Trade Agreement Will Accomplish Nothing If Ports Aren't Open
Now's the time to reform labor legislation to keep goods flowing
The proposed Trans-Pacific Partnership has raised hopes that the U.S. won't pull back from expanding the global commerce that has lifted our economy and improved the lives of the poor around the world for the past generation.
But just as details about currency and labor standards in the agreement are significant, the idea of global commerce must be not only enshrined in a treaty, it must be a practical reality. In this context, it's a good time to take stock of, and reform, labor legislation governing what has been a crucial weak spot in U.S. trade: the ports of the West Coast.
As I have written in a new paper released by the Manhattan Institute this week, “Held Hostage: U.S. Ports, Labor Unrest, and the Threat to National Commerce,” ports are an increasingly essential part of the U.S. economy. Maritime trade has increased dramatically in the past decade from $958 billion in 2004 to $1.75 trillion in 2013. Imports and exports of 20-foot equivalent units of container cargo are expected to triple and quadruple, respectively, by 2037. The U.S.-EU Transatlantic Trade and Investment Partnership (TTIP) and the Trans-Pacific Partnership (TPP) would increase trade even more by liberalizing trade between the U.S. and 39 countries across five continents, which collectively account for almost two-thirds of global economic output.
Trade agreements are of little value if goods cannot move through ports. With international trade now a substantial component of U.S. GDP, port slowdowns and shutdowns already present a growing threat to national commerce that will only grow as trade expands. During the recent West Coast port slowdown, apple farmers lost $19 million a week, while several foreign companies had to air-freight goods into the United States. In 2002, an 11-day West Coast port lockout cost the U.S. economy $15.6 billion. Such incidents have occurred almost exclusively during disputes with ports' management.
Currently, employment at ports is governed by the National Labor Relations Act, while employment at airlines and railroads is overseen by the Railway Labor Act. Labor disruptions at the ports are allowed under the NLRA, but not under the RLA without government permission after a long period of mediation. It's time to give ports the same protections as railroads and airlines.
Congress passed the Railway Labor Act in 1926 to ensure that commerce was not disrupted by labor disputes between railroad employee unions and management. In 1936, it expanded the RLA to cover unionized airline employees. Today, when disputes in the U.S. railroad and airline industries arise, they can be resolved without loss to commerce. For example, in a 2011 dispute between railroads and employees that almost shut down all the railroads, President Obama set up a Presidential Emergency Board that developed a resolution ending in an agreement between the parties within a month.
Railroad crews cannot decide to stop working on the tracks, and airline crews cannot withhold fuel from planes. But workers can simply not show up for shifts in the ports of Los Angeles and Oakland in order to hold out for higher wages.
The RLA does not gut union rights. Far from it. In some ways, unions have greater protections under the RLA. Unions are still able to lobby for higher wages, and it is harder to decertify a union under the RLA than under the NLRA. Further, workers cannot opt out of unions in right-to-work states.
In the railroad dispute in 2011, nine separate unions received a substantial pay increase. The crucial difference is that these pay increases were won without a disruption to commerce.
Just as airlines were added to the RLA in the 1930s, now is the time to add ports. This presents a win-win situation for all parties concerned, including consumers. The purpose of the RLA, as stated in the statute, is to “avoid any interruption of commerce” while providing for “the prompt and orderly settlement of all disputes” that arise in labor matters — two things that were desperately missing in the most-recent West Coast labor dispute.
With new free trade agreements, ports will be even more important. If TTIP is passed, U.S. exports to the European Union are predicted to grow by 37%. TPP would increase U.S. national income by an estimated $77 billion a year, potentially leading to an additional $123.5 billion in U.S. exports by 2025. Much of this trade would go through the ports. It is essential that these be available to make sure that America achieves the full benefits of the agreements.
Congress and the president should not allow millions of jobs and hundreds of billions of dollars in income to be held hostage when port labor contracts expire. As America expands free trade, it is time to modernize U.S. labor law by putting the country's ports under the jurisdiction of the Railway Labor Act.
This piece originally appeared in WSJ's Marketwatch
This piece originally appeared in WSJ's MarketWatch