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Friday, May 29, 2015

Opposition to the FTA is Not About Secrecy: It's About History and Broken Promises

The Senate passed Trade Promotion Authority, TPA, last week on Friday night, with 48 Republicans and 14 Democrats handing President Obama a victory for fast track authority to negotiate the Trans Pacific Partnership, TPP. If the fast track authority is approved in Congress, TPP will be brought to a vote later this year with Congress only allowed a straight up and down vote, with no amendments allowed. It will only require a simple majority vote. No danger of a fillibuster to block it. Both Virginia's senators, Mark Warner and Tim Kaine, voted for it. Both were always for it. They did not require any last minute arm twisting.

The TPA legislation now heads to the House where it will face an even tougher battle. Support for the bill is weaker among House Democrats there, and it has robust opposition from some conservative Republicans too. House majority leader, John Boehner, may not have the votes from his Republican caucus to pass the TPA without Democratic support, and he could fall short. Two Northern Virginia Democratic representatives support the legislation, Don Beyer and Gerry Connolly. Right now, it appears that Bobby Scott opposes it.

I think the Virginia senators and congressmen who support this are wrong. So are the media defenders of it such as the Washington Post, which has always favored all free trade agreements going back to the original 1993 NAFTA legislation. But one of the silliest Washington Post defenses of TPA and TPP came from columnist Ruth Marcus.

In her Washington Post column on May 19,  she claimed that opponents of the TPP objected mainly to its secrecy and she called that objection a bogus argument. The Post's editorial board then doubled down on opponents' objection to bill's secrecy in this full-throated defense of free trade authority.

The Washington Post and its columnist, Ruth Marcus might have a small point. At least they would if secrecy was the main objection. But it isn't. The real objection at the heart of the opposition is history. I will get back to that point in a minute, but it certainly doesn't help the free traders' case to drape an opaque and clandestine cloak around the deal. Secrecy does, after all, limit the discussion and prevent a full and fair airing of the problems with this trade deal. And that's where history comes in.

The most important reason for opposition to the TPA is that many of President Obama's and other proponents' promises for the TPP and Fast Track Authority sound suspiciously familiar. Everybody heard exactly the same assurances about NAFTA and CAFTA years ago.  Here is what we were told back in the 90s and early 2000s about those trade deals and then what really happened.

In 1993, the Clinton administration promised that NAFTA would create 200,000 new export-related jobs by 1995, according to this 2004 Economic Policy Institute report. According to Public Citizen, the administration also promised farmers they would export their way to wealth. The Bush administration similarly promised CAFTA would deliver 170,000 new jobs in  the early 2000s.

Instead, we lost 700,000 jobs due to NAFTA alone, according the Economic Policy Institute.

Promised new markets never materialized for either farmers or domestically manufactured goods. In fact, only one new market was ever created: a robust labor market overseas as jobs fled from the U.S. in search of low wage workers and less regulation. 

Meanwhile, the only thing that has increased is the U.S. trade deficit. Before NAFTA in 1993, we actually had a modest trade surplus of $1.6  billion with Mexico, according to the Economic Policy Institute. Now as of 2012, our trade deficit with them has reached $181 million, according to Public Citizen. And that trade deficit is expected to grow even if we do not enact new trade legislation. That's because of our strong dollar. Due to international monetary conditions, including the weak Euro, our dollar has strengthened, making our exports more expensive. That is not good for our economy and makes any trade deal now dangerous.

So instead of trade surpluses, new markets and good jobs, what we have seen for U.S workers is a race to the bottom. Displaced factory workers lost jobs that are never coming back. The export of so many U.S. jobs has wiped out whole industries and devastated the lives of the displaced workers. And it has destroyed their towns, as this article from the Washington Post shows in heartbreaking detail.

Some of the more honest supporters of free trade have acknowledged that NAFTA and other trade deals have not lived up to their promises for America's economy or its workers. So they drag out a different argument: even though free trade agreements have not met their original expectations in the U.S., at least they have improved the lives of impoverished workers from developing nations. Based on the experience in Mexico, though, NAFTA certainly has not even done that.

In fact, the NAFTA years saw a wave of illegal immigration as Mexicans preferred to risk their lives to come to the U.S. in search of our minimum wage jobs because they were more profitable and had better working conditions than the Mexican maquiladoras, which paid low wages, flouted health and safety rule, suppressed the right to organize a union, and generally provided abysmal working conditions. Immigrants are still coming here, despite recession and wage stagnation, because the jobs pay more, and they can both live in the U.S. and send money home. That should tell you something about how NAFTA’s promise has not even materialized to help those overseas.

But one unintended consequence of the trade deals is that American workers who fell into the low paying service sector must now compete for those jobs with illegal immigrants who often work off the books and are ineligible for benefits. No wonder there is still so much slack in our labor force and wages have stagnated for the average American.

Previous trade agreements did not deliver on their promises. They did not usher in prosperity for American workers. They did nothing to improve the lives of foreign workers, and they did not open markets for U.S. exports. Indeed, NAFTA and CAFTA contributed to the growing wage inequality and soft labor market at home without improving the wages of overseas workers And to add insult to injury, they substantially increased our trade deficit, which is never a good thing for any country’s economy.

Opposition to still another trade deal has nothing to do with its secrecy. It has everything to do with its history. The secrecy objection is a red herring. All it does is highlight the fact that those who support TPP have tired arguments, failed policy, and no credible response to the very legitimate question: how will this trade agreement be different this time? Without an answer to that and transparency, this trade deal should not be enacted. 

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