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  • Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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December 11, 2014

At Export Council, Obama Expected to Urge Corporate Interests to Help Him Obtain New Fast Track Powers to Expand the Status Quo U.S. Free Trade Pact Model That Congressional Democrats, Obama’s Base Oppose

At today’s meeting of the President’s Export Council, President Barack Obama is expected to urge yet another audience dominated by the corporate interests that opposed his election to help him obtain broad new Fast Track trade powers. Obama’s Fast Track request faces opposition by most Democratic members of Congress and base organizations as well as a bloc of conservative Republicans.

Obama also is likely to tout the Trans-Pacific Partnership (TPP), a pact that would expand the status quo U.S. trade agreement model that has led to staggering U.S. trade deficits, job loss and downward pressure on wages. When Obama picked up TPP negotiations from former President George W. Bush in 2009, consumer and environmental organizations, unions and congressional Democrats urged him to use the process to implement his 2008 election campaign promises to replace the old U.S. trade model based on the North American Free Trade Agreement (NAFTA). Instead, the administration has sided with the corporate interests that represent the majority of the approximately 600 official U.S. trade advisors and has replicated many of NAFTA’s most damaging provisions in the TPP.

“With the TPP, Obama is doubling down on the old, failed NAFTA trade pact status quo and even expanding on some of the NAFTA provisions that promoted American job offshoring, flooded us with unsafe imported food and increased medicine prices,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Given the TPP terms that would newly empower thousands of foreign firms to attack American health and environmental laws in foreign tribunals, incentivize even more U.S. job offshoring and ban the use of Buy American and Buy Local preferences, most Americans would be better off with no deal than what is in store with the TPP.”

Obama’s efforts to obtain Fast Track in the 113th Congress were rebuffed, as almost all House Democrats and a bloc of House GOP members indicated opposition.

Obama’s efforts to push more-of-the-same trade policies have been sidelined by the dismal outcomes of his 2011 U.S.-Korea FTA: The trade deficit with Korea in the first two years of the pact. In fact, the record shows that U.S. export growth with U.S. Free Trade Agreement (FTA) partners lags behind the rate of export growth with non-FTA nations. In addition, the aggregate U.S. trade deficit with the group of 20 countries with which the U.S. has FTAs has increased more than fivefold since the FTAs took effect, due in part to a massive NAFTA trade deficit.

December 09, 2014

Outside of TPP Negotiations, Protestors Declare "No Fast Track Ever!"

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As negotiators gather in Washington, D.C. this week for closed-door meetings on the Trans-Pacific Partnership (TPP), hundreds of activists from labor, environmental, consumer, human rights, public health, Internet freedom, faith and family farm activists joined concerned citizens to loudly make their voices heard outside of the secretive negotiations on Monday.  (Meanwhile, a select group of official trade “advisors,” largely representing corporations, enjoys unprecedented access to the TPP negotiators meeting behind closed doors).

The rallying cry from the activists, who gathered in front of the United States Trade Representative’s office, was loud and clear: "No Fast Track now, No Fast Track ever!  The TPP is a lost endeavor!"  

Fast Track was a controversial maneuver that allowed past presidents to railroad through Congress unpopular deals like the North American Free Trade Agreement (NAFTA).  Corporations have called for Fast Track to be revived to empower the Obama administration to unilaterally negotiate and sign the TPP before Congress gets an expedited vote, with no amendments allowed and debate strictly limited.

Fast Track faces widespread opposition in the U.S. Congress and among the U.S. public.  Though a Fast Track bill was tabled about one year ago, it has gone nowhere due to massive opposition from most Democrats and a sizeable bloc of Republicans.  This past September, nearly 600 organizations sent a letter opposing Fast Track to Chair Ron Wyden.  A poll earlier this year found that 62 percent of U.S. voters oppose Fast Tracking the TPP.  

Civil society and lawmakers have good reason to reject corporations' push to Fast Track the TPP. Although it’s impossible to know the full scope of the secret deal, leaks have confirmed some of the worst speculations: the TPP would empower corporations to offshore jobs, increase the price of medicines, weaken environmental standards, and chill domestic interest laws by "suing" the government for public interest policies that frustrate their "expectations." 

Given the stakes, the energy of the rally was high.  Protestors circled the building carrying signs and chanting the death knell of Fast Track and TPP: “Fast Track is a sneak attack -- we’re taking our democracy back! Good paying jobs are what we need, but TPP spells corporate greed!"

If you weren't able to make it to the rally, you can still make your voice heard by writing to your member of Congress to urge them to voice their opposition to Fast Tracking the TPP.

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December 04, 2014

Obama Laments Inequality, Calls for Another Inequality-Spurring Trade Deal

Yesterday President Obama, speaking to a room full of corporate executives, tried to downplay the contribution of corporate-pushed trade deals to the historic rise in U.S. income inequality.  

Obama knew his audience -- corporate representatives eager to expand the status quo trade model by Fast Tracking through Congress the controversial Trans-Pacific Partnership (TPP) are probably keen to deny that this model has been exacerbating inequality.  

But such denial defies a consensus position among economists that recent trade flows have indeed contributed to today's yawning gap between rich and poor -- the only debate is how big of a role status quo trade has played.  

It also defies U.S. public opinion -- in a recent Pew poll, a mere 17 percent of the U.S. public thought that trade has boosted U.S. wages, while 45 percent, across the political spectrum, saw trade as contributing to falling wages for U.S. workers.

Obama acknowledged yesterday that TPP proponents will have a tough time arguing that this time is different -- that reviving Fast Track authority in attempt to push through Congress another more-of-the-same trade pact would not fuel further inequality growth. Fast Track was the Nixon-created maneuver that allowed the executive branch to railroad through Congress controversial, inequality-spurring pacts like the North American Free Trade Agreement (NAFTA) by negotiating and signing the pacts before Congress got an expedited, no-amendments, limited-debate vote.  A study by the Center for Economic and Policy Research finds that were the TPP to be Fast Tracked through Congress, all but the wealthiest among us would lose more to inequality increases than we would gain in cheaper goods, spelling a pay cut for 90 percent of U.S. workers.

Recognizing the unpopularity of Fast Track and the TPP, Obama told the business executives: “There are folks in my own party and in my own constituency that have legitimate complaints about some of the trend lines of inequality, but are barking up the wrong tree when it comes to opposing TPP, and I’m going to have to make that argument.”

Having to make that argument is not an enviable position -- it requires explaining away decades of evidence that Fast-Tracked deals have fostered greater U.S. income inequality.  Here's a sampling of that evidence:

U.S. Wages Stagnate, Despite Doubled Worker Productivity

  • Trade agreement investor privileges promote offshoring of production from the United States to low-wage nations. Today’s “trade” agreements contain various investor privileges that reduce many of the risks and costs previously associated with relocating production from developed countries to low-wage developing countries. Thus, many imports now entering the United States come from companies originally located in the United States and other wealthy countries that have moved production to low-wage countries. For instance, nearly half of China’s exports are now produced by foreign enterprises, not Chinese firms. Underlying this trend is what the Horizon Project called the “growing divergence between the national interests of the United States and the interests of many U.S. multinational corporations which, if given their druthers, seem tempted to offshore almost everything but consumption.” American workers effectively are now competing in a globalized labor market where some poor nations’ workers earn less than 10 cents per hour.
  • Manufacturing workers displaced by trade have taken significant pay cuts. The United States has lost millions of manufacturing jobs during the Fast Track era, but overall unemployment has been largely stable (excluding recessions) as new low-paying service sector jobs have been created. Proponents of status quo trade raise the quantity of jobs to claim that Fast Tracked deals have not hurt U.S. workers. But what they do not mention is that the quality of jobs available, and the wages most U.S. workers can earn, have been degraded. According to the U.S. Bureau of Labor Statistics, about three out of every five displaced manufacturing workers who were rehired in 2014 experienced a wage reduction. About one out of every three displaced manufacturing workers took a pay cut of greater than 20 percent. For the average manufacturing worker earning more than $47,000 per year, this meant an annual loss of at least $10,000.
  • Trade policy holds back wages even of jobs that can’t be offshored. Economists have known for more than 70 years that all workers with similar skill levels – not just manufacturing workers – will face downward wage pressure when U.S. trade policy creates a selective form of “free trade” in goods that non-professional workers produce. When workers in manufacturing are displaced and seek new jobs, they add to the supply of U.S. workers available for non-offshorable, non-professional jobs in hospitality, retail, health care and more. As increasing numbers of American workers, displaced from better-paying jobs by current trade policies, have joined the glut of workers competing for these non-offshorable jobs, real wages have actually been declining in these growing sectors
  • The bargaining power of American workers has been eroded by threats of offshoring. In the past, American workers represented by unions were able to bargain for their fair share of economic gains generated by productivity increases. But the investor protections in today’s trade agreements, by facilitating the offshoring of production, alter the power dynamic between workers and their employers. For instance, a study for the North American Commission on Labor Cooperation – the body established in the labor side agreement of NAFTA – showed that after passage of NAFTA, as many as 62 percent of U.S. union drives faced employer threats to relocate abroad, and the factory shut-down rate following successful union certifications tripled.
  • Even accounting for Americans’ access to cheaper imported goods, the current trade model’s downward pressure on wages outweighs those gains, making most Americans net losers.  Trade theory states that while those specific workers who lose their jobs due to imports may suffer, the vast majority of us gain from trade “liberalization” because we can buy cheaper imported goods. But when the non-partisan Center for Economic and Policy Research (CEPR) applied the actual data to the trade theory, they discovered that when you compare the lower prices of cheaper goods to the income lost from low-wage competition under current policies, the trade-related losses in wages hitting the vast majority of American workers outweigh the gains in cheaper goods from trade. U.S. workers without college degrees (63 percent of the workforce) have lost an amount equal to 12.2 percent of their wages, even after accounting for the benefits of cheaper goods. That means a net loss of more than $3,400 per year for a worker earning the median annual wage of $28,000.

Income Inequality Increases in America

  • The inequality between rich and poor in America has jumped to levels not seen since the robber baron era. The richest 10 percent of Americans are now taking more than half of the economic pie, while the top 1 percent is taking more than one fifth. Wealthy individuals’ share of national income was stable for the first several decades after World War II, but shot up 51 percent for the richest 10 percent and 146 percent for the richest 1 percent between 1974 and 2012 – the Fast Track era. Is there a connection to trade policy?
  • Longstanding economic theory states that trade will increase income inequality in developed countries. In the 1990s a spate of economic studies put the theory to the test, resulting in an academic consensus that trade flows had indeed contributed to rising U.S. income inequality. The pro-“free trade” Peterson Institute for International Economics (PIIE), for example, found that nearly 40 percent of the increase in U.S. wage inequality was attributable to U.S. trade flows. In 2013, when the Economic Policy Institute (EPI) updated an oft-cited 1990s model estimate of trade’s impact on U.S. income inequality, it found that using the model’s own conservative assumptions, one third of the increase in U.S. income inequality from 1973 to 2011 – the Fast Track era – was due to trade with low-wage countries. The role of trade escalated rapidly from 1995 to 2011 – a period marked by a series of Fast-Tracked “free trade” deals – EPI found that 93 percent of the rise in income inequality during this period resulted from trade flows. Expressed in dollar terms, EPI estimates that trade’s inequality-exacerbating impact spelled a $1,761 loss in wages in 2011 for the average full-time U.S. worker without a college degree.
  • Changes in technology or education levels do not fully account for American wage pressures. Some have argued that advances in computer technology explain why less technologically-literate American workers have been left behind, asserting that more education – rather than a different trade policy – is how America will prosper in the future. While more education and skills are desirable for many reasons, these goals alone will not solve the problems of growing inequality. First, as documented in a Federal Reserve Bank paper, inequality started rising as systematic U.S. trade deficits emerged, in the early Fast Track period, far before most workers reported using computers on the job. Second, college-educated workers have seen their wage growth stagnate, even in technologically sophisticated fields like engineering. Thus, addressing trade policy, not only better educating American workers, will be an essential part of tackling rising income inequality.

November 21, 2014

Activists Worldwide Rally Against the TPP

While leaders from the 12 countries negotiating the controversial Trans-Pacific Partnership (TPP) agreement met around the margins of the Asia-Pacific Economic Cooperation (APEC) summit in China to discuss the agreement, activists and civil society from across the globe decided to stage some events of their own.

Throughout the week, rallies, creative actions, meetings, and town halls were planned in a number of countries to draw attention to the secret deal that threatens to limit domestic policies that promote food safety, access to medicine, internet freedom, and environmental protection. The deal would also empower corporations to sue governments in extrajudicial foreign tribunals, challenging public interest laws that they claim frustrate their expectations. (And that’s just what we know based on leaked texts, because the negotiations are taking place entirely in secret).

 

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 Over 700,000 petitions against Fast Track are delivered to U.S. Congress

In the United States, a broad coalition of labor unions, environmental, consumer, faith, online, and other groups assembled on Capitol Hill to deliver 713,674 petition signatures opposing “Fast Track,” the Nixon-era procedure that would empower President Obama to sign the deal before Congress is able to vote on it. Corporations are trying to revive Fast Track to railroad the TPP through Congress, as it would greatly limit lawmakers’ oversight over the content of the agreement by only allowing 20 hours of debate and forcing an up or down vote (with no opportunity for amendments).

The groups also launched an online campaign resulting in thousands of calls and hundreds of thousands of e-mails to Members of Congress urging them to vote “No” on Fast Track. Across the country, 20 rallies and town halls brought the anti-Fast Track message to lawmakers’ home districts.

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  Thousands protest against the TPP in New Zealand

More than 10,000 New Zealanders took to the streets in 17 locations to protest the TPP, gaining national news attention and social media buzz, and pushing the #TPPANoWay hashtag to number 2 worldwide. Protesters were joined by lawmakers from a number of political parties, including leaders from the Green Party and Labour Party. Participants rallied against the secrecy of the negotiating process and TPP's inclusion of the controversial Investor-State Dispute Settlement (ISDS) mechanism, among other issues.

Meanwhile in Japan, 50 activists staged an action outside of Prime Minster Shinzō Abe’s official residence in opposition to the TPP. More than 100 individuals representing farmers, labor groups, consumer organizations, medical advocates, lawyers, and university professors met with Japanese lawmakers to discuss concerns related to the TPP.

A number of flash mobs were organized around Australia. Opposition to the TPP was heard in Sydney, Canberra, Perth, Hobart, Adelaide, and Melbourne. A few days later, concerns about the TPP were represented during G-20 educational forums and protests which attracted thousands.

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    Australian protestors rally against the TPP in Perth, Hobart, and Sydney

While negotiators and corporate advisors are hiding their agenda in confidential documents, activists worldwide are spreading their concerns on the Internet, Twitter, Facebook, and e-mail blasts. While leaders and trade ministers are meeting behind closed doors in undisclosed locations, thousands of citizens are responding by gathering on the streets, in libraries, town halls, and their lawmakers’ offices.

The message of citizens across the globe is clear: we are not willing to accept a "trade" deal negotiated in secret in the interest of corporations and at the expense of our rights to safety, democracy, and health.  

November 18, 2014

A Letter to Fair Trade Activists: While They Play Poker, Let’s Play Chess

Is President Obama really going to sell us out on trade? Did Sen. McConnell have a full or half smile in the last press conference where he talked about Fast Track? Is Rep. Boehner really going to have a showdown with President Obama over immigration and how will that impact Fast Track? What about the news stories stating that TPP will be signed next month? Oh, and how do the XL pipeline and deal with China on carbon emissions factor in?

Comrades, don’t let the results of the elections, and the political posturing that’s happened since, drive you crazy, distract you, or cause you to lose hope. We have a path to victory! Democrats lost control of the Senate, but we did not lose control over our campaign to stop corporate-driven, job-offshoring, democracy-stifling “free trade” agreements by stopping President Obama from getting Fast Track trade authority. In fact, we have a chance to bury Fast Track once and for all.

Don’t mistake my resolve and optimism as a suggestion that our victory is inevitable. Nothing can be further from the truth. We’re going to have to dig deep and fight harder than we ever have. There’s a giant corporate lobby fighting for Fast Track because they want the Trans-Pacific Partnership (TPP) more than they’ve wanted any other trade deal. All their hopes and dreams for a global race to the bottom are wrapped up in the TPP. I live in Washington, D.C. and see the lobbying firsthand. Our opponents are out in full force. But over the past two years I’ve seen a bigger force. I’ve seen the power of us.

Truth be told, President Obama could have had Fast Track a long time ago. But we’ve been on the case day in and day out and we’ve stopped Fast Track thus far. This past Saturday, November 15, marked the one year anniversary of the game-changing letter to President Obama that Reps. Rosa DeLauro and George Miller released in which 151 Democratic members of the House of Representatives stated that, “…we will oppose ‘Fast Track’ Trade Promotion Authority or any other mechanism delegating Congress’ constitutional authority over trade policy that continues to exclude us from having a meaningful role in the formative stages of trade agreements and throughout negotiating and approval processes.” And just three days prior, on November 12 a block of Republican members of the House of Representatives sent their own letters voicing their opposition to Fast Track to President Obama. Can you believe that it’s already been a year?! Our work together has been extraordinary, truly. We’ve been steady and consistent and we surely can’t stop and won’t stop now.

While the President and some congressional leaders sit in backrooms on Capitol Hill playing poker with the lives of over 800 million people across the world, let’s play chess. The fight to stop Fast Track has always been and will continue to be won or lost in the U.S. House of Representatives. Learning about the history of Fast Track will give you insightful perspective. Above all, don’t let the opposition distract us from our strategic path to victory. The corporate lobby is hard at work spinning a narrative of the inevitability of Fast Track because Republicans gained control of the Senate. That’s simply not reflective of reality. They’re trying to psych us out. In fact, here’s what Lori Wallach thinks:

“…a close look at the interplay of the actual politics and policy on Fast Track and the TPP show that the GOP election sweep may, counterintuitively, actually not promote the corporate trade agenda.”

Our strategy must remain sharp and vision focused on stopping Fast Track in this current Lame Duck session of Congress and in 2015 by demanding that our representatives vote NO on Fast Track. House, House, House!

Over the past few years, I’ve had the pleasure and honor of working with activists from all over the country. I’ve been lucky to reconnect with folks who were a part of the historic Battle in Seattle and Free Trade Area of the Americas (FTAA) protests. Wow, we’ve been at this a long time! But back to my point, the World Trade Organization protests in Seattle in 1999 and the FTAA protests in Miami in 2003 remind us that we indeed do have the power to shut these “free trade” agreements down! But here’s the thing, we don’t need another Seattle to stop the TPP and Trans-Atlantic Free Trade Agreement (TAFTA). All we have to do is stop Fast Track. That’s our greatest contribution to the international campaign to stop the TPP and TAFTA. So, keep up the great work!

Gather your comrades, build your resources, stay focused on the House of Representatives and steel yourself for the fight of a lifetime. Stopping Fast Track and the Trans-Pacific Partnership is so much more than a victory for fair trade. Stopping Fast Track now is about putting business-as-usual to rest and building a space for us to shape the future and world we all want to live in. Almost every issue that we care about (good-paying jobs, food safety, access to affordable medicines, environmental protections, Internet freedom, democracy, workers’ rights and much more) will be significantly negatively impacted if Congress gives President Obama the authority to ram TPP through congress and down the throats of people across the world.

Ring the alarm, my friends! It’s time and this time is ours. Stay strong. Keep focused. Stop Fast Track!

In solidarity,

Alisa

P.S. Help spread the word! Share this great new video about the dangers of the TPP and tell everyone you know about www.ExposeTheTPP.org. It’s up to us!

November 05, 2014

What the 2014 Election Results Mean for Trade Policy

Fast Track’s Chances Diminished by GOP Senate Sweep; Obama Flexibility on Japan Agriculture Market Access in TPP Reduced; Bipartisan Campaigning Against Status Quo Trade Policy Heightens Public Awareness

The GOP takeover of the U.S. Senate probably reduces the chances that President Barack Obama gets Fast Track at all before his presidency is over or that a deal is completed on the Trans-Pacific Partnership (TPP). There has been a major corporate PR campaign to push the opposite narrative. However, a close look at the interplay of the actual politics and policy on Fast Track and the TPP show that the GOP election sweep may, counterintuitively, actually not promote the corporate trade agenda.

Fast Track: The issue is not who is Senate Majority leader. The fight over trade authority is always won or lost in the U.S. House of Representatives. Recall that second-term Democratic President Bill Clinton lost a bid for Fast Track in 1998 in the GOP-controlled House with 171 Democrats and 71 GOP members voting “no.” (Clinton had Fast Track for only two of his eight years. Indeed, in the past two decades, the only president to obtain Fast Track was President George W. Bush, and winning that five-year grant required a two-year effort at the start of Bush’s first term and a lot of political capital, after which Fast Track passed by one vote in a GOP-controlled House in 2002.)

The reason that the GOP controlling the Senate could make Fast Track’s passage less likely is related to who will now be writing a trade authority bill. The old Fast Track trade authority mechanism faces a significant bloc of GOP House opposition and virtually no House Democratic support. Outgoing Senate Finance Committee Chairman Ron Wyden (D-Ore.) had undertaken an inclusive process to get input to write his own version of trade authority, which he dubbed Smart Track. That process and its outcome could have broken the bipartisan House opposition to the old Fast Track system.

But neither incoming Finance Committee Chair Orrin Hatch (R-Utah) nor the likely GOP Ways and Means Committee leader supports major changes to the old Fast Track authority delegation process. Indeed, the Camp-Baucus-Hatch bill to establish trade authority was finally introduced in January 2014 only because GOP Finance and Ways and Means leaders opposed even modest changes to the actual authority delegation process from the 2002 bill. Changes to the actual terms delegating congressional authorities are also opposed by the business lobby. Nor do Hatch or the Ways and Means GOP leaders have the inclination or the relationships to widen the base of support for a bill.

But altering the way in which Congress’ authority is delegated, to provide Congress with a more fulsome role throughout the process and with more accountability over negotiators, is necessary to build bipartisan House support for a new delegation of trade authority. Updates to negotiating objectives or the level of transparency required cannot overcome the issues at the core of the House allergy to Fast Track.

A significant bloc of House GOP does not want to delegate more power to Obama, especially as the GOP has been attacking him as the “imperial president” who grabs legislative authority for his own. Tea party activists oppose Fast Track per se and anything that empowers Obama, which leaves GOP lawmakers who support Fast Track exposed to the dreaded tea party primary threat. To make political matter worse, House GOP lawmakers know that even if the GOP votes were available to pass Fast Track on a party line vote, almost no Democrats will vote to give their own president such authority, so any fallout from future trade pacts would be owned solely by the GOP.

As a policy matter, many GOP conservatives think the lump sum delegation of various authorities granted to Congress in the Constitution busts vital checks and balances. (It empowers a president to “diplomatically legislate” by negotiating binding non-trade terms to which U.S. law must be conformed; to sign and enter into a trade pact before Congress approves it; to write legislation not subject to committee mark-up and force a vote on it within 90 days of submission; and to pre-set the rules for floor consideration.)

That is why, when Senate Majority Leader Harry Reid (D-Nev.) indicated no floor time would be provided for Fast Track this year, the Camp-Baucus-Hatch Fast Track bill (introduced Jan. 9, 2014) was already dead on arrival in the House:

  • There were literally only a handful of House Democrats who supported the bill: eight out of 201 members. And three of those eight conditioned their “yes” votes on the bill also extending Trade Adjustment Assistance (TAA), which Hatch viscerally opposes.  
  • The House GOP leadership could not count more than 100 members as “yes” votes on the Camp-Baucus-Hatch bill. They had a bloc of members with solid “no” votes – some of whom signed letters against Fast Track in 2013 – and a large bloc who could not commit to vote “yes.” That is why the House GOP leadership never marked up the Camp-Baucus-Hatch bill or moved it toward a floor vote. And that is why House Speaker John Boehner (R-Ohio) said in May he needed to see 50 firm Democrat votes before he would move the bill.

Reid’s announcement in January certainly made it more certain that the Camp-Baucus-Hatch Fast Track bill would not be moving. But even without Reid’s opposition, Boehner could never find the 50 Democrats he needed to make up for the GOP members he could not count as “yes” votes on the Camp-Baucus-Hatch bill.

And, the House election results do not appear to fix Boehner’s math problem. To fully assess what the new House makeup means for Fast Track, the dust will have to settle on the results to see whether it is a wash, slightly harder for Fast Track to pass (e.g., if a number of Fast Track-opposing tea party GOP candidates replaced GOP members who were for Fast Track) or slightly easier (e.g., if a lot of “Wall Street” GOP candidates replaced no-on-Fast-Track Democrats.)

One more way in which GOP control of the Senate complicates the path for trade authority: Hatch also hates TAA while Wyden supported expanding it. Adding TAA to the old Fast Track process does not add new Democratic support, but not having TAA could result in literally no House Democratic support. For instance, the House’s leading Democratic Fast Track boosters, U.S. Reps. Ron Kind (D-Wis.) and Gregory Meeks (D-N.Y.) – among the eight House Democrats who supported the Camp-Baucus-Hatch Fast Track bill – said absent a TAA extension, they would not support it.

Thus, not having Wyden as Senate Finance Committee chairman actually decreases the chances that Obama will ever get a delegation of trade authority. But that would not be such a shocker anyway. Since Congress woke up to what Fast Track really means with the Fast-Tracked passage of the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) almost 20 years ago, Congress has allowed Fast Track to be in effect for only five of the 20 years.

TPP: The election results may also complicate Obama’s goal of signing a Trans-Pacific Partnership (TPP) deal. As the TPP misses yet another do-or-die deadline – this time a November date announced by Obama in June that was related to the imminent Asia-Pacific Economic Partnership (APEC) meeting – to get a deal, any deal, the administration might be ready to step back from its position regarding Japan and agriculture market access in the TPP. Except, the demand that the TPP include the zeroing of all agricultural tariff comes mainly from the Republicans, as does the call to throw Japan out of the TPP talks unless Japan concedes to this demand.

Both Parties Competed to Highlight Rejection of Unfair Trade in Competitive Races, Heightening Public Awareness and Further Complicating Obama’s Bid for Fast Track: Analysis of the most-watched races of the 2014 elections reveals bipartisan competition to align campaign positions with the American public’s opposition to current U.S. trade policies and the job offshoring they cause. A raft of ads spotlighting the damage caused by status quo trade policies has heightened constituents’ anger about damaging trade deals and the expectation that their newly elected representatives will reject the administration’s attempt to Fast Track more of the same deals.

Some of 2014’s most high-profile races featured both candidates competing to portray themselves as the greater opponent of unfair trade. Republican challengers sought to outdo the fair-trade voting records of Democratic incumbents by proclaiming their own rejection of existing Free Trade Agreements (FTAs), while the incumbents touted their votes against the FTAs and their opposition to Fast Track.

Incumbents who could not themselves claim a fair trade record still campaigned with the trade frame by attacking their opponents on offshoring, voicing opposition to tax policies that incentivize offshoring or citing instances of being “tough on China.” Even Senate Minority Leader Mitch McConnell (R-Ky.), with a 100 percent record of supporting unfair trade deals, was obliged to create and air an ad claiming he “fought against unfair foreign trade” after multiple ads attacked him for supporting damaging trade deals and costing American jobs.

Closely watched races in which both candidates vied to portray themselves as a stronger opponent of unfair trade included:

  • Minnesota’s 8th Congressional District – Nolan vs. Mills: In the closely fought race for Minnesota’s eighth district seat – one of the most competitive races in this election cycle – incumbent U.S. Rep. Rick Nolan (D-Minn.) turned around a likely GOP pick-up after vying with Republican Stewart Mills to declare greater opposition to status quo trade. This race spotlights the difficulty Obama’s quest for Fast Track authority will face in the next Congress, as conservative GOP members campaigned against the trade status quo and thus will be expected by their voters to stop more-of-the-same trade policies. In one ad, Mills tried to convert popular rejection of existing FTAs into rejection of incumbents, blaming “politicians like Rick” for “trade deals that reward outsourcers, while killing Minnesota jobs.” Nolan, who was not in office during the votes for any existing FTAs, touted his own opposition to unfair deals. Nolan’s campaign website stated that he “has fought against ‘fast-tracking’ the ongoing TPP trade negotiations, and will continue to stand up for fair trade.” Nolan was one of 151 House Democrats to sign a letter last year against Fast Tracking the TPP. Voters opted for Nolan, who trumped Mills.
  • U.S. Senate in Michigan – Peters vs. Land: In the competitive Michigan U.S. Senate race between U.S. Rep. Gary Peters (D-Mich.) and Terri Lynn Land (R), both candidates competed to make known their opposition to unpopular trade deals. Competing against Peters’ 100 percent record of opposition to FTAs, Land sought to flaunt her own anti-FTA position, stating in an ad, “My plan will save Michigan jobs by ending unfair foreign trade deals and developing new agreements that open up markets for Michigan exports.” Michigan has lost more than 250,000 manufacturing jobs (about one out of every three) since NAFTA was enacted. Peters’ campaign website touted his own fair trade record, stating, “He has stood up for Michigan manufacturers and opposed any new trade deal that does not require our foreign trading partners play by the same rules as American companies.” In the end, Peters beat Land handily although the race had long been deemed a tossup.
  • U.S. Senate in Kentucky – McConnell vs. Grimes: Trade loomed large in this headline-grabbing race between McConnell and his Democratic challenger Alison Lundergan Grimes. The Senate Majority PAC launched an ad that showed video footage of McConnell expressing support for NAFTA, and stated, “Mitch McConnell’s been tragically wrong about foreign trade deals. They’ve cost America over half a million jobs.” Another Senate Majority PAC ad criticized McConnell for “pushing foreign trade deals that send Kentucky jobs to new homes far away.” As his numbers plummeted in the early fall, McConnell’s campaign ultimately was forced to respond by adopting the same frame used against him, claiming in an ad that McConnell “fought against unfair foreign trade,” despite having cast 20 out of 20 votes in favor of unfair trade since 1991. McConnell beat Grimes after running against his own voting record. 

October 17, 2014

A Trade Storm Is Brewing

At the beginning of the year, we warned you about the upcoming trade tsunami. Well hold on to your hats everyone, because another “trade” storm is heading our way.

Trans-Pacific Partnership (TPP) negotiators are meeting in Australia this month and are aiming to finish the massive 12-country “trade” agreement.

Despite mounting evidence that the TPP should not be completed — including the leak of another part of the top-secret text earlier this week — President Barack Obama wants the TPP done by November 11. That is when he will be meeting with other TPP-country heads of state in China at the Asia-Pacific Economic Conference.

With the TPP’s threats to food safety, Internet freedom, affordable medicine prices, financial regulations, anti-fracking policies, and more, it’s hard to overstate the damage this deal would have on our everyday lives.

But the TPP isn’t the only threat we currently face. We are also up against the TPP’s equally ugly step-sisters: TAFTA and TISA. And Obama wants to revive the undemocratic, Nixon-era Fast Track trade authority that would railroad all three pacts through Congress.

The Trans-Atlantic Free Trade Agreement (TAFTA) is not yet as far along as the TPP, but TAFTA negotiations recently took place in Washington, D.C., and more are set for a few weeks from now in Brussels. The largest U.S. and EU corporations have been pushing for TAFTA since the 1990s. Their goal is to use the agreement to weaken the strongest food safety and GMO labeling rules, consumer privacy protections, hazardous chemicals restrictions and more on either side of the Atlantic. They call this “harmonizing” regulations across the Atlantic. But really it would mean imposing a lowest common denominator of consumer and environmental safeguards.

The Trade in Services Agreement (TISA) is a proposed deal among the United States and more than 20 other countries that would limit countries’ regulation of the service sector. At stake is a roll back of the improved financial regulations created after the global financial crisis; limits on energy, transportation other policies needed to combat the climate crisis; and privatization of public services — from water utilities and government healthcare programs to aspects of public education.

TPP, TAFTA and TISA represent the next generation of corporate-driven “trade” deals. Ramming these dangerous deals through Congress is also Obama’s impetus to push for Fast Track. Fast Track gives Congress’ constitutional authority over trade to the president, allowing him to sign a trade deal before Congress votes on it and then railroad the deal through Congress in 90 days with limited debate and no amendments. Obama opposed Fast Track as a candidate. But now he is seeking to revive this dangerous procedural gimmick.

Because of your great work, we’ve managed to fend off Fast Track so far. This time last year, the U.S. House of Representatives released a flurry of letters showing opposition to Fast Track from most Democrats, and a wide swath of Republicans. This is something the other side was not expecting, and they were shocked. We won that round, but Obama and the corporate lobby are getting ready for the final push.

Because Fast Track is so unpopular in the House, Speaker John Boehner has a devious plan to force the bill through Congress in the “lame duck” session after the November elections. We need to make sure our “ducks” are in a row before that.

Some members of Congress are working on a replacement for Fast Track. U.S. Sen. Ron Wyden (D-Ore.) says he will create what he calls “Smart Track.” It is not yet clear if this will be the real Fast Track replacement we so desperately need, or just another Fast Track in disguise.

Sen. Wyden will want to be ready to introduce his Smart Track bill right as the new Congress starts in January 2015. This means we have only a couple of months left to make sure his replacement guarantees Congress a steering wheel and an emergency brake for runaway “trade” deals.

With all these deadlines drawing near, it’s clear that a knock-down, drag-out fight is imminent. But we will be ready. The TPP missed deadlines for completion in 2011, 2012, and 2013 — if we keep up the pressure, we can add 2014 to that list as well. That’s why there will be a TPP/TAFTA/TISA international week of action Nov 8-14 — more details coming soon!

June 18, 2014

Nixon Hatched Fast Track, Not FDR

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

April 21, 2014

Administration Desperate to Announce Breakthrough on TPP in Japan, But Congress not Buying Economic or Foreign Policy Sales Pitch and Won’t Give Obama Fast Track

Public Citizen Publishes Updated List of TPP Issues That Require Resolution for a Deal to Be Made; List Largely Unchanged Since 2/14 Singapore TPP Ministerial

A major goal of President Barack Obama’s Asia trip is to revive the Trans-Pacific Partnership (TPP) after four years of negotiations have resulted in talks deadlocked over scores of issues and growing U.S. congressional and public opposition. 

Whether or not any real deal is made, a “breakthrough” almost certainly will be announced because the U.S-Japan summit is viewed as a do-or-die moment to inject momentum into the TPP process. Familiarity with kabuki theatre may be useful in interpreting the summit outcomes on TPP.

Obama arrives in Asia without trade authority and with TPP partners Japan and Malaysia aware that the U.S Congress, which has exclusive constitutional authority over trade policy, is increasingly skeptical about the TPP. January 2014 legislation to enact Fast Track authority was dead on arrival in the U.S. House of Representatives. Already in late 2013, 180 House members had announced they would never authorize the Fast Track process again; more announced opposition when the bill was submitted.

The prospect that Obama cannot deliver on whatever “compromises” he may make was heightened by a congressional sign-on letter circulating last week calling for Japan to be thrown out of TPP negotiations unless it agreed to eliminate its agricultural tariffs and major U.S. agribusiness interests calling for the same.

But at the same time, there is enormous pressure for Obama and Prime Minister Shinzo Abe to announce a breakthrough. Months of non-stop U.S-Japan bilateral TPP negotiations and ministerial-level meetings have failed to overcome sensitive agricultural and auto market access issues. Without knowing what market access gains they may achieve in return, other TPP nations have been loath to consider high-stakes tradeoffs relating to U.S. demands in TPP to extend medicine patents, limit financial regulations,  discipline state-owned enterprises, enforce labor and environmental standards, limit financial regulation.  

A checklist of these unresolved issues is included at the bottom of this memo. Despite the unprecedented secrecy surrounding the TPP negotiations, leaks of TPP documents are fueling opposition in many TPP countries as the pact’s prospective threats are revealed.  As a result, the other TPP nation governments face considerable domestic political liability for acceding to various U.S. TPP demands.

Finally, as the economic sales pitch for the TPP has faced increasing incredulity in Congress, TPP proponents have shifted to the foreign policy arguments-of-last-report used to sell flagging trade deals. The president’s Asia trip is the best possible platform to make arguments that distract from the TPP’s merits and shift the focus to broad brush narratives that connect to congressional and public anxieties about a rising China.

A report released last week by Public Citizen reveals that nearly identical foreign policy arguments have consistently proven baseless when used to sell trade deals over the past two decades. The report reviews foreign policy claims made to promote the TPP, ranging from the absurd to the counterfactual, to those that repeatedly have been disproved by the actual outcomes of similar claims made for past pacts. Repeatedly, Congress has approved trade deals based on dire predictions that failure to do so would mean diminished U.S. power,  the takeover of important markets by competitors or foreign instability, only to find that many of those predictions came true in spite of, and sometimes even because of, pacts’ enactment.

Among the report’s findings, echoed last week in a call with members of Congress and Asia policy expert Clyde Prestowitz:

  • Past free trade agreements (FTAs) failed to counter the rising economic influence of China (or Japan): From 2000 to 2011, U.S. FTAs with eight Latin American countries were sold as bulwarks against foreign economic influence in the hemisphere. The U.S. pacts were implemented and China’s exports to Latin America soared more than 1,280 percent, from $10.5 billion to more than $145 billion, while the U.S. saw only modest export growth. The U.S.-produced share of Latin America’s imported goods fell 36 percent, while China’s share increased 575 percent. Similarly, under the North American Free Trade Agreement’s (NAFTA) first 20 years, the U.S.-produced share of Mexico’s imported goods dropped from almost 70 percent to less than 50 percent, while China’s share rose more than 2,600 percent. Similarly, after hysterical claims that Japan would seize U.S. market share in Latin America by signing its own free trade agreements unless the United States approved NAFTA and other FTAs, such Japanese FTAs were signed anyway.
  • The TPP will not “contain” or isolate China: U.S. officials have repeatedly welcomed China as a prospective TPP member. How can the TPP isolate China if China can become a member? Administration officials note that China could join only if it agreed to the TPP’s rules, but those rules would give Chinese products duty-free access to the U.S. market and new foreign investor rights and privileges that would enhance China’s relative economic might within the United States. This may explain China’s statements of increased interest in joining the TPP. The TPP will not empower Pacific allies to act as a bulwark against Chinese influence, given that many of those nations see China as a partner. The report cites officials from TPP countries stating that if the TPP were to become a China-containment tool, they would no longer participate in TPP negotiations. 
  • The TPP is not a vehicle to impose “our” rules vs. China imposing “theirs”: The TPP’s actual terms undercut the false, but conveniently scary, dichotomy posed as a choice between using TPP to impose “our” rules internationally or living with rules set by China. This argument presumes the TPP to represent “our” rules, but in fact many of the TPP’s terms reflect the narrow special interests of the 600 official U.S. corporate trade advisors that have shaped them. TPP investment rules would promote more U.S. job offshoring and further gut the U.S. manufacturing base that is essential for our national security and domestic infrastructure. TPP procurement rules would ban Buy American policies that reinvest our tax dollars to create economic growth and jobs at home. TPP service sector rules would raise our energy prices and undermine our energy independence and financial stability. TPP drug and copyright terms would raise health care costs and thwart innovation. The study summarizes a recent U.S. Department of Defense report that concludes that U.S. deindustrialization poses a threat to national security and our nation’s economic wellbeing.

TPP deal vs. kabuki checklist - to actually have a TPP deal, these issues must be resolved:

Continue reading "Administration Desperate to Announce Breakthrough on TPP in Japan, But Congress not Buying Economic or Foreign Policy Sales Pitch and Won’t Give Obama Fast Track" »

April 02, 2014

Data Debunk for USTR Froman’s Thursday Committee Hearing

In recent weeks, U.S. Trade Representative Michael Froman has begun making outlandish claims about past U.S. trade agreements. These claims are not supported by the official  U.S. government trade data. The Office of the U.S. Trade Representative’s (USTR) recent assertions that the North American Free Trade Agreement (NAFTA) has led to a U.S. trade surplus with Mexico and Canada and that the U.S.-Korea Free Trade Agreement (FTA) has increased U.S. manufacturing exports to Korea have been met with incredulity. These pacts’ recent anniversaries have spotlighted how the trade pact model on which the Trans-Pacific Partnership (TPP) is premised has led to massive trade deficits.

The premise that NAFTA would improve our trade balance was the basis for NAFTA proponents’ promises that the pact would create U.S. jobs. Many of the same government and industry sources made the same claims to sell the 2011 U.S.-Korea FTA. These pacts’ dismal outcomes – slow or even negative export growth, rising imports and burgeoning trade deficits – are intensifying congressional opposition to Fast Track authority for the TPP.

Rather than altering the trade agreement model to avoid repeating these outcomes, USTR appears intent on trying to change the data. To generate the outlandish claims about NAFTA and the Korea FTA, USTR employs a smorgasbord of data tricks to look out for in Froman’s testimony Thursday before the House Ways and Means Committee:

USTR’s Biggest Distortion: Counting Foreign-Made “Transshipped” Products as U.S. Exports

USTR’s primary data distortion is the decision not to use the official U.S. government trade data provided by the U.S. International Trade Commission (USITC).[i] Instead, USTR cites data that include what are called “re-exports.” These are goods made abroad that are simply shipped through the United States en route to a final destination. (The USTR figures would include as U.S. exports goods taken off a truck from Canada in California’s Port of Long Beach then shipped to their final destination in Korea, or goods shipped from China, unloaded in a California port and trucked to Mexico.) Each month, USITC removes re-exports, which do not support U.S. production jobs, from the raw data gathered by the Census Bureau.[ii] But USTR uses the uncorrected data, inflating the actual U.S. export figures.

  • Using the official USITC data, U.S. export growth to countries with which we do not have FTAs has been 30 percent faster than to our FTA partners over the past decade.[iii]
  • The USITC data show U.S. average monthly goods exports to Korea are down 11 percent, imports from Korea have increased and the U.S. average monthly trade deficit with Korea has swelled 47 percent since the enactment of the Korea FTA.[iv] The total U.S. trade deficit with Korea under the FTA’s second year is projected to be $8.6 billion higher than in the year before the deal.[v]  Using the administration’s current export-to-job ratio, this drop in net exports represents the loss of more than 46,000 U.S. jobs.[vi] However since the FTA, foreign-made re-exports passing through the United States en route to Korea are up 13 percent on a monthly average basis.[vii] By counting these foreign goods as U.S. exports, USTR artificially diminishes the dramatic drop in actual U.S. exports to Korea, and errantly claims gains in some sectors.
  • Using the USITC data, the 2013 U.S. goods trade balance with NAFTA nations was a deficit of $177 billion. The combined U.S. goods and services deficit with Mexico and Canada rose (in real, inflation-adjusted terms) from $9.7 billion in 1993 to $139.3 billion in 2012 (the year of comparison used by USTR).[viii] This NAFTA deficit increase of $129.5 billion, or 1,330 percent, represents hundreds of thousands of lost U.S. jobs.[ix]  But adding re-exports has had an increasingly distortionary effect on the true NAFTA deficit, allowing NAFTA proponents to make the 2013 NAFTA goods deficit of $177 billion look less than half as large. By incorporating re-exports, USTR claims in recent press materials: “U.S. total goods and private services trade balance with Canada countries (sic) shifted from a deficit of $2.9 billion in 1993 to roughly balance in 2012 (surplus of $37 million).” But after removing re-exports and adjusting for inflation, the actual total U.S. goods and services trade deficit with Canada increased from $16.9 billion in 1993 to $49.1 billion in 2012. That’s a deficit increase of $32.2 billion, or 191 percent. Similarly, USTR claims: “U.S. total goods and private services trade balance with Mexico countries shifted from a surplus of $4.6 billion in 1993 to a deficit of $49.4 billion in 2012.” But after removing re-exports and adjusting for inflation, the actual total U.S. goods and services trade deficit with Mexico changed from a $7.2 billion surplus in 1993 to a $90.1 billion deficit in 2012. That’s a $97.3 billion decline in the U.S. goods and services trade balance with Mexico.

We Still Have Big Deficits Without Fossil Fuels (And Corn Doesn’t Explain Korea Export Crash)

Despite USTR’s claim that our NAFTA deficit is all about fuel imports, the share of the U.S. NAFTA goods trade deficit that is comprised of petroleum, petroleum products and natural gas has declined under NAFTA, from 77 percent in 1993 to 53 percent in 2013, as we have faced a surge of imported manufactured and agricultural goods.[x] Even if one removes all of these “oil” categories from the balance, the remaining 2013 NAFTA goods trade deficit was $82.9 billion. The combined NAFTA goods and services deficit in 2012 minus oil was $38.3 billion. 

Similarly, with respect to the Korea FTA, USTR claims“[O]ur trade balance has been affected by decreases in corn and fossil fuel exports, changes that are due to the U.S. drought in 2012 and change in Korea’s energy mix.”[xi] But even discounting both corn and fossil fuels, U.S. monthly exports to Korea still fell under the FTA, and the monthly trade deficit with Korea still ballooned.[xii] USTR claims that corn and fossil fuels explain the entirety of the export downfall largely by using an ill-suited 2011 versus 2013 timeframe that omits 10 months of available data and relies on a less relevant pre-FTA baseline. Usage of this less accurate timeframe produces a greater drop in corn and fossil fuel exports, and a smaller decline in exports of all other goods, than has actually occurred under the FTA when comparing the year immediately preceding the FTA with the full set of available post-FTA data. It is not surprising that the dismal FTA record remains without these products, given that of the 15 U.S. sectors that export the most to Korea, 11 of them have experienced export declines under the FTA.[xiii] No product-specific anomalies can explain away what has been a broad-based downfall of U.S. exports to Korea since the pact went into effect.

Not Adjusting for Inflation Counts Increased Prices as an Increase in U.S. Exports

USTR also inflates U.S. exports to Korea by failing to adjust for price inflation. For instance, in its recent Korea FTA news release, USTR claims: “In the two years that this landmark agreement has been in effect … exports of U.S. manufactured goods to Korea have increased … Made-in-America manufactured goods still grew their sales in Korea by 3 percent.”[xiv] Simply adjusting for inflation alone completely erases USTR’s claim of growth in exports of U.S. manufactured goods to Korea under the FTA. That is, even if one includes the distortion of re-exports and uses USTR’s timeframe, U.S. exports to Korea of manufactured goods fell slightly under the FTA after properly accounting for price increases.[xv] If one removes the re-exports (i.e., uses the official USITC data) and looks at the actual months that the FTA has been in effect, U.S. monthly exports to Korea of manufactured goods have fallen 5 percent on average relative to the year before the deal took effect. The United States has lost an average of more than $150 million each month in manufactured goods exports to Korea under the FTA. Manufacturing sectors that provide critical shares of U.S. exports to Korea, such as machinery and computers/electronics, have experienced steep export declines under the FTA (11 percent and 12 percent respectively). In contrast, of the four critical manufacturing sectors that have seen increases in average monthly exports to Korea under the FTA, none has experienced an increase of greater than 2 percent.[xvi]

Cherry-Picking Small-Dollar Winning Sectors, Omitting Major Losers to Distract from Net Losses

In its Korea FTA press release, USTR claims: “U.S. exports of a wide range of agricultural products have seen significant gains. … There were also dramatic increases in U.S. exports of key agricultural products that benefit from reduced tariffs under KORUS, including dairy, wine, beer, soybean oil, fruits and nuts, among many others.”[xvii] But the losses in U.S. meat exports to Korea under the pact alone nearly cancel out the combined export gains for all agricultural sectors that USTR touts as winners (a monthly average loss of $20.1 million in meat exports versus a combined $24.7 million monthly average gain in exports of dairy, wine, beer, soybean oil, fruits and nuts).[xviii]Average monthly exports of all U.S. agricultural products to Korea have fallen 41 percent under the FTA in comparison to the year before the deal. Ignoring this overall result, USTR singles out fruit as a winning agricultural sector under the FTA. But U.S. monthly average exports to Korea of all fruits have increased by just $312,120 under the FTA. This 1 percent increase could hardly be described as “dramatic.” USTR also highlights wine, but U.S. monthly average exports of wine to Korea have increased by just $370,378 under the FTA.[xix] The amount of wine sold in an average six minutes in the United States is worth more ($402,415) than the gain in U.S. wine exports to Korea in an average month under the Korea FTA.[xx]

Such paltry gains pale in comparison to the more than $20 million lost on average under each month of the FTA in U.S. exports to Korea of meat – one of the sectors that the administration promised would be among the biggest beneficiaries of the Korea deal.[xxi] Compared with the exports that would have been achieved at the pre-FTA average monthly level, U.S. meat producers have lost a combined $442 million in poultry, pork and beef exports to Korea in the first 22 months of the FTA.[xxii]Since the FTA, U.S. average monthly exports of poultry to Korea have fallen 39 percent below the pre-FTA monthly average. U.S. poultry exports to Korea have been lower than the pre-FTA monthly level in every single month since the FTA’s implementation. U.S. average monthly exports of pork to Korea since the FTA have fallen 34 percent below the pre-FTA monthly average, and U.S. average monthly exports of beef to Korea have fallen 6 percent below the pre-FTA monthly average.[xxiii]

Omissions and Data Tricks to Hide Massive Auto Sector Deficit Growth Under the Korea FTA

The USTR data on U.S. automotive trade with Korea under the FTA is based on a series of tricks. USTR claims: “Since the Korea agreement went into effect, U.S. exports to Korea are up for our manufactured goods, including autos … overall U.S. passenger vehicle exports to Korea increased 80 percent compared to 2011, and sales of ‘Detroit 3’ vehicles are up 40 percent.”[xxiv] In fact, exports to Korea of U.S.-produced Fords, Chryslers and General Motors vehicles increased by just 3,400 vehicles from 2011 to 2013.[xxv]  But given that pre-FTA exports of “Detroit 3” vehicles was also tiny – 8,252 vehicles – USTR can express the small increase of 3,400 cars as a “40 percent” gain. Meanwhile, 125,000 more Korean-produced Hyundais and Kias were imported and sold in the United States in 2013 (after the FTA) than in 2011 (before the FTA), when Hyundai and Kia imports already topped 1.1 million vehicles.[xxvi]

And USTR’s claim of an “80 percent” rise in passenger vehicle exports, in addition to being inflated by increases in re-exports and prices, omits the export of auto parts, which constitute the majority of the value of U.S. automotive exports to Korea. U.S. average monthly exports of auto parts to Korea have fallen 12 percent under the FTA, offsetting much of the rise in passenger vehicle exports.[xxvii] After including auto parts, excluding foreign-made re-exports, using the more FTA-relevant timeframe and adjusting for inflation, U.S. average monthly automotive exports to Korea have increased by only 12 percent under the FTA, while average monthly automotive imports from Korea have risen by 19 percent.

The disparity is even starker in dollar terms: While U.S. average monthly automotive exports to Korea under the FTA have been $12 million higher than the pre-FTA monthly average, average monthly automotive imports from Korea have soared by $263 million under the deal. The tiny gains in U.S. exports have been swamped by a surge in auto imports from Korea that the administration promised would not occur because of its additional FTA auto sector measure negotiated in 2011. In January 2014, monthly automotive imports from Korea topped $2 billion for the first time on record. The post-FTA flood of automotive imports has provoked a 19 percent increase in the average monthly U.S. auto trade deficit with Korea.[xxviii]

Using a Selective Time Frame to Measure the Outcomes of the Korea FTA

Rather than compare the post-Korea-FTA period to the 12 months prior to the FTA’s implementation (i.e., April 2011 through March 2012), USTR uses calendar year 2011 as a baseline. This means that USTR omits data from the three months immediately prior to the FTA’s 2012 implementation (January through March 2012) and replaces it with data from the same three months in 2011. This difference matters, since U.S. exports to Korea in the first three months of 2011 were 9 percent lower than in the first three months of 2012, giving USTR a lower baseline of comparison that makes the downfall in U.S. exports look less severe than if using the three most recent pre-FTA months.[xxix] In addition, USTR uses only calendar year 2013 to assess the FTA’s record, omitting 10 months of available post-FTA data (April through December 2012 and January 2014). While a comparison between 2011 and 2013 could serve as a second-best approximation in the absence of more precise data, the more FTA-relevant monthly data is readily available.

 


[i] USITC data can be found at U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb.” Available at: http://dataweb.usitc.gov/.

[ii] Census Bureau data can be found at U.S. Census Bureau, “U.S. International Trade Data,” U.S. Department of Commerce. Available at: http://www.census.gov/foreign-trade/data/.

[iii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed February 11, 2014. Available at: http://dataweb.usitc.gov/. The statistic is a comparison of the average annual growth rate of the combined inflation-adjusted exports of all non-FTA partner countries versus that of all FTA partner countries from 2004 through 2013 (adjustments have been made to account for the changes in these two categories as  non-FTA partners have become FTA partners). All data in this memo is inflation-adjusted according to the CPI-U-RS index of the U.S. Bureau of Labor Statistics (which provides indices up through 2012) and the online inflation calculator of the U.S. Bureau of Labor of Statistics (which provides an approximate index for 2013). U.S. Bureau of Labor Statistics, “Consumer Price Index Research Series Using Current Methods (CPI-U-RS),” U.S. Department of Labor, updated March 29, 2013. Available at: http://www.bls.gov/cpi/cpiursai1978_2012.pdf.  U.S. Bureau of Labor Statistics, “CPI Inflation Calculator,” U.S. Department of Labor, accessed March 10, 2014. Available at: http://www.bls.gov/data/inflation_calculator.htm.

[iv] In this paragraph and throughout, figures concerning average monthly trade levels with Korea compare data from the year before the FTA’s implementation and from the 22 post-implementation months for which data are available. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[v] The projection for export losses under the FTA’s first two years assumes that trends during the FTA’s first 22 months continue for the remaining two months for which data are not yet available. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[vi] Michael Froman, “2014 Trade Policy Agenda and 2013 Annual Report of the President of the United States on the Trade Agreements Program,” Office of the U.S. Trade Representative, March 2014, at 2. Available at: http://www.ustr.gov/sites/default/files/2014%20Trade%20Policy%20Agenda%20and%202013%20Annual%20Report.pdf.    

[vii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[viii] Goods trade data in this bullet point come from U.S. International Trade Commission, “Interactive Tariff and Trade Dataweb,” accessed February 20, 2014. Available at: http://dataweb.usitc.gov. Services trade data in this bullet point come from U.S. Bureau of Economic Analysis, “International Data: Table 12: U.S. International Transactions, by Area,” accessed February 20, 2014. Available at: http://www.bea.gov/iTable/iTable.cfm?ReqID=6&step=1#reqid=6&step=1&isuri=1.

[ix] See Robert Scott, “Heading South: U.S.-Mexico trade and job displacement after NAFTA,” Economic Policy Institute, May 3, 2011. Available at: http://www.epi.org/publication/heading_south_u-s-mexico_trade_and_job_displacement_after_nafta1/.

[x] Trade in petroleum, petroleum products and natural gas is defined as NAICS 2111 and 3241 for data since 1997 – when NAICS replaced the SIC classification system – and SIC 131, 291, 295, and 299 for data before 1997.

[xi] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xii] Corn is defined as NAICS 111150 and fossil fuels are defined as NAICS 211111, 211112, 212112 and 212113. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xiii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xiv] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xv] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xvi] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xvii] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xviii] “Meat” includes beef (defined as SITC 011), pork (defined as SITC 0122, 0161 and 0175) and poultry (defined as SITC 0123 and 0174). Dairy is defined as NAICS 2111511, 311512, 311513, 311514 and 311520. Wine is defined as NAICS 312130. Beer is defined as NAICS 312120. Soybean oil is defined as NAICS 311222 and 311224. Fruits are defined as NAICS 11310, 11320, 111331, 111332, 111333, 111334 and 111339. Nuts are defined as NAICS 111335 and 111992. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 21, 2014.  Available at: http://dataweb.usitc.gov/.

[xix] Fruits are defined as NAICS 11310, 11320, 111331, 111332, 111333, 111334 and 111339. Wine is defined as NAICS 312130. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xx] The statistic is based on an estimated $34.6 billion in wine sales in the United States in 2012, adjusted for inflation. The Wine Institute, “2012 California and U.S. Wine Sales,” 2013, accessed March 21, 2014. Available at: https://www.wineinstitute.org/resources/statistics/article697.

[xxi] “Meat” includes beef (defined as SITC 011), pork (defined as SITC 0122, 0161 and 0175) and poultry (defined as SITC 0123 and 0174). Dairy is defined as NAICS 2111511, 311512, 311513, 311514 and 311520. Wine is defined as NAICS 312130. Beer is defined as NAICS 312120. Soybean oil is defined as NAICS 311222 and 311224. Fruits are defined as NAICS 11310, 11320, 111331, 111332, 111333, 111334 and 111339. Nuts are defined as NAICS 111335 and 111992. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 21, 2014.  Available at: http://dataweb.usitc.gov/.

[xxii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxiii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxiv] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xxv] Korea Automobile Importers & Distributors Association, “New Registration,” 2014, accessed March 10, 2014. Available at: http://www.kaida.co.kr/en/statistics/NewRegistList.do.

[xxvi] Timothy Cain, “Hyundai-Kia Sales Figures,” GoodCarBadCar.net, 2014, accessed March 10, 2014. Available at: http://www.goodcarbadcar.net/2012/10/hyundai-kia-group-sales-figures.html.

[xxvii] Passenger vehicles are defined as code 300 and 301 in the one-digit End Use classification system, while auto parts are defined as 302. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxviii] Total automotive exports and imports are defined as code 3 in the one-digit End Use classification system. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxix] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

March 12, 2014

On 2nd Anniversary of Korea FTA, U.S. Exports Down, Imports Up and Trade Deficit Balloons, Fueling Congressional TPP Skepticism

Export Decline Hits U.S. Farmers and Auto Workers Particularly Hard, Dismal Outcomes of Pact Used as TPP Template Will Bolster Opposition to Obama Bid for Fast Track Authority

Two years after the implementation of the U.S.-Korea Free Trade Agreement (FTA), government data reveal that the Obama administration’s promises that the pact would expand U.S. exports and create U.S. jobs are exactly opposite of the actual outcomes: a downfall in U.S. exports to Korea, rising imports and a surge in the U.S. trade deficit with Korea. Using the administration’s export-to-job ratio, the estimated drop in net U.S. exports to Korea in the FTA’s first two years represents the loss of more than 46,600 U.S. jobs.

The damaging Korea FTA record, detailed in a new Public Citizen report, undermines the administration’s attempt to use the same failed export growth promises to sell an already skeptical Congress on Fast Track authority for the Trans-Pacific Partnership (TPP), a sweeping deal for which the Korea FTA was the template.

Contrary to the administration’s promise that the Korea FTA would mean “more exports, more jobs”:

  • U.S. goods exports to Korea have fallen below the pre-FTA average monthly level for 21 out of 22 months since the deal took effect.  See graph below.
  • The United States has lost an average of $385 million each month in exports to Korea, given an 11 percent decline in the average monthly export level in comparison to the year before the deal.
  • The United States lost an estimated, cumulative $9.2 billion in exports to Korea under the FTA’s first two years, compared with the exports that would have been achieved at the pre-FTA level.
  • Average monthly exports of U.S. agricultural products to Korea have fallen 41 percent.
  • The average monthly U.S. automotive trade deficit with Korea has grown 19 percent.

The U.S. exports downfall is particularly concerning given that Korea’s overall imports from all countries increased by 2 percent over the past two years (from 2011 to 2013).

PC Korea FTA Graph 1

The average monthly trade deficit with Korea has ballooned 47 percent in comparison to the year before the deal. As U.S. exports to Korea have declined under the FTA, average monthly imports from Korea have risen four percent. The total U.S. trade deficit with Korea under the FTA’s just-completed second year is projected to be $8.6 billion higher than in the year before the deal, assuming that trends during the FTA’s first 22 months continue for the remaining two months for which data is not yet available.

Meanwhile, U.S. services exports to Korea have slowed under the FTA. While U.S. services exports to Korea increased at an average quarterly rate of 3 percent in the year before the FTA took effect, the average quarterly growth rate has fallen to 2.3 percent since the deal’s enactment – a 24 percent drop.

“Most Americans won’t be surprised that another NAFTA-style deal is causing damage, but it’s stunning that the administration thinks the public and Congress won’t notice if it recycles the promises used to sell the Korea pact – now proven empty – to push a Trans-Pacific deal that is literally based on the Korea FTA text,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The new evidence of the Korea FTA’s damaging record is certain to make it even more difficult for the Obama administration to get Congress to delegate its constitutional trade authority via Fast Track for the TPP.”

The decline in U.S. exports under the Korea FTA contributed to an overall zero percent growth in U.S. exports in 2013, rendering virtually impossible Obama’s stated goal to double exports by the end of 2014. At the export growth rate seen over the past two years, the export-doubling goal would not be reached until 2054. While the Korea pact is the only U.S. FTA that has led to an actual decline in U.S exports, the overall growth of U.S. exports to nations that are not FTA partners has exceeded combined U.S. export growth to U.S. FTA partners by 30 percent over the past decade.

“The data simply do not support the Obama administration’s tired pitch that more FTAs will bring more exports,” said Wallach. “Faced with falling exports and rising, job-displacing deficits under existing FTAs, the administration needs to find a new model, not to repackage an old one that patently failed.”

The Korea FTA has produced very few winners; since the FTA took effect, U.S. average monthly exports to Korea have fallen in 11 of the 15 sectors that export the most to Korea, relative to the year before the FTA (see graph below). And while losing sectors have faced relatively steep export declines (e.g. a 12 percent drop in computer and electronics exports, a 30 percent drop in mineral and ore exports), none of the winning sectors has experienced an average monthly export increase of greater than two percent. Ironically, many sectors that the administration promised would be the biggest beneficiaries of the Korea FTA have been some of the deal’s largest losers.

PC Korea FTA Graph 2
AGRICULTURE: While the administration argued for passage of the FTA in 2011 by claiming, “The U.S.-Korea trade agreement creates new opportunities for U.S. farmers, ranchers and food processors seeking to export to Korea’s 49 million consumers,” average monthly exports of U.S. agricultural products to Korea have fallen 41 percent under the FTA.

  • U.S. average monthly poultry exports to Korea have fallen 39 percent.
  • U.S. average monthly pork exports to Korea have fallen 34 percent.
  • U.S. average monthly beef exports to Korea have fallen 6 percent.

Compared with the exports that would have been achieved at the pre-FTA average monthly level, U.S. meat producers have lost a combined $442 million in poultry, pork and beef exports to Korea in the first 22 months of the Korea deal – a loss of more than $20 million in meat exports every month.

AUTOS AND AUTO PARTS: The administration also promised the Korea FTA would bring “more job-creating export opportunities in a more open and fair Korean market for America’s auto companies and auto workers,” while a special safeguard would “ensure… that the American industry does not suffer from harmful surges in Korean auto imports due to this agreement.” The U.S. average monthly automotive exports to Korea under the FTA have been $12 million higher than the pre-FTA monthly average, but the average monthly automotive imports from Korea have soared by $263 million under the deal – a 19 percent increase. So while U.S. auto exports have risen very modestly under the FTA, those tiny gains have been swamped by a surge in auto imports from Korea that the administration promised would not occur under the FTA.

  • In January 2014, monthly auto imports from Korea topped $2 billion for the first time on record.
  • About 125,000 more Korean-produced Hyundais and Kias were imported and sold in the United States in 2013 (after the FTA) than in 2011 (before the FTA).
  • Sales of U.S.-produced Fords, Chryslers and Cadillacs in Korea increased by just 3,400 vehicles.

The post-FTA flood of automotive imports has provoked a 19 percent increase in the average monthly U.S. auto trade deficit with Korea. The Obama administration has sought to distract from this dismal result by touting the percentage increase in U.S. auto sales to Korea. This allows the sale of a small number of cars beyond the small pre-FTA base of sales to appear to be a significant gain when in fact it is not.

Read the new Public Citizen report on the Korea FTA record.

March 04, 2014

The 2014 Trade Agenda: What Hole? Keep Digging.

The President’s 2014 Trade Policy Agenda, released today by the Office of the U.S. Trade Representative (USTR), violates the first law of holes: when you are in one, stop digging. Instead, it sticks to the first rule of PR, when the data is against you (e.g. when export growth under last year's trade agenda amounted to zero percent), distract. 

In the face of large U.S. trade deficits with Free Trade Agreement (FTA) partners, the report declines to count imports and counts exports when convenient. It tries to camouflage the damaging track record of past deals (“forget about the hole”) to sell to the U.S. Congress and public yet another round of FTAs (“just keep digging”). 

The report states that the administration is “working with Congress” to gain Fast Track authority to enact two sweeping and controversial new FTAs – the Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA). It neglects to mention that, having seen the hole created by past Fast Tracked FTAs, members of Congress have stated in overwhelming, bipartisan fashion that they have no interest in handing the administration another shovel labeled “Fast Track.”

Much of the 2014 agenda is a copy and paste of the 2013 agenda, reiterating USTR’s stock set of talking points, such as the tired, counterfactual promise that a more-of-the-same trade policy will boost exports. In 2013, this is how USTR put it: “The Obama Administration’s trade policy helps U.S. exporters gain access to billions of customers beyond our borders to support economic growth in the United States and in markets worldwide.” This year they invert the sentence: “We seek to…strengthen our economy by…negotiating high standard agreements that help U.S. exporters gain access to billions of customers beyond our borders.”

But repetition does not make the argument any truer. Under the array of FTAs that have served as a template for the Obama administration’s trade policy agenda, U.S. exports grew by a grand total of 0% last year. The year before that, they grew by 2%.  At the abysmal export growth rate seen in the last two years, we will not reach Obama’s stated goal to double 2009’s exports until 2054, 40 years behind schedule. (The authors of this year’s Trade Policy Agenda opt not to highlight the ill-fated goal.)  

Also omitted is the inconvenient fact that the overall growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 30 percent over the last decade.  

Even more glaring is the report's lack of any mention of how exports to Korea have fared under the Korea FTA, which has its second anniversary in less than two weeks, despite detailing export performance to other countries. Under the Korea FTA, which served as the administration’s opening offer for the TPP negotiations, U.S. goods exports to Korea have fallen below the average monthly level seen before the FTA for 20 out of 21 months. Rather than deal with this reality, the report tries to hide it.

The data simply do not support the oft-parroted pitch that more-of-the-same FTAs are the ticket to boosting exports. 

But data is not the report’s strong suit. In defending existing deals like the North American Free Trade Agreement (NAFTA) and the Korea FTA so as to advocate for expanding on their model via the TPP and TAFTA, the report simply ignores the deals' track records. For example, on manufacturing, the report states: “to support the growth of advanced manufacturing and associated high-quality jobs here at home, in 2014 the Obama Administration will continue to pursue trade policies aimed at keeping American manufacturers competitive with their global peers.”

But official government data show that our manufacturing trade deficits have increased dramatically under the very trade policies that the administration vows to “continue to pursue.” Last year, we had a $52.4 billion manufacturing trade deficit with our 20 FTA partners. In 1993, before NAFTA was implemented and before 18 of these 20 countries had an FTA with the United States, we had a $30.1 billion manufacturing trade surplus with these same trade partners.  In the intervening 20 years, during which the United States implemented FTAs with all of these countries, the U.S. manufacturing trade balance with these trade partners fell by $82.6 billion. According to the administration’s own figures, that amounts to a loss of more than 446,000 U.S. jobs in manufacturing alone.

When directly addressing NAFTA, the report chooses to ignore one half of the trade flow equation and focus only on exports. It fails to mention that imports from Mexico and Canada under NAFTA have swamped exports, causing the NAFTA trade deficit to soar 556 percent, reaching $177 billion last year.

And while the report claims that “the agricultural sector has been a bright spot for exports,” that has not been the case under recent FTAs. The average annual U.S. agricultural deficit with Mexico and Canada in NAFTA’s first two decades reached $975 million last year, almost three times the pre-NAFTA level. Over the last decade, U.S. food exports to Mexico and Canada actually fell slightly while U.S. food imports from Mexico and Canada more than doubled.

Food exports have fared even worse under the Korea FTA – in the first year of the deal, U.S. beef, pork, and poultry exports to Korea fell by 8 percent, 24 percent, and 41 percent respectively. 

While ignoring the sluggish exports and deep deficits occurring under existing FTAs (“what hole?”), the 2014 Trade Policy Agenda advocates for the TPP by claiming it would deliver where its predecessors have failed. The report states, “TPP will expand U.S. trade with dynamic economies throughout the rapidly growing Asia-Pacific region.” 

Even if one ignores the disappointing export legacy of the deals serving as the TPP’s template, this sales pitch comes across as hollow. The United States already has FTAs with six of the 11 TPP negotiating countries, for which increased market access is largely not up for negotiation. Of the remaining five TPP countries, Japan is the only major economy, and its growth rate last year was a tepid one percent – hardly the sought-after “dynamism.” The remaining four countries include Vietnam (with an annual per capita income of $1,550), Malaysia (with an annual per capita income of $9,820), New Zealand (with a population the size of metro D.C.), and Brunei (with a population the size of Huntsville, Alabama). Are these the markets on which the administration’s history-defying promise of TPP-led export growth hinge? 

Members of Congress aren’t buying it. Most House Democrats and a sizeable bloc of House Republicans have said no to Fast Tracking the TPP. House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid have also voiced their opposition. So has 62% of the U.S. voting public. Their message to the administration is simple: we’re in a hole. Stop asking for shovels. Find a ladder. 

February 25, 2014

TPP Talks Fizzle Again under Broad Opposition

Another high-level Trans-Pacific Partnership (TPP) meeting has fizzled with no deal.  The talks have missed a succession of deadlines due to opposition from negotiating countries to corporate-backed U.S. demands that would increase the cost of medicines, restrict financial stability measures, and empower corporations to challenge health and environmental safeguards.  Back at home, the administration's attempt to Fast Track the TPP through Congress suffers from overwhelming congressional and public opposition.  

Facing international and domestic resistance, and having already missed deadlines to seal a deal last October and December, TPP trade ministers refrained from naming another deadline after finishing negotiations in Singapore today, stating only that they hope for a deal "as soon as possible."   

Below are statements from members of Congress, Public Citizen, and the Teamsters on the reasons behind the mounting opposition to the beleaguered attempt to Fast Track the TPP. 

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Statement of Reps. Louise Slaughter (D-NY), Rosa DeLauro (D-CT) and George Miller (D-CA) 

“To borrow terminology being used by the negotiators in Singapore, there is a “considerable gap” between what is being proposed in the TPP and what the American people and their elected representatives in Congress will allow. Members of Congress were elected to create and protect jobs – not send them overseas by fast-tracking another flawed trade agreement. Twenty years and a million lost jobs after NAFTA, members of Congress and their constituents are skeptical of another trade agreement negotiated in secret that threatens American manufacturing jobs. Recent polling shows that three out of five Americans oppose granting the administration fast-track authority to push through new trade deals.”                                                                         

.                                                             

 Statement of Rep. Charles Rangel (D-NY) 

Congressman Charles B. Rangel, Ranking Member of the Ways and Means Subcommittee on Trade, issued the following statement in response to the Camp, Baucus, Hatch Trade Promotion Authority (TPA) proposal:  "The Trade Promotion Authority Bill introduced by Senators Baucus and Hatch and Representative Camp falls far short of adequately replacing the failed 2002 TPA model.  In 2007, I worked to develop the "May 10 Agreement" which included the negotiating objectives of labor, environmental and access to medicine provisions. This was not included in the Baucus, Hatch, and Camp proposal.  I will not support their proposal.  As the Ranking Member on the Ways and Means Trade Subcommittee, I have expressed my concerns to the Administration and directly to the U. S. Trade Representative Ambassador Michael Froman regarding the outstanding issues, which include labor rights, environmental protections, access to medicines in developing Countries, currency manipulation, food safety measures, Japan's agriculture and automotive sector, and state owned enterprises, to name just a few.  Globalization has intensified dramatically; its impact on American businesses and workers has been profound and major new issues have proliferated.  We must develop legislation that addresses these issues, and the proposed TPA  clearly fails to do this."   

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

“The spotlight on the Japan-U.S. market access deadlock is obscuring the broader reality that deep divides remain on many TPP chapters while opposition to TPP and Fast Track authority is growing steadily in the U.S. Congress and public.

Other TPP countries remain opposed to outrageous U.S. demands on behalf of corporate interests to extend medicine patents and other terms that would raise medicine costs, ban the use of capital controls and other financial safeguards, limit Internet freedom and expand the scope of the investor-state extrajudicial tribunal system where domestic public interest laws can be attacked by foreign firms. If such terms were included, it would further increase U.S. public and congressional opposition to TPP.

U.S. proposals for enforceable labor and environmental standards and disciplines on state owned enterprise face continuing opposition from other TPP nations, but the absence of such terms would make U.S. congressional approval of the TPP improbable.

U.S. negotiators have not even raised the demand from 60 U.S. Senators and 230 Representatives that TPP must include enforceable disciplines against currency manipulation, yet a TPP without this will be dead on arrival in Congress whether or not there is Fast Track.”

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 Statement of James P. Hoffa, General President of the International Brotherhood of Teamsters

Latest TPP News Is Nothing to Celebrate for U.S. Workers 

Any Agreements Struck Won’t Help Save American Jobs, Reduce Trade Deficits

The following is a statement from Teamsters General President James P. Hoffa on the ministerial declaration made today in the wake of the latest Trans-Pacific Partnership (TPP) meetings concluding in Singapore:

“While negotiators want to tout minor progress made during these latest TPP negotiations, the fact is it’s really just Groundhog Day,” Hoffa said. “We’ve heard this story before, and none of it will help create more Americans jobs, stop currency manipulation or keep our food and environment safe. Workers would be no better off from the TPP today than they would’ve been yesterday.

“If negotiators are actually close to closing the deal on TPP, now would be a good time to release the full text of the agreement to the media and the public,” he continued. “It’s time to lay this deal on the table so all can see it.”

February 21, 2014

Administration Desperate to Announce Deal at TPP Ministerial, But What Is a Real Deal?

What Is a Real TPP Deal Versus Kabuki Aimed at Reviving Obama’s Fast Track Push and Framing His Asia Visit?  Public Citizen Publishes Checklist of Outstanding TPP Issues That Require Resolution for a Deal to Be Made

Familiarity with kabuki theatre may be useful in interpreting the outcomes of the  high-level Trans-Pacific Partnership (TPP) meeting that starts Feb. 22 in Singapore as U.S. officials push for an announcement of a “deal” with the hope of reviving the administration’s quest for Fast Track trade authority and setting the stage for President Barack Obama’s April 2014 Asia trip, Public Citizen said today.

“There is a sense that whether or not any real deal is finalized, there may be an announcement of one, if only to portray the talks as not unraveling despite growing opposition to the TPP in some of the countries involved,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “An announcement also could be a ploy to try to pressure Congress on trade authority and maximize President Obama’s leverage when he visits Japan.”

A bilateral U.S-Japan ministerial meeting last weekend failed to break a deadlock on sensitive agricultural and auto market access issues. Other TPP nations are loath to consider tradeoffs relating to U.S. demands on medicine patents, copyright, state-owned enterprises, financial regulation and other issues on which they face considerable domestic political liability without knowing what market access gains they may achieve in return. A TPP ministerial slated for January was postponed because of the market access deadlock.

“People who follow the TPP closely are baffled about why this meeting is happening,” said Wallach. “Either it is an attempt to improve the optics surrounding the beleaguered talks by announcing some deal, whether or not one is done, or they are afraid that already having postponed this ministers’ meeting once, canceling it would signal that the talks were unraveling.”

Deal vs. kabuki checklist: To actually have a TPP deal, these issues must be resolved:

  • Disciplines Against Currency Manipulation

A TPP without binding currency provisions could be dead on arrival in Congress. The other TPP nations know this but still oppose such terms. While 230 members of the U.S. House of Representatives and 60 U.S. senators have written to Obama demanding currency manipulation disciplines in the TPP, U.S. negotiators haven’t initiated negotiations on this, much less secured terms. Among others, U.S. Sen. Lindsey Graham (R-S.C.), a prominent supporter of past pacts, announced he would oppose the TPP if it does not include enforceable currency disciplines.

  • Enforceable Labor and Environmental Standards

As a January text leak revealed, all other TPP nations oppose many TPP Environment Chapter terms that the United States demands. This includes obligations that, if nations fail to enforce certain environmental agreements that they have signed, they will face TPP enforcement and trade sanctions. Other U.S. bottom lines that face unified opposition are a ban on trade in illegally harvested timber and endangered species, with violations subject to trade sanctions, and enforceable disciplines on fisheries subsidies. Among the TPP countries are those that have led unwavering opposition to disciplines on fishery subsidies, including in the context of the World Trade Organization. More broadly, the other countries have to date rejected the U.S. demand that both the environment and labor chapters be enforceable and subject to the same dispute resolution system as other TPP chapters. These are terms that Congress forced President George W. Bush to include in his pacts. If the Obama administration rolls back the labor and environmental terms included in Bush-signed agreements, it will lose almost all Democratic congressional support for the TPP. In addition, if the labor standards were enforceable, it remains unresolved how the TPP could include Vietnam, one of four countries cited by the Department of Labor for using both child and forced labor in apparel production.

Continue reading "Administration Desperate to Announce Deal at TPP Ministerial, But What Is a Real Deal?" »

February 19, 2014

Fact-checking Froman: The Top 10 Myths Used by Obama’s Top Trade Official

U.S. Trade Representative Michael Froman tried in a speech yesterday to defend the Obama administration’s beleaguered trade policy agenda: the controversial Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA) pacts and an unpopular push to Fast Track those sweeping deals through Congress.  The list of those publicly opposing the Fast Track push includes most House Democrats, a sizeable bloc of House Republicans, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid, and 62% of the U.S. voting public

In attempt to justify the administration’s polemical pacts, Froman resorted to some statements of dubious veracity, ranging from half-truths to outright mistruths.  To set the record straight, here are the top 10 Froman fables, followed by inconvenient facts that undercut his assertions and help explain the widespread opposition to TPP, TAFTA, and Fast Track.

1. Access to affordable medicines

  • Froman:  “[In TPP] we’re working to find better ways to foster affordable access to medicines…” 

2. Income inequality

  • Froman:  “Our trade policy is a major lever for encouraging investment here at home in manufacturing, agriculture and services, creating more high-paying jobs and combating wage stagnation and income inequality.”
  • Fact:  First, study after study has shown no correlation between a country’s willingness to sign on to TPP-style pacts and its ability to attract foreign investment, casting doubt on Froman’s promise of a job-creating investment influx.  But more importantly, Froman opted to ignore a big part of why U.S. workers are currently enduring such acute levels of “wage stagnation and income inequality.”  He did not mention the academic consensus that status quo U.S. trade policy, which the TPP would expand, has contributed significantly to the historic rise in U.S. income inequality.  The only debate has been the extent of trade’s inequality-exacerbating impact.  A recent study estimates that trade flows have been responsible for more than 90% of the rise in income inequality occurring since 1995, a period characterized by trade pacts that have incentivized the offshoring of decently-paid U.S. jobs and forced U.S. workers to compete with poorly-paid workers abroad.  How can the TPP, a proposed expansion of the trade policies that have exacerbated inequality, now be expected to ameliorate inequality? 

3. Internet freedom

  • Froman:  “I’ve heard some critics suggest that TPP is in some way related to SOPA [the Stop Online Piracy Act].  Don’t believe it.  It just isn’t true….”
  • Fact:  Froman’s attempt to assuage fears of a TPP-provided backdoor to SOPA-like limits on Internet freedom would be more convincing if a) he offered details beyond “it just isn’t true,” or b) if his statement didn’t directly contradict leaked TPP texts.  A November leak of the draft TPP intellectual property chapter revealed, for example, that the U.S. is proposing draconian copyright liability rules for Internet service providers that, like SOPA, threaten to curtail Internet users’ free speech.  Indeed, while nearly all other TPP countries have agreed to a proposed provision to limit Internet service providers’ liability, the United States is one of two countries to oppose such flexibility.

4. Corporate trade advisors

  • Froman:  “Our cleared advisors do include representatives from the private sector… [but] they [also] include representatives from every major labor union, public health groups…environmental groups…as well as development NGOs...” 
  • Froman:  “I’m pleased to announce that we are upgrading our advisory system to provide a new forum for experts on issues like public health, development and consumer safety.  A new Public Interest Trade Advisory Committee, or PTAC, will join the Labor Advisory Committee and the Trade and Environment Policy Advisory Committees to provide cross-cutting platforms for input in the negotiations.”
  • Fact:  Froman’s announcement of a new “public interest” committee – a response to the outcry over the vast imbalance of this corporate-dominated advisory system – offers too little, too late. Amid a slew of advisory committees exclusively devoted to narrow industry interests, the “public interest” now gets a single committee?  And how much influence will this committee have in changing the many core TPP provisions that threaten the public interest, now that the administration hopes to conclude TPP negotiations, which have been going on for four years, in the coming months?  Proposed as a TPP afterthought, this new committee comes across as window-dressing, not a genuine restructuring of a system that gives corporations insider access to an otherwise closed trade negotiation process.

5. Fast Track

  • Froman:  Fast Track is “the mechanism by which Congress has worked with every administration since 1974 to define its marching orders on what to negotiate…”  We can use Fast Track to “require[] future administrations to require labor, environmental and innovation and access to medicines [standards]…”
  • Fact:  Under Fast Track, Congress has not given the administration “marching orders” so much as marching suggestions.  Though Congress inserted non-binding “negotiating objectives” for U.S. pacts into past Fast Track bills – a model replicated in the unpopular current legislation to revive Fast Track for the TPP and TAFTA – Democratic and GOP presidents alike have historically ignored negotiating objectives included in Fast Track.  For example, Froman stated that Fast Track could be used to require particular labor standards.  But while the 1988 Fast Track used for the North American Free Trade Agreement (NAFTA) and the establishment of the World Trade Organization (WTO) included a negotiating objective on labor standards, neither pact included such terms.  The history shows that Fast-Tracked pacts that ignore Congress’ priorities can still be signed by the president (locking in the agreements’ contents) before being sent to Congress for an expedited, ex-post vote in which amendments are prohibited and debate is restricted. 

6. Currency manipulation

  • Froman:  In response to a question of whether currency manipulation is being addressed in the TPP: “We take the issue of exchange rates or currency manipulation very seriously as a matter of policy…”
  • Fact:  U.S. TPP negotiators have not even initiated negotiations on the inclusion of binding disciplines on currency manipulation, much less secured other countries’ commitment to those disciplines.  The U.S. inaction on currency in the TPP contrasts with letters signed by 230 Representatives (a majority) and 60 Senators (a supermajority) demanding the inclusion of currency manipulation disciplines in the TPP.  Unless U.S. negotiators take currency manipulation more “seriously,” the TPP may be dead on arrival in the U.S. Congress. 

7. Labor rights

  • Froman:  “In TPP we’re seeking to include disciplines requiring adherence to fundamental labor rights, including the right to organize and to collectively bargain, protections from child and forced labor and employment discrimination.” 
  • Fact:  The TPP includes Vietnam, a country that bans independent unions.  And Vietnam was recently red-listed by the Department of Labor as one of just four countries that use both child labor and forced labor in apparel production.  While Froman acknowledged such “serious challenges,” he did not explain how they would be resolved.  Is Vietnam going to change its fundamental labor laws so as to allow independent unions?  Is the government going to revamp its enforcement mechanisms so as to eliminate the country’s widespread child and forced labor?  Barring such sweeping changes, will the U.S. still sign on to a TPP that includes Vietnam?  

8. Environmental protection

  • Froman:  “We’re asking our trading partners to commit to effectively enforce environmental laws…”
  • Fact:  While Froman touted several provisions in the draft TPP environment chapter as requiring enforcement of domestic environmental laws, he didn’t mention the draft TPP investment chapter that would empower foreign corporations to directly challenge those laws before international tribunals if they felt the laws undermined their expected future profits.  Corporations have been increasingly using these extreme “investor-state” provisions under existing U.S. “free trade” agreements (FTAs) to attack domestic environmental policies, including a moratorium on fracking, renewable energy programs, and requirements to clean up oil pollution and industrial toxins.  Tribunals comprised of three private attorneys have already ordered taxpayers to pay hundreds of millions to foreign firms for such safeguards, arguing that they violate sweeping FTA-granted investor privileges.  Froman’s call for countries to enforce their environmental laws sounds hollow under a TPP that would simultaneously empower corporations to “sue” countries for said enforcement.

9. TPP secrecy

  • Froman:  “Let me make one thing absolutely clear: any member of Congress can see the negotiating text anytime they request it.”
  • Fact:  For three full years negotiations, members of Congress were not able to see the bracketed negotiating text of the TPP, a deal that would rewrite broad swaths of domestic U.S. policies.  Only after mounting outcry among members of Congress and the public about this astounding degree of secrecy did the administration begin sharing the negotiating text with members of Congress last June.  Even so, the administration still only provides TPP text access under restrictive terms for many members of Congress, such as requiring that technical staff not be present and forbidding the member of Congress from taking detailed notes or keeping a copy of the text.  Meanwhile, the U.S. public remains shut out, with the Obama administration refusing to make public any part of the TPP negotiating text.  Such secrecy falls short of the standard of transparency exhibited by the Bush administration, which published online the full negotiating text of the last similarly sweeping U.S. pact (the Free Trade Area of the Americas). 

10. Exports under FTAs

  • Froman:  “Under President Obama, U.S. exports have increased by 50%...”  “Today the post-crisis surge in exports we experienced over the last few years is beginning to recede.  And that’s why we’re working to open markets in the Asia-Pacific and in Europe...”
  • Fact:  U.S. exports grew by a grand total of 0% last year under the current “trade” pact model.   The year before that, they grew by 2%.  Most of the export growth Froman cites came early in Obama’s tenure as a predictable rebound from the global recession that followed the 2007-2008 financial crisis.  At the abysmal export growth rate seen since then, we will not reach Obama’s stated goal to double 2009’s exports until 2054, 40 years behind schedule.  Froman ironically uses this export growth drop-off to argue for more-of-the-same trade policy (e.g. the TPP and TAFTA).  The data simply does not support the oft-parroted pitch that we need TPP-style FTAs to boost exports.  Indeed, the overall growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 30 percent over the last decade.  That’s not a solid basis from which to argue, in the name of exports, for yet another FTA. 

February 18, 2014

New York Times: Obama's TPP-Promoting Mexico Visit Is "Politically Fraught"

A New York Times story today on Obama's trip to Mexico tomorrow underscores a point we made last week: Obama's visit with the leaders of Mexico and Canada shines a spotlight on NAFTA's 20-year legacy of damage, casting a long shadow on Obama's unpopular attempt to Fast Track through Congress the Trans-Pacific Partnership (TPP), a sweeping pact built on the NAFTA model.  The Times reports:

The whirlwind visit...will offer Mr. Obama a chance to reassure his counterparts about his capacity to deliver at a time when he faces significant hurdles at home. Senator Harry Reid of Nevada and Representative Nancy Pelosi of California, the Democratic leaders in Congress, oppose legislation giving him authority similar to that of his predecessors to negotiate trade deals.

That ill-favored legislation is an attempt to revive Fast Track, the Nixon-era maneuver that empowered the executive branch to unilaterally negotiate and sign sweeping "trade" deals, locking in the contents before Congress got an expedited, no-amendments, limited-debate vote.  In addition to Pelosi and Reid, most House Democrats, a bloc of House Republicans, and about two out of three U.S. voters oppose the administration's current push to renew Fast Track so as to skid the controversial TPP through Congress. 

Among the reasons for the broad opposition to a Fast-Tracked TPP is the 20-year legacy of NAFTA.  For many people throughout North America, NAFTA's damage has been tangible: job losses, wage stagnation, displaced livelihoods, unsafe food, and exposure to toxins.  The Times cited our comprehensive report, released last week, that details the empirical record of NAFTA's damaging first twenty years: 

But even two decades after Nafta, debate still rages about its merits or drawbacks. Ms. Wallach’s group released a report last week compiling government data to argue that not only did Nafta’s promised benefits not materialize, but that many of the results were the opposite of what was promised, citing lost jobs, slower manufacturing and large trade deficits.

It is the lived experience of NAFTA, not an abstract ideology, that has prompted 53 percent of the U.S. public to say that we should “do whatever is necessary” to “renegotiate” or “leave” NAFTA.  Seeing such opposition, Obama promised to renegotiate NAFTA as a presidential candidate in 2008.  His current push to Fast Track the TPP represents a stunning flip-flop that threatens to replicate the very NAFTA-style damage that Obama criticized on the campaign trail.  Incredibly, Obama administration officials are now trying to sell the TPP as honoring Obama's renegotiation promise -- an Orwellian move that our own Lori Wallach has been quick to counter.  The Times reports: 

Michael B. Froman, the president’s trade representative, tried to reassure Democrats on Tuesday that the administration would be sensitive to their concerns about workplace and environmental standards in putting together the new trade pact, the Trans-Pacific Partnership, or TPP. He noted that as a candidate, Mr. Obama promised to renegotiate the North American Free Trade Agreement, known as Nafta.

“And that’s exactly what we’re doing in TPP, upgrading our trading relationships not only with Mexico and Canada but with nine other countries as well,” Mr. Froman said in a speech at the Center for American Progress, a liberal research group in Washington.

That assertion drew scorn from critics. “I don’t think that expanding on the Nafta model and extending it to nine more nations was what the unions, environmental groups or Democratic Party activists had in mind when Obama said he would renegotiate Nafta,” said Lori Wallach, a trade expert at Public Citizen, a liberal advocacy group.

The administration's TPP sales pitch is unlikely to convince the broad majority of the U.S. public that wants to renegotiate NAFTA and halt a NAFTA-expanding TPP.  If NAFTA's two-decade legacy of tumult and hardship makes it politically impossible to Fast Track through Congress the TPP, it would constitute a unique benefit of an otherwise damaging deal.

February 13, 2014

Obama Mexico Visit Spotlights 20-Year Legacy of Job Loss from NAFTA, the Pact on Which Obama’s TPP Is Modeled

New Public Citizen Report Catalogs the Negative NAFTA Outcomes That Are Fueling Opposition to Obama Push to Fast Track TPP

The 20-year record of job loss and trade deficits from the North American Free Trade Agreement (NAFTA) is haunting President Barack Obama’s efforts to obtain special trade authority to fast track the Trans-Pacific Partnership (TPP), said Public Citizen as it released a new report that comprehensively documents NAFTA’s outcomes. Next week’s presidential trip to Mexico for a long-scheduled “Three Amigos” U.S.-Mexico-Canada summit will raise public attention to NAFTA, on which the TPP is modeled, which is not good news for Obama’s push for the TPP and Fast Track.

Numerous polls show that opposition to NAFTA is among few issues that unite Americans across partisan and regional divides. Public ire about NAFTA’s legacy of job loss and policymakers’ concerns about two decades of huge NAFTA trade deficits have plagued the administration’s efforts to obtain Fast Track trade authority for the TPP. The TPP would expand the NAFTA model to more nations, including ultra-low-wage Vietnam. In the U.S. House of Representatives, most Democrats and a bloc of GOP have indicated opposition to Fast Track, as has Senate Majority Leader Harry Reid (D-Nev.).

Public Citizen’s new report, "NAFTA’s 20-Year Legacy and the Fate of the Trans-Pacific Partnership", compiles government data on NAFTA outcomes to detail the empirical record underlying the public and policymaker sentiment. It also shows that warnings issued by NAFTA boosters that a failure to pass NAFTA would result in foreign policy crises – rising Mexican migration and a neighboring nation devolving into a troubled narco-state – actually came to fruition in part because of NAFTA provisions that destroyed millions of rural Mexican livelihoods.

“Outside of corporate boardrooms and D.C. think tanks, Americans view NAFTA as a symbol of job loss and a cancer on the middle class,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “If you are a president battling to overcome bipartisan congressional skepticism about giving you special trade authority to fast track a massive 12-nation NAFTA expansion, it is really not helpful to be visiting Mexico for a summit of NAFTA-nation leaders.”

The Public Citizen report shows that not only did projections and promises made by NAFTA proponents not materialize, but many results are exactly the opposite. Such outcomes include a staggering $177 billion U.S. trade deficit with NAFTA partners Mexico and Canada, one million net U.S. jobs lost in NAFTA’s first decade alone, slower U.S. manufacturing and services export growth to Mexico and Canada, a doubling of immigration from Mexico, larger agricultural trade deficits with Mexico and Canada, and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.

“The data have disproved the promises of more jobs and better wages, so bizarrely now NAFTA defenders argue the pact was a success because it expanded the volume of U.S. trade with the two countries without mentioning that this resulted in a 556 percent increase in our trade deficit with those countries, with a flood of new NAFTA imports wiping out hundreds of thousands of American jobs,” said Wallach.

The study tracks specific promises made by U.S. corporations like Chrysler, GE and Caterpillar to create specific numbers of American jobs if NAFTA was approved, and reveals government data showing that instead, they fired U.S. workers and moved operations to Mexico.

“The White House and the corporate lobby sold NAFTA with promises of export growth and job creation, but the actual data show the projections were at best wrong,” said Wallach. “The gulf between the gains promised for NAFTA and the damage that ensued means that the public and policymakers are not buying the same sales pitch now being made for theTPP and Fast Track.”

The report also documents how post-NAFTA trade and investment trends have contributed to middle-class pay cuts, which in turn contributed to growing income inequality; how since NAFTA, U.S. trade deficit growth with Mexico and Canada has been 50 percent higher than with countries not party to a U.S. Free Trade Agreement, and how U.S. manufacturing and services exports to Canada and Mexico have grown at less than half the pre-NAFTA rate.

Among the study’s findings:

  • Rather than creating in any year the 200,000 net jobs per year promised by former President Bill Clinton on the basis of Peterson Institute for International Economics projections, job loss from NAFTA began rapidly:
    • American manufacturing jobs were lost as U.S. firms used NAFTA’s foreign investor privileges to relocate production to Mexico, and as a new flood of NAFTA imports swamped gains in exports, creating a massive new trade deficit that equated to an estimated net loss of one million U.S. jobs by 2004. A small pre-NAFTA U.S. trade surplus of $2.5 billion with Mexico turned into a huge new deficit, and a pre-NAFTA $29.6 billion deficit with Canada exploded. The 2013 NAFTA deficit was $177 billion, representing a more than six-fold increase in the NAFTA deficit.
    • More than 845,000 specific U.S. workers, most in the manufacturing sector, have been certified for Trade Adjustment Assistance (TAA) since NAFTA because they lost their jobs due to offshoring to, or imports from, Canada and Mexico.The TAA program is narrow, covering only a subset of jobs lost at manufacturing facilities, and is difficult to qualify for. Thus, the TAA numbers significantly undercount NAFTA job loss. A TAA database searchable by congressional district, sector and more is available here.
    • According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them taking a pay cut of greater than 20 percent.  
    • As increasing numbers of workers displaced from manufacturing jobs have joined those competing for non-offshorable, low-skill jobs in sectors such as hospitality and food service, real wages have also fallen in these sectors under NAFTA. The resulting downward pressure on middle-class wages has fueled recent growth in income inequality.
  • Scores of environmental and health laws have been challenged in foreign tribunals through NAFTA’s controversial investor-state dispute resolution system. More than $360 million in compensation to investors has been extracted from NAFTA governments via “investor-state” tribunal challenges against toxics bans, land-use rules, water and forestry policies, and more. More than $12.4 billion is pending in such NAFTA claims, including challenges of medicine patent policies, a fracking moratorium and a renewable energy program.
  • The average annual U.S. agricultural trade deficit with Mexico and Canada in NAFTA’s first two decades reached $975 million, almost three times the pre-NAFTA level. U.S. beef imports from Mexico and Canada, for example, have risen 133 percent. Over the past decade,  total U.S. food exports to Mexico and Canada have actually fallen slightly while U.S. food imports from Mexico and Canada have more than doubled. This stands in stark contrast to projections that NAFTA would allow U.S. farmers to export their way to newfound wealth and farm income stability. Despite a 239 percent rise in food imports from Canada and Mexico under NAFTA, the average nominal U.S. price of food in the United States has jumped 67 percent since NAFTA.
  • The reductions in consumer goods prices that have materialized have not been sufficient to offset the losses to wages under NAFTA; U.S. workers without college degrees (63 percent of the workforce) likely have lost a net amount equal to 12.2 percent of their wages even after accounting for gains from cheaper goods.This net loss means a loss of more than $3,300 per year for a worker earning the median annual wage of $27,500.
  • The export of subsidized U.S. corn did increase under NAFTA’s first decade, destroying the livelihoods of more than one million Mexican campesino farmers and about 1.4 million additional Mexican workers whose livelihoods depended on agriculture. The desperate migration of those displaced from Mexico’s rural economy pushed down wages in Mexico’s border maquiladora factory zone and contributed to a doubling of Mexican immigration to the United States following NAFTA’s implementation.
  • Facing displacement, rising prices and stagnant wages, more than half the Mexican population, and more than 60 percent of the rural population, still falls below the poverty line, despite the promises that NAFTA would bring broad prosperity to Mexicans. Real wages in Mexico have fallen significantly below pre-NAFTA levels as price increases for basic consumer goods have exceeded wage increases. A minimum wage earner in Mexico today can buy 38 percent fewer consumer goods than on the day that NAFTA took effect. Despite promises that NAFTA would benefit Mexican consumers by granting access to cheaper imported products, the cost of basic consumer goods in Mexico has risen to seven times the pre-NAFTA level, while the minimum wage stands at only four times the pre-NAFTA level. Though the price paid to Mexican farmers for corn plummeted after NAFTA, the deregulated retail price of tortillas – Mexico’s staple food – shot up 279 percent in the pact’s first 10 years.

“Given NAFTA’s damaging outcomes, few of the corporations or think tanks that sold it as a boon for all of us in the 1990s like to talk about it, but the reality is that their promises failed, the opposite occurred and millions of people were severely harmed and now this legacy is derailing President Obama’s misguided push to expand NAFTA through the TPP,” said Wallach.

February 10, 2014

2013 Trade Data: USITC Corrections of Last Week’s Census Data Show Why Obama’s TPP, Fast Track Quest Is in Trouble

This weekend’s U.S. International Trade Commission (USITC) release of corrected 2013 year-end trade data goes a long way in explaining broad congressional and public opposition to the Obama administration’s trade agenda, which is premised on expanding to additional nations a model of trade pacts that the data show are failing most Americans. The data (graphs below) show:

A stunning decline in U.S. exports to Korea, a rise in imports from Korea, and a widening of the U.S. trade deficit under the Korea Free Trade Agreement (FTA).

  • In 20 out of 21 months since the Korea FTA took effect, U.S. goods exports to Korea have fallen below the average monthly level in the year before the deal.
  • U.S. average monthly exports to Korea since the FTA are 12 percent lower than the pre-FTA monthly average, while monthly imports from Korea are up 3 percent.
  • The monthly trade deficit with Korea has ballooned 49 percent compared to the pre-FTA level. These losses amount to tens of thousands of lost U.S. jobs.

Zero growth in U.S. goods exports relative to 2012, placing the United States decades behind in Obama’s stated goal to double exports in five years.

  • Total U.S. goods exports in 2013 actually dropped slightly from 2012 after adjusting for inflation, revealing a negative 0.1 percent growth rate.
  • The data show there is no chance to meet President Obama’s stated goal to double 2009’s exports by the end of this year. At the paltry 1 percent annual export growth rate seen over the past two years, the export-doubling goal would not be reached until 2054, 40 years behind schedule.

A staggering U.S. trade deficit with Canada and Mexico after 20 years of the North American Free Trade Agreement (NAFTA).

  • The 2013 U.S. goods trade deficit with Mexico and Canada was $177 billion - a nearly seven-fold increase above the pre-NAFTA level, when the United States enjoyed a small trade surplus with Mexico and a modest deficit with Canada.
  • Even worse for U.S. workers, the non-oil NAFTA deficit has multiplied more than 13-fold, costing hundreds of thousands of U.S. jobs. Indeed, the share of the combined U.S. trade deficit with Mexico and Canada that is comprised of oil has declined since NAFTA.

Today’s USITC data correct last week’s Census Bureau trade data to remove re-exports – goods made elsewhere that pass through U.S. ports en route to final destinations. The corrected data only heaps further doubt on Obama’s prospects for getting Fast Track trade authority, now publicly opposed by most House Democrats, a sizeable bloc of House Republicans, and Senate Majority Leader Harry Reid. Obama has asked for Fast Track to push through Congress the Trans-Pacific Partnership (TPP), a controversial deal modeled on the Korea FTA and NAFTA.

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

“Many in Congress and the public oppose NAFTA-on-steroids “trade” agreements like the TPP and Fast Track authority to expedite them because past trade deals have proved to be so damaging. Just like today for TPP, in the past we were sold on glorious projections of these deals’ benefits but the actual data show an ever-larger drop in U.S. exports to Korea since that pact and a growing trade deficit, a massive NAFTA trade deficit and overall zero growth for U.S. goods exports relative to last year despite implementation of more-of-the-same trade deals. The White House and the corporate lobby are trying to sell Congress the TPP and Fast Track with the same old promises about export growth and job creation, but today’s data show that under Obama’s only past major trade deal with Korea on which TPP is modeled, U.S. exports dropped dramatically, imports soared and the U.S. lost more jobs to a trade agreement.”

Korea 2013.

Obama Exports 2013.

NAFTA 2013

January 30, 2014

Obama’s Free-Trade Conundrum

On Wednesday the New York Times published an op-ed by David Bonior, the House Democratic whip during the 1993 vote on NAFTA, on President Obama's stated support for Fast Tracking the NAFTA-style Trans-Pacific Partnership (TPP) through Congress.  Here are a few pertinent excerpts:

...Mr. Obama’s desire for fast-track authority on the T.P.P. and other agreements clashes with another priority in his [State of the Union] speech: reducing income inequality.

This month is the 20th anniversary of the North American Free Trade Agreement, which significantly eliminated tariffs and other trade barriers across the continent and has been used as a model for the T.P.P. Anyone looking for evidence on what this new agreement will do to income inequality in America needs to consider Nafta’s 20-year record.

While many analysts focus on the number of jobs lost from Nafta and similar pacts — and some estimates say upward of a million — the most significant effect has been a fundamental change in the composition of jobs available to the 63 percent of American workers without a college degree.

...

The Labor Department’s Trade Adjustment Assistance program...reads like a funeral program for the middle class. More than 845,000 workers have been certified under this one narrow and hard-to-qualify-for program as having lost their jobs because of offshoring of factories to, and growing imports from, Mexico and Canada since Nafta.

The result is downward pressure on middle-class wages as manufacturing workers are forced to compete with imports made by poorly paid workers abroad. According to the Bureau of Labor Statistics, nearly two out of every three displaced manufacturing workers who were rehired in 2012 saw wage reductions, most losing more than 20 percent.

The shift in employment from high-paying manufacturing jobs to low-paying service jobs has contributed to overall wage stagnation. The average American wage has grown less than 1 percent annually in real terms since Nafta, even as productivity grew three times faster.

But the decline in the wages of workers who lost a job to Nafta is only part of the story. They joined the glut of workers competing for low-skill jobs that cannot be done offshore in industries like hospitality and food service, forcing down real wages in these sectors as well.

And, for America’s remaining manufacturing workers, Nafta put downward pressure on wages by enabling employers to threaten to move jobs offshore during wage bargaining. A 1997 Cornell University study ordered by the Nafta Commission for Labor Cooperation found that as many as 62 percent of union drives faced employer threats to relocate abroad, and the factory shutdown rate following successful union certifications tripled after Nafta.

...

The Nafta data poses a significant challenge for President Obama. As he said on Tuesday, he wants to battle the plague of income inequality and he wants to expand the Nafta model with T.P.P. But he cannot have it both ways.

January 28, 2014

Obama Downplays Trade Authority, Trans-Pacific Partnership: Fleeting Mention Doesn’t Even Reference Recently Introduced Camp-Baucus Fast Track Bill

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

“Corporate interests were fiercely lobbying for President Obama to dedicate serious time in this State of the Union speech to pushing Fast Track and the Trans-Pacific Partnership in order to try to overcome broad congressional and public opposition to both, but instead he made only a passing reference that largely repeated his past statements.

With almost no House Democratic support for Fast Track, a bloc of GOP “no” votes and public opposition making congressional phones ring off the hook, high-profile treatment of the issue was considered necessary to revive any prospect that Fast Track could be passed in this Congress.

“Opposition has been growing to the massive Trans-Pacific Partnership deal. Implementing this  NAFTA-on-steroids deal would undermine Obama’s efforts to battle income inequality. It would be like drilling a hole in a boat just as you are trying to seal the cracks that are letting the water in.”

Background: President Obama’s references to trade in tonight’s speech were similar to his 2013 SOTU trade mentions: “To boost American exports, support American jobs and level the playing field in the growing markets of Asia, we intend to complete negotiations on a Trans-Pacific Partnership.  And tonight, I’m announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union – because trade that is fair and free across the Atlantic supports millions of good-paying American jobs.” Tonight’s speech also replayed   the administration’s standard statement on Fast Track, for instance in the  2013 Annual Trade Policy Agenda: “To facilitate the conclusion, approval, and implementation of market-opening negotiating efforts, we will also work with Congress on Trade Promotion Authority. Such authority will guide current and future negotiations, and will thus support a jobs-focused trade agenda moving forward.”

letter released Monday by more than 550 Democratic base organizations and a news conference today by Tea Party leaders against Fast Track reiterates the breadth of grassroots opposition. The letter included organizations such as MoveOn, SEIU, AFSCME and the American Federation of Teachers, that have not been involved in past “trade” fights and who are strong Obama supporters.

Past trade pacts’ role in fueling the growth of U.S. income inequality is animating new entrants into the Fast Track debate. Over the weekend, former Clinton Labor Secretary Robert Reich called for opposition to Fast Track and the TPP.  The failure of Obama’s past SOTU trade promises is feeding skepticism. In his 2011 SOTU, Obama promised the pact would expand U.S. exports to Korea.  In the pact’s first year, exports dropped 10 percent, imports soared and the U.S. trade deficit with Korea grew 37 percent, equating to a net loss of approximately 40,000 more U.S. jobs.

Democratic and GOP presidents have struggled to persuade Congress to provide Fast Track authority, which Congress has authorized for only five years (2002-07) of the past 20. In late 2013, 151 House Democrats signed a letter opposing Fast Track. Two weeks ago, when U.S. Rep. Dave Camp (R-Mich.) and U.S. Sens. Max Baucus (D-Mont.) and Orrin Hatch (R-Utah) introduced legislation to establish Fast Track, 17 Senate Democrats sentletters opposing the bill, which did not  have a single House Democratic sponsor. Two groups of GOP representatives have also sent letters opposing Fast Track.

Studies Reveal Consensus: Trade Flows during “Free Trade” Era Have Exacerbated U.S. Income Inequality

Recent Studies: Trade’s Contribution to Inequality Has Increased since the 1990s and Is Likely to Increase Further

Tonight President Obama is expected to address two linked subjects in his State of the Union address: the historic rise in U.S. income inequality and a trade policy agenda that threatens to exacerbate inequality. As we've repeatedly pointed out, Obama cannot have it both ways: he cannot propose to close the yawning income gap while pushing to Fast Track through Congress a controversial Trans-Pacific Partnership (TPP) "free trade" deal that would widen the gap. The TPP would expand the status quo "free trade" model that study after study has found to be an increasingly significant contributor to U.S. income inequality.

As unfair trade deals have been Fast Tracked into law, U.S. income inequality has jumped to levels not seen since the robber baron era. Today, the richest 10 percent of the U.S. is taking over half of the economic pie, while the top 1 percent is taking more than one fifth. Wealthy individuals’ share of national income was stable for the first several decades after World War II. But that share has shot up 51 percent for the richest 10 percent and 146 percent for the richest 1 percent since the passage of Fast Track in 1974, a time period characterized by a series of unfair trade deals. The income share of the richest 10 percent escalated particularly abruptly after the 1994 enactment of the North American Free Trade Agreement (NAFTA), as indicated in the graph below.

Trade and Income Inequality
Since 1941 standard economic theory has held that trade liberalization will contribute to greater income inequality in developed countries like the United States. In the early 1990s, as U.S. income inequality soared amid the enactment of U.S. “free trade” deals, a spate of economic studies put the theory to the test, aiming to determine the relative contribution of trade flows to the rise in U.S. income inequality. The result was an academic consensus that trade flows had, in fact, contributed to rising U.S. income inequality. The only debate was the extent of the blame to be placed on trade, with most studies estimating that between 10 and 40 percent of the rise in inequality during the 1980s and early 1990s stemmed from trade flows.

More recent studies have concluded that trade’s role in exacerbating U.S. income inequality has likely grown since the 1990s, as U.S. imports from lower-wage countries, and U.S. job offshoring to those countries, have grown dramatically, impacting an increasing swath of middle-class jobs. Further, an array of studies now project future increases in the offshoring of U.S. jobs, suggesting that even under current U.S. trade policy, trade flows will soon be responsible for an even greater share of rising U.S income inequality. Attempts to Fast Track through Congress controversial deals like the TPP, which would incentivize further offshoring, would only exacerbate the historically high degree of U.S. income inequality.

+++

Recent studies examining trade’s current and projected future contribution to U.S. income inequality:

 

Rising Income Inequality: Technology, or Trade and Financial Globalization?

Florence Jaumotte, Subir Lall, and Chris Papageorgiou;  International Monetary Fund;  September 30, 2009

The International Monetary Fund authors find that the rise in income inequality from 1981-2003 in 20 developed countries, including the United States, is primarily attributable to trade and financial globalization trends. They conclude that globalization’s contribution to inequality has outweighed the role of technological advancement: “Among developed countries…the adverse impact of globalization is somewhat larger than that of technological progress” (p. 19).

 

Trade and Wages, Reconsidered

Paul Krugman;  The Brookings Institution;  Spring 2008

In a Brookings Institution study, Nobel-winning economist Paul Krugman finds that trade flows likely now account for an even greater degree of U.S. income inequality than that found in a series of studies from the early 1990s, which had already concluded that trade liberalization had a negative, but modest, impact on income inequality in developed countries like the United States. In particular, Krugman notes that U.S. manufacturing imports from low-wage developing countries have grown dramatically in the last two decades, suggesting that the role of trade flows in spurring U.S. income inequality growth is “considerably larger” than before (p. 106).  Krugman concludes, “…there has been a dramatic increase in manufactured imports from developing countries since the early 1990s. And it is probably true that this increase has been a force for greater inequality in the United States and other developed countries” (p. 134).

 

Globalization, American Wages, and Inequality: Past, Present, and Future

Josh Bivens;  Economic Policy Institute;  September 6, 2007

In this study Josh Bivens of the Economic Policy Institute updates an early-1990s model estimate of the impact of trade flows on U.S. income inequality and finds that, using the model’s own conservative assumptions, the degree of U.S. income inequality attributable to trade with lower-wage countries increased more than 40 percent from 1995 to 2006. In addition, Bivens cites an array of recent economic studies that project that the offshoring of U.S. jobs will increase under current trade policy, suggesting a substantial rise in the impact of trade flows on U.S. income inequality. For example, Princeton economist and former Council of Economic Advisors member Alan Blinder estimates that about one in every four U.S. jobs, including higher-paying service-sector jobs, could be offshored in the foreseeable future. While such studies differ in the projected extent of future U.S. job offshoreability, all imply an increase in the impact of trade flows on U.S. income inequality. Bivens finds that the range of projections for increased offshoring suggest a further 72 to 262 percent increase in U.S. income inequality attributable to trade with lower-wage countries, compared to the level seen in 2006. Bivens concludes, “The potential level of redistribution caused by offshoring is vast, and, so should be the policy response” (p. 8).

January 27, 2014

On Eve of State of the Union Address, Powerful Message from Obama’s Base about Fast Track for the Trans-Pacific Partnership: Don’t Even Think About It

Prepare for a State of the Union oddity: Democratic members of Congress sitting in silence while Republicans rise to cheer President Obama’s call for Congress to grant him new powers.

A letter released today signed by a stunning array of more than 550 Democratic base organizations reiterates the perverse situation. Despite widespread opposition from congressional Democrats, Obama is expected to call on Congress to delegate Fast Track authority to him. The extraordinary trade authority, which Congress has refused to grant for 15 of the past 20 years, would suspend normal congressional procedures for consideration of the controversial Trans-Pacific Partnership (TPP), which Obama hopes to sign soon.  

Today’s letter is signed by a veritable who’s who of the organizations that worked their tails off to elect Obama and/or who provide his policy initiatives the support to pass: from MoveOn and CREDO to the AFL-CIO, SEIU, AFSCME, UAW, Teamsters, Carpenters, United Steelworkers, American Federation of Teachers, and the Communications Workers of America to the Sierra Club, 350.org, and Greenpeace to the National Farmers Union, National Consumers League, Public Citizen and TransAfrica – and the policy shops of the Presbyterians, Methodists, Episcopalians and numerous Catholic orders. The letter is notable for the number of signatory organizations that have not been involved in past “trade” fights.

This gets to the major policy collision that only adds to the incongruity of the political situation: the TPP would worsen income inequality. Yup, the main theme of Obama’s SOTU has been widely advertised to be his battle against growing American income inequality. But economists of all stripes agree that U.S. trade policy has been a major contributor to growing inequality. A study by the Peterson Institute for International Economics, which supports the TPP, has estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends.

The latest – and stunning – addition to that chorus: Clinton Labor Secretary Robert Reich, who yesterday urged his massive Facebook following to battle Fast Track and TPP, which he called NAFTA-on-steroids.  “[T]his massive deal [TPP] would further erode the jobs and wages of working and middle-class Americans while delivering its biggest gains to corporate executives and shareholders.” 

Today’s letter, organized by the Citizens Trade Campaign, shows the political muscle behind the campaign to make sure TPP is not Fast Tracked: “After decades of devastating job loss, attacks on environmental and health laws and floods of unsafe imported food under our past trade agreements, America must chart a new course on trade policy. To accomplish this, a new form of trade authority is needed that ensures Congress and the public play a much more meaningful role in determining the contents of U.S. trade agreements...”

And, don’t expect ALL of the GOP to stand and cheer Fast Track. Already several dozen Republican House members have announced their opposition to new Fast Track powers for Obama. A conservative grassroots campaign is gearing up against Fast Track and TPP. 

What could unite the A-Z of the Democratic base and conservative grassroots activists? Um, could be the 20 devastating years of NAFTA damage experienced by American workers and communities across the political spectrum. Fast Tracking NAFTA-on-steroids is a hard sell after NAFTA fueled an explosion of the U.S. trade deficit with Mexico and Canada to $181 billion by 2012, resulting in a net American loss of one million jobs. And it is not news that NAFTA increased income inequality by transforming the composition of jobs available to the 63 percent of American workers without college degrees from higher wage manufacturing to low-wage service sector.

And, then there is the inconvenient mess of Obama’s only major trade deal to date, the U.S.-Korea Free Trade Agreement. That deal was premised on the same NAFTA model as TPP. In his 2011 SOTU, Obama promised the pact would expand U.S. exports to Korea.  In the pact’s first year, exports dropped ten percent, imports soared and the U.S. trade deficit with Korea grew 37 percent, equating to a net loss of approximately 40,000 more U.S. jobs.

Will President Obama choose to mount what will need to be a massive campaign to overcome widespread opposition to Fast Track authority for the Trans-Pacific Partnership? And probably fail even so?

Or, will he choose to focus his efforts on reducing income inequality for millions of Americans?

It remains to be seen what his legacy will be. But one thing is clear: President Obama can’t have it both ways.

January 24, 2014

Obama's State of the Union Dilemma: Pushing Fast Track for TPP Would Increase Income Inequality

Article by Lori Wallach, director of Public Citizen's Global Trade Watch, published in The Huffington Post on January 24, 2013

In his upcoming State of the Union speech, President Barack Obama is expected to prioritize what is emerging as his legacy issue: combatting America's growing wealth inequality. Expect him to promote policies to create new middle-class jobs, especially in manufacturing, and counter the erosion of wages now undermining workers economy-wide.

But in the speech, Obama is also expected to highlight several major trade initiatives, including his priority Trans-Pacific Partnership (TPP) deal, a massive pact with 11 Asian and Latin American nations that Obama hopes to sign quickly. The business lobby is at full tilt pushing Obama to use the SOTU to call on Congress to pass Fast Track trade authority for the TPP.

The thing is that economists of all stripes agree that U.S. trade policy has been one of the major contributors to growing U.S. income inequality.

There really is no disagreement about that -- the only debate is about the degree of the effect. A study published by the Peterson Institute for International Economics -- an early supporter of the North American Free Trade Agreement (NAFTA) on which TPP is modeled -- estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends. Other studies have posited greater and lesser contributions.

The TPP would replicate and expand to additional countries the trade agreement model established in the NAFTA. Twenty years of evidence of NAFTA's contribution to U.S. income inequality has become a major problem for Obama's push to get Congress to provide Fast Track authority for the massive TPP deal, described as NAFTA on steroids.

Not a single House Democrat would sponsor the legislation submitted two weeks ago to establish Fast Track. Last week, 17 Senate Democrats made their feelings known in letters to Majority Leader Harry Reid (D-Nev.). And last November, 151 House Democrats signed a letter saying they oppose Fast Track, arguing that lawmakers have been cut out of negotiations.

Congressional opposition to more-of-the-same trade deals has intensified as Obama's past SOTU trade promises have fallen flat. In contrast to Obama's 2011 SOTU promise that his only major past trade deal, the U.S.-Korea Free Trade Agreement, would boost exports, in the agreement's first year, U.S. exports to Korea fell 10 percent, imports from Korea rose and the U.S. trade deficit with Korea exploded by 37 percent. This equates to a net loss of approximately 40,000 U.S. jobs.

The drop in exports to Korea added to last year's sluggish overall two percent U.S. export growth rate. Given current trends, the U.S. will not achieve the president's export-doubling plan until 2032 -- 18 years behind the 2014 deadline Obama set in his 2010 State of the Union speech.

This follows on the recent 20th anniversary of NAFTA, which fueled an explosion of the U.S. trade deficit with Mexico and Canada to $181 billion by 2012, resulting in a net American loss of one million jobs. (The net job loss figure is derived from the U.S. government methodology employed to calculate the employment effects of trade flows.)

U.S. government data show that the average annual growth of our trade deficit has been 45 percent higher with Mexico and Canada than with countries that are not party to a NAFTA-style pact. U.S. manufacturing exports have grown at less than half the rate to Mexico and Canada since NAFTA than in the years before it. Before NAFTA, the U.S. had a small trade surplus with Mexico and a modest deficit with Canada.

While many focus on the number of U.S. jobs lost from NAFTA and similar pacts, the most significant effect has been a fundamental alteration in the composition of jobs available to the 63 percent of American workers without a college degree. And this has had a direct impact on income inequality.

Trade pact investment rules remove many of the risks otherwise associated with sending jobs offshore to where labor costs are drastically cheaper. The United States has lost millions of manufacturing jobs during the 20 years of NAFTA and decade-plus since Congress approved China's entry to the World Trade Organization. As a result, the wages most U.S. workers can earn have been severely degraded even as overall unemployment has been largely stable (excluding the Great Recession) as new low-paying service sector jobs have been created.

According to the U.S. Bureau of Labor Statistics, two of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them more than 20 percent. The list compiled by the Department of Labor's Trade Adjustment Assistance program of more than 845,000 specific American jobs lost to NAFTA and similar pacts reads like the funeral program for the middle class.

The implications for growing income inequality are broad. It is not only those American workers who lost a job to NAFTA or China trade who face downward wage pressure; as increasing numbers of workers displaced from manufacturing jobs joined the glut of workers competing for non-offshorable, low-skill jobs in sectors such as food service and retail, real wages have fallen in these growing sectors as well.

The U.S. government data is striking: The shift in employment from high-paying manufacturing jobs to low-paying service jobs has contributed to overall wage stagnation. The average U.S. wage has grown less than one percent annually in real terms since NAFTA was enacted even as worker productivity has risen more than three times. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent's share has shot up by 58 percent.

Offshoring of American jobs is rapidly moving up the skills ladder, expanding the income inequality effect. Alan S. Blinder, a former Federal Reserve vice chair, Princeton economist and NAFTA supporter, says that one out of every four American jobs could be offshored in the foreseeable future. A study he co-authored found that the most offshorable industry is finance and insurance, not manufacturing. According to Binder's study, American workers with a four-year college degree and an annual salary above $75,000 are among those most vulnerable to having their jobs offshored.

The grandfather of modern free trade economics, Paul Samuelson, published a startling 2004 academic paper in the Journal of Economic Perspectives that shows mathematically how the offshoring of higher-paid jobs to low-wage countries can cause U.S. workers to lose more from reduced wages than they gain from cheaper imported goods. Trade theory states that while those specific workers who lose their jobs due to imports may suffer, the vast majority of us gain from trade "liberalization" because we can buy cheaper imported goods. Except, as job offshoring has moved up the wage level, this is no longer necessarily true.

When the Center for Economic and Policy Research applied the actual data to the trade theory, they discovered that when one compares the lower prices of cheaper goods to the income lost from low-wage competition under our current policy, the trade-related losses in wages hitting the vast majority of American workers outweigh the gains in cheaper priced goods from trade. U.S. workers without college degrees (the vast majority) lost an amount equal to 12.2 percent of their wages, so for a worker earning $25,000 a year, the loss would be more than $3,000 per year.

The 20-year record of NAFTA shows that deals like the Trans-Pacific Partnership would contribute to income inequality as more middle-class jobs are lost. Either Obama can prioritize a battle against income inequality or he can push more NAFTA-style trade agreements and the trade authority to railroad them through Congress, but he cannot do both.

More information is available at http://www.citizen.org/fast-track.

January 22, 2014

“Like Gravity” Fast Track Trade Sinks Jobs and Wages

This is a reposting of a blog post written by Mary Bottari for the Center for Media and Democracy's PR Watch on January 21.

Rep. Dave Camp (R- MI) and Sen. Max Baucus (D-MT) have introduced "Fast Track" legislation in Congress. It's been 15 years since a U.S. president sought Fast Track authority, which strips Congress of its Constitutional authority to have a meaningful role in U.S. trade policy. If the Fast Track bill passes, the Trans-Pacific Partnership (TPP), a trade deal involving 11 Pacific Rim countries could be completed and signed before it is sent to Congress for a vote. Then the far-reaching trade deal will be railroaded through with no amendments and only 20 hours of debate.

The original Fast Track was cooked up by Nixon, served up again by Clinton to pass the NAFTA and WTO agreements, and stirred up again in 2000 to jam China free trade through Congress. That all worked out well, didn't it? The United States lost 5.7 million manufacturing jobs in the NAFTA/WTO era, and our trade deficit with China is now one of the largest in history.

Today, President Obama is seeking Fast Track to get the TPP and the 27-nation Transatlantic Trade and Investment Partnership (TTIP) through Congress. His road is a rocky one. His trade team could not convince a single Democrat to author the bill in the House, and with hundreds of groups across the political spectrum -- from progressive environmental and consumer groups to various Tea Party patriots -- lined up against it, it's possible Fast Track can be defeated.

"When Will We Start to Measure the Results?"

The long, controversial history of fast tracked trade agreements hardly came up in the first Senate hearing on the Baucus-Camp bill on January 16.

Chairman Baucus, the only Democrat to author the legislation in either house, rambled on about the fact that 95 percent of the world's consumers live outside the United States. According to Baucus, we need more trade deals to reach those consumers. But he forgot to mention that the United States is already part of the WTO trade pacts on goods and services encompassing some 159 member countries, so our products already have privileged access around the globe.

This line of argument was also supported by the ever-present Honeywell CEO David Cote, last seen pushing Social Security and Medicare cuts on behalf of the Business Roundtable and the "Fix the Debt" gang. Cote dubbed Fast Track "a key enabler for trade agreements," invoking the wrong kind of chuckle.

Larry Cohen, President of the Communication Workers of America, injected a refreshing dose of reality to the proceedings. Cutting through blather about "leveling the playing field," Cohen looked Baucus in the eye and demanded answers to a few pointed questions.

After 20 years of NAFTA, Cohen demanded, when are we going to start to actually measure the results? "No other nation has trade deficits like ours," said Cohen. Since 1993, the year before NAFTA, our trade deficit in goods was $132 billion or 1.9 percent of GDP. By 2012, our trade deficit ballooned to $741 billion or 4.6 percent of GDP, Cohen detailed in his written testimony.

When, asked Cohen, will we start to document the net effect of these trade deals on employment? "What has happened to our jobs, our communities, the North Philadelphia that I grew up in? The Cleveland that I can picture now? The devastation throughout those communities, no replacement for those jobs," said Cohen. The Economic Policy Institute estimates that between 1998 and 2012, the United States lost one third of its manufacturing base largely due to growing U.S. trade deficits.

When, asked Cohen, will we document the effect of trade on pay and standards of living? "I can tell you story after story where CEOs say to me -- it's gravity, we have to move the jobs or you have to cut the pay," says Cohen. When U.S. workers are put in competition with workers like those in Vietnam making 28 cents an hour, U.S. wages have no where to go but down. Cohen pointed out that average weekly take home pay for an American worker today is $637 compared to $731 40 years ago.

The Senators shifted uncomfortably in their seats, but had no answers for the CWA chief, who pushed to bring thousands of call center jobs back to the United States. Telecom firms, however, demanded that the salaries "be competitive" with those of overseas workers.

Congress Is Targeting the Wrong Deficit

Just days before, Senate Republicans shot down unemployment benefits for 1.3 million Americans, because, to the Republican caucus, nothing matters more than the United States federal account deficit.

But many economists say Washington has the calculus backwards -- they are targeting the wrong deficit. As Dean Baker and Jared Bernstein explain in the New York Times, Washington's obsession with lowering the budget deficit by slashing spending and supports for the economy will only lead to slower growth, whereas "reducing the trade deficit would have the opposite effect. Not only that, but by increasing growth and getting more people back to work in higher-than-average value-added jobs, a lower trade deficit would itself help to reduce the budget deficit." EPI projects that reducing the trade deficit could generate a "manufacturing-based recovery" for the United States.

The two trade agreements in the works right now, the TPP and the TTIP, will only add to our job-killing trade deficit.

Corporate Courts Facilitate Attacks on Consumer, Health, and Environmental Protections

Senator Sherrod Brown (D-OH) turned the conversation at the Fast Track hearing in a completely new direction by asking David Cote if he thought trade agreements should be used to attack consumer and environmental laws democratically enacted around the globe. Brown referenced the so-called "investor-state" provisions that have been included in U.S. trade agreements that allow corporations to directly sue governments for cash damages outside of domestic court systems and in friendly trade tribunals if they believe consumer, health, or environmental regulations harm their products.

Brown pointed to a new case in Australia, where U.S. firm Phillip Morris is suing Australia over a new plain packaging rule for cigarettes designed to reduce cigarette smoking among teens and other new users. Phillip Morris battled the rule in Australian courts and lost, so is taking it to a corporate-friendly trade tribunal. The rulings of these tribunals are binding, and there is no appeal.

Cote, who is no doubt perfectly aware of the perverse system and its history of successful attacks on a range of public interest laws (detailed by Public Citizen here), used the "I am not a lawyer" dodge.

The list of these investor attacks is growing. U.S. pharmaceutical firm Eli Lilly is attacking Canada's system for approving generic drugs under NAFTA, and a U.S. fracking firm is attacking Quebec's moratorium on fracking as a "trade barrier."

Wikileaks Takes on Trade

The range of public interest policies implicated in the trade agreements is enormous. TPP "includes chapters on patents, copyright, financial regulation, energy policy, procurement, food safety and more -- it would constrain the policies on these matters that Congress and state legislatures could maintain or establish," says Public Citizen.

As if that wasn't enough, the TPP's draft environment chapter, published by Wikileaks last week, would undermine protections for oceans, forests, and wildlife. "If the environment chapter is finalized as written in this leaked document, President Obama's environmental trade record would be worse that George W. Bush's," said Michael Brune, executive director of the Sierra Club.

This is Wikileaks' first foray into trade, but it makes consummate sense. Not only are the agreements being negotiated behind closed doors with classified input from 600 U.S. corporate advisors, but the issues on the table include internet freedom and access to medicines around the globe.

The draft intellectual property chapter obtained by Wikileaks "would trample over individual rights and free expression, as well as ride roughshod over the intellectual and creative commons," says Julian Assange. "If you read, write, publish, think, listen, dance, sing or invent; if you farm or consume food; if you're ill now or might one day be ill, the TPP has you in its crosshairs," he told Politico. The U.S. government's pro-PhRMA position "will severely restrict access to affordable medicines for millions of people," says Doctors Without Borders.

Another World Is Possible

The last time the United States used Fast Track to pass a trade agreement, it was with South Korea. Senator Baucus and crew trotted out all the same talking points about how our exports would boom. But it was our trade deficit that boomed, increasing by $5.5 billion or 46 percent since 2012.

With the U.S. recovery staggering and with the wide range of issues caught up in the trade negotiation, it is no wonder that a coalition of those opposing free trade agreements is growing more diverse and powerful every day.

Fast Track will not pass without a sustained effort by the President himself. Yet, when his top trade representative did not bother to show up at the Senate hearing last week, Obama left everyone wondering if he had the appetite for the fight or if another world was possible.

January 16, 2014

U.S. Trade Representative Dodges Senate Fast Track Hearing

The US Trade Representative (USTR) declined an invitation to testify at the Senate Finance Committee opening hearing on the controversial “Fast Track” legislation – leaving an Ohio Republican, Sen. Rob Portman, in the position of representing the White House by reading from an Administration press release.

Several committee members said they were puzzled and disappointed that USTR Michael Froman passed on an opportunity to convince some skeptical lawmakers they need to establish Fast Track authority for President Barack Obama’s priority Trans-Pacific Partnership (TPP) agreement.

“I wish they were here,” said Portman, a member of the committee and a former US trade representative under President George W. Bush.  “It’s important.”

Sen. Orrin Hatch of Utah, the ranking Republican on the committee, said renewing Fast Track for Obama is "not an issue where the president can lead from behind."

The hearing was a crucial early test for Obama’s ability to obtain Fast Track authority and complete the Trans-Pacific Partnership, priorities on his second-term wish list.  But it comes in the shadow of the 20th anniversary of NAFTA – a sweeping free trade agreement that took effect Jan. 1, 1994, and which many experts cite as a factor in the widening gap between rich and poor in the United States.  

The Trans-Pacific Partnership is like NAFTA on steroids. And that is one reason for the noticeable divide between the president and members of his own party in Congress – many of whom have been openly skeptical of TPP and have already announced opposition to Fast Track. This week, a group of Democratic senators sent a letter to leader Reid opposing the Camp-Baucus bill. This follows on five Finance Committee members coming out against Fast Track last week and 160 House Democrats signaling opposition at the end of last year.

The rarely-used Nixon-era procedure would allow Obama to sign the TPP before Congress votes to approve it with a guarantee that the White House could write expansive legislation to implement the pact that would not subject to committee or floor amendment and get House and Senate votes on such legislation in 90 days with only 20 hours of debate allowed.  

Meanwhile, with not a single House Democrat sponsoring the Fast Track bill, the GOP House leadership has insisted that the White House present a list of 50 House Democratic votes for the bill before a vote will be scheduled. Some Republicans are urging the president to do some arm-twisting for a bill embraced by the Chamber of Commerce but rejected by labor unions and progressive groups, mindful of the damage NAFTA has done.

One of the few things economists agree on is that our current trade policy is a major contributing factor to growing U.S. income inequality. Obama is expected to dedicate much of his State of the Union address to plans for battling income inequality while he is also pushing for Congress to Fast Track the TPP, which would expand the NAFTA model to more nations.

A study published by the Peterson Institute for International Economics estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent’s share has shot up by 58 percent.

Communication Workers of America President Larry Cohen said the US was negotiating with countries that have no interest in fair wages for their workers. If TPP is approved, “American workers will compete against workers in Vietnam who are earning 75 cents an hour” and who are rioting for better wages, Cohen said.   If Americans complain, he said, the Vietnamese government has a simple answer, he added: “They say, ‘We’re a communist country.  We don’t need higher labor standards.’”

Senator Sherrod Brown raised concerns about the proposed TPP provisions that would allow foreign corporations to attack U.S. law before foreign tribunals to demand compensation from the U.S. Treasury for our laws that undermine their expected future profits. He discussed the challenge that Philip Morris brought before a trade agreement investor tribunal against the government of Australia for its policies protecting the public from the health problems of tobacco.

Witnesses supportive of Fast Track included David Cote, CEO of Honeywell, Inc., Jim Allen, president of the New York Apple Growers Association, andElena M. Stegemann, of NuStep, a small business that manufactures high-tech exercise machines. 

Uninvited participants included the protestors that Committee Chairman Senator Max Baucus threatened to remove unless they put down their signs. One accused Senator Baucus -- Obama’s nominee to be ambassador to China -- of being a “Benedict Arnold” who was ceding Congress’ constitutional trade authorities through Fast Track.  Other signs read, “Fast Track: Race to the Bottom,” “TPP: How Low Can Wages Go?”

January 15, 2014

Thursday Senate Finance Committee Fast Track Trade Hearing to Be Contentious

Fast Tracking the Trans-Pacific Partnership Conflicts with the President’s Efforts to Counter Income Inequality, a Key Focus of the State of the Union Address

Note: At 10 a.m. Thursday, the Senate Finance Committee is holding a hearing on a bill (3830) to give the president Fast Track trade authority.

Thursday’s hearing on the long-delayed legislation to establish Fast Track authority for President Barack Obama’s priority Trans-Pacific Partnership (TPP) agreement could be a donnybrook, Public Citizen said today. Five Finance Committee Democrats announced opposition when it was introduced last Thursday.

“Democrats want to talk about job creation and tackling income inequality, which are also expected to be the main themes in President Obama’s State of the Union speech, but the 20-year record of NAFTA shows that deals like the Trans-Pacific Partnership would only contribute to income inequality as more middle-class jobs are lost,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

One of the only things that economists agree on regarding the North American Free Trade Agreement (NAFTA), which marked its 20th anniversary of being in effect on New Year’s Day, is that such trade pacts are a major contributing factor to growing U.S. income inequality. Obama is expected to dedicate much of his State of the Union address to plans for battling income inequality while he is also pushing for Congress to Fast Track the TPP, which would expand the NAFTA model to more nations.

This conflict is likely to be among the problems raised by committee Democrats with U.S. Sen. Max Baucus’ (D-Mont.) Fast Track bill. A study published by the Peterson Institute for International Economics estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent’s share has shot up by 58 percent.

“Many members of Congress are asking why we would agree to give up our authority to make sure the Trans-Pacific Partnership is not NAFTA on steroids, particularly when we’ve seen what NAFTA has done to American workers,” Wallach said.

Not a single House Democrat agreed to co-sponsor the Fast Track bill. The “Bipartisan Congressional Trade Priorities Act of 2014” had imminently departing Baucus (D-Mont.) as its only Democratic sponsor, along with U.S. Rep. Dave Camp (R-Mich.) and Sen. Orrin Hatch (R-Utah.)

But getting Fast Track for TPP is a top priority of President Obama. The legislation replicates the Fast Track mechanism found in the 2002 grant of Fast Track, which more than 150 House Democrats announced in a November 2013 letter that they would oppose, as did several dozen House GOP.

“The Trans-Pacific Partnership is a Trojan horse for a host of awful measures that have nothing to do with trade and would never get through Congress in the light of day. Only five of the draft trade pact’s 29 chapters are about international trade. This grab bag should not be pushed through Congress without a real debate over each of its impactful measures. The trade pact would threaten food safety, raise medicine prices and roll back Wall Street reforms. The Trans-Pacific Partnership would offshore millions of American jobs, ban Buy American policies and sneak in threats to Internet freedom,” Wallach said.

Democratic and GOP presidents have struggled to persuade Congress to delegate its constitutional trade authority via Fast Track. Fast Track has been in effect for only five years (2002-2007) of the 19 years since passage of NAFTA and the agreement that created the World Trade Organization (WTO).

“Democrats are saying, ‘No more Fast Track process that sidelines Congress from determining trade agreements’ contents,’ because today’s pacts like the Trans-Pacific Partnership  invade Congress’ domestic policymaking authority and set binding rules on food safety, medicine patents and pricing, copyright and Internet freedom, immigration and much more,” Wallach said.

While many focus on the number of jobs lost from NAFTA and similar pacts, the most significant effect has been a fundamental alternation in the composition of jobs available to the 63 percent of American workers without a college degree. The United States has lost millions of manufacturing jobs during the NAFTA era, even as overall unemployment has been largely stable (excluding the fallout of the Great Recession) as new low-paying service sector jobs have been created.

The qualityof jobs available, and the wages most U.S. workers can earn, have been severely degraded. According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them more than 20 percent. It is not only those who lost a job to NAFTA who face downward wage pressure: as increasing numbers of workers displaced from manufacturing jobs joined the glut of workers competing for non-offshorable, low-skill jobs in sectors such as hospitality and food service, real wages have also fallen in these growing sectors under NAFTA.

The shift in employment from high-paying manufacturing jobs to low-paying service jobs has contributed to overall wage stagnation. The average U.S. wage has grown less than one percent annually in real terms since NAFTA was enacted even as worker productivity has risen at more than three times that pace.

Twenty years of evidence of NAFTA’s contribution to U.S. income inequality makes fast tracking a massive TPP NAFTA expansion a hard sell among Democrats, Public Citizen said. Passing Fast Track in the first half of 2014 before lawmakers’ attention turns to midterm elections would require a full court press by Obama in addition to the massive corporate campaign that is already gearing up. How Obama handles Fast Track in his State of the Union address will be one sign of whether such a White House campaign is forthcoming. 

What happens at the Finance Committee hearing could be a preview of the coming battle.

Meanwhile, proponents of the Camp-Baucus Fast Track bill are trying to highlight the bill’s inclusion of some new negotiating objectives for trade pacts that were not included in the 2002 Fast Track. But the underlying Fast Track process included in the bill ensures that these objectives are entirely unenforceable. Whether or not the president obtains the listed negotiating objectives, the Camp-Baucus bill would empower the president to sign a trade pact before Congress votes on it, with a guarantee that the executive branch could write legislation to implement the pact and alter wide swaths of existing U.S. law, obtaining both House and Senate votes within 90 days. That legislation would not be subject to markup and amendment in committee, all amendments would be forbidden during floor votes and a maximum of 20 hours of debate would be permitted in the House and Senate.

Democratic and GOP presidents alike have historically ignored negotiating objectives included in Fast Track. The 1988 Fast Track used for NAFTA and the pact that established the WTO included a negotiating objective on labor standards, but neither pact included such terms. The 2002 Fast Track listed as a priority the establishment of mechanisms to counter currency manipulation, but none of the pacts established under that authority included such terms.

Congress’ willingness to support Fast Track has also declined markedly because “trade” agreements have increasingly invaded Congress’ domestic policymaking prerogatives. The TPP includes chapters on patents, copyright, financial regulation, energy policy, procurement, food safety and more – it would constrain the policies on these matters that Congress and state legislatures could maintain or establish. Fast Track is outdated 1970s technology being applied to 21st century pacts.

Prior to Fast Track and starting with Franklin Roosevelt’s presidency, Congress gave Tariff Proclamation Authority (TPA) to presidents. But it covered only tariffs, not the broad subject matter included under Fast Track. The mechanism allowed the executive branch to implement reciprocal tariff cuts only within bounds set by Congress. Notably, this “TPA” was entirely different than Fast Track, which is sometimes called Trade Promotion Authority (TPA), as it pertained only to tariffs. (Public Citizen's 2013 book, “The Rise and Fall of Fast Track Trade Authority,” provides an in-depth history of Fast Track and U.S. trade authority.)

Due to Fast Track’s controversy, President George W. Bush spent two years and extraordinary political capital to obtain the 2002-2007 Fast Track grant, which passed a Republican-controlled House by one vote and expired in 2007. A two-year effort by President Bill Clinton to obtain Fast Track trade authority during his second term in office was voted down on the House floor in 1998 when 171 Democrats were joined by 71 GOP who bucked then-Speaker Newt Gingrich.

January 10, 2014

Camp-Baucus Bill Would Revive Controversial 2002 Fast Track Mechanism

The Camp-Baucus Fast Track bill released yesterday replicates the procedures included in the 2002 grant of Fast Track that expired in 2007:

  • The president would be empowered to unilaterally select trade negotiating partners and commence negotiations. Like the 2002 Fast Track, in the Camp-Baucus bill this authority is conditioned only on pro forma consultations and 90 calendar days’ notice being given to Congress before negotiations begin. The Camp-Baucus bill provides no mechanism for Congress to veto a president’s decision to enter into negotiations on a trade pact that would be subject to expedited floor procedures, nor any role in selecting with which countries such pacts are initiated. (Sec. 5(a))
  • The president would be empowered to unilaterally control the contents of an agreement. As with the 2002 Fast Track, congressional negotiating objectives in the Camp-Baucus bill are not enforceable. Whether or not U.S. negotiators obtain the listed negotiating objectives, the Camp-Baucus bill would empower the president to sign a trade pact before Congress votes on it, with a guarantee that the executive branch could write legislation to implement the pact and obtain House and Senate votes within 90 days, with all amendments forbidden and a maximum of 20 hours of debate permitted. (Sec. 3(b)(3))
  • The president would be authorized to sign and enter into an agreement subject to expedited consideration conditioned only on pro forma consultations and providing Congress 90 calendar days’ notice prior to doing so. (Sec. 6(a)(1)) The executive branch alone would determine when negotiations are “complete.” The congressional “consultation” mechanisms in the Camp-Baucus bill do not provide Congress with any authority or mechanism to formally dispute whether negotiations have indeed met Congress’ goals and thus are complete, much less any means for Congress to certify that its objectives were met before an agreement may be signed.
  • The president would be authorized to write expansive implementing legislation and submit it for consideration. (Sec. 6(a)(1)(C)) As with the 2002 Fast Track, such legislation would not be subject to congressional committee markup and amendment. The 2002 Fast Track states that this legislation can include any changes to U.S. law that the president deems “necessary or appropriate to implement such trade agreement or agreements.” (19 USC 3803(b)(3)(B)(ii)) Inclusion of the term “appropriate” in this section of past Fast Track authorities has been controversial, because it provides enormous discretion for the executive branch to include changes to existing U.S. law that Congress may or may not deem necessary to implement an agreement. Indeed, inclusion of the term “appropriate” has enabled Democratic and GOP administrations alike to insert extraneous changes to U.S. law into legislation that skirts committee mark up and is not subject to floor amendment. Rather than remove the term “appropriate,” the Camp-Baucus bill merely adds the superfluous modifier “strictly” in front of the same “necessary or appropriate” language found in the 2002 Fast Track. (Sec. 3(b)(3(B)ii)) As with the 2002 Fast Track, there is no point of order or other mechanism to challenge inclusion of overreaching provisions in the implementing bill.
  • Like the 2002 Fast Track, the Camp-Baucus bill would require the House to vote on such legislation within 60 session days, with the Senate having an additional 30 days to vote thereafter. (Sec. 3(b)(3))
  • Like the 2002 Fast Track, the Camp-Baucus bill would forbid all amendments and permit only 20 hours of debate on such legislation in the House and Senate. Voting, including in the Senate, would be by simple majority. (Sec. 3(b)(3))
  • The Camp-Baucus bill replicates the 2002 Fast Track with respect to limitations that could be placed on the application of the Fast Track process to a specific trade agreement. While the factsheet on the bill released by the Finance Committee suggests that it includes a “strong, comprehensive” disapproval process, in fact it replicates the 2002 Fast Track’s limited grounds for which a resolution to disapprove Fast Track can be offered. The Camp-Baucus bill also replicates the 2002 Fast Track’s procedures for consideration of such a resolution, which curtail the prospect that such a resolution would ever receive a vote. To obtain floor action, a resolution would have to be approved by the Ways and Means and Finance committees, and then the House and Senate would have to both pass the resolution within a 60-day period. (Sec. 6(b))

The Camp-Baucus bill includes several negotiating objectives not found in the 2002 Fast Track. However, the Fast Track process that this legislation would reestablish ensures that these objectives are entirely unenforceable: 

  • In addition, some of the Camp-Baucus bill negotiating objectives advertised as “new” are in fact referenced in the 2002 Fast Track. For example, the 2002 Fast Track included currency measures: “seek to establish consultative mechanisms among parties to trade agreements to examine the trade consequences of significant and unanticipated currency movements and to scrutinize whether a foreign government engaged in a pattern of manipulating its currency to promote a competitive advantage in international trade.” (19 USC 3802(c)(12)) The so-called “new” text in the Camp-Baucus bill is: “The principal negotiating objective of the United States with respect to currency practices is that parties to a trade agreement with the United States avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other parties to the agreement, such as through cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means, as appropriate.” (Sec. 2(b)(11))

What is touted as “enhanced coordination with Congress” is actually the mere renaming of the Congressional Oversight Group from the 2002 Fast Track as “Congressional Advisory Groups on Negotiations,” while provisions ostensibly improving transparency merely formalize past practice:

  • The 2002 Fast Track established a Congressional Oversight Group (COG) comprised of members of Congress appointed by congressional leaders who were to obtain special briefings from the U.S. Trade Representative’s (USTR) office on the status of negotiations and to attend negotiations on an advisory basis. The Camp-Baucus bill renames the COG – delineating a “House Advisory Group on Negotiations” and a “Senate Advisory Group on Negotiations” and describing joint activities of the two – but includes the same appointment process and limited role for  congressional trade advisory groups as found in the 2002 Fast Track. (Sec. 4(c))
  • The Camp-Baucus bill instructs USTR to write guidelines for its consultations with Congress, the public and private sector advisory groups. In effect, this provision merely requires USTR to put into writing how it will (or will not) relate to these interested parties. (e.g. Sec. 4(a)(3) and Sec. 4(d)(1))
  • The Camp-Baucus bill simply formalizes the past practices of USTR by requiring that any member of Congress be provided access to trade agreement documents. For instance, during NAFTA negotiations, members of Congress had open access to the full draft NAFTA texts with a new version placed into a secure reading room in the U.S. Capitol after each round of negotiations. In the summer of 2013, the Obama administration finally responded to growing pressure by members of Congress for access to draft TPP texts by bringing requested specific chapters to members’ offices for review when a member asked for such access. Rather than specifying that USTR must resume the practice of providing standing access for members of Congress to full draft trade agreement texts, the Camp-Baucus bill leaves to the discretion of USTR how it will provide text access to members of Congress if a member requests access. (Sec. 4(a)(1)(B))
  • The Camp-Baucus bill also replicates the problematic language of the 2002 Fast Track that limits access to confidential trade agreement proposals and draft texts for congressional staff with the necessary security clearances to only committee staff, excluding personal staff with clearances. (Sec. 4(a)(3)(B)(ii))

The Camp-Baucus bill faces long odds for approval in the 113th Congress:

  • With a large bloc of House Democrats and Republicans already having announced opposition to the old Fast Track process at the heart of Camp-Baucus bill, the prospects are limited for the Obama administration to secure passage in the first half of 2014 before lawmakers’ attention turns to midterm elections.
    • A letter sent to President Obama in November by 151 Democrats opposed Fast Track authority and called for the creation of a new mechanism for trade agreement negotiations and approval.
    • Twenty-seven Republicans have also announced their opposition to Fast Track in two letters to Obama.
    • Most Democratic Ways and Means Committee members joined an additional letter in November noting that the old Fast Track process enjoys little support.
  • Even after repeated delays in introduction, the Camp-Baucus Fast Track bill failed to gain a House Democratic cosponsor. Ways and Means Ranking Member Sandy Levin (D-Mich.) has announced that he does not support the Camp-Baucus bill. Levin’s demands for changes to the 2002 Fast Track procedure to enhance Congress’ role in determining the contents of trade pacts were rebuffed by Ways and Means Committee Chair Dave Camp (R-Mich.), Finance Committee Chair Max Baucus (D-Mont.) and Finance Committee Ranking Member Orrin Hatch (R-Utah).
  • The Camp-Baucus Fast Track grandfathers in the Trans-Pacific Partnership (TPP) and U.S.-EU Trans-Atlantic Free Trade Agreement (TAFTA) negotiations. (Sec. 7) Fast Track for the TPP and TAFTA is especially controversial because these pacts would include chapters on patents, copyright, financial regulation, energy policy, procurement, food safety and more, constraining the policies that Congress and state legislatures could maintain or establish on these sensitive non-trade matters. Fast Track was designed in the 1970s when trade negotiations were narrowly focused on cutting tariffs and quotas, not the sweeping range of non-trade policies implicated by today’s pacts.

Fast Track is an anomaly. It has only been in effect for five of the past 19 years:

  • Both Democratic and GOP presidents have struggled to convince Congress to delegate its constitutional trade authority via the Nixon-era Fast Track scheme. Fast Track has been in effect for only five years (2002-2007) of the 19 years since passage of NAFTA and the agreement that created the WTO.
  • A two-year effort by President Bill Clinton to obtain Fast Track trade authority during his second term in office was voted down on the House floor in 1998 when 171 Democrats were joined by 71 GOP members who bucked then-Speaker Newt Gingrich. Clinton did not have Fast Track for six of his eight years in office, but still implemented more than 130 trade agreements.
  • President George W. Bush spent two years and extraordinary political capital to obtain the 2002-2007 Fast Track grant, which passed a Republican-controlled House by one vote, and expired in 2007. 

January 09, 2014

Legislation to Provide Fast Track Trade Authority for President Obama Finally Introduced, But Can It Pass?

Considerable House Opposition on Day One, Tight Calendar in Election Year

Legislation introduced today by U.S. Sen. Max Baucus (D-Mont.) and U.S. Rep. Dave Camp (R-Mich.), which would revive the controversial Fast Track trade authority, faces long odds for approval in the 113th Congress, Public Citizen said today. The legislation replicates the Fast Track mechanism found in the 2002 grant of Fast Track; however, the new legislation alters some previous negotiating objectives.

Both Democratic and GOP presidents have struggled to persuade Congress to delegate its constitutional trade authority via the Nixon-era Fast Track scheme. Fast Track has been in effect for only five years (2002-2007) of the 18 years since passage of the North American Free Trade Agreement (NAFTA) and the agreement that created the World Trade Organization (WTO).

With a large bloc of House Democrats and Republicans already having announced opposition to the old Fast Track process at the heart of Camp-Baucus bill, the prospects are limited for the Obama administration to secure passage in the first half of 2014 before lawmakers’ attention turns to midterm elections. The first session of the 113th Congress was consumed with negotiations among Ways and Means and Finance Committee leaders that could not produce a consensus bill. Ways and Means Ranking Member Sandy Levin (D-Mich.) has announced that he wants changes to the old process to enhance Congress’ role.

The legislation includes several negotiation objectives not found in the 2002 Fast Track; however, the underlying Fast Track process included in the bill ensures that these objectives are entirely unenforceable. Whether or not the president obtains the listed negotiating objectives, the bill would empower the president to sign a trade pact before Congress votes on it with a guarantee that the executive branch can write legislation to implement the pact and alter wide swaths of existing U.S. law and obtain both House and Senate votes within 90 days. That legislation is not subject to markup and amendment in committee, all amendments are forbidden during floor votes and a maximum of 20 hours of debate is permitted in the House and Senate.

“Congress’ willingness to support Fast Track has declined markedly because ‘trade’ agreements have increasingly invaded Congress’ domestic policymaking prerogatives,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “On top of that, Democratic and GOP presidents alike have consistently ignored the negotiating objectives included in Fast Track, but the way the process is structured, Congress has given away its authority to do anything about it.”

The Trans-Pacific Partnership, for which President Barack Obama seeks Fast Track authority, includes chapters on patents, copyright, financial regulation, energy policy, procurement, food safety and more that would constrain the policies on these matters that Congress and state legislatures can maintain or establish.

President George W. Bush spent two years and extraordinary political capital to obtain the 2002-2007 Fast Track grant, which passed a Republican-controlled House by one vote and expired in 2007.

A two-year effort by President Bill Clinton to obtain Fast Track trade authority during his second term in office was voted down on the House floor in 1998 when 171 Democrats were joined by 71 GOP who bucked then-Speaker Newt Gingrich. Clinton did not have Fast Track for six of his eight years in office, but still implemented more than 130 trade agreements, including granting Most Favored Nation status to China, which led to China’s WTO access.

“Fast Track is outdated 1970s technology being applied to 21st century realities, which is causing serious damage,” said Wallach. “It’s rare these days that across the aisle, Congress agrees on anything, so it’s notable that a large bipartisan bloc insists on maintaining the exclusive constitutional authority over trade that the Founding Fathers wisely granted to Congress.”

Fast Track allowed a president to determine the contents of trade pacts, sign them before Congress votes and write expansive implementing legislation that is not subject to congressional committee amendment – all with a guarantee that Congress would vote on a completed agreement and the legislation within 90 days, with no floor amendments and limited debate.

A letter sent to Obama in November by 151 Democrats called for creation of a new mechanism for trade agreement negotiations and approval: “Congress, not the Executive Branch, must determine when an agreement meets the objectives Congress sets in the exercise of its Article I-8 exclusive constitutional authority to set the terms of trade,” the letter said. “For instance, an agreement that does not specifically meet congressional negotiating objectives must not receive preferential consideration in Congress.”

Further, “A new trade agreement negotiation and approval process that restores a robust role for Congress is essential to achieving U.S. trade agreements that can secure prosperity for the greatest number of Americans, while preserving the vital tenets of American democracy in the era of globalization,” the letter stated. “Twentieth Century ‘Fast Track’ is simply not appropriate for 21st Century agreements and must be replaced.”

Background:

Opposition to Fast Track authority in Congress has increased significantly since the time of NAFTA and the WTO.

Under President George H.W. Bush in 1991, Fast Track authority passed a Democratic-led House by a 27-vote margin. Clinton had Fast Track authority for only two of his eight years in office, and in 1998, the Democratic-led House emphatically rejected his request, with 71 GOP representatives joining 171 in the majority to vote “no.” Bush managed to obtain Fast Track authority by only one vote in the House after two years of effort, and Congress rebuffed Bush’s request for an extension when that delegation expired in 2007.

In 2008, during his presidential campaign, Obama promised to replace Fast Track with a more inclusive process. History seemed with him: A new system of trade authority delegation has been created every few decades since 1890.

But since capturing a second term in the White House, Obama has ramped up his demand that Congress once again cede its constitutional trade authority via Fast Track.Prior to Fast Track and starting with Franklin Roosevelt’s presidency, Congress gave Tariff Proclamation Authority (TPA) to presidents. But it covered only tariffs, not the broad subject matter included under Fast Track. The mechanism allowed the executive branch to implement reciprocal tariff cuts only within bounds set by Congress. (Notably, this “TPA” was entirely different than Fast Track, which is sometimes called Trade Promotion Authority (TPA), as it pertained only to tariffs.)

Before that, trade agreements were often approved as treaties by the Senate, with both chambers later also required to pass implementing legislation. Public Citizen’s 2013 book, “The Rise and Fall of Fast Track Trade Authority,” provides an in-depth history of U.S. trade authority.

December 21, 2013

Get Ready for the 2014 Trade Tsunami

Hard work, smart planning and perseverance made 2013 a year of inspiring fair-trade activism. 

Vibrant grassroots activism and dogged D.C. advocacy resulted in a new level of public and congressional concern about the perils of Fast Track and the Trans-Pacific Partnership (TPP). In November, three of every four Democrats – and a remarkable number of Republicans – publicly stated their opposition to Fast Track trade authority. The extreme procedure is seen as critical by TPP’s corporate boosters because it could railroad the TPP through Congress despite growing concerns about many aspects of the pact.

And, thanks to civil society pressure in Asia and Latin America, the other TPP country governments did not give in to all of the U.S. corporate-inspired demands for medicine monopolies, financial deregulation and expanded corporate investor tribunals in the TPP. As a result, the Obama administration failed to wrap up TPP negotiations in Singapore this month, missing yet another do-or-die, self-imposed deadline for the deal. 

This sets the stage for the most important U.S. political and policy fights on globalization and “trade” in decades, beginning in a few short weeks. The stakes couldn’t be higher.

In the first months of 2014, Congress will decide whether it will maintain its constitutional authority over trade or succumb to White House and corporate demands to give away its power to save us from more damaging “trade” deals.

This week, the Obama administration announced that top priorities for 2014 will be to sign the massive, dangerous TPP it has been negotiating for four years and extract Fast Track trade authority from Congress. The extreme Nixon-era Fast Track procedure would allow the TPP and a Trans-Atlantic Free Trade Agreement (TAFTA) to be signed before Congress approves them with a guarantee that they can be railroaded through Congress with limited debate and no amendments. (TAFTA would empower the European corporations with 24,000 subsidiaries operating here to drag the U.S. government before foreign tribunals to demand taxpayer compensation for U.S. laws they claim undermine their expected future profits.)

Cue the rattling chains: in 2014 we must banish the ghosts of NAFTA, which haunt us still. 

Twenty years ago on New Years’ Day, the North American Free Trade Agreement (NAFTA) went into effect. The World Trade Organization (WTO) opened shop a year later. Unlike past trade pacts, which dealt mainly with cutting tariffs, these agreements included investment rules that incentivized the “offshoring” of American jobs, ushering in a new era of growing U.S. trade deficits. These pacts also granted corporations new powers that raised medicine prices and limited food safety and financial regulation.

Yet despite NAFTA’s devastating track record and the U.S. loss of five million manufacturing jobs since its advent, the White House has decided to double-down on a failed economic experiment. In the TPP and TAFTA, Obama has taken the NAFTA model, injected it with steroids, and invited scores more countries to sign on.

Although there are powerful, deep-pocketed, international forces that will use everything at their disposal to get the trade deals passed, there is hope – and opportunity – for those of us who want to defeat them. 

The fiery international debates over NAFTA and WTO gave birth to a new fair trade movement in our country.  The devastating outcomes triggered by the trade pacts unified ordinary Americans against them. Polls show a majority of Americans – Republicans, Democrats and independents –think these sorts of pacts are bad not only for themselves and their families but for the nation.

And, the harsh lessons of NAFTA were learned worldwide. This certainly contributed to the other TPP countries’ concerns about the NAFTA-on-steroids proposals in the TPP.

But we face a race against time. Will growing public opposition to the TPP in Asian and Latin American countries overcome what President Obama heartbreakingly announced this week will be his new personal effort to seal the deal in the first months of 2014?

Continue reading "Get Ready for the 2014 Trade Tsunami" »

November 15, 2013

Falling Exports under Korea FTA Likely to Bolster Fast Track Opposition

This week's government release of trade data highlights a stunning decline in U.S. exports to Korea, a rise in imports, and a ballooning of the U.S. trade deficit under the Korea Free Trade Agreement (FTA).  With such sorry results emerging from the Korea deal, it's little wonder that 178 Democrats and Republicans this week rejected Obama's bid to Fast Track through Congress another FTA -- the sweeping Trans-Pacific Partnership (TPP).  

U.S. goods exports to Korea fell 8 percent and imports from Korea grew 8 percent under the first 18 months of the Korea deal, relative to the 18 months before the deal took effect. The shift provoked an incredible 56 percent growth in the U.S. trade deficit with Korea in the FTA’s first year and a half.

The Korea FTA’s abysmal record for U.S. jobs has been consistent: in 18 out of the 18 months since the deal took effect, U.S. exports to Korea have fallen below the average level seen in the year before the deal.  And in every single one of the 18 months since the FTA, the U.S. deficit with Korea has exceeded the average monthly deficit before the deal took effect (see graphs below). These losses amount to tens of thousands of lost U.S. jobs.

The disappointing data from the Korea FTA, a template for the TPP, is poised to generate even more congressional opposition to Obama’s request for Fast Track’s extraordinary authority to railroad the TPP through Congress on an expedited timeline with limited debate and no amendments.

Korea Exports Nov 2

Korea Deficit Nov 2

November 13, 2013

151 House Democrats, Bloc of GOP Announce Opposition to ‘Fast Track’ Trade Authority

Mounting Concerns About Possible Trans-Pacific Partnership Unite Members Across Party Lines Against Abdicating Congressional Authority Over Trade 

A letter sent today to President Barack Obama opposing Fast Track authority, signed by 151 House Democrats, signals the end of a controversial Nixon-era procedure used to railroad contentious trade pacts through Congress. Obama has asked Congress to delegate to him its constitutional trade authority via Fast Track for the Trans-Pacific Partnership (TPP) and other pacts.

The signers of the letter show the breadth and depth of Democratic House opposition to Fast Track. Signers include:

  • 18 of 21 full committee ranking members and 72 subcommittee ranking members;
  • Leadership members including Assistant Democratic Leader Jim Clyburn; Democratic Congressional Campaign Committee Chair Steve Israel; Steering and Policy Committee Co-Chairs Rosa DeLauro and Rob Andrews; and 35 of 48 Democratic Steering and Policy Committee members;
  • 19 of the short list of Democrats who voted for the 2011 U.S.-Korea Free Trade Agreement;
  • 26 of the 51 members of the New Democrat Coalition, and 8 of the 14 members of the Blue Dog Coalition; and
  • 36 of 42 House members of the Congressional Black Caucus, and 13 of 19 House members of the Congressional Hispanic Caucus

On Tuesday, 25 House Republicans members announced their opposition to Fast Track, and most Democratic Ways and Means Committee members joined a letter noting that the old Fast Track process enjoys little support. Even prominent supporters of past trade agreements who did not sign these letters recently have voiced their opposition to Fast Track.

“These letters make clear that Fast Track is history,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “When Nixon cooked up this scheme 40 years ago, trade pacts covered only tariffs. Now, deals like the TPP could rewrite wide swaths of U.S. policy, currently under the control of Congress, from food safety and financial regulation to Buy American procurement to energy policy.”

Fast Track delegated to the executive branch authorities the Constitution explicitly gives Congress. Fast Track let the executive branch unilaterally select trade partners, set agreements’ terms and sign them before Congress even voted. Then the executive branch could write implementing legislation, skirting committee review and amendment. This legislation could be directly submitted for votes, with congressional leaders’ control of House and Senate floor schedules overridden. Votes could be forced within 60 days in the House and an additional 30 days in the Senate. Normal voting rules were waived, with all amendments banned and only 20 hours of debate. Unlike all past trade authorities, which covered only tariffs, Fast Track allowed the executive branch to “diplomatically legislate,” using trade agreements to set policy on non-trade matters.

“Polls show that opposition to more-of-the same trade deals is one of the few issues that uniteAmericans across party lines,” said Wallach. “It’s not really surprising that there is bipartisan congressional opposition to Fast Track.” 

Fast Track has been used only 16 times, although hundreds of U.S. trade agreements have been implemented since the mid-1970s. These have included the most controversial pacts such as the North American Free Trade Agreement (NAFTA) and the agreement that created the World Trade Organization (WTO). The U.S. has a large and growing trade deficit with countries involved in past U.S. fast-tracked Free Trade Agreements (FTAs). U.S. export growth is 38 percent higher with countries with which we do not have FTAs relative to those with which we have FTAs.

Also fueling congressional opposition to Fast Track is the abysmal outcome of the Obama administration’s only major trade pact to date, the U.S.-Korea FTA, which is the template for the TPP.  In contrast to Obama’s promises that the Korea deal would boost exports, in the agreement’s first year, U.S. exports to Korea fell 10 percent, imports from Korea rose and the U.S. trade deficit with Korea exploded by 37 percent. This equates to a net loss of approximately 40,000 U.S. jobs.

Opposition to Fast Track has been growing in Congress since the time of NAFTA and the WTO. The 1991 Fast Track grant passed in the House by a 27-vote margin. President Bill Clinton never was able to obtain Fast Track again after that grant expired. Clinton had Fast Track authority for only two of his eight years in office, and in 1998, the House explicitly rejected his request, with 171 Democratic and 71 GOP opposing Fast Track. President George W. Bush then spent two years and enormous political capital to pass Fast Track in 2002 by two votes. That delegation of Fast Track expired in 2007, and Congress rebuffed Bush’s request for an extension.

In 2008, candidate Obama promised to replace Fast Track with a more inclusive process. Historically, a new system of trade authority delegation has been created every few decades since 1890. But in recent months, Obama has ramped up his demand that Congress once again cede its constitutional trade authority via Fast Track.

“Fast Track is outdated 1970s technology being applied to 21st century realities, which is causing serious damage,” said Wallach. “It enables agreements that offshore U.S. jobs and expose our consumer and environmental laws to attack and rollback.”

Already a decade ago, one of Congress’ most ardent free traders, the late U.S. Rep. Robert Matsui (D-Calif.), who led the Democratic House effort to pass NAFTA, described why Fast Track was unacceptable:

“Trade is no longer primarily about tariffs and quotas. It’s about changing domestic laws. The constitutional authority to make law is at the heart of our role as a Congress and of our sovereignty as a nation. When international trade negotiators sit down to hammer out agreements, they are talking about harmonizing ‘non-tariff barriers to trade’ that may include everything from antitrust laws to food safety. I believe the President and the USTR should be able to negotiate trade deals as efficiently as possible … But that does not mean that Congress must concede to the Executive Branch its constitutional authority over foreign commerce and domestic law without adequate assurances that Congress will be an active participant in the process. Congress should be a partner, not a mere spectator or occasional consultant to the process. … Think about what may be bargained away at the negotiating table: our own domestic environmental protections ... food safety laws ... competition policies. That’s the air we breathe, the food our children eat, and the way Americans do business… The nature of trade has changed, and Fast Track authority must change with it. I ardently believe in the principles of free trade. But I will not put my constitutional authority over domestic law and my responsibility to my own constituents on a fast track to the executive branch.” (Rep. Robert Matsui (D-Calif.), Congressional Record, 147, 12/6/01, at H9025.

Prior to Fast Track and starting with Franklin Roosevelt’s presidency, Congress gave Tariff Proclamation Authority to presidents. But it covered only tariffs, not the broad subject matter included under Fast Track. The mechanism allowed the executive branch to implement reciprocal tariff cuts only within bounds set by Congress. Prior to that, trade agreements were often approved as treaties by the Senate, with both chambers later also required to pass implementing legislation. Public Citizen’s 2013 book, “The Rise and Fall of Fast Track Trade Authority, provides an in-depth history of U.S. trade authority.  

October 10, 2013

Fast Track: New Report Proves Difficulty of Defending the Indefensible

When most people hear about a political maneuver that empowered corporate-advised executive branch negotiators to skirt Congress and rewrite policies that affect our daily lives, they don’t say, “Well, that sounds like something worth defending.”  But that improbable response is exactly the position being taken by corporate defendants of Fast Track who have announced a desperate push to revive the undemocratic maneuver by the end of this year. 

Fast Track was a Nixon-crafted ploy, used to railroad through Congress unpopular “trade” deals that have empowered foreign corporations to attack domestic health and environmental policies, enabled pharmaceutical firms to raise medicine prices, and equipped banks with a tool to roll back financial regulation.  Under the U.S. Constitution, Congress is supposed to write the laws and set trade policy.  For 200 years, these key checks and balances helped ensure that no one branch of government had too much power.  But that changed with Fast Track. 

Fast Track delegated away Congress’ constitutional authority over trade pacts, empowering the executive branch to negotiate and sign an agreement before Congress approved the contents.  Then it allowed the executive branch to write legislation that could not be amended and to force a limited-debate vote on the sealed deal within 90 days.

As unpopular deals like the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) were rammed through Congress under Fast Track, mounting opposition to the maneuver grew strong enough to force Fast Track’s corporate proponents to attempt a rebranding (cynically redubbed as “Trade Promotion Authority”). 

It didn’t work.  Fast Track remained polemical and Congress finally allowed it to die in 2007. 

Now Fast Track’s corporate proponents are trying hard to revive it, because they’d like to shove another unpopular “free trade” agreement (FTA) through Congress.  Administration officials have admitted that Fast Track’s democracy-defying procedure will be essential to usher into law the controversial Trans-Pacific Partnership (TPP) – a sweeping U.S. pact under negotiation with 11 Pacific Rim countries that would impose new rules on daily realities ranging from access to medicines and food safety to Internet freedom and Wall Street reform

One of the most recent attempts to revive Fast Track is a report put out by the Third Way think tank – a glossy 10-pager that undertakes the unenviable task of defending Fast Track.  To do so, the think tank employs a series of claims that are as indefensible as Fast Track itself.  Here’s a sampling.

Claim: We must revive Fast Track to push through Congress the controversial TPP because the deal will boost U.S. exports (even to non-TPP countries). 

Reality:

  • The report hopes for big export gains…to non-TPP countries. The report touts a potential export growth of $600 billion to “Asia-Pacific markets” if the U.S. were to recapture its historical export share in the region.  Great.  But not relevant to the TPP.  The $600 billion projection is based on a hypothetical rise in exports to 12 countries.  Seven of them are not in the TPP.  Two more are in the TPP but already have FTAs with the United States.  That leaves three countries for which the TPP could even plausibly have a bearing on the question of how to increase exports (a question that, per the last point, deserves the answer: “not through another FTA”).  Yet, the report is content to use this hypothesized export growth “opportunity” that is 75% patently irrelevant to the TPP as the reason why the TPP should be railroaded through Congress.  
  • The TPP is not really about trade.  Only five of the TPP’s 29 proposed chapters actually pertain to traditional trade matters.  The rest would set new rules affecting everything from food safety and financial markets to medicine prices and Internet freedom.  The reason for wide-ranging public and congressional opposition to the TPP is because people don’t want more expensive healthcare, unsafe food, a rollback of Wall Street reform, corporate attacks on environmental safeguards, etc.  While there is no observed correlation between enacting an FTA and seeing exports rise, there is a correlation between enacting one and seeing public interest safeguards fall.  

Continue reading "Fast Track: New Report Proves Difficulty of Defending the Indefensible" »

September 19, 2013

As President’s Export Council Meets, No Chance to Meet Obama’s Export Doubling Goal; Exports Fall Under Free Trade Agreements

Obama’s Quest for Fast Track Authority and for Support for Trans-Pacific Partnership Pact Undermined by FTA Outcomes; U.S. Exports Have Declined in Each of 16 Months Since Korea FTA Implementation

As President Barack Obama’s Export Council convenes today to discuss his request for Fast Track authority and the status of the increasingly controversial Trans-Pacific Partnership (TPP), recent government data show it will be virtually impossible to meet Obama’s stated goal of doubling exports by the end of 2014. The same data shows that in 16 out of 16 months since the Korea “free trade” agreement (FTA) took effect last year, U.S. goods exports to Korea have fallen below the average export level in the year before the deal. At last year’s sluggish overall two percent U.S. export growth rate, the United States will not achieve Obama’s export-doubling goal until 2032, 18 years behind schedule.

The actual dismal outcomes of the current free trade agreement model are having a significant impact in Congress, where skepticism is growing about both Obama’s request for the rarely used Fast Track trade authority and the TPP.

“Given the dismal data on U.S. export growth, it would be very revealing if the Export Council just calls for more of the same policies and procedures that have gotten us these bad results,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “But whatever the Export Council says, many members of Congress are well aware that the Korea pact has been a loser and that this Trans-Pacific deal would just expand that model to more countries, which seems to be fueling opposition to the president’s request that Congress delegate its constitutional authority over trade to him via the Fast Track process.”

The overall U.S. export record under FTAs has not been helping Obama make his case for Fast Track or the TPP. Growth of U.S. exports to countries that are not FTA partners has actually exceeded U.S. export growth to countries that are FTA partners by 38 percent over the past decade.

The export record of the Korea FTA is even worse. In the first year of the deal, U.S. exports to Korea fell 10 percent (a $4.2 billion decrease), imports from Korea rose 2 percent (a $1.3 billion increase), and the U.S. trade deficit with Korea swelled 37 percent (a $5.5 billion increase), compared to the prior year. Approximately 40,000 net U.S. jobs were lost under the deal’s first year, according to an economic study.

“If the president is serious about growing exports, he would do well to ditch these NAFTA-style so-called ‘trade’ pacts that export U.S. investment dollars and American jobs and look for a new model,” said Wallach. “As long as the administration keeps pushing more of the same instead of acknowledging the damaging record of the past trade deals, of course members of Congress must maintain their constitutional authority over trade so they can make sure we do not end up with yet another damaging pact.” 

Click here for a PDF of this release.

August 09, 2013

A Fast Track to Greater Inequality?

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

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

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

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

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

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

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

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

Trade and Inequality

July 25, 2013

Obama Hints at Unfair Trade as a Cause of Stagnant Wages

In his economic speech at Knox College yesterday, President Obama acknowledged the role of unfair trade in stagnant wages and growing inequality:

In the period after World War II, a growing middle class was the engine of our prosperity...But over time that engine began to stall, and a lot of folks here saw it...Global competition sends a lot of jobs overseas. It became harder for unions to fight for the middle class...And so what happened was that the link between higher productivity and people's wages and salaries was broken...So the income of the top 1 percent nearly quadrupled from 1979 to 2007, but the typical family's incomes barely budged.

That's all true.  Despite a doubling of U.S. workers' productivity, real median wages hover at 1979 levels.  What does unfair trade have to do with this?  We spell it all out in our synopsis of the economic impacts of the offshoring-prone "free trade" era, enabled by the undemocratic power grab known as Fast Track, which is ironically now supported by Obama's own administration. Here are some critical excerpts: 

Trade agreement investor privileges promote offshoring of production from the United States to low-wage nations. In the past, trade competition came from imports of products made by foreign companies operating in their home countries. But today’s “trade” agreements contain various investor privileges that reduce many of the risks and costs previously associated with relocating production from developed countries to low-wage developing countries. Thus, many imports now entering the United States come from companies originally located in the United States and other wealthy countries that have moved production to low-wage countries. For instance, over half of China’s exports are now produced by foreign enterprises, not Chinese firms.  American workers effectively are now competing in a globalized labor market where some poor nations’ workers earn less than 25 cents per hour.  

The bargaining power of American workers has been eroded by threats of offshoring. In the past, American workers represented by unions were able to bargain for their fair share of economic gains generated by productivity increases.  But the investor protections in today’s trade agreements, by facilitating the offshoring of production, alter the power dynamic between workers and their employers. For instance, a study for the North American Commission on Labor Cooperation – the body established in the NAFTA labor side agreement – showed that after passage of NAFTA, as many as 62 percent of U.S. union drives faced employer threats to relocate abroad, and the factory shut-down rate following successful union certifications tripled.

About 7 million American manufacturing jobs – over 1 out of 3 – were lost during the Fast Track era. The U.S. manufacturing sector has long been a source of innovation, productivity, growth and good jobs.  By 2012, the United States had less than 12 million manufacturing jobs left – about 6.6 million fewer than in 1974 before Fast Track was first established,  with less than nine percent of the American workforce in manufacturing for the first time in modern history.  

Displaced manufacturing workers have been forced to take lower-paid service jobs. Trade policy affects the quality of jobs available, not the aggregate quantity. And the job quality (i.e. wage level) available has been degraded by the mass erosion of manufacturing. According to the Bureau of Labor Statistics, two out of every five displaced manufacturing workers who were rehired in 2012 experienced a wage reduction of greater than 20 percent. Most took a pay cut in lower-paid service jobs (the graph below indicates how lower-paid service jobs have replaced higher-paid manufacturing jobs).

Trade policy holds back wages even of jobs that can’t be offshored. When workers in manufacturing are displaced and seek new jobs, they add to the supply of U.S. workers available for non-offshorable, non-professional jobs in construction, health care, hospitality and more. The Bureau of Labor Statistics has projected that some of the U.S. economy’s fastest job growth in the coming decades will occur in such low-skill occupations. But as increasing numbers of American workers, displaced from better-paying jobs by current trade policies, have joined the glut of workers competing for these non-offshorable jobs, real wages have remained stagnant in these growing sectors.  

And that, in a nutshell, is how Pres. Obama got from "Global competition sends a lot of jobs overseas" to "the typical family's incomes barely budged." Unfair trade deals, built for offshoring, reduced workers' bargaining power, forced displaced manufacturing workers to take big pay cuts, and contributed to the overall glut of workers competing for lower-wage jobs. Now if only his trade negotiators would spot the unfair trade link and stop pushing more offshoring-prone "free trade" deals.  

Manufacturing

March 01, 2013

The Obama Administration Wants to Sell You a Used Trade Policy

The Office of the U.S. Trade Representative (USTR) just released the 2012 annual trade report and 2013 trade agenda of the President.  It reads a bit like a used car salesman trying to do his best with a lemon.  The report/car’s well-polished sheen looks pretty… until you take a peek under the hood. 

Take the first sentence: “Trade is helping to drive the success of President Obama’s strategy to grow the U.S. economy and support jobs for more Americans.”  Almost makes you forget that last year’s non-oil trade deficit rose to a five-year high, implying the loss of millions of jobs, doesn’t it?  How about the second sentence: “The Obama Administration’s trade policy helps U.S. exporters gain access to billions of customers beyond our borders to support economic growth in the United States and in markets worldwide.”  That’s an interesting way to frame a year whose sluggish two percent export growth rate put us 18 years behind schedule in achieving Obama’s export-doubling goal.  The report continues on with its pitch, trying its darndest to pretty up what amounts to a year of ugly trade policy impacts for workers and consumers, and what appears to be more of the same planned for the 2013 trade agenda. 

Before you buy this “certified pre-owned” trade policy, let us help interpret some of the report's glossy claims:

Fast Track

The report’s first page features these two sentences: “To facilitate the conclusion, approval, and implementation of market-opening negotiating efforts, we will also work with Congress on Trade Promotion Authority. Such authority will guide current and future negotiations, and will thus support a jobs-focused trade agenda moving forward.”  Those lines have prompted a frenzy of press speculation that the Obama administration could ask Congress for Fast Track, the controversial tool that presidents from Nixon to Bush II have used to seize Congress' constitutional prerogative to set trade policy.  Fast Track has been newly euphemized as "Trade Promotion Authority." (It's not a "clunker," it's a "mechanic's dream.")  Much of the press hubbub has been over whether or not Congress would or should revive the "politically contentious" Fast Track authority for Obama. But that's not the right question. We should be asking: what kind of trade negotiating system should replace Fast Track?  It's time for a modern, democratic trade negotiating process to replace an autocratic Fast Track system that predates disco. 

It's interesting that the administration decided to devote two lone sentences to Fast Track in a 382-page report. Why not be more forthright in heralding a new push for Fast Track?  Because when asking for something unpopular, it makes sense to whisper.  And Fast Track is vastly unpopular.  Before being allowed to die in 2007, Fast Track was a Nixon-conceived attempt to sidestep checks, balances and other pesky features of a democratic republic by taking from Congress its Constitution-granted prerogative to determine trade policy. In one fell swoop, Fast Track 1) delegated away Congress’ authority to choose trade partners and set the substantive rules for “trade” pacts that have deep ramifications for broad swaths of non-trade domestic policy, 2) permitted the executive branch to sign and enter into FTAs before Congress voted on them, 3) forced a congressional vote on FTAs, and 4) suspended amendments and truncated debate when that vote occurred.  It was under this legislative luge run that we got NAFTA, CAFTA, the Korea FTA, etc.  Fast Track's extreme approach has created many an opponent (right, left, and center), spurring politically costly battles for past presidents that have attempted to wrest the unpopular authority from Congress.  

If Fast Track carries such political liability, why is the Obama administration pursuing it?  Well, according to today's report, it's to “facilitate” the passage of FTAs like the TPP (see below).  But if the TPP is such a “high-standard” agreement, what’s the harm in letting Congress get a good look at it, rather than handcuffing their involvement with Fast Track?  Doing so would save Obama the political grief of a Fast Track fight.  Or maybe there’s something even more objectionable about the TPP itself that requires Fast Track’s unparalleled sequestration of congressional power to get the deal enacted?  

Again, the choice is not Fast Track or no Fast Track.  It's Fast Track or a sensible model of trade policymaking for a modern democracy.  A new model of delegated authority would respect Congress' responsibility to play the lead role in determining the outcome of “trade” deals that intend to rewrite policies regarding financial regulation, immigration, climate and energy policy, healthcare, food safety, etc.  

Trans-Pacific Partnership

USTR reiterates throughout the report its standard definition of the Trans-Pacific Partnership (TPP) as “a high-standard regional trade agreement that will link the United States to dynamic economies throughout the rapidly growing Asia-Pacific region.” (italics added)  The primary problem with this pitch is that we’re already quite linked with these economies -- as in, 90 percent linked.  The United States already has trade deals with six of the seven largest TPP negotiating economies, which constitute 90 percent of the combined GDP of the negotiating bloc.  The TPP “dynamic economies” with which we don’t already have liberalized trade include Vietnam, where annual income per person is $1,374, and Brunei, which has a population smaller than Huntsville, Alabama.  As we’ve said time and again, this deal is not primarily about trade. 

What is it about?  It's about banning Buy American policies that support U.S. jobs; discreetly enacting provisions of the congressionally-defeated, Internet-freedom-threatening Stop Online Piracy Act; restricting safety standards for imported food; empowering foreign investors to directly challenge governments’ public health and environmental policies while demanding taxpayer compensation for “expected future profits;” counteracting efforts to reregulate Wall Street; giving pharmaceutical corporations better tools to undermine drug cost containment policies; and more.  USTR appears to have omitted such details in today's report.   

Under a section entitled “Inclusion of stakeholders at Trans-Pacific Partnership negotiations,” USTR boasts that “Stakeholder engagements and briefings provided an opportunity for the public to interact with negotiators from all of the participating countries and provide presentations on various trade issues, including public health, textiles, investment, labor and the environment.”  We have indeed given such presentations…while TPP negotiators were simultaneously scheduled to be on the other side of the negotiating venue.  It’s hard to engage trade negotiators who are supposed to be in two places at once.  We do appreciate the attempt at engagement, but would appreciate a more concerted effort

After patting its back for being “open” and having “unprecedented direct engagement with stakeholders,” USTR includes this: “At the same time, the Administration will vigorously defend and work to preserve the integrity of confidential negotiations, because they present the greatest opportunity to achieve agreements that fulfill U.S. trade negotiation objectives.”  Here USTR is trying to explain the equivalent of a used car's missing motor: an unbending commitment to not release the TPP negotiating text.  While claiming “unprecedented” engagement with stakeholders, USTR’s decision to keep the TPP negotiating text secret from the public, the press, and even congressional offices is “unprecedented” among 21st-Century trade deals of this scope.  The World Trade Organization (WTO), hardly a paragon of transparency, posts key texts online for public review. In addition, when the last major regional “trade” agreement (the Free Trade Area of the Americas) was at the same stage as the TPP is now, the text was formally released by the U.S. and other negotiating governments (in 2001). It’s hard to claim genuine engagement with stakeholders when those stakeholders cannot see the thing in which they hold such a stake. 

Trans-Atlantic FTA

The report reiterates President Obama’s State of the Union surprise: that the United States intends to not just negotiate a NAFTA-style pact spanning the Pacific (the TPP), but also one spanning the Atlantic. In brief discussion of the Trans-Atlantic FTA (TAFTA), the report says, “Such a partnership would include ambitious reciprocal market opening in goods, services, and investment, and would offer additional opportunities for modernizing trade rules and identifying new means of reducing the non-tariff barriers that now constitute the most significant obstacle to increased transatlantic trade.”  But this deal, even more than most, is not about trade.  Says who?  USTR itself.  U.S. Trade Representative Ron Kirk, in a briefing on the deal said that the administration has resisted including the word “trade” in the name of the deal “because it is so much broader than trade.” 

With tariff levels already quite low between Europe and the United States, this FTA appears to be primarily about those “non-tariff barriers” standing in the way of “regulatory coherence.”  What might such opaque terms mean?  In the past, they have been code for a lowest-common-denominator approach to reducing all those safety, environmental, health, financial stability and other domestic regulations that corporations have not been able to roll back via domestic pressure.  “Trade” deals provide a handy forum in which to write binding rules that contravene such regulations.  What regulations in particular might be on the hoped-for chopping block?  European firms have already taken aim at U.S. financial regulations, while U.S. corporations have long been annoyed by Europe’s tougher policies against unsafe food, GMOs, and carbon emissions.  Big agribusiness, oil and gas, chemical, and financial firms on both sides of the Atlantic may be hoping to undermine such policies in a new TAFTA, to the detriment of, well, just about everyone else. 

Exports and Jobs

The report informs the reader that “Data from 2012 showed that every $1 billion in U.S. goods exports supported an estimated nearly 5,400 American jobs...”  Good to know.  What about an additional $1 billion in imports?  As per usual, USTR trumpets the gains of exports without looking at the other side of the trade equation.  In the same way that exports are associated with job opportunities, imports are associated with lost job opportunities when they outstrip exports, as dramatically occurred last year.  The non-oil U.S. deficit in goods rose six percent in 2012 to $628 billion, the largest non-oil U.S. trade deficit in the last five years.  According to the Obama administration’s own math, that degree of negative net exports implies the loss of 3.4 million jobs.  That data from 2012 didn’t make it into the report. 

Readers of Eyes on Trade know that U.S. exports to Korea under the Korea FTA have been faring particularly poorly: they fell 10 percent in 2012 after the deal took effect (compared to the same months for 2011).  How did USTR deal with this inconvenient truth in its annual report?  It didn’t.  With respect to the three FTAs implemented in 2012, the report states “…in 2013 we will work with Korea, Colombia, and Panama to ensure that the bilateral trade agreements that went into effect last year continue to operate smoothly…”  A ten percent fall in exports for a deal that was sold under the unrelenting promise of “More Exports. More Jobs?”  Real smooth.  It seems that these are not the things one mentions in an annual report when one’s accompanying agenda for the next year includes more of the same FTAs (e.g. TPP), sold under the same “More exports. More jobs” pitch.   

Buy American and Green Procurement Policies

Wonder why our exports and job growth has been so sub-par recently?  USTR thinks it has found the answer—that scourge of our economic woes called “localization.”  Here’s what the report has to say on the topic: “We are also actively combating “localization barriers to trade” – i.e., measures designed to protect, favor, or stimulate domestic industries, service providers, and/or intellectual property (IP) at the expense of goods, services, or IP from other countries…Localization barriers to trade that present significant market access obstacles and block or inhibit U.S. exports in many key markets and industries include: requiring goods to be produced locally; providing preferences for the purchase of domestically manufactured or produced goods and services; and requiring firms to transfer technology in order to trade in a foreign market…Building on progress made in 2012, the localization taskforce will coordinate an Administration-wide, all-hands-on-deck approach to tackle this growing challenge in bilateral, regional, and multilateral forums…” 

Before the USTR dedicates the few hands it has on deck to scour the globe for pernicious localization policies, it might want to check out a few of our own.  Namely, Buy American.  This program, widely-supported among Republicans, Democrats and independents, provides a textbook example of USTR’s definition of a “localization barrier.” Buy American explicitly “provides preferences for the purchase of domestically manufactured or produced goods,” by requiring that U.S. tax dollars be spent on domestic firms when the U.S. government purchases construction equipment, vehicles, office supplies, etc.  Did USTR have in mind the elimination of this job-supporting program? Their trade agenda would certainly indicate so –- the TPP and other FTAs ban the Buy American treatment for any foreign firms operating in new FTA partner countries. 

“Localization” also implicates Buy Local and other green procurement policies that governments are increasingly using to transition to a greener economy.  Ontario, for example, has employed a renewable energy program that requires energy generators to source solar cells and wind turbines from local businesses so as to cultivate a robust supply of green goods, services, and jobs.  The program has earned acclaim for its early success in generating 4,600 megawatts of renewable energy and 20,000 green jobs.  But one group hasn’t had much acclaim to offer: the WTO.  In a ruling at the end of last year, the WTO decided that the successful program’s local requirements violate WTO rules.  Today's report confirms indications that USTR now also intends to take on such climate-stabilizing “barriers to trade." Last month, the United States initiated a WTO case against India, attacking buy-local components of its solar energy policy.  A refurbished trade agenda that undermines an urgently-needed clean-energy agenda?  Sounds like a lemon. 

November 10, 2011

Sherrod Brown Tosses the Panama FTA

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

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

October 11, 2011

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

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

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

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

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

July 15, 2011

Trade-ifact Part Deux

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

Doug Palmer (Reuters)

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

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

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

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

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

Vicki Needham (The Hill)

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

Continue reading "Trade-ifact Part Deux" »

July 07, 2011

Liveblogging dueling congressional hearings on 3 NAFTA deals

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

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

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

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

Core Aspects of Fast Track Trade-Authority Delegation

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

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

++

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

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

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

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

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

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

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

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

++

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

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

Continue reading "Liveblogging dueling congressional hearings on 3 NAFTA deals" »

May 24, 2011

Scott Walker's NAFTA trade package

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

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

Most governors did not sign onto this latest NAFTA push. But  Scott+Walker+Presidents+Obama+Travels+Wisconsin+D0lRNSKUp6Jl major anti-union Republican governors including Walker and Indiana's Mitch Daniels are on the letter. (See whether your governor signed on or not after the jump.)

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

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

See the full list of signatories after the jump.

Continue reading "Scott Walker's NAFTA trade package" »

January 21, 2010

Senate Supermajorities, Filibusters and Worker Rights

Labor activist Thomas Geoghegan recently had a piece in the New York Times that rightly decries how current filibuster practices are imposing supermajority requirements on non-treaty legislation like health care reform.

Ironically, treaties have now been effectively stripped of their supermajority requirements. The Constitution empowers Congress to regulate foreign commerce, and requires that treaties be approved by a Senate supermajority. According to the Federalist Paper 75, this was to ensure popular legitimacy of international instruments that would operate as domestic laws. Yet, the controversial 2005 Central America Free Trade Agreement - which the founders would likely have considered a treaty - passed by only two House votes. The process on this and similar deals was rushed through Congress via the Fast Track mechanism (itself receiving only one vote in the House in 2001), which limits debate and gives expansive powers to the executive to design and sign trade agreements.

Public policy will continue to face a legitimacy crisis if pro-worker legislation is perpetually blocked, while anti-worker trade deals skate through Congress.

October 05, 2009

Lobbyists React with Fury and Threats to Obama Administration Decision

A few weeks ago we reported that the Obama administration was considering taking an important step towards fulfilling the campaign promise of reducing the influence of special interests in Washington by removing registered lobbyists from influential advisory committees.

This decision has been confirmed by the official White House blog which states, “the President has made a commitment to close the revolving door that has in the past allowed lobbyists and others to move to and from full-time federal government service…the President made a commitment to the American people to reduce the influence of lobbyists in Washington out of a belief that lobbyists have too often in the past achieved disproportionate impact on government decision makers at the expense of broader voices from the public at large. If we are going to change the way business is done in Washington, we need to make sure we are not simply continuing the practices of the past.” According to a senior White House official, the panels have been excessively dominated by lobbyists: “It is one of the ways special interests have historically shaped policy to the detriment of the public interest.”

Lobbyists have reacted with “absolute fury” to the decision, and some are brashly threatening to circumvent the policy in order to retain their influence on advisory panels: Dave Wenhold, president of the American League of Lobbyists (ALL) stated, “If lobbyists want to stay on boards, they will just deregister.” 

According to The Hill, an estimated 1,000 federal advisory committees were established under the Federal Advisory Committee Act, and many of them include registered lobbyists. The trade advisory system is made 28 advisory committees of about 700 individuals, approximately 30 percent of whom are registered lobbyists. For example, the textile and apparel advisory committee, which includes registered lobbyists from three industry apparel and textile trade groups, stands to lose a large percentage of its members due to the decision. For more on the trade advisory system, check out our book.

Calman Cohen, president of the Emergency Committee for American Trade and a lobbyists for IMB, Oracle, and eBay Inc, laments that the administration should “take account of all citizens, whether they are a lobbyist or not…”
Hmm…is Cohen suggesting that it’s time for a Lobbyists' Bill of Rights? 

September 18, 2009

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.

June 29, 2009

Unifying the Dems across Caucuses

With Congress in recess this week, we're finally able to take a step back and analyze just how significant last week's TRADE Act roll out was.

What's most impressive is just how diverse the list of TRADE Act cosponsors are. We put together a handy list of cosponsors, and we're all jazzed when we see the 17 members of the Blue Dog Caucus together with 14 members of the New Democrat Caucus and 19 Congressional Black Caucus members. I'd be really interested in seeing a list of bills cosponsored by both Barbara Lee (D-CA) AND Leonard Boswell (D-IA).

And then you have members like freshman Rep. Tom Perriello (D-VA), who won his seat by 727 votes in a district President Obama lost by 2500 votes, connecting the dots between the current economic crisis and 16 years of the NAFTA trade model at the roll out press conference. What Perriello gets, and Democrats must to keep their majority, is that the politics of trade reform play especially well for Democrats in those red or purple districts that Democrats originally lost back in 1994. If I were knocking on doors for a candidate in Virginia, North Carolina or upstate New York, I'd be keeping the TRADE Act's call for a review and possible renegotiation of NAFTA high up on my clipboard.

Blue Virginia gives Rep. Tom Perriello a shout out for his leadership on the issue here.



June 25, 2009

Videos from yesterday's TRADE Act presser

We've got statements from six members on video from yesterday's TRADE Act news conference. Here are the goods (all these links go to YouTube):

Also, check out this Reuters story on the Washington Post website, which says:

Trade deals with Panama, Colombia, and South Korea were negotiated by the Bush administration, but must be ratified by Congress before they can go into effect.

The House legislation "sets a clear standard for where House Democrats are on trade," said Bill Holland, a spokesman for Public Citizen, a consumer advocacy group that supports the bill.

"Those three (pending) agreements are built on the NAFTA model, and today's introduction of the Trade Act is a clear rejection of that model and a call for change," he said.

Finally, here are some letters of support for the TRADE Act from prominent organizations. A few samples: AFL-CIO; Change to Win; Sierra Club; Friends of the Earth (all PDF downloads).

June 24, 2009

TRADE Act 2009: Double the Original Cosponsors, Double the Fun!

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As Todd mentioned, the TRADE Act was reintroduced in the House of Representatives today by sponsor Rep. Mike Michaud (D-Maine). This year's version of the legislation is backed by 106 original cosponsors, including nine committee chairs and 45 subcommittee chairs. The cosponsors come from the full range of Democratic caucuses and from around the country. The full list of cosponsors is available here. The Trade Act - 2009 version - has double the number of original cosponsors as the Trade Act introduced last June, showing that support is rapidly growing for a fair-trade alternative to our current failed NAFTA-WTO model.

At today's press conference, although periodically interrupted by a series of floor votes, a number of members of Congress gave impassioned statements about the need for a new direction on trade. Chairwoman Louise Slaughter (D-N.Y.) and Reps. Michaud, Paul Tonko (D-N.Y.), Betty Sutton (D-Ohio), Tom Perriello (D-Va.), and Rosa DeLauro (D-Conn.) all spoke and took questions. We'll have video clips of some of these statements up by tomorrow.

In the meantime, after the jump, check out our full press release and some additional photos from today's press conference.

Continue reading "TRADE Act 2009: Double the Original Cosponsors, Double the Fun!" »

Trade Act to be unveiled shortly

The 2009 Trade Reform, Accountability, Development and Employment Act, or TRADE Act, will be unveiled at 2 pm at an event on Capitol Hill.

The bill, sponsored by fair-trade champion Rep. Mike Michaud (D-Maine), has over 100 cosponsors, and represents a positive, forward-looking alternative to the failed NAFTA-WTO unfair trade model. Check out our post on last year's unveiling for a taste of things to come.

Stay tuned!

May 11, 2009

Louise Slaughter, Presente!

The Conference Board of Canada just released a report that looks at the impact of the fair-trade sweep in the last two U.S. elections.

It takes the anti-democratic analytical perspective that things said during campaigns don't matter. So we have the inevitable comparison that only Nixon could "open" China, and only Obama could "save free trade," apparently because he campaigned against NAFTA-style policy.

While it's a well-worn trope that Democratic Party candidates lie to their base in the primaries to win their support, the important difference this time was the specificity of Obama's critique of NAFTA, some of which you can read about here. To be certain, we have no idea what his eventual policies will be, but we do know that this is not your father's Democratic primary in terms of the specificity of the commitments. It is a new day in regards to the trade-policy orientation of the president.

As for the congressional politics, the notion that the legislative branch will just roll over on its commitments seems incorrect as well. All you have to do is look at today's Roll Call story for evidence of Congress' collective backbone, and that they won't take the Panama FTA lying down:

“I’m getting really pis*ed off,” said House Rules Chairwoman Louise Slaughter (D), who represents a region of New York that has suffered under the North American Free Trade Agreement. “Obama’s got to get a he*l of a lot of stuff up through here, and to start out by bumming out about half of us doesn’t strike me as a wise move.”

Rep. Mike Michaud (D-Maine), co- chairman of the House Trade Working Group, singled out House Majority Leader Steny Hoyer (D-Md.) in his criticism of his party leaders’ desire to advance the Panama deal. The working group includes several prominent Members, including six committee chairmen and 17 subcommittee chairmen.

“As a Democratic leader, I don’t think it’s helpful to vulnerable Members to ask them to support a Bush-negotiated trade deal,” Michaud said. “As a Democratic leader, [Hoyer] should not be encouraging the White House to move forward on this.”...

During a meeting last month with representatives from the Office of the U.S. Trade Representative, Slaughter spoke on behalf of about 20 Members in voicing concerns with the Panama deal. The USTR attendees seemed “receptive,” she said, but have not contacted her since the meeting.

“I carried on awful,” Slaughter said of the hourlong meeting. “We’re not just going to take all of this stuff lying down anymore.”...

Rep. Marcy Kaptur (D-Ohio), one of the Members who attended the USTR meeting, said Slaughter repeatedly reminded USTR officials that she chairs the powerful Rules Committee.

“She made it very clear that she didn’t intend to move any of those bills,” Kaptur said. “I hope it gets someone’s attention over at the White House.”

The author of the report's obliviousness to a changed landscape within the Democratic Party shows through in the citation of the U.S.-Peru Free Trade Agreement, which the Conference Board notes passed, but doesn't mention that a majority of the majority Democrats opposed.

The Conference Board report is off in a number of other regards. First, it says that Obama will ask for Fast Track (i.e. Trade Promotion Authority). I have not seen that anywhere, and I don't think it is correct. He may ask for some form of delegated authority, but it is unlikely to be Fast Track. In fact, the quote that the Conference Board cites indicates that Obama is looking to change the form of delegated authority by establishing new checks and balances on the process. As the campaign commitments cited above note, Obama has said he will "replace Fast Track." (Our recent book - "The Rise and Fall of Fast Track Trade Authority" - offers a variety of alternative arrangements that could boost the legitimacy of trade deals.)

Finally, far too many Canadian sources are spreading misinformation about the Buy America/n provisions in the stimulus bill. As we've explained many times, the stimulus bill is ONLY an improvement for Canada. For the Buy America provisions related to federal grants to states for transit projects,  U.S. products have always been given a 25 percent price preference over products from Canada (and other trade-pact partner countries). For the Buy American provisions related to federal procurement, U.S. products (specifically iron, steel, and manufactured products for stimulus-funded projects) received a 6 percent preference, and now they receive a 25 percent preference. But... wait for it... so. does. Canada., and all of our other trade-pact partners. Pre-stimulus rules were more generous to Canada than Canada is to us under its WTO-NAFTA commitments, and the post-stimulus rules are more generous than the pre-stimulus rules.

So, friends to the north, don't hate, appreciate! (And don't worry, we know that our friends in labor and the environmental community are already far ahead of their government and elites on this question.)

May 08, 2009

Video from Book Event

For those who missed yesterday's book launch of "The Rise and Fall of Fast Track Trade Authority", you can watch the video here, and check out pics on the New America Foundation website.

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