In this video, workers at the Carrier plant in Indianapolis react to the company announcing that it will ship 1,400 local jobs to Mexico in what they described as “strictly a business decision.” You can hear the heartbreak and outrage in the voices of the workers who must now scramble to figure out how to take care of their families. Carrier makes heating, air conditioning, ventilation and other systems. The layoffs are scheduled to begin in 2017.
Aside from corporate greed, the main reason that Carrier can get away with something like this is the major flaws that have been built into international trade deals like North American Free Trade Agreement and the Trans-Pacific Partnership. These kinds of deals make sure that these types of tragic moments happen more frequently.
First off, these deals provide companies that want to offshore to trading partners with extraordinary powers and legal rights they do not have under U.S. law–powers and rights that shift the balance of power further away from working people. Second, these deals put U.S. manufacturers in closer competition with foreign companies that pay low wages and don’t respect labor rights. This encourages U.S. companies to offshore in order to keep up with those foreign companies.
The third reason these deals encourage outsourcing is that they fail to level the playing field in terms of taxes. Such a deal could set a minimum level for corporate tax rates or create rules to prevent companies from gaming the tax system and pitting countries against each other. With those options left off the table, a race to the bottom is encouraged, where companies shift jobs to countries with lower tax rates, which, in turn, encourages higher-tax rate countries to lower taxes and the ripple effect those lower rates have on the economy and the government’s goods and services. A trade deal meant to create U.S. jobs would address this.
And lastly, of course, these trade deals eliminate tariffs in the trade zone, further encouraging companies to shift jobs to trade partners because corporations know they can ship goods back into the United States without paying tariffs, thus using the tariff cuts to increase U.S. imports instead of increasing U.S. exports.
This blog originally appeared in aflcio.org on February 11, 2016. Reprinted with permission.
Kenneth Quinnell is a long time blogger, campaign staffer, and political activist. Prior to joining AFL-CIO in 2012, he worked as a labor reporter for the blog Crooks and Liars. He was the past Communications Director for Darcy Burner and New Media Director for Kendrick Meek. He has over ten years as a college instructor teaching political science and American history.
