Free Trade Pacts Delayed by Failed Strategy of Union Appeasement, New CEI Report Finds

Washington, D.C., October 4, 2011 – President Obama yesterday sent three free trade agreements to Congress after years of stalling.  A new report shows how the delay was a direct result of the administration’s efforts to appease labor union demands, at the expense of actual job creation in the U.S. It’s estimated that the three free trade agreements (FTAs) would lead to 250,000 new U.S. jobs.

The study points out that union demands – for more extensive labor provisions in trade agreements and more handouts for workers who ostensibly lost their jobs because of trade – created roadblocks to Congress’ consideration of FTAs with Colombia, Panama, and South Korea.

“The Obama administration’s misguided strategy of trade union appeasement hasn’t worked,” said Fran Smith, CEI Adjunct Fellow in trade policy and co-author of the CEI OnPoint study Free Trade without Apology: The Folly of Appeasement of Organized Labor in Trade Negotiations. “Every time policymakers gave in to one union demand, organized labor had ready another challenge to the trade pacts,” said Smith.

This continuous union appeasement also strained relationships with our trade partners. “Each time our trade allies thought the agreements were a done deal, they had to go back to the drawing board,” Smith explained. “That contemptuous on-again, off-again process is hardly an appropriate approach to working with our close allies on mutually beneficial trade pacts.”

Obama yesterday billed the trade agreements as a key part of his economic and job creation plan, despite his administration’s role in delaying those agreements in the first place.  The deals have long enjoyed broad bipartisan support in Congress, and Republicans have promised swift passage.   But some Republicans rightly opposed the trade assistance package pushed by Democrats, estimated to cost $2 billion in 2010.  Senate Majority Leader Harry Reid (D-Nev.), on the other hand, was promising to oppose all three deals.

The CEI paper urges policymakers to consider the trade agreements on their own merits and not hold them hostage to special interests who want to restrict trade. “It is time to end this practice of appeasement,” the authors conclude. As history has shown, it does not work.”

View the CEI OnPoint study, Free Trade without Apology: The Folly of Appeasement of Organized Labor in Trade Negotiations by Fran Smith and Nick DeLong

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