The last time the United States had a trade war was in 1930, and it exacerbated the Great Depression. Now Donald Trump, following the economic nationalism that contributed to his 2016 election, has started a global trade war that has left policymakers shaking their heads with disbelief. Meanwhile, Trump’s response to nations issuing retaliatory tariffs of their own on U.S. agricultural goods has been to create a $12 billion subsidy for farmers. While this is a huge investment, it is estimated to be only a drop in the bucket compared to the ultimate impact of Trump’s tariffs on the agricultural sector. There are many reasons to feel dissatisfied with the global trade regime, but Trump’s tariffs will leave most Americans worse off.
Democrats remain quite vulnerable on trade because their answers to those who have suffered from globalization are insufficient.
Since the end of World War II, the United States has advanced the global cause of free trade. By the 1960s, that included the outsourcing of U.S. industrial jobs to Mexico as part of Mexico’s Border Industrialization Project, which incentivized U.S. companies to set up shop just south of the Rio Grande. U.S. outsourcing exploded by the 1980s to Central America and Asia, with millions of industrial jobs fleeing the United States. In 1994 Bill Clinton signed the North American Free Trade Agreement with support from largely Republican legislators. Barack Obama’s top foreign policy goal late in his presidency was the Trans-Pacific Partnership. All of this angered the U.S. working class, which has seen its relative economic position in the world decline, has felt betrayed by Democratic presidents, and has suffered from stagnating incomes and increasing debt loads.
Donald Trump won the 2016 election for many reasons, but a significant factor is that he tapped into this discontent with trade among white union workers. The combination of racial resentment and economic nationalism was powerful in communities such as Erie and Scranton, Pennsylvania, where large swings to Trump compared to Mitt Romney in 2012 provided Trump’s margin of victory. In the chaotic aftermath of this epochal election, Trump has doubled down on his embrace of racism. And while his domestic policies have done nothing but increase the wealth of the rich and hurt the very people who switched from the Democrats to vote for him, his anti-trade rhetoric remains strong and his tariffs, as half-baked and counterproductive as they are, tap into discontent with the global trade system.
The Democratic response to Trump’s tariffs has been incoherent. Stalwarts of labor such as Sherrod Brown have supported Trump’s position on tariffs. West Coast senators with Pacific-facing economies, including Ron Wyden and Dianne Feinstein, have expressed opposition. Many Democrats have remained silent. As Shaun Richman and I argued in the Washington Post earlier this year, Democrats remain quite vulnerable on trade because their answers to those who have suffered from free trade are insufficient. Telling people to move or to get more education for jobs that do not pay well is no answer at all.
At the same time, the Democratic Party has also shifted drastically to the left since the 2016 election. The centrism of the long-powerful Third Way and Democratic Leadership Council has faded in the face of a base demanding strong liberal policies that would have been impossible for a leading Democrat even a few years ago. The Democratic nominee for president in 2020 is almost certainly going to have to support a fifteen-dollar minimum wage, some version of free or debt-free college, and real criminal justice reform. Several likely candidates have publicly endorsed a federal jobs guarantee. The move to abolish Immigration and Customs Enforcement grows by the day, with Kirsten Gillibrand recently becoming the first senator to support it. Due to the Republican theft of a Supreme Court seat, calls have risen to pack the court the next time Democrats take power. The race to win the party’s restless base in 2020 is a race to the left.
Despite the revanchist nationalism of Trump and his base, progressives largely see themselves as global citizens. They like the good parts of globalization.
These policy demands have come from the grassroots, demonstrating the power an activist base can have on the party’s agenda. But the left has a yawning silence on trade. Part of the reason labor-friendly politicians are embracing tariffs is that the left has not articulated an alternative trade agenda that supports all the world’s workers in a global economy. Such a vision is necessary for two fundamental reasons. First, protectionism does not work politically. Unions and union-friendly politicians have embraced protectionism as a response to free trade for decades and they basically have never won. With unions, especially in the private sector, the weakest they have been in a century, they simply lack the power to create a protectionist agenda that would succeed. Moreover, the economy has become so global and interconnected now that any tariffs at best have a mixed result for U.S. manufacturing workers, as demonstrated by Trump’s agricultural subsidies.
Second, despite the revanchist nationalism of Trump and his base, progressives largely see themselves as global citizens. They like the good parts of globalization. They watch the World Cup, they eat Vietnamese and Indian food, they listen to music from around the world. They are concerned about global human rights violations, donate when a disaster strikes Haiti, and cheer on global democracy. Outside of private-sector unionists and some of the working class, there really is not support for an America First economic policy in the Democratic Party. People want to buy Apple computers and do not mind that they are made in China, but they would like those Chinese workers to make more money and receive better treatment. But articulating a trade policy that would help both U.S. and global workers is both difficult and unsexy. There is no equivalent of “Medicare for All” and “Abolish ICE” that can simply explain what is at stake for average people.
During the Clinton years, United Students Against Sweatshops put tremendous pressure on global apparel makers to clean up their labor conditions, but this movement declined after September 11, 2001. During the Obama administration, the left put up a strong fight against the Trans-Pacific Partnership, which continued the long tradition of trade agreements without meaningful and enforceable protections for workers and the environment. But when Trump won based in part on rejecting the TPP, the left had little to say, not wanting to embrace the new president’s racist nationalism while wondering what this type of rejection would lead to. Nearly all left talk about trade has subsequently disappeared as focus has shifted to stopping the oppression of immigrants, attacks on of basic rights, and the assault on our democratic institutions. Yet even under Obama, when 1,138 workers died in Bangladesh’s Rana Plaza sweatshop collapse—the largest workplace accident in industrial history—the response from Americans was muted, even though the factory produced apparel for Walmart, among other companies. U.S. apparel companies refused any binding agreements to improve conditions in their supply chains and no social movement to support the victims developed.
The left cannot continue to cede the field on trade policy to corporations. Nor can it embrace tired old protectionist policies. Instead, the left must understand that there is no national solution to global trade. Better lives for Americans cannot be won by demonizing Chinese workers for “stealing our jobs.” Any trade solution from the left must embrace globally inclusive values. Moreover, it must use a multi-faceted strategy that seeks to roll back the fundamental problem the United States and the rest of the global working-class face: that corporations have created international legal systems to govern trade while citizens remain constrained by national law.
This problem was at the core of opposition to the TPP. Investor State Dispute Settlement (ISDS) courts can supersede national laws by allowing corporations to sue nations for violating trade agreements when those nations have acted to protect their citizens. For example, under NAFTA, one of these courts ordered Canada to pay the U.S. toxic waste company S.D. Myers C$6.05 million because the nation banned the export of toxic waste. The French company Veolia sued Egypt for lost profits after the nation raised its minimum wage; the company lost but it took six years of Egypt defending its law. Philip Morris sued Uruguay in 2010 after the nation passed legislature requiring graphic depictions of tobacco-caused diseases on cigarette packaging. Such undemocratic attacks on national sovereignty certainly figure in the left’s understandable distrust of trade deals.
Better lives for Americans cannot be won by demonizing Chinese workers. Any trade solution must embrace globally inclusive values.
However, the economy is global, and therefore trade agreements are required to govern it. Globalization is not going away. We have to be realistic about this and find new ways to solve the problems of global trade. For guidance, it is helpful to recall that in 1900, corporations had nearly total freedom to do as they wanted. Backed by a right-wing Supreme Court, they busted unions, trumped other claims to property rights, created monopolies, and could call on state security forces to crush any resistance. Like today, corporations seemed to have total power over regular citizens. Yet the story of the first three-quarters of the twentieth century is how Americans fought to tame corporations, with surprising success. Unions were established, consumer protections won, pollution was reduced.
Unfortunately, this hard-won progress was not permanent. Since the 1970s, corporations have used capital mobility to escape most of these restrictions, recreating the exploitative conditions of the late nineteenth-century United States on a global scale. This time around they have also undermined the economic security that allowed workers to make new demands on their employer and the state. Corporations, in other words, have learned from their “mistakes.” The left must do the same.
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The way forward is to use all available tools to again regulate corporations, this time on an international scale. It is daunting, but not more so than it was for U.S. workers in 1900. I advocate for two progressive strategies that can be used to fight for trade arrangements that prioritize the welfare of global workers.
U.S. law can be used to hold corporations accountable for actions they commit in their supply chain.
First, U.S. law can be used to hold corporations accountable for actions they commit in their supply chain. Other nations can do the same. Each nation can adapt its own strategy for solving these problems based on their own legal systems. In particular, I advocate for the passage of what I call the Corporate Accountability Act, which would bind U.S. companies, wherever they operate, to a set of labor and environmental standards, and which would allow impacted parties to sue for damages in U.S. courts. It should include a global minimum wage; a ban on known toxins; a ban on sexual harassment and forced pregnancy tests for women workers; workplace safety standards; provisions against wage theft; and a guarantee of the right to form a union. These provisions are based largely upon International Labour Organization conventions, many of which the United States has never ratified, but which would provide legitimacy to progressive demands.
For such a law to work, it would require a complex set of mechanisms, but it is not impossible. Because it would allow affected people access to U.S. courts, the problem of recalcitrant global governments could be avoided. The Cambodian government may support the exploitation of its workers, but U.S. consumers do not have to and can work with apparel workers to file suits. The United States has every right to set standards of production upon its imports and has done so throughout its history, so there is legal precedent.
Much of the modern economy, pioneered by Walmart, is reliant upon increasingly complex supply chains that push production costs down onto subcontractors, giving them incentive to wring every cent of profit out of workers and protecting large corporations from responsibility. This must end. Companies claim they cannot patrol their supply chains but this is a choice. They do a great job of controlling for cost and quality, yet when it comes to labor standards, they plead ignorance. That is not acceptable. If a Walmart supplier refuses to pay its workers the minimum wage, then Walmart is responsible for that by choosing that contractor. Holding Walmart financially accountable for its supply chains through U.S. courts would alone raise global workplace standards.
The second major strategy is to demand that trade agreements have truly enforceable labor and environmental standards that open up ISDS and other international courts to workers and citizens. This uses the tools of neoliberal globalization against neoliberalism’s chief beneficiaries. In other words, the aim should not be to reject trade agreements, but to gain control over the process by which they work, creating a legal regime that is as international as corporate trade law. There is nothing inherently wrong with an international legal system, but it is completely unacceptable that corporations can use it to supersede national laws meant to protect citizens, and thus undermine democratic control. Trade agreements must be negotiated with international standards that are not simply side agreements with corporate self-monitoring, which never works. The enforcement mechanisms for labor and environmental standards must be as serious as any other part of the treaty.
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Historically the U.S. government has not often acted in the interest of global workers’ rights, but there are important examples we can build upon. In 1915 President Wilson signed the Seamen’s Act, which sought to raise global workplaces standards by enforcing them on all ships stopping in U.S. ports. Although the Supreme Court eventually ruled it unconstitutional, it serves as an early example of what is possible. Soon after, one good part of the 1930 Smoot–Hawley Tariff—the law that started the United States’ last trade war—banned the importation of most goods made by slave labor. In recent years, this provision was blown open by southeast Asian slave labor goods due to an exemption for goods whose consumer demand would not be met but for slave labor. But in 2016, a Republican Congress passed a bill that President Obama signed, closing this loophole.
A federal job guarantee would ensure that U.S. workers do not feel they are bearing the costs of improved conditions for global workers.
The U.S. Trade Act of 1974 gives the president the power to fight trade practices that violate “acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.” Although no subsequent president has fully embraced this power, in 1997 Bill Clinton acted in its spirit when, as part of a new trade deal with Cambodia, agreed to a U.S. union proposal to provide the Cambodian government incentives to improve the conditions of apparel workers. This allowed Cambodian workers to unionize in return for the nation receiving increased textile export quota under the 1974 Multi-Fibre Arrangement (MFA). Workers received $50 a month for a 48-hour work week, a dozen federal holidays, vacation days, sick leave, and maternity leave. This became the only trade agreement with an enforceable labor provision. Apparel makers signed union contracts and wages rose. Yet within weeks of the MFA’s 2005 expiration, underground sweatshops appeared with terrible working conditions. Now a free-for-all, Cambodian labor saw its working conditions and wages plummet to some of the lowest in the industry. Wages fell by more than 20 percent for Cambodian garment workers between 2001 and 2011 and remains terrible today. This story starkly demonstrates the power the United States has to shape labor conditions in the global marketplace—and what happens when we lose interest in doing so.
This will be an uphill battle. Throughout the United States and Europe, right-wing forces are taking advantage of the perceived economic decline of white workers and the growing diversity of their nations to win political office based on racist and nationalist platforms. Any success in overhauling international trade policies will also certainly only come on the heels of smart complementary domestic policy. In particular, a federal job guarantee would increase worker power and ensure that U.S. workers did not feel as though they were bearing the costs of improved conditions for global workers. Such a policy is also increasingly important as advances in automation threaten millions of American jobs, from fast food workers to nearly all factory work. While ideally provided by the private sector, a significant investment by the public sector in job creation could rebuild the nation’s infrastructure, provide much-needed teachers in neglected subjects such as art and languages, and solve our crisis of low-paid care workers. Several likely Democratic presidential candidates have already issued statements of support for this. Job creation at home only strengthens our ability to tame the corporate trade regime.
Free reign on global trade is what corporate titans hope for. Since 9/11, the left’s lack of attention to global trade has undermined its ability to fight for progressive policy at home and abroad. Taming the global economy is as central to fixing the United States’ many problems as fighting gerrymandering, resisting racism, and defending civil rights. The left has to take this problem seriously and articulate challenges to both Trump and the corporations that have profited from the inequality created by the modern global economy.