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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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April 10, 2014

TPP Foreign Policy Arguments Mimic False Claims Made for Past Pacts

New Report Debunks Notion of the Trans-Pacific Partnership as a Bulwark Against China, Catalogues Outcomes of Similar Geopolitical Claims Made About Pacts Since NAFTA 

As President Barack Obama’s Asia trip looms and proponents of the Trans-Pacific Partnership (TPP) increasingly pitch the deal as a bulwark against China’s rising influence, a report released today by Public Citizen reveals that nearly identical foreign policy arguments have consistently proven baseless when used to sell trade deals over the past two decades. The report reviews foreign policy claims made to promote the TPP, ranging from the absurd to the counterfactual, to those that repeatedly have been disproved by the actual outcomes of similar claims made for past pacts.

“The same old foreign policy arguments get trotted out to sell trade agreements after the economic case fails,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Repeatedly, Congress has approved bad deals based on dire predictions that failure to do so would mean diminished U.S. power,  the takeover of important markets by competitors or foreign instability, only to find that many of those predictions came true in spite of, and sometimes even because of, pacts’ enactment.”

While U.S. concerns about the implications of China’s rising economic power and influence are legitimate, the notion that the establishment – or not – of any specific U.S. trade agreement would control this process is contradicted by the record. Public Citizen’s study examines the outcomes of claims that past trade pacts would counter economic gains by Japan, Europe and China in trade-partner markets; strengthen U.S. foreign policy allies or thwart enemies; and improve U.S. national security.

Among the report’s findings:

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

“Some politicians and pundits seem to hope that raising geopolitical issues that the TPP cannot affect will activate Americans’ anxieties about a rising China and distract from the real issue: Would the TPP benefit most Americans?” Wallach said. 

The report also catalogues decades of trade-pact foreign policy claims, revealing that recent administration arguments for the TPP echo, nearly word-for-word, the sales pitches used for past pacts. For example, Vice President Joe Biden recently called the TPP “a symbol of American staying power,” mirroring the 1993 NAFTA pitch by then-U.S. Rep. Dan Glickman (D-Kan.): “NAFTA has become a critical and yes, symbolic test of U.S. leadership.”

The many unfounded foreign policy claims that repeatedly have been used to push past FTAs and that are being recycled today to pitch the TPP include:

  • NAFTA: In 1993, then-U.S. Sen. John Kerry (D-Mass.) advocated for NAFTA, saying it would “contribute to the growth and the maturity of the Mexican economy and thereby alleviate some of the potential for social and political explosions which could set back progress.” But after 20 years of NAFTA, Mexico’s average growth rate ranked 18th out of the 20 Latin America nations. Indeed, NAFTA contributed to significant poverty and instability within Mexico by enabling a flood of subsidized U.S. corn that eliminated the livelihoods of 2.5 million Mexican farmers and agricultural workers. The mass dislocation contributed to a doubling of migration to the United States in NAFTA’s first seven years and fueled the violence of Mexico’s spiraling drug war. NAFTA failed to prevent the “social and political explosions” Kerry feared; if anything, it contributed to them.
  • CAFTA: In 2005, then-U.S. Sen. Bill Frist (R-Tenn.) argued for the Central America Free Trade Agreement (CAFTA) by saying: “Hugo Chavez moves Venezuela closer and closer to Castro every day. These regimes tend to work to spread their brutal methods and totalitarian philosophies, trying to infect the rest of Latin America and we simply cannot let them succeed. … By linking [Central America’s] economies with democratic capitalism, CAFTA will help gird these nations against the threats at their door.” Soon after CAFTA took effect, most CAFTA nations established close economic and political ties with Venezuela – the Dominican Republic, Honduras, Guatemala and Nicaragua all signed pacts with Venezuela to receive subsidized oil soon after CAFTA took effect.
  • Colombia FTA: In 2011, then-U.S. Rep. Geoff Davis (R-Ky.) pushed for passage of the Colombia FTA by arguing, “The trade agreement with Colombia will advance our national security interests by providing Colombians with alternatives to the drug trade.” Davis’ argument directly contradicts that of Colombia’s own Minister of Agriculture. Before the FTA was passed, the minister predicted that if the deal took effect, Colombian farmers would be unable to compete with an FTA-enabled influx of subsidized U.S. crops and “would have no more than three options: migration to the cities or other countries (especially the United States or bordering countries), leaving to work in drug cultivation zones, or affiliating with illegal armed groups.” In August 2013, thousands of Colombian farmers, facing falling incomes and displacement, blocked highways, launched a national strike and called for the repeal of the FTA.

“The TPP should be debated on the merits of its actual provisions and their likely outcomes, not on the basis of rehashed foreign policy talking points and national security hyperbole that have proved false in the past and that bear little connection to the actual TPP text,” said Wallach. 

April 02, 2014

Data Debunk for USTR Froman’s Thursday Committee Hearing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

March 28, 2014

U.S. Trade Deficits Have Grown More Than 440% with FTA Countries, but Declined 16% with Non-FTA Countries

The aggregate U.S. goods trade deficit with Free Trade Agreement (FTA) partners is more than five times as high as before the deals went into effect, while the aggregate deficit with non-FTA countries has actually fallen. The key differences are soaring imports into the United States from FTA partners and lower growth in U.S. exports to those nations than to non-FTA nations. Incredibly, the U.S. Chamber of Commerce website states, “For those worried about the U.S. trade deficit, trade agreements are clearly the solution – not the problem.” Their pitch ignores the import surges contributing to growing deficits and job loss, while their export “data” is inflated, using tricks described below.

The aggregate U.S. trade deficit with FTA partners has increased by more than $147 billion (inflation-adjusted) since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries has decreased by more than $130 billion since 2006 (the median entry date of existing FTAs). Two reasons: a sharp increase in imports from FTA partners and significantly lower export growth to FTA partners than to non-FTA nations over the last decade. Using the Obama administration’s net exports-to-jobs ratiothe FTA trade deficit surge implies the loss of about 800,000 U.S. jobs. Trade with Canada and Mexico (our first and third largest trade partners, respectively) contributed the most to the widening FTA deficit. Under the North American Free Trade Agreement (NAFTA), the U.S. deficit with Canada ballooned and the small U.S. surplus with Mexico turned into a nearly $100 billion deficit. The trend persists under new FTAs – two years into the Korea FTA, the U.S. trade deficit with Korea has jumped more than 51 percent. Reducing the massive trade deficit requires a new trade agreement model, not more of the same.

U.S. Export Growth Falters under FTAs

Growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 30 percent over the last decade. Between 2003 and 2013, U.S. goods exports to FTA partner countries grew by an annual average rate of only 4.9 percent. Goods exports to non-FTA partner countries, by contrast, grew by 6.3 percent per year on average. Since 2006, when the number of FTA partner countries nearly doubled with the implementation of the Central America Free Trade Agreement (CAFTA), the FTA export growth “penalty” has only increased. Since then, average U.S. export growth to non-FTA partner countries has topped average export growth to FTA partners by 47 percent.

Corporate FTA Boosters Use Errant Methods to Claim Higher Exports under FTAs

Members of Congress will invariably be shown data by defenders of our status quo trade policy that appear to indicate that FTAs have generated an export boom. Indeed, to promote congressional support for new NAFTA-style FTAs, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) have funded an entire body of research designed to create the appearance that the existing pacts have both boosted exports and reversed trade deficits with FTA partner countries. This work relies on several methodological tricks that fail basic standards of accuracy:

  • Ignoring imports: U.S. Chamber of Commerce studies regularly omit mention of soaring imports under FTAs, instead focusing only on exports. But any study claiming to evaluate the net impact of trade deals must deal with both sides of the trade equation. In the same way that exports are associated with job opportunities, imports are associated with lost job opportunities when they outstrip exports, as dramatically seen under FTAs.
  • Counting “re-exports:” NAM has misleadingly claimed that the United States has a manufacturing surplus with FTA nations by counting as U.S. exports goods that actually are made overseas – not by U.S. workers. NAM’s data include “re-exports” – goods made elsewhere that are shipped through the United States en route to a final destination. Determining FTAs’ impact on U.S. jobs requires counting only U.S.-made exports.
  • Omitting major FTAs: The U.S. Chamber of Commerce has repeatedly claimed that U.S. export growth is higher to FTA nations that to non-FTA nations by simply omitting FTAs that do not support their claim. One U.S. Chamber of Commerce study omitted all FTAs implemented before 2003 to estimate export growth. This excluded major FTAs like NAFTA that comprised more than 83 percent of all U.S. FTA exports. Given NAFTA’s leading role in the 443 percent aggregate FTA deficit surge, its omission vastly skews the findings.
  • Failing to correct for inflation: U.S. Chamber of Commerce studies that have claimed high FTA export growth have not adjusted the data for inflation, thus errantly counting price increases as export gains.
  • Comparing apples and oranges: The U.S. Chamber of Commerce has claimed higher U.S. exports under FTAs by using two completely different methods to calculate the growth of U.S. exports to FTA partners (an unweighted average) versus non-FTA partners (a weighted average). This inconsistency creates the false impression of higher export growth to FTA partners by giving equal weight to FTA countries that are vastly different in importance to U.S. exports (e.g. Canada, where U.S. exports exceed $251 billion, and Bahrain, where they do not reach $1 billion), despite accounting for such critical differences for non-FTA countries.

Chart: U.S. Trade Deficit Rises by $147 Billion with FTA Partners, Falls by $131 Billion with Rest of the World

FTA v non-FTA 3

March 12, 2014

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

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

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

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

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

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

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

PC Korea FTA Graph 1

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

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

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

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

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

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

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

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

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

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

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

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

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

March 04, 2014

The 2014 Trade Agenda: What Hole? Keep Digging.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

February 25, 2014

TPP Talks Fizzle Again under Broad Opposition

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

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

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

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

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

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 Statement of Rep. Charles Rangel (D-NY) 

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

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

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

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

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

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

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

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

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

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

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

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

February 21, 2014

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

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

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

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

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

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

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

  • Disciplines Against Currency Manipulation

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

  • Enforceable Labor and Environmental Standards

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

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

February 19, 2014

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

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

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

1. Access to affordable medicines

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

2. Income inequality

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

3. Internet freedom

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

4. Corporate trade advisors

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

5. Fast Track

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

6. Currency manipulation

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

7. Labor rights

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

8. Environmental protection

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

9. TPP secrecy

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

10. Exports under FTAs

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

February 18, 2014

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

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

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

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

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

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

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

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

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

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

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

February 13, 2014

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

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

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

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

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

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

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

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

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

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

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

Among the study’s findings:

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

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

February 10, 2014

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

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

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

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

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

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

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

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

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

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

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

Korea 2013.

Obama Exports 2013.

NAFTA 2013

January 30, 2014

Obama’s Free-Trade Conundrum

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

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

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

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

...

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

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

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

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

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

...

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

January 28, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

+++

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

 

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

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

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

 

Trade and Wages, Reconsidered

Paul Krugman;  The Brookings Institution;  Spring 2008

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

 

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

Josh Bivens;  Economic Policy Institute;  September 6, 2007

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

January 27, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

January 24, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

January 22, 2014

“Like Gravity” Fast Track Trade Sinks Jobs and Wages

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

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

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

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

"When Will We Start to Measure the Results?"

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

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

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

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

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

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

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

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

Congress Is Targeting the Wrong Deficit

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

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

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

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

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

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

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

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

Wikileaks Takes on Trade

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

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

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

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

Another World Is Possible

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

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

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

January 16, 2014

U.S. Trade Representative Dodges Senate Fast Track Hearing

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

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

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

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

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

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

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

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

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

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

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

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

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

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

January 10, 2014

Camp-Baucus Bill Would Revive Controversial 2002 Fast Track Mechanism

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

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

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

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

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

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

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

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

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

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

January 09, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Background:

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

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

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

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

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

December 21, 2013

Get Ready for the 2014 Trade Tsunami

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

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

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

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

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

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

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

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

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

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

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

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

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

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

December 10, 2013

Vaunted 2013 Deadline for TPP Passes as Singapore Ministerial Ends Without a Deal, More Talks Slated for 2014

Obama Administration Bullies Other Nations into Accepting Terms Demanded By Big Pharma, Rolls Back Bush-Era Access to Medicine Reforms; Congressionally-Demanded Labor and Environmental Standards Not Agreed, Currency Manipulation Rules Not Discussed 

Thankfully, the do-or-die trade ministers meeting designed to seal a deal on the controversial Trans-Pacific Partnership by the Obama administration’s much-touted 2013 deadline ended without a deal, said Public Citizen. Ominously, trade Ministers agreed to meet again in January, but no new deadline for completing the deal was set.  However, many countries have caved to relentless U.S. demands that they alter their domestic patent and medicine pricing laws to meet the desires of large pharmaceutical firms.

“At this meeting, the negotiators’ political imperative to ‘make a deal’ - any deal - resulted in a raft of dangerous decisions that would severely threaten consumers’ access to affordable medicines, undermine Internet freedom  and empower corporations to attack our domestic laws,” said Lori Wallach, Director of Public Citizen’s Global Trade Watch. “At the meeting, there was an altogether new desperation to lock in a deal because the TPP is in a race against time: as more details emerge weekly about the damage TPP could do to workers, consumers and the environment, grassroots and lawmaker opposition in many countries is growing.” 

The outrageous secrecy surrounding these talks means that many details from the negotiations are being kept from the public and Congress. Officials issued a short declaration announcing “substantial progress” and plans to meet in January.

“At this stage, the draft TPP text must be released so those of us who will live with the results can know just what was this so-called “progress” entailed, and at whose expense,” Wallach said. “The ploy seems to be to try to seal a deal so there is a sense of inevitability, but a TPP that would lock in a corporate wish-list of anti-consumer, anti-environment policies and promote more job offshoring will hit a wall of massive opposition.”

It appears that U.S. officials did not even raise the demand made by 260 U.S. House and 60 U.S. Senate members that TPP must include enforceable disciplines against currency cheating. But a deal without these terms is dead on arrival in the U.S. Congress.

Leaks from the secretive talks this weekend showed that against nearly every other countries’ objections, U.S. negotiators were adamantly pushing an expansion of the investor privileges and investor-state dispute settlement that expose domestic policies to attack in foreign tribunals where foreign investors can demand government compensation for policies that undermine their expected future profits. Enforceable labor and environmental standards and enforceable disciplines on unfair subsidies for state owned enterprises that the U.S. Congress has demanded are still not agreed. And U.S. officials continued to insist, against every other countries’ opposition, that the TPP ban the use of important macroprudential financial measures in every signatory country – from capital controls to speculation taxes.

“If a final deal is made on those terms, it will be a deal that will be dead on arrival in the United States,” said Wallach. “What seems to be on the table after this meeting is a deal that would ensure that the U.S. Congress never delegates its constitutional trade authority to President Obama, which really begs the question of why the other countries are willing to trade away the health and other policies on which their people rely if doing so is likely to make the eventual congressional passage of any deal less likely.”

Meanwhile, market access negotiations - the portion of the TPP that is actually about trade - were deadlocked. Some countries conditioned their willingness to agree on the medicine terms and investor-state dispute settlement on obtaining market access demands, including access to U.S. sugar and dairy markets. Japanese officials maintained the position set by the Japanese parliament, which conditioned the nation’s participation in the talks on the exclusion of key agricultural commodities from the deal’s zeroing out of tariffs.

December 09, 2013

U.S. TPP Proposals Defy Congressional Objectives, Unanimous Partner Country Opposition

The most recent leaks on the secretive Trans-Pacific Partnership (TPP) negotiations reveal that the Obama administration’s trade negotiators are remarkably isolated in pushing controversial proposals for the deal, from increasing pharmaceutical corporations’ monopoly patent protections to empowering foreign corporations to challenge domestic policies in private tribunals.

In fact, a leaked chart detailing countries’ positions last month on the most contentious issues shows that the United States stands alone among TPP countries on 1 out of every 4 controversial issues.  In each of these contentious areas, all other TPP countries that have taken a position have rejected U.S. demands.  If adding issues in which the U.S. position is shared by just one or two of the 11 other negotiating partners, more than 40% of the unresolved issues constitute unpopular demands made by the United States, often at the behest of corporate interests.  Such divisions cast doubt on the Obama administration’s ability to meet its stated goal of concluding TPP negotiations this year, much less by tomorrow’s end of the current negotiating round in Singapore.

But the U.S. demands not only put U.S. trade negotiators at odds with other TPP nations, but with many members of the U.S. Congress.  Below is a chart of some of the U.S. TPP positions revealed in recent leaks, juxtaposed with statements by members of Congress that directly contradict the U.S. position.  Such lack of concern for congressional priorities in the secretive TPP negotiations does not bode well for the administration’s ability to secure the extraordinary Fast Track authority it seeks to railroad the TPP through Congress.  More than 150 Democrats and about 30 Republicans have already indicated their opposition to Fast Track.  Revelations of the rogue U.S. positions in the TPP negotiations stand to invite further opposition. 
 

Position of U.S. TPP Negotiators

Position of Members of Congress

Currency Manipulation: There is no evidence from the recent leaks that U.S. negotiators have tabled any proposal to counteract currency manipulation within the TPP.

Bipartisan majorities of both the House and Senate (60 Senators and 230 Representatives) have signed letters explicitly calling for currency manipulation disciplines to be included in the TPP.  Congressional leaders on trade policy such as Rep. Sandy Levin (D-Mich.) have flatly stated that they will oppose the TPP if it does not include currency manipulation disciplines.

Access to Medicines: U.S. TPP negotiators are demanding terms, rejected by nearly all other TPP countries, that would allow pharmaceutical corporations to extend monopoly patent protections to the detriment of cheaper generic medicines, and that would impede governments’ ability to negotiate lower medicine costs for public health programs.

Members of Congress have repeatedly criticized the inclusion of such proposals in the TPP, which would not only decrease access to life-saving medicines abroad, but would hamper the Obama administration’s own efforts to lower health care costs at home. Today six House members again denounced such provisions in a letter to Obama, stating, “trade negotiations conducted behind closed doors are not the place to make changes that would have such profound consequences for patients and veterans, as well as state and federal budgets.”

Internet Freedom: The U.S. proposals for copyright provisions, rejected by most other TPP countries, include draconian rules, such as requiring Internet Service Providers to police common web content.

Defenders of Internet freedom and online innovation in Congress have long pushed against the inclusion of such terms in the TPP, which were roundly defeated in the polemical Stop Online Piracy Act (SOPA). In a press conference last Thursday, Rep. Zoe Lofgren (D-Cal.) stated, “It looks like there are some elements of SOPA that are being inserted in this trade agreement and I don’t think the American people are going to put up with it.”

Wall Street Reform: The recent leaks reveal that the U.S. TPP negotiators has shown “zero flexibility” in its demands, which reportedly include 1990s-era deregulatory rules that conflict with efforts to rein in Wall Street risk-taking, and a ban on capital controls – a widely-endorsed policy tool to prevent speculative capital flows from contributing to financial crises.

Members of Congress such as Rep. Sandy Levin (D-Mich) and Rep. Barney Frank (retired, D-Mass) have made clear that deals like the TPP must not inhibit usage of capital controls.  Sen. Elizabeth Warren (D-Mass.) has warned against the usage of the TPP as a backdoor means of rolling back Wall Street reforms, calling such deals “a chance for these banks to get something done quietly out of sight that they could not accomplish in a public place with the cameras rolling and the lights on.”

Corporate Tribunals: The U.S. has faced near-unanimous pushback from TPP countries related to it proposal to empower foreign corporations to bypass domestic courts and challenge TPP governments before private tribunals for health, environmental and other public interest policies they see as inhibiting “expected future profits.” 

Members of Congress continue to criticize this extraordinary TPP proposal to expand the “investor-state” system, which corporations are currently using to attack Canada’s medicine patent policies, Australia’s tobacco controls, and Germany’s phase-out of nuclear energy.  In a statement from the House floor last Wednesday, Rep. Mark Pocan (D-Wis.), criticized the proposal for the TPP to empower foreign corporations to bypass domestic courts, creating “situations where a foreign-owned business could have more power than our own sovereign courts…”

New Leaked TPP Documents Reveal Daunting Obstacles for Obama's 2013 Deadline to Complete the Deal

At Ministerial Meeting's Midpoint, U.S. Isolated on Outrageous Demands that Nations Alter Policies on Medicine Prices, Internet Freedom, Financial Regulations; Congressionally-Demanded Disciplines on State Owned Enterprises, Enforceable Environmental Standards MIA

The Obama administration’s do-or-die 2013 deadline for the Trans-Pacific Partnership (TPP) came into question at the midpoint of closed-door negotiations underway in Singapore, as newly-leaked documents show deep disagreement between Washington and its prospective TPP partners on key aspects of the pact – as well as concerns by a government involved that missing yet another deadline could undermine the process.

With TPP talks shrouded in intense secrecy, the leaks provide the clearest view into the range of sensitive “behind the borders” issues that have spurred growing public opposition to the sweeping agreement in some participating countries.  The documents also reveal U.S. negotiators pushing an agenda in line with American corporate interests on a range of issues, including expansive intellectual property rights, limits on financial regulation and expansive new investor rights to demand compensation from government over policies they claim undermine expected profits.

“Before entering into specific detail in some areas of negotiation, it is noted that the scenario for Singapore seems uncertain given the number of outstanding issues that still remain... The aforementioned, even leaving aside the more complex issues (IP, SOEs and Environment), demonstrates a situation that makes it very difficult to think of a complete closure in December,” according to one leaked memo, which had been prepared by a member nation in advance of the ministerial-level talks. “Some suggested the need to prepare different scenarios, in order to not suffer surprises that affect the process. This involves being prepared for a partial closure scenario or even a failure in December…”

The Huffington Post broke the news about the leaked memo, posting it and a chart showing the positions of each country on scores of unresolved issues. The documents reveal that many Obama administration demands have serious consequences for member nations and their populations – including higher drug prices, vastly extended copyright terms, tough new Internet restrictions similar to the unpopular Stop Online Piracy Act (SOPA), and curbs on financial regulation that face widespread rejection from other TPP countries as well as stiff opposition in the U.S. Congress.

“This leak guts the sense of inevitability about TPP that the negotiators have been so relentlessly building both because it shows, thankfully, how far from agreement the countries are and it puts people in all of the involved countries on notice about just how dangerous this deal would be for them,” said Lori Wallach, Director. “Having these documents released also puts the kibosh on the usual triumphant announcements that follow each of these high-level TPP meetings regardless of what actually happened in the talks.”

The leaked documents reveal that, going in to the Singapore talks, there were 119 contested issues in the TTP draft Intellectual Property chapter.  The United States has been largely isolated in pushing an agenda favorable to large pharmaceutical firms, including extended patents, data exclusivity and other monopoly powers that would hike medicine prices.

The memo and chart reveal that the U.S. promotion of Hollywood and recording industry-inspired proposals that would greatly extend copyright durations, limit innovation and access to educational materials and force Internet providers to act as “copyright police”  also remains widely opposed. 

Financial services issues raised in TPP talks are “paralyzed,” according to the memo.  U.S. officials haven’t budged on what other partners consider outrageous demands – including requirements that TPP member nations agree to a ban on countries’ use of various common-sense, macro-prudential measures, including capital controls that the IMF now endorses to avoid floods of speculative capital that cause financial crises.

The leak reveals that lead TPP negotiators meeting in Salt Lake City just before Thanksgiving  missed a key milestone in market access negotiations. Japan continued to insist that certain agricultural commodities be excluded from TPP’s rules zeroing out tariffs. U.S. refusal to make offers on sensitive market access issues also raised ire from other countries, according to the memo. 

Japan recently reiterated its position when U.S. Vice President Joe Biden visited Tokyo last week: “The minister in charge of the Trans-Pacific Partnership free trade negotiations said Sunday that Tokyo can make no more concessions to Washington on sensitive issues after a Japan-U.S. meeting ended without progress.”  Japan’s parliament has listed five “sacred” commodities it says must be excluded from TTP rules zeroing out tariffs: rice, beef and pork, wheat and barley, sugar and dairy.

The United States and Japan were isolated, according to the leaked memo, in pushing to extend the controversial investor-state dispute settlement system, which empowers private firms to skirt member nations’ laws and courts and instead present grievances in a private tribunal, demanding compensation from governments for policies they claim undermine investor rights.

Both the environmental chapter and a text on state-owned enterprises (SOEs) appeared to be in shambles at the Singapore talks began. The Obama administration faces considerable political peril on these issues. Democrats and Republicans alike have insisted that TPP include enforceable rules ensuring state owned firms competing in the private sector do not obtain any support from governments.

With respect to environmental standards, Congress forced Obama’s Republican predecessor, President George W. Bush, to insert labor and environmental standards into his Free Trade Agreements -- standards enforceable through the same trade sanctions as the pacts’ commercial provisions. If the Obama administration rolls back those policies, it will lose almost all Democratic congressional support for TPP. It is unclear if U.S. officials have even raised the currency discipline provisions that 60 Senators and 230 House members have demanded.

In another chapter relating to medicine pricing, the United States has reintroduced an Annex that it drafted in 2011 that all other TPP countries had rejected. Cynically dubbed the “Annex on Transparency and Procedural Fairness for Healthcare Technologies” it would allow drug firms to challenge TPP nations’ medicine formulary reimbursement and pricing decisions. The target: the national health care systems of New Zealand, Australia and other TPP nations, which have used  formulary lists to greatly reduce healthcare costs. Grassroots and legislator opposition to these terms in those nations is virulent, which may explain why U.S. reintroduction of the proposal has generated ire. U.S. state officials and Democratic congressional supporters of Obamacare also oppose those terms, which could undermine use of formularies to reduce U.S. healthcare costs.

Among the controversies revealed by the memo, which was written after the November 16-24 Salt Lake City round of TPP talks:

 

Continue reading "New Leaked TPP Documents Reveal Daunting Obstacles for Obama's 2013 Deadline to Complete the Deal" »

December 07, 2013

Measuring the Outcomes of the TPP “End Game” Ministerial in Singapore

Reporters Memo from Public Citizen

The Obama administration has invested significant time, effort, and political capital trying to meet the do-or-die 2013 deadline it set for the Trans-Pacific Partnership (TPP) -- the economic arm of the administration’s “pivot” to Asia. As a result, the Singapore TPP Ministerial meeting is critical: it’s their last chance to complete the deal before time runs out.

Nearly all of the politically sensitive issues that have arisen in the secretive, closed-door TPP talks are still unresolved. So, the Obama administration has resorted to extreme tactics at Singapore to try to wring out a deal, including setting up invitation-only “Green Room” meetings where decisions on difficult issues can be “worked out” with some countries excluded.

But to what end? After nearly four years of TPP negotiations, President Obama still hasn’t convinced Congress to give him Fast Track Trade Promotion Authority for the deal. And, congressional opposition to TPP itself is building because lawmakers’ core demands – including sanctions-enforceable labor and environmental standards as well as binding disciplines on currency manipulation and subsidies for state owned enterprises – still haven’t been achieved. As well, many lawmakers oppose the drug patents terms and copyright protections being demanded by U.S. negotiators as well as the ban on the use of capital controls. Blocs of lawmakers also oppose various market access offers U.S. officials may be poised to make.

Missing yet another deadline to complete the TPP would call into question the viability of the process. The Obama administration seeks to lock in policies favorable to American business interests throughout the Pacific Rim. But in many nations, U.S. demands that governments alter their domestic policies on medicine prices, Internet freedom, “buy local” procurement preferences, financial regulations and a host of other sensitive, non-trade issues is spurring growing opposition. And, the extreme secrecy surrounding TPP negotiations has generated outrage: last week, the Australian Senate passed a motion calling for disclosure of the TPP text.

Thus, many observers expect the administration to once again declare a deal has been reached --  regardless of the Ministerial meeting’s actual outcomes. (They deployed the tactic after the TPP missed a previous 2011 deadline.) By withholding any actual agreement text from the public and press, the White House can announce a “final” deal, spurring wide press coverage and creating a false perception of inevitability while negotiations continue. [This memo ends with a checklist that includes the issues that would have to be resolved for an actual TPP deal to be completed at the Singapore Ministerial.]

Congress Warns Obama Not to Rush into Deal at Singapore: Four days ago, Rep. Steve Israel (D. N.Y.), chair of the Democrat’s Congressional Campaign Committee, declared he’s “very concerned” about the TPP, chiefly because leaked documents show the pact doesn’t include the “checks and balances” necessary to ensure congressional approval.  Israel warned that the Obama administration shouldn’t rush to finalize a deal during the Singapore Ministerial. He also reiterated the broad congressional opposition to using the Nixon-era Fast Track authority for the deal: “Twentieth Century ‘fast-track’ just does not work for a 21st Century agreement.”

Obama Unable to Secure Fast Track Authority: With just four days remaining before the end of this session of Congress, lawmakers haven’t even introduced legislation to grant TPP Fast Track authority. This is not altogether surprising – congressional opposition to the controversial procedure, which forbids all congressional amendments to signed trade deals, is widespread and growing.

This represents in part deep divides among lawmakers, who don’t want to cede their authority to amend any deal that undermines their views on sensitive issues, such as intellectual property. For instance, Sen. Orrin Hatch of Utah, the senior Republican on the Senate trade committee, has declared that countries unwilling to meet U.S. demands for patent extensions and other expansive intellectual property protections should be thrown out of the negotiations. But a large bloc of House and Senate members vowed to block TPP if it includes patent terms that could raise prices for medicine or insert  copyright terms similar to those in the Stop Online Piracy Act (SOPA), which Congress – and the public - rejected last year.

Two weeks ago 151 Democratic and 30 Republican members of the U.S. House of Representatives sent letters to the president declaring their opposition to Fast Track.

“In light of the broad scope of today’s trade agreements, it is even more vital that Congress have a fulsome role in shaping these pacts’ terms,” according to the letter sent by Democrats. “Given our concerns, we will oppose ‘Fast Track’ Trade Promotion Authority, or any other mechanism delegating Congress’ constitutional authority over trade policy, that continues to exclude us from having a meaningful role in the formative stages of trade agreements and throughout negotiating and approval processes.”

Even if legislation to establish Fast Track were introduced today, it would require the better part of 2014 for it to be passed by both houses of Congress. Recently Washington observers are suggesting that it may not be possible for Fast Track to obtain majority support in the House of Representatives at all. All Representatives face election in November 2014. Already 85 percent of those needed to stop Fast Track from being applied to TPP have stated their opposition.

Real Deal Check List: Were These Issues Resolved at the Singapore TPP Ministerial?

As Trade Ministers arrived in Singapore, nearly all of the TPP’s 29 chapters include a set of sensitive issues that haven’t been resolved.

 

Continue reading "Measuring the Outcomes of the TPP “End Game” Ministerial in Singapore" »

December 05, 2013

Democrats’ Congressional Campaign Chair, Senior Party Members Warn Obama: Don’t Rush into a TPP Deal in Singapore

They Vow to Block Any Pact Without Enforceable Labor and Environmental Standards, Currency Disciplines or that Includes Patent or Copyright Extensions

Senior Democratic members of Congress said Thursday the still-secret Trans-Pacific Partnership (TPP) trade pact is dead on arrival in Congress if it doesn’t meet their demands to protect American workers and punish currency manipulation as well as provide enforceable labor and environmental standards, in addition to meeting other conditions. 

During a Thursday news conference call, Democratic Congressional Campaign Committee Chair Steve Israel (D-N.Y.), Steering and Policy Committee Chair Rosa DeLauro (D-Conn.), Education and Workforce Ranking member George Miller (D-Cal.), Ways and Means member Earl Blumenauer (D-Ore.) and a leading congressional expert on high tech issues Rep. Zoe Lofgren (D-Cal.) said that the TPP so far excludes many of the provisions that are necessary for it to pass in Congress. 

The U.S. Trade representative will join trade ministers from the other 11 Pacific Rim nations at a meeting this weekend in Singapore  to try to hash out a final deal after four years of TPP negotiations. The Obama administration has insisted that the TPP must be completed this year. Opposition to the expansive pact is growing in many of the nations involved in the talks.

“My bottom line this weekend [when] our trade representatives will join trade ministers from other TPP countries to try and make a final deal: a good deal is more important than a final deal,” said Israel, who noted his opposition to any TPP ban on Buy American procurement preferences.

DeLauro said currency manipulation must be addressed in TPP, or any deal made in Singapore would fail in Congress. Limits on access to affordable medicines, she said, would also undermine support for the deal. Lofgren said that efforts to implement expansive new copyright protections through the “backdoor” of TPP could derail the pact. She noted that a recently leaked TPP chapter in intellectual property included aspects of the “Stop Online Piracy Act” (SOPA) that Congress pulled after mass public opposition.

Miller said that TPP must require countries to provide the labor rights of the ILO Conventions, with failure to do so subject to trade sanctions, or it would fail in Congress. Blumenauer noted the same for a TPP that does not include enforceable environmental standards, including bans on trade in endangered species, rules to prevent overfishing and enforcement of TPP nations’ obligations in Multilateral Environmental Agreements.

Link for recording of news conference: http://www.conferenceplayback.com/stream/66218019/74193201.mp3

Excerpts from Recording of the Representatives’ Comments at Today’s Press Conference

Rep. Rosa DeLauro (D-CT): We all know next week the trade ministers from the 12 nations will meet in Singapore. Their goal is the announcing of a deal on the TPP free trade agreement, a deal on an agreement that we know still has outstanding many of the core demands that have been made by the Congress and the U.S. public…. Several of our TPP partners have a history of or are currently manipulating their exchange rates to promote their exports, which is why including currency discipline in the agreement is critical, which will allow us to level that playing field for American workers. The Congress has been very vocal, our colleague Mike Michaud has led a bipartisan effort in the House, that received more than half of all House members, with 230 signed a letter urging the administration to include currency disciplines in the agreement. A similar letter in the Senate was signed by 60 senators. So not doing something on currency in this agreement would be a slap in the face to Congress…. There appears to be no discussion about currency manipulation, and like labor, environmental standards, intellectual property chapter, among other things- it threatens to limit access to affordable medicines – that remain undecided going into Singapore to this gathering next week…. It is Congress that has a final say on whether a trade deal is approved. Any deal that does not meet the Congress’s prerogative such as insistence that such a deal includes disciplines against currency cheating will not pass in Congress. In other words, any deal announced as final next week is far from it.

Continue reading "Democrats’ Congressional Campaign Chair, Senior Party Members Warn Obama: Don’t Rush into a TPP Deal in Singapore" »

Members of Congress: Fast Tracking the TPP is a Non-Starter

On the eve of an attempt by executive branch negotiators to rush the controversial Trans-Pacific Partnership (TPP) to conclusion in negotiations happening in Singapore this weekend, members of Congress, speaking from the floor of the U.S. House of Representatives on Wednesday, declared that an attempt to Fast Track the secretive, sweeping pact through Congress would be dead on arrival. Below is a transcript of excerpts of floor speeches made by Representative Mark Pocan (D-Wisconsin), Representative Rosa DeLauro (D-Connecticut), and Representative Jared Polis (D-Colorado).

See video highlights here: 

 

Rep. Mark Pocan (D-WI)

“…Unfortunately we appear to have a massive, secret and likely very harmful unfair trade deal on our hands, the TransPacific Partnership or the TPP for short. It is a NAFTA-style agreement between the U.S. and 11 other nations that has been largely negotiated in secret and seems to not just repeat, but perhaps worsen the mistakes made in the past.

In fact, this coming week, TPP negotiators are going to meet again in Singapore and they plan to have a deal by the end of the year, in less than a month, meaning that we may be less than 30 days away from having a final TPP deal, a deal that we have no idea what may contain. And while we may not know what’s in the deal, we do know what we have been promised: and so much of the promises that people across the country and in my state of Wisconsin have been told before about these massive trade deals – from NAFTA to CAFTA to the U.S.-Korea free trade agreement. We’ve been told that free trade would lead to increased U.S. jobs, it would reduce our trade deficits, it would boost our exports, and it lead to improved human rights and labor standards around the globe. Unfortunately, almost every single one of those promises have gone unfulfilled. In Wisconsin we have seen the devastating effects of the free trade agreements such as NAFTA to our local manufacturing industries and our jobs…"

Rep. Rosa DeLauro (D-CT)

“...This could have been a new opportunity. It represented an effort to create something that was new, a sustainable model that promoted economic development, with shared prosperity. But as you know, unfortunately, the talks have gone down the same road as previous trade agreements. Export of more jobs, not more goods, unsafe imports, and threats to public health, among other things…

There is no reason to believe that the Trans-Pacific Partnership trade deal will not be the same kind of a raw deal for U.S. workers and more, as the agreement would be unprecedented in scope.

The president himself has commented that the pact would establish rules that extend far traditional trade matters to include, and I quote, “a whole range of new trade issues that are going to be coming up in the future: innovation, regulatory convergence, how we are thinking about the Internet, and intellectual property.”

The agreement will create binding policies on future Congresses in numerous areas to include those that are related to labor, patent and copyright, land use, food, agriculture and product standards, natural resources, the environment, state-owned enterprises, and government procurement policies, as well as financial, health care, energy, telecommunications and other service sector regulations. This is a treaty that goes beyond tariffs. The scope is as I’ve outlined: it is unbelievable. And we also know that the lack of transparency on this treaty is unbelievable.

It’s interesting to know that industry has had great access to the process and what’s going on. Members of Congress on both sides of the aisle have not had that same access to the information in this trade agreement. And it is our constitutional authority, as members of Congress, to approve trade agreements. We cannot be frozen out any longer. We’re not going to tolerate that.

Continue reading "Members of Congress: Fast Tracking the TPP is a Non-Starter" »

November 25, 2013

Salt Lake TPP Talks End with Growing Pressure to Announce “Deal” at December TPP Ministerial, but No Resolution of Major Controversies

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

A week of intense TPP negotiations, marked with increasingly heavy-handed U.S. tactics, came to an end late Sunday night in Salt Lake City, Utah. Negotiators working on the 12 TPP chapters not yet completed were instructed to narrow disagreements to matters that the chief negotiators or trade ministers will decide. At least three chapters – those covering intellectual property, state owned enterprises and medicine-pricing formularies – did not reach this target. Talks on the controversial intellectual property chapter were extended and will continue for at least two more days.  There was no discussion of disciplines to counter currency manipulation despite 230 House and 60 Senate GOP and Democrats demanding such terms.

In Salt Lake City, TPP chief negotiators prepared a long list of final trade-offs and decisions for trade ministers who will meet from December 7-10 in Singapore. Many TPP country governments are billing the Singapore Ministerial as the ‘end game’ of negotiations. The intensity of efforts at Salt Lake City demonstrated that the United States is desperate that its latest end-of-year deadline for TPP’s completion not be missed like three past deadlines.

Claims that a final TPP deal is close seem incredible, given that it appears that the most  politically sensitive issues that have arisen in three years of talks remains unresolved.  Controversy is growing in many TPP nations about demanded trade-offs relating to medicine prices, Internet freedom, financial regulation and other sensitive non-trade matters. Plus, Congress’s bottom lines - from disciplines against currency cheating and subsidies on state owned enterprises to enforceable labor and environmental standards - remain unachieved.

The tone and intensity of these latest talks was different than previous rounds, however. U.S. officials started to roll back from some long-held positions, perhaps because the administration knows it is in a race against time.  Opposition in Congress and in various TPP countries is growing as more details leak about TPP’s terms. 

The apparent goal for trade ministers meeting in Singapore is to make broad trade-offs on market access and the most controversial policy issues that have been deadlocked and agree on “landing zones” for what they want in a final deal.  By withholding any actual agreement text  from the public and press, they hope to announce these arrangements as a “final” deal so that there is wide press coverage that creates a sense of inevitability while negotiations continue.

 

Inconvenient Questions As Governments Push for a TPP “Deal” in Singapore: 

Negotiations on sensitive Market Access issues

-       How will the U.S. even negotiate market access terms on autos, agriculture and other sensitive issues with Japan without having sealed its bilateral agreement with Japan that it says is a condition for the country being included in a final TPP? 

-       A supermajority in the U.S. Congress has said TPP must include currency disciplines, but the issue has apparently not even been raised to date. What is the plan? 

-       Japan’s parliament has listed five “sacred” commodities – rice, beef and pork, wheat and barley, sugar and dairy - that it demands be excluded from TPP rules zeroing out tariffs. Will the U.S. reverse its insistence that all sectors be liberalized?  

-       The rules of origin have not been agreed for sensitive sectors such as apparel/textiles, autos and more, so how can final deals be reached on tariff-cutting? 

-       If the U.S. provides new market access on dairy and sugar, will it be commercially significant or only small tariff-rate quotas designed to be used by demandeur countries as political optics to “show” gains?

Deadlock over enforceability of labor and environment chapter

-       Because it is a congressional red line, the U.S. has insisted on labor and environmental standards that are enforceable on equal terms with the pact’s other provisions. Most TPP countries oppose enforceable labor and environmental standards altogether.  How will this be resolved?

-       Further, additional issues in the environment chapter remain unresolved. Any rollback from past U.S. FTAs could doom TPP in Congress, so what is the status?

Deadlock over the State Owned Enterprises (SOE) text

-       There still is not agreed text for this chapter, but did the countries finally agree on a definition of what is a state owned enterprise?

-       Given that discussions of actual text have only just begun, how can Ministers make high-level decisions on this chapter in Singapore in 12 days?

-       The U.S. demands disciplines on SOEs that forbid the use of government resources to subsidize SOE activities within TPP nations. A sizable bloc of nations opposes this. A bipartisan supermajority in the U.S. Congress has indicated that it will oppose TPP unless it includes the U.S. version of rules, so how will Ministers handle this issue given other TPP countries have numerous SOEs?

IP chapter patent rules and medicine pricing rules both deadlocked

-       The U.S. proposal that would deliver on Big Pharma’s demands for extended patents, data exclusivity and other monopoly powers that raise medicine prices continues to face opposition by most other TPP countries. What is the plan to resolve this after four years of deadlock? Is the U.S. giving up on Big Pharma’s demands or did other countries trade away their medicine pricing policies?

-       In another chapter, an Annex cynically dubbed “Annex on Transparency and Procedural Fairness for Healthcare Technologies,” would allow drug firms to challenge medicine formulary reimbursement and pricing decisions. Did the U.S. finally give up on this or did other countries agree to allow Big Pharma to challenge the decisions of doctors and pharmacologists who determine what medicines will be included on the formularies of countries’ healthcare systems?

Impasse on Copyright Rules

-       Hollywood and recording industry-inspired proposals to limit internet freedom and access to educational materials, to force internet providers to act as copyright cops, and to cut off peoples’ internet access have triggered public outrage and led to deadlocks on key TPP provisions. Are these issues suddenly on a path to resolution? How?

-        Also there has been entrenched disagreement about whether copyright should be able to keep works of art and literature out of the public domain 70 years after death of the author, Was this resolved, and, if so, how, given it would require rewrites of most TPP nations domestic laws?

United opposition to the U.S. demand that TPP ban the use of capital controls

-       With the IMF now endorsing the us of capital controls as ways  to avoid floods of speculative capital that cause financial crises, it is not surprising that there is united opposition to the unbending U.S. demand that TPP include a ban on countries’ use of various common-sense macro-prudential measures, including capital controls and financial transaction taxes. How will this be resolved?

Deadlocks over aspects of controversial “investor-state” private corporate enforcement of TPP

-       Australia’s new conservative government has reiterated that it will not be bound to the investor-state enforcement system, which elevates individual corporations to equal status with sovereign nations in order to enforce privately a public treaty by demanding compensation from governments before panels of private-sector attorneys for government actions that undermine expected future profits. This is long-established Australian policy. Also, Japanese Prime Minister Abe’s Liberal Democratic Party parliamentary majority has set as a condition for Japan’s TPP participation that the deal not include investor-state enforcement. The U.S. insists all countries be bound. Now what?

-        Other TPP nations oppose the U.S. demand that government natural resource concession, private-public-partnership utility management contracts and procurement contracts be subject to such extra-judicial processes. How will this and a set of other deadlocked issues be suddenly resolved in Singapore after disagreements for the last four years?”

November 15, 2013

Falling Exports under Korea FTA Likely to Bolster Fast Track Opposition

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

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

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

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

Korea Exports Nov 2

Korea Deficit Nov 2

November 13, 2013

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Leaked Documents Reveal Obama Administration Push for Internet Freedom Limits, Terms That Raise Drug Prices in Closed-Door 'Trade' Talks

U.S. Demands in Trans-Pacific Partnership Agreement Text, Published Today by WikiLeaks, Contradict Obama Policy and Public Opinion at Home and Abroad

Secret documents published today by WikiLeaks and analyzed by Public Citizen reveal that the Obama administration is demanding terms that would limit Internet freedom and access to lifesaving medicines throughout the Asia-Pacific region and bind Americans to the same bad rules, belying the administration’s stated commitments to reduce health care costs and advance free expression online, Public Citizen said today.

WikiLeaks published the complete draft of the Intellectual Property chapter for the Trans-Pacific Partnership (TPP), a proposed international commercial pact between the United States and 11 Asian and Latin American countries. Although talks started in 2008, this is the first access the public and press have had to this text. The text identifies which countries support which terms. The administration has refused to make draft TPP text public, despite announcing intentions to sign the deal by year’s end. Signatory nations’ laws would be required to conform to TPP terms.

The leak shows the United States seeking to impose the most extreme demands of Big Pharma and Hollywood, Public Citizen said, despite the express and frequently universal opposition of U.S. trade partners. Concerns raised by TPP negotiating partners and many civic groups worldwide regarding TPP undermining access to affordable medicines, the Internet and even textbooks have resulted in a deadlock over the TPP Intellectual Property Chapter, leading to an impasse in the TPP talks, Public Citizen said.

“The Obama administration’s proposals are the worst – the most damaging for health – we have seen in a U.S. trade agreement to date. The Obama administration has backtracked from even the modest health considerations adopted under the Bush administration,” said Peter Maybarduk, director of Public Citizen’s global access to medicines program. “The Obama administration’s shameful bullying on behalf of the giant drug companies would lead to preventable suffering and death in Asia-Pacific countries. And soon the administration is expected to propose additional TPP terms that would lock Americans into high prices for cancer drugs for years to come.”

Previously, some elements of U.S. proposals for the Intellectual Property Chapter of the TPP had been leaked in 2011 and 2012. This leak is the first of a complete chapter revealing all countries’ positions. There are more than 100 unresolved issues in the TPP Intellectual Property chapter. Even the wording of many footnotes is in dispute; one footnote negotiators agree on suggests they keep working out their differences over the wording of the other footnotes. The other 28 draft TPP chapters remain shrouded in secrecy.

Last week, the AARP and major consumer groups wrote to the Obama administration to express their “deep concern” that U.S. proposals for the TPP would “limit the ability of states and the federal government to moderate escalating prescription drug, biologic drug and medical device costs in public programs,” and contradict cost-cutting plans for biotech medicines in the White House budget.

Other U.S.-demanded measures for the TPP would empower the tobacco giants to sue governments before foreign tribunals to demand taxpayer compensation for their health regulations and have been widely criticized. “This supposed trade negotiation has devolved into a secretive rulemaking against public health, on behalf of Big Pharma and Big Tobacco,” said Maybarduk.

“It is clear from the text obtained by WikiLeaks that the U.S. government is isolated and has lost this debate,” Maybarduk said. “Our partners don’t want to trade away their people’s health. Americans don’t want these measures either. Nevertheless, the Obama administration – on behalf of Big Pharma and big movie studios – now is trying to accomplish through pressure what it could not through persuasion.”

“The WikiLeaks text also features Hollywood and recording industry-inspired proposals – think about the SOPA debacle – to limit Internet freedom and access to educational materials, to force Internet providers to act as copyright enforcers and to cut off people’s Internet access,” said Burcu Kilic, an intellectual property lawyer with Public Citizen. “These proposals are deeply unpopular worldwide and have led to a negotiation stalemate.”

“Given how much text remains disputed, the negotiation will be very difficult to conclude,” said Maybarduk. “Much more forward-looking proposals have been advanced by the other parties, but unless the U.S drops its out-there-alone demands, there may be no deal at all.”

“We understand that the only consideration the Obama administration plans to propose for access to affordable generic medicines is a very weak form of differential treatment for developing countries,” said Maybarduk.

The text obtained by WikiLeaks is available at wikileaks.org/tpp. Analysis of the leaked text is available at www.citizen.org/access.

More information about the Trans-Pacific Partnership negotiations is available at www.citizen.org/tpp.

November 08, 2013

38 Million Retirees Join Workers and Consumers to Say No to "Trade" Deal Terms that Would Make Medicine More Expensive

The chorus of critics of the Trans-Pacific Partnership (TPP) – a sweeping U.S. pact under negotiation with 11 Pacific Rim countries – keeps expanding.  

Today the largest U.S. nonprofit, nonpartisan group – the American Association of Retired Persons (AARP), representing 38 million members – joined the American Federation of State, County and Municipal Employees (AFSCME), Consumers Union and other U.S. health and consumer advocacy groups in sending a letter to President Obama to express "deep concern" that TPP rules will thwart efforts to control escalating healthcare costs.  

The groups outline an array of U.S. policies and proposals to make healthcare more affordable that are jeopardized by TPP provisions "being advanced by the United States Trade Representative." These threatened cost-saving measures include Medicare prescription drug discounts under the Affordable Care Act (Obamacare), an administration proposal slated to save $134 billion by providing rebates to low-income Medicare beneficiaries, and state-level Medicaid policies used to control drug costs.  

The groups also state their opposition to Big Pharma's agressive push for U.S. trade officials to grant pharmaceutical corporations special monopoly rights in the TPP for biologic drugs, which are some of the costliest on the market. In another letter late last month, AARP warned that this TPP proposal alone could cost Americans billions in additional health expenditures annually and undermine the Obama administration’s efforts to ensure more affordable healthcare.

Biologic medicines – the latest generation of drugs to combat cancer, rheumatoid arthritis, and multiple sclerosis, among other diseases – are exceptionally expensive, even for those with comprehensive insurance coverage. Derived from living organisms, these treatments cost approximately 22 times more than conventional medicines. According to AARP, patients can face annual treatment costs of $400,000.

While the Obama administration pushes for measures at home to contain rising health care costs, Big Pharma is urging the administration to include measures in the TPP that would increase costs by expanding pharmaceutical monopoly protections. The proposed TPP measure under consideration, a 12-year period of data exclusivity protection, would allow brand-name companies to obtain an automatic monopoly on biologics even in the absence of patent protection.

During this period, access to cheaper versions of the drugs would be restricted, as governmental regulatory bodies would be prohibited from relying upon the brand-name company’s clinical trial data to approve biosimilars – more affordable versions of the high-cost drugs. While exclusivity is in force, biosimilar applicants would have to replicate costly, time-consuming clinical trials despite already-known outcomes. This would prevent many biosimilar groups from even seeking market approval, keeping their more affordable, life-saving drugs off of pharmacy shelves for years as pharmaceutical corporations accrue monopoly profits.

Although U.S. law currently requires 12 years of data exclusivity for biologics, the White House has repeatedly proposed reducing this period to tamp down spiraling costs. According to the White House budget for fiscal year 2014, shortening exclusivity to 7 years could save federal programs such as Medicare and Medicaid more than $3 billion over the next ten years. But if Obama administration trade officials propose 12-year exclusivity for the TPP at the request of Big Pharma, the binding pact could lock into place pharmaceutical firms’ lengthy monopolies here at home, barring the administration’s proposed cost-cutting changes.

That’s right – Obama administration officials are contemplating TPP rules that would effectively scrap the administration’s own proposal to save billions in unnecessary healthcare costs.

Other TPP countries have been rejecting U.S. pressure to include data exclusivity and other pharmaceutical monopoly protections in the deal, given the large humanitarian cost and financial burden of delaying access to more affordable drugs.  In fact, no other TPP country allows a special data exclusivity protection period for the high-cost biologic drugs.

However, in addition to data exclusivity protection, U.S. trade officials are urging TPP countries to accept egregious measures that would lengthen and broaden patent rights and drug monopolies, stifle cost-cutting generic competition, and favor pharmaceutical companies in court.

Stronger drug monopolies would force consumers to pay high drug prices for longer and would have devastating humanitarian and financial consequences in developing countries. According to the World Health Organization (WHO), more than 100 million individuals fall into poverty due to catastrophic health payments each year. In developing countries including Vietnam, a TPP country, patients often have to pay 50 to 90 percent of pharmaceutical costs out-of-pocket, making medicines the second-highest household expenditure after food.

But this problem is not only a developing country issue.  In the United States, medical expenses account for 60% of bankruptcies.  And in three-fourths of those cases, the person even had health insurance. As AARP, AFSCME, the Consumers Union and others make clear in today's letter, we cannot afford to roll back cost-saving policies and lock in unaffordable healthcare costs via a “trade” deal.

As we strive to recover from an economic crisis, reduce the government deficit, and expand access to health care, it is imperative that our “trade” policy not undermine these goals.  How can the Obama administration continue pushing abroad a secretive trade pact designed by and for Big Pharma while pushing at home access to affordable medicines?

--Stephanie Rosenberg, Public Citizen's Global Access to Medicines program

October 10, 2013

Fast Track: New Report Proves Difficulty of Defending the Indefensible

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

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

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

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

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

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

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

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

Reality:

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

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

October 08, 2013

Statement on Today's TPP Heads of State Declaration

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

“It is not surprising that the leaders could not announce a deal and in fact have eliminated the language in their official statement that negotiations are on track to meet the long-touted 2013 end-of-year deadline, despite all of the hype to the contrary leading up to the summit. [STATEMENT, ATTACHED, NOW SAYS: “…our countries are on track to complete the Trans-Pacific Partnership negotiations. FULL STOP”]

Public and parliamentary opposition in some TPP countries has grown as the true nature of the TPP “trade offs” in public health, financial stability, quality job creation, Internet freedom and more being demanded for this deal has emerged, forcing continued deadlocks on many of these issues. [SEE CHART BELOW FOR DEADLOCKED ISSUES]

That the leaders have admitted that there is no deal nor a clear path to obtaining one this year, despite the hype built up pre-summit, reveals the growing domestic political blowback against the TPP that the leaders are now trying to manage. At the last TPP Summit in 2011, the leaders gleefully announced a breakthrough when they did not have one. Since the last 2011 TPP leaders’ summit, opposition to the very notion that closed-door TPP “trade” negotiations with 600 official corporate advisors should rewrite wide swaths of 12 countries domestic laws has only grown in the U.S. and in other TPP counties, creating new political liabilities for any head of state associated with that agenda.

Perhaps the most lasting effect of Obama not attending the APEC summit due to the government shutdown is that it reveals there is little chance that this Congress will delegate its constitutional trade authority to grant Obama the extraordinary Fast Track powers he says he needs to finish TPP and that other countries want in place to ensure Congress is handcuffed before they make concessions that could cause them political woe at home.  

 

Continue reading "Statement on Today's TPP Heads of State Declaration" »

October 04, 2013

Obama Cancels Trip to Asia Trade Summit as Elected, Labor and Business Leaders Detail TPP Trade Pact Problems

President Obama has now announced that due to the government shutdown, he will not be attending the summit in Indonesia that his administration had (mis)identified as a deadline for concluding the long-lingering negotiations for the sprawling Trans-Pacific Partnership (TPP) "trade" pact.  Long before the shutdown, it became clear that this deadline would be missed given the TPP's laundry list of unresolved controversies, forcing the administration to reframe the summit as a "milestone." Obama's absence further downgrades the summit (more of a "speed bump" than a "milestone") and further dashes the administration's attempts to claim that the polemical TPP is in an "end game."  

The announcement came just after members of Congress, business leaders, and labor leaders joined together yesterday to detail the critical threats of the TPP to U.S. jobs, food safety and affordable medicines, and to throw a dose of reality onto the administration's claims about a quick fix to the beleaguered TPP negotiations. The subsequent announcement of Obama's no-show at the TPP summit bolstered their arguments.  Here's what they said:  

October 3, 2013

As White House Weighs Attending Trade Summit during Government Shutdown, Major Unresolved TPP Issues, Growing Opposition to Fast Track Authority Highlighted

Today, House Democratic Steering and Policy Committee Co-chair  Rosa DeLauro, Ways & Means member Jim McDermott, CWA President Larry Cohen and Brian O'Shaughnessy, Chairman of Revere Copper Products  warned of severe threats to U.S. jobs, food safety and affordable medicines posed by the Trans-Pacific Partnership (TPP) free trade agreement.  With negotiations far from over, Congress should retain its authority to ensure that any final deal benefits most Americans and not pass Fast Track trade authority. Comments were made during a teleconference call moderated by Lori Wallach, Director of Public Citizen's Global Trade Watch.

President Obama is facing the choice of staying in Washington for on-going government shutdown and debt ceiling negotiations or traveling to Bali to attend a summit with the heads of state of the 11 other nations  involved in TPP talks on the sidelines of the 21st Asia-Pacific Economic Cooperation (APEC) Economic Leaders' Meeting October 7-8.

At the Summit, President Obama hoped to announce a final TPP deal after four years of contentious negotiations. However, there is no consensus on key TPP terms relating to job offshoring, a ban on Buy American procurement, disciplines against State Owned Enterprises subsidizing their operations or enforceable labor and environmental rules.  Most other TPP nations strongly oppose U.S. proposals that could increase medicine prices and undermine financial regulation. Talks on sensitive auto, dairy, textile, and sugar market access issues are still in their early stages. Despite bipartisan demands in recent weeks by 60 U.S. Senators and 230 Representatives that TPP include disciplines against currency manipulation, talks on the subject have not even begun.

Rep. Rosa DeLauro (D-CT) said, “The Trans-Pacific Partnership is an agreement of broad scope and I have been particularly concerned with food safety issues.  We would see an influx in seafood products from Vietnam and Malaysia, which have terrible food safety records, with any TPP agreement and I am afraid the food safety dispute resolution process being negotiated may further jeopardize food safety.

“On top of this, I do not believe all Members of Congress are being given a sufficient opportunity to provide input or have a meaningful role in the negotiating process. Twentieth Century ‘Fast Track’ is simply not appropriate for 21st Century agreements like the TPP agreement that is moving toward completion. It must be replaced with trade promotion authority that increases Congress’s role in the process.”

Rep. Jim McDermott (D-WA) said, “Washington State knows the value of a good trade agreement, and our economy depends on robust trade relations. I have voted for some trade agreements and against others, because substance matters.  On fast track authority, I voted against it in 2002 because I did not think it included mechanisms to ensure that a President will consult meaningfully with Congress during a trade negotiation. The Obama administration has been better on consultations compared to the Bush administration, but more can be done to improve the process so that there is greater transparency and larger role for Congress. 

“On the Trans-Pacific Partnership, I will be watching closely to see what kind of an agreement we get out, particularly related to ensuring access to medicines and provisions related to labor and the environment.”

Larry Cohen, President of the Communications Workers of America said, “If we keep going down the same trade road as we have over the past 40 years, America will soon be the one country on Earth that has not just exported our manufacturing base but also the only one that offshores its service sector jobs like those at call centers. We are going to fight to make sure that doesn’t happen.”

Brian O'Shaughnessy, Chairman, Revere Copper Products and Chief Co-Chair of the Coalition for a Prosperous America said, “Companies like mine are the manufacturing cornerstones that our economic revival is supposed to be built on, but year after year, trade bill after trade bill, I see more and more of our customers moving their operations overseas. The lack of transparency during negotiations leads to numerous loopholes in our Free Trade Agreements other countries use to export unemployment and import full time jobs. Just to name three of them, other countries can still manipulate their currency; change their border adjustable taxes to act like tariffs; and, ignore labor, environmental and human rights.”

Lori Wallach, Director of Public Citizen's Global Trade Watch said, “At the last TPP Summit in 2011, heads of state announced they had a deal when they did not and since then opposition to the very notion that closed-door “trade” negotiations with 600 official corporate advisors should rewrite wide swaths of 12 countries domestic laws has only grown in the U.S. and in other TPP counties. This TPP we-have-a-deal kabuki theatre is aimed at trying to create a sense of inevitability when in fact the talks are deadlocked in no small part because increasingly people in the countries involved are realizing that TPP is not mainly about trade, but would promote more job offshoring, raise medicine prices and roll back vital food safety, financial and other safeguards we all rely on.”

The diversity of the speakers on today’s call - senior members of Congress and business and labor leaders – reveal how concerns about the TPP are growing as details about the secretive negotiations have begun to emerge. The speakers were united in insisting that the pact’s draft texts must be aired fully before the American people and the Congress and not railroaded through Congress using the extraordinary Nixon-era Fast Track procedure. Fast Track has only been used 16 times among hundreds of U.S. trade agreements. Congress refused to delegate its authority using Fast Track when requested by President George W. Bush in 2007 and by President Bill Clinton in 1995, 1997 and 1998. 

October 03, 2013

Trans-Pacific Partnership: What End Game? (No End in Sight...)

The heads of state of the 12 nations involved in Trans-Pacific Partnership (TPP) negotiations meeting on the sidelines of the Bali APEC Summit are expected to announce again that the outlines of a TPP deal have been achieved. But wait, that was the story pitched after a similar meeting at the Hawaii APEC summit in 2011. (USTR Release: On November 12, 2011, the Leaders of the nine Trans-Pacific Partnership countries … announced the achievement of the broad outlines of an ambitious, 21st-century Trans-Pacific Partnership (TPP) agreement…”)  Until recently, USTR Michael Froman was declaring that the TPP was in its “end game.”  Except:

  • There is no text agreed for major swaths of at least three of the pact’s 29 chapters.
  • There are multi-year deadlocks on a long list of controversial “behind the borders” issues in a dozen other chapters – one chapter has 300 “brackets.” (Brackets mark disputed text.)
  • There are no deals on any of the controversial market access issues— from sugar and dairy to textiles/apparel and autos, in part because the most basic question remains contested: how will the TPP relate to the more than 30 bilateral trade pacts already existing between the parties?

And, as details have leaked out about the draft texts that have emerged from three years of extremely secretive negotiations, political opposition is building in several TPP countries among parliamentarians, powerful professional associations, business sectors, unions and the public. Signatory countries would be required to conform all of their domestic laws to the TPP terms. And, only five of the pact’s chapters cover traditional trade matters. The rest would set rules on patents and copyright, medicine pricing policies and health care, financial regulation, food safety, immigration visas, government procurement, land-use, energy policy and more.

CHECK LIST: WERE THESE CONTROVERSIAL TPP ISSUES SUDDENLY RESOLVED*?

□  Entire patent section of Intellectual Property chapter and text on medicine pricing rules both deadlocked

A U.S. proposal that would deliver on Big Pharma’s demands for extended patents, data exclusivity and other monopoly powers that raise medicine prices has faced unwavering multi-year opposition by most other TPP countries. The entire patent section of the IP text is in brackets. In another chapter, an Annex cynically dubbed “Annex on Transparency and Procedural Fairness for Healthcare Technologies,” is also deadlocked. This text would allow Big Pharma to challenge the decisions of doctors and pharmacologists who determine the cost-saving medicine formularies of countries’ healthcare systems. These issues have become a major political liability in numerous TPP nations. 

□  Deadlock over enforceability of labor rights

The U.S. seeks labor standards that are enforceable on equal terms with the pact’s other provisions. Most TPP countries oppose enforceable labor standards altogether.

□  Environment chapter at an impasse

The text still has 300 brackets - connoting text that is not agreed, which is most of the text.

□  Deadlock over the State Owned Enterprises (SOE) text

To start with, there is no agreed definition of SoEs! The U.S. has proposed disciplines on SoEs forbidding the use of government resources to subsidize SoE activities within TPP nations. A sizable bloc of nations opposes the U.S. text absolutely. Recently Australia tabled an alternative text altogether. The result: this text is all brackets and no agreement.

□  United opposition to the U.S. demand that TPP ban the use of capital controls

With the IMF now endorsing the usage of capital controls as a legitimate policy to avoid floods of speculative capital that cause financial crises, it is not surprising that there is united opposition to the unbending U.S. demand that TPP include a ban on countries’ use of  various common-sense macro-prudential measures, including capital controls and financial transaction taxes.

□  Deadlocks over various aspects of controversial “investor-state” private corporate enforcement of TPP

Australia’s newly-elected conservative government has reiterated that it will not be bound to the investor-state enforcement system, which elevates individual corporations to equal status with sovereign nations in order to enforce privately a public treaty by demanding compensation from governments before panels of private-sector attorneys for government actions that undermine expected future profits. Japanese Prime Minister Abe’s Liberal Democratic Party parliamentary majority has set as a condition for Japan’s TPP participation that the deal not include investor-state enforcement. Other TPP nations oppose the U.S. demand that government natural resource concession, private-public-partnership utility management contracts and procurement contracts be subject to such extra-judicial processes. Key text remains in brackets with respect to both the substantive rights which investors would be granted and the enforcement system.

□  Negotiations on sensitive Market Access issues not even started

Japan’s parliament has listed five “sacred” commodities – rice, beef and pork, wheat and barley, sugar and dairy - that it demands be excluded from TPP rules zeroing out tariffs. Other TPP countries insist that no sector can be excluded. The rules of origin – how much of a product’s value must come from TPP countries – have not been agreed for sensitive sectors such as apparel/textiles, autos and more, so actual tariff-cutting negotiations have not started on these products. Battles over sugar, dairy and more remain unresolved.

□  Impasse on Copyright Rules 

Hollywood and recording industry-inspired proposals to limit internet freedom and access to educational materials, to force internet providers to act as copyright cops, and to cut off peoples’ internet access have triggered public outrage and led to a negotiation stalemate. There is entrenched disagreement about whether copyright should be able to keep works of art and literature out of the public domain 70 years after death of the author, with no resolution in sight.

□  Negotiations on Currency Disciplines Not Even Started

Despite bipartisan demands in recent weeks by 60 U.S. Senators and 230 Representatives that TPP include disciplines against currency manipulation, talks on the subject have not even begun.

* And, that’s just a sample of the issues that are raising opposition in both the negotiations suites and TPP nations’ streets…

October 02, 2013

Corporate TPP Factsheet Flurry: Many Sheets, Few Facts

Corporate America has just felled a (closed) national park’s worth of trees to draft 51 fancy, fanciful factsheets in attempt to better sell to a skeptical Congress the controversial Trans-Pacific Partnership (TPP) –the sweeping 12-country “free trade” agreement (FTA) mired in deadline-missing negotiations.

In projecting TPP impacts, the factsheets are heavy on platitudes and light on, well, facts. 

The factsheet series was released yesterday by the Business Roundtable (e.g. Goldman Sachs, Verizon, Pfizer, Exxon Mobil), the Coalition of Services Industries (e.g. Halliburton, Walmart, Citigroup), the National Association of Manufacturers (e.g. Lockheed Martin, Merck, Smithfield Foods), the U.S. Chamber of Commerce and other corporate conglomerates. The series posits one set of counterfactual claims, and then replicates them in 50 state-specific variations. The resulting 306-page ream of TPP cheerleading is impressive for its girth, if not its veracity.

Here are the corporate alliances’ three claims about the TPP – sourced from conjecture – followed by some inconvenient and contradictory facts – sourced from data:

1.  Claim: The TPP will “expand trade between the United States and existing FTA partners.” 

Fact: The U.S. is not even discussing trade expansion (i.e. tariff reduction) with most existing FTA partners in the TPP negotiations.  How can something not under discussion be promised as a result of the deal?

Of the 11 countries negotiating the TPP with the United States, six already have FTAs with the U.S.: Australia, Canada, Chile, Mexico, Peru, and Singapore.  The U.S. Trade Representative has stated that the U.S. is not negotiating tariff reductions with most of these countries, in part because tariffs with these FTA partners are already relatively low.  Despite this, the corporate factsheets state, “the TPP negotiations provide an opportunity to…address a range of important tariff…barriers that currently impede exports to these countries.”  Even the TPP-promoting government officials negotiating the deal would have to disagree.  

2.  Claim: The TPP will “open new markets in countries that are not current FTA partners.”

Fact: U.S. exports have actually suffered under FTAs, not gained.  How can we do more of the same and expect different results?

U.S. goods exports to Korea fell 10 percent in the first year of the U.S.-Korea FTA, a template for the TPP that took effect in March 2012. Overall, U.S. export growth has actually been better without FTAs than with them. Growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the last decade. Repeating the tired claim that we need FTAs to boost exports does not make it true.

In addition, some of the particular export growth “opportunities” highlighted by the corporate groups require a reality check.  For example, they cite New Zealand’s 5% tariff on U.S. lactose products as a barrier that, if only reduced via TPP, would herald an increase in U.S. dairy exports to New Zealand.  But U.S. dairy producers fear just the opposite.  U.S. dairy producers have lobbied against the reduction of dairy tariffs between New Zealand and the U.S., fearing that it would lead to their displacement, not a new export “opportunity.” The corporate factsheets’ tariff reduction promises are dotted with such inconvenient facts that, like flies on ointment, tarnish the rosy picture painted for Congress.

3.  Claim: The TPP will “encourage companies based in TPP countries to increase their business investment in the United States.”

Fact: Study after study has shown no correlation between a country’s foreign investment levels and its willingness to be bound to the extreme sort of investor privileges enshrined in the TPP.  With no proven upside, why would we sign up for the proven downside of empowering foreign investors to bypass domestic courts, drag the government to an extrajudicial tribunal, and demand taxpayer compensation for public interest policies that they find inconvenient?  

The corporate factsheets identify corporations based in TPP countries with operations in the United States, arguing (despite the evidence) that TPP investor privileges would encourage them to boost their business. In fact, the TPP would empower these foreign firms, on behalf of any of their 30,000 subsidiaries in the U.S., to directly attack U.S. health, financial, environmental and other public interest policies that they view as undermining new foreign investor rights that the TPP would establish. Extrajudicial tribunals, comprised of three private attorneys unaccountable to any electorate, would be authorized to determine the validity of the challenged policies and order unlimited taxpayer compensation if the policies undermined corporations’ “expected future profits.”  

This extreme “investor-state” system already has been included in a series of U.S. FTAs, forcing taxpayers to hand more than $400 million to corporations for toxics bans, land-use rules, regulatory permits, water and timber policies and more. Just under U.S. pacts, more than $14 billion remains pending in corporate claims against medicine patent policies, pollution clean ups, climate and energy laws, and other public interest polices. Are these the “barriers” to investment that the corporate alliances hope the TPP will remove? 

In the wake of this corporate factsheet flurry, the message to Congress is simple: check the facts.  For they are not found on these sheets.  And they reveal a truer and uglier picture of the TPP than the corporations’ latest attempt at airbrushing.

September 26, 2013

Protests Expose Secret Negotiations, Cast Light on Shadowy TPP Deal

Construction workers stopped working and peered down from the scaffolding high above. Tourists stopped to take pictures. The sound of chanting could be heard blocks away. It was a beautiful day for a rally.

Last Friday, nearly 100 environmental, labor, family farm, faith, public health and trade activists gathered outside the U.S. Trade Representative’s (USTR) office to show the Trans-Pacific Partnership (TPP) lead negotiators that people in the U.S. do not want a “free trade” deal that puts corporate interests over those of the middle class.  

Crowd shot 2The TPP negotiators were not in Washington, D.C. for a formal round of negotiations, but for a below-the-radar “intersessional” meeting. Such secretive meetings are now being scheduled at a moment’s notice in countries across the Pacific Rim as the U.S. cracks the whip in desperate attempt to get negotiations all wrapped up and tied with a neat bow by the end of the year, despite the yawning controversies and gaps in agreed-upon text. 

These “intersessionals” drive the backdoor TPP talks even further underground and away from public scrutiny. Unlike the formal rounds, USTR is not even revealing the location, timing or agenda of the intersessionals. And there are no “stakeholder sessions" to which concerned groups and the general public are invited.

So we created our own stakeholder session.  On the street.  Outside of USTR’s office.

Crowd shotNot about to let top-secret meetings get in their way, the crowd gathered in front of the USTR office last week filled the air with demands for fair trade, against the TPP’s corporate coup, and against Obama’s plan to railroad the controversial deal through Congress with Fast Track.

A medical student in his white coat waved a sign next to a union member demanding the end of "trade" agreements that jack up the cost of medicines while shipping U.S. jobs overseas. Student activists held signs calling for greater transparency. As the D.C. lunchtime crowd merged with tourists walking by, the rally swelled to incorporate newcomers who grabbed signs and joined the cries for justice:

Regulating Wall Street is what we need, it’s time to flush the TPP!”

“People with AIDS under attack, No TPP and no Fast Track!”

“It might be really good for Monsanto, but it sure ain’t good for us!”

“The TPP has gone astray, there’s no shame to walk away!”

With a crowd diverse enough to include a middle aged white man in a suit, a tattooed girl with dreads, a Chinese exchange student, and a modern day hippie in clogs, it was clear that the TPP impacts each and every one of us in profound ways.  Across the U.S., people from all walks of life with all sorts of different interests are coming together to derail Fast Track and stop the TPP. The contagious, hopeful, and determined energy that rocked the crowd on that sidewalk outside the USTR building is increasingly being manifested all over the country in rallies, town hall meetings, teach-ins, and meetings with members of Congress.

TPP-USTR-Ann-Meador-Large-signIn D.C., protests continued throughout the negotiators’ visit. One of the most dramatic moments happened on Monday when activists from FlushTheTPP.org, CODEPINK, Veterans for Peace, and Earth First! emblazoned the very headquarters of TPP scheming with anti-TPP banners.  Disguised as construction workers, activists scaled scaffolding to reach the roof of the USTR’s buildings, and then covered the USTR offices with banners saying no to the TPP and demanding transparency for the sweeping deal.

The fight is on. No matter how deep into the shadows the TPP negotiators try to hide, activists all over the world will be there to shine a light on a deal gone terribly wrong. 

--Lacey Kohlmoos

September 20, 2013

Obama’s Corporate Export Council Ignores Dismal Export Data, Backs More-of-the-Same “Trade” Deals

Yesterday, just before a meeting of the President’s Export Council, we asked whether the powerful, Obama-advising group would recognize that U.S. export growth is seriously lagging and that status-quo “free trade” deals have failed to fulfill promises of increased exports.

They didn’t. 

Somehow the room full of corporate representatives and government officials, “the principal national advisory committee on international trade,” which exists to “promote export expansion” and “discuss and resolve trade-related problems,” made it through two hours of prepared speeches without once acknowledging that we’re 18 years behind schedule to meet Obama’s goal to double exports.  

Groupthink is one plausible explanation.  The members of Obama's top "export" panel include:

  • 17 executives of Fortune 500 corporations and 8 other business representatives
  • 17 administration officials, 9 hand-picked members of Congress, and 2 state and local government officials
  • 0 representatives of labor, environmental, health, consumer, family farmer, or any other public interest groups

It turns out that Obama's "principal national advisory committee on international trade" doesn't need to include a broad cross-section of groups and concerns implicated by trade policy.  Perhaps if a single worker, farmer, or advocate had been present, someone would have pointed out the obvious: exports (i.e. the group's raison d'être) are not doing well.  

Export CouncilInstead, the group touted insignificant data points as “gains.”  For example, President Obama declared, “Part of the reason we set up the Export Council was to make sure we meet our goal of doubling exports in a relatively short period of time.  And we now sell more goods overseas than ever before.” 

Um, the second sentence’s mundane “achievement” is irrelevant to the first sentence’s central goal.  We have actually “sold more goods overseas than ever before” in 43 of the last 53 years – rising exports has been a longstanding accompaniment to economic growth, not a novel cause for bragging rights. 

Actually, Obama’s unremarkable claim may not even prove true for 2013. The most recent government data indicates that U.S. goods exports so far this year are actually one percent lower than they were in the same period last year.  At the current rate, we’d expect 2013 to be a historically unique year of falling exports. 

If so, Obama’s export-doubling goal, which already looked impossible after last year’s sluggish two percent growth rate (mentioned just once during the Export Council meeting), would become even more remote.

Choosing to ignore this elephant in the room, the President’s Export Council called for a hearty embrace of status quo trade policy. Corporate CEOs and administration officials praised two more-of-the-same pacts currently under negotiation: the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA)

No one brought up how exports have actually fared under similar pacts.  No one mentioned that exports to Korea have actually fallen 10 percent under the Korea “free trade” agreement (FTA), a blueprint for the TPP.  No one mentioned that export growth to countries that are not FTA partners has actually exceeded U.S. export growth to countries that are FTA partners by 38 percent over the past decade.

Instead, the Council affirmed the tired and counterfactual narrative that deals like the TPP and TAFTA, which would rewrite wide swaths of non-trade domestic policies, are necessary for export promotion. 

And they reiterated that getting the increasingly controversial deals past a skeptical Congress and a critical U.S. public would require Fast Track – the undemocratic tool used to ram through Congress the Korea FTA, NAFTA, and other past controversial deals whose results the Council resolutely ignored. 

In a decision that took less than thirty seconds, and entailed zero deliberation, the Council approved a resolution supporting Obama’s push for Fast Track.  The Chair, representing Boeing, did not even bother to call a voice vote, opting instead to “assume no objection” and then declare approval of the resolution by stating, “I so move, all in favor, okay.”

So is the President’s Export Council really blind to the current export problems that are central to its mandate?  Are they really unaware of the shoddy export record of “free trade” deals to which they are unblinkingly committed? 

Or do the Council members, representing some of the country’s most aggressive corporate interests, have something else to gain by advocating for the TPP and TAFTA?  For example, Council member J.P. Morgan, Wall Street’s largest firm, might be less concerned with the deals’ implications for exports and more interested in the constraints that the pacts would impose on the reregulation of Wall Street

Maybe Pfizer and Merck, both incoming Council members, decided to join the powerful body to push for the TPP proposal to expand their monopoly patent protections, increasing their profit margins and our medicine prices.  And Walt Disney may be particularly keen, as a Council Member, in pushing for the TPP to include some of the draconian copyright provisions that the corporation failed to get enacted in the Stop Online Piracy Act (SOPA), defeated in Congress as a threat to Internet freedom.  Archer Daniels Midland, meanwhile, would probably like to use its Council membership to push for TAFTA to weaken EU limits on genetically-modified food, while Council member Verizon has already expressed its hope that the pact can be used to roll back Europe’s data privacy safeguards

It’s possible that the President’s Export Council is delusional about the shoddy export record of the status-quo “trade” model that the TPP and TAFTA would expand.  It’s more likely that they are willfully ignorant.  The corporations’ unqualified support for the pacts likely stems not from data-defying hopes of export promotion, but from realistic expectations that the sweeping deals would rewrite health, environmental, financial, and other domestic safeguards that the corporations find inconvenient – and that most of the rest of us find essential.

Will President Obama grant the wishes of his corporate Council members?  In his closing remarks for the meeting, Obama joked, “I am expecting a gold watch from Boeing at the end of my presidency, because I know I’m one of the top salesmen for Boeing.” As Obama continues attempting to sell the TPP and TAFTA to the U.S. public and fast track the controversial pacts through Congress, the likes of Boeing, J.P. Morgan, and Pfizer must be lining up the gold watches.  

September 19, 2013

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

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

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

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

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

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

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

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

Click here for a PDF of this release.

September 12, 2013

Study: "Trade" Deal Would Mean a Pay Cut for 90% of U.S. Workers

The verdict is in: most U.S. workers would see wage losses as a result of the Trans-Pacific Partnership (TPP), a sweeping U.S. "free trade" deal under negotiation with 11 Pacific Rim countries.  That's the conclusion of a report just released by the non-partisan Center for Economic and Policy Research (CEPR).  

TPP's corporate proponents have tried to sell the NAFTA-style deal to the U.S. public and policymakers by claiming that it will result in gains for the U.S. economy.  They often cite a study from the Peterson Institute for International Economics that used sweeping assumptions to project a tiny benefit from the TPP. We brought that study down to size back in January, showing that, even if one accepts the pro-TPP authors' litany of optimistic assumptions, the much-touted "benefit" from the TPP would amount to an extra quarter per person per day

As this week's CEPR report points out, the pro-TPP study projected a meager 0.13 percent increase to U.S. gross domestic product (GDP) by 2025 if the controversial TPP would be signed, passed, and implemented.  By comparison, economists have estimated that Apple's iPhone 5 contributed a 0.25 - 0.5 percent increase to U.S. GDP.  

That is, the TPP's total contribution to the U.S. economy is expected, by TPP proponents, to be about one half to one fourth of the contribution of the latest iPhone version. 

Well, you might say, a nearly invisible blip in GDP is better than no blip in GDP.  (You might say this if you ignore the host of dubious assumptions used to project said blip, and ignore the TPP's expected threats to medicines affordability, environmental protections, food safety, Internet freedom, and financial stability.) 

But what would such a paltry GDP rise mean for your pocket?  Answering that requires taking into account the increase in income inequality that typically results from such "free trade" deals.  The author of the CEPR report, economist David Rosnick, explains, "There are winners and losers from trade, and research has shown that trade contributes to inequality. In fact, it would take only a very small contribution to inequality due to trade to wipe out all of the gains that most workers would get from this agreement."  Rosnick then uses the empirical evidence on the trade-inequality relationship and shows that even taking the most conservative estimate of trade's contribution to inequality (that trade is responsible for just 10% of the rise in inequality), the losses from projected TPP-produced inequality indeed would "wipe out" the tiny projected gains for the median U.S. worker.

That is, as a result of the TPP, the median U.S. income would fall. It would not just fall in comparison to the incomes of the wealthy (which would rise). It would fall in absolute terms, forcing middle-class U.S. workers to take home less in 2025 than they earn today. 

Such wage losses would afflict most U.S. workers.  Rosnick shows that if we assume that trade has contributed just 15% of the recent rise in inequality (a still conservative estimate), then the TPP would mean wage losses for all but the richest 10% of U.S. workers.  So if you're making less than $87,000 per year (the current 90th percentile wage), the TPP would mean a pay cut.  And if you're making more than $87,000 per year, you may still be a tad concerned about how the deal could jeopardize the safety of your food, threaten clean water protections, roll back Wall Street reforms, etc. 

Click here for the disturbing report from CEPR

September 06, 2013

Exports Fall Short under Korea FTA for 16 out of 16 months

At this week's G20 summit in Russia, President Obama has been trying once again to sell two enormous "trade" pacts -- the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA) -- using the beleaguered pitch that such deals will deliver jobs by boosting exports.  

But government trade data released this week douses Obama's export promise with another bucket of cold reality.  Under the Korea "free trade" agreement (FTA), a model for the TPP, U.S. exports have been steadily falling, imports have been rising, and job-displacing trade deficits have surged.    

In fact, in every single month since the Korea FTA took effect in March 2012, U.S. goods exports to Korea have fallen below the average export level seen the year before the deal took effect.  Average monthly exports to Korea since the FTA have sunk 11% below the average monthly level before the FTA. 

The U.S. monthly trade deficits with Korea, meanwhile, have soared about 50% higher than the pre-FTA level.  In 16 out of 16 months since the FTA took effect, the U.S. trade deficit with Korea has exceeded the average monthly deficit seen the year before the deal.  

The dismal record of the Korea FTA for U.S. exports and jobs does not bode well for the administration’s attempt to push the controversial TPP through Congress on a democracy-defying Fast Track under the tired and counterfactual promise of export promotion.  Members of Congress are not likely to be persuaded to revoke their constitutional authority over trade and allow the TPP to be railroaded through Congress after seeing the disappointing data for a deal upon which the TPP is modeled.  

Sep Korea 1

Sep Korea 2

September 05, 2013

Latin American Lawmakers Call for Public Debate on Secretive "Trade" Deal

 

Veronika
Peruvian lawmaker Verónika Mendoza, signatory to the resolution, speaks at a Public Forum on the TPP.

While the negotiations of the ultra-secretive Trans-Pacific Partnership (TPP) have gone further underground, lawmakers in Chile and Peru are urging their country to open a public debate to shed light on the deal's sweeping implications for their countries.

Last week, members of the Peruvian parliament put forth a resolution (English translation available below) requesting that the government open a "public, political, and technical debate" on the binding rules being negotiated in the TPP. The request mentions several of the lawmakers' specific concerns, including the lack of transparency of the process, proposed TPP provisions limiting access to affordable medicines, and the TPP's expansion of the investor privileges model known as investor-state dispute resolution. Under this system, a wealthy U.S. magnate has demanded that Peru's government pay $800 million for asking the company to comply with its contractual obligation to clean up the grave pollution caused by its metal smelter in La Oroya, one of the world's most polluted communities.

The resolution put forth by the Peruvian lawmakers was introduced a few weeks after four Chilean senators sent a very similar formal request to open a public debate about the TPP in Chile. The document introduced by the Chilean senators quotes Rodrigo Contreras, the ex-lead TPP negotiator for Chile who has been publically critical of the TPP.

Considering that large swaths of domestic policies -- from environmental protections to financial regulations to public health laws -- would need to be rewritten to conform to the TPP's deregulatory rules, it is outrageous that elected lawmakers have been excluded from access to the text or the negotiating process. A public debate about this expansive "trade" deal is long overdue. 

Here's the translated text of the Peruvian resolution:

--------------------------------------------------------------------------------------

RESOLUTION

The undersigned Members of Congress of the Republic, members of the group Parlamentario Acción Popular-Frente Amplio, under Article 68 of the Congressional Rules of the Republic, propose the following motion:

Considering:

Whereas the Transpacific Economic Partnership (TPP), which aims to integrate 12 economies: the U.S., Canada, Peru, Mexico, Brunei, New Zealand, Singapore, Australia, Malaysia, Vietnam, Chile and Japan, into a free trade zone of the Pacific, seeks to finalize an agreement on goods, services, and agriculture, as well as agreements on intellectual property rights, investment, rules of origin, competition, labor and environmental standards;

Whereas our attention is drawn to the excessive zeal of the negotiations, declared secret, and the lack of transparency making it impossible to know the contents of the TPP negotiation texts and therefore what standards we as a country are implicating.

Whereas the document that leaked in 2011 about the intellectual property chapter proposed by the U.S., proposes to require TPP signatory countries to conform to copyright rules that impose serious limits to intellectual and artistic creation as well as technological innovation putting at risk freedom of expression, privacy and the capacity to innovate of all Peruvians. This being a new attempt to tighten intellectual property rules;

Whereas the TPP promotes mechanisms, rejected in other negotiations, which limit competition and the entry of generic medicines into the market and endanger the aim to protect biologic medicines, particularly important cancer-fighting medicines, and this is a proposal that should not be accepted;

Whereas, additionally, it threatens the free access to information, the use of the internet and cultural goods: the U.S. proposal seeks to impose rigid copyright rules, similar to those criticized in SOPA (Stop Online Piracy Act) recently rejected in that country, because it would impose serious threats to the right to information, the free use of the internet and other cultural goods (books, software, music, etc.);

Whereas, furthermore, it promotes a model of investment protection that is being questioned internationally because it allows anonymous private capital and transnational corporations to evade domestic courts and challenge necessary measures and the sovereignty of countries, affecting the development of laws in favor of public health or environmental sustainability.  We urge the correction of errors that have allowed an $800 million lawsuit to be filed against Peru by Doe Run in the case of La Oroya under the investment chapter of the FTA with the U.S., and to not expand these advantages for corporations with a new set of nine [sic] countries;

With respect to the agreement of the Chilean Senate, dated August 13, 2013, demanding that the President of the Republic open a public debate about the TPP, alerting how it affects national and regional interests.

The agreement says: “Requesting your excellency the President of the Republic that, beyond diplomatic procedures and mechanisms in the context of the negotiation the government is conducting in the Trans-pacific Partnership (TPP), to open a public debate, that is technical and political, timely and open, about the implications that the agreement could have for Chile   economically and for international relations, especially with respect to the process of regional integration of which we are a part, and of our relationship with China, the country’s main trading partner.”

Whereas it is necessary to have a strong negotiating position in the face of the ambitions and pressure by economically stronger states and reject the imposition of a model conceived for the purpose of the realities of countries with higher incomes, which are very different than the other participating countries;

Whereas it is essential to analyze the impacts and the cost-benefit analysis for the country and determine the reasons for Peru to adhere to this trade agreement;

By the above considerations, the full Congress of the Republic,

RESOLVES:

First: We ask the government to open a public, political, and technical debate on the proposals of the Trans-Pacific Partnership (TPP) negotiations of which Peru is a part.

Second: We invite the Minister of Foreign Trade and Tourism and the technical team in charge of the Trans-Pacific Partnership (TPP) negotiations to report on the matter.

Lima, 28 de Agosto del 2013

August 23, 2013

Bloomberg, Health Experts Denounce Obama's Gift to Big Tobacco in the TPP

The Obama administration has drawn sharp criticism from leading health organizations, U.S. state representatives, and New York mayor Michael Bloomberg by caving to pressure from Big Tobacco to abandon safeguards for tobacco control policies in the Trans-Pacific Partnership (TPP), the pending "free trade" deal with 11 Pacific Rim countries. The administration has scrapped a proposal to provide a "safe harbor" for tobacco control measures.

Instead the administration will issue a proposal in the current Brunei round of TPP negotiations that clears a path for tobacco corporations to use the TPP to directly challenge governments' progressive public health measures.  

In response to the announcement, a major victory in tobacco corporations' effort to use TPP-like deals to roll back anti-smoking safeguards, Dr. Gregory Connolly of the Harvard School of Public Health stated, "Our government’s trade policy is promoting the tobacco epidemic." 

6a00d83452507269e2019104ee149f970c-320wiThe American Cancer Society, the American Heart Association, the American Lung Association, and the Campaign for Tobacco Free Kids denounced the Obama administration’s decision to cave to Big Tobacco's TPP demands at the expense of public health. Legal and health experts at the Harvard School of Public Health, Georgetown University Law Center, and Action on Smoking and Health blasted the TPP proposal, finding it "will do little to protect governments’ right to regulate tobacco." The state of Maine's Citizen Trade Policy Commission concluded, "it would be better to not offer this text at all than to give the false impression that the United States is serious about protecting government authority within the TPP to regulate tobacco to protect health.

Articles spotlighting the administration’s TPP backtracking have appeared in many prominent news sources, including the Washington Post, Bloomberg, the Wall Street Journal, and Reuters.

New York City mayor Michael Bloomberg also weighed in on the TPP controversy by releasing a scathing op-ed in yesterday’s New York Times. Bloomberg noted that not only would the U.S. proposal restrict tobacco control measures and significantly decrease the price of cigarettes, but also expose TPP governments to direct "investor-state" challenges launched by tobacco corporations against public health laws:

If the Obama administration’s policy reversal is allowed to stand, not only will cigarettes  be cheaper for the 800 million people in the countries affected by the trade pact, but multinational tobacco corporations will be able to challenge those governments — including America’s — for implementing lifesaving public health policies. This would not only put our tobacco-control regulations in peril, but also create a chilling effect that would prevent further action, which is desperately needed.

He's right. The TPP's extreme investor privileges would empower tobacco corporations to skirt domestic legal systems and attack tobacco control policies before extrajudicial tribunals as a means of intimidating policymakers who would dare to enact such safeguards. The Obama administration's proposal does nothing to limit, or even to address, this empowerment of Big Tobacco.

Unfortunately, the investor-state threat is not a hypothetical one. Phillip Morris has already used such investor privileges in other treaties to attack landmark anti-smoking laws in Australia and Uruguay after failing to undermine those health laws in domestic courts.  As Andrew Martin points out in Bloomberg, Philip Morris has been leading Big Tobacco's battle to pressure the Obama administration to weaken tobacco-control safeguards in the TPP.

The Obama administration's caving to that pressure makes clear the TPP's very real threat to public health.  As Laurent Huber of Action on Smoking and Health stated, the new tobacco-friendly proposal for TPP "will mean more lives lost, both here in the US and abroad.” It is more crucial than ever to expose the TPP and to stop it from being fast tracked through Congress. Our health depends on it. 

August 22, 2013

"Final" TPP Round Not Final: Are Even More Secretive Talks Ahead?

With No Text Agreed for Several Entire Chapters and Most Tough Political Decisions Unresolved, the So-Called ‘Final Round’ of Trans-Pacific Partnership (TPP) Talks Will Not Be the End of Negotiations

Will TPP Negotiations Become Even More Secretive After Imminent 19th Round of TPP Talks in Brunei, Which is Being Called the Last Formal Negotiating Round?

After announcing for a domestic audience that the Trans-Pacific Partnership (TPP) negotiations were in their “end game,” U.S. Trade Representative (USTR) Michael Froman will face quite a different reality when he meets with TPP nations united in opposition to many core U.S. TPP proposals this week at the start of the 19th round of negotiations in Brunei. Without text for two TPP chapters and no deals on any of numerous difficult market access issues, from dairy and sugar to apparel and rice, it is clear that the Brunei Round will, in fact, not be the final negotiating session. The real question is whether the TPP negotiations coming after the Brunei Round will be unannounced and even more secretive, Public Citizen said today.

Among the most contested aspects of the deal include the U.S. proposals on medicine patents, state-owned enterprises, Internet policy, financial regulatory limits, and environment and labor standards. 

Only five of the TPP’s 29 chapters pertain to traditional trade matters. The rest would set policies, to which the U.S. Congress and state legislatures would be required to conform, relating to regulation of energy and other services, financial regulation, food safety, procurement policy, patents and copyright policy, and other non-trade issues. The draft pact also includes NAFTA-style foreign investor rules that facilitate job offshoring by removing many of the risks and costs of relocating U.S. production to low-wage countries. Among TPP negotiating countries is Vietnam, the lower-cost offshoring alternative to China.

One can see why negotiators being deadlocked over entire TPP chapters to the extent that there is not even text is a detriment to the Obama administration’s announced October deadline for signing the TPP on the sidelines of the Asian Pacific Economic Cooperation summit. However, reporters at the Brunei Round or participating in USTR briefings during the round are likely to get the “TPP End Game” spin. As Obama administration officials try to convince Congress that the TPP is almost completed, some questions that the Obama administration would undoubtedly rather avoid:

1. Is the fact that there is no intellectual property chapter text to even negotiate over – even a heavily bracketed text – related to unwavering multi-year opposition to U.S. patent and copyright text proposals?

2. Is the multi-year deadlock over the TPP’s state-owned enterprises chapter going to be resolved in Brunei by the four nations in absolute opposition to the U.S. suddenly changing its position, or by the U.S. giving up on state-owned enterprise disciplines?

3. And what about the labor rights chapter, which is “done”… except for staunch opposition by many TPP countries to it being enforceable. Given that the Obama administration has pledged to Congress that the pact will have labor rights enforceable on par with the pact’s commercial provisions, what will happen to the non-undecided enforcement section of the TPP chapter?

4. And what about the environment chapter? There is a deadlock over not only the chapter’s enforceability but also the key rules such as enforcement of countries’ obligations in environmental treaties.

5. Has the U.S. now conceded to Vietnam the right to have duty-free treatment for apparel products assembled from Chinese textiles and other inputs so that Vietnam is now participating in closing up negotiations on other chapters, which it has not done to date?

6. Given united opposition by the other TPP countries that has thwarted closure to date of several TPP chapters, has the U.S. relented in its insistence that the TPP forbid any signatory country from using capital controls, speculation, or transaction taxes and other common macroprudential financial measures?

7. Have other countries dropped unified opposition to the U.S. proposal in the investment chapter to extend the controversial investor-state system to procurement and private-public-partnership utility management and natural resource contracts through an “umbrella clause”?

8. Will the United States allow Japan to exclude the five “sacred” commodities – rice, wheat and barley, beef and pork, sugar and dairy – from the TPP tariff zeroing, which is the condition for participating in the TPP that was set by the majority LDP party? 

“The fact that entire chapters of the TPP remain without even a draft text to fight over won’t be a popular talking point in Brunei, given that the Obama administration is claiming that the agreement is almost done while in reality negotiations will just continue on in even greater secrecy,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Apparently, the response to the growing opposition to the TPP among the U.S. Congress and the public here, and legislators and the public in other countries, is to drag negotiations even further underground and claim a deal is almost done.”  

August 21, 2013

A Shady Deal: The Secrecy and Substance of the Largest U.S. Trade Pact

Today, Simon Lester over at the Cato Institute, posted a Huffington Post piece called "The TPP Trade Talks: Forget Secrecy, Let's Talk Substance."  In it, he cited our New York Times critique of the Obama Administration's inexplicable decision to keep the sweeping Trans-Pacific Partnership (TPP) "trade" deal behind a wall of secrecy.  

Simon argued that we should not focus on the TPP's secrecy, but on its substance.

First, that's a tad difficult when said secrecy is obscuring said substance. Second, insofar as we have been able to opine on the shady substance (e.g. thanks to leaked TPP texts), we've not really held back in doing so.  See here, here, here, here, here, here, here, here, here, here, and here. Oh, and here.  

Here's our full exchange with Simon, also posted at Huffington Post (thanks to Simon for his engagement): 

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3:43pm, Ben Beachy

Simon, it’s difficult to talk about the substance of a deal that cannot be seen.  For 19 rounds and more than three years of TPP negotiations, the U.S. public and even most members of Congress have been kept in the dark on the TPP’s content, which could rewrite swaths of non-trade domestic policies.  Those of us tracking the secretive deal have had to rely on rumors, vague characterizations, and a few leaked texts to get an idea of its sweeping substance.

Indeed, the worrisome TPP provisions you point to are themselves the results of leaks, confirming the need for greater transparency.  We only know about the deal’s overreaching copyright extensions that you mention because of a leaked intellectual property text.  Similarly, it is only because of a leaked investment text that we have seen the extreme TPP provisions that, as you note, would actually empower foreign corporations to surpass domestic legal systems and drag sovereign governments before extrajudicial tribunals to demand taxpayer compensation for health and environmental policies they find inconvenient. 

Meanwhile, the vast majority of the TPP’s 29 chapters remain tightly under wraps.  When a few leaked chapters of a 29-chapter deal include alarming threats to the public interest, how can the appropriate conclusion be that we should “not get hung up too much on transparency issues?”  The disquieting leaks provide all the more reason to amplify the call for a long-overdue unveiling of the secretive TPP.  

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4:16pm, Simon Lester

Ben,

There is some truth to what you say. However, a lot of what will be in the TPP was also in prior agreements (e.g., investor-state). As a result, I think we have the basis already for a pretty good debate! We probably know about 95% of what will be in it. Of course, like you, I am eager to hear about the remaining 5%. But we can't have complete transparency in a negotiation (and we certainly don't have it in Congress either, with the legislative process). So let's get started talking about that 95%.

When I hear Elizabeth Warren complain about secrecy, I get frustrated because I would rather see her weigh in on the substance. What does she think about investor-state? Or about copyright extensions? Or, for that matter, protectionist tariffs? Many prominent people seem wary of weighing in on these difficult issues, and instead focus on secrecy. To me, that seems like a bit of a copout.   

-----

6:00pm, Ben Beachy

Simon,

I cannot see how a few leaked chapters in a 29-chapter deal counts as knowledge of 95% of that deal's contents. For the gaping holes not filled in by leaks, we (like you) indeed have been looking at past deals to get a hint at what the TPP could hold. But that's hardly a substitute for release of the official and current TPP text, which has already undergone 18 rounds of negotiations and alterations.

And insofar as we have been able to ascertain the TPP's shady substance (e.g. via leaks), we (like you) have not exactly held back in commenting on said substance. We have repeatedly spotlighted the threats to access to medicines, Internet freedom, and health and environmental safeguards posed by the TPP's leaked investment and intellectual property chapters. And we have quite openly noted the havoc that the TPP could pose to Wall Street reform (also raised by Sen. Warren), food safety, and jobs if the TPP replicates the deregulatory rules of past pacts.

It is precisely because of such threats that it is so critical to unveil the rest of the TPP’s content.

As we pointed out in the NYT op-ed you cited, even the Bush administration released online the negotiating text of the last similarly sweeping “trade” deal (the FTAA). We're simply asking the Obama administration to uphold the same standard of transparency used by the Bush administration. Until that modest request is granted, harping on the TPP’s secrecy is merited.   

August 14, 2013

Video: "Peril in the Pacific" Spotlights TPP's Dangerous Investor Privileges

Friends of the Earth, U.S. has released a video highlighting the threat that the Trans-Pacific Partnership (TPP) poses to the environment and human rights. Check out the video below to learn more about how the TPP's investment chapter (a draft of which has leaked) favors corporations over people and the environment by allowing comapnies to drag a government to an extrajudicial tribunal if they feel that a public interest law has affected their ability to make a profit.

July 25, 2013

Obama Hints at Unfair Trade as a Cause of Stagnant Wages

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

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

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

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

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

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

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

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

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

Manufacturing

July 01, 2013

Will the Trans-Atlantic Spying Scandal Kill the Trans-Atlantic "Trade" Scandal?

The newest Snowden-facilitated leak – that the U.S. National Security Agency (NSA) has been spying on European governments – is the latest hurdle to appear in the steeplechase-resembling race to launch negotiations for the Trans-Atlantic Free Trade Agreement (TAFTA)

The revelation has sparked ire from European officials, unleashing a torrent of warnings today that TAFTA negotiations, slated to start next week, may be doomed before they begin. 

Amid reports that the NSA bugged the offices and infiltrated the hard drives of EU government officials, EU officials have made clear that they are not in the mood to trust U.S. trade negotiators.  Yesterday the EU Commissioner of Justice stated, “We cannot negotiate over a big trans-Atlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators.”  At this point, that doubt seems more than slight. 

But EU nations aren’t the only ones in the crosshairs of the NSA’s Cold-War-style espionage ambitions.  The Guardian revealed yesterday that Mexico and Japan, members of the similarly-sweeping Trans-Pacific Partnership (TPP) “trade” pact, appear on a list of 38 foreign embassies and missions that the NSA lists as spying “targets.”  (It kind of belies the moniker of “partnership” when you spy on your “partners.”)  The revelation could bring the sort of rift with TPP countries that we are now seeing with TAFTA countries. 

For TAFTA, that rift didn’t begin with the most recent NSA spying scandal.  U.S. and European corporations have explicitly called for the deal to be used as a way to water down critical safeguards, prompting waves of criticism from consumer, environmental, health, farmer, labor, and tech groups on both sides of the Atlantic. 

The National Corn Growers Association, which recently went to bat for Monsanto in a Supreme Court case pitting the genetically-modified-organism (GMO) giant against an Indiana farmer, asked that TAFTA be used to “end the moratorium” on GMOs in Europe.  That already contentious proposition became all the more so when non-approved strains of GMO wheat were found in Oregon one month ago. 

Meanwhile, corporations the likes of Verizon have called for such deals to be used to ensure that privacy policies do not limit the “seamless” flow of personal data across borders – a particularly taboo request in the wake of revelations that Verizon has been handing to the NSA the private phone data of anyone carrying a Verizon phone.

Even more incredible, corporations the likes of Chevron have asked that TAFTA grant foreign corporations the power to directly challenge sovereign governments over environmental and health policies in tribunals that operate completely outside any domestic legal system.  The EU negotiating mandate for TAFTA has granted this request, incorporating the extreme “investor-state” enforcement mechanism.  That incredible provision alone generated over 10,000 ire-filled comments from U.S. citizens within 32 hours in response to a single email from Rep. Grayson in May. 

Such controversial components of the deal have generated a crescendo of controversy surrounding TAFTA.  Ironically, the NSA has now added to the cacophony of opposition.   Corporate America cannot be pleased.  The NSA’s overreaching national security agenda has jeopardized their overreaching corporate agenda to use TAFTA to roll back financial, climate and food safety standards that make doing business less convenient.  If the two agendas would cancel each other out, perhaps we could get on with an agenda that’s actually supported by the public – from environmental stability to public health to personal privacy. 

June 18, 2013

Pressure Pays Off: Obama Administration Finally Lets Congress See Secretive TPP Text (But Still Not the Rest of Us)

For once, we have some good news.  After years of calling for release of the secretive draft text of the Trans-Pacific Partnership (TPP), we have achieved an interim victory.  

No, you still can't yet get a look at the sweeping 12-country "free trade" agreement (FTA) that implicates everything from your morning Internet browsing to your evening dinner.  But for the first known time in the three years that the secretive deal has been under negotiation by the Obama administration, said administration has allowed a member of Congress to view three chapters of the bracketed negotiating text.  (In case you're just hearing about this, that's correct: even our elected officials have been kept in the dark on a deal that would rewrite broad swaths of domestic public interest policies.)  

7986556189_1d70f55e0b_zLast week, Congressman Alan Grayson (FL-09) got a peek at the controversial pact after requesting access from the U.S. Trade Representative (USTR).  After similar requests from many members of Congress, including some who received ‘no’ answers from the administration, it appears that Grayson is the FIRST member of Congress to see some of the text.  Upon eyeing the deal, Grayson said, "Having seen what I've seen, I would characterize this as a gross abrogation of American sovereignty.  And I would further characterize it as a punch in the face to the middle class of America.  I think that's fair to say from what I've seen so far.  But I'm not allowed to tell you why!" 

The change in the Obama administration's transparency-defying lockdown of the TPP text comes after a wave of high-profile pressure on the administration to release the text.  Last year produced a steady drumbeat of congressional calls for TPP transparency, including a letter from 132 members of Congress to USTR that protested the "needless secrecy" of the deal.  In September, an online petition calling for a "transparent and accountable" TPP process garnered more than 700,000 signatures. This year began with a letter from over 400 diverse civil society organizations that indicted the continued secrecy as "not consistent with democratic principles."  

This month, the drumbeat crescendoed.  On June 2, the New York Times published our "Obama's Covert Trade Deal" op-ed that concluded, "the secrecy of the Trans-Pacific Partnership process represents a huge assault on the principles and practice of democratic governance. That is untenable in the age of transparency, especially coming from an administration that is otherwise so quick to trumpet its commitment to open government."  Two days later, the Washington Post published an op-ed by Harold Meyerson that lamented, "the administration has kept congressional input on TPP to a minimum — more precisely, at zero."  

Three days later, two-thirds of the Democratic freshmen in the House of Representatives signed a letter that lambasted the administration's TPP secrecy: "Unfortunately, today TPP FTA talks continue in extreme secrecy.  The administration has yet to release draft texts after more than three years of negotiations, and the few TPP FTA texts that have leaked reveal serious problems."   

Capping off the parade of pressure for TPP transparency, on Thursday Senator Elizabeth Warren (MA) sent a letter to Michael Froman, Obama's pick to be the next top U.S. trade official, requesting that he "make fully public the bracketed text of the TPP."  She criticized the lack of TPP transparency, arguing, "Without transparency, the benefit from robust democratic participation -- an open marketplace of ideas -- is considerably reduced."  

It seems this growing chorus of calls to release the TPP text has finally pushed the Obama administration to let at least one member of Congress get a look at the deal.  We hope and expect that revelations to other members of Congress will now follow.  

Meanwhile, the rest of us are still shut out.  Upon granting Congressman Grayson a glimpse at the text, USTR apparently instructed him in no uncertain terms to keep mum about what he saw.  Grayson said, "I get clearance because I'm a member of Congress, but now they tell me that they don't want me to talk to anybody about it because if I did, I'd be releasing classified information...It is ironic in a way that the government thinks it's alright to have a record of every single call that an American makes, but not alright for an American citizen to know what sovereign powers the government is negotiating away."

The calls for transparency listed above did not merely argue that the TPP text should be revealed to Congress, but to the broader public who would have to bear the brunt of the FTA's impact.  As Senator Warren stated in her letter, "if members of the public do not have reasonable access to the terms of the agreements under negotiation, then they are unable to offer real input into the process."  Real public input is critical for a deal that threatens everything from Internet freedom to medicines access, from food safety to financial stability.  

As we noted in our New York Times op-ed, "Even the George W. Bush administration, hardly a paragon of transparency, published online the draft text of the last similarly sweeping agreement, called the Free Trade Area of the Americas, in 2001."  You would hope the Obama administration could at least match the transparency of the Bush administration and publish online the text of largest U.S. "trade" deal to date.  We'll continue pushing until that modest request is also granted.  

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