RELEASE: Labor Rights Can Be Good Trade Policy
An Analysis of U.S. Trade with Less Industrialized Economies with Weak or Strong Labor Rights
Contact: Madeline Meth
Download the full report (pdf)
WASHINGTON, DC—The Center for American Progress released a new report today entitled, “Labor Rights Can Be Good Trade Policy: An Analysis of U.S. Trade with Less Industrialized Economies with Weak or Strong Labor Rights.”
The report’s authors, Christian E. Weller and Stephen Zucconi, analyze data on U.S. trade with a range of countries to see if there is a link between labor rights of other countries and the U.S. trade balance. Specifically, they analyze if the United States has smaller trade deficits or even trade surpluses with less industrialized countries that have some or even strong labor rights compared to countries that have limited or no labor protections. The analysis shows that better labor rights can be a productive part of a trade agenda that aims to correct massive U.S. imbalances. In particular:
- The U.S. trade deficit grows much more slowly with countries that have stronger labor standards. Between 2000 and 2007, the gap between U.S. exports and U.S. imports widened faster for countries with limited or no labor rights than for countries with some or strong labor rights.
- The United States has also smaller trade deficits with countries that have better labor rights. Specifically, on average U.S. exports amounted to 74.5 percent of U.S. imports in countries with strong or some labor rights in 2000 (indicating a trade deficit) compared to an average ratio of 36.0 percent (and thus a larger trade deficit) for countries with limited or no labor protections.
- Trade with less industrialized countries with weak or no worker protections has substantially contributed to the increase in the U.S. trade deficit from 2000 to 2007. If the United States had only traded with less industrialized economies that had some or strong worker rights during those years, its trade deficit in 2007 would have been $123 billion smaller than it actually was.
- U.S. exports tend to be larger when worker rights are stronger. In 2000, U.S. exports to countries with strong or some worker rights were 182.3 percent greater than U.S. exports to countries with limited or no worker rights. If we exclude China from the analysis, the difference was 253.5 percent. In 2007, the difference was still 93.5 percent for all less industrialized economies, and for the analysis without China we find a difference of 327.2 percent in U.S. exports.
- Stronger labor rights are associated with smaller U.S. imports. U.S. imports grew faster from 2000 to 2007 for countries with limited or no labor rights than for countries with some or even strong labor rights.
Labor rights clearly have a positive effect on U.S. trade deficits, and thus help to put U.S. economic growth on a more durable path. Consequently, the promotion of labor standards, alongside environmental protections, should be an integral part of the future U.S. trade agenda. In their report, they present the detailed analysis to support these conclusions and examine how the inclusion of labor rights in trade agreements with newly industrializing economies would result in higher U.S. exports and a growing global middle class.
Download the full report (pdf)
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