Amer­ica seeks its way in a new eco­nomic world

Los Angeles Times - - FRONT PAGE - By Don Lee

WASHINGTON — The long, ac­ri­mo­nious leg­isla­tive bat­tle that ended Wed­nes­day in a vote giv­ing Pres­i­dent Obama the power needed to com­plete trade agree­ments ref lects the steady march of glob­al­iza­tion and the na­tion’s deep fear that widen­ing its eco­nomic en­gage­ment with the world will cost Amer­i­cans jobs.

With the Se­nate’s 60- 38 vote to pass leg­is­la­tion on trade- pro­mo­tion au­thor­ity, or fast track, the Obama ad­min­is­tra­tion now can turn to fin­ish­ing ne­go­ti­a­tions on the Trans- Pa­cific Part­ner­ship, a legacy- mak­ing deal for the pres­i­dent that would join the mar­kets of 12 Pa­cific Rim na­tions ac­count­ing for 40% of the global econ­omy.

It will likely be year- end at the ear­li­est be­fore Congress has a f inal say on the ac­cord. Law­mak­ers will not be al­lowed to amend the pact, and it’s by no means cer­tain they will ap­prove it.

“I do not be­lieve the vote on TPP will be easy,” said Su­san Sch­wab, a for­mer U. S. trade rep­re­sen­ta­tive in the Ge­orge W. Bush ad­min­is­tra­tion. “That will be the next bat­tle.”

History, though, is on Obama’s side: Ev­ery U. S. trade agree­ment pre­sented to Congress by a pres­i­dent af­ter win­ning fast track has even­tu­ally passed.

In that sense, the Pa­cific deal, while the big­gest yet at­tempted, is part of a revo­lu­tion set off by sweep­ing changes in tech­nol­ogy, com­mu­ni­ca­tions and trans­porta­tion as well as in eco­nomic pol­icy all around the world — changes that seem to go well be­yond the power of any sin­gle gov­ern­ment, po­lit­i­cal party or in­ter­est group to con­trol.

“The re­al­ity is, in 2015,

glob­al­iza­tion is a fact of life,” said Sen. Ron Wy­den ( DOre.), a piv­otal f ig­ure in sway­ing enough Democrats to sup­port fast track, a mea­sure that lim­its Congress to a sim­ple yes- or- no vote on com­pleted trade agree­ments.

Cer­tainly the ben­e­fits of glob­al­iza­tion are clear: “We have $ 10 T- shirts, $ 12,000 ba­sic cars and $ 500 com­put­ers,” noted Robert Shapiro, a top eco­nomic ad­vi­sor to Pres­i­dent Clin­ton, who pushed through the North Amer­i­can Free Trade Agree­ment in 1993. “None of that would have been pos­si­ble with­out glob­al­iza­tion.”

But the costs are also clear: Hun­dreds of thou­sands of man­u­fac­tur­ing and other jobs have moved over­seas to coun­tries where work­ers are paid less, have fewer ben­e­fits and ex­ist on a lower stan­dard of liv­ing.

Nor have the costs been con­fined to in­dus­trial work­ers.

Many white- col­lar jobs in law, medicine and ac­count­ing, to name a few, also are mov­ing over­seas as global ed­u­ca­tion rates im­prove and the lev­el­ing inf lu­ence of tech­nol­ogy in­ten­si­fies.

So when free- traders claim ev­ery­one has ben­e­fited from glob­al­iza­tion, a grow­ing cho­rus of trade crit­ics says, “Not so fast.”

There’s ev­i­dence, for ex­am­ple, that China’s rise in the world trad­ing sys­tem over the last two decades has had a sig­nif­i­cant ef­fect on Amer­i­can jobs. Re­searchers at MIT and other in­sti­tu­tions es­ti­mate that soar­ing im­port com­pe­ti­tion from China has re­sulted in a net loss of more than 2 mil­lion do­mes­tic jobs from 1999 to 2011.

Other econ­o­mists say off­shoring, or the mov­ing of U. S. fac­to­ries and jobs to other coun­tries, also has con­trib­uted to broader wage declines for Amer­i­can work­ers.

Lin­ger­ing frus­tra­tion from the Great Re­ces­sion, which has left many U. S. work­ers strug­gling, has raised those stakes even higher, spurring Demo­cratic law­mak­ers to chal­lenge their party’s own pres­i­dent over the trade deal.

Obama had just enough Se­nate Democrats in his cor­ner to get to Wed­nes­day’s vote, which came only af­ter an ini­tial re­buff­ing of the fast- track pack­age by House Democrats ear­lier this month and con­sid­er­able back­room deal­ing.

The in­ten­sity of the f ight ref lects an un­der­stand­ing that the Trans- Pa­cific Part­ner­ship, more than any other trade deal by virtue of its size and scope, will serve as a model for years to come. The pact in­cludes Ja­pan, Canada, Mexico and Viet­nam, but of­fi­cials see China, the Philip­pines and oth­ers po­ten­tially join­ing the U. S.forged ac­cord some day.

“Ev­ery­body sees the stakes be­ing very high be­cause the TPP is de­signed to be in­fin­itely ex­pand­able,” said Thea Lee, the AFLCIO’s deputy chief of staff. She ac­knowl­edged, how­ever, that the odds are against those op­pos­ing the deal, not­ing that “once fast track is given, there’s no in­cen­tive to change course on TPP it­self.”

Both Obama and his trade crit­ics, in­clud­ing pop­ulist Sen. El­iz­a­beth War­ren ( D- Mass.) and pres­i­den­tial can­di­dates Bernie San­ders ( I- Vt.) and, to a lesser de­gree, Hil­lary Rod­ham Clin­ton, in­sist that pro­tect­ing Amer­i­can work­ers is their top pri­or­ity.

To soften the hit for work- ers, many Democrats want Congress to ex­tend fed­eral re­train­ing aid for those hurt by in­ten­si­fied for­eign com­pe­ti­tion. Fund­ing for that pro­gram, which econ­o­mists con­sider in­ad­e­quate, was ini­tially tied to fast track but is now ex­pected to move through Congress sep­a­rately by the end of the week. Obama has said he hopes to sign both to­gether.

Be­yond that, Democrats hold vastly dif­fer­ent per­spec­tives on the Pa­cific trade deal. Obama and many oth­ers ar­gue that it is im­per­a­tive for the U. S. to chart the path of global trade rather than fol­low China or any­body else.

Tough is­sues in­volv­ing sen­si­tive farm and dairy prod­ucts still have to be re­solved, and ne­go­tia­tors also must set rules and stan­dards on in­tel­lec­tual prop­erty, la­bor, en­vi­ron­ment and other ar­eas re­lated to trade and in­vest­ment.

“The rest of the world is still wait­ing for the U. S. to show global lead­er­ship on trade, and it won’t be able to lead glob­ally un­less it suc­ceeds re­gion­ally” with the Pa­cific Rim deal, said James Bac­chus, a for­mer Demo­cratic House mem­ber from Florida and one­time chair­man of the World Trade Or­ga­ni­za­tion’s ap­pel­late body.

Many oth­ers har­bor deep reser­va­tions about some of the pro­posed con­tents of the part­ner­ship, which have been seen by law­mak­ers or leaked out from the se­cret talks.

War­ren, for ex­am­ple, has sharply crit­i­cized a pro­vi­sion that would al­low in­vestors to sue gov­ern­ments over trade dis­putes and have them set­tled by an in­ter­na­tional panel — some­thing that she and oth­ers warn will profit multi­na­tional firms by al­low­ing them to by­pass na­tional courts.

Other crit­ics say the Pa­cific deal will en­rich big phar­ma­ceu­ti­cal mak­ers and en­ter­tain­ment f irms by ex­pand­ing patent pro­tec­tions even at the ex­pense of or­di­nary con­sumers.

“No one be­lieves you can turn back the clock, but what the dif­fer­ent stake­hold­ers are do­ing is try­ing to shape the rules of the road in a way that would ben­e­fit them,” said Jared Bern­stein, for­mer chief economist for Vice Pres­i­dent Joe Bi­den.

What re­mains un­clear is whether those stake­hold­ers will have power to shape or re­write the eco­nomic rules.

As long ago as 1999 in Seat­tle, mas­sive protests against glob­al­iza­tion were mounted at a meet­ing of the World Trade Or­ga­ni­za­tion. The inf lu­ence of the protests was mar­ginal at best; the next year China joined the WTO.

Union lead­ers, con­sumer groups and oth­ers op­posed to the Pa­cific deal are hop­ing for more last­ing re­sults this time. Once ne­go­ti­a­tions are com­pleted, the fast- track leg­is­la­tion calls for the f inal trade pack­age to be made public for 60 days be­fore the pres­i­dent signs it and de­liv­ers it to Capi­tol Hill for a vote .

What­ever the out­come, “the United States is not with­draw­ing from glob­al­iza­tion,” said Shapiro, the Clin­ton ad­min­is­tra­tion economist.

“Glob­al­iza­tion is sim­ply be­com­ing more uni­ver­sal, broader. You don’t re­ally have an op­tion to say ‘ no’ any­more. The op­tion is, how do you get the largest num­ber of your peo­ple to pros­per through it?”

AFP/ Getty I mages

RE­SEARCHERS es­ti­mate that im­port com­pe­ti­tion from China has re­sulted in a net loss of over 2 mil­lion U. S. jobs from 1999 to 2011. Above, work­ers in China.

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