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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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July 25, 2013

Obama Hints at Unfair Trade as a Cause of Stagnant Wages

In his economic speech at Knox College yesterday, President Obama acknowledged the role of unfair trade in stagnant wages and growing inequality:

In the period after World War II, a growing middle class was the engine of our prosperity...But over time that engine began to stall, and a lot of folks here saw it...Global competition sends a lot of jobs overseas. It became harder for unions to fight for the middle class...And so what happened was that the link between higher productivity and people's wages and salaries was broken...So the income of the top 1 percent nearly quadrupled from 1979 to 2007, but the typical family's incomes barely budged.

That's all true.  Despite a doubling of U.S. workers' productivity, real median wages hover at 1979 levels.  What does unfair trade have to do with this?  We spell it all out in our synopsis of the economic impacts of the offshoring-prone "free trade" era, enabled by the undemocratic power grab known as Fast Track, which is ironically now supported by Obama's own administration. Here are some critical excerpts: 

Trade agreement investor privileges promote offshoring of production from the United States to low-wage nations. In the past, trade competition came from imports of products made by foreign companies operating in their home countries. But today’s “trade” agreements contain various investor privileges that reduce many of the risks and costs previously associated with relocating production from developed countries to low-wage developing countries. Thus, many imports now entering the United States come from companies originally located in the United States and other wealthy countries that have moved production to low-wage countries. For instance, over half of China’s exports are now produced by foreign enterprises, not Chinese firms.  American workers effectively are now competing in a globalized labor market where some poor nations’ workers earn less than 25 cents per hour.  

The bargaining power of American workers has been eroded by threats of offshoring. In the past, American workers represented by unions were able to bargain for their fair share of economic gains generated by productivity increases.  But the investor protections in today’s trade agreements, by facilitating the offshoring of production, alter the power dynamic between workers and their employers. For instance, a study for the North American Commission on Labor Cooperation – the body established in the NAFTA labor side agreement – showed that after passage of NAFTA, as many as 62 percent of U.S. union drives faced employer threats to relocate abroad, and the factory shut-down rate following successful union certifications tripled.

About 7 million American manufacturing jobs – over 1 out of 3 – were lost during the Fast Track era. The U.S. manufacturing sector has long been a source of innovation, productivity, growth and good jobs.  By 2012, the United States had less than 12 million manufacturing jobs left – about 6.6 million fewer than in 1974 before Fast Track was first established,  with less than nine percent of the American workforce in manufacturing for the first time in modern history.  

Displaced manufacturing workers have been forced to take lower-paid service jobs. Trade policy affects the quality of jobs available, not the aggregate quantity. And the job quality (i.e. wage level) available has been degraded by the mass erosion of manufacturing. According to the Bureau of Labor Statistics, two out of every five displaced manufacturing workers who were rehired in 2012 experienced a wage reduction of greater than 20 percent. Most took a pay cut in lower-paid service jobs (the graph below indicates how lower-paid service jobs have replaced higher-paid manufacturing jobs).

Trade policy holds back wages even of jobs that can’t be offshored. When workers in manufacturing are displaced and seek new jobs, they add to the supply of U.S. workers available for non-offshorable, non-professional jobs in construction, health care, hospitality and more. The Bureau of Labor Statistics has projected that some of the U.S. economy’s fastest job growth in the coming decades will occur in such low-skill occupations. But as increasing numbers of American workers, displaced from better-paying jobs by current trade policies, have joined the glut of workers competing for these non-offshorable jobs, real wages have remained stagnant in these growing sectors.  

And that, in a nutshell, is how Pres. Obama got from "Global competition sends a lot of jobs overseas" to "the typical family's incomes barely budged." Unfair trade deals, built for offshoring, reduced workers' bargaining power, forced displaced manufacturing workers to take big pay cuts, and contributed to the overall glut of workers competing for lower-wage jobs. Now if only his trade negotiators would spot the unfair trade link and stop pushing more offshoring-prone "free trade" deals.  

Manufacturing

July 24, 2013

Will U.S. Face Trade Sanctions for Anti-Smoking Law?

As Deadline Passes for U.S. to Alter Law Curbing Teen Smoking, Ruled Against by WTO, Final Decision on Administration’s Anti-Smoking Policy Could Shift Back to WTO

As the World Trade Organization (WTO) deadline passes today for the United States to comply with a WTO ruling against a U.S. ban on sweet-flavored cigarettes targeting youth, the spotlight shifts back to the WTO, which could now authorize trade sanctions if requested by Indonesia, the country that won the WTO challenge.

“We now have to wait and see whether the World Trade Organization will slam us with trade sanctions because the United States wants to maintain a policy to keep tobacco companies away from our children,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “After last year’s rulings against U.S. dolphin protections and popular consumer labels letting Americans know where their food comes, will the WTO depart from its anti-consumer legacy or choose to punish the United States for a common sense public health law?” 

Yesterday, the Food and Drug Administration (FDA) requested public comment on an issue related to the WTO ruling: the health implications of menthol cigarettes. The Obama administration stated that FDA’s action constitutes compliance with a 2012 World Trade Organization order to alter a key component of the Obama administration’s landmark Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA).

That law bans sweet-flavored cigarettes that entice youth to smoke. It shut down the sales of chocolate, strawberry and other sweet-flavored cigarettes sold only by U.S. firms as well as the sale of clove-flavored cigarettes that both U.S. and foreign tobacco companies were marketing. The WTO’s April 2012 final ruling against the FSPTCA concluded that the United States could only ban sweet-flavored cigarettes marketed to youth if it banned all flavored cigarettes, including menthols. The FDA will receive comments for 60 days on potential regulation of menthol cigarettes, after which the administration will decide what, if any, action will be taken.

It remains to be seen whether Indonesia will accept the FDA announcement or appeal to the WTO to enact trade sanctions against the United States. Indonesia convinced the WTO that the ban on its U.S. sale of clove-flavored cigarettes violated WTO anti-discrimination rules. U.S. consumer and health groups were outraged by the ruling, which effectively forbade incremental policies designed to target anti-smoking efforts at key populations – in this case, children.

The WTO’s April 2012 ruling against the anti-smoking FSPTCA law was soon followed by WTO rulings against two other popular U.S. consumer policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In June 2012, the WTO ruled against the popular U.S. country-of-origin labeling (COOL) meat labeling program that informs U.S. consumers where their meat comes from and assists regulators in tracking food-borne illness outbreaks.

The administration recently announced solutions to both cases that strengthen rather than weaken consumer and environmental safeguards. Mexico and Canada have threatened to challenge the new U.S. meat labeling policy at the WTO, which would issue a final decision about whether the new labels meet WTO rules. Mexico has also vowed to challenge the enhanced dolphin-safe labeling program, which would place that policy before the WTO as well. If the WTO does not rule that the strengthened U.S. safeguards satisfy WTO requirements, Mexico and Canada could impose trade sanctions against the United States unless and until the U.S. policies are changed to the satisfaction of the WTO.

July 19, 2013

TAFTA: Corporations Express Fear of Democracy

The Trans-Atlantic Free Trade Agreement (TAFTA) negotiations have only just begun, but already hundreds of corporations are weighing in to let negotiators know what they hope to get out of the agreement.  In many cases, multinational corporations submit their views to both sides, and one shudders to imagine teams of European and U.S. negotiators lining up with identical talking points representing the views of “their” corporations, and speedily agreeing on “uncontroversial” sections that favor the interests of corporations over consumers.

Many of the large corporations use their comments to signal their support of “science-based regulation” over “political” considerations (read: support for a weakening of safeguards, such as labels for genetically-modified food, over popular backing for those safeguards).  Here is a selection of some official corporate statements to that effect on TAFTA and food and product safety, submitted either to the U.S. Trade Representative or the Joint EU-U.S. Solicitation on Regulatory Issues:

 Food Safety

  • “Science-based risk assessment, as the foundation for regulatory decisions, must not be overruled by an incorrect (and politically driven) application of the precautionary principle, as currently applied by the EU (Croplife America, a lobbying group of U.S. pesticide corporations that includes genetically-modified-organism (GMO) giant Monsanto)
  • Finally, the EU’s political approach in regulating crops enhanced with traits achieved through modern biotechnology procedures is a concern to U.S. wheat producers. The EU biotechnology approval process is slow and often influenced more by politics than science, creating uncertainty and deterring new investment in wheat research… Science and market preferences, not politics, should be the determinants. (U.S. Wheat Associates)
  • The current 'asynchronous approval' situation is caused by many factors, including risk assessment guidelines that are not aligned and increasing politically-motivated delays in product approvals. (National Grain & Feed Association and North American Export Grain Association, lobbying groups comprised of the largest U.S. agribusinesses, such as Cargill and Archer Daniels Midland)
  • International trade rules fully support trade in products of biotechnology for planting, processing and marketing, subject to science-based regulation… Politically motivated bans or moratoria by WTO member states are not consistent with members’ WTO obligations. (National Corn Growers Association)
  • The implementation of production standards based on politics or popular thought instead of science will do nothing more than eliminate family operations and drive up costs to consumers. (National Cattlemen's Beef Associationa factory-farm-supporting lobbying group for the beef industry)
  • What is deeply concerning about the EU’s overall approach to SPS [sanitary and phytosanitary] issues, however, is that its political body is frequently given the ability to override the EU’s own scientific authority’s findings to instead establish restrictions on products based typically on animal welfare or consumer preferences. (National Milk Producers Federation & U.S. Dairy Export Council)

 Product Safety

  • Significant barriers to further alignment, namely politics and differences in regulatory approach, remain on both sides of the Atlantic. Our experience has also shown that politics and differences in regulatory philosophy are fundamentally the root causes for differences in toy safety standards… Frequently, standards that are stricter than their international counterparts are promulgated due to political influence or the (often unstated) desire to erect technical barriers to trade, and not predicated by science or risk factors. (Toy Industry Association and Toy Industries of Europe)
  • We would like to highlight the fact that these regulatory differences are often politically motivated… We regret that the differences in regulations in the EU and US are often caused by the result of politics rather than a different approach to ensuring safety. (Toy Industries of Europe)
  • Such discussions need to take place between technical, not political or administrative, entities and need to make business sense for the organizations involved. (ASME, a lobbying group for engineers -- the first U.S. "non-profit" entity convicted for violating antitrust laws)

But what do these corporations mean when they use the word “political?"  One possibility is anything they happen to disagree with. 

But let’s give them slightly more credit than that –- what happens if we substitute the words democracy/democratic for politics/political?  After all, the "political" bodies the corporations fear are the democratically elected representatives of the people

Now we see:

  • Croplife (i.e. Monsanto) complaining about the European Commission’s democratically driven application of the precautionary principle, which restricts GMOs.  
  • U.S. agribusinesses decrying democratically-motivated delays in approving GMOs and other products that raise food safety concerns.  
  • The beef industry worrying about production standards based on democracy or "popular thought."
  • Big Dairy concerned that the EU’s democratic body prioritizes "animal welfare [and]consumer preferences."  
  • Toy corporations fearing that democratically motivated regulations will lead to stricter "toy safety standards."  
  • ASME wanting to keep democratic entities out of the room so that regulation “makes business sense for the organizations involved."

The idea that we can choose science over democracy when making our regulations is, of course, nonsense.  Science doesn’t tell us how we should decide between safer toys and cheaper toys (or larger profits for toy companies).  Science doesn’t tell us how cautious we should be about eating food that has been genetically modified to increase farm industry profits.  Science doesn’t tell us how to value cheaper meat and milk versus safeguards that limit the use of antibiotics or acidic carcass cleaning and that allow animals to live in a cage large enough to turn around in. 

Science can inform the unavoidable trade-offs in our policy choices.  But in the end we, the people, not they, the unelected trade negotiators and their corporate advisors, must decide how to strike the balance.

As the TAFTA negotiations get underway, this attempt by industry insiders to concoct an argument that they should be involved in writing regulation, but our democratically elected bodies should not, is yet another reminder of the danger of allowing an agreement to be negotiated behind closed doors, with hundreds of corporate “advisors,” and without transparency to the public or even our democratically elected representatives.

July 16, 2013

Is Commissioner Barnier the "Fat Cat's Meow"?

Fat catOn the heels of the first round of negotiations of the Transatlantic Free Trade Agreement (TAFTA) held in Washington DC last week, the European Union's Commissioner for Internal Market and Services Michel Barnier spoke at  at the Brookings Institution on his way to meet with U.S. Treasury Secretary Jack Lew.  Much to the dismay of consumer advocates who have pushed for financial re-regulation since the crisis, Commissioner Barnier has been an outspoken critic of aspects of the Dodd-Frank financial reform, and has made clear his intentions to use TAFTA negotiations to go after them! 

Big U.S., Canadian, and European banks, which have cited U.S. trade obligations in their attempts to water down pieces of Dodd-Frank, are likely quite pleased to have Commissioner Barnier on their side.  Perhaps that's why a literal fat cat with a sign that read "Banksters for Barnier Heart TAFTA's Financial Deregulation" came to greet the Commissioner outside the event at Brookings yesterday.  

The Commissioner's talk, hosted by the normally very straight-laced and dry Brookings Institution, seemed to spark activist creativity.  Not only was there a feral feline outside, but apparently the same pranksters, who had distributed cards at the TAFTA negotiations ostensibly from the National Security Agency welcoming European negotiations and thanking them in advance for sharing their negotiating positions, were at it again.  This time I saw taped up in the Brookings restroom stall a similar card that said "The NSA commends Commission Barnier on his remarks in advance (because we read all of his emails)".  That poke probably didn't sit too well with the European officials who are dealing with officials from member states who are hopping mad about the claims of NSA spying on European diplomatic missions.

NSA BarnierMr. Barnier nervously mentioned that he had "the pleasure to meet a fat cat with a sign that said Barnier is a deregulator," before giving his prepared remarks about "Restoring Momentum in Transatlantic Cooperation on Financial Reform".

During the question and answer period, I took the opportunity to ask Commissioner Barnier the following question:

"In the wake of the financial crisis, consumer protection groups have worked hard to re-regulate the financial service industry in order to avoid future devastating crises.  In the U.S., Dodd-Frank has been a key piece of this.  And as I’m sure you are aware, Wall Street firms and others have lobbied hard to water down aspects of the rulemaking on Dodd-Frank including on its cornerstone Volcker rule. Other important efforts include the proposed new Fed regulations for foreign banks' legal forms and requirements. You have stated repeatedly your concerns about these and other aspects of U.S. financial regulation and impacts on European banks, and mentioned your intent to address these concerns in the TAFTA/TTIP negotiations.  

Senators Elizabeth Warren and Sherrod Brown have publically stated that they find it inappropriate for  so-called trade negotiations to be used as a back door to undermine financial regulation.  The TransAtlantic Consumer Dialogue has prioritized its focus on TAFTA in part due to your comments.
Later you have said that you do not intend to undermine regulation. To an outside observer, including to the banks that support your call to address these issues in TAFTA, it appears that the intent is to use TAFTA to push the same agenda of the largest banks responsible for the financial crises to thwart financial re-regulation efforts in the U.S.? Can you clarify?"

Commissioner Barnier responded, "I can't imagine how anyone would use the TTIP  [which we call TAFTA] to lower the protection for consumers, small investors and taxpayers. At least I would not accept that."

We certainly hope this is the case, though his explicit targeting of specific aspects of U.S. financial re-regulation eerily echoes the desires of the biggest banks.  Just minutes prior to my question, Commissioner Barnier's answer to a question from a representative of a large Japanese bank about his opinion on the new Fed rule on foreign banking institutions was "On that point, I seek exactly what you seek yourself. I think this proposal of legislation must evolve." 

July 12, 2013

Obama Administration Stands Firm on ‘Dolphin-Safe’ Tuna Labels; Will the WTO Authorize Trade Sanctions?

In Round 3 of Epic WTO v. Flipper Case, Mexico Hints That It Will Seek Trade Sanctions Against U.S. Over Response to Latest WTO Ruling Against Popular Dolphin-Safe Labels

In a creative response to a 2012 World Trade Organization (WTO) ruling, the National Oceanic and Atmospheric Administration (NOAA) has issued a new regulation supported by Public Citizen that strengthens the criteria for dolphin-safe labeling. Mexico, which challenged the policy, sought a rollback of the labeling program and has indicated that it may challenge the new regulation and seek WTO authorization to impose trade sanctions against the United States.

NOAA’s welcome announcement puts the spotlight back on the WTO, which must decide if it will accept the policy as meeting WTO rules or continue its legacy of undermining dolphin protection.

A U.S. ban on the sale of tuna caught with dolphin-deadly purse seine nets was gutted in 1997 after 1991 and 1994 trade challenges by Mexico and other nations. The ban was enacted after six million dolphins were killed by the nets. Outrage over the rollback triggered a new era of trade activism. Mexico’s latest challenge targeted the voluntary labeling policy that replaced the ban on dolphin-deadly tuna. This market-oriented approach provides consumers with information so they can decide if they prefer dolphin-safe tuna.

“Public Citizen applauds NOAA’s approach, which breaks with years of the U.S. government weakening consumer and environmental policies attacked at the WTO,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “We are now left to wait and wonder if the WTO will continue its anti-environmental, anti-consumer rights legacy or finally side with Flipper and consumers’ right to make informed decisions about the food we purchase.”

In a controversial move, the WTO ruled in 2012 that the U.S. labeling program, for which many countries’ tuna qualifies, violated WTO non-discrimination rules because tuna caught in the Eastern Tropical Pacific (ETP) had to meet additional criteria to qualify for the label. The ETP is the only region where dolphins are known to congregate above schools of tuna. Thus, dolphin-safe criteria for that region are set by the Inter-American Tropical Tuna Commission (IATTC), an international body that includes Mexico, and apply to all fishers operating there.

The U.S. labeling regime is voluntary. If U.S. or Mexican fishers choose to use the dolphin-safe methods stipulated by the regime, their tuna qualifies for U.S. dolphin-safe labels. Tuna not meeting the standard can be sold in the United States without the label. U.S., Ecuadorean and other tuna fleets chose to meet the dolphin-safe standard. After decades of refusing to transition to more dolphin-safe fishing methods, Mexico challenged the labeling program at the WTO. The WTO ruled against the policy even though the same standards applied to U.S. fishers, though the alleged discrimination resulted from Mexican fishers’ decision not to meet the standard, and though Mexican tuna could be sold in the United States without the dolphin-safe label.

NOAA’s new policy, supported by Public Citizen and other consumer and environmental groups, addresses the discrimination claim by strengthening the criteria used to assure that tuna caught in other regions and sold under the dolphin-safe label is caught without injuring or killing dolphins. Even before this improvement, the labels contributed to a more than 97 percent reduction in tuna-fishing-related dolphin deaths in the past 25 years. The labels allow consumers to “vote with their dollars” for dolphin-safe methods.

Mexico has stated that it is “analyzing all the available legal mechanisms” to push the United States to alter its response, which includes requesting WTO authorization to impose trade sanctions against the United States. WTO approval of such sanctions would continue the saga of WTO interference with countries’ environmental policies and reinforce the anti-WTO public sentiment spurred by last year’s spate of anti-consumer WTO rulings. In April 2012, the WTO ruled against the Obama administration’s flavored cigarettes ban used to curb youth smoking, and in June 2012 it ruled against the popular U.S. country-of-origin labeling (COOL) program used to inform consumers where their meat comes from.

If the WTO decides that the new policy does not meet its requirements, Mexico can impose trade sanctions against the United States until the policy is altered to the WTO’s satisfaction. If sanctions are authorized, the administration may find the best response to be maintaining the new regulation and negotiating a settlement with Mexico. This was the European Union’s approach after a WTO ruling against its ban on artificial beef hormones that is widely popular with consumers. U.S. environmentalists have won repeated court cases stopping attempts by the George W. Bush and Clinton administrations to weaken the regulations defining the criteria for obtaining a dolphin-safe label under the current law. Thus, absent a negotiated settlement, the administration would face the prospect of having to seek a congressional rollback of a widely popular law, effectively asking Congress to feed Flipper to the WTO.

“The troubling trend of repeated successful WTO attacks against America’s dolphin protection and consumer information policies shows how the terms of our current ‘trade’ agreements can undermine core environmental and consumer safeguards,” said Wallach. “As the Obama administration now seeks to expand the same sort of rules in new Trans-Atlantic and Trans-Pacific pacts it is negotiating, the public is taking note.”

July 11, 2013

TAFTA’s Trade Benefit: A Candy Bar

This week’s launch of negotiations for a massive U.S. “trade” deal with Europe – the Trans-Atlantic Free Trade Agreement (TAFTA) – has spurred several news articles that cite studies projecting large-sounding economic benefits of the deal. 

How realistic are these projected benefits?  How big are they?  And how do they stack up against the potential cost of eroded environmental, financial, health, and consumer protections?  (A smorgasbord of public interest groups highlighted such threats in a letter to Obama and EU officials on Monday and in briefings before TAFTA negotiators yesterday.) 

Based on one study touted by prominent publications this week, the trade-related benefits we should expect from TAFTA amount toan extra three cents per person per daystarting in 2029. 

TAFTA TwixSo if you’re willing to subscribe to a deal that implicates the stability of our climate and the safety of our food, and you’re willing to wait until today’s newborns reach driving age to see any benefits, you would be able to save enough TAFTA trade benefits over the course of a month to almost buy a candy bar.

The study was cited in a Washington Post Wonkblog piece this week, which praised the potential economic impact of TAFTA-produced tariff reductions between the EU and the United States:

Tariffs on stuff traded between the United States and Europe are currently pretty low, in the 5 to 7 percent range. Getting rid of them entirely means that buyers pay less for goods, and also that firms get more productive to stay competitive — a “dynamic” effect that could boost trans-Atlantic trade by around $180 billion a year.

But this deal is not principally about traditional trade matters like tariffs.  Given that (as stated) tariffs between the U.S. and the EU are already quite low, many corporate proponents of the deal see little to gain from tariff reduction and much more to gain from TAFTA’s stated goal of “elimination, reduction, or prevention of unnecessary ‘behind the border’” policies.  Click here for some of the specific financial stability, climate security, and food safety policies that industries have requested to be placed on TAFTA’s chopping block.  And click here for our retort to a different, oft-cited study that projects economic gains from the gutting of such public interest policies. 

Though the Wonkblog later acknowledges that TAFTA is not primarily about tariffs, it is content to tout a study projecting a large-sounding benefit from tariff reductions. Strangely, however, the touted figure – a $180 billion “boost” to trans-Atlantic trade – does not actually appear in the cited study

It’s not clear how the Wonkblog extracted the $180 billion trade increase figure from a study that projects a $51-122 billion trade increase.  Perhaps the intent was to cite the study’s theoretical projection of a $182 billion increase to U.S. GDP – a result of the most starry-eyed scenario the study could envision.  That number assumes that tariff reductions will cause strong “dynamic” economic growth, a contentious proposition that academics have repeatedly assailed with empirical evidence showing no such trade-growth causation (see here and here).  After dropping this dubious assumption, the supposed $182 billion GDP growth for the U.S. shrivels to just $20.5 billion, according to the study (and to just $1.6 billion for the EU). 

The supposed economic benefits shrink even further when examining the study’s projection of what the deal would mean in terms of actual income (a more relevant indicator than the obtuse GDP benchmark). The pro-TAFTA study projects that total annual U.S. national income would be just $4.6 billion higher under the deal (with EU total income just $3.2 billion higher).  Even this number is unreasonably high, given that it assumes that 100% of existing tariffs between the EU and the U.S. would be fully eliminated under the deal.  While both sides have stated this as an aspirational goal, the EU negotiating mandate already states that “both Parties will consider options for the treatment of the most sensitive products, including tariff rate quotas.”  This ex-ante position suggests a lesser degree of tariff reduction than that assumed by the $4.6 billion figure.  But even proceeding with this inflated figure, we find a rather deflated projection of “benefits.” 

The study assumes that this supposed benefit would occur five years after implementation of the deal.  President Obama has stated his intent to get the deal signed by the end of 2017.  The deal would be quite controversial if negotiators grant industry groups’ wishes for a substantive weakening of consumer and environmental safeguards.  Under the unlikely scenario that such a deal could get past the U.S. Congress, it would probably take several years to do so (the controversial pacts with Korea, Panama, and Colombia languished under protest for about 5 years after getting signed, even under Fast Track), suggesting that ratification wouldn’t happen until 2023, meaning the deal likely would not take effect until 2024.  According to the study, the supposed economic benefits of the deal could be fully felt five years later, in 2029. 

What would the projected $4.6 billion be worth in 2029?  After adjusting for inflation and population growth, that amounts to about an extra three cents per person per day.  Again, after a wait of 16 years, you’d get a candy-bar-sized benefit from each month of TAFTA-provided tariff reductions. 

A dose of reality and simple math confirms that proponents of TAFTA cannot seriously sell the deal with the standard promise that tariff reductions will bring increased welfare.  Once again, this deal in not primarily about “trade,” as traditionally defined.  Industry demands and leaked documents reveal that this deal has more to do with whether we maintain or roll back Wall Street reforms, restrictions on genetically-modified food, data privacy policies, carbon emissions controls, and other key protections.  An honest debate about TAFTA is a debate about whether we like these safeguards, not whether we like trade.  

July 01, 2013

Will the Trans-Atlantic Spying Scandal Kill the Trans-Atlantic "Trade" Scandal?

The newest Snowden-facilitated leak – that the U.S. National Security Agency (NSA) has been spying on European governments – is the latest hurdle to appear in the steeplechase-resembling race to launch negotiations for the Trans-Atlantic Free Trade Agreement (TAFTA)

The revelation has sparked ire from European officials, unleashing a torrent of warnings today that TAFTA negotiations, slated to start next week, may be doomed before they begin. 

Amid reports that the NSA bugged the offices and infiltrated the hard drives of EU government officials, EU officials have made clear that they are not in the mood to trust U.S. trade negotiators.  Yesterday the EU Commissioner of Justice stated, “We cannot negotiate over a big trans-Atlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators.”  At this point, that doubt seems more than slight. 

But EU nations aren’t the only ones in the crosshairs of the NSA’s Cold-War-style espionage ambitions.  The Guardian revealed yesterday that Mexico and Japan, members of the similarly-sweeping Trans-Pacific Partnership (TPP) “trade” pact, appear on a list of 38 foreign embassies and missions that the NSA lists as spying “targets.”  (It kind of belies the moniker of “partnership” when you spy on your “partners.”)  The revelation could bring the sort of rift with TPP countries that we are now seeing with TAFTA countries. 

For TAFTA, that rift didn’t begin with the most recent NSA spying scandal.  U.S. and European corporations have explicitly called for the deal to be used as a way to water down critical safeguards, prompting waves of criticism from consumer, environmental, health, farmer, labor, and tech groups on both sides of the Atlantic. 

The National Corn Growers Association, which recently went to bat for Monsanto in a Supreme Court case pitting the genetically-modified-organism (GMO) giant against an Indiana farmer, asked that TAFTA be used to “end the moratorium” on GMOs in Europe.  That already contentious proposition became all the more so when non-approved strains of GMO wheat were found in Oregon one month ago. 

Meanwhile, corporations the likes of Verizon have called for such deals to be used to ensure that privacy policies do not limit the “seamless” flow of personal data across borders – a particularly taboo request in the wake of revelations that Verizon has been handing to the NSA the private phone data of anyone carrying a Verizon phone.

Even more incredible, corporations the likes of Chevron have asked that TAFTA grant foreign corporations the power to directly challenge sovereign governments over environmental and health policies in tribunals that operate completely outside any domestic legal system.  The EU negotiating mandate for TAFTA has granted this request, incorporating the extreme “investor-state” enforcement mechanism.  That incredible provision alone generated over 10,000 ire-filled comments from U.S. citizens within 32 hours in response to a single email from Rep. Grayson in May. 

Such controversial components of the deal have generated a crescendo of controversy surrounding TAFTA.  Ironically, the NSA has now added to the cacophony of opposition.   Corporate America cannot be pleased.  The NSA’s overreaching national security agenda has jeopardized their overreaching corporate agenda to use TAFTA to roll back financial, climate and food safety standards that make doing business less convenient.  If the two agendas would cancel each other out, perhaps we could get on with an agenda that’s actually supported by the public – from environmental stability to public health to personal privacy. 

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