Fair Trade

While we can’t travel into the past, we can look to the future and use the lessons we’ve learned from NAFTA and Permanent Normalized Trade Relations (PNTR) with China to help shape our policies for the future.  The Bush Administration has negotiated trade agreements with Colombia, Panama and South Korea.  These agreements await Congressional action.  However, the Democratic Congress has indicated that they have no desire to bring these flawed agreements up for a vote.  The Bush Administration can introduce these trade agreements and attempt to make Congress vote on these pending agreements under Fast Track rules.

We have also seen the negative effects that trade distorting practices such as currency manipulation and currency misalignment can have on working families and exports.  

When countries don’t play by the rules and the Bush Administration refuses to take action against guilty countries; working families suffer, our trade deficit soars and the dollar becomes weaker.  Many items we buy are imported from countries that don’t play by the rules.  The weaker dollar hurts your kitchen table economy by causing the price of these imports to increase.  Decreased exports mean that fewer jobs producing exportable products are available here. 

Trade Agreements

The Bush Administration has negotiated agreements with Colombia, Panama and South Korea.  All of these agreements are pending Congressional approval.  The Bush Administration has been pushing for consideration of the Colombia agreement.  Businesses and the Colombian government are spending millions of dollars to build support for the Colombia agreement.  CWA is opposed to the Colombia agreement.  President Cohen traveled to Colombia and spoke to labor union members who are routinely harassed and sometimes killed by paramilitary groups who some have linked to Colombian President Alvaro Uribe.  Thousands of union members have been brutally murdered in Colombia and little has been done to bring the murderers to justice. Democratic leaders in Congress have indicated their opposition to the Colombia agreement.  Under fast track rules, the Bush Administration can introduce the agreement whenever they like.

The Panama and South Korean agreements are very unlikely to be considered this year.  Panama is an offshore tax haven for multinational corporations who don’t want to pay their fair share of taxes.  South Korea is a direct threat to our manufacturing industry and is guilty of employing trade distorting barriers such as manipulating their tax code to benefit exports and punish imports by making them cost much more than Korean made products.  The same fast track rules apply to these two agreements as well.  CWA has not taken a formal position on these two agreements and there has been little discussion in Congress regarding consideration of these agreements.

Fast Track/Trade Promotion Authority (TPA)

Much to our liking, President Bush’s authority to use the fast track trade negotiating authority has expired.  This doesn’t preclude the Administration from negotiating agreements.  President Clinton negotiated and passed free trade agreements without fast track authority.  Many in the business community and media are misinforming the public by leading them to believe that without this authority, we can’t trade and our exports will decrease.  This is exactly opposite of reality.  Absent this authority, Congress has more say in what should and should not be included in a trade agreement.  CWA believes that the entire manner in which trade agreements are negotiated is in dire need of more Congressional oversight and review mechanisms.

CWA supports fair trade principles which are vastly different than the principles and process used in negotiating trade agreements today.  CWA strongly encourages Congress and the next president to include the following principles when developing trade policy:

Reduce our unsustainable trade deficit by providing fair and transparent market access, preserving our ability to use domestic trade laws, and addressing the negative impacts of currency manipulation, financial instability, and high debt burdens on our trade relationships in order to create rather than destroy jobs.

 

Target non-tariff trade barriers that unfairly block U.S. goods’ access to foreign markets while safeguarding necessary environmental, labor, health and safety laws.

 

Create a predictable structure for international trade and preserve the ability of national governments to foster and secure economic, social and human development for all their citizens.

 

Enable federal and state governments to regulate in the public interest; to use procurement dollars to create and maintain good jobs; to promote economic opportunity and development and achieve other legitimate social goals; and to provide high-quality public services and regulate all essential services to provide consumer access, safety and quality. Enable the public to participate meaningfully in the decisions our government makes on trade, based on a process that is open, democratic, and fair.

 

Safeguard our system of federalism from international pre-emptive trade agreements of state and local non-trade policy.

 

Safeguard the livelihoods of family farmers in the U.S. and developing countries -- helping them to prosper using sustainable environmental practices.

 

Promote farmers’ ability to earn a fair price for their products, including by disciplining export subsidies, cartels and other anti-competitive practices and promoting inventory management to counter oversupply that causes dumping and depresses prices.

 

Include labor and environmental provisions in trade agreements’ core text and include enforcement mechanisms that are the same as the commercial provisions in the agreement.

 

Include enforceable obligations to effectively enforce domestic labor laws and to respect the core labor standards of the International Labor Organization (ILO) – freedom of association, the right to organize and bargain collectively, and prohibitions on child labor, forced labor, and discrimination.

 

Include enforceable obligations for countries to enforce their domestic environmental laws and their obligations under Multilateral Environmental Agreements in order to promote sustainable growth and preserve the natural environment on which all of our lives and livelihoods rely.

China Currency Manipulation/Misalignment

Our trade deficit with China is the largest in the history of the world between two countries.  In 2007 we imported over $256 billion more from China than we exported to China.  When a country manipulates their currency, it means they are artificially undervaluing that currency on the open market.  Economists estimate that the Chinese Yuan is undervalued by as much as 40%. 

The graph below represents the dollar versus the Chinese Yuan.  Notice how the value of the Yuan didn’t move between 2003 and 2005.  In contrast to this graph, the dollar weakened by 24% against the Euro between 2003 and 2005.  How is it possible that the dollar can remain so strong in China while it loses nearly1/4 of its value in Europe?  In addition, the dollar weakened versus the Japanese Yen by over 12% and the British Pound by about 15% between 2003 and 2005.

One of the key negative impacts of currency manipulation and misalignment is that it keeps the price of American exports artificially higher.   This leads to job loss and massive trade deficits because our products are more expensive.  These factors are a recipe for financial disaster in America and must be changed.

CWA is a proud supporter of the Currency Reform for Fair Trade Act of 2007 (H.R. 2942).  This bill has been introduced by Congressmen Tim Ryan (D-OH) and Duncan Hunter (R-CA).  The aim of this bill is to force countries guilty of currency manipulation and misalignment to let their currencies trade at their real values as required by the World Trade Organization (WTO).  The bill uses oversight and punitive mechanisms such as countervailing duties to achieve this goal.  CWA has worked with a coalition of labor, business and non profits to promote H.R. 2942.  There are competing versions in the Senate and CWA is working with all parties to develop legislation that addresses our concerns regarding currency manipulation and misalignment.  The United States has the right to challenge these practices in a WTO tribunal; however, the Bush Administration has ignored our multiple requests to challenge this illegal practice.

Conclusion

Many economic factors affect our ability to export American made products.  These topics comprise our list of purely economic policy issues we must fight to change.  At the time of publishing, it appears that we will have to fight against the Colombia “free” trade agreement at some point this year.  CWA will also be on offense in attempting to pass H.R. 2942, the Ryan Hunter Currency bill.  Please contact your Legislative Department for additional materials and information regarding these issues should you wish to get involved in fighting for economic justice.

For More Information Contact

David B Martin

AFA-CWA

 Senior Government Affairs Representative

(202) 434-0597

Dmartin@afanet.org