Businesses Crowd Corporate-Hosted Government Hearing on Trans-Atlantic "Trade" Deal

As the Obama Administration gets ready to negotiate a Trans-Atlantic "Free Trade" Agreement (TAFTA) with the European Union that takes aim at a host of health, financial, environmental and other regulations, a smorgasbord of corporate representatives (and a sprinkling of consumer groups) voiced their wishes for the pact this week. The occasion was a standing-room-only "stakeholder session," hosted by the administration's Office of Management and Budget and the European Commission, to get input on what TAFTA should or should not entail.  

What neutral territory did the administration choose to consider such a critical question?  Perhaps one of the many government-owned venues in downtown DC?  Nope.  They went with the headquarters of the Chamber of Commerce.  The Chamber's not exactly a disinterested party in a pact that could implicate a wide swath of U.S. regulation used to balance big business's quest for profits with the public's quest for financial stability, a healthy environment, safe products, and affordable medicines.  The venue choice is akin to the Environmental Protection Agency hosting a forum on offshore drilling...on an offshore drill.  

But at least the administration granted public interest groups like us some time to offer input.  As in, a half hour.  Total.  For all consumer groups.  In a 1.5-day-long forum otherwise filled almost exclusively by industry representatives.  If relative allotment of time is indicative of the relative importance the administration attributes to industry views on TAFTA vs. the views of everyone else, big business "stakeholders" hold 76% of the administration's attention, technical standards organizations hold 11%, and the opinions of the rest of us are worth 13%. 

During that half hour, I squashed Public Citizen's initial take on TAFTA, one of the largest "trade" deals proposed to date, into a five-minute statement.  For a nutshell view of what's at stake in TAFTA, here's the statement:

New Legal Analysis Shows How Obama Administration Can Avoid Trade Sanctions by Strengthening Popular Consumer Country-of-Origin Meat Labels Ruled Against by WTO

As May 2013 Deadline Looms, WTO Compliance Process Begins; USDA Sends Draft COOL Regulations to OMB

WASHINGTON, D.C. – The United States can avoid trade sanctions by strengthening consumer labeling rather than gutting the popular county-of-origin labeling (COOL) meat labeling program against which the World Trade Organization (WTO) ruled in 2012, said Public Citizen as it released a new legal analysis prepared for several consumer and farm groups by the trade law firm Stewart and Stewart.

“Ensuring American consumers’ right to know where their meat comes from must be the Obama administration’s priority,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The American public’s antipathy toward our current trade policies would be greatly intensified if a WTO ruling empowered big agribusiness corporations to sell mystery meat here, despite U.S. consumers and Congress demanding these labels on which we all rely in grocery stores nationwide.”

By July 2013, the United States must respond to three 2012 WTO rulings against popular consumer policies, including the country-of-origin meat labels, “dolphin-safe” tuna labels and a U.S. ban on clove-, candy- and cola-flavored cigarettes that was aimed to curb youth smoking. As of May 23, 2013, Mexico and Canada, which attacked the U.S. meat labels at the WTO, can obtain authorization to impose trade sanctions against the United States that would remain in effect until the policy is altered.

The new legal analysis shows how the United States can meet WTO rules by strengthening existing regulations to provide more information and more accurate details to consumers. The U.S. Department of Agriculture sent new draft COOL rules to the Office of Budget and Management on Friday.

Background:  After 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program, Congress enacted mandatory country-of-origin labeling for meat in the 2008 farm bill. The policy requires American retailers to label certain foods with the country (or countries) in which animals were born, raised or slaughtered. In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO countries are permitted to apply. Canada and Mexico suggested that the United States should eliminate mandatory labeling and return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food firms play a central role. Neither option would provide U.S. consumers with the same level of information as the current U.S. labels.

View the report here.

Victory for Public Health in Australia, But Big Tobacco Threatens Counterattack through Trade Pacts

Last week, public health advocates rejoiced when Australia’s High Court (its Supreme Court equivalent) upheld the country’s landmark tobacco control “plain packaging” laws against a legal attack from Big Tobacco.  Phillip Morris, British American Tobacco, Imperial Tobacco, and Japan Tobacco had sued the government, arguing that the new requirement to sell cigarettes packages with large health warnings rather than brand trademarks would constitute an uncompensated taking of their intellectual property rights. Ultimately, the court ruled that the public health law did not violate the constitution of Australia, where smoking kills 15,000 people each year. Starting on December 1^st, all cigarettes and tobacco products will be sold in plain, brand-free packages with graphic health warnings. 

Australian Attorney-General Nicolos Roxon welcomed the ruling as “a watershed moment for tobacco control around the world.”

Despite this legal victory for public health at Australia’s highest court, unfortunate provisions in trade and investment pacts provide Big Tobacco with additional avenues to attack Australia’s plain packaging policies in foreign tribunals. Internationally, the law already faces attack at both the World Trade Organization (WTO) and through an obscure investment treaty.

Only hours after the ruling, Ukraine filed a formal complaint against the law at the WTO, arguing that the plain packaging law violates Australia’s commitment under the WTO and requesting the establishment of a formal disputes panel. Honduras and the Dominican Republic have also filed complaints. When asked if he thought the big tobacco companies were behind Ukraine's decision to launch its WTO case, Australia’s Trade Minister Craig Emerson said that he was "not aware of tobacco being a big industry in Ukraine, so one would wonder why it would have a big interest in this".

Australia’s plain packaging is also being challenged by tobacco company Philip Morris under the Hong-Kong-Australia bilateral investment treaty (BIT). The U.S. company incorporated a subsidiary in Hong Kong in order to launch the attack through this obscure treaty. A tribunal of three private sector lawyers constituted under the United Nations Commission on International Trade Law (UNCITRAL) will conduct the arbitration to decide whether the laws have had a significant negative impact on Philip Morris’ investment in Australia.

The extreme investor rights contained in the BIT pose particular threats to the case for plain packaging policies. According to Dr. Kyla Tienhaara, a trade law expert at Australian National University (ANU), “The investor-state dispute under the Hong Kong treaty is particularly concerning for supporters of the legislation. Unlike the WTO, there’s no exception under the treaty for public health measures. And unlike in the Australian Constitution, 'expropriation' (the act of a government taking private property) is defined very broadly.”

These cases, which demonstrate the danger of allowing investors a supranational avenue to attack public interest laws, have strengthened Australia’s commitment to not allow foreign investors to sue its government before panels of international trade arbitrators. Australia has refused to be subjected to investor-state dispute settlement in the Trans-Pacific Partnership (TPP), which is being pushed by multinational companies including Philip Morris.  (The TPP's leaked investment chapter, meanwhile, reveals that the pact would require all other countries, including the US, to allow foreign investors to sue their national governments).  

Australia is facing pressure domestically in response to this rejection of investor-state suits in TPP. The Australian Chamber of Commerce and Industry (ACCI) has launched a “Right to Sue” campaign, and has sent a letter to the Prime Minister urging the government to consider including ISDS (Investor-State Dispute Settlement) in future FTAs. (You can find a good analysis of the misleading claims of the campaign and letter here.)

Through progressive tobacco regulation policies, Australia has set an important precedent in placing a higher value on domestic public health policies over foreign investor rights. Unfortunately, trade and investment pacts provide Big Tobacco with second and third avenues to subvert the will of the Australian people and its highest court. The good news is that other countries will inevitably follow Australia’s lead on tobacco control policies.  Hopefully they will also follow Australia's prudent decision to reject extreme foreign investor rights in trade pacts like the TPP.  

America, meet your meat master

Happy Fourth of July! As our fearless leader Rob Weissman articulates in this note here, your holiday meat could be much more mysterious come next Fourth of July:

If you’re looking forward to grilling up some hamburgers and hot dogs, think about this: Where does the food you’re eating come from?

That simple question is going to be a lot harder to answer after a ruling from the World Trade Organization (WTO), which decreed last week that such basic consumer information as country-of-origin labels on meat are “unfair trade barriers” to multinational corporate profits.

If you don’t eat meat, know that the WTO ruling could be extended to country-of-origin labels for produce. So maybe next summer it’s the potato salad and corn on the cob, too.

Like me, you might find this hard to swallow. If you’ll excuse a mixed metaphor, mystery meat (and lettuce) is not my cup of tea.

But it’s standard operating practice for the WTO, which in recent months has proclaimed that U.S. “dolphin-safe” tuna labels and a U.S. ban on clove-, candy- and cola-flavored cigarettes both violate WTO trade rules.

Last November, I shared some of my thoughts about the WTO's lower panel ruling against the country-of-origin labels (COOL) for beef and pork that were created by the 2008 U.S. Farm Bill. Canada and Mexico had challenged the U.S. law, claiming that it violated their rights under the WTO's Agreement on Technical Barriers to Trade (TBT). (See here also.)

Last Friday, that ruling was upheld by the WTO's Appellate Body - specifically, by an AB division composed of Ujal Singh Bhatia of India, Ricardo Ramirez Hernandez of Mexico and Peter Van den Bossche of Belgium. In fact, it's the third consecutive WTO attack on a popular U.S. consumer protection or information policy to go down this year. (See the attacks on dolphin-safe labels and cancer prevention through cigarette controls.)

Like in those other cases, the Appellate Body doubled down on key aspects of the lower panels' rulings. And like those other cases, the implications go far beyond the specific measure at issue. Indeed, many other country of origin labels and consumer information policies are now at greater risk of challenge in the future.

We'll go through some of the specifics after the jump.

TPP could undermine Medicare, Medicaid and Veterans’ Health - hurting seniors, military families and the poor

You've read about how the leaked chapter of the Trans-Pacific Partnership (TPP) that surfaced yesterday will outsource our judicial system and allow corporations to attack our laws.

But did you know that an earlier leaked text shows that the TPP could also undermine Medicare, Medicaid and Veterans' Health? This could hurt access to affordable medicines for our seniors, military families, and poor.

Indeed, it has been an open secret among trade negotiators that U.S. pharmaceutical companies have pushed to limit drug price containment measures, such as through the recent bilateral trade deals with Korea and Australia.

But, in our new public interest analysis, Public Citizen shows that Medicaid, Medicare, the Department of Defense’s TRICARE program for active military personnel, and the Veterans Health Administration and the 340B program are all threatened by the TPP.

We also show how proposed changes to Medicare championed by President Obama would clearly risk violating the TPP. Throughout, we show how trade tribunals are less likely to defer to national healthcare regulators than do national judges, including conservatives like Justices Scalia and Thomas. We conclude with suggested changes to the TPP to insulate smart drug price containment strategies.

Read the full memo here.

Congress Stands up for Dolphins, Pushes Back on WTO

Rep. Ed Markey (D-Mass.), the ranking member on the House Natural Resources Committee, joined 42 colleagues in sending a strong letter to President Obama urging him to push back on the recent WTO ruling against dolphin-safe tuna labels.

In a press release, Markey said “The American people deserve to know whether or not the fish they eat was caught by killing Flipper... Dolphin-safe labeling of canned tuna has been successful in protecting the species and giving consumers informed choices.”

The letters calls the WTO decision "misguided," and says that "the U.S. intends to maintain the strong dolphin-safe standards, and not to water them down." The letter goes on:

The implication of the recent WTO ruling ... is that the U.S. should expend significant regulatory resources around the globe in an untargeted fashion, or alternatively, that imports from Mexico could utilize the dolphin-safe labels without having to meet the same requirements as tuna caught by U.S. or other nations' fleets. Neither result is acceptable, and 'complying' in either way simply invites further WTO litigation from other nations, not to mention serious disruption of the canned tuna market in the US and loss of consumer confidence in environmental laws and labels.

The letter included some notable signatories, including:

• Ranking Members: Berman (Foreign Affairs), Frank (Financial Services), Markey (Natural Resources), and Miller (Ed and Labor)
• Ways & Means Committee Members: Blumenauer, Doggett, Pascrell, Stark, and Van Hollen.
• Oceans Subcommittee of Natural Resources Committee: Faleomavaega, Pallone, Bordallo and Pierluisi.
• Voted for the Uruguay Round Implementation Act (implementing the WTO): Berman, Corrine Brown, Maloney, Markey, Moran, and Waters. Reps. Meeks and Towns - along with Moran, members of the so-called CAFTA 15 for their vote for that trade deal - also signed the letter.

See press release here, and letter here (PDF). See our further discussion of this ruling here.

The magic of government and the legitimacy of international legal orders

In the comments section, Scott Lincicome refers to Lori Wallach’s piece in the HuffPo and apparently is ruffled by the tone.

If only you could see what Public Citizen’s membership and our allied organizations wanted us to publish! We were pretty restrained, and actually understating the political damage this ruling will have on the WTO’s long-term legitimacy.

The fact of the matter is that Public Citizen expended a decent amount of energy trying to lay out for the Appellate Body a way through this morass. We thought that (as a legal matter) there was a way that the lower panel ruling could be overturned and allow the institution to save face. In retrospect, I’m not exactly sure why we did this, because the tone deafness of the Appellate Body ruling is startling.

Scott also dislikes our characterization of the WTO ruling as an “order.”

The relevant passage of the HuffPo piece is: “The ruling, issued Wednesday, was on the final U.S. appeal which means that now the U.S. has 60 days to begin to implement the WTO's orders or face trade sanctions.” Some version of that formulation has appeared consistently in our publications throughout the years.

I could “order” Scott to take down his blog, but he would not need to comply with that “order.” At the other end of the spectrum is an “order” delivered at the barrel of a gun or by a vengeful Norse god, with which compliance is strongly advised.

Somewhere in between is that magical thing we call modern government. The Supreme Court doesn’t have an army, but non-acquiescence with its decisions is rare, because elites believe that the benefits in social order (the other kind of "order") outweigh the costs to complying with disagreeable decisions. The Court in turn exercises (typically) great deference to the political bodies, or it becomes politicized and sees its legitimacy damaged.

Likewise, a WTO “order” backed by the threat of trade sanctions is as close to forced compliance as it gets in international law at peacetime. (The Bank of International Settlements or UN human rights agencies don’t have powers like this.) On the spectrum of meaningfulness of “orders,” the WTO is substantially closer on the spectrum to what modern governments do than my order to Scott to abort his blog. Indeed, by triggering political economic consequences, the WTO agreements create automatic constituencies for compliance, in addition to those that think complying with WTO panels is good per se.

The WTO Appellate Body, just like our own domestic Supreme Court discovered in the New Deal era, cannot be blind to how its rulings actually play out in the real world if it hopes to retain its authority.

In this case, I think we’ve laid out pretty well the politics behind the FSPTCA – a menthol ban is unlikely to happen (not because California Democrats want to protect tobacco industry jobs but because of reasonable regulatory distinctions). However, a roll back of a ban on cloves might happen if the administration doesn't stick to its guns.

Those politics are unlikely to change, and the WTO doesn’t require them to in order to begin compliance proceedings.

If, as a practical matter, the only way that U.S. could comply would be exempting imports from incremental regulatory schemes (and thus, yes, leading to more teenage experimentation with cigarettes than would be true with the FSPTCA whole and intact), then the TBT Article 2.1 ruling becomes the same as an order backed by trade sanctions to eliminate or water down the flavored cigarette ban now in place. Presumably, when some U.S. industries are hit by trade sanctions, the demands for watering down the FSPTCA will grow, increasing the likelihood of that outcome over time.

If the AB is going to get in the habit of putting countries’ backs against the wall on sensitive matters of public health, you’re going to see a lot more demands for non-compliance and non-payment of compensation. My question for the WTO’s supporters is how that state of affairs advances your goals.

Again, we were genuinely surprised by the AB’s ruling. We thought that the public interest stakes were very clear (as they were in EC-Asbestos), and that the AB would find some grounds for overturning the lower panel ruling (say on likeness) and thus allowing the institution to save face.

The fact that they were unable to act in self-preservation (and made a political decision that now is having predictable political consequences) is a bad sign for those that hope to see the WTO remain a legitimate force in global affairs.

Will DIOCOSEFLRD save tobacco rules from the WTO?

The WTO ruling against U.S. measures to reduce teen smoking continues to make waves, with folks like Daniel Ikenson, Scott Lincicome, and my old trade professor Steve Suranovic weighing in - mostly with straw man arguments or the straight libertarian push for less regulation. These are probably not the folks that have a lot invested in maintaining the Family Smoking Prevention and Tobacco Control Act (FSPTCA) to begin with.

We've laid out the essential timeline issues with compliance here. One of the more novel arguments for compliance comes from trade lawyer Rob Howse, who has commented on the issue at IELP here, here and here. In addition to recommending an extention of the FSPTCA's ban to menthol (which I've said is likely to be politically difficult if not impossible), Rob has suggested that the U.S. could comply by making a better case that the exclusion of menthol from the ban is justified. Towards this end, Rob advanced a novel interpretation of Article 21.5 of the WTO's Dispute Settlement Understanding (DSU), which reads:

“Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel. The panel shall circulate its report within 90 days after the date of referral of the matter to it.  When the panel considers that it cannot provide its report within this time frame, it shall inform the DSB [Dispute Settlement Body] in writing of the reasons for the delay together with an estimate of the period within which it will submit its report.”

Rob seems to be saying that, while an Article 21.5 compliance panel could not overturn the AB’s ruling, it might be able to deem that the U.S. is acting consistently with the ruling if it had more data and studies justifying the U.S. approach.

There is a debate as to the legal merits of this argument, but it seems unlikely that the same panel that ruled against the FSPTCA once would think differently a second time around.

Brazil's flavored cigarette ban now targeted

Unless you're an avid reader of Spanish and Portuguese language news wires, you probably missed Brazil's announcement last month of a ban on all flavored cigarettes: cloves, chocolates, and even menthols. Both importers and domestic firms are subject to the same limits.

Here's the announcement in Portuguese, and some of the earlier history from February, including the draft. The text of the final Brazilian measure reads (rough tranaslation courtesy of Google translate):

Sweet surrender?

Over the last few posts (see here and here), we’ve explained the two major findings in the recent WTO ruling against U.S. efforts to reduce teen smoking.

The question inevitably becomes: what happens next?

There is a strong presumption under the WTO’s Dispute Settlement Understanding (DSU) that the U.S. will begin to remove the ban on clove cigarettes in 60 days, i.e. early June 2012. In this particular case, I wouldn’t be surprised if the WTO urged compliance by August 2012, right in the middle of the U.S. election season. But the outer bound for compliance is likely to be July 2013, or 15 months from the date of adoption of the Appellate Body report.

More details after the jump.

Cancer prevention three months too soon

Welcome to Week Two following the WTO’s cancerous decision to rule against the U.S. measures to reduce teen smoking. As Rep. Henry Waxman (D-Calif.) said:

I am deeply disappointed in the WTO’s decision in the clove cigarette case, which has serious public health implications for United States efforts to reduce youth smoking.

The Family Smoking Prevention and Tobacco Control Act gave the FDA broad authority to protect the public’s health. It also directed immediate action to reduce youth tobacco use, including a ban on clove and candied-flavored cigarettes. Importantly, the law made no distinction in where a cigarette is manufactured because a cigarette -- no matter where it is made -- is addictive and deadly. I believe the WTO’s interpretation is wrong on the merits and wrong in its interference with our efforts to protect the American public from tobacco’s devastating effects.

I am committed to working with the Administration to advance our shared goal of ending the tobacco epidemic among our young people and ensuring that the U.S. ban on clove and candied-flavored cigarettes remains in place.

This is an encouraging sign that legislators may be heeding the call of thousands of Americans who have taken action under the Consumer Pledge urging principled non-compliance with the ruling.

We went over the main part of the decision – rendered by the Appellate Body’s three-person panel of Peter Van den Bossche (Belgium), Ricardo Ramirez-Hernandez (Mexico) and Shotaro Oshima (Japan) – in last week’s post. As we noted, this is the first time that the WTO has found a violation of the Agreement on Technical Barriers to Trade (TBT) Article 2.1.

But there was one major aspect of the ruling that we didn’t get to discuss: the finding that the U.S. violated TBT rules by having the sweet tobacco ban (enacted in July 2009) go into place on September 2009 rather than December 2009. In other words, the WTO found that the U.S. began fighting cancer three months too soon.

On Tobacco Appeal Ruling, WTO Shows its Anti-Health Stripes

We’ve done a quick read through of today’s World Trade Organization (WTO) Appellate Body ruling against the U.S. measures to reduce teen smoking. (For our statement, see here, and for a more detailed background into the lower panel ruling, see our analysis here.)

This is a landmark ruling against one of the few policy achievements of the Obama administration: Rep. Henry Waxman’s (C-Calif.) Family Smoking Prevention and Tobacco Control Act (FSPTCA), which included a targeted measure to reduce teen smoking by targeting “starter flavorings” in cigarettes – like cola, chocolate, strawberry and clove.

The FSPTCA also contemplated an eventual ban on menthol cigarettes, but deferred this for further study. The reason? Not protectionism, nor arbitrary decision making. The reason was because – as we learned with the Prohibition Era with alcohol – banning products consumed by large numbers of adults can create a black market and upsurge in crime if not handled appropriately. Oh, and lest we think that the consumer protection lion Waxman went soft, it was also because the U.S. Supreme Court struck down previous federal tobacco legislation for exactly this reason.

So, wisely, the Waxman bill took a targeted and incremental approach.

But as we pointed out on the blog last September, the key flaw in the WTO’s analysis on whether the FSPTCA discriminated against Indonesian clove cigarettes was that it compared the treatment the FSPCTA gave to cloves and menthol, rather than comparing cloves to cola and other flavors. One of these things – menthol – is not like the other, as Big Bird from Sesame Street might have said. (See killer Big Bird video "app" here.)

The Appellate Body not only did not overturn this aspect of the September 2011 lower panel ruling – it doubled down. Indeed, it seems that the Appellate Body was almost determined to show how poorly suited the WTO is to considering matters of public health. In several key respects, the Appellate Body ruling was even more anti-health than the lower panel ruling.

Public Citizen Applauds Obama Administration’s Efforts to Defend Consumer Country of Origin Meat Labeling; Appeal of WTO Ruling Necessary First Step

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

 

Public Citizen commends the Obama administration for taking the necessary step of appealing the harmful World Trade Organization (WTO) ruling against U.S. consumer labeling. In November 2011, a WTO panel ruled that the U.S. country of origin labels on meats (COOL) violated the organization’s rules.

The implications for this ruling are dire, especially in the context of a decades- long battle to ensure that consumers know the source of their meat. After overcoming countless obstacles, from presidential vetoes to adverse Supreme Court rulings in cases brought by food processors, it was only in 2009 that a meaningful country of origin labeling regime was finally implemented.

The legitimacy of the WTO is likely to be further undermined if the organization’s Appellate Body upholds the lower panel ruling. Such an outcome would provide evidence to consumer groups that the WTO allows anti-consumer forces a second (or third) bite at the apple, even when these interests do not succeed in their efforts to undermine consumer safeguards through purely domestic legal and political means.”

The Obama administration is considering expanding some of these anti-consumer rules in the first trade deal it is negotiating – the nine-nation Trans-Pacific Partnership trade agreement. The WTO ruling (and two others in 2011 against dolphin-safe labels on tuna and anti-smoking measures) shows that a new approach to trade agreements is needed – one that puts consumers, the environment and communities first.

                                                                    ###

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

Choking on sugarcoating

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

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

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

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

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

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

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

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

Tucker on ABC on WTO attack on food labels

See our own Todd Tucker on ABC News last night discussing the WTO attack on consumer labels:

 

Public Citizen Applauds Obama Administration’s Appeal of Trade Ruling Against U.S. Dolphin Protection Measures

Public Citizen commends the Obama administration for taking the necessary step of appealing today the harmful World Trade Organization (WTO) ruling against U.S. consumer and dolphin protection measures.

In September 2011, a WTO panel ruled that the U.S. dolphin-safe tuna labeling law violates WTO rules. The labels have been enormously successful in reducing dolphin deaths by tuna fishers – a major problem in the past, when tuna fleets set upon dolphins to catch tuna, since the two species associate with one another in the Eastern Pacific Ocean. The label allows consumers to “vote with their dollars” for dolphin-safe methods. Mexico successfully challenged the U.S. standard after decades of refusing to transition its fishing fleet to more dolphin-safe fishing methods.

The ruling’s implications are dire, especially in the context of a decades-long battle to save dolphins. This struggle has been beset by countless trade-related obstacles: 1991 and 1994 rulings under the WTO’s predecessor organization led to the U.S. eliminating the more potent import ban of dolphin-unsafe tuna, and environmentalists fighting successfully in U.S. court to block the Clinton and Bush administrations from also watering down the voluntary labeling policy. These groups narrowly blocked this executive branch effort, which U.S. courts deemed “Orwellian” and “a compelling portrait of political meddling.” The legitimacy of the WTO is likely to be further undermined if the WTO’s Appellate Body upholds the lower panel ruling. Consumer and environmental groups will see that the WTO allows anti-environmental forces a second (or third) bite at the apple, even when such forces fail in their U.S. legal and political efforts to undermine a domestic policy to which they object.

The Obama administration is considering expanding some of these anti-consumer and environmental rules in the first trade deal it is negotiating: the nine-nation Trans-Pacific Free Trade Agreement. The WTO ruling – and two others in 2011 against country-of-origin labels on meat and a ban on sweet cigarettes used to entice teens into smoking – show that a new approach to trade policy is needed, one that puts consumers, the environment and communities first.

Public Citizen Applauds Obama Administration’s Continued Efforts to Reduce Teen Smoking

Appeal of Trade Pact Ruling Necessary First Step

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

Public Citizen commends the Obama administration for taking the necessary step of appealing the harmful World Trade Organization (WTO) ruling against U.S. efforts to reduce teen smoking.

In September 2011, a WTO panel ruled that the U.S. ban on flavored cigarettes – which are used to entice teens into smoking through cola, strawberry and clove flavors – violated WTO rules because one of these flavors (clove) is predominantly found in imports from Indonesia, another WTO member.

It would pose an unacceptable barrier to public health if any time a good is imported it has to be excluded from regulation, so this appeal is necessary both to defend the law and discourage further WTO attacks on consumer protection policies.

Corporate interests have been relentless in attacking anti-smoking measures, which took a giant leap forward with the signing into law of the 2009 Family Smoking Prevention and Tobacco Control Act (FSPTCA). The flavored cigarette ban was a key plank of the FSPTCA, which envisions a possible future ban on other flavored cigarettes such as menthols. One of the other major planks of the FSPTCA – enhanced warning labels – is currently being attacked by tobacco companies in federal courts. The legitimacy of the WTO is likely to be further undermined if the agency’s Appellate Body upholds the lower panel ruling.

Consumer and public health groups will see that their policy priorities are being undermined by industry in domestic courts when there is a U.S. law basis for a claim, and in the WTO when there is not. The combined effect is fatal to the viability of public interest regulation.

The Obama administration is considering expanding some of these anti-consumer rules in the first trade deal it is negotiating – the nine-nation Trans-Pacific Free Trade Agreement. The WTO ruling (and two others in 2011 against country-of-origin labels on meat and dolphin-safe labels on tuna) shows that a new approach to trade policy is needed – one that puts consumers, the environment and communities first.

Pledge asks Congress to stand up for consumers’ right to know what’s on the dinner table

Just when we thought that that the World Trade Organization (WTO) couldn’t do worse, it managed to wrap up 2011 with a series of dreadful decisions. The international body ruled against our country-of-origin labels on meat, dolphin-safe labels on tuna, and our ban on candy and clove flavored cigarettes. These are all US consumer policies we rely on to allow us to protect children’s health and make informed decisions. Thanks to such rulings, our government will have to either water down or eliminate these safeguards, or face trade sanctions.

It begs the question: Will this be last holiday season that you have a right to know where your food comes from, and how the environment, animals and people were impacted in its production?

We hope not. The press and Congress may be asleep at the wheel on this issue, but consumers can sound off the alarm by asking their congressional leaders to sign the Consumer Rights Pledge—a pledge to protect policies from the attacks of Big Business and a shameful WTO.

Todd Tucker Talks Food Safety with Thom Hartmann

Our own Todd Tucker stopped by the Thom Hartmann program to explain how two recent WTO rulings might undermine consumers' right to know exactly what they are eating.

Check out the full interview here:

WTO Turnaround: Food, Jobs and Sustainable Development First!

GTW will be heading to Geneva next week to join the global civil society response to the World Trade Organization's 8th Ministerial Conference. Our colleague Deborah James from Our World Is Not For Sale Network wrote this informative piece, published in Common Dreams, which explains the current complexities facing the multilateral trading system and our global call from civil society for a "WTO Turnaround".

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WTO Turnaround: Food, Jobs and Sustainable Development First!

by Deborah James

December 15-17, 2011, Trade Ministers will convene in Geneva, Switzerland for an 8^th WTO Ministerial Meeting. After many failed Ministerial meetings and nearly ten years of negotiations, the Doha Round of WTO expansion is at a crossroads. Increasingly, developed countries have tried to push aside agreements to negotiate on key developing country issues intended to correct the imbalances within the existing WTO, which formed the basis of the development mandate of Doha. Instead, rich-country governments appear to be re-packaging the old liberalization and market access demands of their corporate interests as so-called “21^st century” issues. This Ministerial will determine the future path of WTO negotiations, and the global Our World Is Not for Sale (OWINFS) network is calling for a fundamental transformation.

November 30 marked the 12^th anniversary of the massive protests against the World Trade Organization (WTO) in Seattle, Washington, which succeeded in preventing the launch of the so-called “Millennium Round” of WTO expansion negotiations. Developing countries, led by African ministers and buoyed by massive street protests, opposed the launching of a new round of liberalization, focusing instead on their demands to fix the problems left over from the last round. Two years later, after receiving promises from rich countries that the next round would focus on development, these same countries acquiesced to a new “Doha Round.”

Throughout the last ten years, negotiations have collapsed several times, but have always been re-started. Unfortunately, the development mandate has been all but abandoned, with negotiations shifting to focus on the desires of corporations in rich countries, in services, agriculture, and manufactured goods, to achieve greater access to markets in developing countries. Nevertheless, they came perilously close to concluding in the summer of 2008. Since then, the emergence of the economic crises has resulted in a global re-think of the neoliberal economic model by citizens around the world, with resulting domestic pressure against governments to further entrench such a calamitous economic paradigm.

photo: RonnieHall

In many countries – such as Brazil, India, South Africa, and China – leaders are no longer willing to roll over to U.S. and EU demands, as their geopolitical power has grown along with their economies. A key demand of the United States, roiling under the surface of the negotiations, is that these countries should no longer be treated as developing countries – although they have far more poor people than all of the Least Developed Countries (LDCs) combined. The Obama administration decided that since it could not get much of a stimulus package through the Republican-controlled House, the U.S. would focus on increasing exports to these “emerging markets” as a way to boost U.S. economic recovery. But since many of these countries did enact stimulus programs adequate to the size of their economies, and were thus faster on the road to recovery after the crisis than the United States, they are understandably reluctant to bail out the U.S. economy at the expense of their own jobs and development potential. (Unfortunately, past experience with WTO and bilateral trade agreements demonstrates that they are net job losers, thus exposing the jobs claim as a cover-up for pushing the trade agenda of corporate donors.)

COOL Ruling Not COOL

As we noted last week, the WTO has just issued a major ruling against U.S. country-of-origin labels (COOL) on meats. The decision confirms the direst predictions when the WTO was established, which questioned the wisdom of setting internationally binding rules against consumer protection.

The ruling and its six supporting annexes are hundreds of pages long, so going through all of them will take some time. Here are some additional items that we did not include in our longer analysis from Friday.

COOL is hearted by consumers

COOL is very popular, as the Obama team noted during the proceedings:

Numerous polls also indicate strong consumer support for mandatory country of origin labeling. Among the polls cited in various submissions received by USDA during the regulatory process are the following:

• 92 percent of respondents in a 2007 Consumers Union poll believed that imported foods should be labeled with their country of origin
• 88 percent of respondents in a 2007 Zogby poll indicated that they want all retail foods labeled with country of origin information
• 95 percent of respondents in 2007 Zogby poll indicated that they have a right to country of origin information for food
• 82 percent of respondents in a 2007 Food & Water Watch poll supported mandatory country of origin labeling
• 82 percent of respondents in a 2004 nationwide poll conducted for the National Farmers Union supported country of origin labeling
• 86 percent of respondents in a 2002 survey for Packer magazine supported country of origin labeling

However, the panel didn’t explicitly mention these polls. Throughout much of the proceedings, it was treated as an open question whether consumers actually wanted COOL.

Democracy is impermissibly uncertain; hortatory is the new mandatory

This WTO decision is the most recent of three cases with deeply troubling implications for consumers. In September, the WTO also ruled against U.S. efforts to reduce teenage smoking and dolphin mortalities. In the dolphin case, the purely voluntary dolphin-safe labeling scheme was deemed “mandatory,” despite the fact that tuna not having the label was and is sold in the U.S. After that ruling, we joked that “voluntary is the new mandatory.”

But this COOL ruling takes this joke to sad new levels, so that “hortatory is the new mandatory.”

Here’s why.

Your Ignorance is Agribusiness' Right, says WTO

Consumers and the environment are at risk following a series of World Trade Organization (WTO) rulings against popular U.S. policies.

As we noted earlier today, the agency issued a landmark ruling against U.S. efforts to reduce consumer confusion about the origin of the foods they eat. This followed two decisions from September against U.S. measures to reduce teen smoking and dolphin deaths. If the decisions are upheld on appeal, the United States will have to water down or eliminate its country-of-origin labels (COOL) for meats, dolphin-safe tuna labels, and ban on flavored cigarettes directed at kids.

These rulings confirm the worst fears of members of Congress and advocacy organizations, who warned of the dangers of expanding the scope of trade agreements beyond border tariffs into the domestic policy arena. This expansion was pushed by anti-regulation corporations, with substantial assistance from “free-market" ideologues who saw the WTO as a delivery mechanism for light-to-no touch regulation. (Ironically, these WTO decisions have negative implications for both more “free-market” and “interventionist” oriented consumer and environmental protection policies, as we explain below.)

What this ruling means for consumers

When the WTO rules against a country's policy, that country has to change the law to comply, or risk trade sanctions. In this case, Mexico and Canada (the "complainants") were successful in their challenge of U.S. labels.

The U.S. will have to get rid of COOL, or water down the policy to Canada and Mexico's satisfaction. Mexico's position was that the U.S. should simply revert to voluntary COOL, or utilize a weaker standard utilized by a global body known as Codex Alimentarius. But this is what the U.S. used to have that consumers wanted to move past. So it's unclear what would satisfy those countries.

The Obama administration may appeal the ruling, although the track record of successful appeals is very limited: the WTO rules against challenged policies 90 percent of the time, and upholds these rulings at the appellate stage an even higher percentage of the time.

The broader worry is that this ruling leaves the door wide open to attacks on similar consumer policies - not only in the U.S., but all WTO member countries - many of which use COOL.

After the jump, we provide more background on how we got here.

WTO Rules Against Country-of-Origin Meat Labeling Law: Third Ruling Against U.S. Consumer Safeguards in 2011

The World Trade Organization’s (WTO) ruling today against another highly popular U.S. consumer policy – country-of-origin labeling (COOL) for meat cuts and products – will only intensify public opposition to more of the same backwards trade pacts, Public Citizen said. A panel report released today announced that Mexico and Canada have succeeded in their WTO attack on the labeling rule; today’s WTO ruling is the third this year against popular U.S. consumer or environmental measures.

“Today’s ruling makes very clear that these so-called ‘trade’ pacts have little to do with trade between countries and a lot to do with our major agribusiness corporations being free to sell mystery meat in the United States, with neither consumers nor our elected representatives in Congress able to ensure its safety, much less even know where it is from,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

After 50 years of state efforts to institute COOL for meats, and federal experimentation with voluntary COOL for meat, Congress passed a mandatory COOL program as part of the 2008 farm bill. In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO signatory countries are permitted to apply. In their filings to the WTO, Canada and Mexico suggested that the U.S. should drop its mandatory labels in favor of a return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food companies play a central role. Neither option would ensure that U.S. consumers are guaranteed the same level of information as the current U.S. labels.

Today’s decision follows WTO rulings this year against U.S. “dolphin-safe” tuna labels and a U.S. ban on clove, candy and cola flavored cigarettes.

“These three rulings – with the WTO slapping down safe hamburgers, Flipper and children’s smoking prevention policy – make it increasingly clear to the public that the WTO is leading a race to the bottom in consumer protection,” said Wallach.

In today’s ruling, the trade panel specifically found that COOL labeling requirements violated the Agreement on Technical Barriers to Trade (TBT), one of 17 agreements administered by the WTO. While the WTO has ruled on nearly 200 disputes, the TBT had played a major role in only a few cases thus far.

“There has been widespread concern that this provision could empower a WTO panel to second-guess the U.S. Congress, courts and public by elevating the goal of maximizing trade flows over consumer and environmental protection,” said Todd Tucker, research director for Public Citizen’s Global Trade Watch. “Today’s ruling shows that consumers’ concerns were well-founded.” 

“The Obama administration is in the process of negotiating its first-ever trade deal – the Trans-Pacific Free Trade Agreement – and so far it looks like it will replicate many of the anti-consumer rules present in the WTO terms and the North American Free Trade Agreement,” noted Wallach. “These WTO rulings show the need for President Obama to start fulfilling his campaign pledges to create a trade policy Americans can believe in and stop expanding the old trade pact model.”

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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.

Trade disaster: Congress votes tomorrow

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

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

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

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

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

Here’s why:

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

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

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

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

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

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

WTO is the big kid on the seesaw

The recent WTO attacks on U.S. consumer and environmental policies (see here, here and the one about to be announced here) have revived discussion of whether current trade agreements leave enough space for countries to regulate in the public interest.

Those who think not can cite to the fact that the WTO rules against challenged policies 90 percent of the time. Those who think yes often cite the WTO agreements’ so-called “exceptions” clauses. For instance, the WTO’s General Agreement on Tariff and Trade (GATT) Article XX reads in part:

“Article XX: General Exceptions

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

(a) necessary to protect public morals;

(b) necessary to protect human, animal or plant life or health;…

(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;…
 
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;…”

Sounds pretty sweet, doesn't it? Similar provisions are contained in the WTO’s General Agreement on Trade in Services (GATS) Article XIV.

While the WTO’s proponents argue that these exceptions help preserve sovereign policy space, these defenses are unsuccessful over 96 percent of the time. Put differently, countries that actually go out of their way to invoke the so-called "defenses" are even less successful than those that simply lay down and take the beating. 

We can break down the record of these exceptions in more detail.

Typically, when the WTO Appellate Body and panels examine the exceptions, they take three steps.

Say that Australia wanted to defend its anti-smoking policies from WTO attack by invoking GATT Article XX(b) above. The panel would first establish whether it fell within the scope of the subparagraph (b) by determining whether the policy was connected to the protection of human health.

Then, the panel would inquire whether the policy were “necessary” to protect human health, a step which itself is typically broken up into "weighing and balancing" the legitimacy of the aim of the policy (yes, the WTO gets to make a call on the legitimacy of the policies the officials you elected pass), the contribution of the policy to achievement of the aim, the trade restrictiveness of the measure, and whether a less trade restrictive policy option is available.

All these factors are not weighed equally, as it turns out: the trade-related metrics are the big kids on this seesaw.

Flipper gets axed by the WTO

Today, U.S. efforts to reduce dolphin deaths by corporate tuna fishers through dolphin-safe labels on tuna were found to violate the WTO. This follows last week's ruling that U.S. efforts to reduce teen smoking violated the trade organization's rules. These smackdowns of major consumer regulations will be followed by a third in the near future, when the WTO is expected to rule against country of origin labeling for beef.

What this ruling means for consumers and dolphins

When the WTO rules against a country's policy, that country has to change the law to comply, or risk trade sanctions.

The U.S. will have to get rid of the dolphin-safe labels, or water down the policy to Mexico's satisfaction. Mexico's long-standing position (reiterated in this case) is that it should get to receive a dolphin-safe label, even though tuna corporations there use methods to capture tuna that are dangerous for dolphins.

The U.S. currently defines "dolphin-safe" as tuna not caught using dangerous purse-seine nets anywhere in the world. For tuna caught in the Eastern Pacific, a unique region where dolphins and tuna swim together, additional steps are required to earn the label.

Shipping fleets of the U.S. and many developing countries (like Ecuador) operating in the Eastern Pacific have been able to meet these higher standards, thereby giving greater assurance to consumers that their tuna purchases are not harming dolphins.

In contrast, much of the Mexican fleet has chosen not to take such steps. Mexico has advocated use of a distinct standard that even the WTO acknowledges is weaker than the U.S. standard. The WTO ruling wrote of that distinct standard:

... taken alone, it fails to address unobserved adverse effects derived from repeated chasing, encircling and deploying purse seine nets on dolphins, such as separation of mothers and their dependent calves, killing of lactating females resulting in higher indirect mortality of dependent calves and reduced reproductive success due to acute stress caused by the use of helicopters and speedboats during the chase. 7.739 We also note that, to the extent that the AIDCP standard addresses setting on dolphins and not other fishing techniques that may also result in adverse effects on dolphins, it would also not provide an effective or appropriate means of fulfilling the US objectives in this respect.

Nonetheless, the WTO ruled against the U.S. standard. (We explore more of the details of the ruling below.)

Initial reports indicate that the Obama administration will appeal the ruling, although the track record of successful appeals is very limited and the WTO rules against challenged policies 90 percent of the time.

The broader worry is that this ruling leaves the door wide open to attacks on similar environmental and consumer policies - not only in the U.S., but all WTO member countries.

What this ruling means for trade policy

All three of these cases have something in common: none of them related to efforts by the U.S. to intentionally discriminate against foreign goods, nor to protect our own producers. Indeed, in the beef and dolphin cases, no discrimination could even be proved. (In the smoking case, a finding of "discrimination" was established in a biased analysis we detail here.) This alone would suggest that a trade organization has no business passing judgment on such policies.

But we are in a new era of trade policy, where even non-discriminatory, reasonable, even-handed, popular policies (some with virtually no impact on international trade) can be ruled against.

What's more, all three consumer policies could be considered very "free market"-oriented. Rather than the big old government telling Americans what they can and can't consume, the dolphin and beef policies simply require honesty in labeling, so that the consumer can decide on their own free will what to consume, and let the market works its magic.

We've long known that more interventionist government policies (like import bans) can run afoul of trade rules. Indeed, the two adverse rulings at the WTO's predecessor organization in the early 1990s against the U.S. ban on dolphin-unsafe tuna led to the eventual removal of that effective and popular policy tool. Now, with today's ruling, we learn that even regulation by more "free market" means is on the WTO chopping block.

This is going to make it harder for the Obama administration to sell similar anti-consumer trade initiatives like the trade deals with Korea, Panama and Colombia to free-marketeers and environmentalists across the political spectrum.

The long saga of protecting dolphins

After passage of various dolphin protection laws in the 1980s, the U.S. fishing industry abandoned the cruel and environmentally devastating practice of surrounding dolphins with mile-long purse seine nets to trap the schools of tuna fish swimming under the hunting mammals.  The practice had led to the death of millions of dolphins in the Eastern Tropical Pacific, where dolphins accompany schools of tuna.  The U.S. laws forbid the sale of tuna caught with purse seine nets.

In 1991, a General Agreement on Tariffs and Trade (GATT) tribunal ruled that this ban violated GATT rules forbidding discrimination. With the debate over NAFTA’s passage raging, Mexico decided not to impose trade sanctions when the United States maintained the laws. The U.S. prohibition was again successfully challenged under GATT by the European Union in 1994.

After NAFTA’s passage, the Clinton administration launched an intense effort to change the U.S. law to bring it into compliance with the initial ruling, while Mexico threatened a new WTO case to enforce the old ruling. After a lengthy battle with Congress, the Clinton administration managed to pass a new policy that removed the ban on U.S. sales of tuna caught with purse seine nets.

However, an attempt by the Clinton and Bush II administrations to weaken the related labeling law defining what could be labeled “dolphin safe” was reversed after a series of U.S. court cases.

What Big Bird Could Teach the WTO

When I was a kid, a particular Big Bird sketch on Sesame Street made a strong impression on me: "One of these things is not like the other":

It turns out that Big Bird could teach the WTO a thing or two.

As we wrote earlier this week, and have been discussing over at the IELP blog, the WTO ruled against a rare public health victory: namely, the Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA).

This legislation included a number of provisions, but one that attracted a lot of attention was its ban on flavored cigarettes that often serve as starter cigarettes for teenagers because of their sweet taste. The ban included candy, cola and clove flavored cigarettes, but did not include menthol flavored cigarettes in its initial ban.

You or I can disagree with the reasoning, but there was a reason for that particular design: while some kids smoke menthols, so do large numbers of adults, specifically in the African American adult community. As the Obama administration documented in its submissions in the case (quoted at length below in language that would make University of Chicago, Cass Sunstein and the Freakonomics crowd blush), immediately withdrawing menthol from the market would increase hospital visits, and overnight create a massive black market for the cigarettes.

(And not that the administration argued this in its legal case, but can you imagine the political blowback of banning a product (menthol cigarettes) that is predominantly smoked by blacks, that will increase crime and smuggling in predominantly African American neighborhoods (many of which are already struggling), while leaving untouched regular tobacco products that are more often smoked by whites, whose neighborhoods are often less crime-ridden? This would be a pretty harsh blow to race relations in the U.S., and undermine support for public health regulation period.)

By my read, the architects of the FSPTCA had some pretty sound logic for their incremental approach, which contemplated restrictions on menthol in the future, after the efficacy of the teenage-targeted measures could be tested.

Returning to the clip above, as Big Bird shows us, one of the bowls of birdseed is substantially larger than the other three. The WTO panel did not study up on their Sesame Street when ruling against the FSPTCA. In the ruling, the panel decided that menthol and clove were "like products," and that (because Indonesia exported the latter to the U.S.) a ban on the latter was "discriminatory" within the WTO's Agreement on Technical Barriers to Trade (TBT).

While menthol and clove are both "flavored cigarettes," so are cola- and candy-flavored cigarettes. The U.S. argued, plausibly in my mind and to paraphrase Big Bird, that "one of these things is not like the other." Specifically, menthol. Why? Significant numbers of adults smoke them, particularly in the African American adult community. For that reason, it poses significant adverse effect risks that the others did not.

Cloves and candy flavored cigarettes, however, are not only flavored, but they are trainer cigarettes that appeal to teenagers in significant numbers, but not to adults in significant numbers.

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

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

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

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

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

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

More on the details of the case after the jump.

The Korea Trade Deal Horror Show

 

Watch and share this original Global Trade Watch production about the Korea trade deal. To take action, visit: http://bit.ly/meCLGp.

 

FDA Foreign Food Inspections Under Threat

We have yet more bad news on the food safety front. Two weeks ago, news came that U.S. consumers would be barred from knowing if the tuna they're eating was caught using methods potentially fatal to dolphins. Last week we found out that the WTO would prevent country-of-origin labeling on beef from foreign countries sold in the U.S. Now comes word that the meager FDA inspections of foreign food facilities that have given U.S. consumers a modicum of protection against dangerous food will likely be rolled back.

Inside U.S. Trade reports today that proposed cuts to the FDA's 2012 budget could cripple the FDA's ability to conduct food safety inspections at foreign facilities that export food to the United States, according to a leaked FDA document.

FDA inspections of foreign facilities were set to be strengthened in the coming years. The Food Safety Modernization Act, enacted in January, requires the FDA to double the number of inspections of foreign facilities every year over 2012-2016 to protect U.S. consumers from contaminated foods.

The new proposal, contained in a bill approved by the House Appropriations Committee, would fund the FDA's food programs in 2012 at only 90 percent of their 2011 levels, and at only 79 percent of the level requested by the Obama administration to ensure full implementation of foreign food facilities inspections. The FDA is supposed to conduct at least 600 inspections of foreign facilities in 2011, but it will likely have to conduct much fewer next year if the proposed cuts become a reality.

This week, Food and Water Watch released a report examining the threat that uninspected Chinese food imports pose to U.S. consumers' safety. Since China entered the WTO in 2001, the volume of imports of Chinese food into the United States by tonnage has increased by almost 200%, and the share of Chinese imports as a proportion of food consumed in the U.S. has skyrocketed for some key products, reaching 70 percent for apple juice, 43 percent for processed mushrooms, and 78 percent of tilapia. During the same period, several food safety scandals erupted in China, sickening hundreds of thousands of people there and killing thousands of pets in the United States. Nevertheless, between June 2009 and June 2010 the FDA conducted only 13 food inspections in China.

The bill slashing the FDA’s foreign inspections budget is expected to be voted on in the House next week. Given the repeated food safety incidents in China and now news of the tragic deaths in the E. coli contamination case in Germany, the need to fully fund increased food inspections at foreign facilities has never been clearer.

WTO attacks U.S. ground beef labeling

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

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

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

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

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

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

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

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

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

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

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

U.S. dolphin-safe tuna labeling rule deemed a WTO violation

One of the environmental movement's greatest achievements has been the passage of legislation that protects dolphins from being slaughtered.

Now, U.S. dolphin protection rules have gotten slammed yet again by the WTO. GATT-zilla versus Flipper Take One Zillion: flipper goes down to defeat one more time.

We'll take you through some of the history of this battle. Worryingly, the WTO found that even purely voluntary labeling convention like the U.S. "do lphin safe" labels could be deemed mandatory (and thus give rise to a WTO violation) if they impeded non-labeled tuna's "marketing opportunities in the United States." In other words, even private consumer preferences for dolphin-safe tuna can lead to a WTO violation. This could cast a real chill on voluntary labeling practices, which a lot of supporters of free trade are in favor of.

Moreover, the Obama administration did not appear to even use all possible defenses to fight against this attack.

As Inside U.S. Trade reported today,

In a confidential interim report circulated to the United States and Mexico earlier this month, a World Trade Organization panel found that U.S. labeling requirements that preclude many Mexican tuna exports from receiving a "dolphin safe" label in the United States violate international trade rules, according to informed sources.

The interim panel report found that the U.S. requirements violate Article 2.2 of the WTO's Agreement on Technical Barriers to Trade (TBT). That article forbids WTO members from implementing "technical regulations" that are "more trade-restrictive than necessary to fulfill a legitimate objective."

The case is likely to go to the Appellate Body of the WTO. But, assuming the initial WTO panel was correctly applying the WTO's anti-environmental, pro-corporate trade rules, the U.S. will have to (again) water down its dolphin protection policies or face trade sanctions.

This case has a long and sordid history, as we documented all the way back in 2000:

USDA's FTA Report Repeats Errors of Previous Flawed Studies

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

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

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

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

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

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

Japan tragedy highlights consequences of corporate offshoring

Our hearts go out to those who have lost loved ones as a result of the earthquake and its aftermath in Japan.

As humanity collectively sifts through the lessons that can learned from this disaster (including with respect to the perils of nuclear power), Information Week is reporting on another fallout with global implications:

The massive 8.9 earthquake that has caused widespread devastation in Japan is expected to cause worldwide shortages and severe price swings in some semiconductors manufactured in the island nation, according to some analysts.

The electronics expected to be most affected by the 8.9 quake that struck Friday include semiconductor wafers used in making microprocessors, NAND flash used for storing music, video, and other content in handheld devices, and DRAM, which is the system memory in PCs. More than 40% of the world's NAND and 15% of the world's DRAM are made in Japan, according to market researcher Objective Analysis.

In other words, there are consequences beyond just job loss to corporations' decision to offshore production to a few locations on the planet. To put it a different way, what is rational for the individual corporation can be irrational from the perspective of society as a whole.

Such a problem was predicted nearly six years ago by my colleague Barry Lynn, the author of the book "End of the Line." In a column for the FT summarizing the book, Barry wrote:

Time and again, human beings have learned to build buffers into complex systems. We design compartments into our ships, circuit breakers into our electrical networks and minimum reserve requirements for our banks. Yet since the cold war era, we have done the exact opposite with our industrial system. Rather than conceive market-friendly methods to distribute risk and dampen shocks, we devoted ourselves to eliminating the bulkheads that have traditionally existed between nations and between companies. To evoke a more raw analogy, in our production system, we bulldozed all the levees flat.

As a result, we now live in a world where an isolated political or natural disaster on the far side of the globe can disrupt basic systems on which we all depend. Consider what would happen in the event of war on the Korean peninsula, or an uprising in south India, or an avian flu pandemic in industrial Asia.

In the first case, we would immediately lose half the global production of D-ram chips, 65 per cent of Nand flash chips and much more. At a minimum, the result would be massive disruptions in the electronics industry and in all industries that depend on electronics components. In the second case, numerous global companies, including banks, would lose their ability to process information because they have relocated key back-office operations to that region. The third case, meanwhile, presents chilling proof that the production system has evolved in directions no one expected. As a recent article
in Foreign Affairs noted, one cross-border system that would collapse in the event of a pandemic is the one the US relies on for medical respiratory masks.

In each instance, an everyday disaster far away would set off potentially massive disruptions of the industrial systems on which all nations depend... It is time to admit that our grand experiment with radical laissez faire management of industry has failed.

While the global response to the Japan earthquake in the short-term will rightly focus on saving lives and avoiding further deaths, policymakers should also assess why they have allowed corporations to break down reasonable buffers against excessive offshoring of production. A little more redundancy in supply chains is not only collectively rational, but would also have the benefit of creating jobs at home.

Follow the Climate Reality Tour!

We’re pleased to unveil an exciting new project: the Climate Reality Tour.

You may have caught an earlier post, but in case you didn't, let's fill you in The Climate Reality Tour is a movement-building road trip to promote global economic policies that are fair for workers and shift away from the climate- and job-destroying status quo. The destination? The United Nations Climate Negotiations in Cancun in late November. And to bring home the sustainability point, we decided to go by bike. Yep, by bike!

With the world in the grips of overlapping global crises – food, economic/financial and climate – the stakes are high indeed. To save the planet requires confronting these crises simultaneously, and that means overcoming the false jobs vs. environment trade-off. In truth, corporations benefit from exploiting both while human beings and the earth suffer.

But this requires political will and resolve far beyond what we’ve seen from either political party, and even many leading civil society organizations. At Public Citizen, we’ve long believed our unsustainable global economic order, as etched in the tomes of the WTO and NAFTA-type trade deals, unfairly pits workers and ecosystems against one another. We’ve decried how the status quo sanctifies the rights or multinational corporations to exploit and destroy – even above the democratic rights of a people determine their own economic and eological futures.

No new jobs, just blackened lungs, in Uruguay v. Philip Morris dispute

One of the main claims made by proponents of the investment rules in FTAs or "bilateral investment treaties" (BITs) is that, in Scott Linicome's words...

the FTA investment provisions that they're carping about are actually designed to encourage mutual investment in FTA partner countries - i.e., to help the countries give each other money for silly things like factories and jobs - by providing certain basic protections for that investment.  

Notably, very few of the dispute cases I've read about involve new investment or new jobs. In some cases, as with the S.D. Myers case we discuss here, there simply is no major job creating investment at issue - maybe only a storefront office. In other cases, a foreign company has merely acquired a local company, so no new jobs are created.

In still other cases, a foreign investor had invested in a country long before the bilateral investment treaty 
was signed, but then subsequently utilizes the BIT to attack non-discriminatory regulations they don't like.

That's the case with the recent challenge by tobacco company Philip Morris under the Swiss-Uruguay BIT against Uruguayan public health measures. Philip Morris, Inc. - a U.S. corporation at the time - bought up Abal, a Uruguayan tobacco company, during Uruguay's military dictatorship in 1979. In 1991, Switzerland and Uruguay inked a BIT. In 1999 and 2008, the ownership of Abal was shuffled around to Switzerland-based holding companies. In 2010, Philip Morris launched a case against Uruguay's public health measures, which went into effect in 2008 and 2009.

In other words, the implication of the BIT was not more jobs created in Uruguay, but a platform for a long existing entity to challenge Uruguay's efforts to reduce smoking deaths - and maybe, just maybe, put a chill on anti-tobacco legislation in other developing countries - now a primary market for Multinational Big Tobacco.

You can find Philip Morris' request for arbitration here, a legal analysis by investor-state expert Todd Weiler here, a piece by Juan Antonio Montecino and Rebecca Dreyfus here, and an earlier analysis by Luke Eric Peterson here.

Drug Trials Abroad Keep Auditors Away

We’ve seen manufacturing jobs, IT jobs, customer service jobs, and engineering jobs offshored.  We can now add prescription drug trials to that list. The New York Times reports:

Medical ethicists have worried for years about the growing share of new drugs whose human trials took place in foreign countries where federal auditors could not make sure patients were protected, but no one knew how big the potential problem was.

But according to a report by Daniel R. Levinson, the inspector general of the Department of Health and Human Services, 80 percent of the drugs approved for sale in 2008 had trials in foreign countries, and 78 percent of all subjects who participated in clinical trials were enrolled at foreign sites....

The report “highlights a very frightening and appalling situation,” said Representative Rosa DeLauro, Democrat of Connecticut. “By pursuing clinical trials in foreign countries with lower standards and where F.D.A. lacks oversight, the industry is seeking the path of least resistance toward lower costs and higher profits to the detriment of public health.”

Sure, testing the drugs in lower-income countries is cheaper, but how sure can we be that the trial subjects are giving informed consent when foreign drug trial laws are often weaker than U.S. laws?  And how easily can the FDA audit a foreign testing site to ensure that the trial followed all correct procedures? Not very easily. In fact, the Inspector General’s report found that the FDA was 16 times less likely to audit foreign sites than they were to audit a domestic site, partially due to the high cost of auditing foreign sites.  It’s crucial that the FDA be able to verify that proper clinical procedures are followed. Otherwise, drugs that are unsafe or ineffective could be put on the U.S. market, endangering people’s lives.

Trade Tribunals: The Canary in the Mine?

“Mining for Profits in International Tribunals,” a report recently released by the Institute for Policy Studies, presents evidence that transnational corporations are litigating for profit in trade tribunals such as the UNICTRAL (United Nations Commission on International Trade Law)  and the ICSID (International Centre for Settlement of Investment Dispute).  In the process, court rulings favoring corporations are undermining countries’ ability to implement important health, environmental and public safety policies.  This gross usage of the tribunals points to the disturbing role that our current trade agreements have in sacrificing the public welfare for the corporation’s profit margin.

The report, which examines the international trade tribunal framework, details how transnational corporations like Chevron and the Pacific Rim are increasingly using tribunals to gain millions dollars in profit by bringing cases against host countries.   Many of these cases evolve around allegations of “lost profit” due to a country’s environmental or health standards. For example, in February 2010 the Canadian mining firm Blackfire Exploration reportedly threatened to sue Mexico due to its closing of an open pit barite mine in Chiapas.  The mine had been ordered to be closed by officials due to its detrimental environmental and health effects. Sources suggest Blackfire threatened officials with an $800 million dollar claim of compensation!

Leaders need to take notice of the trend this report reveals about the larger international trade regime, as these courts are supported by a system of free trade agreements (FTAs) and bilateral investment treaties (BITs). The report concludes by saying there tribunals are “just one illustration of the imbalance in the current rule that govern international investment.”

This phenomenon should be the canary in the mine for today’s leaders and serve as a warning about the need to reform the current trade regime, remedy this imbalance and in the end promote public welfare – not corporate profits.

Hopping Mad

We wrote last year of the foreign multinational takeover of Budweiser, that staple of American working class life, and how trade pacts have limited efforts to encourage the local beer movement.

Now, the fallout from beer nationalism is rearing its head in the ongoing Gates Gate scandal, where the president has invited Henry Louis Gates and Sgt. Crowley to "have a beer at the White House" and settle their differences. Reports the WSJ:

Late Wednesday, White House spokesman Robert Gibbs hinted the presidential cooler will likely be stocked with what he understood to be the two guests' own personal favorites -- Red Stripe and Blue Moon.

"The president will drink Bud Light," Mr. Gibbs added.

The problem is that all three beers are products of foreign companies. Red Stripe is brewed by London-based Diageo PLC. Blue Moon is sold by a joint venture in which London-based SABMiller has a majority stake.

And Bud Light? It is made by Anheuser-Busch -- which is now known as Anseuser-Busch InBev NV after getting bought last year by a giant Belgian-Brazilian company.

Among rival brewers, the news fell flat. "We would hope they would pick a family-owned, American beer to lubricate the conversation," said Bill Manley, a spokesman for the Sierra Nevada Brewing Co., a California-based brewer that happens to be family-owned.

Jim Koch, founder of Boston Beer Co., which brews Samuel Adams, decried "the foreign domination of something so basic and important to our culture as beer."

The WTO Wants You to Light up a Cancer Stick

Over at IELP, Simon Lester alerts us to a potential WTO case that Indonesia might bring against the recent U.S. bill to step up regulation on tobacco. Read the full post for details, but I thought Simon's closing comment was interesting:

I hate to sound defensive here, but I just want to emphasize to trade skeptics out there that this issue does not mean that countries can't regulate tobacco. It just means that they can't insert protectionist components into their tobacco regulation measures. 99.9% of these measures are fine under trade rules.  The main problem area is the part about (possibly) treating foreign products less favorably than domestic ones.

An insider in the tobacco debates tells Eyes on Trade:

In terms of what actually happened:

Everyone recognizes that flavorings are a way to appeal to kids.

Menthol historically in the US has been marketed to African Americans, so there is actually extra good public health reason to ban it.

The failure to ban was not because of so-called protectionist impulse, but political reality: It's too big a market to wipe out and get the bill passed. This is probably a combination of both manufacturer power and worries about protests from African-American smokers.

Of course, that political reality is no WTO defense at all.

An important point not mentioned in this post is that Philip Morris International now owns the third biggest kretek maker. PMI -- now a separate company from Philip Morris/Altria -- has alleged no interest in the US market but they are under no contractual limits, so far as I know. PMI's HQ is in Switzerland, but they remain registered as a NYSE company.

Tobacco and public health groups will be very worked up about this, should a [WTO] challenge emerge.

This observer's comment that "political reality is no WTO defense at all" is what's key here. God willing, over the next few years, we're going to see a lot of consumer and environmental protection laws going into effect. A lot of them will be messy, and a lot of them will be criticized by groups like Public Citizen. But I don't think there's an advocate here among us that doesn't realize that the political process is going to yield imperfect results that are still better than nothing. Maybe it's time for a "political reality" carveout from WTO obligations.

An update from Simon on a speech from Rep. Virginia Foxx (R-N.C.) had the member arguing that the U.S. should cowtow to WTO threats. Will this be the next case of the WTO chilling effect? Stay tuned.

Food safety nightmare

Last week, I participated in the White House civil society listening session on the new Food Safety Working Group. I made the point that we need to hold imports to the same standards and regulations we hold domestic products and producers, that the agencies need the funding and authority to do so, and that our trade agreements need to be renegotiated to favor non-discriminatory, food-safety regulations. Aspects of these principles are in language supported by Reps. John Dingell (D-Mich.) and Rosa DeLauro (D-Conn.), as well as in the Brown-Michaud TRADE Act.

In addition to other public and NGO consumer advocates, there was a heavy industry presence at this listening session. After reading this article in the New York Times, I seriously questioned whether we can expect any positive food-safety reforms to come from these people:

Increasingly, the corporations that supply Americans with processed foods are unable to guarantee the safety of their ingredients. In this case, ConAgra could not pinpoint which of the more than 25 ingredients in its pies was carrying salmonella. Other companies do not even know who is supplying their ingredients, let alone if those suppliers are screening the items for microbes and other potential dangers, interviews and documents show...

government efforts to impose tougher trace-back requirements for ingredients have met with resistance from food industry groups including the Grocery Manufacturers Association, which complained to the Food and Drug Administration: “This information is not reasonably needed and it is often not practical or possible to provide it.”

What? These companies are going on the record to admit that they have no idea where they get their ingredients from? Companies inability to even comply with transparency initiatives should be a national embarrassment. These companies should at a minimum have their corporate charters revoked for negligence. They certainly should not be helping to shape our food and trade policies.

Offshoring Rubbers, Destroying Lives

I have long threatened to start a new Public Citizen division dedicated to the safety of adult products, because, well, no one is bothering to regulate them, as last year's melamine edible underwear scare showed.

Now, this is happening:

In a move expected to cost 300 American jobs, the government is switching to cheaper off-shore condoms, including some made in China...

“Of course, we considered how many U.S. jobs would be affected by this move,” said a USAID official who spoke on the condition that he would not be named. But he said the reasons for the change included lower prices (2 cents versus more than 5 cents for U.S.-made condoms) and the fact that Congress dropped “buy American language” in a recent appropriations bill...

Fannie Thomas, who has been making AIDS-preventing condoms in southeastern Alabama for nearly 40 years in the small town of Eufaula[, says].

“We pay taxes down here, too, and with all this stimulus money going to save jobs, it seems to me like they (the U.S. government) should share this contract so they can save jobs here in America,” Thomas said.

Thomas and others at the Alatech plant said there aren’t many alternatives for them if it closes down, which is a likely result of the contracting switch.

In fact, the government is close to accepting condoms from two offshore companies: Unidus Corp., which makes condoms in South Korea, and Qingdao Double Butterfly Group, which makes them in China.

There's a number of issues here: first, Buy America, last I checked is still intact. But as we pointed out during the debate on the stimulus bill, this can be waived for a lot of reasons, including NAFTA-WTO-style trade agreements. And I believe that the Chinese bid would have to be only 6% cheaper to choose that over the American bid.

Second, given the rampant problems with product safety in China, there are some serious issues about quality control. As the Kansas City Star reports:

Bill Howe, president of PolyTech Synergies in Ohio, a consultant to the condom industry, said China is “learning” to produce better condoms, but their products are still “notoriously suspect.”

Howe, who has consulted for Alatech, acknowledges that the company got a “sweet deal” for years as the only supplier to the U.S. government for international condom distribution. Nonetheless, “they have a high level of integrity, and you don’t get that in China,” he said.

Even Chinese condom makers admit that some of their customers did not care for their products. Chinese buyers have complained their country’s condoms were “too thick, low quality and don’t feel comfortable.”

Problems persisted for some Chinese condom makers as late as 2007. Free Chinese-made condoms passed out by AIDS groups in Washington, D.C., were the subject of numerous complaints about unreadable expiration dates. Sometimes, just opening the packages damaged the condoms, some groups alleged.

Of course, NAFTA-style trade agreements and the WTO put sharp limits on the kinds of product standards and inspections we can apply to imports, while the WTO procurement agreement places limitations on the kinds of product standards or environmental or human-rights qualifications we can put on suppliers to the U.S .government. Read more here, on our section on product safety.

Attack on product safety law averted

More news from other divisions of Public Citizen working to make the products we buy safer. Here is a press release from our colleagues at Congress Watch:

South Carolina Sen. Jim DeMint’s attempt to undermine the Consumer Product Safety Improvement Act by amending the economic stimulus package fortunately never came to fruition. Lawmakers should block any more attempts to change the product safety law.

DeMint’s proposal, never voted on, would have unnecessarily exempted some businesses from the new safety regulations and would have allowed retailers to keep selling products that contain dangerous levels of lead. Empirical evidence links lead to permanent brain damage in children.

Rolling back protections, as Sen. DeMint proposed, would have meant disregarding the plights of the many children who have been hurt, become sick or even died from unsafe products - and would have put more children at risk by allowing millions of dangerous products to be placed on the market. The flood of hazardous toys and children’s products onto our shelves is what prompted overwhelming bipartisan majorities in Congress to pass the product safety act in August.

Sen. DeMint’s amendment was prompted by an outcry from small manufacturers and secondhand sellers who fear the new law will force them out of business. But changing the law - and putting children at risk - is not necessary to address the concerns that small businesses have raised. The Consumer Product Safety Commission can resolve these concerns with some simple, commonsense rules. It already has begun to do so.

However, at present the commission sorely lacks the leadership it needs to implement this law effectively for consumers or small businesses. Its current chair, Nancy Nord, is a holdover from the past administration, which was often too eager to protect manufacturers at the expense of public health and safety. It’s time for Nord to go, and that - rather than modifying the Consumer Product Safety Improvement Act - is where public officials should focus their energy. The country deserves a product safety leader who is committed to carrying out Congress’ mandate and protecting the public.

Again, for Global Trade Watch's role in this ongoing campaign, check out our report Closing Santa's Sweatshop (PDF) for things we need to do to proactively ensure product safety.

One step towards "No More Toxic Toys"

Congrats to our colleagues in Public Citizen's Health Research and Litigation groups, who in conjunction with the Natural Resources Defense Council won a victory today in requiring toys made with toxic phthalates come off the shelves by February 10. By the way, this was simply the law as Congress passed it last year; but Bush and his pro-corporate Consumer Product Safety Commission decided they were going to try to break the law. Us good guys made sure they didn't. Read more at Public Citizen's Citizen Vox blog.

Of course, here at Global Trade Watch we also work on this issue, since global "trade" rules encourage offshoring of toy production to countries with lower safety standards while at the same time making it more difficult to enforce our own standards at the border. Check out our recent report, Closing Santa's Sweatshop (PDF), for more on the next steps we need to take on toy safety.

Roquefort trade war, Stimulus Buy America Brouhaha Shows WTO Model Broken

By Lori Wallach and Todd Tucker*

Two developments this week provided further illustration that the current NAFTA-WTO model of trade and globalization is fundamentally flawed.

Exhibit A: One of the most contentious issues surrounding the congressional debate on the massive stimulus bill designed to jump start the sinking U.S. economy was… a provision on “Buy America” rules for iron and steel in public works projects?! Opponents of the measure – which include some of the nation’s leading offshorers of U.S. jobs, such as GE and Caterpillar – decried the plan to invest our tax dollars in the U.S.economy as a declaration of war against “free trade,” and claimed that the measure was WTO-illegal. (As it turns out, on the WTO-legal business, the corporates are lying, as we show here in a detailed memo.)

Exhibit B: The Bush administration, in its final week in office, imposed tariffs of up to 300 percent on French Roquefort cheese, and extended punitive tariffs on truffles, Irish oatmeal, Italian sparkling water and foie gras. The reason? In the 1990s, the Europe Union (EU) had banned the use of artificial hormones for raising beef in response to health concerns. The Clinton administration, at the urging of giant agribusiness companies, challenged this measure at the WTO because it not only banned the chemicals’ use by European farmers, but banned imports of artificial-hormone-raised beef. A WTO tribunal ordered the EU to allow in the U.S. beef, and when EU officials, under threat of a massive consumer revolt, refused, the WTO authorized the U.S. to impose retaliatory sanctions. (Canada also sought and received similar authorization.)

When a country’s state, local or national policy is ruled against at the WTO, federal authorities are required to take all available steps to force a change in the law – otherwise, they risk facing perpetual trade sanctions. It’s a fairly powerful system: in the nearly 15-year history of the WTO, countries have always watered down or eliminated the challenged laws, including in the cases brought against U.S. laws (which we’ve lost nearly 90 percent of, by the way). There’s only been one exception, and that’s the beef-hormone case. The Europeans – in an admirable display of moxie – decided that ensuring consumer safety was their top priority. Although they’ve been paying out their pound of flesh for a decade – at a rate of over $120 million per year since 1999 – the Europeans apparently weren’t suffering enough, and Bush upped the cross-sanctions on his way out the door.

++

The larger question raised by these two conflagrations is why political leaders signed up food-safety and government procurement rules – both quintessential, non-trade domestic issues – to comply with so-called “trade” agreements in the first place. A big part of the answer is that they were pushed by companies like GE and Caterpillar and large agribusiness multinationals, who enjoy wild privileges under these pacts that encourage the offshoring of U.S. jobs. Since then, corporations have used the overreaching “trade” agreement rules to attack an array of important non-trade, public-interest policies. The latest installment is the current scare campaign to water down Congress’ response to the economic crisis, and gin up the attack on important food-safety measures abroad.

Nations – not just the U.S., but all nations – should have a right to invest in themselves, spend their tax dollars in the manner deemed best by their democratically elected officials, and pursue other public-interest policies. President Obama and the last two classes of freshmen members of Congress came to office on pledges to overhaul the failed globalization policies of the past, and pursue global integration and cooperation on fairer terms. Let’s hope that they stand their ground: our future prosperity and security depends on it.

*The writers are director and research director, respectively, of Public Citizen’s Global Trade Watch division. They blog at EyesOnTrade.Org. This was originally posted on Huffington Post.

One pill makes you larger, and one pill makes you small

There is a worrying new front of concern for fair traders: the almost complete offshoring of our nation's medicine supply. Here's the latest from the NYT:

Experts and lawmakers are growing more and more concerned that the nation is far too reliant on medicine from abroad, and they are calling for a law that would require that certain drugs be made or stockpiled in the United States.

“The lack of regulation around outsourcing is a blind spot that leaves room for supply disruptions, counterfeit medicines, even bioterrorism,” said Senator Sherrod Brown, Democrat of Ohio, who has held hearings on the issue.

Decades ago, most pills consumed in the United States were made here. But like other manufacturing operations, drug plants have been moving to Asia because labor, construction, regulatory and environmental costs are lower there.

The critical ingredients for most antibiotics are now made almost exclusively in China and India. The same is true for dozens of other crucial medicines, including the popular allergy medicine prednisone; metformin, for diabetes; and amlodipine, for high blood pressure.

Of the 1,154 pharmaceutical plants mentioned in generic drug applications to the Food and Drug Administration in 2007, only 13 percent were in the United States. Forty-three percent were in China, and 39 percent were in India.

Petition to Obama: Close Santa's Sweatshop

You may have read a few days ago that we recently released a new report, Closing Santa's Sweatshop (PDF), showing how trade agreements exacerbate our import safety crisis and what changes need to be made to fix the problem.

We are now circulating a petition to President-Elect Obama, calling on him to keep his campaign pledges to address unsafe imports and to fix the NAFTA/WTO-style agreements that encourage the offshoring of production while simultaneously limiting border inspection and imported product safety standards.

Sign the petition!

(Photo by Flickr user "cursedthing")

Becerra: Trade Not an Obama Priority

Rep. Xavier Becerra (D-Calif) has reportedly turned down the Obama USTR job. According to Politico:

The California Democrat – the first high-profile figure to reject an Obama job offer – says he turned down the U.S. trade representative gig because he was concerned that trade would not be a big priority in the new administration...

Becerra told the Spanish-language newspaper La Opinion he had concluded that trade “would not be priority number one, perhaps not even two or three,” according to a loose translation of his remarks, adding that, “To do this job well, it would be necessary to travel a lot ... and also I have a family.”

As we document in a new report "Closing Santa's Sweatshop", the USTR - along with agencies like the Consumer Product Safety Commission, responsible for safety of imported toys - has a lot to tackle in the coming years. This includes renegotiating existing trade deals like NAFTA and the WTO to create policy space for product safety and climate reform.

New Report: Closing Santa's Sweatshop

We just put out a new report, "Closing Santa's Sweatshop: How to Deliver on Obama's and Congress' Toy Safety and Fair Trade Promises".

We find that, while production of our children's toys has become globalized, our consumer safety system and its protections against injury and death have not. And unfortunately, our trade agreements take us in the wrong direction.

The United States is expected to import $23 billion in toys in 2008, 90 percent of that from China. Imports this year represent 90 percent of U.S. toys, which is the highest toy import level and share on record. Many nations producing our children's toys have extremely lax safety standards and enforcement. Yet, while toy imports exploded by 562 percent from 1980 to 2008, the budget of the agency responsible for toy safety, the Consumer Product Safety Commission (CPSC), was cut by 23 percent, with staffing cut nearly 60 percent during the same period.

Unfortunately, the threat of toy safety improvements being attacked as "illegal trade barriers" under current U.S. trade agreements is no longer only hypothetical. The report describes actions taken by China in 2008 invoking two U.S. safety initiatives relating to state-level bans on lead and bisphenol A (BPA) in toys that China claims violate World Trade Organization (WTO) rules. U.S. laws challenged at the WTO have been ruled against more than 80 percent of the time.

The report lays out a variety of recommendations on how to reform our trade agreements and domestic policy to guarantee toy import safety. "Closing Santa's Sweatshop" also documents campaign pledges on import safety made by President-elect Obama and Rep.-elect Jared Polis (D-Colo.) and other new members of Congress – 71 of whom replaced congressional supporters of the failed trade-policy status quo generating the import safety crisis in the 2006 and 2008 elections.

You can find the press release and all the hot materials here.