The Obama Administration moved forward on a free trade agreement with Panama today, satisfying the final condition put up by Republicans to allow Congressional action on stalled trade agreements with South Korea and Colombia. The White House supplied a fact sheet on the deal. The sticking point with Colombia was the murder of trade unionists and organizers; the sticking point with Panama was its rampant use as a US tax shelter. As part of the deal, the US and Panama implemented a Tax Information Exchange Agreement (TIEA) that will in theory improve the exchange of information on tax dodgers. There are also claims of new protections for workers’ rights in Panama, similar to the Colombia assurances.
It’s not really worth blowing the economic impact of these trade deals out of proportion, on either side; they will not bring an enormous economic benefit or much of a loss, at least compared to other trade agreements with bigger countries. But they do put the US on record as still a stalwart supporter of globalization. And we’re learning what that means for American workers in the Great Recession.
U.S. multinational corporations, the big brand-name companies that employ a fifth of all American workers, have been hiring abroad while cutting back at home, sharpening the debate over globalization’s effect on the U.S. economy.
The companies cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million, new data from the U.S. Commerce Department show. That’s a big switch from the 1990s, when they added jobs everywhere: 4.4 million in the U.S. and 2.7 million abroad […]
The trend highlights the growing importance of other economies, particularly in rapidly growing Asia, to big U.S. businesses such as General Electric Co., Caterpillar Inc., Microsoft Corp. and Wal-Mart Stores Inc.
The data also underscore the vulnerability of the U.S. economy, particularly at a time when unemployment is high and wages aren’t rising. Jobs at multinationals tend to pay above-average wages and, for decades, sustained the American middle class.
I wonder if someone can sketch out for me a vision of America as an economic superpower with no jobs other than finance and the low-wage service sector, with a hollowed-out industrial base, and with its largest corporations replacing jobs at home with jobs overseas. It may make sense to those individual companies, but I’m straining to see how it makes sense for the mass of workers in this country.
The theory is that trade agreements which open new markets give US companies new customers and improve their business. But that improvement seems to go entirely to the benefit of foreign workers at the expense of workers in the US. You really don’t have to be much of a nationalist to look askance at that trend. It doesn’t seem particularly sustainable. Even in the midst of the global recession, multinational corporations based in the US continued this great outsourcing shift. The punch line at the end of this comes when these same corporations argue that they must get a tax holiday to repatriate those earnings from abroad back into the United States. This would expand the economy at home, they say. In practice it would increase profits so they could accelerate the outsourcing of US jobs.
So it’s not so much the specific trade agreements for me – although the murder of trade unionists in Colombia should simply never be rewarded with any help – as the general idea that free trade expands opportunity for both parties. The evidence tells another story.