Sen. John McCain (R-AZ) has openly come out against tying U.S. trade deals to labor standards. His senior policy adviser Douglas Holtz-Eakin said in an interview that “McCain would reject the use of labor and environmental issues to block trade.” Instead, “his preference would be to monitor trading partners in order to determine if they are improving their standards.”
However, in a recently released paper for the Center for American Progress, — “Labor Rights Can Be Good Trade Policy” — Christian Weller argued that the United States can improve its trade deficit, which has been at or above 5% of gross domestic product since the middle of 2004, by calling for improved labor standards from America’s trading partners:
Better labor standards in trading-partner countries, especially in less industrialized economies, can positively affect U.S. exports and U.S. imports. Better labor rights could increase demand for U.S. exports by boosting the incomes of workers overseas. And better labor standards abroad reduce the cost advantage that some countries may enjoy by paying their workers poorly.
To back this assertion, Weller provided evidence showing that, currently, the U.S. “has smaller trade deficits or even trade surpluses with less industrialized countries that have some or even strong labor rights compared to countries that have limited or no labor protections.” Among Weller’s findings:
– Trade with less industrialized countries with weak or no worker protections has substantially contributed to the increase in the U.S. trade deficit from 2000 to 2007. If the United States had only traded with less industrialized economies that had some or strong worker rights during those years, its trade deficit in 2007 would have been $123 billion smaller than it actually was.
– In 2000, U.S. exports to countries with strong or some worker rights were 182.3% greater than U.S. exports to countries with limited or no worker rights.
– U.S. imports grew faster from 2000 to 2007 for countries with limited or no labor rights than for countries with some or even strong labor rights.
The AFL-CIO asserts that “McCain is missing the point”:
Labor and environmental rules are just as much a part of the trade equation as copyright protection or investment rules. It isn’t a question of blocking trade but of making sure that trade deals are fair to workers, don’t trash the environment and provide the right incentives to businesses and governments. McCain’s trade policy would serve only one constituency: multinational corporations.