Pelosi pushes back against Obama-backed unfair trade agreements

The Hill reports that:

House Minority Leader Nancy Pelosi pushed back Wednesday against several pending free-trade agreements championed by President Obama.

The California Democrat signaled doubts that looming trade deals with South Korea, Panama and Colombia would benefit U.S. workers. President Obama on Tuesday called on Congress to approve the deals, which he and Republicans argue would create jobs.

“The White House may support it, but the Congress may have a different view,” Pelosi warned on MSNBC.

During a lengthy interview, MSNBC's Andrea Mitchell suggested that the long-delayed trade pacts “could have produced more jobs.”

Pelosi responded, “Well, that's debatable.”

Unlike Mitchell and too many other reporters, Pelosi may have examined the government's own numbers, which show that the U.S.-Korea and U.S.-Colombia deals will increase the U.S. trade deficit. Or she may have examined the record of past trade deals, which have led to loss of U.S. jobs, and accounted for lower-than-average export growth.

Or she may have examined the text of the U.S.-Panama trade pact, which effectively excludes the Panama Canal expansion project from its scope. (See here, page 17.) That project is the one commercially meaningful piece of business happening in that economy, which specializes in offshore tax evasion. It will give Panama new tools to attack U.S. financial transparency initiatives, just as they've used trade pact rules in the past to successfully attack Colombia's (all too scarce) attempts to address money laundering.

And all three pacts will allow corporations to challenge environmental and public health initiatives, in foreign tribunals, outside the U.S. court system, for taxpayer funded compensation. These investor rules wreak havoc wherever they go.

Congrats to Pelosi for standing up for jobs instead of corporate/ideological initiatives like the three unfair trade deals.

Pelosi responded, “Well, that's debatable.”

Op-Ed Round-Up

Here's a round-up of some of the best opinion pieces over the last couple of months about the pending trade deals:

 

U.S.-Korea trade deal is bad for both countries

By Chun Jung-bae, National Assembly of the Republic of Korea

"There is some rosy fantasy that the pending U.S.-Korea Free Trade Agreement will create tens of thousands of well-paying jobs in both countries and strengthen and expand the U.S. relationship with Korea. This is a fabrication of multinational corporations that have no allegiance to either country. As a member of the Korean National Assembly, I would like to set the record straight: In reality, the deal is lose-lose."

Read the entire piece here.

 

 

Congress should reject proposed trade agreements and insist on better policies

By Lynne Dodson, secretary-treasurer of the Washington State Labor Council, and Kathleen Ridihalgh, senior organizing manager of the Sierra Club in Washington and Oregon.

"The definition of insanity is doing the same thing over and over and expecting a different outcome. This summer, insanity reigns over proposed U.S. trade agreements with South Korea, Colombia and Panama. For more than 20 years, "free" trade agreements have systematically undermined the American economy and the middle class. The growing disparity between the "haves" and "have nots" is turning the American dream into a nightmare. It is a direct result of our failed trade policy, and it needs to stop now."

Read the entire piece here.

 

US-Colombia free trade agreement bad idea for both countries

By John I. Laun and Cecilia Zarate-Laun, Colombia Support Network

"In the coming days, the U.S. Congress will be debating a free trade deal between the United States and Colombia. The agreement, if finalized, will have a negative impact on both countries. It will not lead to job creation in the United States. Instead, it will cost U.S. jobs, as multinationals will relocate to Colombia in order to avoid paying higher wages here. But Colombia will not benefit, either."

Read the entire piece here.

 

Trading Our Future: Tax Cheating and the Panama Free Trade Agreement

By Dylan Ratigan, host of MSNBC's "The Dylan Ratigan Show"

"If you want to know why politicians are so eager to pass a free trade agreement with Panama this month, type "Panama offshore banks" into Google and look at the paid ads. What you'll see is advertising by law firms and banks that will offer you help to set up a secret corporate structure in Panama immune from taxes."

Read the entire piece here.

 

Free Trade Pacts Will Cost Tennesseans Jobs

By Robert E. Scott, director of trade and manufacturing policy research at the Economic Policy Institute

"Based on past U.S. experience with NAFTA and other trade agreements, I have estimated that the U.S.-Korea and Colombia FTAs will displace 214,000 U.S. jobs. These job losses will fall hardest in industrial states like Tennessee. Workers there would be well-advised to think twice before supporting these job-displacing trade agreements."

Read the entire piece here.

  

 So-called 'free' trade agreements harm American workers

By Steve Kagen, doctor and former member of Congress from Appleton, Wis.

"Professional politicians in Washington and their partners on Wall Street are lining up for another payday - this time by promoting 'free trade' deals with Korea, Panama and Colombia. But if you're not in Washington or on Wall Street, there's a problem. These new deals are just like the old deals. They are job-killers - just like NAFTA and CAFTA before them."

Read the entire piece here.

 

 
 
Say no to new trade deals and start over

Editorial

"If so-called free trade is not done right...the only winners are corporations without borders. The losers are the people who live and work in those developing nations and the American blue-collar workers who see jobs leave the States. ... There is a good reason that both Maine tea party groups and organized labor oppose the South Korea, Panama and Colombia trade agreements. After defeating them, Congress must create a better way to promote global trade."

Read the entire piece here.

 

Open borders, trade deals are ruinous for America

By James P. Hoffa, president of the International Brotherhood of Teamsters

"Three more job-killing trade deals are in the hopper, and you can bet the news media will swallow whole the phony claims made about them by the U.S. Chamber of Commerce and other groups. Congress is now considering trade agreements with Colombia, where trade unionists are routinely murdered; Panama, a well-known tax haven; and South Korea, in the biggest trade deal since NAFTA. It seems our trade policy is of the corporation, by the corporation and for the corporation."

Read the entire piece here.

 

Trade deals are no deal for US

By Steven J. D'Amico, former Mass. state Representative and member of the American Jobs Alliance

"Even after losing 682,000 jobs to NAFTA since it took effect in 1994, and 2.4 million to China since it joined the World Trade Organization, Washington continues in its blind faith that somehow these trade deals are good for us. This summer Congress is expected to take up three new trade deals - with Korea, Panama, and Colombia. These trade pacts are bad for American workers, bad for our domestic economy, and bad for democracy."

Read the entire piece here.

 

 
Free-trade deals would be costly to U.S.

By Tom Burga, president of the Ohio AFL-CIO

"For over a decade, the labor movement and development advocates have called for fair-trade policy that is part of a more coordinated and coherent national economic strategy.  Unfortunately, the Korean, Colombian and Panamanian free-trade deals before Congress do not address the fundamental policy failures of the North American Free Trade Agreement and China's inclusion into "favored nation status," which has led to catastrophic job loss in the U.S. and the explosion of our import/export deficit, now reaching $500 billion annually."

Read the entire piece here.

 

 Trade pacts bad for California agriculture

By Curtis W. Ellis, executive director of the American Jobs Alliance, and Joaquin Contente, president of California Farmers Union 

"Pending free trade agreements with Korea, Colombia and Panama are bad for California farmers and must be rejected if we are to preserve our way of life. All three trade treaties are based on North American Free Trade Agreement-style policies that have displaced American farmers while sending jobs that support California's rural communities offshore. In fact our leading export is jobs and we reward companies that outsource jobs. Since NAFTA took effect, the United States has lost 300,000 farms and millions of jobs."

Read the entire piece here.

 

 
Wisconsin Farmers Union opposes free trade pact with Korea

By Darin Von Rudin, president of Wisconsin Farmers Union

"WFU strongly opposes the Korea-U.S. Free Trade Agreement and urges Congress to do the same. We feel our legislative leaders should be protecting and promoting American jobs, family farms and our rural communities through sound economic, environmental and labor policies. We don’t think this trade agreement adequately promotes these values."

Read the entire piece here.

 

 
Rep. Schrader is confused on international trade

By Steve Hughes, state director of the Oregon Working Families Party,Ray Kenny, International Brotherhood of Electrical Workers Local, and Frank Rouse, president of the Machinists Union Local 1005

"Congressman Kurt Schrader seems to be confused. On the one hand, he says he opposes trade deals that extend greater rights to foreign investors than exist for Oregonians doing business in our state. On the other hand, he is supporting a massive new free trade agreement with South Korea that does just that."

Read the entire piece here.

 

 
Free trade agreements jolt the economy, but not in a good way

By Jessica Lettween, director of the Minnesota Fair Trade Coalition

"It's easy to understand why multinationals adore the Korea agreement. But with around 7 percent unemployment in Minnesota, a budget crisis, and an electorate that is strongly opposed to more NAFTA-style trade agreements, it is baffling why any member of Congress would endorse a deal that will cost us so much."

Read the entire piece here.

 

Choose voters over donors on free trade

By Gordon Lafer, professor at the University of Oregon, former senior adviser to the U.S. House’s Labor Committee

"Like Republicans, the White House is eager to get these treaties done quickly, so that voters will have forgotten by the fall of 2012. To see the Obama administration and Republican leadership quietly collaborating to seal this deal in knowing violation of the voters’ will is among the most telling signs of corporate power in Washington, and among the most depressing stories in these tough times."

Read the entire piece here.

 

Obama's trade policy clearly shortsighted

By Karen Hansen-Kuhn, international program director for the Institute for Agriculture and Trade Policy

"More than two years into the Obama administration, we're still waiting for a 21st-century trade policy."

Read the entire piece here.

 

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

 

Dylan Ratigan on Tax Cheating and the Unfair Panama Trade Deal

Check out this HuffPo piece about the Panama trade deal from MSNBC's own Dylan Ratigan:

"If you want to know why politicians are so eager to pass a free trade agreement with Panama this month, type "Panama offshore banks" into Google and look at the paid ads. What you'll see is advertising by law firms and banks that will offer you help to set up a secret corporate structure in Panama immune from taxes.

The State Department knows this. Here's how the State Department described the Panamanian economy in 2006 in a secret memo revealed on Wikileaks.

The Panamanian "incorporation regime ensures secrecy, avoids taxes,and shields assets from the enforcement of legal judgments. Along with its sophisticated banking services, Panama remains an environment conducive to laundering the proceeds from criminal activity and creates a vulnerability to terrorist financing."

Read the whole article.

Trade-ifact Part Deux

It's time for the second installment of Trade-ifact: Keeping the Media Honest about Trade Deals. Since our last installment, FTA proponents in the administration and Congress have worked to move along the negotiations for curtailing Trade Adjustment Assistance (TAA), all while maintaining a straight face when claiming that these trade pacts will create jobs. Late yesterday, White House Chief of Staff Bill Daley said that they would submit the FTAs for Congressional approval within days, so next week expect the FTA debate to turn white-hot (and a wave of questionable claims to reach tidal wave heights).

Doug Palmer (Reuters)

US showdown looming on Korea trade without deal soon (7/10/2011)

Palmer writes, "A year ago, Obama moved to resolve Democratic concerns with the deals." Democratic concerns with the three FTAs remain unresolved. Despite small tweaks to the auto provisions in the Korea FTA, imports of Korean autos are still projected to slam U.S. autoworkers. Plus, nothing was done to address the Korea FTA's prohibitions on certain vital financial sector regulations. Murders of labor union leaders in Colombia continue, and many Democrats are vowing to oppose the Colombia FTA as a result. Finally, Panama's status as a tax haven will remain unchanged if the Panama FTA is approved. The FTA's investor-state provisions would even allow the Panamanian government and corporations to challenge U.S. policies targeting tax havens. Overall, there has been no fundamental change to the NAFTA trade model that Obama promised while he was a presidential candidate.

Palmer claims that Fast Track trade negotiating authority "has long been considered vital for securing trade deals with U.S. trading partners worried that without it their agreements could be picked apart by Congress."  As noted in our book on the history of Fast Track, scores of trade agreements have passed Congress without Fast Track protection, including 130 trade and investment agreements under the Clinton administration alone (Clinton lacked Fast Track authority from 1995 to the end of his second term). In 2000, former Clinton U.S. Trade Representative went as far as to say, "if you look at our record on trade since 1995, I don't think the lack of Fast Track impeded our ability to achieve our major trade goals."

Obama said ready to move on South Korea trade bill (7/14/2011)

Palmer says that Obama demands an "extension" of TAA be approved along with the three FTAs. The Obama administration's proposal on TAA is actually to narrow eligibility and cut benefits. As Inside U.S. Trade reports, under the new TAA plan workers displaced by trade could receive a maximum of 130 weeks of income support while undergoing retraining, while currently workers can receive up to 153 weeks of income support. It also would restrict income support eligibility for workers who are not in retraining programs, cutting the types of waivers for income support from six to three. Chairman of the House Ways and Means Committee, Republican Rep. Dave Camp, said of the deal, "The final result is a program that has been cut not only from 2009 levels, but also below 2002 levels in several key areas." The "2009 levels" are the elements of the TAA program that expired earlier this year, while the 2002 levels are the elements that are currently in effect. The cuts are a burden on displaced workers when they can least afford it.

Vicki Needham (The Hill)

Republicans split on trade tactics (7/13/2011)

Wikileaks blows lid on Panamanian corruption

As Washington debates the NAFTA-style deal with Panama, Wikileaks has released a treasure trove of damning documents about the current Panamanian administration.

One of the major talking points that the trade deal's proponents utilize is that we must pass the trade deal to reward a key friend in the region. (See here and here.)

But with friends like Panamanian President Martinelli, who needs enemies?

In January 2009, the Embassy expressed concern that Panama's authorities supposedly in charge of providing the U.S. with intelligence "failed to provide" information about drug-related money laundering "to the Attorney General as required by law. Ambassador stressed that the credibility and efficacy of the UAF were crucial in fight against money laundering."

It gets worse. The man behind the money - David Murcia Guzman - has links to former Colombian president Alvaro Uribe, and current Panamanian president Ricardo Martinelli. According to this cable from March 2009, Martinelli's network of Super 99 stores may have been a "service provider" to Guzman, and may have laundered illicit proceeds.

The Embassy wrote, "This scandal is a huge black eye for Panama, and could do serious damage to its international reputation as a safe place to do business. And the worst is far from over."

White House Rocked by Protests Against Unfair Colombia Trade Deal

Today, hundreds of activists gathered at the White House for a demonstration against the U.S.-Colombia FTA. These representatives of faith, labor, human rights and consumer organizations called for the Obama administration to drop its push to pass the Bush-signed trade pact. Fifty one coffins were laid in front of the White House to symbolize the murders of that number of Colombian unionists last year. Five activists were arrested as an act of civil disobedience, including Rick Chase, Executive Director of the Presbyterian Peace Fellowship.

Click here for more pictures.

Read the press advisory after the break.

Launch of Trade-ifact: Keeping the Media Honest about Trade Deals

Now that the House Ways & Means Committee and the Senate Finance Committee have held mock markups of the Korea, Colombia, and Panama FTAs, we could see votes on the FTAs very soon. One of the major unknowns at this point is whether trade adjustment assistance (TAA, or aid to trade-displaced workers) will be included in the implementing legislation for one of the FTAs. Earlier in the debate, President Obama appeared to have secured an agreement from Republicans to allow TAA to move forward – now, things seem less sure.

Now, more than ever, it’s important that Congress and the public be well informed about the likely impact of these deals, which are modeled on NAFTA.

Unfortunately, there has been too little reporting on the deals, and even less that is accurate and balanced. In the interests of accurate reporting, we're launching a new feature on the blog: Trade-ifact. (Think Politifact, but for Trade.)

We will highlight instances where reporters have gotten the facts wrong on the FTAs, starting with a roundup of the reporting of the last two weeks. We'll blog periodically about this accuracy-in-FTA-reporting issue as more FTA stories with errors are published.

The main factual errors that we have found time and again are:
- Misquoting export projections and quoting export  and jobs projections without a discussion of the likely import increases and job losses. This is like looking at your family’s budget, but only looking at your paycheck, and not what you owe. Like too many of our households, our nation buys more than it makes, resulting in a massive trade deficit. Reporters should be getting this right, and examining the likely impact of our trade policy on the deficit.

Liveblogging dueling congressional hearings on 3 NAFTA deals

President Obama has decided to introduce NAFTA-style deals with Panama, Colombia and Korea to Congress, bowing to pressure from corporations and Republicans.

Recognizing that the deals would cost jobs, the administration also agreed with House Republicans to cut (but partially renew) trade adjustment assistance (TAA) for workers displaced by trade.

Republicans, after getting what they want, are now threatening to block or muddle the push on the FTAs, because TAA was not cut enough, or out of concerns that pairing TAA with the FTAs backs up the notion that trade deals cost jobs. Well, yes.

The three deals will be considered under Fast Track trade promotion authority, which means that normal congressional procedures and debate are suspended. As we state in our book on the topic:

Core Aspects of Fast Track Trade-Authority Delegation

• Allowed the executive branch to select countries for, set the substance of, negotiate and then sign trade agreements – all before Congress had a vote on the matter.
• Required the executive branch to notify Congress 90 calendar days before signing and entering into an agreement.127
• Empowered the executive branch to write lengthy implementing legislation for each pact on its own, without committee mark ups. That is to say, the process circumvented normal congressional processes. These executive-authored bills altered wide swaths of U.S. law to conform domestic policy to each agreement's requirements, and formally adopted the agreement texts as U.S. law. As a concession to congressional decorum, the executive branch agreed to participate in "non" or "mock" hearings and markups of the legislation by the trade committees. However, this is a practice, not a requirement.

Today, we will attempting to live-blog the simultaneous mock markups in the Senate Finance and House Ways & Means Committees. I'll be focusing on the latter. [My comments will be in brackets; unless noted by quotes, all notes are paraphrased from actual statements.]

++

Chairman Dave Camp (R-Mich.): We obtained significant reductions in TAA. But the agreement was on substance, not process.

[See statement here. Camp has a key misrepresentation in his opening statement:

"The three trade agreements are a sure-fire way to create American jobs by growing U.S. exports of goods and services – and they do not require one dime of new government spending.  The independent U.S. International Trade Commission estimates that the three pending trade agreements together would increase U.S. exports by at least $13 billion.  These agreements will create and support jobs here in the United States – 250,000 jobs, using the President’s own measure."

This is a serious misrepresentation. In fact, consistent use of this methodology here would show a job loss from the trade deals, not a job gain.

And it's misleading to suggest that these deals don't cost money. In fact, as the Congressional Budget Office estimates have shown, the U.S. government will lose billions in tariff revenue from implementing the deals.

Korea FTA itself: $7,355 million over 2011-2021

Colombia FTA itself: $1,400 million over 2011-2021

Panama FTA itself: $6 million over 2011-2021]

++

Ranking Member Sander Levin (D-Mich.): Urging a "no" vote on mock markup of the 3 FTAs if his amendment to include TAA is not included. Is asking for a certification to be required that Colombia has met its action plan requirements before the agreement enters into force. Urging a no vote if this amendment to require certification fails.

[This Action Plan fails to accomplish the most important labor rights objective: requiring an end to unionist killings on the ground. It also falls far short of the extensive benchmarks laid out by Democratic labor rights leaders.]

Breaking: GOP Boycotts Mark-Up of NAFTA Deals

At 3 pm today, the Senate Finance Committee was supposed to hold an "un-mark-up" of the implementing legislation for the three NAFTA-style deals.(For the background on this arcane Fast Track procedure, see our book here.)

But all the Republicans on the Committee boycotted the hearing, so Chairman Max Baucus (D-Montana) called it off.

They objected to the inclusion of any trade adjustment assistance (TAA) in the Korea FTA, on fiscal austerity grounds. Or, as Sen. Orrin Hatch (R-Utah),

"Unions and other anti-trade zealots gleefully use TAA data to make the case that trade causes outsourcing and job loss... Instead of helping build the case for trade, TAA certifications are used to show that trade is bad.  In the end TAA really is just a government subsidy for anti-trade propaganda."

Yes, reality is so uncooperative with corporate spin sometimes!

Not that the administration's stance is much more coherent. As our own Lori Wallach told Politico,

“For most Americans, what’s newsworthy is not that the administration is pushing Trade Adjustment Assistance (TAA), which effectively is a job burial insurance program, but that pushing a deal on TAA is being used as political cover to move more NAFTA-style trade agreements that will kill more American jobs in the first place, especially given our high unemployment rates.” Wallach added. “The point that’s gotten lost in all this wrangling over TAA is that the three leftover Bush trade deals are bad in and of themselves.”

It's unclear what comes next. Senators had lined up a raft of amendments to the FTAs, on everything from restricting abortion rights to restroring the TAA health care credit funding that the Obama administration had agreed to reduce from current levels. There's still time to shelve the deals, reverse course, and actually have Obama make good on his commitments to truly overhaul our failed trade policy. We'll be watching, and out in the streets over this Fourth of July weekend around the country.

Obama Edges Closer to Political Cliff With Deal to Combine Program to Aid Workers Losing Jobs to Trade With Three Bush-Era NAFTA-Style Trade Pacts Projected to Cause More Job Loss

Statement of Lori Wallach, Director of Public Citizen’s Global Trade Watch

Given that polls show most Americans oppose more NAFTA-style trade pacts because they are job-killers, announcing that three more such agreements are ready to move only because a program to assist workers losing jobs to bad trade deals also can be extended will probably not surprise many Americans, but it sure will make them mad.

For most Americans, what’s newsworthy is not that the administration is pushing Trade Adjustment Assistance (TAA), which effectively is a job burial insurance program, but that pushing a deal on TAA is being used as political cover to move more NAFTA-style trade agreements that will kill more American jobs in the first place, especially given our high unemployment rates.

Poll after poll shows that the vast majority of the American public – across stunningly diverse demographics – is opposed to NAFTA-style trade deals and that members of Congress vote for them at their peril. Earlier this month, White House Chief of Staff Bill Daley, whose job is to sell these trade deals and who helped former President Bill Clinton sell NAFTA to a skeptical Congress, recognized that workers “lose from these agreements” and implied that campaigning against FTAs could even be an electoral advantage. (The Washington Post, “White House’s Daley seeks balance in outreach meeting with manufacturers,” June 16, 2011.)

The point that’s gotten lost in all this wrangling over TAA is that the three leftover Bush trade deals are bad in and of themselves. Even an official government study finds that the Korea deal will increase our trade deficit, and we know up front that it will kill jobs and undermine our national security. The Colombia deal will eliminate any leverage the U.S. has to combat the forced displacements and murders of unionists, Afro-Colombians, human rights defenders and others – problems that have gotten worse since this deal was signed in 2007. The Panama deal will make it harder for the U.S. government to penalize tax-dodging multinational corporations. The supplemental deal on autos for Korea, the labor “Action Plan” for Colombia, and the tax information exchange agreement for Panama are all toothless and do nothing to alleviate the aforementioned problems, as Public Citizen has extensively documented. They were all part of a political-cover kabuki dance.

Moreover, the fact remains that all three deals have the same damaging provisions we all remember from NAFTA: limits on financial services regulation, foreign investor privileges that promote offshoring, weak labor standards, limits on imported food safety and inspection, and the ridiculous private investor-state enforcement system that empowers multinational corporations to go around our domestic courts and directly challenge our state and federal laws before foreign tribunals and demand compensation from our tax dollars for claimed violations of the trade deal.

Comparing apples to bloody oranges

Corporate interests have been going into overdrive pushing the flawed NAFTA-style deals with Colombia, Panama and Korea. As we've documented before, a lot of the statistics that they bandy about as support for their position are misleading, incomplete, or makes apples-to-oranges comparisons.

It's one thing when these statistics have to do with economic accounting abstractions like export values: the argument could be wrong, but it doesn't hit you on an emotional level.

Not so with the latest deeply offensive talking point from the Heritage Foundation and the Cato Institute, now being cited by Gary Shapiro of the Consumer Electronics Association, who writes:

The battle over free trade has taken a crass -- and dishonest -- turn thanks to an ad campaign run by the AFL-CIO which suggests a free trade agreement between the United States and Colombia is "about murder" of Colombian labor organizers. The ad, which features a coffin, applauds the "brave union leaders" of Colombia who are lobbying Congress to reject the proposed agreement. The AFL-CIO claims that to approve the FTA would be to condone the murders of union leaders in Colombia.

What's the ads don't mention is that the Colombian union leaders visiting Washington this week are in more danger here than in their home country. In fact, according to statistics cited by the Heritage Foundation, the murder rate in Washington is 33.4 per 100,000 inhabitants, compared to the 5.3 for Colombian unionists.

I can't remember the last time I read anything so callous or tone deaf. The reason that labor, faith and human rights groups have highlighted the Colombian unionist assasination numbers is because many if not all of these murders in Colombia occur because of the unionists' activities.

The D.C. murder rate is heartbreaking. But how many of these murders occur because someone is attempting to exercise their union rights? Zero. That's the relevant comparison.

Murder rates in D.C. - as across most of the U.S. - are driven largely by economic factors and include the failed war on drugs (and the competition between private individuals over drug turf.)

Unionist murders in Colombia are, by contrast, political, and are often carried out with state complicity.

Two closing thoughts.

First, the plan that the Obama administration is pushing does not require an end to these murders before the pact go into place. That is a tragedy and missed opportunity.

Second, much as employment and competition in the illegal drug sector drive DC's murder rate, the Colombian government's own studies predict an exacerbation of such problems in Colombia if the FTA is implemented. Given the rural displacement and further impoverishment the Colombia FTA is projected to cause, the Colombian Ministry of Agriculture concluded that the FTA would give small farmers little choice but “migration to the cities or other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups.”

In sum, while the Colombia FTA does not require Colombia's unionist murder rate to come down to the zero rate of Washington, D.C., it may in fact drive Colombia's overall (non-unionist) murder rate up to Washington, D.C. levels.

Chamber of Commerce's Misleading Data Website Gives Only Half the Story

Today the Chamber of Commerce launched a website that purports to show the effects of U.S. trade upon jobs in each congressional district, as part of its lobbying campaign to pass the Korea, Colombia, and Panama Free Trade Agreements (FTAs).  Even a cursory review shows that the data included to represent “effects of trade” is only gross exports – imports are excluded, as are net figures that show the actual impact of trade on the districts. 

Indeed, the Chamber’s “new” website just repackages the previously-released old exports-only data featured in past Chamber “studies” of the FTAs. It’s the same misleading approach - like only counting deposits into ones bank account, not also withdrawals or the ending balance.

And, this is especially deceptive because it operates to cover up the huge U.S. trade deficit, which has been driven to astronomical levels by the very same NAFTA-style trade pacts supported by the Chamber of Commerce and the American jobs lost from years of large annual trade deficits.

When economists study the jobs impact of  trade pacts, they consider both sides of the ledger by estimating the number of jobs supported by exports as well as the number of jobs displaced by imports. As Nobelist Paul Krugman noted: " If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses. A countervailing duty on Chinese exports would be job-creating; a deal with South Korea, not…"

Studies that review both imports and exports explain why broad majorities of Americans are against the types of trade pacts the Chamber continues to promote. For instance, the Economic Policy Institute found that 5.6 million more jobs were displaced by imports than were supported by exports in 2007. Looking into the future, the Economic Policy Institute has estimated that implementation of the Korea and Colombia FTAs alone will lead to a net loss of 214,000 U.S. jobs due to rising trade deficits.

Exports support jobs, but the NAFTA-style trade pacts touted by the Chamber will lead to greater imports than exports, displacing workers in the United States. Says who? Well, among others, the Korea FTA’s lead negotiator Ambassador Karan Bhatia who was Pesident George W. Bush’s deputy U.S. trade representative. In an October 2006 speech to a Korean audience, Bhatia said that it was a “myth” that “the U.S. will get the bulk of the benefits of the FTA.” He went on to say, “If history is any judge, it may well not turn out to be true that the U.S. will get the bulk of the benefits, if measured by increased exports.” He added that, in the instance of Mexico and other countries, “the history of our FTAs is that bilateral trade surpluses of our trading partners go up,” meaning that the U.S. trade deficit with those countries increased. 

Even on its own terms, the Chamber website’s estimates of the number of jobs supported by exports in each congressional district are often double counted and misleading. According to the website’s own methodological summary, if any part of a county intersects with a congressional district, all of that county's exports and extrapolated “jobs-supported” are added to that  district's total. This leads to a huge degree of double-counting, since exports from a single county are often assigned to multiple congressional districts. In Texas alone, the sum of the number of jobs supported by exports in each congressional district is 250 percent greater than the state total given by the Chamber, meaning that the jobs estimate for the average Texas congressional district is inflated by 250 percent. Thus, users of the website are misled when they think they are accessing the number of jobs supported by exports in their congressional districts.

Public Citizen has estimated the number of jobs in each congressional district in sectors that will be hit particularly hard by the Korea FTA. A searchable database of these estimates is available at:
http://www.citizen.org/korea_fta_jobs_at_risk

FTA Investors Rules Not Fixed by Preamble Change from 2007

As EOT regulars know, NAFTA-style trade deals contain investment rules that allow corporations to bypass national legal systems and launch attacks on governments in international tribunals. The basis for these attacks can be as simple as institution of a new environmental policy that affects the corporation’s expected future profits. Judges for these so-called “investor-state” cases are selected in part by the corporation, and the trade-pact rules are tailored to corporate demands. Often the mere threat of one of these investor-state awards can cast a chill on public-interest regulation.  All told, more than $350 million has been paid to date in these cases.  Moreover, there are over $9.1 billion in claims in the 13 investor-state cases outstanding under NAFTA-style deals, relating to environmental, public health, and transportation policy.  An additional $483 million has been awarded under U.S. Bilateral Investment Treaties (BITs), which contain similar investment rules. Billions of dollars are also pending in BIT cases now underway.

The Panama, Colombia and Korea “free trade agreements” (FTA) may be considered by Congress in the near future. These pacts constain investment rules that are almost identical to those in NAFTA, except where they are worse. There was one investment-related addition made to the preambles of these FTAs as part of a May 10, 2007 deal with the Bush administration. It stated that the parties: “AGREE that foreign investors are not hereby accorded greater substantive rights with respect to investment protections than domestic investors under domestic law where, as in the United States, protections of investor rights under domestic law equal or exceed those set forth in this Agreement.…”

Some have suggested that this provision goes all or most of the way towards resolving the concerns with these provisions. This is not the case. There is no certainty as to the legal meaning of the May 2007 preambular provision.

Public Citizen has just published a memo that examines six different approaches to preambular language, including the four that have been taken by the tribunals under the 45 final awards issued under U.S. FTAs and BITs.

The memo finds the May 2007 preambular modification fails to address the main concerns raised by scholars and members of Congress with regard to the investment provisions. Indeed, there is scant historical support for the notion that pro-public interest provisions of preambles are protective of regulatory prerogatives: nearly 90 percent of the time, tribunals have given them no weight at all. The remainder of the time,tribunals found that pro-public interest provisions had to be balanced against, and possibly watered down by, pro-investor provisions.

Deeper changes will be required to the investment provisions of the proposed FTAs with Korea, Panama and Colombia, as well as a Trans-Pacific FTA (which includes Peru, the U.S. and eight other countries) now under negotiation. 

To read the memo, go here.

As Obama Administration Pushes for Colombia FTA, Human Rights Abuses Persist

As Obama Administration carries on with it push for the Colombia FTA, a deteriorating human rights condition in Colombia persists. News continues to come in about the murders of Colombian activists, unionists, and teachers, including the recent death of a lands rights leader.  And now, reports are surfacing of forced displacement in Afro-Colombia and indigenous communities. According to the United Nations Office of Coordination of Humanitarian Affairs, more than 18,000 people were the victims of an armed strike by FARC guerrillas in May 2011.  Of these 18,000 it is estimated 16,000 are Afro-descendents and 2,000 are indigenous.   In a recent post, The Afo-Colombian Solidarity Network argues that, “When leaders are threatened and killed, movements can be silenced. In Colombia, if these movements cannot exercise their constitutional rights more displacement and violence is inevitable and these communities could vanish.”

 The severity and persistence of these abuses are alarming, particularly in light of the Obama Administration’s plan to go forward with a NAFTA-style Colombia FTA without addressing the perilous human rights situation in Colombia.

We’ve previously brought attention to Obama’s woefully inadequate Action Plan on the Colombia FTA, which does not require murders or displacement to stop. A memo to the President by House Democrats outlined how to address these concerns, but it has apparently fallen to death ears at the White House.

It appears the pressures is growing for the public to take action and draw attention to the present atrocities as well as the future steps needed to ensure human rights are respected in any free trade agreement with Colombia.

Lori Wallach Profiled in The Hill

Check out this profile of Lori Wallach in The Hill today:

Agitator by Trade Unhappy with Obama

"Wallach, who was a year ahead of Obama at Harvard Law School, says the administration took up the mantle of George W. Bush by making only negligible changes to the trade deals that were hammered out while he was in office. 'He’s reviving Bush-era agreements and making those his own. It’s inexplicable,” Wallach said. … Win or lose, Wallach says she doesn’t subscribe to inertia, aiming to out-research, outsmart, outwork and out-organize her opponents — the majority of which are corporations. 'There’s a powerful set of special interests on the other side,' she said. 'The public is with us and our case is strong.'”

Read the entire profile here.

Photo Credit: Greg Nash / The Hill Newspaper

Gordon Lafer in The Hill: Choose Voters over Donors on Free Trade

Check out Gordon Lafer's op-ed in The Hill about the Colombia trade deal:

 
Choose Voters over Donors on Free Trade

"As a political scientist, I’m sometimes asked how it’s possible for a democracy to enact laws that are opposed by the majority of voters. There is no clearer illustration of how this works than the current race to enact a free trade agreement with Colombia. The majority of Americans opposes NAFTA-style treaties. It’s not just union members; only 27 percent of Republicans think 'free trade' helps us. ... To see the Obama administration and Republican leadership quietly collaborating to seal this deal in knowing violation of the voters’ will is among the most telling signs of corporate power in Washington, and among the most depressing stories in these tough times."

Read the entire piece here.

Fair trader wins in Peru... a third time.

Ollanta Humala, the fair trade candidate in Peru's presidential election, appears to have won a majority of the votes in the second and final round of voting. He bested Keiko Fujimori, who campaigned against fair trade.

We brought this story to your attention back in the first round of voting in April, and mentioned that there was a strong worry that there would be outside intevention. As Mark Weisbrot reported for the Guardian, there is a feeling on the ground that there were some U.S. interventions, although these may only be catalogued with time.

Humala has a long history of staking out fair trade positions. It will be interesting to see how his position evolves going forward, especially in the Trans-Pacific FTA negotiations.

WTO attacks U.S. ground beef labeling

For the second time in a week, reports have surfaced about the WTO clobbering a U.S. consumer labeling policy. Last week, the U.S. voluntary dolphin-safe tuna label was deemed a WTO violation. This week, Reuters is reporting that the WTO has ruled that U.S. beef labels are a WTO no-no.

Corporate meatpackers are rejoicing, saying (according to Reuters)... 

COOL was a bad idea from the start. "This ruling is unfortunate for the U.S. government but the consequences of a poor decision have been revealed. We fully support WTO's preliminary ruling," Bill Donald, president of the National Cattlemen's Beef Association, said in a statement.

WTO interference in these types of labeling schemes are likely to further erode support for so-called "trade" deals. As author Eric Schlosser wrote,

"The days when hamburger meat was ground in the back of a butcher shop, out of scraps from one or two sides of beef, are long gone. Like the multiple sex partners that helped spread the AIDS epidemic, the huge admixture of animals in most American ground beef plants has played a crucial role in spreading E. coli 0157:H7. A single fast food hamburger now contains meat from dozens or even hundreds of different cattle..."

Consumers, ranchers, farmers and legislators worked hard to pass the labeling rules after seeing ground beef horror stories in Schlosser's movie and book Fast Food Nation.

Heck, even free marketeers will be upset with the WTO ruling, since labeling transparency allows the consumer to make the free choice as to what kind of product they want to buy without the government dictating the outcome.

Unfortunately, rather than fixing the WTO mess we've got, the Obama administration is working to expand these types of consumer-harming rules through not one, not two, but three additional unfair trade agreements. Indeed, President Obama is pushing a package of three NAFTA-style deals with Korea, Colombia and Panama that replicate and expand on the WTO threats to food safety.

What's worse, they'll allow some food processors with a presence in the U.S. and these countries with new rights to DIRECTLY attack U.S. consumer safety rules. If the investors win, then U.S. taxpayers have to hand over cash compensation to these corporations. Over $350 million in compensation has already been paid out to corporations under these cases. This includes attacks on natural resource policies, environmental protection and health and safety measures, and more. In fact, of the $9.1 billion in pending claims, all relate to environmental, public health and transportation policy – not traditional trade issues.

At a time when food safety and worker safety budgets are being cut, expanding these flawed rules is unconscionable. If you think that Obama should be spending his energy fixing the flawed trade rules already on the books rather than expanding these rules to new countries, say aye here and take action.

How did we get to a place where the WTO was telling us what type of consumer labels we could use? We have more data on the case after the jump...

Trade Looms Large in NY Special Election

(Disclaimer: Public Citizen has no preference among candidates for office)

Yesterday Democrat Kathy Hochul pulled off an upset win against Republican Jane Corwin in the special election for New York's 26th District, wresting control of a seat the GOP has occupied since the 1960's. Much attention has focused on the candidates' positions on Medicare as a deciding factor in the race, but trade policy also played a key role in the election.

Jack Davis, independent candidate and president of a local manufacturing company, turned the spotlight on the devastating consequences of unfair trade policies for American manufacturing workers. His focus on offshoring garnered nine percent of the votes in the special election.

Earlier in the race, Davis was polling at 23 percent, a testament to the power of trade as an election issue.  Eager to be on the right side of the trade issue, Kathy Hochul released a strongly-worded statement condemning NAFTA and opposing the Korea, Panama, and Colombia FTAs.

For her part, Corwin ran an ad claiming that she would "oppose trade agreements that just aren’t fair", but never followed through in naming a specific pact that she would oppose. When asked point-blank in a questionnaire if she supported NAFTA and the Korea, Panama, and Colombia FTAs, she refused to take a position.  The tension between Corwin's vague fair trade statements and her reluctance to oppose specific policies came to a head when Hochul and Corwin addressed Davis' absence from the May 12th debate:

Oddly, Hochul and Corwin both ended up noting Davis’ absence from the debate not to needle him, but each other.

Hochul started it, saying she wished Davis had participated because “he brings a lot to the debate,” and on his behalf demanded Corwin state her view of the North American Free Trade Agreement and unfair trade. That’s been Davis’ signature issue in all four of his congressional campaigns.

Corwin’s answer: “Right back at’cha, Kathy. There are a lot of things that Jack could ask Kathy Hochul. I think we need to get clarification on her plan for Medicare. She talks about holding the line on taxes. How do you hold the line on taxes when you’re advocating ... to raise taxes?”

That exchange sharply contrasted the difference between Hochul's commitment to oppose specific trade agreements and Corwin's broad statements on fair trade. A large number of the new GOP House freshmen campaigned on supporting fair trade. With Hochul's solid win over Corwin, they're on notice that they will have to put their money where their mouths are on the upcoming votes on the Korea, Panama, and Colombia FTAs or face voter anger in November 2012.

Scott Walker's NAFTA trade package

President Obama came under fire from progressives earlier this year who felt he did not do enough to support the working families in Wisconsin and throughout the Midwest who have been fighting to preserve their collective bargaining rights from attacks by anti-worker governors like Scott Walker.

Now, the administration has gone a step further and is touting Scott Walker's support for a package of three NAFTA-style trade deals that are projected to offshore American jobs. The letter also calls for reinstatement of Fast Track, the undemocratic mechanism invented by Richard Nixon to ram trade deals through Congress that expired in 2007 and that Obama campaigned against as a candidate.

Most governors did not sign onto this latest NAFTA push. But  major anti-union Republican governors including Walker and Indiana's Mitch Daniels are on the letter. (See whether your governor signed on or not after the jump.)

It's one thing to backtrack on the fair-trade campaign commitments you made to your political base, adopt Bush's trade policies as your own, and refuse to go out of your way to fully support your political base in state level politics. It's quite another to actively partner with governors that want to destroy your political base on an agenda the American people despise.

Click here to take action and urge your member of Congress to vote down Scott Walker's NAFTA trade package.

See the full list of signatories after the jump.

Trade Deficit with FTA Countries Continues to Climb

Yesterday the Census Bureau released the March trade flow numbers, revealing that our trade deficit continues to worsen. The U.S. trade deficit rose by $2.8 billion, or 6.2 percent, between February and March on a seasonally-adjusted basis.

With Congress on the verge of considering another set of trade agreements based on the NAFTA model, digging into the data of this new release could help illustrate whether existing NAFTA-style trade agreements are aiding or hindering the fight to keep the trade deficit under control.

The most recent trade data shows that the deficit with our 17 FTA partners continues to worsen, adding to the body of evidence that NAFTA-style trade agreements are hurting American workers. Between February and March, the U.S. trade deficit with U.S. FTA partners grew by $1.6 billion, or 12.3 percent. News reports on the trade deficit noted that the dramatic rise in the price of oil in March accounted for much of the widening of the overall trade deficit. Do oil imports explain the rise in the trade deficit with our FTA partners? No, the jump in the trade deficit with U.S. FTA partners is still huge when you take out oil to account for the jump oil prices. With oil excluded, the trade deficit with FTA partners increased by $846.9 million, or 13.9 percent, between February and March. The non-oil trade deficit with countries that are not FTA partners grew by only 6.8 percent over February-March, less than half the pace of the growth in the deficit with FTA partners.

The latest trade numbers are a sign that the trade deficit is acting as a brake on the momentum of the economic recovery. Given that trade with our current FTA partners act as a primary force in that brake, it is time for the Obama administration to rethink the Korea, Panama, and Colombia FTAs and chart a path away from the old trade model that leads to skyrocketing deficits.

As Obama Meets with Panama’s President Martinelli, U.S.-Panama Trade, Tax Agreement Folly Comes into Focus

Statement of Todd Tucker, Research Director, Public Citizen’s Global Trade Watch

As President Barack Obama meets with Panamanian President Ricardo Martinelli today, the folly of Obama’s recent push to ratify former President George W. Bush’s leftover U.S.-Panama trade deal makes it evident that Obama has not learned from past trade policy mistakes. 

Polling repeatedly shows that Americans do not like NAFTA-style trade agreements, but how does a president claiming to close our budget deficit in part by cracking down on tax havens and tax dodgers explain why it’s a good idea to do such a deal with a notorious tax haven? Before considering any trade deal with Panama, Congress should require Panama to sign a tax agreement that isn’t riddled with loopholes and wait to see if and how it is implemented.

We simply have no idea whether and how Panama will implement the modest commitments in its recently-signed bilateral tax agreement. Even if it did so fully, the country’s severe tax haven and money laundering problems will not end, and the other problems raised by Congress have been left entirely unresolved. Time and again we have seen U.S. presidents get us into trade deals based on countries’ promises to fix problems in the future, only to see the old problems get worse once the scrutiny and pressure related to a pending trade pact is removed. 

It gets worse. The proposed Panama trade deal would undermine the tools we now have to combat financial crime by newly empowering private investors to directly challenge U.S. anti-tax haven policies that they claim undermine the limits on financial regulation included in this agreement’s text. The agreement was signed before the global financial crisis and consequent moves toward stronger financial regulation. It also contains the expansive limits on financial regulation included in all of Bush’s bilateral trade pacts.

The actual language of the new tax treaty does not require Panama to automatically share information about U.S. individuals and corporations hiding their assets, but only requires Panama to respond to inquiries if U.S. officials know enough to inquire except “where the disclosure of the information requested would be contrary to the public policy” of Panama. Given Panama’s long-standing public policy of encouraging tax-haven activities, this loophole is big enough to keep its offshore economy alive and kicking.

We’ve seen this promise-now-implement-later show in the past – recently with the Peru trade deal – and it’s been a debacle. In exchange for their support for the Peru pact, Democratic trade leaders in Congress agreed to changes in that pacts’ labor and environmental terms, including a specific commitment by Peru to make changes in how it governed its forests. The Peru pact went into effect in January 2009, just as President George W. Bush was leaving office and before Peru had implemented its labor law reforms or environmental commitments. The Bush trade team simply certified Peru as having met its labor and environmental obligations, despite the protests of the Democrats who had made the 2007 deal and who outlined a host of ways that Peru was not yet in compliance. The forestry policies that Peruvian President Alan García eventually began pushing relieved the government of its obligations to consult with indigenous groups before making changes to forestry, mining or timber policies impacting their lands. The Peruvian government’s crackdown on indigenous communities protesting that pact’s implementation led to the infamous Bagua massacre. Despite the violence, which left 33 indigenous protestors and police dead, and the lack of a new forestry law, Peru’s FTA privileges have never been suspended. But, thanks to the so-called investor-state system, private investors can and currently are challenging Peru’s environmental laws.

Obama should have learned from the Peru trade deal debacle of implementing a trade deal now for promises of change in the future. Congress should require Panama to demonstrate it will end its decades of facilitating tax dodging before an FTA is approved – just as Congress should have required Peru to implement its labor law reforms and forestry policies first and taken the time to see whether they were working before holding a vote on that deal.

To see Public Citizen’s analysis of the impact of the NAFTA-style deal with Panama on U.S. anti-tax haven policies, go to http://www.citizen.org/Page.aspx?pid=519.

###

Todd Tucker in Foreign Policy magazine: "Obama has swapped smart policy for the same-old job-crushing trade deals."

Check out Todd Tucker's piece in Foreign Policy magazine.

 

 

A Bad Trade

Obama has swapped smart policy for the same-old job-crushing trade deals.

"When Barack Obama was elected back in 2008, he committed to breaking with the same flawed trade policy the United States has followed for a generation. Obama promised a new page, one that focused on creating American jobs and protecting the environment. Instead, his administration has flip-flopped on these campaign promises and is now pushing free trade agreements (FTAs) that are projected to cost American jobs, undermine U.S. negotiating credibility, and could even dampen the president's electoral prospects in 2012. ..."

Read the entire piece here.

USDA's FTA Report Repeats Errors of Previous Flawed Studies

Earlier this week, the USDA released a report attempting to estimate the effects of the Korea, Colombia, and Panama FTAs upon U.S. agricultural trade. It also examined possible effects of the ASEAN-China and ASEAN-Australia-New Zealand FTAs upon the U.S.

Unfortunately, the USDA estimated the effects through a computable general equilibrium (CGE) model, which has a shoddy track record, to say the least. A 1999 U.S. International Trade Commission (USITC) study on the likely effects of China’s tariff offer for WTO accession used a CGE model to estimate that the U.S. trade deficit with China would increase by only $1 billion dollars due to China’s accession. In reality, the trade deficit with China skyrocketed by $167 billion between 2001 and 2008.

Similar studies on NAFTA were also way off the mark. An economist at the Federal Reserve concluded that a CGE-based study of NAFTA underestimated NAFTA’s impact upon U.S. imports by ten times the actual effect of NAFTA. He concluded his study with a recommendation: “If a modeling approach is not capable of reproducing what has happened, we should discard it.”

Not accounting for currency manipulation is a chief problem of CGE models, as Rob Scott at the Economic Policy Institute has demonstrated. The USDA's report even acknowledges the devastating effect currency devaluation can have upon U.S. agricultural exports:

In 1997, U.S. apple exports to Southeast Asia peaked at 150,000 tons, just as the Asian financial crisis struck. The crisis led to sharp devaluations of Southeast Asian currencies that raised the prices of imported apples and income losses that further discouraged apple buying, triggering a dramatic decrease in U.S. apple exports to the region.

As we discuss in a factsheet, Korea is only one of three countries to have ever been placed on the Treasury Department’s list of currency manipulators, having repeatedly manipulated its currency in the past. The Korea FTA contains no prohibition against currency manipulation, so the Korean government could effectively negate the tariff cuts mandated under the FTA through currency manipulation. Despite the long history of Korea manipulating its currency, the USDA’s estimates do not attempt to account for the very real possibility of another devaluation, even though they could have done so through estimating alternative scenarios.

Loophole-ridden tax treaty passes Panama's Assembly

Americans are crying out for fair trade policies and a real crackdown on tax dodging. The Obama administration’s trade and tax agreements with Panama represent neither.

The tax agreement ratified yesterday by Panama’s legislature allows the country’s government to refuse a tax information request “where the disclosure of the information requested would be contrary to the public policy” of Panama. Given Panama’s longstanding public policy of encouraging tax-haven activities, this loophole is big enough to keep its offshore economy alive and kicking.

We simply have no idea how and if Panama will cooperate with its tax commitments and other longstanding congressional demands for tax haven reform. In fact, politicians in Panama are already discussing a constitutional challenge to the tax agreement in the country’s Supreme Court.

What we do know for certain is that the NAFTA-style trade deal with Panama will allow investors registered there to attack future U.S. anti-tax haven initiatives for cash compensation, in tribunals outside of the U.S. judicial system. Such so-called investor-state challenges are far from hypothetical: there are nearly $9.1 billion in outstanding claims under NAFTA-style deals.

President Obama has now adopted a Colombia-Korea-Panama trade package that puts corporate interests above those of American workers and taxpayers. The package represents an extension of the failed Bush-Clinton-Bush trade policies that President Obama was elected to replace.

To see Public Citizen’s analysis of the impact of the NAFTA-style deal with Panama on U.S. anti-tax haven policies, see http://www.citizen.org/Page.aspx?pid=519

Fair trader wins in Peru... again. Will US respect the outcome?

Peruvian presidential candidate Ollanta Humala, long a critic of the NAFTA-style US-Peru trade agreement, has won nearly 32 percent of the vote in the first round of voting. This marks the second time Humala has come in first in the first round: in 2006, he won nearly 31 percent of the vote.

Yesterday, Humala's partner on the ticket told reporters that Humala will determine whether past FTAs are compatible with the national interest. Humala's economic team has blasted the U.S. FTA for being between unequal trading partners.

In contrast, former president Alejandro Toledo and vice president Pedro Pablo Kuczynski - who pushed and continue to push the FTA - finished far behind.

Keiko Fujimori, the former president Alberto's daughter, came in second to Humala, and will face him in the run-off election. She has stated that she supports the U.S.-Peru FTA.

As WOLA reports from on the ground in Peru, much is uncertain the weeks ahead. And although many voters remain suspicious of Humala, "he was the only candidate to offer an alternative to the existing economic model, in a country where a significant portion of the population has not benefited from years of steady economic growth."

Now, it is incumbent on U.S. corporations, the Obama administration in the US and the Chavez administration in Venezuela to stay out of the second round of voting, which is set to occur on June 5. Peru is divided enough without all the outside interventions, and U.S. trade policy has been aggravating these divides rather than leading to healing. See here and here.

After the jump, we have a chronology of the outside interventions in Peru's last presidential election. We detail how the Bush II administration pushed through the FTA after Peru's voters had supported two candidates that were pro-fair trade. One of the fair trade candidates, Alan Garcia, had an eleventh hour conversion to support for the FTA, after being courted by Peruvian and international elites.

Obama’s Colombia-Korea NAFTA Expansion Is Damaging, Heartbreaking, Infuriating and Disgusting

Statement of Lori Wallach, Director of Public Citizen’s Global Trade Watch

The “action plan” being sold as a means to improve Colombia’s horrific labor rights conditions is in fact a remarkably cynical maneuver to facilitate passage of yet another leftover NAFTA-style Free Trade Agreement (FTA) developed by former President George W. Bush that many in the Congress and American public oppose.

With today’s move, President Barack Obama takes ownership of a Colombia-Korea trade agreement package that poses enormous policy and political peril.

Passing the Korea deal would kill U.S. jobs; even official government studies show it will increase the U.S. trade deficit. Passing the Colombia deal would kill any leverage Colombian union, and Afro-Colombian and other community leaders and their U.S. union and civil society friends and allies have to stop the murders, forced displacements and other acts of political violence that dominate life in Colombia.

Even on the very week that President Obama announced his re-election bid, once again the administration’s response to a GOP/corporate hostage situation has been to betray its commitments and stomp its political base to comply with hostage takers whose goal is Democrats’ defeat.

Obviously, if the goal of this administration action really was to address the conditions in Colombia – where the number of unionist assassinations has grown during the period of maximum congressional and public scrutiny from 37 when the FTA was signed in 2007 to 51 in 2010 – a very different approach would be undertaken.

To start with, the administration would have adopted the recommendations of those in Congress, unions and other civil society groups who have taken a lead on these issues, rather than springing on them a done deal that meets none of the congressional benchmarks and requires no change in outcomes in the horrible human and labor rights violations suffered daily in Colombia before a trade agreement may be considered. Instead of rushing into an easy-to-meet list of changes to laws and agencies in Colombia, which can be done largely with the stroke of a pen, the administration would have required demonstrated changes on the ground – a serious reduction of unionist and other rights defenders’ murders, successful prosecution of some of the thousands of impunity cases – then conditioned consideration of any trade pact on evidence that such changes had actually occurred. Ninety-seven percent of past murders remain unprosecuted.

The terms of a real initiative would have been enforceable as part of a trade agreement – with consequences related to a loss of trade benefits for failure to maintain real improvements. Instead, this plan is all optics, with no requirement that conditions improve all at before an FTA could be moved. And contrary to administration claims, many aspects of it fall outside the weak labor chapter in the FTA text, which relates only to “trade-related” labor issues. And, the deal would have explicitly addressed the documented and escalating human rights abuses, murders and forced displacement of Afro-Colombians, indigenous people and other vulnerable populations.

The goal was not to get a real deal, but to get something that could be announced when Colombian President Juan Manuel Santos visited the White House today.

We face a situation – an Obama Colombia-Korea NAFTA expansion – that is equal parts damaging, heartbreaking, infuriating and disgusting.

Click here to see statements on the “action plan” from members of Congress and U.S. and Colombian union leaders.

Obama to advance Colombia trade pact without requiring union murders to stop

The Obama administration announced today that it would move forward with an Action Plan on the Colombia FTA, without requiring murders of unionists to stop.  

The plan does not appear to fully address any of the 27 labor rights metrics outlined by House Democrats that were necessary to be fully implemented and yielding results before the FTA should be brought to Congress.

Democrats and labor groups quickly criticized the Obama Action Plan. The six congressional Democrats criticized the plan for failing to require actual results on the ground, and said that the plan does not meet their list of concerns. AFL-CIO President Richard Trumka said that the federation was

“deeply disappointed that the Obama administration has signaled that will move forward to submit the proposed U.S.-Colombia Trade Agreement to a vote in the near future. In our view, the situation in Colombia remains unacceptably violent for trade unionists, as well as for human rights defenders and other vulnerable populations... We have no doubt that if 51 CEOs had been murdered in Colombia last year, this deal would be on a very slow track indeed."

Colombia remains the most dangerous country in the world in which to be a trade unionist. In fact, the number of murdered unionists in the last three years – 52 in 2008, 47 in 2009, and 51 in 2010 – has exceeded the 39 killed in 2007, the year the FTA was signed. The 2008-2010 was the period when the Colombian government was under maximum scrutiny.

Indeed, in every year, more unionists are murdered in Colombia than in the rest of the world combined. According to Colombia’s National Labor School, the leading source on the topic, nearly 2,860 trade unionists have been killed since 1986.  Only six percent of these cases have resulted in any convictions. This is roughly a 94 percent impunity ratio. 

U.S.-Panama FTA Would Allow Offshore Companies to Attack U.S. Anti-Tax Haven Regulations; Meanwhile Panama Has Not Eliminated Financial Secrecy, Tax Haven Problems

Statement of Todd Tucker, Research Director, Public Citizen’s Global Trade Watch

Note: This statement was submitted for the record to the House Ways and Means Committee’s Subcommittee on Trade for its hearing today on the U.S.-Panama FTA.

Members of Congress and the public were very clear that two problems must be remedied before Congress should even consider a “free trade agreement” (FTA) with Panama. First, Panama needed to clean up its bank secrecy practices and get rid of bearer shares and other money-laundering tools; and second, the FTA must be amended to ensure that Panama-registered corporations cannot use the FTA to attack U.S. anti-tax haven regulations. Neither of these conditions has been even halfway met.

Panama is one of the world’s worst tax havens. It is home to an estimated 400,000 corporations, including offshore corporations and multinational subsidiaries. For decades, the Panamanian government has pursued an intentional tax haven strategy. It offers foreign banks and firms a special offshore license to conduct business.  Not only are these businesses not taxed, but they are subject to little to no reporting requirements or regulations. According to the Organisation for Economic Co-operation and Development (OECD), the Panamanian government has little to no legal authority to ascertain key information about these offshore corporations, such as their ownership.

Because of this secrecy, precise numbers of the taxes lost to Panama do not exist. However, according to the U.S. Office of Management and Budget, eliminating tax evasion in tax havens overall could save U.S. taxpayers $210 billion over the coming decade,  while the Senate Committee on Homeland Security and Government Affairs estimates a savings five times as great.  Since Panama is one of the world’s leading tax havens, the country is likely to account for a significant share of those revenue losses, which could be used to meet other urgent policy priorities at home.

Even after several years of intensified scrutiny from the G-20, the OECD and the international community, Panama is the only country in the Western Hemisphere to not pass the OECD’s peer review process.  OECD experts said that sufficient time needed to pass to see how well Panama’s recent flurry of tax reform commitments worked in practice, after years of avoiding even minimal transparency commitments. Even the infamous Cayman Islands tax haven was able to pass this test,  again confirming Panama’s preeminent status as a leading site for tax and regulatory arbitrage.

The Incredible Shrinking FTA Jobs Claim

In Rep. Brady's announcement of last week's hearing on the Colombia Free Trade Agreement (FTA), he said, "According to the President’s own statements, [the pending trade agreements with Colombia, Panama, and South Korea] have the ability to create over 250,000 American jobs." Speaker Boehner's blog has also been claiming this 250,000 jobs gain figure.

But did the President ever say that the three FTAs will create 250,000 jobs? No. Rep. Brady here makes at least three errors. If you correct for one, the "jobs created" number goes down to 78,000. If you correct for two, the jobs number goes down to 39,333. If you correct for three, the job gain turns into a job loss of 3,200 jobs.

Back in November 2009, Obama gave an interview to Reuters on the eve of his trip to Asia in which he stated, "And right now we have about 9 percent of -- a 9 percent share of Asia's -- not just China, but Asia's trade overall, and it's estimated that for every 1 percent of increased share that we get, that could mean 250,000, 300,000 jobs."

Obama's statement was misinterpreted almost immediately by opponents of fair trade. In December 2009, Rep. Aaron Schock (R-IL) wrote an op-ed in The Hill in which he claimed, "Surprisingly, even President Obama agrees with me. He recently stated that increasing US exports by just one percent would create over 250,000 American jobs. According to the International Trade Commission [USITC], passage of the Colombia, Panama and South Korea free trade agreements would increase our exports by more than one percent. The inaction on these trade agreements is preventing the creation of a quarter million American jobs."

Rep. Schock completely ignored the crucial difference between increasing America's market share in Asia (a very big pie) and increasing total U.S. exports (a sizable, but smaller, pie). Going from 9 to 10 percent of the export market share in Asia would mean that total U.S. exports to the world would actually increase by three percent. When Obama talked about going from 9 to 10 percent of the market share in Asia, he was talking about increasing exports by $37.2 billion, which would have translated into 248,000 jobs using the standard exports-jobs multiplier estimated by the Commerce Department, so his estimate was apparently spot-on. Schock is instead talking about a projection of an increase in U.S. exports to the world of one percent, or $11.7 billion, which would translate into only 78,000 jobs using the standard jobs multiplier.

So, Rep. Brady is merely dusting off Rep. Schock's old talking claim that was based on shoddy math. But was Rep. Schock's claim that the USITC predicted a one percent increase in total US exports from the three FTAs accurate? No.

Debunked FTA Export Claims Continue to Pop Up

In his announcement of the hearing on the Colombia FTA that occurred yesterday, Rep. Kevin Brady alleged that "Since 2000, U.S. exports to the 13 countries with which the United States has implemented trade agreements have grown almost twice as fast as our worldwide exports," but a fair accounting of the export record does not support this claim.

In our September report about the dismal record of U.S. exports to our FTA partners, Lies, Damn Lies, and Export Statistics, we debunked similar claims floated by the Chamber of Commerce and the U.S. Trade Representative. Apparently fair trade opponents think this claim is just too good to let facts get in the way, because it has surfaced again in Rep. Brady's statement.

It seems Rep. Brady is engaging in the same apples-to-oranges comparison trick that we highlighted in our September report (see page 18). If you take the unweighted average growth of exports to FTA partners and compare it to the weighted average growth of exports to the world over 2000-2010, you'll get an FTA growth rate almost twice as high as the growth rate of exports to the world.* Comparing weighted and unweighted averages makes FTAs seem great for U.S. exports, but it's a false comparison.

In fact, an apples-to-apples comparison of exports to FTA partners and non-FTA partners since 2000 shows just the opposite of Rep. Brady's claims: exports to FTA partners have grown at half the pace of exports to non-FTA partners. In inflation-adjusted and trade weighted terms, exports to FTA partners grew at an average annual rate of only 1.5 percent over 2000-2010 while exports to non-FTA partners grew at an average annual rate of 3.8 percent over the same period. The best way to compare the FTA and non-FTA export rates is to use a weighted measure since it weights exports by their value - and thus their importance to U.S. workers who produce the exported goods. However, as we demonstrated in our September report, it is also the case that if you slice it the other way - comparing the unweighted FTA rate against the unweighted non-FTA rate - exports to FTA partners still have grown at half the pace of exports to non-FTA partners. Thus, any way you slice it, exports to FTA partners have lagged behind exports to countries with which we do not have FTAs.

*Since Rep. Brady says "worldwide" exports, here exports to FTA partners are not subtracted out from exports to the world to get the non-FTA export growth rate. Also, Rep. Brady speaks of 13 U.S. FTA partners, but there are 17 FTA partners and all 17 were included in the calculations here. Finally, these numbers are not adjusted for inflation because the unweighted FTA export growth rate would actually be more than twice the weighted worldwide export growth rate if the data was adjusted for inflation, which would be inconsistent with Brady's claims.

Despite USTR Kirk’s Rhetoric, Obama Administration Trade Approach Is More of the Same

Statement of Lori Wallach, Director of Public Citizen’s Global Trade Watch

Ambassador Ron Kirk says that the administration wants to restore Americans’ long-lost faith in our trade policy and repeatedly promises to truly fix Bush’s leftover job-killing trade deals – but, at the same time, he’s before Congress pushing forward three of Bush’s NAFTA-style deals for approval.

Slightly altering auto tariff schedules in Bush’s NAFTA-style agreement certainly is not a faith-restoring trade policy overhaul. The Korea trade deal is still projected to increase the overall U.S. trade deficit and cost 159,000 U.S. jobs. The Korea deal requires the kind of financial deregulation that contributed to the economic crisis. The deal still contains Bush’s ban on reference to the International Labor Organization conventions when enforcing its weak labor standards. This agreement even allows South Korean goods to be given the benefits of the agreement even if such goods contain inputs or parts from North Korea, despite our sanctions on trade with that country. And it still has sovereignty-eroding, public-interest-policy-chilling rules that allow multinational corporations to sue governments in private, foreign tribunals for taxpayer money. 

The administration had a chance to fix the many glaring problems in Bush’s NAFTA-style Korea agreement, but it didn’t. Kirk is right that the majority of Americans oppose another one of these job-killing trade deals.

Given the ugly battle that will ensue in Congress and with the American public over the Korea trade deal, we hope the administration will take a different approach with Colombia, Panama and the other countries with which it is now negotiating. With respect to Panama and Colombia, prior to any trade agreement being appropriate, Colombia’s deeply ingrained violence and Panama’s tax-haven status must be eliminated.

###

A funny thing happened on the way to banking transparency in Panama

We always knew that Panama would drag its feet on promises to clean up its banking secrecy problems. Indeed, both government and industry have spent a lot of airtime bragging about how the deal with the United States doesn't force them to change the country's operating philosophy in major ways. See here, for instance.

But we also knew that Panama's tax haven industry would push back hard on any more substantive changes. And indeed they have. See here and here and here.

It seems like at least some of the efforts to water down the legislation worked. The National Assembly watered down the Martinelli administration proposal (itself a watering down of what tax justice groups have called for) in a couple of ways.

First, registered agents in Panama that violated the Know Your Client legislation saw their period of debarment shrink from 1-3 years in the Martinelli proposal, to as little as three months in the National Assembly approved legislation (see Article 20, as amended). So, after a little slap on the wrist, a lawyer could return to offering untransparent services to anonymous tax dodgers, assuming the laws are enforced in the first place.

Second, the Martinelli proposal required resident agents to 1. identify their clients and verify that identity through a paper trail; 2. ascertain the purpose for the creation of the corporate entity, and 3. share information with the government under certain extenuating circumstances. But the National Assembly scaled this back so that, in order to comply with item 2, "the resident agent shall not have the obligation to carry out any proactive step or verification of the information provided by the client." (Article 3, as amended). In other words, trust, but do not verify.

(You can see the original and amended versions here.)

Congress and public interest groups have been very clear about what needs to be fixed before any U.S.-Panama trade deal can be voted on. First, Panama needs to clean up its tax haven practices. Second, the FTA needs to be changed so that tax dodgers don't have FTA "hard law" means of attacking tax collectors' anti-tax haven measures, while tax collectors only have "soft law" means of asking nicely for taxes owed from tax dodgers. Thus far, the Obama and Martinelli administrations have made no progress on the latter, and the Panamanian government has dimished the former to not-even-symbolic changes.

It's pretty clear that, absent redoubled pressure, Panama will remain a top tax haven.

Mubarak Family Takes Advantage of Bank Secrecy in Panama

The entire world has focused on the inspiring and peaceful revolution in Egypt that pushed the Hosni Mubarak regime from power. One of the primary tasks that Egyptians will face in the coming months is tracking what if any wealth the Mubarak regime stashed abroad. As the New York Times reported,

As attention turns to tracking the Mubaraks’ purported wealth, rumors of vast real estate holdings by the family have swirled. But the only property outside of Egypt that has emerged is the London townhouse at 28 Wilton Place in Knightsbridge where Gamal Mubarak lived when he was an investment banker there.

But determining the precise ownership of the house shows why investigating the family’s wealth is complicated. A woman answering the front door of the house said the Mubaraks had sold it, but property agents said there was no record of a sale, and neighbors said they had seen Gamal Mubarak and his family entering it several times recently.

According to British records, the home is owned by a company called Ocral Enterprises of Panama. The registered agent for the company in Panama is a local law firm. A lawyer at the firm said that he could not reveal Ocral’s owner. The lawyer said his firm received its instructions regarding Ocral from a company in Muscat, Oman, which he declined to identify.

Though Swiss banks have begun the search for Mubarak family assets, experts said any money would be returned to Egypt only if its new government formally demanded them.

“Egypt has to run a criminal investigation,” said Daniel Thelesklaf, director of the International Center for Asset Recovery in Switzerland. “A lot will depend on the new Egyptian government.”

As we've discussed often on the blog, Panama is ground zero for rich individuals and corporations looking to avoid taxes and regulation. Despite overwhelming international attention on the tax haven abuses in Panama, the country has responded by threatening WTO action on any country that tries to target the abuses, and then slow-walked any micro-reforms. Thus, instead of getting rid of the bearer shares that allow drug traffickers to launder money, Panama has bragged that it has merely set in place a lesser untested solution that some records be kept on owners.

The grand "compromise" brokered by Treasury Secretary Tim Geithner (and intended to jumpstart the talks on a U.S.-Panama trade deal that was delayed when Congress started asking questions about Panama's tax practices) was to get Panama to sign a so-called Tax Information Exchange Agreement and "understanding". But the deal does not require Panama to automatically share tax information, and instead forces regulators to jump through tons of hoops on investigations that are already far along. (Good luck having the enforcement capacity for that during a time of budget austerity and cuts.)

Moreover, the deal is full of loopholes, like allowing Panama to dodge a U.S. request for tax information if fulfilling the request "would be contrary to the public policy" of Panama. Since Panama's public policy is to attract foreign monies through low to non existent regulations, the TIEA seems likely to give Panama substantial room to be uncooperative.

And not to mention that, unlike the U.S.-Panama FTA, there's no meaningful enforcement regime with the TIEA. Say Congress or the public pushed the administration to block financial transfers to and from Panama until Panama started disclosing the assets of corrupt dictators. Any Panama-registered investor that didn't like the action could force the U.S. into international arbitration, where U.S. taxpayers might have to actually cough up money to the regulation-dodger. In contrast, the "soft law" of the TIEA is all based on genteel requests, and contains no enforcement mechanisms.

This corresponds to a broader problem in international law, documented in a recent academic journal issue: when it comes to measures to build economic stability or enforce transparency (like minimum capital requirements or tax transparency), governments opt for unenforceable mechanisms. But when it comes to measures that get in the way of company profits, we opt for mechanisms (like FTAs) that are not only strongly enforceable, but which companies can themselves directly enforce.

Double standards like this bode poorly for the ability of democracy activists everywhere to push for accountability from those who govern them.

Liveblogging the Kirk Hearing on NAFTA Expansions

The Ways and Means Committee is having its second hearing on the NAFTA expansions to Korea, Panama and Colombia. The hearing is also looking at problematic attempts to expand the World Trade Organization's restrictions on domestic regulations, and the Trans-Pacific Free Trade Agreement (FTA). The U.S. Trade Representative, Ron Kirk, is testifying. I'll be live-blogging over at FiredogLake, and attempt to provide a real-time fact check. (If you want to watch the live feed, go here.)

Troubling Signs for Panama NAFTA Deal from Judge in U.S.-Panama investment dispute

The Obama administration has made some indications that it plans to eventually take up a NAFTA-style trade agreement that the Bush administration negotiated with the tax-haven nation of Panama.

As we’ve pointed out, that agreement is riddled with problems, not least of which it would allow investors to challenge U.S. anti-tax haven measures as violations of the pact for cash compensation. While the U.S. and Panama already have a bilateral investment treaty (BIT) which contains some of these provisions, the trade deal’s investment provisions would make these worse.

Late last year, a World Bank tribunal at the International Center for the Settlement of Investment Disputes (ICSID) issued the first known decision under the U.S.-Panama BIT. While a majority of the tribunal sided with the Government of Panama and against the U.S. investor, the award contained several troubling conclusions that are likely to undermine support for the U.S.-Panama trade deal. Read more after the jump.

Environmental health at stake in first corporate attack under Peru NAFTA deal

It's February 1, which makes it two years since the Bush administration rushed to implement the NAFTA-style deal with Peru right before it left office, and over the objections of the congressional Democrats that had partnered with the administration to get it through Congress.

On the second anniversary of the Peru FTA implementation, we see a lead company attacking Peru's policies related to environmental health. Details about the Renco v. Peru case are scarce, but we know that the company involves a U.S. multinational that got upset after getting smacked with a U.S. lawsuit filed on behalf of 137 Peruvian children who have suffered from lead poisoning. Renco is now claiming $800 million from irritants related to its commitment to clean up the environmental mess on its site.

You can find information about the U.S. lawsuit here, and about the FTA investor-state case here, and here also here. And more after the jump...

SOTU Speech Includes 24 Mentions of Job Creation but Calls on Congress to Pass NAFTA-style Korea Free Trade Agreement That Is Projected to Increase U.S. Trade Deficit, Cost U.S. Jobs

Statement of Lori Wallach, Director of Public Citizen's Global Trade Watch
 
It was beyond surreal to hear President Barack Obama talk about the priority of creating U.S. jobs while saying nothing about on fixing our China trade debacle and calling on Congress to pass a NAFTA-style trade agreement with Korea that the government’s own studies show will increase our trade deficit. The Korea pact is projected to cost another 159,000 U.S. jobs – with nine economic sectors, including high tech electronics, as losers.

As Paul Krugman wrote in a recent New York Times column ("Trade Does Not Equal Jobs,” Dec. 6, 2010): “If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses. A countervailing duty on Chinese exports would be job-creating; a deal with South Korea, not.”

Doing more of the same – more NAFTA-style deals like the Korea pact and continuing the unbalanced mode of China trade – is not going to create American jobs or reduce our trade deficit. After campaigning on the need to reform America's job-killing trade policy, it is stunning for President Obama to call for more-of-the-same trade policies as if these had not resulted in a huge American trade deficit – $810 billion before the economic crisis-related collapse in trade and now again rising – and the net loss of 5.1 million American manufacturing jobs and 43,000 factories closed since we started the damaging experiment with the current trade model in the 1990s.

 

Panama's “Blackmail” and “Threats” Against the US: Can Panama be Trusted?

By signing a weak Tax Information Exchange Agreement (TIEA) with the U.S. last month, Panama has tried to portray itself as finally coming out of the tax haven shadows so that Congress will approve the Panama FTA. Despite the signing of the TIEA, there still remains the question of whether Panama will faithfully implement the TIEA over the next year. Accumulating evidence suggests we can't trust the government of Panama to end its status as one of the largest tax havens in the world.

This Sunday, the New York Times reported on how the Panamanian President, immediately after being elected in July 2009, attempt to coerce the U.S. Drug Enforcement Administration (DEA) into using its wiretapping technology to wiretap his political opponents:

The United States, according to the cables, worried that [Panamanian President Ricardo] Martinelli, a supermarket magnate, “made no distinction between legitimate security targets and political enemies,” refused, igniting tensions that went on for months.

Mr. Martinelli, who the cables said possessed a “penchant for bullying and blackmail,” retaliated by proposing a law that would have ended the D.E.A.’s work with specially vetted police units. Then he tried to subvert the drug agency’s control over the program by assigning nonvetted officers to the counternarcotics unit.

And when the United States pushed back against those attempts — moving the Matador system into the offices of the politically independent attorney general — Mr. Martinelli threatened to expel the drug agency from the country altogether, saying other countries, like Israel, would be happy to comply with his intelligence requests.

The New York Times' reporting is based on several secret diplomatic cables recently released by Wikileaks. One cable dated August 2009 offered a frank assessment of President Martinelli's attitude toward following the law:

Martinelli's seeming fixation with wiretaps and his comments to [the U.S.] Ambassador during an August 12 meeting demonstrate that he may be willing to set aside the rule of law in order to achieve his political and developmental goals....He chided the Ambassador for being "too legal" in her approach to the issue of wiretaps.

On other matters of law such as drug trafficking itself, the diplomatic cables paint a dark view of the Panamanian government, noting that each month President Martinelli's cousin helps smuggle millions of dollars of drug money through Panama's main airport. Since President Martinelli apparently can't be bothered to follow the laws of his own country, how can his government be trusted to follow an international agreement and help the U.S. government ferret out tax dodgers?

More Than TIEA is Needed for Panama Trade Deal

The Obama administration signed a Tax Information Exchange Agreement (TIEA) with Panama yesterday. But a lot of work remains to be done before resolution of Congress’ concerns that no U.S.-Panama “free trade agreement” be considered until Panama cleans up its financial secrecy practices. Verifying that Panama is actually making the necessary changes will take some time. This gives the Obama administration the space to modify the terms of the deal that would make fighting tax-haven abuses difficult.

Read Todd Tucker's statement.

 
 

Follow the Climate Reality Tour!

We’re pleased to unveil an exciting new project: the Climate Reality Tour.

You may have caught an earlier post, but in case you didn't, let's fill you in The Climate Reality Tour is a movement-building road trip to promote global economic policies that are fair for workers and shift away from the climate- and job-destroying status quo. The destination? The United Nations Climate Negotiations in Cancun in late November. And to bring home the sustainability point, we decided to go by bike. Yep, by bike!

With the world in the grips of overlapping global crises – food, economic/financial and climate – the stakes are high indeed. To save the planet requires confronting these crises simultaneously, and that means overcoming the false jobs vs. environment trade-off. In truth, corporations benefit from exploiting both while human beings and the earth suffer.

But this requires political will and resolve far beyond what we’ve seen from either political party, and even many leading civil society organizations. At Public Citizen, we’ve long believed our unsustainable global economic order, as etched in the tomes of the WTO and NAFTA-type trade deals, unfairly pits workers and ecosystems against one another. We’ve decried how the status quo sanctifies the rights or multinational corporations to exploit and destroy – even above the democratic rights of a people determine their own economic and eological futures.

Chamber of Commerce Pushes Offshoring

The folks at Think Progress have been following the breadcrumbs and connecting the dots on unfair trade policies and corporate influence in elections.

Think Progress reports on a program sponsored by the Chamber of Commerce, a corporate interest group, and the Chinese government that puts together workshops on how to offshore work to China. Given the Chamber’s attitude toward offshoring, perhaps we should have expected to find this type of program. As far back as 2004, Tom Donahue, CEO of the Chamber, said that “there are legitimate values in outsourcing - not only jobs, but work.”

This pro-offshoring attitude goes hand-in-hand with the Chamber’s push to approve the unfair Bush-negotiated Colombia, Korea, and Panama Free Trade Agreements (FTAs). Tom Donahue recently claimed that passage of these trade pacts will create millions of jobs, but in reality the FTAs will just make it easier for corporations to offshore jobs abroad. That’s the last thing we need in the middle of this jobs crisis.

Think Progress also reports on how foreign corporations that provide offshoring services have been funneling thousands of dollars to the Chamber of Commerce’s political ad account.   The Chamber of Commerce has been using this political ad account to attack champions of fair trade policies this election cycle.

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

Pollsters say fair trade may be Dems' lifeline

Pollsters Stan Greenberg and James Carville have sent out a memo advising Democratic candidates to run on fair trade as one of the party's best chances to avoid losses in the November elections.

Based on polling from last week, they are suggesting two messages for candidates to take up:

My passion is "made in America," working to support small businesses, American companies and new American industries. (REPUBLICAN HOUSE CANDIDATE) has pledged to support the free trade agreements with Colombia, Panama, and South Korea and protect the loophole for companies outsourcing American jobs. I have a different approach to give tax breaks for small businesses that hire workers and give tax subsidies for companies that create jobs right here in America.

The other message is:

We have to change Washington. That means eliminating the special deals and tax breaks won by corporate lobbyists for the oil companies and Wall Street. (REPUBLICAN HOUSE CANDIDATE) has pledged to protect the tax cuts for the top two percent and the big tax breaks for companies who export American jobs. I'll take a differ-ent approach with new middle class tax cuts to help small businesses and new American industries create jobs. Let's make our country work for the middle class.

Both messages have a strong fair trade tone. As does the runner-up, third-best message:

My priority is to cut middle class taxes, extend unemployment and health insurance for the unemployed, support new industries that create jobs and end tax breaks for exporting jobs. The economy shows signs of improving. But (REPUBLICAN HOUSE CANDIDATE) wants to go back to the Bush policies that crushed the middle class. They want to give tax breaks to the wealthy and big corporations. We must rebuild the middle class, not go back to the same old policies for Wall Street that cost us 8 million jobs.

Returning to the top two messages, the intensity of the appeal of the first message (which is the most specific about branding Bush's FTAs with Korea, Panama and Colombia by name and in a negative light) is particularly noteworthy.

Among those independents and white seniors surveyed, the first message was more likely than the second to make the voter more likely to vote for the Democrat. Among these demographic groups, plus the "white older women" surveyed, the first message was more likely than the second to make them "much more likely" to vote for the Democrat. Greenberg and Carville identified these groups as the ones Democrats need to reach if they are to survive.

And... all three of the messages were energizing of the Democrats' core base.

Finally, when these messages were turned on their head, i.e. when the hypothetical Democrat was accusing the hypothetical GOP candidate of supporting unfair trade, the tactic was successful in raising doubts about the GOP candidate.

From my initial research, many GOP candidates are also running on fair trade - in a number of races, candidates from both parties are trying to "out fair trade" one another.

It looks like we're poised for a third election where fair trade themes play a key role in who wins and who loses.

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

Export Cabinet Report Ignores Job and Export Predictions of Bush Trade Deals

The Obama administration released its Report on the National Export Initiative last week, with 74 pages of plan on how to make the president's plan of doubling exports in five years a reality.

These agenda items range from the no-brainers (overseas trade missions) to the non-starters (passing Bush's NAFTA-style trade deals).

These trade deals pose a major political problem for Democrats in an election year, as Lori Wallach wrote in Huffington Post last week. But they also are unlikely to perform as promised by the president's Export Promotion Cabinet: as our recent report shows, exports to our FTA partners are growing less than half as fast as those to our non-FTA partners.

Moreover, key parts of the report give a fairly misleading interpretation of the likely job and export implications of Bush-era, leftover trade deals.

For instance, on pages 3-4, the report explores areas where "the Export Promotion Cabinet has made significant progress to implement" the president's goal. On example is:

Reinforced efforts to remove trade barriers... At the G-20 Summit in Toronto, President Obama announced that he had instructed Ambassador Kirk to begin discussions with his Korean counterpart to resolve outstanding issues with the United States - Korea Free Trade Agreement (FTA). The Korean FTA would increase goods exports by an estimated $10-11 billion, which would support an estimated 70,000 jobs. The gains from the agreement could significantly exceed this estimate when reductions in non-tariff barriers and increases in services exports are included.

However, as my colleague Travis McArthur blogged about last month, this claim conveniently omits the government's official projections that 60 percent of even this bilateral gain would be washed away by imports. Moreover, the USITC, the source for these numbers, found that the U.S. global trade deficit would actually increase under the Korea FTA.

On pages 6-7, on the priorities going forward, the Export Promotion Cabinet lists:

Concluding an ambitious, balanced, and successful WTO Doha Round that achieves meaningful new market access in agriculture, goods and services.
Concluding the Trans-Pacific Partnership (TPP) Agreement to expand access to key markets in the Asia-Pacific region.

As we wrote earlier this summer, even the pro-WTO Peterson Institute predicts that the current Doha Round proposals will increase the U.S. trade deficit. As for the TPP, the U.S. already has trade deals with four of the seven countries, which combined account for 86 percent of potential bloc's GDP.

Nonetheless, the advocacy for the Korea FTA, TPP and Doha Round continue throughout the Export Promotion Cabinet's report. (For instance, on pages 13-14, and 47-48).

California says NO to more job-killing FTAs

As thousands of Californians struggle to find employment, state leaders are sending a message to Washington to hold off on more free trade agreements (FTAs) that fuel the "race to the bottom." Last week, the California legislature passed Assembly Joint Resolution 27 a vote of 48 to 27. The resolution urges the U.S. Congress to oppose the Colombia FTA.

Lead sponsor Asm. Torrico explains why it's important for the U.S. Congress to take a stand for fair trade:

 

Although it is unlikely that the Colombia FTA will be taken up by Congress imminently, the South Korea FTA - another Bush-negotiated trade pact - is making its way toward Congress quickly. State legislators in several states have been weighing in with the Obama administration on the South Korea FTA in recent weeks. They have been asking that he hold true to his campaign promises to change the failed trade model by fixing the Bush- Korea FTA. 

As Obama pushes FTAs, unionists in Colombia & Panama are killed

The same day that Obama pledged to move forward on the leftover Bush FTAs, one unionist was killed and dozens were wounded in Panama during protests over Panama's new law that severely weakens labor rights.

Last month, two trade unionists were killed in Colombia. This AFL-CIO blog post puts it in perspective. 

There are many reasons to oppose the Colombia and Panama FTAs in their present form. The fact that they would give multinational corporations the ability to exploit the horrible human and labor rights situation in these countries is an important one.

Panama's Latest Tax Moves Way Off the Mark

Inside U.S. Trade recently reported that:

Panama is moving toward removing itself from a list of uncooperative tax haven countries compiled by the Organization for Economic Cooperation and Development (OECD), which requires the implementation of 12 Tax Information Exchange Agreements (TIEAs) or Double Taxation Treaties (DTT) with full tax information exchange provisions, an OECD official said this week.

Panama’s status as a tax haven has become a major stumbling block to congressional passage of the U.S.-Panama free trade agreement.

According to Jeffrey Owens, Director of the OECD’s Center for Tax Policy and Administration, Panama “has been making progress” toward removal from the OECD list by completing talks on DTTs that include model OECD information exchange commitments.

At a June 7 Washington event hosted by the U.S. Council for International Business (USCIB), Owens said that “the next stage for Panama is to actually implement those agreements and that is something we are going to be monitoring.”

Panama may have 13 DDTs in place in a matter of months and become a serious candidate for removal from the OECD list, according to the Panamanian Embassy.

An embassy official said Panama has now signed a double taxation treaty with Mexico and has completed but not signed double taxation treaties with Italy, Belgium, Barbados, Holland, Spain, Qatar and France. Negotiation meetings are scheduled “in the coming months” with Luxembourg, South Korea, Singapore, Ireland and the Czech Republic, according to an embassy official.

No one should be fooled about Panama's latest "non-response" to the criticisms of its tax haven practices: no bilateral trade agreement with Panama – a leading tax and regulatory haven – should be voted on until the country decisively addresses its financial secrecy practices, and the United States ensures that tax haven accountability mechanisms are fully insulated from trade pact challenge.

It's a Family Affair for Death Squad President

Colombian President Alvaro Uribe's post-retirement life just got more complicated. The Washington Post has published new allegations that the reluctantly outgoing Latin American leader and his brother are integrally linked to paramilitary death squads that kill civilians, trade unionists, and community leaders.  

The Post brings us up to speed and drops the new bomb:

But Uribe's government has also been tarnished by scandals, including accusations in congressional hearings that death squads hatched plots at his ranch in the 1980s and revelations that the secret police under his control spied on political opponents and helped kill leftist activists.

Now a former police major, Juan Carlos Meneses, has alleged that Uribe's younger brother, Santiago Uribe, led a fearsome paramilitary group in the 1990s in this northern town that killed petty thieves, guerrilla sympathizers and suspected subversives. In an interview with The Washington Post, Meneses said the group's hit men trained at La Carolina, where the Uribe family ran an agro-business in the early 1990s. 

Regular EOT readers will not be surprised that Uribe's death squad links continue to surface. But the most recent incidents of death threats shocked even me. As Dan Kovalik notes on the HuffPo:

On May 13, 2010, staff from the Washington Office on Latin America ("WOLA"), a D.C.-based human rights organization, met with long-time Colombian Ambassador Carolina Barco at the Colombian Embassy in Washington. At this meeting, WOLA staff, including Gimena Sanchez, expressed their concern for the safety of a number of its human rights partners in Colombia who, in the words of WOLA, have been victimized by "threats, sabotage of activities and baseless prosecutions." WOLA is taking the threats against its partners very seriously as a number of leaders from social groups, particularly from Afro-Colombian and Indigenous groups, have been killed in recent months.

On May 14, the very next day, WOLA received a death threat directed to itself as well as 80 other Colombian human rights, Afro-Colombian, Indigenous, internally displaced and labor rights organizations and individuals. See, WOLA Press Statement. This threat, from the Colombian paramilitary group known as "The Black Eagles," stated: "as so called human rights defenders don't think you can hide behind the offices of the Attorney General or other institutions . . . we are watching you and you can consider yourselves dead." As WOLA noted in an open letter dated May 17, The Black Eagles go "on to falsely accuse the listed organizations of having links to the FARC guerillas and as such declaring themselves military targets."

If this doesn't suggest that the Colombian diplomatic and government structure in corrupted to the core, I don't know what does. Such a brazen threat against a U.S. based human rights group suggests  paramilitary armed groups are feel emboldened, not restricted, under Uribe's so-called 'Anti-Democratic InSecurity" policy.

As Uribe leaves office he loses institutional power and teflon political veneer. It makes you wonder what other evidence of Uribe's linkages to human rights atrocities will surface, and if he'll ever see his day in court. It also makes you wonder what why some in Congress could see anything but continued human rights tragedy resulting from ratifying a failed trade policy with a country where links to atrocities already run straight to the top.

(Hat tip to, and a single tear for, maestro photographer and former GTW staff, Brandon Wu. The photo credit - his first EOT hit since moving on toward grad school - is all his)

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.

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.