The Broken Promise of Trade: A Story of Decline and Anger

The American backlash against trade has its roots in a decades-old failure to provide adequate support to communities threatened by job losses. As trade expanded with countries like Mexico and China, policymakers recognized the need for a safety net, but their efforts were often too little, too late. The story of Trade Adjustment Assistance, a program designed to cushion the effects of economic dislocation, is one of missed opportunities and abandoned promises. As a result, public anger and distrust of trade agreements have grown, threatening the future of international trade.

Key Takeaways:

• In 1954, the president of the United States Steelworkers union proposed a small tariff to provide funding for expanded unemployment benefits, job training, and relocation assistance for workers.
• The Trade Expansion Act of 1962 was passed with the aim of providing financial assistance to workers affected by trade competition, with President John F. Kennedy stating that the "burden of economic adjustment should be borne in part by the federal government."
• By the end of the 1970s, the federal government was spending $1.6 billion per year to provide training and unemployment aid to 500,000 workers, most of whom were in the auto industry.
• The automation and technological changes of the 1980s led to a significant decline in Trade Adjustment Assistance spending and a shift in labor unions' stance against the program.
• The passage of the North American Free Trade Agreement (NAFTA) in 1993, signed into law by President Bill Clinton, was accompanied by a promise to expand the safety net, but Congress narrowed the scope of the program and limited cash payments.
• Between 2000 and 2010, China's entry into the World Trade Organization led to the loss of nearly one million factory jobs in the United States, according to research by economists David Autor, David Dorn, and Gordon Hanson.
• Despite attempts to expand eligibility for Trade Adjustment Assistance and increase funding, workers continue to struggle, with some estimates suggesting that 15 million Americans may lose access to healthcare as a result of tax cuts and Medicaid reductions.
• Labor economist Howard Rosen has repeatedly warned about the need for a national strategy to address economic dislocation, to no avail.

Statistics:

• $1.6 billion: the annual spending of the federal government on Trade Adjustment Assistance by the end of the 1970s.
• 500,000: the number of workers receiving aid in the auto industry by the end of the 1970s.
• 1 million: the number of factory jobs lost in the United States between 2000 and 2010, according to research by economists David Autor, David Dorn, and Gordon Hanson.
• 15 million: the estimated number of Americans who may lose access to healthcare due to tax cuts and Medicaid reductions.
• $1 trillion: the estimated decrease in publicly financed healthcare programs over the next decade, resulting in reduced access to healthcare for many Americans.

Sources:

• The article cites the following sources:

+ "The New York Times"

+ The Peterson Institute for International Economics

+ Congressional testimony by Howard Rosen in 2008

+ Research by economists David Autor, David Dorn, and Gordon Hanson on the effects of the China Shock on factory jobs in the United States

+ The Trade Expansion Act of 1962

+ Congressional reports and statements by Presidents John F. Kennedy, Bill Clinton, and Barack Obama