Current trade policies need changes to return trade efficiency to U.S.

Wednesday, July 16, 2008 | 12:00 p.m. CDT; updated 4:51 p.m. CDT, Tuesday, July 22, 2008

Missouri headlines have been filled recently with news of businesses closing their plants to move their work to low-wage countries. One company recently announced that it is moving over 600 jobs from metropolitan St. Louis to offshore locations such as Mexico and the Dominican Republic. In addition, other businesses in Missouri are cutting thousands of jobs each year in response to foreign competition.

It’s no wonder when we look at the results of current U.S. trade policy. In 1993, the United States had an annual trade deficit of $116 billion; by 2007, our annual trade deficit had grown to $765 billion.

This import explosion has resulted in the loss of one in six U.S. manufacturing jobs — over 3 million thus far. We now borrow $2 billion a day to pay for foreign goods, which has led to the decline of the dollar and rising inflation. Since imported goods displace tax-generating American products, the national debt has more than doubled from $4.4 trillion in 1993 to $8.9 trillion in 2007.

Obviously, our current trade policies are not working and a change is needed. In order to return the United States to an efficient fair trade policy, we must incorporate the following five principles into our trade system.

  • All trade agreements must be fair trade: Agreements negotiated by Congress must include enforceable labor and environmental standards with no restrictions on U.S. or state governments from favoring domestic producers in economic development policies; remedies for non-tariff barriers; and protections from currency manipulation. For example, the recently negotiated Korean Free Trade Agreement fails to address such nontariff barriers as the requirement for the Korean government to audit any Korean citizen buying an American automobile. We have been unable to address the issue of China devaluing its currency as much as 45 percent, as it did in 1994, and maintaining this low rate in order to attract jobs and factories from the U.S. Japan manipulates its currency as well as shelters its market for TVs, autos and steel, while dumping those products into our market.
  • Do not renew trade promotion authority, also known as Fast Track: This anti-democratic procedure prevents our elected congressmen from representing their districts through the amendment process, as it limits congressmen to only a “yes” or “no” vote on the entire agreement. Fast Track also limits debate to 20 hours, denying our elected officials the time to thoroughly explore the ramifications of complex agreements that took years of negotiations.
  • Return to bilateral trade agreements: One-size-fits-all free trade agreements have failed. Only through nation-to-nation trade can we maximize the benefit to all involved. This was the American trade policy during the mid-20th century, and it helped make the U.S. the greatest industrial power in the world.
  • Establish equalizing fees for fair trade: It costs an American business an estimated 40 percent of production fees just to comply with government mandates such as taxes, labor, environmental, reporting and compliance fees. Allowing foreign producers access to our market with lower levels of mandated costs puts American firms at a disadvantage through no fault of their own.
  • Economic impact statements must accompany trade agreements: Currently, an economic impact statement is required by law before any federal project begins. Similar studies should be required for trade agreements to measure the impact of the agreement on jobs, taxes, government deficits and communities. There is a Senate proposal that would require such a study before trade agreements can be voted on.

To create and maintain a healthy economy, trade must be used to improve the lives of Americans and not be allowed to undermine the U.S. standard of living. Our current “free trade” system encourages a “race to the bottom,” with countries trying to outbid each other through low wages and lax environmental regulations.

On the other hand, a true fair trade system, based on the five principles outlined above, would increase the real incomes of workers and grow the domestic and world economies in a stable, sustainable manner that benefits all.

Darin Gilley is president of UAW Local 1760

and lives in Pacific.

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