Restoring Trust After Our “Free Trade” Charade Ends

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

The 2016 elections threw a bucket of cold water into the face of free-trade orthodoxy. It’s no surprise that voters in Wisconsin, Michigan, Ohio, Pennsylvania, and elsewhere are deeply discouraged by decades of failed promises of boon from establishment leaders. The real surprise is, what took us so long?

We need a new approach to globalization that does as much for workers and the environment as it does for global investors.

Everyone I know wants trade and globalization. However, we have managed globalization badly.

Our failed “neoliberal” approach has been to manage globalization through trade deals, written by and for the interests of global companies. The neoliberal vision is a fully integrated global economy, where national identities are blurred, shareholder interests have top priority, public interests are devalued, and gains go almost entirely to investors.

Nothing in trade theory or history says global economic integration is a good idea.

In this neoliberal vision, markets will solve all our problems, government is bad, and power and influence should favor those who already have plenty of both.

A growing number of economists and policy-makers recognize that neoliberalism is exhausted, politically unstable, and increasingly reckless. Martin Wolf, the most influential living British economist, argues that our failed market orthodoxy weakens Democracy. What Wolf sees in Europe is doubled in the US political experience.

The collapse of the Trans-Pacific Partnership (TPP), a 12-country NAFTA clone, is a historic event. TPP was radioactive all through the presidential campaign, for good reason - voters have lost trust in the neoliberal NAFTA approach to globalization.

The discussion has started on a new approach. Representative Sander Levin and economist Simon Johnson recognize that our distorted power relationships and insistence on maximum possible trade cannot solve our problems.

Jared Bernstein and Lori Wallach go through TPP’s shortcomings, suggesting remedies. A recent proposal from the AFL-CIO offers 6 objectives for renegotiating NAFTA. A Sierra Club discussion paper brings environmental interests into sharper focus.

Jeff Faux makes it crystal clear. It’s time to start over.

“The trade policy of the last quarter century is now bankrupt, economically and politically. This is the moment for America to go back to the drawing board and rethink strategies for competing in the global economy in ways that raise living standards for all.”

Go back to the purpose for any political economy - what policies bring economic security, and balance interests fairly so we can prosper together?

The AFL-CIO’s proposal starts at ground zero - eliminate the special dispute settlement system popularized in NAFTA and duplicated in subsequent trade deals. This “investor-state-dispute-settlement” system, known as ISDS, operates on a simple principle. Sure, governments can regulate, but they must pay investors for “unfairness” of policy changes that interfere with trade.

Under NAFTA-style neoliberalism, the governance principle is that investments are sacred, and public interest operates in whatever policy space is left. By ditching that neoliberal corporate-centric principle, we make it clear that public interest is legitimate and meaningful.

We are happy to balance public interests with investor interests, fairly. That’s what we do under the US Constitution. Other modern democracies do that in their own legal tradition.

It may be obvious, but worth saying. Public policies come from a political system. We don’t really have a global political system. We will need to build public interests into our globalization policies at national and international levels.

And we must address the two defining problems of our time, inequality and climate change. These are the market failures of global proportions. We absolutely need public policies to solve them.

Inequality comes from too much power at the top and too little power for workers and communities. Workers can claim a share of the gains they create if they have good jobs that create gains, and they have economic and political power to claim their share of those gains.

Every country in the world has an industrial strategy for creating jobs and sharing gains. Ours sucks.

We had strong manufacturing strategies when we industrialized in the 19th century, and again in the mid-20th century. China, Korea, Japan, Germany and other countries have effective manufacturing strategies. We could start by saying we want an effective manufacturing strategy.

Climate change is arguably the biggest market failure in human history. The Sierra Club’s discussion paper introduces a new mechanism for balancing public and business interests. First, we acknowledge that environmentally sustainable policies are in our national interests. All countries share that interest, and most have made commitments to meet environmental standards.

The Sierra Cub’s discussion paper introduces a “border adjustment” mechanism to encourage countries to honor their voluntary commitments. The paper also calls for an independent body to investigate compliance to those commitments, hear disputes, and impose sanctions. When a country meets its environmental commitments, tariffs are low. When a country falls short of its commitments, sanctions or “border adjustments” would apply to products from that country.

The discussion paper starts with a fundamental political value.

“Trade and investment should be treated as tools for advancing public interest objectives - not ends in and of themselves.”

If we had a Constitution for globalization, that value would be in the preamble. It would frame the rest of the provisions. We don’t need “maximum possible trade.” The optimal level of trade may be less than what we have now. Just sayin’.

The Sierra Club paper gets to the trust issue eating at our national political spirit.

“Above all, if the legitimacy of our democratic political systems is to be maintained, economic policy must be orientated towards promoting the interests of the many not the few; in the first place would be the citizenry, to whom the politicians are accountable. If we fail to do this, the basis of our political order seems likely to founder.”

Furthermore, this is not a question of the US national interests versus other countries’ national interests. Remember - our NAFTA-style neoliberal approach puts the 1% in each country at odds with workers and communities in each country. That can be rearranged, so that we trade, and we share the gains from globalization, and deal with inequality, and manage climate change.

The Sierra Club discussion paper takes a big step toward restoring trust. We need to rehabilitate public interest as a legitimate purpose of public policy. The “border adjustment” mechanism strengthens institutions of civil society and puts public interest directly into our national trade policy.

This approach to trade would work equally well in terms of labor rights and human rights. Countries around the world have endorsed labor standards, such as no slave labor or forced labor; no child labor; no discrimination on the basis of religion, country of origin, gender; freedom to form unions; no human trafficking. The border adjustment mechanism could be expanded to investigate, hear disputes, and impose sanctions regarding labor rights and human trafficking.

The mechanism applies equally well to commitments made for investors(!!) - currency manipulation, state-owned enterprises, illegal expropriations, patent and licensing violations and so on.

The premise is that government has a legitimate role in managing the economy to reflect our own moral, social and political values. We decide how to express public interests, and our trade policy carries that forward.


Reposted from The Huffington Post.

Stan Sorscher is on staff at the Society of Professional Engineering Employees in Aerospace (SPEEA), a union representing over 20,000 scientists, engineers, pilots, technical and professional employees in the aerospace industry. He is President of the Washington Fair Trade Coalition, and represents organized labor on the Board of the Puget Sound Regional Council Economic Development District. He was appointed by the Governor to the Board of the Export Finance Assistance Center of Washington. After receiving his PhD in physics from UC Berkeley, he worked for two decades at Boeing, building optical, ultrasonic, and X-ray systems to visualize materials and assemblies. Follow Stan Sorscher on Twitter:


Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work