President Barack Obama is making a full-court press for two new international business agreements, one with Asian-Pacific countries known as Trans-Pacific Partnership (TPP) and the other with European countries known as the Trans-Atlantic Trade and Investment Partnership (TTIP). To secure these, he is calling on Congress to pass Trade Promotion Authority (TPA), also known as "fast track," so that when TPP and TTIP come up for a Congressional vote, they can only be voted up or down, without amendments.
Obama's advocacy has included a recent report by his Council of Economic Advisors (CEA) on The Economics Benefits of U.S. Trade, and a visit to Nike headquarters in Oregon. At Nike, Obama portrayed opponents of Fast Track as "just wrong," trying to preserve the status quo rather than join the 21st century. Yet the Democrats are so far not buying. They know that there is a lot of mischief and even danger lurking in TPP and TTIP as they are currently constituted, as both would give too much power to multinational companies at the expense of workers and regulators.
The president portrays TPP and TTIP as part of an overall program of "middle-class economics" in which "everybody gets a fair shot, everyone does his fair share, and everybody plays by the same set of rules." That means "making sure that everybody has got a good education," "women are getting paid the same as men for doing the same work," "making sure that folks have to have sick leave and family leave," and "increasing the minimum wage across the country." It means pushing for investments in infrastructure and faster Internet.
The problem, however, is that the president has not succeeded in getting any of those middle-class policies in place. We live in an economy in which the middle class is actually shrinking; good education is for the affluent, not the poor; there is no guaranteed sick leave or family leave; the Highway Trust Fund is bankrupt; and the minimum wage is stuck below a living wage. That is the actual economy into which the president now wants to introduce TPP and TTIP.
The CEA Report and Obama himself recognize that past trade agreements have widened the inequality in the U.S. by costing jobs and putting downward pressure on wages. But this is a thing of the past, the president argues. The opponents of fast track are "looking at what happened in the 90s, over the last 20 years, as there was a lot of outsourcing going on." Yet according to the president, "companies that only care about low wages, they've already moved. They don't need new trade deals to move. They've already outsourced. They've already located in search of low wages."
The gist of the president's argument is that "outsourcing is already giving way to insourcing. Companies are starting to move back here to do more advanced manufacturing, and this is the trend we expect to continue. This trade deal would help that."
It's a bold claim, yet the president hasn't offered convincing evidence for it. The CEA report didn't take up that argument, and instead argued simplistically that since export-oriented jobs are good, expanded trade must be good, without looking at the negative effects on import-competing jobs or jobs lost altogether to offshoring!
There are three problems with Obama's insourcing argument. First, advanced manufacturing is very capital intensive, creating few jobs and mainly for high-skilled workers, if and when production is insourced. Second, there are still many jobs among today's 13 million U.S. manufacturing workers that can be outsourced. According to the U.S. Bureau of Labor Statistics, U.S. manufacturing compensation averaged $35.47 per hour compared with $2.10 in the Philippines in 2012, the year of most recent BLS data. And third, under TPP and TTIP, offshoring will increasingly hit swaths of the service sector as well, as trade and investment in services are opened by the agreements. In the coming decades, the Internet will greatly facilitate the offshoring of service-sector employment.
If the U.S. were a fairer society, in which Obama's vision of everybody getting a fair shot truly applied, then TPP and TTIP would be much easier calls. The losers from trade and offshoring would reliably get help from the winners; workers hit by the agreements would have a clear path to new skills, re-training, family support, adjustment assistance, a higher minimum wage, and all of the other protections that the president rightly seeks but can't secure. Yet America today is not that kind of society. The TPP and TTIP would hand another gift to the multinational companies that are lobbying so hard for the two agreements without providing real protections for workers (and for the environment as well).
It's even worse than that. Obama acknowledges that workers may not have been protected by NAFTA (passed under Bill Clinton) but "that was a different agreement. And in fact this agreement fixes some of what was wrong with NAFTA..." But how can we know? Key parts of the negotiations are unknown to Congress, and no part of the agreement has yet been shared with the public. Obama denies this by saying that any vote on TPP and TTIP will be after full public scrutiny, but he's not fessing up to the fact that the public scrutiny will come far too late in the day, when no amendments will be possible!
He's basically saying to the American workers to trust him and the corporate lobbies that are swarming all over the negotiations. Yet this calls to mind the old adage, "Fool me once, shame on you; fool me twice, shame on me." Trust might be a little easier except for the rumors of many corporate goodies strewn through the draft agreements: giving foreign investors rights to sue governments; giving the drug companies even more power to gouge consumers; and creating weak and unenforceable standards on labor rights and state-owned enterprises.
Fast track puts the politics exactly backward. Workers foresee that service jobs will join manufacturing jobs in the next wave of offshoring. They see a Republican Congress uninterested in supporting those who would be displaced or protecting the environment. In short, Obama and the Republicans in Congress have not made the case to American workers that trade policies under TPP and TTIP will be part of a fair, middle-class, and environmentally sustainable economy.