The upcoming fight over China trade will test not just the clout of organized labor but, more specifically, the price labor can extract from big business as a condition for accepting the deal. And it seems clear that unless the AFL-CIO goes along with the White House proposal to grant China full trading privileges on a permanent basis, the administration won't have the necessary votes. As of this writing, some two-thirds of House Democrats, mostly taking their cue from organized labor, are firmly against it. Together with Republicans who are taking a hard line against China's bellicose foreign policy, that's enough to sink the deal.
The industrial unions--especially steel, autos, and textiles--are irrevocably opposed. They're still smarting from the Clinton administration's North American Free Trade Agreement (NAFTA) and the expanded General Agreement on Tariffs and Trade (GATT) that led to the creation of the World Trade Organization, both of which they blame for the continuing erosion of manufacturing jobs. The rest of organized labor-- teachers, state and federal government workers, service workers--don't much like the China trade deal but know their own jobs aren't on the line. AFL-CIO President John Sweeney, however, has pledged to fight it with all the organizing strength of the newly muscular AFL-CIO, partly to placate the industrial unions and partly because Sweeney is genuinely concerned about human and labor rights abuses in China. Demonstrations are scheduled in the home districts of key uncommitted lawmakers.
But Sweeney and the union presidents know that when labor has chosen to fight the Clinton administration over trade--rather than set a price for cooperating--it has come up empty handed. It could have demanded something in return for backing off on its opposition to NAFTA and then on GATT, but it chose to go to battle and lost both times. This has been the pattern even outside the strict confines of trade deals. Labor could have exacted a price from the administration for its early support of Al Gore for president, but it chose to endorse him for free (only to have the administration unveil its China trade agreement soon thereafter).
Labor should set a price for China trade while it still has the votes and while the other side is eager to move forward. Business is willing to pay something because it wants unfettered access to China's giant market and is afraid of what might happen if Gore is elected next November. Bill Clinton is eager to deal because he wants normal trade relations with China as a capstone to the administration's otherwise incoherent China policy. Gore desperately wants to strike a deal as well because he wants the China trade issue to be resolved well before the nominating convention, so that labor can concentrate its energies on his presidential bid. Dick Gephardt, the House Democratic leader, would like a deal because he doesn't want an ugly Democratic split over China that might derail the Democrats' quest to control the House next election day and make him the next speaker.
What's the price? Labor should demand that there be two other items wrapped in the legislation regularizing China's trade status--a ban on the permanent replacement of striking workers and a tripling of fines against employers who illegally fire workers for attempting to organize a union. Then a vote, up or down, on the whole package. In short, the price for opening the door to more trade with one-sixth of the world's population (the vast majority of whom would eagerly work for a fraction of the American wage) is more power for blue-collar workers in America and a redemption of the Wagner Act's promise that American workers can freely choose collective representation without having to fear for their jobs.
Any economist will tell you that free trade is good for Americans, overall. We get access to cheaper labor-intensive goods from abroad and bigger markets for our knowledge-intensive exports. But free trade also causes some Americans to lose their jobs or a portion of their incomes. And even though the benefits of trade are greater than these burdens, benefits and burdens aren't distributed equally. It's this distributional aspect of trade that's rarely talked about but causes most of the political problems.
Economists will also tell you that public policies are justifiable when those who benefit from them could fully compensate the losers and still come out ahead of where they were before--which is why free trade is a no-brainer. But the political reality is that the winners from free trade don't compensate the losers. Yes, Congress typically enacts small job-retraining programs along with trade agreements so the losers can find new work. But the programs are too tiny to have any real effect.
The price that labor should be demanding for going along with the China trade deal makes sense in these terms. There's no guarantee against job loss, of course; American factory jobs will continue to be on the firing line of globalization as well as technological change. But strengthening the bargaining clout of labor by preventing employers from permanently replacing striking workers, and deterring employers from firing union organizers, can help spread the gains from trade. Stronger unions would give blue-collar workers the ability to summon higher wages and, when job loss was inevitable, more generous severance payments. Labor law reform would also give unions a fairer shot at organizing the new jobs of the globalized service economy.
Will labor set this price rather than go to battle over China trade? Would big business be willing to pay this price? All I know is there's a deal waiting to be done and a lot of powerful people with a strong stake in doing it. It's worth a try. ¤