Congress is close to granting President Obama “fast track” authority to negotiate the massive Trans-Pacific Partnership, a trade deal with a dozen nations around the Pacific Ocean that could impact as much as 40 percent of the United State’s trade.
Critics claim the deal could further erode jobs and workers’ living standards, as previous trade deals have, by opening up American manufacturing to more import competition for domestic markets. They doubt its protections and standards for workers in participating countries will prove enforceable. They say its provisions increasing corporate control over intellectual property rights — in the area of pharmaceuticals, for instance — will largely benefit corporations and could have social costs. They want measures included to crack down on currency manipulation by other countries looking to boost their exports. They say the Trade Adjustment Assistance policy (which assists workers displaced by foreign trade) needs to be funded at $575 million per year, where it was in 2011; it’s currently well short of that.
Supporters say the deal will help American exports, an area where companies are already poised to grow and create more jobs. They defend the international worker protections baked into the deal as a big improvement on the status quo. They say including measures cracking down on currency manipulation as part of an international deal could backfire by tying the U.S.’s hands to address the economy, and note that it is opposed by other participants in the deal.
Labor Secretary Thomas Perez stands at the center of this war. Well respected on the left as a serious advocate for government as an agent for positive change, he is trying to persuade unions and liberals to support the deal. I asked him to respond to all the criticism; a lightly edited transcript follows.
THE PLUM LINE: There’s a tremendous amount of suspicion about trade deals. Prior trade deals didn’t raise wages or bargaining rights. What specifically will be in TPP that is somehow different from these other deals, from the point of view of the standard of living of American workers?
THOMAS PEREZ: I share the skepticism that my friends have about NAFTA. It was woefully weak in protecting workers and on the enforcement side. The question is: Can we meaningfully build a trade regime that has as its North Star protecting American workers and American jobs through meaningful enforcement? I think we can. It’s imperative that we not default to the status quo, which would mean we don’t fix NAFTA.
We have to bake labor provisions into the core of an agreement. TPP would do that. Under NAFTA, countries had to simply promise to uphold the laws of their own nations. Now the provisions baked into TPP are: You must enact or make sure you have already in place meaningful labor protections, such as the freedom of association, health and safety, acceptable conditions of work.
PLUM LINE: We keep hearing TPP will increase exports. But hasn’t every prior trade deal increased exports? And as that has happened we’ve seen stagnated wages and hollowed out manufacturing. Why will increasing exports this time translate into a net jobs gain?
PEREZ: The status quo is that there are no meaningful labor rights in Vietnam. Nike is the largest employer in Vietnam right now. Let’s ensure that they have to pay higher wages and ensure good working conditions. In Mexico there’s a system of protection contracts in place, where companies can establish company unions with no meaningful bargaining rights. That drives down wages and creates an un-level playing field. A lot of farmers across this country look at Asian markets as their future. They are dealing with tremendous tariffs to ship pork or other farm items. We don’t have those tariffs.
PLUM LINE: Paul Krugman argues that trade is already fairly free among participating nations and that there’s currently very little protectionism.
PEREZ: Tell that to a farmer who’s trying to ship pork to Malaysia or other farm items to other countries, where you have 30, 40 percent tariffs. I wouldn’t call the playing field level. There are lots of Japanese autos in the U.S. and there are virtually no American cars in Japan. There are also many non-tariff barriers. I want the F-150 not only made here, but made for shipment abroad.
PLUM LINE: On baking in labor standards, we keep hearing that these rules are enforceable. But will it be at the discretion of a future president to follow up on, for example, an AFL-CIO complaint about labor conditions in Vietnam? Or is there a provision that requires President Ted Cruz to follow up on such a complaint?
PEREZ: Take the hate-crimes bill that passed in 2009. The notion that you wouldn’t support the hate-crimes bill because President Ted Cruz some years down the road might decide not to enforce it as vigorously strikes me as an insufficient argument.
PLUM LINE But how would the mechanism work? Is it at the discretion of a future president to pursue enforcement? Is the argument that labor shouldn’t be concerned about non-enforcement under a future labor-unfriendly president, because there will be committed prosecutors in place?
PEREZ: I can’t speak for what a future president will do. But I can say the structure is indistinguishable from the structure we have at the Justice Department to do enforcement in a wide array of civil and criminal contexts, where you have a dedicated cadre of career professionals. That critique — that a future president may do less — could apply to every aspect of enforcement. Trade is no different. We want to get the best laws on the books. Do we throw up our arms and say, “We’re just going to stick with the status quo?”
PLUM LINE: What do you get from a country like Vietnam in terms of a time commitment for them to come into compliance [with the deal’s labor standards]? On Day One, can they participate in the TPP without being fully compliant?
PEREZ: They are going to have to make significant changes in their laws. We will have what’s called a “consistency plan,” if we are able to get to the finish line. That is, an enforceable agreement in which they will have to do certain things as a condition for participating in TPP.
PLUM LINE: Do they have to be fully compliant to participate?
PEREZ: Right now, we’re negotiating what those steps are. Some of it will be law reform. We are not going to transform Vietnam into Germany overnight. In Vietnam, we want a whole series of reforms and tariff elimination. We want to put in a regime that is meaningfully better.
PLUM LINE: Currency manipulation. If you’re not going to secure currency manipulation reform as part of this, where else can you do it? This would be the place to do it, no?
PEREZ: Jack Lew has been negotiating with a number of members on both sides of the aisle to come up with a meaningful currency bill that would address the concerns.
PLUM LINE: To be clear, if nothing happens on that front, you’d still find a TPP without any currency manipulation provision acceptable?
PEREZ: I would respectfully dispute the premise. People are working 24-7 on this issue. But we want to make sure at that the remedy does not create a new serious illness. That illness is to prevent our government from taking very important steps to respond to macro-economic forces. We need to preserve all of our tools to deal with the natural ups and downs of the economy. At the same time we want the right tools to deal with currency manipulation.
PLUM LINE: Trade Adjustment Assistance. What is your ideal funding level? $575 million? If you can’t get it up higher than what we have now, is that acceptable?
PEREZ: We want to get TAA up as high as we can. We want to make sure, among other things, that it applies to service workers. Our goal is to get as robust a TAA bill as possible. The 2011 level is the ideal level, and we’re going to continue to work as hard as possible to get as much as possible.
PLUM LINE: Intellectual property: Why should an American worker think this part of the deal does anything other than help big corporations?
PEREZ: In terms of intellectual property, so many of the job creators I know are start-ups. In the IP setting, we can meaningfully improve on the status quo, and in so doing, we can help small businesses, large businesses, and those in between. We have increased exports by nearly 50 percent in the last six years. That has resulted in an additional 1.8 million export-related jobs. We know export-related jobs, in the aggregate, pay more. One way to raise wages is to grow more jobs that pay good wages — export-related jobs.