Will Asia trade deal hurt US workers? Six tough questions answered.
| Washington
The Obama administration has a tough sell convincing Congress to grant it 鈥渇ast track鈥� trade negotiating authority so it can complete negotiations on the biggest regional trade deal in United States history 鈥� the Trans-Pacific Partnership agreement, involving a total of 12 nations (though not China).
The administration sees this as a tremendous opportunity for economic growth. It wants fast track 鈥� which would require Congress only an up-or-down vote on a final agreement 鈥� to help it secure the best deal it can. Opponents, mostly Democrats but some Republicans, too, say fast track and TPP will cost America jobs. But supporters say their approach is 鈥渘ew and improved.鈥�
Below are some of the critics鈥� chief concerns, and how fast track and TPP supporters respond:
No. 1 concern: job loss
Critics say free trade kills jobs. Business says it creates them. However, it鈥檚 not that simple.
Most economists agree that broadening trade results in economic growth, but benefits are shared unevenly.
鈥淭rade liberalization promotes overall economic growth among trading partners but 鈥� there are both winners and losers,鈥� the nonpartisan Congressional Research Service said in . It鈥檚 also extremely difficult to calculate how a trade deal affects job creation and loss 鈥渄ue to a lack of data and important theoretical and practical matters,鈥� CRS said.听
In reviewing the 1994 North American Free Trade Agreement, CRS found that "NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters."
The Obama White House admits that while the overall benefits of trade expansion 鈥渕ay be large鈥� they may also be 鈥渦nevenly distributed.鈥� Trade, therefore, 鈥渃an also have adverse effects for some workers鈥� the Council of Economic Advisers (CEA) said in 鈥�,鈥� a report issued earlier this month.
So the White House is arguing to members of Congress that policies the administration supports, such as investment in infrastructure, worker training, and education, can offset jobs lost as a result of trade deals.听
Assistance for the displaced: Is it enough?
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听Trade adjustment assistance (TAA) programs provide help beyond traditional jobless benefits for workers displaced by trade. Displaced workers get help to train for a new career. Without such extra help, the thinking goes, these workers might find new jobs but have to take a big cut in pay 鈥� or they might drop out of the job market entirely.
The programs are also designed to boost chances of passing trade legislation, drawing in some Democrats who might otherwise be in the "no" camp. In a separate bill, TAA has been beefed up to raise benefits and to include service sector workers for the first time.
Whether TAA works, however, is a matter of debate. found that, after four years, participants had earnings comparable to a group of non-TAA job losers.
That can be viewed as bad news (even with the help, they aren't doing any better than other people recovering from joblessness). Or as good news (this is a particularly hard-hit group of workers, who might have fared worse without the training).
Politically, 鈥淚f TAA made even a relatively modest contribution to the ease of enacting free-trade policies, the program鈥檚 benefits would outweigh its costs," said the report.
Weak on 鈥渃urrency manipulation鈥�
When countries such as China and Japan artificially lower the value of their currencies, it costs Americans jobs because foreign imports become cheaper and US exports more expensive. So critics want language in the fast-track bill against currency manipulation.
The bill鈥檚 supporters don鈥檛 dispute the dangers. That鈥檚 why, for the first time, fast-track legislation makes the issue a 鈥� for the administration.
But an enforcement mechanism is too strong a remedy to include in the bill, the administration says, claiming that it would derail trade negotiations. It could also endanger America鈥檚 ability to manage its own currency, and lead to retaliation and trade wars, US officials say. They point to modest success in recent years in pressuring China to increase the value of its currency.
Sen. Charles Schumer (D) of New York, who calls currency manipulation the 鈥渕ost significant trade challenge this country faces,鈥� succeeded in getting a currency amendment in a related customs bill. It鈥檚 not yet clear what will happen to this measure or other attempts to address the issue.
Secret deal? No deal.
Don鈥檛 know what鈥檚 in the TPP? That鈥檚 because it鈥檚 鈥渢op secret,鈥� criticizes Sen. Elizabeth Warren (D) of Massachusetts, a vocal opponent of fast track.
That was a complaint that her colleague, Sen. Ron Wyden (D) of Oregon heard a lot at town halls. As a result, 鈥淚 really went to the mat on these secrecy issues,鈥�听Senator Wyden said at a recent Monitor breakfast.
Senator Wyden, who is the administration鈥檚 point man on trade in the Senate, points out that with the fast-track bill, the full text of the TPP and any other trade agreements will be public for the first time 鈥� starts voting on it. Under fast track, any member of Congress can have access to classified negotiating texts. Members can attend negotiating rounds or be briefed by the administration on request.
That鈥檚 not good enough for Senator Warren. She鈥檚 pushing that tells US trade officials: 鈥淣o vote on a fast-track for trade agreements until the American people can see what鈥檚 in this TPP deal.鈥� Members of Congress also complain about restricted access for their staffs, on whom they heavily rely.
A dispute over resolving disputes
Critics are up in arms over the way corporations settle disputes over alleged violations of free-trade agreements. The investor-state dispute settlement, or ISDS, lets foreign countries sue governments in special tribunals, rather than going through the country鈥檚 court system.
The problem with this, they argue, is that the to corporations for the violations 鈥� such big payments that countries are then incentivized to change their regulations. Not only do supporters of labor object, they worry that foreign companies will use the tribunals to force changes in US regulations and laws.
The administration says it is writing into the TPP that will prevent this from happening.
President Obama also : "There is no chance, zero chance, that the US would be sued on something like our financial regulations, and on food safety, and on the various environmental regulations that we have in place, mainly because we treat everybody the same." He added, "We treat our own companies the same way we treat somebody else's companies."
Vietnam, a contentious subject
For the first time, a non-free-market economy such as Vietnam will be included in a broad trade deal involving the US, and that鈥檚 a problem, say critics. 鈥淎mericans should not be forced to compete against desperately poor workers like those in Vietnam who make as little as 56 cents an hour,鈥� Sen. Bernie Sanders (I) of Vermont, wrote in to to US Trade Representative Michael Froman last month.
In 2013, the US trade was $19.6 billion.
But supporters argue that fast track and the TPP are precisely intended to protect against this problem. The fast-track bill raises the bar for labor, environment, and human rights standards, says Wyden. 鈥淭rading partners must adopt and maintain core international labor and environmental standards, with trade sanctions if they do not comply,鈥� he said in last month.
Staff writers David Cook and Mark Trumbull contributed to this report.
[Editor's note:听The original version of this article misidentified Senator Wyden's home state.]
