In hopes of fostering a conversation that’s about the American people and their issues, rather than about the presidential candidates and theirs, BillMoyers.com will be conducting Q&As with some leading experts on important topics between now and Election Day. Below is a transcript of the conversation between Kathy Kiely and Thea Lee, an AFL-CIO economist and deputy chief of staff.
Kathy Kiely: So tell me how long you have been working on trade.
Thea Lee: [laughs] So I’ve been working on trade policy for about 25 years here in Washington, DC, starting with the debate over NAFTA, the North American Free Trade Agreement. And I was a young economist at the Economic Policy Institute at the time, and there weren’t very many economists in Washington who would say anything critical of something called a free trade agreement, because one of the first lessons we learn in economics is that free trade is good for everybody all the time — unless it isn’t. But that was kind of an exciting time because it was pretty clear that we were kind of in a new era around trade policy where our trade agreements were becoming more ambitious and in some ways more invasive, more threatening.
Kiely: What do you mean by invasive?
Lee: By invasive I mean that they weren’t really just about trade because if you have a trade agreement that is in the classic economist textbook, you would reduce your tariffs to zero. And I think as economist Anne Krueger used to say, “A real free trade agreement is one paragraph. Country A and Country B take their tariffs to zero tomorrow, period.” But that’s not what our trade agreements look like. They tend to be a thousand pages long.
And I think NAFTA was the very first in the template where there were a lot of ways in which NAFTA and the trade agreements that followed impinge upon democratic governments’ regulatory authority and other areas that don’t even have much to do with trade so that they are used as a way for governments, especially for the US government, which is a powerful country with an attractive consumer market, to require their partner countries to change their domestic laws and regulations in ways that are good for American multinational corporations.
And so whether it’s in terms of pharmaceutical pricing, to maintain longer copyrights and raise the prices of pharmaceutical products, let’s say, for Mexican or Canadian consumers in the context of NAFTA, that’s not really free trade per se, but we’ve become accustomed to using a so-called free trade agreement as a vehicle for accomplishing other goals that if corporations are being regulated in ways they don’t like by another country, the free trade agreement can be a vehicle for challenging those regulations through the investor state, dispute settlement. But the whole concept of regulatory coherence through trade agreements can be very challenging to democratically determined protections and regulations, like environmental or health and safety or consumer protection because sometimes those regulations can be challenged as a barrier to trade or unreasonable or not scientifically based and so that has been a big use of the trade agreements.
Raising Environmental and Worker Standards
Kiely: It seems like from what you’re saying that trade agreements could be used to improve health and safety, improve wages, improve environmental standards. Has that happened in any cases and if not, why not?
Lee: Well, that’s a great question and in some ways, you know, there’s been sort of an ongoing battle over how we’re going to use trade agreements and certainly the labor movement and environmental groups have fought to include enforceable labor and environmental protections in the context of trade agreements and we’ve had successes. You know, I think if you look at the labor and environment chapters in NAFTA and then you look at the most recent generation in the Trans-Pacific Partnership, there’s clearly been an evolution and that’s really been my life’s work is trying to progressively strengthen and close loopholes and improve the enforcement and so on. So we have — we’ve been having that debate.
But I have to say we haven’t won it. And that’s the problem: that we’ve made a lot of progress over the course of the last 25 years, and we have included stronger and better labor and environmental provisions, but I think we in the labor and environmental movement would say it really isn’t working yet. We haven’t figured out how to get the enforcement mechanisms powerful enough to really improve laws, to bring countries into compliance with international labor standards, to make sure that workers are really able to exercise their rights without fear, without retaliation — and so that’s been the challenge. And then you actually have two different competing things, which is the rise of the labor and environmental standards at the same time as all the corporate protections, whether it’s intellectual property rights or investment protections or financial services mechanisms, have remained pretty powerful. And so each trade agreement is sort of a mixture of things that are good for corporations and then weaker provisions that are supposed to be helping workers and the environment and consumers but have been less successful. And so I think that’s the tension.
Evolving Views on Free Trade
Kiely: Do you think [among] the people you work with, labor and environment, has the attitude about trade evolved since NAFTA, and how would you describe it if so?
Lee: Well, it has evolved and it’s — I think even back in the early 1990s when we were having the debate about NAFTA, there weren’t that many people in the labor and environment or global justice side of the argument who didn’t want to trade. I think even back then we all would have said we need a different set of rules for trade and for trade agreements, and it’s not that we’re opposed to trade with Mexico or trade with Canada; we already had a free trade agreement with Canada. But we want it to look different. And we’re in some ways saying the same thing today but I think we’ve actually had more success. We have built up and we’ve broadened, particularly within the economics profession, with the academic economists. Back in 1991 or the early 1990s, there really were very few respectable economists — and I don’t count myself in that group — who could say anything critical about trade agreements.
And I think over the last couple of decades there has been an evolution, where prominent economists like Joe Stiglitz or Ralph Gomory or even Paul Samuelson or Paul Krugman have a more nuanced view which is that yeah, these trade agreements — or Larry Summers for that matter — these trade agreements aren’t all they’re cracked up to be. They haven’t really delivered on some of the exaggerated benefits in terms of job creation and even foreign policy gains. But they have had some downsides in terms of the shifting the balance of power to corporations from governments, from workers, from nongovernmental organizations like environmental or consumer groups to corporations.
And we would argue that was the goal of these agreements all along was to shift the balance of power in the context of trade agreements. So that’s been, I think, a big shift — and I mean I think one very real question we have now is whether the whole concept of a so-called free trade agreement is outdated and irrelevant. Even some of the academic economists will tell you the tariff barriers that are remaining are pretty low today. The US has about 2–2.5 percent average tariff. We have peaks in some particular sectors but we have a pretty low average tariff. The European Union has a low average tariff and so the gains from reducing those tariffs from 2.5 percent to 0 percent or from 2.5 percent to 0.5 percent are actually pretty small. So maybe we ought to be looking at the trade challenges very differently and not trying to use the outdated vehicle of a free trade agreement, which in the case of the TPP, the Trans-Pacific Partnership, we’ve spent eight years negotiating and arguing about this and the whole thing may crash and burn in the next couple of months.
Kiely: Are you confident that that will happen?
Lee: I’m never that confident. I’m never 100-percent confident. I think it’s looking increasingly unlikely that TPP will either come for a vote in the lame duck session or if it comes for a vote that it will get a majority in Congress, but you never really know. You know, there’s a lot of pressure both from the Obama administration and from the business community to get it done and so we’re I would say remaining vigilant and we’re not taking it for granted.
Kiely: Going back to what you said about looking at trade in a different way, how would you suggest that? I mean, we’re in the middle of a presidential campaign. What do you think the candidates for office should be thinking about when they think about trade?
Lee: I think if we think about the role of the United States in the global economy, the United States is an important player with a waning industrial sector but I think we have tremendous potential because we have a great consumer market, you know, 330 million people, and pretty good purchasing power. And so we need to look at what our — and we have highly skilled, relatively skilled workforce compared to the rest of the world and we have a pretty good capital stock and we have great technology. So we ought to be competitive in the global economy. But I think for too many decades there has been a mindset amongst elected officials and the corporate sector that our place in the global economy is to import and consume and to own the means of production that is located somewhere else so that our corporations make profits by moving production somewhere cheap, whether it’s China or Mexico or Bangladesh, and then importing the products and selling it to wealthy American consumers.
The problem with that business strategy is that at some point the American consumers aren’t wealthy anymore because you’ve taken all the good jobs away.
And so something that is more integrated would be a sense of how do we build a dynamic and innovative and profitable manufacturing sector here in the United States so that we can produce more of what we consume and we can have a quick turnaround and we can have lean production and we can have empowered workers and strong unions and cutting-edge technology. And I think that’s the kind of manufacturing that the United States can and should be excelling at and if you look at other successful trading nations, a place like Germany or Sweden, that is a high-wage, high-income industrialized nation, very successful in trade, people in the United States for some reason have this belief that we shouldn’t be able to produce things here because we’re a high-wage country and that’s just wrong. We might produce different things, we might have to think differently, that we’re not going to be producing sort of low value added products, but there are a lot of things, a lot of customized production and a lot of high-tech production that the United States is well-suited to produce but in order to do that we have to do a couple of things differently.
So I think we should have a moratorium on new trade agreements. We should be investing in infrastructure and in skills in a way that we haven’t. We have a $3 trillion deficit in infrastructure in the United States, according to the American Society of Civil Engineers. This country — and it’s partly because I would blame it on the Republican majority in Congress — has been unwilling to invest in ourselves. We have not repaired our bridges and highways and ports and airports and public transportation and high-speed rail and smart electrical grid the way other countries have. And I think, you know, we’ve been able to get away with it for a little while. We’re sort of skating on our past successes but it’s starting to catch up with us. But that’s a great thing. That’s a great opportunity for the United States, it’s a great opportunity for a new president, is to create good jobs and to make the United States more competitive and more efficient and more productive and to do that as a first priority in a new term.
The Fallacy of Cheap Goods
Kiely: Do you think that the mindset that you talk about — I felt, when I started covering trade issues back in the 1980s and 1990s that I saw it on both sides, that certainly you heard from economists and deep thinkers during the Republican years — I remember talking to people at the Hoover Institution and saying, “Well, this will be good for the American consumers, we’ll get cheaper goods.” And when I asked what Americans would do it was this vision of America as an economy of middle managers. But in some ways that’s kind of what Robert Reich was also writing about in his book The Work of Nations. Am I wrong or was that mindset shared across parties?
Lee: You’re absolutely right. Both Democrats — I would say the elite of the Democratic and Republican parties did share this consensus that, “We’re in a new era now, we don’t need to make things. We’re so smart we will just buy things and market them and engineer them.” And part of the problem is that there’s a disconnect. If you’re not making things anymore, then the engineering becomes easier to offshore as well. And then if the engineering is offshored, at some point you lose control of the product and the profits and the profit center.
So if our competitive advantage is consuming, that’s not going to work over the long term. That works in the short term but it doesn’t in the long term. But you’re absolutely right and that’s I think part of what you’re seeing come home to roost in this particular election, which is that the elites in the Democratic and Republican parties have not paid enough attention to this issue, have written off the working class and have embraced a form of globalization that is good for corporations but not for working people and not good for communities. And that’s why there’s so much resonance with the anti-trade message now. Now we need to pivot, we need to figure out — we’re not going to stop trading and we shouldn’t stop trading; that’s not realistic in the year 2016 or 2017. The United States is a global player, should be a global player.
But we could do it differently. So in addition to kind of investing in infrastructure and in skills, we do need to address some of the most unfair forms of competition that we face. And I would put up there currency manipulation, when other countries intervene in currency markets in order to make their products cheaper and our products more expensive, that is damaging to businesses and it’s damaging to workers. And we’ve had, I think, both Democrats and Republicans who have not been willing to take this on, to confront it. So that should be a top priority.
And then I think we really do need to think as a nation how do we deal with the challenge of climate change in a global environment? And I don’t think the World Trade Organization rules or any of the trade agreements we’ve signed have addressed that adequately. But that is, looking forward, how we need to be thinking. And of course the worker rights issues that American workers shouldn’t be in competition with workers in other countries who lack basic human rights, who can’t form a union if they want to, who can’t ask for a raise without getting bullied or fired or even murdered. So we’ve taken a lot of steps toward trying to use our trade agreements to protect workers’ rights but I think we really need a lot more focus on that because what we’ve done so far has been inadequate.
Labor Protections and Requirements
Kiely: You said there’s been some progress on the trade agreements, you’ve spent a lot of time working on that. What specifically do you look for and what are the things that make — because every president it seems recently has said, “I’m going to put protections in there,” and of course Obama says they’re there for TPP. What is it that is lacking and are there specifics that you can point to that say this would make a workable deal?
Lee: That’s a really good question and we started by looking at what the requirements are, the labor requirements. And so on that front we’ve talked about the international labor rights that the International Labor Organization has said are universal. And that’s the freedom of association, the right to bargain collectively and prohibitions against child labor, forced labor and discrimination in employment. And I think that is the right bedrock as a starting point. We’ve also said countries need to do a better job enforcing their own labor laws and not weakening their labor laws in order to increase trade or investment. So you don’t set up an export processing zone and waive minimum wage or ban unions, those kinds of things. So I think we agree on sort of the basic elements.
Kiely: Is the living wage part of that too?
Lee: No actually it isn’t and that’s an interesting point. I think a living wage is important, health and safety protections are important but some of these, what we’ve said is if you really had a vibrant union movement, then the labor movement could be part of the democratic process fighting for minimum wage, living wage, health and safety and other kinds of protection. So it’s hard to legislate everything — so that’s why the core labor rights are there. But I think you could make a good argument too that there are a broader set of acceptable conditions of work that need to be included, maximum hours, minimum wage and health and safety protections in particular that are also an important element.
And some of those are included sort of indirectly in our current trade agreements but there’s no real standard. Like I think in the TPP there is a provision that countries need to have a minimum wage but it doesn’t say what that is, and there’s no guidance for it. So if you said, “Okay, my minimum wage is a penny an hour,” that would satisfy the condition. And the same thing with maximum hours, you need to have maximum hours but they could be 24 a day or 25 a day and that would satisfy the conditions. So we’ve said that that isn’t strong enough. I think the key right now is enforcement mechanisms because we’ve been frustrated even with the current administration with a friendly White House that we haven’t really been able to enforce the labor provisions in existing trade agreements, some of which are very similar to what’s in TPP.
Labor Violations and Lack of Enforcement
Kiely: Can you give an example?
Lee: Yes, I’ll give two examples. One is Guatemala, which has, admittedly a weaker labor chapter, that was negotiated under the Central America Free Trade Agreement, negotiated by the George W. Bush administration, so that labor chapter is weaker. So we’ve filed a case more than eight years ago against Guatemala in conjunction with six Guatemalan labor unions about some pretty egregious violations, including murders of workers who tried to organize a union or stand up for their rights and were assassinated and the government of Guatemala did nothing to investigate those murders.
And there were death threats also against other union activists. That case has been moldering for eight years through most of — we filed it at the end of the Bush administration but now the Obama administration has had quite a few years to deal with it and we’ve been frustrated that it has now moved into a dispute settlement phase but really eight years is too long.
Kiely: And this is a case that goes before which body?
Lee: Well, it’s under a free trade agreement, so there is a dispute settlement mechanism in the context of the trade agreement between the two countries, but I don’t think we even have — you can’t believe how long it takes and how slow it is. We filed a case in 2008, for several years nobody does anything, nobody even really looks at it and then finally the Obama administration picks it up and starts to move forward and then there are a lot of excuses. The government of Guatemala wants an extension, they want another extension, they’ve had a change of leadership, they need another extension. And then at some point we’re told, “Well, your case is outdated now,” because it’s been sitting on someone’s desk for four years. So we have to go back and redo some of the research because things are no longer there. So that is the frustration that whatever timelines there are in the context of these trade agreements, they’re not complied with. So that I think is —
Kiely: You wanted to give me another example.
Lee: And the other example is, I think, Colombia. This was an agreement that was implemented during the Obama administration and there was an additional labor action plan because I think that everybody understands that Colombia was a very problematic place in terms of violations of labor rights and violence against union activists. And the reason that’s important is that this does include, the Colombia trade agreement and the labor chapter is essentially the same as what we have under TPP. So this is what President Obama has put forward as the great new language. There are a few tweaks in TPP that go somewhat beyond Colombia, but they’re not really meaningful.
And under Colombia, even with the added scrutiny of the Labor Action Plan and added resources that were there, we still feel that the Labor Action Plan hasn’t been fully implemented. We’re in contact with our union counterparts in Colombia, who have been still pretty frustrated. In terms of labor inspections and in terms of addressing some of the problematic labor laws, there’s still a lot of challenges.
So our sense is that this model is inadequate and we need a different enforcement structure that is tighter, is more streamlined, has shorter timelines.
Kiely: And it also sounds like you depend, under these rules, on the willingness of an administration to be aggressive. And probably there are a lot of other factors that are weighing in. I remember in trade cases I’ve covered, there was always the State Department wanted one thing and the Commerce Department wanted something else, because everyone has a different list of priorities.
Lee: No, that’s exactly right. And that’s an interesting point that you raise, because like most of the things in a trade agreement, the labor chapter is adjudicated in a government to government basis. So in order for us to get any action, we have to convince our government to move forward. Now, this is hard enough, as I’ve just giving the examples, under a friendly Democratic administration that values labor rights — and the Obama administration clearly does care about labor rights. You can imagine the eight years of the George W. Bush Administration was even a million times worse. And so that’s why we do want to figure out whether there’s a way where we could have more assurance that if you have a case with merit, that it will move forward in a timely way.
And obviously, the big contrast is to the investment chapter, where a private corporation does not need to convince the government to act. They can go ahead and challenge another country’s laws if they find them to be in violation of the terms of the agreement. And so you have [an] investor to state dispute settlement that is allowed to enforce the provisions of the investment chapter and yet, for unions or environmental groups or consumer groups, we are in some ways at the mercy of the government.
And so we’ve argued in the past that you can fix this in one of two ways. You can get rid of investor state dispute settlement so that everything is adjudicated in a government to government basis. Or you can give private actors, unions and civil society organizations the right to have a private right of action as well. But at the moment, we have the worst of all worlds, which is that the corporations have their own dedicated avenue for justice and a union has a very slow and problematic — and as you say, you know, it’s subject to every other priority that the government might have. If this is kind of a dicey moment because they’re also trying to deal with a terrorism question or an arms question or a foreign policy issue, then you can bet that the labor rights issue will go to the bottom of the barrel.
The Revolving Door
Kiely: Why do you think that is?
Lee: I think, even though it feels like we’ve been doing this a long time, 25 years of battling around trade agreements and the content of trade agreements, the whole concept of including labor and environmental and consumer protections in a trade agreement is still relatively new, and there are a lot of people, both in government and in business, who still don’t really think it’s legitimate. I mean, I’ve sat across the table from government officials who’ve said to me, “I know the law says we need to take into account worker rights, but the truth is it’s just not that important to me. I’m really concerned about financial flows, capital flows, and that’s just more important to me because that’s how I’ve been trained to do my job. Those are the people who are the big campaign donors and the people I’m just more used to dealing with.” And if you go over to USTR, there’s sort of a sense of very cozy relationship between the corporate and the government trade people, because —
Kiely: Big revolving door.
Lee: They go back and forth constantly. And a lot of the USTR people do end up working for either law firms or corporations in government affairs after they leave, for much higher pay.
Questions for the Presidential Candidates
Kiely: So if you had a chance to ask a couple of questions at the presidential debates, what would you ask to try to gauge whether you thought the next president would be more responsive? Are there a couple of pointed questions that you can think of that would really be a good litmus test?
Lee: That’s a great question too. I really would want to think sort of in a forward-looking way, not so much, you know, are you going to criticize NAFTA, but I would ask, you know, how would you deal with China? Because I do think we’ve wasted a lot of time with these free trade agreements, but the truth is that our biggest trade challenge today is with one country: with China. I think two-thirds of our non-oil goods trade deficit is with one country, with China. And we have currency manipulation issues, we have labor rights issues, we have environmental and consumer safety issues with China.
And yet, most of the past governments in my memory, both Democratic and Republican, have not been willing to confront China over these economic competitiveness issues, very much to the detriment of both business and workers in the United States. We used to have a nice coalition with actually a lot of businesses and trade associations that were just as frustrated as the labor movement was with our government’s failure to address currency manipulation or other sort of unfair subsidies, illegal subsidies, other things that basically made it impossible for US businesses to compete successfully with businesses that are located in China, whether they were American businesses that had moved to China or Chinese state-owned enterprises and so on.
And so I would really like to hear what the next president will do very concretely in terms of our trade relationship and how they would prioritize the various concerns about worker rights and environment and currency.
US Relationship With China
Kiely: What do you think we should do? I mean, what would be the way to bring China to heel on those issues?
Lee: Well, you can’t bring China to heel. It’s a major sovereign important country, and we have a lot of things going on with China. But I would want to recalibrate our relationship. If you go all the way back to when we negotiated China’s entry into the World Trade Organization, you could look at the accession agreement, which was I think a thousand pages long. It was a big fat document. And you could read through that whole accession document for things — you know, they had to allow certain kinds of businesses to establish and remove certain kinds of things and get rid of some subsidies and do all these things. And back then, people said obviously this is a good thing for the United States because this is a one-sided trade arrangement. The United States isn’t changing any market access. We’re not lowering any tariffs. We’re just getting China to address all these concerns that are bad for business. But a lot of them were about investing in China as opposed to selling to China, and none of them had to do with democracy or human rights or worker rights or environmental conditions.
And so there’s a difference between if our relationship with China is about making China more conducive, more safe, more welcoming for American corporations that want to locate there or whether we’re trying to sell products there and compete. And I would say that our economic relationship with China has been almost all about corporate interests and not about selling stuff.
And so I would put currency manipulation at the top of the list and I’d put worker rights at the top of the list, those two issues.
Kiely: Anything else you’d want to ask?
Lee: Well, I’m sure everyone’s going to want to know about TPP, because both major candidates are opposed to TPP. But I guess I would say if you were to renegotiate TPP, how would you do so and what would be the minimum that you would need to move forward? Because I think one of concerns is whether either candidate, once elected, could say, “Oh, now I can find one or two little tweaks and I’m going to call this fixed.” And so I’d want to hear them say in a debate to the whole country, you know, what are the elements of TPP that you would change, improve, strengthen, eliminate?
Kiely: Why do you think there should be a moratorium on trade agreements?
Lee: I think our priority should be addressing the trade relationship with China, which is lopsided and full of competitive problems, and investing at home in infrastructure and skills. I think those things are more important than going out and negotiating a new trade agreement. I can imagine a good trade agreement that would be negotiated, but I think if you look at the two that are on the table, the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, TPP has been negotiated with eleven countries, TTIP is kind of halfway through. I think it’s hard to fix TPP at this late date because it took six or seven years with 12 partners, and so even if the next president were to go back and say, “Okay, I’ve got 10 things I need to fix,” they’ve got 11 partners that all have to go back to their own — it seems to me kind of unwieldy, unrealistic and probably not worth it in terms of the economic gains. I’m sorry we wasted so much time on this agreement.
With the European agreement, I think that agreement is salvageable if the new administration, and I’m thinking the new Clinton administration, were to come in with a new attitude and try to really rebalance the terms of the trade agreement, less about the investor protections, more about protections for consumer and environmental and labor, that could be done with a partner like the European Union — which has very high standards, different from ours. But I know from having spent a lot of time in Europe that there are a lot of concerns over there about how the consumer protections and the labor protections are going to be implemented and whether we really can get there. But I just think that the gains from new trade agreements are minimal and the political headaches are maximized.
Kiely: How confident are you that a new administration will have a new attitude?
Lee: Pretty confident, in the sense that I think if you look at this whole campaign, starting in the primaries and going through now, there’s been a lot more conversation about trade than I’ve ever seen before. And so I think it’s harder for a new president to come into office and just pivot and ignore all of the discussion that’s been had up until now. And there’s always a lot of pressure on a new president to do it the way it’s always been done, and I know in the business community I’ve heard people say, “Oh, we don’t worry because we know that every politician campaigns critical of trade and then governs just the way we’ve always done it.” And I’ve said, and that’s why my members don’t trust politicians and that’s why this is problematic for us, that that’s so cynical, and so unfortunate. But I just think that the level of scrutiny this time around is such that the new president won’t have the luxury of just ignoring everything that was said during the campaign.
Kiely: On the whole, after all this work you’ve done, are you optimistic or pessimistic?
Lee: Well, this kind of work is never done. You know, it’s not like I’ll wake up one morning and say worker’s rights around the world are secure and protected. It’s an ongoing struggle. But I think we’re going in the right direction and I feel like the debate has focused on a lot of things that we think are important, like what would it take for a trade agreement to support good jobs in the United States and in our trading partners? It’s not that we don’t care about workers in other countries. We think the kind of trade agreements that we’ve negotiated to date have been good for multinational corporations and bad for workers everywhere.
So we think there is certainly potential to do a different kind of agreement or to have a different set of global rules, maybe not in the context of new free trade agreements, but maybe at the WTO, maybe through other kinds of international — like the climate change talks I think are one model. I mean that’s been hard, and you can see how challenging it is to have those kinds of talks. They take many years, and countries are unwilling to make commitments if other countries aren’t also making commitments, and so everybody’s sort of waiting for everybody else to act. But we need to figure out how those structures can be made more effective.
Kiely: Do you think other countries are coming to see that the kind of mindset that you talked about being associated with trade is not a sustainable one? Is it happening in other countries too?
Lee: Yes, I think so. I mean, it depends where. Certainly in Europe, I think they’re having a lot of the same kind of debates that we’re having. And I think even China, as challenging as that relationship is, China at some point needs to move towards more democracy, and when China moves towards more democracy, then China needs to build up its own consumer market, as opposed to just being a center of production to export to the United States and other wealthy countries. And China will be an amazing market when workers have more rights, when there’s more democracy. And so that could be, whenever that happens, a positive development.
Kiely: Have you made any new allies domestically in the course of this that would surprise you?
Lee: Yes, I think the TPP battle has been extraordinary in terms of the different kinds of support. We have a lot of the access to medicine groups, like OXFAM and Doctors Without Borders have been strong allies. The LGBT groups have been outraged by some of the violations of basic human rights in some of the partners in the TPP, like Brunei. And I think we have a really strong base and solidarity among the labor and environmental groups — which hasn’t always been the case; in the past there have been some that have sort of broken out — and consumer groups and some senior citizen groups, and women’s groups, because also women’s rights have been part of some of the discussion that we’ve had.
So that’s been really heartwarming, and I think when you add to that the changing views, or evolving views amongst the economic elite and even like Martin Wolf and The Financial Times — you know, we’re seeing a different kind of voice speaking out, not totally agreeing with anything that we’ve said exactly, but certainly saying this debate around the kind of globalization that we need going forward is complex. It’s not so obvious. It used to be, I think they used to call it a no-brainer or a win-win-win, that it was just so obvious that anytime you negotiate a free trade agreement, you have to do it. And now people are saying well, actually, maybe you should read the trade agreement and maybe that matters. And that is the one message we’ve been trying to pound into people’s heads for 25 years is the content of the trade agreement matters. Just because it’s called free trade doesn’t make it automatically good.
Cost and the American Consumer
Kiely: And the last question is, how much is it that we’ve met the enemy and it is us — I mean the American appetite for a bargain? Have we done this to ourselves, in a certain way?
Lee: No, I don’t think so. I’m not going to blame the American consumer. I’m going to blame the American corporation. Because consumers, of course everybody wants a bargain. I love a bargain. You know, you want to buy things cheap. But a lot of this debate has been around corporate profits and not necessarily even — all those benefits haven’t been passed on to consumers. A lot of them have been eaten up by corporate profits, middlemen, retailers, advertisements and so on, and the actual person making the products is not getting a lot of the benefit of it.
And you could double or triple or quadruple the wages of the people actually making the products in many cases and the consumers would see just a tiny blip in terms of the price that they actually pay. Because a huge part of the difference is the retail markup, is the corporate profits, is the advertising budget and so on. So you can imagine a much healthier system that would still provide a lot of benefits to consumers. And there’s maybe some point at which having products so cheap hasn’t really been a boon to the American economy because people just buy junky things and they break and then you buy another junky thing and it breaks and then they all end up in the landfill. And so you could certainly imagine a different kind of economic structure where you bought fewer things but nicer things, they lasted longer, they were better quality, your community had more resources, you had better schools, you had nicer parks, you had better roads because you’re paying taxes in the community where you live and you’re supporting things.
And so I think rebuilding the manufacturing sector in the United States is a really important goal. A country like the United States, 330 million people, huge consumer country — we’re not Monaco. We’re not some tiny little country that can operate just as a retailer and software design. We consume a lot of stuff, and if we have to import all of it, we’re going to have a huge imbalance and a weakness and a fragility in our economy. And we came out of our economic recession, what, six or seven years ago, supposedly? You know, a deep financial recession, but it’s been a slow recovery. One of the reasons our economic recovery is slow, is lackluster, is that when people start to spend money, if they’re spending it on imports, it’s not feeding back into a healthy economic cycle. We’re losing it. And you can think about, in the olden days, when a recovery started, people have money in their pockets. They go out and they buy stuff. The stuff is made by somebody who works in a factory and the people who working the factory go to the coffee shop, the people who work at the coffee shop go and buy something. And so that’s where you get an economic dynamism, and we’ve lost that because we have such a big trade deficit because we have outsourced so much production, because we’re not getting the virtuous cycle of economic recovery and growth. And so that’s what we need to fix. We need to make a healthier domestic economy with a strong manufacturing sector.