Trading Places: With the United States in Retreat, Who Writes the International Rules for Trade?

• Jurisdiction: United States,Federal
• Citation: Vol. 47 No. 2
• Publication year: 2019

TRADING PLACES: WITH THE UNITED STATES IN RETREAT, WHO WRITES THE INTERNATIONAL RULES FOR TRADE?

Austin Chad Cohen^*

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TABLE OF CONTENTS

I. INTRODUCTION........................................................................................540

II. BACKGROUND........................................................................................541

III. ANALYSIS..............................................................................................546

A.TPP..............................................................................................546
B. CETA............................................................................................560
C. RCEP...........................................................................................567

IV. CONCLUSION.........................................................................................572

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I. Introduction

On January 23, 2017, President Donald Trump, upon concluding a campaign that stood squarely against multilateral trade deals, officially withdrew the United States from the Trans-Pacific Partnership (TPP) through executive order.¹ With a stroke of the pen, the Obama-era push towards a trans-pacific trade deal, and perhaps a decades-long American consensus around greater economic integration, came to an end. However, with or without the United States, global trade continues. In the wake of the US's withdrawal from the TPP, other global leaders have sensed an opportunity to fill the void in trade leadership left by the United States. In late 2016, Prime Minister Justin Trudeau traveled to Brussels to sign the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU).² As the "international system established by the U.S. more than 70 years ago" unravels, Europe, though it might find recent developments "unsettling" due to its "longstanding belief 'in a democratic Atlantic community governed by mutually beneficial arrangements,'" has forged on.³ Indeed, in March of 2018, eleven countries resurrected the TPP by concluding the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).⁴ Outside the West, China has likewise seized the opportunity to "expand its economic might across Asia and the Pacific with its own trade deal, the Regional Comprehensive Economic Partnership (RCEP)."⁵ If approved, RCEP would encapsulate 24% of global Gross Domestic Product (GDP).⁶

Trade agreements are distinguished from one another by their varying innovations in the domains over which they govern. One such domain governed by nearly every trade agreement is labor. The TPP, CETA, and RCEP all address labor policy, and they all do so differently. This comparative piece will evaluate and contrast the labor innovations in the three agreements. CETA represents the newest generation of Western trade agreements

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conducted without the United States. RCEP represents a non-Western trade agreement, and the TPP represents an Obama-era trade agreement. This piece will assess the strengths and weaknesses of the labor obligations imposed on signatories by the TPP, and the obligations (or lack thereof) imposed by the two representative next-generation trade agreements. Ultimately, a conclusion will be drawn on the impact of international trade on workers with a reduced American role in global trade regimes. Mindful of the broader trend of a growing American hesitance towards multilateral trade deals, and stateside populist backlash towards trade that extends beyond mere frustration with the TPP, this piece will decide whether decreased American participation in global trade is a boon or detriment for workers.

II. Background

The now-declining era of economic integration resulted from a "principled" beginning.⁷ After the Smoot-Hawley tariffs in the United States led to global trade retaliation during the Great Depression, international commerce slowed to a standstill.⁸ Immediately after World War II, the United States sought to "create an agreement that would ensure postwar stability and avoid a repeat of the mistakes of the recent past, including the Smoot-Hawley tariffs and retaliatory responses, which had been a contributor to the devastating economic climate that culminated in the death and destruction of the Second World War."⁹ The result of the United States' postwar leadership was the General Agreement on Tariffs and Trade (GATT), which established international trade norms that would govern global trade into the 21^st Century, "a set of basic rules and disciplines that participating countries were to follow."¹⁰ Along with the Bretton Woods system, American leadership in the realm of economic integration was cemented and would be periodically refined throughout the decades, notably with the creation of the World Trade Organization (WTO) in 1995.¹¹ Until very recently, free trade was the subject of bipartisan accord in the United States. Despite opposition from organized labor, the North American Free Trade Agreement (NAFTA), for instance, enjoyed the support of the political class at the time of its passage.¹² President

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Bill Clinton inherited President George H.W. Bush's promise to "create a free trade zone 'from the Yukon to the Yucatan,'" and promptly undertook a bipartisan lobbying effort to secure NAFTA's passage through a coalition of 132 Republicans and 102 Democrats.¹³ Both Senate Majority Leader George Mitchell and Minority Leader Robert Dole were able to assure President Clinton in advance that NAFTA would pass in the Senate, and House Minority Whip Newt Gingrich, often hostile to President Clinton, "rallied House Republicans."¹⁴ Both Mexican President Carlos Salinas de Gortari, of the Institutional Revolutionary Party, and Canadian Trade Minister Roy MacLaren, of the Liberal Party, celebrated the passage of NAFTA in the United States.¹⁵ Like Presidents Bush and Clinton, President Barack Obama sought his own landmark free-trade agreement. Whereas President Bush dreamed of a deal that would span the continent, President Obama gazed across the Pacific and forged the "largest regional trade accord in history."¹⁶ President Obama's purpose in vigorously securing twelve Pacific Rim states' approval of the TPP was to lower tariffs and increase American exports, but like his predecessors in the wake of World War II, President Obama's intentions were also political.¹⁷ In liberalizing American trade with the Pacific Rim, the TPP was also to "serv[e] as a buttress against China's growing regional influence."¹⁸ However, with the election of President Trump, who true to his populist campaign pledged to scrap the TPP, a TPP that would include the United States was dealt its death knell.¹⁹ Even before the election of President Trump, free-trade deals had been waning in popularity in the United States. Both 2016 presidential nominees opposed the TPP as a "symbol of failed globalism,"²⁰ and economic anxiety has yielded not only the "antitrade nativism" of President Trump but also the income and social class-based populism of Senator Bernie Sanders.²¹ Still, the forces of globalization churn on, with or without the United States, and as the TPP fails, new agreements are given an opportunity to succeed.

However, new leadership on global trade means new priorities for the countries at the helm. And new innovations have profound consequences for

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labor, the environment, competition, foreign investment, and monetary policy. CETA is similarly aspirational to the TPP. In the Joint Interpretative Declaration on the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States, Canada and the EU trumpet their shared values in areas such as labor.²² Furthermore, Canada and the EU agreed that they "cannot relax their labour laws in order to encourage trade or attract investment."²³ RCEP, on the contrary, is the fruit of a Chinese push "to expand its economic might across Asia and the Pacific."²⁴ China, taking the lead unlike with the TPP, is able to forge a Pacific Rim deal that reflects their trade priorities. The deal, therefore, "lacks the protections for labor, human rights and the environment set by the TPP."²⁵ Whereas friendly labor clauses are highlighted in CETA and the TPP, representative of the Western values that underscore those trade deals, labor standards are given short shrift in rapidly urbanizing China:

[T]hey face considerable hardship in the workplace. Despite their massive number, they are a workforce without collective power. Their plight continues to dominate the news and the media; we are now all familiar with accounts of them working without proper safety equipment, living in crowded and unhygienic dormitories, receiving no medical care, paying arbitrary fines by bosses and being paid late or not at all. Despite the statutory maximum of 40 working hours a week, they are often forced to work overtime. In many cases, they are denied the statutory minimum of one day offaweek.²⁶

Despite the inclusion of labor clauses in Western free trade agreements, workers and organized labor have long been suspicious of free trade agreements. Though the GATT played an important role in fostering postwar economic integration, labor unions in the United States opposed it.²⁷ They argued that the GATT served "mainly to enrich investors to the detriment of workers by encouraging capital flight to low-wage nations."²⁸ They also contended that global labor standards undermined the "much stronger laws"

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that existed in the United States and in other high-wage nations.²⁹ Labor's suspicions again peaked upon the passage of NAFTA. Auto workers in Flint, for instance, worried that their jobs would be "shipped out" to Mexico.³⁰ Amplifying the fears of auto workers, populists at the time, like Ross Perot famously, warned:

If you're paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a

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