Free Trade Without Apology

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With the economy sputtering and unemployment still high, President Obama is looking for ways to jump start growth. He recently stated his intention to gain Congressional approval for free trade agreements (FTAs) with Colombia, Panama, and South Korea. The president’s new stated commitment to free trade is welcome, but there was no need for him to wait this long. 

Moreover, the president accompanies his call for ratification of the trade deals with an endorsement of Trade Adjustment Assistance (TAA) for workers who supposedly lose their jobs due to trade. TAA usually just directs government money to politically favored constituencies. But even worse, it is part of a misguided pattern by policy makers to try to advance trade liberalization by appeasing its most dedicated opponent, organized labor.     

Those three agreements have been awaiting congressional approval for years. What is the holdup? After several years of negotiations, Congress continues to ask for concessions from America’s trading partners. Unions and other special interest groups have been actively pressuring Congress to include labor and environmental provisions in free trade agreements for quite some time. Unfortunately, U.S. trade officials and policy makers have chosen to address union demands through appeasement—a strategy that has been misguided and ineffectual. 

Organized labor’s success in getting labor issues included in trade negotiations is a relatively recent phenomenon. The 1985 U.S.-Israel free trade agreement was the last American trade deal that did not include labor and environmental provisions. Since that time, the U.S. has entered into 10 free trade agreements covering 17 countries. 

Eight years after the Israel agreement, the Clinton administration, as part of a deal to ratify the North American Free Trade Agreement (NAFTA), pushed Mexico and Canada to sign the North American Agreement on Labor Cooperation (NAALC) and North American Agreement on Environmental Cooperation (NAAEC) as side letters to the trade pact. That was the first time that labor and environmental objectives were directly linked to international trade negotiations. From that point onward, interest groups of various stripes have lobbied hard to include a host of irrelevant political agendas in trade negotiations. Organized labor and environmental groups have been especially active in this effort. 

The NAFTA labor provisions were still not enough to satisfy Big Labor. Four years after the labor cooperation agreement was passed, the AFL-CIO stated in a public comment that the agreement had been “ineffective in promoting the concerns of workers beset by stagnant wages and job insecurity.” Rather than appease, the NAFTA labor provisions only whetted the union leaders’ appetites. To this day, unions continue to pressure Congress for more stringent labor obligations in current and future agreements.  

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