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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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December 30, 2007

Useful summary of Democratic candidates' positions on trade

Not to steal Holly's Trade on the Trail thunder, but the folks at the Iowa Fair Trade Campaign have put together a very useful document listing out six Democratic candidates' responses to an IFTC questionnaire on trade and globalization policy. (Apparently the only reason no Republican candidates are included is because, interestingly, none of them responded to the questionnaire.) You can see the information they've collected in various forms here.

(Disclosure: Global Trade Watch has no preference among the candidates.)

December 27, 2007

NAFTA and WTO: job killer, or slave overseer?

Anyone who has spent time in social or political movements knows that language and slogans are often painfully fought out in overcaffeinated and excruciatingly long meetings in poorly lit rooms. When I was active in the sweatshop movement in the late 1990s / pre-9-11 2000s, the topic of discussions was whether our movement was "anti-globalization," "anti-corporate globalization," anti-Global Apartheid, "pro-people's globalization," or all or none of the above.

Immediately after 9-11, there were the long meetings about how and whether we should rhetorically connect the imminent war/invasion to the IMF/World Bank protests supposed to be happening in late September, 2001. And of course there is constant hand-wringing about the terms "free trade" and "fair trade," and what if anything any of these terms mean.

Such convos aren't really my cup of tea. If you like any of these titles, peg 'em on. But in doing the research on our most recent toy report, I got a bit of a labeling bug too, this time around whether we should call NAFTA or WTO a "job-killing" agreement:

The shift of U.S. toy production to China has been a long time in the making. 1972 was the first year that America imported Chinese toys, following President Nixon’s visit to the country.  China was first granted normal trade relations status in 1981, meaning it faced lower tariffs than a communist country would otherwise face. This status was renewed every year through 2001. By 1986, China was actively liberalizing its economy and lobbying for membership in what would become the WTO, and was rapidly expanding its U.S. toy exports. By 1991, China had overtaken Japan as the number one U.S. source of foreign-made toys. Throughout the 1990s, the Clinton administration passed nearly a dozen trade agreements with China,  which continued to edge out other countries for U.S. toy market share. By the end of the decade, China accounted for a majority of toys sold in the United States.  When Congress approved China’s WTO membership in 2000, Chinese-produced toys already accounted for nearly 57 percent of U.S. toy purchases – a figure that has increased to 74 percent (nearly $15 billion) since that time.

These facts illustrate a point we try to make regularly on this blog, that many of the industrial impacts in terms of jobs occurred as tariffs were lowered (in the GATT or preference programs for poor countries) prior to NAFTA and the WTO. So when movement folks say that NAFTA is a "job-killing agreement," they:

  • are saying in a roundabout way that the U.S. trade deficit continued to increase after NAFTA, and with NAFTA countries in particular. With trade policy that either mandated balanced trade (s/t that is NAFTA and WTO-illegal) or under trade that automatically balanced due to exogenous factors, there would have been jobs in tradable sectors here that aren't here now; or
  • NAFTA's (essentially) permanent reductions in tariffs and investor rights incentivized companies that wouldn't have done so otherwise to relocate production overseas, thus reducing jobs in tradable sectors that might have been here otherwise.

When most people say NAFTA is a job-killing agreement, they do NOT mean that the total number of jobs in the US somehow declined (unemployment has been fairly constant, except during the late 1990s thanks not to trade policy but to Alan Greenspan). They are making a point about jobs in TRADABLE sectors (ie. primarily manufacturing), and linking either in a macro sense to the deficit, or in a micro sense in terms of the incentives affecting individual business decisions. Indisputably, there are fewer union jobs and fewer manufacturing jobs than there used to be, and we've been in a trade imbalance scenario, so somehow that has to be explained.

So why do corporations even fight for these trade policies, if they had already offshored so much of their production prior to NAFTA and the WTO? I think the short answer is that it's an unholy alliance between a few exporters (think Caterpillar and agri-business), with a lot of industries that have already offshored production (think toys, apparel) and want to lock in duty-free access for their products coming back into the U.S. market, and with the whole of the multinational corporate lobby (esp. the services and pharmaceutical sector, but also the above) who want some insurance against progressive political change. There's no quicker way to get backdoor, international deregulation at the state, local and national levels of government than pushing these deals.

So perhaps a more apt metaphor for NAFTA rather than "job-killer" is "slave overseer" or "prison guard." The new neoliberal world order begun in the 1970s has prejudiced people both in the U.S. and abroad, and agreements like NAFTA and WTO from the 1990s and today merely serve as an enforcement apparatus to lock in and maintain this state of affairs.

The problem remains that people would probably rather see themselves as dignified workers losing a job rather than as prisoners or slaves. So, I'm taking suggestions - best metaphor wins!

December 26, 2007

New England states call for a new direction on trade

Maine, New Hampshire and Vermont have already been active in demanding a new direction on trade (see here, here and here) and are now banding together to call for better federal consultation with states on trade issues. In a meeting in Portsmouth, the three states' commissions on international trade met to discuss how these "trade" agreement undermine state regulatory authority.

State Senator Jackie Cilley (D-N.H.) explained to the Sun Journal:

"Whether its managing groundwater permits, regulating unsafe toys or using our tax dollars to buy products made in the state, international trade rules can make it harder for us to represent our constituents."

State Senator Virginia Lyons (D-VT) echoes these concerns:

"Free trade agreements are to state sovereignty and economic development what global climate change is to the environment and natural resources. I think it's a really significant issue for our state, and for every state in the country."

As the article points out, many state legislators have been concerned about this issue and the National Conference of State Legislatures passed a new policy position on "Free Trade" and Federalism in August, reflecting the need for reformed trade policies and more consultation with states on trade agreements.

December 21, 2007

WTO Announces Antigua Gambling Case Settlement

The WTO settlement was announced today - Antigua gets to "cross-retaliate" by ignoring copyrights on U.S. music and films, up to $21 million a year.  Read our press release for more info, and IELP blog has a host of other reactions.

Okay, on the one hand, this is some genius political economy at work. That Antigua demanded the ability to break protectionist U.S. patents pokes holes in some of the barriers to free trade that the WTO helps enforce but which are rarely discussed in the press.
 
On the other hand, the final sum amount is only one indicator of what is at stake -- the various rulings by the WTO bodies over the years have given us a preview of how the WTO could rule on future challenges of this nature. And what this case shows is that the WTO has enormous overreach into the domestic policy space of its members, and it makes any "commitments" that member countries make to the WTO extremely costly to reverse.

The practical implications of this is truly frightening when we consider some of the urgent crises we are attempting to deal with (health care and global warming, to take a couple of examples) and the various policy options we may want to consider. There have been all too many rumblings already about how energy policies to combat global warming could be "WTO-illegal." 
 
Those who think U.S. gambling policies are in fact discriminatory shouldn't base it on the WTO saying it's so. Unfortunately, domestic policies treating domestic and foreign firms the same can still be considered a violation of trade rules because that is exactly what the "national treatment" rule under the WTO's General Agreement on Trade in Services (GATS) mandates: "Formally identical or formally different treatment shall be considered to be less favourable if it modifies the conditions of competition..."  Essentially, equitable treatment is NOT sufficient to meet the standard of "non-discriminatory" treatment, and any policy perceived to exclude foreign companies from a GATS-committed service sector can be challenged.
 
The WTO GATS was and continues to be a controversial agreement precisely because of its restrictive rules that favor corporations over safeguarding domestic policy space. The Antigua case points to a bigger problem than the $21 million gamble we lost today.

December 20, 2007

Import toy safety - where's Congress?

The Democrats rode back to power last November thanks to fairly unified opposition to more NAFTA style agreements. Then, this year, with the imported toy safety crisis, there's been increased calls for overhauling of our 1970s toy safety regulatory policy, premised on a reality when most toys where made domestically.

We already know how a slim minority of the House Dems and a frightening majority of the Senate Dems caved on the first issue, by helping pass Bush's NAFTA expansion to Peru. Of those running for president, only Kucinich and Paul managed to vote right, while everyone else - including Biden, Dodd, Clinton, Hunter, McCain, and Obama - didn't manage to even show up to vote. (Additionally, Tancredo voted wrong.)

Now, it seems they're poised to cave on the second as well. Last night, just a couple of minutes before close of business, the House passed 407-0 a Consumer Product Safety Commission bill that does practically nothing on import safety. (If you want to see what "something" looks like, and why the Wall Street Journal gave us some luv and called us " a hard-liner among consumer groups",  see the recommendations at the end of our latest report and after the jump.)

As far as I know, Rep. Jan Schakowsky (D-Ill) was the only member to even acknowledge the shortcoming:

"I hope we can make this bill even stronger. Even with added resources authorized from the bill, a major improvement from the levels requested by President Bush, we could do better, particularly when it comes to monitoring imports. I support measures to add mandatory premarketing testing and other important things."

Now, the bill goes on to the Senate, where there's slightly stronger but still inadequate bill that has been reported out of the Senate Commerce Committee. As The Hill reported,

Industry lobbyists favored the House version, which some consumer groups said didn’t go far enough to protect consumers...

According to a report released Wednesday by the consumer group Public Citizen, however, neither the House measure nor the tougher Senate version will address one of the main culprits in the wave of toy recalls this year: trade policies that have driven domestic toy manufacturers to move their operations overseas.

'Nuff said. Another case unfortunately of siding with industry over meaningful solutions to the problems facing middle class Americans. (see our full recommendations after the jump.)

Not everyone is as shortsighted, however. As Sen. Bob Casey (D-Pa.) said at today's Pa. news conference on our report,

Sen. Casey is backing a bill in the U.S. Senate that would reform the Consumer Product Safety Commission. However he admits that is only part of the problem. He says changes need to be made when it comes to America’s trade policies because from steel to chocolate, Pennsylvania has been hit hard by companies moving overseas.

 (Disclosure: Global Trade Watch has no preference among the candidates.)

Continue reading "Import toy safety - where's Congress?" »

December 19, 2007

Obama steps up to the plate on fair trade

There's been a flurry of news on toy safety today following our report from yesterday.

The Progressive Magazine asks "will the candidates shut down" Santa's sweatshops?" and puts pressure on some of the candidates for their vote on China PNTR.

Sen. Barack Obama (D-Ill.) responded in a major way, stepping up his fair trade credentials:

Obama said on Wednesday he would ban all toys made in China after a series of safety scares, and he called for tougher U.S. inspections of Chinese imports.

"I would stop the import of all toys from China. Now, I have to say that that's about 80 percent of toys that are being imported right now," the Illinois senator told voters in New Hampshire, which helps kick off the 2008 White House race...

"We have just a handful of people who are inspecting all the toys that are flooding into the country," he said. "The big toy makers now manufacture in China and import here and they have put pressure to resist a strong regulatory system."
Sen. Sherrod Brown (D-Ohio) also held forth on his views on the issue:

Sen. Sherrod Brown, an Ohio Democrat, said toy manufacturers have irresponsibly pushed hard for foreign subcontractors to cut costs.

"We know these products are made in conditions and under an economic regime where there is no emphasis on toy safety," said Brown, who supported the findings of Public Citizen. "It's no surprise they make dangerous toys."...

Brown said "failed trade policy" encouraged U.S. toy companies to move much of their manufacturing overseas to areas with less reliable safety standards.

The World Trade Organization and the North American Free Trade Agreements have provisions in them that provide foreign investor protections and limit product safety standards and inspections, the report said.

"These agreements prioritize ensuring a favorable investment climate for U.S. firms seeking to relocate production overseas to take advantage of sweatshop wages, weak regulatory systems, and cheap product inputs over the concern of most Americans," Public Citizen said in the report.

Brown said the United States can make toys safer by changing its approach in trade negotiations and giving fewer incentives to offshore production.

(Disclosure: Global Trade Watch has no preference among the candidates.)

New report: Santa's Sweatshops were made in DC

No, not "Banned in DC," "Made in DC."

Just in time for the holidays, we've released a new report: "Santa's Sweatshop: Made in DC With Bad Trade Policy," which looks at the root causes of the current imported toy safety scare. It's complementary to some of the other reports released this year, some of which go into detail about specific bad products. Ours is a little different in that it goes further back in time to look at the making of the current safety crisis, and also how trade agreements like the WTO, NAFTA, and NAFTA expansions to Peru and elsewhere, actually limit what kinds of domestic safety policies we can have.

There will be releases and events around the country today and tomorrow, including Oregon, Pennsylvania, Wisconsin, Minnesota, Ohio and Texas.

Here's a teaser from our press release:

PUBLIC CITIZEN PRESS RELEASE
For Immediate Release
Dec. 19, 2007                                  

New Report, ‘Santa’s Sweatshop: Made in D.C. with Bad Trade Policy,’ Documents Root Causes of Imported Toy Crisis

Report Provides New Data, Analysis Showing How U.S. Toy Corporations’ Push to Send Production Offshore Boosted Profits at Price of Children’s Safety

WASHINGTON, D.C. - Although China and inadequate U.S. safety systems are often blamed, U.S. toy corporations’ decisions to shift production to countries without adequate safety systems - and trade policies companies pushed through Congress that limit import safety standards and inspection - are the root causes of the imported toy safety crisis, according to a report released today by Public Citizen. Improving toy safety will require changes to trade policy as well as U.S. product safety policies, the report concludes.

“Our children’s safety has been the price for soaring profits and CEO pay of major U.S. toy companies that have chosen to relocate their production to venues in which they cannot ensure the safety of their products,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division, which produced the report. “The main villains in this unhappy holiday story are the CEOs of major U.S. toy and retail companies who spent millions lobbying to lock in race-to-the-bottom offshore production strategies with trade agreements that protect their overseas investments while limiting import safety and inspection.”

Read the rest of the press release here; and the report here. Also, read more here about the current legislation in Congress on product safety, and how it's inadequate for addressing the imported toy safety crisis.

December 17, 2007

Christmastime for corporations (in Germany, err, here)

Just in case you were worried that the corporate masters weren't getting enough of a Christmas this year, what with record CEO pay and booming inequality, never fear. It looks like they may get to gobble up U.S. Postal System, liquiefied natural gas terminals, Mexican peasants, the right to avoid obeying the law overseas, and right to not give back to the community. Let's quickly review:

The Bush administration is on the cusp of formally revealing what they're going to give the European Union to "compensate" for their Internet gambling providers not being able to sell in the U.S. market. As we detail in our release here,

To compensate Europe for the removal of the U.S. gambling sector from WTO jurisdiction, the Bush administration reportedly proposes to bind U.S. storage and warehousing, and postal and delivery to WTO jurisdiction, among other service sectors. Compensation talks have been conducted behind closed doors without input from congressional committees whose jurisdiction would be compromised by the proposal.

What this could mean in practice is that there would be additional pressures to privatize and deregulate not only our postal service, but also our safety policy around dangerous LNG terminals. Oh, yeah, and this is just for the right to maintain a gambling policy that corporations don't like - a policy that treats foreign and domestic gambling firms THE SAME.

Exhibit Two takes us to Mexico, where corporations have reportedly used NAFTA's investor-state system to beat back the Mexican government's right to have a sugar policy for its small peasant producers, rather than allow U.S. high fructose corn syrup exporters and users (the soft drink companies) to run roughshod over a rare policy that keeps Mexicans employed in Mexico. Now, Mexican taxpayers will be ordered by a secretive World Bank court to pay what will probably be tens of millions of dollars to companies like Archer Daniels Midland.

As we wrote about the case back in 2005, Mexico's regulations of HFCS, which it will now be forced to compensate ADM for, were one of the few ways that governments could take active steps to keep farmers on both sides of the border from being squeezed by huge agribusiness corporations. It turns out that's it's inconsistent with NAFTA to help society's most vulnerable.

The final stop is north of the border, in Canada, where U.S. oil companies are using NAFTA to get around having to give back to the community where they are drilling by spending some research and development dollars there. This parallels Big Oil's efforts to  avoid having to pay taxes in Ecuador, where it is using a NAFTA-style tribunal under the U.S.-Ecuador Bilateral Investment treaty to not only not pay, but try to get out of being arrested for not paying. Luke Eric Peterson has the skinny on the Mexico, Canada, and Ecuador cases right here.

And in our ongoing Trade Musical Hits, here's Rage Against the Machine's "Testify," directed by Michael Moore.

December 13, 2007

Your secret's out

As Alan Greenspan wrote in yesterday's WSJ:

The surge in competitive, low-priced exports from developing countries, especially those to Europe and the U.S., flattened labor compensation in developed countries, and reduced the rate of inflation expectations throughout the world, including those inflation expectations embedded in global long-term interest rates.

As we will document in a report next week, the U.S. toy and retail industry, after offshoring all their production, consistently used the threat of higher inflation to further lock in their privileges. This is total bunk, of course, since CEOs have mostly pocketed the difference from their overseas labor arbitrage: the average toy and industry retail CEO makes over 19,000 times what their Chinese workers make.

Here's the chain of events: U.S. corporations pushed for less accountability: they got it when Congress yielded its constitutional responsibility to set the terms of U.S. trade policy by passing the Nixon-hatched Fast Track in 1973-74,  and then in later years gutted the funding for consumer regulatory bodies like the CPSC. Corporations pushed for greater ease in offshoring their production to countries with low wages and weak regulation: they got it when successive U.S. administrations and sessions of Congress signed off on a series of harmful trade policies under Fast Track. At the same time, corporations wanted to lock in their offshoring strategy’s profitability and insure against democratic accountability in the future: they got this too when Congress signed off on the expansive investment, trade and safety deregulation rules of agreements such as NAFTA and the WTO which authorize challenges in foreign tribunals of domestic safety policies that could limit imports.

Just in case this expansive strategic sense of Corporate "America" is getting you down, it also shows that our work to frustruate their efforts and advance our own interests can be similarly strategic. They've got a lot of pans on the fire: can we take over one of them? That's the spirit of this next song: Fugazi's "Oh":

number one in acquisitions
now there is no foreign soil
go global like a round thing
go global like a hole
to every money matchmaker
splicing green as fast as you can
let's break it down and start again...

you would never say you were out of time
coming with the fiction all the time
but there's a call coming on the other line
your secret's out

December 08, 2007

Trade on the Trail, XI

This week, here goes:

From Reuters (you can also see the Financial Times article here and the full transcript of Clinton on Doha here),

Democratic presidential front-runner Hillary Clinton would question whether it was worth reviving the stalled Doha round of trade talks if she were elected, the Financial Times reported on Monday.

In a front-page article based on an interview with Clinton, the newspaper said Clinton believed that theories underpinning free trade might no longer hold true in an era of globalisation.

"I want to have a more comprehensive and thoughtful trade policy for the 21st century. There is nothing protectionist about this. It is a responsible course," she was quoted as saying.

And then Peter Mandelson, EU trade commissioner, took a shot at Clinton:

The apparent scepticism about a Doha world trade deal that Mrs. Clinton expressed in the Financial Times this week, and her suggestion that there is a need to shelpter American companies and interests from foreign investment, are a disappointing sign of the times.

And then this happened, as reported in BNA (sorry, not linkable):

Rep. Barney Frank (D-Mass.), who chairs the House Financial Services Committee, Dec. 6 accused European Trade Commissioner Peter Mandelson of interfering in the U.S. presidential election by attacking Sen. Hillary Clinton (D-N.Y.) over her views on trade, calling it a "graphic example" of why Mandelson will not be able to succeed in helping to bring the Doha Round of World Trade Organization negotiations to a successful conclusion.

And from the Iowa National Public Radio debate:

Barack Obama said,

I have said consistently since the beginning of this campaign that it is important for the president to lead diplomatic efforts, to try to offer to Iran the prospect of joining the World Trade Organization, potential normalized relations over time, in exchange for changes in behavior. That's something that has to be pursued.

And then this,

We have to be tougher negotiators with China. They are not enemies, but they are competitors of ours. And on the economic front, on trade issues, on issues in importation, we have not been the best negotiators, and oftentimes we're negotiating on behalf of — on behalf of Wall Street, as opposed to on behalf of Main Street.

And then Biden said about China,

With the WTO guidelines, we could stop these products coming in now. This president doesn't act. We have much more leverage on China than they have on us.

Let's get something straight here. We're making them into 10 feet tall. It took them 30 years to get 20 percent of their population out of poverty. They've got 800 million people in poverty. They're in real distress.

The idea that a country with 800 million people in poverty has greater leverage over us is preposterous. What it is: We've yielded to corporate America. We've yielded to this president's notion of what constitutes trade, and we've refused to enforce the laws that exist.

As president, I would end — flat, bang, no importation of those toys. Why? Under WTO, you're allowed to do it until you send inspectors to guarantee. Why aren't they doing it? Corporate America doesn't want —                                                              

"But tariffs, Sen. Biden?" asks the moderator...      

BIDEN: No, I'm not willing to go there. You don't need to start a tariff war. All you have to do is enforce the law. Enforce the law.

And Sen. Edwards said when asked about country of origin labelling laws,

The starting place is to actually enforce the laws that exist here in the United States and their obligation to the WTO, neither of which are being done. They're not being done because corporate America drives so much of what happens in Washington, whether it's trade policy that costs Americans millions of jobs — NAFTA, CAFTA, et cetera; whether it is these dangerous Chinese toys coming into the United States of America; whether it is country-of-origin labeling. Why is the president of the United States not saying to the American people, to local communities, "Buy local"? It is good for the local economy. It is good for farmers. It is good on the issue of global warming. Because everything that comes from China carries an enormous carbon footprint with it.

And that's it for this week's exciting trade news...oh, except keep your eye on the special U.S. House election this week, Dec. 11th in Ohio - Latta (R) vs. Weirauch. Lots of trade talk happening in OH-5 (check out today's Toledo Blade story on the race).

(Disclosure: Global Trade Watch has no preference among the candidates.)

December 07, 2007

Your civil rights are a barrier to trade

As we've written about for a long time, "trade" rules are increasingly limiting how our own taxpayer dollars can be spent, namely by banning or rolling back Buy America, green procurement, and human rights conditionality in competing for state, local and federal government contracts - the use of which is one of the very few ways that our elected officials can directly create jobs, and shape the morality of the marketplace.

In a rare sign of morality (or at least political savvy) from the corporate class that drafts these agreements, they've generally excluded minority preferences and set-asides from coverage from trade pact rules.

But this may be ending. According to Luke Peterson's Investment Treaty News, the best source of information on investor-state proceedings anywhere, a group of European mining companies is suing South Africa under a bilateral investment treaty between their respective countries. Their gripe? Having to hire black South Africans.

The investors posit ... that a series of obligations imposed upon mining companies, including hiring "historically disadvantaged South Africans", violates treaty undertakings by South Africa to provide fair and equitable treatment to foreign investors...

According to Mr. Leon [the corporations' lawyers], the key tenets of the new mining regime, including the Black Economic Empowerment requirements, "potentially conflict with South Africa's international law obligations".

Mr. Leon opined that bilateral investment treaties should afford foreign investors higher levels of financial compensation than would be available under South Africa's Constitution. He added that by signing and ratifying a series of bilateral investment treaties, South Africa "has, in effect, outsourced the adjudication of key elements of its public policy to foreign arbitral tribunals".

The "fair and equitable treatment" standard referred to by Luke, also known as the "minimum standard of treatment", is why corporations are pushing hard not only for bilateral investment treaties like the one between South Africa and the European countries, but also "innovating" on this practice by inserting them directly into "free trade agreements", as we do only here in America through NAFTA-style trade policy.

What does the standard mean? As Matthew Porterfield explains in this law journal article,it basically says that foreign investors (and any corporation that can claim "foreigness" by playing games with their corporate structure... think Halliburton's relocation to Dubai, folks) can be required to be treated more favorably than that allowed for under domestic law.

This obviously wreaks havoc on any progressive reform or legislative efforts here or anywhere in the world. If corporations can bypass the domestic political / democratic process and use foreign trade tribunals to define how they have to be treated anywhere in the world (regardless of domestic civil rights, environmental, or labor law), then the end is very nigh.

Continue reading "Your civil rights are a barrier to trade" »

December 05, 2007

The Peru FTA Morning After

Yesterday, the Peru FTA was given final approval, despite opposition from seven out of nine freshman Democrats in the Senate and a majority of Democrats in the House.

Here's what a few members of the MSM had to say about it:

Richard Simon at the Los Angeles Times:

Congress gave final approval to a free-trade pact with Peru on Tuesday, handing President Bush his first victory on trade since Democrats gained the majority a year ago.

Although the Senate overwhelmingly approved the agreement, the White House faces tougher battles on the rest of its trade agenda heading into an election year in which globalization's effect on American jobs, the trade deficit and product safety are expected to be hot campaign issues.

Martin Vaughan at Congress Daily (sorry, not linkable):

But seven Senate freshmen opposed the pact, in keeping with the call from freshman Democrats for a more radical departure from the type of trade-opening agreements negotiated during the Bush administration.

From Steven Weisman at the New York Times:

As it had in the House, the Peru deal exposed a rift among Democrats, with 29 Senate Democrats voting yes and 17 voting no. In the House, where the vote last month was 285 to 132, 109 Democrats were in favor and 116 opposed.

From Renuka Rayasam at Fortune Small Business:

Opponents of the Bush administration's trade agenda argue that such stories reflect only a fraction of the U.S. economy. In an October statement opposing the Peru deal, presidential candidate John Edwards argued that while the agreement might help a few U.S. exporters, it would also weaken food safety protections and give U.S. firms more incentive to move jobs abroad.

Congressional Democrats who voted against the Peru deal voiced similar concerns. Increasingly vocal resistance to free trade may make it harder for the Bush administration to win congressional approval for trade deals that it has already negotiated with Panama, Colombia and South Korea.

Ian Swanson at The Hill:

Trade has been a hot-button issue on the campaign trail among Democrats, with several candidates suggesting free-trade policies would slow or come to a halt if they occupied the Oval Office. Edwards has taken the toughest line, and he criticized Obama in November for offering support for the deal. At the time, Edwards also criticized Clinton for not taking a position on the deal. She later came out in favor of the agreement.

Clinton has taken a different stance on the issue from her husband, who as president loudly advocated free trade. She has called for a “time out” in trade negotiations, and in a weekend interview with the Financial Times, she suggested multilateral trade deals, including the ongoing Doha round of World Trade Organization (WTO) talks, might need to be rethought. Clinton has also talked about a review of the North American Free Trade Agreement (NAFTA), which Peru opponents said was effectively being extended through the Peru deal.

Finally, John Nichols of The Nation blasted the five presidential candidates for not even showing up to vote:

When the Senate voted Tuesday of the Peru Trade Agreement, a critical test of U.S. economic policy that raised fundamental questions with regard to how this country will frame its economic ties to hemispheric neighbors, the five senators who would be president were the only members of the chamber who missed the vote.

If we are to trust their statements with regard to the issue: Biden and Dodd would have voted against the Peru deal, while Obama and Clinton would have supported it.

But senators who don't bother to show up get the out of being able to rewrite history – including their own statements. And that appears to be more important to Clinton, Obama and their fellow senator-candidates than doing the job to which they were elected.

December 04, 2007

Senate Dems join GOP to approve another NAFTA expansion

This is our statement:
Dec. 4, 2007

In Peru Trade Vote, Senate Democrats Break With Base, Dismiss Widespread Public Opposition to More-of-the-Same Trade Policy and Join GOP to Vote for Another Bush NAFTA Expansion Pushed by Corporations

Seven of Nine Senate Freshmen Democrats Oppose Expanding NAFTA to Peru

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

Although not one U.S. labor, environmental, Latino, consumer, faith or family farm group supported the Peru free trade agreement (FTA), a majority of Senate Democrats today broke with their base, dismissed widespread public opposition to more-of-the-same trade policy and joined Republicans to deliver another Bush NAFTA expansion to the large corporations pushing this deal.

The debate in the Senate contrasts with that in the House of Representatives last month. There was little focus on the Peru NAFTA expansion deal in the Senate, but in the House an intense, multi-month debate resulted in a majority of House Democrats, including 12 of 18 House committee chairs, voting against the Peru pact and signaling that it is not an acceptable model for future trade agreements.

The breakdown of this vote vividly demonstrates two phenomena: the distance between most senators and the American public on trade issues, and the depth of the American public’s negative opinion about NAFTA-style trade deals. All but two of nine Democratic freshmen senators who recently campaigned extensively in their states opposed the Peru NAFTA expansion today. Most of the Democratic presidential candidates oppose it, including Sens. Joseph Biden of Delaware and Chris Dodd of Connecticut.

In contrast to most of the Democratic presidential candidates who oppose the Peru NAFTA expansion, Sens. Hillary Clinton of New York and Barack Obama of Illinois support it. Clinton and Obama’s support for the Peru FTA – after both opposed the 2005 Central American Free Trade Agreement (CAFTA), which contained identical provisions and now campaign against NAFTA in Iowa, should make voters wonder just what sort of trade policy Clinton and Obama really support. None of the senators running for president voted today, although all four have issued public statements taking positions on the Peru pact.

Clinton’s support for the Peru FTA suggests that her recent call for “a time-out” on trade agreements apparently begins only after she votes for one more NAFTA-style agreement. The fact that Obama was the first Democratic presidential candidate to announce his support for the Peru NAFTA expansion two months ago makes his recent attacks on Clinton regarding NAFTA bizarre.

Neither Clinton nor Obama has made clear which of the objectionable NAFTA foreign investor privileges – imported food safety limits, service sector privatization and deregulation, “Buy America” bans and other provisions – would be eliminated in potential Clinton or Obama-negotiated agreements. Voters across the country who have suffered the real-life damage from NAFTA deserve to know how all this anti-NAFTA talk from Clinton and Obama would translate if either were elected president.

In key early primary states, Sen. Tom Harkin (D-Iowa) and both Iowa freshmen Democratic House members opposed the Peru NAFTA expansion, as did both New Hampshire Democratic House members.

That the Senate passed a NAFTA-style trade agreement by a wide margin is not unexpected, as even the highly controversial NAFTA had 61 in favor, including 27 Democrats, in 1994. The Morocco and Bahrain FTAs were passed by voice vote in 2004; 80 senators voted for the Australia FTA also in 2004; 83 voted for China permanent normal trade relations in 2000; the Singapore FTA in 2000 obtained 66 votes; and the Chile FTA got 65. In 2005, CAFTA, which obtained no votes from numerous prospective Democratic presidential candidates who had never before opposed a pact, was the closest Senate trade vote ever at 54-45.

The passage of the Peru FTA, which was overwhelmingly opposed in the United States and Peru, is bad foreign policy, bad domestic policy and egregiously bad politics. Both of Peru’s labor federations, its major indigenous people’s organization and its archbishop called on the U.S. Congress to oppose the deal based on the damage it is projected to cause Peru’s small farmers and environment.

The Peru NAFTA expansion replicates many of the CAFTA provisions that led most Democratic senators to oppose that pact. This includes: foreign investor privileges that create incentives for U.S. firms to move offshore and expose basic environmental, health, zoning and other laws to attack in foreign tribunals; bans on “Buy America” and anti-offshoring policies; limits on food import safety standards and inspection rates; and NAFTA-style agriculture rules that are projected to displace tens of thousands of Peru’s Andean farmers and thus increase coca production and immigration. The pact also contains terms that could subject Peru to compensation claims for reversing its unpopular Social Security privatization, the same system Democrats fought against at home.

Repeated polling shows that the American public, both Democrats and Republicans, have negative feelings about current U.S. trade policies and the effects on their lives. Democrats in 2006 gained a majority in Congress with scores of candidates winning in campaigns focused on changing the NAFTA trade model.

The message of the midterm elections was loud and clear: Voters want a new direction on trade. Congress’ public approval rating will not be helped by ignoring this call and passing another Bush NAFTA expansion.

Liveblogging the Peru FTA Senate vote, Take II

5:13 pm: The Hill has a story that highlights Sen. Harry Reid's (D-Nev.) opposition:

Senate Majority Leader Harry Reid (D-Nev.) was one of 16 Democrats voting against the deal.

“It is very unfortunate that the Bush administration’s only policy towards Latin America has been to negotiate free trade agreements,” Reid said. He added that he “reluctantly” opposes the Peru deal because it “reflects major improvements from the previous model.”

“But I still see many holes in U.S. trade policy that need to be filled,” Reid added.

3:29 pm: Full analysis forthcoming, but the majority of leadership and freshmen opposed (minus not surprisingly Ben Cardin from Maryland and VERY surprisingly, Jim Webb of Virginia, hitherto MISTER Inequality). None of the candidates for president even voted, including Clinton, Obama and McCain, who were for; and Biden and Dodd, who were against.

2:54 PM: Passes 77-18.

1:22 pm: There is a bit of life here at the liveblog. There's an agreement to not have more debate and just come in for a vote at 2:15 pm. So we'll know within the hour.

11:42 am: Yeah, we're asleep at the wheel, sorry. Sen. Max Baucus (D-Mont.) just said "Peru is no ordinary country, and the Peru FTA is no ordinary trade agreement." Given Baucus' relentless advocacy for expanding NAFTA to additional countries in opposition to his party's base, Max Baucus is no ordinary senator.

So, we didn't miss much from the Senate debate, as it turns out, which will begin anew shortly after 10 am, and the vote is still scheduled for 2:15 pm.

A couple of things worth pointing out about yesterday's floor speeches:

  • Sen. Ken Salazar (D-Colo.), who voted right on CAFTA and wrong on the Oman FTA, argued that: "coca production, a major concern of ours with respect to Peru, has decreased dramatically, thanks in large part to the eradication, interdiction, and other efforts to develop economic opportunities for the Peruvian people." He appears to be talking about in relation to the 1990s, but as this estimate by the Department of Justice shows, "Coca cultivation in Bolivia and Peru has the potential to increase significantly and to replace some of the decreased cultivation in Colombia: Cocaine production in Bolivia and Peru is at a much lower level than in Colombia. However, illegal coca cultivation has increased to its highest level in 5 years." And as the Economist reported, social movements in Peru are mobilizing to promote even further coca cultivation.
  • In fact, trade policies are never going to substitute for a development or anti-drug policy. As the New York Times reported in 2004 on U.S. efforts to use trade policy to undermine coca production, '
    • After 55 years of packing Eastern Washington asparagus, the Del Monte Foods factory here moved operations to Peru last year, eliminating 365 jobs. The company said it could get asparagus cheaper and year-round there.

      As the global economy churns, nearly every sector has a story about American jobs landing on cheaper shores. But what happened to the American asparagus industry is rare, the farmers here say, because it became a casualty of the government's war on drugs.

      To reduce the flow of cocaine into this country by encouraging farmers in Peru to grow food instead of coca, the United States in the early 1990's started to subsidize a year-round Peruvian asparagus industry, and since then American processing plants have closed and hundreds of farmers have gone out of business.

      One result is that Americans are eating more asparagus, because it is available fresh at all times. But the growth has been in Peruvian asparagus supported by American taxpayers...

      'The irony is that they didn't plow under the coke to plant asparagus in Peru,'' said John Bakker, executive director of the Michigan Asparagus Advisory Board. ''If you look at that industry in Peru and where it's growing, it has nothing to do with coca leaf growers becoming normal farmers. Coca leaf is grown in the highlands. The asparagus is near sea level.''
  • It's not for nuttin that the Washington Office on Latin America and our office argued that the coca-trade connection is the opposite of the one Salazar argued on the floor yesterday: NAFTA-style trade policies lead to RURAL DISPLACEMENT, which means immigration or pursuit of illegal drug cultivation.
  • These and other arguments (about food safety and ag policy more generally) are made forcefully by a letter sent yesterday by family farm groups to the Senate on the Peru FTA.

December 03, 2007

Liveblogging the Peru FTA Senate vote

5:35pm: I'm out.

5:18 pm: Sanders conceding that NAFTA has been good for some Mexicans... well, one. Carlos Slim, the world's richest man.

5:14 pm: "If you like NAFTA, you'll love the Peru FTA. Most people in America don't like NAFTA."

5:10 pm: Once you've been in DC a few years, it really is amazing how rarely you hear members talk about class and inequality in America - something that, after getting back from Chicago where my brother lives, most people in America are comfortable talking about. Sanders is not afraid of going there. Now, he's citing IIE and CEPR studies that document the inequality...

5:06 pm: Sen. Bernie Sanders (I-Vt.), fair trade champion, bringing the pain on Peru FTA, leading off with unsafe imports

5:01 pm: By way of a little advance warning, I am probably going to head home within the next hour (got stuck overnight in Chicago last night, am fighting a cold... did I mention that airport contracted illnesses skyrocketed after NAFTA??!! We need a change in this trade model!), but if people want to liveblog it post 5:30 pm or so in the comment section, you can follow the awesome display of senatorial argumentation at C-Span 2 at this link.

4:50 pm: Grassley is taking on the argument that the Peru FTA will worsen our food safety laws... we wrote a report on this. He argues that there hasn't yet been a challenge of U.S. food safety laws. This is a complex debate, but the WTO challenge of EU's food safety regime is case one that it could happen. If we ever GET some good food safety laws, you can bet this could happen to us under the WTO, NAFTA and Peru FTA laws. The Peru FTA opens up our current food safety laws - low as they are - to claims for compenstation from corporations.

4:43 pm: Okay, we don't work on Venezuela here, but the stuff that gets said about the country is ridiculous. If possible, the media misrepresentations of what goes on there rival or exceed what is said about trade policy. In particular, the proposal to have MORE elections, institute gay rights and other measures is commonly described as some sort of attempt to abolish democracy. Well, that measure was voted down democratically today, and the government is respecting the result. For more on that situation, check out an insightful and funny blog at www.BoRev.Net. A more academic take is here. Nevetheless, as we argue here, the best way to avoid more Chavez's - if that's the goal - is to avoid contributing to economic misery and displacement abroad. Last time I checked, that's how populism succeeds...

4:40 pm: Grassley admits that the FTA will lock-in policies in Peru that current neo-liberal governments passed but which future governments will be bound to.

4:29 pm: Grassley cites the USITC report as justification for passing the Peru FTA. Keep in mind that this report, the official U.S. government assessment, shows our global trade deficit will increase with the Peru FTA.

4:26 pm: Despite the fact that you can't make an economic argument in favor, Grassley and Sen. Bill Nelson (D-Fla.) try to by saying Peruvians will buy tons of our exports.

4:23 pm: Grassley admits that there is no economic justification for the Peru FTA, and it's all geopolitical. But iIn the words of Archbishop Pedro Barreto, the President of the Episcopal Commission for Social Action of the Catholic Church in Peru, “We are certain that the trade agreement will increase the cultivation of coca, which brings along with it a series of negative consequences including drug
trafficking, terrorism and violence.”

4:22 pm: My feed went out for a while. Apologies. Sen. Chuck Grassley (R-Iowa), ranking member of the Finance Committee, endorsing the Peru FTA as expected.

3:49 pm: Dorgan: Despite new labor rights, neither Bush nor the Chamber plan on enforcing them or want them to be enforced, as evidenced by their rejection last year of the proposal by then-Peruvian president Toledo to include ILO conventions themselves in the core text of the agreement. The Jordan FTA shows that paper labor rights are not enough...

3:46 pm: Dorgan: "This agreement will not harm the economic interests of the United States. I don't argue that. But it's an extension of a failed model."

3:40 pm: Dorgan reminding people of the radical, demogoguery of the claim that there is a connection between a net trade deficit and job loss in tradable sectors... sadly, this is still not widely conceded by the pro-NAFTA side, despite hundreds of years of economic theory.

3:30 pm: Sen. Byron Dorgan (D-N.D.) speaking about Bush's NAFTA expansion to Peru, and called for benchmarks in FTAs so that trade balance is maintained, job creation in tradable sectors prioritized...

3:19 pm: Debate is beginning. Vote will happen at 2:15 pm tomorrow.

We'll be liveblogging the Peru FTA Senate vote, momentarily.

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