Today the International Executive Board of the UAW unanimously voted to oppose the Trans Pacific Partnership (TPP).
Over the past several years we met with the Administration, trade negotiators, members of Congress, and an array of stakeholders on the TPP. From the outset we constructively worked in pursuit of an ambitious agreement that creates prosperity both here and abroad for working families.
After analyzing and discussing the text of the now publicly released agreement we have concluded the TPP, regrettably, fails and repeats many of the mistakes of prior trade agreements that contributed to stagnant wages, rising income inequality, and plant closings in the United States.
The stakes are high as forty percent of the world’s economy is in the balance. The scope of the agreement will increase as Indonesia, China, South Korea, Thailand and other nations could join over time. If ratified, TPP will impact our nation for generations to come. It touches nearly every aspect of our daily lives. It will impact the food we eat, the air we breathe, the medicines we take, and the cars we drive. We are concerned by the ramifications of the TPP because it puts the interests of corporations and their pursuit of overseas profits in the driver’s seat.
We already know what happens when overseas profits are put before working families. We had a trade surplus with Mexico in 1993, the year before North American Free Trade Agreement (NAFTA) was implemented. Supporters of the trade agreement promised new jobs. Instead, U.S. trade deficits with Mexico cost almost 700,000 U.S. jobs by 2010. Most of the jobs displaced were in manufacturing. Nearly every auto manufacturer and supplier has increased their operations in Mexico with the hopes of increasing their exports to the United States and elsewhere.
U.S. corporations took advantage of NAFTA’s extraordinary investor protections trade liberalization and low wages to outsource U.S. jobs. Foreign direct investment tripled in Mexico since NAFTA according to the IMF. The TPP includes many of the same investor protections as NAFTA. U.S. laws, including Buy America laws, are jeopardized as foreign investors seek damages in private courts to protest laws supporting U.S. jobs and protect consumers.
Mexican workers also suffered under NAFTA. More than two million subsistence farmers have been forced from their land. Mexican workers are often put in harm’s way for exercising their most basic rights. Most make less than $4 dollars an hour despite booming profits and record growth for the industry. Company unions more aligned with employers than workers dominate and exclude independent unions and unbiased participants. The TPP does not create a concrete, enforceable plan to ensure basic rights for Mexican workers.
TPP backers argue the labor chapter will effectively address structural problems found in Mexico and elsewhere. Unfortunately the chapter often relies on terms without definitions. For example, while countries are required to adopt and maintain laws to provide for a minimum wage, that wage could be set at 5¢ per hour. Many TPP countries notoriously repress workers’ rights and there is no reason to think they will not maintain the status quo.
Manufacturing jobs are falling behind as 600,000 manufacturing workers make just $9.60 per hour or less and 1 out of every 4 make less than $12. Congress should work with the Administration to enact an array of policies to reverse this trend. Sadly, the TPP is counterproductive and undermines the future of domestic manufacturing. Competitive pressures from low wage countries will increase as remaining U.S. tariffs on manufactured goods are eliminated. The Wall Street Journal projects the combined U.S. trade deficit in manufacturing, including autos and auto parts will increase by $55.8 billion under the TPP over the next ten years. The impact will probably be worse.
Countries from around the world sell cars in America without unfair trade barriers. The same cannot be said for many countries in the TPP as some import less than 7% while undervaluing their currency, making their exports cheaper. Currency manipulation has already cost millions of American jobs. Vehicles built overseas are routinely well over five thousand dollars cheaper because of undervalued currencies. Unfortunately, enforceable provisions to stop currency manipulation are nowhere to be found. This shortcoming will directly undermine the potential benefits. More consultation will not solve this problem.
UAW members know what the offshoring of jobs does to communities. The TPP will create more incentives for companies to move operations to low wage countries. The auto Rules of Origin (ROO) Standard is unacceptable as over half of the value of a car or truck could be built by countries that are not in the agreement and still receive benefits. To make matters worse the threshold for many auto parts is 35%. By comparison, NAFTA’s standard is 62.5%. This is another reason why the TPP is worse than NAFTA.
We call on Congress to reject the TPP.
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