LABOR RAISES THE BAR ON THE TRADE ISSUE

NIGHTMARE FOR THE CORPORATE DEMS

It rated one paragraph in the New York Times and passed under the radar of most people on the Hill. But the AFL-CIO’s major change in its trade policy, passed at the recent Executive Council meeting, may have more impact on the political front than its $40 million election year budget.

The AFL-CIO issued a call for the U.S. to exercise our rights under Article 12 of the W.T.O. and impose a temporary, across-the-board tariff increase to reduce America’s trade deficit. Contrary to popular belief (Rep. Charlie Rangel recently told a reporter it was illegal), W.T.O. rules allow tariff increases, but only for the purpose of closing a persistent trade deficit. We can’t raise tariffs to gain a trade surplus, but we can do so to close a deficit.

Things Have Changed
After the passage of NAFTA, labor responded by raising the banner of labor and environmental rights in trade treaties – a move which, among other things, allowed us to shed the label of ‘irrelevant protectionists’ and get back in the debate.

This successfully changed the trade debate. But, while valuable, we were never under any illusion that this would turn around the trade imbalance.

Now things have changed:

Outsourcing Spreads
1) The rapid entry into the global capitalist workforce of a billion low-wage workers has combined with rapid changes in technology to put almost any job at risk of being sent offshore. The main defense of NAFTA – we’ll send the ‘crummy’ jobs overseas and keep the ‘good’ jobs here – wouldn’t pass the laugh test today with almost every job that doesn’t require physical presence (retail, burger-flipping and hands-on health care) already on its way out the door.

This changes the political dynamic of the issue, putting millions more workers in economic jeopardy and expanding the base of any popular movement to deal with it.

Trade Deficit: Looming Disaster
2) This change has produced a second change. The balance of trade deficit has increased steadily since 1992 in both absolute terms and relative to the size of our economy. Americans are currently living 7% beyond our means (i.e., consuming 7% more than we produce). And this is expected to continue to rise. The U.S., which was a creditor nation in the 90’s, has become a debtor nation, slipping further and further into debt.

Elites: Current Imbalances Unsustainable
3) This has in turn changed perception. Among the elites (economists, Wall Street types, etc.) there is now broad consensus that this trend is unsustainable. (In the words of Warren Buffett, “If something can’t last forever, it won’t.”) There is further agreement that any resolution will involve decreased purchasing power of the dollar along with higher interest rates, decreased consumption and a lower standard of living for most Americans. This changes the debate from ‘should we do something?’ to ‘what should we do?’

The WTO rule is made specifically for situations like ours – where severe imbalances in one country threaten global economic stability. It was first suggested in a different form by Warren Buffet in an October 26, 2003 Fortune magazine article. The economic rationale can be found in an article by Wayne Godley, et. al of the Levy Institute, “The United States and her Creditors: Can the Symbiosis Last?”

Controlled Change vs Chaotic
The bottom line is this: everyone agrees the U.S. massive, growing trade deficit cannot continue. There are only two options – let the free market ‘solve’ it with potentially catastrophic consequences to our currency, interest rates and inflation or try to manage the process by an across-the-board tariff increase.

Elite Backlash
Of course the elites will scream. The Tom Friedman’s of the world will call us protectionists and worse. They will say (incorrectly) that it’s illegal. Unable to argue with the plain language of WTO article 12, they will say it’s unprecedented – again incorrectly. (It has been used twice, when the rule was part of GATT – once by Richard Nixon in 1971, once by Great Britain in the mid-60’s.)

But this time they are the Neanderthals, living in the past. There is no doubt this imbalance will be stopped. The question is whether it is done chaotically by the marketplace or in a controlled manner by the use of Article 12.

There is also a powerful national security argument. China’s stash of U.S. dollars (over $800 billion and counting) gives them the potential leverage to strangle the U.S. economy at a time of their choosing. Our growing trade deficit not only will stop. It has to stop – and sooner rather than later.

Time for Dems to Put Up
Supporting labor rights in trade agreements has been a relatively easy lift, allowing Democrats and other to pose as friends of labor without really having to take a position on the trade issue. Those days are over.

Democratic candidates are now going to face the uncomfortable choice of breaking with labor or facing the wrath of the NY Times editorial board. That choice will be more difficult than before with outsourcing now bringing tens of millions of white collar workers into a fight that was previously limited to blue collar types.

I expect genuine friends of labor like Sherrod Brown and Bernie Sanders will have no problem. And Democrats in safe seats, especially House members, may sign on. The real test will be Senate incumbents and Presidential aspirants.

Expect this issue to be front and center in the 2006 election campaign. The timing couldn’t be better with family economics in a downward spiral and the conflict between national security and corporate trade opportunities hitting the front pages as we speak.

This is an issue with the power to swing key states like Ohio, Pennsylvania, Michigan, Wisconsin, Minnesota and Illinois. And the power to expose and isolate the business-Democrats.

Comments

[Carl]

This is great news. Labor seems to be buckling down on the trade issue, and I think this sort of ultimatum makes sense. We need to remain active politically but also make sure we aren't taken for granted. Not a dime for anyone who doesn't support this and EFCA. Pledges from candidates and co-sponsorships for incumbates.

Carl

[Milton Gilmore]

Labor (AFL-CIO) unions should lay it on the line for us union construction travelers who have built some of the largest buildings, plants, refineries, pipelines, and projects in the country. After 37 years and 76 jobs throughout the US I'm not vested for a retirement. I'm still a traveler, and I know plenty more just like me who have ended up with nothing. Most local unions are a group of cousins whose union would dissolve without outside expertise. We're supposed to be Brothers? Unions should see to it that us travelers get our retirement funds, or they are no better than the likes of Enron.

[Patrick Waszkiewicz]

I just read the thank you for contributing to the Steel workers strike at Goodyear.I am a retired UAW member,and I think it is an absolute disgrace that $45,000 was all that was collected for 15,000 strikers. If you figure it out,it averages $3/member on strike. I am ashamed of such a lousy collection amount for striking members at Christmas.

When I was working ar Chrysler we always passed the hat at times of need.I remember the International Union used to make a contribution. If this is a result of a rift between the heads of the Unions,then it is time to get new leadership in both Unions,Unity and Solidarity is what it is all about.

[Mark]

Mark J. Cleland Sr., with the Save Our Turnpikes Coalition, sends us this info and link:

It is now time that all unions put aside our differences and help our brothers and sisters who are about to lose their jobs with the privatization/selling of our turnpikes. I have done a website. It is: www.saveourturnpikes.com. Will you help?

[Milton Gilmore]

Put asside whatever you want to for whoever you please, but you're probably a local yocal who has everything going for you. Will you stand up for the traveler who gets screwed by you local members after a job is complete in your jurisdiction, for the traveler who didn't get a pension check for his contributions to your pension funds? Will you want him or her to leave your little jurisdiction so you can get back to normalcy with just you and your cousins manning the local jobs, and feeding off the pension contributions made by the travelers who helped you get through a hard time manning a big job and if it wasn't manned by skilled workers the contractor would have been able to hire who they wanted--union or non-union? We did you a favor, and the Constitution says that we are to be treated like a local member while we are in you jurisdiction. What's happening, and what will happen, is that we'll get tired of being left out, and the non-union sector will become more to our likeing rather than have your locals starve us out of town. I've had 76 jobs since 1968 and haven't got shit to show for it except solid experience--the kind you don't have because you local people concentrate on your same little contractors to honor you as permanent employees--something I will never get used to. There is no "permanent" anything, not even you or me. The paychecks the AFL-CIO draws for file clerks, and administration assistence is beyond belief--nobody there makes under $77,000. a year. Look it up. That's part of our hard earned pensions fund.
You better wake up to reality.

[ollie crist]

AS a former bartender i have seen far to many miners come to the bar and drink for and hour or more before going to work and some even carried flask of wiskey with them. they put all the men on their shifts in grave danger

[Bill Zona]

Working Families and the Labor Movement have been under continual attack by the Bush White House.
The next president must establish a "real" Labor
Department that doesn't put the interests of Corporate America first.
Unless a candidate for president makes a firm, sincere commitment to establish a Department of Labor that acknowledges Working Families they should not receive any support.
Our next president must support passage of a Workplace Fairness Act that will allow employees to vote for a union of their choice.
In Unity,
Bill Zona
Member SEIU Local 1021 (Ret.)

[Dennis Magarine]

Give America back to the Americans, before it's too late. Americans are the minority now. What about the future of our children and grandchildren?????

[Donald Sharlow]

I have much to say but I will hold it to just one subject. How I was a union steward for almost 10 years and when it came time for my retirement I find out that I don't have a dime comming. How's that for a kick in the you know what. If anyone asks me I tell them the truth. Unions are not for the members they are for the international people who run it and get all the big money while I have to live on a shade over $600.00 a month and when I say shade I mean less then $40.00. I'd like to see them live on that. Unions suck.

[Tim McAninley]

Poor Donald, you are either full of it, or an absolute idiot. I doubt seriously that anything you posted is truthful, you don't like unions because you don't really know how they function. If you had been involved as a shop steward for almost ten years, you, of all people, should have known what you have coming in retirement. You avoid specifics in your post, why? What dire circumstances affected the company you worked for? Bankruptcy for instance, look around and see where this country is headed; hate unions all you want but love your master, the employer that sent you to languish in retirement hell.

TWU Member, Local 567

[Ron Moore]

Just a quick note to praise your site and announce my new site.
I'd like to put a feed of your site on mine, but I'm terrible at these things and couldn't make it happen. Can you send me a link to it?

In Solidarity