Five lessons for new U.S. trade policies

An experienced American trade negotiator, Robert B. Cassidy, is speaking out with a candor rare among high-ranking trade bureaucrats. Cassidy, a former assistant U.S. Trade Representative,is discussing the mistakes of the past and the lessons that should be learned from them by the Obama administration.

In remarks before a packed audience at the Economic Policy Institute (EPI) in Washington on January 27, Cassidy, now in private practice, offered “five overarching lessons” to guide any overhaul of U.S. trade policy.

Fortunately, EPI provides the full text of Cassidy’s talk on its Website, from which this report draws his five lessons and a brief explanation of each, as follows:

First: Trade policy should be based on U.S. economic self-interest, not as the equivalent of corporate self-interest, nor as a subset of foreign policy. Cassidy cites the free trade agreement with Korea as one motivated largely by foreign policy objectives, in this case to surround China with bilateral FTAs.

Second: Trade policy as such has only limited reach. Global monetary, fiscal, and competition policies are more important. As the “only country capable of standing up to China,” the United States should take the lead in the WTO in challenging China’s manipulated exchange rate.

Third: The advisory and decision-making processes of trade policy “need to be balanced,” that is enlarged beyond State, Treasury, and Commerce (plus Agriculture occasionally) to include Labor and environmental interests. The present race to the bottom on labor standards should be abandoned, and indeed can be abandoned fully consistent with WTO principles.

Fourth: We need to get our trade relationship with China on a more balanced footing by asserting our interests more aggressively. On our imports of tainted foods, why are we relying on China to safeguard the health of our citizens?

Fifth: Reconsider “trade promotion authority” to make negotiations more transparent and negotiators more responsible in pursuing our objectives.

The administration, according to Cassidy, should take advantage of a “short window of opportunity” to ensure that the benefits of trade “flow to the broader U.S. economy. . . and help achieve other goals such as improved labor standards and environmental objectives.”

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Why union membership remains low

The number of workers belonging to unions in the United States grew by 428,000 last year to 16,100,000, mostly thanks to increased membership in the ranks of teachers, police officers, firefighters, and other local government employees.

The 2008 union membership rate in the public sector generally – 36.8 percent –stood in stark contrast to the rate in the private sector – 7.6 percent. In other words, government workers were nearly five times more likely to belong to a union than employees in the private sector.

Collective bargaining contracts covered about 1,700,000 workers who themselves refrained from joining a union. These holdouts were distributed about half and half between the public and private sectors.

Exhaustive data on union membership is contained in the latest annual report, “Union Members in 2008,” issued by the U.S. Labor Department’s Bureau of Labor Statistics (BLS), based on monthly household surveys conducted by the Census Bureau.

The BLS report, which covers 12 pages, does not explain why unions are stronger in the public than in the private sector. Numerous surveys, however, show not only that private business is much more unreceptive to unions than government agencies, but also that U.S. law permits companies to put that attitude into action.

A new Human Rights Watch briefing paper focuses on labor law and practice in the U.S. private sector, without drawing a contrast with the public sector. After reading the 12-page report, however, I cannot help marveling that even 8,255,000 of private sector workers still belong to unions.

U.S. labor law “is weak and riddled with loopholes,” and employers take advantage of that weakness in the law and in its enforcement to vitiate the right of workers to organize. The HRW briefing paper supports those two findings with detailed evidence. For example:

-- Penalties for firing pro-union workers and for otherwise breaching the law are so small that employers dismiss them as a worthwhile cost of doing business.
-- The government run election procedures by which workers vote for or against a union are heavily slanted against the union.
-- Even if workers succeed in winning an election, an employer can stall reaching a collective bargaining agreement to the point of making the victory meaningless.

HRW is among a growing number of organizations supporting Congressional approval of the Employee Free Choice Act. For Human Rights Watch, that passage is “a human rights imperative.”

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The case for a huge economic stimulus

More than a third of the U.S. labor force will be plagued by periods of unemployment or underemployment next year if government spending does not surge substantially to spur demand for goods and services. So says a new Issue Brief published by the Economic Policy Institute.

In the absence of a large recovery package, the unemployment rate is expected to reach 10.2 percent in mid-2010, according to the Brief, and middle-income families would earn about $4,700 less in 2010 than they had in 2007,

But the overall statistics “don’t capture the pain” that would impact specific groups of people, warn Lawrence Mishel and Heidi Shierholz, the authors. Those especially hard hit next year would include:

-- Nearly one in five African-Americans in the labor force would be jobless.
-- So would 13.1 percent of Hispanics.
-- Underemployment would reach 18.8 percent of women workers.

In the Brief, entitled “Without Adequate Public Spending, a Catastrophic Recession for Some,” the authors recommend government spending on the order of $600,000,000,000 a year for two years to head off the “catastrophe” they consider otherwise inevitable.


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For blacks, depression is already here

For most white people, it’s a recession, but for blacks, it’s already a depression. That’s a conclusion of a new report, “State of the Dream 2009: a Silent Depression,” released on Martin Luther King’s Day, January 15, by a Boston think tank, United for a Fair Economy (UFE).

“People of color have been experiencing a recession for five years,” says Amaad Rivera, UFE’s racial wealth specialist and one of the authors of the 70-page report. “By definition, a long-term recession is a depression.”

Why has this “silent depression” gotten relatively little attention? In large part, according to UFE, because the economic indicators we rely on are not sophisticated enough to mark the racial divide.

The facts, though, are there deep and not so deep in government documents, and the UFE report digs out many of them, as in a UFE chart showing a poverty rate in 2007 of 8.2% among whites and 24.5% among blacks.

Economic inequality and structural racism “were created, so they can also be eliminated,” the UFE report insists, by adopting reforms small and large, immediate and long range. A significant example: taxing work and wealth at the same rate would generate $95,000,000,000 a year in revenue.

“The current economic crisis requires more than a color blind stimulus,” says Dedrick Muhammad, UFE research associate and a co-author of the report. “It requires a complete economic restructuring that addresses the racial wealth divide.”

For more details, check the Website of United for a Fair Economy.

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