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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 26, 2010

Fighting To Save Jobs in Evansville

Any minute now, the huge rally to save 1,100 good, family-supporting union manufacturing  jobs will begin. Brother Richard Trumka, president of the national AFL-CIO, will headline the event, along with other local labor and elected officials.

IUE CWA - Whirlpool
Trumka has and Oped in today's Evansville Courier & Press that shows the stakes:

After more than 50 years, Whirlpool is turning its back on Evansville — shipping hundreds of good local jobs to Mexico despite the company's healthy profits and millions of taxpayer dollars in federal economic stimulus money.

We need jobs. And we can't stop in Evansville.

We have to take the fight to every company that wants to cut out on America's workers, to the big banks that ruined our economy and to elected officials who refuse to stand up for working families.

When companies such as Whirlpool choose cheaper labor and lax environmental standards over America's workers, consumers and communities, we're going to let them know we won't stand for it.

There's a lot at stake, both nationally and here in Evansville.

Brother Trumka is right indeed. It's a national policy problem that requires a national policy solution. The fight is not just going on in Evansville, but in towns like Newton, Iowa and Galesburg, Illinois, and all throughout the country where good manufacturing jobs being are lost to lower wage countries like Mexico. Thanks to unfair policies like NAFTA, that's where the Whirlpool jobs will go thanks.

That's why we need to pass forward-looking reforms like the TRADE Act that allow for a sane manufacturing policy that creates good jobs right here in the U.S.

For more on the local buildup to today's rally, check out:

~ WFIE's coverage of the Whirlpool Corporation's threat letter to displaced workers who plan to participate in today's action, and ongoing protest preparations, or

~ The local Fox affiliate's continuing coverage of how the threat letter steeling the union's resolve, or

~ The Evansville Courier & Press Editorial expressing some limited solidarity with displaced workers marching against the 'recommendation' of their unfaithful boss:

Cobern [local Whirlpool manager] said in his letter that the decision to close the Evansville plant is final and will not be reconsidered....

In the meantime, allow these workers the freedom to express their frustration and disappointment at seeing their employer pack up for the trip to Mexico.

It has to hurt.

Hurt must barely begin to describe it. But here's hoping that pain will give way to anger at the unfair trade policies and corporate greed at the root of the problem/ Then that anger can transform into organizing to build another world in which the needs of normal hard-working women and men of the world come first!

February 25, 2010

Whirlpool: Taking Tax Dollars, Taking Jobs

It can barely get greedier than this: We're in tough economic times, so Whirlpool receives $19 million in taxpayer funds to create jobs. Then it turns around and announces it will shutter its Evansville, Indiana refrigerator plant and displace the 1,100 workers there. Disgusting.
WHIRLPOOL_8_2009
And where, you might ask, will those jobs go? They'll follow so many other lost family-supporting jobs on the NAFTA train to Mexico.

But workers are hoping to make the planned Evansville closing a turning point in the battle for American manufacturing, and are fighting to keep the plant open. The president of the national AFL-CIO, Richard Trumka, is scheduled to speak tomorrow at a major rally to keep plant open. Many hundreds are expected to join the demonstrations from across the region and the country.

The union representing the Whirlpool workers, IUE-CWA Local 808, is fighting fiercely. Financial Secretary of Local 808, Barbara Reich, lays it bare on evening news of the local Fox affiliate:

We need to bring to the attention of the American public when a so-called - in my opinion - American company gets American tax dollars, $19 million American tax dollars to create jobs, then they should not be taking existing American jobs to Mexico or China... We need those jobs right here in this community.

Sister Reich is right. It's a long shot that the plant will stay open, but workers are rallying to a higher cause. Under the influence of unfair NAFTA/WTO-style trade policies, manufacturing job loss has hobbled the country's economic prospects. Working people in Evansville are fighting not just to keep the plant open, but also to change the policies of "taking these jobs to other countries."

That's why solutions like the TRADE Act that correct our failed trade policies, are a crucial element of this fight. Indiana Representatives Visclosky, Donnelly, and Carson have endorsed the comprehensive reform legislation, but 8th District Rep. Brad Ellsworth, who is expected to speak at the rally and whose hometown is Evansville, has yet to sign on. Hopefully he'll see the light and join the growing reform consensus.

Mobilization and protest are another critical element of the fight. So tomorrow - Friday, February 26th - working families will assemble in Evansville to say, enough!

Continue reading "Whirlpool: Taking Tax Dollars, Taking Jobs" »

USTR Citing the Chamber of Commerce's Slanted Website?

USTR trade data CoC Given that the Chamber of Commerce is fiercely lobbying against the fairer trade model supported by President Obama and members of Congress (and against almost everything else the Obama administration is trying to achieve), it is shocking that the USTR’s webpage of links to trade data includes the Chamber of Commerce’s slanted “trade benefits” website. The USTR webpage lists all government agencies and then only the Chamber as sources of trade data – no unions, no universities, just the country’s main corporate lobby.

Did they miss the wonderful trade data resources of the Economic Policy Institute (EPI), the AFL-CIO, or our searchable Trade Adjustment Assistance database? Or, maybe the USTR staff just hasn’t had a chance to update the webpage in the 14 months since Bush left?—Actually, no, the page says that it was last updated on July 29, 2009.

On the other hand, maybe it’s not an oversight? While most of the administration is engaged in mortal combat with the Chamber, USTR Ron Kirk seems to be all warm and fuzzy toward the Chamber. Consider his comments at a speech there last year:

I couldn't think of a better, more welcoming environment than being right here at the Chamber….I was really excited about the opportunity to come and be with you today because -- I think I've got this thing figured out now, after 60 days; I've got it all down. But considering some of the audiences that I've been in over the last 60 days, I needed a little bit of home cooking, so to speak. So I feel like I'm very much preaching to the choir, and if so, please don't be offended.

This cuddly view of the Chamber is inconsistent with pursuing a new, fairer trade model, which the Chamber strongly opposes. Over half of Democrats in the House have endorsed this new vision for trade policy – by formally sponsoring the Trade Reform Accountability Development and Employment (TRADE) Act. (The Chamber has launched a campaign against the Democrats’ initiative.)

The Chamber of Commerce’s website purports to show the trade “benefits” for each state. The problem is that the Chamber’s website only covers states’ exports, as if the United States were not being swamped in a flood of job-killing imports.  Imports represent goods that American consumers and businesses have purchased from other countries that they could have purchased from U.S. manufacturers employing U.S. workers.  

The Chamber’s website says virtually nothing about the harmful effects of our massive trade deficit that accrued since the Chamber’s beloved NAFTA, WTO and similar trade deals went into effect. (Indeed, our trade deficit increased from $25 billion in 1993 to $263 billion in 2009 with NAFTA countries alone.)  EPI estimated that if we had balanced trade with Canada and Mexico, the U.S. economy could have supported about one million more jobs in 2004. Yup, the Chamber of Commerce site also makes no mention of the nearly 5 million manufacturing jobs that we've lost since NAFTA and WTO went into effect – that’s one out of every four manufacturing jobs.  Balanced trade could help U.S. businesses, but instead the large U.S. trade deficit is a significant drag on growth that is killing U.S. manufacturers and American jobs.

Plus, the Chamber dodges the wage stagnation that has plagued the U.S. during the era of Fast Track and NAFTA-WTO model trade deals. And it does not even get into all of the horrible import safety problems – tainted food, toys and more – or the trade tribunal attacks on key consumer, toxics and environmental law.

What is even stranger about the USTR linking to the Chamber  is that the Chamber has relentlessly attacked President Obama’s major policy priorities.  The Wall Street Journal has called the Chamber’s assault “the biggest undertaking in the Chamber's 100-year history.” Last year, the Chamber spent $140 million lobbying to prevent the administration from passing  health care reform, financial sector reregulation, and climate change legislation.

Instead of heaping praise on an organization that is attacking his boss’ goals and citing the Chamber as a reliable source of trade information, perhaps USTR Kirk could achieve more progress by  advancing the new trade model that so many members of Congress have endorsed.

February 24, 2010

What a Difference a CAFTA Makes

IMF logoThe IMF just released a new research paper about the effect of the U.S. economic downturn on 
Central American countries entitled “Spillovers to Central America in Light of the Crisis: What a Difference a Year Makes.”  The main finding of the paper is pretty shocking: Each 1.0 percent decline in U.S. GDP during the most recent economic crisis caused a 0.7 to 1.0 percent decline in Central American GDP.  In total, the link between the Central American and U.S. economies lowered Central American GDP by 4 to 5 percent.

And guess what the culprit is? According to the paper,

Spillovers [from the U.S. economy] have typically been transmitted through both financial and trade links, while remittances were not found to play an important role in transmitting business cycles across borders.

The author of this paper also discusses a paper published in 2005 that “predict[ed] that CAFTA-DR would cause a significant increase in the effects of U.S. shocks on the region.” In other words, the implementation of CAFTA meant that Central American economies are now more sensitive to downturns in the U.S. economy.  So now even the IMF agrees that tearing down trade barriers willy-nilly can expose your country to stronger foreign macroeconomic shocks that have nothing to do with how well your domestic businesses perform.

Coincidentally, the IMF also just released a staff position paper that reversed the IMF’s longstanding opposition to controls on capital inflows that could reduce financial volatility. According to the New York Times,

The other paper, released Friday, said that in the aftermath of the crisis, officials were “reconsidering the view that unfettered capital flows are a fundamentally benign phenomenon.”

“Concerns that foreign investors may be subject to herd behavior, and suffer from excessive optimism, have grown stronger; and even when flows are fundamentally sound, it is recognized that they may contribute to collateral damage, including bubbles and asset booms and busts,” the fund’s deputy director of research, Jonathan D. Ostry, wrote, along with five other authors.

Are these two papers a sign that the IMF wants to turn over a new leaf and pull back from its insistence on excessive economic liberalization for developing countries?  Let’s hope so.

February 22, 2010

GOP Turnaround on Buy American: Genuine Concern or Opportunism?

Mike Elk over at Campaign for America’s Future points out that the leadership of the Republican Party has flip flopped over the limited “Buy American” provisions in the stimulus bill.  This debate is particularly salient now, since the U.S. just watered down the Buy American requirements when it comes to Canada. Mike Elk explains how Michael Steele has made a U-turn on Buy American:

GOP Chairman Michael Steele blasted the Obama administration in a fund-raising email earlier this week for allowing stimulus money designated for clean energy solutions to be spent on overseas companies. Which is interesting, because stimulus money going to overseas firms was the direct result of conservative opposition to attempts to keep that money in America.

Notwithstanding Republican leaders’ huffing and puffing about “protectionism” one day and offshoring the next, Buy American isn’t a partisan issue.  As Mike points out, 86 percent of Americans support the Buy American provisions of the stimulus legislation, including 79 percent of Republicans.  If the Republican Party’s position on Buy American has actually changed, then they should say it loud and clear.  As of now, though, it just seems that Steele is attacking the Obama administration simply for partisan gain.

February 19, 2010

Justice Beyond Copenhagen

Last night DC was lucky enough to host an all-star panel of global justice activists in a panel discussion called "Evaluating Copenhagen: What it Means for Ecology, Economy, and Equity", convened by leading global justice organizations.

Among the panelists were longtime friends of ours at Global Trade Watch. They included leaders the Global Justice movement like Martin Khor from the South Centre, Maude Barlow from the Council of Canadians, Victor Menotti of the International Forum on Globalization, Chair of the UN Permanent Forum on Indigenous Issues Victoria Tauli-Corpuz, and Gopal Dayaneni from Movement Generation. I'll discuss some highlights below the video.

These experts and leaders left very little doubt that the fight to avert climate catastrophe is the fight for the direction of the global economy; that climate justice + trade justice = true global justice.

If, as panelists noted, the climate negotiations will eventually lead to the rewriting of the global economy then global institutions like the WTO and other unfair institutions of trade and development will have to change dramatically. For decades, social movements have resisted the globalization agenda of the international corporate elite. With the threat of climate change, the world has been forced to pursue fundamental economic transformation. That transformation presents tremendous opportunity, and so comprises the silver lining on the dark, looming clouds of possible climate catastrophe.

Problem is that too few of us in the global north are connecting the dots between the struggles of the global justice movement with the current fight for a fair climate deal.

Continue reading "Justice Beyond Copenhagen" »

February 18, 2010

Lori Wallach's In-Depth Interview with Joseph Stiglitz

UntitledOur very own Lori Wallach recently conducted and hour-long interview with Nobel Prize winning economist Joseph Stiglitz on C-SPAN's BookTV. They discuss his new book, Freefall, about the global economic crisis.

Watch the interview here.

Check out the exchange starting at 24:50 where they talk about the WTO locking in and pushing for more financial services deregulation as the world is scrambling to reregulate in response to the crisis.

GDP Growth Figures Smaller than they Appear

The release of the 2009 trade flow data last Wednesday revealed that the trade deficit jumped significantly more than expected in December 2009.  The seasonally adjusted December deficit amounted to $40.2 billion; most experts expected a trade deficit of $35.8 billion. This deficit figure is for trade in goods and services combined - see the chart below for the trade deficit for goods alone.
Clipboard02
This will mean that the robust fourth quarter annualized 5.7 percent GDP growth estimates released at the end of January - based on projected December trade flows - will likely need to be revised in light of the new trade deficit numbers, in addition to revisions due to other factors. (Recall that trade flows are an important part of the calculation of GDP - the dollar value of exports is added to GDP, but the value of imports is subtracted.)

According to the AFP

Most analysts predicted the December trade gap would reduce the gross domestic product (GDP) growth estimate for the fourth quarter, which is due for revision later this month.

The economy grew at a robust 5.7 percent annual pace in the final quarter, accelerating from 2.2 percent growth in the prior quarter after four quarters of contraction amid the worst recession in decades, officially begun in December 2007.

"It is true that the wider deficit will shave a couple of tenths off GDP growth, but it is hard to describe the trade figures as bad news, since they show a continuing robust rebound in world trade," said Nigel Gault, chief US economist at IHS Global Insight.

"Over the second half of 2009, US goods export volumes rose 15.5 percent, while goods import volumes rose 17.7 percent," he said.
Its worth pointing out that the claim of the economist at HIS Global Insight that it is hard to describe the trade figures as bad news, since they show a continuing robust rebound in world trade, refers to the indication, given the trade data, that global demand for goods is rising and hence the global economic recovery is underway. A larger U.S. trade deficit is not good news for the U.S. economy, though, since it represents jobs that could have been created if our trade deficit was lower.

AP notes that "the export gains are expected to be outpaced by an even larger rebound in imports" in the coming months.

The first revision of the fourth quarter GDP estimate is due on February 26.

February 17, 2010

Things USTR Should Give Up For Lent

Ash-wednesday11

Now that Fat Tuesday is over, we've thought of ten things USTR should give up for Lent to avoid unnecessary policy failure and political disaster, if not eternal damnation:

  1. Going to the first Obama-era Trans-Pacific Partnership (TPP) talks (March 15-19) to represent the "U.S. position" without having consulted with the congressional Democrats and Democratic base groups who expect USTR to deliver on Pres. Obama's campaign commitment to create a new U.S. trade agreement model.
  2. Allocating limited USTR resources to trade negotiations that hold few prospects for expanding exports or creating jobs. (Um, for instance like the TPP - given the U.S. already has trade pacts that zero out tariffs with the four prospective TPP partners - Australia, Singapore, Chile and Peru - that comprise over 85% of the combined GNP of countries involved in TPP talks.)
  3. Continuing to ignore the growing China trade disaster. (Even as the 2009 annual trade data showed that the global economic crisis had suppressed overall trade flows, China's share of the U.S. trade deficit increased.)
  4. Disregarding the TRADE Act, given it represents the majority view among House Democrats about what TPP and other trade negotiations should and should not include.
  5. Only discussing exports, not imports - and the related Bush-era talking points. (Giving this up would be aided by disconnecting the direct hotline between the offices of USTR Ron Kirk and Chamber of Commerce President Tom Donohue.)
  6. The Doha Round - after all these years, it's pretty clear that the agenda forced in 2001 ain't cutting it. Time for a new agenda for multilateral trade expansion.
  7. The hangover Bush FTAs with Colombia, Panama and Korea. (What Democrats have forgotten the 1994 congressional midterm wipeout lesson about what happens when a new Democratic president pushes a NAFTA-related trade agreement inherited from a Bush?)
  8. Prioritizing WTO compliance over necessary climate solutions.
  9. Obsession with killing food safety rules in other countries. (Has Michelle Obama read the 2009 National Trade Estimates report?)
  10. Empty rhetoric on transparency and accountability (in favor of actually doing the comprehensive, inclusive trade policy review promised in early 2009.)

And, just as giving up most of the things that people give up for the 40 days of Lent is actually a good idea for the rest of the year too, we think these should stick.

Have a good Ash Wednesday!

February 05, 2010

Exciteable Young Men

As we pointed out last week, Obama's SOTU speech explicitly DID NOT call for passage of Bush's FTAs with Peru, Panama, and Colombia, just as it did not (unfortunately) spell out a new direction for trade deals that could gain the support of the American people.

He reiterated this "position" in his comments to the GOP House caucus:

CONGRESSMAN ROSKAM: -- Moving forward, I think all of us want to hit the reset button on 2009. How do we move forward? And on the job creation piece in particular, you mentioned Colombia, you mentioned Panama, you mentioned South Korea. Are you willing to work with us, for example, to make sure those FTAs get called, that's no-cost job creation? And ultimately, as you're interacting with world leaders, that's got to put more arrows in your quiver, and that's a very, very powerful tool for us. But the obstacle is, frankly, the politics within the Democratic caucus?...

THE PRESIDENT: On the specific issue of trade, you're right, there are conflicts within and fissures within the Democratic Party. I suspect there are probably going to be some fissures within the Republican Party, as well. I mean, you know, if you went to some of your constituencies, they'd be pretty suspicious about it, new trade agreements, because the suspicion is somehow they're all one way.

So part of what we've been trying to do is to make sure that we're getting the enforcement side of this tight, make sure that if we've got a trade agreement with China or other countries, that they are abiding with it -- they're not stealing our intellectual property or making sure that their non-tariff barriers are lowered even as ours are opened up. And my hope is, is that we can move forward with some of these trade agreements having built some confidence -- not just among particular constituency groups, but among the American people -- that trade is going to be reciprocal; that it's not just going to be a one-way street.

You are absolutely right though, Peter, when you say, for example, South Korea is a great ally of ours. I mean, when I visited there, there is no country that is more committed to friendship on a whole range of fronts than South Korea. What is also true is that the European Union is about to sign a trade agreement with South Korea, which means right at the moment when they start opening up their markets, the Europeans might get in there before we do.

So we've got to make sure that we seize these opportunities. I will be talking more about trade this year. It's going to have to be trade that combines opening their markets with an enforcement mechanism, as well as just opening up our markets. I think that's something that all of us would agree on. Let's see if we can execute it over the next several years.

But some in his administration seem to be taking their queues from elsewhere.

Here's Tim Geithner, as Inside U.S. Trade reported it:

"In a related development, Treasury Secretary Timothy Geithner on Feb. 3 testified to the House Ways and Means Committee that passing the pending three FTAs is a part of President Obama’s plan to double U.S. export in five years as is the effort to reach a Doha round deal. Rep. Kevin Brady (R-TX) asked Geithner if the pending three trade agreements are part of the president’s plan 'this year' and Geithner responded 'absolutely.'"

Here's Gary Locke, according to IUT:

USTR is trying to " 'address the outstanding concerns we have with the pending free trade agreements' with South Korea, Panama and Colombia. Asked at the event if Obama will submit the South Korea agreement to the Congress once the issue of access for U.S. autos in the Korean market is fixed, Locke said Obama is 'very supportive' of all three pending FTAs. He said that once issues with all three are resolved, they will be 'brought up' for a congressional vote."

And USTR Ron Kirk kinda takes the cake. According to IUT,

"According to [Rep. Jim] Moran, Kirk 'had very high praise for President Uribe [and] felt that he should have gotten the Nobel Peace Prize as much as President Obama for all that he has done in Colombia.' Kirk also feels that the Colombia FTA 'would be a very positive step forward,' Moran said."

Maybe it's just the snow falling down in Washington, but I can't seem to see how we get from Obama's general support of the notion of trade to these very specific advocacy points by what are perhaps some overly eager members of the administration.

Put differently, I don't see how any of these FTAs get the administration anywhere but voted out of office. Obama seems to get that, but I'm not sure that his staff do.

Why Countries Sign Trade Deals "Against Their Interest"

"If NAFTA-like trade deals are so bad for developing nations, why are they lining up to get on board?"

Hand out enough fair-trade leaflets on campus, and you'll get asked this question soon enough by some smart ass from the Libertarian Debating and Choral Arts Society, or whatever the equivalent is at your school.

The Wall Street Journal provides clues that should inform your answer:

Manuel Medina-Mora has long had ambitions of running Citigroup Inc. He is getting closer.

After more than a decade as chief executive at Grupo Financiero Banamex, the Mexican banking company that is one Citigroup's choicest businesses, the 59-year-old Mr. Medina-Mora resigned last week to devote more attention to a daunting new job. The Mexican banker has to somehow turn around Citigroup's struggling consumer-banking operations world-wide...

Mr. Medina-Mora's growing power reflects his leadership of operations that stayed out of the headlines as much of Citigroup suffered through the financial crisis. Banamex and other Citigroup operations in Latin America overseen by Mr. Medina-Mora had $12.1 billion in net revenue last year, or about 20% of the total for Citigroup's core businesses.

Michael Mayo, a managing director and banking analyst at Calyon Securities, says Mr. Medina-Mora "has led one area of Citigroup that hasn't had significant issues." Banamex is a favorite of Mr. Pandit, who has praised its "universal bank" model of cooperation between different parts of the bank as Citigroup's future.

"We're going to export it around the world," Mr. Pandit said in 2008. The CEO has dispatched executives to Mexico to learn more about Mr. Medina-Mora's successful formula.

(Exporting the "universal banking" model around the world? Where have we heard that before?)

Turning to a helpful magazine profile of "the most influential and important people in Nafta commerce and finance" in the magazine Global Finance, we learn that:

Manuel Medina-Mora has been chairman and CEO of Citi Latin America and Mexico since 2004. Citi was a key promoter of Nafta and provides corporate finance for Mexican and foreign companies through its Banamex Mexican subsidiary. He started his career with Banamex in 1971 and in 1990 led Banamex’s privatization. In 1991 he became the deputy president responsible for Grupo Financiero Banamex-Accival’s strategy and corporate development and was appointed its CEO in 1996 and CEO of Banamex from 2001 to 2006.

In other words, local corporate honchos look North, see a way to climb up the corporate ladder by privatizing a national asset, advocating for a flawed trade deal, and letting a bigger corporation get in on a piece of the pie. And by the way, said flawed trade deal gives the big foreign corporation outrageous rights to make sure that the pie keeps coming.

By the time millions of your countrymen are left out of work and your country has been taken over by drug-traffickers, you've got a golden elevator up to a new global throne.

Folks, Mexico didn't sign up for anything. People like Medina-Mora signed Mexico up for NAFTA. Now, the rest of Mexico is left trying to pick up the pieces.

February 04, 2010

China Rights Abuses on the Rise... Where's leverage when you need it?

See Andrew Jacobs in NYT:

Emboldened by China’s newfound economic prowess but insecure about its standing at home, the Chinese Communist Party has been tightening Internet censorship, cracking down on legal rights defenders and brushing aside foreign leaders who seek to influence the outcome of individual cases...

In the 31 years since the People’s Republic of China and the United States established diplomatic relations, Chinese officials have often resisted American intervention on human rights, calling the issue a domestic matter. But there has generally been some give and take, largely behind the scenes, especially in the years after the violent suppression of protests in Tiananmen Square, when China was eager to shed its pariah status abroad.

That leverage began dissipating in 2001 after China was admitted to the World Trade Organization, and Congress surrendered the right to review China’s human rights record before granting it favorable trade status.

I'm just sayin' is all I'm sayin'.

High Standards? Which Way is Up?

The Trans-Pacific Partnership Agreement (TPP) is slated to be the first trade agreement negotiated by the Obama administration and, given that the President has promised to break with the NAFTA trade agreement model, the negotiators will likely strive for different standards than in the past.

When the March 2010 negotiations for the TPP were announced in December, the U.S. Trade Representative (USTR) Ron Kirk remarked

Through the Trans-Pacific Partnership, we have the opportunity to expand U.S. trade in the Asia-Pacific by negotiating and shaping a high-standard trade agreement with key Asia-Pacific economic partners. [emphasis added]

"High-standard" is quite a flexible term. Over 100 corporations, industry groups, unions, public interest organizations, and members of Congress submitted public comments on the TPP negotiations to the USTR and most of them urged that the TPP be a high-standard agreement, but they didn't have the same ideas in mind. High standards for civil society groups mean strong labor, environmental, and food safety protections plus excluding investor rights provisions and overly restrictive rules on drug patents, among other things.

The Teamsters laid out the fair trade vision:

We agree with the President; we want to support a high-standard Trans-Pacific Partnership. The Teamsters will support a TPP that: contains a democracy clause... protects workers and their right to organize... does not grant greater rights to foreign investors than to U.S. firms... protects the environment...protects food safety and family farms...allows Congress and state legislatures to enact government procurement programs in the public interest.

Corporate groups take high standards to mean something entirely different. Regarding the treatment of financial services in the agreement, the U.S. Chamber of Commerce urged that:

The agreement should set the highest standards of market opening, including rights to own 100% of any investment, full national treatment, and elimination of non-prudential regulatory barriers to achieve equal conditions of competition and enhanced terms of transparency....Such standards would ensure that American companies can compete effectively in participating countries financial services market. U.S. firms should be encouraged to develop new and innovative products to meet the needs of consumers in each of the eight participating economies. The financial services chapter of the U.S.-Korea FTA sets a gold standard in these critical areas and could serve as a departing point for further gains. [emphasis added]

Hmmm, "new and innovative financial products". Where have we heard that phrase before? Oh yeah, it was back in the fall of 2008 when CNN financial analysts were discussing how financial derivatives and credit default swaps brought the financial system to near full-scale collapse. The Chamber also wants to roll back the important (but modest) intellectual property exceptions for essential drugs that the Peru FTA contained:

It must be clear that the objective of the TPP is to raise the level of IP protection in the region to international best practices, and that wherever possible IP provisions should be lifted to the highest standards that exist among any of the parties to the agreement.

The National Association of Manufacturers (NAM) went so far as to threaten to withhold support for a TPP if the Obama administration doesn't give NAM everything on its wish list:

The NAM believes in the core importance of ensuring a gold standard agreement. The NAMs International Trade Policy Subcommittee most recently met on January 20, 2010, and among other matters agreed the NAM should testify in favor of moving forward on the TPP negotiation. There was a consensus at the meeting, however, that the NAMs support must be conditioned on the highest quality agreement.

Time is ticking away quickly for the Obama administration to define high standards in line with how a majority of Democrats in the House have defined them. Negotiations for the TPP begin in mid-March.

Global Trade Watch's comments to the USTR on the TPP are here.

February 02, 2010

New Blog on the Triple Crisis

Kevin Gallagher of Boston University / GDAE and Jayati Ghosh of Nehru University in India have just launched a blog on the Triple Crises confronting the world on finance, development and environment called the TripleCrisis.Com. Here' s their opening post:

Crises are not new to the world economy, or to developing countries. Indeed, our current predicament is a convergence of at least three crises: in global finance, development, and environment.  These areas are seemingly disparate but actually interact with each other in forceful ways to reflect major structural imbalances between finance and the real economy; between the higher income and developing economies; between the human economic system and the earth’s ecosystems.  This blog seeks to contribute to a more open and global dialogue around these three crises: about how they interact, and how they can collectively be solved.


Gallagher and Ghosh are both economists and good friends of Public Citizen, and I look forward to seeing what they do with TripleCrisis.Com.

February 01, 2010

A Year After Implementation of Peru Free Trade Agreement, U.S. and Peru Left with Broken Promises, No New Trade Model

Public Citizen Report Details Decline in Peru’s Labor and Environmental Conditions

On the one-year anniversary of the implementation of the U.S.-Peru Free Trade Agreement (FTA), it has become clear that the hopes and predictions of proponents of the trade deal have failed to materialize, Public Citizen said today. Instead, as critics of the deal had feared, environmental and labor conditions in Peru have deteriorated rapidly since the congressional passage of the FTA in late 2007 and implementation in early 2009. In a brief report released today, Public Citizen outlines some of the broken promises and labor and environmental problems.

The Peru FTA text included several reforms with respect to labor and environmental standards relative to the normal Bush trade pact model, which was based on the North American Free Trade Agreement (NAFTA) and the Central America Free Trade Agreement (CAFTA). These changes were added following a May 2007 deal between the Bush administration and some congressional Democrats.Peru FTA protest

Despite the revised environmental language, the Peruvian government rolled back environmental protections existing prior to the FTA so as to implement the FTA’s foreign investor rights to access forestry, mining and other natural resource concessions. This included access to sensitive Amazonian territories over which indigenous communities had control under pre-FTA Peruvian law. In response to indigenous opposition, including road blocks in the remote northern Amazonia region of Bagua, the Peruvian government dispatched the military, and the resulting confrontation resulted in 34 fatalities – making the Peru FTA the first U.S. trade agreement to result in an immediate body count. 

Despite the revised labor language, in Peru today under the FTA, Peruvian employers can use subcontracting and outsourcing legal loopholes that greatly limit workers’ ability to unionize; child labor and forced labor continue unabated.

“The initial outcomes of the Peru FTA’s implementation demonstrate that major reforms remain to be undertaken if a new American trade agreement model is to be created that can deliver broad benefits to people in the countries involved while protecting the environment,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division.

Starting in 2008, the U.S. House Committee on Ways and Means Chairman Charlie Rangel (D-N.Y.) and Trade Subcommitee Chair Sandy Levin (D-Mich.) protested the Bush administration authorizing the FTA to go into effect despite the García administration failing to implement key labor and environmental reform commitments. A January 2009 letter from Rangel and Levin to Bush U.S. Trade Representative Susan Schwab noted that the García administration adopted new loopholes that could allow enhanced use of company subcontracting to crush unionization drives.

The Peruvian government’s true intentions became clear at a U.S. Chamber of Commerce victory event the
day the Peru FTA was signed into law, when Peruvian President Alan García told the audience of lobbyists for U.S. multinationals: “Come and open your factories in my country so we can sell your own products back to the U.S.” (U.S. Chamber Magazine, December 2007. Accessed July 13, 2009.)

Recent comments filed by unions and other civil society groups concerning the administration’s proposal to initiate Trans-Pacific Partnership (TPP) agreement negotiations focus strongly on the need for major reforms to be made to the trade agreement model used for the Peru FTA. TPP talks, which would include Peru, would provide the Obama administration with the opportunity to implement the president’s trade reform campaign commitments that included the issues unaddressed in the May 2007 deal, and to replace the current damaging Peru FTA text with a new trade pact model.

Read the full report here.

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