New Report: Panama FTA Would Undermine U.S. Efforts to Stop Offshore Tax-Haven Abuse

We released a comprehensive new report on the Panama FTA. Here's our press release:

President Obama's ability to deliver on his campaign commitments to close tax loopholes that promote offshoring and re-regulate the financial sector would be dealt a sharp blow if the U.S.-Panama Free Trade Agreement (FTA) is passed, according to a Public Citizen report released today (PDF).

The new report details how Panama explicitly created an industrial policy designed to create a "comparative advantage" in tax-evasion and money-laundering services for entities such as the bailed-out American International Group (AIG) and Mexican and Colombian narcotraffickers. The report also examines how specific FTA rules would remove key policy tools – such as limitations on transfers from tax-haven countries that are used to combat financial crimes – and would also conflict with U.S. government efforts to combat the global economic crisis by re-regulating finance.

"Members of Congress wouldn't vote to let AIG not pay its taxes or to give Mexican drug lords a safe place to hide their proceeds from selling drugs to our kids, but that's in essence what the Panama FTA does," said Lori Wallach, director of Public Citizen's Global Trade Watch division. "The Obama administration has discarded or altered many leftover Bush initiatives, so why would it push a Bush trade pact that directly conflicts with its priority campaign goals of closing tax loopholes and regulating finance?"

The Panama deal, negotiated by the Bush administration, is modeled on the controversial North American Free Trade Agreement (NAFTA) template. It includes the controversial private “investor-state” enforcement system, which would give new powers to hundreds of thousands of private investors from around the world that are registered and have operations in Panama. This includes the right to challenge U.S. anti-tax haven policies and financial service regulations in foreign tribunals to demand taxpayer-funded compensation. 

Among the key findings:

NAFTA: A Familiar Hurdle for California's Environmental Regulators

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

The Associated Press reports:

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

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

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

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

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

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

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

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

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

Death Squad Leader: I "Funded Uribe"

'Breaking' news today: President Uribe is linked to narcotrafficking paramilitary death squads. We say 'breaking' because, as the below article mentions, these allegations have followed Uribe since early in his political career, and some of us have been noting the fact for some time.

The BBC reports on the most recent development in the so-called 'para-politics' scandal that shows Uribe's complicity in the murders of thousands of Colombians:

A drug lord imprisoned in US has said that he and his illegal paramilitary army funded the 2002 election campaign of Colombian President Alvaro Uribe.

Diego Murillo, aka Don Berna, was one of the heads of the AUC, which demobilised after a peace settlement...

Don Berna was the successor of drug lord Pablo Escobar in the city of Medellin.

He then joined the brutal AUC, or the United Self-Defence Forces of Colombia, as it fought, often in cahoots with the military, to destroy the Marxist rebels.

The article goes on:

Ever since Mr Uribe started his political career, he has been dogged by accusations of links with right-wing paramilitaries.

During his term as governor of the province of Antioquia the AUC was born, flourished and spread across the country, leading to the deaths of more than 100,000 Colombians.

Currently there are 77 congressmen under investigation for links to the AUC, nine of whom have been condemned.

Almost all are supporters of President Uribe.

Despite the denial, the scandal is unlikely to die quietly as Don Berna has not yet finished delivering his revelations.

We've said it before and will say it again: if this global trade regime is a race-to-the-bottom (and it is!) then Colombia, under a death-squad linked President, is in the running to win.

Eyes on Trade will keep readers posted on further developments.

Indigenous Crisis in Panama & International Solidarity

As we contemplate how to further a global or hemispheric movement for social justice - on the heels of the People's Summit and the Summit of the Americas - we must take a moment to reflect on the brave allies in Latin America and the Caribbean who lay their bodies on the line to stop the corporations who exploit and destroy across the globe - when we blog from offices atop Capitol Hill.

In Panama, where a leftover Bush FTA is pending, indigenous peoples fight daily to have their rights respected - while their government and some in ours spend their energies expanding rights of the already privileged investors and corporations, via a Bush-style FTA.

The indigenous rights advocacy organization Cultural Survival is drawing attention to - and soliciting your actions in solidarity with - the struggle of the Naso and Ngöbe indigenous peoples against construction of hydroelectric dams that would bring profit for corporations and peril for the areas' inhabitants.

On March 30, more than a hundred Panamanian police officers in riot gear leveled a Naso village in response to a peaceful protest by Naso and Ngöbe villagers who oppose hydroelectric dams that threaten their homelands. Hundreds of people were left homeless and destitute...

The government has said it will only give people materials to rebuild if they promise to move away from their territories, which the government considers to be "invaded lands."

Cultural Survival provides additional background:

For centuries the Ngöbe people have lived by the rivers in the remote hills of western Panama, but now the government of Panama sees profit in those rivers, and they have given concessions to subsidiaries of the American company AES to build a series of large hydroelectric dams.

It should be pretty obvious that a true change in trade and globalization policy would grant greater rights and protections to the Naso and Ngöbe, NOT to the very corporations that go after the lands of indigenous or Afro-descendants.

Its on us to keep pushing for fair trade, by calling or clicking or writing hand-written letters even. Contacting our Congresspeople to have them oppose the leftover Bush FTAs is really the least we can do.

Days of Tax Dodging Thunder

As the new administration continues to debate whether to adopt Bush's Panama trade deal as their own, the evidence of Panama's tax-evasion industry keep piling in, this time from a race-car champ, according to the Miami Herald:

Federal jurors in Miami will resume deliberations on Tuesday in the tax-evasion trial of Indy 500 champ Helio Castroneves.

The 12-member jury is deciding whether the Brazilian race car star is guilty of conspiring with others to avoid paying U.S. taxes on $5.5 million.

Castroneves, a U.S. resident who has lived in Miami since 1997, received $530,000 from a Brazilian trading company that sponsored him just before he hit the big time a decade ago as an IndyCar driver with Penske Racing. The racer, who owns a Coral Gables mansion, also received $5 million from a 1999 licensing deal with Penske.

So far, Castroneves has paid taxes on only $50,000 of his total earnings from the Brazilian sponsor, Coimex Internacional -- income that he diverted to his Panamanian shell company's bank account in New York and then to a Swiss bank with the help of his sister, according to prosecutors and court records.

That would mean Castroneves allegedly avoided paying taxes on $480,000 from Coimex in addition to the $5 million from Penske. Bottom line: He owes $2.3 million to the Internal Revenue Service, prosecutors say.

(HT to Oregon Fair Trade Coalition!)

NAFTA Ch. 11 Suit to Keep on Truckin

When Congress and President Obama eliminated funding for a controversial NAFTA trucking program last month, the Mexican government, claiming this was a violation of NAFTA, responded by raising tariffs on a variety of U.S. goods.

Now, Mexican trucking companies are also getting involved and demanding compensation from the United States government. CANACAR, a trade association representing Mexican trucking companies, has filed a notice of arbitration which initiates the NAFTA investor-state challenge process. Inside U.S. Trade reports that the U.S. State Department vowed to fight CANACAR's claim "vigorously".

Under NAFTA, investors are given special rights and if they feel their ability to make profit has been compromised by a regulatory change, they are empowered under NAFTA to seek compensation directly from the trading partner country.

 

What Would Cesar Chavez Do?

WWCCD? If someone was selling such a bracelet, I have to admit I'd jump at the chance and wear it with pride.

The photos from last week's Cesar Chavez Day celebrations are rolling in from across the country, and it occurs to me that Cesar Chavez' legacy contains inspiring lessons for fair traders to the point that a more than annual reminder would be in order.

The movement is growing to win recognition of a national Cesar Chavez Day, and fair traders especially should strive to follow the footsteps of this leader for labor rights, civil rights, and immigrant rights.

Imagine if Congress sought the advice of visionaries like Chavez as they ponder how to deal with Bush's leftover NAFTA-type deals with Panama, Colombia and South Korea? If they were to tirelessly advocate for marginalized farmworkers and farmers, as United Farmworkers (UFW) union co-founder Chavez did, they would certainly come to a fair-trade conclusion and demand reforms that put small farmers and workers first in devising trade policy.

The campesino and farmers movements in all four countries (U.S. as well!) could expect solidarity from brother Cesar in their opposition to the hangover FTAs for this model's proven record of displacing rural people and forcing them to immigrate to where they are exploited as cheap labor. United Farmworkers co-founder Delores Huerta (equally praiseworthy for her vision in forging the UFW) has been an outspoken advocate of fair trade, advocating along with other Latin@ and labor leaders to fix our broken trade policies. This makes great company for groups like the Panamanian farmers and farm-workers organization ONAGRO, who state their opposition to the U.S.-Panama FTA in these terms.

Groups like the UFW and countless local organizations like San Antonio's Cesar Chavez Legacy and Educational Fund are keeping on, marching to remember the works of brother Cesar, and to forward the struggle he left behind. Here's hoping that you marched or otherwise have had a chance to remember brother Cesar, and that you take some strength from it into the fight for fair-trade reform that lies ahead.

Note: The closest we can find to a WWCCD bracelet can be ordered online from the United Farmworkers.

(Photos Courtesy of Flickr user sandy richard under a Creative Common License, and from Cesar Chavez Legacy Foundation, respectively)

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

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

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