Implementation of Colombia Trade Deal a New Low for Workers and the Environment

It is oddly fitting that U.S. Trade Representative (USTR) Ron Kirk would celebrate today’s implementation of the U.S.-Colombia trade deal at the U.S. Chamber of Commerce. After all, even as the U.S. government’s own projections showed that this pact and a similar one with Korea would increase the U.S. trade deficit, both USTR and the Chamber worked overtime to misrepresent this and other likely impacts.
 
At a time when nearly four out of ten Americans are unemployed or simply not participating in the labor force, it is unconscionable to implement a trade deal with Colombia – the unionist murder capital of the world.  At a time when multinational mining and other extractive industries are displacing poor Colombians, it is unthinkable for this pact to privilege these same corporations with special rights to challenge Colombia’s social and environmental mitigation policies in supranational tribunals. The Colombian government’s own pre-pact assessment anticipated the likely consequence of this deal: rural Colombians “would have no more than three options: migration to the cities or to other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups.''

The failed North American Free Trade Agreement has virtually identical rules as the Colombia pact, and we know how that worked out: increased job insecurity and more corporate attacks on public interest policies outside of national judicial systems. These rules weren’t a good idea when it came to Mexico: they’re even worse when it comes to Colombia.

In October, President Obama set a new low by pushing a controversial U.S.-Colombia trade deal that attracted the highest level of Democratic opposition to a Democratic president’s trade initiative in history. Instead, record high levels of Republican support were marshaled, only because the Tea Party-supported members of Congress flip-flopped on their campaign commitments by voting for a trade deal that undermines American jobs and sovereignty.

If the administration continues the course on the failed trade policies of the Bush-Clinton-Bush years (as it seems to be with the nine-nation Trans-Pacific Partnership), it can expect continued outrage from people across the political spectrum.

Illegal log trade flourishes under U.S.-Peru trade deal

Our colleagues over at the Environmental Investigation Agency have just published a comprehensive study in the trade in illegal logging certificates in Peru in the years since the US-Peru FTA was signed. As they write:

By crossing public information on (a) the “supervision” inspections conducted by the Supervisory Body for Forest Resources and Wildlife (OSINFOR for its Spanish initials) on a series of timber concessions with (b) the documentation for CITES export permits for cedar and mahogany, EIA identified more than 100 shipments containing illegally logged CITES wood that were exported to the US between January 2008 and May 2010 – that is, more than 35% of all such shipments with CITES permits that left Peru for the US during this period.

Peru’s primary exporter, Maderera Bozovich, exported shipments under 152 CITES permits during this time, at least 45% of which included wood of illegal origin. It is likely that more supervisions in the field would discover that these percentages are actually higher.

The FTA contained a new Annex on Forest Sector Governance, which was put in place because Peru was (at the time of negotiations on the deal) one of the world's primary sources of cedar, mahogany and other endangered species. (Longtime Eyes on Trade readers will recall that the forestry annex was a major reason cited by key Democrats for their support of an otherwise fundamentally flawed trade deal, back when a minority of Democrats joined with a majority of Republicans to pass the deal back in 2007.) A provision of the annex reads that Peru is obligated to:

"Provide criminal and civil liability at adequate deterrent levels for actions that impede or undermine the sustainable management of Peru’s forest resources. Such actions shall include:

(i) Threats or violence against, or other intimidation of, government personnel engaged in enforcement of Peru’s laws, regulations and other measures relating to the harvest of, and trade in, timber products;
(ii) Knowingly creating, using, presenting or providing false information on any material document relating to enforcement of Peru’s laws, regulations and other measures relating to the harvest of, and trade in, timber products, including forest management plans, annual operating plans, applications for permits/concessions, and transportation documents;
(iii) Obstructing an investigation, verification, or audit conducted by government personnel engaged in enforcement of Peru’s laws, regulations and other measures relating to the harvest of, and trade in, timber products;
(iv) Knowingly harvesting or purchasing timber or timber products from areas or persons not authorized under Peruvian law; or knowingly transporting timber or timber products taken from areas or persons not authorized under Peruvian law; and
(v) Providing to a government official, or receiving as a government official, compensation, whether monetary or in kind, in exchange for particular action taken in the course of that official’s enforcement of Peru’s laws, regulations and other measures relating to the harvest of, and trade in, timber products."

While there is no statistical evidence that trade in endangered timber has increased, or that deforestation has increased, EIA is concerned (as I understand it) that the lack of accountability represented by the forged documents that do not line up to the actual origin of the trees sold and exported from 2008-10 could be an indication of deeper forestry abuses beneath the statistical surface or down the line. They're calling on the Obama administration to audit Peru's forestry practices, as a first step that could lead to actual retaliation under the FTA.

The FTA has been a fundamentally disruptive force in Peruvian life, disrupting presidential elections and now offering U.S. multinationals with tools to evade justice and environmental clean-up responsibilities. See this excellent report by the Sunlight Foundation's Keenan Steiner for more on this latter point, which makes mention of our March 2012 report on a recent so-called investor-state case under the U.S.-Peru FTA. The Obama administration is set to lock in and expand these rules under the Trans-Pacific Partnership trade deal, which both Peru and the US are in and which is also supported by presumptive GOP candidate Mitt Romney.

The significance of the EIA reports (you can check out EIA's 2010 study on the same topic) is that the best part of the FTA (the forestry sector annex) is delivering more information and attention to forestry, but has not yet led to fundamental change on the ground. To deliver that change, we'll have to see actual enforcement. Now, the ball's in Obama's (or Romney's) court. Will they deliver?

Senator Wyden files amendment for more transparency in the TPP negotiations

A couple of weeks ago we reported about Senator Wyden's lively exchange with U.S. Trade Representative Ron Kirk regarding transparency in the Trans-Pacific Partnership Free Trade Agreement (TPP).

Senator Wyden has now increased pressure on USTR by filing a legislative amendment for more transparency in the TPP negotiations related to intellectual property and the internet. Our colleagues at KEI posted a short blog about the amendment.

Choking on sugarcoating

Last night, the Office of the U.S. Trade Representative (USTR) released its hefty, annual Trade Policy Agenda and Annual Report. This statutorily mandated annual tome offers a good opportunity for Congress and the public to understand what USTR thinks it's doing, or what the agency wants us to think it's doing.

Unfortunately, the Trade Policy Agenda is (once again) an exercise in sugar-coating so extreme that it's surprising it got past Michelle Obama's nutrition advisers.

We've detailed how, after some initial honesty in the 2009 Trade Policy Agenda, USTR by President Obama's second year was back to the same old Bush administration rhetoric on trade policy. The 2012 agenda is in that latter vein as well. Here are just some of the flaws in the latest report:

Trade without a net (calculation). As we've detailed on this blog many times over (see here and here), one of the administration's biggest sins in its recent push for the Korea and Colombia trade deals was its claim that these deals would boost bilateral exports by $12 billion, without noting that the government's own numbers project that the deals will increase job-displacing imports more than job-creating exports. In other words, these deals are projected to be a net negative for job creating exports. We were kinda hoping that the administration might stop misrepresenting its own research once they got Congress to pass these deals. But this seems to be a case of repeating the same incorrect line so many times that you start to believe it's true.

American-made smoke and mirrors. The very first page of the Trade Agenda mentions the "Made in America" theme twice. But USTR is actually pushing the exact opposite of Made in America. Not only have our trade deals meant that imports of products Made-Overseas swamp exports of products Made-in-America, but these pacts also require that the U.S. roll back Buy American requirements for our trading partners. In fact, today, the morning after the Trade Agenda touting Made in America was published, USTR issued a determination stating that Korean-made products will be treated as if they were American for U.S. government procurement purposes.

Korea deal hurts U.S. auto sector. Everyone loves to love on the auto sector these days, and the Trade Agenda paints the Korea deal as a boon to Detroit. But once again, the government's actual numbers show that Korean auto imports will outstrip U.S. auto exports under the deal. Moreover, the harebrained (and high profile in Korea) exemption of U.S. autos from having to meet Korean auto safety and environmental standards will read like a "Do Not Buy American cars for your teen" label to every concerned Korean mother and father.

No mention of significant WTO attacks. The Trade Agenda also celebrates U.S. participation in the World Trade Organization (WTO) in 2011, but fails to mention the most important news: the U.S. lost not one, not two, but three high-profile WTO attacks on U.S. consumer protection policies. As the majority of WTO members cheered from the sidelines, three panels of nine unelected foreign "judges" ruled that U.S. efforts to reduce teen smoking and inform consumers about the origin of meats and the impact of tuna fishing on dolphins violate WTO rules. These three rulings were the first ever under controversial terms of the WTO's Agreement on Technical Barriers to Trade, and could open the U.S. up to trade sanctions. (Now, if you bother to look through the full 393 pages of the extended Annual Report, these disputes are mentioned, albeit with insufficient detail or balance to develop an informed view.)

Working hard to export less. Significant USTR resources are being expended on the Trans-Pacific Partnership (TPP). The Trade Agenda touts U.S. exports to the eight TPP nations (supposedly to point out how awesome the deal will be for U.S. exports), but fails to mention that USTR already put FTAs in place with the four most significant nations on the list (Peru, Chile, Singapore and Australia). Oops.

Non-Compliance in Investor-state proceedings

There were some interesting press hits over the weekend from Reuters' Alison Frankel, Adam Klasfeld, and AFP about the recent investor-state arbitral ruling against Ecuador.

(The award for Chevron was made by Horacio Grigera Naón (of American University, nominated by Chevron); Vaughan Lowe (of Oxford University, nominated by Ecuador); and V.V. Veeder ("one of the stars" of investment arbitration from the UK's Essex Court Chambers, appointed by the other two).)

Alison writes:

Lori Wallach of Public Citizen's Global Trade Watch told me that Ecuador should not comply with the panel's most recent order. (Wallach went to law school with Steven Donziger, the architect of the Ecuadorean plaintiffs' case, but is not a paid consultant for the plaintiffs.) Wallach agreed that countries regularly ignore orders from private arbitrators, whom she derided as "three private lawyers in a hotel room." She said that the directive from the Chevron panel, however, is "the most outlandish one I've seen." It's unprecedented for a panel to order an injunction that calls for an executive to interfere with a domestic court system, she said. "It would be as if one of these panels ordered Obama to act contrary to the Supreme Court," said Wallach, who has been tracking international arbitration since 1994. "Ecuador shouldn't follow it." (Public Citizen put out a press release Friday asserting that the Chevron panel's "obscene" award "could lead to the implosion of the entire investor-state system, which international companies are increasingly using to try to evade justice worldwide.")

Chevron counsel Randy Mastro of Gibson, Dunn & Crutcher said suggestions that the Republic should ignore the arbitrators' instruction are absurd. "Any country ignoring the ruling of an arbitration panel would be doing so at its peril," he said. Chevron's underlying claim in this arbitration, he pointed out, is for a judgment that under an old agreement with Chevron predecessor Texaco, the Republic of Ecuador is responsible for bearing all the costs associated with cleanup of the Lago Agrio region -- including Chevron's liability to the Ecuadorean plaintiffs. With that part of the arbitration pending, the Republic would be risking an adverse result if it flouted the panel's interim order.

"Typically, nations with treaty obligations honor those obligations or face the consequences," Mastro said.

This raises an interesting question, which a colleague asked me: “Are there any penalties written in the treaty if Ecuador disobeys the ruling?"

The US-Ecuador bilateral investment treaty says: “Any arbitral award rendered pursuant to this Article shall be final and binding on the parties to the dispute. Each Party undertakes to carry out without delay the provisions of any such award and to provide in its territory for its enforcement.”

What if a country refuses to see itself as bound? What then?

Well, the BIT also says that all arbitrations “shall be held in a state that is a party to the New York Convention.” This creates a backdoor enforcement regime. When an arbitral tribunal orders a cash payment, a claimant can take the arbitral award to the national court of any signatory to the New York Convention (1958). This is about every country. 

Supposedly in all of these countries (but definitely in the developed countries), a national court will almost always agree to simply enforce the award, and they can order that the assets of the complainant or respondent (as needed) that may exist within national territory be impounded in order to make the payment. (Virtually every government has bank accounts or other assets in the US, UK and Switzerland, which is where most of these arbitral award enforcement actions occur.)

The situation is considerably murkier in the Chevron case, and there are not many (if any) precedents for non-cash related awards.

Chevron's counsel argues that Ecuador risks an adverse ruling in the "final award" if it flounts the interim measures award. (Interestingly, Veeder, Lowe and Grigera Naon have not even found that they have jurisdiction over the case, but assumed they did for the sake of making this injunction-like interim award.) I see a few problems with that argument. First, it's possible that there could never be a "final award." Second, if Ecuador already denounced the interim award, what would keep them from denouncing the final award?

Here's where we get to brass tacks, all extra-legal, so to speak:

1. Chevron could argue that capital will dry up. This argument states that capital markets would refuse to lend to a country that didn’t “play by the rules.” Indeed, Argentina has had difficulty accessing international capital markets since its default and subsequent refusal to enter bond markets. However, this has not mattered since Argentina has strong internal capital markets, export markets and has been growing like gangbusters. My bet is that Ecuador (certainly under Correa) would not find this threat super credible either, although it could definitely make the government's life uncomfortable.
2. Chevron could pressure U.S. to take foreign policy action. More recently, Obama has tried to pressure Argentina to comply with investor state rulings by voting against disbursements for Argentina in the Inter-American Development Bank. Congress may attach riders to appropriations for Argentina to pressure them to comply. This could hurt Ecuador, but the country also has been on the outs in trade preference legislation already.
3. Chevron could press for war. In an earlier era of gunboat diplomacy, countries that didn’t “play by the rules” received a visit from the US or UK Armed Forces.

Although some of these sound absurd, they are options for "enforcing international law."

Now, Ecuador could attempt to launch a state-to-state dispute over the interpretation of the BIT. In fact, they’ve already done this in the earlier investor-state case brought by Chevron. (In that underlying case, Ecuador was ordered to pay Chevron around $100 million, essentially because Chevron argued that the Ecuadoran courts were moving too slow in hearing the case brought by indigenous people against the oil giant. Now, Chevron is essentially arguing that Ecuador is moving too fast, and they need international intervention.)

Since we don't know how that case will end up, it's hard to know how a second one could end up in Chevron v. Ecuador Part Deux, nor what if any consequence it could have on an adverse investor-state ruling. But it seems things will stay interesting in this case for a while to come.

UPDATE: Bottom line: Ecuador is stuck between a rock and a hard place. If the government complies with the investor-state ruling and therefore breaks its own Constitution, it risks revolution at home. If it ignores the investor-state ruling, it allows Chevron to continue its global campaign to isolate Ecuador in international capital markets and politics. Chevron would probably ultimately try to enforce a cash arbitral award in third country courts. I'm betting that the plaintiffs would, in this case, also try to enforce the Ecuadoran court ruling in third country courts. Essentially, compliance puts Ecuador on a constitutionally tainted collision course with its citizenry; non-compliance puts the investor-state system on a geopolitically tainted collision course with justice for the plaintiffs. Either situation is unprecedented.

Public Citizen statement on ruling in favor of Chevron

Speaking of the Chevron case, there was just a major development. Here's the ruling, and here's our statement:

Will Chevron Case Take Down Trade Pact ‘Investor-State’ Enforcement System?

Unprecedented Ruling Today by International Investor Tribunal Orders Ecuadorian Government to Violate Its Constitution, Interfere in Its Independent Court System to Help Chevron Evade Liability for Amazonian Contamination

WASHINGTON, D.C. – An unprecedented ruling, in which an investor-state international arbitral tribunal initiated by Chevron ordered the Ecuadorian government to interfere in the operations of Ecuador’s independent court system on behalf of the oil giant, provides a chilling glimpse of how corporations are trying to use international investor tribunals to evade justice, said Public Citizen.

After having lost on the merits in Ecuador and U.S. courts and after 18 years of trying to stall judgment, Chevron turned to an ad hoc “investor-state” tribunal of three private lawyers as the last chance to help the company avoid paying to clean up contamination in the Amazonian rainforest. Chevron is trying to get this private tribunal to suspend enforcement of or alter an $18 billion judgment against Chevron rendered by a sovereign country’s court system.

The tribunal issued a ruling yesterday even though it has not even determined that it has jurisdiction over the case. Past such international investor cases in which tribunals have ordered governments to pay cash damages to corporations have led to growing controversy.

“The Ecuadorian government should not violate its own constitution and interfere with its independent courts’ order for Chevron to clean up its horrific contamination in the Amazon, because some unelected ad hoc tribunal of three private sector lawyers called together by Chevron to meet in a rented room in Washington, D.C., pretends to have the authority to second-guess 18 years of U.S. and Ecuadorian court rulings,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

“Consider the broader implications of this star chamber ‘investor-state’ system: How can a panel of three unelected private sector lawyers order a sovereign government to violate its own constitution’s separation of powers and interfere in its court system, all to help Chevron (a company whose severe contamination of the Ecuadorian Amazon has been repeatedly proven), and how can that tribunal do this all before it has even decided that it has jurisdiction over this case,” Wallach said.

Meanwhile, the three private-sector lawyers serving as tribunalists on this kangaroo court will continue to rack up large hourly fees even as they order Ecuador’s government to help Chevron deny justice to the 30,000 Amazonian indigenous people who have won a historic $18 billion clean-up of deadly environmental contamination. Tribunalists in this system, who alternate between serving as “judges” and representing corporations in cases before panels of their colleagues, are paid on an hourly basis.

“The only silver lining of this obscene ruling is that having one of these shady investor-state tribunals presume to attack a country’s constitution, justice system and 30,000 people whose futures rely on Chevron cleaning up its mess could lead to the implosion of the entire investor-state system, which international companies are increasingly using to try to evade justice worldwide,” said Wallach.

These unaccountable investor-state tribunals have issued perverse rulings in the past on behalf of corporate claimants. Recent U.S. trade agreements empower foreign corporations to use this system to skirt our domestic courts and directly use our government before these corporate tribunals to obtain payment of unlimited taxpayer funds when they claim domestic environmental, land use, health and other laws undermine their “expected future profits.”  More than $350 million has been paid by government to corporations in attacks on toxics bans, environmental issues and zoning permits under the North American Free Trade Agreement (NAFTA.) Billions in additional claims are pending. Possible inclusion of the investor-state private enforcement system for corporations to sue governments is becoming one of the most controversial issues in the first “trade” deal the Obama administration is negotiating – a new Trans-Pacific Partnership trade deal.

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Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, visit www.citizen.org.

Perils of a two-track justice system

During last week's events on the Chevron v. Ecuador investor-state case, someone asked an interesting question: say the Ecuadoran domestic ruling for the plaintiffs (who allege harm from environmental contamination by Texaco, now Chevron) stands. Say their legal team moves to attempt to enforce that ruling in other courts (say courts in Venezuela, where Chevron has some assets). How would a U.S. court treat the Ecuadoran or Venezuelan ruling?

This question actually perfectly illustrates the offensiveness of the two-track justice system that the investor-state system represents: the Ecuadoran plaintiffs would actually receive more favorable treatment of their enforcement actions if their original case had been an investor-state arbitration rather than a national court case. (Not that they would have standing in any case. I'm just sayin'.)

The U.S. (along with Ecuador and Venezuela) is party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958). An investor-state arbitral award anywhere in the world can be enforced in the U.S. with respect to assets of the respondent located in the U.S., which is considered a “secondary jurisdiction” under U.S. court interpretations of the Convention.

In 1985, the U.S. Supreme Court put its stamp of approval on the enforcement of arbitral awards. This appeared to be motivated in part by a desire to avoid losing some of this “business” to France and the UK. (For a fascinating history of this, see this book by Yves Dezalay and Bryant Garth.) As the court wrote in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.: “[C]oncerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce ... agreement[s]” to submit disputes to binding international arbitration.

However, most foreign court rulings (like the Ecuadoran ruling) will have difficulty being enforced in the U.S. The U.S. (along with almost every other country in the world) is not party to the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters, which would have set up an international framework for this.

As a consequence, legal scholar Brian Richard Paige writes, each U.S. state has different practices regarding recognition of foreign judgments. Moreover, the U.S. Supreme Court in Hilton v. Guyot, 159 U.S. 113 (1895), ruled that the U.S. would only enforce foreign rulings if the foreign government granted reciprocity, i.e. enforced U.S. rulings. Since most foreign governments hate U.S.-style class action cases, U.S. courts have been wary to recognize foreign judgments. As the Hilton case stated:

“When an action is brought in a court of this country, by a citizen of a foreign country against one of our own citizens, to recover a sum of money adjudged by a court of that country to be due from the defendant to the plaintiff, and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties, and upon due allegations and proof, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged; and it should be held conclusive upon the merits tried in the foreign court, unless some special ground is shown for impeaching the judgment, as by showing that it was affected by fraud or prejudice, or that by the principles of international law, and by the comity of our own country, it should not be given full credit and effect.”

However, as Paige writes, the Hilton Court refused to domesticate the French judgment on the ground that there was no showing that French courts would grant reciprocal treatment to judgments of the United States. As such, “the comity of our nation” did not require the Court “to give conclusive effect to the judgments of the courts of France.”

This stuff gets very complicated. Take a recent case in U.S. federal courts, KBC v. Pertamina. KBC was a Cayman company that had a contractual relationship with Pertamina, an Indonesia state owned enterprise. They agreed to arbitrate if they ran into problems, on Indonesian territory under UNCITRAL rules. On December 18, 2000, the arbitral panel issued a final decision awarding KBC more than $261 million in damages, lost profits, and costs of arbitration.

Pertamina asked for Swiss courts to overturn the award, which they did not do.

KBC, for its part, asked a Texas federal court to enforce the judgment. Pertamina appealed, but refused to post a bond. KBC then took it to New York court. Both courts upheld the arbitral award, on the basis of comity and the 1985 Mitsubishi precedent.

But then Pertamina launched a case in Cayman courts, arguing that the whole dispute was fraudulent. KBC then asked U.S. courts to enjoin the Cayman action, which they did, this time without referencing comity, but instead the need to uphold the New York Convention.

The case shows that an arbitral award in favor of Chevron is going to be given much more weight in U.S. courts than an Ecuadoran (or Venezuelan) court ruling in favor of the Ecuadoran plaintiffs.

I’m sure there’s a lot more legal complexity than what I’m capturing here in this quick review, but the comity doctrine seems to be among the most elastic on the books.

Moreover, the recent ruling in Donziger v. Chevron in the NY courts shows that U.S. judges were pretty unwilling to treat their Ecuadoran counterparts as equal. In a March 2011 ruling, Judge Lewis Kaplan wrote "that Ecuador has not provided impartial tribunals or procedures compatible with due process of law." While this was vacated in September, it definitely gives a flavor of what might go down.

Tucker in Extra!: The Trade Debate That Wasn’t Reported

Our own Todd Tucker has a piece on the media distortion of last year's trade debate in this month's edition of Extra!, Fairness and Accuracy in Reporting's magazine. Here’s a snippet:

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In the 16 months leading up to the congressional vote on a set of trade deal with Korea, Colombia and Panama in mid-October, new reporting on the agreements scarcely mentioned that critics existed; when they were acknowledged, their objections were frequently mischaracterized. With media doing little to evaluate misleading claims made by the trade pacts' proponents, all three were approved by Congress by considerable margins.

There were two major points that opponents of the trio of deals – including  labor, environmental, consumer and even Tea Party groups – consistently emphasized in reports, press releases, letters and direct outreach to reporters.

First, these trade deals were modeled on the controversial North American Free Trade Agreement (NAFTA), a pact whose actual content reporters have historically paid little attention to (Extra!, 11-12/97). The combined text of the three new deals was nearly 4,000 pages; as with NAFTA, the bulk of the provisions were not related to "trade" issues per se, but rather restrict how the U.S. and the other nations might regulate their domestic economies. For instance, corporations are given new rights to challenge environmental and other regulations outside of national court systems, and demand that taxpayers compensate them for regulations' potential impact on profits.

Second, unlike earlier trade deals, even the government's own projections showed that the pacts would increase the U.S. trade deficit (Extra!, 10/11). The projections were produced by the independent U.S. International Trade Commission (ITC), which typically produces overly rosy estimates of trade deals' impacts.

But at two of the country's most prominent papers, the New York Times and the Wall Street Journal, such criticisms were almost entirely absent.

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The full article is available by subscription.

Election 2012: the Candidates on Trade

(Disclaimer: Public Citizen has no preference among candidates for office.)

With the budget and other scandals dominating political discourse, little space has remained for discussion of trade policy among possible presidential candidates.

To fill this void we decided to examine exactly where the politicians fall on key trade issues:

Bachmann
Although foreign policy hasn’t always been her strong suit, Rep. Michele Bachmann (R-Minn.) is pretty confident about her views on trade. Bachmann interrupted her presidential campaign and broke a streak of 88 absences to cast a vote in favor of the free trade deals with Korea, Colombia and Panama. In a press release she writes that these deals will “spur economic growth… without cost to taxpayers.” Notably, the representative voted against Trade Adjustment Assistance, which would provide support for workers displaced by the deals. Bachmann also voted against Fast Track cancellation in 2008 and in favor of the Peru trade deal in 2007.

In a blog post urging lawmakers to pass the Korea, Colombia and Panama trade deals, Bachmann writes that the “role of free trade as an expression of liberty….signifies the very principles our country was founded upon.” Unfortunately, these trade deals were negotiated under Fast Track, leaving Congress no authority to amend the agreements. (The constitution, or the document our country was actually founded upon, outlines a system of checks and balances granting Congress the power to “regulate commerce with foreign nations”).

Paul
A self-proclaimed proponent of free trade in its most pure form, Rep. Ron Paul (R-Tex.) opposes NAFTA-style trade deals because they erode U.S. sovereignty and are unconstitutional. He has voted against almost every trade deal that has surfaced during his tenure in office, including Peru, Oman, Bahrain, CAFTA, Australia, Singapore and Chile. Paul has also been an advocate of withdrawing from the World Trade Organization.

Sherrod Brown Tosses the Panama FTA

Well, not quite. But, man, that FTA text does look pretty heavy, and like it could put a hurtin' on some of the senators in the room that are against fair trade.

But here's a floor speech from fair trade champion Sen. Sherrod Brown (D-Ohio) on the night the Senate voted on the Panama, Korea and Colombia trade deals. It's about 30 minutes, and a very eloquent description of why these trade deals are no longer primarily about "trade," but about how we regulate our domestic economy. Brown's TRADE Act would go a long way to getting "trade" policy right.

Wallach and Tucker in American Prospect: Parties realign on flawed trade deals

Our own Lori Wallach and Todd Tucker have a piece in the American Prospect today. Here’s a snippet:

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As he gears up for a difficult re-election campaign, President Obama risks losing key swing states that he won in 2008 because of a recent flip-flop on trade commitments…
 
Even the government’s own study, produced by the U.S. International Trade Commission (ITC), showed that these pacts would increase U.S. imports by more than exports…
 
Instead of probing such matters, most mainstream press reports over the entire four-plus year debate simply parroted corporate and Obama-administration talking points.

The missed political storyline, too, was equally astounding. Two-thirds of Democratic House members opposed Obama on the Korea pact and 82 percent who opposed him on the Colombia pact. It's his biggest split with House Democrats thus far. The number who voted against the deal is even greater than the percentage of House Dems who opposed the Patriot Act (63 percent) or the war-funding bills (56 percent). And of course, Obama got nothing in return for the capitulation: Republicans advanced the trade pacts while blocking his second stimulus package. So much for negotiation.

It took Bill Clinton nearly eight years of NAFTA job losses, sellouts, and scandals to have about two-thirds of the House Democrats vote against China’s entry into the World Trade Organization in 2000. Obama managed to meet and beat that record with his first trade votes. The percentage of Democratic House votes against these deals even surpassed Democrats’ average level of opposition to Republican presidents’ trade initiatives.

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Click here for the full article.

Trade Talks in Peru Meet Strong Opposition

As trade negotiators from the U.S. and eight other Pacific Rim countries met in Lima, Peru this week for Trans-Pacific Free Trade Agreement (FTA) talks, Peruvian and global activists criticized the continued secrecy of the talks and the public health implications of recently leaked texts on drug patents and pharmaceutical pricing.

Read Public Citizen's statement about the dangers of the leaked U.S. proposals.

And here's some television coverage from a leading Peruvian news network of a civil society rally outside the hotel where talks are taking place, featuring some of our Peruvian and international allies.

 

 

Vast Majority of Dems Abandon President, and Media Misses It

It's typically treated as pretty newsworthy when a majority of a president's own party votes against a signature presidential initiative. Double that when over two-thirds do so. Triple the newsworthiness when it's the first time that magnitude of opposition has occured in a president's tenure.

Quadruple for when talking heads are debating whether elected officials will carry the banner of a wide-ranging new progressive protest movement that has declared its independence from that same president. And quintuple when the president has presented a two-plank carrot-stick deal with Republicans - controversial trade deals that won't create jobs plus stimulus spending that will - and when the Republicans move forward with the job-killing plank. But the job-creating plank? Not so much.

This describes precisely what happened with last night's votes to expand NAFTA-style deals to Korea, Colombia and Panama. But you wouldn't know it from any of this morning's press coverage of the vote, which lauded the "bipartisanship" of a deal that was supported by only a tiny cohort of corporate Democrats.

This is deeply misguided, as Lori Wallach noted over at FireDogLake,

"Today a larger share of House Democrats voted against a Democratic president on trade than ever before. It took Bill Clinton nearly eight years of NAFTA job losses, sell outs and scandals to have (not even) two-thirds of the House Democrats vote against him on trade."

Obama managed to do the same in three, getting Democratic opposition nearly 20 percentage points higher than Clinton ever did.Over 82 percent of Democrats opposed the Colombia FTA, while over two-thirds opposed the Korea FTA and over 64 percent opposed the Panama FTA. Even a majority of the New Democrats - the most pro-NAFTA grouping in the party - opposed. These percentages go well beyond the previous high-water mark of House Dem revolt from the president (the February vote on the Patriot Act).

Why were Dems so opposed? The deals won't do anything to help the jobs crisis, and could make things worse. On top of that, they contain hundreds of pages of non-trade provisions that put obstacles in the way of re-regulation of Wall Street and environmental protection. Rep. Mike Michaud (D-Maine), a leading Blue Dog, lays out the analysis in this compelling speech that takes the White House to task.

Democrats' declaration of independence wasn't the only thing that was missed in the coverage. The media also missed the storyline of the Tea Party's abandoning of its principles. Candidate Rand Paul, for instance, railed against the WTO as as an intrusion on U.S. sovereignty. Countless House Tea Party candidates ran paid ads attacking job offshoring, helping them make key inroads among working class voters. Yet virtually the entirety of the Tea Party backed candidates sided with the president for job offshoring deals.

Indeed, there has always been several dozen Republicans who could be counted on to vote against unfair trade policy - even in super-close votes like Bush's push in 2005 for CAFTA, which passed by two votes. Fast forward to 2011, when ONLY SIX Republicans voted against the Panama FTA. This is a historic shift for a party who has always had a more trade-skeptical segment going back centuries.

These political shifts are likely to have major consequences in the upcoming elections. Many Democrats have - like the movement on the streets - declared their political independence. Will it be enough to make up for being down-ticket from a president who flip-flopped on his own campaign pledges to overhaul U.S. trade policy? The world will be watching.

(P.S. The media also was also mum that the president was misrepresenting the government's own studies on the likely economic impact of the deal. These studies, unlike similar studies for all earlier trade deals, showed an increase in the trade deficit. For virtually the entire four-year debate on the bills, the media mentioned only the projected export increase, without discussing the projected import increase. This was Very valuable political cover, but not particularly good reporting. But that's another story.)

Job-Killing Trade Deals Pass Congress Amidst Record Democratic Opposition

Obama and Tea Party Flip Flop on Fair Trade Campaign Commitments

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

With nine percent unemployment and Americans desperate for job creation, it is unconscionable that President Obama and House Republicans would push through a trio of NAFTA-style job-killing trade agreements that even the government’s own studies show will increase the U.S. trade deficit.

This represents a complete flip-flop for President Obama, who won crucial swing states by pledging to overhaul our flawed trade policies. So it is no surprise that a sizeable majority of Democrats in Congress voted against these agreements, against Obama and for American jobs.

Today a larger share of House Democrats voted against a Democratic president on trade than ever before. It took Bill Clinton nearly eight years of NAFTA job losses, sell outs and scandals to have nearly two-thirds of the House Democrats vote against him on trade.

Given the strong Democratic opposition, ultimately it was the Tea Party GOP freshmen who passed these job-killing deals despite their campaign commitments at home to stand up for Main Street businesses, against more job offshoring and for Buy American requirements. The three pacts explicitly ban Buy America procurement policies. The Korea FTA is projected to increase the trade deficit, with seven U.S. industrial sectors hardest hit and job losses of 159,000 in its first seven years.

Members of Congress that voted for these job-killing agreements – backed by Wall Street and America’s most notorious job-offshoring corporations and harmful to American workers, small business and consumers – will face a reckoning as the damage of these pacts hits home. We promise to closely track and publicize every development.

Everyone is asking what the Obama administration could have been thinking to push the sorts of NAFTA-style trade deals that polls show majorities of Democrats, Independents and even GOP voters oppose as job killers, especially after the lesson of the 1993 NAFTA vote, when a Democratic president’s blurring of the distinctions between the parties on trade and jobs caused a disgruntled base to stay home. 

Every election cycle, more Democrats and GOP are campaigning against these sorts of NAFTA-style trade pacts. Given this and the high unemployment rate, it will be very rough for those officials who then betrayed folks at home and voted for these deals loved only by Wall Street and job-offshoring corporations.

Record of Congressional Democratic Opposition to Democratic Presidents on Trade Pacts

- 82.3% of House Democrats opposed the Colombia FTA (158 Democrats against, 31 for)

- 67.7% of House Democrats opposed the Korea FTA  (130 Democrats against, 59 for)

- 64.1% of House Democrats opposed the Panama FTA (123 Democrats against, 66 for)

- 60.6% of Democrats opposed NAFTA (1993)

- 35% opposed the WTO (1994)

- 65.56% opposed China PNTR (2000)

 

Record of Congressional Democratic Opposition to GOP Presidents on Trade Pacts

- 62.6% opposed the Chile FTA (2003)

- 62.14% opposed the Singapore FTA (2003)

- 41.3% opposed the Australia FTA (2004)

- 39.32% opposed the Morocco FTA (2004)

- 92.6% opposed the Central America Free Trade Agreement (2005)

- 40.4% opposed the Bahrain FTA (2005)

- 87.6% opposed the Oman FTA (2006)

- slightly more than half opposed the Peru FTA (2007)

House Dems Take White House to Task

Check out this powerful speech by Rep. Mike Michaud (D-Maine), a fair trade champion, sayin' stuff that needs to be said:

 

Livetweeting the Unfair Trade Pact Trifecta

Follow us on Twitter @pcgtw.Going on now!

Also, check out Fairness and Accuracy in Reporting's take on the press coverage around the FTAs, and Glenn Hurowitz over at HuffPost on the awful political calculus the adminstration made by taking up these deals.

Obama Shifts Away From Jobs Message to Promote Bush-Signed Trade Pacts Projected by Official Government Studies to Increase Trade Deficit

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

It is bizarre that President Barack Obama has switched from his long-awaited focus on jobs to spending effort passing three George W. Bush-signed, NAFTA-style trade deals that official government studies show will increase our trade deficit even as polls show most Americans oppose NAFTA-style trade pacts and recognize that they kill American jobs.

The only way these deals will pass is if congressional GOP lawmakers expose themselves to the foreseeable election attack ads and provide President Obama almost all of the votes; most congressional Democrats will oppose these deals, which are loved by the U.S. Chamber of Commerce and despised by the Democratic base groups.

Apparently, the Obama team has a way to win re-election that does not involve Ohio or other industrial swing states. We saw with NAFTA in 1993 the dire political consequences of a Democratic president blurring distinctions between the parties on this third-rail issue of trade and jobs. And unlike NAFTA, this time, even official government studies show that these pacts will increase our trade deficit.

Trade disaster: Congress votes tomorrow

A message from Lori Wallach, Director of Public Citizen's Global Trade Watch

You don't hear from me often. Over the past year, I have spend most of my time on Capitol Hill, meeting with members of Congress, educating them about our current flawed trade policy and how we can create a trade model that works.

I have been working to get a majority on Congress to say NO to the three devastating NAFTA-style trade deals signed by Pres. Bush that now Pres. Obama is trying to ram through Congress.

But today, I urgently need a favor from you. It will take about five minutes. Congress will vote on these job-killing, unsafe-import-flooding deals on Wednesday. I need you to pick up the phone and call 1-800-718-1008 right now to stop the three unfair trade deals with Korea, Colombia, and Panama.

Take 5 minutes to save jobs. Dial 1-800-718-1008 and tell your Representative to vote NO on all three flawed trade deals.

Here’s why:

• The Korea trade deal is the largest offshoring deal of its kind since NAFTA. If approved, the deal will displace 159,000 American jobs in the first seven years. Even the official U.S. government study on the Korea pact says that it would increase our trade deficit, and it hits the "jobs of the future” sectors hardest – solar, high speed trains, computers. [Learn more]
• We should have never even discussed a new trade deal with Colombia, the world capital for violence against workers. More unionists are assassinated every year than in the rest of the world combined. In 2010, 51 trade unionists were assassinated. Do you think we would consider a trade deal with a county where 51 CEOS were murdered? So far in 2011, another 22 have been killed, despite Colombia’s heralded new "Labor Action Plan.” [Learn more]
• The Panama agreement has many of the same problems as the other two deals -- undercutting the reregulation of the big banks and speculators who destroyed our economy and empowering foreign investors to attack U.S. health, safety, labor and environmental laws before foreign tribunals. But, Panama is also one of the world’s largest tax havens. There, rich U.S. individuals and over 400,000 corporations take advantage of the offshore financial center, many dodging paying the taxes our communities desperately need. This FTA would undercut our current tools to fight tax dodging and money laundering. [Learn more]

Stop the trade deals that replicate the failed policies of the past. Call your Representative today.

Behind the scenes and throughout the country, our team has done everything we can do to try and get through to the leaders in Congress to stop these trade agreements. But it looks like many of our leaders in Washington—both Democrats and Republicans—are siding with corporate lobbyists instead of learning from the experience of working Americans.

YOU know the reality of these trade deals better than corporate lobbyists—and Congress needs to listen to you.

Please call 1-800-718-1008 right now.

Speak out with millions of Americans against the job-killing trade deals that only reward fat cats, off-shore our jobs and undermine our environmental and financial stability safeguards.

Lori Wallach on HuffPo: "Obama Flip-Flopped Off Trade Cliff"

Check out Lori Wallach's latest piece on the Huffington Post.

 

Obama Flip-Flopped Off Trade Cliff

"Apparently, Obama has a plan for winning re-election that does not involve Ohio... oh, and he is tired of talking about job CREATION..."

Read the entire piece at the Huffington Post.

At least 18,600 jobs offshored by corporations signing pass-the-FTAs ad

As part of the corporate ad campaign to push congressional passage of the NAFTA-style trade deals with Korea, Colombia, and Panama, the heads of 32 corporations placed an "open letter" in yesterday's National Journal Daily (subscription only). Thing is, many of these very corporations are certified by the U.S. government as having offshored thousands of jobs under past U.S. trade agreements. That's right, the advertisement claiming that these Bush-era FTAs are needed to create U.S. jobs is sponsored by many chronic trade-agreement offshorers of, um, U.S. jobs.

Moreover, while these CEOs claimed that these deals would create U.S. jobs, the government’s own official studies predict an increase in the U.S. trade deficit from the deals. And, an independent economist projected the net loss of hundreds of thousands of jobs from the pacts. The historical record of similar trade agreements is that the United States has slower export growth to countries we have NAFTA-style deals with than with other countries.

In reality, it's likely that these corporations are licking their chops waiting for the offshoring opportunities that will come with another batch of unfair trade deals. Thanks to the Department of Labor's Trade Adjustment Assistance (TAA) data on workers laid off due to imports and offshoring, we can see how these corporations have taken advantage of past unfair trade deals to ship jobs overseas. (And, given it provides a list of corporate offshorers, we can also see why the Republicans in Congress are keen to kill off this program that provides training and extended unemployment benefits to workers whose are certified as casualties of trade pacts, offshoring, and rising imports.)

We have a searchable form of the TAA database on our website. There you can see that some of these 32 corporations have shipped a combined 18,600 American jobs overseas since 2001. Consider that an example rather than a full accounting of the damage, as TAA is a narrow program that excludes many workers who may well have lost their jobs to trade pacts and imports but who do not meet the program's criteria. If a broader range of trade-related job loss is utilized, the Department of Labor reports over 35,000 workers who have lost their jobs at these companies due to trade since 2001.

Just to pick out a few examples, Whirlpool took advantage of NAFTA and shipped over 1,000 jobs at their Fort Smith, Arkansas facility to Mexico in 2008. Caterpillar, a major backer of the proposed trade pact with Colombia, laid off 338 workers at its Mapleton, Illinois facility when it shifted their work to Mexico. And it looks like Texas Instruments was getting a head-start on the offshoring possibilities offered by the Korea trade deal when it shipped 149 jobs at its Attleboro, Massachusetts facility to South Korea, Mexico, and China in 2005. It just so happens that electronics is going to be the hardest-hit sector in terms of the ballooning deficit from the Korea pact, so the remaining Texas Instruments workers in the United States should be wary.

This ad came the day of Obama's big jobs speech, and it turned out that he slipped in one definitely anti-jobs pitch, advocating for the passage of the Korea, Colombia, and Panama pacts. (Although this time, unlike in the State of the Union address, he did not make the dubious "70,000 jobs supported" claim.) If this isn't bad enough, Larry Summers, Obama's former director National Economic Council, last month argued that "We should not oppose offshoring or outsourcing."

After the jump is a list of the incidents of offshoring at the corporations that signed the letter pushing the three trade pacts:

(UPDATED 9/12/11)

U.S. measures to reduce teenage smoking deemed WTO violation

U.S. measures to reduce teenage smoking violate World Trade Organization (WTO) rules, according to a panel ruling released late last week. Indonesia successfully argued that the U.S. Family Smoking Prevention and Tobacco Control Act (FSPTCA) of 2009 violated WTO rules. The ruling opens the door to more teenage tobacco addiction, while further imperiling the legitimacy of a WTO that rules against environmental, health and other national policies 90 percent of the time.

The FSPTCA took a series of unprecedented and bold measures to combat teenage smoking, including the banning of many forms of flavored cigarettes. There is substantial evidence that tobacco companies produce and market these cigarettes as "starter" or "trainer" cigarettes in order to hook teenagers into a lifetime of nicotine addiction.

However, as the U.S. noted in its defense in the WTO case, the U.S. did not ban all types of cigarettes. In particular, regular tobacco and menthol cigarettes were excluded from the ban. The justification for these exclusions was that, unlike candy flavored or clove cigarettes, large numbers of adults are also hooked on regular and menthol cigarettes. To abruptly pull these products out of the market could cause a strain on the U.S. healthcare system (as lifetime addicts would instantly seek medical treatment for wrenching withdrawal symptoms) and might lead to a rise in illicit black market sales and associated crime. Nonetheless, various studies were ordered on the feasibility of banning menthol cigarettes in the future.

The FSPTCA banned candy and clove cigarettes regardless of where they were produced or who produced them. But Indonesia successfully argued that, since its exporters are the primary providers of clove cigarettes to the U.S. market, the FSPTCA constituted de facto discrimination, in violation of WTO rules under the Agreement on Technical Barriers to Trade (TBT). The WTO panel accepted this argument, despite the fact that the FSPTCA was totally non-discriminatory and many U.S. cigarette makers (such as those that make cola-flavored cigarettes) were also blocked from making these harmful products.

This severe blow to consumer protection comes on the heels of two other WTO rulings against America's dolphin-safe tuna and beef country-of-origin labels, and are likely to put a significant damper on the Obama administration's efforts to pass trade deals with South Korea, Colombia and Panama that contain similar anti-consumer rules.

More on the details of the case after the jump.

U.S. Trade Representative's New Jobs Strategy

Last week, amid mounting signs that the job market may be deteriorating further, Tim Robertson, Director of the California Fair Trade Coalition, interviewed U.S. Trade Representative (USTR) Ron Kirk about the implications of the Korea, Colombia, and Panama trade deals. In the course of the interview, Kirk seemed to suggest that the Obama administration's trade policy encouraged shrinking the number of jobs in the United States. According to Kirk, our massive trade deficit is inconsequential since the imports constitute goods that "we don't want to make in America." He explains:

Let's increase our competitiveness... the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don't want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don't want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure. Our advanced services like [at the architecture firm where we met], there's no reason in the world ... why would we not want to capture the economic benefit of that here in America? I mean, I would argue that that is exactly the reason that we're doing it.

With the unemployment rate at nine percent, it's hard to fathom a government official saying that the United States should pass up jobs, even if those jobs don't require a degree. Shoes are arguably some of the "cheaper products" that Kirk references. The Washington Post recently ran a piece about New Balance's shoe plant in Maine where the workers are glad to be keeping their jobs, contrary to Kirk's assertion that we don't want to make them anymore:

“We want to fight really hard to keep this business in Maine,” said Lori Cook, 28, a single mom with two kids. “I’d like to keep my job.”

The Korea trade deal, projected to result in the loss of 159,000 U.S. jobs, will not just displace workers in the apparel industry, however. The Korea FTA will increase the U.S. deficit in cutting-edge industries, including electronics and motor vehicles, costing us even the "next generation" jobs that Kirk extolls. The Korea, Colombia, and Panama trade deals clearly endanger President Obama's job creation agenda, and USTR Ron Kirk should go back to the drawing board to formulate a trade policy that creates jobs instead of one that eliminates them.

Brookings FTA Paper Falls Short on the Facts

Last month, the Brookings Institution published a policy brief advocating for the passage of the Korea, Colombia and Panama trade deals (or FTAs). The policy brief contains little in the way of new research, but it certainly quotes existing research in a selective way.

Like the Obama administration, the policy brief incorrectly cites the U.S. International Trade Commission's (USITC) predictions for the change in exports to Colombia under the Colombia FTA as the increase in U.S. exports ($1,060 million), rather that prediction for the change in total U.S. exports under the FTA ($654 million). Moreover, the brief does not discuss the jobs implications of the fact that U.S. imports will increase more than exports under the Korea and Colombia trade deals. Since imports will increase more than exports, net job losses will likely result.

By now, this export mistake is familiar. What is new in the Brookings policy brief is it emphasizes the USITC's predicted change in nominal GDP under the FTAs. The policy brief says that the USITC predicts the Korea FTA will boost U.S. GDP by up to $12 billion and the Colombia FTA will boost GDP by $2.5 billion. (The USITC did not give a GDP estimate for the Panama FTA since the model that they used for that study could not estimate GDP changes.)

In reality, the numbers that the policy brief quotes are actually the USITC's estimates for changes in nominal GDP, i.e. changes in GDP that take into account price changes due to the FTAs. Basically, this is the number that is not adjusted for the inflation that occurs within the model. In a footnote to its $12 billion GDP estimate for the Korea deal, the USITC explains:

GDP here is defined as nominal GDP, which takes into account both the price and quantity changes of its components. Welfare, on the other hand, summarizes the real (i.e., exclusive of price effects) value of present and deferred consumption....Increases in the prices of consumption or investment will lead to an increase in GDP, but not in welfare.

In plain English, this means that the $12 billion figure cited in the policy brief is not the change in the quantity of goods and services produced by the U.S. economy. Rather, a separate measure called welfare represents this change in the real value of the economy that actually matters to businesses. Browsing through the tables (specifically, Table 2.1) in the report reveals that the USITC's estimate of the real increase in GDP under the Korea FTA is only $1.8-2.1 billion. Real GDP under the Colombia FTA is expected to increase by $419 million.

So, the predicted increase in GDP is smaller than claimed, but there's still an increase, and therefore we benefit, right? The truth is that the small predicted real GDP gains under the FTAs will not be enjoyed equally by everyone. The big economic issue with FTAs is that some of them may boost overall GDP slightly, but the gains go almost exclusively to corporations and those Americans who already have a lot of wealth. Meanwhile, the adjustment costs fall upon the middle and working classes, leading to net losses for them. Incidentally, the USITC's model simply assumes that adjustment costs don't exist. This distributional issue in trade policy is critical. Josh Bivens at EPI estimates that trade flows have increased income inequality in the U.S. by 7 percent, costing an average household $2,000 per year.

The policy brief also repeatedly claims that the U.S. is losing market share in Asia to its competitors. It argues that the Korea FTA will reverse this "trend."  This claim has scant evidence to back it up. As we pointed out in our latest Trade-ifact, U.S. exports to the Pacific region have grown 35 percent since 2005, while overall U.S. exports to the world have grown at a slower rate, 25 percent, over the same period.  And without FTAs the United States continues to edge out competitors, increasing its market share in most of the major Asian economies since 2005, including South Korea.

In a claim about the "benefits" of the Colombia FTA, the authors of the policy brief seem uninformed about the realities of Colombia’s rural economy. They write, "[The Colombia FTA] supports U.S. goals of helping Colombia reduce cocaine production by creating alternative economic opportunities for farmers." However, the Colombian Ministry of Agriculture and Rural Affairs conducted a study of the effects of an FTA with the U.S. upon nine primary agricultural products and found that full liberalization would lead to a 35 percent decrease in employment in those sectors (see pages 162-163 of the study). The study said that with an FTA without agricultural protections, rural Colombians “would have no more than three options: migration to the cities or to other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups” (pg. 180). Thus, contrary to the claims of the policy brief, all evidence indicates that the FTA would reduce agricultural opportunities for farmers, possibly increasing cocaine production.

Unlike Budget Debate, Basic Math Error on Trade Continues to Go Unchallenged

The Obama administration spent much energy over the weekend attempting to discredit Standard & Poor’s credit rating agency’s downgrade of U.S. debt, which they said was based on a “basic math error of significant consequence.”

In sum, the administration argued that S&P applied the Budget Control Act’s deficit reduction dollar amount of $2.1 trillion to a non-inflation adjusted baseline scenario, when that number was derived from a scenario where discretionary spending levels grew with nominal GDP. In 2021, government debt as a share of GDP would be 93 percent under S&P’s original methodology, while it would be 85 percent under what Treasury maintains is the correct methodology. This claim of an error has been all over the press for days.

It would sure be nice if the Treasury and press got as worked up about basic math errors that the White House itself is making on the three pending trade deals with Korea, Colombia and Panama.

The administration maintains that the Korea deal will boost U.S. exports by $11 billion, when in fact the administration’s own numbers within the U.S. International Trade Commission study show that the deal will lead to a decline in net exports of about $416 million. The S&P’s debt number overstated the debt by about nine percent, but the administration’s claim of exports under the Korea deal overstates the magnitude of the change in the trade balance by 25,000 percent, in addition to getting the direction of the change wrong. If, as the Treasury Department says, the S&P debt error was “of significant consequence,” the administration’s trade-deal export claims must qualify as a misstatement of colossal consequence.

Similarly, the administration says that U.S. exports will increase by $1 billion under the Colombia deal, when the administration’s own numbers show that net exports will take a $66 million hit under the deal. (No estimates have been provided for the U.S.-Panama deal.)

Why these discrepancies? In its public statements, the administration is selectively looking only at one side of the ledger, extracting a number for bilateral exports, while not accounting for the overall change (the change in exports minus imports under the deal). In budget economics, this would be akin to looking only at what the government is taking in as revenue, without looking at what the government is spending. If the government simply assumed away any government spending, I’m betting that the press would call them on this “basic math error of significant consequence.”

The administration is also selectively looking at just the change in U.S. exports to Korea and Colombia under the pacts. But as the administration’s own reports show, these deals will also induce changes in trade patterns with other countries. At the end of the day, the U.S. is projected to be importing more than it is exporting as a result of these deals.

It is newsworthy that the administration’s own reports (produced by the USITC) conclude that net exports will decline under the deal, especially since their primary public rationale for the deals is that exports will increase. These USITC reports in the past have tended to be wildly optimistic, such as underestimating the increase in the U.S.-China trade deficit after China entered the World Trade Organization by $166 billion. But, the reports have nonetheless always concluded that, even if bilateral deficits increase, the global U.S. balance will improve. That is, until the reports on the three pending deals, and the deal with Peru (negotiations on all four were concluded in 2007), predicted a worsening of the overall balance.

This fact was even trumpeted by no less of a champion of NAFTA-style deals than Sen. Chuck Grassley (R-Iowa), who said that the total net export number is the “the one number that is of significance to our economic health.” (See full quote below, after the jump.)

It is unclear why the press continues to report as fact (or unchallenged assertion) the claim that the pending trade pacts will create jobs. These claims rely on using the wrong trade numbers from the government’s own study. Unlike many complex economic debates, all these numbers are publicly available, very straightforward and involve reading no more than two pages in two reports to simply verify the administration’s claims (pages 2-14 and 2-15 of the Korea report and pages G-12 and G-13 of the Colombia report). Moreover, the administration’s basic math error has been known for over nine months, and communicated to reporters and their editors repeatedly over that time (see “Survey of Studies on Potential Economic Effects of the Korea FTA Show Rising Deficits and Job Losses”,  “Survey of Studies on Potential U.S. Economic Effects of Korea Trade Deal Shows Rising Deficits and Job Losses, 2010 ‘Supplemental Deal’ Does Not Alter These Outcomes”, “Guide to the the State of the Union on Jobs, Exports”, “Previewing Ways and Means Chair Camp’s Request for USITC Analysis of the December 2010 Korea FTA Supplemental Auto Deal”, “The Korea FTA is Lose-Lose for the U.S. and Korea: The Facts”, “Here’s an Impediment to Job Creation That Ways and Means Hearing Should Discuss: Korea Trade Deal Is Projected to Increase the Overall U.S. Trade Deficit”.

Reporters can and should quote advocates of these trade deals, and explore their reasoning for wanting Congress to pass them. But, to the extent that job and export claims are based on the administration’s basic math errors, this needs to be pointed out in reporting.

(For what it’s worth, there is also no historical support for the notion that NAFTA-style deals increase exports in relative terms. This would also cast doubts on the administration’s stated rationale for pushing the agreements. However, one would not even have to examine the record to report that the administration is misrepresenting its own research.)

Incorrect Numbers Continue to Pop Up in Trade Reporting: Trade-ifact III

The announcement late Wednesday of a nebulous "agreement" in the Senate on a legislative "path forward" for the Korea, Colombia, and Panama trade deals (or FTAs), has renewed the trade chatter in the newswires. But we're still seeing a lot of questionable claims about the FTAs in these stories, so it's time for another edition of Trade-ifact.

For the third installment , we've organized the stories by theme.

 

Faulty Export Numbers

Misquotes of the official U.S. International Trade Commission (USITC) studies of the three trade deals continue to pop up in news articles, either directly or through quotes of FTA proponents.

As we have said before, FTA supporters only look at the USITC's bilateral export numbers and do not consider the USITC's projections on the change in overall U.S. imports. When the global changes in exports and imports are taken into account, the USITC studies reveal that net exports would decline by $482 million under the Korea and Colombia trade deals (instead of the “bilateral exports only” of $11-12 billion). The USITC made no overall trade estimate for Panama.) 

There were several stories that misreported this $12 billion export number as fact, including:

- Doug Palmer (Reuters), US Congress leaders agree path to pass trade deals (8/3/2011)

- Angus Loten (Wall Street Journal),  Trade Pacts Urged for Export Growth (7/27/2011)

There were several additional stories that reported the incorrect number as the opinion of an interviewee or the Obama administration, but failed to note its misleading origin. These included:

- Mark Drajem (Bloomberg), U.S. Senate Leaders End Impasse on Three Free-Trade Deals, Workers’ Aid (8/4/2011)

- Jim Abrams (AP),  Senate deal on taking up worker, trade bills (8/4/2011)

- Suzy Khimm (Washington Post),  How can Washington help create jobs? (8/3/2011)

- Doug Palmer (Reuters), U.S. business hopes debt deal clears way for trade (8/1/2011)

Doug Palmer’s stories also round up the administration's export claims from $12 billion to $13 billion.

 

Faulty Jobs Numbers

News stories are also continuing to report that the trade deals will create or support 70,000 jobs. This has got to be one of the most popular outright errors in the history of trade debates. As we show here, it is derived from applying an incorrect methodology to an incorrect number (bilateral export projection). But even if one accepts the administration’s methodological choices, applying that method to the correct number (net exports) would reveal a decline in jobs.

Doug Palmer's US Congress leaders agree path to pass trade deals (8/3/2011) misreported this number as fact.

There were several additional stories that reported the incorrect number as the opinion of an interviewee, but failed to note its misleading origin. These included:

North Korean dictatorship poised to benefit from trade pact: Huffington Post

A new reporting and video series has been launched by Zach Carter and company over at the Huffington Post that will explore how the Korea trade deal will benefit the North Korean dictatorship.

As Carter writes,

In 2004, Hyundai inked one of the best land deals in history. For a mere $12 million, the South Korean car company secured the rights to 50 years of use on over 41,000 square miles of industrial space -- $292 per square mile, only about 10 percent higher than the rate the U.S. paid France under the Louisiana Purchase.

For a manufacturing giant, the Hyundai deal was a dream: plenty of space for factories, room for worker housing and a population that would work for less than half the wages that Hyundai was accustomed to paying for labor in its Chinese factories.

Products made In this sweatshop, finds Carter, can be incorporated into goods assembled in South Korea, and then shipped to the U.S. duty-free under the U.S.-South Korea trade deal. If the U.S. attempted to block it, South Korea could use trade pact rights to challenge the U.S.

Future installments will look at tax haven abuses in Panama and labor murders in Colombia, and how the package of three trade deals being pushed by the administration could make these matters worse.

Pelosi pushes back against Obama-backed unfair trade agreements

The Hill reports that:

House Minority Leader Nancy Pelosi pushed back Wednesday against several pending free-trade agreements championed by President Obama.

The California Democrat signaled doubts that looming trade deals with South Korea, Panama and Colombia would benefit U.S. workers. President Obama on Tuesday called on Congress to approve the deals, which he and Republicans argue would create jobs.

“The White House may support it, but the Congress may have a different view,” Pelosi warned on MSNBC.

During a lengthy interview, MSNBC's Andrea Mitchell suggested that the long-delayed trade pacts “could have produced more jobs.”

Pelosi responded, “Well, that's debatable.”

Unlike Mitchell and too many other reporters, Pelosi may have examined the government's own numbers, which show that the U.S.-Korea and U.S.-Colombia deals will increase the U.S. trade deficit. Or she may have examined the record of past trade deals, which have led to loss of U.S. jobs, and accounted for lower-than-average export growth.

Or she may have examined the text of the U.S.-Panama trade pact, which effectively excludes the Panama Canal expansion project from its scope. (See here, page 17.) That project is the one commercially meaningful piece of business happening in that economy, which specializes in offshore tax evasion. It will give Panama new tools to attack U.S. financial transparency initiatives, just as they've used trade pact rules in the past to successfully attack Colombia's (all too scarce) attempts to address money laundering.

And all three pacts will allow corporations to challenge environmental and public health initiatives, in foreign tribunals, outside the U.S. court system, for taxpayer funded compensation. These investor rules wreak havoc wherever they go.

Congrats to Pelosi for standing up for jobs instead of corporate/ideological initiatives like the three unfair trade deals.

Pelosi responded, “Well, that's debatable.”

Op-Ed Round-Up

Here's a round-up of some of the best opinion pieces over the last couple of months about the pending trade deals:

 

U.S.-Korea trade deal is bad for both countries

By Chun Jung-bae, National Assembly of the Republic of Korea

"There is some rosy fantasy that the pending U.S.-Korea Free Trade Agreement will create tens of thousands of well-paying jobs in both countries and strengthen and expand the U.S. relationship with Korea. This is a fabrication of multinational corporations that have no allegiance to either country. As a member of the Korean National Assembly, I would like to set the record straight: In reality, the deal is lose-lose."

Read the entire piece here.

 

 

Congress should reject proposed trade agreements and insist on better policies

By Lynne Dodson, secretary-treasurer of the Washington State Labor Council, and Kathleen Ridihalgh, senior organizing manager of the Sierra Club in Washington and Oregon.

"The definition of insanity is doing the same thing over and over and expecting a different outcome. This summer, insanity reigns over proposed U.S. trade agreements with South Korea, Colombia and Panama. For more than 20 years, "free" trade agreements have systematically undermined the American economy and the middle class. The growing disparity between the "haves" and "have nots" is turning the American dream into a nightmare. It is a direct result of our failed trade policy, and it needs to stop now."

Read the entire piece here.

 

US-Colombia free trade agreement bad idea for both countries

By John I. Laun and Cecilia Zarate-Laun, Colombia Support Network

"In the coming days, the U.S. Congress will be debating a free trade deal between the United States and Colombia. The agreement, if finalized, will have a negative impact on both countries. It will not lead to job creation in the United States. Instead, it will cost U.S. jobs, as multinationals will relocate to Colombia in order to avoid paying higher wages here. But Colombia will not benefit, either."

Read the entire piece here.

 

Trading Our Future: Tax Cheating and the Panama Free Trade Agreement

By Dylan Ratigan, host of MSNBC's "The Dylan Ratigan Show"

"If you want to know why politicians are so eager to pass a free trade agreement with Panama this month, type "Panama offshore banks" into Google and look at the paid ads. What you'll see is advertising by law firms and banks that will offer you help to set up a secret corporate structure in Panama immune from taxes."

Read the entire piece here.

 

Free Trade Pacts Will Cost Tennesseans Jobs

By Robert E. Scott, director of trade and manufacturing policy research at the Economic Policy Institute

"Based on past U.S. experience with NAFTA and other trade agreements, I have estimated that the U.S.-Korea and Colombia FTAs will displace 214,000 U.S. jobs. These job losses will fall hardest in industrial states like Tennessee. Workers there would be well-advised to think twice before supporting these job-displacing trade agreements."

Read the entire piece here.

  

 So-called 'free' trade agreements harm American workers

By Steve Kagen, doctor and former member of Congress from Appleton, Wis.

"Professional politicians in Washington and their partners on Wall Street are lining up for another payday - this time by promoting 'free trade' deals with Korea, Panama and Colombia. But if you're not in Washington or on Wall Street, there's a problem. These new deals are just like the old deals. They are job-killers - just like NAFTA and CAFTA before them."

Read the entire piece here.

 

 
 
Say no to new trade deals and start over

Editorial

"If so-called free trade is not done right...the only winners are corporations without borders. The losers are the people who live and work in those developing nations and the American blue-collar workers who see jobs leave the States. ... There is a good reason that both Maine tea party groups and organized labor oppose the South Korea, Panama and Colombia trade agreements. After defeating them, Congress must create a better way to promote global trade."

Read the entire piece here.

 

Open borders, trade deals are ruinous for America

By James P. Hoffa, president of the International Brotherhood of Teamsters

"Three more job-killing trade deals are in the hopper, and you can bet the news media will swallow whole the phony claims made about them by the U.S. Chamber of Commerce and other groups. Congress is now considering trade agreements with Colombia, where trade unionists are routinely murdered; Panama, a well-known tax haven; and South Korea, in the biggest trade deal since NAFTA. It seems our trade policy is of the corporation, by the corporation and for the corporation."

Read the entire piece here.

 

Trade deals are no deal for US

By Steven J. D'Amico, former Mass. state Representative and member of the American Jobs Alliance

"Even after losing 682,000 jobs to NAFTA since it took effect in 1994, and 2.4 million to China since it joined the World Trade Organization, Washington continues in its blind faith that somehow these trade deals are good for us. This summer Congress is expected to take up three new trade deals - with Korea, Panama, and Colombia. These trade pacts are bad for American workers, bad for our domestic economy, and bad for democracy."

Read the entire piece here.

 

 
Free-trade deals would be costly to U.S.

By Tom Burga, president of the Ohio AFL-CIO

"For over a decade, the labor movement and development advocates have called for fair-trade policy that is part of a more coordinated and coherent national economic strategy.  Unfortunately, the Korean, Colombian and Panamanian free-trade deals before Congress do not address the fundamental policy failures of the North American Free Trade Agreement and China's inclusion into "favored nation status," which has led to catastrophic job loss in the U.S. and the explosion of our import/export deficit, now reaching $500 billion annually."

Read the entire piece here.

 

 Trade pacts bad for California agriculture

By Curtis W. Ellis, executive director of the American Jobs Alliance, and Joaquin Contente, president of California Farmers Union 

"Pending free trade agreements with Korea, Colombia and Panama are bad for California farmers and must be rejected if we are to preserve our way of life. All three trade treaties are based on North American Free Trade Agreement-style policies that have displaced American farmers while sending jobs that support California's rural communities offshore. In fact our leading export is jobs and we reward companies that outsource jobs. Since NAFTA took effect, the United States has lost 300,000 farms and millions of jobs."

Read the entire piece here.

 

 
Wisconsin Farmers Union opposes free trade pact with Korea

By Darin Von Rudin, president of Wisconsin Farmers Union

"WFU strongly opposes the Korea-U.S. Free Trade Agreement and urges Congress to do the same. We feel our legislative leaders should be protecting and promoting American jobs, family farms and our rural communities through sound economic, environmental and labor policies. We don’t think this trade agreement adequately promotes these values."

Read the entire piece here.

 

 
Rep. Schrader is confused on international trade

By Steve Hughes, state director of the Oregon Working Families Party,Ray Kenny, International Brotherhood of Electrical Workers Local, and Frank Rouse, president of the Machinists Union Local 1005

"Congressman Kurt Schrader seems to be confused. On the one hand, he says he opposes trade deals that extend greater rights to foreign investors than exist for Oregonians doing business in our state. On the other hand, he is supporting a massive new free trade agreement with South Korea that does just that."

Read the entire piece here.

 

 
Free trade agreements jolt the economy, but not in a good way

By Jessica Lettween, director of the Minnesota Fair Trade Coalition

"It's easy to understand why multinationals adore the Korea agreement. But with around 7 percent unemployment in Minnesota, a budget crisis, and an electorate that is strongly opposed to more NAFTA-style trade agreements, it is baffling why any member of Congress would endorse a deal that will cost us so much."

Read the entire piece here.

 

Choose voters over donors on free trade

By Gordon Lafer, professor at the University of Oregon, former senior adviser to the U.S. House’s Labor Committee

"Like Republicans, the White House is eager to get these treaties done quickly, so that voters will have forgotten by the fall of 2012. To see the Obama administration and Republican leadership quietly collaborating to seal this deal in knowing violation of the voters’ will is among the most telling signs of corporate power in Washington, and among the most depressing stories in these tough times."

Read the entire piece here.

 

Obama's trade policy clearly shortsighted

By Karen Hansen-Kuhn, international program director for the Institute for Agriculture and Trade Policy

"More than two years into the Obama administration, we're still waiting for a 21st-century trade policy."

Read the entire piece here.

 

(Disclosure: Public Citizen has no preference among the candidates for public office.)

 

Dylan Ratigan on Tax Cheating and the Unfair Panama Trade Deal

Check out this HuffPo piece about the Panama trade deal from MSNBC's own Dylan Ratigan:

"If you want to know why politicians are so eager to pass a free trade agreement with Panama this month, type "Panama offshore banks" into Google and look at the paid ads. What you'll see is advertising by law firms and banks that will offer you help to set up a secret corporate structure in Panama immune from taxes.

The State Department knows this. Here's how the State Department described the Panamanian economy in 2006 in a secret memo revealed on Wikileaks.

The Panamanian "incorporation regime ensures secrecy, avoids taxes,and shields assets from the enforcement of legal judgments. Along with its sophisticated banking services, Panama remains an environment conducive to laundering the proceeds from criminal activity and creates a vulnerability to terrorist financing."

Read the whole article.

Trade-ifact Part Deux

It's time for the second installment of Trade-ifact: Keeping the Media Honest about Trade Deals. Since our last installment, FTA proponents in the administration and Congress have worked to move along the negotiations for curtailing Trade Adjustment Assistance (TAA), all while maintaining a straight face when claiming that these trade pacts will create jobs. Late yesterday, White House Chief of Staff Bill Daley said that they would submit the FTAs for Congressional approval within days, so next week expect the FTA debate to turn white-hot (and a wave of questionable claims to reach tidal wave heights).

Doug Palmer (Reuters)

US showdown looming on Korea trade without deal soon (7/10/2011)

Palmer writes, "A year ago, Obama moved to resolve Democratic concerns with the deals." Democratic concerns with the three FTAs remain unresolved. Despite small tweaks to the auto provisions in the Korea FTA, imports of Korean autos are still projected to slam U.S. autoworkers. Plus, nothing was done to address the Korea FTA's prohibitions on certain vital financial sector regulations. Murders of labor union leaders in Colombia continue, and many Democrats are vowing to oppose the Colombia FTA as a result. Finally, Panama's status as a tax haven will remain unchanged if the Panama FTA is approved. The FTA's investor-state provisions would even allow the Panamanian government and corporations to challenge U.S. policies targeting tax havens. Overall, there has been no fundamental change to the NAFTA trade model that Obama promised while he was a presidential candidate.

Palmer claims that Fast Track trade negotiating authority "has long been considered vital for securing trade deals with U.S. trading partners worried that without it their agreements could be picked apart by Congress."  As noted in our book on the history of Fast Track, scores of trade agreements have passed Congress without Fast Track protection, including 130 trade and investment agreements under the Clinton administration alone (Clinton lacked Fast Track authority from 1995 to the end of his second term). In 2000, former Clinton U.S. Trade Representative went as far as to say, "if you look at our record on trade since 1995, I don't think the lack of Fast Track impeded our ability to achieve our major trade goals."

Obama said ready to move on South Korea trade bill (7/14/2011)

Palmer says that Obama demands an "extension" of TAA be approved along with the three FTAs. The Obama administration's proposal on TAA is actually to narrow eligibility and cut benefits. As Inside U.S. Trade reports, under the new TAA plan workers displaced by trade could receive a maximum of 130 weeks of income support while undergoing retraining, while currently workers can receive up to 153 weeks of income support. It also would restrict income support eligibility for workers who are not in retraining programs, cutting the types of waivers for income support from six to three. Chairman of the House Ways and Means Committee, Republican Rep. Dave Camp, said of the deal, "The final result is a program that has been cut not only from 2009 levels, but also below 2002 levels in several key areas." The "2009 levels" are the elements of the TAA program that expired earlier this year, while the 2002 levels are the elements that are currently in effect. The cuts are a burden on displaced workers when they can least afford it.

Vicki Needham (The Hill)

Republicans split on trade tactics (7/13/2011)

Wikileaks blows lid on Panamanian corruption

As Washington debates the NAFTA-style deal with Panama, Wikileaks has released a treasure trove of damning documents about the current Panamanian administration.

One of the major talking points that the trade deal's proponents utilize is that we must pass the trade deal to reward a key friend in the region. (See here and here.)

But with friends like Panamanian President Martinelli, who needs enemies?

In January 2009, the Embassy expressed concern that Panama's authorities supposedly in charge of providing the U.S. with intelligence "failed to provide" information about drug-related money laundering "to the Attorney General as required by law. Ambassador stressed that the credibility and efficacy of the UAF were crucial in fight against money laundering."

It gets worse. The man behind the money - David Murcia Guzman - has links to former Colombian president Alvaro Uribe, and current Panamanian president Ricardo Martinelli. According to this cable from March 2009, Martinelli's network of Super 99 stores may have been a "service provider" to Guzman, and may have laundered illicit proceeds.

The Embassy wrote, "This scandal is a huge black eye for Panama, and could do serious damage to its international reputation as a safe place to do business. And the worst is far from over."

White House Rocked by Protests Against Unfair Colombia Trade Deal

Today, hundreds of activists gathered at the White House for a demonstration against the U.S.-Colombia FTA. These representatives of faith, labor, human rights and consumer organizations called for the Obama administration to drop its push to pass the Bush-signed trade pact. Fifty one coffins were laid in front of the White House to symbolize the murders of that number of Colombian unionists last year. Five activists were arrested as an act of civil disobedience, including Rick Chase, Executive Director of the Presbyterian Peace Fellowship.

Click here for more pictures.

Read the press advisory after the break.

Launch of Trade-ifact: Keeping the Media Honest about Trade Deals

Now that the House Ways & Means Committee and the Senate Finance Committee have held mock markups of the Korea, Colombia, and Panama FTAs, we could see votes on the FTAs very soon. One of the major unknowns at this point is whether trade adjustment assistance (TAA, or aid to trade-displaced workers) will be included in the implementing legislation for one of the FTAs. Earlier in the debate, President Obama appeared to have secured an agreement from Republicans to allow TAA to move forward – now, things seem less sure.

Now, more than ever, it’s important that Congress and the public be well informed about the likely impact of these deals, which are modeled on NAFTA.

Unfortunately, there has been too little reporting on the deals, and even less that is accurate and balanced. In the interests of accurate reporting, we're launching a new feature on the blog: Trade-ifact. (Think Politifact, but for Trade.)

We will highlight instances where reporters have gotten the facts wrong on the FTAs, starting with a roundup of the reporting of the last two weeks. We'll blog periodically about this accuracy-in-FTA-reporting issue as more FTA stories with errors are published.

The main factual errors that we have found time and again are:
- Misquoting export projections and quoting export  and jobs projections without a discussion of the likely import increases and job losses. This is like looking at your family’s budget, but only looking at your paycheck, and not what you owe. Like too many of our households, our nation buys more than it makes, resulting in a massive trade deficit. Reporters should be getting this right, and examining the likely impact of our trade policy on the deficit.

Liveblogging dueling congressional hearings on 3 NAFTA deals

President Obama has decided to introduce NAFTA-style deals with Panama, Colombia and Korea to Congress, bowing to pressure from corporations and Republicans.

Recognizing that the deals would cost jobs, the administration also agreed with House Republicans to cut (but partially renew) trade adjustment assistance (TAA) for workers displaced by trade.

Republicans, after getting what they want, are now threatening to block or muddle the push on the FTAs, because TAA was not cut enough, or out of concerns that pairing TAA with the FTAs backs up the notion that trade deals cost jobs. Well, yes.

The three deals will be considered under Fast Track trade promotion authority, which means that normal congressional procedures and debate are suspended. As we state in our book on the topic:

Core Aspects of Fast Track Trade-Authority Delegation

• Allowed the executive branch to select countries for, set the substance of, negotiate and then sign trade agreements – all before Congress had a vote on the matter.
• Required the executive branch to notify Congress 90 calendar days before signing and entering into an agreement.127
• Empowered the executive branch to write lengthy implementing legislation for each pact on its own, without committee mark ups. That is to say, the process circumvented normal congressional processes. These executive-authored bills altered wide swaths of U.S. law to conform domestic policy to each agreement's requirements, and formally adopted the agreement texts as U.S. law. As a concession to congressional decorum, the executive branch agreed to participate in "non" or "mock" hearings and markups of the legislation by the trade committees. However, this is a practice, not a requirement.

Today, we will attempting to live-blog the simultaneous mock markups in the Senate Finance and House Ways & Means Committees. I'll be focusing on the latter. [My comments will be in brackets; unless noted by quotes, all notes are paraphrased from actual statements.]

++

Chairman Dave Camp (R-Mich.): We obtained significant reductions in TAA. But the agreement was on substance, not process.

[See statement here. Camp has a key misrepresentation in his opening statement:

"The three trade agreements are a sure-fire way to create American jobs by growing U.S. exports of goods and services – and they do not require one dime of new government spending.  The independent U.S. International Trade Commission estimates that the three pending trade agreements together would increase U.S. exports by at least $13 billion.  These agreements will create and support jobs here in the United States – 250,000 jobs, using the President’s own measure."

This is a serious misrepresentation. In fact, consistent use of this methodology here would show a job loss from the trade deals, not a job gain.

And it's misleading to suggest that these deals don't cost money. In fact, as the Congressional Budget Office estimates have shown, the U.S. government will lose billions in tariff revenue from implementing the deals.

Korea FTA itself: $7,355 million over 2011-2021

Colombia FTA itself: $1,400 million over 2011-2021

Panama FTA itself: $6 million over 2011-2021]

++

Ranking Member Sander Levin (D-Mich.): Urging a "no" vote on mock markup of the 3 FTAs if his amendment to include TAA is not included. Is asking for a certification to be required that Colombia has met its action plan requirements before the agreement enters into force. Urging a no vote if this amendment to require certification fails.

[This Action Plan fails to accomplish the most important labor rights objective: requiring an end to unionist killings on the ground. It also falls far short of the extensive benchmarks laid out by Democratic labor rights leaders.]

Breaking: GOP Boycotts Mark-Up of NAFTA Deals

At 3 pm today, the Senate Finance Committee was supposed to hold an "un-mark-up" of the implementing legislation for the three NAFTA-style deals.(For the background on this arcane Fast Track procedure, see our book here.)

But all the Republicans on the Committee boycotted the hearing, so Chairman Max Baucus (D-Montana) called it off.

They objected to the inclusion of any trade adjustment assistance (TAA) in the Korea FTA, on fiscal austerity grounds. Or, as Sen. Orrin Hatch (R-Utah),

"Unions and other anti-trade zealots gleefully use TAA data to make the case that trade causes outsourcing and job loss... Instead of helping build the case for trade, TAA certifications are used to show that trade is bad.  In the end TAA really is just a government subsidy for anti-trade propaganda."

Yes, reality is so uncooperative with corporate spin sometimes!

Not that the administration's stance is much more coherent. As our own Lori Wallach told Politico,

“For most Americans, what’s newsworthy is not that the administration is pushing Trade Adjustment Assistance (TAA), which effectively is a job burial insurance program, but that pushing a deal on TAA is being used as political cover to move more NAFTA-style trade agreements that will kill more American jobs in the first place, especially given our high unemployment rates.” Wallach added. “The point that’s gotten lost in all this wrangling over TAA is that the three leftover Bush trade deals are bad in and of themselves.”

It's unclear what comes next. Senators had lined up a raft of amendments to the FTAs, on everything from restricting abortion rights to restroring the TAA health care credit funding that the Obama administration had agreed to reduce from current levels. There's still time to shelve the deals, reverse course, and actually have Obama make good on his commitments to truly overhaul our failed trade policy. We'll be watching, and out in the streets over this Fourth of July weekend around the country.

Obama Edges Closer to Political Cliff With Deal to Combine Program to Aid Workers Losing Jobs to Trade With Three Bush-Era NAFTA-Style Trade Pacts Projected to Cause More Job Loss

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

Given that polls show most Americans oppose more NAFTA-style trade pacts because they are job-killers, announcing that three more such agreements are ready to move only because a program to assist workers losing jobs to bad trade deals also can be extended will probably not surprise many Americans, but it sure will make them mad.

For most Americans, what’s newsworthy is not that the administration is pushing Trade Adjustment Assistance (TAA), which effectively is a job burial insurance program, but that pushing a deal on TAA is being used as political cover to move more NAFTA-style trade agreements that will kill more American jobs in the first place, especially given our high unemployment rates.

Poll after poll shows that the vast majority of the American public – across stunningly diverse demographics – is opposed to NAFTA-style trade deals and that members of Congress vote for them at their peril. Earlier this month, White House Chief of Staff Bill Daley, whose job is to sell these trade deals and who helped former President Bill Clinton sell NAFTA to a skeptical Congress, recognized that workers “lose from these agreements” and implied that campaigning against FTAs could even be an electoral advantage. (The Washington Post, “White House’s Daley seeks balance in outreach meeting with manufacturers,” June 16, 2011.)

The point that’s gotten lost in all this wrangling over TAA is that the three leftover Bush trade deals are bad in and of themselves. Even an official government study finds that the Korea deal will increase our trade deficit, and we know up front that it will kill jobs and undermine our national security. The Colombia deal will eliminate any leverage the U.S. has to combat the forced displacements and murders of unionists, Afro-Colombians, human rights defenders and others – problems that have gotten worse since this deal was signed in 2007. The Panama deal will make it harder for the U.S. government to penalize tax-dodging multinational corporations. The supplemental deal on autos for Korea, the labor “Action Plan” for Colombia, and the tax information exchange agreement for Panama are all toothless and do nothing to alleviate the aforementioned problems, as Public Citizen has extensively documented. They were all part of a political-cover kabuki dance.

Moreover, the fact remains that all three deals have the same damaging provisions we all remember from NAFTA: limits on financial services regulation, foreign investor privileges that promote offshoring, weak labor standards, limits on imported food safety and inspection, and the ridiculous private investor-state enforcement system that empowers multinational corporations to go around our domestic courts and directly challenge our state and federal laws before foreign tribunals and demand compensation from our tax dollars for claimed violations of the trade deal.

Comparing apples to bloody oranges

Corporate interests have been going into overdrive pushing the flawed NAFTA-style deals with Colombia, Panama and Korea. As we've documented before, a lot of the statistics that they bandy about as support for their position are misleading, incomplete, or makes apples-to-oranges comparisons.

It's one thing when these statistics have to do with economic accounting abstractions like export values: the argument could be wrong, but it doesn't hit you on an emotional level.

Not so with the latest deeply offensive talking point from the Heritage Foundation and the Cato Institute, now being cited by Gary Shapiro of the Consumer Electronics Association, who writes:

The battle over free trade has taken a crass -- and dishonest -- turn thanks to an ad campaign run by the AFL-CIO which suggests a free trade agreement between the United States and Colombia is "about murder" of Colombian labor organizers. The ad, which features a coffin, applauds the "brave union leaders" of Colombia who are lobbying Congress to reject the proposed agreement. The AFL-CIO claims that to approve the FTA would be to condone the murders of union leaders in Colombia.

What's the ads don't mention is that the Colombian union leaders visiting Washington this week are in more danger here than in their home country. In fact, according to statistics cited by the Heritage Foundation, the murder rate in Washington is 33.4 per 100,000 inhabitants, compared to the 5.3 for Colombian unionists.

I can't remember the last time I read anything so callous or tone deaf. The reason that labor, faith and human rights groups have highlighted the Colombian unionist assasination numbers is because many if not all of these murders in Colombia occur because of the unionists' activities.

The D.C. murder rate is heartbreaking. But how many of these murders occur because someone is attempting to exercise their union rights? Zero. That's the relevant comparison.

Murder rates in D.C. - as across most of the U.S. - are driven largely by economic factors and include the failed war on drugs (and the competition between private individuals over drug turf.)

Unionist murders in Colombia are, by contrast, political, and are often carried out with state complicity.

Two closing thoughts.

First, the plan that the Obama administration is pushing does not require an end to these murders before the pact go into place. That is a tragedy and missed opportunity.

Second, much as employment and competition in the illegal drug sector drive DC's murder rate, the Colombian government's own studies predict an exacerbation of such problems in Colombia if the FTA is implemented. Given the rural displacement and further impoverishment the Colombia FTA is projected to cause, the Colombian Ministry of Agriculture concluded that the FTA would give small farmers little choice but “migration to the cities or other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups.”

In sum, while the Colombia FTA does not require Colombia's unionist murder rate to come down to the zero rate of Washington, D.C., it may in fact drive Colombia's overall (non-unionist) murder rate up to Washington, D.C. levels.

Chamber of Commerce's Misleading Data Website Gives Only Half the Story

Today the Chamber of Commerce launched a website that purports to show the effects of U.S. trade upon jobs in each congressional district, as part of its lobbying campaign to pass the Korea, Colombia, and Panama Free Trade Agreements (FTAs).  Even a cursory review shows that the data included to represent “effects of trade” is only gross exports – imports are excluded, as are net figures that show the actual impact of trade on the districts. 

Indeed, the Chamber’s “new” website just repackages the previously-released old exports-only data featured in past Chamber “studies” of the FTAs. It’s the same misleading approach - like only counting deposits into ones bank account, not also withdrawals or the ending balance.

And, this is especially deceptive because it operates to cover up the huge U.S. trade deficit, which has been driven to astronomical levels by the very same NAFTA-style trade pacts supported by the Chamber of Commerce and the American jobs lost from years of large annual trade deficits.

When economists study the jobs impact of  trade pacts, they consider both sides of the ledger by estimating the number of jobs supported by exports as well as the number of jobs displaced by imports. As Nobelist Paul Krugman noted: " If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses. A countervailing duty on Chinese exports would be job-creating; a deal with South Korea, not…"

Studies that review both imports and exports explain why broad majorities of Americans are against the types of trade pacts the Chamber continues to promote. For instance, the Economic Policy Institute found that 5.6 million more jobs were displaced by imports than were supported by exports in 2007. Looking into the future, the Economic Policy Institute has estimated that implementation of the Korea and Colombia FTAs alone will lead to a net loss of 214,000 U.S. jobs due to rising trade deficits.

Exports support jobs, but the NAFTA-style trade pacts touted by the Chamber will lead to greater imports than exports, displacing workers in the United States. Says who? Well, among others, the Korea FTA’s lead negotiator Ambassador Karan Bhatia who was Pesident George W. Bush’s deputy U.S. trade representative. In an October 2006 speech to a Korean audience, Bhatia said that it was a “myth” that “the U.S. will get the bulk of the benefits of the FTA.” He went on to say, “If history is any judge, it may well not turn out to be true that the U.S. will get the bulk of the benefits, if measured by increased exports.” He added that, in the instance of Mexico and other countries, “the history of our FTAs is that bilateral trade surpluses of our trading partners go up,” meaning that the U.S. trade deficit with those countries increased. 

Even on its own terms, the Chamber website’s estimates of the number of jobs supported by exports in each congressional district are often double counted and misleading. According to the website’s own methodological summary, if any part of a county intersects with a congressional district, all of that county's exports and extrapolated “jobs-supported” are added to that  district's total. This leads to a huge degree of double-counting, since exports from a single county are often assigned to multiple congressional districts. In Texas alone, the sum of the number of jobs supported by exports in each congressional district is 250 percent greater than the state total given by the Chamber, meaning that the jobs estimate for the average Texas congressional district is inflated by 250 percent. Thus, users of the website are misled when they think they are accessing the number of jobs supported by exports in their congressional districts.

Public Citizen has estimated the number of jobs in each congressional district in sectors that will be hit particularly hard by the Korea FTA. A searchable database of these estimates is available at:
http://www.citizen.org/korea_fta_jobs_at_risk

FTA Investors Rules Not Fixed by Preamble Change from 2007

As EOT regulars know, NAFTA-style trade deals contain investment rules that allow corporations to bypass national legal systems and launch attacks on governments in international tribunals. The basis for these attacks can be as simple as institution of a new environmental policy that affects the corporation’s expected future profits. Judges for these so-called “investor-state” cases are selected in part by the corporation, and the trade-pact rules are tailored to corporate demands. Often the mere threat of one of these investor-state awards can cast a chill on public-interest regulation.  All told, more than $350 million has been paid to date in these cases.  Moreover, there are over $9.1 billion in claims in the 13 investor-state cases outstanding under NAFTA-style deals, relating to environmental, public health, and transportation policy.  An additional $483 million has been awarded under U.S. Bilateral Investment Treaties (BITs), which contain similar investment rules. Billions of dollars are also pending in BIT cases now underway.

The Panama, Colombia and Korea “free trade agreements” (FTA) may be considered by Congress in the near future. These pacts constain investment rules that are almost identical to those in NAFTA, except where they are worse. There was one investment-related addition made to the preambles of these FTAs as part of a May 10, 2007 deal with the Bush administration. It stated that the parties: “AGREE that foreign investors are not hereby accorded greater substantive rights with respect to investment protections than domestic investors under domestic law where, as in the United States, protections of investor rights under domestic law equal or exceed those set forth in this Agreement.…”

Some have suggested that this provision goes all or most of the way towards resolving the concerns with these provisions. This is not the case. There is no certainty as to the legal meaning of the May 2007 preambular provision.

Public Citizen has just published a memo that examines six different approaches to preambular language, including the four that have been taken by the tribunals under the 45 final awards issued under U.S. FTAs and BITs.

The memo finds the May 2007 preambular modification fails to address the main concerns raised by scholars and members of Congress with regard to the investment provisions. Indeed, there is scant historical support for the notion that pro-public interest provisions of preambles are protective of regulatory prerogatives: nearly 90 percent of the time, tribunals have given them no weight at all. The remainder of the time,tribunals found that pro-public interest provisions had to be balanced against, and possibly watered down by, pro-investor provisions.

Deeper changes will be required to the investment provisions of the proposed FTAs with Korea, Panama and Colombia, as well as a Trans-Pacific FTA (which includes Peru, the U.S. and eight other countries) now under negotiation. 

To read the memo, go here.

As Obama Administration Pushes for Colombia FTA, Human Rights Abuses Persist

As Obama Administration carries on with it push for the Colombia FTA, a deteriorating human rights condition in Colombia persists. News continues to come in about the murders of Colombian activists, unionists, and teachers, including the recent death of a lands rights leader.  And now, reports are surfacing of forced displacement in Afro-Colombia and indigenous communities. According to the United Nations Office of Coordination of Humanitarian Affairs, more than 18,000 people were the victims of an armed strike by FARC guerrillas in May 2011.  Of these 18,000 it is estimated 16,000 are Afro-descendents and 2,000 are indigenous.   In a recent post, The Afo-Colombian Solidarity Network argues that, “When leaders are threatened and killed, movements can be silenced. In Colombia, if these movements cannot exercise their constitutional rights more displacement and violence is inevitable and these communities could vanish.”

 The severity and persistence of these abuses are alarming, particularly in light of the Obama Administration’s plan to go forward with a NAFTA-style Colombia FTA without addressing the perilous human rights situation in Colombia.

We’ve previously brought attention to Obama’s woefully inadequate Action Plan on the Colombia FTA, which does not require murders or displacement to stop. A memo to the President by House Democrats outlined how to address these concerns, but it has apparently fallen to death ears at the White House.

It appears the pressures is growing for the public to take action and draw attention to the present atrocities as well as the future steps needed to ensure human rights are respected in any free trade agreement with Colombia.

Lori Wallach Profiled in The Hill

Check out this profile of Lori Wallach in The Hill today:

Agitator by Trade Unhappy with Obama

"Wallach, who was a year ahead of Obama at Harvard Law School, says the administration took up the mantle of George W. Bush by making only negligible changes to the trade deals that were hammered out while he was in office. 'He’s reviving Bush-era agreements and making those his own. It’s inexplicable,” Wallach said. … Win or lose, Wallach says she doesn’t subscribe to inertia, aiming to out-research, outsmart, outwork and out-organize her opponents — the majority of which are corporations. 'There’s a powerful set of special interests on the other side,' she said. 'The public is with us and our case is strong.'”

Read the entire profile here.

Photo Credit: Greg Nash / The Hill Newspaper

Gordon Lafer in The Hill: Choose Voters over Donors on Free Trade

Check out Gordon Lafer's op-ed in The Hill about the Colombia trade deal:

 
Choose Voters over Donors on Free Trade

"As a political scientist, I’m sometimes asked how it’s possible for a democracy to enact laws that are opposed by the majority of voters. There is no clearer illustration of how this works than the current race to enact a free trade agreement with Colombia. The majority of Americans opposes NAFTA-style treaties. It’s not just union members; only 27 percent of Republicans think 'free trade' helps us. ... To see the Obama administration and Republican leadership quietly collaborating to seal this deal in knowing violation of the voters’ will is among the most telling signs of corporate power in Washington, and among the most depressing stories in these tough times."

Read the entire piece here.

Fair trader wins in Peru... a third time.

Ollanta Humala, the fair trade candidate in Peru's presidential election, appears to have won a majority of the votes in the second and final round of voting. He bested Keiko Fujimori, who campaigned against fair trade.

We brought this story to your attention back in the first round of voting in April, and mentioned that there was a strong worry that there would be outside intevention. As Mark Weisbrot reported for the Guardian, there is a feeling on the ground that there were some U.S. interventions, although these may only be catalogued with time.

Humala has a long history of staking out fair trade positions. It will be interesting to see how his position evolves going forward, especially in the Trans-Pacific FTA negotiations.

WTO attacks U.S. ground beef labeling

For the second time in a week, reports have surfaced about the WTO clobbering a U.S. consumer labeling policy. Last week, the U.S. voluntary dolphin-safe tuna label was deemed a WTO violation. This week, Reuters is reporting that the WTO has ruled that U.S. beef labels are a WTO no-no.

Corporate meatpackers are rejoicing, saying (according to Reuters)... 

COOL was a bad idea from the start. "This ruling is unfortunate for the U.S. government but the consequences of a poor decision have been revealed. We fully support WTO's preliminary ruling," Bill Donald, president of the National Cattlemen's Beef Association, said in a statement.

WTO interference in these types of labeling schemes are likely to further erode support for so-called "trade" deals. As author Eric Schlosser wrote,

"The days when hamburger meat was ground in the back of a butcher shop, out of scraps from one or two sides of beef, are long gone. Like the multiple sex partners that helped spread the AIDS epidemic, the huge admixture of animals in most American ground beef plants has played a crucial role in spreading E. coli 0157:H7. A single fast food hamburger now contains meat from dozens or even hundreds of different cattle..."

Consumers, ranchers, farmers and legislators worked hard to pass the labeling rules after seeing ground beef horror stories in Schlosser's movie and book Fast Food Nation.

Heck, even free marketeers will be upset with the WTO ruling, since labeling transparency allows the consumer to make the free choice as to what kind of product they want to buy without the government dictating the outcome.

Unfortunately, rather than fixing the WTO mess we've got, the Obama administration is working to expand these types of consumer-harming rules through not one, not two, but three additional unfair trade agreements. Indeed, President Obama is pushing a package of three NAFTA-style deals with Korea, Colombia and Panama that replicate and expand on the WTO threats to food safety.

What's worse, they'll allow some food processors with a presence in the U.S. and these countries with new rights to DIRECTLY attack U.S. consumer safety rules. If the investors win, then U.S. taxpayers have to hand over cash compensation to these corporations. Over $350 million in compensation has already been paid out to corporations under these cases. This includes attacks on natural resource policies, environmental protection and health and safety measures, and more. In fact, of the $9.1 billion in pending claims, all relate to environmental, public health and transportation policy – not traditional trade issues.

At a time when food safety and worker safety budgets are being cut, expanding these flawed rules is unconscionable. If you think that Obama should be spending his energy fixing the flawed trade rules already on the books rather than expanding these rules to new countries, say aye here and take action.

How did we get to a place where the WTO was telling us what type of consumer labels we could use? We have more data on the case after the jump...

Trade Looms Large in NY Special Election

(Disclaimer: Public Citizen has no preference among candidates for office)

Yesterday Democrat Kathy Hochul pulled off an upset win against Republican Jane Corwin in the special election for New York's 26th District, wresting control of a seat the GOP has occupied since the 1960's. Much attention has focused on the candidates' positions on Medicare as a deciding factor in the race, but trade policy also played a key role in the election.

Jack Davis, independent candidate and president of a local manufacturing company, turned the spotlight on the devastating consequences of unfair trade policies for American manufacturing workers. His focus on offshoring garnered nine percent of the votes in the special election.

Earlier in the race, Davis was polling at 23 percent, a testament to the power of trade as an election issue.  Eager to be on the right side of the trade issue, Kathy Hochul released a strongly-worded statement condemning NAFTA and opposing the Korea, Panama, and Colombia FTAs.

For her part, Corwin ran an ad claiming that she would "oppose trade agreements that just aren’t fair", but never followed through in naming a specific pact that she would oppose. When asked point-blank in a questionnaire if she supported NAFTA and the Korea, Panama, and Colombia FTAs, she refused to take a position.  The tension between Corwin's vague fair trade statements and her reluctance to oppose specific policies came to a head when Hochul and Corwin addressed Davis' absence from the May 12th debate:

Oddly, Hochul and Corwin both ended up noting Davis’ absence from the debate not to needle him, but each other.

Hochul started it, saying she wished Davis had participated because “he brings a lot to the debate,” and on his behalf demanded Corwin state her view of the North American Free Trade Agreement and unfair trade. That’s been Davis’ signature issue in all four of his congressional campaigns.

Corwin’s answer: “Right back at’cha, Kathy. There are a lot of things that Jack could ask Kathy Hochul. I think we need to get clarification on her plan for Medicare. She talks about holding the line on taxes. How do you hold the line on taxes when you’re advocating ... to raise taxes?”

That exchange sharply contrasted the difference between Hochul's commitment to oppose specific trade agreements and Corwin's broad statements on fair trade. A large number of the new GOP House freshmen campaigned on supporting fair trade. With Hochul's solid win over Corwin, they're on notice that they will have to put their money where their mouths are on the upcoming votes on the Korea, Panama, and Colombia FTAs or face voter anger in November 2012.

Scott Walker's NAFTA trade package

President Obama came under fire from progressives earlier this year who felt he did not do enough to support the working families in Wisconsin and throughout the Midwest who have been fighting to preserve their collective bargaining rights from attacks by anti-worker governors like Scott Walker.

Now, the administration has gone a step further and is touting Scott Walker's support for a package of three NAFTA-style trade deals that are projected to offshore American jobs. The letter also calls for reinstatement of Fast Track, the undemocratic mechanism invented by Richard Nixon to ram trade deals through Congress that expired in 2007 and that Obama campaigned against as a candidate.

Most governors did not sign onto this latest NAFTA push. But  major anti-union Republican governors including Walker and Indiana's Mitch Daniels are on the letter. (See whether your governor signed on or not after the jump.)

It's one thing to backtrack on the fair-trade campaign commitments you made to your political base, adopt Bush's trade policies as your own, and refuse to go out of your way to fully support your political base in state level politics. It's quite another to actively partner with governors that want to destroy your political base on an agenda the American people despise.

Click here to take action and urge your member of Congress to vote down Scott Walker's NAFTA trade package.

See the full list of signatories after the jump.

Trade Deficit with FTA Countries Continues to Climb

Yesterday the Census Bureau released the March trade flow numbers, revealing that our trade deficit continues to worsen. The U.S. trade deficit rose by $2.8 billion, or 6.2 percent, between February and March on a seasonally-adjusted basis.

With Congress on the verge of considering another set of trade agreements based on the NAFTA model, digging into the data of this new release could help illustrate whether existing NAFTA-style trade agreements are aiding or hindering the fight to keep the trade deficit under control.

The most recent trade data shows that the deficit with our 17 FTA partners continues to worsen, adding to the body of evidence that NAFTA-style trade agreements are hurting American workers. Between February and March, the U.S. trade deficit with U.S. FTA partners grew by $1.6 billion, or 12.3 percent. News reports on the trade deficit noted that the dramatic rise in the price of oil in March accounted for much of the widening of the overall trade deficit. Do oil imports explain the rise in the trade deficit with our FTA partners? No, the jump in the trade deficit with U.S. FTA partners is still huge when you take out oil to account for the jump oil prices. With oil excluded, the trade deficit with FTA partners increased by $846.9 million, or 13.9 percent, between February and March. The non-oil trade deficit with countries that are not FTA partners grew by only 6.8 percent over February-March, less than half the pace of the growth in the deficit with FTA partners.

The latest trade numbers are a sign that the trade deficit is acting as a brake on the momentum of the economic recovery. Given that trade with our current FTA partners act as a primary force in that brake, it is time for the Obama administration to rethink the Korea, Panama, and Colombia FTAs and chart a path away from the old trade model that leads to skyrocketing deficits.

As Obama Meets with Panama’s President Martinelli, U.S.-Panama Trade, Tax Agreement Folly Comes into Focus

Statement of Todd Tucker, Research Director, Public Citizen’s Global Trade Watch

As President Barack Obama meets with Panamanian President Ricardo Martinelli today, the folly of Obama’s recent push to ratify former President George W. Bush’s leftover U.S.-Panama trade deal makes it evident that Obama has not learned from past trade policy mistakes. 

Polling repeatedly shows that Americans do not like NAFTA-style trade agreements, but how does a president claiming to close our budget deficit in part by cracking down on tax havens and tax dodgers explain why it’s a good idea to do such a deal with a notorious tax haven? Before considering any trade deal with Panama, Congress should require Panama to sign a tax agreement that isn’t riddled with loopholes and wait to see if and how it is implemented.

We simply have no idea whether and how Panama will implement the modest commitments in its recently-signed bilateral tax agreement. Even if it did so fully, the country’s severe tax haven and money laundering problems will not end, and the other problems raised by Congress have been left entirely unresolved. Time and again we have seen U.S. presidents get us into trade deals based on countries’ promises to fix problems in the future, only to see the old problems get worse once the scrutiny and pressure related to a pending trade pact is removed. 

It gets worse. The proposed Panama trade deal would undermine the tools we now have to combat financial crime by newly empowering private investors to directly challenge U.S. anti-tax haven policies that they claim undermine the limits on financial regulation included in this agreement’s text. The agreement was signed before the global financial crisis and consequent moves toward stronger financial regulation. It also contains the expansive limits on financial regulation included in all of Bush’s bilateral trade pacts.

The actual language of the new tax treaty does not require Panama to automatically share information about U.S. individuals and corporations hiding their assets, but only requires Panama to respond to inquiries if U.S. officials know enough to inquire except “where the disclosure of the information requested would be contrary to the public policy” of Panama. Given Panama’s long-standing public policy of encouraging tax-haven activities, this loophole is big enough to keep its offshore economy alive and kicking.

We’ve seen this promise-now-implement-later show in the past – recently with the Peru trade deal – and it’s been a debacle. In exchange for their support for the Peru pact, Democratic trade leaders in Congress agreed to changes in that pacts’ labor and environmental terms, including a specific commitment by Peru to make changes in how it governed its forests. The Peru pact went into effect in January 2009, just as President George W. Bush was leaving office and before Peru had implemented its labor law reforms or environmental commitments. The Bush trade team simply certified Peru as having met its labor and environmental obligations, despite the protests of the Democrats who had made the 2007 deal and who outlined a host of ways that Peru was not yet in compliance. The forestry policies that Peruvian President Alan García eventually began pushing relieved the government of its obligations to consult with indigenous groups before making changes to forestry, mining or timber policies impacting their lands. The Peruvian government’s crackdown on indigenous communities protesting that pact’s implementation led to the infamous Bagua massacre. Despite the violence, which left 33 indigenous protestors and police dead, and the lack of a new forestry law, Peru’s FTA privileges have never been suspended. But, thanks to the so-called investor-state system, private investors can and currently are challenging Peru’s environmental laws.

Obama should have learned from the Peru trade deal debacle of implementing a trade deal now for promises of change in the future. Congress should require Panama to demonstrate it will end its decades of facilitating tax dodging before an FTA is approved – just as Congress should have required Peru to implement its labor law reforms and forestry policies first and taken the time to see whether they were working before holding a vote on that deal.

To see Public Citizen’s analysis of the impact of the NAFTA-style deal with Panama on U.S. anti-tax haven policies, go to http://www.citizen.org/Page.aspx?pid=519.

###

Todd Tucker in Foreign Policy magazine: "Obama has swapped smart policy for the same-old job-crushing trade deals."

Check out Todd Tucker's piece in Foreign Policy magazine.

 

 

A Bad Trade

Obama has swapped smart policy for the same-old job-crushing trade deals.

"When Barack Obama was elected back in 2008, he committed to breaking with the same flawed trade policy the United States has followed for a generation. Obama promised a new page, one that focused on creating American jobs and protecting the environment. Instead, his administration has flip-flopped on these campaign promises and is now pushing free trade agreements (FTAs) that are projected to cost American jobs, undermine U.S. negotiating credibility, and could even dampen the president's electoral prospects in 2012. ..."

Read the entire piece here.

USDA's FTA Report Repeats Errors of Previous Flawed Studies

Earlier this week, the USDA released a report attempting to estimate the effects of the Korea, Colombia, and Panama FTAs upon U.S. agricultural trade. It also examined possible effects of the ASEAN-China and ASEAN-Australia-New Zealand FTAs upon the U.S.

Unfortunately, the USDA estimated the effects through a computable general equilibrium (CGE) model, which has a shoddy track record, to say the least. A 1999 U.S. International Trade Commission (USITC) study on the likely effects of China’s tariff offer for WTO accession used a CGE model to estimate that the U.S. trade deficit with China would increase by only $1 billion dollars due to China’s accession. In reality, the trade deficit with China skyrocketed by $167 billion between 2001 and 2008.

Similar studies on NAFTA were also way off the mark. An economist at the Federal Reserve concluded that a CGE-based study of NAFTA underestimated NAFTA’s impact upon U.S. imports by ten times the actual effect of NAFTA. He concluded his study with a recommendation: “If a modeling approach is not capable of reproducing what has happened, we should discard it.”

Not accounting for currency manipulation is a chief problem of CGE models, as Rob Scott at the Economic Policy Institute has demonstrated. The USDA's report even acknowledges the devastating effect currency devaluation can have upon U.S. agricultural exports:

In 1997, U.S. apple exports to Southeast Asia peaked at 150,000 tons, just as the Asian financial crisis struck. The crisis led to sharp devaluations of Southeast Asian currencies that raised the prices of imported apples and income losses that further discouraged apple buying, triggering a dramatic decrease in U.S. apple exports to the region.

As we discuss in a factsheet, Korea is only one of three countries to have ever been placed on the Treasury Department’s list of currency manipulators, having repeatedly manipulated its currency in the past. The Korea FTA contains no prohibition against currency manipulation, so the Korean government could effectively negate the tariff cuts mandated under the FTA through currency manipulation. Despite the long history of Korea manipulating its currency, the USDA’s estimates do not attempt to account for the very real possibility of another devaluation, even though they could have done so through estimating alternative scenarios.