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House Members to White House: We Got Your Back

A large bloc of House members sent President Obama a letter describing a trade reform agenda about which they are excited to work in cooperation with him. On issues ranging from renegotiating the North American Free Trade Agreement (NAFTA) and Central American Free Trade Agreement (CAFTA) and creating new import safety policies to remedying the failed U.S.-China trade relationship, the letter focuses largely on implementing Obama's campaign pledges to transform U.S. trade and globalization policies.House Seal

The letter, which was initiated by House Trade Working Group co-chair Mike Michaud (D-ME) was signed by a prominent group of members, including 6 Committee chairs and 17 Subcommittee chairs representing 24 states from Hawaii to Maine, from Georgia to Oregon, and stretching far beyond the Rust Belt. See the press release and letter here. One choice except of the letter to the President:

We heartily agree with your conclusion that trade policies “are not sustainable if they favor the few rather than the many.” Rebalancing our trade and globalization policies so that they create and retain good jobs in the United States, foster sustainable and equitable development worldwide, and provide government with the policy space necessary to solve pressing economic, climate, and other challenges is critical to prosperity and security at home and around the world.
This four-page letter was endorsed by key congressional leaders and members of diverse Democratic caucuses (Blue Dogs, New Democrats, Black Caucus, Hispanic Caucus, Progressive Caucus and more).

(Photo used under a Creative Commons license courtesy of Flickr user Stella's mom).
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Hearings Set for Obama's Trade Change Agent

(Note: Hearing has been postponed until Monday March 9, 2009, at 5:00 p.m.)

The Senate Finance Committee posted official notice that the hearing for President Obama's choice to head the Office of the United States Trade Representative (USTR) will being at 3pm on Thursday, March 5th.

Kirk on the trail

This will be fair trader' first in-depth look at former Dallas, TX Mayor and USTR nominee Ron Kirk's personal views on trade policy, and to hear how he plans to implement the litany of reforms committed to by President Obama on the campaign trail.

You can join in spirit what's sure to be an swinging hoppin' viewing party here at Global Trade Watch - either on cable, or by tuning in online at C-SPAN.org for all the fun.

I sure hope they're planning to devote some extra bandwidth to this programming. If just a small fraction of our friends who voted for fair trade last November decide to show up to the online auxiliary viewing part, it'll be quite the crowd!

(Photo courtesy of Flickr user Rob 1914)

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Where To Hide All This Colombian Drug Money...?

I've got just the place: the pockets of Panamanian and Colombian politicians!

Thats what David Murcia did, whose elaborate pyramid and money laundering scam left in the lurches at least 700,000 and as many as 3 million citizen investors. According to the New York Times, two of the three Bush hangover FTA countries are caught up in the mess:Drug money

Mr. Murcia has been charged with creating a hydra-headed enterprise based in Panama that laundered money and enticed thousands of Colombians into a pyramid scheme known by his own initials, D.M.G.

Murcia might be about to get a slice of evidently-needed humble pie as he faces trial. Seems that the paw prints of narco-traffickers and Panamanian politicians and Colombian politicians - I know you're shocked - are all over his dirty money. We'll get to the Colombians tomorrow.

According to Colombian press La Patria (translated from Spanish) the authorities are starting to think this was much more than a your average pyramid scheme:

'It's not just the word on the street, statements in the media, by people linked to [DMG], above all its the investigation that points to the fact that this business had to do with narcotrafficking", stated the national Attorney General Mario Iguarán Arana.

This has been suspected for some time, though reporting prior to the new year, like this Washington Post's mention of the drug money, has been more in passing:

But investigators say it appears Murcia made money by buying electronic goods in bulk and selling them at high prices and by laundering drug profits.

Folks who watch the region won't be surprised that due to its banking secrecy laws that Colombian cartels - or Mexican ones for that matter - choose Panama as the site to hide their money. Maybe it shouldn't surprise us either that ruling party politicians are implicated in both Panama and Colombia. Panamanian press reeled when ruling party candidates got linked to the drug-money laundering pyramid scheme (from Spanish):

In an interview from La Picota prison in Colombia, Murcia mentioned to TVN Channel 2 the names of presidential candidate Balbina Herrera and her party-mate and capital city mayoral hopeful Roberto “Bobby” Velásquez and referred to other candidates.

Continue reading "Where To Hide All This Colombian Drug Money...?" »

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Obama Budget to Close Offshore Tax Loopholes

The new Obama Budget will close Offshore Tax Loopholes. At least that's what the Office on Management and Budget's budget document says:

The Budget also begins to restore a basic sense of fairness to the tax code, eliminating incentives for companies that ship jobs overseas and giving a generous package of tax cuts to 95 percent of working families.

No detail as of yet as to what this means. As this CRS Report on the U.S. international taxation system shows, it could mean at least a few things:

  1. Elimination to multinationals' ability to defer taxes on foreign-source income;Jonathanwinters-tvweek
  2. Elimination of the foreign tax credit, which give certain multinationals with subsidiaries in certain countries a credit for taxes they pay in the foreign country;
  3. Some sort of regulatory prohibition or disincentive structure to make it difficult to re-incorporate abroad, i.e. create a "new" parent company in Panama that "adopts" the "old" U.S. parent company, which becomes the kiddie and ages in reverse like Benjamin Button or Mearth in Mork & Mindy.

Sources tell me we may be waiting a bit before OMB Director Peter Orzag offers any detail on this.

The other trade tidbits in the budget:

Countries and companies around the world recognize [the climate crisis] and are working day and night to develop clean energy technologies that will change everything from how we generate our electricity to how we power our cars and trucks. While the challenge is great, the promise of the moment is unparalleled. If we lead the world in the research and development of clean energy technology, we can create a whole new industry with high-paying jobs that cannot be shipped overseas...

Reforming the Market Access Program (MAP). The Budget reforms MAP by reducing program funding for overseas brand promotion and minimizes the benefits that large for-profit entities may indirectly gain as members of trade associations who participate in MAP. An annual funding reduction of 20 percent will improve the program by placing greater emphasis on promoting generic American agricultural products overseas and assisting small business entities.

UPDATE: A colleague alerts met to page 122 of the budget document, which indicates that some non-elaborated combination of "international enforcement, reform deferral and other tax reform efforts" is projected to generate $210 billion in additional federal revenue over 2010-2019.

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WTO Dispute/FTA Countries Set Stage for Banking Drama

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

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

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

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

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

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

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

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

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

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Fast Track = dope

Just came across a pretty funny intervention in the original Fast Track fight from 1973-74, when Rep.Dope Charles Dent (D-Pa.) said,

"This is one bill that no one wants to hear anything about, because they might hear something that is in opposition to their views. The trade bill is just like someone who starts taking dope. People who take dope know it is wrong, they know it is unhealthy, they know that in the end it will kill them, but they keep on taking it."

Dent was referring to the Trade Act of 1974, which established the first grant of Fast Track authority, where Congress delegates its constitutional authority to set the terms of trade agreements to the executive. Most Democrats voted against the original Nixon proposal in December 1973. The Senate made some changes to the bill in 1974, but no printed copies were furnished to the members of the House, who were told by Ways & Means Committee members that the bill was dramatically improved. Most members simply trusted their colleagues to be telling the truth, a blind faith that was eroded by every single trade vote since.

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An "American" identity crisis

Robert Cassidy spent decades working for the U.S. Government to advance the free trade agenda, accumulating an impressive set of experience and credentials:

Corporate American Flag "Cassidy was the chief U.S. negotiator on China's 1999 market access agreement with the United States -- the document that was the basis for Congress's extension of permanent normalized trade relations to China, which in turn enabled China to join the World Trade Organization. During the 1990s, Cassidy was the assistant U.S. trade representative for the Asia-Pacific region, and before that he worked in the Treasury Department's international affairs office."

But, as reported in the Washington Post, Cassidy sang a different tune at an Economic Policy Institute (EPI) event in response to the uproar about keeping "Buy American" provisions in the stimulus package. After taking part in crafting certain inner workings of our current global economy, Cassidy is discontent with the results of his labor and the path they have put the United States on.

Cassidy emphasized a crucial point: that the interests of American multinationals are not, in fact, in line with our (the USA's) national interest. Here's how the WaPo broke it down:

"the economic relationship between the United States and China is the linchpin of the global economy -- that is, a central cause of the global economic crisis. China produces and we consume; China takes the proceeds from our consumption and lends it back to us, not so we can produce more -- American multinationals would prefer the Chinese do that -- but so we can take on more debt and continue to consume...

It speaks volumes about the last couple of decades of U.S. trade policy that the man who negotiated many key points of that policy now thinks that they were calculated not to enhance our national interest but, rather, those of U.S. financial and corporate interests.

The debate about the stimulus package before Congress has helped expose the huge rift between our national interest and that of our globalized business sector. Last week, the House Appropriations Committee voted almost unanimously to require the use of U.S.-made steel in the infrastructure projects included in the stimulus, unless the U.S. industry -- which is running at 43 percent of capacity -- was unable to supply it. You might think that American business, beyond the steel industry, would welcome such language, but, in fact, using Americans' tax dollars to stimulate American production looks like the last thing globalized American business wants. A letter opposing "Buy American" provisions in the stimulus has been signed by the U.S. Chamber of Commerce, the Business Roundtable and several other such groups.

It was bad enough when our banks and corporations decided to take their funds out of American manufacturing to promote low-wage production in China. Now they want to direct the tax dollars behind the stimulus program to the same end.

The only mystery here is why the Chamber and the Roundtable aren't compelled to register as foreign lobbyists. Of all the terms we could use to describe them, "American" certainly does not spring to mind."

This confusing allegiance (and harsh reality) is at the root of our troubles. And it begs a serious question, not only for citizens of the United States but of all countries: If our Chamber of Commerce, Business Roundtable, and trade representatives aren't representing the national interest, who is?

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The 800 Lb. NAFTA in the Room

I would have loved to have been a fly on the wall when President Obama - who ran as a fair trader - breached the the tiny matter of renegotiating the world's largest trading relationship with Canadian Prime Minister Stephen Harper - an unabashed anti-fair trader.Obama canada

Seems like it would be hard not just to break the ice, but to bust through the inherent iciness of that setup. Not real quotes:

"So. You come here often? Kinda chilly, huh? Nippy even. Like Chicago... But - hey - about this NAFTA..."

The meeting was certainly a loaded affair, with heavies on both sides of the border monitoring to ensure that NAFTA fixes that put working people first would stay on the agenda. The AFL-CIO and Canadian Labour Congress sent a joint letter to President Obama and Prime Minister Harper, which reminds the North American leaders that the world's largest trading relationship hasn't always worked for the majority of us:

The North America Free Trade Agreement (NAFTA) was sold on the promise that it would bring net benefits in more and better jobs and faster growth. While NAFTA did succeed in increasing trade and investment flows, it did not (and could not) have created more net trade related jobs in all three countries, and those jobs that were created were often less stable, with reduced pay and fewer benefits, than the largely unionized manufacturing jobs that were displaced. Income inequality grew in all three countries.

NAFTA has failed so badly to deliver for North American workers that there's no avoiding an elephant of these proportions. As GTW's Director Lori Wallach mentions to Reuters , President Obama promised change on trade policy, and change on trade policy is what people are still hoping for:

"You can't campaign ... repeatedly about how you are going to fix NAFTA and otherwise reform U.S. trade and globalization policy and then not do it," said Lori Wallach, director of Public Citizen's Global Trade Watch. "Everyone's going to be watching to see that he delivers on those promises."

And again in today's WP:

"I am happy for him to frame his way of positioning the issue any way he wants, as long as he actually delivers on the issue," said Lori Wallach, the director of Public Citizen's Global Trade Watch division. "If down the road Obama doesn't deliver on the policy, there will be a whole lot of really upset people."

We'll be watching to see what comes of the meeting, but preliminary reports show no sign of Obama caving on the weighty topic.

(Photo Courtesy of Flickr user Jeff Macpherson)

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Obama's Promised NAFTA Fixes

As President Obama heads to Canada tomorrow for his first international trip as president, we wanted to take you back to last year’s Democratic presidential primary. You may remember, that at about this time last year, then-candidate Obama campaigned strongly on a pledge to renegotiate NAFTA. On the campaign trail, Obama got it. From Oregon to South Carolina, Ohio to Texas, Obama saw the devastating impact NAFTA is having on communities across the country, and promised to renegotiate the agreement.

With little prodding, Obama made very specific commitments on NAFTA renegotiation:

"While NAFTA gave broad rights to investors, it paid only lip service to the rights of labor and the importance of environmental protection... We should amend NAFTA to make clear that fair laws and regulations written to protect citizens in any of the three countries cannot be overridden simply at the request of foreign investors."

As he heads north, let's hope Obama remembers who won the "anti-NAFTA off" that we all enjoyed last winter.

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Uribe: War is Peace, Ignorance is Strength

It just can't get much more Orwellian Uribian (?) than this.

Colombian President Uribe's true colors came through last week when he again openly equated human-rights defenders and seekers of peace with left-wing combatants, as reported here English in elsewhere in Spanish:Alvaro_uribe_hands

"The intellectual bloc of the FARC is always talking about human rights, only to intimidate our soldiers and police," he said.

"We can't allow that they, with their nice little story of peace and permanent accusations against the armed forces, paralyse our policy of democratic security and the strategy against drugs and terrorism," Uribe said.

Uribe's warnings came as the nation waited expectantly to hear the contents of a document that FARC's top leader Alfonso Cano has sent to Senator Piedad Cordoba, who mediated in the release of captive soldiers, police and politicians.

(Activists are speaking out to denounce these attacks, and you can too!)

So let me get this straight: the Colombian peace movement successfully negotiates for the release of hostages held by the FARC rebels (Uribe's Army and Police Personnel) in hopes that it deescalates conflict and lays the groundwork for permanent cessation of violence. They show that could be possible with a peaceful turnover of hostages.

Then Big Brother President Uribe says that by even questioning the notion that the military solution - having failed for over 40 years to bring resolution to the country - is the only viable way to end the war, and that the individuals and organizations actually talking about peace comprise a secret cadre of rebel war-mongers.

Got it. In Uribe's Colombia both the act of taking Army soldiers hostage, and also of freeing Army soldiers, makes you a narco-terrorist. Its all clear now. I just had to walk through it to understand it all...

But wait, what does that make him?

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Buy Keynesian

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

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

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

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

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

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

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

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

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Congress Passes Buy America in Stimulus

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

Here's the final version of the language:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This morning the House Committee on Education and Labor, chaired by Democratic California Rep. George Miller, held a hearing on the true state of workers rights and violence against union leaders in Colombia.Miller

The verdict is that it ain't pretty: violence against unionists rose 25% in 2008, and reached 49 assassinations last year:

“Sadly, Colombia has been the most dangerous place in the world to belong to a labor union for decades,” said Rep. George Miller (D-CA), chairman of the committee. “In some recent years, there have been more labor killings in Colombia than the rest of the world combined.”

We've documented the Uribe government's campaign of deception regarding the supposed improvements in labor rights and their (ahem) "vigorous" prosecution of rights violators, so it's heartening to again see the truth being heard in Congress.

Witnesses testified that, despite its claims, the Uribe government has continued to drag its feet in enforcing labor laws and prosecuting perpetrators of violence:

“Despite the two sentences in which the Colombian judges have ruled that my father was murdered for being a labor unionist, the prosecutor’s office, in order to continue hiding the truth, maintained the hypothesis of a crime of passion up until August of 2008,” said Yessika Hoyos, daughter of Jorge Dario Hoyos Franco. “It took international pressure for the prosecutor’s office to acknowledge the truth with respect to the motive for the crime. We will continue to demand that the intellectual authors be investigated, as the murder of unionists in Colombia is the result of a systematic government policy.”

Continue reading "Seeing the Truth: Capitol Hearings on Colombia's Labor Violations" »

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Buying America; Playing in Peoria

Buyamerica Do you remember this campaign graphic from the Obama campaign in Pennsylvania? Obama promoted Buy American policy in television and radio ads and even committed to renegotiating existing trade agreements to remove their limits on Buy American procurement. We thought you'd be interested in what President Obama had to say about "Buy America" policies on the campaign trail, especially given this Thursday he will be in Peoria visiting a plant operated by Caterpillar, the corporation leading the attack against Buy America provisions in the Stimulus Plan:

When asked in writing: "Do you support renegotiating trade agreements so they will allow us to use "Buy America" and "Buy Local" procurement policies? Obama answered "Yes" in a May 2008 Candidate Questionnaire (PDF) from the Oregon Fair Trade Campaign.

Obama ran paid TV attack ads in North Carolina against John McCain's opposition to Buy American provisions.

Obama also ran a radio ad attacking John McCain's opposition to Buy America after McCain slammed Obama's European trip at a biker rally. At the rally, McCain said he would rather listen to the "roar of 50,000 Harleys" than the cheering of 200,000 Berliners. An Obama ad retorted that McCain was a phony for opposing a requirement that the government buy American-made motorbikes. "But when it comes to his record," the announcer says, "American-made motorcycles like Harleys don't matter to John McCain. Back in Washington, McCain opposed the requirement that the government buy American-made motorcycles."

Finally, check out David Sirota's piece for lots of great details of Obama's commitments to voters to support Buy America policies.

According to a recent poll (PDF), an overwhelming 86 percent of Americans support the Buy America provisions in the stimulus. (See the video embedded below for more on this poll.)

Buy America policies seem to play pretty well in Peoria.

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Attack on product safety law averted

More news from other divisions of Public Citizen working to make the products we buy safer. Here is a press release from our colleagues at Congress Watch:

South Carolina Sen. Jim DeMint’s attempt to undermine the Consumer Product Safety Improvement Act by amending the economic stimulus package fortunately never came to fruition. Lawmakers should block any more attempts to change the product safety law.

DeMint’s proposal, never voted on, would have unnecessarily exempted some businesses from the new safety regulations and would have allowed retailers to keep selling products that contain dangerous levels of lead. Empirical evidence links lead to permanent brain damage in children.

Rolling back protections, as Sen. DeMint proposed, would have meant disregarding the plights of the many children who have been hurt, become sick or even died from unsafe products - and would have put more children at risk by allowing millions of dangerous products to be placed on the market. The flood of hazardous toys and children’s products onto our shelves is what prompted overwhelming bipartisan majorities in Congress to pass the product safety act in August.

Sen. DeMint’s amendment was prompted by an outcry from small manufacturers and secondhand sellers who fear the new law will force them out of business. But changing the law - and putting children at risk - is not necessary to address the concerns that small businesses have raised. The Consumer Product Safety Commission can resolve these concerns with some simple, commonsense rules. It already has begun to do so.

However, at present the commission sorely lacks the leadership it needs to implement this law effectively for consumers or small businesses. Its current chair, Nancy Nord, is a holdover from the past administration, which was often too eager to protect manufacturers at the expense of public health and safety. It’s time for Nord to go, and that - rather than modifying the Consumer Product Safety Improvement Act - is where public officials should focus their energy. The country deserves a product safety leader who is committed to carrying out Congress’ mandate and protecting the public.

Again, for Global Trade Watch's role in this ongoing campaign, check out our report Closing Santa's Sweatshop (PDF) for things we need to do to proactively ensure product safety.

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Canadian Businesses Support "Buy Canada"

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

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

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

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

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

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

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

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Buy America survives Collins-Nelson Fleet Streeting

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

Luckily, the Buy America provisions survived the Collins-Nelson Fleet Streeting of the Stimulus, as didJohnny_depp_in_2007_sweeney_todd__the_demon_barber_of_fleet_street_wallpaper_4 the Sanders-Grassley amendment, which was passed unanimously by voice vote. For companies receiving TARP funds, it restricts their ability to cite labor shortages in their hiring of H-1B workers from abroad. The idea is that Microsoft shouldn't be able to layoff thousands of workers and then come to Congress citing engineer labor shortages in their quest to import foreign workers that are covered by weaker labor rights. (Text below).

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

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

    (b) Prohibition-

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

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

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

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Wake Up and Smell the New Day on Trade!

Here's another alarm for those who've had their heads buried undeThink Credence: Fair Trade Sun on the Riser the covers since before November of 2006: Wake up and smell the New Day on Trade!

347 public interest organizations (and counting) have joined forces to welcome the new fair-trade president and newly upgraded fair trade Congress and express their excitement to work together to reform our broken trade policies.

The letter, spearheaded by the Citizens Trade campaign along with its member groups and state affiliates, reads:

The recent election demonstrated a relentless demand from the American public for trade reform. Across the country, from the Presidency to both chambers of Congress, successful candidates in 2008 ran against the failed status quo and for a new approach. With this election, 42 newly elected Senators and Representatives committed to changing our past trade model. They join over two dozen fair traders elected in 2006 – making a combined total of 71 fair-trade reformers who replaced those supporting the North American Free Trade Agreement (NAFTA), the Central America Free Trade Agreement (CAFTA) and our current China trade policies.

Signatories said they look forward to working the Congress and the Obama administration to correct our failed trade policies of the past. Specifically groups cited a desire to fix past deals like NAFTA, CAFTA and the WTO, as well as the hangover Bush NAFTA-type deals with Panama, Colombia, and South Korea and that they be renegotiated along the lines of the real reform outlined in the TRADE Act.

Wipe the crust from your eyes America, and see the trade reform start a flowin!

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Pretending there's a problem

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

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

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

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

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

It's like the murder on the Orient Express: It turned out everyone participated, but they all did it for their own reasons.
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The American People is Ready for a Change with Buy America

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

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

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It's Because She's a Fair Trader - Not a Good Ol' Boy - Isn't It?

GOP Senators are blocking confirmation of President Obama's Labor Secretary pick and fair trader Rep. Hilda Solis (D-Calif.). Seems like they'd prefer someone with no family background of actually laboring and no history of support for people who perform labor for a living - you know, people like them.Solis 

They say its another tax issue that's been dug up about Solis' husband, but here's the San Francisco Chronicle on the what are likely the real GOP objections:

Republicans on the committee have challenged Solis over her support for the Employee Free Choice Act, which would make it easier for workers to unionize. They also suggested that her position as an unpaid board member for the pro-labor group American Rights at Work amounted to a lobbying role, which Solis denies.

We should also note that those same GOP Senators might not be too jazzed that Solis has an almost 100% fair-trade voting record representing her California constituents. Just a hunch.

But labor leaders like John Sweeney and Andy Stern are coming to Solis' defense. Sweeney, President of the AFL-CIO, reiterated his support for Solis yesterday:

Congresswoman Hilda Solis is eminently qualified for this post, and will be a vigorous advocate for the kinds of programs that our nation is working people need the most. She will fight to improve skills development and job creation programs, including development of "green collar" jobs. She will work to assure that workers get the pay they have earned and that they work in safe, healthy, and fair workplaces. She is ready to address the retirement security crisis and will work hard to protect every worker from job discrimination, regardless of race, sex, veteran status, or disability.

She understands that working men and women deserve the freedom to choose whether to form a union without employer interference.

Stern, President of the Service Employees International Union, put out a video calling this obstruction "unacceptable."

We'll be watching closely as hearings over this fair-trade cabinet member-to-be develop.

(Photo of Rep. Solis courtesy of Flickr user Barack Obama used under a Creative Commons License)

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One step towards "No More Toxic Toys"

Congrats to our colleagues in Public Citizen's Health Research and Litigation groups, who in conjunction with the Natural Resources Defense Council won a victory today in requiring toys made with toxic phthalates come off the shelves by February 10. By the way, this was simply the law as Congress passed it last year; but Bush and his pro-corporate Consumer Product Safety Commission decided they were going to try to break the law. Us good guys made sure they didn't. Read more at Public Citizen's Citizen Vox blog.

Of course, here at Global Trade Watch we also work on this issue, since global "trade" rules encourage offshoring of toy production to countries with lower safety standards while at the same time making it more difficult to enforce our own standards at the border. Check out our recent report, Closing Santa's Sweatshop (PDF), for more on the next steps we need to take on toy safety.

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McCain Amendment to Prohibit Buy America Crashes and Burns

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

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

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

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

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

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Harper Gets Hypocritical about Hypotheticals

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Double Standards for Banks and Builders

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

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

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

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

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

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

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

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

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

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

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Broken Promises from Buy America Opponents

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

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

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

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

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

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

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

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

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

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

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Rightwing Canadian Government Trying to Sabotage Obama Administration

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

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

As we've been pointing out, there has been a massive corporate lying campaign about the iron and steelHarperStencil2 provisions for U.S. transit projects. Now, corporations have teamed up with Canada and some of the knuckle-dragging EU governments to throw just enough fake spin to try to fool U.S. policymakers into thinking these measures are WTO-illegal. They're not.

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

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

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

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

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

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

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

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

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

By Lori Wallach and Todd Tucker*

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

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

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

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


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

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

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

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Sirota on Obama's Buy America Promises

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

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

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