News & Commentary

September 24, 2017

Wilbur Ross, the Secretary of Commerce, penned an op-ed in the Washington Post discussing how NAFTA has disadvantaged American workers.  Citing a report released by the Office of Trade and Economic Analysis within the Department of Commerce, Secretary Ross argues that the amount of U.S. content in manufactured goods imported from Canada and Mexico has decreased since NAFTA went into effect.   According to Secretary Ross, U.S. content is being replaced by non-NAFTA members.  While NAFTA has increased trade among the United States, Canada and Mexico on the whole, the op-ed claims that U.S. businesses and workers have been more disadvantaged by the trade agreement than either Mexico or Canada.  Secretary Ross claims that NAFTA’s rules of origin, which are supposed to regulate the amount of non-NAFTA content that ends up in goods, are faulty.  The rules only apply to specific parts, many of which are no longer in common use.  Secretary Ross also took issue with the substantial transformation rule.  If a NAFTA member processes a non-NAFTA item, the item may be considered a product of the United States, Canada, or Mexico.  According to Secretary Ross, amendments to the rules of origin, among other things, would have to be part of any successful renegotiation of NAFTA.  The Secretary’s op-ed comes on the heels of yesterday’s third meeting in Ottawa to discuss updating the agreement.

The Equal Employment and Opportunity Commission has sued IHOP for sexual harassment and retaliation.  The suit, which involves some of the chain’s New York and Nevada franchises, claims that the chain failed to address continuing sexual harassment and retaliation against employees.  According to the EEOC’s complaint, the IHOP franchises in question created a hostile work environment, and took no steps to address employees’ sexual harassment claims when notified.  Additionally, the franchises retaliated in a number of ways, such as firing employees who complained or reducing their work hours.  The EEOC is seeking compensatory and punitive damages, back pay, and injunctive relief.  The EEOC attempted to settle the suit through a conciliation process before filing suit in Nevada.

This week, the New York Times examined the connection between Germany’s robust job market for blue collar workers and the country’s ability to avoid the populist movements gaining strength in much of Europe.  According to the article, Germany has managed to avoid a populist backlash through a series of policy and economic measures.  Dortmund, Germany used to be one of the centers of Germany’s steel and coal industry.  Despite the decline of the steel and coal industry, Dortmund’s economy continues to thrive.  The city manages to retain manufacturing jobs and to attract new ones.   Midsize companies, known as Mittelstand companies, have created new job opportunities that compensate for the loss of antiquated blue collar jobs.  The German government has also helped retain blue collar jobs.  The government has built a technology park and provides entrepreneurs with startup funding. The government has also funded expansions of universities to create a pool of skilled workers.   The concerted efforts of private companies and the government have allowed Germany to continue providing blue collar workers without college degrees competitive wages, likely staving off the sense of frustration and alienation that fueled populist movements elsewhere.


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