Call her the Dismal Scientist who came in from the cold.
When Thea Lee began what would turn out to be a career of working on trade issues, 25 years ago at the Economic Policy Institute, she was a bit of an outcast in her profession.
“There really were very few respectable economists — and I don’t count myself in that group — who could say anything critical about trade agreements,” she recalled in a recent interview on the executive floor of the AFL-CIO’s headquarters, a short walk from the White House. “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.”
How times have changed. Today, top economists including Nobel Prize winner Joseph Stiglitz and former Treasury Secretary Larry Summers (an adversary of unions on NAFTA) are pulling back from the view that trade deals are an automatic plus for the economy. Donald Trump made opposition to trade deals a central part of his successful campaign to win the Republican presidential nomination and Bernie Sanders’ trenchant criticism of the Trans-Pacific Partnership forced his successful rival for the Democratic nomination, Hillary Clinton, to pull back her support for the megatrade pact.
Lee’s too diplomatic to say “I told you so.” But for the AFL-CIO’s deputy chief of staff and former chief international economist, this year’s political drama is the inevitable outcome of “the elites in the Democratic and Republican Party” making trade policy decisions that maximized corporate profits and the expense of worker and community welfare.
NAFTA was the first of a series of trade agreements that have been “used as vehicles” to accomplish other goals, Lee said. Those goals could have included laws and regulations to raise standards of living and to improve worker and environmental safety globally. Instead, America got cheap imported goods in exchange for shuttered factories.
“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… somewhere cheap, whether it’s China or Mexico or Bangladesh, and then importing the products and selling it to wealthy American consumers,” Lee said. “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.”
Turning back the clock isn’t an option, but Lee likes the idea of a pause. She favors a temporary moratorium on trade deals so US policymakers can focus on a “recalibration” of the US relationship with China. She accused the nation with which the US runs the biggest trade deficit of consistently undercutting American business and workers with currency manipulation and human-rights violations. “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,” she said.
Not that Lee is a proponent of Fortress America. “We’re not going to stop trading and we shouldn’t stop trading; that’s not realistic in the year 2016 or 2017,” she said. “The United States is a global player.” But while Lee has made it her “life’s work” to improve worker and environmental protections in trade agreements, she is the first to acknowledge “it really isn’t working yet.”
While the now-infamous Investor Dispute Settlement System allows companies doing business in countries covered by trade deals to take swift action against government regulations and laws they consider anti-competitive, the wheels of justice grind much more slowly, if at all, when it comes to labor and environmental protections.
In Guatemala, the AFL-CIO and local unions have been trying to win redress for what Lee calls “some pretty egregious violations” of labor protections negotiated under the Central American Free Trade Agreement. The violations include the murder of union organizers. Yet even under a “friendly Democratic administration that values labor rights,” Lee said, “that case has moldered for eight years.”
Unlike corporate investors, unions and environmentalists must rely on their government to bring cases under trade agreements, and governments always have other priorities. “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,” Lee said. It’s the “worst of all possible worlds,” says Lee, with corporations having “their own dedicated avenue for justice,” while for unions and environmentalists, the route is “very slow and problematic.” Fixing that would be key for any new trade agreements, in Lee’s book. And then there is the revolving door at the US Trade Representative’s Office, where, Lee said, former corporate economic advisers and corporate economic advisers in waiting “still don’t really think it’s legitimate” to make labor, environmental and consumer protection part of a trade deal.
So Lee says she understands why some union members might be cynical about this year’s election. They share the view she sometimes hears from the other side of the bargaining table. “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.'”
After this campaign, however, Lee says she doesn’t think that will happen. “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,” she said.
It may be a bit far off, but the onetime outlier economist says she can almost envision a time when trade deals and economic policy are made with a different set of priorities.
“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,” Lee said. “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.”