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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 31, 2015

Yet Another ‘Final’ TPP Ministerial and Again No Deal; Not Surprising Given Growing Controversy Over TPP Threats Here and in Other Nations

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Today’s fourth “final” TPP ministerial without a deal means the clock has run on possible U.S. congressional votes in 2015. No deal means the TPP is thrown into the political maelstrom of the U.S. presidential cycle and with opposition building in many countries there are reduced chances that a deal will ever be reached on a pact that U.S. Trade Representative Michael Froman declared to be in its “end game” in 2013 but that has become ever more controversial since.

It’s good news for people and the planet that no deal was done at this final do-or-die meeting given the TPP’s threats to jobs, wages, safe food, affordable medicines and more. Only the beleaguered negotiators and most of the 600 official U.S. trade advisors representing corporate interests wanted this deal, which recent polling shows is unpopular in most of the countries involved.

This ministerial was viewed as a do-or-die moment to inject momentum into the TPP process, so this Maui meltdown in part reflects how controversial the TPP is in many of the involved nations and how little latitude governments feel to make concessions to get a deal.

The intense U.S. national political battle over trade authority was just a preview of the massive opposition the TPP would face once members of Congress and the public see the specific TPP terms that threaten their interests. Given the damaging impacts that some TPP proposals could have for many people, it’s not surprising that the same set of issues including investor-state dispute resolution and medicine patents as well as market access issues like sugar, dairy, and rules-of-origin on manufactured goods like autos remain deadlocked given they will determine whether a final pact is politically viable in various TPP countries.

Many of the 28 House Democrats who supported Fast Track authority for Obama explicitly said that their support for the TPP relied on certain goals being met, including strong, enforceable labor and environmental standards, and no rolling back of past patent rule reforms relating to access to medicines – terms meeting the “May 2007” standard that elements of the TPP do not meet. 

July 28, 2015

CAFTA’s Decade of Empty Promises Haunts the TPP

Ten years ago, after a flurry of backroom deal-making, Congress passed the Central America Free Trade Agreement (CAFTA).  In the dead of night.  By a single vote.  

Exactly one decade later, today trade ministers are gathering in Hawaii to try to conclude deadline-missing negotiations on the Trans-Pacific Partnership (TPP) – a sweeping deal that would expand the CAFTA model of trade across the Pacific.

In attempt to quell the controversy surrounding the TPP, the administration is recycling the same lofty promises that were used to push for passage of CAFTA: the deal would safeguard public health, spur economic prosperity at home and abroad, and protect workers, consumers, and the environment.

After 10 years of CAFTA, the emptiness of such promises is on full display. Today in Central America, life-saving medicines are more expensive due to monopoly protections that CAFTA gave to pharmaceutical corporations – protections that are slated for expansion in the TPP.  And the headlines from several CAFTA countries do not report economic prosperity, but economic instability, drug violence and forced migration.  Meanwhile, CAFTA’s labor provisions have failed to halt the assassination of dozens of Central American union workers who were trying to end unmitigated labor abuses like wage theft.  In contrast, the pact’s foreign investor privileges, which the TPP would expand, have succeeded in empowering multinational corporations to challenge domestic laws, including consumer and environmental protections.

Worse than repeating the mistakes of the past, the TPP would repeat the mistakes of CAFTA’s present.

Making life-saving medicines unaffordable

During the debate over CAFTA, health experts warned that by handing pharmaceutical firms greater monopoly protections, the deal would restrict Central Americans’ access to more affordable generic versions of life-saving drugs.

Unfortunately, they were right.  Take, for example, Kaletra, a drug used to fight HIV/AIDS.  Under CAFTA rules, Kaletra has enjoyed monopoly protections in Guatemala, making generic versions unavailable, for the entire first decade of CAFTA.  Without a generic alternative, Guatemala’s public health system pays about $130 per bottle of Kaletra.  In contrast, the generic version of Kaletra costs less than $20 per bottle, according to the Pan American Health Organization reference price.  For Guatemala’s taxpayers, paying more than six times the generic price for Kaletra under CAFTA means less money to build schools or bridges.  For Guatemala’s HIV/AIDS patients, it can mean the difference between life and death.

Like CAFTA, the TPP is slated to include extreme monopoly protections for pharmaceutical corporations.  Indeed, the deal even omits limited provisions to protect access to affordable medicines that were included the most recent U.S. free trade agreements.  That’s why Doctors without Borders has described the TPP as not only worse than CAFTA in restricting access to medicines, but “the most damaging trade agreement ever for global health.” 

Turning a blind eye to labor abuses

One decade ago, the Office of the U.S. Trade Representative sold CAFTA as the “best ever trade agreement on labor,” boasting “world class” labor provisions.  Those provisions failed to prevent the murder of 68 Guatemalan unionists over the course of seven years without a single arrest.  In 2008, the AFL-CIO and Guatemalan unions filed an official complaint under CAFTA’s labor provisions, calling for an end to the rampant anti-union violence, wage theft, and other abuses.  It was not until six years and dozens of unionist murders later that the U.S. government moved to arbitration on the case.  Today Guatemala’s union workers still endure frequent attacks with near-total impunity.

CAFTA’s labor provisions have proven similarly ineffective in the Dominican Republic, where sugar cane workers endure 12-hour workdays in hazardous conditions without receiving legally-required overtime pay.  A Spanish priest who filed an official CAFTA complaint in attempt to rectify the abuses was informed by U.S. Department of Labor officials, “Nothing is going to happen on account of not complying.”  Indeed, nothing has happened.  Despite CAFTA’s “world class” labor provisions, the Dominican Republic’s underpaid cane workers continue laboring in squalid conditions.

Why has CAFTA, like U.S. trade agreements before and since, failed to curb widespread labor abuses?   Kim Elliot, a member of the Department of Labor’s National Advisory Committee on Labor Provisions of U.S. Free Trade Agreements, recently offered this blunt explanation: the labor provisions of U.S. trade deals “are in there because they’re necessary to get deals through Congress.”  She added, “It’s really all about politics and not about how to raise labor standards in these countries.”

Now, in attempt to get the TPP through Congress, the Office of the U.S. Trade Representative is parroting the same promise it made for CAFTA, claiming that the deal would include “the highest-ever labor commitments.”  While the TPP’s labor provisions have been described as more “enforceable” than those in CAFTA, this is nothing new.  The last four U.S. Free Trade Agreements (FTAs) already included such “enforceable” terms, but still failed to end on-the-ground offenses, according to a 2014 U.S. government report.  Colombia’s unionists have faced dozens of assassinations and hundreds of death threats despite the Colombia FTA’s inclusion of TPP-like labor provisions.  And last year Peru explicitly rolled back occupational health and safety protections for workers despite the Peru FTA’s “enforceable” labor provisions.  Neither country has faced penalties under the FTAs.  It’s unclear why the TPP’s replication of such unsuccessful labor provisions should be expected to curb the systematic labor abuses in TPP countries like Vietnam, which bans independent unions, uses forced labor, and, by the Vietnamese government’s own estimate, has more than 1.75 million child laborers.

Empowering corporate attacks on consumer and environmental protections

In contrast to CAFTA’s unenforceable “protections” for workers, the deal granted highly enforceable privileges to foreign corporations.  This includes empowering them to bypass domestic courts and challenge domestic consumer and environmental protections before extrajudicial tribunals via “investor-state dispute settlement” (ISDS).

Corporations have not held back in using this controversial parallel legal system to challenge pro-consumer policies, including government efforts to keep electricity affordable.  In 2010 a U.S. energy company with an indirect, minority stake in Guatemala’s electric utility used ISDS to challenge Guatemala’s decision to lower electricity rates for consumers.  The next day, the company sold off its minority share.  A three-person ISDS tribunal generously decided to treat the firm as a protected “investor” in Guatemala and ordered the government to pay the corporation more than $32 million.  In another energy-related CAFTA case, a U.S. financial firm challenged the Dominican Republic’s decision not to raise electricity rates amid a nationwide energy crisis.  The government decided to pay the firm to drop the case in a $26.5 million settlement, reasoning that it was cheaper than continuing to pay legal fees.

CAFTA countries also face an increasing array of ISDS cases against environmental protections.  A U.S. mining company, for example, has launched a claim against the Dominican Republic for delaying and then denying environmental approval for an aggregate materials mine that the government deemed a threat to nearby water sources.  Other U.S. investors in the Dominican Republic have threatened to launch a CAFTA claim against the government for denying environmental approval for their plans to expand a gated resort.

The TPP would dramatically expand the controversial ISDS system, newly empowering more than 28,000 additional foreign-owned firms to ask private tribunals to order taxpayer compensation for commonsense environmental and consumer protections.

Fueling economic instability

Ten years ago, CAFTA proponents promised the deal would bring economic prosperity to Central America, making it “the best immigration, anti-gang, and anti-drug policy at our disposal.”  Today, CAFTA countries Honduras, El Salvador, and Guatemala are plagued by drug-related gang violence and forced migration.  While the causes are many, “economic stagnation” has fed the crisis, according to the U.S. State Department.  CAFTA clearly failed to deliver on its promise of economic growth for the region.

Worse still, CAFTA has contributed to the region’s economic instability.  Before the razor-thin passage of CAFTA, development organizations warned that the deal could lead to the displacement of the family farmers that constitute a significant portion of Central America’s workforce, by forcing them to directly compete with highly-subsidized U.S. agribusiness.  Indeed, agricultural imports from the United States in Honduras, El Salvador, and Guatemala have doubled since the deal went into effect, while the countries’ agricultural trade balance with the United States has dropped, spelling farmer displacement. 

And despite promises that CAFTA would make up for rural job loss by creating new jobs in apparel factories, apparel exports to the United States from Honduras, El Salvador, and Guatemala have actually fallen $1.6 billion, or 21 percent, since the year before CAFTA took effect.  Not only has the promise of new factories disappeared – so have existing factories.  

If the TPP were to take effect, the apparel jobs of Central America would be expected to decline even quicker, contributing to further economic instability.  That’s because the TPP includes Vietnam, a major apparel exporter where independent unions are banned and where the minimum wage averages less than 60 cents an hour – a fraction of the minimum wages in Central America (or even in China).  Central America is already losing the race to the bottom.  It will only fall further behind if the TPP makes Vietnam the newest low-wage competitor. 

The promise-defying track record of CAFTA need not be repeated.  When the TPP negotiators meeting today in a resort hotel in Hawaii finish this round of negotiations, we are likely to hear a familiar litany of promises about how the TPP would benefit consumers, workers, and the environment.  With those promises punctured by a decade of CAFTA’s stark realities, we have a unique opportunity to say “enough is enough.” 

July 27, 2015

Obama Administration’s Cynical Bid to Salvage the TPP by Turning a Blind Eye to Malaysia’s Trafficked Persons’ Mass Graves Will Only Fuel Criticism of the Pact

In a cynical bid to salvage the already-controversial Trans-Pacific Partnership (TPP), the Obama administration today removed Malaysia from a list of the world’s most flagrant violators of basic human trafficking norms – two months after the discovery of mass graves for human trafficking victims in Malaysia, Public Citizen said.

In its annual Trafficking in Persons Report released today, the U.S. Department of State ignored TPP member Malaysia’s documented deterioration of human trafficking enforcement and upgraded the country’s human trafficking compliance status. Members of Congress,religious groups and leading U.S. and Malaysian human rights organizations have rightly lambasted the decision as an indefensible maneuver to avoid a U.S. law that prohibits Fast Tracking the TPP as long as a country  on the blacklist, like Malaysia, is a party to the pact.

“The administration knows that the TPP will have trouble in Congress, but turning a blind eye to Malaysia’s grave human rights violations in order to include Malaysia in the pact because it’s one of the few TPP countries we don’t already have a trade deal with and keeping the TPP on Fast Track so Congress’ oversight is limited is shameful,” said Alisa Simmons, deputy director of Public Citizen’s Global Trade Watch.

The maneuver also will backfire, instead adding to the controversy surrounding the TPP.

“If the Obama administration is willing to ignore people-smuggling camps in Malaysia, why should we believe it would not also ignore TPP member Brunei’s criminalization of homosexuality, TPP member Vietnam’s widespread child labor or TPP member Peru’s rollback of environmental protections?” Simmons said.

Today’s manipulation of Malaysia’s human trafficking record will only bolster criticism from human rightsreligiousLGBTwomen’slaborand environmental organizations that the TPP’s touted human rights, labor and environmental provisions are mere fig leaves that would fail to actually curb widespread abuses among TPP members.

July 09, 2015

Will Obama Turn a Blind Eye to Malaysia’s Mass Graves in a Cynical Bid to Salvage the Controversial TPP?

Just after the discovery of mass graves for human trafficking victims in Malaysia, the Obama administration is reportedly planning to remove Malaysia from its list of the world’s worst human trafficking offenders.

Why would the Obama administration do such a thing?

Maybe it has something to do with the fact that Malaysia is a negotiating member of the controversial Trans-Pacific Partnership (TPP) and that under U.S. law the TPP cannot be Fast Tracked through Congress if one of the countries involved (i.e. Malaysia) is on the administration’s human trafficking blacklist.

If the Obama administration wants to Fast Track the TPP through Congress with Malaysia included (and without the democratic annoyances of checks, balances, and amendments), it has two options:

  1. Pressure Malaysia to end its deplorable human trafficking abuses
  2. Pretend those abuses do not exist 

In a cynical bid to salvage the unpopular TPP, the Obama administration has reportedly chosen the latter option.  Inside sources report that the administration plans to remove Malaysia from its list of the worst human trafficking offenders, despite the country’s documented deterioration of human trafficking enforcement, in an annual State Department report expected to be released next week. 

Turning a blind eye to Malaysia’s grave human rights violations in effort to rescue the TPP, which would grant Malaysia privileged access to the U.S. market, would be simply shameful.

It would also backfire, instead adding to the controversy surrounding the TPP. If the Obama administration is willing to ignore cages for humans in Malaysia’s people-smuggling camps, why should we believe it would not also ignore TPP member Brunei’s criminalization of homosexuality, TPP member Vietnam’s widespread child labor, or TPP member Peru’s rollback of environmental protections?

If the Obama administration removes Malaysia from the human trafficking blacklist, it will only bolster criticism from human rights, religious, LGBT, women’s, labor and environmental organizations that the TPP’s touted human rights, labor and environmental provisions are mere fig leaves that would fail to actually curb systematic abuses among TPP members.

In its tunnel-vision push for the TPP, the Obama administration has already dismissed widespread concerns about job offshoring, wage stagnation, unsafe food, environmental degradation, inaccessible medicines, Internet restrictions, and financial instability.  Will it now add human trafficking to the list?   We will soon find out. 

July 02, 2015

Leaked Text Shows Trade Agreement Threat to Deregulate Financial Services

Statement of Robert Weissman, President, Public Citizen

Note: Today, draft texts of the Trade in Services Agreement were made public by WikiLeaks. Click here to see our analysis. 

It would be helpful if policymakers acted with some recognition that the 2008-2009 financial crisis actually occurred. It shouldn’t be hard. In the United States alone, nearly $20 trillion in wealth was lost, between lost output and lost home equity; unemployment peaked at 10 percent; millions of families lost their homes. The situation was worse in much of the world, with severe problems continuing in many countries, notably in Europe.

Learning from the crisis means not repeating the deregulatory and non-enforcement mistakes that led up to it. Yet a secret international trade agreement, the Trade in Services Agreement (TISA), threatens to adopt and impose a global financial deregulatory standard.

Our analysis of a leaked version of the draft agreement, along with a draft annex on financial services, identifies threats to rules and policies ranging from limits on overall bank size to consumer protections, from prophylactic protections against new speculative financial instruments to limits on transfers of personal financial data.

It is unimaginable that such an agreement is under negotiation while the global economy is still recovering from the most severe crisis since the Great Depression, and while Greece and other countries are still reeling from developments related to the crisis.

Yet, thanks to the publication of the TISA texts by WikiLeaks, we know that such negotiations are in fact underway.

Post-crisis, the United States and countries around the world have tightened their domestic financial regulations, imposing somewhat tougher restraints on Wall Street and financial centers around the world. TISA is an effort by Wall Street and its global counterparts to undo those positive steps in a forum absolutely closed to the public.

To analyze the TISA text is to see that negotiators are ignoring the lessons from the financial crisis, and to see how vital it is to shine a light on the secret TISA negotiations. These leaks show that it is imperative for TISA negotiators to suspend their efforts, publish all texts under negotiations and not resume until there is a proper public debate about their radical deregulatory maneuvers.

Read our analysis of the leaked texts here: https://wikileaks.org/tisa/financial/04-2015/analysis/Analysis-TiSA-Financial-Services-Annex.pdf

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