Unpacking Disingenuous GOP Complaints About Presidential Trade Authority

At midnight on June 30, Fast Track, which delegates Congress’ constitutional trade authority to the president, extended for another three years.

The congressional Democrats, who fought this broad give-away of control over trade agreements even when it was President Barack Obama’s request in 2015, could not even obtain a vote because the procedure is so rigged it automatically extends unless a “non-extension resolution” is passed. But that vote can only occur if the congressional GOP leadership allows it.

And the congressional GOP, most of whom supported the extreme Fast Track procedure but now are cynically howling about undue presidential authority over trade, chose not to take action.

Under the U.S. Constitution, Congress is supposed to write the laws and set trade policy, while the executive branch represents the United States in negotiations with foreign governments. When it came to trade agreements, this arrangement required cooperation between the branches.

For 200 years, these key checks and balances helped ensure that no one branch of government had too much power over trade policy. But, starting with Nixon, presidents have tried to seize those congressional powers using Fast Track.

Fast Track, which supporters renamed Trade Promotion Authority as the procedure became increasingly controversial, empowers the executive branch to unilaterally select partner countries for “trade” pacts, decide the agreements’ contents, and then negotiate, sign and enter into the agreements — all before Congress has a vote on the matter. Normal congressional committee processes are forbidden, meaning that the executive branch is empowered to write lengthy legislation on its own with no review or amendments. And, then the president is guaranteed a vote on the done deal within a set amount of time with no amendments allowed and debate limited.

President Obama — despite his campaign promise to reject Fast Track — requested the authority for the Trans-Pacific Partnership (TPP). A years-long battle ensued, with opposition coming from a majority of the U.S. public, most House Democrats and a sizeable bloc of Republicans, organized labor, environmental groups, public health organizations, family farmers, and many more. Despite the unprecedented strength and diversity of this coalition focused on a trade issue, Fast Track authority was passed by a one-vote margin in June 2015.

This delegation of Fast Track authority was for a three-year period with an automatic renewal for another three years after that. The only way to stop the automatic renewal of Fast Track would have been with a congressional resolution of disapproval.

The AFL-CIO sent a letter to Congress opposing Fast Track renewal in its current form because of its opacity and inadequate labor standards. But the broad coalition in Congress and outside that almost stopped Fast Track in 2015 did not organize a push to end the procedure because the disapproval mechanism is designed to only function if the congressional leadership allows it.

And, it was a telling spectacle to watch Sen. Bob Corker (R-Tenn.) and other GOP senators going ballistic over President Donald Trump’s authority to do anything to stop trade cheating while revealing their disinterest in getting rid of the Fast Track legislative luge run. 

Fast Track has been the necessary swamp oil to grease the skids to pass pacts like the North American Free Trade Agreement (NAFTA), and other job-killing deals packed with special corporate protections and rights. The corporate lobby opposes the president having trade authority to combat trade cheating that costs American jobs, but loves Fast-Tracked trade deals that make it easier to outsource additional jobs.

The GOP inaction on Fast Track disapproval made 100 percent clear what is really going on: Team Trade Status Quo is keen to eliminate presidential authority on trade matters that break with their pro-job-outsourcing trade agenda while remaining committed to the current iteration of Fast Track with a view to trying to use it to get more-of-the-same trade deals.

That dynamic makes the current NAFTA renegotiation a moment of truth. The U.S. Trade Representative, Robert Lighthizer, is using this delegation of Fast Track to negotiate a NAFTA replacement that actually has a chance of making things better for working people rather than expanding greater corporate control over our lives.

The renegotiated NAFTA just might eliminate the job outsourcing incentives at NAFTA’s heart, including the system that empowers multinational corporations to attack our laws for taxpayer money before a panel of three corporate lawyers. And the NAFTA replacement may even add labor and environmental standards that could actually help raise wages and improve conditions for people throughout North America.

In the face of this potential game-changer of a trade agreement, congressional Republicans’ inconsistency on Fast Track belies the truth, that for them criticism of presidential trade authority was never about constitutional checks and balances – it was all about making sure their corporate cronies can do whatever they want.

However, the revised NAFTA deal is not done yet. And the GOP’s decision not to act against Fast Track extension suggests that they still think they can get the terrible, TPP-style NAFTA deal that they want.

The diverse coalition that fought Fast Track and that defeated the TPP must remain vigilant and show that a revolutionary new model for NAFTA that puts working people first is the only type of deal that will pass in Congress.


For G-7, Trump’s racism and misogyny are ok, but his trade policies are intolerable

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U.S. President Donald Trump greets Canadian Prime Minister Justin Trudeau during the 2017 G-7 Summit in Italy. (Official White House Photo by Shealah Craighead)

U.S. President Donald Trump seems as welcome at the G-7 picnic as a rabid skunk.

Most G-7 leaders have worked to build warm relationships with Trump, despite his xenophobia, racism, misogyny, climate denialism, warmongering and corrupt business self-dealing. But apparently, taking on the trade status quo was a bridge too far.

That is a bitter irony, given that the trade and financial policies that the G-7 has relentlessly promoted created the political context that helped to make Trump president. Decades of U.S. presidents from both parties and their G-7 counterparts have pushed international economic policies that have created expansive new rights and powers for multinational corporations and hurt working people.

Pushing corporate-rigged trade agreements, blessing financial deregulation and loosening trillions in speculative investment flows were the economic priorities.

Even as millions of manufacturing jobs were lost, absent was coordinated G-7 action to counter China’s currency manipulation or a unified approach to end Chinese subsidies and other unfair trade practices that, among other problems, fueled the global steel and aluminum oversupply glut.

And as working-class wages declined and income inequality and financial instability grew, the majority harmed by the G-7 version of globalization were told their fate was inevitable.

In the United States, that message was conveyed by Democratic and Republican presidents alike even as the economic and social fallout became increasing difficult to deny. About 4.5 million net American manufacturing jobs have been lost since the 1994 start of the North American Free Trade Agreement (NAFTA) and 2000 trade deal with China related to its admission to the World Trade Organization. Sixty-thousand manufacturing facilities shuttered. And real wages flattened, given that the replacement of the higher-wage manufacturing jobs with lower-wage service sector jobs pushed down wages economy-wide even if one did not lose their job to trade.

Enter Trump, who, whatever else his trade policies may or may not do, ended the bipartisan presidential practice of not seeing or talking about the many Americans who have been harmed by our trade status quo.

Therefore perhaps Trump’s truly unforgiveable sin, finally meriting open ire from G-7 partners, is to demonstrate that the trade status quo is, in fact, not pre-ordained, but rather is a set of policies he is shredding.

Trump may well not achieve the better trade outcomes he promised.

That would require him to stay focused on changing China’s cornucopia of unfair trade practices rather than settling for the usual Chinese promises to buy more U.S. exports. And, unless he can implement a replacement deal that eliminates NAFTA’s investor-state outsourcing incentives and adds strong labor and environmental terms with swift and certain enforcement to raise wages, companies will keep moving jobs to Mexico to pay workers a pittance and dump toxins and import those products back for sale here.

And, the U.S. corporate lobby is in overdrive working against any attempt to change the trade policies to preserve the status quo. Doing so is apparently a higher priority for them than preserving the Republican congressional majority. The Koch Brothers just announced a campaign designed to line up congressional Republicans against Trump’s trade agenda before the midterm elections, even as polls show GOP and Independent voters support that agenda.

Plus, Trumpian chaos has led to Trump caving on well-thought-out policies, such as the China trade enforcement action aimed at dismantling the technology theft essential to the China 2025 agenda to dominate industries of the future. That approach was revived, for now.

But whether or not Trump’s trade policies succeed, the other G-7 leaders should reflect on the painful lesson of Trump’s rise and that of other authoritarian politicians who wrap themselves in economic populism: Political leaders who fail to offer a new approach on trade and the related economic policies that provide greater economic security for all only serve to alienate more and more people who are left behind, creating fertile political ground for more Trumps.

Trump’s pledges to upend the trade status quo, end job outsourcing and create manufacturing jobs attracted hard-hit working-class votes in the key Midwestern swing states that put him in the White House. And President Barack Obama’s relentless efforts right through the 2016 campaign to pass the business-as-usual Trans-Pacific Partnership (TPP), and Secretary Hilary Clinton’s ambiguous views on the TPP and connection to President Bill Clinton’s NAFTA, dampened working-class enthusiasm for the Democratic ticket.

If Trump’s foreseeably cringe-worthy exploits at the G-7 don’t drive home this point, perhaps yesterday’s election of Doug Ford — considered the Donald Trump of Canada and brother of the infamous right-wing, populist, crack-smoking Ontario Mayor Robert Ford — as Ontario’s new Premier will.


Corporate Lawyers Hijack UN Meeting, While Civil Society Is Sidelined

By Melinda St. Louis

As originally published in TruthOut

Thanks to years of public education and organizing around the globe, the once-obscure investor-state dispute settlement (ISDS) system is on the ropes. The ISDS system, buried in trade and investment agreements, grants new rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, and their decisions are not subject to appeal. The corporations need only convince the lawyers that an environmental law or safety regulation violates the expansive investor rights granted by such pacts.

As governments are increasingly questioning the legitimacy of this system, the law firms and corporate beneficiaries of the regime are trying defend it, including by rigging international intergovernmental meetings like the one I recently managed to attend despite being banned. 

Supporters of the ISDS regime are on the defensive for good reason. The Trans-Pacific Partnership (TPP) never achieved majority support in the US Congress in large part due to bipartisan opposition to ISDS -- from the Republican-majority National Conference on State Legislatures and US Supreme Court Chief Justice John Roberts, to Nobel laureate economist Joseph Stiglitz and Sen. Elizabeth Warren. The EU Trade Commissioner admitted that ISDS was "the most toxic acronym in Europe." As the number of ISDS cases filed each year has exploded and corporations have won billions in attacks on a stunning array of policies, governments from South Africa to Indonesia to Ecuador have terminated many of their treaties that include ISDS. Even the Trump administration has proposed eliminating ISDS from the North American Free Trade Agreement (NAFTA).

The law firms, tribunalists, hedge funds and private equity firms getting rich off of these raids on governments' treasuries have been scrambling to figure out how they can save the system, even as they are being forced to reckon with massive opposition to ISDS by civil society and governments alike.

The result has been a high-stakes shell game, with ISDS defenders setting up discussions about whether the system requires "reforms" that are designed to avoid real change.

Biased ISDS "Reform" Discussions

Exhibit A: The little-known United Nations Commission on International Trade Law (UNCITRAL), which provides one set of rules under which many ISDS cases are litigated, has now been forced to engage in a discussion about the need to reform ISDS. Very few people -- even within governments -- have paid much attention to UNCITRAL. But the arbitration industry, and all the law firms who make millions bringing ISDS cases on behalf of corporations or sitting as arbitrators in these ad-hoc tribunals, have been heavily invested in this process.

Whose views is UNCITRAL most interested in hearing, as the agency holds a series of meetings to discuss whether ISDS reform is desirable and what those reforms should be? The report from the first November 2017 UNCITRAL ISDS "reform" meeting made that quite clear: Of the 27 the groups listed as non-governmental "observers," all but two (93 percent) represented the arbitration industry. If this were not sufficiently galling, many of the governments' own delegations to the meeting included private ISDS lawyers and arbitrators. Indeed, some governments, including Mauritius, Iceland and Bahrain, were solely represented by practicing arbitrators. 

The arbitration industry is obviously not keen for UNCITRAL to engage in meaningful reform of the system. Those who wish to save the ISDS regime are aiming to hijack the UNCITRAL reform discussion to maintain the status quo or promote half-measures around the margins that do not address ISDS's fundamental flaws. For instance, the European Union has been pushing a proposal to establish a "multilateral investment court" within this process, which could actually institutionalize and formalize the ISDS system.

Critical Voices Not Welcome?

Concerned about this danger, Public Citizen's Global Trade Watch, along with other international civil society organizations, applied to be observers at the April 2018 meeting in order to provide more critical views of some of the emerging proposals. UNCITRAL's observer application process is opaque and unclear, but we sent a detailed letter explaining how we met their observer criteria relating to international focus, competence and expertise in the subject area, and whether we would contribute to reaching the goal of a more balanced representation of major viewpoints.

We fully expected to be approved as observers, given our deep expertise in the issue and that we have been accredited to attend all the World Trade Organization Ministerial meetings and other UN meetings on ISDS. But Public Citizen and other close allies received rejection letters from UNCITRAL.

The message seemed pretty clear: UNCITRAL welcomes the arbitration industry to be a part of these discussions, despite the clear conflict of interest. But several civil society organizations like ours that represent the public interest were to be kept away.

A Fly on the Wall

Despite being officially banned from the premises, yours truly managed to attend the April 2018 UNCITRAL meeting in New York as a guest of an approved organization. The flawed, biased process became even more evident.

The arbitration industry dominated observer and governmental delegations in the actual formal sessions. Thirty-seven of the 44 non-governmental observer organizations represented private lawyers and arbitrators, while only seven represented broader civil society interests. Hardly "reaching the goal of a more balanced representation of major viewpoints" that was the remit of the UNCITRAL secretariat.

An "academic forum" -- held on the sidelines of the UNCITRAL meeting -- was organized by a well-known arbitrator who served as an official member of Switzerland's delegation to the meeting. Many academics who participated in the forum were also arbitrators themselves with a personal financial stake in the ISDS system. Not only were well-known academic critics of the system notably absent from the invitation list, but the event itself was held at the New York International Arbitration Centre -- not exactly a neutral, academic venue. 

The UNCITRAL secretariat did not have its story straight about the role of this academic forum or a separately organized "practitioners' forum," which even more explicitly represented the views of the arbitrators. 

During an introductory meeting with civil society organizations, the UNCITRAL representative explained that the practitioners' forum and the academics' forum were separate from the UNCITRAL proceedings. The official said that results of those discussions would only be linked to the UNCITRAL website if they meet a "test" of "objective, neutral and fact-based, technical and not political, and from research and not political organizations." It is peculiar that the views of people with a personal financial stake in maintaining the ISDS status quo as arbitrators might be considered "neutral" and "not political" in a discussion about reforming the ISDS system.

It only got more bizarre. During the UNCITRAL meeting, an official US government delegation representative took the floor and invited all the government delegates to an evening event hosted by his law firm, King and Spalding. The firm has represented corporations in some of the most egregious ISDS claims, including the infamous Chevron v. Ecuador case. No one in the room seemed to question the propriety of a private law firm that earns millions from the ISDS system speaking on behalf of the US government delegation to invite delegates at an intergovernmental meeting to that law firm's event. 

At that King and Spalding event, the UNCITRAL secretariat announced that because they "wanted to ensure the widest possible input, [UNCITRAL] set up the practitioners' forum and the academic forum," and they specifically wanted "to hear from arbitrators because they are the people most affected by the UNCITRAL process." Yes, those would be the same forums that UNCITRAL officials said were unrelated to the meeting. And of course, no mention of the communities around the globe who are affected by ISDS attacks against their environmental, public health and safety laws.

Further, while civil society organizations were informed by UNCITRAL that no space was available inside the UN building for side events, the International Chamber of Commerce held just such a side event down the hall from the official meetings in the UN building.

Perhaps perceiving the public relations nightmare that might arise from their biased meeting, towards the end of the week, some governments and the UNCITRAL secretariat took some small steps to include the perspectives of the few civil society organizations present.

But the takeaway from the UNCITRAL's process for its so-called "reform" discussions thus far is that lawyers making millions in ISDS cases are welcomed, while the voices of the millions of people whose lives are harmed by ISDS cases brought by multinational corporations are barely an afterthought.

Venues like UNCITRAL and the arbitration industry may want to tamp down the wave of opposition to the unjust ISDS system, even as they go through the motions of considering "reform." But sidelining the growing critique against ISDS from across the political spectrum around the globe will most certainly backfire. Worldwide, the call to end ISDS is only growing louder, and pro-status quo forces ignore those voices at their peril.


NAFTA Talks Should Continue Until a Good Deal Is Achieved

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Lori Wallach, director of Public Citizen’s Global Trade Watch, released the following statement upon the conclusion of today’s North American Free Trade Agreement (NAFTA) ministerial meeting:

“Until a deal is achieved that eliminates NAFTA’s job outsourcing incentives and foreign tribunals exposing our laws to attack, and that adds strong labor and environmental standards with swift and certain enforcement to raise wages, talks should continue. The administration has been making progress on important elements of the major NAFTA replacement deal that is needed, and we hope they continue negotiating until they get a deal that would enjoy broad support.

Only a deal that eliminates NAFTA’s job outsourcing incentives and investor-state dispute settlement tribunals and adds strong labor and environmental standards with swift and certain enforcement can obtain broad support in Congress, a reality demonstrated by the Trans-Pacific Partnership falling dozens of votes short of passage in the previous Congress.

Certainly the continuation of the status quo of NAFTA helping corporations outsource more jobs to Mexico every week and attack health and environmental safeguards in secretive tribunals is not acceptable. President Trump promised to bring jobs back with a quick NAFTA renegotiation, but more important than a fast deal is the right deal that transforms the failed NAFTA model. Members of Congress, unions and small businesses, state legislators and consumer groups have articulated for decades the structural changes needed to NAFTA to reverse its outsourcing incentives, downward pressure on wages and attacks on our health and environmental laws.”


New Data Show Trump’s First Quarter 2018 China and Mexico Trade Deficits Largest on Record as All Eyes Focus on This Week’s Trade Discussions in China, Looming NAFTA Deadline

U.S. Trade Deficit With World Largest Since 2008 Financial Crisis, Contrary to Trump’s Campaign Pledge to Quickly Reduce Deficit to Bring Back Manufacturing Jobs  

WASHINGTON, D.C. – Record-high first-quarter trade deficits add to the urgency of the Trump administration succeeding in reworking the terms of U.S.-China trade and the North American Free Trade Agreement (NAFTA), Public Citizen said today.

The 2018 first quarter goods trade deficit with China and with the world is significantly larger than figures for the first quarter of 2017 even as the March monthly goods deficit with China declined as U.S. exporters accelerated shipments to beat tariffs that may be imposed relating to the 301 action, which gave an extra boost to U.S. exports overall this month.

President Donald Trump’s pledge to quickly reduce the U.S. trade deficit remained unfulfilled after the U.S. trade deficit rose in 2017. As his second year in office begins:

  • The first-quarter goods trade deficit with China is the largest ever recorded at $91.1 billion, up from $80.7 billion for the same period last year;
  • The goods trade deficit with the world of $196.7 billion is larger than any period since before the 2008 financial crisis – up 8.5 percent over the first quarter of 2017 deficit of $181.4 billion.
  • The first-quarter goods trade deficit with Mexico is the largest ever recorded at $33.3 billion, up from $30.6 billion for the same period last year. After improving from 2011 to 2016, but worsening in 2017, the NAFTA first-quarter 2018 goods deficit is up slightly relative to the first quarter of 2017 – an increase from $49.1 billion to $49.6 billion. (NAFTA data exclude re-exports, which account for 20 percent of U.S. exports to NAFTA countries.)
  • The 2018 first-quarter goods trade deficit with the world is up $24.4 billion compared to the $172.4 billion first-quarter global goods deficit in 2016, the last year of the Obama administration. The deficit in manufactured goods remained 88 percent of the overall deficit from 2016 to 2017, contradicting Trump’s promises to help manufacturing workers.

(All data in inflation-controlled terms.)

With the comment period on proposed China 301 tariffs closing at the end of May, Trump’s senior trade and economic advisers are in Beijing this week seeking major changes to the terms of U.S.-China trade. NAFTA talks must be completed within weeks for a pact to be voted on this year, but only a deal that removes NAFTA’s job outsourcing incentives and adds strong and strictly enforced labor and environmental standards could change the trade deficit trends. Given the failure of the Trans-Pacific Partnership to obtain majority support in Congress, such a major redo of the past U.S. trade agreement model is also necessary for a new pact to be approved by Congress.

“This ever-expanding trade deficit is like the ghost of Trump trade promises past that is haunting the U.S. negotiators now in Beijing trying to remedy the debacle of our China trade policy and those trying to conclude a NAFTA replacement deal that ends the outsourcing incentives and thus could win broad support,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

The Deficit Is Now Mostly Made Up of Manufactured and Agricultural Goods, With the Oil Deficit Down

Economists who critique the significance of bilateral deficits nonetheless agree that large sustained overall trade deficits can suppress demand and slow economic growth. The overall U.S. trade deficit is mostly made up of manufactured and agricultural goods. Growth in U.S. oil exports and a decline of oil imports since 2011 have masked the deterioration of the non-oil trade deficit.

Over the past three years, the worsening of the non-oil trade deficit has been comparable in magnitude to the worst part of the 2000s “China shock” period, reaching 3.5 percent of GDP between 2014 and 2017 compared to 3.6 percent of GDP between 2002 and 2005. The non-oil trade deficit increased from $573 billion to $756 billion from 2014 to 2017, including the increase in Trump’s first year of office from $703 billion to $756 billion.

“Expect ever-expanding trade deficits that eviscerate Trump’s grand trade reform promises unless the administration transforms our failed China trade policy and removes NAFTA’s job outsourcing incentives, adds strong labor and environmental standards, and thus achieves a NAFTA replacement that can get through Congress,” Wallach said.

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New Trump Administration Trade Report Sticks to the Status Quo

The Trump administration’s recently released 2018 National Trade Estimate Report could become classic reading for political science students studying the “deep state” concept.

The 2018 report, which provides a 500-page compilation of policies in other countries that U.S. commercial interests claim are “trade barriers,” is remarkably similar to Obama-era editions of this congressionally-mandated annual report.

Yes, it was shocking that the Obama administration issued a report that labeled countries’ public health and environmental policies, food-labelling laws, and even religious standards as significant trade barriers. Sadly, this aspect of the report is not surprising for the new administration. 

But attacks in the report on other countries’ policies that reflect the new administration’s approach can only be explained by the reality that too many career trade-policy staff are rutted in pro-status-quo groupthink.

Exhibit A: A key administration demand in the North American Free Trade Agreement (NAFTA) renegotiations is to cut investor-state dispute settlement (ISDS). Administration officials have made clear that ISDS is considered a problem because it makes it less risky and costly to outsource jobs and because it undermines sovereignty. The ISDS system empowers foreign investors and corporations to skirt domestic courts and attack domestic policies by going before tribunals of three corporate lawyers to adjudicate claims. These extra-judicial international arbitration tribunals can order unlimited compensation be paid to investors by a host country’s taxpayers.

Yet this year’s report identifies as a barrier Mexico’s hydrocarbons law because it requires foreign companies to use the domestic court system in Mexico to arbitrate certain government disputes – rather than allowing foreign firms to use unaccountable international tribunals.

Along the same lines, the Trump administration is seeking to roll back NAFTA terms that require the waiver of Buy American and other domestic preference programs. But the report attacks Quebec’s requirement that 60 percent of the goods used in wind energy projects be sourced domestically as this “could pose hurdles for U.S. companies in the renewable energy sector in Canada.”

Jumping from NAFTA to other news headlines, another barrier listed is the European Union’s new privacy law. According to the report, the policy adds “new requirements for accountability, data governance, and notification of a data breach,” which may “increase administrative costs and burdens” for U.S. companies operating in Europe. Funny thing is that U.S. megacorporation Facebook, facing attacks on its lax safeguards, just announced it is adopting the European standard for its operations worldwide.

It bears noting that once again even public health policies designed to improve maternal and infant health are attacked as trade barriers in the report. That includes Malaysia’s proposed revisions to “its existing Code of Ethics for the Marketing of Infant Foods and Related Products” that would restrict corporate marketing practices aimed at toddlers and young children. Also, the report criticizes Hong Kong’s recent regulations governing the marketing of infant formula. Although acknowledging that the regulations are based on “World Health Organization guidance and purportedly voluntary,” the report parrots the food industry’s concern that Hong Kong’s new policies might become mandatory.

Other eyebrow-raising trade barriers? The report criticizes Malaysia – a predominantly Muslim country – for having certain restrictions on the importation of alcohol, and Brunei – another predominantly Muslim country – for requiring that non-halal foods be sold in specially designated rooms.

It remains to be seen whether future National Trade Estimate reports by the Trump administration will be consistent with the administration’s stated positions or the deep-state “trade-think” of decades of Democratic and Republican administrations past will prevail. Either way, we will be watching closely.


On Announcement of Revisions to U.S.-Korea Free Trade Agreement

Statement of Lori Wallach, Director of Public Citizen’s Global Trade Watch

WASHINGTON, D.C. – As the administration announced revisions to the U.S.-Korea Free Trade Agreement (FTA), Lori Wallach, director of Public Citizen’s Global Trade Watch, commented:

“Despite the touted 10,000 tariff cuts and promises of more exports, more jobs, our deficit almost doubled in the FTA’s first five years as U.S. agricultural exports declined and a flood of Korean cars were shipped here.

“It’s unclear how the proposed changes to the pact itself would reverse the doubling of our Korea trade deficit under KORUS, but the new currency agreement could make a difference if it has teeth, delaying the U.S. tariff cuts on Korean trucks could stop the big imbalance from getting even worse, and the parallel steel agreement is significant.

“The limited revisions to KORUS do not the promised new American trade agreement model make, which puts added pressure on NAFTA renegotiations to deliver a deal that eliminates the job outsourcing incentives in our past trade deals and adds strong labor and environmental standards with swift and certain enforcement.  

“Success on many key issues that were not addressed at all in this deal – such as the elimination of job outsourcing incentives and the controversial ISDS tribunals, the tightening of automobile rules of origin, and the addition of strictly enforced labor and environmental standards – will determine if a renegotiated NAFTA can get the bipartisan support necessary to get it passed.”

KORUS Outcomes: First Five Years

Despite the Korea FTA including more than 10,000 tariff cuts, 80 percent of which began on Day One:

U.S. exports to Korea declined 7.8 percent ($3.7 billion), and imports from Korea increased 13.1 percent ($8.1 billion) by the end of KORUS’ fifth year.

  • Since the FTA took effect, S. average monthly exports to Korea have fallen in nine of the 15 U.S. sectors that export the most to Korea, relative to the year before the FTA.
  • U.S. exports to Korea of agricultural goods have fallen 5.4 percent in the first five years of the Korea FTA, despite almost two-thirds of U.S. agricultural exports by value obtaining immediate duty-free entry to Korea under the pact. U.S. agricultural imports from Korea, meanwhile, have grown 45.4 percent under the FTA. As a result, the U.S. agricultural trade balance with Korea has declined 8.1 percent, or $554 million, since the FTA’s implementation. The Obama administration promised that U.S. exports of meat would rise particularly swiftly, thanks to the deal’s tariff reductions on these products. However, despite U.S. officials’ promises that the pact would enhance cooperation between the U.S. and Korean governments to resolve food safety and animal health issues that affect trade, South Korea has imposed temporary bans on imports of American poultry in each of the last three years, including 2017. Comparing the fifth year of the FTA to the year before it went into effect, U.S. poultry producers have faced a 78 percent collapse of exports to Korea – a loss of 82,000 metric tons of poultry exports to Korea. U.S. pork exports have also dropped 1 percent.
  • The 85 percent trade deficit increase with Korea under the pact – from $14 billion in the 12 months before the pact went into effect on March 15, 2012, to $26 billion in its fifth year – came in the context of the overall U.S. trade deficit with the world decreasing by 5 percent. While U.S. goods imports from the world decreased by 7.1 percent, goods imports from Korea increased by 13.1 percent.
  • During that period Korea’s GDP rose 15 percent, and the unemployment rate has averaged 3.4 percent, belying the claims from KORUS defenders that the growing deficit was fueled by weak growth and thus weak demand in Korea.  
  • The U.S. service sector trade surplus with Korea grew much slower since the FTA. In KORUS’ first five years, it increased by only $2 billion from 2011 to 2015, a growth rate of 29 percent, which is notably 64 percent slower than our services surplus growth over the five years before the FTA went into effect.
  • Record-breaking U.S. trade deficits with Korea have become the new normal under the FTA – in 59 of the 60 months of KORUS’ first five years, the U.S. goods trade deficit with Korea has exceeded the average monthly trade deficit in the five years before the deal.
  • The auto sector was among the hardest hit: The U.S. trade deficit with Korea in motor vehicles grew 55.7 percent in the pact’s first five years. S. imports of motor vehicles from Korea have increased by 64.2 percent, or $6.4 billion by the fifth year of the Korea FTA.
  • Exports of machinery and computer/electronic products, collectively comprising 27 percent of U.S. exports to Korea, have fallen 17.1 and 18.8 percent, respectively.

Public Citizen Report: ‘Follow the Money: Did Administration Officials’ Financial Entanglements With China Delay Trump’s Promised Tough-on-China Trade Policy?’

WASHINGTON, D.C. – As the administration is poised to announce long-awaited action on a China trade investigation launched last summer, Public Citizen released a report revealing Trump administration Cabinet members’ and top advisors’ longstanding personal financial entanglements with the Chinese government and government-connected firms. The report raises the question of whether the lack of action during President Donald Trump’s first year in office despite China being candidate Trump’s top target of trade wrath is better explained by the current or past Chinese financial entanglements of numerous top administration officials rather than an ideological battle over trade in the White House.

The report reveals the widespread business connections – some ongoing – between Trump Cabinet officials and other senior staff and Chinese government-run or connected firms that may have affected administration trade policies on China. For instance, despite pledging to divest from two Chinese shipping firms in which he was invested, U.S. Commerce Secretary Wilbur Ross’ financial transaction reports do not include the sale of an estimated $125 million stake in Navigator Holdings, which operates a fleet of liquefied natural gas (LNG) tanker ships that could benefit from several gas-related investment deals with Chinese government-linked firms that Ross announced since becoming Commerce secretary.

“The exits of White House Economic Adviser Gary Cohn and U.S. Secretary of State Rex Tillerson will significantly diminish the top staff with past or current significant financial stakes in China and with Chinese government entities, although Ross remains,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Will changes in personnel lead to changes in policy with the recent trade enforcement actions paving the way to creation of the comprehensive new China trade policy that is decades overdue?”

Only on China trade were administration trade actions during Trump’s first year opposite of Trump’s campaign pledges and rhetoric. Even Trump’s bellicose China trade rhetoric from the campaign was replaced by an uncharacteristically subdued tone. Rumors have raged since Thanksgiving that the administration would impose punitive measures against Chinese technology theft via a Section 301 investigation that the administration initiated in August. But time and again, action was delayed.

During Trump’s China state visit, Ross gleefully touted Goldman Sachs’ new $5 billion joint fund with the Chinese government’s main investment arm and plans by other state-owned and state-linked firms to buy assets in sensitive U.S. infrastructure, energy and food sectors. Such investments may facilitate the Chinese government “Made in China 2025” plan to dominate the global economy but would seem antithetical to Trump’s promised “tough on China” agenda.

A review of the top-level staff of the Trump administration shows stark conflicts of interests not just relating to business in or with China, but with the Chinese government. These ties and conflicts include:

  • Previous or current ownership of shares in companies profiting from Chinese state-owned investment in the United States (Ross, Cohn, Treasury Secretary Steve Mnuchin, Trump Senior Adviser Jared Kushner);
  • Investments in companies doing business in China that may not have been divested at the time an official was engaged in policymaking that could impact his investments (Ross);
  • Co-investments with Chinese state-owned investors that may not have been divested at the time an official was engaged in policymaking that could impact his investments (Ross);
  • Previous direct ownership of stakes in Chinese state-owned companies (Cohn and Tillerson);
  • Ownership of businesses awaiting approvals for pending trademark applications in China (Ivanka Trump); and more.

The new report provides a compilation of information that is available about these links; many investments might not be disclosed as they may be held in investment vehicles in which the underlying assets are not known.


TPP-11 Countries Sign a Deal — While We Dodged a Bullet on ISDS Expansion Here, Our International Allies Face a Major Fight

Thanks to years of organizing, we in the United States saved ourselves from the corporate-dominated Trans-Pacific Partnership (TPP) by ensuring that the controversial deal was universally reviled across party lines and could never gain a majority in Congress.

But it is deeply unfortunate for our international partners that this week the remaining 11 TPP countries — including Canada and Mexico — signed the deeply flawed TPP model for their countries in a cynically renamed “Comprehensive and Progressive Trans-Pacific Partnership.” We know from our years-long, internationally-coordinated TPP campaign that our sisters and brothers in those nations fought against the corporate-rigged TPP model as hard as we did. We stand in solidarity with them as they continue to mobilize to block the ratification and implementation of this TPP-11 deal in their countries.

While some of the most egregious provisions pushed by Big Pharma that would have further threatened access to life-saving medicines were fortunately set aside (for now) in the revised TPP-11 deal, most of the TPP’s dangerous rules remain intact. It is shocking, for instance, that Canada, Mexico and others agreed to maintain the infamous investor-state dispute settlement (ISDS) system (with only some minor tweaks), that empowers multinational corporations to attack public interest laws before panels of three corporate lawyers.

We dodged a bullet here in the United States — the TPP would have doubled U.S. exposure to investor-state attacks against U.S. policies by newly empowering more than 1,000 additional corporations in TPP countries, which own more than 9,200 additional subsidiaries in the United States, to launch investor-state cases against the U.S. government.

But, it is beyond perplexing that Canada and Mexico would agree to expand their liability to these ISDS attacks on their laws in the TPP-11. In the North America Free Trade Agreement (NAFTA) renegotiations, the United States has proposed to radically roll back ISDS, which should be good news for Canada and Mexico, since Canadian and Mexican taxpayers have paid $392 million to mostly U.S. corporations who won ISDS attacks against their public interest laws using NAFTA.

The corporate lobby, which has been doing all it can to block the positive NAFTA proposal to roll back ISDS, is undoubtedly rejoicing that the TPP-11 countries have signaled their willingness to accept expansion of the controversial ISDS system.

But the diverse consensus to end ISDS in NAFTA and elsewhere spans the political spectrum, with stark criticism coming from voices as disparate as U.S. Supreme Court Chief Justice John RobertsReagan-era associate deputy attorney general Bruce Fein, the pro-free-trade libertarian Cato Institutethink tank, U.S. Senator Elizabeth Warren (D-Mass.)Nobel laureate economist Joseph Stiglitzunions and environmental groups.

We will continue to push to remove ISDS from NAFTA and support our allies in Canada, Mexico and in the other TPP-11 nations as they fight ISDS expansion.


In Memory of Zahara Heckscher

Zahara_HeckscherAll of us at Public Citizen lift up in loving memory our dear friend and peaceful warrior Zahara Heckscher, who passed away on February 24 at the age of 53, after her years-long battle with breast cancer. 

Among her many talents as a writer, poet, teacher and facilitator, Zahara was a fierce, creative and committed activist. As she valiantly battled advanced breast cancer, she became determined to fight for all patients to have access to the cutting-edge cancer medicines that extended her life. 

When she learned that prescription drug companies were using the Trans-Pacific Partnership (TPP) negotiations to lock in extended monopolies that threatened access to affordable medicines, Zahara became a passionate trade justice advocate on behalf of cancer patients around the world. 

She galvanized testimony from people living with cancer and HIV/AIDS from the United States and other TPP countries to protest what she dubbed the “TPP death sentence clause” — a provision that would require governments to grant monopoly periods for biologic medicines used to treat cancer and other serious illnesses and thus deny patients access to more affordable generic and biosimilar medicines.  

The battle over biologics and access to cancer treatment was responsible for dragging out TPP talks for years. In October 2015, she carried those patients’ stories with her to the final round of TPP negotiations in Atlanta to demand that the TPP negotiators drop the “death sentence clause”. She was arrested as she attempted to enter the negotiations, holding an IV-pole, calling on the U.S. Trade Representative (USTR) to drop its insistence on demanding the extended monopoly period for biologic medicines. 

The video of her arrest was shared widely on social media, and her subsequent media interviews on Democracy Now, The Big Picture and others contributed to the national conversation about the dangers of the TPP for health. Due in part to the advocacy of public health advocates like Zahara, the pharmaceutical industry and USTR failed to convince the other TPP nations to accept the full twelve-year monopoly they had been demanding, but the final TPP did include a five-year period.

Zahara insisted that cancer patients cannot wait even one additional year for access to medicines that can keep them alive, so she turned her efforts to stopping Congress from ratifying the TPP.

On World Cancer Day in February 2016, she and fellow cancer survivor Hannah were arrested blocking the entrance to PhRMA, the pharmaceutical industry’s lobby that had pushed the TPP death sentence clause, to warn the public and Congress about TPP’s dangers for access to cancer medicines.  Together, Zahara and Hannah then co-founded Cancer Families for Affordable Medicines, creating public education and advocacy materials for cancer patients and their loved ones to support access to medicines by convincing their members of Congress to vote no on the TPP. 

As the pressure on Congress to pass the TPP mounted in the summer of 2016, Zahara took her message directly to Capitol Hill, getting arrested a third time at the office of Congressman Polis, and traveling to speak in-district to undecided members of Congress to demonstrate what was at stake in the TPP for cancer patients and their loved ones. Despite the fact that TPP passage was a top priority of the White House, Republican congressional leadership and Chamber of Commerce, the district-by-district activism by people like Zahara ensured that the TPP could not achieve majority support in Congress.

In the last year, Zahara’s waning physical strength did not stop her from continuing her trade justice activism. Concerned by reports that the Trump administration was pushing for the same “death sentence clause” in its renegotiations of the North America Free Trade Agreement (NAFTA), just last month, Zahara made an educational video to urge people to take action to ensure that NAFTA renegotiations not further undermine access to essential medicines.

Until the very end, Zahara used every tool at her disposal — from her razor-sharp intellect to her poetic spirit to even the cancer itself — to bless the world and to change it for the better. Her strategic and creative trade justice activism was just one small piece of her multi-faceted legacy. She was an inspiration. We will miss her dearly.