Robert Reich on Free Trade

Former Secretary of Labor; Democratic Challenger MA Governor


Free trade isn't opposite of protectionism; it's political

The conventional view equating "free trade" with the "free market," in contrast to government "protectionism," is misguided. "Free trade" agreements entail complex negotiations about how different market systems are to be integrated. The most important aspects of such negotiations concern items such as intellectual property, finance, and labor. Within these negotiations, the interests of large corporations--to fully protect the value of their intellectual property and financial assets--time and time again trump the interests of average working Americans to protect the value of their labor. (A personal confession: When I was secretary of labor in the Clinton administration, I argued against NAFTA within the confines of the administration but did not air my concerns publicly, believing I could do more good remaining inside than resigning in protest over this and bringing China into the World Trade Organization. In subsequent years I have often wondered whether I made the right choice.)
Source: Saving Capitalism, by Robert Reich, p.124 , May 3, 2016

NAFTA would be better with labor & environment standards

Q: When you were the labor secretary to the first term of the Clinton administration, they pushed through the North American Free Trade Agreement. You were part of that administration. Was that a mistake?

A: I don’t think it was a mistake, but it wasn’t really a tremendous help. If you put labor and environmental standards into our trade agreements, it’s not a race to the bottom. If you have an environmental standard and a labor standard that, for example, bars all slave labor, guarantees the right to organize, maintains kind of minimum labor standards throughout the world, you are setting a floor for all nations. It’s not protectionism. This is a way of actually getting everybody up rather than having the bar continue to trend downward. We tried to do this in NAFTA, and, unfortunately, we couldn’t get the Mexican government support. We tried to have a labor and environmental side agreement. I think it would have been a much better agreement had we had that.

Source: CNN Late Edition: 2008 presidential series with Wolf Blitzer , Jun 22, 2008

Stockpile vital materials rather than subsidizing industries

Some proponents of subsidies or protections argue that America should have more capacity within its borders than the market demands, or risk not having enough oil, jet airplanes, or other "vital" assets during wartime. But how much domestic capacity? And what's vital? As a practical matter, we can better reduce the risk by not becoming too dependent on imports from any one country or region, stockpiling certain critical reserves, conserving our natural resources, and relying more on renewable sources of energy.

Even if we'd feel more secure with certain capacity inside the US, subsidizing or protecting American-owned businesses is hardly the most efficient way to get it.

Source: I'll Be Short, by Robert Reich, p. 32-33 , May 2, 2002

MA should compete by being productive, not cheap

Massachusetts is part of the global economy -- depending on exports to the rest of the world, capital from all over the globe, and immigrants. But Massachusetts can’t compete primarily on the basis of low costs of doing business; there’s always somewhere else on the globe that will be cheaper. We must compete on the basis of high productivity.
Source: Campaign web site, RobertReich.org , Jan 25, 2002

Share benefits of globalization; lower import trade barriers

Instead of being opposed to globalization, progressives should pressure the world’s wealthiest nations into sharing the benefits. While the global economy has grown at an average rate of 2.3 percent a year during the past three decades, the gap between the best-off and worst-off countries (as measured in per capita gross national product) is 10 times wider now than it was 30 years ago. And with poverty comes disease--AIDS already has claimed the lives of 10 million Africans and is projected to kill 25 million more over the next decade--as well as the continued destruction of the global environment.

Rather than advocate for less trade, progressives should seek to remove barriers that make it difficult for poorer countries to export to richer ones. That means fewer subsidies to farmers in advanced nations, combined with lower tariffs on farm products from the third world and fewer barriers (including “voluntary restraint agreements”) to textile and steel imports from poor nations.

Source: The American Prospect, vol.12, no.17, “Proper Global Agenda” , Oct 8, 2001

Isolationists & xenophobes misguided on trade & immigration

There is, undeniably, much to celebrate about the new economy. American capitalism is triumphant all over the world, and with good reason. Neo-Luddites who claim that advancing technologies will eliminate jobs & relegate most of us to poverty are wrong, even silly. Isolationists and xenophobes who want to put up the gates and reduce trade & immigration are misguided, often dangerously so. Paranoid populists who say global corporations and international capitalists are conspiring against us are deluded, possibly hallucinating. We--you and I and most Americans--are benefitting mightily from the new economy. We are reaping the gains of its new inventions, its lower prices, its fierce competition. We are profiting from the terrific deals its offering us as consumers, and to a large and growing proportion of us an investors.

And yet... As wondrous as the new economy is, we are also losing parts of our lives to it--aspects of our family lives, our friendships, our communities, ourselves.

Source: The Future of Success, by Robert Reich, p. 8 , Jan 9, 2001

Poor nations should improve conditions as wealth increases

A practical agreement over labor and environmental standards could work this way: Poor nations agree that as they become wealthier, their labor and environmental standards will improve according to a predetermined scale of improvements: Median wages will rise, as will the minimum wage; workplace health and safety standards will ascend in tandem; environmental standards will gain ground.
Source: The American Prospect, vol.11, no.13, “Trade: A Third Way” , May 22, 2000

Backlash against globalization is growing, because of jobs

Will what happened in Seattle last week [protests against globalization at the WTO meeting] have any practical consequence for American politics? There is something going on here that politicians are taking note of. It’s a deepseated, grass-roots, backlash against globalization.

[In a 1999 poll] a majority of respondents thought the global economy will hurt average Americans. The only people in the survey who were positive about globalization were those earning more than $75,000 a year, a distinct minority.

Why this backlash against globalization? Simply because most peoples’ jobs are more precarious now than ever before. And while trade isn’t the only culprit -- it’s also technology, and fierce domestic competition -- trade is the easiest culprit for most people to understand.

It’s not Seattle that’s going to make a lasting political imprint. It’s the backlash that lay behind Seattle. And that backlash is growing.

Source: PBS radio, “Marketplace” broadcast, “What Seattle Means” , Dec 9, 1999

Urges worldwide campaign against child labor

Secretary of Labor Robert Reich says governments and international organizations must wage a coordinated campaign to end child labor around the world.

Speaking to an International Labour Organization (ILO) meeting, Reich voiced strong support for the ILO’s International Program for the Elimination of Child Labor (IPEC) for helping to raise public awareness about the problem.

He also praised a pilot program, recently launched with US government assistance, that will enable the ILO to work with the Bangladesh Garment Manufacturers and Exporters Association to remove children from garment factories there and place them in school programs.

“If we can succeed in stopping child exploitation in the garment sector in Bangladesh, why can’t we do it elsewhere?” Reich commented.

Reich said the ministers should consider what additional international law would be useful in combating child labor and what role the World Trade Organization might play in the effort.

Source: Clinton Cabinet P.R.“Worldwide Campaign against Child Labor” , Jun 12, 1996

Globalization means less focus on Nation and more on People

As almost every factor of production--money, technology, factories, and equipment--moves effortlessly across borders, the very idea of an American economy is becoming meaningless, as are the notions of an American corporation, American capital, American products, and American technology.

So who is "us"? The answer lies in the only aspect of a national economy that is relatively immobile internationally: the American work force, the American people. The real economic challenge facing the US in the years ahead--the same as that facing every other nation--is to increase the potential value of what its citizens can add to the global economy, by enhancing their skills and capacities and by improving their means of linking those skills and capacities to the world market.

There is no longer any reason for the US to protect, subsidize, or otherwise support its corporations above all others. Nor are there grounds for reducing public expenditures and cutting taxes.

Source: The Work of Nations, by Robert Reich, p. 8 , Feb 4, 1992

Post-WWII global capitalism was history's greatest growth

America at mid-century was not a major trading nation. Few war-devastated economies were capable of selling Americans much of anything. Nonetheless, America sought to extend the wonders of American capitalism to the rest of the world, as a further bulwark against the spread of Soviet communism.

America led the way toward a global capitalism. In the early postwar years, the nation championed a system of fixed exchange rates to minimize currency fluctuations, the IMF to ensure world liquidity, and GATT to ensure an open trading system. America funneled billions of dollars in aid to Western Europe and Japan in order to rebuild factories, roads, railways, and schools and targeted aid and know-how to developing nations. And it steadily reduced its tariffs on foreign imports.

The effort was an astounding success for all concerned. The years 1945 to 1970 witnessed dramatic and widely shared economic growth in the history of mankind. The world's GNP grew from $300 billion to about $2 trillion.

Source: The Work of Nations, by Robert Reich, p. 63-64 , Feb 4, 1992

Dumping no different than competitive pricing

By the end of the 1980s, almost 1/3 of the standard goods manufactured in the US, by value, were protected against international competition. America's core corporations insisted that they were simply protecting themselves against the "unfair" practices of foreign traders. The precise nature of this unfairness, however, was rarely stated with any specificity. It was said that foreigners were "dumping" their wares in the US--a term conjuring up images of huge piles of substandard consumer durables and cheap novelty items littering American beaches. In fact, "dumping" described nothing more than foreign producers acting exactly as would any self-respecting competitor who wished to sell in large quantity: offer a cut-rate price from the very first sale onward, sometimes even taking a loss, in anticipation of making money later on after gaining scale efficiencies.
Source: The Work of Nations, by Robert Reich, p. 71 , Feb 4, 1992

Trade with China makes sense if US workers are protected

Labor should set a price for China trade while it has the votes. Labor should demand that there be two other items 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 on the whole package. The price for opening the door to more trade with one-sixth of the world’s population is more power for blue-collar workers in America.
Source: The American Prospect, Vol. 11, #11 , Apr 24, 2000

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