[CTC] Key Senate Democrats: ITC analysis ignores workers, especially of color

[Arthur Stamoulis]

Key Senate Democrats: ITC analysis ignores workers, especially of color
By Margaret Spiegelman, Inside US Trade
9/21/2021

A U.S. International Trade Commission analysis of the economic impacts of free trade agreements published in June ignored the adverse trade effects on workers, particularly those of color, according to five leading Senate Democrats who are calling on the ITC’s commissioners to commit to changing how they analyze FTAs.

The ITC concluded in its congressionally mandated report that FTAs have had “small but positive” economic effects. The report was the second of two analyses called for in the Bipartisan Congressional Trade Priorities and Accountability Act of 2015. The first was released in 2016.

In a letter on Monday to the ITC, Senate Finance Committee members Sens. Elizabeth Warren (D-MA) and Sherrod Brown (D-OH), along with Sens. Jeff Merkley (D-OR), Tammy Baldwin (D-WI) and Edward Markey (D-MA), took the commission to task for what they described as “deep flaws” in its analysis, which, “if corrected, would cast serious doubt upon even its tepid conclusions about the benefits of the trade agreements analyzed in its study,” they wrote.

The ITC’s report, according to the senators, was “based on an analysis that uses wholly unrealistic models of the U.S. labor market and that systematically ignores the negative effects of trade agreements on workers, particularly workers of color, and on the overall health of the American economy.”

The lawmakers contend the ITC erred by assuming full employment -- a condition unseen in the U.S. “for the vast majority of the last five decades,” they wrote -- and “costless switching,” ignoring the costs of temporary unemployment and employment transitions.

They also decried the analysis for failing to adequately address how trade impacts different groups of workers, noting that only two pages in the 300-page report addressed the effects of trade across different racial groups and parts of the country.

“Black and Latino workers are disproportionately represented in industries hit hardest by import competition; they are less likely than their white counterparts to find a replacement job; and when they find new jobs, they face disproportionate pay cuts,” they wrote, citing research by Public Citizen, a nonprofit consumer advocacy group.

By “relying on analyses that ignore the regional and racial effects of U.S. trade policy,” the senators added, “our trade policy will continue to exacerbate inequities and hurt the most disadvantaged American workers and communities.”

The senators described the report’s analysis of trade impacts by gender and education, meanwhile, as “very general.” The report noted that employment gains from trade were “not distributed evenly,” with the largest gains going to college-educated men.

Other blindspots in the ITC’s analysis, according to the senators, include a failure to examine the impacts of trade on workers’ standard of living or their ability to bargain with employers and whether trade contributes to increased market concentration or lost “technological expertise.”

The report also “assumes that important domestic rules and regulations such as labor standards, environmental protections, and consumer safety provisions” represent obstacles to trade that the U.S. “should seek to eliminate during trade negotiations.”

“These issues get to the heart of whether the American economy is healthy, resilient, and working for all of us,” they wrote.

The senators concluded their letter with a series of questions, calling on the commissioners to explain the reasoning behind their conclusions and asking if they have undertaken further analysis that addresses the senators’ concerns and what additional sources of data might be necessary to do so. They also asked if the commission would commit to including such analysis in future studies. They called on the commissioners to respond by Oct. 5.

A spokeswoman for the ITC confirmed the commission received the letter and said it “is being considered.”

During a confirmation hearing for U.S. Trade Representative Katherine Tai in February, Warren asked the nominee to commit to having more representatives from labor, consumer and environmental groups on USTR’s trade advisory committees, according to a transcript of the exchange from her office.

Tai has repeatedly described the Biden administration’s developing trade agenda as “worker-centric” and “inclusive.”

During an event last month with union leaders in Chicago -- one of a series of meetings Tai has conducted with workers around the country -- she asked for their input on how trade has helped workers and “where past policies have fallen short.”

“Developing a better understanding of these two important questions will help us craft more inclusive trade policies that fulfill President Biden’s vision of creating an economy built from the bottom up and the middle out,” Tai said.

“These conversations have real impacts,” she added, noting that the U.S. had recently announced a settlement to resolve a dispute launched under the U.S.-Mexico-Canada Agreement involving alleged worker rights violations at an auto parts factory in Mexico.

Some progressive Democrats, including Warren, supported USMCA after House Democrats won key changes on labor and environment issues.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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