FT: U.S. Top Union Leader Warns of ‘Inferior’ China Trade Deal

America’s top union leader, Richard Trumka, has warned Donald Trump that he risks striking an “inferior agreement” with China to end the trade war if he fails to rein in Beijing’s use of industrial subsidies, raising pressure on US negotiators in the final stretch of talks with Beijing, Financial Times reported.

The 69-year-old president of the AFL-CIO said the deal being hashed out between U.S. and Chinese officials did not seem to contain anything “very earth shattering or very helpful” to rebalance the trade relationship between the two countries, he said in an interview with the Financial Times. 

In particular, he urged Robert Lighthizer, the U.S. trade representative, and Steven Mnuchin, the US Treasury secretary, to secure binding commitments from China to prevent currency manipulation and restrain the use of industrial subsidies. Some currency measures are expected to be included in the deal, but big curbs to subsidies are not thought to be part of the agreement, according to people familiar with the text. 

“[The Chinese] circumvent comparative advantage by underwriting the cost of their uncompetitive industries or by targeting an industry and subsidising [it]. That has to come to a screeching halt,” said Trumka. “If the agreement doesn’t do that, and gives us a way to enforce it, then it will be an inferior agreement. And it’ll be another opportunity, a great opportunity, missed.” 

Trumka’s reservations are significant because they highlight the risk of a political backlash against Trump if he is seen as striking a weak deal, FT adds.

While U.S. labour unions generally favour Democrats, they have been sympathetic to the President’s protectionist stance on trade. A rejection of the China deal by Trumka, who has led the AFL-CIO labour federation for a decade, would be a big blow to Trump’s hopes of claiming that his deal will benefit rust belt voters who backed him in droves in the 2016 presidential election.

Speaking in a Washington office decorated with memorabilia celebrating past political and union campaigns as well as the Pittsburgh Steelers American football team, Trumka said the President would be making a “colossal mistake” if he favoured Wall Street over U.S .workers in the China deal.

“If they go [on] the side of Wall Street, a couple of billionaires will benefit from it and do just fine, but the rest of the American people won’t do that. It will continue to hurt our economy and our ability to be a world power, because we are losing that capacity,” Trumka said. 

He warned that the U.S. president was already losing his hold on union members. “They are coming back across the bridge,” he said. “Unfortunately for [Trump] the list of things he’s done to hurt [members] massively outweighs the number of things he’s done to help them.”

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