Previous deals have cost black workers hundreds of thousands of manufacturing jobs
African Americans have lost 281,000 manufacturing jobs since China joined the World Trade Organization
By Frederick H. Lowe
President Barack Obama is seeking Congressional authority to move quickly on the Trans-Pacific Partnership, a trade agreement, but if TPP is anything like earlier contracts, black workers will suffer, not prosper, because previous deals caused them to lose hundreds of thousands of well-paying manufacturing jobs due to currency manipulation and trade deficits.
A trade deficit occurs when a country’s imports exceed its exports. Currency manipulation is more complicated. It occurs when a trade-surplus country with a strong currency, like China, buys other countries’ currencies instead of purchasing exports from countries like the U.S., which has a big trade deficit with China. In both cases, U.S. jobs disappear while foreign countries make inexpensive goods and sell them here.
The Office of the United States Trade representative reported in 2013 America’s trade deficit with China was $318.4 billion.
The Trans-Pacific Partnership, or TPP, involves the U.S., Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile Peru, New Zealand, Vietnam and Brunei. The countries account for almost 40% of the world’s economy. If the agreement, which has been in the works for a decade, is signed, it would reduce tariffs on open markets.
The U.S. Office of the Trade Representative claims TPP will support “Made-In-America” exports, enforce fundamental labor rights, promote environmental protection and help American small businesses benefit from trade.
The deal is being negotiated in secret and only top government officials know what’s going on, but the Economic Policy Institute, a Washington, D.C.-based think tank, said any deal should include enforceable measures to stop currency manipulation especially for some the countries participating in TPP. Japan, Malaysia and Singapore are currency manipulators, claims EPI. China, Taiwan and South Korea also have expressed interest in joining TPP.
“It’s difficult to estimate the jobs impact of the TPP, given we have not seen a complete draft of the final text, but based on prior experience, we can expect growing trade deficits and job losses—similar to what after NAFTA (North American Free Trade Agreement) and KORUS (U.S.-Korean Free Trade Agreement),” said Robert Scott, director of Trade and Manufacturing Policy Research at the Economic Policy Institute.
Past international trade agreements have eliminated hundreds of thousands of high-paying jobs in the manufacturing for black workers and other working-class families as companies moved their operations to other countries where labor costs are cheaper than in the United States.
Trade agreements that led to job losses in manufacturing, include NAFTA, a trilateral agreement between the U.S., Canada and Mexico, which took effect in January 1994. It was negotiated under President Bill Clinton. The other trade agreements are KORUS which took effect March 15, 2012, under President Obama. China joined the World Trade Organization (WTO) on December 11, 2001 under President George W. Bush. The World Trade Organization deals with rules of trade between nations.
New jobs were promised, but they never materialized
In each case the U.S. Chamber of Commerce, U.S. Trade Representative and some politicians claim the deals would bring new higher-paying jobs here. Some jobs did materialize, but black manufacturing workers lost more jobs than they gained.
President Clinton, for example, claimed NAFTA would create an export boom from Mexico that would create 200,000 jobs in two years and millions of jobs in five years, but 20 years later, trade deficits with Mexico eliminated 682,000 good jobs in the U.S. and 61 percent were in manufacturing,” Scott wrote in 2013 paper titled “NAFTA’s Legacy: Growing U.S. Trade Deficits Cost 682,000 jobs.”
Black workers lose big with China
When China entered the World Trade Organization in 2001, it cost black workers 281,100 high-paying manufacturing jobs from 2001 to 2011, said Scott, author of the 2013 research paper, “Trading away manufacturing advantage: China trade drives down U.S. wages and benefits and eliminates good jobs for U.S. workers.”
Scott estimated that African Americans made up 25% of minorities displaced by trade with China, suffering wage losses in excess of $2.5 billion.
“The displacement of manufacturing jobs by growing U.S. trade deficits with China has been particularly hard on minority workers : 958,800 were displaced, with wage-related losses in 2011 of $10,485 per worker and $10.1 billion overall,” Celeste Drake, Trade and Globalization Policy Specialist for the AFL-CIO in Washington D.C., wrote in an email.
Following along that same line, KORUS has resulted in the net loss of 75,000 jobs for African American and other workers. U.S. imports from Korea surged to more than $12 billion while U.S. exports to Korea increased by less than $1 billion, Scott said.
Once African American and other non white workers lose their jobs, they have a difficult time finding a new one, wrote author Lori Keltzer in the book titled “Job Loss from Imports: Measuring the Costs.”
“Minority workers face reemployment rates almost 11 percentage points lower than white workers,” Keltzer wrote. “For less skilled manufacturing workers, the male minority’s employment rate is 20% lower than the average. Female minority’s reemployment rate is 24% lower.”
Manufacturing displaced workers are older, less likely to be female, less educated and more likely to be minority, she said.
The trade agreements are a little-discussed triple whammy in the black community that has hit African-Americans financially hard over the past two decades.
Trade agreements, mass incarceration and The Great Recession
While President Clinton was pushing NAFTA, he also pushed tough on crime legislation in 1994 that resulted in the mass prison incarceration of black men. Clinton didn’t do it alone. Some members of the Congressional Black Caucus voted for the legislation called the Violent Crime Control Act.
There are more than 2.3 million people in the nation’s state and federal prisons and nearly 1 million are black men.
Recently, The New York Times published an article about the disappearance of 1.5 million black men from daily American society. The reasons were early death, overseas deployment and prison.
President Clinton has since said the justice system is broken. His wife, Hillary Clinton, who is seeking the Democratic Party’s nomination for president, also supported the tough on crime legislation, but she has since changed her mind. When men are released from prison, it is difficult for them to find a job and because they have been in prison they haven’t been able to earn a pension or Social Security.
Finally, there was the Great Recession, which has been called the largest setback for racial-wealth equality in the last quarter century. The Great Recession, which was caused in part by the subprime lending, lasted from December 2007 to June 2009.
African Americans, however, are still recovering from the Great Recession in which African Americans and Hispanics lost 600,000 public-sector jobs. In April, the unemployment rate for blacks was 9.6%. In some cases, it was more than double the jobless rate compared to other ethnic and racial groups.
Congress is expected to vote soon Bipartisan Congressional Trade Priorities and Accountability Act of 2015, which is known as “Fast Track.” President Obama requested Fast Track authority from Congress to ease passage of the Trans-Pacific Partnership, Sen. Elizabeth Warren (D., Mass.), wrote in a 15-page paper titled “Broken Promises: Decades of Failure to Enforce Labor Standards in Free Trade Agreements.”
Scott of the Economic Policy Institute said the U.S. trade deficit with the 11 TPP countries (the U.S. is the 12th country) was $154 billion in 2014.
“With trade deficits already on the rise, it makes no sense to sign a deal that would exacerbate them further,” he added.