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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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June 25, 2014

Corporate America’s Mysterious Affinity for the Number 700,000

The Chamber is at it again.  As negotiations drag and support flags for the controversial Trans-Pacific Partnership (TPP), the U.S. Chamber of Commerce has come up with a new number to sell the controversial deal to a skeptical Congress and U.S. public: 700,000. 

That’s the number of U.S. jobs that the corporate alliance claims could be created by the sweeping pact opposed by a diverse array of members of Congress, small businesses, and labor organizations for its threats to, well, U.S. jobs. 

How did the Chamber get this number?  They don’t say. 

The Chamber blog post proclaiming the six-digit figure simply says it is “based on the methodology and outcomes” of a Peterson Institute study that used outsized assumptions to produce miniscule projections for the TPP’s economic impact.  Under the most optimistic scenario the authors could envision, the study projected a 0.13 percent increase in U.S. GDP under the deal –- a fraction of the estimated GDP contribution of the latest version of the iPhone. 

But the Peterson Institute study did not project what this tiny economic impact would mean for jobs.  It is unclear how the Chamber pulled a jobs number from a study that did not produce a jobs number. 

We called them to ask.  We were told that no one was there who could answer our question.  Multiple calls and emails later, and we still have no response from the Chamber to solve the mystery of the unsubstantiated statistic.

Here’s one theory on the steps the Chamber took to derive its estimate of the TPP’s prospective impact:

  1. Copy
  2. Paste

This is not the first time the Chamber has used the number 700,000. Indeed, the Chamber appears to have an uncanny affinity for the number when pushing a retrograde, anti-worker agenda. 

When some states raised their minimum wage laws and increased workers’ benefits after the Great Recession, the Chamber commissioned a study finding that such labor laws had cost U.S. jobs.  How many?  700,000

When the Obama administration proposed a tax increase on the wealthy in 2012, the Chamber commissioned a study finding that the proposal would eliminate U.S. jobs…700,000 jobs, to be precise. 

Perhaps it should not come as a surprise that the Chamber is using its lucky number once again to push a regressive deal like the TPP. 

But hey, if the copy/paste method works…

Maybe we should take a cue from the Chamber and start using whatever numbers we have lying around.  Let’s see…how many U.S. jobs have been lost under NAFTA to Mexico alone?  Well I’ll be -– the answer is 700,000

Borrowing a card from the Chamber, we hereby project that the TPP will cost U.S. workers 700,000 jobs. 

Okay, obviously it would be ridiculous to pull such projections out of thin air.  And let’s hope that’s not what the Chamber is doing to arrive at its unsubstantiated claim. 

But without an explanation from the Chamber, we are left to speculate.  Maybe they somehow converted Peterson’s miniscule projected GDP gain projection into a much larger jobs gain, errantly ignoring the impact of TPP-spurred inequality.  (The Center for Economic and Policy Research found that the likely increase in inequality resulting from the TPP would swamp the small gains projected by the Peterson Institute, spelling a pay cut for 90 percent of U.S. workers.)  

Or maybe the Chamber extrapolated a jobs figure from the study’s export calculations, errantly ignoring the impact of TPP-spurred imports.  (Any study claiming to evaluate the net impact of trade deals must deal with both sides of the trade equation –- in the same way that exports are associated with job opportunities, imports are associated with lost job opportunities when they outstrip exports, as dramatically seen under existing U.S. pacts.) 

In the end, we don’t know how the corporate alliance generated the mystery number behind its TPP cheerleading.  Until we see some evidence, we’re going to take the Chamber’s statistic with about 700,000 grains of salt.  

June 18, 2014

Nixon Hatched Fast Track, Not FDR

By Lori Wallach, director of Public Citizen’s Global Trade Watch and author of The Rise and Fall of Fast Track Trade Authority

Amidst the distorted trade data and counterfactual foreign policy claims, U.S. Trade Representative Michael Froman offered up a bit of revisionist U.S. trade policy history on Monday that must have left the folks listening to his Council on Foreign Relations speech scratching their heads.

No, FDR did not create Fast Track trade authority. And, JFK did not celebrate its renewal.

Invoking those Democratic icons is an interesting strategy, given that a sizable bloc of House GOP members oppose giving President Obama Fast Track.  The extraordinary authority, which Congress has refused to delegate for 15 of the past 20 years, let a president negotiate and sign a “trade” pact before Congress approved it and guaranteed a no-amendments vote in 90 days regardless of whether the pact met Congress’ objectives.

But maybe the target audience was House Democrats, given that only seven of the Democratic representatives have announced support for legislation introduced  early this year to revive the old Fast Track mechanism.

In his speech, Froman noted the 80th anniversary of the Reciprocal Trade Agreement Act (RTAA) of 1934 and declared that the trade authority it established was an antecedent of Fast Track, and that it was used by the Roosevelt administration, renewed 11 times by 1962 and toasted by President Kennedy.

House Ways and Means Committee Chairman Dave Camp echoed Froman’s insinuations about   Fast Track: “every president, until now, has partnered with Congress to have this powerful tool to negotiate the best possible trade deals for America.” The talking point is also favored by the Business Roundtable and other corporate groups of the Trade Benefits America Coalition: “Trade Promotion Authority is a partnership between the President and Congress…Since the 1930's, such authority has been critical to the opening of new markets…”

Except, in fact, Fast Track was first hatched by Richard Nixon, not FDR. And it only went into effect in the 1970s, not the 1930s.

Due to its unpopularity, Fast Track was only in effect for five of the last 20 years. But that hasn’t stopped U.S. trade growth. Fast Track was only used on 16 of the hundreds of U.S. trade and commercial pacts that have gone into effect since the 1970s. Trade-expansion-focused President Clinton only had Fast Track for two of his eight years in office, after the House voted down his request for the extraordinary authority in 1998. Yet, Clinton’s administration completed more than 200 trade and commercial agreements with diverse countries.

And, that gets us to the TPA sleight of hand. The “TPA” that was established in the Reciprocal Trade Agreement Act of 1934 is “Tariff Proclamation Authority.” It has allowed presidents to declare cuts to tariffs – border taxes on goods – within parameters set by Congress. And yes, presidents have had that authority since the 1930s, including Fast-Trackless Clinton.

In contrast, Fast Track – for which “TPA” was not coincidentally chosen as the preferred rebranding – may be Nixon’s most under-appreciated power grab. For the first time in 200 years of U.S. history, Fast Track empowered the executive branch to “diplomatically legislate” changes to non-trade U.S. domestic policy via “trade” negotiations. Until Fast Track, Congress used five different forms of trade authority over the course of the nation’s history to direct executive branch trade negotiators. None of them granted executive authority beyond tariffs.

In contrast, Fast Track turned “trade” pacts into backdoor means for executive branch officials to set policy on an array of matters otherwise under Congress’ or state legislatures’ constitutional authority: patent and copyright laws; immigration policies; food and product safety standards; financial, health and energy service sector rules; and even government procurement terms. U.S. domestic law must be altered to conform to such “trade” pact terms. Failure to do so can result in indefinite trade sanctions against U.S. exports.

For all the focus on Fast Track’s end-game legislative luge-run of a guaranteed no-amendments, limited-debate vote in 90 days, it was the invasion of Congress’ core policymaking prerogatives that has made Fast Track so toxic. Under Fast Track, the executive branch could ignore – and did so under both Democratic and Republican presidents – Congress’ “trade” pact negotiating objectives and still get the expedited approval processes for whatever it negotiated and signed. That’s why the talking point now being passed around that somehow Fast Track is a means for Congress to exercise its constitutional authority is just silly. 

A member of Congress can love free trade and seek new trade agreements and still find unacceptable the concentration of power in the executive branch that is at the core of the Fast Track form of trade authority. The expansive scope of the Trans-Pacific Partnership (TPP) agreement now under negotiation spotlights this reality. Of its 29 chapters, only five pertain to traditional trade matters. Most of the rest of the TPP chapters would set policies on subjects otherwise under the authority of Congress and state legislatures, which would be binding on the United States and not subject to amendment absent approval by all signatory countries.

It is not surprising that the prospects for reestablishment of the expansive old Fast Track delegation of Congress’ constitutional trade and legislative authorities are remote. And that is the case whether or not it is conflated with the old TPA, the new TPA or falsely associated with any beloved president.

The real question is whether the old Fast Track process will be replaced by a new trade authority mechanism that is appropriate for the reality of today’s expansive international commercial negotiations. A modern approach would require an expanded role for Congress from start to finish and much more accountability over executive branch negotiators. 

June 09, 2014

On Fifth Anniversary of Peru FTA Bagua Massacre of Indigenous Protestors, State Department Cables Published on Wikileaks Reveal U.S. Role

Now, Obama Administration Seeks to Further Expand the Foreign Investor Privileges That Led to Amazon Standoff Via the Trans-Pacific Partnership Pact

On the fifth anniversary of a deadly confrontation in Peru spurred by controversial policies enacted to comply with the U.S.-Peru Free Trade Agreement (FTA), Amazon Watch and Public Citizen expressed extreme concern over recently revealed U.S. diplomatic cables showing the U.S. government’s role in the violence that resulted in the deaths of at least 32 people.

On June 5, 2009, Peruvian security forces attacked several thousand indigenous Awajun and Wambis protestors, including many women and children, who were blocking the “Devil's Curve,” a jungle highway near Bagua, 600 miles north of Lima. The protestors were demanding revocation of decrees providing new access to exploit their Amazonian lands for oil, gas and logging that had been enacted to conform Peruvian law to FTA requirements.

“The Bagua massacre is emblematic of how so-called free trade agreements enable an environment in which governments trample the basic rights of grassroots communities while promoting the destruction of natural resources,” said Atossa Soltani, founder and executive director of Amazon Watch. “Instead of defending the constitutional rights of Peru’s indigenous peoples, the U.S. government apparently encouraged the Peruvian government to steamroll the people protecting their land from exploitation.”

Public Citizen received only heavily redacted diplomatic cables in response to a Freedom of Information Act request regarding the U.S. role in the 2009 Peruvian crisis over FTA implementation. But now WikiLeaks has published the full text of messages between the State Department and the embassy in Lima.

Four days before the killings, a cable addressed the growing indigenous protests, stating, “Should Congress and [Peruvian] President Garcia give in to the pressure, there would be implications for the recently implemented Peru-US Free Trade Agreement.” This mirrored public comment by Peruvian government officials who argued that acceding to indigenous demands to annul controversial new laws would doom the entire FTA.

U.S. officials argued that the Peruvian government was being too lenient by allowing the indigenous roadblocks to continue. “The government's reluctance to use force to clear roads and blockades is contributing to the impression that the communities have broader support than they actually do,” the cable read.

On the day of the killings, the U.S. Embassy in Lima sought to justify the government’s actions, stating in another cable that the security forces in Bagua had “reluctantly chosen to enforce the rule of law.” Unacknowledged was the fact that the groups blocking the road at the “Devil’s Curve” had expressed their intention to demobilize on June 5 starting around midday. The Peruvian riot police went in that morning at the break of dawn.

In a letter sent on June 12, 2009, 15 nongovernmental organizations urged the Obama administration to speak out publicly against the violent repression and to state that repeal or reform of the controversial laws would not conflict with Peru’s obligations under the FTA. No public statement was issued.

What has become known as the “Amazon’s Tiananmen” brought the realities of the U.S.-Peru FTA into sharp relief. Rather than being a new trade agreement model, as it was sold, at the FTA’s heart were the same extreme investor rights that animated the North American Free Trade Agreement (NAFTA).

“The fifth anniversary of the Peru FTA Bagua massacre is a most appropriate time to reconsider the U.S. approach to the Trans-Pacific Partnership (TPP),” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The U.S.-Peru FTA makes clear even improved labor and environmental chapters cannot overcome the NAFTA-style investor protections at the core of the Peru FTA and now TPP.”

When Congress passed the U.S.-Peru FTA in late 2007, a majority of House Democrats opposed the deal. And no labor, environmental, consumer, family farm or faith group supported it. While Democratic House trade committee leaders had forced some improvements with respect to access to medicine and the FTA’s labor and environmental chapters, the pact included an expansion of NAFTA-style investor privileges.

The FTA’s foreign investor privileges were demonstrated when a U.S. firm pressured Peru’s government to reopen a smelter that had severely poisoned hundreds of children in La Oroya, Peru with lead – a story revealed in a Bloomberg exposé.

Now the Obama administration is pushing for inclusion of the same extreme foreign investor privileges in the TPP it is negotiating with Peru and 10 other Pacific Rim countries.

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