WASHINGTON — The Bush administration has rejected the AFL-CIO’s unfair trade practice petition against China, delivering a harsh blow to organized labor in an election year when job losses are front and center.
Labor officials expressed outrage Wednesday at the administration’s outright denial, which effectively kills the petition. The AFL-CIO could refile it, but said it won’t.
In an unusual tour de force, four Cabinet members — Treasury Secretary John Snow, Labor Secretary Elaine Chao, Commerce Secretary Don Evans and U.S. Trade Representative Robert Zoellick — held a press conference Wednesday to outline the administration’s reasons for rejecting the petition and to send a strong warning that it would reject another anticipated trade case on China’s alleged currency manipulation — even though it hasn’t been filed.
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Administration officials claimed they will continue to pursue the same trade policy with China, and push for labor standard and currency policy reforms by leveraging the market economy designation for which China is clamoring.
The AFL-CIO filed a petition under Section 301 of the Trade Act of 1974 with the Office of the U.S. Trade Representative on March 16, alleging that China represses workers’ rights, which in turn drives down wages by 47.4 percent to 85.6 percent, lowers the price of exports by 10.6 percent to 43.6 percent and ultimately results in the loss of U.S. manufacturing jobs.
The administration had until Friday to decide whether it would consider the petition and launch an investigation into the charges that China grossly fails to enforce core labor rights, such as the right to unionize. Critics of the petition claimed President Bush would have nothing to gain by taking on the case and imposing sanctions. The President is unlikely to win the union vote in the November election, they said, and any sanctions would strain relations with China.
Zoellick said the AFL-CIO’s petition — the first such case to challenge another country’s labor laws — would in effect end the U.S.’s economic relationship with China by slapping 77 percent tariffs on imports and “jeopardize” U.S. exports to the country.
“If that were not a big enough wall against trade and development, the petition goes further and demands new conditions that would halt all progress toward opening markets for U.S. goods and services in the Doha negotiations at the World Trade Organization,” Zoellick said. “We do not need to conduct a year-long investigation to know that there are serious concerns with labor rights and working conditions in China, as there are in many other developing countries. We do not need a year-long investigation to know that we have serious concerns with China’s policies on the value of its currency.”
Evans said the U.S. will use the market-economy designation China seeks as a tool to press the nation for reforms in its labor standards and currency policies.
“We all know that obtaining market-economy status is a high priority for the Chinese leadership,” said Evans. “Without this status, China is subject to more antidumping cases with higher duties on their imports.”
Evans said countries must meet six criteria, including labor standard and currency policy reforms, spelled out by the Tariff Act of 1930, to be designated a market economy.
“But our goal isn’t to impose dumping actions,” Evans said. “American jobs depend on trade with China. But the rapid progress in our export promotion efforts within the Chinese market would be jeopardized by a blunt instrument like this petition.”
Snow outlined the steps he has taken to urge the Chinese to reform their currency policies and stop pegging it to the U.S. dollar, which drives down prices, according to trade groups. Zoellick said the U.S. and China are launching a joint effort to implement core International Labor Organization standards.
The four cabinet members claimed the petitions would take the U.S. down the path of “economic isolationism,” a phrase the Bush administration has leveled at some of the campaign promises of Sen. John Kerry (D., Mass.), the presumptive Democratic presidential nominee.
Kerry, who has been endorsed by the AFL-CIO, has fired away at the President on job losses. He has also promised to institute a 120-day review of existing trade agreements to strengthen labor and environmental provisions if he wins the presidency.
“The simple fact is that this administration has once again refused to make any serious effort to use the legitimate rules that govern trade to level the playing field, and prevent our businesses and workers from being taken to the cleaners,” Kerry said in a statement Wednesday. “It won’t even consider taking action. When it comes to China and defending American jobs, this White House is all talk and no action.”
Bruce Raynor, president of the apparel and textile union UNITE, said: “I think it’s an outrageous decision from a political standpoint. Given the huge loss of U.S. jobs, for the administration to reject a legal way to be on the side of U.S. workers is outrageous. Hundreds of thousands of American businesses would have been helped had the administration enforced the law.”
Powerful business coalitions, which lobbied against the AFL-CIO’s petition, applauded the administration’s decision.
Erik Autor, international trade counsel at the National Retail Federation, said, “It was a prudent decision on the part of the administration based on a legal and policy analysis of the petition.”
Meanwhile, a coalition of manufacturing trade associations, called the Fair Currency Alliance, claimed it would have to reevaluate whether it would go ahead with its petition against China’s alleged currency manipulation. The coalition includes the National Association of Manufacturers and the National Council of Textile Organizations, .
“In addition to rejecting their [AFL-CIO] petition, they have a strong indication if the Fair Currency Alliance files its petition, it will be rejected, as well,” said Frank Vargo, vice president for international economic affairs at NAM. “We expect to have quick discussions with the administration, and then assess and decide the best thing to do.”