Groups Call on Obama to Push Peru's President on Trade, Forestry and Indigenous Rights

Public Citizen joined a wide range of labor, environmental, human rights and fair trade groups in sending a joint letter to President Obama today asking him to raise a series of issues in his June 1 meeting with Peruvian President Alan Garcia. One of these demands of interest to EOT readers will be that Obama communicate that he does not share the same trade policy as his predecessor George W. Bush.

Bush of course negotiated and signed the bilateral trade deal - over the objections of Peruvians and a majority of Democrats and Democratic base groups. Days before leaving office, he then announced it would enter into force, despite the fact that Peru had not even fully implemented it obligations under the labor and environmental chapters. Come August, Peru's environmental obligations come fully phased in, and there's real worry that they won't be compliant.

And for the last several years, the Garcia administration's relations with indigenous groups have been atrocious - leading to bloody confrontations. (You knew things were going to take a turn for the worse when, in October 2007 - March 2008, President Garcia himself published a series of op-eds calling indigenous people "manger dogs" for wanting to have some control over the oil, gas and mining companies that were invading their lands, with a government handshake.)

Luckily, Obama has the opportunity to help set some of this mess right on Tuesday. Read after the jump for the full letter.

Ongoing WTO-Wall Street Snow Job Continues

In March, Sen. Ron Wyden (D-Ore.) - the chair of the trade subcommittee of the Senate Finance Committee - became one of the first members of Congress to call the U.S. Trade Representative (USTR) to account for its inclusion of financial services deregulation-promoting provisions in WTO agreements and various U.S. trade deals. These terms were included at the behest of lobbying of big Wall Street banks, and sharply limit the kinds of financial regulations countries can enact without facing WTO challenges and other claims for compensation.

Unfortunately, USTR continued to dodge these issues in their written response to Wyden's question, as we note in this brand spanking new memo that goes through USTR's response point by point.

In the meantime, financial interests have stepped up their accusations that smart regulations violate WTO commitments. Just last week, the European Union attacked U.S. regulations meant to check the behavior of offshore insurance firms, while a pro-WTO think-tank alleged that German efforts to rein in risky speculation could also run afoul of the country's GATS commitments. This comes shortly after a European Commission paper stated that taxes on Wall Street to help Main Street could violate the WTO, and after years of Panama alleging that anti-tax haven measures could violate the WTO.

If you're interested in putting economic stability and job creation ahead of deregulation-promoting trade deals, you could do a lot worse than to ask your member of Congress to get on the bipartisan TRADE Act, which specifically addresses these questions, and which is supported by a majority of House Democrats, committee chairs and subcommittee chairs, across diverse caucuses in Congress.

The Chamber of Commerce Continues to Distort Record of Failed Trade Policies

The Chamber of Commerce is at it again, once again misleading the public on the factual record of our flawed trade policies. In a report released today, the Chamber makes claims of massive export and job gains from our “free trade agreements” (FTAs).

But the actual data show that these pacts, currently in place with 17 countries, have been a dismal failure. On the whole, the U.S. has a $54 billion non-oil deficit with these countries, including a trade deficit with Mexico and Canada that has grown 848 percent over the period.

To repeat, this growth is not caused by oil, but by a loss of competitiveness in the U.S. manufacturing and agriculture sectors vis a vis our two most significant FTA partners. There are many ways to calculate the job loss from these trends, but any honest method comes up with a negative job impact from our FTAs in the millions of jobs.

An honest analysis of the data show that actually U.S. export growth to our FTA partners has been slower than with non-FTA counties – between 1998 and 2008, total goods exports to non-FTA partners grew 47.0 percent faster than exports to FTA partners. Translated into dollar terms, this FTA export penalty amounted to $25 billion in lost potential exports for 2008 alone. And utilizing the job multiplier assumed by the Chamber, this penalty accounted for 302,585 jobs that could have softened the blow of the Great Recession. (See after the fold for more detail.)

Our own Lori Wallach responded to these points in our official statement on the Chamber report:

The implication of the actual FTA record for President Obama’s laudable goal of doubling exports in the next five years is clear: there are many ways to increase exports and support jobs, but FTAs ain’t one.

I suspect that more Americans are likely to believe reports of UFO sightings than Chamber of Commerce claims about trade agreements creating millions of jobs for them, given many Americans have personally experienced the damage wrought by the job-killing trade deals pushed by the Chamber on behalf of their serial-offshoring multinational corporate members. It’s high time that corporate lobbyists stopped lying to the U.S. public about job and export gains from FTAs that never materialize.

If the Chamber supports trade expansion, then instead of serving up another batch of improbable numbers trying to defend the damaging trade agenda of the past that most Americans fiercely reject and that is dead in Congress, the Chamber should help promote the TRADE Act, which rebuilds consensus for trade expansion by providing new trade terms that can benefit more people.

American public opinion polling systematically shows bipartisan opposition across numerous demographics and regions to U.S. trade agreement regime characterized by NAFTA. Already in the 2010 election cycle, opposition to the very pacts the Chamber is a prominent feature of Democratic and GOP House and Senate races. During the 2006 and 2008 election cycles, 72 representatives and senators who supported the status quo were replaced by those who campaigned on trade reform.

Seattle Employment Not Harmed by NAFTA? O RLY?

Last week U.S. Trade Representative Ron Kirk was in Seattle to meet with Association of Southeast Asian Nations (ASEAN) trade ministers and business executives.  In conversations with reporters, he seemed to imply that Washington workers haven’t experienced the devastating effects of the NAFTA trade policy model like workers in the Midwest have:

"When I'm east of the Mississippi, people think I'm a two-headed monster," he quipped. He said he loves coming here. "For every five trips to Michigan and Illinois I ought to earn one trip to Seattle."

Eh? Is it true that Seattle has escaped the fate that has befallen Michigan and Illinois?

No. The manufacturing base of Seattle has been crippled in the NAFTA/WTO trade policy era.  Since the implementation of NAFTA in 1994, the Seattle area has lost 29,600 manufacturing jobs, a decline of 16 percent, according to the Bureau of Labor Statistics.  Washington as a whole has lost 51,100 manufacturing jobs since NAFTA entered into force. These are prime high-paying jobs with good benefits to support families, and the NAFTA trade model was a contributing factor in their disappearance.  In fact, a study conducted by the Economic Policy Institute (EPI) found that the increase in the deficit with Canada and Mexico alone since NAFTA’s implementation has cost Washington 16,500 jobs.

The Trade Reform, Accountability, Development and Employment (TRADE) Act offers a way to fix the flawed NAFTA model through ensuring that U.S. trade agreements include strong labor, environmental, and consumer protections that would help grow jobs instead of destroy them.  If Seattle-area Representatives Jay Inslee, Jim McDermott, David Reichert, and Adam Smith were to join the 140 cosponsors of the TRADE Act, it would go a long way toward reversing the devastating effects of the NAFTA model on Washington workers.  EPI’s recent study on the effect of the rise in the trade deficit with China since it joined the WTO in 2001 upon jobs should give the members of Congress extra incentive to support the fair trade policy embodied by the TRADE Act.  Here are the EPI-estimated job losses from the China deficit in each of their districts:

1^st District (Rep. Jay Inslee): 6,800 jobs lost

7^th District (Rep. Jim McDermott): 5,600 jobs lost

8^th District (Rep. David Reichert): 7,100 jobs lost

9^th District (Rep. Adam Smith): 4,900 jobs lost

For more analysis about why the NAFTA model is bad for Washington workers, see The Real Pirates of the Caribbean: U.S. High Tech Industry’s False CAFTA Promises Disguise Bad Policy by the Washington Alliance of Technology Workers, The Society of Professional Engineering Employees in Aerospace, and The American Ingenuity Alliance (with some help from Global Trade Watch).

Facts are stubborn things when it comes to trade

Nerds strike again!

Folks may remember the exchange we had with the Chamber of Commerce a while back on their distortions of the export record of FTAs.

Well, it ain't over yet.

After The Hill published a piece by Lori on Obama's policy opportunity, the National Association of Manufactures responded with a highly misleading op-ed on export stats. Today, The Hill published a piece of mine responding to some of the factual claims, or lack thereof, in the NAM piece. Enjoy!

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Facts are stubborn things when it comes to Trade
By Todd Tucker - 05/07/10 11:06 AM ET

We're all entitled to our own opinion about NAFTA-style trade pacts, but we're not entitled to our own facts. In this vein, it's hard to know whether the "data" presented in National Association of Manufacturers (NAM) official Frank Vargo's op-ed in The Hill ("Free trade pacts have been good for U.S.", 4/19) is intentionally misleading or just sloppy. Vargo's representations will be familiar to Hill denizens: In recent weeks the Chamber of Commerce and other defenders of the trade status quo have been blasting the same "data" far and wide.

Perhaps the most peculiar claim is that the U.S. has trade surpluses with its "Free Trade Agreement" (FTA) partners, when in fact the data show we have a deficit. Vargo wrote, "over the past two years FTAs have resulted in a U.S. manufactured goods surplus of nearly $50 billion." The way Vargo comes up with this "surplus" is to include billions of "re-exports" – those are foreign products passing through U.S. ports, but were not made by American workers. When the correct measure is used (the difference between "domestic exports" and "imports for consumption"), the opposite result is produced: the trade balance in non-oil, manufactured goods with U.S. FTA partners over 2008-2009 was a deficit of $97 billion.

Vargo also argues that NAFTA was a U.S. job-creating success, noting that, "for almost a decade after NAFTA, the United States gained nearly a half-million manufacturing jobs." That statistic actually highlights NAFTA's damage. As the population grows, the number of manufacturing jobs should grow, all else being equal. But in the period after NAFTA and onto when Congress voted to admit China to the World Trade Organization (WTO), manufacturing jobs as a share of total U.S. nonfarm jobs steadily shrank. A cursory examination of the Bureau of Labor Statistics data shows that manufacturing employment share began falling even in NAFTA's early years, as the trade deficit with Mexico and Canada exploded. This was exactly the opposite of what NAFTA's proponents, such as the NAM, predicted. Then, starting in the late 1990s, even the total (not just relative) number of manufacturing jobs started to precipitously decline. Only in the twisted world of Beltway lobbyists is the net loss of 5 million American manufacturing jobs during the NAFTA-WTO era a vindication for a failed policy.

Vargo claims the trade deficit is all oil imports. He writes: "The manufactured goods deficit with NAFTA barely budged after 2001 while nearly doubling with the rest of the world. Jobs displaced by imports from NAFTA were offset by the jobs gained from exports. True, the overall deficit with NAFTA has soared since 2001 – again, the result of oil imports, not manufactured goods. Aside from energy imports, the deficit is virtually unchanged."

Where to begin? The inflation-adjusted trade deficit in non-oil manufactured goods (NOMG) with NAFTA countries shows an increase of 16 percent from 2001-07, before global trade collapsed. And, looking at the longer period, the NOMG deficit with NAFTA countries went from a $5.8 billion surplus in 1993 to a whopping $45 billion deficit in 2009. Meanwhile, it is hard to understand how NAM concludes that U.S. jobs lost to imports were offset by those gained from exports, when the United States suffered a NOMG deficit that peaked at $663 billion during the period in question, accounting for millions of lost U.S. job opportunities.

Vargo also praises the Peru FTA, saying "The U.S. has moved into a surplus with Peru." Actually, the U.S. already had a NOMG surplus with Peru before the pact's 2009 start date. A year later, the NOMG balance (or net export level) is only $0.000498 trillion. To put this in perspective, Obama's export drive will require $1 trillion in increased exports over the next five years. At the rate of the Peru FTA, the U.S. could sign FTAs with all 192 members of the United Nations, and still only be a tenth of the way to the goal.

Unfortunately, Vargo is not alone in misrepresenting the U.S. experience with FTAs. Widely cited "data" published by the Chamber of Commerce also is used to make outlandish claims about trade gains. A review of the relevant Chamber study shows that the data touted as evidence of exciting export gains is not adjusted for inflation. The Chamber study also includes other basic arithmetic errors. When the Chamber's own method is cleaned up, for instance by inflation adjusting, it shows an export penalty from FTAs. In other words, it shows that export growth rates to U.S. FTA partners were slower than with non-FTA trade partners.

Finally, Vargo makes factually incorrect claims about the Trade Reform Accountability Development and Employment (TRADE) Act to argue it would undermine President Obama's export initiative. Given the TRADE Act is a vehicle to rebuild consensus for trade expansion and is supported by a majority of House Democrats including twelve chairs, fifty-five sub-committee chairs and large blocs of New Democrats and Blue Dogs, one might expect NAM to seize on the legislation as a means to obtain new trade agreements that can expand exports. Alas, it appears that the NAM data errors also extend to vote counting.
 
Todd Tucker is research director with Public Citizen's Global Trade Watch division, and co-author of a forthcoming study "Lies, Damn Lies and Export Statistics: How Corporate Lobbyists Distort Record of Flawed Trade Deals.

ONI Debate Heats up...in Bermuda

Yesterday, eight insurance lobbying groups released a letter opposing Senator Merkley’s amendment to the financial re-regulation bill that we discussed last week.   Merkley’s amendment would strip out a provision in the bill that allows a newly-established Office on National Insurance (ONI) to unilaterally negotiate and approve international insurance agreements that give foreign insurers broad new privileges.  The ONI could then preempt state laws that conflict with the agreements.

It’s not surprising that big insurers would launch an attack on the right of states to regulate their insurance markets. What is surprising is that one of the lobbying groups signing onto the letter is the Association of Bermuda Insurers and Reinsurers.  Yes, that’s right, insurance corporations that have benefited from the lax tax laws in Bermuda for years are now looking to tear down regulations through the ONI.

As small as Bermuda may be (only 68,000 people live on the island), Bermuda is second only to the U.K. as a home to foreign insurers in the United States. About 17 percent of foreign insurers in the U.S. are incorporated in Bermuda, compared to 18 percent that are incorporated in the U.K.

So, we must ask Senators who have not yet committed to supporting the Merkley amendment: Will you fight to preserve the right of states to regulate their insurance markets, or will you let tax-skirting insurance corporations in Bermuda erode crucial consumer protections?

(Thanks to Flikr user p_snelling for the photo)

Slick Willy's at it again!

(Disclosure: Public Citizen has no preference among the candidates.)

On the heels of his trade policy renege, Bill Clinton has come back to Arkansas for some home cookin'.  He rather unfortunately defends Senator Blanche Lincoln's vote for NAFTA in this new campaign ad:

...But, this is yet another example of how trade is becoming a wedge issue this campaign season.

Trade Tribunals: The Canary in the Mine?

“Mining for Profits in International Tribunals,” a report recently released by the Institute for Policy Studies, presents evidence that transnational corporations are litigating for profit in trade tribunals such as the UNICTRAL (United Nations Commission on International Trade Law)  and the ICSID (International Centre for Settlement of Investment Dispute).  In the process, court rulings favoring corporations are undermining countries’ ability to implement important health, environmental and public safety policies.  This gross usage of the tribunals points to the disturbing role that our current trade agreements have in sacrificing the public welfare for the corporation’s profit margin.

The report, which examines the international trade tribunal framework, details how transnational corporations like Chevron and the Pacific Rim are increasingly using tribunals to gain millions dollars in profit by bringing cases against host countries.   Many of these cases evolve around allegations of “lost profit” due to a country’s environmental or health standards. For example, in February 2010 the Canadian mining firm Blackfire Exploration reportedly threatened to sue Mexico due to its closing of an open pit barite mine in Chiapas.  The mine had been ordered to be closed by officials due to its detrimental environmental and health effects. Sources suggest Blackfire threatened officials with an $800 million dollar claim of compensation!

Leaders need to take notice of the trend this report reveals about the larger international trade regime, as these courts are supported by a system of free trade agreements (FTAs) and bilateral investment treaties (BITs). The report concludes by saying there tribunals are “just one illustration of the imbalance in the current rule that govern international investment.”

This phenomenon should be the canary in the mine for today’s leaders and serve as a warning about the need to reform the current trade regime, remedy this imbalance and in the end promote public welfare – not corporate profits.

Office of National Insurance: Subverting Democracy?

Proponents of NAFTA-style trade agreements are trying to pull a fast one on us by sneaking some devastating provisions into the Senate financial reform bill.  Right now there is language in the bill that creates an Office of National Insurance (ONI) within the Treasury Department that would strike down state insurance policies if the ONI believes that they violate trade agreement rules.  The ONI would also be able to negotiate and approve new agreements that give foreign insurers greater rights without having to ask for approval from Congress first.  Senator Jeff Merkley is leading the charge with an amendment to the bill that would prevent this dangerous seizure of state and congressional authority. Click here to urge your Senator to support Merkley’s amendment.

Think this is something that only threatens states like New York, where there are lots of foreign companies? Think again. Consider the stakes for Sen. Susan Collins of Maine, where the following foreign-owned insurance companies could benefit from an international trade pact drive towards lower regulation:

Great-West Lifeco Inc., based in Canada

Cunningham Lindsey Group Inc., based in Canada

Willis Group Holdings Limited, based in the U.K.

In fact, there are foreign insurance companies in every state in the Union that could take advantage of any new rights that the ONI would give them.  Check out the chart below to see the number of foreign insurance firms operating in your state.  Keep in mind, however, that the presence of even one firm would be enough to create problems for state insurance regulations.