy and political landscape that has been transformed since the end of the Obama presidency by both the Trump trade strategy and COVID-19. The COVID-19 crisis and the inability of the world’s richest country to make or obtain essential goods in the face of a crisis has awakened new sectors of the American public to fundamental problems with the current trade regime and the hyperglobalization it has implemented. And the incoming administration will have more trade policy tools and considerable leverage at its disposal thanks to U.S. Trade Representative (USTR) Robert Lighthizer’s many unprecedented actions, which also debunked the conventional wisdom that tactics, such as deployment of major tariffs, would trigger autarky, massive economic contraction, or other cataclysm. The considerable leverage that the Biden administration will inherit, created by USTR Lighthizer’s China and World Trade Organization (WTO) tactics, must not be squandered but rather harnessed to realign U.S. trade policy so that it promotes the interests of working people, our health and safety, and the environment.
However, Trump also failed to implement other critical changes that were necessary to actually significantly alter the outcomes of U.S. trade policy. Thus, working-class Americans remain angry about the significant trade-related job loss that continues to devastate communities nationwide. And many young activists concerned about climate, social and economic justice, and health joined with the labor movement in fighting the Trans-Pacific Partnership (TPP) and are well informed about how corporate-rigged trade agreements undermine their goals. In the face of a demand to reshape U.S. trade policy, President-elect Biden’s commitment to not engage in negotiations for new trade agreements before succeeding with key domestic initiatives is very helpful. The incoming administration should use this space to develop new approaches that prioritize the creation and maintenance of good jobs, protect consumer health and safety, promote small businesses and competition by breaking up monopolies, and promote the environmental and energy policies needed to counter climate catastrophe.
Such reforms are also essential if U.S. trade policy is to promote, not undermine the goals and policies set forth in the Biden Build Back Better plan.
China: The public discussion of “global supply chains” that the COVID-19 crisis spurred is accelerating a shift that was already underway around the world about the myriad vulnerabilities created by reliance on China as the world’s factory. Governments, residents and businesses in many countries are questioning the current trade and global economic regime, especially in the context of the role that China plays in it. USTR Lighthizer’s tactical escalations regarding longstanding U.S. problems with China’s international economic policies and practices have created significant leverage for the next administration. The Section 301 tariffs now in place not only serve as a rough countervail against Chinese subsidies. They could become the foundation for an alliance of democracies taking similar action to make the prospect of not altering various practices even more painful than doing so to China’s interconnected political, commercial and military leaders. And, if U.S. allies are unwilling to enact similar penalties against unfair Chinese trade practices, the tariffs would continue as a U.S. safeguard against subsidized imports and provide bargaining leverage for U.S. bilateral demands of China. However, such demands must prioritize the needs of workers and businesses operating here by targeting subsidies, currency misalignments and labor rights. This contrasts with the Trump administration’s “Phase 1” China deal with its investor and intellectual property protections that incentivize more offshoring of production and its Wall Street market access that help finance the domination of industries of the future by Chinese firms.
WTO: USTR Lighthizer’s tactical escalations at the WTO, most notably declining to allow new tribunalists to be appointed to the Appellate Body, have also created significant leverage to support U.S. reform demands from the new administration. Abruptly reversing Lighthizer’s approach would not be strategic or sensible. Rather, the Biden administration should employ the leverage he created behind a U.S. initiative to push a much-needed WTO transformation. As a first step, the administration should undertake an inclusive domestic process to develop an agenda of deep reforms that are proportionate to the WTO’s existential crisis. The procedural concerns about the dispute settlement regime are only a part of the problem. The substantive rules that the WTO enforces reflect a doctrinaire 1990s faith in the wonders of neoliberalism. These terms not only directly conflict with many core initiatives in the Build Back Better plan, but also undermine existing non-trade policies needed to counter our most pressing challenges. Consider that WTO terms have triggered a circular firing squad over climate-change efforts. The European Union and Japan challenged Canadian renewable energy incentives. The United States hit India’s solar-power program, then India attacked U.S. states’ renewable energy programs. Then China filed a case in 2018 against additional U.S. renewable energy measures. Meanwhile, the United States is now blocking a waiver of WTO patent rules for COVID-19- related goods sought by a bloc of countries seeking to maximize the production of and thus global access to affordable vaccines and treatments. U.S. reform demands must focus on new goals for the WTO, and thus the institution’s appropriate scope, rules and procedures and not become distracted with academic notions about the benefits of “multilateralism” and a “rules-based” system.
Reforming Trade Policy to Promote, Not Undermine Domestic Policy Goals: The conflicts between existing U.S. trade agreements and policies and many priority goals and policies from the Build Back Better plan and beyond that President-elect Biden has promoted spotlight why trade reform is overdue. Clearly, the administration should press forward with the many proposals and initiatives included in the Build Back Better plan that could simultaneously revive the pandemic-wracked economy and create jobs by making needed investments in our nation’s infrastructure, enhanced manufacturing capacity and more. But, that such commonsense proposals conflict in many ways with the expansive non-trade dictates in today’s “trade” agreements must be addressed, if only to harness trade policy as a tool to promote the goals of such domestic policies. (And certainly, it is worthwhile to remove the conflicts to shut down the use of such conflicts by opponents of important innovations to chill progress.) This includes WTO and FTA terms that conflict with domestic goals with respect to expansion of Buy American policy and the favoring of domestic firms and goods in major infrastructure investment initiatives, certain climate-related energy policies and standards, policies for expanding affordable health care and medicines, consumer protections and anti-monopoly actions against Big Tech predations and more.
Moving away from decades of a corporate-led trade policy is also politically important. For the Biden agenda to succeed, congressional Democrats and base groups must be united for core Biden non-trade policy goals, and work with the administration to maximize the prospect of enacting them. That means avoiding trade nominations or policies that would redirect attention and resources into fighting against the administration.
More broadly, Democrats can’t rely on the next right-wing populist who exploits real anger over real damage from our past trade policies and pacts being entirely undisciplined and incompetent. The damage caused by the corporate-led hyperglobalization that has been implemented over the past decades by “trade” agreements such as the North American Free Trade Agreement (NAFTA) and NAFTA-style free trade agreements, the WTO, and the “China shock” when Congress approved Permanent Normal Trade Relations (PNTR) and China entered the WTO, has been well documented — from mass job outsourcing, 60,000 American production facilities closed and towns and regions economically gutted, to unreliable supply chains, downward pressure on wages and weakened consumer and environmental protections.
As a candidate in 2016, Trump conflated progressives’ critique of corporate globalization and the real damage of job outsourcing with a xenophobic and racist appeal to target white working-class voters. While decades of such corporate-rigged trade policies have harmed many American workers of all races and ethnicities, as Public Citizen’s forthcoming report, Trade Discrimination: The Disproportionate, Underreported Damage to U.S. Black and Latino Workers From U.S. Trade Policies, shows, Black and Latino workers have assumed a disproportionately large share of the harm inflicted by these deals. U.S. government data — despite shortcomings as to the recognition of the complexities of race and ethnicity — show that these two groups were overrepresented in the industries and concentrated in the regions that were hit hardest by the past decades of offshoring and surging imports that eliminated 4.5 million middle-class-supporting manufacturing jobs and numerous service sector jobs, from unionized call centers and other back office operations to computer programmers, accountants and engineers.
As Donald Trump failed to deliver on his promises to stop job offshoring or to create a “manufacturing boom” by “bringing back” or creating millions of new manufacturing jobs, in 2020 a surge in union voters and voters who earn $50,000 or less in key swing states ousted Trump, initial exit poll analyses show. Whether these working-class voters of diverse races and ethnicities will stick with the Democratic Party depends on whether their lives and livelihoods measurably improve over the next four years. And that relies on the Biden administration enacting economic policies designed to do just that, which means breaking from the trade policy supported by Republican and Democratic presidents alike over the past few decades that has incentivized job outsourcing and put downward pressure on wages. Even if President-elect Biden had not committed to a moratorium on new trade deals while he focusses on domestic priorities, such a cooling off period would be essential politically. Having made the commitment, it would be especially politically damaging if the Biden administration just proceeded on with the Trump-launched negotiations for free trade agreements with the United Kingdom and Kenya, the Big Tech-demanded plurilateral “digital trade” talks in Geneva or long-stymied WTO deals limiting government rights to regulate foreign investor and the service sector.
Rather, the Biden administration must now seize the opportunity to show working-class voters that Democrats recognize the real damage of past pacts and policies. And, that unlike Trump, who made appealing promises but largely failed to deliver, President Biden will fix the real problems with new approaches to trade that prioritize the wellbeing of working people of all races and ethnicities and of the planet. Indeed, among many Democratic members of Congress and base groups, there is a common understanding of what sorts of policies that would require. And that consensus has moved beyond the large core of progressive and/or union-oriented representatives and senators who were united against the TPP and the massive U.S. movement of movements that campaigned against the TPP for years.
One unexpected benefit of the renegotiation of NAFTA is that internal congressional Democratic discussions about and engagement in that process fostered an unusual degree of unity among congressional Democrats across caucuses on trade. That occurred in no small part because the internal discussion with congressional Democrats and base groups (unions, environmental and consumer groups, faith and family farm groups, etc.) started with a focus on goals. And, on that there was broad agreement. Expanding trade should not be considered a goal unto its own, but rather must be understood as one tool among many to build towards common goals:
From that basis, congressional Democrats and base groups were united in the first months of renegotiations and remained united to force the Trump administration to renegotiate the renegotiated NAFTA. The final U.S.-Mexico Canada Agreement (USMCA) won wide Democratic support, even if it was far from being a “good” trade deal, because it significantly improved on the original NAFTA and established a new floor: Even the corporate-infested Trump administration was forced to acknowledge that to be widely supported, trade agreements cannot have extreme Pharma protections that lock in high medicine prices, investor-state dispute settlement (ISDS) or terms that obligate countries to export portions of their natural resources — and agreements must have stronger labor standards and enforcement that imposes pain on the companies violating workers’ rights, wage standards (even if the USMCA version is flawed), tight rules of origin, and stronger environmental requirements.
The incoming administration must build from that floor, starting with a comprehensive and inclusive review of changes needed to our existing trade agreements, trade preference programs, and other trade policies to ensure they are compatible with Democratic policy goals.