U.S. lawmakers during the 1970s won support to expand free trade by promising to protect workers, and that approach still makes sense today.
The U.S. House last week voted to advance legislation to give President Barack Obama special authority to negotiate a Pacific trade deal that involves about 40% of the global economy. Despite the political drama, the move was nonetheless positive for Obama’s push to achieve a key element of his trade agenda.
This week, the drama will continue to unfold, with votes in the Senate and House. For most observers, it may be like watching a game of cricket — the rules and actions are obscure, but this particular contest bears watching because the stakes are very high, as the attention is now focused not only on the trade agreement promotion authority but also on re-authorization of measures to assist workers where there are job losses or negative implications that an expansion of free trade might have.
Despite the opposition, the Republican Congressional leadership has vowed to pass this legislation continuing Trade Adjustment Assistance for Workers (TAA), in hopes of gathering enough support from Democrats to renew trade promotion authority in an ongoing effort to permit progress on Obama’s trade agenda.
This strategy was key in 1974 when legislation for the worker assistance program was included in the first modern trade promotion authority. (You will recall that trade promotion authority, then referred to as “fast track,” was a special procedure for consideration of the agreements the President presented to the Congress for approval and implementation. It permitted only an up or down vote, with no amendments, with little ability to block the vote – e.g. no filibusters permitted.). Inclusion of worker assistance 40 years ago brought along enough Democratic support to pass the trade promotion authority.
When a more effective (and larger) trade adjustment assistance program was being debated within the Nixon Administration, it was not free of controversy. Then Treasury Secretary George Shultz questioned the logic of giving assistance to a worker adversely affected by import competition in excess of that given to a worker hurt by other causes, such as changes in technology or consumer tastes. After all, being out of work is being out of work. That was indeed logical, but there was a Catch 22: there was not enough money to retrain, relocate, and support all workers who lost their jobs regardless of cause. So the program was limited to one class – the trade-related group.
To date, over 2 million workers have received benefits under the current trade adjustment assistance program. The question to ask now is whether worker assistance is still relevant today?
Twenty-first Century trade agreements are still about lowering trade barriers, but are even more about setting new rules for international trade.
The United States is, by and large, a very low tariff country. Liberalization of trade under any new agreements is likely to have very limited adverse effects on any worker. To be sure, the U.S. still has areas of protection against imports – apparel being one of them. But the fact is that imports already account for about a 98% share of the U.S. apparel consumption, and no agreement that is contemplated is going to change that reality. What is at stake for America in the new agreements consists primarily of obtaining additional liberalization abroad and, as or more importantly, putting into place better trade rules. Neither of these objectives is likely to result in displacement of American workers.
So why have worker adjustment assistance? Because the series of trade agreements beginning some 70 years ago is responsible for markets around the world being more open. This has brought unprecedented prosperity to America and to its trading partners. There is no serious proposal in any quarter that our market should be closed. Part of the bargain to maintain this openness and to strive for greater openness abroad and rules-based trade is to maintain the worker trade adjustment assistance. The worker assistance program deserves strong bipartisan support.
Alan Wolff is chairman of the National Foreign Trade Council and practices law in Washington D.C.