TRADE : Focusing on Workers in the Fast-Track Talk

In a desperate attempt to salvage his request for fast-track trade legislation, President Bill Clinton has proposed a “12-point program” to provide retraining and other adjustment assistance to workers who lose their jobs because of trade.

Unfortunately, while the idea that the losers in the trade deal should be able to retool for new jobs makes sense, it appears that Clinton and the Congress lack the political will to allocate the funds needed for the retraining effort.

Overall, U.S. trade eliminated at least 2.4 million jobs between 1979 and 1994; the North American Free Trade Agreement alone has eliminated almost 400,000 jobs since 1993. That’s 200,000 jobs lost each year even without considering the effect of recent imports from China and Japan. Another way to see this is to note that 200,000 workers have qualified each year for various forms of trade-adjustment assistance.

A minimally adequate program would provide workers with an average of two years of training, for a total of 400,000 a year in such programs. Costs of retraining these workers would include tuition and fees of $3,000 to $5,000 a year, plus income support and minimal health- insurance benefits, for a total of at least $10,000 a year. Trade-related retraining would thus require a minimum of $4 billion a year.

Clinton has proposed a program costing less than $100 million a year, or about $250 per worker. It’s no wonder that fewer than 10% of all eligible workers participate in trade-adjustment programs. Most move into lower-paying service jobs that require no retraining.

This illustrates one of the fundamental obstacles to congressional approval of fast track. While most Americans believe trade is good for the economy, we can no longer avoid the evidence that trade has destroyed millions of jobs and put downward pressure on the wages of even larger numbers of workers, whose jobs are threatened by plant closures and competition with cheap, foreign products. Economists contend trade is good because the winners can compensate the losers. But the question is: Will they? The problem is not with trade per se, but with the rules that regulate it. Previous trade agreements have protected and expanded investor rights, while ignoring labor and the environment. Clinton’s proposed fast-track bill would roll back his own authority to negotiate trade agreements in the future by specifically prohibiting the inclusion of enforceable labor rights or environmental standards.

Current trade agreements have not been a resounding success for the United States. They have failed to solve our trade problems, which have grown far worse in the past two decades. U.S. trade has gone from being balanced in 1975 to an expected deficit this year of more than $200 billion. Each year, deficits eliminate more high-paying U.S. jobs.

As a first step, trade rules need to be altered so that workers and the environment are given equal priority to corporate interests. Future trade agreements should include enforceable worker rights and environmental standards at their core.

While it may not be possible for poor countries to bring their labor and environmental standards into conformance with America’s, we have every right, in trade negotiations, to ask them to enforce their own labor and environmental laws, and to adhere to internationally accepted minimal standards, such as prohibitions on child labor. In this way, workers everywhere can enjoy rising standards of living even as other countries become both better markets for U.S. products and more stable democracies.

Band-Aids like Clinton’s meager proposals for adjustment assistance are unworkable. The United States needs new approaches to trade negotiations that will improve trade rules and restore this country’s trade balance. New rules can generate jobs, not destroy them, and can raise, rather than lower, wages. We need a fast track to greater opportunity, instead of glib promises that don’t add up.