Smarter Trade That Puts Workers First
"Trade has become a bad word for working Americans for a simple reason: our trade policy has been bad for working Americans. We need new trade policies that put workers, wages and families first." - John Edwards
In America today, most families are working harder and struggling to get by. Our economy is growing and the productivity of our workers is at an all-time high, but workers' wages have failed to keep up with the costs of health care, education and retirement. Globalization, technological change and outdated labor and workplace laws have fundamentally changed our economy and redistributed the benefits of economic growth upwards. Equally fundamental change is needed to ensure our economy once again rewards work.
* A Generation of Stagnant Wages: America has always been about building a better life for our children, but we have lost a generation of progress. Men in their thirties today earn less after inflation than did men of their fathers' generation 30 years ago, leading families to work harder. Only 30 percent of Americans think the next generation will be better off. [Pew, 2007; Edison Media Research, 2006]
* An Economy Growing only at the Top: Income inequality is at its greatest level since 1928. Forty percent of economic growth over the past 20 years has gone to the top 1 percent of households. In 2005, income grew 14 percent for the top 1 percent but was stagnant for the bottom 90 percent. If all Americans shared in prosperity to the same extent they did 30 years ago, families in the bottom 80 percent would be earning $7,000 more a year. [Saez, 2007; EPI, 2006; Summers, Furman and Bordoff, 2007]
* A Washington Run by Special Interests: Powerful special interests are doing better than ever. The number of Washington lobbyists has tripled to 36,000 since 1996, more than 60 for every member of Congress. Their impact can be seen in a broken health care system, dependence on fossil fuels, neglect of poverty, abusive lending, and subsidies for corporate farms over family farms. [Senate OPR, 2006]
Today, John Edwards proposed "smart trade" policies: insisting on pro-worker provisions in new deals, holding trade partners to their commitments, investing more in dislocated workers and communities, and ensuring that imports are safe. He believes that the U.S. should not enter any new trade deals that do not meet these tests. His agenda is based upon three principles:
* Help Workers as Well as Corporations: Trade agreements like NAFTA and the WTO include special privileges for corporations, such as strong remedies for commercial rights and unprecedented rights to challenge environmental and health laws. Edwards believes that trade agreements should be judged by their effect on regular families and include strong rights for workers.
* Lift Up Families Around the World: Building the global middle class will promote balanced trade relationships and, by reducing poverty, make us safer and more secure. Edwards supports trade and foreign aid to ensure that workers around the world share in the gains from trade.
* Build on Other Efforts to Share Prosperity: Trade policy alone will not address the needs of American workers. As president, Edwards will also lead the country toward universal health care, better schools, stronger unions, and investments in innovation and skills to improve competitiveness and create new jobs in industries like clean energy and the life sciences.
Smart Trade For American Workers
After growing up in Carolina mill towns, John Edwards understands the devastating impact trade can have on workers and communities. The current account deficit exceeded $850 billion in 2006, which is 6.5 percent of our economy. An estimated 5 million jobs have been sent offshore under President Bush, and economist Alan Blinder estimates that 30 million to 40 million jobs are potential candidates to be sent offshore in the coming decades. Even when jobs are not moved offshore, competition from cheap labor overseas holds down wages and benefits in the United States. [MarketWatch, 3/14/2007; Wash. Post, 5/6/2007]
* Be a Tough Negotiator, Unafraid to Reject Bad Deals: The American position in trade negotiations has been formulated behind closed doors with help from corporate lobbyists. Under the "fast track" procedure, Congress could not amend the resulting deals. Not surprisingly, trade deals include special privileges for American multinational corporations but not protections for worker rights. For example, while the core NAFTA agreement failed to include any labor standards, its Chapter 11 gave corporations sweeping rights to challenge national laws in secretive tribunals, putting investor profits ahead of American sovereignty and protections for health and the environment.
o Insist on Benefits for Regular Families: Edwards believes that the true test of a trade deal is not its reception on Wall Street or contribution to the gross domestic product. Instead, his primary criterion for new trade deals will be simple: considering its impact on jobs, wages and prices, will it make most families better off? He rejects President Bush's use of trade agreements to encourage countries to support his foreign policy, rather than to strengthen our economy.
o Demand Strong Labor Laws: Many overseas workers work 12 to 16 hours a day in dangerous conditions for poverty wages, without the right to form an independent union. Requiring our trade partners to adopt and enforce basic workers' rights will prevent a global race to the bottom and help build a global middle class. Edwards believes that all of our trade partners should be required to enforce at least the core labor rights defined by the International Labor Organization: the right to organize and bargain collectively and prohibitions against forced labor, child labor, and discrimination. Edwards will pursue these goals through linkage to U.S. trade preference programs, any new bilateral trade agreements, and future World Trade Organization negotiations.
o Require Environmental Standards: Edwards supports strong environmental standards so multinational companies cannot profit by exploiting weak environmental laws and enforcement in some countries. For example, after the U.S. has capped its greenhouse gas pollution as Edwards proposes, trade policy could be used to encourage similar commitments by other nations.
o Fight Currency Manipulation: Some of our trading partners intentionally manipulate their currencies to keep the price of their exports low, putting American businesses at a great disadvantage. Edwards believes that other nations like China and Japan must make meaningful progress toward ending currency manipulation. Future deals must include strong, clear language on impermissible currency practices. Edwards will also make it easier for the Department of the Treasury to act against unfair trade practices by removing the intent requirement and allowing a range of responses, such as suspending government purchases from the foreign country to taking a case directly to the WTO.
* Demand a Level Playing Field for Trade: America's trade with the world has accelerated greatly in the past 15 years. Technology reduced the cost of trading goods and services, large countries like China, India and the former Soviet bloc joined world markets, and the U.S. cut its average tariff in half. In that time, imports have increased by more than 50 percent as a share of our economy and our leaders in Washington have failed to ensure that overseas markets are open and that American workers and companies can compete on fair terms. [ITC, 2006; BEA, 2007]
o Prosecute Violations of Trade Deals: Too often, Washington has looked the other way while other countries have broken trade laws and failed to live up to their commitments to open markets to U.S. goods. The U.S. Trade Representative is currently responsible for enforcement, but often neglects trade deals as soon as the ink dries. As a result, trade violations like subsidies are overlooked, unsafe products enter the country, intellectual property is pirated, and goods are counterfeited. Edwards will assign top prosecutors at the U.S. Department of Justice to the job of enforcing trade laws, including the stronger labor and environment standards he will negotiate. He will also go after illegal trade subsidies and insist that China and other countries move toward ending manipulation of their currencies, seeking WTO sanctions if necessary.
o Eliminate Tax Incentives to Move Offshore: The U.S. tax code encourages multinational corporations to invest overseas by allowing them to indefinitely defer taxation on their foreign profits. A recent $90 billion "tax holiday" for multinational corporations failed to create jobs, as President Bush promised, and many of these companies laid off employees instead. The effective tax rate on foreign non-financial income is less than 5 percent, which is well below the U.S. statutory rate of 35 percent. In some cases corporations actually receive subsidies to invest overseas through a "negative tax." Edwards will eliminate the benefit of deferral in low-tax countries, ensuring that American companies' profits are taxed when earned at either the U.S. rate or by a foreign country at a comparable rate. [NYT, 7/27/2007, Grubert and Mutti, 2002; Altshuler and Grubert, 2001; Treasury, 2000]
* Revamp Trade Assistance to Help Dislocated Workers and Communities: The economic upheaval of globalization is no longer limited to certain jobs or communities. American workers today are more likely to lose their jobs, look longer for a new one, and then take a significant pay cut. Trade Adjustment Assistance (TAA) helps only a select group of manufacturing workers and unemployment insurance (UI) fails to help most unemployed workers. [EPI, 2007; Blinder, 2006; NELP, 2007]
o Create a New "Training Works" Initiative Tied to High-Wage Jobs: While training alone is no substitute for good trade policies, we must do more to help workers get skills and move ahead in their careers. Edwards will make an aggressive, multi-pronged effort to help workers advance by:
+ Building career ladders that help low-wage workers gain skills and move up into well-paying jobs that can support their families. Edwards will support industry labor-management partnerships that work with community colleges and educators in industries like health care and manufacturing to expand opportunities for tailored, industry-specific training.
+ Supporting quality on-the-job and customized training for responsible businesses that agree to hire and train previously jobless workers.
+ Extending unemployment benefits to allow workers to enroll in long-term, quality training.
+ Supporting unemployed workers who have promising business ideas with entrepreneur grants, mentoring, and continuing unemployment benefits through the business start-up phase.
+ Investing in trained, professional career counselors, which is a proven, cost-effective approach to helping workers identify quality job and training opportunities.
o Help Communities Recover from Mass Layoffs: When communities lose a major employer, there is a predictable downward spiral: retailers lose customers, home foreclosures depress property values, and falling tax receipts force cuts in public services. For too long, the federal government has stood by while plant closings devastate entire towns. And yet, which communities will struggle under new trade deals is usually predictable. Edwards will require the independent U.S. International Trade Commission to study which communities will face stiffer competition under new trade deals. When a plant closing appears imminent, Edwards will immediately deploy technical assistance and recovery specialists to work with affected employers, unions and local officials just as the government does for areas facing a military base closing. New resources will be available for shoring up the local tax base, attracting new family-sustaining jobs, and helping local businesses expand.
o Strengthen the Safety Net for Workers Who Lose Their Jobs: Our unemployment insurance program has not been improved in over 70 years. Americans today are more likely to lose their jobs and less likely to receive unemployment benefits. TAA excludes millions of service workers facing trade-related competition. Edwards will help states provide UI coverage to 500,000 more workers a year, particularly low-wage and part-time workers. He will help the long-term unemployed by creating a standard 26-week extended benefit and expanding options for benefits during job training. He will also expand TAA's extended unemployment insurance and training benefit to all workers dislocated by globalization, regardless of their industry, making an estimated 600,000 workers a year eligible. Edwards' universal health care plan will ensure that workers who lose their jobs will not lose their health insurance. [EPI, 2003; CBPP and EPI, 2002; Rosen, 2007; NELP, 2006]
* Ensure the Safety of Imported Food and Drugs: Food imports more than doubled in the last decade and Americans eat 260 pounds of imported foods a year. Imported food poses risks, but Washington has failed to respond due to its pro-business ideology. [AP, 4/16/07; NY Times, 4/30/07]
o Enforce Mandatory "Country of Origin" Labeling: Large meat packers, agribusiness and retailers like Wal-Mart are blocking the implementation of right-to-know law for the origin of meat, produce and nuts. Edwards will finally enforce mandatory country-of-origin labeling, letting families choose the origin of their food. [USDA, 2007; The Hill, 4/7/05; National Family Farm Coalition, 2007]
o Increase Inspections of Imports: Less than 1 percent of imported food is inspected, down from 8 percent in 1992. Edwards will restructure our food inspection responsibilities and increase FDA inspections. [NY Times, 5/16/07; NY Times, 7/1/07; GAO, 1998]
o Require Safety Systems Abroad: Edwards will require the FDA to certify that a foreign nation's food safety systems are equivalent to our own before its producers can sell food into America, as currently done for meat, poultry and egg products. [CSM, 5/807; GAO, 2004]
o Ensure Safe Prescription Drugs: India and China now supply the United States with 20 percent of its finished generic and over-the-counter drugs and more than 40 percent of the active ingredients for pills made here. Americans face a 1-in-100 chance of buying tampered or fake goods each time they go to the drugstore. Big drug companies have lobbied and litigated to prevent enforcement of the drug safety law passed in 1988. As president, John Edwards will require the pharmaceutical industry to quickly implement non-forgeable electronic "track-and-trace pedigrees" to ensure that drugs stay safe at every step in the supply chain, from factory to store. He will also start enforcing laws requiring sellers to prove that their drugs came from an authorized distributor and close the loophole that allows big drug wholesalers to ignore pedigree requirements. [Washington Post, 6/17/07; ACSH, 2006]
o Strengthen Toy Safety: Nearly 80 percent of children's toys are made in China, and recently Fisher-Price recalled almost 1 million toys made with high amounts of lead. Edwards will raise penalties for safety violations, examine the possibility of requiring independent testing, and ban travel paid by industry for the experts at the Consumer Product Safety Commission. [Toy Industry Association, 2007]