Andean Trade Preferences: Uncontroversial, Safe Vote

Today, the House will be voting on H.R. 4284 - Andean Trade Preference Extension Act of 2009, cosponsored by Chairmen Rangel and Levin.

The bill is uncontroversial - everyone from Wal-Mart to the faith groups to the AFL-CIO is either supporting it or not opposed. All it does is extend the trade preferences for Colombia, Peru and Ecuador for one more year, through the end of 2010. It's been standing policy since 1991 to give these countries a little extra help to ensure regional stability and employment.

(One other note: a little over a year ago, the Bush administration suspended Bolivia - a country statutorily included in the ATPDEA - from receiving benefits under the program. The Obama administration has continued this policy, which is a taste of ham-fisted diplomacy in a region reeling from insufficient U.S. action on the recent coups in the region. However, as the Center for Economic and Policy Research recently showed, even despite the loss of these preferences, Bolivia has one of the top performing economies in the region - and a growth record that has surpassed the country's performance for over a generation.)

UN: Colombia Abuses Continue, Now Against Human Rights Defenders

As Rep. Joe Sestak (D-Pa.) is set to challenge Sen. Arlen Specter (D-Pa.) for his U.S. Senate seat in the upcoming Democratic primary, trade policy has surfaced as a point of contention between the two candidates. Both have criticized the other as being supportive of unfair trade agreements and Specter agreed with the accusation that Sestak is “weak on trade.”

The candidates have a mixed vote record on trade. Specter voted for both NAFTA and the WTO, but has made occasional fair trade votes in recent years, by voting against China PNTR and CAFTA. On the Senate floor in 2005, Specter said of CAFTA,

“This trade agreement would adversely affect this job loss in the United States… many U.S. corporations would have to shut down their operations, export their jobs, and leave skilled workers jobless. This agreement would aggravate the problem. In addition to job loss, this agreement fails to enhance workers' rights…Ultimately, CAFTA would create downward pressure on wages because it would force our American workers to compete with Central American workers who are working for lower wages. This would allow foreign based companies to expand while leaving America more dependent on imports from abroad, which in turn would lessen the demand for domestic production and create even greater economic instability.”

Sestak for his part voted to deny fast-track treatment to the FTA with Colombia and has said that he plans to vote against the Korea and Colombia FTAs.

Yet, both candidates voted for the Peru FTA in 2007 and at this point, neither has cosponsored the TRADE Act – a key demand of fair traders.

The fact that the two candidates are analyzing each other’s trade policies and referring to specific trade agreements shows that political candidates are becoming more educated about trade policy and are using the issue as a platform for (re)election. In other words, trade continues to be a major election issue.

On Tuesday, Public Citizen’s Global Trade Watch division joined with other organizations to host a successful protest of Colombia’s current PR campaign at Union Station. GTW staff worked with several other public interest groups, including Witness for Peace, TransAfrica Forum, International Labor Rights Forum, the Latin American Working Group, and the Colombia Human Rights Committee. The Teamsters also came out in force.

The backstory here is that the government of Colombia has spent almost a million dollars on a PR campaign in Washington, D.C., supposedly to try to change perceptions about the country and boost tourism. A sprawling, elaborate display has been set up at Union Station, with representatives handing out free flowers and coffee. The location is suspicious – Union Station is where congressional staffers flock every day before and after work, staffers whose bosses may have to vote on the pending Colombia FTA. The campaign’s media work is being coordinated by a former Bush administration trade official, and business representatives connect the effort to the Colombian government’s desire to promote the U.S.-Colombia FTA. The agreement would basically expand NAFTA to the country with the highest level of unionist murders in the world.

We came together with other public interest organizations to illustrate how Colombia has earned the reputation it is trying to reverse, through mass discrimination against indigenous peoples, forced displacement, and ongoing violence against union organizers, workers, and human rights defenders. In order to counter the rosy picture being painted inside, protesters used street theater to show how the proposed Colombia FTA would protect Colombian and American business interests while allowing for continued abuse of Colombia’s workers and indigenous population. Protesters marched outside Union Station for several hours, and constructed a memorial to honor the growing list of victims of violence and impunity in Colombia. The protest disrupted foot traffic going in and out of the station, and garnered coverage from several media outlets, including local ABC, FOX, and NBC channels. Stories were also published in Roll Call and the Washington City Paper.

For more information and to learn how you can help to counter the government of Colombia’s campaign, go to http://www.nomorebrokenhearts.net/. Check out more photos from yesterday's protests after the jump.

The embassy of union murder and human rights violation capital of the world Colombia just can't seem to even score a single. After 630 at-bats, the embassy 's batting average out-pathetics even the roster of the dead-last in the majors (pun intended), the Washington Nationals.

According to CQ Today:

To say the stalled U.S.-Colombia trade deal is important to the Colombian government is something of an understatement.

Colombian Ambassador Carolina Barco had no fewer than 630 meetings with U.S. lawmakers about the pact last year in an effort to get Congress to approve the deal, negotiated by the George W. Bush administration.

But it’s an uphill battle, for the moment. With public attitudes toward trade becoming increasingly negative, job losses weighing down much of the United States and a presidential administration focusing on other priorities, Congress has been in no mood to approve new trade deals.

Suddenly, its not so bad to be the Kansas City Royals (PCT .384), the Baltimore Orioles (PCT .405), or even the Nats (PCT .357). At least their D.H. can rally the team and say,"Hey we're only 28 games back. The Colombians have thousands of murders of civic leaders to clean up, and more last year than the year before. Not to mention that the public expects them to fix the text of the FTA, to meet the President's campaign pledges... At least we don't have it that bad".

What insightful trade-wonk ballplayers!

Reuters reported on Wednesday that the leaders of six major U.S. business groups have called for President Barack Obama to back speedy passage of NAFTA-style “free trade” agreements (FTAs) with Colombia, Panama and South Korea. Wisely, the president has yet to send Congress any of the bilateral trade deals negotiated by former president George W. Bush with the three nations.  In addition to pressing for passage of the three pending trade agreements, the groups urged Obama to pursue “major market-opening agreements with the Asia-Pacific and beyond,” essentially advocating for even more NAFTA-style FTAs. 

In a letter to the president, the associations acknowledged that trade agreements can ship jobs overseas, and stated that "[T]rade agreements can have adverse effects on specific industries, workers and communities…”. Actually, this is true, and Obama knows it. On the campaign trail, President Obama repeatedly expressed opposition to NAFTA and promised to usher in an era of U.S. trade policy that would require respect for labor rights, environmental standards, and human rights. The Colombia FTA is especially controversial due to the repressive regime of President Álvaro Uribe. Colombia has a longstanding and egregious record of violations of labor and human rights, especially with regard to those of its indigenous and Afro-descendant peoples. 

In addition to gaining a reputation as a notorious corporate tax haven, Panama has some of the most secretive, least transparent banking and financial laws in the world. This is exactly the wrong approach to the current global financial crisis. This problem would be made worse by the FTA.

It is up to Americans as taxpayers and voters to ensure that the new administration does not bend to the will of agents of corporate globalization, and instead works to fulfill its campaign promises. 

That's the sort of high class date that fair traders should demand when it comes to the Obama administration's dealings with human rights improvements in Colombia.

Two-time TRADE Act original cosponsor Congressman Jim McGovern (D-MA) gets this point like few others, and set the right example for his peers about the insanity of expanding NAFTA to the union murder capital of the world without seismic changes in both the text of the deal and the human rights context surrounding it.

According to Inside US Trade (subscription only):

"I don't want us to be a cheap date when it comes to human rights," he said on July 13 after an address to the U.S. Institute of Peace. "Colombia is still one of the most dangerous places in the world to be a unionist. The idea of going forward with a trade agreement when there are still significant human rights challenges doesn't make any sense."

McGovern stressed he is not involved in efforts to develop benchmarks Colombia must meet before Congress votes on the FTA, but argued the benchmarks should include fewer killings of trade unionists in Colombia.

...He also cited wariness among some stakeholders in Colombia regarding the economic effects of the trade deal.

"As we have traveled around Colombia, there are some significant questions that have been raised by different groups, legitimate groups, who believe the trade agreement will have a bad impact on them," he said. "I think they are looking at Mexico with [the North American Free Trade Agreement] and saying, 'boy, this isn't what everybody says it's going to be.'" 

...McGovern strongly criticized Colombian President Alvaro Uribe, saying he has frequently urged Uribe in private meetings not to conflate political dissidents, including trade unionists, with rebel guerrillas in the Revolutionary Armed Forces of Colombia (FARC). He also said that he felt a lack of trust for Uribe due to the fact that Uribe had initially denied connections between paramilitary organizations and the Colombian army that have now surfaced in Colombia. [all emphases added]

The (New) Democratic Leadership Council has just put a 14-page brief called "Toward a New Trade Agenda," and it offers anything but.

It starts off with some relatively unobjectionable material, like tariff reform for Middle Eastern and the very poorest countries.

But then, it takes a weird turn.

It calls for climate and procurement policy to be subordinated to commercial policies.

It lauds the president's food-safety plan, not because it will resolve the problem, but because of the optics: it will "ease globalization anxieties."

And while the DLC admits that the inherited Bush trade agreements with Panama, Korea and Colombia are problematic, and focuses on too small markets, it nonetheless calls for Obama to "clear the decks" by passing them. This call appears to be based on several miscalculations:

1. That FTAs "do seem to have helped boost exports." Actually, as we've shown, U.S. export growth to non-FTA countries outstrip that to FTA countries. And, as it happens, the DLC shows it too, in their Table 3. FTA country exports grew 47% from 2000-08, while non-FTA countries grew 77 percent.
2. That FTAs are divisive, but that the way out is through. Ed Gresser, the author of the report, goes to pains to note how much opposition within the party there is to the FTAs. He writes: "with trade only one of many issues on its agenda, the administration has a pragmatic interest in limiting these conflicts to genuinely important topics. And so, with the FTAs modest in scale from the start and now fading under the impact of structural change in technology and logistics, it is time to remove them from the starring role." Uh, did I miss something? These fights are divisive. Check. They require lots of political capital better spent on other fights. Check. FTAs actually aren't that useful. Check. SO LET'S PICK THAT FIGHT. There you have it folks: let's build the party by destroying it. I haven't seen such sectarian thinking since my school days!
3. FTAs help foreign policy by pleasing foreign heads of state. Actually, as Gresser notes elsewhere in the piece, we should care less about heads of state and more about the broad public diplomacy that our trade policy represents, and which FTAs undermine. (Think Mexico and Peru.)

Gresser also has a nasty habit of not taking fair traders' arguments seriously. He notes that many "unions and 'populist' politicians did not support—and often outright opposed—the agreement with Peru. They now oppose the three remaining agreements as well, despite the labor and environmental provisions. Their opposition to the Panama agreement in particular suggests the main question is not really about environmental and labor policy, but rather a more basic alarm over competition from poor countries."

Hmm. By unions and populist politicians, does he mean a majority of the House Democratic Caucus? Does he mean the 16 New Democrat Caucus members that opposed the Peru FTA?

The Wall Street Journal reports that Starr International Co., a Panamanian firm led by former AIG head Maurice Greenberg, has prevailed in litigation against AIG.

A little background is necessary. Over several decades, Greenberg helped convert AIG from a sleepy insurance company with origins in pre-revolutionary China into a world-threatening leviathan, which expanded into insuring collateralized debt obligations via credit default swaps. The firm became too interconnected to fail, and when the value of the underlying mortgage-backed securities it was insuring went south, AIG ended up owing money to all sorts of counterparties all over the U.S. and global economies. Greenberg was also deeply involved in policy matters, serving as midwife to the WTO's Financial Services Agreement.

Now U.S. taxpayers, as the primary shareholders in AIG (Greenberg's SICO is the second largest) are trying to get capital back on the firm's books so that the firm and its counterparties can begin to return to health and the taxpayers can get their money back, with some return.

And, then there's the interesting part...

As we reported in March, under Greenberg, AIG maintained affiliations with a variety of offshore entities,  including Panama's SICO, often to provide reinsurance and other services. Part of SICO's role in the division of labor was to operate a compensation pool for top AIG staff, who would get rewarded for good behavior with AIG stock held by SICO. As the WSJ reported:

The trial was basically a dispute over tens of millions of shares in AIG held by Starr but used for decades when Mr. Greenberg was AIG's chief executive to fund a long-term compensation plan for AIG employees. Mr. Greenberg left AIG in 2005 while it was under investigation for its accounting. When he left, the program ended and Starr later sold off some of the shares; AIG maintains it should control the shares.

The verdict is a setback for the insurer, which has been hungry for funds to repay a federal bailout in September that rescued the storied firm from the brink of bankruptcy. The government has made as much as $173.3 billion in aid available to AIG.

Greenberg's victory not only pushes AIG (and us, as its owners) farther away from financial health, it also shows the power that a Panama-registered company can wield in the U.S. court system, in a case against a government-owned company.

Just imagine what such a firm might be able to do if it had even greater rights under the Panama FTA. Earlier this year, we asked you to contact your member of Congress and let them know that these foreign investor rights should be stripped from U.S. trade and investment agreements. With Greenberg's latest success against U.S. companies and taxpayers, now's a good time to let them know that this issue hasn't gone away! Congress should "just say no" to the Panama FTA, and "just say yes" to positive trade legislation like the TRADE Act.

We'll continue to follow the AIG-SICO story, which is not yet over. AIG is suing the U.S. taxpayers for back taxes it owed related to its (and SICO's) Panamanian operations. And, will AIG and other mega corporations continue to push for the Panama FTA, which grants them rights that go beyond U.S. law? Stay tuned.

Fair traders have long maintained that NAFTA-style trade deals promote instability.

The case of Mexico clearly showed this, with massive amounts of post-NAFTA rural displacement leading to sharp increases in immigration and narcotrafficking, leading the country to the brink of failed statehood.

Earlier this month, the thesis was proved again in Peru. In 2007, Peruvian fair-traders warned against signing the FTA, arguing that it would incentivize further rainforest destruction. Sure enough, within months of the deal going into effect, huge parcels of the Amazon were sold off to developers, and indigenous forest-dwellers were locked in a life-or-death battle with the government.

Now, over the weekend, fair trader Manuel Zelaya (president of Honduras) was ousted in the region's first military coup since the Cold War. Opposition to CAFTA ran high in Honduras, but local elites signed the deal anyway. This led to a groundswell of support for a president that kept getting more and more progressive, most recently signing onto the Bolivarian Alternative of the Americas, an alternative to NAFTA-style FTAs. The country's elites wanted to block these changes, so pushed a coup. (More information on how you can take action is available here.)

Looking ahead, as the debate continues in the United States over the Panama FTA, some comments made by that country's peasant leaders are worth considering. He said of the FTA:

In Panama, the poverty rate is nearly 40 percent, and it is even higher for the rural areas (65 percent) and indigenous communities (95 percent). If we experience even a fraction of what happened to Mexico in terms of the flood of subsidized U.S. agricultural products, our rural population will disintegrate and look for any survival option – including immigration to the United States.

This kind of trade agreement will only increase hunger and misery in the indigenous and peasant sectors of Latin America, pushing our countries even faster into the arms of leftist governments, which has already happened in South America proper.

The message is clear: if you want increase in desperation and polarization, push FTAs. If you want preservation of democracy and stability, choose fair trade.

Last week, we mentioned briefly that Peru is suspending two new laws related to the U.S.-Peru FTA aimed at encouraging "investment" (ie resource extraction) in the Peruvian Amazon. OpenLeft's Paul Rosenberg reported in depth on these developments.

As it turns out, this story has legs. Today, the Wall Street Journal reports that Peruvian Prime Minister Yehude Simon "will resign in the near future, amid criticism of his handling of bloody indigenous protests in the Amazon earlier this month in which at least 32 police and Indians were killed... Under Peru's constitution, Mr. Simon's resignation will lead to the resignation of the entire cabinet, opening the door for [Peruvian President Alan] García to push out other ministers tarnished by the conflict, such as Interior Minister Mercedes Cabanillas."

And then there's this:

Mr. García may also now pull back from his unofficial policy of favoring investments with or without the consent of local populations, said political analyst Santiago Pedraglio. The government had approved the decrees in part to bring Peru's laws in line with requirements outlined in its free-trade deal with the U.S.

"García made a bet that there could be these large-scale investments without taking into account the people in those regions," says Mr. Pedraglio. "But he will have to now, and I imagine investors will also want to take those concerns into account now."

The WSJ article makes it sound like García himself is free of blame, but of course he played a key role in getting the U.S.-Peru FTA passed and implemented. And as should be abundantly clear by now, it's the FTA's pro-corporate investment provisions that are a root cause of these upheavals.

EDIT: Courtesy Peruanista, check out this video (Spanish language) of Citizens Trade Campaign's Octavio Ruiz discussing Peru's future under the FTA, outside the Peruvian embassy in Washington DC. (There have been numerous protests outside the embassy in the past week; we'll have photos from one of them shortly.)

U.S. fair traders won a temporary victory with Obama's decision to back off on the Panama FTA. Now it looks like our Peruvian allies have won a temporary victory in their country, after pressure from grassroots activists and legislators from the U.S. and Peru. Reports Reuters:

Peru's Congress on Wednesday temporarily suspended two land laws that triggered violent clashes last week between protesters and police in a remote Amazon region, killing 60 people.

The laws, decreed by Peruvian President Alan Garcia under special powers Congress gave him to implement a free-trade pact with the United States, outline a broad plan for how to regulate investment in the Amazon.

Oregon trade activists showed yet again why they are among the MVPs of the fair-trade movement, pressing themselves into Rep. Earl Blumenauer's (D-Ore.) office to demand that he publicly come out against the Panama FTA.

One of my favorite parts of this video come right at the beginning, when organizer Beth Poteet describes a recent speaking tour with Witness for Peace, where speakers from Mexico and elsewhere made the case against NAFTA-style policy on moral, policy and other grounds:

We just had a farmer from Oaxaca come here on a speaking tour. He spoke in Washington, Oregon for two weeks to about 2,000 people, sharing a message of how NAFTA has been devastating for the rural economy in Oaxaca and throughout Mexico...  We're now seeing some of the same things happen in Central America...

Personally, I'm tired of it. I'm tired of hosting people on these speakers tours and taking delegations to Latin America. We're hearing the same thing over and over again, that these policies are further impoverishing people, not only abroad, but also in our own country. And I'm tired of it. And I want Earl Blumenauer, as all of our representative, to take a stand against it. It's ridiculous that he continues to side with corporations, instead of with people. That's not his job.

Can I get an Amen? Brothers and sisters, can you imagine a world without speaking tours, where our representatives do what's right without a fight? Where speakers don't have to catch a cross-country flight in a small dangerous puddle-jumper plane whilst feeling ill, all to be fed vegan chili and "hosted" on the floor of a college dorm room?

In all seriousness, Beth captures very well the feeling of frustration and exhaustion that so many of us experience as we make the indictment over and over again, year in, and year out, and there's still way too many members of Congress who should be with us that aren't. Hats off to the Oregon activists for impressing the heck out of us yet again, and holding their state delegations' feetsies to the fire!

Reports over the weekend show the violence surrounding protests in in Peru is worse than originally thought. According to Australian Broadcasting Corporation (ABC) News:

Up to 100 Amazon natives have been killed after Friday's military crackdown on protesters in Peru and the situation is expected to worsen, says a Canadian Indigenous rights activist.

Twenty-two-year-old Ben Powless is working alongside Peru's national organisation of Amazon Indigenous people, AIDESEP, and fears more lives will be lost, with the government now labeling protesters as "terrorists"...

AIDESEP, as some may recall, was outspoken in their principled opposition to the U.S.-Peru FTA during the U.S. congressional debate in 2007. Their letter to Congress correctly predicts the FTA would pave the way for policies that would harm communities and the environment:

The Wall Street Journal is reporting on the unrest generated by García's investment-at-all-cost trade policies:

The president is facing his worst crisis since 2006, when he took office for a second term. The protesters are demanding that the government backtrack on decrees that the indigenous groups say would weaken their traditional communal land system by breaking up land into parcels of private property. The García government has been moving aggressively to grant concessions for oil and natural gas exploration in the Amazon.

Analysts say giving in to protester demands would make Mr. García seem weak and cast a cloud over a recently signed free-trade agreement with the U.S. Following the pact, the government enacted laws that opened up indigenous lands to development, changes that the indigenous groups oppose.

ABC News' reports from ground zero suggest that the government's PR machine is working overtime to blame the victims for being massacred:

"What we've been hearing from some of the communities is that a lot of the death tolls and the number of people hurt or injured are dramatically different from the Government figures, which put it as low as three to nine Indigenous people who have been killed," he said.

"But we have heard from some representatives on the ground that there may be as many as 100 people murdered.

"There was an active attempt by the Government here to portray it as a massacre of policemen who went into an area and were killed on their job, when in reality, native participants were sitting in blockades early in the morning [on Friday] when the police attacked."

Mr Powless says the Government is controlling information on the unfolding events.

"There is a lack of information about what's going on," he said.

(HT to BoRev.Net.)

Report are in that Peruvian police have massacred at least 20 indigenous people who have been protesting FTA-related policies that give concessions to corporations without consent or consultation of indigenous communities.

According to Reuters:

At least 20 people died and 50 were injured Friday in clashes between Peruvian police and Amazon tribes opposed to foreign companies opening oil wells and mines in the rainforest.

Indigenous leaders accused police of shooting at hundreds of protesters from helicopters to end a road block on a remote jungle highway 870 miles from Lima, the capital.

Police said the protesters fired first, but the tribesmen denied having guns and said they only bore their traditional spears.

Tribal leaders said a dozen protesters were killed, while the interior ministry said eight officers died in protests over the government's push to open up Peru to foreign investment. It was the first round of severe violence since demonstrations started in April.

"There are 12 dead ... from bullets shot from helicopters," indigenous leader Alberto Pizango told reporters in Lima.

Check back soon for more details on the mobilizations and more analysis on how the U.S.- Peru FTA started this horrifying chain of events into motion. Let's keep the families, and the causes for which their loved ones died, in our thoughts this weekend.

One thing that you get used to after living in Washington for a while are the tight controls on messaging and information.

Corporate types didn't get the memo.

First there was this article from the NYT over the weekend:

The Obama administration has riled corporate America by cracking down on secretive offshore tax havens. But now a big onshore refuge — Delaware — is drawing scrutiny, too...

Defenders of the arrangement — corporate executives, tax lawyers and, unsurprisingly, Delaware officials — rebuff such criticism. Mailbox subsidiaries like the ones along North Orange Street do nothing to minimize companies’ federal tax bills, they say. Corporations must still pay Uncle Sam. Moreover, these people say, many companies are drawn to Delaware for its business-friendly laws and courts, not to save on taxes.

That is certainly the view at 1209 North Orange Street, a nondescript low-slung building at the corner of West 13th Street. This address serves as a tax minimizer for dozens of brand-name companies, among them Dillard’s, the department store chain based in Little Rock, Ark., and Kentucky Fried Chicken, which is part of Yum Brands of Louisville, Ky. All of them, and nearly two-thirds of the Fortune 500, have tax-exempt subsidiaries at this address to reduce their state tax bills.

I love this: they openly admit that Delaware helps corporations avoid state tax bills "but they still have to pay their federal bill"! As the comedian Chris Rock might say, "What do you want, a cookie?! You're not supposed to dodge your federal taxes!"

And their line about Delaware having other charming features besides the massive tax-dodging opportunities is rich too, and recalls some of what we detailed in our report on Panama's tax haven practices. (Check out the appendix, where we show Panamanian officials bragging that tax evasion isn't the only reason corporations set up shop there.)

Speaking of Panama, "La Estrella," one of Panama's leading papers, has been running a series on the country's tax-haven practices. Here are some of the juicy translated tidbits from the source:

"We are not a tax haven," says Moises Cohen, president of the Panamanian Banking Association says in his offices... In the street, without anger, more out of resignation, the cabdriver Gilberto Francisco Ortega declares, "He who has money can come to Panama and do with it as he will."

The dominant system in Panama grants significant benefits to the corporations established here. All you need to create one is an agent on the ground, generally from one of the large law firms. But these vehicles are a dead letter without the other element of the system: the banking policy, constituted in 1970 that gives, among other benefits, anonymous numbered accounts...

For the lawyer Sidney Sitton, specialist in the creation of corporations, this creates the ideal system for criminals... "Despite the dozens of public and private corruption scandals Panama has witnessed over the years, no one has ever investigated even a single bank, nor have they ever ordered the lifting of bank secrecy," says Sitton...

Moises Cohen views the situation radically differently from Sitton: he is convinced that what has allowed his country to become a financial center is the creativity to attract investment to the country. "If they take that away, Panama is done with. We have a strategic location and a tax system with obvious benefits, but that's it," he says...

[The national banking regulator] draws its budget from fees it charges the banks it supervises... and the laws that regulate banking activities are made and implemented by this regulator and do not go through the legislative branch...

[The Panamanian banking associations] have faith that, in the end, the international community will understand that, just as Panama is a transit hub for the region, the veil of impunity that appears to favor illicit businesses also generates income for other countries.

Yeah, l'm sure Citigroup and AIG are getting a lot of income from Panama's lax policies - and, news flash - that's why all this hay is being made. Here's some other juice:

• This Cohen fellow seems like a real charmer. In this extended interview, he has such brilliant quips (that recall the Delaware apologetics from above) as: [when trying to explain why a Colombian criminal was able to launder money in Panama] "If people have a legitimate front operation, it's much harder to notice that they may have illicit operations [behind this]." Or, when asked why Panama doesn't charge taxes on multinationals (despite having some of the highest child malnutrition rates in the region]: "Panama doesn't need those taxes... Our economy is very different from others. It would be like telling China they should pay their workers more. Everyone acts in accord with their own economic situation." Yeah, no one would be so crazy as to insist that China close its sweatshops, and certainly not workers... oh, wait.
• Like we hear of a lot in this country (like from Bill Clinton) whenever there is a corporate crisis, it is blamed (like by this Panamanian official) on a few bad apples. The official can't even answer whether any banks have ever been investigated in Panama. And this article profiles some of the very bad apples - and there have been many. Like the Colombian Nelson Urrego Cardenas, "who is known as the man who made cocaine fall from the sky, and who created 17 foundations that allowed me to even buy an island."
• This article reports that from May 2008 to May 2009 alone, 13,729 new corporations were registered in Panama, and that, on average, 100 are registered every day.

So, in short, the Panamanian banking sector and government - and let's not forget to mention the bailed out banks and drug dealers that enable the system to function - wants a cookie. But they certainly don't want to regulate.

Panamanian union leaders are pushing back on proposals by the outgoing president to fast track labor law changes to pave way for the pending Panama FTA.

La Estrella reports: (Spanish only):

Mariano Mena, a leader of CONATO [the largest Panamanian union federation], stated that although the changes proposed by the Obama administration are good, he worries that this opening be used as a smokescreen include [other] alterations that are damaging to the Panamanian worker. "This is the perfect pretext that had previously been lacking to initiate [anti-worker] labor reforms", he added.

Looks like the Mena and CONATO are learning from the experiences their Peruvian counterparts, who saw labor law 'improvements' and 'fixes' under the Peru FTA translate into rollback of hard-won rights and protections, a net-negative for Peruvian workers.

Workers won't get fooled again!

(FYI - Above photo above is NOT of Mariano Mena, but IS used courtesy of Flickr user Steven(Esteban) J Golliday under a Creative Commons license)

Pop quiz: who said that? Was it a Panamanian worker with nothing to lose?

Nope. It was the chair of one of the most powerful committees in Congress. Yesterday, 55 House members sent a letter to Speaker Nancy Pelosi with strong language against the Panama FTA:

We believe the Panama Free Trade Agreement (FTA) is not a new model on trade and does not represent the kind of change the American people are seeking. After eight years of a failed Bush free trade agenda, the current demise of our economy, and an ensuing massive increase in unemployment, it is difficult to justify to our constituents the passage of another badly flawed trade agreement. We fear passage of this agreement will set us back down the misguided course of past trade deals.

The letter was released in a press conference held yesterday with 13 of the members. It's a diverse group that includes nine freshman members and committee chairs Louise Slaughter (D-N.Y.) and John Conyers (D-Mich.). All of these members are committed to not letting more Bush-negotiated NAFTA expansions pass, and they're not mincing any words. As quoted in CongressDaily, Slaughter said, "I will absolutely fight to the death to not get that bill [the Panama FTA] up here."

Also yesterday, a story emerged from Bloomberg that Obama may be backing off the Panama FTA until he can "offer a new 'framework' for trade." That's consistent with the fair-trade campaign promises he made on the campaign trail last year. Memo to President Obama: the framework already exists. It's called the TRADE Act!

It's not linkable, unfortunately, but today's CongressDaily addressed these developments with the headline, "Panama Agreement Hits Multiple Snags On A Brutal Day":

The odds got longer for a stalled trade accord with Panama on Thursday. Union opposition hardened, a bloc of 55 mostly Democratic House members as well as a key GOP senator came out against the deal, and the Obama administration signaled it might want to re-evaluate the agreement's role in a larger economic strategy.

After the jump, check out the full text of the release that accompanied the letter to Pelosi.

We posted yesterday on some of the strong statements made by Rep. Lloyd Doggett (D-Texas) and Sen. Carl Levin (D-Mich.) on the Panama FTA. Before that, we noted the strong opposition of Chairwoman Louise Slaughter of the Rules Committee, and of up-and-coming members of Congress like Rep. Bruce Braley (D-Iowa), who has not organized against a NAFTA-style FTA in the past.

Today, Sen. John Kerry (D-Mass.) followed this up with a great op-ed in today's Politico:

In Panama’s case, we have an opportunity to use the prospect of opening our vast markets as leverage to win the long-sought commitment from the Panamanian government to sign and implement a tax information exchange agreement with the United States and to bring its banking laws into compliance with international standards.

Few, if any, countries offer a higher level of secrecy than Panama. There is no requirement to disclose the beneficial owners of any corporation or trust. Despite seven years of negotiations, Panama refuses to sign a treaty with the U.S. that would require it to share tax information with American authorities. Small wonder that more than 40,000 new offshore corporations were registered in Panama from 2007 until October 2008, according to the State Department, bringing the total to more than 350,000.

...I believe in trade. But as we debate this agreement, its trade merits must be weighed against the necessity of persuading countries that cater to tax evaders, terrorists and drug lords to change the way they do business. This is an essential step in protecting our treasury and our homeland.

Also, six environmental groups sent a letter to Congress today expressing their "strong opposition" to the Panama FTA. Finally, as I write, the Senate Finance Committee is meeting now on the Panama FTA. Tune in to hear it live! Last thing I heard, Sen. Bob Menendez (D-N.J.) was really grilling USTR about how the FTA would not solve the tax-haven problem.

Rep. Lloyd Doggett (D-Texas) and Sen. Carl Levin (D-Mich.) released a letter to President Obama today saying that they would not support the Panama FTA unless steps are taken to reform the bank and tax secrecy laws that have made Panama one of the leading offshore tax havens in the world. This is an issue that we've been hammering on for some time, as highlighted today by this quote in CongressDaily:

What impact the tax haven issue has on Panama remains to be seen. If critics like Public Citizen's Lori Wallach have their way, that and other issues will be at the forefront of the trade debate for years to come. She called it "ridiculous" to try to separate governance issues in trade partner countries from the agreements themselves.

"When you think about the rights and powers and connections that those agreements establish, it's like getting married to somebody who you don't know, if they're a murderer and an alcoholic," Wallach said. "So particularly when it's something like a country that repeatedly violates the rule of law ... you don't want to have those kind of tight, tight connections that are affecting your domestic and regulatory legal systems."

Read the full text of the Doggett/Levin letter after the jump.

This just came in from Witness for Peace, follow-up up to a story we relayed last December. The powerful 60-second video mostly speaks for itself:

Target for Telling the Truth from Witness For Peace on Vimeo.

Despite these sorts of atrocities, and the atrocities later committed to cover up the atrocities, recent reports have some in the U.S. government looking for cosmetic fixes to "resolve" human rights problems in Colombia so they can bring the FTA to a vote.

According to Reuters:

Colombia says it has made great progress over the past decade reducing all forms of violence in a country once on the verge of collapse from a decades-old civil war...

Obama, who also opposed the [Colombia FTA] last year, recently asked [USTR] Kirk to work with Congress and Colombia on a plan to address the anti-labor violence.

"Ours teams will be meeting shortly to discuss and crystallize those issues that need to be resolved," Kirk said.

How can you negotiate with a government that is at least complicit in violence against civilians on the one hand, and then tries to take credit for reductions in violence on the other?!?! You can't call it a good faith negotiation, that's for sure.

The Colombia FTA will only give more incentives for violence by tilting the scales even more in favor of the powerful interests that already exploit and displace working Colombians and use the climate of fear, violence and lawlessness to do so. We could expect to see MORE of the sort of tragedy that befell Martha.

The House Ways & Means Trade Subcommittee had a hearing on investor protections in U.S. trade and investment agreements. I gave testimony for the record, which you can read here.

As we detail in our recent book, "The Rise and Fall of Fast Track Trade Authority," investment rules in trade deals are a classic non-tariff, non-trade provision. We wrote:

Largely flying under the radar, the 1984 act dramatically expanded the subject matter and the types of agreements that the president was authorized to negotiate. Title III of the act authorized the president to collect information on (and enter into agreements related to the elimination of) "barriers to international trade in services" and "the trade distortive effects of certain investment-related measures." Service and investment barriers were defined as denial of "national treatment and restrictions on the establishment" of service operations and investments; "foreign industrial policies;" "export performance requirements;" and "direct or indirect restrictions on the transfer of information into, or out of" a given country.

The 1988 Fast Track went even further, specifying that:

The principal negotiating objectives of the United States regarding foreign direct investment are --

(i) to reduce or to eliminate artificial or trade-distorting barriers to foreign direct investment, to expand the principle of national treatment, and to reduce unreasonable barriers to establishment; and

(ii) to develop internationally agreed rules, including dispute settlement procedures, which --

(I) will help ensure a free flow of foreign direct investment, and

(II) will reduce or eliminate the trade distortive effects of certain trade-related investment measures.

This delegation of Fast Track produced NAFTA. And despite efforts in the 2002 Fast Track and the May 2007 deal to change the investment provisions in the "cookie cutter" trade template, U.S. trade agreements' investment provisions (such as those in CAFTA and now in the U.S.-Panama FTA) have delved ever more deeply into regulatory policy space. And indeed, in today's hearing, Thea Lee of the AFL-CIO in particular pointed out that the [preambular] language added as a part of the May 2007 deal is non-binding in nature.

One of the richest debates at today's hearing was the nature of the changes made to investment provisions of trade deals since 2002, in particular with respect to so-called exceptions (i.e. protections for governments from having to cough up cash or change laws in response to successful trade-pact challenges by foreign investors and governments) for prudential/ financial and tax measures. You don't often get that kind of substantive debate in a congressional hearing, and perhaps it was too substantive for some, judging by the small attendance by the end of the hearing. As it happens, these so-called exceptions are a subject of our latest report on Panama's tax-haven practices and the U.S. FTA.

We recently told you how some of the bailed-out banks and insurance firms are pushing Congress to pass Bush's leftover NAFTA expansion with Panama – where some of them have tax shelter subsidiary corporations. As I was researching Panama's tax haven status for our recent report, I wondered just how easy it was to set up a corporation in Panama to dodge taxes. In fact, it seemed so simple, I asked Global Trade Watch's star intern Jessica to give it a try. Jessica, a college sophomore, sprung into action last week seeking to answer one question: How easy is it to set up a tax-dodging corporation in Panama?

Check out this hilarious video to see how she does. Then pass the video to your friends and family.

Decades ago, Panama explicitly crafted a "comparative advantage" in tax-evasion and money-laundering services for entities such as the bailed-out American International Group (AIG) and Mexican and Colombian narcotraffickers. Frighteningly, specific rules in the proposed U.S.-Panama Free Trade Agreement would remove key policy tools used to combat financial crimes – and would conflict with U.S. government efforts to combat the global economic crisis by re-regulating finance.

It seems pretty crazy that last week, President Obama announced a major campaign to crack down on tax havens and tax cheating that promotes offshoring of U.S. jobs... while his trade representative is talking up the very tax-dodging corporations' demand to pass Bush's NAFTA with Panama.

Please watch the video, pass it around to your friends and family, and tell your member of Congress to say "no" to Bush's NAFTA expansion to Panama.

So says the 46th President elect of the Republic of Panama.

On May 3rd, 2009 Panamanian voters elected in a landslide conservative Ricardo Martinelli, the owner of the country's leading supermarket chain - entirely non- anti-union too, our labor allies on the ground inform us. He routed the second place contender and won by 25% of the popular vote.

According to Inside U.S. Trade (subscription only) the incoming Panamanian President will refuse to sign thorough Tax Information Exchange Agreement (TIEA) with the U.S. to crack down on tax haven abuse and money laundering:

Martinelli, who is pro-business, views the FTA as a “top priority” De Lima [his spokesperson] said, but he is opposed to changes to Panama’s tax regime or labor laws that will hurt local business interests.

“We don’t want them to rush into an agreement that will hurt our economy,” De Lima said, referring to the Torrijos government. “They have to take into account the best interests of Panamanian business. They have not consulted with anyone.”

 ...DeLima said he understands that the U.S. wants Panama to complete a Tax Information Exchange Agreement (TIEA) with the U.S. and Martinelli is willing to allow some limited sharing of tax information based on an 2002 tentative agreement with the U.S. Since that time, however, the U.S. has demanded automatic disclosure of tax information and this is not acceptable to Martinelli.

So, let me get this straight. We had a lax tax agreement queued up in 2002, which the Panamanian government has forgotten existed. So, the U.S. government wants a TIEA to actually solve the problem, but the only Panamanians who will sign it are irrelevant, having suffered an embarrassing political rout (not unrelated to their links to Colombian money-launderer DMG). Some voices within the Obama administration and Congress tell us they're about to solve all the problems with Panamanian labor law and tax-haven abuse, even though the incoming government is anti-union and is raising Cain about the possibility of meaningful reforms on those fronts.

And they want us to believe that this combo is a recipe for actual enforcement of labor law and and tax reforms in Panama!?!? Have they already forgotten how (as reported in subscription-only Inside U.S. Trade on January 23, 2009):

In a Jan. 15 letter to Schwab, Rangel and Levin wrote that Peru has failed to put in place the laws and regulations necessary to meet those obligations. “This includes the obligation under Article 17.2.1 of the Agreement to adopt in law and practice the fundamental labor rights, including freedom of association and the right to collective bargaining,” the letter said. [emphasis mine]

At least the Obama White House still has time to stop this madness before its too late. The Who has a  great tune that seems an appropriate fair-trade anthem today:

[Editorial note: This post is written by guest blogger Peter Riggs. The views expressed herein are solely those of the individual contributor and do not necessarily reflect those of Public Citizen.]

Naaah, no way. We’re not that stupid, right?

Inside U.S. Trade this week quoted a member of Congress as saying that Panama couldn’t possibly agree to completion of a Tax Information Exchange Agreement (TIEA) prior to the passage of a Free Trade Agreement with the United States.

Adam Smith of Washington noted helpfully that the “final arrangement on tax issues will likely commit Panama to work towards taking additional steps to address allegations on tax havens in the future.”

‘Likely commit… to work towards taking additional steps….to address allegations”?!?

Are you kidding me? Panama is a tax haven. Tens of thousands of multinational corporations have set up mail-drop subsidiaries in Panama that allow for tax dodging. AIG did it. Some of the largest recipients of TARP bailout funds have done it. Heck, some of the Department of Homeland Security’s largest contractors have set up subsidiaries in Panama.

Once we sign an FTA with Panama, what kind of leverage will the United States have to push for a TIEA?
Congressman Adam Smith wasn’t alone in proposing free get-out-of-tax-burden passes. Other House members also suggested that asking the Panamanians to make routine disclosures of tax information with the United States—and to make a firm commitment prior to being rewarded with passage of an FTA with the United States—was a ‘non-starter.’

All this handwringing came a week after Panama’s Commerce Minister Gisela Porras said that Panama is making no plans to exchange tax information with the United States on a normalized basis—which is the whole point of a TIEA!

Fortunately, Carl Levin was able to remind us that Panama agreed seven years ago to talks on a TIEA. “A tax information exchange agreement is the least of what we should get before the free-trade agreement,” said the senior Senator from Michigan. Indeed, the conversation has now moved on - we know that now we need automatic TIEAs, not the weaker TIEAs that still allow Switzerland to protect tax evaders.

Panama has repeatedly dug in its heels on this issue. Government spokespersons, with refreshing honesty, have acknowledged that the country’s economic comparative advantage isn’t in bananas or coffee or semiconductors or call centers. It’s in banking secrecy. And why should Panama give up this comparative advantage, unless compelled to do so?—it’s worked quite well for them so far.

In the early part of this decade, Panama kept its head down after being labeled a “non-cooperative jurisdiction” by the G-7’s Financial Action Task Force. After a brief spin on the dance floor, flirting with the United States regarding a bilateral exchange of tax information—Panama told Washington to pound sand.

Panama figured there wouldn’t be any adverse consequences. They were right. On the contrary —Panama was rewarded with another negotiation—this time for an FTA.

Now that was an agreement they wanted. Badly. It would dramatically increase Panama’s attractiveness as a tax and regulatory haven. Hot dang! thought the multinationals. They could scarcely believe their good fortune.

A tax-haven jurisdiction where setting up a subsidiary can be done on-line in about twenty minutes, where they can stash profits, and from which they’d have the right to sue the United States government for regulatory actions taken by municipalities, states, or the federal government? Hot dang!

And so when earlier this year the G-20 thundered with a kind of biblical wrath against the scourge of tax havens, Panamanian leaders merely shrugged their shoulders.

So tell me again—why, if during the past seven years the United States has been unable to persuade the Panamanians to sign a TIEA, to acknowledge that the game is up, that tax-paying citizens are finally demanding that their governments close these egregious global loopholes—why is it we would sign an FTA and in so doing, lose any semblance of leverage in this debate with Panama?

Most of us can tell a cart from a horse, right? 

Which one goes first if you want to get anywhere? 

First, the automatic TIEA, similar to what we have with Canada. Then we can talk about fixing the agreement itself.

I was thinking over the weekend a little more about how the USTR responded to Jake Tapper’s excellent question on the Panama FTA, and thought a little more detail would be helpful in rebutting their claim. (A more extended and perhaps precise version of this can be found in our recent report. The page numbers I mention in the bullets below refer to the page numbers of the report to consult for more detail.) Here goes:

1. The U.S.-Panama Free Trade Agreement (FTA) requires financial services and firms operating out of Panama to be treated the same as those from the U.S. and other third countries (Article 12.2-12.3) - even though Panama is specifically listed on all the major tax-haven watchdog lists. (Check pages 17-18 of the report.)
2. The so-called exceptions that USTR references wouldn't apply to tax measures that treat a whole country differently based on its tax-haven practices. This is the approach of the Stop Tax Haven Abuses Act, which Obama co-sponsored in the Senate. In any case, a foreign trade tribunal would get to decide whether the U.S. use of the "exception" were legitimate, not U.S. courts or panels comprised of tax-haven experts. (Check pages 18-20 of the report.)
3. U.S. measures that place limits or slow-down financial transfers in and out of Panama would violate the FTA (Article 10.8.1 and 12.1.2). Again, the U.S. could try to raise a so-called exception, whose legitimacy a foreign trade tribunal would get to decide. Even if the U.S. were allowed to invoke the exception, it would have to show that the financial restriction were "necessary" for the regulatory purposes - a term of art in trade law which means that "no less trade restrictive means exists to obtain the goal." Trade panels have overwhelmingly (90% of the time at the WTO) ruled that challenged regulations were not "necessary," so it is a nearly impossible bar to meet. (Check pages 20-23 of the report.)
4. The Panama FTA's rules do not only deal with cases of discrimination against foreign firms, but also with non-discriminatory laws. For instance, the FTA's "Market Access" provisions contain certain absolute rights. The U.S. government would be compelled to allow its citizens to purchase financial services in Panama, thus locking in a permanent tax shelter if Panama doesn’t start taxing the multinationals that operate there. (Check pages 23-24 of the report.)
5. The FTA’s Financial Services market-access rules set limits not only on how U.S.-Panama trade in services may (or may not) be regulated, but also sets limits on U.S. governmental regulation of foreign services operating within the United States. These rules would forbid the U.S. government from banning Panamanian banks or other financial services from establishing operations here, or acquiring existing firms, and also forbid limiting the size of such operations. (Check pages 23-24 of the report.)
6. Panama-registered corporations would be able to directly challenge U.S. taxation and financial regulation measures as “indirect expropriations” in foreign tribunals. They could be awarded U.S. taxpayer-funded damages for measures that would not be considered expropriations under domestic U.S. law. Far from excluding such challenges, the FTA text actually specifically envisions them. In the case of measures that the U.S. claims are for “prudential reasons,” then a special binational panel would be convened to decide whether this is a “valid defense.” If the Panamanian representative on this panel thinks that the defense is not valid, or drags their feet for a few months, then the case proceeds to the so-called investor-state dispute resolution. (Check pages 24-28 of the report.)

As we’ve mentioned, it ain’t hard to fix this problem.

I've been taking a closer look at Obama's tax-haven plan, and I would make a general observation.

First, it is a classic "neo-liberal" regulation, and I don't necessarily mean that in the derogatory sense we usually use that term on this blog. Rather, it tries to indirectly solve a problem by interfering in markets as little as possible. So, rather than telling U.S. corporations what to do and how to do it, and then use the power of the state to punish those who disobey, the Obama proposal attempts to create incentives for private actors to voluntarily comply.

A few examples:

• Rather than prohibit deferral by U.S. corporations of repatriation/taxation on their foreign-source income, the Obama plan creates an incentive to repatriate income by not allowing companies to deduct expenses supporting their overseas investments from their U.S. tax returns until they repatriate income.
• Rather than require foreign financial institutions to share information with the U.S. government on U.S. corporations' foreign banking accounts, or prohibit U.S. corporations from doing banking with foreign banks that don't share information with the IRS, the Obama plan would require U.S. banks that service U.S. corporations that also utilize overseas banks that are not "qualified intermediaries" to withhold 20-30 percent of payments to these corporations until certain disclosures happen.

Some of these provisions are kind of clever in a Policy 201 kind of way. The problem is that their very indirectness would still allow substantial evasion of taxes and money laundering.

Canadian mining company Pacific Rim Corp. has responded to grassroots efforts against its proposed mining project in El Salvador by filing a CAFTA investor suit against the Salvadoran government.  

Communities in northern El Salvador, worried about the environmental impacts of proposed mining projects, campaigned vigorously along with environmental, religious and human rights organizations to hault what would be El Salvador's first large-scale mine in 70 years. They were successful in convincing President Tony Saca to rethink issuing the permit for Pacific Rim's El Dorado mine.

The Miami Herald explains:

President Saca fears mining would cause cyanide contamination of water much in the way it did in the 1950s at the El Dorado mine, the same underground mine in the eastern region of Cabañas which Pacific Rim wants to reopen and expand.

''I won't give any mining exploitation permits because mining is definitively harmful,'' Saca said.

Saca's position has been echoed by his successor, president-elect Mauricio Funes, whose left-wing FMLN party ended 20 years of right-wing rule with their victory in the March elections. Funes will officially take power in June.

El Salvador is not alone in choosing to preserve natural resources over mining projects that do not bring long-term employment and whose profits will flow out of the country. And Pacific Rim is not alone in using NAFTA or CAFTA investor rights to challenge local decisions over mining. The United States is currently fending off a $50 million NAFTA investment suit over California's mining regulations.

Although Pacific Rim is a Canadian company that shouldn't even be eligible to utilize investor rights under CAFTA (an agreement between the United States and five Central American countries), they have found a way around this problem. Pacific Rim Mining Corp. will bring this investment suit through its Nevadan subsidiary, Pac Rim Cayman LLC! As with all NAFTA and CAFTA investor-state cases, the case will be decided outside of domestic courts by a panel of arbitrators.

And all this talk of a Panama FTA, which contains the same kind of investor rights found in NAFTA and CAFTA could makes matters much worse. Panama is home to an estimated 350,000 subsidiaries of foreign mulinational companies. Just as Canadian company Pacific Rim used its Nevadan subsidiary to file a CAFTA investor suit against El Salvador, so could any of the 350,000 parent companies use their Panamanian subsidiaries to take the United States government to task over environmental and other public interest regulations.

Check out ABC News' Jake Tapper's question from yesterday's press briefing:

TAPPER:  OK.  And then following up on the president's announcement yesterday about tax havens, the president's trade representative, Ron Kirk, has said that the administration is pushing for a trade agreement with Panama.  Panama is one of the tax havens that's been cited by various organizations that look at countries that have these tax havens. And as part of the trade agreement, according to Public Citizen, there would be a lift on the amount of money that can be wired from the U.S. to Panama.  Is the Obama administration going to be pushing for the elimination of Panama as a tax haven as part of this anti-tax haven effort?
   
GIBBS:  Let me check with USTR and folks here on what's in the trade agreement and some of the statements that have been made.  I don't have any of that with me, but I'll check on it.*

David Sirota provides some of the background to the question here. A few hours later, Tapper got an answer:

* UPDATE: Carol Guthrie, a spokeswoman for US Trade Representative Ron Kirk, tells ABC News that "Ambassador Kirk has been always been very clear that it will be necessary to address outstanding issues on labor and tax policies, and we continue to work on those tax issues.  Our refusal to tolerate tax havens is precisely why we’re working with the Panamanian government to address concerns regarding its international tax policies.  We can work to improve international tax practices and open markets for entrepreneurs and workers at the same time."

Guthrie adds that the free trade agreement "actually does specifically include exceptions that would allow us to restrict or limit capital transfers in various circumstances, including to protect against tax evasion and money laundering."

Our new report goes through these so-called exceptions. Here's what we found:

• They do not provide a defense for policies that treat an entire country and all business activities related to it differently based on that country’s general tax-haven policies.
• Foreign tribunals get to determine if the exceptions are allowed to defend a challenged policy.
• If a policy is challenged, and even if the exceptions are allowed, these tribunals get to decide whether the policy is "necessary" to fight tax havens, regulate finance, etc. To put this into perspective, WTO panels have ruled that national policies did not meet the “necessary” test in nearly 90 percent of the cases where this defense was raised. Thus, the United States would bear the burden of showing that the specific “financial reporting or record keeping of transfer” rules were the least trade restrictive way to stop money laundering or tax evasion.
  
• In sum, were the Panama FTA to go into effect, the U.S. government could lose its most effective tools for dealing with countries, such as Panama, that are widely recognized as tax havens and venues for money laundering. And, this is not a speculative concern. Already Panama has spoken out at the WTO about how various policies aimed at tax haven countries could violate WTO rules.

But perhaps most worrying is the so-called investor-state system in the Panama FTA. Not only Panamanian nationals and their firms would be empowered under the FTA to use this private enforcement system. Rather, it applies to the 350,000 foreign subsidiaries operating in Panama – including U.S. subsidiaries that have “substantial business activities” there. 

This is extremely problematic, because an array of financial service regulation and tax-haven elimination goals of Congress and the Obama administration fall within the limits on regulation and rights for foreign banks and investors included in the Panama FTA. Perhaps Panama’s government might hesitate to drag the United States before an international tribunal if we limited certain risky transactions or conditioned access to U.S. financial services on banking transparency in Panama. Although, given Panama’s main comparative advantage is its bad bank and tax practices (and it has already complained to the WTO about such measures), who can predict?

However, a private investor or institution would not have to make such diplomatic considerations, and under the FTA would be empowered to enforce the pact’s investor rights terms. The Panama FTA investor-state private enforcement system (like those in NAFTA and CAFTA) would empower Panama-based subsidiaries of U.S., Chinese, European and other multinationals to privately enforce this right of compensation by circumventing domestic courts and domestic law to bring cases based on FTA law directly against signatory governments in foreign tribunals. 

This “investor-state dispute settlement” system uniquely empowers foreign investors to privately enforce the terms of a public contract between governments (i.e. private enforcement of a government-government agreement).  Cases under this FTA provision are submitted to tribunals that operate in the United Nations (United Nations Commission on International Trade Law, i.e. UNCITRAL) or World Bank (International Center on Settlement of Investment Disputes, i.e. ICSID). These tribunals operate outside of the signatory countries’ court systems and enforce FTA (not domestic) property rights law. There is no limit placed on the awards that these foreign tribunals can order governments to pay foreign investors.

So, while it's refreshing to know that some in government are paying close attention to Panama's tax practices, the deeper problem, as we have pointed out, is that the FTA's rules actually take us in the wrong direction on tax, financial and investment matters.

And (FWIW), Panama's incoming administration had this to say (from Bloomberg's Eric Sabo, not linkable):

Panama’s President-elect Ricardo Martinelli will refuse to give in to pressure from the U.S. to change the country’s banking secrecy laws, economic adviser Frank de Lima said.

De Lima, who advised Martinelli during the presidential campaign, said Panama’s economy would be hurt by scrapping laws keeping account information secret from other governments.

According to the U.S. State Department, Panama has over 350,000 foreign-registered companies (i.e. mostly subsidiaries of foreign multinationals),  all of which face low to no taxes and regulation. This high rate of foreign incorporation – the country is reportedly second only to Hong Kong – makes the country a magnet for tax evasion.

In fact, many of the top 30 recipients of TARP money have subsidiaries in Panama. Because Panama does not charge taxes on “offshore” subsidiaries, the TARP and other bailout fund recipients may be able to avoid paying significant amounts of U.S. taxes by essentially permanently deferring repatriation of their income in Panama. According to Securities and Exchange Commission (SEC) filings, Citigroup Inc. has a whopping 17 Panamanian subsidiaries, while American International Group, Morgan Stanley and American Express each have one.    

Many of the top 100 federal contractors also have Panamanian subsidiaries: BearingPoint, Caterpillar, Dell, EDS, Fluor, General Mills, International Shipholding, Johnson & Johnson, Kraft Foods, Mantech International, McDermott International [a U.S. corporation which reincorporated as a Panamanian firm], Merck, PepsiCo, and Proctor & Gamble. Others top U.S. corporations with subsidiaries in Panama include Altria, Cisco, Ingram, News Corporation, Pfizer, and Sunoco.

How does any of this relate to the Bush-negotiated, NAFTA-style trade deal with Panama? Well, the FTA does not directly or indirectly remedy Panama’s problems with tax evasion and money laundering. There are no special requirements that take into consideration, much less try to counter, Panama’s banking secrecy rules, lax financial service regulations or designation as a venue for money laundering and tax evasion.

In today's Inside U.S. Trade, key trade and tax-transparency leaders had this to day:

Among the Democrats demanding a [U.S.-Panama tax information exchange agreement] TIEA as a precondition of the FTA is Rep. Lloyd Doggett (D-TX).

“[I]t is not only essential that they get an agreement signed, but that they change their laws,” he said. “Given their status as a tax abuser, I want to be sure that [Panamanian] laws have been changed, not just that the agreement is signed,” he said.

Doggett said that at a time when President Obama has called for action against companies that use tax havens and Treasury Secretary Tim Geithner has endorsed his legislation to help address the problem of tax havens, it would be a “real mistake” to reward “one of the most abusive tax havens.”

Doggett’s bill has a companion measure in the Senate sponsored by Sen. Carl Levin (D-MI), who is also opposing action on the Panama FTA before a TIEA is negotiated.

“A U.S.-Panama tax information exchange agreement is the least of what we should get before the free-trade agreement,” Sen. Levin said in a statement forwarded by his press office this week.

In fact, if the Panama FTA were adopted, it would make these matters of bipartisan concern worse. For instance, TARP recipients’ Panama-registered subsidiaries would be newly empowered to demand U.S. taxpayer-dollar damages for U.S. financial service regulations or limits on transfers (related to Panama’s status as a tax-haven country) that they could claim undermined its future expected profits and were thus ”tantamount” to (“indirect”) “expropriations.” These cases would be heard by UN or World Bank tribunals, and could be brought to attack domestic regulatory measures that would not be considered expropriations under the U.S. Constitution as interpreted by the U.S. Supreme Court. The effect of these excessive Panama FTA investor rights could be a watering down or chilling of much needed tax and financial-sector re-regulatory efforts.

So, perhaps unsurprisingly, the financial firms that created our current economic crisis are pushing hard for these benefits... even just days before AIG was bailed out.

Luckily, our new report details the easy fixes that could make the Panama FTA less objectionable:

1. Eliminate the FTA provisions that ban limits on transfers, which would remove from the U.S. the key policy tool for acting against banking secrecy, tax haven policies and money laundering;
2. Remove the investor-state enforcement system, which would allow hundreds of thousands of private investors from around the world that are registered and have operations in Panama to challenge U.S. anti-tax haven policies for cash compensation;
3. Remove the FTA’s restrictions on financial regulations, including those that forbid limits on financial service firms’ size or establishment of firewalls between different financial service businesses, and add to the FTA’s financial services text a set of required minimum financial regulatory standards that signatories to the agreement would agree to adopt in domestic law and enforce and that could be based on the re-regulation proposals now being formulated in multilateral and domestic forums; and
4. Require that the FTA be terminated if Panama fails to maintain high transparency standards, which should be passed before the FTA goes into effect.

We released a comprehensive new report on the Panama FTA. Here's our press release:

President Obama's ability to deliver on his campaign commitments to close tax loopholes that promote offshoring and re-regulate the financial sector would be dealt a sharp blow if the U.S.-Panama Free Trade Agreement (FTA) is passed, according to a Public Citizen report released today (PDF).

The new report details how Panama explicitly created an industrial policy designed to create a "comparative advantage" in tax-evasion and money-laundering services for entities such as the bailed-out American International Group (AIG) and Mexican and Colombian narcotraffickers. The report also examines how specific FTA rules would remove key policy tools – such as limitations on transfers from tax-haven countries that are used to combat financial crimes – and would also conflict with U.S. government efforts to combat the global economic crisis by re-regulating finance.

"Members of Congress wouldn't vote to let AIG not pay its taxes or to give Mexican drug lords a safe place to hide their proceeds from selling drugs to our kids, but that's in essence what the Panama FTA does," said Lori Wallach, director of Public Citizen's Global Trade Watch division. "The Obama administration has discarded or altered many leftover Bush initiatives, so why would it push a Bush trade pact that directly conflicts with its priority campaign goals of closing tax loopholes and regulating finance?"

The Panama deal, negotiated by the Bush administration, is modeled on the controversial North American Free Trade Agreement (NAFTA) template. It includes the controversial private “investor-state” enforcement system, which would give new powers to hundreds of thousands of private investors from around the world that are registered and have operations in Panama. This includes the right to challenge U.S. anti-tax haven policies and financial service regulations in foreign tribunals to demand taxpayer-funded compensation. 

Among the key findings:

'Breaking' news today: President Uribe is linked to narcotrafficking paramilitary death squads. We say 'breaking' because, as the below article mentions, these allegations have followed Uribe since early in his political career, and some of us have been noting the fact for some time.

The BBC reports on the most recent development in the so-called 'para-politics' scandal that shows Uribe's complicity in the murders of thousands of Colombians:

A drug lord imprisoned in US has said that he and his illegal paramilitary army funded the 2002 election campaign of Colombian President Alvaro Uribe.

Diego Murillo, aka Don Berna, was one of the heads of the AUC, which demobilised after a peace settlement...

Don Berna was the successor of drug lord Pablo Escobar in the city of Medellin.

He then joined the brutal AUC, or the United Self-Defence Forces of Colombia, as it fought, often in cahoots with the military, to destroy the Marxist rebels.

The article goes on:

Ever since Mr Uribe started his political career, he has been dogged by accusations of links with right-wing paramilitaries.

During his term as governor of the province of Antioquia the AUC was born, flourished and spread across the country, leading to the deaths of more than 100,000 Colombians.

Currently there are 77 congressmen under investigation for links to the AUC, nine of whom have been condemned.

Almost all are supporters of President Uribe.

Despite the denial, the scandal is unlikely to die quietly as Don Berna has not yet finished delivering his revelations.

We've said it before and will say it again: if this global trade regime is a race-to-the-bottom (and it is!) then Colombia, under a death-squad linked President, is in the running to win.

Eyes on Trade will keep readers posted on further developments.

As we contemplate how to further a global or hemispheric movement for social justice - on the heels of the People's Summit and the Summit of the Americas - we must take a moment to reflect on the brave allies in Latin America and the Caribbean who lay their bodies on the line to stop the corporations who exploit and destroy across the globe - when we blog from offices atop Capitol Hill.

In Panama, where a leftover Bush FTA is pending, indigenous peoples fight daily to have their rights respected - while their government and some in ours spend their energies expanding rights of the already privileged investors and corporations, via a Bush-style FTA.

The indigenous rights advocacy organization Cultural Survival is drawing attention to - and soliciting your actions in solidarity with - the struggle of the Naso and Ngöbe indigenous peoples against construction of hydroelectric dams that would bring profit for corporations and peril for the areas' inhabitants.

On March 30, more than a hundred Panamanian police officers in riot gear leveled a Naso village in response to a peaceful protest by Naso and Ngöbe villagers who oppose hydroelectric dams that threaten their homelands. Hundreds of people were left homeless and destitute...

The government has said it will only give people materials to rebuild if they promise to move away from their territories, which the government considers to be "invaded lands."

Cultural Survival provides additional background:

For centuries the Ngöbe people have lived by the rivers in the remote hills of western Panama, but now the government of Panama sees profit in those rivers, and they have given concessions to subsidiaries of the American company AES to build a series of large hydroelectric dams.

It should be pretty obvious that a true change in trade and globalization policy would grant greater rights and protections to the Naso and Ngöbe, NOT to the very corporations that go after the lands of indigenous or Afro-descendants.

Its on us to keep pushing for fair trade, by calling or clicking or writing hand-written letters even. Contacting our Congresspeople to have them oppose the leftover Bush FTAs is really the least we can do.

As the new administration continues to debate whether to adopt Bush's Panama trade deal as their own, the evidence of Panama's tax-evasion industry keep piling in, this time from a race-car champ, according to the Miami Herald:

Federal jurors in Miami will resume deliberations on Tuesday in the tax-evasion trial of Indy 500 champ Helio Castroneves.

The 12-member jury is deciding whether the Brazilian race car star is guilty of conspiring with others to avoid paying U.S. taxes on $5.5 million.

Castroneves, a U.S. resident who has lived in Miami since 1997, received $530,000 from a Brazilian trading company that sponsored him just before he hit the big time a decade ago as an IndyCar driver with Penske Racing. The racer, who owns a Coral Gables mansion, also received $5 million from a 1999 licensing deal with Penske.

So far, Castroneves has paid taxes on only $50,000 of his total earnings from the Brazilian sponsor, Coimex Internacional -- income that he diverted to his Panamanian shell company's bank account in New York and then to a Swiss bank with the help of his sister, according to prosecutors and court records.

That would mean Castroneves allegedly avoided paying taxes on $480,000 from Coimex in addition to the $5 million from Penske. Bottom line: He owes $2.3 million to the Internal Revenue Service, prosecutors say.

(HT to Oregon Fair Trade Coalition!)

If you were a playwright, you'd wish you'd have written this. As the drug-money laundering indictment against now-infamous pyramid schemer money-launderer David Murcia comes down in U.S. federal court, the Panamanian press buzzes amidst new revelations of links between this illicit businessman, state security forces and Panamanian politicians.

Some of the highest ranking leaders of the Institutional Protection Service (SPI in its Spanish initials) were arrested for their alleged role in providing the equivalent of Panamanian Secret Service protection to Murcia. From La Prensa in Panama (Spanish only):

The controversial Colombian prisoner was able to penetrate the highest spheres of the Institutional Protection Service (SPI), the specialized entity in charge of security for the Presidency of the Republic. 

Yesterday the disciplinary body of the SPI detained at its operations center in Corozal two agency directors, Joseph Antoine y Luis Almengor, both for links to the network of agents who served as protection for Murcia, without presidential authorization, as the La Prensa put forth yesterday.

Even though it sounds a lot like another country nearby with which Bush administration negotiated an FTA, infiltration of organized crime into the highest levels of the Panamanian state security apparatus should raise eyebrows.

La Estrella reports that agents seems to have been present in meetings between Murcia and Panamanian politicians, and reminds us that it's not the first time the SPI is in hot water:

The image of the Institutional Protection Service (SPI) has been tarnished yet again with accusations of SPI agents who protected Colombian businessman David Murcia Guzman in their spare time, in violation of SPI code.

Anger is brimming over in diverse corridors over the Bush hangover agreement with Panama, and the new rights it would give to AIG-linked bodies in Panama to sue U.S. taxpayers.

Rep. Mike Michaud (D-Maine) just ran an op-ed in The Hill newspaper explaining what is at stake with the debate around the Panama FTA:

When the House Trade Working Group spoke with President Obama during the campaign, he explained that if he was going to be the one responsible for enforcing a trade agreement, he wanted to be the one setting its terms. In the case of Panama, renegotiating the agreement is a necessary, but insufficient, step.

Removing the special investor rights and limits on Buy America and other non-trade policies is essential. But, no FTA should go into effect with Panama until that country eliminates its excessive banking secrecy practices, re-regulates its financial sector and forces banks and multinational subsidiaries to pay their fair share of taxes.

Indeed, the grassroots is pretty peeved about the whole discussion of this deal. Over the last 24 hours, 9,000 letters were sent to Congress to complain about the AIG-Panama scandal that we reported on last week. You too can let Congress know how you feel about AIG pushing a NAFTA-style deal with Panama, by clicking here.

It sounds like Congress is hearing this outrage, with Chairman Charles Rangel (D-N.Y.) of the House Ways & Means Committee putting out a press release yesterday that says:

“As I have discussed with the Government of Panama and the U.S. Ambassador to Panama, there are remaining outstanding issues that need to be addressed and actions that need to be taken by Panama before Congress considers the FTA.  These include specific actions to meet ILO labor standards and resolution of the tax haven issue now being discussed by our two governments. I hope these actions will be taken soon.”

We should let Congress know that we must also fix the underlying problems with the agreement, such as the provisions granting AIG-linked corporations the right to sue U.S. taxpayers for even more money.

Now that the feds are saying it, U.S. media have started to report (as we did weeks ago) that fallout of the latest political mega-scandal in Latin America would reach not just into the slimy depths of Panamanian and Colombia political corruption, but also to the Mexican and Colombian drug cartels.

The Miami Herald reported Saturday on what they now more accurately term the "Panama-Colombia Ponzi drug case":

The principal suspects in a multimillion-dollar Ponzi scheme linked to scandals of alleged illicit payments to officials in Colombia and presidential candidates in Panama have been charged in a New York federal court with laundering drug trafficking profits.

At least 11 properties in South Florida and California have been seized in connection with the case, which involves the firm DMG and its principal broker and owner, David Murcia Guzmán. Six others were also charged.

According to the charges, the organization opened an account at a U.S. branch office of Merrill Lynch and deposited $2.1 million, an amount prosecutors hope to show is connected to money Mexican drug cartels paid to Colombian drug traffickers.

Following the scandal, several Colombian officials and one of President Alvaro Uribe's sons had to explain their links to the suspects.

In investigating if they received money from Murcia, Panama's electoral tribunal on Friday stripped legal privileges from two presidential candidates, Balbina Herrera and Ricardo Martinelli.

It's disturbing to imagine that candidates for the presidency of any country be granted special privileges to conceal their finances, but we might not be too surprised in the case of Panama, a known banking secrecy and offshore tax-haven destination.

The AP says Murcia may face extradition to the U.S.:

A man charged in Colombia with orchestrating a giant pyramid scheme that bilked people out of hundreds of millions of dollars now faces money laundering charges in the United States.

Federal prosecutors in New York brought money laundering charges Wednesday against DMG Group founder David Guzman and six others affiliated with the company.

They say he was laundering drug trafficking profits but don't detail their alleged origin.

Eyes on Trade will be watching and more will be revealed. If the juiciness of recent weeks are any indication, you won't want to miss it!

Despite high rates of GDP growth thanks to the canal and banking sectors, over 40 percent of Panama’s population is rural and poor. This population is already squeezed by Panama’s net food-importer status.  UNICEF statistics show that the wealthiest 20 per cent of the population has an annual family income 32 times that of the poorest 20 per cent, making Panama one of the most unequal countries in the world. More than half of children under the age of 5 live in poverty, and nearly 30 percent live in extreme poverty. Most of these children come from indigenous areas. And Panama is one of very few countries in the region that has experienced a rise in child chronic malnutrition, despite rising GDP growth. 

So why is Panama's government putting up roadblocks to the charitable distribution of nearly $50 million to combat child hunger? And not only that, but engaging in an extended harassment campaign against the lawyer designated to execute this will?

Here's the story from the International Herald Tribune's Marc Lacey:

In life, Wilson C. Lucom was not exactly child-friendly. The curmudgeon never had children himself, nor was he especially close to the offspring of his third wife, Hilda. When he opened his ample checkbook, friends say, it was more likely to finance a conservative political cause than to help underprivileged youth.

But Lucom, a native of rural Pennsylvania who spent much of his life in Palm Beach, Florida, surprised everyone in his will, which was disclosed upon his death two years ago at the age of 88. After doling out relatively small portions of his tens of millions of dollars to survivors, he left the rest to a foundation he had dreamed up in secrecy to aid the poor children of Panama, where he spent the final years of his life.

It would be one of the largest charitable donations, if not the largest, in Panama's history, but so far not a single child has had access to the money. The will has set off a vicious legal battle that is playing out in at least four countries. Criminal charges have been filed, insults traded and threats made. The number of law firms involved exceeds 20.

"This is all about greed," said Hector Avila, an advocate for at-risk children in Panama who organized a demonstration of young people in May outside Supreme Court in Panama, calling for Lucom's gift to be honored. Within a week of the protest, Avila survived a shooting. No link to the Lucom case was established.

Richard Lehman, a Florida-based lawyer, is the executor of Lucom's estate, and has set up a webpage describing his legal battle with Panamanian authorities. The situation has gotten so bad that Lehman has requested precautionary protection from the Inter-American Commission on Human Rights. Listen to what Lehman and several charitable organizations in Panama had to say about the case:

I've spoken with Lehman a number of times, and he thinks that signing an FTA with Panama sends exactly the wrong message to a regime that fails to respect human rights, not to mention its disregard for the suffering children within their own national borders.

We'll keep you updated about any developments in this case, and feel free to go to the Lucom - Lehman website to become more informed, and please spread the word!

Taking a queue from his boss who equates advocacy for human rights with aiding 'the enemy', Colombian Vice President Francisco Santos is resorting to personal attacks against those who disagree with his ideology, even well-respected international dissenters like Rep. George Miller (D-Calif.).

Santos' ad hominem against Chairman George Miller, whose House Committee on Education and Labor recently held hearings on the rampant human-rights violations in Colombia, featured prominently in today's El Pais, a conservative Colombian daily (from Spanish):

Vice President Santos classified as "enemy of Colombia" United States Democratic Representative George Miller because he stated that the human rights situation in [Colombia] is similar to that of Chile or El Salvador of decades past...

According to the Vice President [Santos], statements by Miller, who has visited the Colombian nation on three occasions, are "a rebuff of such dimensions that I do not want to qualify them".

But qualify them he did. Santos called those the remarks of an enemy of his country. Apparently that's just how he and his boss see the legitimate concerns regrading their trampling of their citizens' rights. If Santos' and Uribe's policies are hurting the Colombian people and violating their most basic rights, but Miller is the enemy, then one has to ask: what does that make Santos and Uribe?

The fact is that Bush/Cheney Santos/Uribe and their with-us-or-against-us mentality has cost many their lives. Luckily for us all, it's not likely that Chairman Miller will himself fall victim of the paramilitary death squads that attack individuals the Uribe government alternatively denounces as "enemies" or rebel sympathizers.

Sadly, many have paid the price, and more will, unless U.S. policy shifts away from FTAs and toward a people-first foreign economic policy that creates material conditions for a peaceful end of the 40+ year Colombian conflict.

While other Colombian officials bombarded DC hoping to pull the wool over the eyes of Congress and the Obama administration, Colombian Vice President Francisco Santos was on tour throughout the U.S. playing nice with state and local officials.

On the Chicago stop, groups like the Chicago Religious Leadership Network on Latin America (CRLN) rallied citizens of conscience to ensure the public.

See, VP Santos ain't no Little Bo Peep. Not unlike his boss the President, or his brother, the Defense Minister - Santos has been linked to the paramilitary death squads that kill Afro-Colombian activists, union leaders, and indigenous and other social-justice organizers. CRLN Executive Director Gary Cozette wrote up a summary of last Tuesday when they tailed the one of the Colombian government's biggest baddest wolves.

Here are some of the choice excerpts of the report back on their welcoming committee's activities:

Dear Colleagues:  Francisco Santos, Vice President of Colombia, visited Chicago on Tuesday Februray 24, 2009 to promote U.S. investment in and trade with Colombia. With 4 million people internally displaced (nearly 10% of the population), Colombia remains as described by the UN as “the greatest humanitarian catastrophe in the Western Hemisphere.” Paramilitary death squads have reorganized and spread out across Colombia. The Colombian military were exposed internationally last year for systematically killing poor Colombian civilians, then dressing them as guerrillas to collect incentive bonuses and gain promotions. Santos’ visit to Chicago is part of a major diplomatic offensive by the Colombian government diminish the reality of this human rights disaster.

The U.S. State Department released its annual International Narcotics Control Strategy Report last week, and they published some pretty tasty morsels of the country the Bush administration signed its hangover FTA with:

By virtue of its geographic position and well-developed maritime and transportation infrastructure, Panama is a major logistics control and trans-shipment country for illegal drugs to the United States and Europe. Major Colombian and Mexican drug cartels as well as Colombian illegal armed groups use Panama for drug trafficking and money laundering purposes.

Indeed, Panama has been listed as a "country of primary concern" (the most severe designation) by the Department due to the proliferation of drug-related money laundering in the country:

The majority of money laundering activity in Panama is narcotics-related or the result of transshipment or smuggled, pirated, and counterfeit goods through Panama’s major free trade zone, the Colon Free zone (CFZ). The funds generated from illegal activity are susceptible to being laundered through a wide variety of methods, including the Panamanian banking system, Panamanian casinos, bulk cash shipments, pre-paid telephone cards, debit cards, insurance companies, real estate projects and agents, and merchandise...

Panama is an offshore financial center that includes offshore banks and various forms of shell companies that have been used by a wide range of criminal groups globally for money laundering.

A certain David Lee Roth once wrote some lyrics that indicate a certain familiarity with the national product:

Jump back, what's that sound?
Here she comes, full blast'n top down
Hot shoe, burnin' down the avenue
Model citizen, zero discipline...

She's runnin', I'm flyin'
Right behind in the rearview mirror now
Got the fearin', power steerin'
Pistons poppin', ain't no stoppin' now

Panama, Panama

Although the Office of the U.S. Trade Representative (USTR) and other trade-related agencies have not been staffed up yet, the annual USTR report to Congress (PDF) says that they hope to move the NAFTA expansion to Panama "relatively quickly." According to Congress Daily PM:

Multinational corporations like Caterpillar, eager to bid on a massive Panama Canal widening project, support that the Panama pact, but skeptics say the country's laws lack transparency and it remains too easy for companies to use that nation as a tax shelter.

Lori Wallach, director of Public Citizen's Global Trade Watch, noted that as a senator, Obama co-sponsored legislation to crack down on overseas tax shelters that specifically listed Panama. "Having a vote on this begs the question of the wisdom of picking a big political brouhaha" while in the midst of sensitive negotiations on health care and climate change, Wallach said. "President Obama certainly doesn't want to have trade policy start with hangovers and leftovers from the Bush administration, if in fact this document represents the Obama trade policy."

And according to Bloomberg,

a majority of Democratic lawmakers voted against a similar agreement with Peru in 2007, and many may not be eager to vote on a Bush proposal.

“It’s a political miscalculation,” Lori Wallach, president of Global Trade Watch, which has organized opposition to Nafta, Peru and other trade pacts. A vote would provoke “huge political unpleasantness,” he said...

More than 50 House members, led by Maine Democrat Mike Michaud, sent a letter to Obama last week, urging him to tear up all three pending trade deals.

Labor unions and many Democrats say they oppose the Colombia deal because of a history of violence against union organizers in that South American nation.

I've got just the place: the pockets of Panamanian and Colombian politicians!

Thats what David Murcia did, whose elaborate pyramid and money laundering scam left in the lurches at least 700,000 and as many as 3 million citizen investors. According to the New York Times, two of the three Bush hangover FTA countries are caught up in the mess:

Mr. Murcia has been charged with creating a hydra-headed enterprise based in Panama that laundered money and enticed thousands of Colombians into a pyramid scheme known by his own initials, D.M.G.

Murcia might be about to get a slice of evidently-needed humble pie as he faces trial. Seems that the paw prints of narco-traffickers and Panamanian politicians and Colombian politicians - I know you're shocked - are all over his dirty money. We'll get to the Colombians tomorrow.

According to Colombian press La Patria (translated from Spanish) the authorities are starting to think this was much more than a your average pyramid scheme:

'It's not just the word on the street, statements in the media, by people linked to [DMG], above all its the investigation that points to the fact that this business had to do with narcotrafficking", stated the national Attorney General Mario Iguarán Arana.

This has been suspected for some time, though reporting prior to the new year, like this Washington Post's mention of the drug money, has been more in passing:

But investigators say it appears Murcia made money by buying electronic goods in bulk and selling them at high prices and by laundering drug profits.

Folks who watch the region won't be surprised that due to its banking secrecy laws that Colombian cartels - or Mexican ones for that matter - choose Panama as the site to hide their money. Maybe it shouldn't surprise us either that ruling party politicians are implicated in both Panama and Colombia. Panamanian press reeled when ruling party candidates got linked to the drug-money laundering pyramid scheme (from Spanish):

In an interview from La Picota prison in Colombia, Murcia mentioned to TVN Channel 2 the names of presidential candidate Balbina Herrera and her party-mate and capital city mayoral hopeful Roberto “Bobby” Velásquez and referred to other candidates.

Other than being small Caribbean countries, what do Panama and Antigua have most prominently in common? Trade wonks will know there's a stalled U.S.-Panama FTA hungover from the bad old Bush years, and that Antigua's case challenging the U.S.'s right to set our own gambling policy give them that common thread. But what else?

If you answered "setting of huge banking scandal", you're right!

Gazillionaire financier Bernie Madoff Allen Stanford has been all over the headlines for an $8 Billion fraud scheme (yes that's a 'B'...) that rocked several Caribbean and Latin American countries, including Panama and Antigua. As the New York Times reports on the scandal and its impact on other popular offshore banking destinations:

Stanford International claims it had about $8 billion in assets, but the Securities and Exchange Commission has only said it has not been able to account for that money. Most of the key players, including Mr. Stanford, failed to appear to testify after the S.E.C. issued a subpeona.

Panama's strict banking secrecy laws make it a well known tax haven and popular destination for money laundering of all sorts. During the Stanford manhunt, one financial press blogger betrayed the truth, that "of course" Panama would be implicated in a Caribbean financial scandal:

[G]iven that [Stanford] owns banks in many different jurisdictions (the FT has found entities not only in the US and Antigua, but also New Zealand, Switzerland, Colombia, Ecuador, Mexico, Peru, Panama, Venezuela, and, of course, Panama), as well as what Matthew Goldstein calls "a number of private jets", one expects that at this point his contingency plan is well underway.

You'd hope the U.S. government will be smarter than Stanford - who despite what the blogger notes about the ease for him to hide abroad was caught on U.S. soil last week. The guvs can prove they are smarter by doing away with Bush's hangover Panama FTA, which would do nothing to ensure that the rich pay their fair share of taxes as we invest hundreds of billions in American recovery. Even worse, the Panama FTA could potentially allow corporations and the wealthy to escape the regulations that will be needed to avoid the next financial crisis - deregulation having gotten us into this economic tailspin in the first place.

The Antigua case is something of a non-sequitur - though it's still crucial that the Obama administration act in the public interest to both resolve that case and get us out of an overreaching WTO agreement on financial services. However, U.S. policymakers still have time to avoid facilitating further fraud by sending the Panama FTA packing.

(Photo used under Creative Commons license courtesy of Flickr user guano)

It just can't get much more Orwellian Uribian (?) than this.

Colombian President Uribe's true colors came through last week when he again openly equated human-rights defenders and seekers of peace with left-wing combatants, as reported here English in elsewhere in Spanish:

"The intellectual bloc of the FARC is always talking about human rights, only to intimidate our soldiers and police," he said.

"We can't allow that they, with their nice little story of peace and permanent accusations against the armed forces, paralyse our policy of democratic security and the strategy against drugs and terrorism," Uribe said.

Uribe's warnings came as the nation waited expectantly to hear the contents of a document that FARC's top leader Alfonso Cano has sent to Senator Piedad Cordoba, who mediated in the release of captive soldiers, police and politicians.

(Activists are speaking out to denounce these attacks, and you can too!)

So let me get this straight: the Colombian peace movement successfully negotiates for the release of hostages held by the FARC rebels (Uribe's Army and Police Personnel) in hopes that it deescalates conflict and lays the groundwork for permanent cessation of violence. They show that could be possible with a peaceful turnover of hostages.

Then Big Brother President Uribe says that by even questioning the notion that the military solution - having failed for over 40 years to bring resolution to the country - is the only viable way to end the war, and that the individuals and organizations actually talking about peace comprise a secret cadre of rebel war-mongers.

Got it. In Uribe's Colombia both the act of taking Army soldiers hostage, and also of freeing Army soldiers, makes you a narco-terrorist. Its all clear now. I just had to walk through it to understand it all...

But wait, what does that make him?

This morning the House Committee on Education and Labor, chaired by Democratic California Rep. George Miller, held a hearing on the true state of workers rights and violence against union leaders in Colombia.

The verdict is that it ain't pretty: violence against unionists rose 25% in 2008, and reached 49 assassinations last year:

“Sadly, Colombia has been the most dangerous place in the world to belong to a labor union for decades,” said Rep. George Miller (D-CA), chairman of the committee. “In some recent years, there have been more labor killings in Colombia than the rest of the world combined.”

We've documented the Uribe government's campaign of deception regarding the supposed improvements in labor rights and their (ahem) "vigorous" prosecution of rights violators, so it's heartening to again see the truth being heard in Congress.

Witnesses testified that, despite its claims, the Uribe government has continued to drag its feet in enforcing labor laws and prosecuting perpetrators of violence:

“Despite the two sentences in which the Colombian judges have ruled that my father was murdered for being a labor unionist, the prosecutor’s office, in order to continue hiding the truth, maintained the hypothesis of a crime of passion up until August of 2008,” said Yessika Hoyos, daughter of Jorge Dario Hoyos Franco. “It took international pressure for the prosecutor’s office to acknowledge the truth with respect to the motive for the crime. We will continue to demand that the intellectual authors be investigated, as the murder of unionists in Colombia is the result of a systematic government policy.”

Bush is on an orgy of FTA implementation, putting into effect NAFTA-style deals with Oman, Costa Rica and now Peru in its last days in office. Here's what we had to say about the latest Bush Peru mess:

President Bush's announcement that the Peru Free Trade Agreement (FTA) will be implemented despite Peru's refusal to conform its laws to the pact's labor rights requirements and its gutting of forestland protections after the pact's U.S. passage, is the sort of outcome we worried about when we opposed the deal in 2007.

The Bush administration and Democratic congressional leaders negotiated improvements to the FTA's labor and environmental standards, but the fact that the pact is going into effect after Peru gutted its forestry law and has refused to bring its labor laws up to International Labor Organization standards shows more improvements are needed to the labor and environmental provisions of the U.S. trade agreement model.

The Peru FTA, which included enhanced labor and environmental standards but also extended some of the most damaging provisions of the North American Free Trade Agreement (NAFTA), including extreme foreign investor protections, was opposed by a majority of House Democrats.

Given the problems we have seen with the Peru FTA model upon which the Panama FTA is based, plus Panama's money-laundering and tax evasion issues that were highlighted in legislation co-sponsored by President-elect Obama during the last Congress, Bush's announcement today will only fuel opposition to the sidelined Panama FTA. In addition, since the Peru FTA vote, 28 House members who campaigned against NAFTA and its expansion were elected to replace those who had voted for the Peru FTA.

Earlier this week, House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) and Ways and Means Trade Subcommittee Chair Sandy Levin (D-Mich.) wrote to Bush asking that he not implement the FTA because Peru has not "implemented its obligation (under Article 17.2.1 of the FTA) to adopt and maintain in its statutes, regulations and practices the fundamental right of workers to freely associate and collectively bargain."

The environmental rollback that has received the most attention since the U.S. Congress passed the FTA was the approval by Peru's Congress of a law that removed protections for as much as 60 percent of Peruvian lands now defined as forest, such as recently deforested areas and plantations.

Outrage over Bush giving the Presidential Medal of Freedom to paramilitary-linked Colombian President Alvaro Uribe is spreading, and for good reason. When your country's leader awards its highest civilian honor to a man linked to the murder of unionists and human rights activists and presides over the worst human rights abuses and deepening humanitarian disaster in the hemisphere, outrage is beyond appropriate, it's required.

MSNBC asked Lori on their 1600 Pennsylvania Ave show last night to examine the audacity of this hypocritical doublespeak.

Despite his clear record, as Bush hung Uribe's medal, Uribe was said to be "dedicated to the prosperity of Colombia's people and democratic values" (!) What's more, it was said that "under Uribe, Colombia has become a model for countries seeking reconciliation and a society based on respect for human dignity" (!)

Los compas del blog Peruanista han traducido la declaración de Lori sobre la Medalla que Bush regaló a Uribe. Super agradecido, Carlos! (Our friends at the blog Peruanista took it upon themselves to translate Lori's statement into Spanish. Much appreciated, Carlos!)

(Datos de la foto son de la primavera de 2007 - Stats in photo from spring 2007)

Concesión hecha por Bush de la Medalla de la Libertad al presidente colombiano Uribe es un ultraje

Publicado el 13 de enero de 2009 en Eyes on Trade

La premiación que ha hecho [George W.] Bush de la Medalla de la Libertad al presidente colombiano [Álvaro] Uribe es un ultraje considerando los vínculos de su gobierno con paramilitares de extrema derecha y los ataques en aumento contra los sindicalistas, los afro colombianos y pueblos indígenas en Colombia.

Declaración de Lori Wallach, directora de Global Trade Watch, de Public Citizen:

La concesión hecha por el presidente Bush de la Medalla de la Libertad a el presidente colombiano, Álvaro Uribe, es indignante y ofensiva, en vista de las horribles violaciones de los derechos humanos hechos por la administración Uribe de comprobados por los miles de lideres sindicales, afro colombianos e indígenas que han sido asesinados, atacados o desplazados, y dadas las profundas conexiones de ese gobierno con asesinos paramilitares de derecha.

Bush Grant of Medal of Freedom to Colombian President Uribe Is an Outrage Given his Government’s Links with Right-Wing Paramilitaries and the Growing Attacks on Colombian Unionists, Afro-Colombian and Indigenous People.

Statement of Lori Wallach, Director of Public Citizen's Global Trade Watch Division:

President Bush’s award of the Medal of Freedom to Colombian President Alvaro Uribe is outrageous and offensive given the Uribe administration’s horrific human rights abuses documented by the thousands of assassinated, attacked or displaced union, Afro-Colombian and indigenous leaders and given the administration’s deep links to murderous right-wing paramilitaries.

How could Bush award our nation’s highest civilian honor to the leader of a country with worldwide pariah status for its systematic crushing of the most basic human rights?

More than 460 unionists have been murdered in Colombia since Uribe took office in August 2002, including 43 in 2008 alone (an increase from 2007), even as Colombia faced scrutiny related to a trade agreement Bush negotiated with Uribe. Colombia has the world’s highest assassination rate for unionists.

In addition, the Uribe administration has worked consistently to undermine Afro-Colombians’ hard-won civil rights and territorial control. Systematic violence against Afro-Colombians and assassinations of their leaders continue unabated.

Trade a Flash Point Issue in Pennsylvania’s Democratic Primary

As Rep. Joe Sestak (D-Pa.) is set to challenge Sen. Arlen Specter (D-Pa.) for his U.S. Senate seat in the upcoming Democratic primary, trade policy has surfaced as a point of contention between the two candidates. Both have criticized the other as being supportive of unfair trade agreements and Specter agreed with the accusation that Sestak is “weak on trade.”

The candidates have a mixed vote record on trade. Specter voted for both NAFTA and the WTO, but has made occasional fair trade votes in recent years, by voting against China PNTR and CAFTA. On the Senate floor in 2005, Specter said of CAFTA,

“This trade agreement would adversely affect this job loss in the United States… many U.S. corporations would have to shut down their operations, export their jobs, and leave skilled workers jobless. This agreement would aggravate the problem. In addition to job loss, this agreement fails to enhance workers' rights…Ultimately, CAFTA would create downward pressure on wages because it would force our American workers to compete with Central American workers who are working for lower wages. This would allow foreign based companies to expand while leaving America more dependent on imports from abroad, which in turn would lessen the demand for domestic production and create even greater economic instability.”

Sestak for his part voted to deny fast-track treatment to the FTA with Colombia and has said that he plans to vote against the Korea and Colombia FTAs.

Yet, both candidates voted for the Peru FTA in 2007 and at this point, neither has cosponsored the TRADE Act – a key demand of fair traders.

The fact that the two candidates are analyzing each other’s trade policies and referring to specific trade agreements shows that political candidates are becoming more educated about trade policy and are using the issue as a platform for (re)election. In other words, trade continues to be a major election issue.

Protesters Counter Government of Colombia’s PR Campaign

On Tuesday, Public Citizen’s Global Trade Watch division joined with other organizations to host a successful protest of Colombia’s current PR campaign at Union Station. GTW staff worked with several other public interest groups, including Witness for Peace, TransAfrica Forum, International Labor Rights Forum, the Latin American Working Group, and the Colombia Human Rights Committee. The Teamsters also came out in force.

The backstory here is that the government of Colombia has spent almost a million dollars on a PR campaign in Washington, D.C., supposedly to try to change perceptions about the country and boost tourism. A sprawling, elaborate display has been set up at Union Station, with representatives handing out free flowers and coffee. The location is suspicious – Union Station is where congressional staffers flock every day before and after work, staffers whose bosses may have to vote on the pending Colombia FTA. The campaign’s media work is being coordinated by a former Bush administration trade official, and business representatives connect the effort to the Colombian government’s desire to promote the U.S.-Colombia FTA. The agreement would basically expand NAFTA to the country with the highest level of unionist murders in the world.

We came together with other public interest organizations to illustrate how Colombia has earned the reputation it is trying to reverse, through mass discrimination against indigenous peoples, forced displacement, and ongoing violence against union organizers, workers, and human rights defenders. In order to counter the rosy picture being painted inside, protesters used street theater to show how the proposed Colombia FTA would protect Colombian and American business interests while allowing for continued abuse of Colombia’s workers and indigenous population. Protesters marched outside Union Station for several hours, and constructed a memorial to honor the growing list of victims of violence and impunity in Colombia. The protest disrupted foot traffic going in and out of the station, and garnered coverage from several media outlets, including local ABC, FOX, and NBC channels. Stories were also published in Roll Call and the Washington City Paper.

For more information and to learn how you can help to counter the government of Colombia’s campaign, go to http://www.nomorebrokenhearts.net/. Check out more photos from yesterday's protests after the jump.

Steee-riking Out ! (x630)

The embassy of union murder and human rights violation capital of the world Colombia just can't seem to even score a single. After 630 at-bats, the embassy 's batting average out-pathetics even the roster of the dead-last in the majors (pun intended), the Washington Nationals.

According to CQ Today:

To say the stalled U.S.-Colombia trade deal is important to the Colombian government is something of an understatement.

Colombian Ambassador Carolina Barco had no fewer than 630 meetings with U.S. lawmakers about the pact last year in an effort to get Congress to approve the deal, negotiated by the George W. Bush administration.

But it’s an uphill battle, for the moment. With public attitudes toward trade becoming increasingly negative, job losses weighing down much of the United States and a presidential administration focusing on other priorities, Congress has been in no mood to approve new trade deals.

Suddenly, its not so bad to be the Kansas City Royals (PCT .384), the Baltimore Orioles (PCT .405), or even the Nats (PCT .357). At least their D.H. can rally the team and say,"Hey we're only 28 games back. The Colombians have thousands of murders of civic leaders to clean up, and more last year than the year before. Not to mention that the public expects them to fix the text of the FTA, to meet the President's campaign pledges... At least we don't have it that bad".

What insightful trade-wonk ballplayers!

Business Leaders Lobby Obama to Push Through Harmful FTAs

Reuters reported on Wednesday that the leaders of six major U.S. business groups have called for President Barack Obama to back speedy passage of NAFTA-style “free trade” agreements (FTAs) with Colombia, Panama and South Korea. Wisely, the president has yet to send Congress any of the bilateral trade deals negotiated by former president George W. Bush with the three nations.  In addition to pressing for passage of the three pending trade agreements, the groups urged Obama to pursue “major market-opening agreements with the Asia-Pacific and beyond,” essentially advocating for even more NAFTA-style FTAs. 

In a letter to the president, the associations acknowledged that trade agreements can ship jobs overseas, and stated that "[T]rade agreements can have adverse effects on specific industries, workers and communities…”. Actually, this is true, and Obama knows it. On the campaign trail, President Obama repeatedly expressed opposition to NAFTA and promised to usher in an era of U.S. trade policy that would require respect for labor rights, environmental standards, and human rights. The Colombia FTA is especially controversial due to the repressive regime of President Álvaro Uribe. Colombia has a longstanding and egregious record of violations of labor and human rights, especially with regard to those of its indigenous and Afro-descendant peoples. 

In addition to gaining a reputation as a notorious corporate tax haven, Panama has some of the most secretive, least transparent banking and financial laws in the world. This is exactly the wrong approach to the current global financial crisis. This problem would be made worse by the FTA.

It is up to Americans as taxpayers and voters to ensure that the new administration does not bend to the will of agents of corporate globalization, and instead works to fulfill its campaign promises. 

Champagne, Caviar, and a Room At the Ritz

That's the sort of high class date that fair traders should demand when it comes to the Obama administration's dealings with human rights improvements in Colombia.

Two-time TRADE Act original cosponsor Congressman Jim McGovern (D-MA) gets this point like few others, and set the right example for his peers about the insanity of expanding NAFTA to the union murder capital of the world without seismic changes in both the text of the deal and the human rights context surrounding it.

According to Inside US Trade (subscription only):

"I don't want us to be a cheap date when it comes to human rights," he said on July 13 after an address to the U.S. Institute of Peace. "Colombia is still one of the most dangerous places in the world to be a unionist. The idea of going forward with a trade agreement when there are still significant human rights challenges doesn't make any sense."

McGovern stressed he is not involved in efforts to develop benchmarks Colombia must meet before Congress votes on the FTA, but argued the benchmarks should include fewer killings of trade unionists in Colombia.

...He also cited wariness among some stakeholders in Colombia regarding the economic effects of the trade deal.

"As we have traveled around Colombia, there are some significant questions that have been raised by different groups, legitimate groups, who believe the trade agreement will have a bad impact on them," he said. "I think they are looking at Mexico with [the North American Free Trade Agreement] and saying, 'boy, this isn't what everybody says it's going to be.'" 

...McGovern strongly criticized Colombian President Alvaro Uribe, saying he has frequently urged Uribe in private meetings not to conflate political dissidents, including trade unionists, with rebel guerrillas in the Revolutionary Armed Forces of Colombia (FARC). He also said that he felt a lack of trust for Uribe due to the fact that Uribe had initially denied connections between paramilitary organizations and the Colombian army that have now surfaced in Colombia. [all emphases added]

Will the Real New Dems Please Stand Up?

The (New) Democratic Leadership Council has just put a 14-page brief called "Toward a New Trade Agenda," and it offers anything but.

It starts off with some relatively unobjectionable material, like tariff reform for Middle Eastern and the very poorest countries.

But then, it takes a weird turn.

It calls for climate and procurement policy to be subordinated to commercial policies.

It lauds the president's food-safety plan, not because it will resolve the problem, but because of the optics: it will "ease globalization anxieties."

And while the DLC admits that the inherited Bush trade agreements with Panama, Korea and Colombia are problematic, and focuses on too small markets, it nonetheless calls for Obama to "clear the decks" by passing them. This call appears to be based on several miscalculations:

1. That FTAs "do seem to have helped boost exports." Actually, as we've shown, U.S. export growth to non-FTA countries outstrip that to FTA countries. And, as it happens, the DLC shows it too, in their Table 3. FTA country exports grew 47% from 2000-08, while non-FTA countries grew 77 percent.
2. That FTAs are divisive, but that the way out is through. Ed Gresser, the author of the report, goes to pains to note how much opposition within the party there is to the FTAs. He writes: "with trade only one of many issues on its agenda, the administration has a pragmatic interest in limiting these conflicts to genuinely important topics. And so, with the FTAs modest in scale from the start and now fading under the impact of structural change in technology and logistics, it is time to remove them from the starring role." Uh, did I miss something? These fights are divisive. Check. They require lots of political capital better spent on other fights. Check. FTAs actually aren't that useful. Check. SO LET'S PICK THAT FIGHT. There you have it folks: let's build the party by destroying it. I haven't seen such sectarian thinking since my school days!
3. FTAs help foreign policy by pleasing foreign heads of state. Actually, as Gresser notes elsewhere in the piece, we should care less about heads of state and more about the broad public diplomacy that our trade policy represents, and which FTAs undermine. (Think Mexico and Peru.)

Gresser also has a nasty habit of not taking fair traders' arguments seriously. He notes that many "unions and 'populist' politicians did not support—and often outright opposed—the agreement with Peru. They now oppose the three remaining agreements as well, despite the labor and environmental provisions. Their opposition to the Panama agreement in particular suggests the main question is not really about environmental and labor policy, but rather a more basic alarm over competition from poor countries."

Hmm. By unions and populist politicians, does he mean a majority of the House Democratic Caucus? Does he mean the 16 New Democrat Caucus members that opposed the Peru FTA?

Panamanian Firm Beats U.S. Taxpayers

The Wall Street Journal reports that Starr International Co., a Panamanian firm led by former AIG head Maurice Greenberg, has prevailed in litigation against AIG.

A little background is necessary. Over several decades, Greenberg helped convert AIG from a sleepy insurance company with origins in pre-revolutionary China into a world-threatening leviathan, which expanded into insuring collateralized debt obligations via credit default swaps. The firm became too interconnected to fail, and when the value of the underlying mortgage-backed securities it was insuring went south, AIG ended up owing money to all sorts of counterparties all over the U.S. and global economies. Greenberg was also deeply involved in policy matters, serving as midwife to the WTO's Financial Services Agreement.

Now U.S. taxpayers, as the primary shareholders in AIG (Greenberg's SICO is the second largest) are trying to get capital back on the firm's books so that the firm and its counterparties can begin to return to health and the taxpayers can get their money back, with some return.

And, then there's the interesting part...

As we reported in March, under Greenberg, AIG maintained affiliations with a variety of offshore entities,  including Panama's SICO, often to provide reinsurance and other services. Part of SICO's role in the division of labor was to operate a compensation pool for top AIG staff, who would get rewarded for good behavior with AIG stock held by SICO. As the WSJ reported:

The trial was basically a dispute over tens of millions of shares in AIG held by Starr but used for decades when Mr. Greenberg was AIG's chief executive to fund a long-term compensation plan for AIG employees. Mr. Greenberg left AIG in 2005 while it was under investigation for its accounting. When he left, the program ended and Starr later sold off some of the shares; AIG maintains it should control the shares.

The verdict is a setback for the insurer, which has been hungry for funds to repay a federal bailout in September that rescued the storied firm from the brink of bankruptcy. The government has made as much as $173.3 billion in aid available to AIG.

Greenberg's victory not only pushes AIG (and us, as its owners) farther away from financial health, it also shows the power that a Panama-registered company can wield in the U.S. court system, in a case against a government-owned company.

Just imagine what such a firm might be able to do if it had even greater rights under the Panama FTA. Earlier this year, we asked you to contact your member of Congress and let them know that these foreign investor rights should be stripped from U.S. trade and investment agreements. With Greenberg's latest success against U.S. companies and taxpayers, now's a good time to let them know that this issue hasn't gone away! Congress should "just say no" to the Panama FTA, and "just say yes" to positive trade legislation like the TRADE Act.

We'll continue to follow the AIG-SICO story, which is not yet over. AIG is suing the U.S. taxpayers for back taxes it owed related to its (and SICO's) Panamanian operations. And, will AIG and other mega corporations continue to push for the Panama FTA, which grants them rights that go beyond U.S. law? Stay tuned.

FTAs = Destabilization

Fair traders have long maintained that NAFTA-style trade deals promote instability.

The case of Mexico clearly showed this, with massive amounts of post-NAFTA rural displacement leading to sharp increases in immigration and narcotrafficking, leading the country to the brink of failed statehood.

Earlier this month, the thesis was proved again in Peru. In 2007, Peruvian fair-traders warned against signing the FTA, arguing that it would incentivize further rainforest destruction. Sure enough, within months of the deal going into effect, huge parcels of the Amazon were sold off to developers, and indigenous forest-dwellers were locked in a life-or-death battle with the government.

Now, over the weekend, fair trader Manuel Zelaya (president of Honduras) was ousted in the region's first military coup since the Cold War. Opposition to CAFTA ran high in Honduras, but local elites signed the deal anyway. This led to a groundswell of support for a president that kept getting more and more progressive, most recently signing onto the Bolivarian Alternative of the Americas, an alternative to NAFTA-style FTAs. The country's elites wanted to block these changes, so pushed a coup. (More information on how you can take action is available here.)

Looking ahead, as the debate continues in the United States over the Panama FTA, some comments made by that country's peasant leaders are worth considering. He said of the FTA:

In Panama, the poverty rate is nearly 40 percent, and it is even higher for the rural areas (65 percent) and indigenous communities (95 percent). If we experience even a fraction of what happened to Mexico in terms of the flood of subsidized U.S. agricultural products, our rural population will disintegrate and look for any survival option – including immigration to the United States.

This kind of trade agreement will only increase hunger and misery in the indigenous and peasant sectors of Latin America, pushing our countries even faster into the arms of leftist governments, which has already happened in South America proper.

The message is clear: if you want increase in desperation and polarization, push FTAs. If you want preservation of democracy and stability, choose fair trade.

More potentially good news from Peru

Last week, we mentioned briefly that Peru is suspending two new laws related to the U.S.-Peru FTA aimed at encouraging "investment" (ie resource extraction) in the Peruvian Amazon. OpenLeft's Paul Rosenberg reported in depth on these developments.

As it turns out, this story has legs. Today, the Wall Street Journal reports that Peruvian Prime Minister Yehude Simon "will resign in the near future, amid criticism of his handling of bloody indigenous protests in the Amazon earlier this month in which at least 32 police and Indians were killed... Under Peru's constitution, Mr. Simon's resignation will lead to the resignation of the entire cabinet, opening the door for [Peruvian President Alan] García to push out other ministers tarnished by the conflict, such as Interior Minister Mercedes Cabanillas."

And then there's this:

Mr. García may also now pull back from his unofficial policy of favoring investments with or without the consent of local populations, said political analyst Santiago Pedraglio. The government had approved the decrees in part to bring Peru's laws in line with requirements outlined in its free-trade deal with the U.S.

"García made a bet that there could be these large-scale investments without taking into account the people in those regions," says Mr. Pedraglio. "But he will have to now, and I imagine investors will also want to take those concerns into account now."

The WSJ article makes it sound like García himself is free of blame, but of course he played a key role in getting the U.S.-Peru FTA passed and implemented. And as should be abundantly clear by now, it's the FTA's pro-corporate investment provisions that are a root cause of these upheavals.

EDIT: Courtesy Peruanista, check out this video (Spanish language) of Citizens Trade Campaign's Octavio Ruiz discussing Peru's future under the FTA, outside the Peruvian embassy in Washington DC. (There have been numerous protests outside the embassy in the past week; we'll have photos from one of them shortly.)

Breaking: Another win in Peru

U.S. fair traders won a temporary victory with Obama's decision to back off on the Panama FTA. Now it looks like our Peruvian allies have won a temporary victory in their country, after pressure from grassroots activists and legislators from the U.S. and Peru. Reports Reuters:

Peru's Congress on Wednesday temporarily suspended two land laws that triggered violent clashes last week between protesters and police in a remote Amazon region, killing 60 people.

The laws, decreed by Peruvian President Alan Garcia under special powers Congress gave him to implement a free-trade pact with the United States, outline a broad plan for how to regulate investment in the Amazon.

Oregonians Raise a Ruckus, Say "We're Tired of Hosting Speaking Tours"

Oregon trade activists showed yet again why they are among the MVPs of the fair-trade movement, pressing themselves into Rep. Earl Blumenauer's (D-Ore.) office to demand that he publicly come out against the Panama FTA.

One of my favorite parts of this video come right at the beginning, when organizer Beth Poteet describes a recent speaking tour with Witness for Peace, where speakers from Mexico and elsewhere made the case against NAFTA-style policy on moral, policy and other grounds:

We just had a farmer from Oaxaca come here on a speaking tour. He spoke in Washington, Oregon for two weeks to about 2,000 people, sharing a message of how NAFTA has been devastating for the rural economy in Oaxaca and throughout Mexico...  We're now seeing some of the same things happen in Central America...

Personally, I'm tired of it. I'm tired of hosting people on these speakers tours and taking delegations to Latin America. We're hearing the same thing over and over again, that these policies are further impoverishing people, not only abroad, but also in our own country. And I'm tired of it. And I want Earl Blumenauer, as all of our representative, to take a stand against it. It's ridiculous that he continues to side with corporations, instead of with people. That's not his job.

Can I get an Amen? Brothers and sisters, can you imagine a world without speaking tours, where our representatives do what's right without a fight? Where speakers don't have to catch a cross-country flight in a small dangerous puddle-jumper plane whilst feeling ill, all to be fed vegan chili and "hosted" on the floor of a college dorm room?

In all seriousness, Beth captures very well the feeling of frustration and exhaustion that so many of us experience as we make the indictment over and over again, year in, and year out, and there's still way too many members of Congress who should be with us that aren't. Hats off to the Oregon activists for impressing the heck out of us yet again, and holding their state delegations' feetsies to the fire!

FTA-Spawned Crisis Continues in Peru

Reports over the weekend show the violence surrounding protests in in Peru is worse than originally thought. According to Australian Broadcasting Corporation (ABC) News:

Up to 100 Amazon natives have been killed after Friday's military crackdown on protesters in Peru and the situation is expected to worsen, says a Canadian Indigenous rights activist.

Twenty-two-year-old Ben Powless is working alongside Peru's national organisation of Amazon Indigenous people, AIDESEP, and fears more lives will be lost, with the government now labeling protesters as "terrorists"...

AIDESEP, as some may recall, was outspoken in their principled opposition to the U.S.-Peru FTA during the U.S. congressional debate in 2007. Their letter to Congress correctly predicts the FTA would pave the way for policies that would harm communities and the environment:

The Wall Street Journal is reporting on the unrest generated by García's investment-at-all-cost trade policies:

The president is facing his worst crisis since 2006, when he took office for a second term. The protesters are demanding that the government backtrack on decrees that the indigenous groups say would weaken their traditional communal land system by breaking up land into parcels of private property. The García government has been moving aggressively to grant concessions for oil and natural gas exploration in the Amazon.

Analysts say giving in to protester demands would make Mr. García seem weak and cast a cloud over a recently signed free-trade agreement with the U.S. Following the pact, the government enacted laws that opened up indigenous lands to development, changes that the indigenous groups oppose.

ABC News' reports from ground zero suggest that the government's PR machine is working overtime to blame the victims for being massacred:

"What we've been hearing from some of the communities is that a lot of the death tolls and the number of people hurt or injured are dramatically different from the Government figures, which put it as low as three to nine Indigenous people who have been killed," he said.

"But we have heard from some representatives on the ground that there may be as many as 100 people murdered.

"There was an active attempt by the Government here to portray it as a massacre of policemen who went into an area and were killed on their job, when in reality, native participants were sitting in blockades early in the morning [on Friday] when the police attacked."

Mr Powless says the Government is controlling information on the unfolding events.

"There is a lack of information about what's going on," he said.

(HT to BoRev.Net.)

A Terrifying Way to Start the Weekend

Report are in that Peruvian police have massacred at least 20 indigenous people who have been protesting FTA-related policies that give concessions to corporations without consent or consultation of indigenous communities.

According to Reuters:

At least 20 people died and 50 were injured Friday in clashes between Peruvian police and Amazon tribes opposed to foreign companies opening oil wells and mines in the rainforest.

Indigenous leaders accused police of shooting at hundreds of protesters from helicopters to end a road block on a remote jungle highway 870 miles from Lima, the capital.

Police said the protesters fired first, but the tribesmen denied having guns and said they only bore their traditional spears.

Tribal leaders said a dozen protesters were killed, while the interior ministry said eight officers died in protests over the government's push to open up Peru to foreign investment. It was the first round of severe violence since demonstrations started in April.

"There are 12 dead ... from bullets shot from helicopters," indigenous leader Alberto Pizango told reporters in Lima.

Check back soon for more details on the mobilizations and more analysis on how the U.S.- Peru FTA started this horrifying chain of events into motion. Let's keep the families, and the causes for which their loved ones died, in our thoughts this weekend.

Wanting a Cookie

One thing that you get used to after living in Washington for a while are the tight controls on messaging and information.

Corporate types didn't get the memo.

First there was this article from the NYT over the weekend:

The Obama administration has riled corporate America by cracking down on secretive offshore tax havens. But now a big onshore refuge — Delaware — is drawing scrutiny, too...

Defenders of the arrangement — corporate executives, tax lawyers and, unsurprisingly, Delaware officials — rebuff such criticism. Mailbox subsidiaries like the ones along North Orange Street do nothing to minimize companies’ federal tax bills, they say. Corporations must still pay Uncle Sam. Moreover, these people say, many companies are drawn to Delaware for its business-friendly laws and courts, not to save on taxes.

That is certainly the view at 1209 North Orange Street, a nondescript low-slung building at the corner of West 13th Street. This address serves as a tax minimizer for dozens of brand-name companies, among them Dillard’s, the department store chain based in Little Rock, Ark., and Kentucky Fried Chicken, which is part of Yum Brands of Louisville, Ky. All of them, and nearly two-thirds of the Fortune 500, have tax-exempt subsidiaries at this address to reduce their state tax bills.

I love this: they openly admit that Delaware helps corporations avoid state tax bills "but they still have to pay their federal bill"! As the comedian Chris Rock might say, "What do you want, a cookie?! You're not supposed to dodge your federal taxes!"

And their line about Delaware having other charming features besides the massive tax-dodging opportunities is rich too, and recalls some of what we detailed in our report on Panama's tax haven practices. (Check out the appendix, where we show Panamanian officials bragging that tax evasion isn't the only reason corporations set up shop there.)

Speaking of Panama, "La Estrella," one of Panama's leading papers, has been running a series on the country's tax-haven practices. Here are some of the juicy translated tidbits from the source:

"We are not a tax haven," says Moises Cohen, president of the Panamanian Banking Association says in his offices... In the street, without anger, more out of resignation, the cabdriver Gilberto Francisco Ortega declares, "He who has money can come to Panama and do with it as he will."

The dominant system in Panama grants significant benefits to the corporations established here. All you need to create one is an agent on the ground, generally from one of the large law firms. But these vehicles are a dead letter without the other element of the system: the banking policy, constituted in 1970 that gives, among other benefits, anonymous numbered accounts...

For the lawyer Sidney Sitton, specialist in the creation of corporations, this creates the ideal system for criminals... "Despite the dozens of public and private corruption scandals Panama has witnessed over the years, no one has ever investigated even a single bank, nor have they ever ordered the lifting of bank secrecy," says Sitton...

Moises Cohen views the situation radically differently from Sitton: he is convinced that what has allowed his country to become a financial center is the creativity to attract investment to the country. "If they take that away, Panama is done with. We have a strategic location and a tax system with obvious benefits, but that's it," he says...

[The national banking regulator] draws its budget from fees it charges the banks it supervises... and the laws that regulate banking activities are made and implemented by this regulator and do not go through the legislative branch...

[The Panamanian banking associations] have faith that, in the end, the international community will understand that, just as Panama is a transit hub for the region, the veil of impunity that appears to favor illicit businesses also generates income for other countries.

Yeah, l'm sure Citigroup and AIG are getting a lot of income from Panama's lax policies - and, news flash - that's why all this hay is being made. Here's some other juice:

• This Cohen fellow seems like a real charmer. In this extended interview, he has such brilliant quips (that recall the Delaware apologetics from above) as: [when trying to explain why a Colombian criminal was able to launder money in Panama] "If people have a legitimate front operation, it's much harder to notice that they may have illicit operations [behind this]." Or, when asked why Panama doesn't charge taxes on multinationals (despite having some of the highest child malnutrition rates in the region]: "Panama doesn't need those taxes... Our economy is very different from others. It would be like telling China they should pay their workers more. Everyone acts in accord with their own economic situation." Yeah, no one would be so crazy as to insist that China close its sweatshops, and certainly not workers... oh, wait.
• Like we hear of a lot in this country (like from Bill Clinton) whenever there is a corporate crisis, it is blamed (like by this Panamanian official) on a few bad apples. The official can't even answer whether any banks have ever been investigated in Panama. And this article profiles some of the very bad apples - and there have been many. Like the Colombian Nelson Urrego Cardenas, "who is known as the man who made cocaine fall from the sky, and who created 17 foundations that allowed me to even buy an island."
• This article reports that from May 2008 to May 2009 alone, 13,729 new corporations were registered in Panama, and that, on average, 100 are registered every day.

So, in short, the Panamanian banking sector and government - and let's not forget to mention the bailed out banks and drug dealers that enable the system to function - wants a cookie. But they certainly don't want to regulate.

Fixes Schmixes!

Panamanian union leaders are pushing back on proposals by the outgoing president to fast track labor law changes to pave way for the pending Panama FTA.

La Estrella reports: (Spanish only):

Mariano Mena, a leader of CONATO [the largest Panamanian union federation], stated that although the changes proposed by the Obama administration are good, he worries that this opening be used as a smokescreen include [other] alterations that are damaging to the Panamanian worker. "This is the perfect pretext that had previously been lacking to initiate [anti-worker] labor reforms", he added.

Looks like the Mena and CONATO are learning from the experiences their Peruvian counterparts, who saw labor law 'improvements' and 'fixes' under the Peru FTA translate into rollback of hard-won rights and protections, a net-negative for Peruvian workers.

Workers won't get fooled again!

(FYI - Above photo above is NOT of Mariano Mena, but IS used courtesy of Flickr user Steven(Esteban) J Golliday under a Creative Commons license)

"I Will Absolutely Fight to the Death" Against the Panama FTA

Pop quiz: who said that? Was it a Panamanian worker with nothing to lose?

Nope. It was the chair of one of the most powerful committees in Congress. Yesterday, 55 House members sent a letter to Speaker Nancy Pelosi with strong language against the Panama FTA:

We believe the Panama Free Trade Agreement (FTA) is not a new model on trade and does not represent the kind of change the American people are seeking. After eight years of a failed Bush free trade agenda, the current demise of our economy, and an ensuing massive increase in unemployment, it is difficult to justify to our constituents the passage of another badly flawed trade agreement. We fear passage of this agreement will set us back down the misguided course of past trade deals.

The letter was released in a press conference held yesterday with 13 of the members. It's a diverse group that includes nine freshman members and committee chairs Louise Slaughter (D-N.Y.) and John Conyers (D-Mich.). All of these members are committed to not letting more Bush-negotiated NAFTA expansions pass, and they're not mincing any words. As quoted in CongressDaily, Slaughter said, "I will absolutely fight to the death to not get that bill [the Panama FTA] up here."

Also yesterday, a story emerged from Bloomberg that Obama may be backing off the Panama FTA until he can "offer a new 'framework' for trade." That's consistent with the fair-trade campaign promises he made on the campaign trail last year. Memo to President Obama: the framework already exists. It's called the TRADE Act!

It's not linkable, unfortunately, but today's CongressDaily addressed these developments with the headline, "Panama Agreement Hits Multiple Snags On A Brutal Day":

The odds got longer for a stalled trade accord with Panama on Thursday. Union opposition hardened, a bloc of 55 mostly Democratic House members as well as a key GOP senator came out against the deal, and the Obama administration signaled it might want to re-evaluate the agreement's role in a larger economic strategy.

After the jump, check out the full text of the release that accompanied the letter to Pelosi.

John Kerry, presente!

We posted yesterday on some of the strong statements made by Rep. Lloyd Doggett (D-Texas) and Sen. Carl Levin (D-Mich.) on the Panama FTA. Before that, we noted the strong opposition of Chairwoman Louise Slaughter of the Rules Committee, and of up-and-coming members of Congress like Rep. Bruce Braley (D-Iowa), who has not organized against a NAFTA-style FTA in the past.

Today, Sen. John Kerry (D-Mass.) followed this up with a great op-ed in today's Politico:

In Panama’s case, we have an opportunity to use the prospect of opening our vast markets as leverage to win the long-sought commitment from the Panamanian government to sign and implement a tax information exchange agreement with the United States and to bring its banking laws into compliance with international standards.

Few, if any, countries offer a higher level of secrecy than Panama. There is no requirement to disclose the beneficial owners of any corporation or trust. Despite seven years of negotiations, Panama refuses to sign a treaty with the U.S. that would require it to share tax information with American authorities. Small wonder that more than 40,000 new offshore corporations were registered in Panama from 2007 until October 2008, according to the State Department, bringing the total to more than 350,000.

...I believe in trade. But as we debate this agreement, its trade merits must be weighed against the necessity of persuading countries that cater to tax evaders, terrorists and drug lords to change the way they do business. This is an essential step in protecting our treasury and our homeland.

Also, six environmental groups sent a letter to Congress today expressing their "strong opposition" to the Panama FTA. Finally, as I write, the Senate Finance Committee is meeting now on the Panama FTA. Tune in to hear it live! Last thing I heard, Sen. Bob Menendez (D-N.J.) was really grilling USTR about how the FTA would not solve the tax-haven problem.

Stop Tax Haven Abuse Act Authors Speak Out Against Panama FTA

Rep. Lloyd Doggett (D-Texas) and Sen. Carl Levin (D-Mich.) released a letter to President Obama today saying that they would not support the Panama FTA unless steps are taken to reform the bank and tax secrecy laws that have made Panama one of the leading offshore tax havens in the world. This is an issue that we've been hammering on for some time, as highlighted today by this quote in CongressDaily:

What impact the tax haven issue has on Panama remains to be seen. If critics like Public Citizen's Lori Wallach have their way, that and other issues will be at the forefront of the trade debate for years to come. She called it "ridiculous" to try to separate governance issues in trade partner countries from the agreements themselves.

"When you think about the rights and powers and connections that those agreements establish, it's like getting married to somebody who you don't know, if they're a murderer and an alcoholic," Wallach said. "So particularly when it's something like a country that repeatedly violates the rule of law ... you don't want to have those kind of tight, tight connections that are affecting your domestic and regulatory legal systems."

Read the full text of the Doggett/Levin letter after the jump.

And They STILL Want to Expand NAFTA to Colombia

This just came in from Witness for Peace, follow-up up to a story we relayed last December. The powerful 60-second video mostly speaks for itself:

Target for Telling the Truth from Witness For Peace on Vimeo.

Despite these sorts of atrocities, and the atrocities later committed to cover up the atrocities, recent reports have some in the U.S. government looking for cosmetic fixes to "resolve" human rights problems in Colombia so they can bring the FTA to a vote.

According to Reuters:

Colombia says it has made great progress over the past decade reducing all forms of violence in a country once on the verge of collapse from a decades-old civil war...

Obama, who also opposed the [Colombia FTA] last year, recently asked [USTR] Kirk to work with Congress and Colombia on a plan to address the anti-labor violence.

"Ours teams will be meeting shortly to discuss and crystallize those issues that need to be resolved," Kirk said.

How can you negotiate with a government that is at least complicit in violence against civilians on the one hand, and then tries to take credit for reductions in violence on the other?!?! You can't call it a good faith negotiation, that's for sure.

The Colombia FTA will only give more incentives for violence by tilting the scales even more in favor of the powerful interests that already exploit and displace working Colombians and use the climate of fear, violence and lawlessness to do so. We could expect to see MORE of the sort of tragedy that befell Martha.

Corporates Out of Step in Today's Hearing on Investment, Panama, etc.

The House Ways & Means Trade Subcommittee had a hearing on investor protections in U.S. trade and investment agreements. I gave testimony for the record, which you can read here.

As we detail in our recent book, "The Rise and Fall of Fast Track Trade Authority," investment rules in trade deals are a classic non-tariff, non-trade provision. We wrote:

Largely flying under the radar, the 1984 act dramatically expanded the subject matter and the types of agreements that the president was authorized to negotiate. Title III of the act authorized the president to collect information on (and enter into agreements related to the elimination of) "barriers to international trade in services" and "the trade distortive effects of certain investment-related measures." Service and investment barriers were defined as denial of "national treatment and restrictions on the establishment" of service operations and investments; "foreign industrial policies;" "export performance requirements;" and "direct or indirect restrictions on the transfer of information into, or out of" a given country.

The 1988 Fast Track went even further, specifying that:

The principal negotiating objectives of the United States regarding foreign direct investment are --

(i) to reduce or to eliminate artificial or trade-distorting barriers to foreign direct investment, to expand the principle of national treatment, and to reduce unreasonable barriers to establishment; and

(ii) to develop internationally agreed rules, including dispute settlement procedures, which --

(I) will help ensure a free flow of foreign direct investment, and

(II) will reduce or eliminate the trade distortive effects of certain trade-related investment measures.

This delegation of Fast Track produced NAFTA. And despite efforts in the 2002 Fast Track and the May 2007 deal to change the investment provisions in the "cookie cutter" trade template, U.S. trade agreements' investment provisions (such as those in CAFTA and now in the U.S.-Panama FTA) have delved ever more deeply into regulatory policy space. And indeed, in today's hearing, Thea Lee of the AFL-CIO in particular pointed out that the [preambular] language added as a part of the May 2007 deal is non-binding in nature.

One of the richest debates at today's hearing was the nature of the changes made to investment provisions of trade deals since 2002, in particular with respect to so-called exceptions (i.e. protections for governments from having to cough up cash or change laws in response to successful trade-pact challenges by foreign investors and governments) for prudential/ financial and tax measures. You don't often get that kind of substantive debate in a congressional hearing, and perhaps it was too substantive for some, judging by the small attendance by the end of the hearing. As it happens, these so-called exceptions are a subject of our latest report on Panama's tax-haven practices and the U.S. FTA.

It's So Easy to Set Up A Tax Haven in Panama, Even An Intern Could Do It!

We recently told you how some of the bailed-out banks and insurance firms are pushing Congress to pass Bush's leftover NAFTA expansion with Panama – where some of them have tax shelter subsidiary corporations. As I was researching Panama's tax haven status for our recent report, I wondered just how easy it was to set up a corporation in Panama to dodge taxes. In fact, it seemed so simple, I asked Global Trade Watch's star intern Jessica to give it a try. Jessica, a college sophomore, sprung into action last week seeking to answer one question: How easy is it to set up a tax-dodging corporation in Panama?

Check out this hilarious video to see how she does. Then pass the video to your friends and family.

Decades ago, Panama explicitly crafted a "comparative advantage" in tax-evasion and money-laundering services for entities such as the bailed-out American International Group (AIG) and Mexican and Colombian narcotraffickers. Frighteningly, specific rules in the proposed U.S.-Panama Free Trade Agreement would remove key policy tools used to combat financial crimes – and would conflict with U.S. government efforts to combat the global economic crisis by re-regulating finance.

It seems pretty crazy that last week, President Obama announced a major campaign to crack down on tax havens and tax cheating that promotes offshoring of U.S. jobs... while his trade representative is talking up the very tax-dodging corporations' demand to pass Bush's NAFTA with Panama.

Please watch the video, pass it around to your friends and family, and tell your member of Congress to say "no" to Bush's NAFTA expansion to Panama.

Banking Secrecy Here to Stay?

So says the 46th President elect of the Republic of Panama.

On May 3rd, 2009 Panamanian voters elected in a landslide conservative Ricardo Martinelli, the owner of the country's leading supermarket chain - entirely non- anti-union too, our labor allies on the ground inform us. He routed the second place contender and won by 25% of the popular vote.

According to Inside U.S. Trade (subscription only) the incoming Panamanian President will refuse to sign thorough Tax Information Exchange Agreement (TIEA) with the U.S. to crack down on tax haven abuse and money laundering:

Martinelli, who is pro-business, views the FTA as a “top priority” De Lima [his spokesperson] said, but he is opposed to changes to Panama’s tax regime or labor laws that will hurt local business interests.

“We don’t want them to rush into an agreement that will hurt our economy,” De Lima said, referring to the Torrijos government. “They have to take into account the best interests of Panamanian business. They have not consulted with anyone.”

 ...DeLima said he understands that the U.S. wants Panama to complete a Tax Information Exchange Agreement (TIEA) with the U.S. and Martinelli is willing to allow some limited sharing of tax information based on an 2002 tentative agreement with the U.S. Since that time, however, the U.S. has demanded automatic disclosure of tax information and this is not acceptable to Martinelli.

So, let me get this straight. We had a lax tax agreement queued up in 2002, which the Panamanian government has forgotten existed. So, the U.S. government wants a TIEA to actually solve the problem, but the only Panamanians who will sign it are irrelevant, having suffered an embarrassing political rout (not unrelated to their links to Colombian money-launderer DMG). Some voices within the Obama administration and Congress tell us they're about to solve all the problems with Panamanian labor law and tax-haven abuse, even though the incoming government is anti-union and is raising Cain about the possibility of meaningful reforms on those fronts.

And they want us to believe that this combo is a recipe for actual enforcement of labor law and and tax reforms in Panama!?!? Have they already forgotten how (as reported in subscription-only Inside U.S. Trade on January 23, 2009):

In a Jan. 15 letter to Schwab, Rangel and Levin wrote that Peru has failed to put in place the laws and regulations necessary to meet those obligations. “This includes the obligation under Article 17.2.1 of the Agreement to adopt in law and practice the fundamental labor rights, including freedom of association and the right to collective bargaining,” the letter said. [emphasis mine]

At least the Obama White House still has time to stop this madness before its too late. The Who has a  great tune that seems an appropriate fair-trade anthem today:

Putting the cart before the horse on Panama - Guest Post by Peter Riggs

[Editorial note: This post is written by guest blogger Peter Riggs. The views expressed herein are solely those of the individual contributor and do not necessarily reflect those of Public Citizen.]

Naaah, no way. We’re not that stupid, right?

Inside U.S. Trade this week quoted a member of Congress as saying that Panama couldn’t possibly agree to completion of a Tax Information Exchange Agreement (TIEA) prior to the passage of a Free Trade Agreement with the United States.

Adam Smith of Washington noted helpfully that the “final arrangement on tax issues will likely commit Panama to work towards taking additional steps to address allegations on tax havens in the future.”

‘Likely commit… to work towards taking additional steps….to address allegations”?!?

Are you kidding me? Panama is a tax haven. Tens of thousands of multinational corporations have set up mail-drop subsidiaries in Panama that allow for tax dodging. AIG did it. Some of the largest recipients of TARP bailout funds have done it. Heck, some of the Department of Homeland Security’s largest contractors have set up subsidiaries in Panama.

Once we sign an FTA with Panama, what kind of leverage will the United States have to push for a TIEA?
Congressman Adam Smith wasn’t alone in proposing free get-out-of-tax-burden passes. Other House members also suggested that asking the Panamanians to make routine disclosures of tax information with the United States—and to make a firm commitment prior to being rewarded with passage of an FTA with the United States—was a ‘non-starter.’

All this handwringing came a week after Panama’s Commerce Minister Gisela Porras said that Panama is making no plans to exchange tax information with the United States on a normalized basis—which is the whole point of a TIEA!

Fortunately, Carl Levin was able to remind us that Panama agreed seven years ago to talks on a TIEA. “A tax information exchange agreement is the least of what we should get before the free-trade agreement,” said the senior Senator from Michigan. Indeed, the conversation has now moved on - we know that now we need automatic TIEAs, not the weaker TIEAs that still allow Switzerland to protect tax evaders.

Panama has repeatedly dug in its heels on this issue. Government spokespersons, with refreshing honesty, have acknowledged that the country’s economic comparative advantage isn’t in bananas or coffee or semiconductors or call centers. It’s in banking secrecy. And why should Panama give up this comparative advantage, unless compelled to do so?—it’s worked quite well for them so far.

In the early part of this decade, Panama kept its head down after being labeled a “non-cooperative jurisdiction” by the G-7’s Financial Action Task Force. After a brief spin on the dance floor, flirting with the United States regarding a bilateral exchange of tax information—Panama told Washington to pound sand.

Panama figured there wouldn’t be any adverse consequences. They were right. On the contrary —Panama was rewarded with another negotiation—this time for an FTA.

Now that was an agreement they wanted. Badly. It would dramatically increase Panama’s attractiveness as a tax and regulatory haven. Hot dang! thought the multinationals. They could scarcely believe their good fortune.

A tax-haven jurisdiction where setting up a subsidiary can be done on-line in about twenty minutes, where they can stash profits, and from which they’d have the right to sue the United States government for regulatory actions taken by municipalities, states, or the federal government? Hot dang!

And so when earlier this year the G-20 thundered with a kind of biblical wrath against the scourge of tax havens, Panamanian leaders merely shrugged their shoulders.

So tell me again—why, if during the past seven years the United States has been unable to persuade the Panamanians to sign a TIEA, to acknowledge that the game is up, that tax-paying citizens are finally demanding that their governments close these egregious global loopholes—why is it we would sign an FTA and in so doing, lose any semblance of leverage in this debate with Panama?

Most of us can tell a cart from a horse, right? 

Which one goes first if you want to get anywhere? 

First, the automatic TIEA, similar to what we have with Canada. Then we can talk about fixing the agreement itself.

More on Tapper-USTR exchange

I was thinking over the weekend a little more about how the USTR responded to Jake Tapper’s excellent question on the Panama FTA, and thought a little more detail would be helpful in rebutting their claim. (A more extended and perhaps precise version of this can be found in our recent report. The page numbers I mention in the bullets below refer to the page numbers of the report to consult for more detail.) Here goes:

1. The U.S.-Panama Free Trade Agreement (FTA) requires financial services and firms operating out of Panama to be treated the same as those from the U.S. and other third countries (Article 12.2-12.3) - even though Panama is specifically listed on all the major tax-haven watchdog lists. (Check pages 17-18 of the report.)
2. The so-called exceptions that USTR references wouldn't apply to tax measures that treat a whole country differently based on its tax-haven practices. This is the approach of the Stop Tax Haven Abuses Act, which Obama co-sponsored in the Senate. In any case, a foreign trade tribunal would get to decide whether the U.S. use of the "exception" were legitimate, not U.S. courts or panels comprised of tax-haven experts. (Check pages 18-20 of the report.)
3. U.S. measures that place limits or slow-down financial transfers in and out of Panama would violate the FTA (Article 10.8.1 and 12.1.2). Again, the U.S. could try to raise a so-called exception, whose legitimacy a foreign trade tribunal would get to decide. Even if the U.S. were allowed to invoke the exception, it would have to show that the financial restriction were "necessary" for the regulatory purposes - a term of art in trade law which means that "no less trade restrictive means exists to obtain the goal." Trade panels have overwhelmingly (90% of the time at the WTO) ruled that challenged regulations were not "necessary," so it is a nearly impossible bar to meet. (Check pages 20-23 of the report.)
4. The Panama FTA's rules do not only deal with cases of discrimination against foreign firms, but also with non-discriminatory laws. For instance, the FTA's "Market Access" provisions contain certain absolute rights. The U.S. government would be compelled to allow its citizens to purchase financial services in Panama, thus locking in a permanent tax shelter if Panama doesn’t start taxing the multinationals that operate there. (Check pages 23-24 of the report.)
5. The FTA’s Financial Services market-access rules set limits not only on how U.S.-Panama trade in services may (or may not) be regulated, but also sets limits on U.S. governmental regulation of foreign services operating within the United States. These rules would forbid the U.S. government from banning Panamanian banks or other financial services from establishing operations here, or acquiring existing firms, and also forbid limiting the size of such operations. (Check pages 23-24 of the report.)
6. Panama-registered corporations would be able to directly challenge U.S. taxation and financial regulation measures as “indirect expropriations” in foreign tribunals. They could be awarded U.S. taxpayer-funded damages for measures that would not be considered expropriations under domestic U.S. law. Far from excluding such challenges, the FTA text actually specifically envisions them. In the case of measures that the U.S. claims are for “prudential reasons,” then a special binational panel would be convened to decide whether this is a “valid defense.” If the Panamanian representative on this panel thinks that the defense is not valid, or drags their feet for a few months, then the case proceeds to the so-called investor-state dispute resolution. (Check pages 24-28 of the report.)

As we’ve mentioned, it ain’t hard to fix this problem.

Is Indirectness a virtue on tax havens?

I've been taking a closer look at Obama's tax-haven plan, and I would make a general observation.

First, it is a classic "neo-liberal" regulation, and I don't necessarily mean that in the derogatory sense we usually use that term on this blog. Rather, it tries to indirectly solve a problem by interfering in markets as little as possible. So, rather than telling U.S. corporations what to do and how to do it, and then use the power of the state to punish those who disobey, the Obama proposal attempts to create incentives for private actors to voluntarily comply.

A few examples:

• Rather than prohibit deferral by U.S. corporations of repatriation/taxation on their foreign-source income, the Obama plan creates an incentive to repatriate income by not allowing companies to deduct expenses supporting their overseas investments from their U.S. tax returns until they repatriate income.
• Rather than require foreign financial institutions to share information with the U.S. government on U.S. corporations' foreign banking accounts, or prohibit U.S. corporations from doing banking with foreign banks that don't share information with the IRS, the Obama plan would require U.S. banks that service U.S. corporations that also utilize overseas banks that are not "qualified intermediaries" to withhold 20-30 percent of payments to these corporations until certain disclosures happen.

Some of these provisions are kind of clever in a Policy 201 kind of way. The problem is that their very indirectness would still allow substantial evasion of taxes and money laundering.

Pacific Rim Uses CAFTA to take on Mining Regs in El Salvador

Canadian mining company Pacific Rim Corp. has responded to grassroots efforts against its proposed mining project in El Salvador by filing a CAFTA investor suit against the Salvadoran government.  

Communities in northern El Salvador, worried about the environmental impacts of proposed mining projects, campaigned vigorously along with environmental, religious and human rights organizations to hault what would be El Salvador's first large-scale mine in 70 years. They were successful in convincing President Tony Saca to rethink issuing the permit for Pacific Rim's El Dorado mine.

The Miami Herald explains:

President Saca fears mining would cause cyanide contamination of water much in the way it did in the 1950s at the El Dorado mine, the same underground mine in the eastern region of Cabañas which Pacific Rim wants to reopen and expand.

''I won't give any mining exploitation permits because mining is definitively harmful,'' Saca said.

Saca's position has been echoed by his successor, president-elect Mauricio Funes, whose left-wing FMLN party ended 20 years of right-wing rule with their victory in the March elections. Funes will officially take power in June.

El Salvador is not alone in choosing to preserve natural resources over mining projects that do not bring long-term employment and whose profits will flow out of the country. And Pacific Rim is not alone in using NAFTA or CAFTA investor rights to challenge local decisions over mining. The United States is currently fending off a $50 million NAFTA investment suit over California's mining regulations.

Although Pacific Rim is a Canadian company that shouldn't even be eligible to utilize investor rights under CAFTA (an agreement between the United States and five Central American countries), they have found a way around this problem. Pacific Rim Mining Corp. will bring this investment suit through its Nevadan subsidiary, Pac Rim Cayman LLC! As with all NAFTA and CAFTA investor-state cases, the case will be decided outside of domestic courts by a panel of arbitrators.

And all this talk of a Panama FTA, which contains the same kind of investor rights found in NAFTA and CAFTA could makes matters much worse. Panama is home to an estimated 350,000 subsidiaries of foreign mulinational companies. Just as Canadian company Pacific Rim used its Nevadan subsidiary to file a CAFTA investor suit against El Salvador, so could any of the 350,000 parent companies use their Panamanian subsidiaries to take the United States government to task over environmental and other public interest regulations.

Jake Tapper asks about Panama FTA, WH (and we) respond

Check out ABC News' Jake Tapper's question from yesterday's press briefing:

TAPPER:  OK.  And then following up on the president's announcement yesterday about tax havens, the president's trade representative, Ron Kirk, has said that the administration is pushing for a trade agreement with Panama.  Panama is one of the tax havens that's been cited by various organizations that look at countries that have these tax havens. And as part of the trade agreement, according to Public Citizen, there would be a lift on the amount of money that can be wired from the U.S. to Panama.  Is the Obama administration going to be pushing for the elimination of Panama as a tax haven as part of this anti-tax haven effort?
   
GIBBS:  Let me check with USTR and folks here on what's in the trade agreement and some of the statements that have been made.  I don't have any of that with me, but I'll check on it.*

David Sirota provides some of the background to the question here. A few hours later, Tapper got an answer:

* UPDATE: Carol Guthrie, a spokeswoman for US Trade Representative Ron Kirk, tells ABC News that "Ambassador Kirk has been always been very clear that it will be necessary to address outstanding issues on labor and tax policies, and we continue to work on those tax issues.  Our refusal to tolerate tax havens is precisely why we’re working with the Panamanian government to address concerns regarding its international tax policies.  We can work to improve international tax practices and open markets for entrepreneurs and workers at the same time."

Guthrie adds that the free trade agreement "actually does specifically include exceptions that would allow us to restrict or limit capital transfers in various circumstances, including to protect against tax evasion and money laundering."

Our new report goes through these so-called exceptions. Here's what we found:

• They do not provide a defense for policies that treat an entire country and all business activities related to it differently based on that country’s general tax-haven policies.
• Foreign tribunals get to determine if the exceptions are allowed to defend a challenged policy.
• If a policy is challenged, and even if the exceptions are allowed, these tribunals get to decide whether the policy is "necessary" to fight tax havens, regulate finance, etc. To put this into perspective, WTO panels have ruled that national policies did not meet the “necessary” test in nearly 90 percent of the cases where this defense was raised. Thus, the United States would bear the burden of showing that the specific “financial reporting or record keeping of transfer” rules were the least trade restrictive way to stop money laundering or tax evasion.
  
• In sum, were the Panama FTA to go into effect, the U.S. government could lose its most effective tools for dealing with countries, such as Panama, that are widely recognized as tax havens and venues for money laundering. And, this is not a speculative concern. Already Panama has spoken out at the WTO about how various policies aimed at tax haven countries could violate WTO rules.

But perhaps most worrying is the so-called investor-state system in the Panama FTA. Not only Panamanian nationals and their firms would be empowered under the FTA to use this private enforcement system. Rather, it applies to the 350,000 foreign subsidiaries operating in Panama – including U.S. subsidiaries that have “substantial business activities” there. 

This is extremely problematic, because an array of financial service regulation and tax-haven elimination goals of Congress and the Obama administration fall within the limits on regulation and rights for foreign banks and investors included in the Panama FTA. Perhaps Panama’s government might hesitate to drag the United States before an international tribunal if we limited certain risky transactions or conditioned access to U.S. financial services on banking transparency in Panama. Although, given Panama’s main comparative advantage is its bad bank and tax practices (and it has already complained to the WTO about such measures), who can predict?

However, a private investor or institution would not have to make such diplomatic considerations, and under the FTA would be empowered to enforce the pact’s investor rights terms. The Panama FTA investor-state private enforcement system (like those in NAFTA and CAFTA) would empower Panama-based subsidiaries of U.S., Chinese, European and other multinationals to privately enforce this right of compensation by circumventing domestic courts and domestic law to bring cases based on FTA law directly against signatory governments in foreign tribunals. 

This “investor-state dispute settlement” system uniquely empowers foreign investors to privately enforce the terms of a public contract between governments (i.e. private enforcement of a government-government agreement).  Cases under this FTA provision are submitted to tribunals that operate in the United Nations (United Nations Commission on International Trade Law, i.e. UNCITRAL) or World Bank (International Center on Settlement of Investment Disputes, i.e. ICSID). These tribunals operate outside of the signatory countries’ court systems and enforce FTA (not domestic) property rights law. There is no limit placed on the awards that these foreign tribunals can order governments to pay foreign investors.

So, while it's refreshing to know that some in government are paying close attention to Panama's tax practices, the deeper problem, as we have pointed out, is that the FTA's rules actually take us in the wrong direction on tax, financial and investment matters.

And (FWIW), Panama's incoming administration had this to say (from Bloomberg's Eric Sabo, not linkable):

Panama’s President-elect Ricardo Martinelli will refuse to give in to pressure from the U.S. to change the country’s banking secrecy laws, economic adviser Frank de Lima said.

De Lima, who advised Martinelli during the presidential campaign, said Panama’s economy would be hurt by scrapping laws keeping account information secret from other governments.

Bailed Out Banks Among Top Panama FTA Pushers

According to the U.S. State Department, Panama has over 350,000 foreign-registered companies (i.e. mostly subsidiaries of foreign multinationals),  all of which face low to no taxes and regulation. This high rate of foreign incorporation – the country is reportedly second only to Hong Kong – makes the country a magnet for tax evasion.

In fact, many of the top 30 recipients of TARP money have subsidiaries in Panama. Because Panama does not charge taxes on “offshore” subsidiaries, the TARP and other bailout fund recipients may be able to avoid paying significant amounts of U.S. taxes by essentially permanently deferring repatriation of their income in Panama. According to Securities and Exchange Commission (SEC) filings, Citigroup Inc. has a whopping 17 Panamanian subsidiaries, while American International Group, Morgan Stanley and American Express each have one.    

Many of the top 100 federal contractors also have Panamanian subsidiaries: BearingPoint, Caterpillar, Dell, EDS, Fluor, General Mills, International Shipholding, Johnson & Johnson, Kraft Foods, Mantech International, McDermott International [a U.S. corporation which reincorporated as a Panamanian firm], Merck, PepsiCo, and Proctor & Gamble. Others top U.S. corporations with subsidiaries in Panama include Altria, Cisco, Ingram, News Corporation, Pfizer, and Sunoco.

How does any of this relate to the Bush-negotiated, NAFTA-style trade deal with Panama? Well, the FTA does not directly or indirectly remedy Panama’s problems with tax evasion and money laundering. There are no special requirements that take into consideration, much less try to counter, Panama’s banking secrecy rules, lax financial service regulations or designation as a venue for money laundering and tax evasion.

In today's Inside U.S. Trade, key trade and tax-transparency leaders had this to day:

Among the Democrats demanding a [U.S.-Panama tax information exchange agreement] TIEA as a precondition of the FTA is Rep. Lloyd Doggett (D-TX).

“[I]t is not only essential that they get an agreement signed, but that they change their laws,” he said. “Given their status as a tax abuser, I want to be sure that [Panamanian] laws have been changed, not just that the agreement is signed,” he said.

Doggett said that at a time when President Obama has called for action against companies that use tax havens and Treasury Secretary Tim Geithner has endorsed his legislation to help address the problem of tax havens, it would be a “real mistake” to reward “one of the most abusive tax havens.”

Doggett’s bill has a companion measure in the Senate sponsored by Sen. Carl Levin (D-MI), who is also opposing action on the Panama FTA before a TIEA is negotiated.

“A U.S.-Panama tax information exchange agreement is the least of what we should get before the free-trade agreement,” Sen. Levin said in a statement forwarded by his press office this week.

In fact, if the Panama FTA were adopted, it would make these matters of bipartisan concern worse. For instance, TARP recipients’ Panama-registered subsidiaries would be newly empowered to demand U.S. taxpayer-dollar damages for U.S. financial service regulations or limits on transfers (related to Panama’s status as a tax-haven country) that they could claim undermined its future expected profits and were thus ”tantamount” to (“indirect”) “expropriations.” These cases would be heard by UN or World Bank tribunals, and could be brought to attack domestic regulatory measures that would not be considered expropriations under the U.S. Constitution as interpreted by the U.S. Supreme Court. The effect of these excessive Panama FTA investor rights could be a watering down or chilling of much needed tax and financial-sector re-regulatory efforts.

So, perhaps unsurprisingly, the financial firms that created our current economic crisis are pushing hard for these benefits... even just days before AIG was bailed out.

Luckily, our new report details the easy fixes that could make the Panama FTA less objectionable:

1. Eliminate the FTA provisions that ban limits on transfers, which would remove from the U.S. the key policy tool for acting against banking secrecy, tax haven policies and money laundering;
2. Remove the investor-state enforcement system, which would allow hundreds of thousands of private investors from around the world that are registered and have operations in Panama to challenge U.S. anti-tax haven policies for cash compensation;
3. Remove the FTA’s restrictions on financial regulations, including those that forbid limits on financial service firms’ size or establishment of firewalls between different financial service businesses, and add to the FTA’s financial services text a set of required minimum financial regulatory standards that signatories to the agreement would agree to adopt in domestic law and enforce and that could be based on the re-regulation proposals now being formulated in multilateral and domestic forums; and
4. Require that the FTA be terminated if Panama fails to maintain high transparency standards, which should be passed before the FTA goes into effect.

New Report: Panama FTA Would Undermine U.S. Efforts to Stop Offshore Tax-Haven Abuse

We released a comprehensive new report on the Panama FTA. Here's our press release:

President Obama's ability to deliver on his campaign commitments to close tax loopholes that promote offshoring and re-regulate the financial sector would be dealt a sharp blow if the U.S.-Panama Free Trade Agreement (FTA) is passed, according to a Public Citizen report released today (PDF).

The new report details how Panama explicitly created an industrial policy designed to create a "comparative advantage" in tax-evasion and money-laundering services for entities such as the bailed-out American International Group (AIG) and Mexican and Colombian narcotraffickers. The report also examines how specific FTA rules would remove key policy tools – such as limitations on transfers from tax-haven countries that are used to combat financial crimes – and would also conflict with U.S. government efforts to combat the global economic crisis by re-regulating finance.

"Members of Congress wouldn't vote to let AIG not pay its taxes or to give Mexican drug lords a safe place to hide their proceeds from selling drugs to our kids, but that's in essence what the Panama FTA does," said Lori Wallach, director of Public Citizen's Global Trade Watch division. "The Obama administration has discarded or altered many leftover Bush initiatives, so why would it push a Bush trade pact that directly conflicts with its priority campaign goals of closing tax loopholes and regulating finance?"

The Panama deal, negotiated by the Bush administration, is modeled on the controversial North American Free Trade Agreement (NAFTA) template. It includes the controversial private “investor-state” enforcement system, which would give new powers to hundreds of thousands of private investors from around the world that are registered and have operations in Panama. This includes the right to challenge U.S. anti-tax haven policies and financial service regulations in foreign tribunals to demand taxpayer-funded compensation. 

Among the key findings:

Death Squad Leader: I "Funded Uribe"

'Breaking' news today: President Uribe is linked to narcotrafficking paramilitary death squads. We say 'breaking' because, as the below article mentions, these allegations have followed Uribe since early in his political career, and some of us have been noting the fact for some time.

The BBC reports on the most recent development in the so-called 'para-politics' scandal that shows Uribe's complicity in the murders of thousands of Colombians:

A drug lord imprisoned in US has said that he and his illegal paramilitary army funded the 2002 election campaign of Colombian President Alvaro Uribe.

Diego Murillo, aka Don Berna, was one of the heads of the AUC, which demobilised after a peace settlement...

Don Berna was the successor of drug lord Pablo Escobar in the city of Medellin.

He then joined the brutal AUC, or the United Self-Defence Forces of Colombia, as it fought, often in cahoots with the military, to destroy the Marxist rebels.

The article goes on:

Ever since Mr Uribe started his political career, he has been dogged by accusations of links with right-wing paramilitaries.

During his term as governor of the province of Antioquia the AUC was born, flourished and spread across the country, leading to the deaths of more than 100,000 Colombians.

Currently there are 77 congressmen under investigation for links to the AUC, nine of whom have been condemned.

Almost all are supporters of President Uribe.

Despite the denial, the scandal is unlikely to die quietly as Don Berna has not yet finished delivering his revelations.

We've said it before and will say it again: if this global trade regime is a race-to-the-bottom (and it is!) then Colombia, under a death-squad linked President, is in the running to win.

Eyes on Trade will keep readers posted on further developments.

Indigenous Crisis in Panama & International Solidarity

As we contemplate how to further a global or hemispheric movement for social justice - on the heels of the People's Summit and the Summit of the Americas - we must take a moment to reflect on the brave allies in Latin America and the Caribbean who lay their bodies on the line to stop the corporations who exploit and destroy across the globe - when we blog from offices atop Capitol Hill.

In Panama, where a leftover Bush FTA is pending, indigenous peoples fight daily to have their rights respected - while their government and some in ours spend their energies expanding rights of the already privileged investors and corporations, via a Bush-style FTA.

The indigenous rights advocacy organization Cultural Survival is drawing attention to - and soliciting your actions in solidarity with - the struggle of the Naso and Ngöbe indigenous peoples against construction of hydroelectric dams that would bring profit for corporations and peril for the areas' inhabitants.

On March 30, more than a hundred Panamanian police officers in riot gear leveled a Naso village in response to a peaceful protest by Naso and Ngöbe villagers who oppose hydroelectric dams that threaten their homelands. Hundreds of people were left homeless and destitute...

The government has said it will only give people materials to rebuild if they promise to move away from their territories, which the government considers to be "invaded lands."

Cultural Survival provides additional background:

For centuries the Ngöbe people have lived by the rivers in the remote hills of western Panama, but now the government of Panama sees profit in those rivers, and they have given concessions to subsidiaries of the American company AES to build a series of large hydroelectric dams.

It should be pretty obvious that a true change in trade and globalization policy would grant greater rights and protections to the Naso and Ngöbe, NOT to the very corporations that go after the lands of indigenous or Afro-descendants.

Its on us to keep pushing for fair trade, by calling or clicking or writing hand-written letters even. Contacting our Congresspeople to have them oppose the leftover Bush FTAs is really the least we can do.

Days of Tax Dodging Thunder

As the new administration continues to debate whether to adopt Bush's Panama trade deal as their own, the evidence of Panama's tax-evasion industry keep piling in, this time from a race-car champ, according to the Miami Herald:

Federal jurors in Miami will resume deliberations on Tuesday in the tax-evasion trial of Indy 500 champ Helio Castroneves.

The 12-member jury is deciding whether the Brazilian race car star is guilty of conspiring with others to avoid paying U.S. taxes on $5.5 million.

Castroneves, a U.S. resident who has lived in Miami since 1997, received $530,000 from a Brazilian trading company that sponsored him just before he hit the big time a decade ago as an IndyCar driver with Penske Racing. The racer, who owns a Coral Gables mansion, also received $5 million from a 1999 licensing deal with Penske.

So far, Castroneves has paid taxes on only $50,000 of his total earnings from the Brazilian sponsor, Coimex Internacional -- income that he diverted to his Panamanian shell company's bank account in New York and then to a Swiss bank with the help of his sister, according to prosecutors and court records.

That would mean Castroneves allegedly avoided paying taxes on $480,000 from Coimex in addition to the $5 million from Penske. Bottom line: He owes $2.3 million to the Internal Revenue Service, prosecutors say.

(HT to Oregon Fair Trade Coalition!)

Enter State Security, Stage Right

If you were a playwright, you'd wish you'd have written this. As the drug-money laundering indictment against now-infamous pyramid schemer money-launderer David Murcia comes down in U.S. federal court, the Panamanian press buzzes amidst new revelations of links between this illicit businessman, state security forces and Panamanian politicians.

Some of the highest ranking leaders of the Institutional Protection Service (SPI in its Spanish initials) were arrested for their alleged role in providing the equivalent of Panamanian Secret Service protection to Murcia. From La Prensa in Panama (Spanish only):

The controversial Colombian prisoner was able to penetrate the highest spheres of the Institutional Protection Service (SPI), the specialized entity in charge of security for the Presidency of the Republic. 

Yesterday the disciplinary body of the SPI detained at its operations center in Corozal two agency directors, Joseph Antoine y Luis Almengor, both for links to the network of agents who served as protection for Murcia, without presidential authorization, as the La Prensa put forth yesterday.

Even though it sounds a lot like another country nearby with which Bush administration negotiated an FTA, infiltration of organized crime into the highest levels of the Panamanian state security apparatus should raise eyebrows.

La Estrella reports that agents seems to have been present in meetings between Murcia and Panamanian politicians, and reminds us that it's not the first time the SPI is in hot water:

The image of the Institutional Protection Service (SPI) has been tarnished yet again with accusations of SPI agents who protected Colombian businessman David Murcia Guzman in their spare time, in violation of SPI code.

Panama-AIG Outrage On All Fronts

Anger is brimming over in diverse corridors over the Bush hangover agreement with Panama, and the new rights it would give to AIG-linked bodies in Panama to sue U.S. taxpayers.

Rep. Mike Michaud (D-Maine) just ran an op-ed in The Hill newspaper explaining what is at stake with the debate around the Panama FTA:

When the House Trade Working Group spoke with President Obama during the campaign, he explained that if he was going to be the one responsible for enforcing a trade agreement, he wanted to be the one setting its terms. In the case of Panama, renegotiating the agreement is a necessary, but insufficient, step.

Removing the special investor rights and limits on Buy America and other non-trade policies is essential. But, no FTA should go into effect with Panama until that country eliminates its excessive banking secrecy practices, re-regulates its financial sector and forces banks and multinational subsidiaries to pay their fair share of taxes.

Indeed, the grassroots is pretty peeved about the whole discussion of this deal. Over the last 24 hours, 9,000 letters were sent to Congress to complain about the AIG-Panama scandal that we reported on last week. You too can let Congress know how you feel about AIG pushing a NAFTA-style deal with Panama, by clicking here.

It sounds like Congress is hearing this outrage, with Chairman Charles Rangel (D-N.Y.) of the House Ways & Means Committee putting out a press release yesterday that says:

“As I have discussed with the Government of Panama and the U.S. Ambassador to Panama, there are remaining outstanding issues that need to be addressed and actions that need to be taken by Panama before Congress considers the FTA.  These include specific actions to meet ILO labor standards and resolution of the tax haven issue now being discussed by our two governments. I hope these actions will be taken soon.”

We should let Congress know that we must also fix the underlying problems with the agreement, such as the provisions granting AIG-linked corporations the right to sue U.S. taxpayers for even more money.

Drug Money, eh? Not Exactly a Shocker...

Now that the feds are saying it, U.S. media have started to report (as we did weeks ago) that fallout of the latest political mega-scandal in Latin America would reach not just into the slimy depths of Panamanian and Colombia political corruption, but also to the Mexican and Colombian drug cartels.

The Miami Herald reported Saturday on what they now more accurately term the "Panama-Colombia Ponzi drug case":

The principal suspects in a multimillion-dollar Ponzi scheme linked to scandals of alleged illicit payments to officials in Colombia and presidential candidates in Panama have been charged in a New York federal court with laundering drug trafficking profits.

At least 11 properties in South Florida and California have been seized in connection with the case, which involves the firm DMG and its principal broker and owner, David Murcia Guzmán. Six others were also charged.

According to the charges, the organization opened an account at a U.S. branch office of Merrill Lynch and deposited $2.1 million, an amount prosecutors hope to show is connected to money Mexican drug cartels paid to Colombian drug traffickers.

Following the scandal, several Colombian officials and one of President Alvaro Uribe's sons had to explain their links to the suspects.

In investigating if they received money from Murcia, Panama's electoral tribunal on Friday stripped legal privileges from two presidential candidates, Balbina Herrera and Ricardo Martinelli.

It's disturbing to imagine that candidates for the presidency of any country be granted special privileges to conceal their finances, but we might not be too surprised in the case of Panama, a known banking secrecy and offshore tax-haven destination.

The AP says Murcia may face extradition to the U.S.:

A man charged in Colombia with orchestrating a giant pyramid scheme that bilked people out of hundreds of millions of dollars now faces money laundering charges in the United States.

Federal prosecutors in New York brought money laundering charges Wednesday against DMG Group founder David Guzman and six others affiliated with the company.

They say he was laundering drug trafficking profits but don't detail their alleged origin.

Eyes on Trade will be watching and more will be revealed. If the juiciness of recent weeks are any indication, you won't want to miss it!

Panama Denying Charity to Children?

Despite high rates of GDP growth thanks to the canal and banking sectors, over 40 percent of Panama’s population is rural and poor. This population is already squeezed by Panama’s net food-importer status.  UNICEF statistics show that the wealthiest 20 per cent of the population has an annual family income 32 times that of the poorest 20 per cent, making Panama one of the most unequal countries in the world. More than half of children under the age of 5 live in poverty, and nearly 30 percent live in extreme poverty. Most of these children come from indigenous areas. And Panama is one of very few countries in the region that has experienced a rise in child chronic malnutrition, despite rising GDP growth. 

So why is Panama's government putting up roadblocks to the charitable distribution of nearly $50 million to combat child hunger? And not only that, but engaging in an extended harassment campaign against the lawyer designated to execute this will?

Here's the story from the International Herald Tribune's Marc Lacey:

In life, Wilson C. Lucom was not exactly child-friendly. The curmudgeon never had children himself, nor was he especially close to the offspring of his third wife, Hilda. When he opened his ample checkbook, friends say, it was more likely to finance a conservative political cause than to help underprivileged youth.

But Lucom, a native of rural Pennsylvania who spent much of his life in Palm Beach, Florida, surprised everyone in his will, which was disclosed upon his death two years ago at the age of 88. After doling out relatively small portions of his tens of millions of dollars to survivors, he left the rest to a foundation he had dreamed up in secrecy to aid the poor children of Panama, where he spent the final years of his life.

It would be one of the largest charitable donations, if not the largest, in Panama's history, but so far not a single child has had access to the money. The will has set off a vicious legal battle that is playing out in at least four countries. Criminal charges have been filed, insults traded and threats made. The number of law firms involved exceeds 20.

"This is all about greed," said Hector Avila, an advocate for at-risk children in Panama who organized a demonstration of young people in May outside Supreme Court in Panama, calling for Lucom's gift to be honored. Within a week of the protest, Avila survived a shooting. No link to the Lucom case was established.

Richard Lehman, a Florida-based lawyer, is the executor of Lucom's estate, and has set up a webpage describing his legal battle with Panamanian authorities. The situation has gotten so bad that Lehman has requested precautionary protection from the Inter-American Commission on Human Rights. Listen to what Lehman and several charitable organizations in Panama had to say about the case:

I've spoken with Lehman a number of times, and he thinks that signing an FTA with Panama sends exactly the wrong message to a regime that fails to respect human rights, not to mention its disregard for the suffering children within their own national borders.

We'll keep you updated about any developments in this case, and feel free to go to the Lucom - Lehman website to become more informed, and please spread the word!

Name-Calling Will Get You Nowhere

Taking a queue from his boss who equates advocacy for human rights with aiding 'the enemy', Colombian Vice President Francisco Santos is resorting to personal attacks against those who disagree with his ideology, even well-respected international dissenters like Rep. George Miller (D-Calif.).

Santos' ad hominem against Chairman George Miller, whose House Committee on Education and Labor recently held hearings on the rampant human-rights violations in Colombia, featured prominently in today's El Pais, a conservative Colombian daily (from Spanish):

Vice President Santos classified as "enemy of Colombia" United States Democratic Representative George Miller because he stated that the human rights situation in [Colombia] is similar to that of Chile or El Salvador of decades past...

According to the Vice President [Santos], statements by Miller, who has visited the Colombian nation on three occasions, are "a rebuff of such dimensions that I do not want to qualify them".

But qualify them he did. Santos called those the remarks of an enemy of his country. Apparently that's just how he and his boss see the legitimate concerns regrading their trampling of their citizens' rights. If Santos' and Uribe's policies are hurting the Colombian people and violating their most basic rights, but Miller is the enemy, then one has to ask: what does that make Santos and Uribe?

The fact is that Bush/Cheney Santos/Uribe and their with-us-or-against-us mentality has cost many their lives. Luckily for us all, it's not likely that Chairman Miller will himself fall victim of the paramilitary death squads that attack individuals the Uribe government alternatively denounces as "enemies" or rebel sympathizers.

Sadly, many have paid the price, and more will, unless U.S. policy shifts away from FTAs and toward a people-first foreign economic policy that creates material conditions for a peaceful end of the 40+ year Colombian conflict.

No Sheep's Clothing for VP Santos

While other Colombian officials bombarded DC hoping to pull the wool over the eyes of Congress and the Obama administration, Colombian Vice President Francisco Santos was on tour throughout the U.S. playing nice with state and local officials.

On the Chicago stop, groups like the Chicago Religious Leadership Network on Latin America (CRLN) rallied citizens of conscience to ensure the public.

See, VP Santos ain't no Little Bo Peep. Not unlike his boss the President, or his brother, the Defense Minister - Santos has been linked to the paramilitary death squads that kill Afro-Colombian activists, union leaders, and indigenous and other social-justice organizers. CRLN Executive Director Gary Cozette wrote up a summary of last Tuesday when they tailed the one of the Colombian government's biggest baddest wolves.

Here are some of the choice excerpts of the report back on their welcoming committee's activities:

Dear Colleagues:  Francisco Santos, Vice President of Colombia, visited Chicago on Tuesday Februray 24, 2009 to promote U.S. investment in and trade with Colombia. With 4 million people internally displaced (nearly 10% of the population), Colombia remains as described by the UN as “the greatest humanitarian catastrophe in the Western Hemisphere.” Paramilitary death squads have reorganized and spread out across Colombia. The Colombian military were exposed internationally last year for systematically killing poor Colombian civilians, then dressing them as guerrillas to collect incentive bonuses and gain promotions. Santos’ visit to Chicago is part of a major diplomatic offensive by the Colombian government diminish the reality of this human rights disaster.

Model Citizen? Zero Discipline?

The U.S. State Department released its annual International Narcotics Control Strategy Report last week, and they published some pretty tasty morsels of the country the Bush administration signed its hangover FTA with:

By virtue of its geographic position and well-developed maritime and transportation infrastructure, Panama is a major logistics control and trans-shipment country for illegal drugs to the United States and Europe. Major Colombian and Mexican drug cartels as well as Colombian illegal armed groups use Panama for drug trafficking and money laundering purposes.

Indeed, Panama has been listed as a "country of primary concern" (the most severe designation) by the Department due to the proliferation of drug-related money laundering in the country:

The majority of money laundering activity in Panama is narcotics-related or the result of transshipment or smuggled, pirated, and counterfeit goods through Panama’s major free trade zone, the Colon Free zone (CFZ). The funds generated from illegal activity are susceptible to being laundered through a wide variety of methods, including the Panamanian banking system, Panamanian casinos, bulk cash shipments, pre-paid telephone cards, debit cards, insurance companies, real estate projects and agents, and merchandise...

Panama is an offshore financial center that includes offshore banks and various forms of shell companies that have been used by a wide range of criminal groups globally for money laundering.

A certain David Lee Roth once wrote some lyrics that indicate a certain familiarity with the national product:

Jump back, what's that sound?
Here she comes, full blast'n top down
Hot shoe, burnin' down the avenue
Model citizen, zero discipline...

She's runnin', I'm flyin'
Right behind in the rearview mirror now
Got the fearin', power steerin'
Pistons poppin', ain't no stoppin' now

Panama, Panama

Testing the Panamanian Waters

Although the Office of the U.S. Trade Representative (USTR) and other trade-related agencies have not been staffed up yet, the annual USTR report to Congress (PDF) says that they hope to move the NAFTA expansion to Panama "relatively quickly." According to Congress Daily PM:

Multinational corporations like Caterpillar, eager to bid on a massive Panama Canal widening project, support that the Panama pact, but skeptics say the country's laws lack transparency and it remains too easy for companies to use that nation as a tax shelter.

Lori Wallach, director of Public Citizen's Global Trade Watch, noted that as a senator, Obama co-sponsored legislation to crack down on overseas tax shelters that specifically listed Panama. "Having a vote on this begs the question of the wisdom of picking a big political brouhaha" while in the midst of sensitive negotiations on health care and climate change, Wallach said. "President Obama certainly doesn't want to have trade policy start with hangovers and leftovers from the Bush administration, if in fact this document represents the Obama trade policy."

And according to Bloomberg,

a majority of Democratic lawmakers voted against a similar agreement with Peru in 2007, and many may not be eager to vote on a Bush proposal.

“It’s a political miscalculation,” Lori Wallach, president of Global Trade Watch, which has organized opposition to Nafta, Peru and other trade pacts. A vote would provoke “huge political unpleasantness,” he said...

More than 50 House members, led by Maine Democrat Mike Michaud, sent a letter to Obama last week, urging him to tear up all three pending trade deals.

Labor unions and many Democrats say they oppose the Colombia deal because of a history of violence against union organizers in that South American nation.

Where To Hide All This Colombian Drug Money...?

I've got just the place: the pockets of Panamanian and Colombian politicians!

Thats what David Murcia did, whose elaborate pyramid and money laundering scam left in the lurches at least 700,000 and as many as 3 million citizen investors. According to the New York Times, two of the three Bush hangover FTA countries are caught up in the mess:

Mr. Murcia has been charged with creating a hydra-headed enterprise based in Panama that laundered money and enticed thousands of Colombians into a pyramid scheme known by his own initials, D.M.G.

Murcia might be about to get a slice of evidently-needed humble pie as he faces trial. Seems that the paw prints of narco-traffickers and Panamanian politicians and Colombian politicians - I know you're shocked - are all over his dirty money. We'll get to the Colombians tomorrow.

According to Colombian press La Patria (translated from Spanish) the authorities are starting to think this was much more than a your average pyramid scheme:

'It's not just the word on the street, statements in the media, by people linked to [DMG], above all its the investigation that points to the fact that this business had to do with narcotrafficking", stated the national Attorney General Mario Iguarán Arana.

This has been suspected for some time, though reporting prior to the new year, like this Washington Post's mention of the drug money, has been more in passing:

But investigators say it appears Murcia made money by buying electronic goods in bulk and selling them at high prices and by laundering drug profits.

Folks who watch the region won't be surprised that due to its banking secrecy laws that Colombian cartels - or Mexican ones for that matter - choose Panama as the site to hide their money. Maybe it shouldn't surprise us either that ruling party politicians are implicated in both Panama and Colombia. Panamanian press reeled when ruling party candidates got linked to the drug-money laundering pyramid scheme (from Spanish):

In an interview from La Picota prison in Colombia, Murcia mentioned to TVN Channel 2 the names of presidential candidate Balbina Herrera and her party-mate and capital city mayoral hopeful Roberto “Bobby” Velásquez and referred to other candidates.

WTO Dispute/FTA Countries Set Stage for Banking Drama

Other than being small Caribbean countries, what do Panama and Antigua have most prominently in common? Trade wonks will know there's a stalled U.S.-Panama FTA hungover from the bad old Bush years, and that Antigua's case challenging the U.S.'s right to set our own gambling policy give them that common thread. But what else?

If you answered "setting of huge banking scandal", you're right!

Gazillionaire financier Bernie Madoff Allen Stanford has been all over the headlines for an $8 Billion fraud scheme (yes that's a 'B'...) that rocked several Caribbean and Latin American countries, including Panama and Antigua. As the New York Times reports on the scandal and its impact on other popular offshore banking destinations:

Stanford International claims it had about $8 billion in assets, but the Securities and Exchange Commission has only said it has not been able to account for that money. Most of the key players, including Mr. Stanford, failed to appear to testify after the S.E.C. issued a subpeona.

Panama's strict banking secrecy laws make it a well known tax haven and popular destination for money laundering of all sorts. During the Stanford manhunt, one financial press blogger betrayed the truth, that "of course" Panama would be implicated in a Caribbean financial scandal:

[G]iven that [Stanford] owns banks in many different jurisdictions (the FT has found entities not only in the US and Antigua, but also New Zealand, Switzerland, Colombia, Ecuador, Mexico, Peru, Panama, Venezuela, and, of course, Panama), as well as what Matthew Goldstein calls "a number of private jets", one expects that at this point his contingency plan is well underway.

You'd hope the U.S. government will be smarter than Stanford - who despite what the blogger notes about the ease for him to hide abroad was caught on U.S. soil last week. The guvs can prove they are smarter by doing away with Bush's hangover Panama FTA, which would do nothing to ensure that the rich pay their fair share of taxes as we invest hundreds of billions in American recovery. Even worse, the Panama FTA could potentially allow corporations and the wealthy to escape the regulations that will be needed to avoid the next financial crisis - deregulation having gotten us into this economic tailspin in the first place.

The Antigua case is something of a non-sequitur - though it's still crucial that the Obama administration act in the public interest to both resolve that case and get us out of an overreaching WTO agreement on financial services. However, U.S. policymakers still have time to avoid facilitating further fraud by sending the Panama FTA packing.

(Photo used under Creative Commons license courtesy of Flickr user guano)

Uribe: War is Peace, Ignorance is Strength

It just can't get much more Orwellian Uribian (?) than this.

Colombian President Uribe's true colors came through last week when he again openly equated human-rights defenders and seekers of peace with left-wing combatants, as reported here English in elsewhere in Spanish:

"The intellectual bloc of the FARC is always talking about human rights, only to intimidate our soldiers and police," he said.

"We can't allow that they, with their nice little story of peace and permanent accusations against the armed forces, paralyse our policy of democratic security and the strategy against drugs and terrorism," Uribe said.

Uribe's warnings came as the nation waited expectantly to hear the contents of a document that FARC's top leader Alfonso Cano has sent to Senator Piedad Cordoba, who mediated in the release of captive soldiers, police and politicians.

(Activists are speaking out to denounce these attacks, and you can too!)

So let me get this straight: the Colombian peace movement successfully negotiates for the release of hostages held by the FARC rebels (Uribe's Army and Police Personnel) in hopes that it deescalates conflict and lays the groundwork for permanent cessation of violence. They show that could be possible with a peaceful turnover of hostages.

Then Big Brother President Uribe says that by even questioning the notion that the military solution - having failed for over 40 years to bring resolution to the country - is the only viable way to end the war, and that the individuals and organizations actually talking about peace comprise a secret cadre of rebel war-mongers.

Got it. In Uribe's Colombia both the act of taking Army soldiers hostage, and also of freeing Army soldiers, makes you a narco-terrorist. Its all clear now. I just had to walk through it to understand it all...

But wait, what does that make him?

Seeing the Truth: Capitol Hearings on Colombia's Labor Violations

This morning the House Committee on Education and Labor, chaired by Democratic California Rep. George Miller, held a hearing on the true state of workers rights and violence against union leaders in Colombia.

The verdict is that it ain't pretty: violence against unionists rose 25% in 2008, and reached 49 assassinations last year:

“Sadly, Colombia has been the most dangerous place in the world to belong to a labor union for decades,” said Rep. George Miller (D-CA), chairman of the committee. “In some recent years, there have been more labor killings in Colombia than the rest of the world combined.”

We've documented the Uribe government's campaign of deception regarding the supposed improvements in labor rights and their (ahem) "vigorous" prosecution of rights violators, so it's heartening to again see the truth being heard in Congress.

Witnesses testified that, despite its claims, the Uribe government has continued to drag its feet in enforcing labor laws and prosecuting perpetrators of violence:

“Despite the two sentences in which the Colombian judges have ruled that my father was murdered for being a labor unionist, the prosecutor’s office, in order to continue hiding the truth, maintained the hypothesis of a crime of passion up until August of 2008,” said Yessika Hoyos, daughter of Jorge Dario Hoyos Franco. “It took international pressure for the prosecutor’s office to acknowledge the truth with respect to the motive for the crime. We will continue to demand that the intellectual authors be investigated, as the murder of unionists in Colombia is the result of a systematic government policy.”

Latest Peru FTA Developments Confirm Opponents' Fears

Bush is on an orgy of FTA implementation, putting into effect NAFTA-style deals with Oman, Costa Rica and now Peru in its last days in office. Here's what we had to say about the latest Bush Peru mess:

President Bush's announcement that the Peru Free Trade Agreement (FTA) will be implemented despite Peru's refusal to conform its laws to the pact's labor rights requirements and its gutting of forestland protections after the pact's U.S. passage, is the sort of outcome we worried about when we opposed the deal in 2007.

The Bush administration and Democratic congressional leaders negotiated improvements to the FTA's labor and environmental standards, but the fact that the pact is going into effect after Peru gutted its forestry law and has refused to bring its labor laws up to International Labor Organization standards shows more improvements are needed to the labor and environmental provisions of the U.S. trade agreement model.

The Peru FTA, which included enhanced labor and environmental standards but also extended some of the most damaging provisions of the North American Free Trade Agreement (NAFTA), including extreme foreign investor protections, was opposed by a majority of House Democrats.

Given the problems we have seen with the Peru FTA model upon which the Panama FTA is based, plus Panama's money-laundering and tax evasion issues that were highlighted in legislation co-sponsored by President-elect Obama during the last Congress, Bush's announcement today will only fuel opposition to the sidelined Panama FTA. In addition, since the Peru FTA vote, 28 House members who campaigned against NAFTA and its expansion were elected to replace those who had voted for the Peru FTA.

Earlier this week, House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) and Ways and Means Trade Subcommittee Chair Sandy Levin (D-Mich.) wrote to Bush asking that he not implement the FTA because Peru has not "implemented its obligation (under Article 17.2.1 of the FTA) to adopt and maintain in its statutes, regulations and practices the fundamental right of workers to freely associate and collectively bargain."

The environmental rollback that has received the most attention since the U.S. Congress passed the FTA was the approval by Peru's Congress of a law that removed protections for as much as 60 percent of Peruvian lands now defined as forest, such as recently deforested areas and plantations.

Colombia a Model For Democracy... Bush/Cheney Style

Outrage over Bush giving the Presidential Medal of Freedom to paramilitary-linked Colombian President Alvaro Uribe is spreading, and for good reason. When your country's leader awards its highest civilian honor to a man linked to the murder of unionists and human rights activists and presides over the worst human rights abuses and deepening humanitarian disaster in the hemisphere, outrage is beyond appropriate, it's required.

MSNBC asked Lori on their 1600 Pennsylvania Ave show last night to examine the audacity of this hypocritical doublespeak.

Despite his clear record, as Bush hung Uribe's medal, Uribe was said to be "dedicated to the prosperity of Colombia's people and democratic values" (!) What's more, it was said that "under Uribe, Colombia has become a model for countries seeking reconciliation and a society based on respect for human dignity" (!)

Denuncia de la Medalla en Español (Translation on Bush/Uribe Medal)

Los compas del blog Peruanista han traducido la declaración de Lori sobre la Medalla que Bush regaló a Uribe. Super agradecido, Carlos! (Our friends at the blog Peruanista took it upon themselves to translate Lori's statement into Spanish. Much appreciated, Carlos!)

(Datos de la foto son de la primavera de 2007 - Stats in photo from spring 2007)

Concesión hecha por Bush de la Medalla de la Libertad al presidente colombiano Uribe es un ultraje

Publicado el 13 de enero de 2009 en Eyes on Trade

La premiación que ha hecho [George W.] Bush de la Medalla de la Libertad al presidente colombiano [Álvaro] Uribe es un ultraje considerando los vínculos de su gobierno con paramilitares de extrema derecha y los ataques en aumento contra los sindicalistas, los afro colombianos y pueblos indígenas en Colombia.

Declaración de Lori Wallach, directora de Global Trade Watch, de Public Citizen:

La concesión hecha por el presidente Bush de la Medalla de la Libertad a el presidente colombiano, Álvaro Uribe, es indignante y ofensiva, en vista de las horribles violaciones de los derechos humanos hechos por la administración Uribe de comprobados por los miles de lideres sindicales, afro colombianos e indígenas que han sido asesinados, atacados o desplazados, y dadas las profundas conexiones de ese gobierno con asesinos paramilitares de derecha.

Bush Grant of Medal of Freedom to Colombian President Uribe Is an Outrage

Bush Grant of Medal of Freedom to Colombian President Uribe Is an Outrage Given his Government’s Links with Right-Wing Paramilitaries and the Growing Attacks on Colombian Unionists, Afro-Colombian and Indigenous People.

Statement of Lori Wallach, Director of Public Citizen's Global Trade Watch Division:

President Bush’s award of the Medal of Freedom to Colombian President Alvaro Uribe is outrageous and offensive given the Uribe administration’s horrific human rights abuses documented by the thousands of assassinated, attacked or displaced union, Afro-Colombian and indigenous leaders and given the administration’s deep links to murderous right-wing paramilitaries.

How could Bush award our nation’s highest civilian honor to the leader of a country with worldwide pariah status for its systematic crushing of the most basic human rights?

More than 460 unionists have been murdered in Colombia since Uribe took office in August 2002, including 43 in 2008 alone (an increase from 2007), even as Colombia faced scrutiny related to a trade agreement Bush negotiated with Uribe. Colombia has the world’s highest assassination rate for unionists.

In addition, the Uribe administration has worked consistently to undermine Afro-Colombians’ hard-won civil rights and territorial control. Systematic violence against Afro-Colombians and assassinations of their leaders continue unabated.