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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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October 30, 2009

How NOT to Seek Higher Office

It's really hitting the fan for Congressman Kendrick Meek, the likely Democratic contender for the 2010 Florida Senate seat. Meek recently withdrew his cosponsorship from two key pieces of legislation for progressives: the Single Payer Health Care bill (HR 676), and the TRADE Act (HR 3012).KMeek

Congress Daily (Oct 23rd, 2009 - subscription only) reports on the fury Meek's flip-flop has unleashed on himself:

Labor unions are furious with Rep. Kendrick Meek, D-Fla., for his decision this week to withdraw his name from a bill rapidly gaining support among House Democrats to renegotiate or scrap several major trade agreements.

One labor source called it "spineless," and people familiar with the matter said some unions were threatening to withdraw support for Meek's 2010 Senate bid. "It's very disappointing, especially considering he's got a pretty good labor record," said Lisa Kinard, director of federal legislation and regulation for the Teamsters Union.

The Hill additionally notes Meek's "abrupt" and conspicuously-timed reversal on the two measures:

The Florida AFL-CIO endorsed Meek for the Senate at an Oct. 7 meeting, which Meek touted in a press release on Wednesday, the same day he changed his sponsorship.

Thea Lee, a lobbyist for the AFL-CIO, said her organization supports Michaud’s legislation and that Meek’s decision to drop his sponsorship would be a subject of discussions.

Congress Daily notes another conspicuous fact:

The fracas was a step backward for Meek after good news arrived late last week, when Rep. Corinne Brown, D-Fla., announced she would not challenge Meek for the nomination.

Congressman Meek's statement on the floor offered not so much as an attempt at an excuse as to why he would changes his mind, but his spokespeople sound an awful lot like the Chamber of Commerce misleading talking points against the TRADE Act.

Working people in Florida will have to watch Meek closely to see whether his actions side with them and for reform of our unsustainable job-wrecking economic model, or with the Chamber of Commerce business as usual.

(Disclosure: Global Trade Watch has no preference among candidates for elected office.)

October 26, 2009

Killing Regs, Not Just Applying them Equally

I wanted to share a bit more about the Citigroup Global Services Summit soiree, which I posted on last week.

On a substantive level, what was the tenor of the conference? First, a reluctant concession to the political-economic reality that more financial services regulation might be necessary and/ or likely to be imposed; and second, some positioning against over-regulation, with veiled references to WTO disciplines against domestic regulations.

At the same time, because this was a meeting of WTO boosters, many folks claimed that trade deals would not prevent reregulation - no matter how lacking these arguments were on the merits. (On a parallel track, Goldman Sachs has recently been showing how to do this two step, first here, and then here.)

Here was WTO Secretary-General Pascal Lamy:

"As you all know, in the world of the GATS, ‘liberalization’ is essentially about opening specified sectors to competition on a non-discriminatory basis. It does not mean deregulation. It has long been recognized that opening up certain services, such as financial and telecom services, may require a regulatory framework in order to protect consumer interests, and ensure competitive markets. At this point in the services negotiations, this is very important. Let me repeat it: opening markets is one thing, you can do it more or less. Regulation is another. You can open and regulate, open and not regulate, not open and regulate, or not open and not regulate. At this moment, it is important to understand this. If you open your market, you are saying you are regulating foreign and domestic in the same way. It is no coincidence that the GATS Annex on Financial Services preserves the right of Members to take measures for prudential reasons even if they do not conform to its obligations under the Agreement.”

It's rare to see the titular head of an organization so blatantly misrepresent its purpose. Do the international nuclear agencies claim they're really food groups? Does the UN claim to do stand up?

As a report we put out last month shows, Lamy disregards a coterie of hairy provisions in WTO texts that would limit countries' ability to reregulate: this includes the Annex provision cited by Lamy.

Also, the WTO's own Appellate Body ruled that non-discriminatory bans on the supply of services, in sectors where full market access commitments have been undertaken, are quantitative limitations covered by GATS Article XVI(2) - and thus must be removed.

GATS Article VI also creates a mandate to discipline "non-discriminatory" regulations. And, as I noted in a recent post, the WTO secretariat explicitly says that many consumer protections - let alone requirements that banks reinvest in their communities - would be disciplined by either Article VI, XVI or XVII of the GATS.

How can anyone say with a straight face that this is just liberalization, not deregulation?

(HT to Ellen Gould for many of these points.)

Offshoring airline safety

Last week, NPR ran a three-part story on U.S. airlines sending airplane maintenance work - formerly a high-paying, unionized domestic profession - offshore, particularly to Central America and Asia. The lead story, To Cut Costs, Airlines Send Repairs Abroad, summarizes much of the relevant information, but the entire three parts are worth a read. Also note that this is not the first time that this issue has made headlines in recent years. At issue here are both the offshoring of quality jobs and the problems with regulating safety under today's trade model. Some of the money quotes from the first NPR story regarding the latter:
"The FAA does not require airlines to report exactly where they send their aircraft for which kinds of repairs. So, FAA inspectors are not sure which of the roughly 700 foreign repair shops they should inspect... The FAA's inspectors didn't even show up at some foreign repair stations to monitor their work for as long as three to five years."
The second story in the series details some of the questionable practices at one Salvadoran repair operation, Aeroman:
...[Aeroman] mechanics say managers keep pressuring them to fix the planes faster. For instance, if there's rust on a metal beam, but it's just a little over tolerance, "the supervisor says, 'Oh, just leave it like that,'" the mechanic says, through an interpreter. "'There's no need to repair it.'" [...] Another mechanic ticked off other problems at Aeroman. Some employees don't store glues at the required temperatures, he says. That means the glues could fail — which potentially means that parts of the airplane could fall apart... And this mechanic says some workers can't even read the airlines' repair manuals. The manuals are written in English, but some mechanics at Aeroman can't read English — including him.

October 21, 2009

Citigroup, Ward of State, Funds Conference Advising Bankers on Warding off State

Citigroup was birthed by the Clinton administration's financial deregulation proposals, and was most recently saved from total collapse by the Bush/ Obama administrations.

This is not a bank with an arms length relationship with government - in fact, so much not that Mexico may force Citigroup out of the country because of laws there against state-owned entities owning large banks like Banamex. (And, as if to prove that there's still no life beyond the nanny state, it seems that sources close to Citigroup are talking up the notion of further state assistance, this time via a NAFTA challenge.)

Apparently in Washington, having such a strong track record of dependence on taxpayer-funded policies like bailouts and trade pacts (not to mention government sign off for commercial banks to invest in toxic securities) does not disqualify you from funding a conference advising banks and other corporations how to get the guv'mint off your back.

Case in point. Last week, Citigroup helped put on the Global Services Summit here in DC. Many top corporations also lent a hand, such as Wal-Mart. Anyone willing to cough up at least $250 could go and be feted by the top brass in service-sector corporations and lobby groups, and enjoy a close personal audience with policymakers from around the globe.

Citi-inset-small

I decided to go and check things out, and not only because I love filet mignon kabobs, of which copious portions were served during the reception hour. (Oh, and did I mention the party favor that was handed out: the cutest, Made-in-China Citigroup pig bank?)

No, I was curious to see whether my taxpayer investment in Citigroup was helping them turn their act around, or whether they were simply pushing more race-to-the-bottom policies. Did Citigroup and their ilk tame their ambition to deregulate in the wake of the financial crisis? What I found was quite the opposite: corporate lobbyists and government officials busily exhorted one another to push expansion of the WTO, the rules of which explicitly require further financial services deregulation. Here's just some of what they had to say about their vision of the corporate-government partnership to push such controversial WTO rules:

Continue reading "Citigroup, Ward of State, Funds Conference Advising Bankers on Warding off State" »

October 20, 2009

WTO Turnaround - Battle Continues Ten Years After Seattle

Ten years ago next month, 50,000 global activists shut down the WTO ministerial in Seattle. History was made when a devastating plan to expand the WTO's reign of corporate globalization was derailed.Wtoturnaround-350

On November 30, 2009 - ten years to the day of the Seattle protests - trade ministers and their corporate allies will meet in Geneva to try once again to expand the WTO, in spite of the global economic disaster caused by their failed policies.

We aren't letting it happen. Instead, we're helping to launch the WTO Turnaround campaign to mobilize fair traders to keep the pirit of Seattle alive, and demand an end to the WTO's expansion of corporate rule that threatens workers, the environment, public health, sustainable development and democracy across the globe.

We at GTW are proud to join activists worldwide in demanding that the existing WTO regime be fundamentally transformed - shrunk or sunk, fixed or nixed - as go the slogans from protests past. The WTO Turnaround campaign features a petition drive, nationwide house parties and WTO-related movie screenings, speakers tours, as well as protests and vigils nationwide on the eve of the WTO ministerial in Geneva in late November.

The first push is an online petition drive. We're helping gather as many signatures as possible to let President Obama know we'll mobilize to support him acting on his campaign promises to push for fundamental change at the WTO. Over a thousand activists committed in the first hours of the campaign, and more are signing on every minute.

Visit the new site today to add your voice to theirs at the WTO Turnaround campaign site, and stay tuned to Eyes on Trade for all the latest on the much-needed WTO-Turnaround.

October 15, 2009

"Stiglitz Commission" Calls for WTO financial services reform

For folks that have not gotten a chance to look at the final United Nations "Stiglitz Commission" report on the financial crisis, it is will worth a read. Here are just some of the highlights:

  • "many developing countries have entered into (North-South) free trade agreements (FTAs), bilateral investment treaties (BITs), and World Trade Organization (WTO) commitments that prevent them from regulating the operations of financial institutions and instruments or capital flows. For example, if a developing country decides to nationalize some services such as banking, this can require compensation if the sector has been liberalized under the WTO GATS Financial Services Agreements (FSA) or under an FTA or BIT. When these agreements and commitments are enforced, developing countries have to pay compensation or suffer the imposition of tariffs on their exports to the complainant if they do not or cannot comply." (at 38-39)
  • "The framework for financial market liberalization under the Financial Services Agreement of the General Agreement on Trade in Services (GATS) under the WTO and, even more, similar provisions in bilateral trade agreements may restrict the ability of governments to change the regulatory structure in ways which support financial stability, economic growth, and the welfare of vulnerable consumers and investors (see Chapter 4, Appendix)." at 82.
  • "Capital and financial market liberalization, pushed not only by the IMF but also within certain trade agreements, exposed developing countries to more risk and has contributed to the rapid spread of the crisis around the world. In particular, trade-related financial services liberalization has been advanced under the rubric of the WTO’s General Agreement on Trade in Services (GATS) Financial Services Agreement with insufficient regard for its consequences either for growth or stability. Externalities exerted by volatility in the financial sector have severe negative effects on all areas of the economy and are an impediment to a stable development path. Chapter 3 and discussions earlier in this chapter emphasized how inadequate regulation in one country may harm others. Unfortunately, while the GATS Financial Services Agreement provides the only significant regulatory framework for international financial services, it was not conceived and negotiated with these broader considerations in mind but rather was driven by sectoral interests. These special interests often do not realize (or care about) the vulnerabilities that these commitments impose on other aspects of their economy or the international economy." (103)
  • "Policy space is restricted not only by a lack of resources but also by multilateral and bilateral agreements and by the conditionalities accompanying assistance. Many bilateral and regional trade agreements contain commitments that restrict the ability of countries to respond to the current crisis with appropriate regulatory, structural, and macroeconomic reforms and support packages. Developing countries have had imposed on them deregulation policies akin to those that are now recognized as having played a role in the onset of the crisis. In addition, they have also faced restrictions on their ability to manage their capital account and financial systems (e.g. as a result of financial and capital market liberalization policies). These policies are placing a heavy burden on many developing countries." (104)
  • "Agreements that restrict a country’s ability to revise its regulatory regime—including not only domestic prudential but, crucially, capital account regulations—obviously have to be altered, in light of what has been learned about deficiencies in this crisis. In particular, there is concern that existing agreements under the WTO’s Financial Services Agreement might, were they enforced, impede countries from revising their regulatory structures in ways that would promote growth, equity, and stability."
  • "More broadly, all trade agreements need to be reviewed to ensure that they are consistent with the need for an inclusive and comprehensive international regulatory framework which is conducive to crisis prevention and management, counter-cyclical and prudential safeguards, development, and inclusive finance. Commitments and existing multilateral agreements (such as GATS) as well as regional trade agreements, which seek greater liberalization of financial flows and services, need to be critically reviewed in terms of their balance of payments effects, their impacts on macroeconomic stability, and the scope they provide for financial regulation. Macroeconomic stability, an efficient regulatory framework, and functioning institutions are necessary preconditions for liberalization of financial services and the capital account, not vice versa. Strategies and concepts of opening up developing economies need to include appropriate reforms and sequencing. This is of particular importance for small and vulnerable economies with weak institutional capacities. But there has to be a fundamental change in the presumptions that have guided efforts at liberalization. As noted in previous chapters, one of the lessons of the current crisis is that there should be no presumption that eventually there should be full liberalization. Rather, even the most advanced industrial countries require strong financial market regulations." (105)

October 13, 2009

Walking the Line

ImHungryStopNAFTAUp here in the Global Trade Watch field loft, we love a good picket line. This one, however, brings a special joy to our heart. Autoworkers from the UAW's Local 174 based in Romulus, Michigan made a trek down to Brownsville, TX to protest our broken NAFTA-style trade policies. 

The Brownsville Herald Reports that the picketers denounced the greed that drives NAFTA-style globalization:

"We are losing our jobs on this side, and (American corporations) are paying workers low wages on the other," Local 174 UAW President John Zimmick said at the protest, wiping a sweaty brow. "Why can’t they pay workers what they are worth?

Its heartening to see these unionists take a 28 hour drive to stand in solidarity with their brothers and sister autoworkers, regardless of nationality. These UAW leaders and activists demanded better for auto employees in both the U.S. and in Mexico. The Herald continues:

This was the second demonstration staged by the group, which took to marching in front of the Hidalgo-Reynosa International Bridge Monday afternoon. At that time, workers also gathered at a street corner on the Mexican side of the bridge to protest what they said were unfair layoffs at a TRW Automotive maquiladora in Reynosa. TRW Automotive is a supplier for Ford Motor Co. and Chrysler.

"We want trade, but we want it to be just," said Martha Ojeda, executive director of the Coalition for Justice in the Maquiladoras, adding that the 600 TRW Automotive workers dismissed from their jobs did not receive severance pay or unemployment benefits as they would in the United States.

Couldn't have said it better ourselves. We need FAIR trade, just trade, like envisioned in the TRADE Act to rebuild our economy. That's why the TRADE Act is supported by nearly half the House Democrats and two Republican Representatives as well.

CAFTA: Threatening Development and Democracy in El Salvador

The Salvadoran government has been under corporate assault recently for allegedly dragging its feet on issuing mining permits to foreign investors. If the permitting process has in fact been delayed, it has likely been delayed because the Salvadoran government is responding to public outcry and is considering the environmental and public health affects associated with mining for precious metals in a country the size of Massachusetts.   

In May, I posted that a Nevadan subsidiary of Canadian mining company Pacific Rim filed a $77 million CAFTA investment suit against the Salvadoran government claiming that the government was dragging its feet during the permitting process for the proposed El Dorado mine in Cabanas, El Salvador.

In late August, Milwaukee-based Commerce Group Corps also decided to take a shot at using CAFTA to pressure the Salvadoran government into ignoring community leaders and environmentalists. The company has filed a $100 million CAFTA investment claim.

Luke Eric Peterson reports in Investment Arbitration Reporter that:

Commerce Group and its partner [San Sebastian Gold Mines Inc.] allege that El Salvador has breached the Central American Free Trade Agreement (CAFTA) by “frustrating” development of mining interests in the country.

The pair say that they have been engaged in gold production in the country on-and-off since the late 1960s, however they allege that growing hostility on the part of the current government to mining activity has led to the revocation of a key environmental permit, as well as ongoing “de facto” denials of new permit and licensing applications.

Meanwhile, community leaders are continuing to stand firm against mining practices that could destroy vital natural resources and limit community access to clean water. However, the death in July of anti-mining activist Marcelo Rivera, presumed by many to have been a politically motivated murder, underscores the severity of the push back against activists in El Salvador. 

 

All the while the Salvadoran government has ALSO been facing threats of other foreign investment suits against government actions to protect public health. Luke Eric Peterson reports in September that:

Foreign shareholders in a battery manufacturing and recycling plant have threatened several arbitration claims against the Republic of El Salvador following the abrupt 2007 shuttering of the facility.The plant has been at the center of a heated campaign by local citizens and environmental groups who complained that pollution from the facility was responsible for adverse health and environmental impacts. The company is understood to have rebutted these allegations.

Following several years of increasingly vocal public opposition to the facility, El Salvador’s Health Ministry authorized the closure of the site in September of 2007.Several company shareholders, including members of the Lacayo family, as well as a UK entity, Oak Investments LP, allege that El Salvador’s actions breach protections contained in the UK-El Salvador bilateral investment treaty and the Central American Free Trade Agreement (CAFTA).

This pattern of foreign companies trying to use CAFTA investment suits as a way to steamroll the Salvadoran government into allowing operations that might threaten public health is nothing short of disgraceful.

 

Regardless of whether or not the companies win these claims, the Salvadoran government will need to funnel millions of dollars towards defending or settling them instead of spending tax dollars on meeting critical public needs. It will also make it that much more difficult for Salvadoran communities to get their government's ear next time a foreign investor's project poses a serious environmental or public health risk.

October 05, 2009

Check Out Rep. Levin's Guide on the Chinese Tire Case

As the media continues to cover the Obama administration’s recent decision to impose tariffs on tire imports from China, Congressman Sandy Levin has released a very useful guide covering the primary issues and arguments involved in the dispute - it is especially helpful in terms of distinguishing fact from fiction in the case.

Lobbyists React with Fury and Threats to Obama Administration Decision

A few weeks ago we reported that the Obama administration was considering taking an important step towards fulfilling the campaign promise of reducing the influence of special interests in Washington by removing registered lobbyists from influential advisory committees.

This decision has been confirmed by the official White House blog which states, “the President has made a commitment to close the revolving door that has in the past allowed lobbyists and others to move to and from full-time federal government service…the President made a commitment to the American people to reduce the influence of lobbyists in Washington out of a belief that lobbyists have too often in the past achieved disproportionate impact on government decision makers at the expense of broader voices from the public at large. If we are going to change the way business is done in Washington, we need to make sure we are not simply continuing the practices of the past.” According to a senior White House official, the panels have been excessively dominated by lobbyists: “It is one of the ways special interests have historically shaped policy to the detriment of the public interest.”

Lobbyists have reacted with “absolute fury” to the decision, and some are brashly threatening to circumvent the policy in order to retain their influence on advisory panels: Dave Wenhold, president of the American League of Lobbyists (ALL) stated, “If lobbyists want to stay on boards, they will just deregister.” 

According to The Hill, an estimated 1,000 federal advisory committees were established under the Federal Advisory Committee Act, and many of them include registered lobbyists. The trade advisory system is made 28 advisory committees of about 700 individuals, approximately 30 percent of whom are registered lobbyists. For example, the textile and apparel advisory committee, which includes registered lobbyists from three industry apparel and textile trade groups, stands to lose a large percentage of its members due to the decision. For more on the trade advisory system, check out our book.

Calman Cohen, president of the Emergency Committee for American Trade and a lobbyists for IMB, Oracle, and eBay Inc, laments that the administration should “take account of all citizens, whether they are a lobbyist or not…”
Hmm…is Cohen suggesting that it’s time for a Lobbyists' Bill of Rights? 

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