Obama Administration Blocking Reform at the UN Financial Crisis Summit?

We sent this memo to reporters yesterday:

Is the Obama Administration Working With the EU, Canada to Block Real Reform at This Week’s UN Financial Crisis Summit?

Wealthy Nations Send Only Low-Level Reps; Insist Communiqué Calls for WTO Doha Round Conclusion Even as Doha Agenda Includes More Financial Service Deregulation

This week, government representatives will meet in New York for what was to be an unprecedented, inclusive high-level global debate about the causes of and solutions to the financial crisis. The summit was called to remedy the significant shortcoming of the G-20 summits, which excluded most of the 192 United Nations (UN) member nations, promoted only minimal reforms to the global economic architecture and pushed further financial deregulation by calling for completion of the World Trade Organization (WTO) Doha Round talks.

Instead of the UN summit remedying the problems of the G-20 approach, reports indicate that rich countries have worked behind the scenes to ensure the UN summit does not focus on the role of existing global economic governance structures in causing the crisis nor issue a call for reforms to these institutions and policies. In a candid speech this weekend, the elected president of the UN General Assembly, Nicaraguan priest Miguel D’Escoto noted: “...despite the growing need for major changes, many Member States, particularly those in the North, increasingly resist reforms of the IMF and the World Bank, hoping that things will return to business as usual. And they have also made it very clear that they do not want a serious global conversation to take place at the United Nations.”

Read the full memo after the jump, or download the PDF (with footnotes that are not included here).

Meet the New USTR Website, Same as the Old USTR Website

President Obama's promises during the campaign to shift our trade policies got the base psyched. Yet in the first five months of the administration, the most oft-touted shift in the USTR's workplan (working "rigorously" to pass a Bush FTA doesn't count as a shift, and thankfully appears to be put off for the moment) has been the upgrade to a new website.

We've taken a look at the website, which is purtier and more consistent with other Obama campaign and admin webpages, and here are some things we noticed:

• The Bush administration's full throated defense of NAFTA is still prominently displayed, even though Obama himself does not support NAFTA. (See below: "I voted against CAFTA and never supported NAFTA.")
• Pure cheerleading on the Colombia FTA, and no mention of Obama's human rights concerns anywhere. (Let's just watch that video again, shall we?)

• Up until yesterday, this link had Panama, Colombia, Korea as agreements in force. This was corrected this morning.
• A lot of the specific trade agreement pages seem to have lost a lot of their material. For instance, look at this cached page on the Panama FTA, which includes advisory committee reports, and then compare with the new page. The old link that would have gone to the advisory pages doesn't work.
• The Fast Track / Trade Promotion Authority page seems to be removed. (Maybe I'm wrong, but I couldn't find it.) If USTR is looking for content, we've got a book for them to post - The Rise and Fall of Fast Track Trade Authority!

We're going to be migrating to a new website in the coming months, and the years of planning for it already has me nervous. So, some bumps in the road seem inevitable. The thing that is most concerning about the USTR's new website is the lack of meaningful reference to Obama's trade commitments on the campaign - which would seem like the biggest update needed, with some of the full-throated advocacy of bad trade deals tamped down or removed.

So, here's my question for "Ask the Ambassador" (a new "interactive" feature for the website): When will the Bush talking points on trade come down, and the Obama talking points on trade go up? (Some illustrative examples suggested after the jump:)

Will GM Bailout Trigger a WTO Case?

That's what the American Enterprise Institute seems to think in a new policy brief:

GM had recently informed Congress that it planned to produce roughly 50,000 subcompacts per year in China to sell in the U.S market in the near future. However, on Thursday, UAW President Ron Gettelfinger said that GM had agreed not to import the cars from China and to produce them in the United States instead as part of its deal with the UAW. This change opens up an enormous set of problems for the United States that will stretch well beyond the automotive sector. The United States has commitments under the World Trade Organization for its tariffs on cars; it's supposed to avoid quantitative restrictions altogether. This latest policy switch looks very much like a government-mandated reduction in auto imports from China...

Nor will GM be the only automaker affected. The principle criticism levied by opponents of the Korea-United States Free Trade Agreement has been that South Korea maintains non-tariff barriers that block imports of U.S. cars. Will the United States still make these arguments while it blatantly uses its financial leverage to block foreign auto exports into the United States?

The Wall Street Journal cited some factors that might tamp down this criticism:

The Canadian government is taking a stake in GM, which could give the restructuring a sense of multilateralism.

Some other governments may balk at challenging the U.S. because they also support domestic auto makers. The German state of Lower Saxony holds just over 20% of Volkswagen AG. The German government and the European Commission have fought for years over a German law that essentially allows Lower Saxony to block VW's major decisions.

...And notes some other potential WTO conflicts of the GM move:

U.S. support for GM has both trade and investment implications. On the trade front, the issues include whether U.S. support amounts to unfair subsidies and whether, as a government-owned entity, GM is bound by international procurement rules that limit the U.S. government from discriminating against foreign suppliers.

When it comes to investment, GM's moves overseas could face tougher scrutiny. The U.S. often closely examines investment by state-owned companies to make sure the firms are acting in a commercial rather than political fashion. That level of scrutiny might now be applied to GM overseas.

Once again, I gotta point out the double standard here. There was not a lot of hooting and hollering going on when AIG and Citi became government-owned entities, and there is certainly a case that could be made that these moves ran afoul of the spirit if not letter of the U.S. WTO commitments on financial services. To paraphrase Leo Gerard, we'll call your bailout WTO-illegal if it benefits those that shower after work, but not if it benefits those that shower before work.

(HT to Simon Lester.)

Climate Policy's Unwelcome House Guest

One of the aspects of climate-change policy rarely discussed outside of very specialized circles is the compatibility of carbon reduction schemes with WTO rules. Indeed, even many in the environmental community don't know about the potential conflicts, and those that do wish like heck that the issue would just go away.

But corporations and pro-corporate think-tanks are paying attention to this issue, and a lot of what they are advocating would take us farther away from a just and sustainable international economic and climate architecture.

Take a recent book by Gary Hufbauer, Steve Charnovitz and Jisun Kim entitled "Global Warming and the World Trading System." In the book, they provide one of the most thorough outlines I've seen yet regarding the potential WTO constraints on climate-change policies, in particular those being debated in Congress and in the lead-up to the Copenhagen summit on climate this December 2009.

They offer up a number of ways of reconciling trade and climate constraints, including

1. Simply letting WTO members challenge each others' climate measures in the WTO dispute settlement body. The advantage to this approach is that it would help build up "case law" that could settle "once and for all" the question of how restrictive the WTO is with regards to environmental measures. The disadvantage, in the authors' view, is that this "could inspire greater criticism of the already-fragile WTO system" if the panels privilege commerce over climate; "could open the door to widespread opportunistic protectionism and rent-seeking behavior" if the panels privilege climate over commerce; and even a middle ground of balancing the two objectives would not be desirable because those "with a different sense of balance will challenge the outcome as illegitimate." (page 96).
2. A never-before used Permanent Group of Experts contemplated under the WTO's subsidy agreement could give an opinion as to whether certain climate measures might be considered a subsidy under WTO rules. The disadvantage of this approach is that the opinion would be advisory and perhaps also confidential.
3. Another option is to renegotiate the WTO, but this would require unanimity among the member countries. (An option they don't consider is for the U.S. to pull out of the WTO.)
4. WTO members could negotiate a waiver from WTO requirements, with the disadvantage being that a three-quarters majority vote would be necessary.
5. WTO members could negotiate an optional "code" that certain members could join to allow deviations from WTO requirements on climate reduction policies. While all WTO members would have to approve this code, the authors consider it likely that this approval would be granted, because not all countries would be required to comply with the code's rules. This is the approach favored by the authors.
6. Nations could ignore the WTO, and simply create a multilateral environmental agreement (MEA) at Copenhagen that conflicts with WTO rules. Obviously, the disadvantage to this approach is that a country that signed onto the MEA would not be immune from a WTO challenge from a country not party to the MEA.
7. Countries could negotiate a WTO round that would drop tariffs further on products reclassified by their carbon intensity. This is not mutually exclusive from the alternatives outlined above, and in fact a modest version of this is being advocated by the Obama administration, like the Bush administration before it. This is encountering opposition from many development groups that believe that it would deprive developing nations of infant industry protection for green industries.
8. A final option contemplated in the book is a WTO sectoral agreement on climate-intensive industries, like steel. This model has been used in the past to provide tariff protection for sectors like textiles, one reason the authors seem to dislike this option. Moreover, it would have to be approved by all WTO members.
   

The problem I see with their idea for a code, and I've just read the book and may not be understanding it correctly, is that it would not be binding on non-code countries. So, what's to keep a non-code country from launching a WTO dispute against a code country? In other words, if the U.S. were in the Code, along with Europe, but China were not, and a U.S. cap-and-trade / green jobs program hurt Chinese "dirtier" steel to the benefit of U.S. "greener" steel, what would insulate the U.S. from a WTO challenge from China? (Given what Paul Krugman reports on Chinese official attitudes on climate in his column today, such an outcome would not seem unlikely.)

We've argued, on the other hand, that the better option is to shrink or sink the WTO. It already has little popular support, as Hufbauer et. al's point 1 shows: anything short of a gutting of the WTO will fuel anger at the institution. The WTO moreover is serving as an obstacle rather than an enabler of finding climate solutions, which inevitably will require messy domestic and international political compromises, as we are seeing currently in the debate around the Waxman-Markey climate bill. The climate emergency means, at a minimum, that the WTO must be kicked to the side, and then renegotiated to be compatible with the climate regime that results from the real give and take between and within nations. After all, even if you like the World Trade Organization, what good is it if there's no world left?

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

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

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

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

The 1988 Fast Track went even further, specifying that:

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

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

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

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

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

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

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

NAFTA: A Familiar Hurdle for California's Environmental Regulators

Last Thursday, California, yet again, proved itself to be a laboratory of innovation, by becoming the first state in the nation to require low-carbon fuels.

The Associated Press reports:

The California Air Resources Board voted 9-1 to approve the standards, which are expected to create a new market for alternative fuels and could serve as a template for a national policy that has been advocated by President Barack Obama and Democrats in Congress.

California state legislator Fran Pavley led the fight to reduce emissions in California by introducing the Global Warming Solutions Act (AB 32) which Governor Schwarzenegger signed into law in 2006. However, the Bush administration stalled implementation of this legislation with a variety of obstacles and it wasn’t until January 2009 that California was given the green light to fully implement the Global Warming Solutions Act.

Now…even after California has cleared the Bush preemption hurdles, officials may have to fight against backdoor international preemption of some of these landmark regulations!

International Business Times reports that Canadian trade lawyers are beginning to grumble about these new environmental measures possibly violating NAFTA and the WTO.

The measures to slash such emissions would force refiners to consider the carbon footprint of the fuels they produce, a potential blow to synthetic crude upgraded from Alberta's oil sands, whose production emits more carbon-dioxide than conventional oil.

However, the state may have no business imposing such rules on oil produced in other countries, a Canadian lawyer said, and the provisions may violate international trade treaties.

"There's definitely a NAFTA case and a WTO case. There's no doubt in my mind about it," said Simon Potter, a partner at the McCarthy Tetrault law firm whose practice includes trade and competition law.

If a Canadian company were to, as Potter hints, file a NAFTA case, it would be the third major NAFTA investor case launched against California environmental regulations. The first major suit was in response to California’s ban on a harmful gasoline additive MBTE that was leeching into the water system. After five years, the case was finally settled with California’s ban intact. The California Attorney General’s office is yet again helping the federal government fend off a suit brought by Canadian mining company Glamis Gold over California’s mining regulations.

State legislators in California have objected in the past to the kind of backdoor preemption of state regulations encouraged in current trade agreements and have urged the federal government to consult with state legislatures about new trade commitments that could compromise states’ ability to regulate. This legislative session, Assembly Member Nancy Skinner introduced AB 1276 which would add more oversight to the process by which state commits to comply to certain provisions of future trade agreements. 

G-20’s Bizarre Contradiction: We All Pledge to Re-Regulate Financial Services … and Further De-Regulate Financial Services

WASHINGTON, D.C. - Today’s G-20 commitments to enhance financial service regulation clash with deregulation requirements in the World Trade Organization’s (WTO) 1999 Financial Services Agreement. Instead of G-20 leaders calling for completion of WTO “Doha Round” negotiations that include further finance deregulation, they needed to agree to fix the existing WTO rules that facilitated the current crisis, Public Citizen said today. 

“It is crazy that the G-20 leaders vowed to re-regulate the financial system while simultaneously undermining their ability to actually do so,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division. “Instead of agreeing to change WTO rules that now obligate 105 nations to continue the extreme finance deregulation policies that got us into this economic mess, the G-20 leaders called for completion of a WTO expansion that includes additional financial deregulation.”

Key G-20 Item Is Latest Threat To World Trade: WTO's Ever- Expanding Definition Of "Protectionism"

Is anybody else getting the feeling that government public service ads reminding us to eat a balanced diet or funding of school crossing guards will soon be labeled a "protectionist" measure? And that, moreover, Smoot and Hawley are rising from the grave?

There is a narrative that keeps getting repeated in the press and in politicians' speeches that "protectionist' measures are on the rise because of the economic crisis. But where is the evidence?

Take a close read of the actual WTO March 26 report on this subject. What exactly is the cause of the breathless fears about growing protectionism? Would it be the unilateral tariff cuts in the seemingly ominous list of "trade measures" countries have taken since September which is attached to the report? 

It seems that between what's in the actual report and the press reporting about it, a lot of new protectionism has been created - from thin air. Because if you read the small print, you will see that the scary "trade measures" list is just notification of any and all policy actions take by WTO nations. That includes new tariff cuts, filing of anti-dumping cases just like before the crisis when there is dumping, and - heaven forbid - ensuring food and toy safety. 

The first page of the actual WTO report even notes: "There is no indication of an imminent descent into high intensity protectionism involving widespread resort to trade restriction and retaliation."  So, what is on the list?  

Food Safety Measures:

• China's halt of Irish pork imports after Ireland warned importers of dioxin contamination;
• Russia's suspension of pork imports from U.S. plants after on-site inspection of the facilities; 
• U.S. defunding of a carbon-intensive, food safety-threatening program to facilitate U.S.-slaughtered chickens being shipped to China for processing and back to U.S. for sale.

Consumer & Public-Safety Measures:

• India and Argentina's toy-safety policies; 
  
• U.S. defunding of a Bush program that circumvented congressional requirements that Mexican-domiciled trucks must meet U.S. driver and vehicle standards to access U.S. roads.

Economic Stimulus Measures:

• Paraguay's 'Buy Paraguayan' preferences for government expenditures;
• China's encouragement of colleges and schools to buy local; 
• Taiwan's encouragement of buy and hire local on construction projects; 
• Japan's local governments encouraging citizens to buy local; 
• U.S. domestic preference for domestic infrastructure spending.

National-Defense and Immigration Measures:

• The immigration policies of Malaysia and United States;
• India's policies relating to foreign ownership of defense production and aviation.

Whatever arguments can be made about the desirability of any of these domestic policies on questions ranging from food and consumer safety, to national security, immigration and domestic stimulus and infrastructure spending, they are subjects of national political decision-making about which one would find nary a tariff or quota involved.    

Certainly even the most ardent defenders of the WTO see that labeling every other domestic policy "protectionism" will only undermine public support for the policies that really are critical to obtain the benefits of open trade?

Offshoring Rubbers, Destroying Lives

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

Now, this is happening:

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

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

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

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

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

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

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

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

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

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

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

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

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

Double Standards for Banks and Builders

The Treasury Department released details of its new Public-Private Investment Program, which will give a massive subsidy to investors to partner with the government to buy up toxic assets.

You too can participate! All you need to pre-qualify is "demonstrated capacity to raise at least $500 million of private capital; demonstrated experience investing in Eligible Assets, including through performance track records, a minimum of $10 billion (market value) of Eligible Assets currently under management; demonstrated operational capacity to manage the Funds in a manner consistent with Treasury’s stated Investment Objective while also protecting taxpayers."

Oh, and you must have "Headquarters in the United States."

But in the WTO's Financial Services Agreement, the United States took on the commitment to treat foreign banks as well as we treat U.S. banks. As we say in a forthcoming paper:

A requirement to provide foreign corporations National Treatment with regard to subsidies is unquestionably part of these obligations. The Guidelines for Scheduling GATS Commitments, adopted by WTO Members in 2001, states:

“Article XVII [National Treatment] applies to subsidies in the same way that it applies to all other measures. ... any subsidy which is a discriminatory measure within the meaning of Article XVII would have to be either scheduled as a limitation on National Treatment or brought into conformity with that Article. Subsidies are also not excluded from the scope of Article II (MFN). In line with the paragraph above, a binding under Article XVII with respect to the granting of a subsidy does not require a Member to offer such a subsidy to a services supplier located in the territory of another Member.”

As Dean Baker points out, it is an outrage that folks in Washington would make such a stink about making sure Buy America is compliant with draconian WTO requirements, but we violate them willy nilly when it comes to subsidizing someone's rich friends on Wall Street.

Is Your Mudda Necessary?

As the U.S. and international climate debate gears up, we are getting a lot of questions about how WTO compliant is this or that climate policy. My colleague Steve Charnovitz and two co-authors recently released a book called Global Warming and the World Trading System that goes into some depth on this topic.

I hope to release a response to this report in the coming weeks or months, but Steve and his coauthors have an extremely useful appendix that summarizes key WTO cases with relevance for environmental protection. Drawing from this, as well as this win-loss chart and our recent report on the WTO compatibility of Obama's green jobs plans, I conclude that the attempts to defend environmental and other public-interest policies at the WTO have failed most of the time.

By way of a background, the WTO's General Agreement on Tariffs and Trade (GATT) prohibits discrimination against foreign products (even some measures not intended to discriminate), and makes difficult all sorts of other environmental policy implementation besides. That grouplet of trade lawyers that claim that the WTO doesn't represent the most significant international legal tripwire against environmental protection rely on GATT's Article 20 exceptions, which read:

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

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

(d)        necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;...

(g)        relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;

As you can see, defending an environmental measure can be cumbersome. There's that pesky "requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade." Then there's also that funny word "necessary." Is the environment "necessary"? Is my awful plaid shirt that my dad gave me that I am offending my co-workers with "necessary"? What about that after-dinner ice cream? We focus on some stats on the necessary test in this post.

It turns out that meeting this "necessary" hurdle is very difficult. According to Joost Pauwelyn, GATT panels never deemed environmental or public-interest policies "necessary" prior to the establishment of the WTO. As we list in our report in footnote 130, there have been 11 post-95 WTO cases where Article 20 exceptions have been invoked.

• In In US - Shrimp 2006, EC - Trademarks 2003, EC - Tariff Preferences 2002, Canada- Wheat 2002, and Korea - Beef 1999, the necessity test was rejected. (This paper identified two pre-95 cases where necessity was invoked: 1989's US-Section 337 1989 and 1992's US - Beer. In both cases, the "necessity" defense was rejected. There were also two other GATT-era cases, US-Tuna Dolphin 1994, and Thailand-Cigarette 1990, where the necessity test was rejected. The Tuna-Dolphin case is one of the most infamous GATT cases, and is being started up again by Mexico now.)
• In Brazil-Tyres 2007, the WTO panel agreed with Brazil on necessity test, but not on the so-called chapeau requirement bolded above. And on EC-Asbestos 1998, the panel accepted EC's necessity defense. This is the first time this was true.
• The other cases, Argentina - Bovine Hides 1998, US-Gasoline 1995, Mexico - Soft Drink 2004,  and Dominican Republic - Cigarettes 2003, relied on other exceptions and did not have to meet the necessity test.

So, out of 11 cases pre- and post-95 where the "necessary test" was invoked, it was only accepted twice. Of the 15 cases listed here, the overall exception was only accepted twice. So environmental and other GATT exceptions failed 80-87 percent of the time.

If you have comments, or know of other cases where the exceptions (and specifically ones where the "necessary" test is relevant), please let me know. This is what I'm cramming together from memory and these few sources.

WTO Dispute/FTA Countries Set Stage for Banking Drama

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

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

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

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

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

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

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

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

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

Buy Keynesian

My colleague John Schmitt has written an interesting column suggesting the following:

The President could rewrite the current "Buy American" restriction to allow US recovery funds to be spent on US goods — as well as those from any country that passes an economic stimulus program that is at least as large (as a percent of their national GDP) as the package ultimately passed here. Call it a "Buy Keynesian" plan.

The "Buy Keynesian" clause would let the President thread the political needle. He gets to keep the "Buy American" provision that many taxpayers (and Senators) are demanding. And, when foreign leaders accuse him of protectionism, he can rightly respond that their goods have been excluded not because they are foreign, but because their countries aren't pulling their weight in the international recovery.

This is a great idea, and obviously a great way to reflate the economy. Which of course means that it's  WTO illegal. Check this out from the WTO procurement agreement:

With respect to all laws, regulations, procedures and practices regarding government procurement covered by this Agreement, each Party shall provide immediately and unconditionally to the products, services and suppliers of other Parties offering products or services of the Parties, treatment no less favourable than:

            (a)        that accorded to domestic products, services and suppliers; and

            (b)        that accorded to products, services and suppliers of any other Party.

And unfortunately, there is no Keynesian exception to the national-treatment and most-favored nation obligation. Yet another reason that I am coming to the point of view that EVERY policy proposal ith any WTO implications should include both the proposed domestic measure, and a proposed sense of Congress that the WTO should be renegotiated to allow policy space for the measure.

Congress Passes Buy America in Stimulus

On votes of 246-183 in the House and 60-38 in the Senate, Congress passed the biggest economic stimulus package of all time, which included Buy America provisions. The Washington Post has a truly touching story about how fair-trade champion Sen. Sherrod Brown (D-Ohio) flew from his mother's memorial service to cast the deciding vote. Our hearts and prayers go out to Sen. Brown and his family.

Here's the final version of the language:

    Sec. 1605. Use of American Iron, Steel, and Manufactured Goods. (a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.

    (b) Subsection (a) shall not apply in any case or category of cases in which the head of the Federal department or agency involved finds that--

    (1) applying subsection (a) would be inconsistent with the public interest;

    (2) iron, steel, and the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or

    (3) inclusion of iron, steel, and manufactured goods produced in the United States will increase the cost of the overall project by more than 25 percent.

    (c) If the head of a Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the Federal Register a detailed written justification as to why the provision is being waived.

    (d) This section shall be applied in a manner consistent with United States obligations under international agreements.

The conferees' report made the following note regarding Buy America provisions:

Section 1605 provides for the use of American iron, steel and manufactured goods, except in certain instances. Section 1605(d) is not intended to repeal by implication the President's authority under Title III of the Trade Agreements Act of 1979. The conferees anticipate that the Administration will rely on the authority under 19 U.S.C. 2511(b) to the extent necessary to comply with U.S. obligations under the WTO Agreement on Government Procurement and under U.S. free trade agreements and so that section 1605 will not apply to least developed countries to the same extent that it does not apply to the parties to those international agreements. The conferees also note that waiver authority under section 2511(b)(2) has not been used.

It seems that this last sentence refers to the president's ability to waive Buy America requirements for countries that aren't parties to procurement agreements with the U.S. (i.e. Brazil, India, China, for starters.) It's actually fairly troubling that the president has so much discretion in these matters in the first place. The history of this power is that Congress, in 1979 on a fast-tracked vote, decided to waive much of its authority over procurement, handing it to the president, who could then waive the requirements to comply with flawed trade deals. Clearly, this whole system - born as it was of a kind of double delegation of legislative powers - needs a major rethink.

In other news, our colleagues Terry Stewart and Elizabeth Drake put out a useful paper debunking some of the myths surrounding Buy America perpetrated by corporate-backed think-tanks. It's chock full of useful material. Here is something I did not know:

Myth #5: Insisting on the use of domestic goods will reduce the effectiveness of the recovery plan by imposing unreasonable requirements where U.S. goods are unavailable or prohibitively expensive.33

The Facts: This assertion ignores the language of the recovery bills and U.S. experience applying similar provisions in the past. First, both the House and Senate versions of the Act allow domestic sourcing requirements to be waived where the relevant goods “are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.”34 This waiver provision is also included in the Buy American Act,35 and data relied upon by Hufbauer and Schott indicate that such non-availability waivers were necessary to permit foreign sourcing for only 0.29 percent of all federal contract dollars spent in 2007.36

Moreover, the House and Senate bills permit domestic sourcing requirements to be waived where their application would increase the cost of the overall project by more than 25 percent.37 The 25 percent threshold reflects cost competitiveness standards that currently apply in Buy America requirements attached to federal highway and mass transit funds.38 Similar cost waivers are available for direct federal contracting under the Buy American Act, though they have been set at different levels administratively.39 Such cost waivers were needed to justify 0.20 percent of the federal government’s spending on foreign manufactures for domestic use in 2007 – a mere 0.01 percent of all federal contracting dollars spent.40

Clearly, unavailability and cost differences present obstacles to domestic purchasing in only a tiny portion of contracts, and, where such issues do arise, procurement officials are able to use their waiver authority to address them. The same will be true under the economic recovery plan.

Canadian Businesses Support "Buy Canada"

We've reported on the disappointing efforts of offshore-happy corporations like Caterpillar to invoke the "Shock Doctrine" and roll back "Buy America" rules already on the books and consistent with our trade obligations. We've reported on the hypocritical campaign by the Canadian government to accomplish the same, even though they committed even fewer types of procurement contracts to the WTO than we did.

But one question has been nagging me: what kinds of "Buy Canada" policies are actually on the books? Turns out there are a few major examples

• In Ontario, mass transit vehicles are given preference if they have 25% Canadian content. (This is a compromise from the 50% demanded by the New Democratic Party and the Canadian unions, and the 60% by some others.)
• In Quebec, mass transit vehicles are given an increasing scale of preference the more Canadian content that they have.

Another major difference between here and there is that the business and exporters' associations actually support Buy Canadian policies (including the Manufacturers and Exporters of Canada, where my friend Birgit works!)

And a recent USTR report shows that the Europeans are making good use of their flexibilities under the WTO:

In 2004, the EU adopted a revised Utilities Directive (2004/17), covering purchases in the water, transportation, energy, and postal services sectors. Member States were mandated to implement the new Utilities Directive by the end of January 2006, but some EU Member States still have not implemented it. This Directive requires open, objective bidding procedures, but discriminates against bids with less than 50 percent EU content that are not covered by an international or reciprocal bilateral agreement. The EU content requirement applies to U.S suppliers of goods and services in the following sectors: water (production, transport, and distribution of drinking water), energy (gas and heat), urban transport (urban railway, automated systems, tramway, bus, trolley bus, and cable), and postal services.

Congrats EU and Canada!  Nice to see we're all doing what we can to support a local industrial base!

(Please let me know if you know of other local content requirements - especially in transportation infrastructure funding - that we should highlight.)

Buy America survives Collins-Nelson Fleet Streeting

Paul Krugman points out in today's column that Sens. Susan Collins (R-Maine) and Ben Nelson (D-Neb.) have effectively gutted much of the stimulative impact of the American Recovery and Reinvestment Act.

Luckily, the Buy America provisions survived the Collins-Nelson Fleet Streeting of the Stimulus, as did the Sanders-Grassley amendment, which was passed unanimously by voice vote. For companies receiving TARP funds, it restricts their ability to cite labor shortages in their hiring of H-1B workers from abroad. The idea is that Microsoft shouldn't be able to layoff thousands of workers and then come to Congress citing engineer labor shortages in their quest to import foreign workers that are covered by weaker labor rights. (Text below).

Sec. 1610. Hiring American workers in companies receiving TARP funding.

(a) Short Title- This section may be cited as the `Employ American Workers Act'.

(b) Prohibition-

(1) IN GENERAL- Notwithstanding any other provision of law, it shall be unlawful for any recipient of funding under title I of the Emergency Economic Stabilization Act of 2008 (Public Law 110-343) or section 13 of the Federal Reserve Act (12 U.S.C. 342 et seq.) to hire any nonimmigrant described in section 101(a)(15)(h)(i)(b) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(h)(i)(b)) unless the recipient is in compliance with the requirements for an H-1B dependent employer (as defined in section 212(n)(3) of such Act (8 U.S.C. 1182(n)(3))), except that the second sentence of section 212(n)(1)(E)(ii) of such Act shall not apply.

(2) DEFINED TERM- In this subsection, the term `hire' means to permit a new employee to commence a period of employment.

(c) Sunset Provision- This section shall be effective during the 2-year period beginning on the date of the enactment of this Act.

Pretending there's a problem

Canada's Globe and Mail had a must read editorial from a few days ago on Buy America. Here's a preview:

This week's horror and hysteria over a U.S. move to “protectionism” like the Smoot-Hawley tariffs of the 1930s, leading to global “trade war” and disaster – was sheer myth. The Buy American clause and the ensuing “backdown” by Congress meant nothing. Those policies have been in place for decades; they still are...

So what's up? Whence the frenzy? Good question, different answers. Stockwell Day and Stephen Harper get to look vigilant and militant, standing on guard for us, while nothing is really at stake. Barack Obama gets to look presidential. He says sternly that he's against bad things, knowing no vetoes or actions will follow. John McCain wants to repeal the offending clause so the world won't think the U.S. has “gone back” to protectionism, which it never left, but maybe the world won't think so now...

Derek Burney, Canadian corporate mouthpiece, calls for even less regulation and protection than we now have, on the grounds, as they say in the Obama White House, that you never let a serious crisis (or a fake one) go to waste. ...

I especially like Michael Ignatieff's demand that Stephen Harper phone Barack Obama on this. I'd like to overhear that one. Uh, I'm calling to pretend there's a problem. … Fine, I'm taking the call to pretend the same thing. [Silence. Silence. Silence.] We agree, then. … Yes, good talking to you...

It's like the murder on the Orient Express: It turned out everyone participated, but they all did it for their own reasons.

The American People is Ready for a Change with Buy America

I was on Washington Journal this morning opposite Birgit Matthiesen of the Manufacturers and Exporters of Canada. The subject? Buy America, and how it is consistent with existing domestic and international law. And a few digs at the WTO's procurement agreement while we're at it.

Here's the video; let me know what you think.

McCain Amendment to Prohibit Buy America Crashes and Burns

Back in the general election, Obama bashed McCain for his comment that Buy America provisions were "disgraceful," as in this paid television ad below:

(See this ad and over a hundred others in our online database of paid election trade ads.)

If there was any doubt that McCain was fo' real, an amendment he introduced yesterday to the stimulus bill cleared that up. Senate Amendment 279 to the American Recovery and Reinvestment Act of 2009 (H.R. 1) listed as its purpose: "To prohibit the applicability of Buy American requirements in the Act to the utilization of funds provided by the Act."

This would have gone considerably farther than our current law and WTO commitments, since we have always been allowed to do most if not all of what is in the stimulus package. In essence, had it passed, it would have put the Senate on the record as opposing even the WTO-legal parts of Buy America. It would have also announced to America that, even when domestic policy proposals do NOT violate WTO obligations, we will not pass them if someone might THINK that they do. I'm not a total sovereignty hawk, but, wow...

Luckily, the amendment crashed and burned at around 8:30 pm last night, with only 31 senators (all GOP + Lieberman) supporting. All the Dems plus 9 GOP opposed. Find out how your senator voted! And then let them know what you think about it!

Harper Gets Hypocritical about Hypotheticals

The hysteria-fest coming out of Ottawa and Brussels over the Buy America/n provisions in the stimulus plan continues. But if Canadian PM Stephen Harper and the EU are getting so bent out of shape over our tiny domestic preferences, what's the state of theirs? As it turns out, we (at least according to the WTO exceptions if not actual practice) our products can't get the contracts benefits in their countries that they claim we will be denying them theirs here.

First, some background. As we keep pointing out, the U.S. excluded Buy America (i.e. requiring U.S.-made iron and steel in transit projects administered by the states but with federal funding) from its WTO commitments. What does this mean? Put simply, the way trade agreements are generally structured is to presume total "free trade" and "free markets," but then allow countries to say "except for" in a certain sensitive sectors. Governments with lots of trade lawyers will typically put in lots of so-called "exceptions," or "carve outs," from our trade-pact obligations to generally pursue totally "free markets." Poor nations with few trade lawyers may put in relatively few "exceptions" or "carve outs." (Often, however, the trade agreements are so complicated that the simple dichotomy doesn't hold: a few years back, the U.S. lost a WTO case brought by the Caribbean island of Antigua against our Internet gambling ban because the U.S. didn't realize it had failed to "exclude" or "carve out" gambling from our WTO commitments.)

So, translated out of trade law language, the iron and steel provisions of the Buy America Act, in effect since 1982, are perfectly compliant with the WTO. The WTO knows that we have these policies on the books, and is not complaining. (Okay, not too loudly.) More importantly, they're nothing new. I'll say it again: the stimulus package is not a change from current U.S. practice, and is perfectly consistent with our WTO commitments.

But as we show in a forthcoming memo, the EU and Canada do not take their own medicine. They wisely excluded considerably broader swaths of their procurement activity from WTO rules (and in the case of Canada, also from NAFTA) than did the United States, and thus have no obligation to provide U.S. firms products with access to preferential treatment under a wide array of their government contracts.

While the United States (only) safeguards its preferences for domestic iron and steel used in federally funded state transportation projects, Canada simply carves out steel, motor vehicles and coal altogether (for all provinces, for all sectors), and also carves out all construction contracts issued by the Department of Transport. The EU carved out of its WTO procurement obligations all EU members’ country contracts awarded by federal governments and subfederal governments in connection with activities in the fields of drinking water, energy, transport or telecommunications. (On the links, just click on Appendix I, Annexes I-II, and the general notes. Some bits will be easy to read, other bits less so.)

Translated out of trade lingo, under their WTO obligations, both Canada and EU reserve the right to give their nations' companies products much more generous preferences than Congress is even considering giving ours. While current U.S. laws (merely extended in the stimulus bill) give U.S. iron and steel a leg up over the foreign competition for transit projects, Canada and the EU 's WTO commitments allow them to give their firms products a leg up over American companies and products on EVERY aspect of transit funding, and many other government purchases besides.

And, we’re not criticizing them for it: why SHOULD decisions by democratically elected parliaments about how to best spend tax dollars on domestic infrastructure be subject to constraints imposed by international trade agreements? There is no “protectionism” at issue here. But, it is certainly hypocrisy -- and perhaps a bit of opportunism -- on the part of Ottawa and Brussels.

[UPDATE: In my effort to speak English rather than trade-law-ese, I got a bit sloppy with some terminology. The Buy America/n preferences refer to the products, not the companies. So, if a Canadian firm wants to make steel in the U.S., that steel could get preferential treatment. Yet another way these rules are not protectionist, but instead about job creation.]

Gap Between Dems and Corporate "Dem" Think-tanks Grows

The folks over at Third Way - a corporate-backed "think"-tank that claims to be aligned with the Democrats - have put out an anti-Buy America "memo."

Besides raising the tired bogeyman of foreign retaliation and the misleading claims about WTO compatibility, they propose providing "a bonus R&D tax credit that significantly rewards companies based on the percentage of their manufacturing and production that occurs in the United States. This would entice companies to conduct research here and produce here. It would not violate international laws."

Not a bad idea, but unfortunately the Bush administration has pushed to expand the WTO coverage of U.S. R&D measures, which could limit our policy space in this area and something that the Obama administration must act on to reverse.

Third Way also proposes decreasing the taxes that multinationals have to pay on their profits earned overseas. While the group claims that this would entice the big boys to generate U.S. jobs, a comprehensive Congressional Research Service analysis found that the opposite occurred when the same policy was enacted for a year in 2005-06. According to the Washington Post:

A more recent analysis in January by the nonpartisan Congressional Research Service looked at 12 companies that returned significant sums to the United States. Of those companies, at least eight had cut jobs by 2006. Pfizer, for example, received a significant tax break on $37 billion returned to the United States -- more than double the amount returned by any other company -- but cut 10,000 jobs in 2005, according to the CRS report.

"Empirical analyses of the stimulative effects of the repatriation provisions . . . suggests a limited stimulative impact from the provisions," the report says. "They conclude that much of the repatriated earnings were used for cash-flow purposes and little evidence exists that new investment was spurred."

Meanwhile, the nonpartisan Joint Committee on Taxation estimates that the tax holiday produced an initial flood of cash in 2005, increasing tax collections by $2.8 billion. But because some of that money would have been returned to the United States anyway -- and at a much higher tax rate -- congressional tax analysts predict that the 2004 holiday will cost the government $3.3 billion in lost revenue by 2014.

"Uncle Sam missed out on billions in needed tax revenues," Levin said yesterday. "Such tax holidays not only reduce U.S. tax revenue in the long run, but create new incentives for U.S. multinationals to send more jobs, funds and facilities offshore."

I got a chance to look at the report, and here's what the CRS said about the 2005-06 program, citing IRS statistics:

The benefits of the repatriation provision are not evenly spread across industries. The pharmaceutical and medicine industry accounted for $99 billion in repatriations or 32% of the total. The computer and electronic equipment industry accounted for $58 billion or 18% of the total. Thus these two industries accounted for half of the repatriations. Most of the dividends were repatriated from low tax countries or tax havens.

The benefits were also highly concentrated in a few firms. According to a recent study, five firms (Pfizer, Merck, Hewlett-Packard, Johnson & Johnson, and IBM) are responsible for $88 billion, over a quarter (28%) of total repatriations. The top 10 firms (adding Schering-Plough, Du Pont, Bristol-Myers Squibb, Eli Lilly, and PepsiCo) accounted for 42%. The top 15 (adding Procter and Gamble, Intel, Coca-Cola, Altria, and Motorola) accounted for over half (52%).

At least Third Way proposes putting some conditions on the multinational tax cut. But their overall take on Buy America is out of step with the party. As Inside U.S. Trade reported today,

House Transportation and Infrastructure Committee Chairman James Oberstar (D-MN) warned today (Feb. 4) in a House Steel Caucus meeting that he would actively work against the passage of the stimulus package if the “Buy America” provisions are removed.

“If it's not in, I'm against this package. Can I be any clearer than that? If it's not in, I'm not supporting it and I'm bringing a lot of votes with me,” he said. “We can't have any of this fluff about being nicey-nicey on foreign trade at time when we're trying to create jobs at home and to have foreign steel come in here and undercut U.S. jobs? No way, not with my help.”

In short, while Dems are running government thanks to a fair-trade platform, the Corporate "Dem" think-tanks are spouting the same old snake oil that got us into this economic mess.

Double Standards for Banks and Builders

In 2008, Congress passed sweeping bailout legislation for the white-collar financial sector, but failed to take comparable action for the blue-collar manufacturing sector.

As Steelworkers President Leo Gerard said, "The message here could not be more clear: Washington will bailout out those who shower before work but not those who shower afterwards."

Fast forward to 2009. Scare stories on Buy America are being ginned up by a perverse alliance of corporations (who want to deflect attention from the fact that they offshore U.S. jobs) and pro-corporate foreign governments (who want to deflect attention from the fact that they do not allow U.S.-made iron and steel in THEIR countries' transit and procurement projects, as we show in a forthcoming memo.)

That's right: a Buy America provision that affects a tiny fraction of stimulus spending and national income is being used as a pretext to make all sorts of threats: that it violates U.S. trade commitments (it doesn't), that it's some sort of radically new policy (it isn't); and that this offends other nations (news flash: Canadians want job programs just as much as we do).

But where was this perverse alliance when the U.S. financial bailout was going through? As a new document from the WTO shows, the Bush administration's approach to the financial crisis was much more nationalistic than many of our top trading partners. While most nations opened up their financial sector reforms to subsidiaries of foreign companies, the U.S. TARP and other programs are (in practice) geared almost exclusively to domestically owned banks.* (Not to mention that the Bush administration jacked up tariffs on French Roquefort cheese to 300%.)

Where were the cries of trade war then? I think Scott Sinclair, the Canadian writer, had it right when he said:

"As far as I can tell," he says, "the provision included in the stimulus package will not violate U.S. international treaty obligations." ,,,"I think they want to knock Obama off balance and gain influence over his trade policy from the outset," said Sinclair.

The Senate now faces tremendous corporate pressure to weaken the Buy America provisions of the stimulus bill. As I told the Dayton Daily News,  "We need to use all the tools that are available to help put people back to work... This is one of those tools."

Use this link to contact your senators today, and let them know you support Buy America!

(*If you know different, please let me know!)

Broken Promises from Buy America Opponents

Back in 1992, economist Gary Hufbauer of the Peterson Institute for International Economics famously predicted that NAFTA would create 170,000 new jobs, because the U.S. would be running a $9 billion trade surplus with Mexico.

But, as we know, our Mexican trade surplus instead turned into a raging deficit, now at $91 billion, accounting for an estimated 1 million lost manufacturing jobs.

By 1995, when we were already running a $23 billion deficit with Mexico, Hufbauer famously told Bob Davis at the Wall Street Journal that, "The lesson to me is that I should stay away from job forecasting." (Bob Davis, "Free Trade is Headed for More Debate," WSJ, 4/17/95.)

Unfortunately, Hufbauer has broken his occupational promises like they were so many NAFTA job-creation promises. And while economists like to preach that blue collar workers should lose their jobs when they screw up, there is no such accountability for the neoclassicals.

In a new paper for Peterson, Hufbauer and colleague Jeffrey Schott estimate that the Buy America provisions of the stimulus package would create 1,000 to 1,900 jobs, but destroy 6,500 to 65,000 jobs due to foreign retaliation. While the job creation estimates are based on something approaching a sound methodology, the job destruction estimates are pulled out of a hat, and retaliation is simply assumed.

But as we pointed out this morning, the rumors of retaliation are part of a joint scare campaign by right-wing governments and corporations that have offshored U.S. jobs. For the right-wing Canadian administration in particular, this is a continuation of their attacks on Obama that began in the Ohio primaries.

But the allegations of trade-law violations are misleading, as Hufbauer and Schott at least have the decency to point out:

While US commitments under the [World Trade Organization's Government Procurement Agreement] cover many federal government entities and 37 states, the proponents of Buy American provisions argue that a large portion of the projects funded by the stimulus bills are not covered in the GPA. For example, there is a general exclusion for federal funds destined for mass transit and highway projects. Moreover, many of the 37 states that acceded to the GPA also reserved sensitive procurement areas, such as motor vehicles, construction-grade steel, and construction services... [emphasis added]

Existing laws already provide Buy American preferences for much of the public procurement authorized in the stimulus bill...

Of course the bigger question continues to be why political leaders signed up government procurement rules – a quintessential, non-trade domestic issue – to comply with so-called “trade” agreements in the first place. It's clear that, going forward, these rules need to be changed. But the immediate task is to put America back to work.

Rightwing Canadian Government Trying to Sabotage Obama Administration

A lot of the hairbrained editorializing on the Buy America provisions in the stimulus package suggests that Obama will get cross-ways with the Europeans and Canadians if he were to implement the measures, and that a trade war would be provoked.

This is ridiculous. As we pointed out last year during the Ohio primaries, the rightwing Canadian government tried to sabotage the Obama candidacy with the NAFTA-gate leaks. Now they're trying to do the same to his administration. Think of Canadian Prime Minister Stephen Harper as a little Karl Rove of the North.

As we've been pointing out, there has been a massive corporate lying campaign about the iron and steel provisions for U.S. transit projects. Now, corporations have teamed up with Canada and some of the knuckle-dragging EU governments to throw just enough fake spin to try to fool U.S. policymakers into thinking these measures are WTO-illegal. They're not.

And, as it turns out, Canadians actually want the right to invest in themselves as well. Read this from the Toronto Star:

By using "trade war" rhetoric, [Canadian International Trade Minister Stockwell] Day appears to have positioned the Conservative government with big American corporations already gunning for new President Barack Obama by attacking the package now being worked out by Congress in response to Obama's election pledges. News emerged yesterday that Canada's ambassador to the U.S., Michael Wilson, has fired off a letter to U.S. legislators warning the rules would be a disaster for business and workers in both countries.

"Unfortunately, rather than working co-operatively and practically for an exemption, Canadians politicians ... have been publicly lecturing Americans about their `international obligations' and the theoretical virtues of global free trade," wrote Erin Weir, economist with the United Steelworkers' Canadian arm, in The Progressive Economics Forum.

"This argument is not correct in the current economic context and certainly will not be very persuasive south of the border."

Scott Sinclair, senior trade analyst with the Canadian Centre for Policy Alternatives, agrees. "As far as I can tell," he says, "the provision included in the stimulus package will not violate U.S. international treaty obligations." He cautions that Day "should know better," adding: "I think there is a back story here.",,,

"I think they want to knock Obama off balance and gain influence over his trade policy from the outset," said Sinclair. "They are enlisting the support of foreign governments, and so you have (British Prime Minister) Gordon Brown and Stockwell Day talking about it."...

NDP Leader Jack Layton agrees Ottawa is "failing to do what other countries are doing to ensure some of the work in government procurement has a big Canadian component." Says Layton: "Instead of doing his homework, Day is huffing and puffing – and this isn't a house that can be blown down."

We should work together "to ensure both of our stimulus packages work" he says, and concentrate on the dumping of cheap steel on the Canadian market from offshore.

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

By Lori Wallach and Todd Tucker*

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

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

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

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

++

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

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

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

Sirota on Obama's Buy America Promises

David Sirota has a great post showing how Obama campaigned on Buy America pledges.

Back in August, presidential candidate Barack Obama made his commitment to the concept behind "Buy America" legislation very clear in a series of campaign statements and ads lambasting John McCain for opposing such pragmatic laws. Obama even distributed campaign stickers and flyers with a special emblem (at right) declaring his support. It was part of Obama's decidedly progressive and populist campaign platform on trade and economics that many of us (me included) loudly applauded - and it was smart politics and good policy.

As Businessweek reported in its cover story a few weeks back, taxpayers lose a major bang for their buck when our money is allowed to be spent on products and commodities made overseas. Thus, the least we can do is make sure that when taxpayer money is spent, that it gets spent to create jobs here at home. That's basic commonsense that Republicans, Democrats, domestic business and labor should all be able to agree on.

Menendez sez no bailout for foreign firms

The Detroit Free Press is reporting that some in Congress are eager to avoid having the bailout open the U.S. taxpayer up to limitless liability for the travails of multinational corporations.

Chrysler LLC should be forced to pay back its $4-billion loan from the U.S. Treasury should Fiat S.p.A. take control of the automaker, a U.S. senator told President Barack Obama today.

In a letter, U.S. Sen. Robert Menendez, D-N.J., said he did not want “American taxpayers paying to prop up the foreign auto industry.” Under the terms of the deal announced Tuesday, Fiat will take a 35% stake in Chrysler, and has the right to increase its stake to 55% if the two companies work well together...

“I am asking you to address the potentiality of foreign control and require the immediate payback of the loans already dispersed should such a scenario present itself,” Menendez said. “I am sure you would agree that the responsible action is to ensure that American taxpayers are not financing foreign automakers.”

Hat-tip to Simon Lester. Foreign banks have already been involved in some of the same shenanigans as it relates to the financial sector bailout, and the backdrop is of course the WTO's General Agreement on Trade in Services (GATS, and all its financial service tack-ons). Here's how legal scholar Apostolos Gkoutzinis describes this agreement:

The General Agreement on Trade in Services, the most significant product of the Uruguay Round of trade negotiations, is the most far-reaching in coverage of the international legal instruments that regulate the terms of trade in services among nations. The 1997 Financial Services Agreement and the specific national commitments on financial services operate against the legal and institutional framework established by the GATS. The agreement on trade in services reached in the Uruguay Round is perhaps the most important single development in the multilateral trading system since the GATT itself came into effect in 1948.

Here's a subtle way that so-called "trade" rules work as a constraint on public-sector activism and industrial policy: if every time you open up the piggy bank you have to open it up to thousands of corporations, you're going to be less likely to open it up at all. Such far-reaching non-discrimination rules are like advice from a demon psychologist: prioritize all objectives and all players all  at once. That kind of objective function would seem to lead to an equilibrium  away from selecting subsidization strategically and towards doing nothing at all.

Bhagwati: WTO Constrains Pro-Local Response to Crisis

Just a few thoughts on Jagdish Bhagwati's recent FT column on Obama, the bailout, and the WTO:

1. Whatever one thinks of Bhagwati's economics, one can't help but be repulsed by his political philosophy. Tariffs or auto bailouts may or may not be a bad idea, but isn't it the rightful place of democratically elected representatives and administrators to determine their value without undue interference from unelected bodies like the WTO?
2. Ditto for his ecology. Bhagwati writes, "Under a 1995 WTO agreement, export subsidies and “local content” requirements are prohibited as directly damaging to trade and all other subsidies that are specific to companies or industries are open to complaint; and this applies even when they are claimed to be environmentally friendly." We've been raising the green jobs vs. WTO issue for some time. It's nice that Bhagwati agrees with the analysis, although disturbing that he doesn't see WTO rules that forbid a pro-local bias (read: green) in policy as desirable.
3. Bhagwati also agrees with us on the desirability of NAFTA-style FTAs, saying such a vote "is not a vote for multilateralism but just the opposite." Curiously, he somehow thinks that labor unions are friendlier to FTAs than to the WTO, which has been the opposite of my experience and I'm sure of every trade lobbyist on Capitol Hill. Here's Bhagwati's explanation:

• "To understand this paradox, consider that labour union lobbies and their political friends have decided that the ideal defence against competition from the poor countries is to raise their cost of production by forcing their standards up, claiming that competition with countries with lower standards is “unfair”. “Free but fair trade” becomes an exercise in insidious protectionism that few recognise as such. This cynical tactic can work only when the US is engaged in negotiating FTAs, typically with weak countries. It does not work for the multilateral system where powerful, democratic countries such as India and Brazil reject such trade-unrelated demands. So, the “fair trade” lobbies, which Mr Obama continues to embrace, gravitate towards FTAs rather than the WTO. The Democrats’ opposition to occasional FTAs – including the latest one with Colombia – reflects, then, a recurring attempt at imposing yet more draconian demands on small countries rather than a preference for the multilateral trading system."

Wait, is he talking about Democrats, labor unions, or which political actor? The reason labor is opposed to Colombia FTA is not because Uribe won't submit to their demands, but because Uribe's government has been implicated in assasinations of union members. Additionally, they oppose the NAFTA model, and don't believe that any FTA with Colombia is acceptable.

Bhagwati is right that more and more legislatures and citizens groups around the world are rejecting the insertion of non-trade issues into trade negotiations. But labor rights are not the target of this rejection in 2008: it is rather the WTO prohibitions on anti-recession measures that Bhagwati (perversely) celebrates.

New Report: Closing Santa's Sweatshop

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

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

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

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

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

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

"I want the WTO to tell us we can't do this... because then we won't have a WTO."

Josh Holland had a great piece on Alternet a while back that talked about how the WTO will need to be shrunk, sunk or otherwise renegotiated to allow Obama's green jobs plans to go forward without challenge or sanction. He does fresh reporting on an issue we've been raising for a while:

It's a story that's gotten little attention during the campaign. The traditional media have found the time to analyze Sarah Palin's wardrobe in great detail, take a hard look at whether or not the fact that Joe Biden was raised in Scranton, Penn., will win over white folks from the "Heartland" and ponder the all-important question of whether a mainstream, centrist Democrat like Barack Obama is in fact a crypto-Maoist. But they haven't bothered to point out that much of what both the Democratic and Republican nominees are promising on the campaign trail would likely be found "illegal" according to the rulings of shadowy trade tribunals that have the power to impose daunting financial penalties against the U.S. government if it were to stray from the economic orthodoxy known as "neoliberalism."

That's what "free trade" deals are about: limiting by treaty the policy space in which lawmakers can operate. As such, both of the presidential candidates are boxed into a cage of their respective parties' creation. It's the dirty secret of the 2008 campaign.

Recently, AlterNet asked Van Jones, founder of Green For All and author of The Green Collar Economy, about this issue, and he responded with defiance. "I want the WTO to tell us we can't do this," he said, "because then we won't have a WTO. I want the free traders to stand up in front of the world and explain to Americans why some people are going to tell you that you can't have clean energy and you can't have your home retrofitted (with American-made products) because it is more efficient for it to be made in Asia or Germany, that you can't bring Detroit back to build wind turbines. I want the free traders to defend having an overseas body to declare this agenda illegal. I want that fight."

With Begich, we're up to 41 new fair traders!

It was just announced that Anchorage mayor Mark Begich (D) defeated Sen. Ted Stevens (R) for the Alaska Senate seat. Begich made strong fair-trade statements on his website, and his win brings our total new fair traders in Congress up to 41, or a net shift of 33, in the 2008 elections. This means that the 2006-2008 shift is up to 70.

With at least six races still uncalled, there may still be changes to our total count. But you can find the latest 58-page report and 37-page appendix on our website, which includes the Alaska races. As we state in our newly updated report:

In conservative Alaska, Democrat Mark Begich defeated Republican incumbent Sen. Ted Stevens with a platform that called for trade reform. Of course Stevens’ ethics scandal was the prominent focus of the campaign in the closing months. However, the trade issue played with Alaska’s conservative voters in a similar way as seen elsewhere in the west. Alaska’s economy bears little resemblance to that of the Rustbelt. Employment is concentrated in service and extractive industries that are rarely affected by imports in the same way foreign textile imports might affect that domestic industry. But concerns over local and national control of policy are important, and in fact Stevens and his House colleague Rep. Don Young (R-Alaska) had a history of opposing the WTO and other trade policies based on sovereignty concerns. Neither, however, had voted the fair-trade position since 2003.

Begich’s campaign sensed an opening, and his website said, “NAFTA has not worked as predicted, costing an estimated 1 million American jobs. NAFTA, CAFTA and the bilateral free trade agreements negotiated by the Bush administration have helped big business while hurting middle class Americans. Mark believes fair trade policies should include meaningful and fully enforceable consumer, labor, environmental and human rights protections. He favors a tax code that rewards companies for creating jobs in America, not that take those jobs abroad. International trade can be good for Americans, and is a vital part of Alaska’s economy, but it needs to serve middle class families, not just multi-national corporations.”

[Thanks CitizenChunk for taking the awesome photo. Click here for some more great ones.]

Word of the fair-trade election victory is getting around. Joseph Schatz at CQ has written about it, Bridges over in the EU ran something on it, David Sirota has written about it his latest column and elsewhere, and Bill Lambrecht at The St. Louis Post Dispatch also weighed in. In a wire story by Jim Abrams that is making the rounds at the NYT, WP, IHT, Guardian, Newsweek and elsewhere:

The election of Barack Obama has delivered a decisive victory to "fair traders," mainly Democrats and their allies who for years have contended that the free-trade policies of past administrations were recipes for American job losses and environmental degradation.

Obama's win marks the first time in modern American history "that a candidate advocating a shift in our trade policies in a decisively pro-worker, pro-consumer, pro-environment direction has been elected president," Public Citizen's Global Trade Watch, an advocacy group that is critical of free trade agreements, said in a report.

On the other side, Dan Griswold, director of the center for trade policies at the pro-trade Cato Institute, was equally stark in his assessment: "We are going to see the U.S. retreat from its long-standing leadership in the global economy."         

Of course, there is both life and leadership after the WTO model. One way that climate groups are suggesting Obama could claim the mantle of global leadership - and rebuild significant good will in developing nations - is to lead a global effort to establish a "green carve-out" in WTO rules that would allow countries to pursue cap-and-trade programs, green subsidies and procurement, and other carbon-reducing policies without being subject to WTO challenge or sanction.

A similar move has already been made on public-health matters in 2001. As we suggest in a recent fact sheet, an Obama-led green overhaul of the WTO would be one way to stop to avoid the planetary heat, and stop the WTO chill... not to mention a great first step on global leadership by putting climate ahead of commerce.

[UPDATE: For more on this issue, we've re-released our analysis of how WTO rules will need to be overhauled to accomodate Obama's climate and health plans. See our new press release after the jump.]

WTO case against U.S. auto industry bailout??

We've been warning about this for some time, but there is an ongoing WTO threat to our plans to usher in a green energy revolution here in the U.S. See this news on the U.S. auto bailout, which includes several greening components:

The European Union might complain to the World Trade Organisation about U.S. plans to help its stricken car industry, European Commission President Jose Manuel Barroso said on Friday.

Democrats in the United States Congress are trying to draw up a $25 billion bail-out for American automakers, who are struggling to survive the financial crisis.

"We are in the process of analysing the plan. The plan has not yet been presented yet. Of course, if it is illegal state aid, we will act at a WTO level," Barroso told Europe 1 radio.

       

Honestly, I've even been a doubter at times as to whether these challenges would ever materialize. But as this news shows, whenever there is real money on the line - and the green revolution is nothing if not MONEY - there will be a WTO challenge.

Flipper attacked again

A few weeks ago, Mexico requested WTO consultations with the United States at the World Trade Organization. What’s at issue this time around? The “dolphin safe” tuna label…again!

You may have thought this was settled back several years ago when Congress, in response to another trade dispute under GATT, gutted the “dolphin safe” labeling requirements. Now the dispute is back, and it’s even more serious this time because a ruling by the WTO would be binding.

Check out this article for a full history of the case.

G-20 communique continues with more of the same

Here's what we had to had to say in response to the G-20 communique released yesterday:

G-20 Financial Crisis Summit Declaration Calls for Completion of WTO Doha Round that Includes Further Financial Services Deregulation: Ignorance or Cynicism?

G-20 Leaders Fail to Address Existing Radical WTO Financial Service Deregulation Requirements that Conflict with Summit Reform Proposals

WASHINGTON, D.C. - The failure of world leaders today to require significant changes to existing World Trade Organization (WTO) rules that lock in domestically and export worldwide the extreme financial services deregulatory agenda that fostered the global economic crisis seriously threatens proposed solutions, Public Citizen said. The summit statements call for completion of the Doha Round of WTO expansion is maddening, given one of the three core pillars of the agreement is further service sector deregulation and liberalization, including financial services.

"Only ignorance or extreme cynicism can explain why the summit not only failed to address the existing radical WTO financial service deregulation requirements that conflict with many of the most basic remedies to fix the mess and avoid future meltdowns, but called for a new Doha Round WTO expansion agreement a core aspect of which is further financial services deregulation and liberalization," said Lori Wallach, director of Public Citizens Global Trade Watch division.

The G20 call for countries to strengthen their domestic financial service regulations and also work towards regulation of the world's major cross-border financial institutions fails to recognize that 105 of the worlds nations have taken binding WTO Financial Service Agreement commitments to stay out of the business of regulating multinational financial service firms.

"Because they dont address the radical financial services deregulation agenda that has been aggressively promoted and entrenched by the WTO, the proposals emerging from this summit will simply NOT solve the problem," Wallach said. "Given president-elect Obama is savvy to the problem of trade agreements undermining domestic regulatory space and the Democratic platform includes resolving the overreach of trade rules that limit non-trade regulatory space, hopefully the next U.S. administration will be able to chart a new course and bring the change we need to the global financial architecture."

Despite the pervasive role of the WTO in worldwide financial service deregulation, the primary comments regarding adherence to global trade rules made by world leaders and commentators before and during the global financial crisis summit were of the red herring variety: panicky warnings about the perils of countries raising tariffs to block imports in response to dire economic conditions - something no country has proposed.

"Altering the WTO financial services rules is critical for creating domestic policy space to address the crisis," Wallach said. "However, even in the face of this crisis, the United States and the European Union are pushing for further financial services liberalization in the ongoing WTO Doha Round, the conclusion of which they are now pushing as a cure to the crisis, even as they find that flaunting the existing WTO terms is the necessary course of action."

As part of its original WTO commitments, the United States agreed to conform a broad array of financial services - including banking, insurance and other financials services - to comply with WTO rules.

For more information about the WTOs role in the crisis, go to http://www.citizen.org/documents/WTO-FinancialCrisis-ReportersMemo.pdf .

United States and China teaming up to push toxic toys?

As state (and some federal) legislators across the United States have been working feverishly to keep toxic toys away from children, the U.S. government is working to derail other countries' efforts to do the same.

Which country do you think the U.S. government is partnering with to attack toy-safety standards? It couldn't possibly be China (the source of a flood of unsafe imports in recent years to the U.S.), could it?

According to Inside U.S. Trade:

The U.S. and China this week both pressed Brazil at the World Trade Organization on import licensing procedures for toys put in place last year in order to help ensure the safety of imported toys, and claimed that the procedures have caused unnecessary delays for exporters trying to ship toys to the Brazilian market.

The two countries raised the issue in an Oct. 19 meeting of the WTO Committee on Import Licensing. While the manufacturing and shipment of toys largely occurs in developing countries such as China, Malaysia and Thailand, toy companies such as Mattel that are headquartered in the U.S. and design products here are also interested in the issue, sources said.

For the third level of irony/disgust in this situation, please see our recent post about Delegate Jim Hubbard from Maryland who received troubling correspondence from the Chinese government regarding legislation he introduced to remove toxic toys from Maryland shelves.

It's really nice that in the face of a product-safety crisis here at home, the U.S. is using scarce government resources to attack other countries' regulations, at the behest of Mattel and with China no less.

Treating Food Like Color TVs

Even former President Bill Clinton is voicing concerns that the current international trade model poses significant risks for economic and food security in the developing world.

The Associated Press reports:

Former President Clinton told a U.N. gathering Thursday that the global food crisis shows "we all blew it, including me," by treating food crops "like color TVs" instead of as a vital commodity for the world's poor.

Clinton criticized decades of policymaking by the World Bank, the International Monetary Fund and others, encouraged by the U.S., that pressured Africans in particular into dropping government subsidies for fertilizer, improved seed and other farm inputs as a requirement to get aid. Africa's food self-sufficiency declined and food imports rose.

Now skyrocketing prices in the international grain trade — on average more than doubling between 2006 and early 2008 — have pushed many in poor countries deeper into poverty.

Indeed, many countries have become net food importers over the neoliberal period, and are already being slammed by an increase in food prices brought on by the ethanol boom and weather disruptions. According to World Bank data, in 2005, after a decade of the WTO, 103 countries were net food importers, a figure that was at least 19 more than in 1991, prior to the conclusion of the Uruguay Round. These World Bank estimates include unstable nations like China, the Philippines, Pakistan and Nigeria - all of whom were previously food self-sufficient. At least 14 additional countries - like Haiti and Mozambique - were self sufficient in 1981, before structural-adjustment policies were adopted.  Additionally, some poor countries like Sierra Leone and Haiti are spending well over half of their export revenues just to finance food imports.

Our statement on the Bush summit

Bush called for a global huddle on financial rules today, and here's what we had to say about it:

Bush’s Schizophrenic Economic Summit Plan: With World Calling for Regulation of Global Finance to Counter Wild Volatility, Bush Calls for Session to ‘Enhance Commitments’ to Deregulation, Liberalization

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

That President George W. Bush’s idea of a global plan “to avoid a repetition” of the financial crisis spawned in large part by radical deregulation of financial services is to call a summit for nations “to strengthen the underpinnings of capitalism by discussing how they can enhance their commitment to open, competitive economies, as well as trade and investment liberalization” brings to mind Einstein’s definition of insanity: doing the same thing over and over and expecting a different result.

The White House today said that the Nov. 15 summit would advance a common understanding of the crisis’ causes and lead global leaders to agree “on a common set of principles for reform of regulatory and institutional regimes for the world's financial sectors.” Yet unless the radical financial services deregulation agenda that has been aggressively promoted and entrenched by the World Trade Organization (WTO), World Bank and International Monetary Fund is understood as a source of the current crisis, reform proposals will not address the crisis’ root causes.

The content of the Bush administration summit announcement suggests that trying to resuscitate the radical deregulatory agenda and the laissez faire ideology thoroughly discredited by this crisis is the primary objective of the summit, rather than a serious discussion of what new global governance and regulation is required.

While an extreme deregulation agenda had been pursued in the United States by various administrations, it was the WTO’s 1995 General Agreement on Trade in Services (GATS) and 1999 WTO Financial Services Agreement (FSA) that exported the radical deregulation agenda worldwide and locked it into place. Deregulation of the financial services sector - including banking, insurance, asset management, pension funds, securities, financial information and financial advisory services - has been among the most important but least discussed aspects of the WTO’s agenda since its inception.

As part of its original WTO commitments, the United States agreed to conform a broad array of financial services including banking, insurance and other financial services to comply with GATS rules. In some cases, for instance regarding the “firewall” policies established in the 1933 Glass-Steagall Act that forbade bank holding companies from operating other financial services, U.S. WTO commitments that contradicted domestic policy were used to push for domestic revocation of existing laws. (The U.S. WTO GATS schedule explicitly includes a Clinton administration commitment to roll back Glass-Steagall, which had been keeping foreign financial service firms that offered both traditional consumer banking and investment banking services from operating here.) Other U.S. WTO commitments in financial services simply locked into place existing U.S. policies because the GATS includes a “standstill” rule - meaning countries may not roll back liberalization and deregulation once a sector is bound to GATS.

The United States then used ongoing WTO financial service negotiations to export the U.S. model of extreme financial service deregulation to the other 100-plus WTO signatory countries, including through a 1999 WTO Financial Service Agreement. Further financial service deregulation is currently on the agenda of the WTO Doha Round talks.

For further detail, please see our backgrounder on the WTO’s role in the crisis at http://www.citizen.org/hot_issues/issue.cfm?ID=2044.

Melamine Scare Goes Adult

It's official. It's not just kids who are endangered by the China melamine scare, adults are now at risk too, in their most, uhm, adult activities.

According to Marie Claire magazine, Britain's novelty shop Ann Summers has had to pull some of its most popular edible sex toys off the shelf because they contain many times the allowable amount of melamine. The guilty culprit? A Chinese manufacturer named, wait for it, Le Bang. I think that is about as much juice as I can offer on a family-oriented blog like our own, so you'll have to go the original source if you want more details.

As we wrote last holiday season, one of the main reasons that corporations have offshored so much production to China in the WTO era is to avoid U.S.-style product liability laws. The NYT reports on how
this lack of product safety is affecting consumers within China:

The first sign of trouble was powder in the baby’s urine. Then there was blood. By the time the parents took their son to the hospital, he had no urine at all.

Kidney stones were the problem, doctors told the parents. The baby died on May 1 in the hospital, just two weeks after the first symptoms appeared. His name was Yi Kaixuan. He was 6 months old.

The parents filed a lawsuit on Monday in the arid northwest province of Gansu, where the family lives, asking for compensation from Sanlu Group, the maker of the powdered baby formula that Kaixuan had been drinking. It seemed like a clear-cut liability case; since last month, Sanlu has been at the center of China’s biggest contaminated food crisis in years. But as in two other courts dealing with related lawsuits, judges have so far declined to hear the case...

Chinese officials, under pressure to promote fast rates of economic growth and to enforce social stability, routinely favor producers over consumers. Product liability lawsuits remain difficult to file and harder still to win, especially if the company involved is state-owned or has close connections to the government...

“This is a product liability case that in a Western country would turn into a class-action lawsuit,” Professor Zhang said. In China, he said, “they don’t want to see so many people getting involved in one lawsuit. This might threaten social stability.”

Can we even remember what democracy looks like?

American Prospector Ezra Klein reviews the "Battle in Seattle" over at the Guardian website. Along with a quote from Stuart Townsend that shouts us out, here are some highlights from Ezra's take on the movie:

Of the fissures running through the American left, the deepest, and most impenetrable, is probably trade... It's a complicated issue. But you wouldn't know it from Stuart Townsend's new film, Battle in Seattle. ... It is, in Townsend's telling, a seminal moment in political history. It's just not clear why.

The core of the movie is the protesters. But the core of the protesters proves curiously hollow. ... At no point does any character explain the problems with the World Trade Organisation, or detail their vision for a better world or give a reason for their presence that doesn't sound like the sort of thing you'd say to get laid at a protest rally. If Townsend's point was that protest is a form of superficial self-definition rather than an actual engagement with the issues at hand, then, point well made. But I don't think that was his point...

Toward the end of the film, Django and Jay are sitting in jail. Trying to cheer up his friend, Django leans over. "Look man, a week ago nobody knew what the WTO was!" Then he considers the statement. "Actually, they still don't know what it is! But at least they know it's bad." Having thus articulated the movie's thesis, they both laugh.

It continues to be revealing to me that the best reviews the movie has gotten were from people active in the global-justice movement and from journalists that actually covered the protests, including from the typically pro-corporate trade Seattle papers. Is this motivated by the narcissism of seeing ourselves depicted on the big screen? Maybe in part. But I think there's more to it than that.

Stuart took a big risk in depicting recent history. As an artistic matter, BIS is one of a crop of recent movies set in the 1990s, along with "The Wackness" and "Recount," about the 2000 election. The Seattle protests were the culmination of a decade of Clintonism, where the left was paid short shrift when it wasn't thrown directly under the bus. Meanwhile, corporations like Citigroup and Wal-Mart ruled D.C. (still do), pushing the creation of new commercial institutions and instruments that required a law degree to understand.

Middle-class left activists groomed in the late 1990s drew more inspiration from tree-sitters and direct action than the debating salons of the Ivy League, or their modern-day equivalent: political blogs run largely by Ivy Leaguers. Watch Recount and Battle in Seattle right next to each other: you'll see, on the one side, a Democratic Party that had forgotten how to fight (personified by Warren Christopher) and, on the other side, the cry of the excluded. My reaction to the depiction of Christopher is probably akin to the many centrist movie reviewers when they saw BIS: retching at the all-too familiar stench of players on the other side of a political divide.

From Blockbusterization to Bustamoverization

Wow. Direct action has gone so mainstream that even former VP Al Gore is calling for it. According to the NYT:

“If you’re a young person looking at the future of this planet and looking at what is being done right now, and not done, I believe we have reached the stage where it is time for civil disobedience to prevent the construction of new coal plants that do not have carbon capture and sequestration,” he said at the third annual meeting of former President Bill Clinton’s initiative, which arranges partnerships between the very rich and the very needy.

In a related note, I took in Stuart Townsend's "Battle in Seattle" last Friday night here in DC, after years of anticipation and weeks of positive and negative critical reviews. (And it's opening in a ton of new cities this weekend.) Mark Weisbrot fairly captured the movie in his recent column:

Perhaps most unusual for a feature film, it gives the protesters credit for what they accomplished: they changed the debate over what has been deceptively marketed as “free trade.” They were beaten and jailed, choked with tear gas and shot with rubber bullets, but they succeeded in raising awareness about what these organizations and international agreements really do.

The movie also captures the instances of both tension and cooperation between diverse tactics, such as insider lobbying, "Yes Men" style infiltration, outsider direct action, and even property destruction. Stuart could have put a seal of approval on any one of these methods, but he holds back. Would an obscure international commercial agency like the WTO have received attention if thousands of people hadn't put their bodies on the line, if there hadn't been broken Starbucks windows? Is negative attention better than no attention? You'll just have to make up your own mind.

There were some puzzling reviews of the movie. The Washington Post, for instance, chided the movie for not focusing on telling us enough about the WTO, but then also for giving insufficient attention to character development. On the third hand, other reviews slammed the movie for giving us too much character backstory.

Huh, what? A drama that discusses in rapid but significant detail issues like the WTO sea turtle case and the TRIPS agreement does not tell us enough about policy? Well, if you insist, I could put on a tweed jacket and a top hat and tape myself speaking into a handheld camera about the base and growth of export trends to Bahrain. I could even put some wicked Manu Chao tracks over it. But, judging from my wife's glazed over eyes anytime I get into that level of detail (and she's a flippin' economist), I'm betting there's a pretty limited audience at best for greater detail into the issues that Stuart generously provides.

The charge of insufficient character development also rings untrue. I have worked, partied, supped, dated, and studied with people in the global justice movement for over a decade. With very few missteps, Stuart captures almost exactly the personality of the median activist: earnest to a fault, a little weak on understanding of (class, establishment, etc.) politics and details, occasionally fruity in their interpersonal relations, unable to compartamentalize different parts of their life, but mostly absolutely devoted to making this world a better place. There are outliers of course, who try to get the rest of the movement to take class politics and/or fun more seriously, but there's a reason that they have to write books to make their point.

Think activists wouldn't say "icons of violence"? Tell that to the kid that handed me a flyer slamming the movie for being a "Blockbusterization of Reality." This ain't agitprop, it's a mostly loyal reading of the cohort of people who made Battle in Seattle happen. And for better or worse, it celebrates both our past accomplishments and the real challenges we face in growing the movement and making it as effective as possible in 2008.

Use your Freedom of Choice: See Battle in Seattle

The Battle in Seattle goes live today. Here's a message I received from GTW director Lori Wallach:

Come to the Battle in Seattle!" The call spread nationwide. By November 1999, 50,000 people converged to protest the WTO summit. History was made when a devastating plan to expand the WTO's reign of corporate globalization was derailed. 

On September 19, an entertaining new film, Battle in Seattle, opens in select theaters. Starring Charlize Theron, Andre 3000, Michelle Rodriguez, Channing Tatum, Woody Harrelson, Ray Liotta, and others, Battle in Seattle is a full feature drama that tells the story of a dozen characters whose lives come together during the historic Seattle protests. One of the characters is an MSF doctor fighting the WTO rules that limit access to meds. Our story and our fight on the big screen where the whole country can get educated and activated!

This is the film Big Hollywood doesn't want us to see. Its being independently distributed -- starting in 15 cities. In 1999, folks took to the streets at the Seattle WTO protests. You can help deliver the Seattle Surprise Round II! Hit the seats!  If the opening theaters are packed for the film's first two weeks, the film will get a national distribution - turning on a new generation to the joy, fun and power of the Seattle Spirit and how we can win the better world we know is possible.

Here's how you can help:

• Organize your local group or your friends to purchase a block of tickets to a screening. Visit www.battleinseattlemovie.com to find theaters near you.
• For discount tickets (including group), cool widgets for your website and email action alerts you can send your friends, contact Michael at mcrawford@citizen.org.
• Forward this to your friends and allies.

Here's a highlight from the NYT review of the movie:

“Battle in Seattle” is a film that leaves bruises. A visceral fictionalized account of the 1999 demonstrations in Seattle against the World Trade Organization, it repeatedly plunges you into the kicking and screaming melee of peaceful protest gone awry. Cries rend the air and bodies crumple as police batons are swung and tear-gas canisters explode. This is what happens, the movie warns, when the powers that be are unprepared for the magnitude of organized opposition and impulsively lash back. Resistance gives way to fury, and fury incites chaos.

The filmmaking debut of Stuart Townsend, an Irish actor, “Battle in Seattle” makes no bones about where its sympathies lie. Except for the anarchistic fringe, it is wholeheartedly on the side of the demonstrators, a loose coalition of grass-roots activists from the environmental and labor movements joined by students and other groups who opposed globalization.

In related news, Theron's appearance on Jon Stewart's The Daily Show, where Stewart jokes that - because the level of public awareness about the WTO is so low - the institution is "like the Freemasons", controlling everything from a hidden bunker. Elsewhere, director Stuart Townsend commented that the WTO "overturned" the U.S. clean water air act. This comment set off one of my all time favorites "anti-political", technocratic memes: that the WTO can't force a country to do anything.

Yes, the WTO doesn't directly overturn national laws: that would be illegal and Orwellian.

What it does is issue a panel report pointing out laws that are inconsistent with strict WTO rules, and then countries have the "choice" to change the law to secure compliance (which generally results in a change in a neoliberal direction), or they can "choose" to pay perpetual trade penalties (usually cash or trade sanctions in other sectors) until they do. Unlike penalties for labor violations in many NAFTA-style FTAs, these are not capped in dollar amount by an pact text.

To call this a choice? That's just regular ol' Orwellian.

This kind of "choice" is a lot like what workers face everyday in today's economy: you can choose to work at a job which does not adequately compensate you and which is demeaning, or you can choose to be fired. The option of raising standards is a quaint, folksy memory from the bad old days; best to forget about that. It's like Devo said,

A victim of collision on the open sea
Nobody ever said that life was free
Sink, swim, go down with the ship
But use your freedom of choice

And here's the song itself.

Battle in Seattle Opens! - Critics Chatter!

Tomorow, Stuart Townsend's new movie, The Battle of Seattle, opens across the country. There's still time to get involved in spreading the word about this movie, which depicts how everyday people can work together to change our system. Get involved here.

There are also plenty of reviews.

• David Postman of The Seattle Times, who covered the protests, says of Townsend: "When he began the project several years ago, he said he wanted to make something that would show "the meaning and limits of democracy." I think "Battle in Seattle" does that."
• John Hartl, doing the actual review of the movie for The Seattle Times, says: "Atlanta had "Gone With the Wind." New York City got "King Kong," more than once. And now our Emerald City has "Battle in Seattle." ... In the tradition of such movies as "Inherit the Wind" and "Compulsion," which appropriated Clarence Darrow's courtroom antics but never called him Clarence Darrow, "Battle in Seattle" features recognizable historical figures whose identities are partly inventions."
• Democracy Now has an interview with Townsend, and activist David Solnit, who helped orchestrate direct action events at the Seattle protests, and has written critically about the realism/authenticity of the protest scenes in the movie. He now says he is pleased with the movie and the debate it is engendering.
• Townsend writes about the David and Goliath moment on HuffPost.

The AFL-CIO features Steelworker president Leo Gerard's talking about the movie on the AFL blog:

It’s rare for a feature film to celebrate union power—or how activists of any stripe can trounce the world’s largest corporations. The writer and director, Stuart Townsend, tells our story in a way that lets a broad audience connect and learn about one of the proudest moments in American history.

The powers that be in Hollywood did not want this film made. Heaven forbid that the real story got out about the outrage of corporate globalization, the WTO or how motivated activists won against impossible odds.

Just like we organized turnout at the Seattle protests—telling our friends, posting information in our union halls, sending out e-mails and fliers—we can create another Seattle surprise! The fat cats in the big Hollywood studios are just like those CEOs sitting pretty the day before the Seattle summit started. I urge you to see the film and bring your friends, family and union brothers and sisters.

UPDATE: Also see Charlize Theron on Jon Stewart here:

Biden's Son, WTO, Internet Gambling, Sleaze thread

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

The New York Times reported over the weekend that Robert Hunter Biden, vice-presidential candidate Joe Biden's son, did some lobbying work of trade relevance:

Federal lobbying records show that Hunter Biden’s firm was hired in June by lawyers for J. Russell DeLeon and his wife, Ruth Parasol, billionaire expatriates who founded a Web site called PartyPoker. Their company, PartyGaming P.L.C., which later went public in London, stopped doing business in the United States after President Bush signed a bill into law in 2006 aimed at curbing online gambling.

Wyeth Wiedeman, a lobbyist hired by Mr. DeLeon and Ms. Parasol, said Mr. Biden helped put together a lobbying campaign to persuade Congress to pass a law that would clarify the question about whether online gambling was legal prior to 2006. Mr. Wiedeman said the Justice Department has been examining the couple and others involved with the PartyPoker site.

Mr. Wiedeman said Mr. Biden visited a House member from North Carolina to discuss the issue...

Published accounts have said that Ms. Parasol, a lawyer who now lives in Gibraltar, started out as an adviser to her father’s telephone sex-chat business and then operated pornographic Web sites before turning to online gambling.

Hunter Biden could not be reached for comment. David Wade, a spokesman for the Obama campaign, said Mr. Biden’s involvement in the lobbying effort “gives much ado about nothing a whole new meaning.” He said Mr. Biden was hired by PartyGaming’s law firm, Sharp & Barnes, to provide expert advice because he specialized in electronic commerce and served on a working group on Internet gambling issues when he worked at the Commerce Department in the Clinton administration.

There is no report that any of this was connected in any way to the presidential campaigns. To see the official document detailing the $50,000 in lobbying expenditures by Biden for the gambling company investors in the gambling company, click here. (Taken from the Senate Office of Public Records.)

PartyGaming was shut out of the U.S. market when Congress passed an Internet gambling ban in 2006. Interestingly, although their lawyers PartyGaming's investors' lawyers paid Biden Biden's company thousands of bucks to lobby Congress for clarification that online gambling provision was legal prior to 2006, the company actually stated in their public offering documents that they knew it probably was illegal... and that they didn't care. As Kurt Eichenwald reported:

The Justice Department and numerous state attorneys general maintain that providing the opportunity for online gambling is against the law in the United States - and PartyGaming does it anyway. Indeed, of its $600 million in revenue and $350 million in profit in 2004, almost 90 percent came from the wallets and bank accounts of American gamblers.

To justify this, PartyGaming walks a very thin line. Providing online gambling is not illegal per se in the United States, the company argues - federal prosecutors just say it is. The company has already received an e-mail message from the Louisiana attorney general demanding that it cease providing online gambling in that state; PartyGaming simply ignored the communication and waited for additional action that never came.

The company's prospectus - a British document that is not available in the United States - at times reads something like a legal brief, citing American case law to support the company's position that no prosecution would ever take place.

Still, in its offering documents, PartyGaming makes no secret of the fact that even if the company's view of the law proves wrong, it is banking on its executives' belief that there is little that law enforcement can do - or will do - to prosecute. "In many countries, including the United States, the group's activities are considered to be illegal by the relevant authorities," PartyGaming says in its offering document. "PartyGaming and its directors rely on the apparent unwillingness or inability of regulators generally to bring actions against businesses with no physical presence in the country concerned."...

Now, as the largest company pushing into the United States market, PartyGaming is best positioned to benefit if the question of online gambling is decided in its favor. Already, the World Trade Organization and foreign governments are siding with companies like PartyGaming and against the United States.

LATE last year, for example, the W.T.O. agreed with the Caribbean island nation of Antigua that United States legislation criminalizing online betting based in other countries violated global laws. An appellate body at the trade organization upheld the principal conclusions in that ruling in April.

And it has still been upheld, as we reported on recently in our lawsuit against the Bush administration.

UPDATE: 9/17: The NYT has issued a correction, stating that:

An article on Saturday about a decision by R. Hunter Biden, a son of Senator

Joseph R. Biden Jr.

, to quit working as a

Washington

lobbyist included an incorrect identification from Senator

Barack Obama

’s campaign for the clients of a law firm, Sharp & Barnes, that had hired the senator’s son to lobby on an online-gaming issue. The firm’s clients are two investors, J. Russell DeLeon and Ruth Parasol — not the company PartyGaming P.L.C.

I corrected the info above.

VT Legislator Reacts to Interference on E-waste Bill

On July 3rd, we posted that two state bills in Maryland had seen interference from the People's Republic of China (PRC) before they had the opportunity to come to a vote, cited as "barriers to trade" in conflict with the U.S. commitments under the World Trade Organization (WTO). Since then, we have been updated on the developments of a similar case in Vermont and wanted to share.

State Senator Ginny Lyons (D-Chittenden County) recently issued a statement on August 12th responding to the correspondence she received from the PRC regarding her bill on electronic waste. This letter from the Chinese Government also referenced U.S. commitments under the WTO as reason for asking Lyons to "cancel" or "revise" her bill. To which Sen. Lyons responds:

"The People's Republic of China questions the authority of the Vermont legislature to enact legislation to protect human life and the environment. This attempted interference by the People's Republic of China in the democratic process in Vermont is alarming and threatens basic principles of our system of government. Common sense solutions to health issues at the state and local level should not be subject to international pressure."

She stresses that, "This is part of a disturbing trend toward undermining states's rights. It's simply not OK for other governments to feel that they have a right to intervene in our state legislative process in this way. It wouldn't matter whether the bill addressed by the Chinese government was about health care, workers' benefits, land use permitting, or in this case, electronic waste recycling, the underlying principle is the same: respect for democratic decision-making. And so, we have to let folks in Washington DC and in Beijing know that this is an unacceptable intrusion."

This statement follows the unanimous passage of Sen. Lyons' resolution on this issue by the National Conference of State Legislatures (NCSL) Labor and Economic Development Committee at their annual meeting in July. The resolution asks that, at minimum, USTR issue a statement to NCSL "affirming that states’ abilities to pass laws and regulations protecting human health and the environment should not be abridged, and that USTR will aggressively defend states’ regulatory powers as a matter of U.S. federalism."

The Forum on Democracy and Trade released a preliminary analysis of the allegations by the People's Republic of China claiming that Sen. Lyons' bill is inconsistent with the WTO Agreement on Technical Barriers to Trade (TBT). The analysis finds the following:

"The TBT Agreement, which states that "Members should ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade." Under this strict "necessity test," trade values arguably trump other public policy values unless there is no conceivable alternative policy that is less burdensome on trade."

And states in conclusion:

"As illustrated by this event, other countries could and are beginning to use the trade system to apply pressure to state legislatures and to impact the state legislative process. Since trade promotion authority has expired, states see an opportunity to evaluate the process for providing input on trade issues and to improve federal-state communication. A new system for improving communication between states, USTR, and Congress should be a strong priority for the next Congress and President to ensure that our democratic system of government is protected."

We wholeheartedly agree with the Forum's conclusion and hope that state legislators will act on this opportunity to improve their role in the process. (If you are a state legislator and would like to get involved in a working group devoted to these issues, please email: sedelman@citizen.org.)

Trade battles on the big screen at national conventions

If the presumptive presidential contenders and their advisors have still not figured out - ahem - the political costs of surrendering to so-called "free trade" policies of the NAFTA/WTO variety against the interest of, well, almost everybody, they might be surprised to find some people getting a little riled up about the issue at convention time: delegates to both the Democratic National Convention (August 25-28 in Denver) and the Republican National Convention (September 1-4 in St Paul) will be treated to a "sneak peak" viewing of the latest Hollywood indie extravaganza...

Stuart Townsend's Battle in Seattle won't open for another month for the rest of us (September 19th and 26th in select cities across the country), but thanks to the folks behind the Impact Film Festival, convention delegates will get an inspiring (and timely) look-in on a rocking film set in Seattle during the WTO protests.

With a star-studded cast (Charlize Theron, Woody Harrelson, Andre-3000, Ray Liotta, Michelle Rodriguez and more), everyone will want to see the story of the 5-day uprising that forced the collapse of the WTO's 1999 Seattle ministerial. The film is sort of like Crash, following the lives of twelve characters during those historic days. Woody plays a cop – no kidding. So does Tatum Channing. Andre Henderson and Michelle Rodriquez are protestors. One of the most powerful "people's" moments in recent U.S. history never looked so beautiful.

Maybe a trip down that particular 'memory lane', to the days when more than 50,000 union members (voters!), environmentalists (also voters!), students (read: youth voters!) and more converged in Seattle to speak truth to power in the face of the world's biggest corporations - and their Washington DC pundits - will keep the politicians just a little more honest when they talk about the looming trade issues of our time?

For the rest of us, now is the time to start booking those advance tickets for the Battle in Seattle showings closer to home. The film will be opening:

• September 19:   New York, San Francisco and Seattle (of course!)
• September 26:   Atlanta, Boston, Chicago, Detroit, Los Angeles, Minneapolis, Sacramento and Washington, DC.                        

Groups of 25 or more receive discount tickets. To find a theater near you call 866-758-1258 or visit www.battleinseattlemovie.com/labor

To organize an event around the film's release, contact Michael Crawford at 202-546-4996 or mcrawford@citizen.org

Morales rising: Evo win margin jumps 15% on record of stopping NAFTA-WTO expansion; reasserting control over natural resources

Bolivia’s President Evo Morales was returned to office last week following a controversial ‘recall referendum’ pushed by rightwing political opponents with a landslide victory of 68%.  Morales, the first indigenous president of Bolivia, won by 53% when initially elected in late 2005. The recall vote increased the majority of Morales and his Movement Towards Socialism (MAS) party by nearly 15%.

Morales’ landslide victory exposed the marginality of a vocal bloc of right-wing separatists in the country’s gas and oil-rich regions. Their goal – to get things back to pre-Morales days when a small elite controlled the revenues from the country’s massive energy resources and farm land. And they are desperate to derail Morales' planned constitutional and social reforms, including regaining control of the country’s oil and gas resources and land redistribution for one of the world’s erstwhile poorest nations.

The right wing had two related strategies: breaking the oil-producing lowland regions away from the rest of the country and taking the national oil revenues with and um...throwing Morales out of office. The first avenue is unconstitutional (although that has not stopped them from repeatedly trying) but now they’ve just gotten whomped on Plan B to un-elect Morales.

Media reports of the past week have largely focused on predictions that the defeated right wing would continue to attack Morales despite the massive vote of public confidence, since four key separatist opponents of Morales were also, as expected (and detailed in a report by WOLA here), returned to their regional posts. The significance of Morales’ rising support levels have largely been swept under the carpet: When Morales was elected in late 2005, his 53 victory was by far the largest in the country’s history, making him the first Bolivian leader able to claim an absolute majority. Two years later, his support has grown by a further 15%.

Such numbers suggest widespread support among Bolivia’s indigenous majority and beyond for the approach Morales has adopted to redistribute wealth and resources (as detailed in a recent report by CEPR)

Morales’ campaign for social and economic justice extends beyond Bolivia when the country participates in international negotiations. For instance, when the WTO recently held an invitation-only mini-ministerial for a select 30 countries, Morales’ issued a powerful statement. He said what many excluded developing country leaders were thinking about the attempt to steamroller through a Doha Round WTO expansion most poor countries oppose:

“The WTO negotiations have turned into a fight by developed countries to open markets in developing countries to favor their big companies…The poorest countries will be the main losers. The economic projections of a potential WTO agreement, carried out even by the World Bank, indicate that the cumulative costs of the loss in employment, the restrictions to national policymaking and the loss in tariff revenues will be greater than the “gains” from the “Development Round”.

After seven years, the WTO round is anchored in the past and out of date with the most important phenomena we are currently living: the food crisis, the energy crisis, climate change and the elimination of cultural diversity. The world is being led to believe that an agreement is needed to resolve the global agenda and this agreement does not correspond to that reality. Its bases are not appropriate to resist this new global agenda,” Morales said in a statement
ahead of the talks.

It is just this sort of clarity and principled defense of the interests of his country’s majority poor population that makes the right wing in Bolivia – and in the United States – obsessed with attacking Morales. With Morales and his social change projects facing continued challenges from corporate interests - both domestic and foreign - as well-argued in this CounterPunch essay, the struggle is far from over.

The Punditocracy: Speaking for the Wretched of the Earth

For those of us who get dizzy listening to the circular logic of the paragons of Punditocracy (especially of the capital P variety), Roger Bybee's (Fairness and Accuracy in Reporting) excellent historical round-up of Fareed Zakaria's noxious views on trade and globalization issues offers a welcome breath of cold, clean facts  after some pretty serious doses of post-Doha death vertigo from the 'powers that be'...

Fareed Zakaria, now the highly influential editor of Newsweek International, author of The Post-American World, and host of Fareed Zakaria GPS, constructed a landmark of unintended irony when he regally pronounced that “the downtrodden beg to differ” with protesters of corporate globalization (Foreign Affairs, 12/13/99).

Those who demonstrated against the World Trade Organization at the famous “battle of Seattle” in 1999, he asserted, were displaying the hubris of the “rich and privileged,” who were delivering “a familiar plea for the downtrodden of the world” by challenging the WTO’s promotion of sweatshops and environmental degradation in the impoverished Third World.

In other words, Zakaria denounced the arrogance of those who presume to advocate for the world’s poor—while appointing himself, the son of a prominent Indian attorney and politician, as the poor’s spokesperson. “There’s just one problem: The downtrodden beg to differ,” Zakaria declared.

In his eyes, the Third World’s poor eagerly welcome Western investment on any terms as a vast improvement over their current misery. Microscopic wages, long hours and heartless management in sweatshops, along with befouled air and water, might seem horrific to wealthy Westerners, but are gratefully welcomed by the desperate people of nations like Mexico, China and India. “In fact, if the demonstrators’ demands were met, the effect would be to crush the hopes of much poorer Third World workers,” he declared (12/13/99)...

On globalization, Zakaria zealously denounces opponents of corporate-determined trade agreements as seeking to impose utopian rules for the global economy that are widely rejected, especially by the most wretched of the earth....

Zakaria’s “anti-democratic” and “minority” accusations invert reality in...critical ways....

A recent multinational Chicago Council/ WorldPublicOpinion.org poll (released 4/25/07) found majorities in most poor nations insisting that globalization be accompanied by global standards to prevent a “race to the bottom.”

“Strong majorities in developing nations around the world support requiring signatories of trade agreements to meet minimum labor and environmental standards,” the survey concluded, citing data from China, India, Thailand, the Philippines, Argentina and Mexico. “Nine in 10 Americans also support such protections for workers and the environment.”

Elites in Third World nations, in contrast, staunchly opposed such standards, the study noted:

The leaders of less developed nations have generally opposed including language mandating minimum standards for working conditions and environmental protections in trade deals, arguing that such rules are protectionist and would undermine their ability to compete in major markets such as Europe and the United States.

“It has often been assumed that when leaders of developing countries argue against including labor or environmental standards in trade agreements, they represent the wishes of their people,” added Steven Kull, director of WorldPublic Opinion.org. “However, it appears that these publics would like to see the international community put pressure on their governments to raise their standards.”

These findings directly contradict Zakaria’s simplistic worldview that the free-trade agenda of America’s political and business elite reflects overwhelming public sentiment in both poorer nations and the U.S.

And, closer to home (and to the other salient topic of the day - the upcoming November polls - about which Zakaria is busy confusing the American electorate daily), Bybee reminds us of the ultimate price yet to be paid by those candidates who forget that the people actually know what's going on...

While elites across the globe support unregulated globalization, majorities in both the U.S. and poorer nations essentially seek to restructure globalization so that it benefits everyone—as signified by the flipping of 37 congressional seats in the 2006 mid-term elections from “free trade” advocates to supporters of “fair trade” (Global Trade Watch, 12/13/06)."

Gotta love it when the real elites try to carve their niches by claiming to speak for the poorest of the poor. Frantz Fanon must be spinning in his grave!

Kwa: "Doha Collapse Won't Mean Suffering for The Poor"

Comrade Aileen Kwa of the Third World Network has some great analysis over at IPS:

Will the poor suffer because of the way the Doha talks ended? The failure of the talks can in fact be regarded as a victory because key developing countries were able to stand by their principles and to defend the interests of the poor in their countries...

The world is in a very different place than when the World Trade Organisation (WTO) was formed in 1995. At that point the Washington Consensus advocating liberalisation and deregulation was still at an all-time high. It has fallen from its pedestal since.

Its failure can be seen in the fact that many African countries, despite implementing neoliberal structural adjustment policies to the letter, have de-industrialised in the last 20 years. The failure of the Doha talks is another blow to the crumbling consensus...

Binding a country’s trade policy and liberalising in accordance with a standard formula cannot accommodate this dynamism. In fact, liberalisation cannot be an end in itself. Countries should liberalise only when it is of benefit to them...

Countries should be allowed to explore a diversity of trade policies, in as far as they are not harmful to others outside.

How has the press reported on the WTO collapse?

You can find out from me, on Counterspin tonight, trying to break it down for the masses.

I get to hit on a point which I've been making privately since the Obama trip to Europe, which is that foreign correspondents for U.S. media need to get outside the capital cities and executive office buildings and start talking to real people on the street. A lot of the press coverage made it sound as if Obama's critical take on status quo trade policies is somehow anti-European, or anti-other countries. Far from it! As I wrote a few months back, the Irish rejection in a referendum against some corporate globalizing aspects of the EU - along with similar previous rejections by French and Dutch voters - shows that the true internationalist position is a stand for democracy and policy space, and against corporate takeover of our food supply and political systems.

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

RIP Doha Round - for shore!

Another WTO Collapse in 'Make or Break' Talks Shows New Direction Is Required; Victory for Small Farmers, Workers, Civil Society and Developing Nations as WTO Expansion Bid Is Again Defeated in Geneva

29 July - Global Trade Watch Director Lori Wallach's statement: "Thank God no deal was reached, because the proposal under consideration would have exacerbated the serious economic, food security and social problems now rocking numerous countries.

The moldering corpse of the Doha WTO-expansion Round should have been buried years ago. Hopefully after this latest rejection of the Doha agenda, countries will move on to a new agenda focused on fixing the existing WTO rules.

Read the full Global Trade Watch statement after the jump.

Also check out some of the agency news reports, from Reuters and Bloomberg on the long-awaited funeral, which ironically began to hit the ether before WTO Director-General Pascal Lamy's slow-motion "official" announcement of the collapse...

And for more insight into the Death of Doha, check out what some key civil society groups like CEPR and IATP are saying about it here, and here.

More about the insider gossip and fallout soon....