Working People Need Fair Currency Rules in #NAFTA
One of the reasons that so-called U.S. “trade” deals (such as the North American Free Trade Agreement, or NAFTA) should really be called “offshoring” deals is that they do not contain any enforceable restrictions on currency misalignment and manipulation. Without such restrictions, countries can game the value of their currency to gain a trade advantage that provides corporations an incentive to strip jobs and wages from the U.S.
China’s currency manipulation and misalignment in recent decades helped displace 3.4 million U.S. jobs and cost America’s working families $37 billion in wages in 2011 alone. You see, when trade between countries gets out of balance, with one country racking up mounting deficits and another racking up mounting surpluses, the currencies of each country are supposed to adjust, making the exports of the deficit country (in this case the U.S.) relatively cheaper, which would eventually create a rough balance of trade.
But when currencies don’t adjust properly—which can happen when a country purposely holds the value of its currency down, as China did for a couple decades—balance won’t be achieved. Misaligned currency creates incentives for global companies to invest in the countries with the lower valued currency, such as China (where they are also confident they can exploit workers) and to disinvest in the countries with the higher valued currency, such as the U.S., where employers can use the threat of offshoring to drive down wages.
Trade deals like NAFTA should fight this trend, not exacerbate it. But they never have. NAFTA and other trade deals (such as the WTO, CAFTA and the TPP) were written to benefit global companies, not working people. That can change with a new NAFTA, but we still don’t know yet if a final deal will create new, people-centered trade rules. So far, we don’t know if enforceable currency rules will be in the new deal. If the administration fails to propose enforceable currency rules, it will signal that the “new” NAFTA isn’t very new at all, but the same old corporate power grab that continues to push down wages all across North America.
You can help by calling the U.S. Trade Representative’s office at 202-395-6135 and demanding that negotiators include enforceable currency rules in NAFTA. Then text TRADE to 235246 to learn what else you can do to join the fight for a new and better North American economy!
This is the fourth in a series of blog posts on what rules are needed to create a new North American economy. Read more.
Tue, 10/03/2017 – 10:53