WTO Still Pushing More of the Same, WTO Turnaround Demanded

It's been ten years since the massive WTO demonstrations that rocked Seattle and the world. While the global justice movement has been successful in preventing further WTO expansion, President Obama has still not committed to fulfill his campaign promises on fair trade and launch a WTO turnaround. Read this exclusive report from our own Lori Wallach, who is on the ground in Geneva at the moment, and then take a moment to let President Obama know that you demand a WTO turnaround at www.WTOTurnaround.Org.

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Dispatch: Lori Wallach. Location: Geneva, WTO Ministerial.

It's late afternoon here in Geneva as the 7th ministerial of the WTO is opening - 10 years to the day that the Seattle WTO protests rocked the world. 

Ten years after the world's most powerful governments and corporations failed to launch a massive WTO expansion at the 1999 Seattle WTO Ministerial, there still is not WTO expansion. BUT, there also is still no WTO turnaround - and the current rules are causing major damage on many fronts. 

In fact, the damaging outcomes of the WTO's radical financial service deregulation requirements, agribiz-written food trade rules and more have resulted in most of the WTO member countries favoring negotiations to fix the existing WTO rules.  

Thus, it was not surprising that the 300-plus press and civil society representatives who were just in a briefing presented by WTO Director General Pascal Lamy burst into repeated bouts of laughter when Lamy declared in short order that the WTO and the version of corporate globalization it implements had absolutely NOTHING to do with, respectively, the world financial crisis, the world food crisis or growing unemployment in numerous countries. In fact, the WTO was part of the cure to all of the above - oh, and the climate crisis also. 

This after the WTO Director General had been directly contradicted on the financial deregulation the day before at a public event that included Lamy and the trade ministers of various countries, including Brazil and South Africa. Meanwhile, yesterday the G-33 bloc of countries focused on the food crisis also explicitly fingered the current WTO rules as a cause of the crisis, not a solution. 

Lamy's comments came in response to questions about HOW the WTO intended to change its current rules to address their untenable outcomes. Instead, we were treated to the bizarre notion that the "Doha Round" - a watered-down-from-the-Seattle-plan-but-nonetheless-dangerous WTO expansion - is the answer to all ills. Yup, MORE WTO financial service dereg as the answer. More corporate control of food production and distribution as the answer. 

Meanwhile, the topic of the WTO Doha Round is too toxic to put on the agenda here. Yes, this is a WTO summit at which negotiation is not on the agenda. The WTO boosters knew that one more collapsed WTO summit, and the WTO expansion idea would certainly be toast. But, it's been too dangerous to get together for FOUR years, and this has caused an increasing crisis of legitimacy for WTO which is supposed to met biannually in a conference of minister-level officials who, per WTO mythology, set the organization's agenda and lend it the credibility of their governments. So, here we are. 

No country is willing to be blamed for officially pulling the plug on the Doha Round, yet many would be extremely relieved if some other country or bloc of countries did so. The speeches now being given at the opening ceremony are a bit Alice in Wonderland with calls for completion of the Doha Round based on terms and conditions not related to what is on the table. Perhaps the most interesting point raised by a trade minister here came yesterday from Brazil's Celso Amorim, who asked why almost a year into the Obama administration, the U.S. WTO representatives were continuing to push the same extreme GOP WTO agenda.

Giving thanks

• I'm thankful that there is a fair-trade groundswell in Congress, with positive forward-looking legislation like the Trade Act occupying an important space in the national debate.
• I'm thankful that there's still no ratified Colombia, Panama or Colombia FTAs - those awful holdovers from the Bush era.
• I'm thankful that Dubai Ports World never took over U.S. ports. As we predicted, the UAE government is taking ever more control over Dubai World, and it's not clear where it's going to end.
• I'm thankful Eyes on Trade has never gotten a review this bad.
• I'm thankful that I don't have a nail bed whose production was offshored to China.

Mr. Engman, who left a job in banking last June to become chief executive at Shakti, said he saw only one major threat to his business, which imports its mats from India. “Now, lots of people are producing nail mats more cheaply,” he said. “In China.”

Pokemon Gets Offshored

As if further evidence were needed that offshoring is no longer a pure blue collar phenomenon, the WSJ reports on the latest occupation to get hit:

Anime, Japan's stylized animation that has become hugely popular around the world, helped reshape the country's image as a cultural trend-setter. But behind the scenes, things aren't so rosy.

Japan's animation industry is struggling. Anime workers are unhappy, toiling long hours at low pay. Sales have been declining. On top of that, there is fast-growing competition from across Asia ....

The Japanese government says it is trying to support the industry, with plans to increase spending on education and training young animators and allocating more funds toward film marketing. But nurturing home-grown talent has become more difficult as Japanese companies increasingly outsource anime drawing to studios in China, South Korea and Vietnam, where labor costs are lower.

If you can't beat 'em, bite 'em

Dean Baker from CEPR has a way to deal with the trade deficit without the Chinese government having to do a thing:

First, there is no issue of "manipulation" with China's currency. The Chinese government is not sneaking around in the middle of the night trying to influence currency prices. China has an official exchange rate that puts the value of its currency well below the market exchange rate. This official exchange rate is widely publicized. We don't have to catch them acting improperly in the dark; anyone can just look in the paper or call the Chinese embassy to ask what the exchange rate target is.

Second, the US doesn't have to "pressure" China to boost the yuan. Contrary to what you may have read in the paper, Washington is not helpless in this story.

Just as China can set a value of its currency against the dollar, the US government can set a value of the dollar against the yuan. The Chinese government currently supports an exchange rate at which the dollar can buy 6.8 yuan. This high value of the dollar makes US goods uncompetitive relative to China's. To make US goods more competitive, the US could adopt a policy through which it will sell dollars at a much lower price, say 4.5 yuan.

It's it? What is it?

Fair traders have focused a lot on getting the Obama administration change course on the Bush administration's failed trade and investment policy. The message we've gotten consistently is that this new approach is still being thought out, discussions are being had, and the new approach is coming out soon and we'll hear about it.

Is this the "new" policy?

The two sides recognize the importance of open trade and investment to their domestic economies and to the global economy, and are committed to jointly fight protectionism in all its manifestations.  The two sides agreed to work proactively to resolve bilateral trade and investment disputes in a constructive, cooperative, and mutually beneficial manner. Both sides will expedite negotiation on a bilateral investment treaty. The two sides are committed to seeking a positive, ambitious, and balanced conclusion to the Doha Development Agenda in 2010.

What about this?

President Obama opened a potentially bruising battle within the Democratic party on Thursday when he pledged to complete a long-stalled trade agreement with South Korea that he inherited from President George W. Bush.

The fair trade response was swift:

“I can’t for the life of me understand why we would want to extend the Bush economic and trade policies,” said Senator Sherrod Brown of Ohio. “It’s unacceptable to say we’ll put in some side agreements. It’s still Bush trade policy, which is as bankrupt as Bush fiscal policy.”

And earlier this week...

Members of the House Trade Working Group called on the Obama administration Wednesday to review current U.S. trade agreements and push for a trade overhaul in the upcoming World Trade Organization ministerial meeting.

“We want to work together to develop a trade agenda that we can all be proud of,” said Rep. Louise Slaughter (D-N.Y.) during a press conference.

Rep. Michael Michaud (D-Maine) and Slaughter said they want Obama to live up to campaign promises on trade by dismissing the Doha round trade liberalization talks, agreements aimed at lowering trade barriers for developing countries, and start a compete overhaul that focuses on labor rights for American workers.

“As our nation’s representatives prepare to head to Geneva, we want them to know that the trade act not only represents a way here at home, it also mirrors calls from many WTO countries to turn around the WTO,” said Michaud. “This represents exactly what many nations have called for at WTO: a review of the existing views and the will to fix what is broken.”

The adminstration has expressed desire for a way forward on trade, and it sounds like there are a lot of paths towards this goal. But the path can't be backwards to Bush-era policies.

Jagdish Bhagwati gets it. He really gets it.

Jagdish Bhagwati, "free trader" extraordinaire, gave an interview to Reason Magazine, and made some very fair trade-sounding points:

There is another thing to worry about. When you look at a trade agreement like NAFTA, it’s about that thick (holds his hands about two feet apart). When I debate people like Lori Wallach of Public Citizen, she arrives with a lot of books, and among them is this NAFTA treaty she carries for effect. I hope she gets a hernia from doing this often enough, because it looks pretty heavy to me. I wouldn’t be carrying it around. Anyway, she shows this book and asks, “Is this free trade?” And mad as she is, she’s right to raise that issue. You should be able to say maybe in 10 pages that in these sectors we are going to liberalize and so on. But nine-tenths of what’s in these agreements are things which have nothing to do with trade. Labor standards, environmental standards, intellectual property rights. If I were Jane Fonda, in order to sell more workout tapes, I could put into the agreement a clause that the president of Mexico has to do his exercise to my tapes. And it would go in, because ours is a lobbying culture and nobody really would know that it’s there. Because who opens these things except the lobbyists?

So many developing countries are now waking up to the fact that they’re being sold a bill of goods in the form of trade agreements.

It’s 10 pm… do you know where your trade negotiators are?

For the last two years of financial crisis, the WTO’s Committee on Trade in Financial Services has not seriously addressed the crisis, or any role that the WTO might have played in bringing it on. This is curious, since the WTO financial rules both require deregulation and, unlike other international bodies, actually have binding and enforceable dispute settlement.

It’s not for lack of trying. In meetings on March 31, the Kenyan and Tanzanian delegation asked to ensure that LDCs have “adequate policy space in confronting development issues.” The Indian delegation to these talks “mentioned the issue of standstill in the Understanding on Commitments in Financial Services. Many Members had made commitments according to the Understanding with a standstill clause. He wondered about the implications of that standstill commitment in the context of the major developments that had taken place.” He went on to ask about one of the major deregulatory requests made by the U.S., Canada and other countries.

You would think that this would be a perfect opportunity for the delegates of the Obama administration to clarify that there was a new sheriff in town, and further deregulation through WTO requirements were not being considered. Instead, even when given such a golden opportunity to announce the change of regime, said they were unwilling to discuss these issues in a non-negotiating forum. In other words, countries wanting the answer to that question must be prepared to discuss committing more to the WTO rules. Canada backed the U.S. up, and that was the end of the discussion.

But on June 24, things got a bit hotter. (The notes for this meeting were only recently disclosed to the public.) The first part of the meeting was relatively stale. The issues of Islamic finance and microfinance were brought up – believe it or not, among the most oft-raised issues in recent talks, and about as far as you can get from the issues that nearly brought down Wall Street, not to mention the hordes of unemployed and evicted.

That was the first agenda item. The second agenda item was even more alarming. The delegation from AIG (oops, the U.S.) had the audacity to suggest that it be allowed to make a presentation on the virtues of further market access (read: deregulation) of the insurance sector. This dragged on for half the session. The other delegations were incredulous, and began aggressively questioning (well, by Geneva standards) why such a presentation was appropriate.

Then, the levee broke. South Africa made a pointed question about the compatibility of rich countries’ bailouts, and whether they were consistent with GATS, or allowed by the so-called prudential “carve out.” Chile, Kenya, Argentina and China backed up the proposal. (As we've written, this isn't much of a carve-out... much more of a carve-in.)

Canada – presumably trying to offer cover to the U.S. for the bailouts – said that any questions about whether the bailouts were GATS-consistent should be handled bilaterally. The U.S. thanked Canada, and agreed that it was not the time or place to have this discussion.

Other delegations quickly called the North Americans on their hypocrisy – Brazil and India in particular. After spending half the session calling for a discussion of further deregulation of the insurance sector, now the rich countries did not want to talk about their bailouts.

The delegate of Bolivia put it well: “it was … quite strange to realize that the only committee that was not dealing with issues related to the financial crisis was in fact the Committee on Trade in Financial Services.”

Strange indeed. When do we get to see the Obama administration's new proposals on financial services? You know, the ones where we re-enshrine the right to regulate our domestic economies to ensure stability and prosperity?

Bringing home the Battle in Seattle

Recently, we told you about our WTO Turnaround campaign – an effort urging President Obama to turn around the WTO’s failed policies. Starting this week as part of that campaign, in retirement communities and universities, at birthday parties and union halls, activists across the country will be holding special WTO Turnaround House Parties to celebrate the 10th anniversary of the Seattle protests where 50,000 activists took to the streets of Seattle and shut down the WTO.

The House Parties include showing a bonus special edition DVD of the feature film Battle in Seattle with exciting Seattle protest footage and a short new documentary we helped the Steelworkers produce about the protests and ongoing efforts to turnaround the WTO.

If you think you can pull together 10 or more of your friends and family, coworkers, church group, or classmates for a house party or screening, let us know and we’ll send you the DVD. We’ll also get you an activist tool kit with postcards to the president so that your friends and neighbors can remind President Obama about his trade reform commitments and the incredible citizen victory that happened in Seattle 10 years ago. We think that anyone, from the students, family farmers, unionists, and tree-sitters who rallied in Seattle in ’99 to all of those who wished they were there, won’t want to miss this DVD.  Click here for more info.

Political spectrum agrees! WTO must change, for climate's sake

If you opened the Washington Post this morning, you might have been surprised to find an opinion piece on the barriers that World Trade Organization (WTO) rules pose for climate solutions. More surprisingly, the authors were a rather odd couple - our own Lori Wallach (longtime fair trade reformer), and C. Fred Bergsten (longtime trade agreement promoter). Here's a snippet:

There is a real danger that a collision between climate policy and trade agreements could derail two critical goals: controlling climate change and expanding trade.

But this danger is avoidable.

We are an unusual pair of advocates for this message. For a long time, we and our organizations have been on opposite ends of the debate over trade agreements, disagreeing about their effects on economies, livelihoods and domestic regulations.

But we agree on a surprising number of aspects of the climate-change debate and on the related need to overhaul global trade negotiations, which are stalled by disagreements and the worldwide financial crisis.

They go on to warn that "Implementing a treaty on global warming could require new trade rules in intellectual property, services, government procurement and product standards" and "that allowing the WTO adjudication process to handle trade disputes over climate matters is a recipe for discord and impasse."

As Fred and Lori's agreement on so many points demonstrates, the WTO must change, for the climate's sake. Similar notions have been floated from sources like the Center for American Progress, Sierra Club and even the WTO's own director general, Pascal Lamy.

When such a diverse spectrum of trade deal proponents and opponents agree, it's evidence of a path out of what President Obama called the "gridlock" on trade policy. This is a nice parallel to what we've seen in the House of Representatives this year - where New Democrats, Blue Dogs, Black Caucus, Hispanic Caucus, Progressives and even Republicans have come together on the TRADE Act to pave a new way forward on trade. The conversation on trade reform is also happening in houses across America, through the WTOTurnaround house parties.

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The opinion piece references a 2008 Public Citizen report on what changes are needed to the WTO to implement then-candidate Obama's climate policies. You can find that report here (PDF).

Lori, in the WaPo piece, also mentions in the piece that "policymakers should fix existing WTO financial deregulation requirements rather than proceed with the Doha-round agenda of even more deregulation." For more info on what changes are needed to the WTO to address the financial crisis, go here.

Loving the Miami Heat!

No, not that Miami Heat! I'm referring to the Miami Florida heat rising up about Rep. Kendrick Meek (D-Fla.) who pulled his cosponsorship of two bills important to Public Citizen - the Single-Payer Health Care for All bill (HR 646), and the TRADE Act (HR 3012).

Meek waited until he'd wrapped up key labor endorsements, and until his main primary opponent dropped out, then signed off both bills.

Peter Cohn reports for Congress Daily (Oct 30th; subscription only):

On Oct. 21, he withdrew his support from the bill, sparking a conflagration his office is still trying to put out. Meek had a conference call the following day with around 40 Florida labor officials to thank them for their support; instead, the labor officials erupted with anger over his move, according to people on the call.

He spent the afternoon calling them individually, and Meek's office attempted some more damage control Wednesday, sending an e-mail to critics explaining his actions. The explanation does not appear to have had its desired effect.

Labor leaders are furious that Meek would pull such a move. Cohn's report goes on:

"I believe if he doesn't go back as a co-sponsor on that trade bill, he might have some problems, based on the scuttlebutt I've heard," said Pat Emmert, president of the Palm Beach-Treasure Coast chapter of the Florida AFL-CIO.

 

Emmert said the International Machinists and Aerospace Workers union in particular was angry with Meek's move. In fact, while Meek has racked up endorsements and campaign contributions from unions, the Machinists are not one of them, according to FEC records and a list of endorsements on his campaign Web site. The Machinists' PAC donated $5,000 to his 2008 House campaign.

 

Frank Ortis, president of the Florida Machinists, said "all of our jobs are going south" because of trade pacts, and that a once million-strong union is down to 372,000 members.

It remains to be seen whether Meek's siding with corporate interests over his base will be an obvious trend in his campaign. If so you, you can bet it'll be a disappointing November for Florida Democrats.

(Disclaimer: Public Citizen has no preference among candidates.)

Photo used under Creative Commons License, courtesy of user Miki

Sen. Bunning Gets Lit Over Canadian Anti-Smoking Law

According to Inside U.S. Trade, Sen. Jim Bunning (R-Ky.) has placed a hold on the nomination of Miriam Saprio to the post of Deputy U.S. Trade Representative, due to concerns about …Canadian legislation to prevent tobacco marketing to kids?

Bunning has apparently halted the nomination proceedings to focus the Obama administration on the Canadian anti-smoking legislation, which some U.S. tobacco interests fear will block exports to Canada. The law is known as the Cracking Down on Tobacco Marketing Aimed at Youth Act, and was passed in the Canadian Senate in October. It has already been criticized as a so-called trade barrier, and has been placed on the WTO's Technical Barriers to Trade committee meeting agenda for this week. A U.S. source said that Brazil will likely speak in opposition to the law, but USTR has yet to decide if it will take a position.

Sen. Harry Reid (D-Nev.) has criticized Bunning’s move, saying the Obama administration “cannot dictate how the Canadian legislature does its job, any more than the Canadian Parliament can dictate how we do ours.” If Reid likes this, he should check out the recent USTR 2009 National Trade Estimate Report on Foreign Trade Barriers, which criticizes Canada and a number of American allies for their domestic safety and health laws.

U.N. Report Shows Global Wages Falling

On Nov. 3 the U.N. agency on labor, the International Labor Organization (ILO), released a 15-page report finding that real wages fell in countries around the world, including the U.S. and some other wealthy nations, raising questions about whether workers are sharing in any global economic recovery.

The report included data from 35 countries, and found that monthly wages have fallen almost 2 percent in the U.S. since January 2009. The ILO found that inflation-adjusted wage growth fell sharply around the world in 2008 to 1.4 percent, down from 4.3 percent in 2007, and wages continued to fall in a number of countries in 2009.

This continuing drop in real wages around the world illustrates the need for trade policies and agreements that protect workers’ rights and prevent a further “race to the bottom” in global wages. Fair traders have long warned that trade agreements such as NAFTA, CAFTA, and other NAFTA-type trade agreements would deflate wages and threaten workers’ rights. The ILO’s report on the drop in real wages for workers in the global economy is disturbing and makes a strong case for renegotiating these pacts and preventing new trade agreements based on the flawed NAFTA model.

How NOT to Deal with Too Big to Fail

Over at the Baseline Scenario, Simon Johnson once again makes a good banking reform suggestion coupled with a bad WTO-related strategy:

the consensus is moving towards the view that state-supported banking (i.e., operating through implicit guarantees on Too Big To Fail banks) constitutes an unfair form of protectionism.  Financial services in this guise do not currently fall within the remit of the World Trade Organization, but it would be a simple matter to extend its mandate in this direction. In any reasonable judicial-type process, involving relatively transparent weighing of the evidence [proponents of big banks] would be most unlikely to prevail.

We blogged on some of Simon's over-reverence for the WTO a while back. In fact, the WTO does have rules on financial services, they do require financial deregulation, and specifically, they make it more difficult - not easier - to solve the too big to fail problem.

To wit: the WTO's General Agreement on Trade in Services Article XVI(2):

In sectors where market-access commitments are undertaken, the measures which a Member shall not maintain or adopt either on the basis of a regional subdivision or on the basis of its entire territory, unless otherwise specified in its Schedule, are defined as:

(a)        limitations on the number of service suppliers whether in the form of numerical quotas, monopolies, exclusive service suppliers or the requirements of an economic needs test;

(b)        limitations on the total value of service transactions or assets in the form of numerical quotas or the requirement of an economic needs test;

(c)        limitations on the total number of service operations or on the total quantity of service output expressed in terms of designated numerical units in the form of quotas or the requirement of an economic needs test;(9)

(d)        limitations on the total number of natural persons that may be employed in a particular service sector or that a service supplier may employ and who are necessary for, and directly related to, the supply of a specific service in the form of numerical quotas or the requirement of an economic needs test;

(e)        measures which restrict or require specific types of legal entity or joint venture through which a service supplier may supply a service;...

Financial services is a sector that countries can commit under the GATS, and over 100 countries did so for this market access obligation - including the US and EU. You can see what deregulators would like this provision:

1. It prohibits even non-discriminatory size caps (i.e. it's deregulation, not just liberalization);
2. It limits the ability of countries to specify that investment services can't be provided by a commercial bank, or make other requirements that certain services have to be provided by non-profits;
3. It contemplates five different ways that governments might try to limit size, and prohibits all of them - even at the subfederal level of government.
4. Then, there are other GATS-related rules, like GATS Article VI and the Understanding on Commitments in Financial Services that pose additional deregulation obligations on nondiscriminatory policies.

Even without these specific rules, the WTO dispute settlement system's 15 year track record of ruling against over 90 percent of challenged public interest laws should give pause to any reformer looking to utilize it to serve the public interest. It's interest is in maximizing trade flows, not preserving sound regulation.

The Stuff Nightmares Are Made of…

Just in time for Halloween, we’ve found a truly scary article about unprecedented NAFTA expansion: Erik Heinrich of CNN predicts that the upcoming conclusion of a “free trade” agreement between the European Union and Canada will likely begin a push for a NAFTA-EU trade zone, which would encompass nearly a billion people and would account for more than half of the world’s total GDP.

The president of Canadian Manufacturers & Exporters, the country’s largest trade and industry association, has said “the largest benefits will come from economic integration,” referring to increased foreign direct investment and access to government procurement, the very provisions of NAFTA fair traders have flagged as some of the most damaging aspects of the agreement and others based on the NAFTA model.

According to Steven Schrage of the Center for Strategic and International Studies (CSIS), (who opines that “it makes sense to integrate NAFTA with the EU,”) the Bush administration had a NAFTA-EU deal on its radar, but failed to make progress: “The ball is in the Obama administration’s court.” CNN does concede that a NAFTA-EU trade deal would likely be met with stiff opposition in the United States.

What an interesting way to sell this deal to the Obama administration: “The Bush administration thought this was a great idea!” I am comforted that Obama has expressed that he is fully aware of what he calls “NAFTA’s shortcomings” and has made a variety of trade promises that suggest he has no interest in continuing the Bush administration’s failed trade initiatives. As for Congress, the desire for a new trade agenda is illustrated by support for the Trade Reform, Accountability, Development and Employment (TRADE) Act, which currently enjoys support from 123 Democrats and two Republicans in the House of Representatives, including 10 committee chairs, 52 subcommittee chairs, and wide swaths of the Democratic Blue Dog Coalition, Congressional Black Caucus, Congressional Hispanic Caucus, and the New Democrat Coalition.

It still freaks me out, though.