WTO Bleeding American Economy Dry

Editor's note: This article originally ran in 2008, but is just as relevant today.

The World Trade Organization is an undemocratic organization run by the rich, for the rich. The bylaws of the organization supersede our own Constitution . If America is to recover economically it must either renegotiate or completely withdraw from the WTO.

The Constitution states that all treaties made under the authority of the United States become supreme law of the land. The U.S. invited the WTO to rule over us when our government signed the treaty, and now we have no choice but to conform U.S. laws, regulation and administrative procedures to the agreement.

In October 2008, Pascal Lamy Director General of the WTO, made a visit to the Stanford Institute for Economic Policy Research, where he openly exulted the benefits of unfettered free trade and discounted the abundance of overwhelming evidence pointing to the fallacies of “free trade.”

“Evidence is persuasive that trade openness delivers efficiencies and generates wealth,” Lamy said. “If trade opening takes place under the right conditions, all countries can benefit from international exchange.”

Of course, the former half of that statement is fairly accurate. Unfortunately, that wealth created goes to the haves, while the have-nots are worse off. It’s a classic case of the rich getting richer and the poor getting poorer. In fact, since the advent of the WTO, the percentage of people worldwide living on less than $1 per day has actually increased. Moreover, 500 million peasant farmers have been displaced during the WTO regime by “agricultural modernization.” That “agricultural modernization” has not only displaced poor farmers, but it has also brought us mad cow disease, the avian bird flu and melamine contaminated milk products.

Lamy qualified the latter half of his statement with “under the right conditions,” which the WTO has not delivered. Perhaps he was referring to the right conditions for the corporate agenda concerned only with obscene profits because unfettered “free trade” has been an unmitigated disaster for the working people of America.

Lamy, however, insisted that trade was not to blame for the decimation of America’s manufacturing base. “The role of trade has been rather small compared to other factors.”

However, the facts simply do not support this claim. Take China, for example. Since entering the WTO in 2001, trade with China has resulted in the loss of 2.3 million jobs through 2007, according to the Economic Policy Institute. In 2006 alone, the trade gap with China resulted in the loss of 366,000 American jobs. Those fortunate enough to retain their jobs witnessed their annual earnings decrease by roughly $1,400. American workers are put in direct competition with one another as more and more employers look to offshore production to nations with lower wage rates.

Those jobs losses have affected each and every sector of the economy in both white and blue-collar workers. Over that time the U.S. has lost 561,000 jobs in computer and electronic products, 153,000 in apparel and accessories, 139,000 in administrative support services and 128,000 in professional, scientific and technical services.

In all, those displaced workers lost an average of $8,146 annually - a total of $19.4 billion - as they moved into lower paying jobs.

Those job losses can be directly attributed to China’s rapidly growing trade surplus with the U.S., maintained by the systematic manipulation of the Chinese yuan. By purposely undervaluing their currency, they subsidized exports - some estimates put this subsidy at nearly 30 percent. This practice has allowed America’s trade deficit with China to balloon since China entered into the WTO. In 2001, when China joined the WTO, they held a small trade surplus of $84 billion with the U.S. By 2007, that number has grown exponentially to $262 billion. On average, that deficit will increase by $30 billion each and every year.

With the U.S-China trade deficit exploding, more job losses are forecast in the future. The Progressive Policy Institute, a moderate Democratic think tank aligned with the pro-free trade wing of the party, claims that unless the trade deficit is brought under control, 12 million information-based jobs in the U.S. are highly susceptible in the future.

“Policies aimed at trying to address job loss and stagnant wages through trade measures will not fix the problem of manufacturing job erosion and it could, on the contrary, lead to a deterioration of this most vibrant part of the U.S. economy today,” Lamy said.

Obviously, Mr. Lamy has never visited the decaying steel mills of Youngstown, Oh. or Pittsburgh, Pa., otherwise he would have realized that there is absolutely nothing “vibrant” about that part of the U.S. economy today.

“The direct impact on incomes, more than $8,000 per displaced worker per year on average, is catastrophic for the individual workers and the single most visible cost of globalization for American workers,” EPI economist Josh Bivens said. “But it’s also critical to recognize the indirect impact of trade on workers. Trade with less developed countries has reduced the bargaining power of all workers in the U.S. economy who resemble those displaced workers in education, credentials and skill.”

But beyond the quantifiable numbers of economic hardship in the U.S., the WTO is inherently wrong for other reasons. The organization remains indifferent to issues of workers rights, child labor and environmental protection standards. The organization has little to no transparency as all of its hearing are closed to the public. It is no wonder then that the U.S. comes out a loser in nine of 10 trade disputes brought before the body. The corporate agenda of the organization has destroyed the developing economies of the world, exploiting cheap resources and giving them little in return. This has come to represent the most efficient form of colonization the world has ever seen - reaping all the benefits with no downsides of occupation.

The latest global trade-negotiation round - the Doha Round - collapsed last summer, now President Barack Obama has the opportunity to start with a blank check on global trade-negotiations. Please write to Obama and demand America’s withdrawal from the WTO.

Front Page Photo – han Soete – Flickr © Some rights reserved

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