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The Coming Free Trade Swindle

September 20, 2011 - by Donny Shaw

Free-trade deals generally help some American companies increase their exports and create jobs. However, history shows that they tend to do far more to increase imports, which may help consumers access cheaper goods and manufacturers access cheaper parts, but has a net negative impact on jobs in the U.S. In the first decade that NAFTA was in effect, for example, nearly 900,000 U.S. manufacturing jobs were lost due to accelerated trade imbalances with Mexico and Canada, our then-new free-trade partners.

But while workers tend to lose out in the deals, big American companies benefit by gaining access to new markets of cheap labor overseas. That’s why the Chamber of Congress and dozens of major U.S. corporations like Wal-Mart, Microsoft and GE have been pushing Congress for years to finalize the free-trade deals with Colombia, South Korea, and Panama that were drafted under the Bush Administration. In recent months, the Obama Administration has begun championing the deals, calling on Congress repeatedly to pass them as a way to boost employment.

Senate Majority Leader Harry Reid [D, NV] is reluctantly following Obama’s recommendations. “I want everyone within the sound of my voice to understand that I do not like these [agreements] and I will vote against them,” Reid said on the Senate floor last week as he announced that he would be bringing the deals to a vote. “I have been asked on numerous occasions to move these trade agreements to the floor. That’s what I have agreed to do, and I will do that.”

Knowing that the deals are going to cost jobs, Reid, Obama, and the rest of the Democrats are coupling the trade deals with aid for displaced workers. AP:

Many Democrats don’t like the trade agreements with South Korea, Colombia and Panama but are open to votes if Congress extends expired provisions of the Kennedy-era Trade Adjustment Assistance program, or TAA. Republicans are cool to TAA but won’t object as long as the trade deals are completed.

President Barack Obama has often extolled the benefits of the three trade accords originally signed during the George W. Bush administration. But he has refrained from submitting them to Congress until he gets assurances that expanded aid continues for workers who lost their jobs because of trade.

The Senate on Monday took up a routine bill giving poorer countries access to U.S. markets, with the intent to attach the trade adjustment provisions for affected workers to that bill as an amendment. If all goes as planned, the Senate will pass the bill and send it to the House, which would consider it along with the three free trade accords. The Senate too would vote on the trade deals.

In a sign that a strong majority of senators were on board with this aid-and-trade formula, the Senate voted 84-8 to sidestep the first legislative hurdle to considering the bill for developing countries.

According to the article, under a deal worked out between Senate Democrats and House Republicans, the TAA benefits would be scaled back and paid for by cuts to Medicare and unemployment insurance.

So, in sum, the deal would open up cheap labor markets to big corporations, kill more jobs in the U.S. than it creates, reduce benefits for displaced American workers, and pay for the reduced benefits by cutting healthcare for the poor and benefits for laid-off workers. Sounds to me like a pay-day for the re-election campaigns of incumbents and a raw deal for the rest of us.

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  • Brian62 09/20/2011 10:13pm

    A point that needs to be addressed up front is NAFTA, which was pushed and signed by President Clinton (remember when VP Gore debated Ross Perot on Larry King and he said this would be great for the American worker). This was the first big sucking sound the American worker heard as they watched their jobs going down the toilet. The author of the AP article conveniently failed to mention this fact. It should also be mentioned that the two headed monster called the Democrat and Republican Party backed this together.

    With that said, in a true capitalistic arena I would welcome additional “free trade” because the whole world should be a free trade world. But that ideal is for over thinking Libertarians to dream about. The truth of the matter is as you described; the American worker is about to get hammered once again. If we have nothing to produce, how can we buy goods from overseas? Services don’t translate to overseas revenues.

  • Comm_reply
    Brian62 09/20/2011 10:19pm

    Additionally, I have been watching the US Senate for some time (see Repeal the 17th Amendment Weblog) and if anyone in their right mind believes Reid is looking out for the American worker, well then I have the beach front property you have been looking for in Nevada. Reid speaks out of every orifice on his body sometimes at the same time, and it is doublespeak, triple-speak and BS. Except for one or two in the senate, the entire body is good for nothing but taking the American out at the knees whilst doing the bidding for special interest groups.

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