Brian Fraga, National Catholic Register, February 3, 2017
WASHINGTON — With President Donald Trump pulling the United States out of the Trans-Pacific Partnership (TPP) and looking to renegotiate the North American Free Trade Agreement (NAFTA), the new administration is tapping into festering anger that international trade pacts have devastated the country’s manufacturing base and left millions of blue-collar workers without jobs.
While acknowledging that trade agreements such as NAFTA, established in 1994, and the TPP, signed nearly a year ago, are often mixed bags that do in fact displace workers and incentivize companies to move some operations overseas, the U.S. Conference of Catholic Bishops and several economists say trade can benefit nations’ economies and improve overall standards of living.
But the trade agreements have to be fair.
“Ultimately, trade is good. Trade creates jobs, and you want to create jobs, but you want to encourage it in a way that provides for labor standards, that provides for environmental standards. … You want a scenario where both societies end up benefiting from trade,” said Stephen Colecchi, director of the U.S. bishops’ Office of International Justice and Peace.
Colecchi told the Register that two committees at the bishops’ conference were poised to oppose the TPP because it didn’t meet “some very basic criteria” the bishops use to analyze trade agreements. Among the concerns was that the TPP’s intellectual property-rights provisions would have made it more difficult for people in developing countries to access lifesaving medicines.
“The impact can be devastating,” Colecchi said.
Among several other principles the nation’s Catholic bishops and their staff use when analyzing trade agreements are whether the pacts have adequate labor protections for displaced workers and ensure people in developing nations with lower wages and safety standards are not exploited.
The bishops will oppose trade pacts that allow the United States’ agriculture sector, which enjoys subsidies and favorable policies from the federal government, to wipe out small farmers in developing countries. The bishops also point to dispute resolution mechanisms in the agreements that critics say multinational corporations can use to weaken a country’s environmental and labor standards.
Widespread Opposition to TPP
Whether the TPP would have benefited the United States and 11 other nations in Central and South America and the Asia-Pacific is debatable. By the time Trump signed an executive order formally ending the United States’ participation in the pact, the TPP had become so politically toxic that even many pro-trade Republicans, including Sen. Ted Cruz, R-Texas, had come out against it.
“Most objections on the right to TPP were that a lot of jobs would be lost, while on the left they believed TPP gave big corporations a special court, which the companies could use to overturn national laws and policies,” said Charles Clark, an economics professor and senior fellow at the Vincentian Center for Church and Society at St. John’s University in New York.
Clark told the Register that trade agreements, the TPP in particular, are negotiated by corporate attorneys and are geared toward benefiting companies, not workers. One criticism of TPP was that its negotiations were not transparent.
“Even Congress didn’t know about TPP’s details until it was time to send it to them for a vote,” Clark said. “There were multiple reasons why this was a bad deal.”
In an interview with Breitbart News before the election, Trump called the TPP “insanity” and said the deal should not have been allowed to happen. The new president had similar words for NAFTA, calling it “the worst trade deal ever” and vowing to renegotiate its terms on the campaign trail.
But since NAFTA — a 1994 accord that established trade and investment relations between Canada, the United States and Mexico — is a long-standing treaty ratified by the U.S. Senate, the president cannot withdraw the nation from the pact or unilaterally change its terms, said Jay Richards, a professor at The Catholic University of America’s Busch School of Business and Economics.
“And it’s clear that it would have a significant effect, since it has been in place for so many years. In fact, voiding it might be so disruptive to trade and industry that it would harm our economy,” Richards told the Register.
The president’s rhetoric to the contrary, NAFTA has not caused huge job losses feared by critics, although its economic gains have been more modest than what its proponents envisioned, according to a 2015 report by the Congressional Research Service. Still, the reality is that, more than 23 years since NAFTA took effect, millions of jobs in Mexico and the United States depend on trade.
“With NAFTA, Mexico was able to change its economy to much more manufacturing, and they have been fairly successful with that,” said Clark, who accused Trump of looking to “destroy” Mexican manufacturing, which he argued would displace millions of Mexican workers, who would then move north across the U.S. border to seek employment.
“It’s the classic example of what economists call unintended consequences,” Clark said.
Trump has also threatened retributive tariffs on American companies that manufacture products overseas, which may please his base but have mixed results, analysts said.
“It is a regressive tax on the poor and for small businesses that depend on imported goods,” said Jesuit Father Richard McGowan, a professor in the Finance Department at Boston College’s Carroll School of Management. Father McGowan said such a tariff, though, could preserve U.S. jobs, especially in the auto industry, and probably prompt large retailers such as Walmart to find other sources of cheaper goods.
“Most economists will be in favor of trade because overall production of goods and services will increase if you allow countries to produce that have a comparative advantage,” Father McGowan said.
Resonates With U.S. Workers
But the Republican president’s trade skepticism has resonated with millions of U.S. workers, as well as progressive union and labor organizations, who have seen factories in the Northeast and Midwest shut their doors over the last several decades and move to other countries.
Clayton Sinyai, a board member of the Catholic Labor Network, told the Register that the labor movement and the Church in the United States have been pointing to the hazards of profit-driven globalization for decades.
“Free-trade agreements that facilitate a race to the bottom, where nations compete for the favors of multinational corporations by reducing labor standards, slashing environmental and safety regulations, and reducing social investment increase economic inequality and ultimately hurt workers everywhere,” said Sinyai, who suggested that the recent election cycle marked a “remarkable turnaround” after decades of neglect by both major political parties.
“The president’s decision to withdraw from TPP and to review and revise NAFTA to better protect American workers represents an important opening, if the dialogue can be widened to include solidarity with workers in the global south, as well,” Sinyai said.
But while economists agree that international trade agreements inevitably result in some workers being displaced, they argue there are more factors at work, especially automation.
“At the same time that we’ve seen international trade, we’ve also seen technological changes, with manufacturers moving more toward robotics. Things like that are a little more subtle. They don’t get the big news you get when the U.S. signs a trade agreement,” said Thomas Gresik, an economics professor at the University of Notre Dame.
“There is no doubt manufacturing jobs have declined over the last several decades, in terms of the number of jobs. I would attribute that partly to international trade, outsourcing and offshoring, but I think it’s largely due to automation and greater technology,” said Richards, who argues that NAFTA on balance has been beneficial to the United States, Mexico and Canada.
“Trump seems to speak of international trade and trade agreements as if they are all cost and no benefit,” Richards said. “In fact, I think it’s much more of a mixed bag.”
Opportunity for China?
President Barack Obama’s administration supported the TPP, partly on geopolitical grounds that the pact would economically align member nations with the United States instead of China.
“China is already moving on this, to sign trade agreements with the same countries that we would have entered into the agreement with, and that will have the effect of diverting trade toward China,” Gresik told the Register.
Joseph McCartin, executive director of the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University, told the Register that although the TPP was unlikely to offer much help to beleaguered American workers, its cancellation could cause larger problems.
“One characteristic of Trump’s moves on this and other issues is that they are impulsive and are not linked to a broader strategy,” said McCartin, who suggested that canceling the TPP does not itself create a strategy for lifting stagnant wages of American workers. He also said trade deals in general do not take Catholic social teachings very seriously.
“They do not tend to include workers’ representatives in their drafting,” McCartin said. “They have not resulted in the strengthening of real workers’ rights, such as the right to organize. Where labor protections are written into them, those protections tend to be flimsy and lack enforcement. Trade agreements have mostly benefited the elites of the nations that have engaged in them.”
In his 2009 encyclical Caritas in Veritate (Charity in Truth), Pope Benedict XVI wrote that the new context of modern international trade and finance had altered the political power of modern nation-states, exposing and straining limitations on their sovereignty.
‘Fair Trade, Not Just Free Trade’
While the U.S. bishops’ conference offers its list of principles to evaluate trade pacts, Richards argued that the principles do not really offer a concrete way to decide for or against trade agreements.
“I think you have to look at real economic outcomes. You don’t want outcomes where more people are harmed than others, for example, or in which the environment is degraded,” Richards said.
Colecchi, from the bishops’ conference, noted that the bishops, in January, released a background document on trade agreements that stressed that such pacts have consequences and moral dimensions, and so must be evaluated with reference to the effects they have on people of both developed and developing countries.
Said Colecchi, “It needs to be fair trade, not just free trade, and it needs to be trade which is win-win.”