China Trade Is No Job Threat
The pivotal decision on granting China permanent trading privileges with the United States comes up for a vote in Congress this week, carrying with it hot issues of American jobs and Chinese labor practices. On balance the choice should be clear. More trade would help both countries.
To U.S. labor unions and their supporters, increased trade with China means cheap imports that threaten U.S. jobs, and wage disparities do indeed give China a leg up on exports to America. The unionists point to the growing U.S. deficit with China as a clear sign that America is losing in two-way trade. The trade deficit carries political heat, but more than anything else it is a sign of the strength of the American economy.
Organized labor has been a strong adversary of free trade in recent years. It opposed the North American Free Trade Agreement with Mexico and Canada in 1994 on grounds it would cost U.S. jobs and lobbied heavily against trade with Africa, citing poor labor conditions there.
Labor spokesmen now say expanded trade with China would divert jobs that could be filled by Americans and would perpetuate poor conditions for Chinese workers. But to conclude, as the AFL-CIO seems to do, that every worker is a loser in open trade is a stretch.
True, NAFTA tripled U.S. investment in Mexico to roughly $2 billion a year. Many U.S. jobs went south with that investment. But the trade alliance has created new opportunities elsewhere. A study released earlier this year by UCLA’s North American Integration and Development Center showed that the number of jobs in the United States, and in California in particular, has increased, not decreased, because of NAFTA. High-tech companies are moving production facilities to Mexico but keeping their high-paying engineering jobs at home. Essentially, U.S. plants in Mexico serve as assembly facilities for goods designed in the United States.
The same process is happening with China. The bulk of Chinese goods shipped to the United States is made up of toys, shoes and textiles--all low-tech products--along with electronic equipment conceived and designed in the United States. Yes, boosting imports from China would result in job losses in some U.S. sectors, but, as with Mexico, it would create new job opportunities in others.
Hundreds of thousands of new jobs are being created in the United States each year, and most of them pay better than the ones that disappeared. For all Americans, imports from China are the source of cheap goods and one of the key reasons U.S. inflation remains low. Rather than opposing China trade, labor unions should help retrain those workers whose jobs are lost because of imports and get back in the game.
The U.S.-China trade deal, which opens Beijing’s way into the World Trade Organization, is more in Washington’s favor than any other that the United States has struck. It calls for Beijing to make all the concessions--not only in opening its markets to imports but, more important, committing to economic reforms that will change the face of China’s society. China will get permanent trade privileges. American business will gain a growing market it has long pursued.
