Standing up for American businesses, workers, farmers

Globalization might be making the world flat, but left alone, it certainly is not leveling the economic playing field between nations by spreading its benefits broadly to people around the globe. Democrats believe that trade policy has been badly off track in failing to actively shape globalization to maximize its benefits and minimize its downside.

Majority Democrats have set out a “New Trade Policy for America” as first steps toward changing course and restoring confidence among the American people that government stands up for U.S. businesses, workers and farmers in the global marketplace.

Setting a new course means enforcing trade agreements and using U.S. trade remedy laws and international dispute settlement so U.S. companies and workers are not being harmed or disadvantaged by the unfair trading practices of other countries. The Bush administration has repeatedly denied relief to harmed companies and they have failed to aggressively pursue the violations by China and others at the World Trade Organization (WTO). Active pressure from the new Democratic majority is having an impact on enforcement as seen in recent months through WTO cases filed by the administration and the decision by the Commerce Department to treat China as a non-market economy (NME) when implementing U.S. trade laws.

Also on our legislative agenda are plans to formalize in law China’s NME status, to address efforts to weaken U.S. trade remedy laws and to finally address the issue of currency manipulation. American manufacturers estimate that imbalance with China’s currency puts them at anywhere from a 15 percent to 40 percent competitive disadvantage. And, it is calculated that Japan’s weak yen adds on average $4,000 in profit for every Toyota shipped to the U.S.

U.S. businesses, workers and farmers need a two-way street in order to compete in the global marketplace. Unfortunately, the Bush administration has failed to open up one of the most closed markets in the world — South Korea — in the recently concluded free trade agreement (FTA). Illustrating the grip of its closed market, in 2006, Korea exported over 700,000 cars to the U.S. while the U.S. exported 4,556 to Korea. Automotive accounts for 87 percent of the $13.4 billion U.S. trade deficit with Korea.

The U.S. gave away our auto and pickup-truck tariff without linking it to concrete results to end Korea’s unfair non-tariff barrier structure. Korean automakers would win $217 million in auto tariff reductions from the FTA while tariff reductions for U.S. automakers amount to just $12 million.

The failure of the U.S. Trade Representative (USTR) to stand up for this key sector extends to other areas of the agreement and sets a horrible precedent for WTO negotiations where the effective elimination of non-tariff barriers is essential for U.S. manufacturing. Unless the USTR uses the days before signing the FTA on June 30 to dramatically change these provisions, it will not merit congressional consideration.

Worker rights have been a central test of whether the terms of expanded trade are shaped to spread the benefits of globalization more broadly. Democrats have been fighting for over a decade to include the five basic international standards as stated in the 1998 International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work in trade agreements. That was the core of our opposition to CAFTA, and that was our firm position in discussions with the administration over the pending Peru and Panama FTAs. The resulting changes represent all of what we have been fighting for these last years: basic ILO standards fully enforceable like every other provision, environmental standards fully enforceable like every other provision, and important changes to generic medicine provisions to ensure more access to needed medicines in developing countries, as well as improvements to government procurement and investment.

The changes being made to the Peru and Panama FTAs shatter old trade models and are important steps toward a New Trade Policy. I am confident that once these changes are examined and unfortunate misrepresentations become clear these two agreements will earn broad support in Congress.

Unfortunately, the pending FTA with Colombia is not in the same category as Peru and Panama. Colombia is an important ally of the United States in a region that deserves our active engagement, but the high level of violence in that country cannot be resolved through language in a trade agreement. We must insist that Colombia demonstrate concrete results on the ground to stop the violence against workers and their leaders, end the culture of impunity, dramatically increase investigations and prosecutions and get to the bottom of the role of paramilitary.

There are also plans underway to dramatically overhaul trade adjustment assistance but not as a substitute for the long road ahead in our effort to turn trade policy into an active tool to shape globalization and convince the public that we are fighting to maximize the benefits and minimize the downsides of globalization. The changes a Democratic majority has secured in the Peru and Panama FTAs are important breakthroughs toward a New Trade Policy for America.

Levin is the chairman of the House Ways and Means Trade Subcommittee.

SPECIAL SECTION: Trade
Change course on U.S. trade policy
We must have fair trade
Extending trade promotion authority
Voters in November demanded a new direction for trade
Goal: Protect intellectual property from piracy in China, other countries
Combating currency misalignment
Without TPA reauthorization, trade agenda will flounder
Don’t handcuff Congress through fast track