The Building Tradesman Newspaper

Friday, February 07, 2020

With 'New NAFTA' done, lack of worker protection will likely trip China deal

By The Building Tradesman

WASHINGTON (PAI)— President Trump signed the rebooted North America Free Trade Agreement (New NAFTA) on the south lawn of the White House on Jan. 29. 

And the finalized U.S.-Canada-Mexico Agreement is a deal that the AFL-CIO and most of the rest of organized labor can live with, mainly because it inserts strong and enforceable worker rights provisions into it, especially targeting labor exploitation in Mexico. Congressional Democrats said they would not go along with the deal without a green light from organized labor, and the Trump Administration, which initially rejected the pro-worker language in the deal, finally went along with it.

But if Trump thinks he’s going to easily push through his China trade deal on Capitol Hill this year, he’s got another thing coming. Both AFL-CIO President Richard Trumka and a top Democrat on trade issues, Rep. Richard Neal, D-Mass., are saying “not so fast.”

That’s because, as Trumka put it on Jan. 16, “the devil is in the details.”

“It’s important to remember China has made similar commitments in the past” on issues important to workers ranging from ending subsidies to its companies to allowing the true value of its currency – issues Trump cited -- “and failed to live up to them,” Trumka added.

And Neal implied Trump would have to write worker protections into the China deal’s text, just as unions and congressional Democrats forced him to do in re-re-negotiating his U.S.-Mexico-Canada Agreement (USMCA). 

The comments from the two are important. Trump touted both the USMCA, which labor signed off on, and the China deal as the nation’s “biggest trade deals ever.” But Trumka and Neal could have a big say in deciding whether lawmakers vote on legislation this year to OK it. 

Trump’s bragging on Jan. 21, at the World Economic Forum – a yearly closed-door gathering of the corporate elite and their political handmaidens in Davos, Switzerland – was promptly called out by the Associated Press as an exaggeration, at best, according to government and historical data. Past trade pacts have been bigger, AP noted. 

And AP’s fact-checkers said Trump’s China deal still leaves $360 billion worth of Chinese goods open to U.S. tariffs, and pushes other issues off into a second round of talks.

Big or not, both Trumka and Neal have doubts about the China deal, which features reductions in some U.S. tariffs on Chinese-made goods in return for Chinese concessions, or so Trump claims, in other areas. 

Trumka and Neal are being kind. Economic Policy Institute foreign trade analyst Robert Scott isn’t. In a forthcoming report, Scott calculates that from 2001 – the first full year China had “normal” trade treatment with the U.S. – through 2018, China’s subsidies, currency manipulation and labor repression let its trade surplus balloon so much it cost the U.S. 3.7 million jobs, net. And 2.8 million of them were in factories, Scott adds.

The week before, Trump also took China off the “currency manipulation” list. China has usually kept its currency, popularly known as the yuan, artificially low in order to boost its exports, thus undercutting U.S. firms and jobs. Trumka criticized that Trump currency decision, too. Scott’s forthcoming study shows the artificially low yuan was the biggest booster of Chinese exports and resulting U.S. job losses in the last decade and a half.

“There is precious little in this deal that addresses China’s long-standing denial of basic labor rights,” Trumka said on Jan. 16 after Trump announced the agreement. 

“The deal also fails to address the worst aspects of China’s cheating -- massive subsidies to its domestic companies and the predatory practices of its state-owned enterprises, which have cost millions of U.S. jobs and gutted our manufacturing base.”

“And it lacks a mechanism for the United States to address the persistent currency misalignment between the dollar" and the yuan.

Scott’s study quantifies the outsourcing. Using federal figures, he calculates the U.S. trade deficit with China cost 700,000 U.S. jobs from 2016-18, alone, due to China’s massive surplus with us and the resulting U.S. trade red ink.