IE 11 is not supported. For an optimal experience visit our site on another browser.

The Democrats' odd trade tussle

Democratic presidential contender John Edwards has adopted a neo-populist line of attack, bashing multinational corporations and blaming his rival John Kerry for voting for the 1993 North American Free Trade Agreement.
Presidential contender John Edwards addresses a crowd at a rally in Sacramento, Calif., on Wednesday. California's Democratic primary will be held Tuesday.Charlie Riedel / AP
/ Source:

As Democratic presidential contender Sen. John Edwards of North Carolina strives to catch and surpass his rival Massachusetts Sen. John Kerry in the delegate count, Edwards has made criticism of trade agreements a centerpiece of his campaign.

The Senate voting records of Kerry and Edwards are similar on most issues, from supporting the Iraq war resolution to voting against the 2003 tax cuts to opposing several of President Bush’s judicial nominees.

But presidential primaries often require a challenger to magnify any differences he might have with the front runner. And that is what Edwards has been doing.

Edwards has adopted a neo-populist line of attack, bashing multinational corporations and blaming Kerry for voting for the 1993 North American Free Trade Agreement (NAFTA), which was approved five years before Edwards took his Senate seat.

“There is no question that our current trade policies are good for the profits of multinational corporations,” Edwards said last week. But he argued that U.S. trade policy hasn’t benefited workers.

“It is not good enough to say that we'll drive up stock prices if it means driving down wages,” Edwards said. “If we really believe in honoring work and working people, we must change our trade policies.”

Kerry pledges action
Kerry addressed the trade issue Wednesday as he campaigned in Ohio and it is likely to come up in Thursday night's debate among the Democratic contenders to be broadcast on CNN.

“We’ll require full disclosure to the American public about how many jobs are being sent overseas, where they’re going, and why they’re going,” he said, adding that he would propose requiring companies to give workers three months notice “if their jobs are being exported offshore.”

Kerry also vowed to make “labor and environment standards in the core of every trade agreement” negotiated in the future. 

On a few counts, it is remarkable that trade has become a prominent issue at this point in the Democratic presidential contest.

One oddity is that the candidate with the longest, most consistent anti-trade liberalization, pro-labor union record, Missouri Rep. Dick Gephardt, dropped out of the race after discovering that the trade issue did not work to generate enough support for him.

If the trade issue didn’t work for Gephardt, it is not clear why it would work for Edwards.

Kucinich the most anti-NAFTA
There is still one uncompromising, outspoken anti-NAFTA, anti-free trade contender in the Democratic field: not Edwards, not Kerry, but Ohio Rep. Dennis Kucinich, who has not yet won any primaries or caucuses and has only eight delegates compared to Kerry’s nearly 700.

Last week the AFL-CIO labor confederation announced it was backing Kerry, seemingly willing to forgive Kerry’s vote not only for NAFTA but for the 2000 bill to grant China permanent normal trade relations status with the United States, which paved the way for Beijing to join the World Trade Organization (WTO).

Organized labor opposed both NAFTA and the China trade bill. In each case, labor leaders said the accords were fatally flawed because they did not include labor and environmental standards which would be binding on America's trading partners. Kerry now says such standards should be part of any future trade accords.

Partly due to its entry into the WTO and its promise to lower its trade barriers, China is now America’s third biggest trading partner, after Canada and Mexico. The U.S. trade deficit with China, at $124 billion last year, is by far the largest it has with any of trading partners.

Kerry’s vote for the China accord might have made him vulnerable to criticism from his flank — except that Edwards also voted for that agreement.

As he explained his vote on Sept. 19, 2000, Edwards told the Senate, “trade between U.S. companies and the Chinese will likely explode in the coming years, generating jobs and revenues in this country. It could easily be the keystone in the continuing prosperity of this nation.”

Prediction about China trade
Edwards explained that once China joined the WTO, North Carolina farmers would benefit because China would cut its tariffs on poultry, pork and tobacco, all North Carolina exports.

“China’s agreement to lower its tariffs, to eliminate quotas, and to defer to U.S. health standards provides North Carolina farmers with real opportunity.”

Edwards acknowledged that “textile and apparel workers, many of whom live in North Carolina, face real challenges” as a result of China entering the WTO.

“The industry can protect itself through the anti-surge mechanism put in place by this legislation,” Edwards said. “Yet it does us no good to pretend that these remedies are perfect and that people will not be hurt.”

Edwards, at that point, was willing to accept the tradeoff of some American workers getting hurt so that other American workers might benefit from the opportunity to make goods that could be sold in more open Chinese markets.

According to the United States Trade Representative, some of what Edwards has predicted has come to pass.

"Over the last three years, while U.S. exports to the rest of the world have decreased by 10 percent, U.S. exports to China have increased by 66 percent," according to a report issued last December by the USTR on China's compliance with its market-opening promises as a member of the WTO.

But the report says that the Chinese government is still not fully opening domestic markets to American goods and services and is intervening in the market to protect Chinese firms.

"The shortcomings in China’s WTO implementation are noteworthy," the report says.

Textile jobs lost
Edwards’ own state of North Carolina has suffered greatly from textile industry job losses. According to the American Textile Manufacturers Institute, the trade group representing U.S. textile firms, the job losses are due to an influx of Chinese and other Asian textile imports.

Since the end of 2000, 51,000 textile jobs in North Carolina have disappeared, according to the Textile Manufacturers Institute.

When asked Edwards last November about his vote for the China trade accord, he said, “The Chinese have done a lot of things, including the manipulation of their own currency, which has contributed dramatically to this trade deficit that we have with China. And the Bush administration refuses to do anything about that. They’re allowing China to manipulate their currency; they’re not putting any serious pressure on them, they’re not bringing a case against them at the WTO.”

Likewise, Kerry said Wednesday, “As president, I’ll demand that countries like China stop manipulating their currency to get an unfair trading advantage. … they will feel the full force of our trade laws if they don’t.” 

In a conference call with reporters Wednesday, Kerry economic advisor Gene Sperling, who served as director of President Clinton’s National Economic Council, said that if elected president, Kerry would take steps, such as reducing energy costs, that would make U.S.-based firms more competitive with their overseas rivals.

Sperling and China accord
In 2000, Sperling helped Clinton persuade Congress to approve the China trade deal.

Asked how many U.S. jobs had been lost due to the China trade accord, Sperling said Wednesday, “I don’t know of any calculation” of jobs destroyed.

He added that most studies by economists of the effects of such trade accords find that there is “a changing composition of jobs” in a nation’s workforce, not an outright net loss of jobs.

He said Bush had not been forceful in battling alleged currency manipulation by China and contended that Kerry would take action.

The Fair Currency Alliance, a coalition of industry groups and labor unions, is urging the Bush administration to keep the pressure on the Chinese to force a downward revaluation of the renminbi.

"We're pleased that the administration has engaged the Chinese government on a high level on this issue," said Patricia Mears, Fair Currency Alliance executive director. To add to the pressure, her alliance is preparing to file a "Section 301" petition under U.S. trade law that would threaten China with punitive actions if its currency is not revalued.