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Chile's Former Lead TPP Negotiator Warns of TPP as "Imposition" and "Threat"

The critics of the Trans-Pacific Partnership (TPP) -- the proposed expansion of the much-decried NAFTA model of "trade" being negotiated by the U.S. and 10 other Pacific Rim countries -- are an increasingly motley bunch.  The list includes members of Congress, small businesses, unions, techies, family farmers, state legislators, enviromental activists, health experts, religious groups, food safety advocates, and more than a few Star Wars fans

One more category of people has now been added to the TPP-wary ranks: former TPP negotiators. 

Last week, Rodrigo Contreras, Chile's lead negotiator for the TPP until two months ago, published a shakedown of the sweeping deal in a leading Peruvian magazine (Caretas) as TPP negotiations were getting underway in Peru.  Writing principally to the Latin American governments negotiating the TPP (Chile, Peru, and Mexico), the former top TPP negotiator warned:

It is critical to reject the imposition of a model designed according to realities of high-income countries, which are very different from the other participating countries. Otherwise, this agreement will become a threat for our countries: it will restrict our development options in health and education, in biological and cultural diversity, and in the design of public policies and the transformation of our economies. It will also generate pressures from increasingly active social movements, who are not willing to grant a pass to governments that accept an outcome of the TPP negotiations that limits possibilities to increase the prosperity and well-being of our countries. 

Contreras spelled out the particular areas that he sees as a "threat" if an outside model is "imposed" by "high-income countries" (read: U.S.):

We must avoid limits on access to knowledge available on the Internet and not exacerbate intellectual property protection for the downloading of online content. Nor should we accept the excessive expansion of copyright protection terms for books, movies or music, which would limit their availability in libraries and schools, and would make them more expensive for lower income people. The extension of drug patent protections beyond the current terms, or the restriction of challenges to frivolous patent applications, would delay the availability of generic drugs and increase the cost of medicines. Public health budgets and access to health services for the most vulnerable would be affected in our countries...[and] it does not makes sense to further liberalize capital flows, depriving us of legitimate tools to safeguard financial stability.

Unfortunately, each of the threats that Contreras names are already enshrined in TPP text proposed by the United States.  The leaked intellectual property chapter threatens to sneak in draconian copyright protections reminiscent of the Stop Online Piracy Act (SOPA) roundly defeated in the U.S. Congress. It would also expand monopoly drug patents for big drug companies at the expense of those of us who shop for cheaper generic medicines, which would become harder to find on pharmacy shelves. The leaked investment chapter would ban the usage of capital controls, despite being endorsed by top economists and even the International Monetary Fund as a legitimate means of preventing and mitigating financial crises.  

Perhaps the TPP's embodiment of these threats is why Contreras stepped down from his top TPP negotiating post. Yves Smith over at Naked Capitalism (hat tip back to her hat tip) suspects so:

It’s widely believed that [Contreras] left his post voluntarily. He’s held in high esteem not just in Chile but among his fellow trade negotiators. His departure left people on the trade beat scratching their heads. It now appears probable that the reason for his resignation was that he saw where the TPP was likely to go and didn’t want his name attached to it.

As the "imposed" model that Contreras worried about takes root in the TPP negotiating text, amplifying its threat to consumers, workers, and the environment, perhaps we'll see more conflicted TPP negotiators follow Contreras' principled lead.


Here is the complete translated text of Contreras' statement, published in Caretas

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USDA Stands Firm on Consumer Meat Labels, but Will the WTO Continue its Anti-Consumer Legacy and Authorize Trade Sanctions?

Today, on the deadline for the United States to comply with the World Trade Organization’s (WTO) 2012 ruling against the popular U.S. country-of-origin labeling (COOL) meat labeling program, the U.S. Department of Agriculture (USDA) announced it will strengthen rather than eliminate or weaken the consumer label. The welcome decision raises the critical question: will the WTO accept the change supported by 87 percent of the U.S. public or continue its legacy of undermining consumer safeguards?

Mexico and Canada, the countries that won a final June 2012 WTO ruling against COOL, stated that they opposed the proposed U.S. resolution to the case released in March, which closely aligns with today’s final rule, and would challenge it as a WTO violation. Under WTO rules, if the countries contest the new U.S. regulations, the WTO will decide whether the new U.S. policy complies with WTO requirements, or whether Mexico and Canada may impose trade sanctions against the United States.

Consumer groups have applauded the USDA approach, which stands in stark contrast to past U.S. responses to WTO rulings, which have involved weakening public interest safeguards ruled against by the WTO. The new USDA rule eliminates the WTO violations identified in this case and complies with the WTO ruling, but does so by strengthening the consumer labels.

The WTO ruling against the COOL meat labels, which inform U.S. consumers where their meat comes from and assist regulators in tracking food-borne illness outbreaks, followed WTO rulings against two other popular U.S. consumer policies. In May 2012 the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In April 2012, the WTO ruled against a U.S. ban on clove-, candy- and cola-flavored cigarettes, enacted to curb youth smoking.

For the COOL case, USDA found a way to rectify the specific WTO rule violations identified in the WTO’s final ruling by giving consumers even more information about the country of origin of the beef and pork they consume. The WTO ruling had identified ambiguities in the labels that limited consumer information as a reason why the policy violated WTO rules. In filing the case, Mexico and Canada had sought an elimination of mandatory U.S. country-of-origin labeling. 

If the WTO accepts the strengthening of COOL as compliance with its final ruling, it will mark a stark departure from precedent. WTO lawyers are accustomed to seeing governments scuttle constituent interests and roll back domestic policies in an attempt to comply with WTO directives. If the WTO does not accept USDA’s new policy and instead authorizes trade sanctions against the United States, it will reinforce the anti-WTO public sentiment spurred by last year’s spate of anti-consumer rulings.

Mexico and Canada Openly Threaten Retaliation

The question of the WTO’s determination of U.S. compliance is relevant because Mexico and Canada may well challenge USDA’s final rule, shifting the decision back to a WTO panel. When USDA released its rule change proposal in March, Canada’s Agriculture Minister Gerry Ritz minced no words in stating: “Our Government is extremely disappointed with the proposed regulatory changes put forward by the United States today with respect to Country of Origin Labeling. We do not believe that the proposed changes will bring the United States into compliance with its WTO obligations.” A letter from the Mexican Embassy identically stated that the regulatory change “will not bring the United States into compliance with its WTO obligations.”

Both Canada and Mexico have already threatened retaliatory action, which the WTO will authorize if it deems that USDA’s new rule to provide consumers with further information about their food does not satisfy WTO rules. The list of punishments that the WTO could impose on the United States for maintenance of country-of-origin meat labels include U.S. taxpayer compensation to Mexico and Canada, or authorization of trade sanctions by those countries against the United States. Mexico has already voiced its support for the latter, stating in March that if USDA would not abandon its proposed strengthening of COOL, “Mexico would be forced to pursue the available mechanisms for withdrawing trade benefits from the United States.”   

The open threats of retaliation from Mexico and Canada come while both countries are engaged in negotiations with the United States on the Trans-Pacific Partnership (TPP), the sweeping “free trade” agreement (FTA) that the Obama administration is currently negotiating with 10 Pacific Rim countries. The hard line that Mexico and Canada appear ready to take against the United States on COOL will at least significantly complicate the TPP negotiations. Most observers, including TPP proponents, have already given up hope that the negotiating governments will meet their goal of concluding negotiations by this October’s Asia-Pacific Economic Cooperation summit. Fresh tension from the COOL dispute will only further encumber TPP negotiations.

Background on COOL, the WTO Dispute and the USDA Rule

After 50 years of U.S. government experimentation with voluntary country-of-origin meat labeling and efforts by U.S. consumer groups to institute a mandatory program, Congress enacted mandatory labeling for meat in the 2008 farm bill. The policy requires American retailers to label certain foods with the country (or countries) in which animals were born, raised and slaughtered. Polls indicate that 90 percent of the U.S. public approves of COOL.

In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO countries are permitted to apply. Canada and Mexico suggested that the United States should eliminate mandatory labeling and return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food firms play a central role. Neither option would provide U.S. consumers with the same level of information as the current U.S. labels.

Instead of pursuing such a watering down of the popular program, USDA proposed a COOL rule change in March 2013 that would strengthen the labeling regime to address the problems identified in the WTO’s ruling. Today’s final rule from USDA maintains that approach. The WTO’s Appellate Body ruled that the program’s requirement that meat producers gather a greater amount of information about meat origins than is ultimately conveyed to consumers downstream violated WTO requirements. To address this concern, USDA’s new rule will offer consumers more precise labels that specify the country in which each step in the meat production process occurred. The change will better fulfill COOL’s policy objective and consumers’ rising demand for greater transparency regarding the production of their food, while also satisfying the issues raised in the WTO’s final ruling. 

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RECAP FROM LIMA: Experts, Activists, and Peruvian Members of Congress Rally Against the TPP

As the 17th round of the Trans-Pacific Partnership (TPP) negotiations continue in Lima this week, objections to the proposed sweeping NAFTA-style deal (with 10 Pacific Rim countries) have been heard from a diverse spectrum of voices, including experts, activists, and even a Peruvian Member of Congress.

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Last Thursday, a public forum was held in Lima to discuss concerns about the TPP. Advocates and experts, including Global Trade Watch's own Melinda St. Louis, discussed topics ranging from intellectual property and internet freedom, to labor standards and the investment chapter.

One of the most notable speakers was Pablo Fabian Mosau, a representative from La Oroya, the town that has been severely polluted by a metal smelter owned by U.S.-based Renco/Doe Run (considered one of the ten most polluted sites in the world). Renco/Doe Run has launched an $800 million investor-state claim against Peru using the investment privileges enshrined in the U.S.-Peru FTA –- privileges that the TPP aims to expand. Mosau gave an emotional account of the dire situation in his community, where 99.7% of the children suffer from lead contamination, and flowers and trees have died as a result of the pollution.

The audience also heard from Verónika Mendoza, a Peruvian Member of Congress, who expressed concern about a negotiation process that locks out citizen and government participation. She cited investor-state cases such as Renco/Doe Run and Eli Lilly as indicators that Peru needs to take a strong position to protect environmental health in the face of proposed investment privileges and protect access to medicines in the face of proposed monopoly patent expansions.

On Friday, activists took to the streets to protest the TPP negotiations. Protestors wore masks to symbolize the danger the TPP poses to access to medicines and health and chanted “No es negociable!” (Not negotiable!). The protest was covered by several prominent Latin American news outlets, including CNN, La Pr1mera,  the Associated Press, and many others. La Mula posted a video of the protest.

After the protest, advocates organizing around the TPP negotiations in Lima hosted a webinar to update activists from around the globe and answer questions about the TPP. Click here to check out a video of the webinar if you missed it.

Though the negotiating round in Lima round is coming to an end, many Peruvians -- including the citizens of La Oroya -- still have to live with the damaging effects of the investor privileges embodied in "trade" pacts. Australia has already refused to sign on to such privileges in the TPP.  Hopefully Peru will follow suit. In the meantime, it is crucial that civil society around the globe carry Peruvians' message to their own governments: our right to health, a clean environment, fair labor standards, and internet freedom are not negotiable.

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LIVE FROM LIMA: Our Health, Environment, and Rights are Not Negotiable!

NonegociableCivil society from around the globe are in Lima, Peru for the 17th round of Trans-Pacific Partnership (TPP) negotiations to tell negotiators that a trade agreement that prioritizes the rights of corporations above the well-being of citizens is not acceptable. For the latest news, click here at 5pm today (May 17) to participate in a webinar hosted by activists in Lima.

Several Peruvian organizations have joined together to launch the No Negociable! (Not Negotiable!) campaign to highlight the grave threats that the TPP poses to Internet freedom, the environment, workers' rights, and public health.

Events kicked off on Wednesday when Peruvian activists took part in a press conference  to express their concerns about the TPP:


+Julia Cesar Cruz (Red Peruana de Pacientes y Usarios), representing Peruvians living with HIV, tuberculosis, and cancer, said that patients of these diseases and others are terrified about how the TPP proposals could affect the lives of those living with chronic illness. She called on President Humala to follow through on his campaign promise to guarantee access to medicines for Peru’s poorest.

+Jose de Echave (CooperAcción) expressed concerns about how TPP’s investment chapter would allow crucial policies to protect indigenous communities and the environment to be challenged.

+Juan Jose Gorritti (CGTP) rejected a trade agreement model that does not respect workers' rights and encourages a race to the bottom.

+Crisólogo Cáceres (ASPEC) expressed concerns about how the TPP would impact consumer rights and privilege corporations over consumers.

+Alejandra Alayza (RedGE) spoke about a Peruvian petition that will be sent to President Humala. (Spanish speakers can find a video of Alayza speaking at the press conference here).


Several other civil society events have been planned during the round, including an all-day public forum, a protest, and the delivery of signatures to President Humala.  

Stay tuned to Eyes on Trade, as well as our Twitter and Facebook pages, for periodic updates from Lima.

Today: You can also learn more about what is happening on the ground by connecting to a webinar hosted by activists in Lima. To take part in the interactive webinar, join this link TODAY, Friday, May 17th, at 5 PM EST.

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Flood of 10,000 Critical Public Comments Spotlights TAFTA Controversy

First House Hearing Today on the Trans-Atlantic Free Trade Agreement

Submission of more than 10,000 public comments on the Trans-Atlantic Free Trade Agreement (TAFTA) to the U.S. Trade Representative’s (USTR) docket last week punctured the notion that the pact will avoid the controversies that have dogged past trade deals. The cause of controversy is that negotiations will focus primarily on “behind-the-border policies and “regulatory and other non-tariff barriers,” given tariffs between the United States and EU are already quite low.

Critical comments were submitted by a panoply of consumer, farmer, labor, environmental, health and tech groups concerned about the negotiations being used to roll back critical public interest safeguards. In addition, nearly 10,000 comments were generated in 32 hours after an email sent by Rep. Alan Grayson (D-Fla.) alerted the public that the deal is slated to include controversial “investor-state” provisions. The investor-state proposal would empower foreign corporations to skirt U.S. legal systems and directly challenge domestic health, environmental and other public interest policies before extrajudicial foreign tribunals authorized to order taxpayer compensation. The investor-state system has generated controversy across the political spectrum. Conservatives have objected to the notion that the United States would be subjected to the jurisdiction of United Nations and World Bank tribunals. Progressives have viewed the system as a backdoor means to attack domestic health and safety policies.

To date, most U.S. agreements including investor-state enforcement have been with developing countries. TAFTA would break that mold, empowering corporations to circumvent the U.S. and EU court systems, not typically criticized for being unfriendly to investors, to attack U.S. and EU policies in extrajudicial tribunals. As a result, foreign firms operating in the United States would enjoy greater rights than those provided to domestic firms. Moreover, because many European firms are established here, U.S. taxpayers would face unprecedented liability from investor-state suits, in contrast to past U.S. pacts with developing countries whose firms have relatively few investments in the United States.

In contrast to the bulk of public comments on TAFTA, the four witnesses presenting to the House Ways and Means Trade Subcommittee in Congress’ first hearing today on proposed TAFTA negotiations all represent business interests. This includes two witnesses representing the trans-Atlantic coalition of large corporations that has pushed for TAFTA negotiations for years. The business interests view TAFTA negotiations as a means to eliminate an array of consumer, environmental and other public interest safeguards that they have identified as “trade irritants.” The corporate agenda is closely mirrored by the official framework for talks announced in February in a report of a high-level U.S.-EU government commission, advised by many of the same corporate interests. 

Despite growing public scrutiny of the  TAFTA proposal, President Obama met this week with British Prime Minister David Cameron, to discuss how to rush the completion of this sweeping “trade” agreement by the end of next year. Obama and Cameron announced plans to launch formal talks during the G8 Summit in Northern Ireland next month.

What Generated 10,000 Comments in 32 Hours: Proposed Inclusion of the “Investor-State” System that Would Empower Foreign Corporations to Challenge the U.S. Government in Extrajudicial Tribunals, Undermine Domestic Public Interest Policies, and Cost U.S. Taxpayers Millions

U.S. and EU officials have confirmed that they plan to include  in TAFTA a mechanism included in  prior U.S. “free trade” agreements (FTAs) called “investor-state dispute resolution.” This mechanism, which is facing growing controversy in many countries, elevates foreign corporations to the level of sovereign governments, empowering them to privately enforce the terms of a public treaty. This is done with trade pact terms that authorize individual foreign firms and investors to skirt domestic laws and courts and directly challenge signatory countries’ public interest policies before foreign tribunals, demanding taxpayer compensation for claims that those policies undermined investors’ expectations. The cases are decided by panels comprised of three private sector attorneys, unaccountable to any electorate, who rotate between serving as "judges" and bringing cases against governments for corporations.

Foreign investors have used the broad “rights” granted by this system, which are superior to those afforded to domestic firms, to demand taxpayer compensation for environmental, energy, land-use, toxics, water, mining, labor, and other non-trade domestic policies that they allege undermine their “expected future profits.” A recent Bloomberg exposé “Coup d’Etat to Trade Seen in Billionaire Toxic Lead Fightdetails one such case under the U.S.-Peru FTA. When an investor-state tribunal rules in favor of the foreign investor, the government must hand the corporation an amount of taxpayer money decided by the tribunal. There is no appeal mechanism. Even when governments win, they often must pay for the tribunal’s costs and legal fees, which average $8 million per case, wasting scarce resources to defend public interest policies against corporate challenges.

More than $380 million in taxpayer compensation has already been paid out to foreign corporations in a series of investor-state cases brought under the North American Free Trade Agreement (NAFTA) and related U.S. FTAs. Of the over $14 billion in the 18 pending claims under NAFTA-style deals, all relate to environmental, energy, land use, public health and transportation policies – not traditional trade issues. In November 2012, U.S. pharmaceutical corporation Eli Lilly used the investor-state provisions of NAFTA to attack Canada’s entire legal basis for granting patents, demanding $100 million in compensation.

The investor-state system was initially established to provide a venue for foreign investors to obtain compensation when a government expropriated an investment in a country that did not have a well-functioning domestic court system. In the past, it was included in pacts between a developed and developing country with the developed country firms launching investor-state cases against developing country governments. The United States was not exposed to significant liability under this regime because the only agreement that included a major capital-exporting country was NAFTA. Ninety percent of investor-state challenges against the United States under NAFTA have come from Canadian firms. Inclusion of this regime in an FTA with the EU would expose U.S. taxpayers to enormous new liabilities.

The global World Trade Organization rules do not include private enforcement. Thus, EU corporations currently do not enjoy greater legal privileges than U.S. firms and cannot directly challenge the U.S. government in foreign tribunals over U.S. domestic policies. If TAFTA is enacted with investor-state provisions, EU corporations would be newly empowered to demand U.S. taxpayer compensation for being required to comply with the same policies enacted by Congress and state legislatures that apply to domestic firms. U.S. corporations would gain the same privileges in EU countries.

 Growing Public Outcry over TAFTA

When Rep. Grayson alerted citizens of TAFTA’s proposed inclusion of the investor-state regime, nearly 10,000 individuals submitted comments within 32 hours to denounce the extreme provision as an affront to democracy and the public interest. In addition, more than 370 groups and individuals filed concerns and remarks on the deal in response to USTR’s invitation for public input. Below are links to comments submitted by the diverse array of organizations concerned about TAFTA’s threats to food safety, climate change policy, family farmers, Internet freedom, workers’ rights, access to medicines, financial regulation and other critical public interest objectives.

Public Citizen: http://www.citizen.org/documents/TAFTA-comments.pdf

Rep. Alan Grayson (D-Fla.): http://graysonforcongress.com/news/grayson-army-opposes-corporatocracy-nearly-10000-submit-comments-against-trade-deal-sell-outs

Sierra Club: http://action.sierraclub.org/site/DocServer/TTIP__Federal_Register__May_10.pdf?docID=13041

AFL-CIO: http://www.regulations.gov/contentStreamer?objectId=09000064812db32c&disposition=attachment&contentType=pdf

National Farmers Union: http://nfu.org/images/stories/policy/05%2010%2013%20Transatlantic%20Trade%20-%20USTR.PDF

Electronic Frontier Foundation: https://www.eff.org/deeplinks/2013/05/dear-us-trade-rep-dont-shut-the-public-out-from-us-eu-trade-negotiations

Coalition for Sensible Safeguards:


Consumer Federation of America: http://www.consumerfed.org/pdfs/TTIP-Comments-Consumer-Federation-of-America.pdf  

Library Copyright Alliance: http://www.librarycopyrightalliance.org/bm~doc/lca-ttip-comments-final-10may13.pdf

U.S. Public Interest Research Group: http://www.regulations.gov/contentStreamer?objectId=09000064812dac68&disposition=attachment&contentType=pdf  

Food and Water Watch: http://www.regulations.gov/contentStreamer?objectId=09000064812da8d4&disposition=attachment&contentType=pdf

International Association of Machinists and Aerospace Workers: http://www.regulations.gov/contentStreamer?objectId=09000064812bff6b&disposition=attachment&contentType=pdf  

Citizens Trade Campaign: http://www.regulations.gov/contentStreamer?objectId=09000064812d898d&disposition=attachment&contentType=msw8

United Steelworkers:


Center for Food Safety: http://www.regulations.gov/contentStreamer?objectId=09000064812da7a4&disposition=attachment&contentType=pdf    

Public Knowledge: http://publicknowledge.org/files/PK%20TTIP%20comments.pdf

Communications Workers of America: http://www.regulations.gov/contentStreamer?objectId=09000064812d7715&disposition=attachment&contentType=pdf

Center for Democracy and Technology: https://www.cdt.org/files/pdfs/CDT-TTIP-Comments-5-10-13.pdf

Center for Digital Democracy: http://www.centerfordigitaldemocracy.org/sites/default/files/CDDUSTRMay102013.pdf  

Maine Citizen Trade Policy Commission: http://www.regulations.gov/contentStreamer?objectId=09000064812dc78a&disposition=attachment&contentType=pdf

Knowledge Ecology International: http://keionline.org/sites/default/files/KEIcomments_TTIP_9May2013.pdf

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Bloomberg: "Coup d’Etat to Trade Seen in Billionaire Toxic Lead Fight"

Percy Ramírez - Oxfam America
Percy Ramírez / Oxfam America

Today, Bloomberg published an in-depth piece highlighting the secretive public policy “coup d’etat” that allows corporations to use trade agreements to attack domestic health, environmental, and other public interest policies they feel undermine their ability to make a profit. The use of this "investor-state" system, which was once considered a last resort for companies that had been wronged by countries with weak legal infrastructure, has exploded in recent years as a first-resort way to circumvent strong domestic legal systems. In 2012, corporations used the system to launch a record-breaking 62 new cases against sovereign governments.

Outlined in the article are some of the most egregious cases, including that of Doe-Run/Renco, the company that, after refusing to fulfill its contractual obligations to clean up the pollution of a lead smelter that caused lead poisoning in 99.7% of the community’s children, is now suing Peru under the Peru-U.S. "free trade" agreement (FTA) for $800 million. The story also mentions the record-breaking $1.8 billion judgment that Occidental Petroleum Corp. won against Ecuador last year -- a staggering penalty imposed on Ecuador's taxpayers that amounts to 16% of the country’s external debt.

As the number of investor-state cases balloons, more and more countries are expressing concerns and opting out of investor-state provisions. Despite U.S. pressure, Australia has refused to be a party to the investor-state provisions in the Trans-Pacific Partnership (TPP).  In April, 12 Latin American governments met at a summit focused on investor-state concerns, resulting in a declaration by seven of the governments to coordinate efforts to replace the investor-state regime.  Bolivia and Venezuela have already pulled out of the International Centre for Settlement of Investment Disputes (ICSID), and in March, Ecuador moved to annul its Bilateral Investment Treaty (BIT) with the US.  Other countries such as Brazil, India, and South Africa have either outright rejected the investor-state regime or have made strides to abolish investor-state clauses. Hopefully, these steps forward, combined with increased media attention, will motivate more countries to discard harmful investment provisions that threaten crucial environmental, health, and regulatory policies aimed at improving the lives of the majority.  

Click here to check out the full Bloomberg article.

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As Korean President Addresses Congress Today, First Year of Korea Free Trade Agreement Data Shows U.S. Exports Down, Trade Deficit with Korea Up

After First Year of U.S.-Korea FTA, U.S. Exports to Korea Down 10 Percent, Imports from Korea Up and Deficit With Korea Swells 37 Percent, Contradicting Obama Promises of U.S. Export and Job Growth

Just-released government trade data, covering the first year of implementation of the U.S.-Korea Free Trade Agreement (FTA), shows a remarkable decline in U.S. exports to Korea and a rise in imports from Korea, provoking a dramatic trade deficit increase that defies the Obama administration’s promises that the pact would expand U.S. exports and create U.S. jobs, Public Citizen said today.

The coincidence of the dismal trade data coming out just before the Korean president’s Wednesday address to a joint session of Congress can only heighten attention to the gap between the administration’s promises and the outcomes of its trade agreements.

“The Korea pact’s damaging outcomes being the opposite of the administration’s promises will certainly complicate the administration’s current efforts to use the same claims about export expansion to persuade Congress to delegate away its constitutional trade authority or to build support for the administration’s next trade deal, a massive 11-nation Trans-Pacific Partnership (TPP) based on the same model,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

U.S. export growth to countries with NAFTA-style pacts like the U.S.-Korea FTA has been particularly lackluster; growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the past decade.

In contrast to the Obama administration’s promise that the U.S.-Korea FTA would mean “more exports, more jobs,” U.S. goods exports to Korea have dropped 10 percent (a $4.2 billion decrease) under the Korea FTA’s first year, in comparison to the year before FTA implementation. U.S. imports from Korea have climbed 2 percent (a $1.3 billion increase). The U.S. trade deficit with Korea has swelled 37 percent (a $5.5 billion increase). The ballooning trade deficit indicates the loss of tens of thousands of U.S. jobs.

“Most Americans will not be shocked that another trade agreement has increased our trade deficit, because they know that these NAFTA-style deals are losers, but anger toward the politicians who keep supporting these deals is soaring,” said Wallach. “The question is why any member of Congress would buy the same tired promises that once again have proven false and cede to the administration’s demands that Congress give away its constitutional authority over trade to allow the administration to Fast Track into effect yet another deal, TPP, that will increase our trade deficit and cost U.S. jobs.”

The decline in U.S. exports under the Korea FTA contributed to an overall disappointing U.S. export performance in 2012, placing the United States far behind Obama’s stated goal to double U.S. exports by the end of 2014. At the sluggish 2012 export growth rate of 2 percent, the United States will not achieve the president’s goal until 2032, 18 years behind schedule.

“The sorry Korea FTA numbers beg the question: How can the administration call for a rebirth of American manufacturing and job growth while pushing the TPP, a sweeping deal that would expand the failed Korea FTA model to low-wage countries like Vietnam, ban Buy American provisions and offshore tens of thousands more U.S. jobs,” said Wallach.

Many of the sectors that the Obama administration promised would be the biggest beneficiaries of the Korea FTA have actually been some of the deal’s largest losers:

  • U.S. pork exports to Korea have declined 24 percent under the first year of the FTA relative to the year before FTA implementation.
  • U.S. beef exports have fallen 8 percent.
  • U.S. poultry exports have plunged 41 percent.

The U.S. deficit with Korea in autos and auto parts increased 16 percent in the first year of the FTA. U.S. auto imports from Korea have surged by more than $2.5 billion under the FTA’s first year. FTA proponents have shamelessly touted “gains” in U.S. auto exports without revealing that this increase totaled just $130 million, with fewer than 1,000 additional U.S. automobiles sold in Korea relative to the 1.3 million Korean cars sold here in 2012.

Read additional analysis of the government data on U.S. trade with Korea under the U.S.-Korea FTA.

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Public Citizen and Sierra Club Denounce World Trade Organization Attack on Successful Clean Energy Program

In Final Appeals Ruling, WTO Orders Canada to Roll Back Green Jobs Program

A World Trade Organization (WTO) final ruling against Ontario’s successful renewable energy incentives program, which has reduced carbon emissions and created clean energy jobs, underscores the threat the WTO poses to a clean energy future, Public Citizen and Sierra Club said today.

In November 2012, the WTO ruled that Ontario’s incentives program for renewable energy companies at home – or “feed-in tariff” program – violates WTO rules that forbid treating local or domestic firms and products differently from foreign firms and products. On Monday, the WTO struck down Canada’s appeal of that initial ruling in a decision that went even further to condemn the green jobs program as a violation of WTO rules.

“By ordering the rollback of a successful program that is reducing carbon pollution and creating green jobs after recently sacking three popular U.S. consumer protection policies, the WTO is destroying whatever shred of legitimacy it still had after years of imposing its anti-consumer, anti-environment dictates,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Just like the WTO rulings ordering the U.S. to gut popular laws on country-of-origin meat labels, dolphin-safe tuna labels and limits on candy-flavored cigarettes marketed to kids, this latest attack against an initiative promoting renewable energy, localization and green job creation is simply unacceptable.”

Ontario’s renewable energy incentives program was established under the Green Energy and Green Economy Act of 2009. It increases incentives to develop clean and safe renewable energy by guaranteeing that the provincial public electricity utility, Ontario Power Authority, will pay a preferential price for 20 years to companies for the wind, solar and other clean energies they produce. Although the program is new, it already has achieved significant success, including contracts for an estimated 4,600 megawatts worth of clean energy and the creation of more than 20,000 jobs in just two years.

“As people around the world grapple with consequences of the climate crisis, their governments should and must use every tool available to reduce dangerous carbon pollution and create new clean energy jobs,” said Ilana Solomon, Sierra Club trade representative. “To avoid climate chaos, the WTO needs to get out of the way of innovative and successful climate solutions and job creators.”

The Sierra Club and Public Citizen support calls of Canadian allies, including the Council of Canadians, to keep Ontario’s renewable energy incentives program in place.

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12 Latin American Governments Gather to Confront Extreme Investor Privileges Regime


Last week 12 Latin American governments gathered in Guayaquil, Ecuador to craft a common response to an increasingly common menace: costly "investor-state" suits in which foreign corporations are dragging sovereign governments to extrajudicial courts to demand taxpayer compensation for health, environmental, and other public interest policies.   

Ecuador, the host of this "Ministerial Conference of Latin American States Affected by Transnational Interests," has taken a particularly hard battering from the investor-state system enshrined in NAFTA-style Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs).  The country currently faces a ruling from one tribunal to hand $2.4 billion to Occidental Petroleum after Oxy broke Ecuador's hydrocarbons law, while confronting a ruling from another tribunal that the government should breach its own Constitution and block the enforcement of an $18 billion court ruling against Chevron for massive pollution of the Amazon.  Many of the other countries present have also faced a taxing litany of investor-state cases in recent years: Mexico (e.g. losing $170 million in a NAFTA-created tribunal to the same U.S. agribusinesses that, under the same NAFTA, displaced over two million farmers), Argentina (e.g. losing a slew of cases to foreign financial firms for using financial regulations to mitigate the country's 2001 financial crisis), Guatemala (e.g. losing $13 million to a railroad company that failed to build a railroad because the tribunal thought that the government had failed to fulfill the company's expectations), etc.  

These countries have indeed been "affected by transnational interests."  And they are tired of it.  

So they put together a conference, officiated by Ecuador's foreign minister Ricardo Patiño, to address the investor-state system that has empowered a multitude of foreign corporations to mount a skyrocketing number of challenges against the public policies of sovereign goernments.  Several civil society organizations from around the world attended to deliver presentations on the dangers of the investor-state system.  I was there on behalf of Public Citizen and summarized the exceptionally broad privileges that unaccountable tribunals have granted to foreign investors in this Wild West frontier of international law, and the equally broad array of public interest policies that have been directly attacked as a result.  Cecilia Olivet of the Transnational Institute detailed the deep conflicts of interest among the private attorneys who alternate between acting as judges in investor-state tribunals and as prosecuting lawyers who bring the cases on behalf of corporations.  Martin Khor of the South Centre explained that while attacks on public interest policies have grown under this investor-state system, foreign investment (the ostensible objective for such an extreme system) has not--study after study has shown no correlation between binding a country's policies to this anomalous regime and attracting foreign direct investment.  

At the end of the day, seven of the governments present signed a declaration to coordinate efforts in seeking to replace the investor-state regime with an alternative investment framework that respects sovereignty, democracy, and public wellbeing.  They announced the launch of an International Observatory, a intergovernmental commission based in Latin America to audit investor-state tribunals, draft alternative investment agreements, and collaborate in strategies for reform.  The group will be headed by an executive committee that will help Latin American countries exchange information about emergent investor-state cases and collaborate in mounting defenses against such claims.  Representatives from the remaining five governments participated as observers and are now taking the declaration back to their capitals to discuss joining the emerging Latin American coalition.  

By launching this effort, these dozen Latin American countries are joining a mounting effort by governments to halt, renegotiate, or leave the now-notorious investor-state system.  Australia has publicly refused to sign on to the proposed expansion of the extreme regime in the Trans-Pacific Partnership FTA, despite significant U.S. pressure to do so.  India has moved to abolish investor-state dispute clauses in FTAs.  South Africa is re-examining its policy on investor-state disputes and has refused to renew BITs with the EU.  And now Ecuador's National Assembly is considering a bill to terminate its investor-state-embodying BIT with the United States.  Last week's conference adds another dash of momentum to this growing global push to ditch this rather radical regime.

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