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

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August 01, 2014

Central America Crisis Belies CAFTA’s Empty Promises

 

“…[the Central America Free Trade Agreement (CAFTA) is] the best immigration, anti-gang, and anti-drug policy at our disposal…”

--Representative Tom Davis, July 27, 2005 – one day before Congress passed CAFTA

“Something must be happening that children and their mothers are now leaving for the United States in busloads…People are saying, ‘There’s no future here.’”

--Miriam Miranda, Honduran human rights leader and recent kidnapping survivor, July 30, 2014

 

Nine years ago this week, the polemical Central America Free Trade Agreement (CAFTA) was passed by the House of Representatives…in the dead of night…by a single vote.  

CAFTA proponents promised the deal would reduce gang and drug-related violence in Central America, boost economic development, and diminish the factors pushing Central Americans to migrate to the United States. 

Such promises already sounded hollow when they were voiced in 2005.  Today, as thousands of Central American children leave their homes and risk their lives to try to make it to the United States, CAFTA’s promises have proven tragically empty.  

When trying to secure passage for CAFTA’s expansion of the controversial North American Free Trade Agreement (NAFTA) model to five Central American nations and the Dominican Republic, the Bush administration and corporate lobbyists could not rely on the standard promises of job creation and deficit reduction that had proven false under NAFTA.  Instead, they launched a barrage of political arm-twisting and horse-trading to convince members of Congress to vote against the anti-CAFTA opinions of their constituents.  

Many CAFTA backers also resorted to selling the deal as a pathway to peace and prosperity for Central America.  Here is Representative Tom Davis (R-Va.) speaking on the House floor in favor of CAFTA on July 27, 2005:

“…we need to understand that CAFTA is more than just a trade pact. It's a signal of U.S. commitment to democracy and prosperity for our neighbors. And it's the best immigration, anti-gang, and anti-drug policy at our disposal…Want to fight the ever-more-violent MS-13 gang activity originating in El Salvador but prospering in Northern Virginia? Pass CAFTA …Want to begin to ebb the growing flow of illegal immigrants from Central America? Pass CAFTA.

One day later, Congress passed CAFTA.

Nine years later, gang and drug-related violence in Central America has reached record highs and the “growing flow” of immigrants from Central America has surged.

On Wednesday, Miriam Miranda, coordinator of the Fraternal Black Organization of Honduras (OFRANEH) traveled to Washington, D.C. to speak to congressional staff about the rampant violence and unrelenting poverty in her home country and its neighbors. Miriam spoke not only of the skyrocketing homicides and widespread gang and paramilitary control in Honduras, but the economic instability undergirding such violence.

The issue is not theoretical for Miriam – just two weeks ago she survived an attempted kidnapping by armed men.

I asked Miriam what she would say, if given the opportunity, to the members of Congress who had promised CAFTA would spur development and reduce violence and migration pressures in Central America. She responded:

“It’s more than evident with what has happened in the last eight to nine months – this massive exit from Central America – that these policies that they have implemented are completely mistaken. They don’t respond to our needs…We have to question this model of development – development for whom?” 

Not only did CAFTA fail to stem violence and migration from Central America as Rep. Davis and other proponents promised. The deal appears to have actually contributed to the economic instability feeding the region’s increase in violence and forced migration.

That’s the conclusion reached by the 67 members of Congress’ Progressive Caucus, who included CAFTA in their recent summary of the root causes of the refugee crisis occurring along the U.S.-Mexico border: “free trade agreements, including the North American Free Trade Agreement (NAFTA) and the Central America Free Trade Agreement (CAFTA) have led to the displacement of workers and subsequent migration from these countries.”

How has CAFTA led to displacement and migration?  Under CAFTA, family farmers in Honduras, El Salvador, and Guatemala have been inundated with subsidized agricultural imports – mainly grains – from U.S. agribusinesses. Agricultural imports from the United States in those three CAFTA countries have risen 78 percent since the deal went into effect. 

While agricultural exports to Central America represent a small slice of U.S. agricultural corporations’ business, they present a large threat to the livelihoods of small-scale Central American farmers who cannot compete with highly subsidized and mechanized U.S. firms. When Mexico experienced a similar surge in agricultural imports under NAFTA, more than 2 million Mexican farmers and agricultural workers lost their livelihoods and migration to the United States doubled.  

In the lead-up to CAFTA, development groups like Oxfam warned of such displacement, stating that when considering the impacts on Central American rice production alone, CAFTA threatened the livelihoods of up to 1.5 million people in the region.  Central American immigrant advocacy groups like CARECEN, CONGUATE, and SANN also raised such concerns early in the CAFTA negotiating process, but were ignored by the Bush administration.

Certainly the economic instability and violence plaguing Central America, and the resulting surge in migration to the United States, cannot be pegged on CAFTA alone. The causes of the crisis are manifold, and many have been amply discussed.  But though CAFTA did not singlehandedly spark this fire, it appears to have contributed to the kindling.

And clearly, CAFTA has utterly failed to deliver on the far-fetched promises used by Rep. Davis and other proponents to sell the controversial deal to a skeptical Congress back in 2005.  I wish Representative Davis, and all those who voted for CAFTA, would have been there on Wednesday to hear Miriam’s words.  

I wish the same for the members of the Obama administration who are now pushing to expand the NAFTA/CAFTA trade model across the Pacific under the Trans-Pacific Partnership (TPP).  As with CAFTA, some are trying to sell that deal with rosy promises that it will spur development in TPP countries. 

In the words of Miriam, development for whom?  

February 13, 2014

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

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

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

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

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

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

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

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

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

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

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

Among the study’s findings:

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

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

July 13, 2011

Wikileaks blows lid on Panamanian corruption

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

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

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

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

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

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

Continue reading "Wikileaks blows lid on Panamanian corruption" »

March 02, 2011

Cola Wars Beat Drug Wars

The award in agribusiness giant Cargill's NAFTA investor-state attack on Mexico's jobs program was published last week.

The short version: a tribunal of three unelected judges determined that Mexico's efforts to save or create jobs for campesinos in the sugar sector were a violation of NAFTA. Mexico's taxpayers were ordered to cough up over $77 million plus interest, all the judges' and court fees, and to even pay Cargill $2 million for Cargill's own lawyers' costs.

Here's the longer version:

For years, large agribusiness groups have been pushing the use of high fructose corn syrup in soda drinks, despite concerns about the environmental and public health impact. Not only is HFCS opposed on health grounds, it's also opposed by some foodies on taste grounds: witness the growing demand for Mexican Coca Cola, much of which is made with sugar and is said to therefore taste better.

By the late 1990s, Mexico had a whole lot of excess sugar in its market that it hoped to be able to export to the U.S.This pile-up was driving down prices and hurting Mexico's farmers, who were generally getting battered by NAFTA-style rules and in turn driving displacement into drug trafficking or immigration, as President Obama himself noted during the campaign.

Continue reading "Cola Wars Beat Drug Wars" »

November 08, 2010

Candidates of color running and winning on fair trade

Anytime you force an ad-man to compress a difficult policy problem into a 30-second soundbyte, you're going to lose some complexity.

That's why I was surprised at the push back on politicians on so-called "China bashing." (See for instance, Reihan Salam here, and Matt Yglesias here.)

I watched about 800 political ads for the 2010 cycle, and most of the China-related ads I that I saw were not bashing Chinese people - they're bashing unfair trade deals and policies, voted on in Washington, that had the effect of offshoring jobs to other countries. In other words, the reason things aren't made in America is because of policies that were. You can see the full pantheon of ads and analysis in our new report here.)

For what it's worth, candidates of color (including a number of South Indian Americans and Asian Americans) in both parties have launched some of the strongest attacks on job offshoring this election cycle.

This includes Rep. David Wu (D-Ore.) in Portland, who bears the distinction not only of being an Asian-American campaigning for fair trade, but also a Democrat showing that you can campaign and win on fair trade in the Pacific Northwest, where the (incorrect) conventional wisdom is that this message doesn't play.

Democrats and Indian-Americans Manan Trivedi in Pennsylvania and Raj Goyle in Kansas also posted credible showings in GOP-leaning districts. Both campaigned extensively on fair trade themes. As an NPR column argued:

The trick for these candidates is to never let voters forget you are running to represent Sacramento, or Wichita - not Bangalore.

Raj Goyle does this by campaigning very hard on fighting outsourcing of Kansas jobs.  Ami Bera agrees, "we have to keep those jobs here because we have over 12 percent unemployment."

(Bera ran in against Dan Lungren in California.)

In Hawaii, Democratic candidate Colleen Hanabusa criticized job offshoring in paid television ads, and was successful in her effort to unseat GOP incumbent Charles Djou, who ran the campaign's only television ad in favor of the Korea FTA. Both candidates are Asian American.

Democrat and Congressional Hispanic Caucus member Loretta Sanchez fought back a challenge from Vietnamese-American GOP candidate Van Tran in this heavily Latino and Asian district. She campaigned against unfair trade with Vietnam, and against other anti-worker trade deals.

In Louisiana, African-American candidate Cedric Richmond beat Vietnamese-American GOP incumbent Anh Cao. Richmond ran paid television ads against unfair trade deals, while Cao attacked unfair trade with Vietnam (even though he had supported the Bush-initiated Trans-Pacific Partnership while in office).

In Georgia, Democratic incumbent and African-American Sanford Bishop won re-election in his majority White-American, deep South district, and ran paid television ads attacking NAFTA and China trade policy. (Bishop has had complicated trade policy history - voting for the WTO and China's entry into it, while voting against NAFTA and cosponsoring the fair trade TRADE Act.) Meanwhile, his fellow Democratic incumbent Jim Marshall did not campaign on his fair trade record, and lost to Austin Scott, a Republican that emphasized Buy America themes. (Both Marshall and Scott are white.)

Ryan Frazier, an African-American GOP candidate in Colorado, criticized the fact that the stimulus bill was not used to buy only U.S.-made goods. Allen West, an African-American GOP candidate in Florida, criticized the job offshoring impact of cap-and-trade. Their Democratic opponents approached these candidates in different ways: Ed Perlmutter in Colorado ran anti-offshoring ads of his own and won, while Ron Klein in Florida was mum on trade and lost.

And Latino voters in California and Nevada strongly backed Democratic Senate incumbents Barbara Boxer and Harry Reid, who both campaigned against policies that send jobs to Mexico and other countries.

Finally, 75 percent of the Congressional Black Caucus, nearly half of the Congressional Hispanic Caucus, and Asian-American members like Reps. Mazie Hirono (D-Hawaii) and Judy Chu (D-Calif.) have endorsed the TRADE Act, which simultaneously pushes for good jobs here at home, while prioritizing stronger environmental justice, workers rights and democratic protections for our trading partners. Not to mention a fellow named Barack Obama, who also campaigned and won on these themes - winning not only communities of color but making serious inroads into the white working class.

In sum, elected officials don't seem to have much difficulty reconciling justice for communities of color at home and abroad with a strong working class message of standing up for job creation in the United States. They know as well as anyone what my colleagues John Schmitt and Nicole Woo (and other CEPR folks) have found: that the quality of manufacturing and other jobs here at home is a major reason that families from Asian-Pacific, African-American and Latino-American communities have ascended to the middle class.

October 27, 2010

Follow the Climate Reality Tour!

DSC01484 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.

Continue reading "Follow the Climate Reality Tour!" »

March 30, 2010

Clinton Reversal on NAFTA Model?

Haiti collapsed house

While former President Clinton was visiting Haiti last week, he revealed that his views on trade policy have undergone some transformation since leaving office:    

At a news conference in Port-au-Prince Monday, Clinton said when he helped Haitian President Jean Bertrand Aristide return to power in 1994, Clinton also signed legislation that increased the flow of cheap American rice into Haiti.

But now, he says, "I think it was a mistake. I think it was part of a global trend that was wrong-headed."

Clinton says the theory behind that global trend was that wealthy countries could provide poorer countries with cheaper food than their farmers could grow.  That would lead poor countries to skip directly to industrialization. But Clinton says, once he left office and saw the effects of that policy on farmers in developing countries, he changed his mind.

"It is unrealistic to expect that a country can totally obliterate its capacity to feed itself and just skip a stage of development," he says. "It seems almost laughable now that we ever thought it."

It’s heartening to see one of the strongest proponents of the neoliberal economic model come to realize just how damaging that model has been. For Mexico, though, this realization has come about 16 years too late.

When NAFTA entered into force in 1994, cheap subsidized American corn from corporate farms flooded the Mexican economy, forcing hundreds of thousands of small corn farmers to leave their farms.  Many of these farmers, faced with corn prices below their cost of production, often had no choice but to emigrate to the U.S. to escape economic disaster.  During the 2007-2008 global food price crisis, poor Mexicans found out exactly how costly the destruction of the Mexican corn industry could be when tortilla prices, propelled by U.S. corn prices, skyrocketed by 60 percent within a few months.  

Now that Clinton has seen the flaws of the unfair trade model epitomized by NAFTA, could he press Obama to renegotiate NAFTA to make it fair for consumers, workers, and farmers in all three NAFTA countries?


(Thanks to Flickr user talkradionews for the photo)

June 30, 2009

FTAs = Destabilization

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

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

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

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

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

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

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


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

June 19, 2008

Obama campaign fights back on Fortune interview

(Disclosure: Global Trade Watch has no preference among the candidates.)

Say what you will about Obama's trade positions, but you can't deny that they learned the lesson of Al Gore and John Kerry that you must fight back when attacked or misquoted. The Obama campaign has established a Fact Check operation to respond to absolutely everything, including what they claim is a  misrepresentation of Obama's trade views in a Fortune Magazine interview. Particularly interesting was his statement to Nina Easton on NAFTA and immigration, which I don't think has ever been said by a major party candidate:

And by the way, just going back to NAFTA for a second, I don't dispute that there may have been some modest aggregate benefit in terms of lowering prices on consumer goods for example. But I would also argue that not only did it have an adverse affect on certain communities that saw jobs move down to Mexico but for example our agricultural section pretty much devastated a much less efficient Mexican farming system. But from a pure economic, you know if you're just an economist looking at this in an abstract way you would say well a more efficient producer displaced a less efficient producer in Mexico, there's nothing wrong with that. As a practical matter those are millions of people in Mexico who are displaced. Many of whom now are moving up to the United States, contributing to the immigration concerns that people are feeling. And so, those human factors should be taken into account. They may not override or every single decision that we make in respect to trade, but to pretend those costs aren't there, that those costs aren't real, and my job as president to take those into account, I think, does no service to free trade. And its part of what has fed the protection incentive and the anti-immigration incentive that is out there in both parts and you know I think that if we manage trade more effectively, if we're better partners, if we are thinking about the dislocations that occurs as a consequence of it, if were true to our belief that labor and environmental standards should be a part of raising living standards around the world instead of a race to the bottom, then we can have free trade and it will be sustainable and we will have political support over the long run.

May 28, 2008

Bhagwati channels Dean Baker on immigration

I knew this day would come. My friend and former boss Dean Baker has been taunting the neoliberals to embrace his idea of free trade in health care and immigration. This was good politics, so long as no neoliberals did so. It served to show their hypocrisy for subjecting steelworkers to unrelenting low-wage competition, while not opening up the immigration floodgates to low-wage doctors. It also showed that our trade policy is not a random inevitability, but structured by real people to benefit real favored interests at the expense of others.

The problem with the strategy is that neoliberals have actually long been much warmer to this idea than Dean let on. As early as the 1970s, corporate lobbyists were trying to figure out ways to put immigration and social services under emerging neoliberal institutions. By 1994, the Clinton administration offered up health insurance and our H-1B visa programs to WTO General Agreement on Trade in Services coverage. And as our report shows, this move by Clinton has hurt the prospects for his wife's health care package.

Many corporate lobbyists (and some WTO nations) want to create a GATS visa that would put the whole of U.S. immigration policy under WTO jurisdiction. This pretty much the gist of the Bhagwati and Madan piece in the WSJ that Dean praised today:

Mode 4 concerns doctors and other medical providers going where the patients are. It offers substantial cost savings, since the earnings of foreign doctors are typically lower than those of comparable suppliers in the U.S.

Now, while it may be interesting to think about the economics of liberalizing immigration, it is something altogether different to think about the constitutionality and institutional aspects of doing so through the WTO. We've found that those in favor of more...

The WTO has no mandate to negotiate migration policy, nor should it... We reject the guest worker model, which inevitably ties migrant workers' right to stay and work in a country to employment with a specific employer, making them vulnerable to extensive abuse that sometimes borders on indentured servitude and undermines domestic and international labor standards.

...and of less immigration...

A WTO-imposed guest-worker scheme would be even more devastating as the global bureaucrats would have sanctioning ability to force our submission to their sovereignty-destroying whims.

...prefer to duke it out on the national stage, where with power comes accountability, rather than at the WTO, where there is no popular accountability. I hope that Dean will clarify that he means he is for free trade for professionals in theory, not in WTO practice.

May 13, 2008

Corporate takeover of everything department

And the food crisis roils on, thanks to NAFTA and WTO's neoliberalization of the food supply. Mexican farmers continue to be displaced in the wake of NAFTA:

“We migrate because we don’t think there are options,” Mr. León said. “The important thing is to give options for a better life.”

Viewed against the backdrop of rising food prices in a global marketplace, Mr. León’s fight to keep farmers from abandoning their land is much more than a refusal to give up a millennial way of life.

As Mexico imports more corn from the United States, the country’s reliance on outside supplies is drawing protests among nationalists, farmers’ groups and leftist critics of Mexico’s free trade economy. Earlier this year, as the last tariffs to corn imports were lifted under the North American Free Trade Agreement, farmers’ groups marched against the accord in Mexico, asking for more aid.

And the few that made it across the border are now getting slammed by ICE stings. And has anybody noticed that the destruction of Mexico's traditional economy and import substitution schemes have not led the way to more efficiency, but greater instances of narcotrafficking and narcoterrorism? I mean, seriously, we seem close to having a failed state on our borders.

In other news, apparently the Supreme Court is so taken over with corporate concerns that they can't even hear international human rights cases any more, most recently in the case of apartheid in South Africa. And though it's not directly trade related, I thought this piece on the Senate compromising on banning menthol cigarettes showed an outrageous form of health and environmental racism:

Menthol is particularly controversial because public health authorities have worried about its health effects on African-Americans. Nearly 75 percent of black smokers use menthol brands, compared with only about one in four white smokers.

That is why one former public health official says the legislation’s menthol exemption is a “cave-in to the industry,” an opinion shared by some other public health advocates.

“I think we can say definitively that menthol induces smoking in the African-American community and subsequently serves as a direct link to African-American death and disease,” said the former official, Robert G. Robinson, who retired two years ago as an associate director in the office of smoking and health at the Centers for Disease Control and Prevention.

McCain self censors from telling Americans what polls say they want to hear

Pew Center has a new poll out in response to this question (hat tip to Deborah James for the link):

In general, do you think that free trade agreements—like NAFTA, and the policies of the World Trade Organization—have been a good thing or a bad thing for the United States?

Bad thing: 48%

Good thing: 35%

In other news, Sen. John McCain (R-Ariz.) has come out in favor of punitive tariffs on climate change laggards, but according to the NYT:

In the prepared text of his speech, e-mailed to reporters on Sunday night and Monday morning, Mr. McCain went so far as to call for punitive tariffs against China and India if they evaded international standards on emissions, but he omitted the threat in his delivered remarks. Aides said he had decided to soften his language because he thought he could be misinterpreted as being opposed to free trade, a central tenet of his campaign and Republican orthodoxy.

As we noted a couple of months ago, McCain's (and Obama's and Clinton's) climate change policies are seriously limited by his beloved "free trade" deals.

May 12, 2008

Standing tall

Here's what's hot:

January 03, 2008

Rain on the scarecrow as the border blockaded

January 3rd, you know what that means? Only 40 more days until the Dee-Cee presidential primary vote! I can't wait! D.C. has always had a unique role in the nation for our role in the presidential primary process. Sure, there's SOMETHING happening in Iowa today, but it's not until a candidate wins the D.C. primary that they're truly considered anointed.

In all seriousness, voting in America's last inland colony is not today's top news. No, just wanted to remind everyone about the Iowa Fair Trade Campaign's excellent web resource on the candidates' positions on trade, available here.

There's been a lot of paeans to corn ethanol during this season, and with good reason: Iowa's farmers are taking it on the nose. As we've written before,

While the volume of U.S. corn and soybean exported increased as predicted by NAFTA’s proponents, the prices received by American farmers declined to the lowest levels in recent memory. While American farmers received $12.64 per bushel of soybeans (in inflation-adjusted terms) when the NAFTA predecessor Canada FTA went into place in 1988, that price halved to $6.30 by 2006. In inflation-adjusted dollars, farmers received $4.29 a bushel for corn in 1995, the year the WTO went into effect and a year after NAFTA went into effect. But a decade later in 2005, the bushel price was at a low of $2.06, and only started increasing with the recent ethanol boom  – a development that is threatened with derailment as Brazil and other agricultural exporters plot WTO challenges against U.S. corn ethanol subsidies. 

But don't take my word for it... after all, there's a reason that John Cougar Mellencamp is a political figure on par with Oprah in Iowa.

The corn issue in Iowa is connected to the corn issue in Mexico, which has been a lot in the news recently. (See our fact sheet for more.) In particular, the final phasing in of NAFTA tariff cuts in Mexico happened, and folks in Mexico were none too happy about it. (video in spanish)

As we've written about before, Latino civil rights groups are calling attention to NAFTA-style policies, which are destroying the Mexican countryside, which has led to massive displacement of people towards the United States.

As the AP reported,

Mexico's Roman Catholic Church has warned that the changes could spark an exodus to the U.S.

"It is clear that many farmers will have a difficult time competing in the domestic market, and that could cause a large number of farmers to leave their farms," the archdiocese said in a statement issued on New Year's Day.

Dozens of farm activists in Ciudad Juarez blocked one lane of the border bridge leading into El Paso, Texas, to protest the unrestricted imports of U.S. corn, as part of a 36-hour demonstration that started in the first minutes of the New Year.

They had pledged not to allow any U.S. grain into the country...

"The open battle against NAFTA begins," read a banner headline in the daily La Jornada.

In Mexico City, activists announced plans to march through the capital and hold a nationwide conference on Jan. 14 to plan further protests.

"This is going to be a complicated year, and there will certainly be a lot of demonstrations," said Enrique Perez, a spokesman for the National Association of Farm Distributors, one of the groups organizing the marches.

Mexico, the birthplace of corn, obtained a 15-year protection for sensitive farm crops when NAFTA was negotiated in 1993. That protection period ran out on Jan. 1. Mexico still grows almost all of the corn consumed here by humans, but imports corn to feed animals.

Mexican politicians from all major parties agree that a NAFTA renegotiation needs to happen. An area where there might be some common ground with the candidates for president, many who are talking about doing something that sounds an awful lot like renegotiation of NAFTA.

October 09, 2007

National Latino Congreso to Congress: Oppose Bush's NAFTA Expansions!

NEWS RELEASE, October 7, 2007

National Latino Congress Unanimously Passes Resolution Calling on U.S. Congress to Stop Signing New Trade Agreements

Latino Leaders Say U.S. Cannot Address Immigration without Changing Course on Failed Trade Policy

Los Angeles, CA – Reflecting on the root causes of poverty and migration in Latin America, the National Latino Congreso has unanimously approved a resolution rejecting new trade agreements based on the North America Free Trade Agreement (NAFTA), and calling on the U.S. to change its international economic policies, which so far are largely to be blamed for producing wealth and income inequalities abroad, as well as at home. In the case of Latin America, policies promoted by the U.S. have also resulted in the impoverishment and displacement of millions of rural inhabitants.

The resolution adopted on Saturday Oct. 6 by delegates of the Second National Latino Congreso , comes at a moment in which the U.S. Congress considers a new trade agreement with Peru, which largely mirrors NAFTA. The adopted resolution reads, in part:

“Therefore, be it resolved that the organizations present at the 2007 Latino Congreso, are strongly opposed to expanding the failed NAFTA and CAFTA through the “free trade” agreements between the United States and Peru, Colombia, and Panama, and will mobilize our constituencies to work in vehement opposition to their passage, and call on the U.S. Congress directly to reject these agreements.”

The resolution specifically condemns national lawmakers who are attempting to push anti-immigrant legislation while continuing to push for expansion of trade and economic policies that force families to emigrate in the first place. More than 1,000 Latino leaders present applauded the passage of the resolution, calling it an important step towards addressing the obvious link between current U.S. trade and economic policies, and migration.

Continue reading "National Latino Congreso to Congress: Oppose Bush's NAFTA Expansions!" »

September 25, 2007

Latino, immigrant and other groups tell Congress to reject Peru NAFTA expansion

OPEN LETTER TO THE UNITED STATES CONGRESS – OPPOSE U.S.-PERU FTA

Dear Members of the U.S. Congress:

We are concerned Peruvian-Americans, immigrant organizations and human rights advocates in the United States. We are writing to express our strong opposition to the Free Trade Agreement with Peru (FTA) and to request its further renegotiation for the following reasons:

Continue reading "Latino, immigrant and other groups tell Congress to reject Peru NAFTA expansion" »

June 27, 2007

Latino groups call for opposition to anti-Latino, Deathstar-ed deals

This from across the wires...

Members of Congress, Latino Civil Rights and Immigrant Groups Say NAFTA-Style Trade Pacts Fail Latinos in the U.S. and Abroad

Latino Organizations United in Opposition to NAFTA-expansions to Peru, Panama and Colombia; Call on Congress to Chart a New Course on Trade

Washington, DC — As the fight over immigration heats up in Washington, U.S. Congress must oppose proposed NAFTA expansion agreements with Peru, Panama and Colombia that are expected to increase pressure on millions of small farmers in those countries to attempt desperate migration to the United States, said Latino civil rights leaders and members of the Congressional Hispanic Caucus in a press conference today.

Major Latino organizations including the League of United Latin American Citizens (LULAC), the National Alliance of Latin American and Caribbean Communities (NALACC) and the Dolores Huerta Foundation today sent a letter to the U.S. Congress reiterating their opposition to the proposed trade agreements after the recent release of freshly re-negotiated texts of the agreements failed to address the key concerns of the Latino community in the United States and abroad.   

“It is unbelievable that in the middle of a contentious debate on immigration, Congress is being asked to pass trade agreements that are certain to increase the pressure on impoverished small farmers in Latin America to attempt to come to the United States,” said Brent Wilkes, the Executive Director of the League of United Latin American Citizens (LULAC), the nation’s oldest and largest Latino civil rights membership organization. “We wrote repeatedly to the U.S. Congress requesting that the agricultural provisions in the agreement be fixed, and we are disappointed that the new text released this week for the FTAs doesn’t fix them.”

The agricultural rules included in the Peru, Colombian and Panama agreements mirror closely the agricultural rules from NAFTA that resulted in over 1.3 million lost jobs in Mexico’s rural sector.  Undocumented migration from Mexico to the United States has more than doubled since NAFTA was enacted in no small part due to failed trade policies.  In the case of the Peru, Colombia and Panama agreements, these same agricultural provisions will foreseeably result in the displacement of large numbers of peasant farmers — increasing hunger, social unrest, and desperate migration at a minimum; and according to a report of the Colombian Ministry of Agriculture, will lead to an increase in drug cultivation and violence. 

“We are calling on members of Congress today to realize that in order to fix the immigration problem of the United States, we need to look at the root cause.  If we don’t fix the failed NAFTA model of free trade, we’ll be fighting over immigration again and again,” said Gabriela Lemus, Executive Director of the Labor Council for Latin American Advancement.

UPDATE: Mark Drajem from Bloomberg reports on the pending Peru, Panama and Colombia FTAs:

Under the current fast-track treatment, Congress must accept or reject a trade agreement without change. Still, even with the changes worked out between the White House and House Ways and Means Committee Chairman Charles Rangel of New York, supporters from the U.S. Chamber of Commerce don't expect a majority of Democrats to support either of those agreements.

The accords were dealt a blow today as the largest U.S. Latino groups wrote members of Congress opposing them, arguing that a flood of subsidized U.S. agriculture exports would push farmers in those countries off the land.

"This deal would continue to generate economic inequality and a deterioration of social standards both at home and abroad, and continue to make migration to the United States the only option for many working families in Latin America,'' the League of United Latin American Citizens and other Latino groups wrote in their letter.

 

June 12, 2007

Deepa Fernandes on a real solution to immigration

WBAI radio host Deepa Fernandes comes across with some clear thinking on immigration:

I have spent years researching immigration policies and talking about immigration with citizens and migrants alike. While some immigrants certainly do aspire to stay permanently in the U.S., many wish they could have remained in their home country and earned a living wage there.

But trade policies like NAFTA, CAFTA and free trade agreements with many Caribbean and Asian countries, coupled with IMF and World Bank policies that have gutted social welfare programs in many of these countries have forced millions into migratory patterns to eek out a living. When their village or rural town becomes unviable, most people move to the nearest big city. Cities in all these countries are far from able to provide meaningful employment for the masses and the migration continues until a decent paying job can be found. In this part of the hemisphere, that place is the United States.

Simultaneously, U.S. workers have suffered because employers can hire, en-masse, a workforce that has few rights, no benefits and accepts paltry wages. But somehow, this exploitation of undocumented workers has been transformed into the idea that immigrants are the ones to blame for “taking” plum “American” jobs.

So here’s my solution. Let’s go to the root cause of the problem. Let’s deal with why people can’t stay in their home country and earn a fair wage, and lets then look at why there is a race to the bottom for wages and job conditions here in the U.S. In sum, the domestic immigration problem should be tackled through trade and labor policies...

Imagine if we could end, or at the very least massively reform, NAFTA, CAFTA and all the free trade agreements the U.S. has with other nations. Let’s push for fair trade or even take some of the huge budget that is spent on militarizing the southern border (because let’s be real, it hasn’t worked and more money for stadium lights, unmanned drones and border patrol agents is not going to stop people coming in search of work) and lets invest in jobs that will keep people where they want to be: in their home country. If one could earn $7-10 an hour in Mexico, Guatemala, Jamaica, Peru etc, you watch the flow of undocumented immigrants dry up. And while this may seem a pipe dream, with political will, it is possible.

June 07, 2007

Sanders, Grassley try to put the brakes on outsourcing

In the latest strange-bedfellows case, Sens. Bernie Sanders (I-Vt.) and Chuck Grassley (R-Iowa) have introduced an amendment (PDF) to the Senate immigration bill that would bar companies from hiring foreign workers with H-1B visas if they have made mass layoffs of U.S. workers within the past year. This would prevent companies from profiting by dumping U.S. labor in favor of cheaper international workers, while still allowing companies with genuine labor shortages to take advantage of the H-1B program.

This has been covered extensively by technology sites like Ars Technica, PC World and Information Week, and on Sirota's site, although it doesn't seem like it's gained much traction yet elsewhere (and I can't seem to find a statement from either senator). Maybe that's not too surprising given that there have already been over 100 proposed amendments to this bill. In any case, we're keeping our eyes on it.

Immigration debate over at the National Review

David Frum over at the National Review poses an interesting line of argument:

I am often asked: how can you support free trade while favoring curbs on immigration? If borders are open to goods and capital, should they not be open to people as well? This argument used to impress me a great deal. (In the next NRODT I tell the story of how I came to change my mind on immigration.)  But can we please note that from a distributional point of view, immigration functions more like protectionism than trade?

Protectionists always do well in Congress because the benefits of protectionism are tightly concentrated while the costs are broadly dispersed. The beneficiaries clamor for protection; the victims keep quiet.

Isn't that exactly what happens with immigration? The benefits of open borders are claimed by a few tightly organized groups; the costs fall on the American people as a whole.

Immigration is an odd issue that cuts in odd ways in the body politic. The left tends to emphasize the individual dimension of immigration (i.e. families that have suffered from ICE raids, border policing, etc.) as reason to have more open borders to immigration, while this right advances cultural arguments (who is dem America? what language do dem speak?) disguised as economic ones (labor supply concerns). Still others emphasize that we're importing the "wrong workers," and that there would be more payoff to American families if we imported doctors and lawyers rather than putting our lowly paid manufacturing workers in race to the bottom competition.

Continue reading "Immigration debate over at the National Review" »

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