:00:00. > :00:08.International trade makes the world go round.
:00:09. > :00:10.New York was built on it, everyone engages in it.
:00:11. > :00:14.But in this election cycle, it's getting a bad rap.
:00:15. > :00:47.That's the topic of this week's Talking Business.
:00:48. > :00:50.There's been a significant slowdown in global trade growth,
:00:51. > :00:52.according to the World Trade Organisation and
:00:53. > :00:56.In fact the WTO warned trade is likely to grow at its slowest
:00:57. > :01:01.One reason being cited is rising protectionism.
:01:02. > :01:04.Here in the US we are certainly hearing hostile rhetoric
:01:05. > :01:09.Voters blame international trade for their economic woes,
:01:10. > :01:12.and both candidates have taken up the cause.
:01:13. > :01:19.Is trade policy the culprit for America's economic disaffection?
:01:20. > :01:22.During the past half-century, the US economy has become more
:01:23. > :01:31.As it has grown, so has the number of US jobs supported by it.
:01:32. > :01:35.In 1992, trade accounted for 10% of all US jobs.
:01:36. > :01:41.By 2013, that figure had grown to almost 22%.
:01:42. > :01:44.But if we look specifically at manufacturing, in 1960 almost
:01:45. > :01:51.a quarter of American workers had a job in manufacturing.
:01:52. > :01:59.And some blame global trade for this decline.
:02:00. > :02:04.So, what do these figures actually mean?
:02:05. > :02:07.Has trade been good or bad for the US economy?
:02:08. > :02:10.Here to help me decipher this are Claude Barfield,
:02:11. > :02:12.resident scholar at the American Enterprise Institute.
:02:13. > :02:15.You also served as an adviser to the Office of US Trade
:02:16. > :02:19.Representing the unions we have Celeste Drake,
:02:20. > :02:23.you are a trade and globalisation policy specialist at the AFLCIO, I'm
:02:24. > :02:28.The American Federation of Labor and Congress of Industrial
:02:29. > :02:34.And last but not least, David Lowenstein, you are president
:02:35. > :02:37.of Joseph H Lowenstein Sons, a fourth-generation dye manufacturer
:02:38. > :02:44.Well Claude, if I could start with you, talk to us
:02:45. > :02:53.Well, because with international trade, you could trade among
:02:54. > :02:58.the states of the United States or among the nations in Europe,
:02:59. > :03:03.but if you could add to that economic activity with other
:03:04. > :03:09.countries, in the current political scene a number of people,
:03:10. > :03:11.including Hillary Clinton the other night, made the point that 95%
:03:12. > :03:14.of customers around the world are outside the United States.
:03:15. > :03:22.So clearly if you can latch onto that both in terms
:03:23. > :03:29.of businesses and in terms of workers being able to produce
:03:30. > :03:31.for trade-related things, you will be better off.
:03:32. > :03:33.I see you nodding there, Celeste.
:03:34. > :03:35.International trade is absolutely important and I think what you said
:03:36. > :03:37.in the opening statement is the right question.
:03:38. > :03:41.It's not about whether trade is the cause of some of our economic
:03:42. > :03:48.So we have unfortunately these statistics like 95% of consumers
:03:49. > :03:57.That's true, but about half of them live on less than $2.50 a day.
:03:58. > :04:01.So we aren't going to be selling high-tech goods to a lot of these
:04:02. > :04:04.folks until we get their incomes up and start building middle classes,
:04:05. > :04:07.and then we can have a really dynamic international economy,
:04:08. > :04:10.I would say quickly, incomes in developing
:04:11. > :04:20.All studies show the reason they have risen is globalisation.
:04:21. > :04:22.That the countries that were more open to trade and investment have
:04:23. > :04:28.grown at a more rapid rate than those that were not.
:04:29. > :04:32.And so we had less inequality around the world over the last two decades,
:04:33. > :04:34.the last two decades, because, I think, of globalisation.
:04:35. > :04:40.And consumers have benefited, American consumers have benefited
:04:41. > :04:42.by being able to afford goods at cheaper prices.
:04:43. > :04:48.David, you are someone who imports raw materials,
:04:49. > :04:53.You've stayed in New York for four generations.
:04:54. > :05:00.What is the competitive advantage for you of staying right
:05:01. > :05:04.The advantage for us in New York is, I would say, the skills
:05:05. > :05:14.We are not one of these multinational conglomerates
:05:15. > :05:19.where we move to wherever things are cheaper.
:05:20. > :05:21.This is where my family is from and this is
:05:22. > :05:26.And if things are tough, we do as best we can
:05:27. > :05:34.I can imagine maybe a couple of generations later,
:05:35. > :05:39.if we get to be in a different category where we start having
:05:40. > :05:42.global assets and thousands of employees, then we can start may
:05:43. > :05:45.But as a family owned closely held small business,
:05:46. > :05:48.this hopping around from country to country is not really
:05:49. > :05:55.We are Americans and we do what we do right here in our home.
:05:56. > :05:57.Is that tough when you are competing against other countries,
:05:58. > :05:59.whether it's Mexico or China, against lower wage companies
:06:00. > :06:06.where they can therefore produce a cheaper product?
:06:07. > :06:11.In our business, we have a large mix of products, some of them
:06:12. > :06:14.you could call specialties and some you could call commodities.
:06:15. > :06:18.The commodities are subject to those price pressures,
:06:19. > :06:24.The specialties are more dependent on our ability to innovate and be
:06:25. > :06:29.That said, when we approach a customer or region,
:06:30. > :06:38.we need a package of products, including the commodity side.
:06:39. > :06:42.If we are undercut by another country in that area,
:06:43. > :06:46.it's harder to get our foot in the door and sell the specialty.
:06:47. > :06:49.It's certainly a factor but we try to overcome it by out
:06:50. > :06:57.We work with a number of employers who produce exclusively in the US,
:06:58. > :07:01.and they tend to have views on trade, in many cases that agree
:07:02. > :07:06.As opposed to the companies that produce either only overseas or both
:07:07. > :07:14.It's important to have lowered tariffs so you can have access
:07:15. > :07:20.But some of the other features of trade agreements like limitations
:07:21. > :07:23.on the government's ability to prefer American products
:07:24. > :07:25.over foreign products, or local products in
:07:26. > :07:28.a state or a city, those things are not helpful
:07:29. > :07:35.And they frankly limit the government's ability in many
:07:36. > :07:38.cases to use fiscal policy to say we want to create jobs
:07:39. > :07:41.here and we want to do this through how we spend taxpayer money.
:07:42. > :07:49.Discriminating in favour of US manufacturers is protection.
:07:50. > :07:51.And we, whether a Democrat or Republican president,
:07:52. > :07:58.We are trying to tell the Europeans or the Asians,
:07:59. > :08:01.the South Americans, no, we want to compete on an equal basis.
:08:02. > :08:04.So you should not intervene to help your Brazilian company
:08:05. > :08:12.Now, what was just said means that we would then be subject
:08:13. > :08:19.Now we don't do it a lot, I think.
:08:20. > :08:24.The American economy by and large is the most open in the wild.
:08:25. > :08:26.But there are these protectionist elements that we have,
:08:27. > :08:35.The public or at least a section of them at the moment seem to be
:08:36. > :08:46.They feel people at the top are benefiting at their expense.
:08:47. > :08:48.Is there any statistics to back that up?
:08:49. > :08:50.The statistics, over the last year, have shown that the American people
:08:51. > :08:53.are much more in favour of trade and the politicians.
:08:54. > :08:57.Unfortunately, we have two candidates, one of whom is cowardly
:08:58. > :09:01.because her party is against her, and the other one is a demagogue.
:09:02. > :09:06.I would also say that Republican candidates are moving
:09:07. > :09:10.toward who is going to win, did not stand up for trade.
:09:11. > :09:12.The American public is bombarded with anti-trade, anti-global
:09:13. > :09:22.And yet, recent polls have shown that well into the 50s,
:09:23. > :09:26.It depends on how the question is asked.
:09:27. > :09:29.And also ironically, as you know, the Democrats today
:09:30. > :09:32.when they are polled are more favourable to trade
:09:33. > :09:42.I think that somebody answering a poll saying yes I'm in favour
:09:43. > :09:45.of free trade is not the same thing as saying I am in favour
:09:46. > :09:49.of the rules that are in the TPP, that look like they are going to be
:09:50. > :09:52.Everybody likes to drink coffee and eat bananas,
:09:53. > :09:57.It doesn't mean that they agree that foreign investors should
:09:58. > :10:01.have a special right to sue our government,
:10:02. > :10:05.it doesn't mean they agree with giving away the use of fiscal
:10:06. > :10:10.policy, it doesn't mean that they agree that we should give
:10:11. > :10:12.permanent trade advantages to countries that engage in human
:10:13. > :10:16.There's a lot of broader questions than free trade.
:10:17. > :10:22.Is there any evidence that free trade deals cost American
:10:23. > :10:35.It's whether you look at the studies done by the economic policy
:10:36. > :10:38.institute that really gauge job loss based on the size of our trade
:10:39. > :10:40.deficit and which say that we've lost about 700,000 jobs
:10:41. > :10:43.to Mexico because of NAFTA, or 3.2 million jobs to China
:10:44. > :10:48.because of China's accession to the WTO.
:10:49. > :10:50.Or more conservative estimates like the work of David Dorn
:10:51. > :10:53.and Hanson and Autor, which say we've lost at least
:10:54. > :10:57.a million jobs to China because of its accession to the WTO.
:10:58. > :11:00.Trade will create job gains and job losses, and that's the case always.
:11:01. > :11:03.And traditional theory says that nations as a whole
:11:04. > :11:14.But that really doesn't get into questions of how much market
:11:15. > :11:16.power do these large companies have and are they taking
:11:17. > :11:25.the gains as profits rather than sharing them with workers.
:11:26. > :11:29.It doesn't get into what are our domestic policies that encourage
:11:30. > :11:33.There are a whole host of other questions.
:11:34. > :11:36.The US just doesn't have the right policy mix to make sure
:11:37. > :11:42.Later in the programme, why has trade become such a big
:11:43. > :11:44.issue in this election, and what are the implications
:11:45. > :11:48.But first let's hear from our comedy consultant Colm O'Regan.
:11:49. > :11:51.In this week's Talking Point he went down to the docks in Dublin.
:11:52. > :11:54.COLM: as far as I'm concerned, there's no better place to come
:11:55. > :11:56.to look for international trade than a port.
:11:57. > :12:00.It's got it all, ships arriving and leaving,
:12:01. > :12:07.Containers, cranes, the whole shebang.
:12:08. > :12:10.When I'm down here at the dockside, trade feels very tangible,
:12:11. > :12:20.We send you some of our stuff, you send us some of yours.
:12:21. > :12:22.It's underpinned by international agreements, and the general
:12:23. > :12:24.assumption that trade is good for the economy.
:12:25. > :12:27.When you're talking to trade negotiators, I used to be one,
:12:28. > :12:31.there's a focus on opening up markets for exports.
:12:32. > :12:34.And so there's always a sense of quid pro quo,
:12:35. > :12:38.we'll give you some market access if you open your market.
:12:39. > :12:41.So you can get to this sense of someone is going to walk out
:12:42. > :12:44.Loads of containers filled with consumer goods,
:12:45. > :12:48.But is all this stuff coming in from abroad make it difficult
:12:49. > :12:50.for local companies to compete, and does cheap
:12:51. > :12:56.If there's a market for a poor quality TV set in the
:12:57. > :13:03.And the market will determine whether or not that survives.
:13:04. > :13:06.There's also the question of selling goods in the United States below
:13:07. > :13:09.cost, and this issue of dumping which is seen as being unfair
:13:10. > :13:13.Dumping, of course nobody wants that.
:13:14. > :13:17.A lot of people are very anti-free trade at the moment as a result.
:13:18. > :13:20.In fact there's calls for protectionist policies.
:13:21. > :13:27.One proposal which you hear is about going back,
:13:28. > :13:32.reconstructing tariffs, building more obstacles to
:13:33. > :13:38.And the question is whether that would return these industrialised
:13:39. > :13:40.countries and the industrial sectors back to their former vigour.
:13:41. > :13:47.For someone who gets as excited about trade and containers
:13:48. > :13:50.as I clearly do, in fact I can hardly contain myself,
:13:51. > :13:53.I find it hard to understand why anyone would want to restrict trade.
:13:54. > :14:02.In fact politicians are full of talk about trade restriction.
:14:03. > :14:04.We've seen certainly in the presidential debates
:14:05. > :14:08.in the United States, for instance, I think
:14:09. > :14:11.to some extent we see it with what is happening with Brexit
:14:12. > :14:14.in the UK, we see it in some of the debates in the continent,
:14:15. > :14:17.in Europe, increasing voices for more protectionism.
:14:18. > :14:19.For closing off economies, for turning away from
:14:20. > :14:27.The structure of global trade has changed, and there has been trade
:14:28. > :14:32.liberalisation around the world, and therefore any move to return
:14:33. > :14:40.to an era of protection is going to lead to lots of unpredictable
:14:41. > :14:45.If Donald Trump gets elected, and taking him at his word,
:14:46. > :14:47.I think we are potentially in for a significant
:14:48. > :14:49.era of protectionism, trade wars, and deterioration in
:14:50. > :14:58.So in these choppy and probably murky waters of International Trade,
:14:59. > :15:01.negotiators are going to have to balance a number
:15:02. > :15:06.There is national self-interest, there's politicians arguing
:15:07. > :15:09.for protectionist policies, and at the same time there's
:15:10. > :15:18.One way or another we are all in the same boat.
:15:19. > :15:21.MICHELLE: Colm O'Regan examining the dilemmas of national interest
:15:22. > :15:27.Remember you can see more of his films on our
:15:28. > :15:34.Back here in the United States, the Obama administration has
:15:35. > :15:43.been negotiating several historic trade deals.
:15:44. > :15:51.The Transpacific Partnership with Asia and the Transatlantic
:15:52. > :15:52.Trade and Investment partnership, or TTIP,
:15:53. > :15:56.But both have been controversial at home.
:15:57. > :15:58.Celeste, we've heard a lot of anti-trade rhetoric
:15:59. > :16:01.Does this point to a more inward looking America,
:16:02. > :16:04.and why has trade become such a lightning rod in this election?
:16:05. > :16:08.Because it's a policy that working people don't really have a fair
:16:09. > :16:15.Because it's negotiated behind closed doors,
:16:16. > :16:18.because the history of it has shown that there are big winners,
:16:19. > :16:22.but those winners tend to be the global companies.
:16:23. > :16:25.And meanwhile you have productivity de-linking firm wages,
:16:26. > :16:29.you have flat wages for most workers in the US from the 1970s,
:16:30. > :16:32.you have a whole bunch of things where the future is looking a lot
:16:33. > :16:36.more bleak than it did 20, 30, 40 years ago.
:16:37. > :16:42.Trade is not the sole reason for that but plays a big part.
:16:43. > :16:44.If we can reshape the rules we could make sure that trade
:16:45. > :16:49.could benefit all across the board, and not just the very elite.
:16:50. > :16:52.David, Celeste said that these trade deals aim to help more of the global
:16:53. > :17:01.Do you agree with that, do you find they help you?
:17:02. > :17:04.We are interested spectators trying to run our business,
:17:05. > :17:07.and our business, we like to think that our business lives
:17:08. > :17:17.and dies by how hard we work and our innovations.
:17:18. > :17:19.And if we can out-think our competitors.
:17:20. > :17:22.But there are these moments with the trade deals where
:17:23. > :17:25.we are just caught in the river, and waiting for things to settle
:17:26. > :17:33.Maybe there will be some retaliatory effect on the line as well.
:17:34. > :17:40.I'm sure TPP would help us sell to Europe, but from my experience
:17:41. > :17:43.with Mexico it may be short lived, it may affect some of our
:17:44. > :17:46.Certainly the companies in the US who are selling mainly commodities
:17:47. > :17:51.will be hurt by this, I would imagine.
:17:52. > :17:54.Because if it's the kind of product that could just be put together
:17:55. > :17:58.with low skilled labour anywhere in the world,
:17:59. > :18:02.it's going to go where the labour is the cheapest and that's not here.
:18:03. > :18:04.When you are crafting trade policy, how do
:18:05. > :18:07.you balance national interests and international interests?
:18:08. > :18:11.I think, if you look at TPP, sometimes we balance too
:18:12. > :18:16.much national interest, in my view.
:18:17. > :18:20.We wouldn't lower duties on sugar, we have protectionist
:18:21. > :18:22.rules about textiles, where we just don't belong
:18:23. > :18:33.But I want to go back and tie that to something that you said,
:18:34. > :18:37.But the real truth is the United States, US companies,
:18:38. > :18:39.are not going to compete in most cases on things
:18:40. > :18:44.We'll take the special case of China, maybe.
:18:45. > :18:52.But if it's more that other countries with less
:18:53. > :18:53.skilled workers, that's where their comparative
:18:54. > :18:58.You then say that you have other more high-value added,
:18:59. > :19:01.and that is kind of in microcosm the story of the future
:19:02. > :19:04.But I am curious about your thoughts on protectionism.
:19:05. > :19:07.You've got the IMF, the WTO, the World Bank is concerned that
:19:08. > :19:09.rising protectionist could have a negative impact
:19:10. > :19:14.I'm curious to get your thoughts about this idea that America
:19:15. > :19:22.is among the countries turning more protectionist.
:19:23. > :19:29.What is really amazing is how little protection we had from 2008 to 2010
:19:30. > :19:32.when we had the biggest recession since the 1930s.
:19:33. > :19:35.You can trace what happened in 2009-11 with what happened
:19:36. > :19:45.Part of it is the fact that people see with supply chains,
:19:46. > :19:47.you start cutting things off in terms of imports,
:19:48. > :19:49.you're hurting your own firms because they are importing
:19:50. > :19:54.Particularly in high-end electronics.
:19:55. > :19:57.For me, it's not that I'm not worried about protection,
:19:58. > :20:02.but I think we dodged a real bullet six years ago and I think this
:20:03. > :20:05.is creeping and we should try to stop it, but it's not
:20:06. > :20:10.I want to bring in David, our manufacturer in the room.
:20:11. > :20:12.What do you make of what you're hearing?
:20:13. > :20:15.Something else we haven't touched on is exchange rates.
:20:16. > :20:19.From my point of view as a manufacturer, that's something
:20:20. > :20:25.If the exchange rate changes it affects us a lot.
:20:26. > :20:28.I'd be interested in the effect of these various deals
:20:29. > :20:32.In the case of NAFTA, I didn't think it mattered so much,
:20:33. > :20:34.but in other trade deals we are talking about now
:20:35. > :20:37.I have a feeling that it's more of a relevant factor.
:20:38. > :20:40.It's definitely a relevant factor and was something that we pushed
:20:41. > :20:43.a lot with American manufacturers to get enforceable rules
:20:44. > :20:51.in the TPP to control that misalignment and manipulation.
:20:52. > :20:54.You can literally wipe out tariff cuts overnight with the right amount
:20:55. > :21:03.In fact the TPP doesn't speak to currency manipulation at all.
:21:04. > :21:08.There's a separate agreement that's not included in the TPP and not
:21:09. > :21:11.enforceable through sanctions that says countries should cooperate
:21:12. > :21:18.Frankly, that's a big deal and is something that China has used
:21:19. > :21:22.in addition to its state owned enterprises and subsidies.
:21:23. > :21:27.That is going to be a problem because the countries
:21:28. > :21:28.that are in the TPP, Vietnam, Singapore,
:21:29. > :21:31.And if China is this aligning its currency,
:21:32. > :21:35.they are going to follow along and we are going to lose some of
:21:36. > :21:41.Going against China ten years ago on currency would have been valid.
:21:42. > :21:44.The problem with now is the Chinese are trying to boost their currency.
:21:45. > :21:48.The second thing is, Celeste knows, there is no definition of currency
:21:49. > :21:52.manipulation that anyone can agree on.
:21:53. > :22:03.They do not cover what our Federal Reserve did in 1908-11
:22:04. > :22:05.when they had policies that indirectly drove down
:22:06. > :22:08.The European Central Bank has done the same thing.
:22:09. > :22:11.It's not the same as the direct manipulation, but people
:22:12. > :22:14.on the other side will say what the hell are you talking about?
:22:15. > :22:17.The effect of your Federal Reserve has the same affect indirectly,
:22:18. > :22:21.but the same outcome that we had directly.
:22:22. > :22:23.We are going to have to leave it there.
:22:24. > :22:29.Claude Barfield, Celeste Drake, and David Lowenstein,
:22:30. > :22:34.thank you very much for joining us this week on Talking Business.
:22:35. > :22:37.Next week we will be coming from Jakarta,
:22:38. > :22:39.Indonesia where my colleague Karishma Vaswani looks at Asia's
:22:40. > :23:01.For now, from New York, it's goodbye.
:23:02. > :23:08.It's pretty quiet out there right now. It scattered cloud and defuse
:23:09. > :23:12.showers. Not much change on the way for tomorrow. Some sunshine and if
:23:13. > :23:13.you showers, some of them could be