International trade is a fact of life in our global economy. The question for us is under what rules trade will occur. For decades, U.S. trade agreements have promoted the economic interests of multinational corporations over those of working people as U.S. companies invest more in foreign countries where workers are poorly paid and labor rights are repressed. In turn, global trade often puts downward pressure on wages and has led to massive losses in U.S. manufacturing jobs. We need trade policies that raise the wages for workers and prevent multinational companies from outsourcing U.S. jobs. International trade can be of some benefit to workers if trade agreements are negotiated to benefit the broader public interest. This can only happen if our trade agreement model is fundamentally changed. Furthermore, trade does not exist in a vacuum. We also need to reform our tax policies as we must no longer give companies tax breaks for moving jobs overseas.
TRADE
KEY POINTS
Workers’ rights have to be part of any trade deal — For trade to work for workers and our communities, workers’ rights must be incorporated into the agreement, with strong, swift enforcement mechanisms.
Coronavirus confirms manufacturing is essential — The continuous shortage of Personal Protective Equipment (PPE), respirators, and ventilators during the pandemic drives home the point that manufacturing production, engineering and R&D is essential to America’s national security. Going forward, U.S. trade policy must ensure America maintains and re-establishes core manufacturing industries.
Trade policy is only one tool in America’s industrial policy — Trade policy doesn’t occur in a vacuum, and to realize the best results from any trade agreement or tariff, it is imperative that other parts of our industrial policy, like tax, labor laws, and R&D spending, point in the same direction. This in part explains why recent steel and aluminum tariffs have not stopped the continued shuttering of America’s steel mills.
Trade deficits — Our members who work in the agricultural implement industry have been hit hard by trade decisions in recent years that have contributed to drops in sales. While it may be encouraging to see new and different action taken on our trade policy, the approach has often allowed corporate special interests to game negotiations, and worse still, it hasn’t reduced the U.S. trade deficit with the world. In 2019, the U.S. overall goods and service trade deficit was 14% higher than it was in 2016.
Mexico — The recently renegotiated NAFTA, renamed the USMCA, will not bring back the hundred of thousands of good U.S. manufacturing jobs that have been lost. At best, it will only stem the tide of outsourcing. Throughout negotiations, the UAW and pro-labor House and Senate Democrats fought for real labor reform and enforcement in Mexico. Now that the agreement has gone into force, the real work starts. The U.S. must use the enforcement mechanisms in the USMCA to ensure Mexico implements its labor reforms, breaking up phony unions and their corporate protection contracts, allowing workers’ rights and independent unions to flourish.
China — After years of escalating tariffs, the U.S. and China reached a modest agreement in which China agreed to purchase more U.S. agricultural goods and reform some of its unfair trade practices. Workers’ rights were not even part of the negotiations. China continues to deploy unfair trade practices. To date, China has been not meeting their agricultural purchases, and has done little in terms of reform.
Japan — A “Stage One” agreement with Japan has been implemented that includes U.S. tariff cuts on machine tools, fasteners, steam turbines, bicycles and parts, and musical instruments. The agreement did nothing to crack down on Japan’s unfair trade practices. The UAW remains concerned that such trade policies come at expense of U.S. workers and manufacturing which could ultimately increase the U.S. auto trade deficit and hurt the U.S. domestic auto industry.
HISTORY
For decades, the UAW has fought against poorly designed trade rules. Of particular importance was NAFTA. For nearly two and a half decades, NAFTA devastated American workers and their communities. Economists estimated between 1993-2013 over 850,000 U.S. jobs were lost due to outsourcing to Mexico. Between 1993-2016, the U.S.-Mexico auto trade deficit grew 1,288%, and the auto parts deficit exploded by 23,700%. Over the same period, the U.S. lost 10 final assembly plants, while Mexico gained eight.
While the renegotiated USMCA, is an improvement over NAFTA, there is no evidence that indicates it will bring back hundreds of thousands manufacturing jobs. USMCA is also unlikely to resolve longstanding U.S.-Mexico trade issues. America’s trade deficit with Mexico increased by more than 29% in 2019 alone. And GM has been closing assembly plants in Ohio, Michigan, and Maryland while increasing its reliance on imports from Mexico. Offshoring to Mexico is also taking place in aerospace and other sectors, with aerospace exports from Mexico increasing 10% in 2019. While the USMCA significantly improves labor protections compared to NAFTA agreement, its overall provisions are inadequate to do anything more than slow down these offshoring trends.
Trade with China has also hurt communities throughout the country. Between 2001 and 2018, the U.S. lost 3.7 million jobs due to trade with China, of which 2.8 million were manufacturing jobs. In fact, the U.S. lost 700,000 jobs to China.
The U.S.-Japan trade agreement could further deepen our trade deficit with Japan while providing very little, if any, benefits to American workers. While Japan maintains zero tariffs on auto imports, it uses significant non-tariff barriers, like onerous and costly vehicle certification procedures for imported automobiles, and a complex and changing set of safety, noise, and pollution standards to keep its market virtually closed. A trade agreement will probably not change this. And in the case that it does, the non-tariff barriers will be eliminated for all imports into Japan, not just American. Meaning European, Chinese, and South Korean automakers would be able to equally capitalize on an agreement, while not bearing the cost to their domestic workforce.
WHAT'S AT STAKE IN THIS ELECTION
Putting workers’ rights into trade deals — The labor rights protections incorporated into the USMCA should be the floor for all new trade agreements. Trade agreements should strengthen workers’ wages and defend independent unions with strong language and swift enforcement mechanisms.
Enforcing trade deals — Enforcement mechanisms within trade deals must be utilized, especially labor protections.
China — Additional negotiations will occur with China in the coming years. While the stealing of intellectual property, currency manipulation, use of state owned enterprises and other unfair trade practices must be addressed, workers’ rights must be incorporated into any final agreement.
Mexico — A great deal of work remains concerning Mexico. Mexico needs to implement real labor reforms by eliminating phony unions that are aligned with employers, and instead strengthen the rights of Mexican workers to freely negotiate contracts with better wages and benefits. Until this issue is addressed, Mexican workers will continue to make a fraction of what U.S. union jobs pay, luring companies like GM to locate operations south of the border.
Japan — A “Stage One” agreement has been implemented with Japan that includes U.S. tariff cuts on machine tools, fasteners, steam turbines, bicycles and parts and musical instruments. U.S. auto tariffs were not included. Stage One was not a good deal for U.S. manufacturing workers and the UAW is deeply concerned that a larger agreement with Japan could further widen the enormous auto trade deficit there. In 2017, the U.S. had a $68.9 billion trade deficit with Japan, 75% of the deficit came from motor vehicles and parts. Japan maintains one of the most closed auto markets in the world, using nontariff trade rules, including currency manipulation, to maintain its competitive edge. The UAW believes trade agreements must prohibit countries from unfairly lowering the cost of exports through currency manipulation.
DEMOCRAT – Joseph Biden and Trade
Biden has said he:
Will enforce existing labor provisions in trade agreements and aggressively push for strong and enforceable labor provisions in any trade deal his administration negotiates — and not sign a deal unless it has those provisions.
Take aggressive trade enforcement actions against unfair practices, including currency manipulation, anti-competitive dumping, state-owned company abuses or unfair subsidies.
Establish “claw-back” provisions to force a company to return public investments and tax benefits when they eliminate jobs here and send them overseas.
Work with allies to address China’s trade abuses.
Put a down payment on American manufacturing by introducing a $400 billion “Buy American” clean energy and infrastructure bill.
Provide capital and tax credits for small to medium U.S. manufacturers to modernize, retool and compete.
Bring back critical supply chains to America, utilizing federal procurement and the Defense Production Act if necessary.
TAKE ACTION
Support candidates who:
Defend worker rights globally and raise labor standards across the global supply chain in the auto and other industries.
Strengthen the ability of the United States to act to protect American workers against import surges that threaten their jobs.
Support legislation requiring countries to stop manipulating their currencies to obtain an unfair competitive advantage for their products.
Support excluding the auto sector in any future agreement with Japan.