About Us

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


November 11, 2014

Defending Foreign Corporations' Privileges Is Hard, Especially When Looking At The Facts

Forbes just published this response from Lori Wallach and Ben Beachy (GTW director and research director) to a counterfactual Forbes opinion piece by John Brinkley in support of investor-state dispute settlement.  

Forbes-logoDefending Foreign Corporations' Privileges Is Hard, Especially When Looking At The Facts

By Lori Wallach & Ben Beachy


Even those who support the controversial idea of a parallel legal system for foreign corporations, known as investor-state dispute settlement or ISDS, likely cringed at John Brinkley’s recent attempt to defend that system. (“Trade Dispute Settlement: Much Ado About Nothing,” October 16.)

In trying to justify trade agreement provisions that provide special rights and privileges to foreign firms to the disadvantage of their domestic competitors, Brinkley wrote 24 sentences with factual assertions. Seventeen of them were factually wrong.

To his credit, it is no easy task to defend a system that empowers foreign corporations to bypass domestic courts and laws to demand taxpayer compensation for domestic policies that apply equally to their local competitors, but that they claim frustrate special privileges granted to them as foreign investors. The cases are heard by extrajudicial tribunals not bound by precedent. Decisions are not subject to substantive appeal.

Brinkley’s mission was particularly difficult given how unpopular the ISDS system has become. Indeed, one reason that the CATO Institute has come out against ISDS is the realistic concern that its inclusion in the proposed trans-Pacific and transatlantic free trade pacts could derail those negotiations.

ISDS is risky to include in a transatlantic deal

In Europe, the incoming European Commission President and the Economic Minister of Germany have both indicated that they oppose including ISDS in the U.S.-EU deal. Whether one focuses on the threat to solvency or fair competition, it’s especially risky to include ISDS in a transatlantic deal. Doing so would newly empower more than 70,000 U.S. and EU subsidiaries of cross-registered firms to demand compensation based on special foreign investor privileges—an unprecedented increase in liability for both the United States and the EU.

Around the world, governments from Australia to South Africa have started to rebuke ISDS as studies have shown countries have failed to attract more FDI by enacting ISDS agreements, while governments—and their treasuries—have come under increasing ISDS attacks by foreign firms.

Only 50 cases were launched in the first three decades of ISDS pacts. But in each of the past three years more than 50 cases have been filed annually. The current stock of 568 ISDS cases includes demands for compensation over land use policies, tobacco controls, energy and financial regulations, pollution cleanup requirements, patent standards and other policies that apply equally to domestic firms, and that often have been approved by domestic high courts.

This trend and its threat to the rule of law have led esteemed jurists from free-trade-minded nations such as Singapore, New Zealand and Australia to join the U.S. National Conference of State Legislatures (which represents our states’ majority GOP-controlled legislatures) in opposing ISDS.

Reviewing the facts

In his quixotic effort to defend the ISDS system, Brinkley made a real mess of the facts. There’s not space to go through all 17 factual errors, but it’s important to correct his biggest blunders.

For instance, Brinkley argued, “What matters is not whether [the foreign corporations] can sue, but whether they can win.” He then proceeded to misstate the win record.

In fact, the United Nations figures on ISDS case outcomes, which Brinkley cited, show that foreign corporations have gained favorable rulings or settlements in 57 percent of the ISDS cases launched to date.

Foreign corporations have “won” against Canada’s ban on hazardous waste exports, the Czech Republic’s decision to not bail out a bank, a Mexican municipality’s decision to not allow the expansion of a contaminated toxic waste facility, and a Canadian requirement for any and all firms obtaining oil concessions to contribute to research and development in the affected province.

Foreign firms and the success of their ISDS cases

Foreign firms have also proven successful in using the threat of an ISDS case to extract favorable settlements, which often oblige governments to pay large sums to the foreign firms. A government paid $900 million to a firm in one recent ISDS settlement.

ISDS settlements have also led governments to alter policies challenged by foreign corporations. An ISDS case that a U.S. chemical company launched against Canada’s ban on a toxic gasoline additive – one currently also banned in the United States – resulted in Canada overturning the ban. In another ISDS settlement, the German city of Hamburg was obliged to roll back environmental requirements on a Swedish corporation’s coal-fired power plant.

Without explanation, Brinkley chose simply to ignore all of the ISDS cases that were settled in favor of the foreign firm, distorting his “scoreboard” of ISDS case outcomes. And he did not mention that even when governments “win,” they are still on the hook for high legal costs and tribunal fees associated with defending these cases – an average of $8 million per case.

Investor-state disputes vs. state-state disputes

Brinkley’s accounting became even more confused when he conflated investor-state disputes withstate-state disputes – and similarly made a mish-mash of our critique. Brinkley appears not to realize the difference between the ISDS system, in which any covered foreign corporation claiming to have an investment in a country can drag a government to an extrajudicial tribunal to challenge its policies, and trade agreement dispute settlement in which cases may only be brought by government signatories to pacts.

He stated, for example, that “the aggrieved foreign investor can turn to a dispute settlement body at the…WTO [World Trade Organization].” False. The WTO only allows governments – not foreign corporations – to bring cases against governments.

Brinkley then picked one state-state dispute that the United States lost at the WTO and wondered why the UN did not include it in its list of investor-state cases against the United States. He added the lost WTO state-state case to his tally of investor-statechallenges that the United States has faced to date, and summarized his hodgepodge U.S. win-loss record as, “we’ll say 13-1.”

Brinkley seems unaware that in fact the United States has lost 61 out of 67state-state cases brought against it at the WTO – a 91 percent loss rate.

As for investor-state cases brought against the United States, few such cases exist thanks to the reality that 52 of the 54 countries with which the United States has an ISDS-enforced pact are not major FDI exporters. Brinkley appears strangely unconcerned that the U.S. government plans to dramatically expand its investor-state liability under the U.S.-EU deal, which would open the door to foreign investor claims from 11 of the world’s 20 largest FDI exporters.

The Loewen fluke

Brinkley also cited an ISDS case that Loewen, a Canadian funeral home conglomerate, launched against the U.S. government over Mississippi’s jury trial system and the standard common-law requirement to post bond before pursuing an appeal. (Loewen had lost a state court case battle against a rival funeral home operator.)

Brinkley argued that because the tribunal dismissed Loewen’s ISDS claim, there is no cause for concern. But the tribunal actually supported a number of Loewen’s claims on the merits. It only dismissed the case without imposing a penalty on the U.S. government thanks to a remarkable fluke: Loewen’s lawyers reincorporated the firm as a U.S. company, thus destroying its ability to obtain compensation as a “foreign” investor.

Such luck should not be expected to continue, particularly if, under the U.S.-EU deal, foreign investor privileges are granted to thousands of European firms operating here.

Before we subject our national treasury, our domestic firms or our laws to an unprecedented expansion of ISDS liability, we should take a cold, hard look at the legacy to date of this extraordinary system. It would help to start with actual facts.

Ms. Wallach and Mr. Beachy are the director and research director, respectively, of Public Citizen’s Global Trade Watch.

October 20, 2014

World Trade Organization Rules Against Popular U.S. Country-of-Origin Meat Labels on Which Consumers Rely

Compliance Panel Says U.S. Policy Still Violates WTO Despite Changes Made to Comply With 2012 WTO Order; U.S. Should Not Change COOL Policy

Today’s ruling by a World Trade Organization (WTO) compliance panel against U.S. country-of-origin meat labeling (COOL) policies sets up a no-win dynamic, and the Obama administration should appeal the ruling, Public Citizen said.

If the administration were to weaken COOL, U.S. consumers would lose access to critical information about where their meat comes from at a time when consumer interest in such information is at an all-time high and opposition would only grow to the administration’s beleaguered trade agenda. If the administration again were to seek to comply with the WTO by strengthening COOL, then Mexico and Canada – the two countries that challenged the policy – likely would continue their case, even though cattle imports from Canada have increased since the 2013 strengthening of the policy. 

The ruling further complicates the Obama administration’s stalled efforts to obtain Fast Track trade authority for two major agreements, the Trans-Pacific Partnership and the Trans-Atlantic Free Trade Agreement. Both of these pacts would expose the United States to more such challenges against U.S. consumer, environmental and other policies.

“Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Today’s ruling spotlights how these so called ‘trade’ deals are packed with non-trade provisions that threaten our most basic rights, such as even knowing the source and safety of what’s on our dinner plate.”

The WTO compliance panel decided that changes made in May 2013 to the original U.S. COOL policy in an effort to make it comply with a 2012 WTO ruling against the law are not acceptable and that the modified U.S. COOL policy still constitutes a “technical barrier to trade.” The panel decided that the strengthened COOL policy afforded less favorable treatment to cattle and hog imports from Canada and Mexico, despite a 52 percent increase in U.S. imports of cattle from Canada under the modified policy. The panel stated that the alleged difference in treatment did not “stem exclusively from legitimate regulatory distinctions.”

The United States has one chance to appeal this decision before the WTO issues a final, binding ruling. Under WTO rules, if the U.S. appeal fails, Canada and Mexico would be authorized to impose indefinite trade sanctions against the United States unless or until the U.S. government changes or eliminates the popular labeling policy.

Today’s ruling follows a string of recent WTO rulings against popular U.S. consumer and environmental policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In April 2012, the WTO ruled against a U.S. ban on clove-, candy- and chocolate-flavored cigarettes, enacted to curb youth smoking. In each of those cases, U.S. policy changes made to comply with the WTO’s decisions also have been challenged before WTO panels similar to the one that issued today’s ruling.

“The WTO again ruling against a popular U.S. consumer protection will just spur the growing public and congressional concerns about the big Pacific and European trade deals the administration is now pushing and the Fast Track authority to railroad through Congress more agreements that undermine basic consumer rights,” said Wallach.


The COOL policy was created when Congress enacted mandatory country-of-origin labeling for meat – supported by 92 percent of the U.S. public in a recent poll – in the 2008 farm bill. This occurred after 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program.

In their successful challenge of COOL at the WTO, Canada and Mexico claimed that the program violated WTO limits on what sorts of product-related “technical regulations” signatory countries are permitted to enact. The initial WTO ruling was issued in November 2011. Canada and Mexico demanded that the United States drop its mandatory labels in favor of a return to a voluntary program or standards set by an international food standards body in which numerous international food companies play a central role. Neither option would offer U.S. consumers the same level of information as the current labels. The United States appealed.

The WTO Appellate Body sided with Mexico and Canada in a June 2012 ruling against COOL. The U.S. government responded to the final WTO ruling by altering the policy in a way that fixed the problems identified by the WTO tribunal. However, instead of watering down the popular program as Mexico and Canada sought, the U.S. Department of Agriculture responded with a rule change in May 2013 that strengthened the labeling regime. The new policy provided more country-of-origin information to consumers, which satisfied the issues raised in the WTO’s ruling. However, Mexico and Canada then challenged the new U.S. policy. With today’s ruling, the WTO has announced its support for the Mexican and Canadian contention that the U.S. law is still not consistent with the WTO rules.

May 22, 2014

WTO Final Ruling: European Ban on Products from Inhumane Seal Harvest Violates WTO Rules

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

The WTO today added fuzzy white baby seals clubbed to death on bloody ice flows to dolphins and sea turtles as animals that the WTO has declared cannot be protected by domestic laws because they  violate “trade” rules, which will just fuel public and policymaker skepticism about these so-called trade deals. 

As a technical matter, today’s ruling confirms the uselessness of the WTO exceptions, allegedly designed to protect countries’ domestic public interest laws, that are now being touted as the way to safeguard environmental, health and safety policies in proposed pacts such as the Trans-Pacific Partnership (TPP). This is the 39th time out of 40 attempted uses that the exception has been rejected by WTO tribunals when raised to safeguard a domestic public interest law.

BACKGROUND: In this final ruling, the WTO Appellate Body acknowledged that the European Union’s ban on the importation and sale of seal products resulted from concerns about “inhumane” hunts with “inherent animal welfare risks,” but concluded the EU failed to satisfy the litany of conditions required to defend public interest policies under the WTO’s “general exception” provisions. Specifically, the Appellate Body ruled against use of the WTO exception for policies “necessary” to protect public morals. Only one out of 40 government attempts to use the the WTO General Exceptionse, found in Article XX of the WTO’s General Agreement on Tariffs and Trade (GATT) and Article XIV of the General Agreement on Trade in Services (GATS), has ever succeeded.

In its ruling today, the Appellate Body also rebuffed arguments made by the U.S. government as a third party observer to the case demanding that the WTO evaluate whether policies that appear to have a discriminatory effect stem from a “legitimate regulatory distinction.” The Appellate Body ruled against this U.S. government position, concluding that WTO panels do not need to consider under GATT whether a challenged domestic policy stems from a legitimate policy objective.

Today’s ruling follows a string of WTO rulings against popular U.S. environmental and consumer policies. In May 2012, for example, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. Today’s decision will again spur public ire over WTO rules that extend beyond “trade” to target domestic environmental and consumer safeguards.

December 06, 2013

WTO’s Legitimacy So Weak that Ability to Agree on Anything Is Touted as Success

11pm: Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch on Conclusion of Bali WTO Ministerial

Hype about this outcome ‘saving’ the WTO reveals just how dire the WTO’s crisis of legitimacy has become. The actual deliverables were a rollback of existing WTO agricultural rules, a commitment that countries will update their customs procedures and implementation of trade benefits for least developed countries that had been agreed to years ago.

It is perverse to declare that this outcome restores the WTO’s credibility when the biggest ‘breakthrough’ was simply that yet another WTO meeting did not melt down altogether. 

Consider the context of this deal: the Doha Round WTO expansion agenda remains deadlocked after more than a decade.  The most apt headline to describe today’s outcome comes from Monty Python: I’m not dead yet!

Except for formal adoption of new duty free access for least developing countries that had been agreed years ago, this deal includes no new trade market access. Ironically, another WTO Ministerial meltdown only because the United States agreed to a waiver for existing WTO agricultural rules that developing countries had demanded to help ensure food security for their populations.

The other texts issued from the meeting merely “affirm” past agreements. Notably, agreement could not even be reached to force compliance with a 2005 WTO decision that all countries must eliminate agricultural export subsidies by 2013, which has not occurred.

The fundamental principle of the WTO – that 160 countries should conform their domestic food,  financial, health, energy, patent, procurement and other policies to terms favored by the world’s largest corporations – faces growing opposition worldwide.

It’s not surprising that the core ‘Doha Round’ proposals that would have expanded the WTO’s power have been rejected, given the damage WTO has caused so many people around the world, and that developing countries have instead insisted on rolling back of some of the existing WTO rules.


4pm: Breaking News -- The face-saving deal that WTO members desperately tried to conclude today, meager as it was (see below), has now taken a face-plant.  Four Latin American countries have "firmly rejected" the deal's last-minute text as "unbalanced" in favor of developed countries at the expense of developing countries.  It's unclear what will happen next.  A spokesperson for the WTO Secretariat stated today, "We don't know when the next meetings will be. We don't know when the next press conference will be. I can't tell you anything."  WTO members might still scramble to eke out a deal similar to that described below, in which case WTO proponents will have to try to sell a deal that waives WTO rules as a success of the WTO.  Or talks may break down entirely, marking another in a long string of WTO negotiations that have collapsed due to the WTO's stubborn adherence to an unpopular agenda. 


11am: As Doha Round WTO Expansion Agenda Remains Deadlocked for More than a Decade, Today's “Big Breakthrough” Amounts to: Developing Nations Force Waiver of Existing WTO Ag Rules, Nations Agree to Finish Deal by July to Update Customs Procedures, Previously-Agreed Trade Benefits for Least Developed Nations Adopted

After nearly two decades of futile efforts to expand the authority and scope of the World Trade Organization (WTO), another WTO Ministerial meltdown was averted in Bali today when the United States agreed to a waiver for existing WTO agricultural rules that developing countries had demanded to help ensure food security for their populations.

Countries also are poised to agree to finalize a “trade facilitation” deal by July 2014 that would require countries to update customs procedures, and to formally adopt a package of trade benefits for the poorest nations that was agreed to years ago. The other texts issued from the meeting merely “affirm” past agreements. Notably, agreement could not even be reached to force compliance with a 2005 WTO decision that all countries must eliminate agricultural export subsidies by 2013, which has not occurred.

Continue reading "WTO’s Legitimacy So Weak that Ability to Agree on Anything Is Touted as Success" »

December 04, 2013

Live from Bali: WTO to Blame for WTO's Failures (not India)

Screen shot 2013-12-05 at 8.12.50 AM
Protests supporting India's position outside (above) and inside (below) the 9th WTO Ministerial in Bali, Indonesia.

During this week’s 9th World Trade Organization (WTO) Ministerial in Bali, activists, largely led by Indian farmers' groups, have been gathering in the halls, chanting “food sovereignty now!” and carrying signs reading “USA – Hands off our food!” and “Support the right to food.”  Farmers, fisherman, and other members of civil society have also been protesting in large numbers against the Ministerial.

These actions are juxtaposed against finger-pointing by the U.S., other developed countries, and the mainstream media, which have been blaming India for the possible collapse of the talks in Bali (see: BBC, Financial Times, Washington Post, for example). Some are going so far as to imply that it is India’s stance that would be responsible for a resulting loss of legitimacy for the WTO and the entire multilateral trading system.

India’s transgression? Wanting to protect an ambitious and innovative law designed to address hunger and poverty in a nation that, according to the UN, is home to 25% of the world’s hungry poor. That law, the National Food Security Act, requires the Indian government to help pull the poorest farmers out of poverty by purchasing staple goods at a fixed price, and to feed the hungriest families by providing food at subsidized, below-market prices. 

IMG_5086India's not alone.  Latin American and African countries, not wanting to face WTO challenges for their own programs to increase access to food, have indicated support for India's defense of its food security initiative. 

The U.S. has labeled such programs as “trade-distorting.” But the hypocrisy of the U.S., which grants some of the highest levels of subsidies to its own farmers, totaling more than $14 billion in 2012 alone, remains an elephant in the room. That elephant has been largely unreported by the media and unmentioned in the speeches of U.S. officials that have criticized India’s refusal to subject food security to WTO rules.

Perhaps the real culprit of the WTO’s failure to produce a deal for nearly 19 years (a track record unlikely to be broken this week) is the WTO itself. The world's most powerful commerce agency continues to push an old model of globalization favored by corporate interests.  Despite opposition on a global scale, it has not proven willing to accept innovative approaches to address development concerns.  The breakdown of discussions in Bali (and before that in Seattle, Geneva, Cancun, Hong Kong...) is an unsurprising result of the WTO’s obstinate refusal to change –- not the result of a country’s decision to defend food security.

July 24, 2013

Will U.S. Face Trade Sanctions for Anti-Smoking Law?

As Deadline Passes for U.S. to Alter Law Curbing Teen Smoking, Ruled Against by WTO, Final Decision on Administration’s Anti-Smoking Policy Could Shift Back to WTO

As the World Trade Organization (WTO) deadline passes today for the United States to comply with a WTO ruling against a U.S. ban on sweet-flavored cigarettes targeting youth, the spotlight shifts back to the WTO, which could now authorize trade sanctions if requested by Indonesia, the country that won the WTO challenge.

“We now have to wait and see whether the World Trade Organization will slam us with trade sanctions because the United States wants to maintain a policy to keep tobacco companies away from our children,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “After last year’s rulings against U.S. dolphin protections and popular consumer labels letting Americans know where their food comes, will the WTO depart from its anti-consumer legacy or choose to punish the United States for a common sense public health law?” 

Yesterday, the Food and Drug Administration (FDA) requested public comment on an issue related to the WTO ruling: the health implications of menthol cigarettes. The Obama administration stated that FDA’s action constitutes compliance with a 2012 World Trade Organization order to alter a key component of the Obama administration’s landmark Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA).

That law bans sweet-flavored cigarettes that entice youth to smoke. It shut down the sales of chocolate, strawberry and other sweet-flavored cigarettes sold only by U.S. firms as well as the sale of clove-flavored cigarettes that both U.S. and foreign tobacco companies were marketing. The WTO’s April 2012 final ruling against the FSPTCA concluded that the United States could only ban sweet-flavored cigarettes marketed to youth if it banned all flavored cigarettes, including menthols. The FDA will receive comments for 60 days on potential regulation of menthol cigarettes, after which the administration will decide what, if any, action will be taken.

It remains to be seen whether Indonesia will accept the FDA announcement or appeal to the WTO to enact trade sanctions against the United States. Indonesia convinced the WTO that the ban on its U.S. sale of clove-flavored cigarettes violated WTO anti-discrimination rules. U.S. consumer and health groups were outraged by the ruling, which effectively forbade incremental policies designed to target anti-smoking efforts at key populations – in this case, children.

The WTO’s April 2012 ruling against the anti-smoking FSPTCA law was soon followed by WTO rulings against two other popular U.S. consumer policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In June 2012, the WTO ruled against the popular U.S. country-of-origin labeling (COOL) meat labeling program that informs U.S. consumers where their meat comes from and assists regulators in tracking food-borne illness outbreaks.

The administration recently announced solutions to both cases that strengthen rather than weaken consumer and environmental safeguards. Mexico and Canada have threatened to challenge the new U.S. meat labeling policy at the WTO, which would issue a final decision about whether the new labels meet WTO rules. Mexico has also vowed to challenge the enhanced dolphin-safe labeling program, which would place that policy before the WTO as well. If the WTO does not rule that the strengthened U.S. safeguards satisfy WTO requirements, Mexico and Canada could impose trade sanctions against the United States unless and until the U.S. policies are changed to the satisfaction of the WTO.

July 12, 2013

Obama Administration Stands Firm on ‘Dolphin-Safe’ Tuna Labels; Will the WTO Authorize Trade Sanctions?

In Round 3 of Epic WTO v. Flipper Case, Mexico Hints That It Will Seek Trade Sanctions Against U.S. Over Response to Latest WTO Ruling Against Popular Dolphin-Safe Labels

In a creative response to a 2012 World Trade Organization (WTO) ruling, the National Oceanic and Atmospheric Administration (NOAA) has issued a new regulation supported by Public Citizen that strengthens the criteria for dolphin-safe labeling. Mexico, which challenged the policy, sought a rollback of the labeling program and has indicated that it may challenge the new regulation and seek WTO authorization to impose trade sanctions against the United States.

NOAA’s welcome announcement puts the spotlight back on the WTO, which must decide if it will accept the policy as meeting WTO rules or continue its legacy of undermining dolphin protection.

A U.S. ban on the sale of tuna caught with dolphin-deadly purse seine nets was gutted in 1997 after 1991 and 1994 trade challenges by Mexico and other nations. The ban was enacted after six million dolphins were killed by the nets. Outrage over the rollback triggered a new era of trade activism. Mexico’s latest challenge targeted the voluntary labeling policy that replaced the ban on dolphin-deadly tuna. This market-oriented approach provides consumers with information so they can decide if they prefer dolphin-safe tuna.

“Public Citizen applauds NOAA’s approach, which breaks with years of the U.S. government weakening consumer and environmental policies attacked at the WTO,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “We are now left to wait and wonder if the WTO will continue its anti-environmental, anti-consumer rights legacy or finally side with Flipper and consumers’ right to make informed decisions about the food we purchase.”

In a controversial move, the WTO ruled in 2012 that the U.S. labeling program, for which many countries’ tuna qualifies, violated WTO non-discrimination rules because tuna caught in the Eastern Tropical Pacific (ETP) had to meet additional criteria to qualify for the label. The ETP is the only region where dolphins are known to congregate above schools of tuna. Thus, dolphin-safe criteria for that region are set by the Inter-American Tropical Tuna Commission (IATTC), an international body that includes Mexico, and apply to all fishers operating there.

The U.S. labeling regime is voluntary. If U.S. or Mexican fishers choose to use the dolphin-safe methods stipulated by the regime, their tuna qualifies for U.S. dolphin-safe labels. Tuna not meeting the standard can be sold in the United States without the label. U.S., Ecuadorean and other tuna fleets chose to meet the dolphin-safe standard. After decades of refusing to transition to more dolphin-safe fishing methods, Mexico challenged the labeling program at the WTO. The WTO ruled against the policy even though the same standards applied to U.S. fishers, though the alleged discrimination resulted from Mexican fishers’ decision not to meet the standard, and though Mexican tuna could be sold in the United States without the dolphin-safe label.

NOAA’s new policy, supported by Public Citizen and other consumer and environmental groups, addresses the discrimination claim by strengthening the criteria used to assure that tuna caught in other regions and sold under the dolphin-safe label is caught without injuring or killing dolphins. Even before this improvement, the labels contributed to a more than 97 percent reduction in tuna-fishing-related dolphin deaths in the past 25 years. The labels allow consumers to “vote with their dollars” for dolphin-safe methods.

Mexico has stated that it is “analyzing all the available legal mechanisms” to push the United States to alter its response, which includes requesting WTO authorization to impose trade sanctions against the United States. WTO approval of such sanctions would continue the saga of WTO interference with countries’ environmental policies and reinforce the anti-WTO public sentiment spurred by last year’s spate of anti-consumer WTO rulings. In April 2012, the WTO ruled against the Obama administration’s flavored cigarettes ban used to curb youth smoking, and in June 2012 it ruled against the popular U.S. country-of-origin labeling (COOL) program used to inform consumers where their meat comes from.

If the WTO decides that the new policy does not meet its requirements, Mexico can impose trade sanctions against the United States until the policy is altered to the WTO’s satisfaction. If sanctions are authorized, the administration may find the best response to be maintaining the new regulation and negotiating a settlement with Mexico. This was the European Union’s approach after a WTO ruling against its ban on artificial beef hormones that is widely popular with consumers. U.S. environmentalists have won repeated court cases stopping attempts by the George W. Bush and Clinton administrations to weaken the regulations defining the criteria for obtaining a dolphin-safe label under the current law. Thus, absent a negotiated settlement, the administration would face the prospect of having to seek a congressional rollback of a widely popular law, effectively asking Congress to feed Flipper to the WTO.

“The troubling trend of repeated successful WTO attacks against America’s dolphin protection and consumer information policies shows how the terms of our current ‘trade’ agreements can undermine core environmental and consumer safeguards,” said Wallach. “As the Obama administration now seeks to expand the same sort of rules in new Trans-Atlantic and Trans-Pacific pacts it is negotiating, the public is taking note.”

June 13, 2013

Verizon Sees “Trade” Deal as the Next “Share Everything” Plan

We’ve often reported on the surprising array of “non-trade” issues tucked away in so-called “trade” deals.  Today’s “trade” agreements implicate daily facets of life from medicine prices to Internet freedom to food safety standards.  This week Verizon added another sensitive area to that “trade”-implicated list: personal privacy. 

Corporate events in Washington have been abuzz with talk of two new “trade” agreements: the Trans-Atlantic Free Trade Agreement (TAFTA) between the U.S. and EU, and the Trade in Services Agreement (TISA) involving the U.S., EU and 20 other countries.  Both deals aim to use World Trade Organization rules hatched in the deregulation-happy 1990s as the blueprint for restricting the regulation of service sectors such as telecommunications.

Why should we care about “trade” rules impacting telecommunications policies?  In a word: privacy.  Last week’s landmark leak from Edward Snowden revealed that the U.S. National Security Agency is indiscriminately spying on Verizon customers’ telephone records. This week, a Verizon representative speaking on a pro-TISA panel expressed the company’s hope that the “trade” deal can be used to keep privacy policies in check.  (It was perhaps not the most couth timing for Verizon-produced criticism of privacy protections.) 

Verizon Share everythingThe Verizon rep was probably most disgruntled about privacy policies in the EU, a negotiating member of TISA and TAFTA.  The EU’s data privacy protections are significantly more rigorous than those in the U.S. in ensuring that private data can be kept private.  And EU law requires U.S. corporations to meet seven privacy criteria before transferring Europeans’ phone, health, and financial records to the United States, in part due to (now confirmed) fears that the U.S. government could access the private data under the broad provisions of the Patriot Act.  But it appears that Verizon would now like to place these EU cross-border data privacy protections in TISA’s crosshairs.  During the TISA event, the Verizon rep stated that the deal should be used to “make sure that privacy rules do not undermine these seamless data flows” between other TISA countries and the U.S. 

As much of the country criticizes the NSA for secretly collecting private phone records from everyone with a Verizon phone, Verizon itself is taking a different tack: naming “privacy rules” as excessive and “seamless data flows” as insufficient.  They seem to have the diagnosis backwards. 

But through TISA and TAFTA, Verizon clearly hopes to advance that diagnosis, using the deals as a second "Share Everything" plan: an opportunity to impose a ceiling on data privacy protections for the company’s convenience. 

The NSA-Verizon scandal will not help their cause.  U.S. trade officials acknowledged this week that the Verizon data handover, along with NSA’s PRISM spying program, is fueling criticism in Europe of the proposed “trade” deals.  It turns out that the Europeans aren’t too anxious to “seamlessly” transfer their personal information to servers falling under blanket government surveillance.  Having already unwittingly handed over our own information, that's a position those of us in the U.S. should understand. 

May 23, 2013

USDA Stands Firm on Consumer Meat Labels, but Will the WTO Continue its Anti-Consumer Legacy and Authorize Trade Sanctions?

Today, on the deadline for the United States to comply with the World Trade Organization’s (WTO) 2012 ruling against the popular U.S. country-of-origin labeling (COOL) meat labeling program, the U.S. Department of Agriculture (USDA) announced it will strengthen rather than eliminate or weaken the consumer label. The welcome decision raises the critical question: will the WTO accept the change supported by 87 percent of the U.S. public or continue its legacy of undermining consumer safeguards?

Mexico and Canada, the countries that won a final June 2012 WTO ruling against COOL, stated that they opposed the proposed U.S. resolution to the case released in March, which closely aligns with today’s final rule, and would challenge it as a WTO violation. Under WTO rules, if the countries contest the new U.S. regulations, the WTO will decide whether the new U.S. policy complies with WTO requirements, or whether Mexico and Canada may impose trade sanctions against the United States.

Consumer groups have applauded the USDA approach, which stands in stark contrast to past U.S. responses to WTO rulings, which have involved weakening public interest safeguards ruled against by the WTO. The new USDA rule eliminates the WTO violations identified in this case and complies with the WTO ruling, but does so by strengthening the consumer labels.

The WTO ruling against the COOL meat labels, which inform U.S. consumers where their meat comes from and assist regulators in tracking food-borne illness outbreaks, followed WTO rulings against two other popular U.S. consumer policies. In May 2012 the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In April 2012, the WTO ruled against a U.S. ban on clove-, candy- and cola-flavored cigarettes, enacted to curb youth smoking.

For the COOL case, USDA found a way to rectify the specific WTO rule violations identified in the WTO’s final ruling by giving consumers even more information about the country of origin of the beef and pork they consume. The WTO ruling had identified ambiguities in the labels that limited consumer information as a reason why the policy violated WTO rules. In filing the case, Mexico and Canada had sought an elimination of mandatory U.S. country-of-origin labeling. 

If the WTO accepts the strengthening of COOL as compliance with its final ruling, it will mark a stark departure from precedent. WTO lawyers are accustomed to seeing governments scuttle constituent interests and roll back domestic policies in an attempt to comply with WTO directives. If the WTO does not accept USDA’s new policy and instead authorizes trade sanctions against the United States, it will reinforce the anti-WTO public sentiment spurred by last year’s spate of anti-consumer rulings.

Mexico and Canada Openly Threaten Retaliation

The question of the WTO’s determination of U.S. compliance is relevant because Mexico and Canada may well challenge USDA’s final rule, shifting the decision back to a WTO panel. When USDA released its rule change proposal in March, Canada’s Agriculture Minister Gerry Ritz minced no words in stating: “Our Government is extremely disappointed with the proposed regulatory changes put forward by the United States today with respect to Country of Origin Labeling. We do not believe that the proposed changes will bring the United States into compliance with its WTO obligations.” A letter from the Mexican Embassy identically stated that the regulatory change “will not bring the United States into compliance with its WTO obligations.”

Both Canada and Mexico have already threatened retaliatory action, which the WTO will authorize if it deems that USDA’s new rule to provide consumers with further information about their food does not satisfy WTO rules. The list of punishments that the WTO could impose on the United States for maintenance of country-of-origin meat labels include U.S. taxpayer compensation to Mexico and Canada, or authorization of trade sanctions by those countries against the United States. Mexico has already voiced its support for the latter, stating in March that if USDA would not abandon its proposed strengthening of COOL, “Mexico would be forced to pursue the available mechanisms for withdrawing trade benefits from the United States.”   

The open threats of retaliation from Mexico and Canada come while both countries are engaged in negotiations with the United States on the Trans-Pacific Partnership (TPP), the sweeping “free trade” agreement (FTA) that the Obama administration is currently negotiating with 10 Pacific Rim countries. The hard line that Mexico and Canada appear ready to take against the United States on COOL will at least significantly complicate the TPP negotiations. Most observers, including TPP proponents, have already given up hope that the negotiating governments will meet their goal of concluding negotiations by this October’s Asia-Pacific Economic Cooperation summit. Fresh tension from the COOL dispute will only further encumber TPP negotiations.

Background on COOL, the WTO Dispute and the USDA Rule

After 50 years of U.S. government experimentation with voluntary country-of-origin meat labeling and efforts by U.S. consumer groups to institute a mandatory program, Congress enacted mandatory labeling for meat in the 2008 farm bill. The policy requires American retailers to label certain foods with the country (or countries) in which animals were born, raised and slaughtered. Polls indicate that 90 percent of the U.S. public approves of COOL.

In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO countries are permitted to apply. Canada and Mexico suggested that the United States should eliminate mandatory labeling and return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food firms play a central role. Neither option would provide U.S. consumers with the same level of information as the current U.S. labels.

Instead of pursuing such a watering down of the popular program, USDA proposed a COOL rule change in March 2013 that would strengthen the labeling regime to address the problems identified in the WTO’s ruling. Today’s final rule from USDA maintains that approach. The WTO’s Appellate Body ruled that the program’s requirement that meat producers gather a greater amount of information about meat origins than is ultimately conveyed to consumers downstream violated WTO requirements. To address this concern, USDA’s new rule will offer consumers more precise labels that specify the country in which each step in the meat production process occurred. The change will better fulfill COOL’s policy objective and consumers’ rising demand for greater transparency regarding the production of their food, while also satisfying the issues raised in the WTO’s final ruling. 

May 07, 2013

Public Citizen and Sierra Club Denounce World Trade Organization Attack on Successful Clean Energy Program

In Final Appeals Ruling, WTO Orders Canada to Roll Back Green Jobs Program

A World Trade Organization (WTO) final ruling against Ontario’s successful renewable energy incentives program, which has reduced carbon emissions and created clean energy jobs, underscores the threat the WTO poses to a clean energy future, Public Citizen and Sierra Club said today.

In November 2012, the WTO ruled that Ontario’s incentives program for renewable energy companies at home – or “feed-in tariff” program – violates WTO rules that forbid treating local or domestic firms and products differently from foreign firms and products. On Monday, the WTO struck down Canada’s appeal of that initial ruling in a decision that went even further to condemn the green jobs program as a violation of WTO rules.

“By ordering the rollback of a successful program that is reducing carbon pollution and creating green jobs after recently sacking three popular U.S. consumer protection policies, the WTO is destroying whatever shred of legitimacy it still had after years of imposing its anti-consumer, anti-environment dictates,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Just like the WTO rulings ordering the U.S. to gut popular laws on country-of-origin meat labels, dolphin-safe tuna labels and limits on candy-flavored cigarettes marketed to kids, this latest attack against an initiative promoting renewable energy, localization and green job creation is simply unacceptable.”

Ontario’s renewable energy incentives program was established under the Green Energy and Green Economy Act of 2009. It increases incentives to develop clean and safe renewable energy by guaranteeing that the provincial public electricity utility, Ontario Power Authority, will pay a preferential price for 20 years to companies for the wind, solar and other clean energies they produce. Although the program is new, it already has achieved significant success, including contracts for an estimated 4,600 megawatts worth of clean energy and the creation of more than 20,000 jobs in just two years.

“As people around the world grapple with consequences of the climate crisis, their governments should and must use every tool available to reduce dangerous carbon pollution and create new clean energy jobs,” said Ilana Solomon, Sierra Club trade representative. “To avoid climate chaos, the WTO needs to get out of the way of innovative and successful climate solutions and job creators.”

The Sierra Club and Public Citizen support calls of Canadian allies, including the Council of Canadians, to keep Ontario’s renewable energy incentives program in place.

April 25, 2013

Global Civil Society Expresses Rejection of the Report, “The Future of Trade: The Challenges of Convergence”

The following media release was issued by the global Our World is Not for Sale (OWINFS) network rejecting a panel report released yesterday at the World Trade Organization (WTO). Public Citizen's Global Trade Watch is a participating member of OWINFS.


April 24, 2013 -- Global Civil Society Expresses Rejection of the Report, “The Future of Trade: The Challenges of Convergence”

Contact: Deborah James +41 (0) 76 652 6813

Civil society experts from the global Our World Is Not for Sale (OWINFS) network expressed rejection of the panel report “The Future of Trade: The Challenges of Convergence,” released today at the World Trade Organization (WTO), both in terms of its content and process.

Last year, at the time of the launching of the panel, OWINFS sent a letter to Pascal Lamy objecting to the formation of the panel, in terms of its lack of diversity, such as its exclusion of LDCs, its inclusion of only one Latin American and one African, its exclusion of the United Nations Conference on Trade and Development (UNCTAD), and its paucity of participation by civil society beyond the private business sector.

Today, at the launching of the panel’s report, we reiterate our criticism that we “find the process of the composition of the panel to have been autocratic and not in keeping with the rhetoric of a member-driven organization.” It was clear that even despite the best efforts of representative organizations such as the International Trade Union Confederation (ITUC), which participated in the panel, to include issues such as “to have the dominant context of inequality and unemployment recognised and the trade regime located in the context of a failed model of globalization,” such concerns were not included in the final text.

Two representatives of the OWINFS network intervened in the public discussion of the report at the WTO. Deborah James told the audience that based on this lack of representation, “it is thus no surprise that even though the report alleges to be focused on not immediate issues but the future, the report them makes specific recommendation to accept Trade Facilitation – which is the current demand of developed countries – for the proposed Bali package!

“At the same time, the report does not call for approval of the LDC (Least Developed Country) package demanded by the LDCs. And it does not deal with emergence of the Food Crisis and need for more policy space for developing countries to feed their poor including increasing livelihood of their poor farmers, which we all know is the emphasis of the G33 proposal. These – along with a fundamental re-taking up of the Implementation agenda issues – are the first steps of the changes needed to be made towards the transformation of the global trading system, to address historical inequities and asymmetries between developed and developing countries, and between benefits for corporations, and the negative impacts on workers and farmers. And I am quite aghast that the report even goes so far as to endorse the long-term developed country proposals that were explicitly rejected by developing countries in Cancun, of course I’m talking about the Singapore issues of competition policy and investment.

“So this report does not have any legitimacy; because it does not reflect the membership of the WTO, and therefore, with all due respect to the hard work of the participants, it must be said that it has no role in the future of the negotiations. This is a point that has already been made by several members at the last General Council meeting. But I also fail to see any way that this report reflects any future pathway of using trade for development, which is not even appear to be its goal, but rather I’m afraid that we must conclude that it is more reflection of the Secretariat’s continued emphasis on helping developed countries achieve their negotiating goals of simply expanding liberalization for the benefit of their corporations, rather than addressing the serious challenges facing the multinational trading system in terms of fundamental transformation needed to achieve trade for the true benefit of development and job creation.

Another member of the OWINFS network, Sanya Reid Smith of the Third World Network, said:

“I would like to thank the panelists for their work. I’ve just been speed-reading, so I haven’t finished reading it thought yet. From what I’ve read so far: in addition to concerns raised by OWINFS, I would repeat that at the beginning, the report says that trade is a means, not and end. Presumably for developing countries, development is the end goal. So it is interesting then that the report is about convergence of trade regimes, not convergence of levels of development. Usually in development, we talk about developing countries reaching desired levels of development, ie a convergence of development levels. So report seems to be about a convergence of trade regimes regardless of the levels of development as fixed time specific goals based on actual levels of development. (And as have seen, because of the financial crisis or HIV/AIDS etc, countries can actually go backwards in objective development indicators like life expectancy). This is despite the fact that there is a commitment to Special and Differential Treatment (SDT) throughout the WTO's rules. I recognize that the comments of some panelists who said that they personally don't believe in convergence at any cost, but the report itself appears to recommend violating or amending current WTO rules on SDT including for LDC status which is set objectively by UN.

Also I am shocked to see that proposal by one developed WTO Member to multilateralise the FTAs appears taken up as recommendation.

So as to future of this report, this panel was established by the Director General, Lamy, on his own responsibility. WTO Members did not choose panel members and did not set terms of reference or review the report before it came out, or agree to the text. So as raised by WTO Members in the past, the report does not seem to be grounds for basis for ministerial conference or any further work."


OWINFS is a global network of NGOs and social movements working for a sustainable, socially just, and democratic multilateral trading system. www.ourworldisnotforsale.org.


March 01, 2013

The Obama Administration Wants to Sell You a Used Trade Policy

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

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

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

Fast Track

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

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

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

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

Trans-Pacific Partnership

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

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

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

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

Trans-Atlantic FTA

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

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

Exports and Jobs

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

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

Buy American and Green Procurement Policies

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

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

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

February 12, 2013

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

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

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

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

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

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

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

View the report here.

January 30, 2013

Latest WTO Lunacy: Poker and Piracy Together at Last

Op-ed by Global Trade Watch Director Lori Wallach, published in The Huffington Post:

On Monday the World Trade Organization (WTO) officially authorized Caribbean nation Antigua to sell $21 million in "pirated" U.S.-copyrighted music, films and computer programs in retaliation for the United States failing to comply with a 2005 WTO order to allow online gambling here.

Say what? (And, no, this news was not sourced from a parody in The Onion.)

The case is an illustrated guide to much of what is wrong with the WTO. And, it should spotlight the lunacy of Obama administration plans to expand this dangerous "trade" agreement model via the Trans-Pacific Partnership (TPP) "free trade"agreement. More on that later. Let's tour what is now a full coop of WTO chickens that have come home to roost on this WTO case.

First, the backstory: in 2003, Antigua filed a case at the WTO claiming that U.S. laws banning Internet gambling violated WTO rules. The case, which some say was in fact the brainchild of an American attorney, Mark Mandel, who is handling the WTO litigation for Antigua, was joined by the European Union and other countries with major gambling industries. Antigua won a final ruling in 2005 and Monday's "sanctions" announcement was retaliation for the United States failing to change its domestic laws to comply with the WTO.

Why does the WTO have anything to say as to whether or not the U.S. Congress can ban Internet gambling, especially when the ban applies to domestic and foreign firms alike? Unlike past trade agreements, which focused on cutting tariffs, the WTO imposes expansive constraints on signatory governments' non-trade policies and establishes new corporate rights. The WTO's General Agreement on Trade in Services (GATS) limits how the U.S. government may regulate foreign service firms operating here and cross-border "trade" in services too. The WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement requires countries to provide expanded monopoly patent and copyright terms. (That's how U.S. drug patent monopolies got expanded from 17 to 20 years in 1994 when Congress OK'd U.S. WTO accession, overruling decades of congressional opposition to such patent extensions and costing us billions in higher drug prices, pocketed by WTO booster Big PhRMA.)

Yup, the appealing "free trade" brand was used to sell worldwide a Trojan horse delivery mechanism for a comprehensive set of policies that deeply invade domestic non-trade policymaking space. And, this horse has a kick. Unlike other international agreements, the WTO is strongly enforced.

Countries are required to conform their domestic policies to its rules and can be challenged in WTO tribunals if they don't. WTO tribunals rule against domestic laws 92 percent of the time. And if a country does not change its laws as ordered by the WTO, sanctions are authorized.

But wait, didn't WTO just authorize Antigua to violate U.S. copyrights? Welcome to the world of WTO "cross-retaliation." That is a WTO feature that the United States demanded. It wanted to be able to slap tariffs on developing countries' commodity exports (i.e. real trade) if these countries did not comply with the WTO's invasive drug patent, financial service deregulation and other one-size-fits-all dictates.

The delicious and tsunami-scale irony is that now Antigua (population 88,000 and GDP $1 billion) is being "borrowed" by gambling interests to cross-retaliate against the United States - by removing intellectual property rights from U.S. products in the first use of such a sanction. Except, wait, didn't Ralph Nader warn against just this scenario of some commercial interest finding a tiny country to attack U.S. public interest policies back when the WTO was being debated?

And, if you are looking for a silver lining, it is not that the WTO is that rare international organization where small, developing countries get a fair shake. Indeed, this case is Exhibit #1 that they do not. Rather, Antigua's move comes after seven years of the United States ignoring its initial WTO win. And, now that Antigua is trying to enforce, using a mechanism created by the United States itself, the comments from the U.S. Trade Representative's Office are ominous: "To be clear, the United States will not tolerate theft of intellectual property and will take whatever steps are most efficient and effective to prevent this from happening."

U.S. trade negotiators have threatened that Antigua will be harming its own interests if it follows through with enforcement. Hum...wonder if we'll soon hear about the threats to the students at Antigua's offshore American medical school of access to super-cheap on-line music and more... In all seriousness, Antigua will certainly face liabilities for enforcement actions, no matter how totally legal they are under WTO rules.

Which brings us back to the core point - the damaging WTO rules. By now you might be wondering about these vaunted benefits of the WTO that were promised by politicians and corporations alike back when the WTO was being considered by Congress.

Would those benefits include the 5 million U.S. manufacturing jobs that we have lost since the WTO went into effect? The exploding U.S. trade deficit that has slowed U.S. growth? Would the benefit be that the United States could face more trade sanctions unless it guts the country-of-origin meat labels we all rely on in the grocery store, the highly popular dolphin protections that we all know from the dolphin-safe labels on our tuna cans or our ban on the U.S. sale of sweet-flavored cigarettes used to hook kids on smoking? Yup, the WTO has ruled against all three popular policies and ordered the United States to gut them by this summer.

The vast gulf between promised WTO benefits and reality is especially worth considering now, as the Obama administration and the same exact corporate interests are trotting out the very same myths to try to sell Americans on the TPP negotiations.

January 29, 2013

In which the WTO Beats a Dead Horse with another Dead Horse

The World Trade Organization (WTO) has two dead horses on its hands: Doha – the deceased WTO round that has long awaited a proper burial – and the paternalist development model.  The latter is epitomized by WTO and International Monetary Fund (IMF) policy impositions on developing countries that crescendoed in the 1990’s, but have taken a global battering ever since.  The WTO seems to think that using one dead horse, the we-know-what’s-best-for-you development approach, to beat the other, Doha, will reanimate both. Call me crazy, but beating one dead horse with another doesn’t seem like a winning strategy.

The WTO disagrees, WTO Director-General Pascal Lamy particularly disagrees, and some developed countries of the WTO aggressively disagree.  They have picked a new name for the dead horse embodying the paternalist development model: “trade facilitation.”  This euphemistic WTO proposal would have developing countries spend their own limited funds to improve their import infrastructure, i.e. customs and port facilities. WTO adherents are pegging their hopes of Doha resuscitation to this new scheme.  In Friday’s issue of The Guardian, Pascal Lamy singles out the trade facilitation agenda as the best hope this year for reviving the much-chagrined Doha round. EU Ambassador to the WTO Angelos Pangratis argues that “most delegations” realize the “vast benefits” that trade facilitation brings “both in terms of intrinsic economic value, as well as systematically.”

Really?  If there’s such widespread agreement on the benefits of trade facilitation, why does the Doha trade facilitation negotiating text have about 650 square brackets, each one indicating disagreed-upon text (according to Washington Trade Daily)?

The significance of that number of edits is being downplayed by the trade facilitation negotiations chair Eduardo Ernesto.  Meanwhile Pascal Lamy is hard at work selling trade facilitation as “essentially about making trade, both imports and exports, easier and less costly.”

Less costly for who, Mr. Lamy? For developing countries whose strained budgets must now make room for outsider-requested line items of bigger ports and more customs personnel?  Less costly for farmers in those same developing countries who would be outcompeted in their local markets by increasing flows of subsidized imports?  

Let’s look at that again: the World Trade Organization would have developing countries paying the cost of importing more goods, including agricultural products that would, and have, put their own small farmers out of business, bringing increases in unemployment, immigration, and food insecurity.  Even more, the added budgetary cost of refurbishing imports infrastructure would place greater pressure on developing country governments to cut education/training programs that might help those displaced farmers.  So “trade facilitation” could cost the livelihood of farmers, and the ability of the government to support that sizeable population.

Mr. Lamy, your belief that “trade facilitation” makes trade “less costly” is measuring “costs” in the wrong way.  

Continue reading "In which the WTO Beats a Dead Horse with another Dead Horse " »

January 02, 2013

New Year's Resolution for the WTO: Let Countries Regulate Finance

Here's a new year's resolution for the World Trade Organization (WTO): make sure prevailing trade law does not prevent countries from enacting policies to prevent a next financial crisis.   

Back in October, civil society organizations across the globe urged the World Trade Organization’s Committee on Trade in Financial Services (CTFS) to hold a clarifying discussion about countries’ ability under WTO rules to employ crucial capital controls and other measures to avoid and mitigate financial crises.  To that end, more than 100 organizations from across the globe participated in weeks of advocacy in support of a discussion proposal submitted by WTO member state Ecuador, releasing an impressive statement, penning op-eds, sending letters to officials, arranging meetings with ministries, and reaching out to the press.

Civil society’s persistence paid off when, at the December 5, 2012 CTFS meeting, the Committee agreed by consensus to approve the framework of Ecuador’s proposed “dedicated and focused discussion” on the experiences of WTO Members in introducing prudential measures, including macroprudential regulations or policy measures.  The discussion will be held at the first quarterly meeting of the CTFS in March 2013, with the possibility of continued discussion at the following quarterly meeting in June of the same year.

Such a clarifying discussion is timely and important because more than 100 countries (including 40 developing nations) have financial services commitments under WTO’s General Agreement on Trade in Services (GATS).  Countries that have made such commitments now face the danger that GATS rules could prohibit the usage of policy tools needed to ensure financial  stability (such as capital controls).  Given this potential contradiction between GATS and financial stability, countries face three options: (1) implement financial regulation and risk facing a WTO challenge, (2) choose not to institute a needed regulatory tool to avoid a threatened challenge, or (3) alter their GATS commitments and comply with WTO-mandated compensation to affected member states--an option that may be particularly infeasible for developing countries.

While the Committee’s agreement to simply hold a discussion on this topic may seem like a minor step, it is important to note that in 2011, the U.S., EU and Canada rejected the possibility of a review of the WTO rules in light of the financial crisis and then continued to block even a discussion in the Committee two additional times in 2012.  But pressure for such a discussion continued to mount.  In addition to the increased advocacy by consumer, labor and development organizations and growing support for a discussion by major developing countries, institutions such as the IMF have now officially shifted their position on the use of capital controls, endorsing them as a legitimate tool for financial stability.

The fact that a dedicated discussion will take place at the WTO signals that, thanks to Ecuador’s proposal and civil society’s call for action, these developed countries have been forced to acknowledge that it is necessary to address concerns about the compatibility of WTO rules with financial regulation priorities. We will be eager to see the outcome of this dedicated discussion this year.

November 21, 2012

World Trade Organization Attacks Successful Canadian Clean Energy Program

Sierra Club and Public Citizen Express Disappointment

Geneva – The World Trade Organization (WTO) has just announced a ruling against Ontario’s successful renewable energy incentives program that is designed to reduce carbon emissions and create clean energy jobs. This highlights the threat posed by the WTO to a clean energy future. The WTO ruled that Ontario’s renewable energy incentives – or “feed-in tariff” – program violated the WTO rules that forbid treating local or domestic firms and products differently from foreign firms and products.

"As countries take steps to address the climate crisis, the last thing we need is the WTO interfering with innovative climate programs. Ontario’s solar and wind incentives program seeks to reduce dangerous carbon pollution and create clean energy jobs, and it should serve as a model for other countries, not a punching bag," said Ilana Solomon, Sierra Club Trade Representative.

Ontario’s renewable energy incentives program was established under the Green Energy and Green Economy Act of 2009. It increases incentives to develop clean and safe renewable energy by guaranteeing the provincial public electricity utility, Ontario Power Authority, will pay a competitive price for 20 years to companies for the wind, solar, and other clean energies they produce. Although the program is new, it has already achieved significant success, including contracts for an estimated 4,600 megawatts worth of clean energy and the creation of more than 20,000 jobs.

"Only an attack on this sort of job-creating, climate-chaos-combating policy could put the WTO in worse repute than last year’s string of WTO rulings ordering us to gut popular U.S. laws on country-of-origin meat labels, dolphin-safe tuna labels and limits on candy-flavored cigarettes marketed to kids," said Lori Wallach, Public Citizen Global Trade Watch Director. "Combating the climate crisis and transitioning to a clean-energy economy must include relocalizing production and creating green jobs, so having the WTO declare that governments cannot do this is simply intolerable."

The Sierra Club and Public Citizen are particularly disappointed that the U.S. decided to weigh in on this case by submitting a third-party brief pointing out how Ontario’s program violated WTO rules.

"Instead of attacking another countries’ clean energy program, the U.S. government should focus on how we will build on our own solutions to tackle the climate crisis and create clean energy jobs," Solomon said.

This case follows an alarming trend of anti-environment and anti-consumer rulings at the WTO.   In May 2012, the WTO ruled against U.S. dolphin-safe tuna labels, which they said discriminated against Mexican tuna fishers. And in June 2012, the WTO ruled against the highly popular country-of-origin labeling (COOL) for meat, which shows American consumers where their food is coming from and helps health regulators track food safety issues. In April 2012, the WTO ruled against the Family Smoking Prevention and Tobacco Control Act of 2009, which bans the sale of candy and sweet-flavored cigarettes that attract youth to smoking.

October 05, 2012

What went down at the WTO Public Forum in Geneva?

In addition to building support for Ecuador's proposal to discuss financial regulation policy space at the World Trade Organization (WTO), members of the Our World Is Not for Sale Network (OWINFS) spent the week before the Oct. 1 discussion of Ecuador's proposal attending the annual WTO Public Forum in Geneva. Public Citizen joined an array of OWINFS partner organizations in seizing the opportunity to impress upon WTO member states that civil society stands behind countries' right to regulate finance.  

Opening Session:

Our own Melinda St. Louis asked the following question at the WTO Public Forum opening session (which was attended by over 700 government officials and stakeholders): 

“Rules governing trade in financial services were negotiated in the 1990s when financial deregulation was in vogue.  We believe that, to succeed, the multilateral trading system must make sure that it learns lessons from the global financial crisis.  The global consensus has now shifted toward the need for more regulation of the financial sector to ensure stability.  Therefore the WTO must ensure its coherence with that consensus toward more macroprudential financial regulation.  Many trade and finance experts have noted possible conflicts between WTO / FTA rules and some common-sense macroprudential regulations.  Recently labor, consumer and development organizations representing hundreds of millions of citizens around the globe signed a statement supporting a discussion at the WTO to ensure all members have confidence that WTO rules governing financial services could not hinder or chill macroprudential financial regulation. I hope this week will provide an opportunity for members and stakeholders to reflect on these lessons to ensure that the financial sector supports the real economy instead of spinning out of control and leading to instability.”

Director-General Pascal Lamy answered (paraphrasing):

“I’ve been debating this with Public Citizen for 10 years. Let me repeat as clearly as possible so that we don’t have a nightmare about something that has no chance of happening.  Especially in the financial services agreement – always and until today – a government can take regulatory action.  There has never been a case where a government was willing to take regulation that was challenged at the WTO.  Many topics deserve a lot of attention, but this one is already settled and any competent lawyer would tell you so.”

Continue reading "What went down at the WTO Public Forum in Geneva?" »

Globe-Spanning Civil Society Groups Push Forward Critical Discussion on WTO Rules and Financial Regulation

Last week, we blogged about a statement signed by over 100 civil society groups from around the globe who are campaigning and putting pressure on their respective governments to support Ecuador’s proposal for a conversation to take place at a meeting of the World Trade Organization's Committee on Trade in Financial Services (CTFS).  The objective of the discussion is to clarify whether WTO rules provide sufficient policy space for the financial reregulation necessary to avoid another global crisis.  

Many of the signatory organizations engaged in national and regional level media outreach and advocacy, and were able to get articles placed in key publications and engage with important government officials in their respective countries.

On Monday, October 1, Ecuador’s proposal was discussed at the CTFS. While minutes to the meeting will not be available for quite some time, it appears that no country blocked Ecuador’s proposal. Below, find a summary of the great work that has helped push toward a discussion of this critical issue at the CTFS.


  • Center of Concern’s Aldo Caliari wrote a Spanish language piece that ran in Agenda Global in Peru and Uruguay.
  • Professor Kevin Gallagher’s op-ed, “Trade rules should not constrain fixing global finance,” appeared in Al Jazeera.
  • An article that appeared on October 1 in the Wall Street Journal noted that WTO Director General Lamy was forced to respond to questions raised about WTO rules and financial regulation.
  • Inside US Trade’s “This Week in Trade” linked to the sign on statement and Public Citizen’s press release.
  • The Brazilian Network for Peoples' Integration (REBRIP) translated and adapted the press release and sent it out to press in Brazil.
  • Trade and Gender Initiative worked to place an op-ed in the Nigerian press.


  • The European Consumers' Organization (BEUC), Centre for Research on Multinational Corporations (SOMO), Finance Watch, Financial Services User Group, and the European Federation of Financial Services Users (EuroFinuse) sent an open letter to EU Commissioners Barnier and DeGucht, calling on the European Union to support Ecuador’s Proposal, and did media outreach.  
  • South African Labour organizations presented the sign-on statement and a specific request from labour to the South African government's Department of Trade and Industry (DTI), asking them to officially support the Ecuador proposal at a high-level meeting of the Technical Sectoral Liaison Committee (Teselico).  Teselico is a tripartite consultative forum to discuss matters relating to trade negotiations, under the Trade and Industry Chamber of Nedlac, the social dialogue structure in South Africa.
  • The Federation of German Consumer Organizations (VZBZ) engaged on the topic with Ms. Micong Klimes, a German representative to the WTO who serves as the current Chair of the WTO’s Committee on Trade in Financial Services.
  • The Argentine Federation of Commercial and Service Employees (FAECYS) engaged in direct advocacy with Argentina’s trade ministry, speaking specifically with Maria Ines Rodriguez, a ministry official representing Argentina in Geneva. The Citizen Forum for Justice and Human Rights (FOCO) forwarded a translation of the sign-on statement to other Argentine civil society organizations.
  • Initiatives for Dialogue and Empowerment through Alternative Legal Services (IDEALS) reached out to Walden Bello, a representative from the Philippines, and members of CSOs
  • REBRIP sent letters to the Brazilian Foreign Affairs Ministry and Finance Ministry calling on them to support Ecuador’s proposal.
  • The Council of Canadians forwarded  the statement to Mark Carney, head of the Bank of Canada, as well as Canadian representatives in Geneva, the trade minister, and opposition critics.
  • The Marcus Garvey Peoples' Political Party (MGPPP) worked to get the statement to relevant ministries in Jamaica and the Bank of Jamaica.
  • The Consumers Protection Association engaged in direct advocacy with relevant ministries in Lesotho, which chairs the influential African group negotiating bloc at the WTO.
  • Public Citizen circulated the sign-on statement to trade-focused media in the United States, as well as to Representative Barney Frank, co-author of the Dodd-Frank financial reform law.
  • Tufts University’s Global Development and Environment Institute (GDAE) released a policy brief with analysis of the potential conflict between GATS / FTA financial services rules and capital controls.  GDAE sent the summary to its list of 15,000 academics, advocates and government officials.
  • The International Trade Union Confederation reached out to national affiliates in target countries to encourage them to sign on to the statement.
  • Consumers International circulated the statement to its member organizations around the world.
  • A network of organizations pushing for a financial transactions tax also circulated the statement.

September 27, 2012

On Eve of Major WTO Meeting, 112 Civil Society Groups Tell U.S., EU: Stop Blocking Discussion of Strong Financial Regulation

On Monday, October 1st, the World Trade Organization (WTO) will make a decision on Ecuador's proposal to set up a process to discuss whether WTO rules leave policy space for robust financial regulations, including capital controls. This week, 112 major global consumer, labor, environmental and development organizations issued a strong statement urging their governments to support Ecuador’s proposal and ensure that global “trade” rules do not undermine countries’ ability to strengthen their own financial regulations to avoid future crises.

The 112 civil society organizations comprising the impressive list of signatories represent hundreds of millions of members from 160 nations. This includes the International Trade Union Confederation (ITUC), which represents 175 million workers globally, and Consumers International, an umbrella organization of 240 consumer organizations operating in more than 120 countries.

A powerful bloc of countries supported a proposal for a formal review of these WTO rules in late 2011, but some WTO members, including the United States and the European Union, blocked it. Now, the same countries have indicated their intent to quash this proposal to even discuss the issue of policy space for crucial financial regulations, much less consider updates to the old rules.

More than 100 countries, including many developing nations, have commitments under the WTO financial services rules. Countries that seek to re-regulate the financial sectors that they previously bound to comply with the WTO’s regulatory limits could face a WTO challenge and trade sanctions. To avoid such liability, they would need to avoid sensible post-crisis policies, such as banning risky financial services, limiting the size of financial institutions, imposing firewalls between commercial and investment banking, and using capital controls. 

A clarifying discussion on the importance of capital controls, which even the IMF has accepted as a crucial policy, would be particularly timely.  The statement from the globe-spanning organizations notes that "we cannot afford to wait until the next financial crisis to ensure that countries’ WTO commitments do not interfere with or chill financial regulation.”

August 21, 2012

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

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

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

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

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

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

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

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

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

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

July 26, 2012

Senators Defend Dolphin Protections Threatened by WTO Ruling

On Tuesday, Sen. Barbara Boxer (D-CA) led a bipartisan group of 14 Senators in sending a letter to Rebecca Blank (Acting Secretary of the U.S. Department of Commerce) and Ron Kirk (U.S. Trade Representative) expressing concern over last year's WTO tuna-dolphin ruling. The statement noted that while "cruel and lethal" tuna-fishing methods have killed over 6.5 million dolphins in the past six decades, the U.S. "Dolphin-Safe" tuna label has contributed to an amazing 98% decrease in such dolphin deaths since 1990.  As such, the Senators made clear that, despite the WTO's determination that "Dolphin-Safe" constitutes a trade violation, Congress intends to stand by current dolphin protection laws:

“We are deeply disappointed by the WTO’s final ruling, but we stand firmly committed to preserving the Dolphin-Safe label. Let us be clear--Congress has no intention of repealing or weakening the current law applying to this label.”

The Senators also sent a letter to Arturo Sarukhan Casamitjana, the Ambassador of Mexico to the U.S., requesting that Mexico comply with the U.S.’s request to hear the case under NAFTA. The letter expresses the Senators’ disappointment that “Mexico has continued to stall consideration of this issue under the North American Free Trade Agreement (NAFTA),” and urges Mexico to proceed with selection of NAFTA dispute resolution panelists so that the case can be resolved in a more timely manner.

These letters follow an impressive House letter, sent in May, urging the Obama administration to push back on the tuna-dolphin ruling.

For a more detailed analysis of the tuna-dolphin case, click here.  For the press release from Senator Boxer's office, click here.  

July 16, 2012

WTO takes on credit card regulations

The WTO issued its first ever ruling on a dispute over financial services earlier this morning. The case was brought in 2010 by the Obama administration against China's credit card policies.

This sprawling case - which alleged that a myriad of diverse Chinese policies operated collectively to violate WTO rules - failed on most counts.

But even the partial U.S. success raises more questions than in answers. U.S. credit card companies were reportedly less than enthusiastic about the case, and even the most optimistic U.S. job impact of China's credit card policies represent only a drop in the bucket relative to the considerable job displacement caused by Chinese industrial policies in U.S. manufacturing.

The greater significance of the ruling is in the precedent that it sets of a WTO member being willing to tackle another member's financial policies. Those of us who have raised the alarm about the conflict of the WTO's services agreement with financial regulation have often been told not to worry... that diplomatic restraint would keep a case from ever being launched. Even if launched, the WTO's institutional interests would keep it, the argument went, from ruling against a nation's policies.

Today's ruling totally undermines both aspects of this argument.

So what did the ruling - authored by Virachai Plasai (Thailand), Elaine Feldman (Canada) and Martin Redrado (Argentina) - say?

Continue reading "WTO takes on credit card regulations" »

July 03, 2012

America, meet your meat master

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

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

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

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

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

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

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

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

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

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

Continue reading "America, meet your meat master" »

June 29, 2012

WTO Rules Against Yet Another U.S. Consumer Protection Policy

WTO Rules Against Yet Another U.S. Consumer Protection Policy

 Final WTO Appeal Ruling Goes Against U.S. Country-of-Origin Meat Labeling Law that Applies to Domestic and Imported Meat

 WASHINGTON, D.C. – The World Trade Organization’s (WTO) final ruling today against a highly popular U.S. consumer policy – the country-of-origin labeling (COOL) for meat found in every grocery store – will only intensify public opposition to trade pacts, such as the Trans-Pacific Partnership (TPP), a nine-nation pact now under negotiation that is slated to include anti-consumer rules similar to those in the WTO, Public Citizen said. Last week, U.S. officials agreed to allow Mexico and Canada to enter TPP negotiations despite failing to obtain a settlement in the WTO meat labeling case.

 The WTO appellate ruling released today, which is final and not subject to further appeal, means that Mexico and Canada have succeeded in their WTO attack on the U.S. meat labeling policy. Under WTO rules, Mexico and Canada may soon be able to impose trade sanctions against the United States if it does not water down or eliminate the labels to comply with the WTO ruling. If the law is weakened, American families may not be able to know where there food is coming from, and health regulators may have a harder time tracking food borne bacteria to its point of origin. Public Citizen urged the administration not to weaken the law.

 “Today’s ruling makes very clear that these so-called ‘trade’ pacts have little to do with trade between countries, but rather impose outrageous limits on the most basic consumer safety policies on which we all rely,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The WTO announcing that big agribusiness corporations must be allowed to sell mystery meat here, despite U.S. consumers and Congress demanding these labels, is yet another example of outsourcing our legal system to international commercial bodies that push corporate interests.”

 Earlier this month, leaked text from the TPP revealed that the agreement, if completed, would subject U.S. laws to challenges by private business interests before secretive foreign tribunals and authorize the payout of unlimited funds, in compensation to businesses, from the U.S. Treasury.  

 Today’s decision narrowed the number of specific WTO provisions that the U.S. meat labeling policy was found to violate, but still reaffirmed the previous WTO ruling that the law must be altered or eliminated. This ruling  follows WTO rulings this year against U.S. “dolphin-safe” tuna labels and a U.S. ban on clove-, candy- and cola-flavored cigarettes.

 “These three rulings – with the WTO slapping down safe hamburgers, Flipper and children’s smoking prevention policy – make it increasingly clear to the public that the WTO is leading a race to the bottom in consumer protection,” said Todd Tucker, research director of Public Citizen’s Global Trade Watch.

 After 50 years of state efforts to institute country-of-origin labeling for meat cuts and products, and federal experimentation with voluntary COOL for meat, Congress passed a mandatory COOL program as part of the 2008 farm bill. In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO signatory countries are permitted to apply. In their filings to the WTO, Canada and Mexico suggested that the U.S. should drop its mandatory labels in favor of a return to voluntary COOL or to standards suggested by the Codex Alimentarius, an international food standards body in which numerous international food companies play a central role. Neither option would ensure that U.S. consumers are guaranteed the same level of information as the current U.S. labels. In an initial ruling in November 2011, the WTO sided with Mexico and Canada against the U.S. law, but the U.S. appealed the decision in January of this year.

 The Obama administration is in the process of negotiating the secretive TPP trade deal, an expansive deal that expands on the North American Free Trade Agreement (NAFTA), which currently includes  11 Asian and Western Hemisphere countries. The pact is expected to include limits on domestic consumer safety and labeling policy.

 “The only thing worse than NAFTA-on-steroids with any old country is NAFTA-on-steroids with NAFTA countries,” said Wallach. “What’s worse, the administration appears to have abandoned its leverage and greenlit Mexico and Canada joining the TPP without an agreement to drop their WTO attack on consumer labels. The American public is desperately waiting for President Barack Obama to show some negotiating savvy, and to start fulfilling his campaign pledges and reconsider the so-called ‘trade’ model that his administration is pushing with the TPP.”


June 21, 2012

Just Relax, Canada. U.S. Pharma Will Handle It

Dear Fellow Canadians:

Welcome to the Trans-Pacific Partnership (TPP) negotiations! Since you are fresh off a bruising fight getting provisions that protect Internet freedom and privacy into Canada’s copyright Bill C-11, I’m sure that you are exhausted with defending your rights. Take heart. With the TPP, you will not have much of a say on laws or policies threatening your privacy, rights on the Internet or access to affordable medicines. Instead, lobbyists from major American industries and some 600 “corporate trade advisers” have helped lay out some of what the Office of the United States Trade Representative (USTR) expects from you.

These are the same industries that forced major concessions on C-11’s approach to digital locks despite near-universal criticism. Hundreds of pages of new non-trade policy contained in the most sweeping “free trade agreement” could face a mere up or down vote in the House of Commons. And the USTR proposes intellectual property provisions that cover dramatically more than copyright law. They touch a wide range of IP issues.

You thought NAFTA was a pill? Sure, Big PhRMA used NAFTA to attack our drug formulary system and all of those compulsory licenses for affordable meds. But back then, our government drew a line. Despite some considerable hysteria from the U.S. drug industry giants, you did not give away all of our policy space. This time, however, the TPP gives Prime Minister Stephen Harper a way to write all of us a real prescription for high drug prices and cement his view of Canada as an extended playground for corporate America.

Here are some of the highlights of the U.S. proposed IP chapter:

• Expand patent evergreening and create new pharmaceutical monopolies, raising medicine costs;

• Dramatically increase the life of a copyright term from 50 years in most cases under C-11 to 95 years;

• Increase penalties for circumvention and reduce the exceptions for individuals; and

• Establish an American-style notice-and-take down system for online copyright infringement.

This seems like a lot. If you were worried, however, that we had some duty to at least read the proposals for the law and voice our democratic concern, fear not. Negotiators act in secret. The only glimpse of the actual agreement so far has come from leaked copies of the text from the IP, Investment and other chapters. Remember in the good old days of ACTA when the University of Ottawa filed an access-to-information request but received a blacked out document with only the title visible? Expect similar treatment during TPP negotiations. While lobbyists and corporate liaisons are granted electronic access to the agreement, your parliamentary representative might have to walk down to the Department of Foreign Affairs and International Trade to speak personally with The Honourable Ed Fast P.C. , M.P., Minister of International Trade.

Moreover, if you are distressed by the fact that our respectable Department of Trade will have lots of work reviewing all the work done so far once Canada’s negotiators get hold of these secret drafts, you will be relieved to hear that Canada has a lesser role in the negotiations. By coming late to the table, Canada has achieved a second-tier position. This status requires Canada to agree to all the settled chapters, which its officials have not even read, and Canada cannot veto current provisions. Thus, not even lobbyists or the trade minister need concern themselves with settled provisions. The TPP negotiations shut individual citizens and even members of parliament and ministers out of the process.

The public response to C-11 proved that civil engagement has made a difference on intellectual property issues in Canada. The people—frustrated, fearful and bedraggled—woke up to the oppressive measures of industry groups and fought hard. But this is far from the end. In upcoming years, we might still witness the implementation of a multinational corporations’ wish list, which seeks to criminalize copyright infringement, implement ACTA-plus provisions and restrict Canadians’ access to affordable medicines. Through the TPP, the USTR seeks to achieve all these goals and more—without too much of a voice from us. Will we allow American industry to dictate to the Canadian people our rights—or stand up and demand that Canada step down from these negotiations?

Follow Public Citizen's Global Access to Medicines Program: https://twitter.com/#!/PCMedsAccess

James Cormie is a legal intern at Global Access to Medicines Program.  Originally from Edmonton, Alberta, James blogs on issues of trade, IP, and international law.

May 31, 2012

Congress Stands up for Dolphins, Pushes Back on WTO

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

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

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

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

The letter included some notable signatories, including:

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

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

May 16, 2012

Analysis: today's WTO ruling bad for dolphins, consumers... and even the WTO

We’ve waded our way through today's 165-page, 771-footnote WTO ruling against dolphin-safe labels. Here’s a quick guide to what it says and means.

What it means for dolphins

From the 1950s through the 1990s, an estimated seven million dolphins were killed in the Eastern Tropical Pacific from the practice of chasing, encircling and netting them to catch the tuna underneath. This was profitable because, unlike in other fisheries and regions, dolphin and tuna swim together.

Beginning in the late 1980s and early 1990s, something changed: consumers got organized. First, they instituted a ban on dolphin-unsafe tuna, which the WTO’s predecessor organization ruled against in 1991 and 1994 and which was subsequently repealed. Around the same time, dolphin-safe labels were put on tuna, in order to allow consumers to “vote with their dollars” for dolphin-safe methods. These measures have been successful in reducing dolphin deaths to near-negligible numbers.

Countries like Ecuador were the success stories, in adapting to the dolphin-safe methods, and therefore tapping into consumers’ demand for dolphin-safe tuna. The U.S. and nearly all other nations’ fleets also adapted. Mexico, on the other hand, is almost alone as a hold-out – using litigation rather than adaptation, and in the process branding its fish in the minds of consumers as dolphin-unsafe. Not a real forward looking strategy, to say the least. This WTO case, brought by Mexico in 2008, is just the latest indication of this – after pushing unsuccessfully for a decade to get the Clinton and Bush administration and the U.S. courts to water down the labels.

It is vital for the ongoing health of dolphin herds that the U.S. not bow to this pressure from the WTO.

What it means for consumers

If the U.S. gives in on this WTO threat, consumers will have lower quality or less information on which to base their tuna purchasing practices. For families with kids (including of the grown-up variety) who love animals like dolphins, this will be deeply troubling on its own.

But think of the precedent this sets. The WTO has now said that even voluntary labeling schemes are open to WTO attacks if not all countries (regardless of their production practices) equally benefit from them. This is going to be especially the case whenever there are complementary governmental efforts to ensure the accuracy of the claims on the label.

Labels like organic, cruelty-free, fair trade, Buy Local, Buy America, green, natural, worker-friendly, gluten free and everything else could be next.

What happens next

After today’s ruling, Mexico will begin pushing for elimination of the dolphin-safe labels, or to be allowed to use the label without meeting the U.S. standards.

Depending on how the compliance proceedings progress, the U.S. will have a matter of weeks or months to begin complying. After an extreme outer bound of about 15-18 months, Mexico may be able to begin instituting trade sanctions on U.S. goods or services. In the past, such sanctions have helped to create a domestic constituency in industry and Congress crying out for elimination of the “offending measure.”

It is vital that the U.S. communicate clearly to Mexico and other WTO members that the labeling standards will not be eliminated or watered down. The U.S. can talk to Mexico if need be about other options for compliance, and make the point that it is really long overdue for Mexico to bring its fishing practices into line with international norms.

What the ruling says

Maybe I’m losing my cynical edge, but I was shocked by today’s WTO Appellate Body (AB) ruling. There were a variety of ways that the AB could have worked itself out of the mess left by the September lower panel ruling, and instead, the AB chose to deepen the knot.

Continue reading "Analysis: today's WTO ruling bad for dolphins, consumers... and even the WTO" »

Public Citizen Condemns WTO Attack on U.S. Dolphin Protection Efforts

In Final Appeals Ruling, Global Commerce Agency Orders U.S. to Drop, Change Dolphin-Safe Tuna Labels

WASHINGTON, D.C. – The World Trade Organization’s (WTO) final ruling today against U.S. dolphin-safe labels on tuna cans deals a major blow to consumers’ ability to make free and informed decisions about how our food was caught and processed, Public Citizen said. This is the third time the WTO and its predecessor General Agreement on Tariffs and Trade have ruled against America’s dolphin protection policies.
“Today’s ruling makes very real the threats these overreaching pacts pose, which have little to do with traditional trade issues. The first round of this case in 1991 became known to environmental activists as ‘GATTzilla Kills Flipper’ and ignited U.S. public opposition to what would become the WTO,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Until that first ruling, and then a second one several years later, all we could do was point out worrisome negotiating text that we thought could undermine vital domestic environmental and other public interest policies – and then, suddenly, we had the proverbial smoking dolphin.”
Dolphin-safe tuna labels are strictly voluntary. If Mexican fleets chose to use dolphin-safe tuna-fishing methods, they would have access to the label, just like fish caught by U.S., Ecuadorean and other nations’ fleets. Mexico wanted access to the label without meeting the standards.
“This latest ruling makes truth-in-labeling the latest casualty of so-called ‘trade’ pacts, which are more about pushing deregulation than actual trade,” said Todd Tucker, research director for Public Citizen’s Global Trade Watch. “Members of Congress and the public will be very concerned that even voluntary standards can be deemed trade barriers.”
The Obama administration is considering expanding some of these anti-consumer rules in the first trade deal it is negotiating – the nine-nation Trans-Pacific Partnership.
“This case underscores why countries must insist that WTO rules be altered and that no new agreements use the same corporate backdoor deregulation model,” said Wallach. “The Obama administration must stand with the thousands of Americans who have signed a Consumer Rights Pledge calling on the U.S. to not comply with these illegitimate trade pact rulings and to stop the Trans-Pacific Partnership trade negotiations that would greatly intensify this problem.”
This latest WTO ruling, along with two others in the past year against U.S. country-of-origin labels on meat and flavored cigarette bans, shows that a new approach to trade policy is needed – one that puts consumers, the environment and communities first, said Public Citizen.
In September 2011, a WTO panel of three lawyers and diplomats from Chile, Singapore and Switzerland ruled that the U.S. dolphin-safe tuna labeling law violates WTO rules. The labels have been enormously successful in reducing dolphin deaths by tuna fishers – a major problem in the past, when tuna fleets set upon dolphins to catch tuna, since the two species associate with one another in the Eastern Pacific Ocean. The label allows consumers to “vote with their dollars” for dolphin-safe methods. Mexico successfully challenged the U.S. standard after decades of refusing to transition its fishing fleet to more dolphin-safe fishing methods.
Because Mexico prevailed on some counts but lost on others, both Mexico and the U.S. appealed the lower panel decision. 
Today’s Appellate Body ruling flipped the findings of the lower panel ruling. The lower panel found that the dolphin-safe labels were “more trade-restrictive than necessary to fulfil a legitimate objective.” While this finding was problematic, the lower panel at least acknowledged that the U.S. objectives of consumer information and dolphin protection were legitimate.

“The Appellate Body went in an even more anti-environment, anti-consumer direction by claiming that these labels – which regulate imported and domestic tuna alike, and for which many foreign nations’ tuna qualifies – were discriminatory against Mexico,” said Tucker.

This follows on a deeply troubling ruling from last month that found that a U.S. ban on sweet flavored cigarettes that applies to imported and domestic cigarettes also is somehow “discriminatory.”

“In essence, the WTO has found that voluntary is the new mandatory, and non-discriminatory is the new discriminatory,” added Tucker.

The ruling’s implications are dire, especially in the context of a decades-long battle to save dolphins. This struggle has been beset by countless trade-related obstacles: 1991 and 1994 rulings under the WTO’s predecessor organization led to the U.S. eliminating the more potent import ban of dolphin-unsafe tuna, and environmentalists fighting successfully in U.S. court to block the Clinton and Bush administrations from also watering down the voluntary labeling policy. These groups narrowly blocked this executive branch effort, which U.S. courts deemed “Orwellian” and “a compelling portrait of political meddling.”

April 30, 2012

The magic of government and the legitimacy of international legal orders

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

April 26, 2012

Will DIOCOSEFLRD save tobacco rules from the WTO?

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

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

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

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

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

Continue reading "Will DIOCOSEFLRD save tobacco rules from the WTO?" »

April 23, 2012

Betting against Obama? The WTO may have something to say about that.

Ben Protess wrote in the NYT a few weeks ago about a new effort following from the Dodd-Frank financial overhaul legislation:

The Commodity Futures Trading Commission is poised this week to reject plans for so-called political event contracts, a lucrative derivative deal that would allow firms to wager on Congressional races as well as the presidential battle, the people briefed on the matter said...

[the The North American Derivatives Exchange,] which currently is a marketplace for derivative contracts tied to commodities and stock market indexes, wanted to offer five basic contracts. One contract allows traders to wager that President Obama will win another four years in the White House. Other contracts say that either Democrats or Republicans will control the Senate or House...

Some states explicitly outlaw gambling on elections. Even in Las Vegas, the epicenter of gambling, betting on elections is off limits, regulators say.

Intrade is the most prominent player in the world of trading political event contracts, but it is based in Ireland. It is unclear whether American law applies to Intrade.

Only academics have escaped the strict rule. For two decades, United States regulators have allowed business students at the University of Iowa to operate an electronic exchange for trading political contracts.

The basis for the CFTC decision can be found in this CFTC order, which details the statutes and regulations that lead it to rule that NADEX is against the public interest. it's also worth pointing out that Nadex - despite the homegrown sounding name - is a subsidiary of a European financial services group.

The question we like to ask often at EOT is how might the under-studied, underappreciated rules of the World Trade Organization (WTO) and other trade rules relate to this legitimate political event regulation?

Continue reading "Betting against Obama? The WTO may have something to say about that." »

April 16, 2012

Brazil's flavored cigarette ban now targeted

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

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

Continue reading "Brazil's flavored cigarette ban now targeted" »

April 12, 2012

Sweet surrender?

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

The question inevitably becomes: what happens next?

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

More details after the jump.

Continue reading "Sweet surrender?" »

April 10, 2012

Cancer prevention three months too soon

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

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

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

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

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

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

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

Continue reading "Cancer prevention three months too soon" »

April 09, 2012

Lori Wallach in the Huffington Post: WTO Orders U.S. to Dump Landmark Obama Youth Anti-Smoking Law

A landmark U.S. health policy already was being struck down even as protestors surrounded the Supreme Court over the attack on President Obama's healthcare law. Behind closed doors in Geneva, a World Trade Organization (WTO) tribunal issued a final ruling ordering the U.S. to dump a landmark 2009 youth anti-smoking law.

The Obama administration's key health care achievement slammed by the WTO was the Family Smoking Prevention and Tobacco Control Act (FSPTCA), sponsored by Rep. Henry Waxman (D-Calif.). The ruling, issued Wednesday, was on the final U.S. appeal which means that now the U.S. has 60 days to begin to implement the WTO's orders or face trade sanctions.

This outrageous WTO ruling should be a wake up call. Increasingly "trade" agreements are being used to undo important domestic consumer, environmental and health policies. Instead, the Obama administration has intensified its efforts to expand these very rules in a massive Trans-Pacific Partnership (TPP) "free trade" agreement.

The WTO's ruling against banning the sale of flavored cigarettes isn't the only example of its attack on consumer protection and health laws. The U.S. has filed WTO appeals on two other U.S. consumer laws -- U.S. country-of-origin meat labels and the U.S. dolphin-safe tuna label -- both were slammed by lower WTO tribunals in the past six months. Yup, in short order we could see the WTO hating on Flipper, feeding us mystery meat and getting our kids addicted to smoking.

Read the rest here.

April 04, 2012

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

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

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

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

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

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

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

Continue reading "On Tobacco Appeal Ruling, WTO Shows its Anti-Health Stripes" »

Public Citizen Condemns WTO Attack on U.S. Efforts to Reduce Teen Smoking

 In Final Appeals Ruling, Global Commerce Agency Orders U.S. to Drop, Change Landmark Obama Youth Anti-Smoking Law

WASHINGTON D.C. – The World Trade Organization’s (WTO) final ruling today against U.S. efforts to reduce teen smoking shows that our current trade regime is simply incompatible with basic public health regulation, Public Citizen said. With today’s ruling, the WTO Appellate Body has now ordered the U.S. to water down or get rid of a key plank of its landmark Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA), one of the few policy achievements of the Obama administration’s first term. The act banned sale of candy and other sweet-flavored cigarettes used to attract children to smoking.

“The Obama administration and Congress must not bow to yet another ruling from a so-called trade agreement tribunal demanding that the U.S. get rid of yet another important health or environmental policy,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The Obama administration must stand with the thousands of Americans who have signed a Consumer Rights Pledge calling on the U.S. to not comply with these illegitimate trade pact rulings and to stop the Trans-Pacific Partnership (TPP) trade negotiations that would greatly intensify this problem.

“Countries should not be weakening their public health laws to comply with the anti-health, anti-environmental WTO rules. This case underscores why countries must insist that WTO rules be altered and that no new agreements use the same corporate backdoor deregulation model,” said Wallach. “If there is any silver lining to today’s ruling, it is that it will confirm the views of growing numbers of consumers, citizens and governments that the WTO must be shrunk or sunk.”

The Obama administration is considering expanding some of these anti-consumer rules in the first trade deal it is negotiating – the nine-nation TPP. This latest WTO ruling, along with two others in 2011 against country-of-origin labels on meat and dolphin-safe labels on tuna, show that a new approach to trade policy is needed – one that puts consumers, the environment and communities first, said Public Citizen.



The WTO Appellate Body’s decision today upheld the major conclusions of a September 2011 WTO ruling from a panel of three diplomats from Costa Rica, Japan and Uruguay, who ruled that the U.S. ban on sweet-flavored cigarettes (which are used to entice teenagers into smoking) violated a never-before interpreted provision of the WTO’s Agreement on Technical Barriers to Trade (TBT). Public health experts have concluded that these narrowly targeted bans help stop smoking before it starts.

But the panel reasoned that the ban discriminated against Indonesian clove cigarettes, even though both U.S. and foreign tobacco companies were prohibited from selling clove cigarettes in the U.S., and even though other sweet flavors like chocolate and cola also were banned. In its WTO attack on the FSPTCA, Indonesia successfully argued that the ban as it applied to clove cigarettes violated the WTO TBT rules because the U.S. did not ban all flavored cigarettes (menthol-flavored cigarettes were exempted from the ban).  

While the FSPTCA actually does contemplate extending the ban to menthol cigarettes, U.S. lawmakers advocated for a gradual approach to menthols, which are smoked (unlike other sweet cigarettes) primarily by adults. Policymakers had concerns that banning cigarettes primarily smoked by adults would have created dangerous black market activities and would not target teenage smoking. The WTO panel and Appellate Body gave little weight to these science-backed arguments and effectively concluded that imports have to be carved out from nations’ regulatory schemes.

Of nearly 200 rulings in 16 years, this was the first time that the WTO ever found a violation under this WTO provision, which has long been of concern to consumer advocates, given the threat that it could be interpreted in the all-encompassing way that it was in this final ruling. Today’s was one of the first rulings under the TBT, which is one of 17 agreements administered by the WTO.



April 01, 2012

Public Citizen Applauds President Obama's Decision to Finally Release Draft Trans-Pacific Partnership (TPP) Trade Agreement Text Over Objections Of U.S. Trade Representative Vlad von Dracula

 WASHINGTON:  Today President Obama removed a mortifying blot from his claim of having the most transparent administration ever by releasing the draft text of a massive regional trade agreement now in its third year of negotiations that will affect wide swaths of U.S. federal and state non-trade policy, said Public Citizen.

"We thought the secrecy could not get worse than when the previous U.S. Trade Representative (USTR) Ron Kirk actually admitted under Senate Finance Committee questioning in March that he would not release the TPP text because doing so would ensure he could never complete the deal," said Public Citizen's Sunshine Isthebest. “Then the new USTR, Vlad von Dracula, announced that not only would the text never be made public until the deal was set in stone and unchangeable, but that negotiations could no longer be conducted during daylight hours to minimize the chance that those who will live with the results could get a peek.”

Although draft trade agreements have been made public by negotiating governments in the past, including the last major regional trade deal the Free Trade Area of the Americas, and the World Trade Organization posts draft negotiating texts, the TPP text has been kept secret. Indeed, in a special TPP secrecy agreement signed in 2010, the Obama administration agreed for the first time in trade pact history to keep negotiating texts secret for four year after a deal was signed or abandoned. Only 600 corporate representatives serving as officials U.S. trade advisors and officials of the 8 other TPP governments have had access to the texts, which is to say everyone but the U.S. public, press and most in Congress.



March 27, 2012

WTO still denying its Wall Street ties

Last week, we pointed out an interesting piece by the New York Times' Gretchen Morgenson, who wrote about the WTO conflict with financial re-regulation.

In this Sunday's NYT, the WTO's Keith Rockwell responds. Here's a highlight:

The most important elements of the W.T.O. commitments on financial services pertain to nondiscrimination and national treatment, meaning that if you accept opening your market, you may not apply different regulations to banks from different foreign countries or to your local banks.

We've been following this issue on the blog for years, and I'm a little underwhelmed by the WTO talking points. As far back as 2009, Pascal Lamy (the WTO head) made the same argument that Rockwell now makes: that the WTO's GATS only requires non-discrimination. And as we wrote then:

...the WTO's own Appellate Body ruled that non-discriminatory bans on the supply of services, in sectors where full market access commitments have been undertaken, are quantitative limitations covered by GATS Article XVI(2) - and thus must be removed.

This article, as it happens, was the focus of Morgenson's piece. She wrote on Article XVI or Market Access rules, while Lamy and Rockwell seem to want to only talk about Article XVII or National Treatment rules. (Their conversation on National Treatment doesn't really draw the right lessons from the case history: even policies that don't have discriminatory aims or effects can be found to violate the so-called "anti-discrimination" rules.)

Both articles are major planks of the GATS architecture: for the WTO to pretend that the former doesn't  exist is disingenous and inconsistent with the organization's own case law.

Rockwell is also off point when he writes:

As members of the European Union, Britain and Sweden provide the same degree of market access to foreign providers of financial services. Yet the crisis did not hit Swedish banks, while British banks suffered greatly. Why? Their regulatory systems differ.

The real pertinent question is whether either nation attempted to ban a dangerous financial product, cap the size of financial service providers, or restrict capital flows. If they attempted to, and they had deep financial services commitments under Article XVI, they could face dispute settlement and ultimately trade sanctions.

So, it's not ALL regulations that are banned by the GATS, but some very important ones are.

To recap: the WTO rules are enforceable and ban some very important financial regulations, while there is no international body (not BIS, not IMF, etc.) that can compel any positive financial regulation. To paraphrase Morgenson, this is an unfortunate paradox, and isn't about doing the right thing.

March 23, 2012

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

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


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

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

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

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


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

March 19, 2012

Two interesting reads on WTO conflict with financial re-regulation

In yesterday's New York Times, columnist Gretchen Morgenson sums up where we are at on avoiding another Wall Street melt-down:

Financial institutions, eager to maintain their profitable status quo, have lobbied hard against change. As a result, too-big-to-fail institutions have become even bigger and more powerful.  

In addition to lobbying, big financial players have another potential weapon in their battle against safety and soundness. This one is more hidden from view and comes from, of all places, the World Trade Organization in Geneva.

Back in the 1990s, when many in Washington — and virtually everyone on Wall Street — embraced the deregulation that helped lead to the recent crisis, a vast majority of W.T.O. nations made varying commitments to what’s called the financial services agreement, which loosens rules governing banks and other such institutions...

All this represents yet another paradox of our financial world: Even as our regulators try to devise a safer financial system, our trade representatives thwart efforts to reduce risks these operations pose to taxpayers.

Obama's trade team apparently had no comment for the article, which you can read here.

And over on the IDEAS web-page, veteran economist and policy analyst Andrew Cornford also discusses the conflict between the WTO services agreement and re-regulation, writing...

The introduction of the post‐crisis regulatory architecture for the financial sector reflects far‐reaching shifts in thinking concerning the appropriate scope and practice of financial regulation in comparison with that prevalent at the time of the drafting of the GATS rules on international trade in banking. These shifts have provided a further fillip to the debate among GATS commentators as to how far the rules accommodate prudential measures and reforms likely to constitute key elements of this new architecture.

He reviews the major interventions in the debate since the financial crisis.

Both Morgenson and Cornford's pieces are useful additions to the ongoing debate about ensuring that our trade rules don't get in the way of reining in Wall Street.

February 15, 2012

Tucker on ABC on WTO attack on food labels

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


January 26, 2012

Trying to Inch the WTO Away from Extreme Financial Deregulation

As regulators and legislators have wrestled with reforming the financial system in the wake of the crisis, one quiet corner of the debate has received less notice.  As we have reported in past posts, The World Trade Organization’s General Agreement on Trade in Services limits the kinds of financial regulations countries can impose.

These rules were hashed out during the 1990s – before the lessons of the financial crisis, and when deregulation was in vogue. Documents we obtained under the U.S. Freedom of Information Act show that, in the late 1980s and 1990s, U.S. government officials worked closely with Wall Street executives to sell these rules to wary developing nations.

Unlike the re-regulation being discussed in the G-20 or the Bank of International Settlements, these rules at the WTO are highly enforceable. While the near-total absence of re-regulation over the last 15 years has presented few opportunities to road-test this services agreement, tax havens like Panama have already threatened to use them against the tax transparency initiatives of cash-starved countries like Ecuador.  The U.S. lost a high-profile services trade case related to its ban on Internet gambling. Regulatory bans – even of questionable services – are prohibited under the WTO. And a European Commission staff paper about a potential financial transactions tax noted that it would be necessary to assess whether such a tax might conflict with the EU’s WTO commitments.

But the U.S., EU and the WTO Secretariat have spent the last 18 months trying to quash any discussion of these problems, much less consideration of possible updates to the old rules.

WTO Member States Try to Raise Issue at Ministerial Conference

Last fall, a group of countries led by Ecuador tried to get this problem on the formal agenda.  Their modest objective was for Trade Ministers at last December’s  WTO Ministerial Conference to acknowledge the need to review the WTO rules covering financial services in light of the financial crisis and the efforts internationally and domestically to strengthen regulation.

 Ecuador presented its proposal at the WTO’s Committee on Trade in Financial Services (CTFS) in late October in order to get the item on the agenda for December’s meeting.  A powerful bloc of countries – including India, Argentina, Turkey, Brazil, and South Africa – supported the proposal. However, the skewed “consensus” process in the WTO allowed the U.S., EU and Canada to block the discussion from moving forward at the Ministerial Conference, where Ministers would have been forced to recognize that there is a potential conflict between the WTO rules and the global consensus toward financial re-regulation. 

As is often the case in flawed WTO processes, it appears that Ecuador’s proposal was unfairly downplayed, perhaps to ensure that it would not be noted in the Ministerial Conference.   Because the CTFS finalized its Annual Report at the beginning of their October 31 meeting (the last meeting of the Committee in 2011), the discussion on Ecuador’s proposal that occurred later in the meeting was not included in the Annual Reports of the Committee on Trade in Financial Services or of the Council on Trade in Services.  The minutes from the October 31 CTFS meeting state that the Chair of the Committee noted that there was “some” interest in discussing the substantive issues raised by Ecuador.  An observer in the meeting, however, shared with us that the Chair had actually said that there was “broad” support.  The minutes also failed to take note that China and Venezuela supported the proposal, though the representatives from both countries joined the many others present in expressing support for the proposal. 

Ecuador reserved its right to raise the issue at the General Council meeting where the Ministerial Conference’s agenda was finalized.  Despite the fact that there was not consensus on any agenda items for the Ministerial, Ecuador’s proposal was blocked from the agenda, while other agenda items proposed by developed countries remained on the General Council agenda.   Ecuador was forced to raise its proposal under the  “Other Business,” section of the agenda, which was dealt with after 11 pm.  Despite this marginalization, again, a number of countries – including Argentina and Turkey -  spoke in favor of Ecuador’s proposal, and no countries opposed.  In the end, a brief statement about Ecuador’s proposal was included in the General Council’s Annual Report to the Ministers in the documents circulated at Ministerial Conference, but, unfortunately, the summary only lists the countries that spoke, but does not note their support, nor the fact that no country spoke in opposition. 

Activities at the Ministerial Conference

Since the efforts of Ecuador and its allies to include this issue on the agenda of the Ministerial Conference were thwarted, the government of Ecuador hosted a side event “Future of Trade in Financial Services: Safeguarding Stability” to raise this issue during the Ministerial.

During the side event, the Honourable Francisco Rivadeneira, Ecuador’s Vice Minister of Trade and Integration, strongly made the case for why Ecuador proposed a review of the WTO’s financial services rules -  to ensure that WTO members, particularly small countries like Ecuador, have sufficient policy space to engage in the regulation needed to ensure stability of the financial system. Alfredo Calcagno from UNCTAD’s  Division on Globalization and Development Strategies described in detail the concerns raised by UNCTAD’s 2011 Trade and Development Report, particularly how the ambiguities in the WTO’s General Agreement on Trade and Services (GATS) could restrict policy space for capital controls and other financial regulatory tools. Lori Wallach, Director of Public Citizen’s Global Trade Watch division, laid out the potential conflicts between GATS rules and needed financial regulations, based on a review of the legal literature.  Finally, Kavaljit Singh Director of Public Interest Research Centre in India gave a rousing presentation about how the financial sector must be properly regulated to ensure financial stability and inclusion, using examples from the Indian context.  

Unfortunately, the official proceedings of the Ministerial Conference went on in Alice-in-Wonderland - style as if no financial crisis had ever happened.   Without anything real to deliver after more than ten years of negotiations on the Doha round, the WTO struggled to demonstrate its continued relevance by trumpeting the accessions of Russia and Samoa – even though accessions are rarely considered to be news at the Ministerial Conference level.  If the powerful countries in the WTO – and its Secretariat – continue to refuse to acknowledge that its extreme deregulation rules require revision, the WTO will continue to lose legitimacy on the international stage.

 The good news is that Ecuador’s efforts did raise the profile of the issue among important WTO countries and that the Chair of the WTO’s Committee on Trade in Financial Services has agreed to keep Ecuador’s proposal for a review of the rules on the agenda for the Committee in 2012.  It will be important to watch closely to make sure that the U.S. and EU allow a robust review of the rules to go forward.


January 20, 2012

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

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

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

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

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

January 06, 2012

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

Appeal of Trade Pact Ruling Necessary First Step

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

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

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

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

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

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

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

January 03, 2012

Bankers Trying to Use NAFTA to Kill Financial Reform

Remember the Volcker Rule? Proposed by former Federal Reserve Chairman Paul Volcker and endorsed by five former Secretaries of the Treasury, it aims to prohibit commercial banks from trading stocks, bonds, currency, and derivatives for their own profit. (Customers of banks could still ask their banks to buy and sell these financial instruments if the customers front the cash.) Banks' risky trades played a huge role in the development of the 2008 financial crisis and precipitated the bailout for these overextended banks.

A form of the Volker Rule made it into the Dodd-Frank financial reform bill that became law in 2010, but bankers are trying to cripple the rule as regulatory agencies write the details of how the rule will work. The Investment Industry Association of Canada has raised the possibility of attacking the Volker Rule with NAFTA. In a letter sent to the Federal Reserve last month, the Association claims:

[T]he Volcker Rule will clearly interfere and raise the costs of cross-border dealing in Canadian securities. As a result, the Volcker Rule may contravene the NAFTA trade agreement.

The Investment Industry Association of Canada perfectly illustrates how "trade" agreements can reach inside nations' borders and interfere with public interest regulations that have nothing to do with the flow of goods between countries. Since NAFTA was enacted, bankers have gotten much more aggressive in their attempts to block regulation through trade deals. For example, the Korea FTA, passed by Congress in October, included much worse restrictions on financial sector regulations than NAFTA. On top of that, the General Agreement on Trade in Services of the WTO has its own set of rules that conflict with policies on capital controls, bans on risky financial services, size limits on banks, and “firewalls” between banking and investment services.

Necessary efforts to make our financial system stable like the Volker Rule may continue to run into obstacles unless we have a turnaround in trade policy to protect, rather than restrict, the right of governments to regulate in the public interest.

December 21, 2011

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

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

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

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

December 15, 2011

Carolers Sing for WTO Turnaround at Ministerial

WTO Turnaround, 12.14.11

December 14, 2011

Todd Tucker Talks Food Safety with Thom Hartmann

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

Check out the full interview here:

Recent Posts