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The White House responds, and we respond to the response

Last week we received this e-mail from White House staffer Kerrie Rushton, taking issue with Todd's post (really Lori's statement) about the many problems with the Colombia FTA.  We're reprinting the email in full, of course with our own responses.  After the break, Kerrie's email is in boldface, with our responses mixed in.

Eyes on Trade blog,

The White House appreciates the chance to respond to Todd Tucker's post yesterday, "Colombia-Congress Fast Track: What Happened, What We Will Do, and What You Should Think."

While we clearly, but respectfully, disagree with your belief that NAFTA has adversely affected U.S. economy (nearly 27 million new jobs since then; manufacturing output up 58 percent, a much higher increase than in the years preceding NAFTA), we'd like to address your post from yesterday and point out some ways the Colombia FTA differs from NAFTA.

As we have documented time and time again, the relevant measure of trade's impact on the economy is not the total number of jobs, but their composition. Net manufacturing job loss during the NAFTA-WTO era has been 3 million, while EPI estimates that job loss directly due to the trade deficit was millions more. Additionally, manufacturing value-added is a more appropriate measure than raw manufacturing output, which doesn't account for the growing share of imported inputs into "American"-made products. Growth in value-added is the same before and after NAFTA. Please refer to our "The Real NAFTA Score 2008" document for more detail.

First, the investment provisions of the Colombia TPA include innovations developed by the Administration in response to Congressional guidance in the 2002 Trade Act, including provisions on expropriation and investor-state dispute settlement.  These innovations strike the right balance between investor protection and the right for governments to regulate the public welfare, including health, safety, and the environment. Indeed, nothing in the Colombia TPA's investment provisions prevents a country from adopting or maintaining non-discriminatory laws or regulations that protect the environment, worker rights, health and safety, or other public interest.  The United States has never lost a challenge in the cases decided to date under the arbitration provisions of our trade agreements, nor paid a penny in damages to resolve any investment dispute. Even if the United States were to lose a case, it could be directed to pay compensation but it could not be required to change the laws or regulations at issue.

NAFTA's undemocratic investor-state system allows corporations to privately enforce NAFTA-granted rights and be compensated for government policies or actions that undermine their expected future profits. The majority of the cases brought by corporations against governments under this system has been against public interest policies related to the environment, natural resources and public health (26 out of 49). Over $31 billion has been claimed by investors in NAFTA investor-state suits, and $45 million has been paid out by taxpayers to corporations - all in cases related to environmental, health or agricultural policy. Legislators throughout North America have had their environmental initiatives chilled by threats of damaging NAFTA investor-state cases. And U.S. taxpayers have spent millions fighting these claims.

In a NAFTA case brought by the Loewen Group, a Canadian funeral home conglomerate, the United States lost on the merits, only to have the case dismissed on a technicality. This case is a prime example of how foreign investors are granted greater rights than domestic firms. The NAFTA panel in the Loewen case issued a remarkable jurisdictional ruling indicating that all adverse domestic court decisions are potentially eligible for NAFTA review as international law violations and may even qualify as "expropriations." The panel failed to place any limits on the type of domestic court decision that can be challenged using the investor-state mechanism, except to state that plaintiffs should exhaust domestic court remedies before proceeding to a NAFTA tribunal. (On this and other cases, see our most recent report on the Chapter 11 system, and a table put together by the Canadian Center for Policy Alternatives.)

Recent FTAs, if anything, make this situation worse. Under CAFTA, foreign cigar companies threatened to challenge the expansion of the S-CHIP children's health insurance program, because it would have been financed by an increase in cigar taxes.

And in the Peru and Colombia FTAs, the investment chapters specifically extend coverage to corporations that have a "written agreement" with "a national authority of a Party" with regard to "natural resources that a national authority controls, such as for their exploration, extraction, refining, transportation, distribution, or sale." These pacts thus would empower multinational oil and gas to drag the Peruvian or Colombian governments to World Bank tribunals to demand compensation for changes to the corporations' exploration and exploitation contracts that could undermine their "expected future profits." What this means is that these FTAs would allow such firms to crush measures governments might take to protect the vulnerable Amazon rainforest.

Both critics and proponents of our status quo trade policy agree that the purpose of FTAs is to lock in deregulation and neoliberal policies at home and abroad. As Jeff Faux writes in his book The Global Class War:

"That a leftist almost became president of Mexico [Cuauhtémoc Cárdenas in 1988] and therefore might have set back [President Carlos] Salinas's plans to open up the country to foreign investment made Washington nervous. Preventing that in the future was on the minds of many NAFTA promoters. By locking Salinas's specific neoliberal agenda into an international treaty the U.S. and Mexican elites in effect were colluding to prevent he Mexican people from freely choosing different policies even if Salinas's reform failed... In 2004, Robert Rubin recalled, ‘Salinas once told me that the best thing about NAFTA was that in the next crisis it would prevent Mexico from going back to the old statist protectionist days.'"

Never mind that those "bad old days" were actually a time of substantial growth and welfare gains for Mexicans!

Second, Colombian farmers. The Colombia FTA establishes protective mechanisms, such as long-term phase-out schedules, grace periods, and quotas, for highly trade-sensitive products like rice and corn.  These provisions will prepare Colombian farms for any challenges that may arise from the FTA. The agreement includes transitional protection for the most vulnerable Colombian agriculture producers.

You don't have to take our word for it that FTAs mean displacement of poor people. The Colombian government's own agriculture ministry projects that the Colombia FTA will eliminate 35 percent of the jobs in crucial agriculture sectors like corn, rice, beans and more. And a recent exposé in the pro-NAFTA New Republic reads:

" cheap American foodstuffs flooded Mexico's markets and as U.S. agribusiness moved in, 1.1 million small farmers - and 1.4 million other Mexicans dependent upon the farm sector - were driven out of work between 1993 and 2005. Wages dropped so precipitously that today the income of a farm laborer is one-third that of what it was before NAFTA. As jobs disappeared and wages sank, many of these rural Mexicans emigrated, swelling the ranks of the 12 million illegal immigrants living incognito and competing for low-wage jobs in the United States."

Regarding food safety, no provision in any of our FTAs - including NAFTA and the Colombia agreement - limits the ability of the U.S. to protect our food supply.  On the contrary, all our FTAs allow U.S. government agencies, on the basis of a science-based assessment of specific risk, to apply appropriate measures to safeguard life and health.  There is nothing in our FTAs that restricts food regulators in the United States from taking appropriate surveillance and enforcement measures when necessary for food safety.

The Colombia FTA, and other NAFTA expansions such as the Peru FTA, incorporate provisions that have already limited food safety. These NAFTA expansion agreements incorporate the WTO's Sanitary and Phytosanitary (SPS) Agreement, which contains a series of rules limiting countries' levels of food safety and animal and plant health protections, and requiring that imported foods be treated the same as domestic foods. Many U.S. foods safety regulations have already been altered and weakened to meet these requirements.

Furthermore, foreign countries and companies can - and have - challenged or "chilled" U.S. food safety regulations in NAFTA or WTO tribunals. Trade agreements empower foreign nations (and, in the case of NAFTA and its expansions, foreign private companies) to attack our food safety standards and inspection rates in binding trade and investment tribunals. Laws ruled against in government-government trade tribunals must be changed or indefinite trade sanctions are applied. Already under NAFTA, Canadian cattle producers used these foreign investor rights to demand $235 million in compensation from the U.S. Treasury over the U.S. temporary ban on Canadian beef imports mad cow disease was discovered in that nation.

Please refer to our earlier response to USTR on exactly this issue for more details and examples.

We'd also like to remind you that this agreement fully incorporated, at the Democrats' request, increased labor and environmental standards to the deal.  The labor protections in the agreement are among the strongest ever in an FTA.

While a step in the right direction, these alterations do not change the underlying NAFTA structure of new FTAs such as that with Colombia. They fail to remove the many core NAFTA elements contained in FTAs that suppress U.S. wage levels, promote offshoring of manufacturing jobs and expose our environmental laws to attack in foreign tribunals. Needed changes to the core NAFTA-CAFTA investment, procurement, service-sector, agriculture and other provisions, which have been specifically enumerated as necessary by labor unions, environmental, consumer, faith and family farm groups were not made.

Additionally, from the Chamber of Commerce to the Change to Win Federation to Human Rights Watch, many analysts consider the May 10 labor provisions to be unenforceable.

Finally, a note about labor violence. Colombia still has work to do, but it's important to acknowledge the very real gains that have been made under President Uribe and to realize that failing to pass this agreement will not save one life.  Homicides are down 40 percent (homicides of trade unionists are down 79 percent according to the National Union School); terrorist attacks 76 percent; and kidnappings 83 percent.  One union leader death is too one too many, which is why President Uribe established an independent prosecutors unit and created a special program that protects labor activists.

Just to review the numbers, over 2,500 trade unionists have been killed since 1986 - more than the rest of the world combined. Less than three percent of unionist murders have been prosecuted. Over 500 unionists have been murdered since the current President Uribe has been in power. Human rights groups have documented collusion between the Uribe government and murderous paramilitary groups on these and other issues. As seen in the above quote, the Bush administration is pushing the deal by arguing that these killings have gone down - only 39 unionists murdered in 2007, Bush has said. As if a single assassination is acceptable!

As Chris Hayes has pointed out, we would not be signing a trade agreement with a country that murdered CEOs... or even expropriated their property. That a Colombia FTA is even being considered shows the extreme classism of the Bush administration and many in Congress.

This week, several Colombian labor leaders traveled to Washington this week to express their support for the FTA. Gerardo Zapata, secretary general of the textile and apparel section of the Textiles Rionegro-Coltejer labor union, said "The FTA is very important to our country for peace and economic stability."  We hope you will consider their plea.

The Bush and Uribe administrations have cultivated front groups of "labor and Afro-Colombians" to carry a pro-FTA message. The majority of workers and Afro-Colombians and peasant farmers oppose the Colombia FTA - the AFL-CIO has shown that legitimate Colombian unions representing 86 percent of the country's organized workforce oppose the agreement. The "unions" speaking in favor of the FTA are management-dominated groups or figureheads hand-picked by the government who have spoken in favor of the agreement even though the unions they purportedly represent do not support the FTA.

Thank you for allowing us this chance to respond,


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