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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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August 27, 2013

Colombia Uprising: Is This What "Free Trade" Looks Like?

Colombian farmers are dumping tons of oranges onto highways.  Roadways have been blocked throughout the country.  Hundreds of thousands of Colombian protestors are risking rubber bullets and even live ammunition to take to the streets.   

Is this what “free trade” looks like?  Flickr user Marcha Patriótica Independencia 4

Unfair trade is one of the rallying cries of the underreported protests currently wracking Colombia. Protesting groups are asking the Colombian government (among other things) to suspend and renegotiate the U.S.-Colombia “Free Trade” Agreement (FTA).  Thanks largely to the FTA, which took effect in May 2012, highly-subsidized U.S. agricultural products have started to swamp Colombia’s small-scale farmers, contributing to their displacement, the deterioration of livelihoods across Colombia, and the loss of the country’s food security.  

Before the FTA was passed, Colombia’s own Minister of Agriculture predicted a miserable outcome for the country’s farmers. He warned that if the asymmetric deal took effect, Colombian farmers “would have no more than three optionsFlickr user Marcha Patriótica Independencia 2migration to the cities or other countries (especially the United States or bordering countries), leaving to work in drug cultivation zones, or affiliating with illegal armed groups.” Not content to accept any of those three fates, Colombia’s farmers are now making their voices heard. 

For an on-the-ground perspective on the FTA-fed tumult in Colombia, Julia Duranti of Witness for Peace’s team in Colombia offers this guest post:

 

A Struggle for Survival in Colombia’s Countryside

Julia Duranti, Witness for Peace Colombia International Team

Though you wouldn’t know it from most English-language media or from heads of state, last week tensions in Colombia’s countryside came to a head. But not between the military and armed groups like the FARC, the usual suspects in foreign reporting on Colombia. The source of this uprising lies in policies not up for discussion in the country’s current peace talks: the impact of the U.S.-Colombia FTA – implemented in May 2012 – and policies that have similarly afflicted Colombian campesinos (small-scale farmers).

Flickr user Marcha Patriótica IndependenciaColombia’s campesinos launched the protests – which have overtaken the nation – because they perceive the FTA, and policies like it, to be a threat not just to their production, but their very existence.

The National Grassroots and Agrarian Strike began on August 19 when over 200,000 potato, rice, fruit, coffee, dairy and livestock farmers; miners; truck-drivers; teachers; healthcare workers; and students left their work activities and blocked roadways in 30 key corridors around the country, with the provinces of Boyacá, Valle del Cauca and Nariño being most affected.

The diverse protesters’ list of demands includes suspension and renegotiation of the U.S.-Colombia FTA, financial and political support for agricultural production, access to land, recognition of campesino, indigenous and Afro-descendant territories, the ability to practice small-scale mining, the guarantees of political rights of rural communities, and social investment in rural areas, including in education, healthcare, housing and infrastructure.

Along with roadblocks and marches, in symbolic acts intended to express their inability to earn a living and their frustration at government inertia, dairy farmers in Boyacá poured out over 6,000 liters of milk while citrus farmers in Valle del Cauca dumped 5,000 tons of oranges onto the highway.

Flickr user Marcha Patriótica Independencia 3What could possibly bring farmers to willingly destroy their own products? Campesino livelihoods have been devastated, a process that began with economic liberalization under President Cesár Gaviria in the early 1990’s and continued with a host of Colombian laws that cleared the way for the U.S-Colombia FTA. Then came the FTA itself.  Just over a year old, the deal is already taking its predicted toll on Colombia’s countryside. An FTA-enabled influx of heavily-subsidized U.S. products has contributed to the breakdown of Colombia’s local economies and the displacement of its farmers, fueling the urgency of the current protests.

Despite promises of more jobs and increased exports, the balance after year one of the U.S.-Colombia FTA is dismal for Colombia. According to Colombian paper El Espectador, Colombia’s exports to the U.S. actually fell 4.5% between May 2012 and March 2013, while Colombia’s imports from the U.S. rose 19.7%. In the agroindustrial sector on which many Colombians depend for their livelihood, U.S. imports from Colombia rose 11.5%, but Colombian imports from the U.S. skyrocketed 70%. An economic study conducted prior to the FTA’s passage predicted that just such a scenario would lead to income losses of up to 70% for the vast majority of Colombia’s farmers, contributing to their displacement.   

It is not only that strikers feel they cannot compete with heavily-subsidized U.S. production: they are actually prohibited from doing so. The FTA prohibits the Colombian government from subsidizing agriculture for export or domestic consumption, even as the U.S. government subsidizes U.S. agribusinesses to the tune of $15 billion each year.  

Continue reading "Colombia Uprising: Is This What "Free Trade" Looks Like?" »

August 23, 2013

Bloomberg, Health Experts Denounce Obama's Gift to Big Tobacco in the TPP

The Obama administration has drawn sharp criticism from leading health organizations, U.S. state representatives, and New York mayor Michael Bloomberg by caving to pressure from Big Tobacco to abandon safeguards for tobacco control policies in the Trans-Pacific Partnership (TPP), the pending "free trade" deal with 11 Pacific Rim countries. The administration has scrapped a proposal to provide a "safe harbor" for tobacco control measures.

Instead the administration will issue a proposal in the current Brunei round of TPP negotiations that clears a path for tobacco corporations to use the TPP to directly challenge governments' progressive public health measures.  

In response to the announcement, a major victory in tobacco corporations' effort to use TPP-like deals to roll back anti-smoking safeguards, Dr. Gregory Connolly of the Harvard School of Public Health stated, "Our government’s trade policy is promoting the tobacco epidemic." 

6a00d83452507269e2019104ee149f970c-320wiThe American Cancer Society, the American Heart Association, the American Lung Association, and the Campaign for Tobacco Free Kids denounced the Obama administration’s decision to cave to Big Tobacco's TPP demands at the expense of public health. Legal and health experts at the Harvard School of Public Health, Georgetown University Law Center, and Action on Smoking and Health blasted the TPP proposal, finding it "will do little to protect governments’ right to regulate tobacco." The state of Maine's Citizen Trade Policy Commission concluded, "it would be better to not offer this text at all than to give the false impression that the United States is serious about protecting government authority within the TPP to regulate tobacco to protect health.

Articles spotlighting the administration’s TPP backtracking have appeared in many prominent news sources, including the Washington Post, Bloomberg, the Wall Street Journal, and Reuters.

New York City mayor Michael Bloomberg also weighed in on the TPP controversy by releasing a scathing op-ed in yesterday’s New York Times. Bloomberg noted that not only would the U.S. proposal restrict tobacco control measures and significantly decrease the price of cigarettes, but also expose TPP governments to direct "investor-state" challenges launched by tobacco corporations against public health laws:

If the Obama administration’s policy reversal is allowed to stand, not only will cigarettes  be cheaper for the 800 million people in the countries affected by the trade pact, but multinational tobacco corporations will be able to challenge those governments — including America’s — for implementing lifesaving public health policies. This would not only put our tobacco-control regulations in peril, but also create a chilling effect that would prevent further action, which is desperately needed.

He's right. The TPP's extreme investor privileges would empower tobacco corporations to skirt domestic legal systems and attack tobacco control policies before extrajudicial tribunals as a means of intimidating policymakers who would dare to enact such safeguards. The Obama administration's proposal does nothing to limit, or even to address, this empowerment of Big Tobacco.

Unfortunately, the investor-state threat is not a hypothetical one. Phillip Morris has already used such investor privileges in other treaties to attack landmark anti-smoking laws in Australia and Uruguay after failing to undermine those health laws in domestic courts.  As Andrew Martin points out in Bloomberg, Philip Morris has been leading Big Tobacco's battle to pressure the Obama administration to weaken tobacco-control safeguards in the TPP.

The Obama administration's caving to that pressure makes clear the TPP's very real threat to public health.  As Laurent Huber of Action on Smoking and Health stated, the new tobacco-friendly proposal for TPP "will mean more lives lost, both here in the US and abroad.” It is more crucial than ever to expose the TPP and to stop it from being fast tracked through Congress. Our health depends on it. 

August 22, 2013

"Final" TPP Round Not Final: Are Even More Secretive Talks Ahead?

With No Text Agreed for Several Entire Chapters and Most Tough Political Decisions Unresolved, the So-Called ‘Final Round’ of Trans-Pacific Partnership (TPP) Talks Will Not Be the End of Negotiations

Will TPP Negotiations Become Even More Secretive After Imminent 19th Round of TPP Talks in Brunei, Which is Being Called the Last Formal Negotiating Round?

After announcing for a domestic audience that the Trans-Pacific Partnership (TPP) negotiations were in their “end game,” U.S. Trade Representative (USTR) Michael Froman will face quite a different reality when he meets with TPP nations united in opposition to many core U.S. TPP proposals this week at the start of the 19th round of negotiations in Brunei. Without text for two TPP chapters and no deals on any of numerous difficult market access issues, from dairy and sugar to apparel and rice, it is clear that the Brunei Round will, in fact, not be the final negotiating session. The real question is whether the TPP negotiations coming after the Brunei Round will be unannounced and even more secretive, Public Citizen said today.

Among the most contested aspects of the deal include the U.S. proposals on medicine patents, state-owned enterprises, Internet policy, financial regulatory limits, and environment and labor standards. 

Only five of the TPP’s 29 chapters pertain to traditional trade matters. The rest would set policies, to which the U.S. Congress and state legislatures would be required to conform, relating to regulation of energy and other services, financial regulation, food safety, procurement policy, patents and copyright policy, and other non-trade issues. The draft pact also includes NAFTA-style foreign investor rules that facilitate job offshoring by removing many of the risks and costs of relocating U.S. production to low-wage countries. Among TPP negotiating countries is Vietnam, the lower-cost offshoring alternative to China.

One can see why negotiators being deadlocked over entire TPP chapters to the extent that there is not even text is a detriment to the Obama administration’s announced October deadline for signing the TPP on the sidelines of the Asian Pacific Economic Cooperation summit. However, reporters at the Brunei Round or participating in USTR briefings during the round are likely to get the “TPP End Game” spin. As Obama administration officials try to convince Congress that the TPP is almost completed, some questions that the Obama administration would undoubtedly rather avoid:

1. Is the fact that there is no intellectual property chapter text to even negotiate over – even a heavily bracketed text – related to unwavering multi-year opposition to U.S. patent and copyright text proposals?

2. Is the multi-year deadlock over the TPP’s state-owned enterprises chapter going to be resolved in Brunei by the four nations in absolute opposition to the U.S. suddenly changing its position, or by the U.S. giving up on state-owned enterprise disciplines?

3. And what about the labor rights chapter, which is “done”… except for staunch opposition by many TPP countries to it being enforceable. Given that the Obama administration has pledged to Congress that the pact will have labor rights enforceable on par with the pact’s commercial provisions, what will happen to the non-undecided enforcement section of the TPP chapter?

4. And what about the environment chapter? There is a deadlock over not only the chapter’s enforceability but also the key rules such as enforcement of countries’ obligations in environmental treaties.

5. Has the U.S. now conceded to Vietnam the right to have duty-free treatment for apparel products assembled from Chinese textiles and other inputs so that Vietnam is now participating in closing up negotiations on other chapters, which it has not done to date?

6. Given united opposition by the other TPP countries that has thwarted closure to date of several TPP chapters, has the U.S. relented in its insistence that the TPP forbid any signatory country from using capital controls, speculation, or transaction taxes and other common macroprudential financial measures?

7. Have other countries dropped unified opposition to the U.S. proposal in the investment chapter to extend the controversial investor-state system to procurement and private-public-partnership utility management and natural resource contracts through an “umbrella clause”?

8. Will the United States allow Japan to exclude the five “sacred” commodities – rice, wheat and barley, beef and pork, sugar and dairy – from the TPP tariff zeroing, which is the condition for participating in the TPP that was set by the majority LDP party? 

“The fact that entire chapters of the TPP remain without even a draft text to fight over won’t be a popular talking point in Brunei, given that the Obama administration is claiming that the agreement is almost done while in reality negotiations will just continue on in even greater secrecy,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Apparently, the response to the growing opposition to the TPP among the U.S. Congress and the public here, and legislators and the public in other countries, is to drag negotiations even further underground and claim a deal is almost done.”  

August 21, 2013

A Shady Deal: The Secrecy and Substance of the Largest U.S. Trade Pact

Today, Simon Lester over at the Cato Institute, posted a Huffington Post piece called "The TPP Trade Talks: Forget Secrecy, Let's Talk Substance."  In it, he cited our New York Times critique of the Obama Administration's inexplicable decision to keep the sweeping Trans-Pacific Partnership (TPP) "trade" deal behind a wall of secrecy.  

Simon argued that we should not focus on the TPP's secrecy, but on its substance.

First, that's a tad difficult when said secrecy is obscuring said substance. Second, insofar as we have been able to opine on the shady substance (e.g. thanks to leaked TPP texts), we've not really held back in doing so.  See here, here, here, here, here, here, here, here, here, here, and here. Oh, and here.  

Here's our full exchange with Simon, also posted at Huffington Post (thanks to Simon for his engagement): 

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3:43pm, Ben Beachy

Simon, it’s difficult to talk about the substance of a deal that cannot be seen.  For 19 rounds and more than three years of TPP negotiations, the U.S. public and even most members of Congress have been kept in the dark on the TPP’s content, which could rewrite swaths of non-trade domestic policies.  Those of us tracking the secretive deal have had to rely on rumors, vague characterizations, and a few leaked texts to get an idea of its sweeping substance.

Indeed, the worrisome TPP provisions you point to are themselves the results of leaks, confirming the need for greater transparency.  We only know about the deal’s overreaching copyright extensions that you mention because of a leaked intellectual property text.  Similarly, it is only because of a leaked investment text that we have seen the extreme TPP provisions that, as you note, would actually empower foreign corporations to surpass domestic legal systems and drag sovereign governments before extrajudicial tribunals to demand taxpayer compensation for health and environmental policies they find inconvenient. 

Meanwhile, the vast majority of the TPP’s 29 chapters remain tightly under wraps.  When a few leaked chapters of a 29-chapter deal include alarming threats to the public interest, how can the appropriate conclusion be that we should “not get hung up too much on transparency issues?”  The disquieting leaks provide all the more reason to amplify the call for a long-overdue unveiling of the secretive TPP.  

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4:16pm, Simon Lester

Ben,

There is some truth to what you say. However, a lot of what will be in the TPP was also in prior agreements (e.g., investor-state). As a result, I think we have the basis already for a pretty good debate! We probably know about 95% of what will be in it. Of course, like you, I am eager to hear about the remaining 5%. But we can't have complete transparency in a negotiation (and we certainly don't have it in Congress either, with the legislative process). So let's get started talking about that 95%.

When I hear Elizabeth Warren complain about secrecy, I get frustrated because I would rather see her weigh in on the substance. What does she think about investor-state? Or about copyright extensions? Or, for that matter, protectionist tariffs? Many prominent people seem wary of weighing in on these difficult issues, and instead focus on secrecy. To me, that seems like a bit of a copout.   

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6:00pm, Ben Beachy

Simon,

I cannot see how a few leaked chapters in a 29-chapter deal counts as knowledge of 95% of that deal's contents. For the gaping holes not filled in by leaks, we (like you) indeed have been looking at past deals to get a hint at what the TPP could hold. But that's hardly a substitute for release of the official and current TPP text, which has already undergone 18 rounds of negotiations and alterations.

And insofar as we have been able to ascertain the TPP's shady substance (e.g. via leaks), we (like you) have not exactly held back in commenting on said substance. We have repeatedly spotlighted the threats to access to medicines, Internet freedom, and health and environmental safeguards posed by the TPP's leaked investment and intellectual property chapters. And we have quite openly noted the havoc that the TPP could pose to Wall Street reform (also raised by Sen. Warren), food safety, and jobs if the TPP replicates the deregulatory rules of past pacts.

It is precisely because of such threats that it is so critical to unveil the rest of the TPP’s content.

As we pointed out in the NYT op-ed you cited, even the Bush administration released online the negotiating text of the last similarly sweeping “trade” deal (the FTAA). We're simply asking the Obama administration to uphold the same standard of transparency used by the Bush administration. Until that modest request is granted, harping on the TPP’s secrecy is merited.   

August 14, 2013

Video: "Peril in the Pacific" Spotlights TPP's Dangerous Investor Privileges

Friends of the Earth, U.S. has released a video highlighting the threat that the Trans-Pacific Partnership (TPP) poses to the environment and human rights. Check out the video below to learn more about how the TPP's investment chapter (a draft of which has leaked) favors corporations over people and the environment by allowing comapnies to drag a government to an extrajudicial tribunal if they feel that a public interest law has affected their ability to make a profit.

August 09, 2013

A Fast Track to Greater Inequality?

President Obama is thankfully talking again about the yawning inequality in the U.S.  In an interview with the New York Times late last month, he said that the ever-widening gap in income is "not a future that we should accept." Unfortunately, it's the future that his trade negotiators are promoting. 

While Obama denounces inequality, the Obama administration is rushing to conclude talks on the Trans-Pacific Partnership (TPP), a sweeping commercial pact with 11 Pacific Rim countries that implicates everything from the cost of our medicines to the safety of our food. The TPP also threatens to further widen the gap between rich and poor, as emphasized by economist Nancy Folbre in a New York Times piece this week, by perpetuating the inequality-spurring history of unfair trade deals spelled out below.

Obama recently implied that unfair trade "sends a lot of jobs overseas." When the jobs being offshored are primarily those of workers in the middle and lower income brackets, as has been true under the last couple decades of TPP-like deals, middle-class wages stagnate as upper-class incomes climb. The result: increased income inequality.  

But Obama seems to miss this connection.  Just last week, in his economic speech in Chattanooga, Tennessee, he praised the Korea Free Trade Agreement (under which exports have been falling) and vowed to get authority from Congress to sign more such deals.  Obama's top trade official, Michael Froman, has confirmed that Obama would like to Fast Track deals like the TPP through Congress. Fast Track was an extreme and rarely-used maneuver that empowered executive branch negotiators, advised by large corporations, to ram through unfair trade deals like the TPP by unilaterally negotiating and signing the deals before sending them to Congress for an expedited, no-amendments, limited-debate vote. Apparently, Obama would like more of the same.

Stopping Fast Track would go far toward stopping the TPP.  And halting the TPP would go far toward halting the upward march of income inequality.  Unfair trade deals have been a steady drumbeat in that march:   

As unfair trade deals have been Fast Tracked into law, U.S. income inequality has jumped to levels not seen since the robber baron era. Today, the richest 10 percent of the U.S. is taking nearly half of the economic pie, while the top 1 percent is taking one fifth. Wealthy individuals’ share of national income was stable for the first several decades after World War II. But that share has shot up 45 percent for the richest 10 percent and 117 percent for the richest 1 percent since the passage of Fast Track in 1974, a time period characterized by a series of unfair trade deals. The income share of the richest 10 percent escalated particularly abruptly after the 1994 enactment of the North American Free Trade Agreement (NAFTA). See the graph below. 

The median family has been losing about as much to trade-induced inequality as to taxes. Longstanding economic theory predicts that trade will increase income inequality in developed countries. In the 1990s, the pro-NAFTA Peterson Institute for International Economics (PIIE) sought to quantify the effect of trade policy on U.S. income inequality, and found that nearly 40 percent of the increase in inequality was attributable to U.S. trade policy. When the Economic Policy Institute (EPI) updated the PIIE figures, it found that the median U.S. family lost about $2,300 per year (in today’s dollars) from the burden of rising inequality due to trade. The wage losses from trade each year for the median family are on par with the median household’s income tax burden. EPI projects that, if current trade policies and trends continue, all wage gains made since 1979 by workers without a four-year college degree (65 percent of the U.S. workforce) could be erased.

Changes in technology or education levels do not fully account for U.S. wage pressures. Some have argued that advances in computer technology explain why less technologically-literate U.S. workers have been left behind, asserting that more education – rather than a different trade policy – is how to end income inequality. While more education and skills are desirable for many reasons, these goals alone will not solve the problems of growing inequality. First, as documented in a Federal Reserve Bank paper, inequality started rising as systematic U.S. trade deficits emerged, in the early Fast Track period, far before most workers reported using computers on the job. Second, college-educated workers have also seen their wage growth stagnate, even in technologically sophisticated fields like engineering. Thus, rectifying unfair trade policy, not only better educating U.S. workers, will be an essential part of tackling rising income inequality.

Trade and Inequality

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