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  • Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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February 21, 2017

Will the Trump Administration Fix the Distortions in U.S. Trade Data?

Analysis From Lori Wallach, Director Public Citizen’s Global Trade Watch

Recent press reports reveal that the Trump administration is exploring changes in how U.S. trade data is reported. Depending on what those changes are, that could be good news, because the current method for reporting bilateral trade flows significantly distorts trade balances to dramatically and deceptively reduce U.S. trade deficits. No doubt that defenders of status quo U.S. trade policies will gin up an attack on any efforts to fix these distortions.

So it is ironic, but not surprising, that the coverage insinuates that the Trump administration is trying to bias the data for political purposes: For years, members of Congress and trade analysts have demanded changes to U.S. trade flow reporting to make it more accurate. Why? Because proponents of past trade agreements have politically exploited the way that the current trade data inaccurately inflates export levels and artificially suppresses trade deficit figures to try to hide past pacts’ damage. 

Namely, the trade data that is reported monthly by the Census Bureau counts “foreign exports,” also known as “re-exports” as if they were U.S.-made goods. This can dramatically and inaccurately inflate export figures and hide trade deficits. According to the official Census Bureau definition, re-exports are goods made abroad, imported into the United States, and then re-exported again without undergoing any alteration in the United States. Re-exports support zero U.S. production jobs.[i] 

To put this into perspective, if one counts as U.S. exports only goods actually produced here, the 2015 U.S. goods trade deficit with Mexico was $109 billion and with Canada $63 billion – a $172 billion North American Free Trade Agreement (NAFTA) goods deficit. However, if one includes the foreign-made re-exported goods as U.S. exports, the NAFTA goods deficit shrinks by more than half - to $76 billion. The Mexico goods deficit falls to $60 billion and the Canadian deficit to $16 billion.

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Current U.S. Trade Data Methodology Skews Bilateral Trade Balances

If the Trump administration were to institute a new method to report trade data that accurately captures the balance between American-made exports to each country and imports from each country that are consumed in the United States, it would be a significant improvement on the currently available information. And as described below, the way to do this is not difficult as a policy matter. It would merely require tracking U.S. exports on the basis of the country in which they are actually produced.

Currently, each month, the U.S. Census Bureau releases raw data on the “total exports” from the United States and total imports coming in (called “general imports”). This data, as demonstrated by the NAFTA example, distorts bilateral trade balances. For example, this data counts as U.S. exports goods produced in China, stored in a warehouse after being taken off a ship from China in California’s Long Beach port and then later, without alteration, trucked to a destination in northern Mexico. This data also counts the Chinese imports into the United States as part of the U.S.-China trade balance. The result: The U.S. deficit with Mexico would be artificially reduced, and the U.S. deficit with China would be artificially increased. (The Census measure does provide accurate accounting of our trade balance with the world because the re-exports and those imports that get re-exported balance out.)

A more accurate measure for bilateral trade balances come from the U.S. International Trade Commission (ITC). Each month, a few days after the Census data is released, the ITC posts refined data for “domestic exports” that includes only U.S.-produced exports and data for “imports for consumption” that removes imports destined for export processing zones. This ITC data is used in the congressionally mandated trade agreement studies required under Fast Track that are the basis for projections on trade pacts’ effects on economic growth and jobs. This data accurately captures American-made exports. But the import data still can be skewed because some of the imports counted in “imports for consumption” may be re-exported. That is to say that the U.S. International Trade Commission’s current import data is not detailed enough to avoid distorting the U.S. bilateral trade balances with numerous nations on the import side even as it corrects for the false inflation of exports.

If the U.S. government provided data on where all goods exported from the United States were actually produced, then it would be possible to extract from the import data those goods that end up being re-exported. Canada requires that all imports indicate a country of production. So, for instance, if a Korean firm producing televisions in Mexico so as to obtain duty-free access into the U.S. consumer market under NAFTA were to import $2 billion in televisions into the United States, but then $500 million of those goods were re-exported to Canada, the Canadian data would let us know to count only $1.5 billion as U.S. imports for consumption. Expanding on this notion, if the Trump administration were to require that all U.S. exports indicate their country of production, then the import side of the ITC data could be perfected across the board.

As a policy matter, this is a rather painless solution to a trade data problem that currently thwarts  the availability of the accurate data needed to inform U.S. trade policymaking decisions. But proponents of status quo trade policies can be expected to launch a nasty political attack on such an improvement because it would clarify the enormity of the gap between what was promised for pacts such as NAFTA relative to their actual outcomes. Ironically, such an improvement also likely would bring down the U.S.-China trade deficit figures some. 

The Politics Underlying Current U.S. Trade Data

For years, the U.S. Chamber of Commerce has pushed out various cuts of the raw Census data to claim that past trade pacts have not generated significant trade deficits. In 2014, then-U.S. Trade Representative Michael Froman even used a cut of the raw data to claim, absurdly, that the United States no longer had a NAFTA trade deficit.

Interests seeking to maintain current U.S. trade agreements and policies undoubtedly oppose refinements to the current data that would accurately expose the extent of U.S. trade deficits with trade agreement partners. This is especially true with respect to NAFTA countries, because the portion of re-exported versus domestically produced goods relative to total U.S. exports to the NAFTA nations has increased over time.

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These interests have pushed for their own changes to U.S. trade data, including a 2014 proposal for “Factoryless Goods” accounting. This proposal would have counted as a U.S. export an iPhone produced in China that is exported from China to Germany. These interests also raise a series of specious arguments against removing foreign-made exports from U.S. export figures. For instance, they claim that re-exports have some U.S. value-added, just not enough to shift a product into a new tariff category, even though the Census definition of re-export states explicitly that re-exports have zero value added in the United States: Foreign Exports (Re-exports: For statistical purposes: These are exports of foreign-origin goods that have previously entered the United States, Puerto Rico, or the U.S. Virgin Islands for consumption, entry into a CBP bonded warehouse, or a U.S. FTZ, and at the time of exportation, have undergone no change in form or condition or enhancement in value by further manufacturing in the United States, Puerto Rico, the U.S. Virgin Islands, or U.S. FTZs. For the purpose of goods subject to export controls (e.g., U.S. Munitions List (USML) articles) these are shipments of U.S.-origin products from one foreign destination to another.)

When confronted with the accurate data, NAFTA defenders then typically shift to claims that the NAFTA deficit mainly represents trade in oil and other fossil fuels. But the share of the U.S. NAFTA goods trade deficit that is composed of fossil fuels (oil, gas and coal) has declined under NAFTA, from 82 percent in 1993 to 26 percent in 2015, as we have faced a surge of imported manufactured and agricultural goods from NAFTA countries. Even if one were to remove all fossil fuel categories from the balance, the remaining 2015 NAFTA goods trade deficit was $127.3 billion.

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  [i] Call between U.S. Census Bureau staff and Public Citizen staff, Sept. 25, 2014.

February 02, 2017

Trump Missed Deadline for Promised Start of NAFTA Renegotiation in 100 Days, But Whenever Talks Begin, It is the Content, Not The Speed, That Counts

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

The Trump administration can rename NAFTA the North American Free and Most Fairest of Them All Trade Agreement, but given that NAFTA is packed with incentives to offshore jobs and special protectionist goodies for various industries, NAFTA must be replaced – not tweaked – to actually deliver better outcomes for working people.

Monthly government data will show whether a NAFTA replacement delivers on the trade deficit reduction and job creation Trump has promised and to move those numbers will require a new deal that raises Mexican wage levels and environmental standards and eliminates NAFTA’s job and investment offshoring incentives and ban on Buy American procurement.

Replacing NAFTA is important, but with China counting for half of the U.S. trade deficit, it is odd that Trump has not announced an end to negotiations almost completed by the Obama administration for a U.S.-China bilateral agreement that includes the job offshoring incentives at the heart of NAFTA or  declared China a currency manipulator on his first day as promised.

It’s ironic that Trump is the beneficiary of the “Fast Track” trade authority narrowly enacted by congressional supporters of NAFTA. By delegating away its constitution trade authority, Congress has empowered Trump to unilaterally launch NAFTA renegotiations or create new bilateral deals with Mexico and Canada; determine the contents, sign and enter into deals before Congress gets a vote; and then write implementing legislation and force congressional consideration in 90 days with amendments forbidden and Senate supermajority rules suspended.

Under the Fast Track rules, Trump needed to have given notice on Monday, Jan. 31, to be able to start NAFTA renegotiations within his first 100 days as promised.

If the 500 official U.S. trade advisers representing corporate interests who have had a privileged role in developing our past trade deals, including NAFTA, remain in place to shape NAFTA renegotiations, the resulting deal not only could be more damaging to working people, but – like the Trans-Pacific Partnership (TPP) – become impossible to enact.

Even with Fast Track, Trump requires House and Senate majorities to enact a NAFTA redo. Most congressional GOP and their corporate allies support the offshoring incentives and other terms that must be eliminated if Trump is to deliver on his deficit reduction and job growth goals. Building a congressional majority requires that a NAFTA replacement exclude terms that would alienate congressional Democrats who for decades have promoted NAFTA alternatives to expand trade without undermining American jobs and wages, access to affordable medicine, food safety or environmental protections. (See Citizens Trade Campaign’s Jan. 13 letter to Trump and U.S. Rep. Rosa DeLauro’s Jan. 3 letter to Trump on what must be in a NAFTA replacement for it to provide broad benefits.)

Many congressional Republicans and the corporations that have rigged past deals view NAFTA renegotiation as a means to revive aspects of the TPP. This includes limits on generic competition that bring down medicine prices for consumers. Including such terms would eliminate Democratic support.

January 23, 2017

President Trump’s Executive Orders Formally Bury TPP’s Corpse, but What About TTIP, TISA, China BIT?

President Trump’s Executive Orders Formally Bury TPP’s Corpse, but What About TTIP, TISA, China BIT?

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

Formally withdrawing from the Trans-Pacific Partnership (TPP) will bury the moldering corpse of a deal that couldn’t gain majority support in Congress, but the question is going forward will President Trump’s new trade policies create American jobs and reduce our damaging trade deficit while raising wages and protecting the environment and public health not just here but also in trade partner nations?

If President Trump intends to replace our failed trade policy, a first step must be to end negotiations now underway for more deals based on the damaging NAFTA/TPP model so its notable that today’s announcement did not end talks to establish the Transatlantic Trade and Investment Partnership, the Trade in Services Agreement and the U.S.-China Bilateral Investment Treaty – all of which would replicate and expand the TPP/NAFTA model Trump says he is ending.

President Trump also repeatedly has said he would launch NAFTA renegotiations immediately and withdraw from NAFTA if he cannot make it “a lot better” for working people. NAFTA renegotiation could be an opportunity to create a new trade model that benefits more people, but if done wrong, it could increase job offshoring, push down wages and expand the protections NAFTA provides to the corporate interests that shaped the original deal.

Even with the Fast Track authority Trump inherits, to pass a NAFTA replacement he must ensure its terms enjoy support from most congressional Democrats and a subset of Republicans. Most congressional Republicans and many people Trump has named to senior positions passionately support the very agreements Trump opposes. Most congressional Democrats have opposed deals like TPP and NAFTA and for decades promoted alternatives that expand trade without undermining American jobs and wages, access to affordable medicine, food safety or environmental protections.

NAFTA is packed with incentives for job offshoring and protections for the corporate interests that helped to shape it, so to make NAFTA better for people and the planet will require it to be replaced, not tweaked. To remedy – not worsen – NAFTA’s damage, both the old negotiating process and the contents must be replaced. To put the needs of working people, their communities, the environment and public health over the demands of the special interests that have dominated U.S. trade policymaking, the 500 official U.S. trade advisers representing corporate interests who called the shots on past agreements must be benched.

If corporate elites are allowed to dictate how NAFTA is renegotiated, the deal could become even more damaging to working people and the environment in the three countries. Absent high labor and environmental standards, requirements for more North American content in products could increase U.S. job offshoring. The corporate interests that have rigged past trade deals say NAFTA renegotiation is how they will revive the special protections they achieved in the TPP, for instance limits on competition from generic drugs so pharmaceutical firms can keep medicine prices high.  (See Citizens Trade Campaign’s Jan. 13  letter to Trump and U.S. Rep. Rosa DeLauro’s Jan. 3 letter to Trump on what must be in a NAFTA replacement for it to provide broad benefits.)

January 03, 2017

Choice of Robert Lighthizer as USTR Strengthens Prospects for a New Approach to U.S. Trade Policy

Former Reagan Trade Official and Longtime Critic of Dogmatic “Free-Trade” Republicans Nominated to Join Trump Cabinet Packed With TPP Proponents

WASHINGTON, D.C. — The nomination of Robert Lighthizer to be U.S. Trade Representative signals President-elect Donald Trump’s interest in altering the trade policy approach that has prevailed through Republican and Democratic administrations for the past two decades. Lighthizer has consistently noted that historically Republicans favored trade policies designed to obtain specific national economic goals and criticized the Republican Party’s rigid support over recent decades of “free trade” ideology. His views put him at odds with most of Trump’s other high-level appointees who represent the very perspective on trade that Lighthizer has long critiqued.

“Lighthizer is very knowledgeable about both technical trade policy and the ways of Washington, but what sets him apart among high-level Republican trade experts is that for decades his views seemed to be shaped by the pragmatic outcomes of trade agreements and policies rather than fealty to any particular ideology or theory,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “I don’t know that he would agree with progressive critics of our status quo trade policies about alternative approaches, but he also has had quite a different perspective on trade policy than the Republican congressional leaders and most of Trump’s other cabinet nominees who have supported the TPP and every past trade deal.”

President-elect Donald Trump has filled many top administration posts with proponents of the Trans-Pacific Partnership (TPP), a pact that Trump railed against during his campaign. Trump appointees who publicly advocated for the TPP include Wilbur Ross (Secretary of Commerce), Exxon Mobil CEO Rex Tillerman (Secretary of State), Gov. Terry Branstad (Ambassador to China), Gen. James Mattis (Secretary of Defense) and Goldman Sachs President Gary Cohn (Director of National Economic Council) – not to mention Vice-President-elect Mike Pence.

“Thankfully there was never a congressional majority for the TPP in the 10 months after it was signed so the TPP was dead before the election,” said Wallach. “But even so, most of Trump’s cabinet members will be inclined to grab the shovel from Trump’s hands before he can bury the TPP’s moldering corpse by formally withdrawing the U.S. as a signatory.”

Other prominent TPP supporters nominated to join the Trump administration include:

  • Rick Perry – TPP supporter named Secretary of Energy
  • Ryan Zinke – Supporter of Fast Track for TPP named Secretary of Interior
  • Tom Price – Supporter of Fast Track for TPP named Secretary of Health & Human Services
  • Ben Carson – TPP supporter named Secretary of Housing and Urban Development
  • Elaine Chao – TPP supporter named Secretary of Transportation
  • Mike Pompeo – TPP supporter named CIA Director

December 21, 2016

TPP Would Have Proved Useless in Countering China’s Ambitions

New Report Shows Systematic Failure of Past Trade Pacts Sold with Foreign Policy Claims about China’s Conduct, Improved Labor Rights, and U.S. Global Leadership Now Being Recycled to Warn about TPP’s Demise

WASHINGTON, D.C. – It remains to be seen whether Donald Trump will withdraw the United States’ signature from the Trans-Pacific Partnership (TPP) on his first day in office as promised, but the dire warnings emanating from TPP supporters in response to the pact’s inability to obtain majority support in Congress recycle almost verbatim foreign policy claims that have proved baseless, a new report published today by Public Citizen shows. China’s rise poses real challenges for the United States, but a comprehensive review of foreign policy-related claims made to sell past U.S. trade agreements shows that trade agreements have systematically failed to forestall posited foreign policy threats or deliver promised benefits.

“The economic arguments for the TPP failed, it could not garner majority support in Congress and now its supporters are resurrecting the same old zombie foreign policy arguments in an attempt to stave off its final burial,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

In extensive side-by-side tables, the report reviews four categories of foreign policy arguments used for decades to sell the controversial trade-policy-of-the-moment, from the North American Free Trade Agreement (NAFTA) to China Permanent Normal Trade Relations (PNTR) to the TPP. Congress and the public are warned that an agreement’s implementation is essential to counter China’s ambitions and let the United States write the rules of the road, maintain U.S. global leadership, export U.S. values such as human and labor rights and enhance U.S. national security.

Such claims helped pass previous trade deals that they were employed to sell. As a result, we can examine the actual outcomes of the claims and document that they have proven uniformly false.

“If future U.S. presidents want to pass the trade agreements that they negotiate, then they must deliver deals that provide economic benefits to most Americans,” said Wallach. “Trying to scare up support for a trade deal by raising the same old parade of foreign policy horrors that allegedly will result if is not implemented is not a winning strategy and even more so because these very claims have proved false.”

The research for the report showed the most overlap between TPP claims and those made during the 2000 China PNTR fight. Indeed, a 2000 quote from then-U.S. Senator John Kerry (D-MA) on China PNTR and a 2016 quote from Secretary of State Kerry on the TPP, are almost identical. But implementation of China PNTR did not, in fact, provide a counter pressure to China's authoritarian government, improve human and labor rights, or enhance China’s cooperation on an array of national security challenges. The actual result was just the opposite.

The report also reviews various U.S. trade pacts with Latin American that were also sold as necessary to keep China (or Japan) from dominating the region, politically and economically, and as vital to improving democracy and human rights in trade partner countries. Yet the very foreign policy (and economic) threats that the deals’ passage was promised to forestall, occurred regardless, while the touted improvements in human rights failed to materialize.

“With a robust debate about the TPP’s actual terms, and the rising public awareness of the pact’s real threats, the foreign policy scare tactics failed this time,” Wallach said. “But that has not stopped TPP proponents from repeating them endlessly in response to the TPP’s demise as if somehow that will revive the deal.”

November 15, 2016

TPP RIP

 Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch on the Demise of the Trans-Pacific Partnership in the Lame-Duck Session of Congress

The news that the White House and Republican congressional leaders have given up on passing the Trans-Pacific Partnership (TPP) is welcome. That the TPP would be defeated by Congress if brought to a vote signals that Trojan-horse “trade” agreements that expand corporate power and shrink Americans’ wages are simply no longer politically viable. People power beat the united forces of a U.S. president, the Republican congressional leaders and the entire corporate lobby.

The unremitting push by the Obama administration for the TPP right through this election helped to elect Donald Trump, but Trump has not derailed the TPP – people power united across borders did that. Six years of relentless, strategic campaigning by an international movement of people from the TPP countries united across borders to fight against corporate power is why the TPP is all but dead.  

Thanks to years of campaigning by people across this country, since its February 2016 signing, the TPP could not garner a majority of support in the U.S. House of Representatives. And it was clear that the TPP was in trouble in 2015, when Fast Track authority for the TPP barely squeaked through Congress.

The TPP’s signing was delayed for years by vibrant civil society movements in other TPP nations that pushed their governments to reject TPP terms expanding investor rights, monopolies for pharmaceutical firms, financial deregulation and other threats. That meant time to organize, organize, organize. Over those years, millions of Americans helped to educate and organize their friends, families, and colleagues to demand their representatives opposed the TPP.

That the TPP pushed by the most powerful forces in the world is not being implemented represents the American public’s resounding rejection of  trade policies that not only failed to live up to its proponents’ promises over the past 20 years, but caused real damage to working people and the environment.

The only way forward is to create new rules of the road for globalization that put people and the planet first while harvesting the benefits of expanded trade. And we must roll back the existing “trade” deals and extreme investor-state dispute settlement regime that have caused people and the planet so much damage. The coalition that stopped the TPP is powerful and united and will fight forward to deliver that change. And, we will be ready to take on any attempt to revive the TPP or advance other corporate-friendly trade pacts based on the same failed and outdated model of trade.

For a review of the six-year international campaign against the TPP, please read https://medium.com/@citizenstrade/no-trump-didnt-kill-the-tpp-progressives-did-884b534542d#.175otqc1j

November 10, 2016

Latest TPP Peril: President Donald Trump

The election of President Donald Trump, and the slew of exit polls showing Americans’ ire over our failed trade policies that fueled that outcome, should dissuade Republican congressional leaders from pushing the Trans-Pacific Partnership (TPP) in the lame-duck session of Congress that starts next week. We will know by Thanksgiving if that is the case.

But even if the TPP never goes into effect, its damage will be felt worldwide - in the form of the election of President Donald Trump.

Yes, many factors contributed to this outcome. But it was not all racists and other haters who elected Trump. It was also a lot of working class voters who supported President Barack Obama twice. Hillary Clinton suffered her biggest losses in the places where Obama was strongest among white voters.

Did we have to get to this to end the era of smug Democratic and Republican political elites scoffing at the notion that trade is a salient political issue - and relentlessly pushing more of the same policies to the detriment of a voting bloc otherwise known as a majority of our fellow Americans?

Michael Moore proved to be spot on when he warned that Trump would win - and why. Do not underestimate the fury and desperation of tens of millions of Americans whose lives and communities have been devastated by bipartisan complicity in an agenda of corporate empowerment, job-killing trade agreements and Wall Street ravages, he wrote in an essay well worth a read.

Do not assume that these voters will focus on the messenger being a multinational corporation masquerading as a racist, misogynistic, narcissistic man (my description, not Moore’s) when they finally hear the message they have long awaited: yes, you have been screwed by Washington; yes I know your economic future was crushed by bad trade deals and Apple and Ford will pay if they move more jobs offshore; yes, the political establishment needs Molotov-cocktail accountability and I am that guy.

Do not imagine, Moore cautioned, that the millennials’ passion for Bernie Sander, a very different but also improbably successful (from the political establishments’ perspective), anti-establishment messenger of economic populism will translate into enthusiasm for the ultimate Democratic establishment nominee.

That Hillary Clinton, an impressive, capable and intelligent woman, proved a perfect foil as The Establishment was not all her doing. Bill Clinton sowed the wind with NAFTA, his China trade deal and Wall Street deregulation that reaped the whirlwind for Hilary Clinton.

This is a reality with which the Democratic Party must reckon. Through the lens of a Trump victory delivered by traditional Democratic base working class voters in Wisconsin, Pennsylvania, Michigan and Ohio, the shift in polling over the past several years showing Democrats more favorable than GOP voters to the TPP and past trade deals require careful study.

Have “Democratic voters” opinions about the same old trade policies that deliver more corporate power and fewer good American jobs really gotten rosier? Or, does that polling data reflect changes in the composition of who now considers themselves to be a Democrat?

Given polling shows that Independents’ views on trade closely mimic those of GOP voters, perhaps that bloc of working class voters that is a necessary component of a winning presidential coalition has maintained a steady view on trade. But witnessing President Obama enthusiastically push a slew of the same sort of trade deals they hate akin to those President Clinton enacted in the 1990s signaled that the Democratic Party no longer had a place for them and they accordingly no longer consider themselves Democrats.

This is worth considering in the context of the TPP effect on this election. The TPP did not elect Trump per se.

But with no small thanks to President Obama’s relentless, high-profile campaign throughout the primaries and general election to pass the pact, the TPP pact readily served as a potent symbol of business-as-usual in Washington and its facilitation of growing corporate power over every facet of our lives.

The TPP seems like something from an overwritten dystopian novel: It covers 40 percent of the global economy, yet it was negotiated in secret with hundreds of corporate advisors while the public was locked out. The TPP’s key provision grants new rights to thousands of multinational corporations to sue the U.S. government before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by America’s 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 a U.S. environmental law, financial regulation or pro-consumer court ruling violates the new rights that the TPP would grant them.

No doubt that Trump’s sweep of midwestern and southern states was accompanied by exit polls showing the power of his attack on our failed trade policy. Or that the Reuters/Ipsos election day poll found 72 percent agree “the American economy is rigged to advantage the rich and powerful,” while 68 percent agree that “traditional parties and politicians don’t care about people like me,” and 75 percent agree that “America needs a strong leader to take the country back from the rich and powerful.”

Consider the poll released last week by Greenberg, Quinlan and Rosner showing fully 68 percent of GOP voters (34 percent with intensity), and 60 percent of all voters would punish a member of Congress supporting the TPP in the lame-duck session. While this sentiment was strongest among Republicans, it spanned the political spectrum and included majorities of all segments of the “rising electorate,” millennials, minorities and unmarried women.

What happens next? At least as far as the TPP is considered, it’s the call of House Speaker Paul Ryan. In the coming days he must decide whether to bring the TPP to a vote in the lame-duck Congress.

Would Paul Ryan risk jeopardizing his hold on power in the House and remain a credible future presidential candidate if he pushes something overwhelmingly opposed by his party’s base voters? And more practically, with 16 GOP House members that voted to give President Obama Fast Track authority for the TPP in 2015 having mid-election conversions to TPP opposition and others who weathered the wrath of trade voters in this cycle worrying about the 2018 primaries, could he muster the votes? (House Democrats who opposed Fast Track have remained consistent in opposing the TPP, so passing the TPP would rely on the Republicans.)

Undoubtedly House GOP will note the electoral success of improbable GOP down-ticket converts to TPP opposition, such as former U.S. Trade Representative and now U.S. Sen. Rob Portman (R-Ohio), Sen. Pat Toomey (R-Pa.), and Sen. Richard Burr (R-N.C.) in contrast to the defeat of Rep. Joe Heck (R-Nev.) who supported Fast Track and refused to reveal his position on TPP (read: support) as his opponent, now the Senator-election, campaigned against it. (Also noteworthy: in this wave election, the only congressional Democrat who may lose is Rep. Brad Ashford (D-NE), one of few Democrats to vote in favor of fast tracking TPP approval.)

On the other hand, the Chamber of Commerce and the GOP donor class are clamoring for a TPP vote.

Stay tuned...

September 13, 2016

U.S. Agricultural Exports Lag under Past Trade Deals

Proponents of the Trans-Pacific Partnership – or TPP – have spent decades promising U.S. farmers and ranchers that free trade agreements are good for agriculture. Time and again, these promises have been broken. Since becoming the researcher at Public Citizen’s Global Trade Watch, I have been digging through the agriculture trade data. The case is quote compelling:  our past trade agreements have had a negative impact on U.S. agriculture. That is worth considering, because the TPP would double down on the past model.

Since 2008, U.S. food exports to free-trade partners have lagged behind U.S. food exports to the rest of the world. In fact, the volume of U.S. food exports to non-FTA countries rebounded quickly after the 2009 drop in global trade following the financial crisis. But U.S. food exports to FTA partners remained below the 2008 level until 2014. Even then, U.S. food exports to FTA partners were just 1 percent higher than in 2008, while U.S. food exports to the rest of the world stood 4 percent above the 2008 level.

Agpic Now let’s consider what to make of the recycled promises that the TPP will be a boon for U.S. farmers. The TPP itself was modeled on the U.S.-Korea free trade agreement that entered into force in April 2012. Before its passage, U.S. Agriculture Secretary Tom Vilsack declared: “we believe a ratified U.S. Free Trade Agreement [with Korea] will expand agricultural exports by what we believe to be $1.8 billion.”

In reality, exports to Korea of all U.S. agricultural products fell $1.4 billion, or 19 percent, from the year before the FTA took effect to its recently-completed fourth year of implementation. During that same period, total U.S. agricultural exports to the world only declined by 9 percent.

And there are many products that have experienced declining exports since the U.S. – Korea FTA.

  • Apples:S. apple exports to Korea have fallen 8 percent in the first four years of the Korea FTA.
  • Corn:S. corn exports to Korea have plummeted 57 percent during the Korea FTA’s first four years – a loss of more than 3.6 million metric tons of corn exports each year.
  • Poultry: S. poultry exports to Korea have dropped 35 percent during the first four years of the Korea FTA – a loss of more than 25,300 metric tons of poultry exports each year.
  • Wine: While FTA proponents have claimed wine as a winner under the Korea FTA, U.S. exports to Korea of wine have declined 6 percent under the Korea FTA’s first four years – a loss of nearly 239 metric kiloliters of wine exports each year.

Those hardest hit by rising agricultural imports and declining trade balances are the smaller-scale U.S. family farms. Since 1993, the year before NAFTA took effect, one out of every ten small U.S. farms has disappeared. By 2015, nearly 198,000 small U.S. farms had been lost.

In addition to this report, the Department of Agriculture’s conducted its own study and found that the TPP would increase U.S. growth by 0.00 percent if all tariffs on all products were eliminated, which did not occur. The U.S. International Trade Commission’s study found that nearly half of all U.S. agricultural sectors would experience worsening trade deficits under the TPP. And this study was conducted under many false assumptions, including the assumption that countries won’t manipulate their currency to gain a competitive edge in exports.

Government data undermine the claim that farmers and ranchers benefit under free trade agreements. To read more of our findings on what trade agreements have meant for U.S. agriculture, please click here.

 

September 08, 2016

New Interactive Map Shows TPP Would Expand Multinational Corporations’ Power to Attack U.S. Laws Using System That Hundreds of Law Professors, VP Candidate Kaine Cite as Reason to Oppose Pact

TPP Would Double Number of Corporations Empowered to Demand U.S. Taxpayer Compensation After Years of the U.S. Government Dodging Investor-State Challenges Because Current U.S. Treaties Cover Few Major Foreign Investors Here

A new Public Citizen interactive map shows how enactment of the Trans-Pacific Partnership (TPP) would dramatically expand U.S. exposure to multinational corporate demands for taxpayer compensation using the controversial “investor state dispute settlement” (ISDS) system.

Under existing treaties, relatively few foreign investors are empowered to use the ISDS regime against the United States, which is why the U.S. has come close to losing cases, but to date has not been ordered to pay compensation. Implementation of the TPP would double the U.S. exposure, an unprecedented increase in U.S. investor-state liability that recent Colombia Law School analyses will make it highly probable that the U.S. will lose future cases.

As the White House escalates its push for a vote on the TPP in the lame-duck session, an explosive four-part investigative exposé by Pulitzer Prize-winning journalist Chris Hamby revealed how Justice Department, State Department and other government lawyers, and even some of the inside players in the ISDS system, view it as a threat to the U.S. justice system. Earlier this week, hundreds of prominent pro-free trade law and economics professors called on Congress to oppose the TPP because it would greatly expand the extra-judicial tribunal system.

The ISDS system at the heart of the TPP would grant new rights to thousands of foreign corporations to sue the U.S. government before a secret panel of three corporate lawyers. These lawyers would be able to award the corporations unlimited sums to be paid by America’s taxpayers, including for the loss of expected future profits. These foreign corporations need only convince the lawyers that a U.S. law or safety regulation violates their TPP rights. Their decisions would not be subject to appeal, and the amount awarded would have no limit.

The interactive map, released today, shows additional multinational corporations located in every U.S. state that would be able to launch ISDS attacks against the United States if the TPP were implemented as well as if the Transatlantic Trade and Investment Partnership (TTIP) (now being negotiated with European countries) were completed with ISDS included. If one counts all corporations in all countries covered by all 50 existing U.S. investor-state pacts, 9,829 U.S. subsidiaries owned by 4,100 foreign corporations from those 50 nations can currently launch investor-state cases against the U.S. government. The TPP alone would double U.S. ISDS exposure, with the additional 10,085 U.S. subsidiaries owned by 3,682 additional corporations in TPP countries not now covered by U.S. ISDS pacts newly able to launch investor-state cases against the U.S. government. The TTIP would newly empower the more than 26,900 U.S. subsidiaries of more than 12,100 European Union parent corporations invested here. .

Under existing U.S. pacts, nearly $3 billion in taxpayer money has been paid to corporations by other countries for toxics bans, land-use rules, regulatory permits, and water and timber policies, among others. More than $70 billion is pending under U.S. treaties in corporate claims against medicine patent policies, pollution cleanup requirements, climate and energy laws, and other public interest polices.

While the Obama administration is pushing for the TPP and TTIP pacts, other countries have begun to withdraw from the system after facing billions in claims, including South Africa, India, Indonesia and other nations. After Germany was hit with two major ISDS claims against its decision to phase out nuclear power and its new coal-fired electric plants regulations, the government notified the EU that it could not accept a TTIP pact that expanded the existing ISDS regime.

As White House Spotlights Conflict With Democratic Presidential and Congressional Candidates by Escalating Toward TPP Lame-Duck Vote, Sen. Warren and Hundreds of Academics Urge Rejection

Audio recording and transcription of press call with Senator Warren and prominent academics can be found here.

Economic and Legal Scholars Cite Multinational Corporate Rights to Unlimited Taxpayer Funds Via ISDS Tribunal System Named by VP Candidate Kaine as Basis for His Opposition

The investor-state dispute settlement (ISDS) regime at the heart of the Trans-Pacific Partnership (TPP) that would newly empower thousands of multinational corporations to challenge U.S. policies before panels of three private lawyers to demand taxpayer compensation is the target of a letter sent to Congress today by leading pro-free trade U.S. economics and law professors calling on Congress to reject the TPP.

The White House has escalated its efforts to pass the TPP in the lame-duck session, with Cabinet secretaries who are promoting the TPP crossing paths with Democratic presidential and congressional candidates campaigning against the TPP.  

Last year, several dozen legal scholars joined congressional Democrats in raising concerns about the ISDS regime and demanding that a final TPP deal exclude the parallel legal system for multinational corporations. President Barack Obama scorned the critics, declaring they were  “making this stuff up.” Today’s letter, signed by more than 200 prominent academics, including Obama’s Harvard Law School mentor Professor Larry Tribe, warns that the ISDS regime threatens the rule of law and undermines our nation’s democratic institutions. The academics call on Congress to reject the pact because the final deal would greatly expand the ISDS regime.

U.S. Sen. Elizabeth Warren (D-Mass.) praised the letter: “Today’s letter from top legal experts makes clear: ISDS undermines the American judicial system and tilts the playing field further in favor of big multinational corporations,” Warren said. “This provision empowers companies to challenge laws and regulations they don’t like, with friendly corporate lawyers instead of judges deciding their disputes. Congress should not approve a TPP agreement that includes ISDS.”

Tribe, Nobel laureate Joseph Stiglitz, former California Supreme Court Justice Cruz Reynoso, and Columbia University Professor and UN Senior Adviser Jeffrey Sachs are among the signers, many of whom have supported past U.S. trade agreements. The letter spotlights the danger of the ISDS provisions, which was the same reason Democratic vice presidential nominee Tim Kaine cited for opposing the final TPP deal.

The U.S. has dodged ISDS liability to date because past treaties have covered only a limited number of foreign investors operating here. Research conducted by Public Citizen shows that the TPP, which includes Japan, Australia and other nations with more than 9,000 corporate subsidiaries in the United States, would double U.S. ISDS exposure. Nearly $3 billion in ISDS awards has been paid to corporations under U.S. treaties alone and claims worth more than $70 billion are pending.

Recent investigative reports by a Pulitzer-Prize-winning journalist and a new Columbia Global Reports book reveal how critics have understated the threats posed by the ISDS regime, which – if the TPP is approved – would empower thousands more multinational corporations to challenge U.S. federal, state and local laws, court decisions and government actions before panels of three private lawyers. Under ISDS, the panel of lawyers can award the companies unlimited taxpayer money, including for loss of expected future profits. The decisions cannot be appealed.

“In recent years, corporations have challenged a wide range of environmental, health and safety regulations, fiscal policies, bans on toxins, denials of permits including for toxic waste dumps, moratoria on extraction of natural resources, measures taken in response to financial crises, court decisions on issues ranging from the scope of intellectual property rights to the resolution of bankruptcy claims, policy decisions on privatizations of prisons and health care, and efforts to combat tax evasion, among others,” the letter notes.

The experts lament that despite the Obama administration’s claims to have addressed growing concerns about the ISDS system, “the final TPP text simply replicates nearly word-for-word many of the problematic provisions from past agreements, and indeed would vastly expand the U.S. government’s potential liability under the ISDS system.” They fear that the expansion of ISDS in the TPP and in ongoing negotiations with Europe “threatens to dilute constitutional protections, weaken the judicial branch and outsource our domestic legal system to a system of private arbitration that is isolated from essential checks and balances.”

This letter adds to a rising chorus of opposition to ISDS from prominent members of Congress such as Warren; the National Conference of State Legislatures; pro-free trade think tanks such as the Cato Institute; and hundreds of labor, environmental, consumer and faith organizations.

View the letter and list of signers.

What the signers are saying:

Jeffrey Sachs, professor of economics, Columbia University:

“We need trade agreements that protect worker rights and the environment. ISDS gravely threatens environmental protection and worker rights, and the rule of law more generally, as evidenced by the current lawsuit by TransCanada suing the U.S. government for $15 billion over the cancellation of the climate-wrecking Keystone XL Pipeline.” 

Jeffrey Sachs: lsachs1@law.columbia.edu


Cruz Reynoso, former California Supreme Court Justice and professor of law emeritus, University of California, Davis:

 “The right of foreign corporations and investors to challenge U.S. policies which allegedly violate investor rights is a frontal attack on our judicial system.”

Cruz Reynoso: creynoso@ucdavis.edu

 

Alan Morrison, associate dean, George Washington Law School:

“The United States Constitution simply does not allow Congress to assign the duty to assess the legality under the TPP of federal and state laws to the unreviewable discretion of three private individuals, instead of to our federal court system with full-time and unconflicted judges.”

Alan Morrison: abmorrison@law.gwu.edu

 

Lisa Sachs, professor of law, director of Columbia Center on Sustainable Investment:

“A multilateral agreement presents an opportunity to promote the rule of law, strengthen domestic judicial systems and ensure the rights of all, including the most vulnerable, are equally advanced. ISDS in its current form undermines each of those objectives. The whole system needs a rethink to better balance all stakeholders' interests and rights.”

Lisa Sachs: lsachs1@law.columbia.edu

 

Kevin Gallagher, professor of economics, Boston University:

“ISDS accentuates the regulatory risks that characterize the latest trade and investment pacts by granting foreign investors far greater rights over national democratic decision-making. Putting governments and their citizens back in charge of settling disputes is the first step toward the comprehensive reform that is needed.”   

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