Contrary to a recent column by our friend Rafael Anchia, Democratic state representative of Dallas, proposed “fast track” legislation that would grease passage of the controversial Trans-Pacific Partnership (TPP) would likely harm American and Mexican workers.
Anchia would have you believe that opponents are engaged in “inflammatory rhetoric,” do not understand basic economics and oppose the very idea of trade.
Believe it or not, as leaders of labor unions we want business to do well. We also want workers, the heart of any successful business, to thrive. We support trade when it grows companies, helps workers and benefits our nation. But we oppose the rigged “race to the bottom” trade model because it inevitably allows the cheapest and worst labor and environmental standards to prevail in the world trade order.
Supporters love to dwell on rising U.S. exports in “free trade,” but they are strangely silent on the flood of imports that costs Americans jobs.
In March alone, the U.S. trade deficit stood at $51.4 billion. The annual trade deficit in 2014 topped $500 billion. Labor activist Stan Sorscher nailed the effect of rigged trade deals on the American economy with this explanation: “Exports go up. Of course, imports go up faster. This is really a simple issue. You give me $5. I’ll give you $3. Look! You just got $3. You should be very happy. We can congratulate each other for negotiating that great deal. Let’s do it again. You give me $5 and I’ll give you $3. Look. You have 3 more dollars!”
Under TPP, many American workers will suffer. Only because of leaks, we know this secret treaty – there is no public copy of TPP and members of Congress cannot talk about the provisions under penalty of law – would force Americans to compete with Vietnamese workers making less than 60 cents an hour. It would allow nations with the worst working conditions to sue America because our laws interfere with their business “expectations.” And it would do who knows what else. “Fast track” legislation would deny Congress a chance to amend the treaty regardless of its contents. That is an abdication of responsibility.
The TPP poses a particular threat to Texas jobs, given its potential to destabilize the Mexican border economy that supports many businesses here.
Since implementation of the North American Free Trade Agreement (NAFTA), more than 159,000 Texas jobs have been lost to offshoring or imports, as certified by one narrow Department of Labor program. The job loss stems largely from decisions by manufacturing companies to relocate to Mexico in pursuit of cheaper wages after NAFTA guaranteed tariff-free access to the U.S. market for autos, electronics and clothing.
After many hard years, the Texas border has made a significant comeback. Manufacturing jobs lost to Mexico have been replaced with new Texas jobs in industries that support the automotive and electronics factories that relocated across the border. Auto companies, for example, set up “twin maquiladoras,” with plants in Mexico that manufacture vehicles, supported by firms in Texas border cities from El Paso to Brownsville that inspect and ship the vehicles.
However, these border jobs would face special peril under the proposed TPP, which would give Mexico’s low-wage competitors, like Vietnam, new tariff-free access to the U.S market. Economists call this “preference erosion”; another way of saying it is that Mexican workers, unbelievably, may soon become too rich for management blood.
Take autos, for example. Under NAFTA, leading Japanese auto companies like Mazda, Honda, Nissan and Toyota decided to produce cars in Mexico, in part to avoid U.S. tariffs when exporting to the United States. Today, Japanese auto companies comprise about one-third of Mexico’s auto production, which supports Texas border businesses that handle customs brokering, distribution and delivery of Mexican-made autos.
But if the TPP takes effect, the elimination of U.S. tariffs on vehicles imported from Japan, along with Japan’s depreciated yen value, would provide a significant incentive for Japanese automakers to supply the U.S. market with autos made in Japan rather than Mexico. (Japan is already the world’s second-largest exporter of passenger vehicles.) The United States would eliminate tariffs on Japanese autos even if the parts were made in ultra-low-wage Vietnam, and potentially even if they were made in China, posing a sincere threat to Mexico’s burgeoning auto parts sector and the Texas businesses that support it.
Texas already has had to cope with displacement of manufacturing jobs spurred by NAFTA. Now that the economy has begun to adjust, members of Texas’ congressional delegation should make clear that they will not let another rigged trade deal jeopardize recovery by placing Mexico’s border industries in competition with Vietnam’s 60-cents-per-hour wages. A “fast track” to job loss is not in America’s interest.