Why does Obama support trade deals that would kill U.S. jobs, help North Korea and protect an offshore tax haven?
President Obama’s three-day bus tour of small Midwestern (and virtually all-white) towns this week was designed to show his understanding of ordinary Americans’ plight. The country’s jobless rate is above 9 percent and recovery seems more remote than ever.
Obama aims to express confidence in America’s capacity for renewal and provide the outlines of a broader economic plan to be rolled out after Labor Day. Unfortunately, Obama’s remarks thus far on that plan have been highly disappointing, apart from his advocacy of a national infrastructure bank to fund much-needed public projects to put Americans back to work.
The tour looks like yet one more lost opportunity for Obama to move public opinion toward defining the jobs crisis as America’s most compelling economic and moral imperative. Compared with FDR’s speeches during the Great Depression, Obama seems tone-deaf to the despair felt over the nation’s rising inequality and distant to his base — especially labor activists in Wisconsin and elsewhere — that he must count on now to be re-elected next year. The tour reflects numerous problems that continue to discourage Obama’s (former?) base:
STIFF-ARMING HIS BASE: While touring the region where fierce battles are taking place between right-wing Republican governors ravaging public workers and financing more corporate tax breaks, Obama passed over any opportunity to defend the struggle of workers in Wisconsin despite their two election victories in recall elections this week.
Instead, he used a question from a unionized schoolteacher to generally defend the role of unions, but finished off his response with an insulting reminder to unionists that they must support “reform.” While Joan Walsh in Salon defended Obama as merely displaying his typical “on the other hand” syndrome, the remarks reflected his more basic unwillingness to simply embrace his base at a vital moment.
DISASTROUS ASSUMPTIONS: An administration official expressed the self-crippling assumptions of the Obama administration to the New York Times last week:
“It would be political folly to make the argument that government spending equals jobs.” …. “[Key advisor] David Plouffe, and his chief of staff, William M. Daley, want [Obama] to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.
Even before he got on the bus, Obama’s mystifying bargaining during the debt-ceiling episode severely limited his ability to provide any stimulus needed to avoid a double-dip recession.
Having almost disarmed themselves, Obama and his team must resort to ridiculously small-scale proposals like patent reform and downright disastrous proposals like the three free-trade agreements with South Korea, Panama, and Colombia.
After witnessing the devastating effects of NAFTA on American industrial and farming communities, Americans are deeply hostile to free-trade agreements and hardly eager for three more. New disclosures about the South Korea and Panama deals are only likely to deepen the public’s opposition.
BACKDOOR ENTRANCE FOR GOODS FROM NORTH KOREA
As previously discussed, the U.S.-South Korea deal will likely act as a funnel for goods produced in China and NorthKorea. Huffington Post’s Zach Carter has contributed immensely to understanding this angle by revealing how Hyundai, the parent of the South Korean automaker, has purchased 41,000 square miles in North Korea for a huge industrial expansion:
The land deal formed the basis for the Kaesong Industrial Complex: a conglomeration of factories and residencies dedicated to lowering labor costs for South Korean corporations. Over 47,000 North Korean laborers are currently performing work for over 120 South Korean firms doing business in the area….
While working in the Kaesgong establishment, they are treated better than other North Korean laborers:
Workers officially make a minimum wage of $60.78 per month – 35 cents an hour based on a 40-hour work schedule – but South Korean companies have almost no oversight capacity, according to the CRS. Laborers are hired, disciplined and fired by the North Korean government, and the wages are kept low via intense citizen repression.
Astonishingly, the proposed U.S.-South Korea trade deal would open the floodgates to goods produced in North Korea, despite a variety of bans on imports from the totalitarian state, reports Carter:
The South Korea trade agreement currently pending before Congress…would have a new obligation to allow access for products assembled in South Korea that include parts and labor from North Korea.
These goods would obtain access to U.S. markets devoid of any tariffs, resulting in big profits for the Kaesong complex and the North Korean government.
PROTECTING TAX HAVEN FOR AMERICA’S SUPER-RICH
Meanwhile the Panama trade deal would consolidate that nation’s role as one of the world’s worst tax havens, and open up additional opportunoities for America’s super-rich to stash their cash tax-free in Panama, reports Sara Kenigsberg:
The trade agreement with Panama would effectively bar the U.S. from cracking down on this activity. The U.S. would not be allowed to treat Panamanian financial services transactions differently from transactions in nations that are not tax havens. It would also be unable to pursue some standard anti-money laundering techniques in Panama. Combating tax haven abuse in Panama would be a violation of the trade agreement, exposing the U.S. to fines from international authorities.“It directly undermines Obama’s putative domestic agenda of job creation, cracking down on tax havens and collecting revenue from tax-dodging corporations,” said Lori Wallach, Director of Public Citizen’s Global Trade Watch. “The [free trade agreement] would forbid future use of existing policy tools to combat financial crime.”
The fact that these deals require no budgetary outlays that would offend Republicans has made Obama an ardent advocate of all three, according to Califronia Democratic Rep. Brad Sherman:
As negotiations over raising the federal debt ceiling stalled out in June and July, Obama repeatedly referred to the trade deals as easy, immediate ways to create jobs.
How is this trade deal an “easy, immediate ways to create jobs,” when the Korea deal alone is projected by the Economic Policy Institute to cost 159,00 U.S. jobs? If Barack Obama — who campaigned in 2008 as a fierce opponent of job-destroying “free trade” deals — has come to believe these things, he has truly lost his moral compass — not to mention any political sense.