Jonathan Ernst | Reuters
President Barack Obama and Japanese Prime Minister Shinzo Abe on the White House South Lawn in Washington, April 28, 2015.
Ironically, the defeated bill provided retraining assistance for workers dislocated by the trade bill. Lawmakers had crafted this legislation specifically to help the workers represented by the unions working so actively to defeat it. A further irony is that free trade agreements are heavily weighted to America's advantage because they open up foreign markets – in this case, Asian markets – to American goods, which face substantial restrictions in the form of tariffs and other limitations on their marketing. In contrast, American markets are already wide open to foreign goods with few limitations other than agriculture.
There is no doubt that globalization of the workforce – a trend that is inevitable in today's global world – is putting downward pressure on wages. For decades, labor unions have been steadily losing members. Additionally the public has gained greater insight into how certain union agreements hamper productivity, such as in the automobile industry. If labor fails to effectively partner with management and together create value for consumers, both labor and management will lose their jobs.
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The reality of the trade bill's defeat means that more American manufacturers will be required by foreign governments to set up production and often research and development, thereby cutting production in the U.S. The trade bill would go a long way to alleviate that. As American companies expand globally, inevitably they add many more jobs here in the U.S. – engineering, manufacturing, marketing, finance, and management.
Former Ford CEO Alan Mulally directly addressed these issues shortly after taking over Ford in 2006. He saw that Ford, General Motors, and Chrysler were steadily losing market share for several decades and de-emphasizing cars (in favor of SUVs) because they were unprofitable and could not compete with German, Japanese, and Korean cars built in plants in the Southern states. He met with leaders of the United Automobile Workers and devised plans to bring jobs back to Detroit, based on lower starting wages for new workers with the goal of cost parity with plants in the Southern states. This plan worked. Ford's market share has grown dramatically, and its Midwest factories are flourishing.