Many Leery of Trade-Offs With Free Trade

Jeff Engels, a 42-year-old Seattle sailor, fears competition from vessels carrying low-paid foreign crew.

Lucille Moyer blames global competitive pressures for her unwanted membership in Silicon Valley’s “throwaway work force.”

Jackie Woll, a Los Angeles mother of three, worries about genetically altered organisms in her children’s canned corn.

Like many Americans, this diverse trio is generally supportive of the global trading network that brings cheaper imported products to local stores while creating expanded markets for U.S. goods abroad. But they worry about the effect this increasingly borderless world is having on the air they breathe, the food they eat and their job security.

President Bush returns from Canada this week with the support of his Latin counterparts, but his toughest job lies ahead: convincing skeptical Americans that creating a giant trade zone stretching from Alaska to Argentina--the so-called Free Trade Area of the Americas--is in their best interests. Such a free-trade zone, by curbing tariffs and other trade barriers, would give consumers access to cheaper goods from other nations in the hemisphere.

And if history is any indicator, Bush’s job will get even tougher as the slew of recent layoff notices by companies such as Honeywell International Inc., Cisco Systems and Citigroup Inc. start to work their way through the economy.

“A slowdown is the hardest time to push through trade liberalization because people think trade costs jobs,” said Lori Kletzer, a labor economist at UC Santa Cruz.

Gaining public support is critical because the looming battle over trade in this country promises to be bitter. The president already is at odds with labor and environmental leaders over non-trade-related matters such as worker safety and wilderness preservation.

Congress is sharply divided over trade, with Republicans seeking fewer restrictions on global commerce and Democrats insisting on protections for worker rights and the environment.

Even free trade purists such as Sen. Charles E. Grassley (R-Iowa), the powerful chairman of the Senate Finance Committee, acknowledges that the Bush administration will have to address these grass-roots globalization worries if it wants to push through its ambitious trade plans. One measure being considered would impose penalties, rather than trade sanctions, on countries that are labor or environmental renegades.

The Bush agenda includes finalizing China’s entry into the Geneva-based World Trade Organization, getting “fast-track” trade negotiating authority, completing bilateral trade agreements with Jordan, Vietnam and Singapore and winning support for the Free Trade Area, which is supposed to be finalized by 2005.

Trade supporters don’t want a repeat of 1997 and 1998, when fierce opposition derailed then-President Clinton’s hopes of getting fast-track authority. Such authority allows an administration to negotiate a trade pact and then have Congress vote on it without modification.

But winning the battle of public perception won’t be easy.

Trade-friendly organizations such as the Manufacturers Alliance, the National Assn. of Manufacturers and the Business Roundtable have issued numerous reports recently extolling the benefits that expanded trade has brought to the U.S. economy.

From 1993 to 2000, at a time of explosive growth in trade, the U.S. created more than 20 million new jobs and increased economic output more than $1 trillion a year, according to the Center for the Study of American Business at Washington University in St. Louis.

But the benefits of trade have not been distributed evenly and activists like Michael McCormack have become more sophisticated in reaching out to Americans who wouldn’t normally find themselves at an anti-trade rally.

A year ago, the 25-year-old Kansas City native returned to his hometown to start working with labor unions, church officials and student groups fighting everything from labor oppression to genetically modified foods.

In March, he was handed a powerful tool for organizing when GST Steel Co., a Kansas City firm, said it was closing its doors and laying off 750 workers because it couldn’t compete with cheaper imported steel. He helped union leaders send out 19,000 fliers to an anti-Free Trade Area of the Americas rally last weekend to coincide with the Quebec summit. Similar events were held around the U.S., including an eclectic gathering of about 1,000 anti-globalization activists at the San Diego-Tijuana border.

“I don’t think the answer is to become protectionist. But I think this is a way we can talk about how these ideas . . . affect our lives in ways we’re not sure of,” McCormack said. “We’ve got people in our organization whose fathers lost their jobs.”

Job loss anxiety is widespread in Silicon Valley, where globally dependent technology firms have been battered by the collapse of tech stocks and the slowing of demand at home and abroad.

In recent years, companies such as Hewlett-Packard, Intel and Solectron, faced with fierce competition at home and abroad, have shifted more of their work to temporary employees. Temps enable companies to avoid paying costly benefits and give them greater flexibility to adjust their work force to rapid changes in demand.

The AFL-CIO, which has been trying with little success to organize technology workers, estimates that 40% of the workers in Silicon Valley are employed in temporary or nontraditional relationships. The union organization has started an employment agency for temps in San Jose called Working Partnerships.

Some workers prefer the flexibility that temporary jobs provide. But Moyer, the disgruntled Silicon Valley worker, feels temp workers are being unfairly used as a buffer to protect companies against global turbulence. Moyer, a 54-year-old single mom who held eight jobs over a two-year period, said she has tried unsuccessfully to land a permanent position.

After leaving her last job on a stress disability, she is now taking business courses at DeAnza College in Cupertino and hopes to find full-time work in a more affordable city.

“These companies are trying to compete with countries producing stuff and paying much lower wages,” said the San Jose resident. “We’re all being temped. I feel like a lot of people are taking home the money that should be mine.”

Kletzer, the UC Santa Cruz labor economist, traces the domestic impasse on trade to the U.S. government’s failure to acknowledge the “legitimate” concerns Americans have about high job turnover even during the recent period of strong growth and low unemployment.

Job churn has become a way of life in America. During the 1990s, job losses hit less-skilled workers the hardest, but even higher-skilled workers increased their job loss rate to nearly 7%, up from 5.4% a decade earlier, according to a study by Kletzer and economist Robert Litan.

Though just a small fraction of Americans work in industries such as steel and textiles that are directly affected by foreign competition, many Americans associate job loss with trade. In a recent poll by the Pew Research Center for People and the Press, 78% of the respondents said “protecting the jobs of American workers” should have top priority in deciding U.S. trade policies.

Given those feelings, Kletzer predicts the Bush administration is unlikely to pass trade liberalization measures unless it creates a better safety net for workers who lose their jobs to foreign competition.

She suggests providing those workers medical insurance subsidies and wage insurance that would help make up for decreased earning power. At least one-quarter of displaced manufacturing workers reported an earnings loss of 30% or more, according to her study.

Labor unions and environmentalists want more. They have asked Congress to ensure that future trade agreements such as the Free Trade Area of the Americas or an expanded World Trade Organization contain provisions that extend the same protections to worker rights and the environment as those granted to intellectual property or farm goods.

That would mean using trade sanctions to punish countries that permit child labor, don’t enforce pollution laws or don’t allow workers to unionize. Developing countries strongly oppose such measures, calling them a disguised form of protectionism aimed at undermining their competitive advantages.

Engels, the Seattle sailor, thinks tough penalties are the only way to force shipping companies to pay fair wages wherever they operate. As a third-generation seaman, whose Croatian grandfather jumped ship in a West Coast port in the 1880s, he has seen the dramatic erosion of the U.S. shipping fleet as companies moved their ships abroad so they could use lower-cost, nonunion crews.

Engels owes his livelihood to trade, crewing on tugboats plying the West Coast or larger ships that head out to sea for months at a time. The work is difficult and dangerous but pays pretty well. As a member of the International Longshore and Warehousemen’s Union, an average sailor makes $35,000 to $40,000 for six to seven months of work.

But while trade has exploded in recent years, the membership of the ILWU’s Inland Boatman’s Union has remained stagnant at about 4,000 West Coast members. Engels fears that his job will be in jeopardy if the proposed trade agreements are expanded to include previously protected areas such as shipping and air travel.

“Like everyone else, we face the nonunion threat and the globalism threat,” said Engels, who participated in a temporary work stoppage at West Coast ports to protest the 1999 WTO meeting in Seattle.

Woll, the Los Angeles mother of three, had no idea what the Free Trade Area of the Americas was when she stopped by the Trader Joe’s store in Silver Lake last week. Greenpeace was holding protests at Trader Joe’s stores around the country, demanding the retailer remove all products that might contain genetically modified organisms, known as GMOs. The environmental group says a corn bread sold by Trader Joe’s tested positive for the controversial substance.

The 33-year-old Woll was horrified to learn that the Trader Joe’s products she had sitting in her kitchen cabinet, canned corn and corn flakes, might contain GMOs, even though she doesn’t know for sure whether the substances are harmful.

Critics of GMOs claim they are unsafe. Trader Joe’s insists any products it carries containing GMOs have been approved by the U.S. government for human consumption. The store also pointed out that nearly 60% of all corn and soy products on the market contain GMOs.

What does this have to do with the Free Trade Area of the Americas? Greenpeace argues that free trade agreements increase the likelihood that food containing GMOs will be shipped across the border. It also claims that trade pacts such as the North American Free Trade Agreement have been used to successfully challenge tough U.S. health and safety rules by calling them trade barriers.

The U.S. government strongly denies it has put the American public at risk. But that’s not good enough for Woll. One of her children is autistic and highly sensitive to chemicals in his food.

“Why don’t we look out for our own people?” she asked. “We’re so busy helping everybody else. And meanwhile, our quality of clothes, the food we eat, all seems to be going downward.”