The recent trade agreement in Congress has generated a lot of excellent discussion, and Jane Hamsher has done a great job covering it here and here. Another set of trade concerns came to the fore this week as a delegation of government officials from China—nearly half the Chinese cabinet, in fact—met here in Washington, D.C., for trade talks. U.S. Treasury Secretary Henry Paulson once again tried to shore up the disastrous state of U.S. trade, and once again failed in staunching the nation’s trade deficit, while refusing to address workers’ rights in any agreements along the way. After all, Paulson, the former Goldman Sachs honcho, and other Bushites must focus on issues of most concern to Big Business, such as reducing intellectual property rights infringement.

Some perspective. Overall, the U.S. trade deficit in goods and services rocketed upward by more than $50 billion in 2006 to $765 billion—or nearly $2 billion a day, according to the U.S. Census Bureau and the federal Bureau of Economic Analysis. For the trade deficit to stay flat, exports need to grow 53 percent faster than imports. Last year, exports grew 2.5 percent faster than imports.

Meanwhile, the 2006 U.S. trade deficit with China, concentrated in manufacturing, grew by 15 percent to $233 billion and accounts for 28 percent of the total deficit. This year’s first-quarter $46.4 billion deficit with China is twice as large as in the same period last year. Our deficit with China is the largest bilateral deficit in world history. 

For those corporate-speak economists who pooh-pooh an emphasis on U.S.-China trade as sour grapes and an inordinate emphasis on our trade relations with one country, they should consider this: 1.8 million U.S. jobs have been lost due to trade with China.

The U.S. trade deficit with China between 1997 and 2006 has displaced production that could have supported 2,166,000 U.S. jobs, according to a report released this month by the Economic Policy Institute (EPI). Most of these jobs (1.8 million) have been lost since China entered the World Trade Organization (WTO) in 2001. According to Costly Trade with China, after China entered the WTO in 2001, job losses increased to an average of 441,000 per year—more than the total employment in greater Dayton, Ohio. Between 2001 and 2006, jobs were displaced in every state and the District of Columbia.

The union movement opposed China’s entry to the WTO both because of the likely loss of jobs here and because of the deplorable state of working conditions in that country and its lack of workers’ rights. Supporters of China’s entry in the WTO said those issues would be better resolved when China was accepted along with the other big boy nations in the WTO. They were wrong.

As Brett Gibson, a legislative representative at the AFL-CIO, testified before the U.S. International Trade Commission in March: 

Labor in China is not just cheap: it is deeply disenfranchised and disempowered, leading to horrible abuses of workers’ individual liberties, but also to dangerous and unsafe working conditions, unpaid wages, and abuse of prison labor.

China’s more than 109 million manufacturing workers, many of them migrants without rights, are paid between 15 cents and 55 cents per hour. Many work 70 hours a week but overtime, minimum wage, safety and health and environmental laws are not enforced.    

And there are as many as 10-to-20-million child workers in China—one-eighth to one-quarter the number of factory workers.  

Both issues are entwined. As AFL-CIO Secretary-Treasurer Richard Trumka puts it: 

…hundreds of thousands of U.S. jobs are lost because the Chinese government brutally suppresses the rights of Chinese workers to form independent unions and bargain collectively for their fair share of the wealth they create.

Working conditions in China won’t qualitatively improve nor will the bleeding of U.S. jobs be staunched until corporations stop steering the course for U.S. trade. As Gibson further noted, the interests of U.S. corporations  

are closely aligned with those of the Chinese government—although not so well aligned with those of American workers or domestic producers. Artificially low prices on Chinese products—whether caused by currency manipulation, subsidy, or repression of workers’ rights—are a competitive advantage for companies importing from China.

In addition to winning trade deals that fail America’s workers, Big Business interests are investing outside our nation. Former Labor Secretary Robert Reich describes how America’s largest corporations have “decoupled from the United States.” 

Their overseas subsidiaries are booming even as their American operations stagnate. General Electric expects more than half its revenue this year to come from outside the United States for the first time. More than half of Boeing’s new orders are from overseas. Ford is struggling in America but doing well in Europe.  

In other words, the president’s supply-side tax cuts are great for America’s global investors, who have been investing their extra money around the world—either in foreign companies or in global American-based ones.

Even Newsweek in recent days has noted the hypocrisy of U.S. corporations when it comes to labor standards in China. Seems Big Business interests are lobbying China’s officials to weaken a draft labor law—after years of claiming that by moving jobs to China, their presence has helped improve labor standards and even forward democracy—certainly not to exploit cheap labor and sweatshop conditions. Writes reporter Sarah Schafer: 

The proposed law would require employers to sign contracts with all workers and to pay severance to fired employees, and tighten job protection for older workers and sole breadwinners. It would also give the party-run union more power in contract negotiations and setting workplace rules. Designed to quell unrest over working conditions, withheld wages and long hours, the law has already been amended to make it more acceptable to foreign firms and is due to be approved as early as this summer. Critics say efforts to water it down further show how U.S. firms put profits ahead of principles in China while staying mum on sensitive issues, from Internet censorship to the repression of lawyers.

Companies such as Microsoft and General Electric and lobbies like the American Chamber of Commerce and the U.S. China Business Council object that the bill would make it difficult to fire employees on probation, while giving too much power to the official union…GE asked the Chinese government for five specific changes, including greater penalties for intellectual-property theft and union consultation, rather than union approval, of new workplace rules. 

The AFL-CIO and our affiliated unions across the board have tackled these issues on many fronts—including urging the administration to get tough on China’s currency manipulation and human rights’ abuses (get a sample of actions here.) But as Trumka said this year when testifying before the Senate Committee on Banking, Housing and Urban Affairs on the issue of China’s currency manipulation: 

I don’t mean to sound cynical, but I’m starting to feel like Bill Murray in the movie Groundhog Day. Every year, I or one of my colleagues is invited to testify on these important economic issues. Every year, the trade deficit worsens, more jobs are lost, and the economic pressures on workers and the middle class continue to grow. And every year, someone from the administration responds with pledges of increased dialogue and cooperation.  

Which is why we already are knee-deep in the 2008 race. The next president will determine the direction of this country in many ways—and who steers the course on the crucial issue of trade is one of them.

Tula Connell

Tula Connell