A Dangerous Cycle Of US Job Loss: TPP To Expand, Encouraging Companies To Send Jobs Overseas
(MintPress) – After an election sold on the candidate who was most likely to prioritize job creation in the U.S., rather than shipping employment overseas, the U.S. finds itself in the midst of a trade agreement that would deliver the latter.
The Trans-Pacific Partnership (TPP) Free Trade Agreement seeks to expand trade relationships with Australia, New Zealand, Singapore, Vietnam, Brunei, Malaysia and the U.S. While it’s argued that it would be a benefit for the U.S. export business through lifted tariffs, it would pave a profitable path for corporations to ship jobs overseas.
Losing jobs to cheap labor overseas has become a cornerstone of the U.S. economy for the last 30 years. From 2000 to 2009, in the lead-up to the recession, the nation’s largest companies created 2.4 million jobs overseas, while eliminating 2.9 million in the U.S., according to the U.S. Commerce Department.
Recognizing a possible perpetual cycle of overseas job creation through the TPP, some legislators are stepping up, demanding more transparency in the treaty negotiation process and restrictions that would protect the American worker.
In a letter sent on behalf of Sen. Al Franken (D-Minn.) to President Barack Obama, he asserts that some included countries offer tremendously low labor costs while touting poor systems of worker’s rights and protections, most notably in Vietnam.
“These rules should not grant corporations extreme protections that help them relocate investment and jobs overseas, especially because this deal includes Vietnam, a low-wage, weak-labor rights offshoring alternative to China — and may include other, similar countries in the future,” Franken writes.
Franken isn’t alone in his concern over the TPP. More than 130 congressional leaders signed a letter to U.S. Trade Rep. Ron Kirk, claiming Congress was being left out of important negotiations relating to the agreement. Fifty-two members of Congress specifically questioned Vietnam’s involvement in the trade agreement, according to a Bloomberg report.
Lifting tariffs on low-wage countries creates cycle of job loss
A 2009 Human Rights Watch report detailed the arbitrary arrests, detentions and prison sentences of those who attempted to join union movements in the country, highlighting a concern that the low-wage market could lure even more positions away from the U.S., subjecting workers to conditions they’re incapable of challenging.
Vietnam, specifically, is a country that has already raised concern among those working for New Balance, the last athletic shoe company that still maintains all factory operations on U.S. soil.
The company expressed concern with the proposed TPP agreement, claiming that it would cut tariffs on shoes coming from Vietnam, creating an atmosphere the company couldn’t compete with. This, in turn, would result in the loss of American jobs, as New Balance would struggle to remain competitive on the transforming world stage.
Kirk visited a New Balance factory for discussion with CEO Rob DeMartini on the proposed TPP, yet failed to deliver any answers on whether the agreement with Vietnam would hurt the company’s American factory jobs.
“I want to thank the people at New Balance for giving me the opportunity to visit their Norridgewock factory, and for their willingness to engage with USTR as we negotiate the Trans-Pacific Partnership agreement,” Kirk said in a press release. “Our negotiators working to get a strong deal for American workers and businesses, and we intend to negotiate a high-standard agreement that supports and retains American jobs.”
During the discussion, New Balance reportedly requested that tariffs remain on 20 categories of athletic shoes from Vietnam, according to a Reuters report.
Medical professionals also see possible red flags with the TPP agreement, claiming extending patents for pharmaceutical companies could drive up the cost of life-saving medicine in developing countries.
Learning from NAFTA — or not
In the lead-up to the ratification of the North Atlantic Free Trade Agreement (NAFTA), then-presidential candidate Ross Perot referred to America’s potential involvement as a move that would create a “giant sucking sound,” referring to the jobs that would be shipped overseas by companies recognizing the benefits of cheap labor.
While it was argued at the time by then-Democratic presidential challenger Bill Clinton and former president George H. W. Bush that the trade agreement would create jobs in the U.S., the numbers now prove that wasn’t the case, at least in the manufacturing sector.
Data compiled by the Federal Reserve shows that from 1992 to 2010, the number of manufacturing jobs in the U.S. went from 16.8 million in 1992 to 11.65 million in 2010 — a loss of 4.5 million once existing manufacturing jobs. Other data shows that from 1992 to 2010, the U.S. created 29 million jobs overseas.
“It’s NAFTA on steroids in terms of its geographic scope, its economic scope and the new powers it gives to corporations,” Arthur Stamoulis, executive director of Citizens Trade Campaign, told the Miami Herald.
Laying the framework for protection
The transparency of TPP negotiations have been questioned by many, including members of Congress. Franken addresses this issue in his letter, claiming Congress must be given a more active role in the process.
“Nowhere is such cooperation on trade more urgent than in the ongoing negotiations on the Trans-Pacific Partnership, a vast, multi-country free trade agreement that will have a significant effect on global trade and investment,” Franken writes. “It should be crafted to maximize good job creation and market expansion while minimizing the incentives for further offshoring of middle class jobs.”
The letter goes on to “urge” the president to maintain “buy American” government procurement requirements and safeguard against rules that “provide incentives for offshoring of both goods and manufacturing and service sector jobs.” Franken also touches on an obligation to protect labor rights.
“A country that denies these rights to workers is providing a hidden subsidy that keeps wages artificially lower than they otherwise would be if workers were free to organize and bargain — a subsidy that makes U.S.-based producers less cost-competitive,” he writes.
The agreement is set to come to fruition in 2013, although not without robust debate from congressional leaders. Now what is to be seen is whether the administration will take the advice of its critics and include Congress before asking for approval on the final draft.
“If your Administration pursues these basic negotiating objectives and collaborates with Congress during the negotiations — ahead of the ratification debate — we are confident that the TPP can become a tool for job creation that helps rebuild a national consensus on international trade policy,” Franken writes.
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