Hotseat: Earl Blumenauer and Peter Defazio

Two Oregon congressmen—divided over free trade—disagree about what a Trans-Pacific deal would mean.

TRADE SKEPTIC: "Huge multinational corporations and Wall Street drive our trade policy," U.S. Rep. Peter DeFazio says.

President Barack Obama jetted to Portland last week to use the city and the world headquarters of Nike as backdrops in his push for a sweeping new free-trade agreement with 11 Pacific Rim countries.

The setting made sense. Oregon—especially Washington County, where Nike's campus sits—depends heavily on trade.

The visit also reminded many critics of the concerns about free-trade deals: concerns about jobs shipped overseas (where Nike, through its contractors, employs 1 million workers) and weakened labor and environmental standards.

The pact Obama seeks, the Trans-Pacific Partnership, would likely boost Oregon businesses by lowering tariffs and other barriers to trade. The deal—still under negotiation—would include legal protections for multinational companies operating abroad. Critics say the deal would make it even easier for U.S. employers to send jobs overseas. 

As WW went to press, the U.S. Senate was debating whether to give Obama authority to "fast track" the deal. That means Congress would have the power only to approve a final deal, but not amend it. The House also needs to approve the authority—and that's where many Democrats and some Republicans hope to stop it.

Proponents say U.S. manufacturers and professional service providers would win new markets without giving much up, because U.S. tariffs are typically lower than those in the Trans-Pacific pact countries.

Opponents point to the North American Free Trade Agreement, or NAFTA, which they say sucked hundreds of thousands of jobs out of the U.S. and into Mexico despite promises of safeguards. They dismiss Obama's assurances the Trans-Pacific Partnership would have better protections for labor and the environment.

Oregon represents the extremes of that divide with two of its Democratic congressmen, Earl Blumenauer and Peter DeFazio.

Blumenauer, from Portland, has become an outlier in his party for his free-trade philosophy, which also earned him face and limo time with Obama last week.

Blumenauer, 66, is a 10-termer in the U.S. House, known for his bow ties and expertise in transportation issues. He says he's spoken with hundreds of Oregon companies—and none opposes the Trans-Pacific Partnership.

He's optimistic that Obama and Sen. Ron Wyden (D-Ore.), who has led the Senate fight for the fast-track authority, will "bake" strong protections into legislation to make sure the TPP creates a level playing field for U.S. interests.

"Being able to penetrate foreign markets," Blumenauer says, "will have significant benefits for Oregon."

WW: You say the TPP would help the U.S. How would that happen?

Earl Blumenauer: We have some of the lowest tariffs, so people who bring their goods to the United States pay a relatively modest burden. But the guy who is making pipe in Eugene that he wants to sell in Vietnam, it's a big hit.

You've said you had concerns about how NAFTA worked out. Why would this agreement be any better?

There's more transparency. The TPP will be available to the public for two months before the president signs it.

There will be the strongest provisions for labor and environmental standards. I've spent a lot of time dealing with fisheries—one of the greatest environmental threats of our time, overfishing and the collapse of our fishing stock. The provisions are going to be really path-breaking in that regard.

Do you believe the U.S. has the ability to dictate how other nations manage themselves?

I've proposed a fund where we would take some of the money from the cheaters who violate trade provisions and dedicate it to enforcement. Enforcement of labor standards and worker protections is a global challenge. We don't always do so well in the U.S. Look at The New York Times reporting on New York City nail salons. Abuse and corruption is a problem here, too.

Critics of this deal say the TPP is just a warmed-over version of NAFTA.

That's just categorically not true. We're going to find in Oregon that we'll be able to penetrate markets for agricultural products, for wine, for bicycles and a whole host of other items with significant beneficial consequences.

Economics professors love free trade, but critics say it has cost America manufacturing jobs.

There are other forces at work with the loss of manufacturing jobs. Those jobs are declining around the world, and it's primarily because of modernization and technology. We have a fraction of the agricultural jobs that we used to have but more output.

In Portland, we are a manufacturing powerhouse, and that should continue. The extent to which things were outsourced, chasing cheap labor, that's gone, that's done.

Why is outsourcing finished? There are many countries where labor is much cheaper than in the U.S.

Well, why isn't everything in Bangladesh now?

You've mentioned that big local companies, such as Precision Castparts and ESCO Corp., are supportive of the trade deal. Is there any manufacturer that's come to you and said don't do this?

I have talked to hundreds of businesses, and I can't think of a manufacturer or an agricultural producer that's said, "No, we think we will be at a disadvantage."

Are critics just wrong?

People are frustrated because of other trends. Look at what is going on in the woods now. If you gave the Oregon timber industry permission to cut all of our old growth, we won't have a fraction of the employment we used to have. You sit in one of those mills and you see one guy or gal with a computer getting everything but a little bit of sawdust out of it.

If you've looked at when we've really gone into the tank economically, we've lost jobs, and industry has been really slow to hire them back. Either they've automated or they've shifted production to other parts of the country. 

What will be the impact of the TPP on the average Oregonian?

The average Oregonian will be better off. There will be more access to markets. Some of their core values will be reinforced, and there will be more upside for companies that want to have access to the other 95 percent of the world.

There are other considerations as well. I was just in Africa visiting my daughter. What I saw there was the Chinese Development Bank stepping in to provide loans and economic muscle. I'll guarantee you the Chinese are not concerned about labor rights. They are not concerned about environmental standards.

So you're saying if we don't pass the TPP, the Chinese win? 

If China moves in to fill the bill in these other countries, that's good for Chinese markets and their increasing influence.

As a child of the Vietnam War era, I think what we do to try to deal with the troubling consequence of that tragic war is an important consideration. This trade agreement gives us a chance to recalibrate the relationship with Vietnam, a country with almost 100 million people that can serve as a counterweight to China.

People need to consider with these massive trade agreements, they work both ways. The world is moving on with agreements. We're part of them or not. We have to ask whether we're better served trying to use our values, or sitting on the sidelines.

There was no limo ride last week for Peter DeFazio.

The Democrat from Springfield wasn't in Portland for Obama's visit. The president wouldn't have held any car doors open for him anyway. Had he been in town, DeFazio probably would have been happier on the protest lines outside Obama's hotel.

DeFazio, 67, is serving his 15th term in Congress. His district—covering the Willamette Valley and many rural counties—has been scarred by mill closures and job losses since the 1980s.

DeFazio notes that NAFTA, ratified by Congress in 1993, made things worse by giving American employers carte blanche to chase cheap labor in Mexico and around the world. The deal cost Oregon 22,000 manufacturing jobs, according to the group Public Citizen.

The TPP, DeFazio says, is just NAFTA on steroids, another historic mistake being ghostwritten by American multinationals, and that it would do far more for Japan, Vietnam and Singapore than it would for the U.S.

Supporters say the pact could help build an alternative to China, with its vexing trade policies and currency manipulation. But DeFazio warns that a trade agreement would do little to keep China in check—and instead make the trade imbalance worse while sucking away more American jobs.

WW: You're a longtime critic of free-trade agreements. Why is that?

Peter DeFazio: The first one when I was in Congress was NAFTA. It had a complete lack of any environmental or labor standards. Bill Clinton ponied up five meaningless side agreements that said, "Hey, we're taking care of labor and the environment, we'll put them in later." I didn't buy that, but other Democrats did. And of course NAFTA was never renegotiated. I was right, and in fact, it was worse than I thought.

Of course, they go running around saying it creates 400,000, 500,000 American jobs, and they'll be buying American goods.

The total buying power of the country of Mexico, if they spent all their pesos on nothing but U.S. goods, would be less than the people of the state of New Jersey. How the hell could that be a boom for U.S. industry? It was always about U.S. capital moving south of the border, where they could dump the toxics out the back door and exploit people for labor. That's the basis for all these trade agreements.

Obama, Wyden and Oregon U.S. Reps. Kurt Schrader and Suzanne Bonamici—they're all smart people. Why are they full speed ahead on this agreement?

This is incredibly important to Nike and Intel. Nike wants to be producing in places like Vietnam, and it would be safer for them to make that investment there with the TPP. 

You've been in Congress for nearly 30 years. Can you put the risk this agreement poses in the context of your tenure in Washington?

It's the worst. There will never be another need to negotiate—it's an all-encompassing trade agreement.

China is not part of the TPP now. Everybody says the U.S.-China rivalry is the context for this deal. What are your concerns?

When Obama started this, he said we're not going to let the Chinese take over. We're going to challenge them. The Chinese were really upset for the first couple years of the negotiation. Then they saw it: "This isn't so bad, we can pretend to comply with this."

Now the Chinese have indicated that they're interested in joining as soon as possible. This will be the end of U.S. manufacturing, substantially.

So given everything you've said, why would U.S. negotiators work on a deal with all the negatives you describe?

Remember, this agreement is being shared online in real time with 500 corporations, and the corporations write much of the language, and then they hand it to the diplomats to negotiate. 

You've ended up allied with people you're not usually allied with, some of the more conservative members of the Republican Party.

Wait, just back up from that. According to news reports, TPP supporters have less than 20 House Democrats lined up. These agreements under Democratic presidents are passed with a large Republican majority and a small minority of Democrats. I'm not exactly alone on my side of the aisle. I have tremendous company.

If we're going to beat this, we need people on the other side. There are Republicans who are concerned about our ongoing trade deficit and the loss of American jobs. There are people who are concerned about Congress ceding its constitutional authority. And there are some Republicans who just hate Obama.

All together, it adds up to some number of Republicans who ally with 90 percent of Democrats. The House can potentially beat this.

How would the average Oregonian, who doesn't think about these things every day, see his or her life affected?

What we might lose, what sectors of manufacturing, I can't tell you specifically. It's easier to predict the national stuff than to predict how it's going to hit each and every state. 

If I had gone out publicly in 1994 and said thousands of Oregonians are going to lose jobs through the NAFTA, they would have locked me up in a mental institution. I had enough credibility issues just -opposing it: "You're protectionist." A year after that, they came up and said, "Hey, you know, you were right."

How does this whole TPP process make you feel, given you were right about NAFTA. You're seeing history repeat itself with what you say is an even worse agreement.

Well, angry and frustrated. And determined to do the best we can to defeat it. We're in a pretty good spot at the moment. 

WWeek 2015

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