Unions, Protectionism, and U.S. Competitiveness

By Griswold, Daniel | The Cato Journal, Winter 2010 | Go to article overview

Unions, Protectionism, and U.S. Competitiveness


Griswold, Daniel, The Cato Journal


In the past three decades, labor union leaders have emerged as among the chief critics of trade liberalization, while the economic evidence has grown that labor unions compromise the ability of American companies to compete in global markets.

Organized labor has been politically vocal in the United States ever since the movement emerged in the late 1800s. A striking development since the 1970s, however, is its hardening opposition to trade liberalization. Labor leaders have opposed virtually all legislative initiatives since the 1980s to reduce barriers to trade, including the North American Free Trade Agreement, China's entry into the World Trade Organization, presidential Trade Promotion Authority, the Central American Free Trade Agreement, and pending trade agreements with South Korea, Panama, and Colombia.

In the past 30 years, labor unions have pushed for higher trade barriers in the form of "domestic content" requirements for autos sold in the United States, import quotas for textiles and steel, and the Gephardt amendments of 1986-87 that would have imposed sanctions on imports from nations that ran large bilateral trade surpluses with the United States (Destler and Balint 1999: 19). More recently, unions have lobbied for higher tariffs, quotas, or outright bans on imported steel, tires made in China, and Mexican-driven trucks on U.S. highways. Labor leaders lobbied hard for the "Buy American" provisions in the $800 billion stimulus package that Congress approved and President Obama signed in early 2009.

Labor leaders such as Richard Trumka of the AFL-CIO and James Hoffa of the Teamsters union express the fears of many of their members that free trade and globalization have reduced the scope and power of organized labor in the United States. They see import competition and the ability of U.S. companies to locate production abroad as direct threats to the living standards and bargaining leverage of the union members they represent.

Organized labor was not always uniformly hostile to trade liberalization. In the 1930s, labor leaders supported the Reciprocal Trade Agreements Act that allowed the Roosevelt administration to negotiate bilateral agreements to roll back high tariffs that had been enacted by President Hoover and a Republican Congress.

In fact, labor unions in most industrial countries resisted the rising protectionism of the interwar years. Back then, labor leaders and the left-of-center parties they supported understood trade policy more as a means for delivering lower prices to workers rather than protected markets to producers. In her book Who Adjusts?, Simmons (1994: 197) noted:

   One of the prime effects of tariffs in the interwar years was that
   they improved the return to capital in import-competing industries
   while raising the price of imported consumer goods to the working
   classes. One left-wing party after another lowered tariffs when it
   came to power: the American Democrats reversed the high tariff
   policy of the Republicans after 1932, and the Front Populaire
   lowered tariffs in France in 1936. Even where they did not have the
   electoral power to block protection, parties of the Left were the
   voice of free trade. Hence, the British Labour party opposed the
   General Tariff of 1931; and Belgian Socialists inveighed against
   tariffs and quotas because of the effect these policies would have
   on the cost of living for workers.

U.S. labor unions continued their support for trade after the war, endorsing the Trade Expansion Act of 1962, which authorized negotiations that led to the ambitions Kennedy Round agreement with members of the General Agreement on Tariffs and Trade in 1967 (Destler and Balint 1999: 15). In the first decades after World War II, U.S. organized labor was, in the words of trade historian I. M. Destler (1998: 389), "a consistent and reliable member of the free-trade coalition that found a comfortable home in the Democratic Party. …

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