Bad Trade

It happens every time. Whenever President Obama does something to please the one percenters, invariably it's something that not only causes significant harm to the economy, but also discourages the 99 percenters from supporting his re-election.

Yes, bad policy is bad politics. And the closer we get to the 2012 election, the worse the policy and the politics get.

John Nichols at The Nation:

President Obama is preparing to mangle his jobs message signing free-trade agreements that are opposed by unions, by Democrats and by the “99 Percenters” who recognize that the Bush-Clinton-Bush-Obama approach to trade policy has harmed the interests of working people in the United States and abroad.

Why? Because, according to Congressman Mike Michaud, D-Maine, the president “is going to give in to the Washington elites, once again” because “the big companies and the big banks want” the new trade deals with South Korea, Colombia and Panama.
The three agreements, all modeled on the failed North American Free Trade Agreement, passed the House and Senate Wednesday with overwhelming support from Republicans and minimal support from Democrats.

(President Obama signed all three bills this week.)

Only thirty-one House Democrats backed the agreement with Colombia, where unions note that labor organizers are regularly assassinated. Fifty-nine Democrats backed the agreement with South Korea. Sixty-six Democrats supported the Panama deal.

In the Senate, 30 Democrats opposed the Colombia deal, as did Vermont Senator Bernie Sanders, an independent who caucuses with the Democrats, and two Maine Republicans: Olympia Snowe and Susan Collins.

The Democrats who opposed the agreements did so because these deals are wrong, economically and politically.

Congresswoman Tammy Baldwin, D-Wisconsin, who is running for an open US Senate seat in 2012, made the economic case.

“Trade agreements should be in the best interests of our nation and its people, but sadly this has not been the case with the past free trade agreements,” Baldwin told the House. “Have some of our wealthiest corporations profited from them? Indeed. But the rest of America, especially the middle class, has struggled with job loss, closed factories, and economic and emotional anguish across the country.”

Citing a study issued by the Economic Policy Institute, which reveals that more than 680,000 US jobs have been lost or displaced due to the rise in the trade deficit with Mexico alone since the North American Free Trade Agreement (NAFTA) was enacted in 1994. Baldwin explained: “I hear from Wisconsin families every day that are struggling mightily—struggling to pay the mortgage, put food on the table, and send their kids to college, especially during these uncertain economic times. The solution is to put our people back to work and preserve American jobs. When done right, trade agreements can help bolster our manufacturing and high-skilled technology industries and create jobs as they increase exports and help our economy recover. Done wrong, trade agreements send these same jobs offshore, leaving Americans out of work. Unfortunately, I believe these trade agreements with South Korea, Panama, and Colombia will exacerbate the US trade deficit and further erode our manufacturing base.”

Lori Wallach, who directs Public Citizen’s Global Trade Watch, made the political case.

“It is bizarre that President Barack Obama has switched from his long-awaited focus on jobs to spending effort passing three George W. Bush–signed, NAFTA-style trade deals that official government studies show will increase our trade deficit even as polls show most Americans oppose NAFTA-style trade pacts and recognize that they kill American jobs,” said Wallach. “The only way these deals will pass is if congressional GOP lawmakers expose themselves to the foreseeable election attack ads and provide President Obama almost all of the votes; most congressional Democrats will oppose these deals, which are loved by the US Chamber of Commerce and despised by the Democratic base groups. Apparently, the Obama team has a way to win re-election that does not involve Ohio or other industrial swing states. We saw with NAFTA in 1993 the dire political consequences of a Democratic president blurring distinctions between the parties on this third-rail issue of trade and jobs. And unlike NAFTA, this time, even official government studies show that these pacts will increase our trade deficit.”

Baldwin’s right.

Wallach’s right.

Obama’s wrong—very, very, very wrong.

Signing these free-trade deals will harm the economy.

And it will make it a lot harder for voters in factory towns to support his re-election.

2012 is going to come down to turnout. Period. More than the economy, more than unemployment, more than the Occupy Protests, the 2012 election is going to be won by the party that gets every one of its voters to the polls. Democrats won big in 2008 because of huge turnout, and lost huge in 2010 because Disappointed Democrats sat at home.

As I have written numerous times before, I am going to vote for President Obama, and I encourage everyone who is not Mitt Romney to do so as well. But as someone who struggles every day to help people overcome the repug-installed barriers to voting and to light fires under the non-voting asses of apathetic Democrats, I do not appreciate President Obama making that job a thousand times harder than it already is.

"Made in America"

Those "trade agreements" are NAFTA-on-steroids job-killers, Mr. President, and don't think we don't know it.



Full transcript here.

Meanwhile, Massive Job-Killing Trade Deal on the Table

While we're all freaking out over the kill-Social-Security-to-help-Paris-Hilton deal, the administration is working quietly behind the scenes to repeat the NAFTA catastrophe with South Korea.

From Firedoglake:

Statement by AFL-CIO President Richard Trumka On Korea Trade Deal

For more than a decade, the labor movement, environmental groups, development advocates and others have advocated for a new trade policy that is part of a more coordinated and coherent national economic strategy. The proposed U.S.-Korea trade deal does not live up to that model and does not contribute to a sustainable global future. We believe we must move towards a more democratic, sustainable and fair global economy with broadly shared prosperity for working people around the world. Reaching that goal will require deep-seated reforms in current trade policy, as well as in our own domestic labor laws and other policies.

We welcome the tremendous efforts by the Obama administration and particularly Ambassador Ron Kirk and his team to address the urgent concerns of autoworkers and auto companies with respect to market access, safeguard provisions and some non-tariff barriers. Ways and Means Chairman Sander Levin and Ranking Member Dave Camp also pressed hard for key improvements in the auto provisions, and we appreciate their strong efforts. These newly negotiated provisions will give some much needed breathing room to the auto industry, and we appreciate the hard bargaining that was necessary to win these important changes.

However, the labor movement’s concerns about the Korea trade deal go beyond the auto assembly sector to a more fundamental question about what a fairer and more balanced trade policy should look like. In particular, the labor movement has consistently and for many years argued that the investment and government procurement provisions in the Korea deal will encourage off shoring. And despite the progress made in improving the labor chapter in 2007, it is clear that in both the United States and South Korea, workers continue to face repeated challenges to their exercise of fundamental human rights on the job – especially freedom of association and the right to organize and bargain collectively. This deal does nothing to improve or strengthen the provisions negotiated by former President George W. Bush in these crucial areas. It is essential that both countries bring their labor laws and practice fully into compliance with international standards prior to implementation of the agreement. And for American workers to benefit from trade deals, we must strengthen U.S. labor law to harmonize social activity. Going forward, we hope to work closely with the Obama administration to address all of these concerns in any future deals,particularly the pending Trans-Pacific Partnership agreement.

The Korea deal also fails to address the potential problem of currency manipulation and contains lax provisions on rule of origin (allowing up to 65% foreign content in autos eligible for the lower tariff treatment,in contrast to the EU-Korea agreement, which allows only 45% foreign content) and duty drawback (which disadvantages domestic parts production). These provisions will undermine both S. Korean and American workers. There is significant opposition by many S. Korean unions to the trade agreement, as the agreement fails to address key offshoring and outsourcing issues facing S. Korea. In fact, the weak offshoring protections and rule of origin make the agreement a back door for increasing offshoring to China and other countries from South Korea,as well as from the United States.

We are also concerned that the trade agreement leaves open the possibility that goods produced in the North Korean free trade zone, the Kaesong Industrial Complex (KIC), could in the future gain access to the United States. We shouldn’t leave open the possibility of including these goods for two reasons: 1) grave concerns over the atrocious labor rights record in the KIC and 2) the impact on jobs and wages of the exports of these goods — produced at perhaps the lowest wage levels in the world.

In addition to much needed reforms in trade policy, the United States must implement a well coordinated industrial strategy that includes tax policy, infrastructure, skills development and technology investments to support a vibrant, growing and modern manufacturing sector.

The experiences of union members and working people with too many flawed trade deals like the North American Free Trade Agreement and China’s accession to the World Trade Organization do not justify optimism that this deal will generate the promised new jobs. We’ve seen U.S. multinational companies take advantage of the investment and other corporate protections in past trade deals to shift production offshore, while maintaining access to the U.S. consumer market and undermining the jobs, wages and bargaining power of American workers.And the results have been catastrophic, with chronic and unsustainable trade deficits that sap economic growth and domestic job creation.

So long as these agreements fall short of protecting the broad interests of American workers and their counterparts around the world in these uncertain economic times, we will oppose them.

More Firedoglake coverage of the NAFTA-style Korea Free Trade deal.

This Time, Ignoring Mexico's Crisis Will Be Fatal

I think it was former Canadian Prime Minister Pierre Trudeau who said that living next to the United States was like sleeping next to a bear - you notice every twitch.

For Mexico, it's been more like getting regularly crushed by that bear.

In the Nation, Jeff Faux examines how the perverted incentives of NAFTA and Wall Street have exacerbated Mexico's political weaknesses to create a narco state on the verge of revolution.

Another infusion of cash to the Mexican economy, unacknowledged in the official statistics, is the roughly $25 billion in illegal drug exports to the States. Today, with remittances, oil prices and tourism depressed, the narco trade is probably Mexico's largest single earner of hard currency.

NAFTA and the neoliberal ideology it represents are certainly not the root causes of narco-trafficking. But they have been major factors in its recent monstrous growth.

For starters, the trade agreement created a two-way overland superhighway for contraband; the Mexican drug lords use the dollars they have earned from their exports to import guns, aircraft and sophisticated military equipment from the United States to fight their territorial wars. By wiping out small Mexican farms that could not compete with heavily subsidized US agribusiness, NAFTA also expanded the pool of unemployed young people that provides the narco-traffickers with recruits. And banking integration under NAFTA made money laundering much easier.

Perhaps most important, NAFTA has helped maintain the corrupt network of Mexican oligarchs. The 1988 presidential election--which the then-ruling PRI had to steal from the PRD to win--shocked the establishment on both sides of the border. By opening up Mexico to US money and influence, NAFTA was a way, as the US Trade Representative said to me at the time, "to keep the Mexican left out of power."

Until the 1980s, Mexican drug (mostly marijuana) smuggling to the north was modest in scale and generally tolerated by successive PRI governments. Their message was: we don't care what you sell to the gringos, but no rough stuff here, keep it away from our kids and of course share a little of the profit under the table. But the US-backed neoliberals who took over the PRI in the 1980s had closer ties with the Mexican cartels. The brother and father of president and NAFTA champion Carlos Salinas--hailed in Washington as a good-government reformer--were widely accused of being connected to the drug business. In Salinas's first year in office his national police chief was found with $2.4 million in drug money in the trunk of his car.

SNIP

The entire relationship must be rethought. In this regard, Obama's abandonment of his campaign pledge to renegotiate NAFTA was a missed opportunity. A renewed debate over the trade deal could have spurred public discussion of the failure of neoliberal economics, the "war on drugs" and an immigration policy that ignores conditions in Mexico that drive people across the border. It could have been a forum to think through the question of how continental integration can work for working people rather than just investors. For example, what kind of cooperative transportation, energy and green industrial policies would make the people of three nations--now bound together in one market--globally competitive?

Obama's Wall Street advisers have no more interest in this sort of change than did Bush's. And without a new economic direction, life for the average Mexican will surely worsen and social tensions rise. Some Mexican friends point out that the revolution against Spain erupted in 1810 and the one against the US-backed dictator Porfirio Díaz in 1910. And in 2010... ?

In any event, Mexico's growing troubles will not stay conveniently on the other side of the Rio Grande. Build a ten-foot wall, and desperate people will find twelve-foot ladders. Free trade will, of course, continue to flourish; Homeland Security Secretary Janet Napolitano estimates that Mexican drug cartels are now operating in 230 US cities.

So, thanks to the people who brought you the subprime mortgage disaster, the credit freeze and the Great Recession, the next Mexican revolution may come closer to home than you think.

Read the whole thing.