Understanding complex terms can help us make our case
The political season is fully underway. Along with the high-profile — and high-stakes — presidential contest, Americans will be electing new congressional representation. As UAW members we want to know where they stand on issues of importance to us. We want the current Congress to understand we are keeping an eye on the lame duck session after the election, as well.
The Trans-Pacific Partnership (TPP) is one of our biggest issues. Some of the terms that come up in discussions about trade are complex. What follows is an attempt to break through some of the legislative-speak to make trade issues more understandable and help in our efforts to educate our fellow members, the general public and lawmakers:
Trans-Pacific Partnership (TPP)
A multilateral trade agreement negotiated between the United States and 11 other countries in a deal representing more than 40 percent of global trade. It has over two dozen chapters and could impact nearly every facet of our lives. In addition to the United States, nations involved in TPP negotiations include Japan, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, Canada, Mexico and Vietnam. Many of the countries in the TPP block U.S. imports and have terrible human rights records. The UAW opposes the TPP because it could lead to more offshoring of jobs, lower wages and greater economic inequality.
Currency manipulation, also known as foreign exchange market intervention, occurs when a government buys or sells foreign currency to lower the value of its own currency in order to make their products cheaper. Many countries in the TPP have a history of engaging in currency manipulation. This unfair practice has had a seriously adverse impact on the U.S. economy and job market. Studies estimate that currency manipulation by our current trading partners alone has inflated trade deficits by up to $500 billion annually and cost America up to five million jobs. Imported vehicles are routinely several thousand dollars cheaper because of undervalued currencies. Ending this exchange rate manipulation would help bring many of those good jobs back to the United States. Unfortunately, enforceable measures against currency manipulation are absent from the TPP.
Fast Track (also known as TPA)
Fast Track grants the president power to negotiate trade agreements with foreign nations. Fast Track also prevents Congress from amending trade agreements and nullifies the use of the filibuster in the Senate. In 2015 Congress passed legislation granting President Obama and his successor Fast Track authority. It will expire in 2021. The last time Fast Track was granted was in 2002 and expired in 2007. Under Fast Track, if the president transmits a trade agreement to Congress, then the majority leaders of the House and Senate or their designees must introduce the implementing bill submitted by the president on the first day that their chamber is in session. The House and Senate have 60 legislative days to vote on the bill. Senators and Representatives may not amend the president’s bill, either in committee or on the Senate or House floor. The UAW opposes Fast Track because it is an undemocratic process that has led to the passage of trade agreements that have put the interests of international corporations ahead of the interests of working Americans.
Free Trade Agreement (FTA)
FTAs refer to sweeping trade agreements that eliminate tariffs and other impediments to trade between countries. The U.S. has signed 20 FTAs since the 1980s.
A tariff is a tax or duty to be paid on a particular class of imports or exports on most products the United States charges lower tariffs than our trading partners. Tariffs can be used to level the playing field with countries that maintain closed markets and block U.S. products through Non-Tariff Barriers.
Non-Tariff Barriers (NTB)
A term used in trade debate to describe policies and practices that are designed to unfairly stop imports. Countries around the world sell cars and other goods in the US without unfair trade barriers. The same cannot be said for many countries in the TPP. For example, currency manipulation is a NTB that can make products imported to the United States artificially inexpensive and U.S. exports artificially expensive. Some countries use complex regulations that make it virtually impossible for companies to compete. For instance, in the automobile industry, Japan has used numerous technical regulations as a means to protect local markets through the creation of difficult and costly regulatory and certification requirements. Value Added Taxes (VATs) also provide unfair advantages to other countries. The S. is one of the few nations that does not charge a VAT on incoming goods. Meanwhile, our manufacturers still face double digit VATs in several TPP countries. Worse, most countries also rebate VAT taxes on their exported goods.
In Mexico, free and independent labor unions are virtually non-existent. Instead, “protection unions” negotiate one-sided contracts with employers. They are established by the employers to make it appear there is union representation, while the protection unions actually serve the employers’ interests. Mexican workers are often threatened for exercising their most basic rights as these protection unions dominate. These so-called unions routinely violate the right to freedom of association. Collective bargaining agreements with these protection unions are usually conducted without the knowledge and consent of workers, often even before the enterprises open. They usually provide only the minimum benefits already required by Mexican law. Currently, most Mexican autoworkers make less than $4 an hour despite booming profits and record growth. The TPP will not end this injustice.
Investor State Dispute Settlement (ISDS)
One lesser-known aspect of the TPP is the Investor- State Dispute Settlement (ISDS) system. ISDS allows foreign investors to legally challenge host state regulations outside that country’s courts. In other words, foreigners would be allowed to challenge state and federal regulations without the case being heard in U.S. courts. Rather, an arbitration panel would be selected to hear the dispute, limiting the legal recourse Americans citizens have available. U.S corporations would have the same special rights abroad. ISDS in other FTAs has been used to challenge public health and safety laws.
The Auto Rules of Origin (ROO)
The Auto Rules of Origin (ROO) track where the content of vehicles and parts are made. If a vehicle or part meets the threshold it is shipped without tariffs being applied. At present, at least 62.5 percent of a passenger car or light truck’s net cost must originate in North America to be considered tariff-free under NAFTA. The TPP knocks this figure down to 45 percent of a passenger car or light truck that must be built in the country that is importing it into the U.S. This could lead to outsourcing jobs and building a great deal of their autos in China and other countries that are not in the TPP. The TPP ROO standard could decimate decent- paying auto and auto parts jobs in the United States.
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