The New Politics of Trade in the United States

Susan Ariel Aaronson, Guest Blogger

For many years the U.S. debate over trade has been a little like a sixth grade dance. Proponents from business, academia, and government squirm on one side of the room.  Meanwhile, opponents who include members of labor unions, civil society groups, academics, and local government officials, refuse to move. But on December 6, 2010, two unions joined the dance.  The United Autoworkers and the United Food and Commercial Workers expressed support for the US-Korea Free Trade Agreement (KORUS), arguing that the agreement will not only “protect” but according to the UAW “grow more jobs.” These unions became the first U.S. unions to publicly support a free trade agreement since the U.S.-Canada free trade agreement (FTA) of 1988.  Meanwhile, several other prominent unions including the AFL-CIO umbrella organization continued to signal their opposition to the KORUS and other trade agreements.

Does this development signal a new policy environment for trade? Perhaps. The UAW got special provisions to protect workers in the auto sector from import surges. But the politics of trade may be changing. The Obama Administration has made labor enforcement a top priority for trade policymaking and in so doing, has built trust with union leaders and members of Congress. Moreover, in recognition of changed economic and demographic conditions, some union leaders see opportunities in some of these agreements.

The Obama Administration has worked hard to show trade agreement critics that it is focused on achieving improved governance, labor rights, and employment “results” from trade agreements. The Bush and Clinton Administrations had done little to hold FTA partners “accountable” for their labor practices. In fact, the U.S. has rarely acted to enforce these rights and has never applied sanctions in response to violations. In 2009, the Congressional Government Accountability Office found that these agreements had done little to improve labor rights.

Obama Administration officials shrewdly recognized that labor rights language in bilateral FTAs could not appease concerns about these agreements.  In its first trade policy agenda report in 2009, the Administration acknowledged that protecting worker rights makes “support for global markets sustainable.” Ron Kirk, the U.S. Trade Representative asserted that “USTR will proactively monitor…labor violations and enforce labor provisions…When efforts to resolve violations have… expired, USTR will not hesitate…to invoke formal dispute settlement.”

The Administration began to act on its promises. Trade officials initially maintained the Bush Administration’s ban on Mexican trucks.  Trade and labor officials put FTA partners on notice that the U.S. would monitor their labor rights performance. The Administration added an addendum to the U.S.-Korea FTA to ensure that that the American auto industry would not suffer from harmful surges in Korean auto imports. It worked with key members of Congress to find ways to improve Colombia’s labor, human rights, and judicial practices.  And on July 30, 2010, the Obama Administration promised to review and possibly challenge Guatemala’s labor practices if that country did not show the U.S. government that it is both effectively enforcing its labor laws and complying with the agreement.

Changing economic and demographic conditions have also forced union leaders to rethink their strategies.  Workers and union leaders confront a world where both skilled and unskilled workers are plentiful but jobs are scarce. The U.S. manufacturing sector is relatively efficient at manufacturing and has shown a marked hostility towards unionization. Therefore, expanded goods exports may not directly result in many new manufacturing jobs.  However, the U.S. service sector is more labor intensive, and unions may find such companies more fertile ground for unionization.  The Department of Commerce found job growth in sectors associated with exports, including  education, financial services, tourism, agriculture, transport and warehousing.  Some of these sectors may be ripe for further unionization.

Finally, union leaders recognize the power of demographics.  Many of the fastest growing countries in Latin America and Asia also have growing middle classes ready to consume a wide range of U.S.-produced goods and services.  Although the U.S. population is growing, according to the IMF, overseas markets represent almost three-quarters of the world’s purchasing power and some 87% of economic growth.  Manufacturing is increasingly moving to such locations.  Thus, some union leaders seem to have decided it is better to help shape the trade agreements that can help stimulate that growth.  Others recognize that they may be able to grow their union internationally and have more influence over corporate behavior if they become continental or international unions.

Union leaders are unlikely to become enthusiastic converts for trade liberalization. They see these agreements as deregulatory, and they have a point. They have seen pay and relative labor standards decline for many workers.  But these agreements are also re-regulatory—they give foreign market actors, including workers, a voice in regulating our behavior, just as they give us a voice in their polity. [1] U.S. unions are just beginning to test this leverage, challenging work conditions in China and Guatemala. While the Bush Administration rejected and marginalized these petitions, the Obama Administration appears to be using them to prod changes in behavior, before using sanctions

The AFL-CIO notes quite rightly that South Korea has labor rights problems, including limitations on strike activity and widespread intervention in internal trade union affairs by the state (including restrictions on union membership). Moreover, some 55% of the Korea workforce works as contingent or irregular workers.  These workers have little ability to affect workplace conditions.

If American workers want to help empower these workers, will they have more influence with the trade agreement or without it? In making its case for KORUS, the Obama Administration argues it will challenge violations of labor rights related to trade, as it may do with Guatemala.  However, the AFL-CIO argues that even with a sympathetic administration, it will be difficult to challenge violations because it will be hard to prove a connection to trade or investment.  But the AFL-CIO certainly can’t challenge violations without the agreement.

In sum, Obama administration strategies coupled with changing economic and demographic conditions are remaking the political environment for debating trade. Labor is now divided as to the potential benefits and costs of free trade agreements. This division will allow us to have a broader more honest debate about the costs and benefits of bilateral free trade agreements; it will allow us to discuss whether these agreements are deregulatory or re-regulatory.  Such a debate is in America’s best interest.

Susan Ariel Aaronson is Associate Research Professor at the Elliott School of International Affairs, George Washington University, and the author of six books on trade and globalization issues.

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[1] In this regard, see S. Aaronson and R. Abouharb, “Strange Bedfellows: The WTO and Some Democratic Rights,”  International Studies Quarterly, June 2001;  and S. Aaronson and J. Zimmerman, Trade Imbalance: The Struggle to Weigh Human Rights in Trade Policymaking (Cambridge: 2007), U.S. Chapter