Providing work for America’s workers (Part 4)


Part 4 – Workers Fair Trade Agreements
(A 5-part series by the Economic Policy Institute)

(The Economic Policy Institute has developed a FIVE POINT working people’s agenda to (1) provide a planning guideline for the new Trump administration to put Americans back to work and (2) provide a benchmark to judge whether or not President Trump is really the workingman’s president he pledged to be in his campaign. This is Point 4.

Part 4: Level the playing field that trade agreements slanted against workers

Globalization depresses wages — and our trade policy makes it worse

Textbook economics and real-world evidence correctly predicted that globalization—particularly trade with lower-wage nations—was going to be hard on the wages of most American workers.

Policymakers should have responded by providing compensation for those on the losing end—compensation on the scale of the harm. Instead, they amplified the wage-suppressing effects of globalization by allowing the U.S. dollar to become overvalued (which made U.S. goods more expensive than the goods of our trading partners) and by signing trade agreements that eroded workers’ power while protecting corporate profits.

Anger over the impact of international trade on jobs, wages, and opportunities likely played a role in Donald Trump’s election. Trump now promises to negotiate “fair bilateral trade deals that bring jobs and industry back onto American shores.”


But the quest for better trade agreements has gone on for decades with no success because the entire process is effectively captured by corporate interests. The solution is not better negotiating—and certainly not faith-based reliance on a billionaire to negotiate worker-friendly agreements.

The solution is stopping the process of omnibus trade agreements altogether.

To return to an international economic policy that promotes the interests of all workers, policymakers must:

  • Fight exchange rate misalignments that have inflated the dollar to levels that hamper U.S. exporters and lead to trade deficits.

Large U.S. trade deficits have slowed economic recovery, destroyed jobs, and depressed wages. Indeed, the growth of trade deficits since the late 1990s has eliminated millions of U.S. manufacturing jobs.

Reducing trade deficits requires confronting the intentional currency manipulation by our trading partners and the speculative excess in global financial markets that push the value of the dollar too high to balance trade. Figuring out how is easy—plenty of well-established proposals would work. What’s needed is the political will.

  • Enforce trade laws that help American workers.

American workers could get a fairer chance to compete in global markets if provisions of trade laws already on the books were enforced.

Enforcement includes action against dumping—when state-backed enterprises produce more than their domestic market demands and export the surplus at below-market rates. Excess capacity and dumping drive down global prices and damage American producers.

A key first step would be creating a chief trade enforcement office that can initiate trade cases without waiting for affected industry representatives to begin the process. Enforcement of trade laws that protect American workers should not hinge on whether firms have the will and resources to begin enforcement proceedings.

  • Reject the Trans-Pacific Partnership (TPP) and other trade agreements that protect American and multinational corporations but not American workers.

The proposed TPP follows a model that amplifies the upward redistribution of income caused by globalization.

Like previous trade agreements, it was designed to erode workers’ protections but make it safer and more profitable for U.S. corporations to invest in foreign countries. Particularly egregious provisions are the investor-state dispute system, which gives corporations a forum to sue countries that take actions that diminish their profits, and excessive intellectual property protections given to pharmaceutical, software, and entertainment sectors.

The TPP should be the last omnibus trade agreement modeled on NAFTA ever negotiated. And it should never become law.

  • Reorient international economic policy away from trade deals.

There are genuine challenges confronting the United States that need international cooperation. Cracking down on international tax havens and harmonizing policies to slow greenhouse gas emissions are just two obvious examples. Policymakers should spend their time and efforts on these challenges, not on the corporate-friendly distractions of traditional trade agreements.

(EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.)

Next week: Agenda Point 5: Raise top tax rates to invest in America, restore income equality

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