Lori Wallach on HuffPo: “WTO Orders Sanctions Unless US Cuts Consumer Labels, Disproving Obama TPP Claims”

 

“Yesterday's World Trade Organization (WTO) ruling against the country-of-origin meat labels (COOL) that Americans rely on to make informed choices about their food provides a glaring example of how trade agreements can undermine U.S. public interest policies. The WTO authorized over $1 billion annually in trade sanctions against the United States unless and until the popular consumer policy is weakened or eliminated.

The ruling is a nightmare for the Obama administration's uphill battle to build support for the controversial Trans-Pacific Partnership (TPP)."

 

Read the entire piece at the Huffington Post to find out how the WTO’s ruling spells trouble for the TPP.

WTO Orders U.S. to Gut U.S. Consumer Country-of-Origin Meat Labeling Policy, Further Complicating Obama Fast Track Push

Final WTO Ruling Spotlights How Trade Pacts Can Undermine U.S. Consumer, Environmental Policies, Orders Rollback of Popular Consumer Law; Vilsack Says Congress Must Act

Today’s final ruling by the World Trade Organization (WTO) Appellate Body against popular U.S. country-of-origin meat labeling (COOL) policy spotlights how trade agreements can undermine domestic public interest policies, Public Citizen said today. The WTO decision is likely to further fuel opposition to Fast Track authority for controversial “trade” pacts that would expose U.S. consumer and environmental protections to more such challenges. (A list of some of the past public interest policies undermined by trade pacts is below.)

COOL requires labeling of pork and beef sold in the United States to inform consumers the country in which the animals were born, raised and slaughtered.

“The president says ‘we’re making stuff up,’ about trade deals undermining our consumer and environmental policies but today, we have the latest WTO ruling against a popular U.S. consumer policy. Last week, Canadian officials announced that our financial regulations violate trade rules, and earlier this year, the Obama administration, in response to another trade agreement ruling, opened all U.S. roads to Mexico-domiciled trucks that threaten highway safety and the environment," said Lori Wallach, director of Public Citizen’s Global Trade Watch.

In a May 1, 2015, letter, Agriculture Secretary Tom Vilsack informed Congress that it will need to repeal the COOL law or else change it if the final WTO ruling were to go against the United States. In contrast, in his recent speech at Nike, President Barack Obama said, “Critics warn that parts of this deal would undermine American regulation – food safety, worker safety, even financial regulations. They’re making this stuff up. This is just not true. No trade agreement is going to force us to change our laws.”

“Today’s WTO ruling, which effectively orders the U.S. government to stop providing consumers basic information about where their food comes from, offers a clear example of why so many Americans and members of Congress oppose the Fast Tracking of more so-called ‘trade’ pacts that threaten commonsense consumer safeguards,” said Wallach. “The corporations lobbying to Fast Track the TPP must be groaning right now, as this ruling against a popular consumer protection in the name of ‘free trade’ spotlights exactly why there is unprecedented opposition to more of these deals.”

Today’s decision on the final U.S. appeal of a 2012 initial ruling against the COOL policy paves the way for Canada and Mexico, which challenged COOL at the WTO, to impose indefinite trade sanctions against the United States unless or until it weakens or eliminates COOL, which is supported by nine in 10 Americans. Last year, consumer groups wrote to the administration requesting it use the ongoing Trans-Pacific Partnership (TPP) negotiations as leverage to demand that Canada and Mexico drop the case instead of rolling back the policy. But they received no response.

Today, the WTO Appellate Body upheld a 2014 compliance panel ruling, which said that changes made in May 2013 to the original U.S. COOL policy, in an effort to make it comply with a 2012 WTO ruling against the law, were not acceptable. The Appellate Body decided that the modified U.S. COOL policy still constitutes a “technical barrier to trade.” It  decided that the strengthened COOL policy afforded less favorable treatment to cattle and hog imports from Canada and Mexico, despite a 53 percent increase in U.S. imports of cattle from Canada under the modified policy. The Appellate Body upheld the earlier panel ruling that the alleged difference in treatment did not “stem exclusively from legitimate regulatory distinctions.”

Today’s ruling is not subject to further appeal. The decision initiates a WTO process to determine the level of trade sanctions that Canada and Mexico are authorized to impose on the United States as retaliation for COOL.

Today’s ruling follows a string of recent WTO rulings against popular U.S. consumer and environmental policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths.

Changes made last year to comply with the WTO’s decision are now being challenged in WTO compliance proceedings. This comes after the U.S. revoked a long-standing ban on tuna caught using dolphin-deadly nets following an earlier WTO ruling. In January 2015, the Obama administration announced it would allow Mexico-domiciled long haul trucks on all U.S. highways after losing a North American Free Trade Agreement challenge and being threatened with sanctions on more than two billion in U.S. trade flows.Consumer groups warn that the trucks pose significant safety threats, while environmental groups warn that they do not meet U.S. emissions standards.

In response to previous WTO rulings, the United States has rolled back U.S. Clean Air Act regulations on gasoline cleanliness standards successfully challenged by Venezuela and Mexico; Endangered Species Act rules relating to shrimping techniques that kill sea turtles after a successful challenge by Malaysia and other nations; and altered auto fuel efficiency (Corporate Average Fuel Economy) standards that were successfully challenged by the European Union.

The Fast Tracked legislation that implemented the WTO enacted a patent extension sought by pharmaceutical interests that consumer groups had successfully defeated for decades. The Uruguay Round Agreements Act amended the U.S. patent law to provide a 20-year monopoly – replacing the 17-year term in U.S. law and increasing medicine prices by billions by extending the period during which generic competition would be prohibited. The bill also watered down the Federal Meat Inspection Act and the Poultry Products Inspection Act both of which  required only poultry and meat that actually met U.S. safety and inspection standards could be imported and sold here and allowed imports that meet “equivalent” standards with foreign nations certify their own plants for export.

Background

The COOL policy was created when Congress enacted mandatory country-of-origin labeling for meat – supported by 92 percent of the U.S. public in a recent poll – in the 2008 farm bill. This occurred after 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program.

In their successful challenge of COOL at the WTO, Canada and Mexico claimed that the program violated WTO limits on what sorts of product-related “technical regulations” signatory countries are permitted to enact. The initial WTO ruling was issued in November 2011. Canada and Mexico demanded that the United States drop its mandatory labels in favor of a return to a voluntary program or standards set by an international food standards body in which numerous international food companies play a central role. Neither option would offer U.S. consumers the same level of information as the current labels. The United States appealed.

In a June 2012 ruling against COOL, the WTO Appellate Body sided with Mexico and Canada. The U.S. government responded to the final WTO ruling by altering the policy in a way that fixed the problems identified by the WTO tribunal. However, instead of watering down the popular program as Mexico and Canada sought, the U.S. Department of Agriculture responded with a rule change in May 2013 that strengthened the labeling regime. The new policy provided more country-of-origin information to consumers, which satisfied the issues raised in the WTO’s ruling. However, Mexico and Canada then challenged the new U.S. policy. With today’s ruling, the WTO has announced its support for the Mexican and Canadian contention that the U.S. law is still not consistent with the WTO rules.

Seven Corporations that Could Sponsor Obama’s Controversial Trade Deal (If His Nike Endorsement Falls Flat)

President Obama apparently has a flair for irony. He selected the headquarters of offshoring pioneer Nike as the place to pitch the controversial Trans-Pacific Partnership (TPP) trade deal in a major speech on Friday. As Obama tries to sell a pact that many believe would lead to more U.S. job offshoring and lower wages, why would he honor a firm that has grown and profited not by creating U.S. jobs, but by producing in offshore sweatshops with rock bottom wages and terrible labor conditions?

Less than 1 percent of the 1 million workers who made the products that earned Nike $27.8 billion in revenue in 2014 were U.S. workers. Last year, one-third of Nike’s 13,922 U.S. production workers were cut. Most Nike goods, and all Nike shoes, are produced overseas, by more than 990,000 workers in low-wage countries whose abysmal conditions made Nike a global symbol of sweatshop abuses.

This includes more than 333,000 workers in Nike-supplying factories in TPP nation Vietnam, where the average minimum wage is less than 60 cents per hour and where workers have faced such abuses as supervisors gluing their hands together as a punishment. Instead of requiring Nike to pay its Vietnamese workers more or ending the abuse they endure, the TPP would allow Nike to make even higher profits by importing goods from low-wage Vietnam instead of hiring U.S. workers.

If using an offshoring pioneer to rally support for the beleaguered TPP does not succeed for some reason, here are seven other U.S. corporations that Obama might consider as equally fitting backup options: 

1.      Philip Morris

Sure, Philip Morris International – the world’s second-largest tobacco corporation – may not be the world’s most-loved corporation, but Obama would find an enthusiastic TPP corporate sponsor in the firm.  Philip Morris has explicitly lobbied for controversial TPP provisions that would empower multinational corporations to bypass domestic courts, go before extrajudicial tribunals of three private lawyers, and challenge domestic laws that millions of people rely on for a clean environment, a stable economy, and healthy communities. Indeed, Philip Morris is already using this parallel corporate legal system, known as “investor-state dispute settlement,” to attack landmark anti-smoking policies from Australia to Uruguay. The TPP would newly empower thousands of multinational corporations to launch “investor-state” attacks against countries’ health, environmental and financial protections. In one fell swoop, the deal would roughly double U.S. exposure to “investor-state” attacks against U.S. policies.

2.      Goldman Sachs  (and other Wall Street firms)

If Obama’s Nike promo falls flat, maybe he should turn to a Wall Street bank as the next TPP corporate cheerleader. It’s no surprise that Wall Street firms like Goldman Sachs love the TPP.  The deal includes
binding rules, written before the financial crisis under the advisement of the banks themselves, that would require domestic policies to conform to the now-rejected model of deregulation that led to financial ruin. And for the first time, the TPP would empower some of the world’s largest 20 banks to directly challenge new U.S. financial protections before extrajudicial tribunals on the basis that the regulations frustrated the banks' "expectations."

3.      Pfizer  (and other Big Pharma corporations)

Pharmaceutical corporations like Pfizer are likely candidates for further corporate TPP-peddling given that the pharmaceutical industry has lobbied for the TPP more than any other. Small wonder – the deal offers pharmaceutical corporations a buffet of handouts that would allow them to raise medicine prices while restricting consumers’ access to cheaper generic drugs. One TPP chapter would give pharmaceutical firms expanded monopoly protections that would curb access to essential medicines in TPP countries like Vietnam, where it is projected that 45,000 HIV patients would no longer be able to afford life-saving treatment. Another TPP chapter would establish new restrictions on government efforts to cut medicine costs for taxpayer-funded programs such as Medicare, Medicaid and veterans' health programs. A third TPP chapter would empower foreign pharmaceutical corporations to directly attack domestic patent and drug-pricing laws in extrajudicial tribunals.

4.      ExxonMobil  (and other fracking corporations)

Maybe Obama’s next TPP photo op should be in front of a natural gas fracking drill owned by TPP-supporting ExxonMobil, the world’s largest publicly traded natural gas corporation. Natural gas firms are hopeful about TPP provisions likely to spur a surge in natural gas exports. For the rest of us, that would mean an expansion of dirty fracking and an increase in electricity costs. Implementing the TPP would require the U.S. Department of Energy to automatically approve natural gas exports to TPP countries, waiving its prerogative to determine whether those exports, and the resulting incentive for more fracking, would be in the public interest. As states like New York ban fracking to protect against health and environmental dangers, the TPP would move in the opposite direction. Indeed, the TPP would open the door to more “investor-state” attacks on anti-fracking protections, like the one Lone Pine Resources has launched against a Canadian fracking moratorium that prevents the firm from fracking under the Saint Lawrence Seaway.

5.      Time Warner  (and other Hollywood corporations)

Hollywood corporations like Time Warner Inc. already have been partnering closely with the Obama administration in stumping for the TPP – recent leaks reveal that the Motion Picture Association of America literally has asked the administration to vet the corporate alliance’s pro-TPP statements. The corporations are pining for stringent TPP copyright protections that could threaten Internet freedom by pushing Internet service providers to police everyday content sharing, resulting in blocked or censored websites. Leaked proposals for the deal would even make the common, non-commercial sharing of copyrighted content (e.g. remixed songs, reposted video clips) a prosecutable crime. 

6.      Red Lobster  (and other corporations using imported fish and seafood)

U.S. chain restaurants and agribusinesses that profit from imports of fish and seafood, at the expense of U.S. independent fishers and shrimpers, could also serve as willing backers of Obama’s TPP pitch. The deal would likely reduce or eliminate U.S. tariffs on imports of more than 80 types of fish and seafood products, increasing further the already massive flow of fish and seafood imported into the United States. Even without the TPP, the U.S. Food and Drug Administration (FDA) only physically inspects less than 1 percent of imported fish and seafood for health risks, despite that the Centers for Disease Control and Prevention has found that imported fish are the number one cause of U.S. disease outbreaks from imported food. The TPP would exacerbate this public health threat by enabling more fish and seafood imports from major exporters like Malaysia and Vietnam, where widespread fish and seafood contamination has been documented. For example, the FDA has placed 193 Vietnamese fisheries on a “red list” due to risk of salmonella contamination.

7.      Chinese Corporations in Vietnam

If Obama is willing to use Nike to promote the controversial TPP despite its reliance on low-wage labor in Vietnam, maybe he’d be willing to also solicit TPP endorsements from the Chinese corporations that are setting up shop in Vietnam in hopes of using the TPP to undercut U.S. businesses. The Chinese and Vietnamese press report that many Chinese textile and apparel firms are now building factories in Vietnam in hopes of taking advantage of the TPP’s planned phase-out of U.S. tariffs on apparel imported from Vietnam. This not only would place U.S. textile producers in direct competition with Chinese-owned firms using low-wage labor in Vietnam, but also would eliminate the jobs of workers in Mexico and Central America who now make the clothes that were made in the United States before the North American Free Trade Agreement and Central America Free Trade Agreement. In addition, the TPP’s gutting of Buy American policies would newly empower Chinese firms operating in Vietnam to undercut U.S. businesses to get contracts for goods bought by the U.S. government, paid for by U.S. taxpayers. For all firms operating in TPP countries like Vietnam, the United States would agree to waive "Buy American" procurement policies that require most federal government procurement contracts to go to U.S. firms, offshoring U.S. tax dollars to create jobs abroad. 

Should the World’s Largest Chemical Corporations Be Allowed to Attack States’ Chemical Safety Protections?

Patrick Gleeson, Trade and Policy Researcher of Global Trade Watch  

How would you feel about the U.S. government paying foreign corporations to keep cancer-causing chemicals out of your water bottles?

That is a risk we’d face under a sweeping U.S.-EU “trade” deal under negotiation – the Trans-Atlantic Free Trade Agreement (TAFTA), also known as TTIP.  As proposed, TAFTA would empower thousands of European firms – including chemical giants like BASF, Bayer, and Royal Dutch Shell – to bypass U.S. courts, go before extrajudicial tribunals and demand taxpayer compensation for U.S. policies – including chemical regulations.  

We depend on such regulations every day to keep toxic chemicals out of our food, toys, rivers, and clothes.  This past July, more than 100 organizations on both sides of the Atlantic sent a letter to TAFTA negotiators to warn against TAFTA’s threats to such commonsense protections:

Stricter controls (including restrictions on some or all uses) of hazardous chemicals – including carcinogens and hormone disrupting chemicals – are vital to protecting public health…EU and U.S. trade policy should not be geared toward advancing the chemical industry’s agenda at the expense of public health and the environment – but that appears to be exactly what is currently underway with TTIP.

While U.S. federal chemical regulations are sorely outdated – with no major overhaul since the 1976 Toxic Substances Control Act (TSCA) – U.S. states have been filling in the gap, enacting forward-looking policies to protect us from chemicals that pose a threat to human health and the environment.  State chemical safety policies cover everything from mandatory disclosure of chemical compounds on the packaging of consumer goods to outright bans on specific chemical compounds and additives.  According to Safer States, 35 U.S. states have enacted 169 chemical safety policies, while 114 more such policies are pending in 29 states.  

But this web of state-level protections on which most U.S. consumers depend could come under attack if TAFTA were to expand the controversial system known as investor-state dispute settlement (ISDS).  Six of the world’s 15 largest chemical firms are based in EU countries. The largest among them have facilities in many of the U.S. states that are currently contemplating new chemical restrictions.

Using TAFTA’s ISDS provisions, these foreign firms would be empowered to challenge U.S. state-level chemical protections with which U.S. firms must comply.  They could do so on the basis of sweeping rights available only to foreign investors, alleging, for example, that new chemical restrictions violated their rights by frustrating their expectations.  Such cases would be decided by tribunals unaccountable to any electorate, composed of three private lawyers authorized to order U.S. taxpayer compensation for “expected future profits” that the corporations claim they would have earned if not for the challenged chemical safety policies.

Recognizing the threat that ISDS poses to the autonomy of U.S. states to regulate in the public interest, the National Conference of State Legislatures (NCSL), a bipartisan association representing state legislatures, has repeatedly stated it will oppose any deal that includes ISDS.

“The unpopular proposal to include ISDS in TTIP would force the public and their representatives to decide between compensating corporate polluters for lost profits due to stronger laws, or continuing to bear the health, economic and social burdens of pollution,” stated the July 2014 letter from more than 100 organizations.

To launch ISDS attacks against U.S. states’ chemical safety measures under TAFTA, European chemical firms would just need to have an investment in the United States – a broad criterion that many of the largest firms easily fulfil.  

BASF, the world’s largest chemical company, is based in Germany but has 66 subsidiaries in the United States.  BASF has particularly large facilities in 20 states, including Arkansas, Colorado, Connecticut, Delaware, Florida, Kentucky, Louisiana, Michigan, New Jersey, New York, North Carolina, Pennsylvania, Tennessee, and South Carolina.  Each of these states has considered new chemical safety legislation this year, the likes of which BASF would be empowered to challenge before extrajudicial tribunals under TAFTA. 

As a major supplier of chemicals to the U.S. market, BASF has already actively lobbied the U.S. Congress specifically to halt proposed restrictions on chemicals that it manufactures.  In 2014 alone, BASF has spent $2.3 million to lobby Congress on chemicals-related policies. TAFTA would give BASF a new tool to chill the development of U.S. chemical safety measures.

Other European chemical corporations have facilities scattered throughout the United States, manufacturing products ranging from synthetic fibers to rubber chemicals to pesticides.  Bayer, based in Germany, has subsidiaries in nine U.S. states, seven of which have been considering pending chemical safety legislation this year.  Royal Dutch Shell, headquartered in the Netherlands, has a U.S.-based chemical division that claims to make “approximately 20 billion pounds of chemicals annually, which are sold primarily to industrial markets in the United States.”  Shell’s U.S. chemicals division has facilities in Louisiana, which has been enacting new chemical safety measures. Were such new state-level regulations to be imposed on these corporations’ products out of concern for chemical safety, they would be empowered under TAFTA to demand taxpayer compensation.

Fifteen states, for example, are currently considering legislation related to a notorious chemical called bisphenol A, or BPA.  BPA has been identified as an endocrine disruptor, a class of chemicals that, according to the National Institutes of Health, “may interfere with the body’s endocrine system and produce adverse developmental, reproductive, neurological, and immune effects in both humans and wildlife.” BPA is used extensively as a plastics coating and hardener in food and beverage containers, including water bottles and the lining of metal cans. BPA can seep into the foods and beverages it contains, leading to human consumption.  

Though usage of BPA in baby bottles, pacifiers, and other baby products was phased out in recent years due to broad consumer concerns and government reports of potentially harmful impacts on infants’ development, BPA is still widely used in other consumer products.  Recent studies have continued to indicate health concerns for adults, including a 2014 Duke Medicine study finding that BPA stimulates the growth of breast cancer cells and lowers the efficacy of cancer treatments.  Another study this year, from the University of Cincinnati, finds a link between BPA levels in men and prostate cancer.

According to the NCSL, 12 states and the District of Columbia have enacted BPA restrictions thus far, including, for example, bans on BPA in reusable food containers and thermoses. With 15 states considering additional BPA-related protections just this year, we are likely to see more states enact policies to limit consumers’ exposure to this toxin.  

The risk is real that such policies could become the target of ISDS attacks by European chemical firms under TAFTA.  Some of these firms, including ones with investments in the United States, have already been lobbying against BPA restrictions in Europe for years.  Bayer is even a member of an industry alliance known as the BPA Coalition, dedicated to convincing the public and policymakers “that the safe use of BPA poses no known health risk to people.”

Might such firms be interested in using TAFTA to demand U.S. taxpayer compensation for new efforts to keep our water bottles free of carcinogens?  Let’s not find out.  

World Trade Organization Rules Against Popular U.S. Country-of-Origin Meat Labels on Which Consumers Rely

Compliance Panel Says U.S. Policy Still Violates WTO Despite Changes Made to Comply With 2012 WTO Order; U.S. Should Not Change COOL Policy

Today’s ruling by a World Trade Organization (WTO) compliance panel against U.S. country-of-origin meat labeling (COOL) policies sets up a no-win dynamic, and the Obama administration should appeal the ruling, Public Citizen said.

If the administration were to weaken COOL, U.S. consumers would lose access to critical information about where their meat comes from at a time when consumer interest in such information is at an all-time high and opposition would only grow to the administration’s beleaguered trade agenda. If the administration again were to seek to comply with the WTO by strengthening COOL, then Mexico and Canada – the two countries that challenged the policy – likely would continue their case, even though cattle imports from Canada have increased since the 2013 strengthening of the policy. 

The ruling further complicates the Obama administration’s stalled efforts to obtain Fast Track trade authority for two major agreements, the Trans-Pacific Partnership and the Trans-Atlantic Free Trade Agreement. Both of these pacts would expose the United States to more such challenges against U.S. consumer, environmental and other policies.

“Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Today’s ruling spotlights how these so called ‘trade’ deals are packed with non-trade provisions that threaten our most basic rights, such as even knowing the source and safety of what’s on our dinner plate.”

The WTO compliance panel decided that changes made in May 2013 to the original U.S. COOL policy in an effort to make it comply with a 2012 WTO ruling against the law are not acceptable and that the modified U.S. COOL policy still constitutes a “technical barrier to trade.” The panel decided that the strengthened COOL policy afforded less favorable treatment to cattle and hog imports from Canada and Mexico, despite a 52 percent increase in U.S. imports of cattle from Canada under the modified policy. The panel stated that the alleged difference in treatment did not “stem exclusively from legitimate regulatory distinctions.”

The United States has one chance to appeal this decision before the WTO issues a final, binding ruling. Under WTO rules, if the U.S. appeal fails, Canada and Mexico would be authorized to impose indefinite trade sanctions against the United States unless or until the U.S. government changes or eliminates the popular labeling policy.

Today’s ruling follows a string of recent WTO rulings against popular U.S. consumer and environmental policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In April 2012, the WTO ruled against a U.S. ban on clove-, candy- and chocolate-flavored cigarettes, enacted to curb youth smoking. In each of those cases, U.S. policy changes made to comply with the WTO’s decisions also have been challenged before WTO panels similar to the one that issued today’s ruling.

“The WTO again ruling against a popular U.S. consumer protection will just spur the growing public and congressional concerns about the big Pacific and European trade deals the administration is now pushing and the Fast Track authority to railroad through Congress more agreements that undermine basic consumer rights,” said Wallach.

Background

The COOL policy was created when Congress enacted mandatory country-of-origin labeling for meat – supported by 92 percent of the U.S. public in a recent poll – in the 2008 farm bill. This occurred after 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program.

In their successful challenge of COOL at the WTO, Canada and Mexico claimed that the program violated WTO limits on what sorts of product-related “technical regulations” signatory countries are permitted to enact. The initial WTO ruling was issued in November 2011. Canada and Mexico demanded that the United States drop its mandatory labels in favor of a return to a voluntary program or standards set by an international food standards body in which numerous international food companies play a central role. Neither option would offer U.S. consumers the same level of information as the current labels. The United States appealed.

The WTO Appellate Body sided with Mexico and Canada in a June 2012 ruling against COOL. The U.S. government responded to the final WTO ruling by altering the policy in a way that fixed the problems identified by the WTO tribunal. However, instead of watering down the popular program as Mexico and Canada sought, the U.S. Department of Agriculture responded with a rule change in May 2013 that strengthened the labeling regime. The new policy provided more country-of-origin information to consumers, which satisfied the issues raised in the WTO’s ruling. However, Mexico and Canada then challenged the new U.S. policy. With today’s ruling, the WTO has announced its support for the Mexican and Canadian contention that the U.S. law is still not consistent with the WTO rules.

Pharmaceutical CEO: This Controversial Deal Will Be Great for Us…And You (Trust Us)

In an op-ed appearing in Forbes on Tuesday, the CEO of Eli Lilly, a U.S. pharmaceutical corporation, paints a glowing picture of how the proposed Trans-Atlantic Free Trade Agreement (TAFTA) would benefit consumers on both sides of the Atlantic – but it’s pure fantasy.

It is not surprising that Eli Lilly is cheerleading this controversial deal. This is the same pharmaceutical firm that is using the North American Free Trade Agreement (NAFTA) – TAFTA’s predecessor – to challenge Canada’s legal standards for granting patents and demand $500 million in taxpayer compensation.

John Lechleiter, Lilly’s CEO, shrouds his arguments under the guise of “free trade,” while in reality Lilly’s TAFTA proposals are a plea for increased government protection for his company and expansion of the monopolistic business model upon which the multinational pharmaceutical industry relies.

This post will take on Mr. Lechleiter’s claims, one by one.

Civil Society Organizations Oppose U.S.-EU ‘Trade’ Pact Proposals That Would Undermine Chemical Safety Protections

111 Consumer, Health, Environmental, Labor Groups Warn Trade Ministers About TTIP Proposals That Would Endanger Public Health

In a letter today, a broad array of major U.S. and European chemical safety, health, environmental, labor, consumer and other organizations expressed strong opposition to proposed rules for the Transatlantic Trade and Investment Partnership (TTIP) that could chill or roll back robust chemical safety standards on both sides of the Atlantic. 

The letter was sent to U.S. Trade Representative Michael Froman and EU Commissioner for Trade Karel de Gucht, in advance of the sixth round of TTIP negotiations, which are to begin in Brussels next week.

“EU and U.S. trade policy should not be geared toward advancing the chemical industry’s agenda at the expense of public health and the environment – but that appears to be exactly what is currently underway with TTIP,” the letter states. “The presence of toxic chemicals in our food, our homes, our workplaces, and our bodies is a threat to present and future generations, with staggering cost for society and individuals.”  

“U.S. and EU negotiators appear to have bought the chemical corporations’ argument that this so-called ‘trade’ deal should go well beyond trade and target our safeguards from toxic chemicals as ‘barriers to trade,’ which could continue public exposure to hazardous substances in unsafe workplaces, toxic lakes and rivers, and tainted food and toys” said Lori Wallach, director of Public Citizen’s Global Trade Watch and one of the letter’s signatories. “If the U.S. and EU governments want to have any hope of stemming the controversy surrounding this proposed pact, they must reverse course and keep our chemical safety protections out of their closed-door “trade” negotiations.” 

At next week’s TTIP negotiations, draft text will be presented for the first time for several of the proposed pact’s chapters that could directly undermine strong chemical safety rules. The texts will be kept secret from the public during negotiations, but the rules that would be established would be binding on the United States and EU member nations, with trade sanctions or cash fines ordered against domestic policies that do not comply with TTIP rules.

The letter highlights specific TTIP proposals that the U.S. and EU governments and industry interests have put forward that could chill U.S. efforts to strengthen chemical regulations while weakening tighter EU chemical protections. This includes a U.S. proposal for regulatory coherence that could “thwart the timely promulgation of important regulations” and an EU Regulatory Cooperation Council proposal that would require regulators to calculate “chemical regulations’ costs to transatlantic trade, not the benefits of such protective laws for society.” 

The letter also rejects a controversial proposal – opposed by U.S. state legislators, some EU member states and a transpartisan array of U.S. and EU civil society groups – to include “investor-state dispute settlement” terms in the TTIP. Already inclusion of such terms in other pacts has empowered corporations to circumvent domestic courts and directly challenge controls for the use of hazardous substances, pollution cleanup requirements and other chemical protections before extrajudicial tribunals authorized to order unlimited taxpayer compensation for violations of broad foreign investor “rights.” Such extraordinary provisions, according to the letter, “would force the public and their representatives to decide between compensating corporate polluters for lost profits due to stronger laws, or continuing to bear the health, economic and social burdens of pollution.”

The letter concludes by criticizing the negotiations’ lack of transparency: “In a deal where fundamental changes to sub-national, national and regional policies and lawmaking processes are being proposed and negotiated, the non-disclosure of TTIP negotiating positions or texts is inexcusable and inconsistent with the principles of a modern democracy.” 

Obama Mexico Visit Spotlights 20-Year Legacy of Job Loss from NAFTA, the Pact on Which Obama’s TPP Is Modeled

New Public Citizen Report Catalogs the Negative NAFTA Outcomes That Are Fueling Opposition to Obama Push to Fast Track TPP

The 20-year record of job loss and trade deficits from the North American Free Trade Agreement (NAFTA) is haunting President Barack Obama’s efforts to obtain special trade authority to fast track the Trans-Pacific Partnership (TPP), said Public Citizen as it released a new report that comprehensively documents NAFTA’s outcomes. Next week’s presidential trip to Mexico for a long-scheduled “Three Amigos” U.S.-Mexico-Canada summit will raise public attention to NAFTA, on which the TPP is modeled, which is not good news for Obama’s push for the TPP and Fast Track.

Numerous polls show that opposition to NAFTA is among few issues that unite Americans across partisan and regional divides. Public ire about NAFTA’s legacy of job loss and policymakers’ concerns about two decades of huge NAFTA trade deficits have plagued the administration’s efforts to obtain Fast Track trade authority for the TPP. The TPP would expand the NAFTA model to more nations, including ultra-low-wage Vietnam. In the U.S. House of Representatives, most Democrats and a bloc of GOP have indicated opposition to Fast Track, as has Senate Majority Leader Harry Reid (D-Nev.).

Public Citizen’s new report, "NAFTA’s 20-Year Legacy and the Fate of the Trans-Pacific Partnership", compiles government data on NAFTA outcomes to detail the empirical record underlying the public and policymaker sentiment. It also shows that warnings issued by NAFTA boosters that a failure to pass NAFTA would result in foreign policy crises – rising Mexican migration and a neighboring nation devolving into a troubled narco-state – actually came to fruition in part because of NAFTA provisions that destroyed millions of rural Mexican livelihoods.

“Outside of corporate boardrooms and D.C. think tanks, Americans view NAFTA as a symbol of job loss and a cancer on the middle class,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “If you are a president battling to overcome bipartisan congressional skepticism about giving you special trade authority to fast track a massive 12-nation NAFTA expansion, it is really not helpful to be visiting Mexico for a summit of NAFTA-nation leaders.”

The Public Citizen report shows that not only did projections and promises made by NAFTA proponents not materialize, but many results are exactly the opposite. Such outcomes include a staggering $177 billion U.S. trade deficit with NAFTA partners Mexico and Canada, one million net U.S. jobs lost in NAFTA’s first decade alone, slower U.S. manufacturing and services export growth to Mexico and Canada, a doubling of immigration from Mexico, larger agricultural trade deficits with Mexico and Canada, and more than $360 million paid to corporations after “investor-state” tribunal attacks on, and rollbacks of, domestic public interest policies.

“The data have disproved the promises of more jobs and better wages, so bizarrely now NAFTA defenders argue the pact was a success because it expanded the volume of U.S. trade with the two countries without mentioning that this resulted in a 556 percent increase in our trade deficit with those countries, with a flood of new NAFTA imports wiping out hundreds of thousands of American jobs,” said Wallach.

The study tracks specific promises made by U.S. corporations like Chrysler, GE and Caterpillar to create specific numbers of American jobs if NAFTA was approved, and reveals government data showing that instead, they fired U.S. workers and moved operations to Mexico.

“The White House and the corporate lobby sold NAFTA with promises of export growth and job creation, but the actual data show the projections were at best wrong,” said Wallach. “The gulf between the gains promised for NAFTA and the damage that ensued means that the public and policymakers are not buying the same sales pitch now being made for theTPP and Fast Track.”

The report also documents how post-NAFTA trade and investment trends have contributed to middle-class pay cuts, which in turn contributed to growing income inequality; how since NAFTA, U.S. trade deficit growth with Mexico and Canada has been 50 percent higher than with countries not party to a U.S. Free Trade Agreement, and how U.S. manufacturing and services exports to Canada and Mexico have grown at less than half the pre-NAFTA rate.

Among the study’s findings:

• Rather than creating in any year the 200,000 net jobs per year promised by former President Bill Clinton on the basis of Peterson Institute for International Economics projections, job loss from NAFTA began rapidly:

• American manufacturing jobs were lost as U.S. firms used NAFTA’s foreign investor privileges to relocate production to Mexico, and as a new flood of NAFTA imports swamped gains in exports, creating a massive new trade deficit that equated to an estimated net loss of one million U.S. jobs by 2004. A small pre-NAFTA U.S. trade surplus of $2.5 billion with Mexico turned into a huge new deficit, and a pre-NAFTA $29.6 billion deficit with Canada exploded. The 2013 NAFTA deficit was $177 billion, representing a more than six-fold increase in the NAFTA deficit.

• More than 845,000 specific U.S. workers, most in the manufacturing sector, have been certified for Trade Adjustment Assistance (TAA) since NAFTA because they lost their jobs due to offshoring to, or imports from, Canada and Mexico.The TAA program is narrow, covering only a subset of jobs lost at manufacturing facilities, and is difficult to qualify for. Thus, the TAA numbers significantly undercount NAFTA job loss. A TAA database searchable by congressional district, sector and more is available here.

• NAFTA has contributed to downward pressure on U.S. wages and growing income inequality.There is broad consensus among economists that recent trade flows have been a significant contributor to growing income inequality; the only debate is about the degree of trade’s responsibility. NAFTA’s broadest economic impact has been to fundamentally transform the types of jobs and wages available for the 63 percent of American workers without a college degree. Most of those who lost manufacturing jobs to NAFTA offshoring and import competition found reemployment in lower-wage service sector jobs. 

• According to the U.S. Bureau of Labor Statistics, two out of every three displaced manufacturing workers who were rehired in 2012 experienced a wage reduction, most of them taking a pay cut of greater than 20 percent.  

• As increasing numbers of workers displaced from manufacturing jobs have joined those competing for non-offshorable, low-skill jobs in sectors such as hospitality and food service, real wages have also fallen in these sectors under NAFTA. The resulting downward pressure on middle-class wages has fueled recent growth in income inequality.

• Scores of environmental and health laws have been challenged in foreign tribunals through NAFTA’s controversial investor-state dispute resolution system. More than $360 million in compensation to investors has been extracted from NAFTA governments via “investor-state” tribunal challenges against toxics bans, land-use rules, water and forestry policies, and more. More than $12.4 billion is pending in such NAFTA claims, including challenges of medicine patent policies, a fracking moratorium and a renewable energy program.

• The average annual U.S. agricultural trade deficit with Mexico and Canada in NAFTA’s first two decades reached $975 million, almost three times the pre-NAFTA level. U.S. beef imports from Mexico and Canada, for example, have risen 133 percent. Over the past decade,  total U.S. food exports to Mexico and Canada have actually fallen slightly while U.S. food imports from Mexico and Canada have more than doubled. This stands in stark contrast to projections that NAFTA would allow U.S. farmers to export their way to newfound wealth and farm income stability. Despite a 239 percent rise in food imports from Canada and Mexico under NAFTA, the average nominal U.S. price of food in the United States has jumped 67 percent since NAFTA.

• The reductions in consumer goods prices that have materialized have not been sufficient to offset the losses to wages under NAFTA; U.S. workers without college degrees (63 percent of the workforce) likely have lost a net amount equal to 12.2 percent of their wages even after accounting for gains from cheaper goods.This net loss means a loss of more than $3,300 per year for a worker earning the median annual wage of $27,500.

• The export of subsidized U.S. corn did increase under NAFTA’s first decade, destroying the livelihoods of more than one million Mexican campesino farmers and about 1.4 million additional Mexican workers whose livelihoods depended on agriculture. The desperate migration of those displaced from Mexico’s rural economy pushed down wages in Mexico’s border maquiladora factory zone and contributed to a doubling of Mexican immigration to the United States following NAFTA’s implementation.

• Facing displacement, rising prices and stagnant wages, more than half the Mexican population, and more than 60 percent of the rural population, still falls below the poverty line, despite the promises that NAFTA would bring broad prosperity to Mexicans. Real wages in Mexico have fallen significantly below pre-NAFTA levels as price increases for basic consumer goods have exceeded wage increases. A minimum wage earner in Mexico today can buy 38 percent fewer consumer goods than on the day that NAFTA took effect. Despite promises that NAFTA would benefit Mexican consumers by granting access to cheaper imported products, the cost of basic consumer goods in Mexico has risen to seven times the pre-NAFTA level, while the minimum wage stands at only four times the pre-NAFTA level. Though the price paid to Mexican farmers for corn plummeted after NAFTA, the deregulated retail price of tortillas – Mexico’s staple food – shot up 279 percent in the pact’s first 10 years.

“Given NAFTA’s damaging outcomes, few of the corporations or think tanks that sold it as a boon for all of us in the 1990s like to talk about it, but the reality is that their promises failed, the opposite occurred and millions of people were severely harmed and now this legacy is derailing President Obama’s misguided push to expand NAFTA through the TPP,” said Wallach.

Monsanto’s Plan B: A Backdoor to Genetically Modified Food

One week ago, the governor of Connecticut signed into law the country's second genetically modified organism (GMO) labeling policy, following one approved in Maine (both require adoption of GMO labeling laws in neighboring states to take effect). The movement demanding the right to know when food is genetically modified has gained steam recently, pushing more than half of U.S. states to consider labeling initiatives. As Connecticut Governor Malloy stated upon signing last week's bill, "This is not a movement you are going to stop."

But that doesn't mean that the likes of Monsanto aren't trying.  The latest tool sought by GMO corporations to ensure unimpeded and unlabeled production and consumption of GMO products is a sweeping "trade" deal under negotiation this week between the U.S. and the European Union.  A “trade” deal only in name, the Trans-Atlantic Free Trade Agreement (TAFTA) would require the United States and EU to conform domestic financial laws and regulations, climate policies, food and product safety standards, data privacy protections and other non-trade policies to TAFTA rules.

We profiled recently the top ten threats this deal poses to U.S. consumers.  Here's how TAFTA could threaten GMO limits and labels.   

The EU/U.S. TAFTA Agenda: Deregulation in Disguise

U.S. and EU TAFTA negotiators, advised by the world’s largest agribusinesses, have used coded language in pushing for TAFTA rules that could chill attempts to label food containing GMOs and government approvals of GMO seeds and cultivation of GMO crops. A majority of European consumers and a plurality of U.S. consumers are concerned about the impacts of genetically modified food and crops on human health and the environment.

The EU requires GMO seed approvals that are based on the precautionary principle – that in the face of uncertainty about a product’s safety for consumers or the environment, policies must seek to avoid exposure to risk. Governments have long relied on this principle to shield their populations from uncertain risks from new or emerging products. The U.S. drug safety system is based on the precautionary principle. Thus, drugs must be proved safe before they are permitted on the U.S. market. As a result, the United States did not allow sale of the morning sickness drug Thalidomide in the 1960s, which prevented a generation of children from being born with severe birth defects. In countries where medicines were allowed on the market before being proved safe, thousands of “thalidomide babies” were born.  

The EU GMO approval policy requires that a seed/crop must be assessed for its consumer health and environmental implications before it can be marketed. Moreover, EU member countries maintain the authority to altogether ban cultivation of GMOs, which nine nations have done. In addition, the EU and an increasing number of U.S. states have responded to consumers’ demands for GMO labels that allow people to choose whether or not to consume GMO foods.

However, U.S. and EU negotiators are now proposing TAFTA rules that could undermine both precautionary principle-based approvals for GMO seeds and cultivation and GMO labeling. U.S. negotiators have stated that TAFTA should “seek to eliminate or reduce non-tariff barriers…such as sanitary and phytosanitary (SPS) restrictions that are not based on science.” Translated out of trade jargon, this means that instead of agribusinesses being required to prove that a GMO seed does not pose a threat before it can be sold, limits on GMO seeds or cultivation would only be permitted under TAFTA rules if governments can show that there is scientific evidence of a specific threat to human, animal or plant life. Not only would this endanger the EU GMO approval process, but it would directly undermine the current rights of EU member states to ban cultivation of GMOs.

This Deal Could Make You Sick: A Backdoor for Food Contamination

Next week, the safety of our food could be up for negotiation.  

In case you missed it, negotiators from the European Union and the Obama administration will converge in Washington, D.C. next week for a third round of talks on the Trans-Atlantic Free Trade Agreement (TAFTA).  What is TAFTA?  A “trade” deal only in name, TAFTA would require the United States and EU to conform domestic financial laws and regulations, climate policies, food and product safety standards, data privacy protections and other non-trade policies to TAFTA rules. 

We profiled recently the top ten threats this deal poses to U.S. consumers.  One area of particular concern is how TAFTA's expansive agenda implicates food safety.  Here's a synopsis. 

The EU/U.S. TAFTA Agenda: Deregulation in Disguise

U.S. and EU TAFTA negotiators, advised by the world’s largest agribusinesses, have used coded language in pushing for TAFTA rules that could roll back food safety standards. A leaked EU position paper reveals that EU negotiators are pushing for TAFTA to impose sweeping restrictions on food safety policies by mandating that such measures “must be applied only to the extent necessary to protect human, animal, or plant life or health.” Such terms would enable foreign governments to second-guess the “necessity” of domestic safety standards. U.S. negotiators have called for parallel TAFTA restrictions. Some members of Congress have even openly called for TAFTA to do away with “spurious” sanitary regulations, asking that TAFTA-created tribunals be empowered to rule on the validity of domestic food safety standards challenged by foreign governments.

Food Corporations’ TAFTA Agenda: Deregulation without Disguise

European and U.S. food corporations, in their formal demands issued to TAFTA negotiators, have been remarkably candid in naming the specific U.S. and EU safety regulations that they would like to see dismantled via TAFTA.  Here is their wishlist for food safety rollbacks, as stated by the corporations themselves:

• Contaminated food: BusinessEurope, Europe’s largest corporate group, states, “Key non-tariff barriers affecting EU exports to the US include the US Food Safety Modernization Act.” The landmark 2011 law authorizes the U.S. Food and Drug Administration to recall contaminated food, a prerogative that European corporations would apparently like to see removed via TAFTA. 

• Questionable meat: The EU corporations in BusinessEurope also state consternation with U.S. “import restrictions on uncooked meat products.” The loosening of such restrictions would allow more European meat to enter the United States at a time when many European countries are eliminating regular meat inspections – a fact that likely contributed to the 2013 scandal in which meat exported by the United Kingdom as “beef” was found to be horse meat.

• Chlorinated chicken: The U.S. meat industry has stated its annoyance that EU consumers and regulators do not wish to eat meat products treated with “hyperchlorination and organic acids,” as spelled out by the North American Meat Association. Europe’s stronger safety standards limit poultry products’ exposure to contaminants during slaughter and processing. U.S. rules allow for more possibility of contamination, and then for chicken to be treated with antimicrobial chemicals such as chlorine to kill E. coli and other microbes afterward. The corporate group laments that “only the application of water and steam are permitted for use on meat carcasses by the EU.” Yum! Restaurants International, the owner of Kentucky Fried Chicken, has seconded this concern, asking that TAFTA be used to change EU food safety standards so that the company can sell Europeans chlorinated chicken.

• Weaker U.S. Grade A dairy safety standards: The U.S. safety standards for Grade A milk have been listed as a TAFTA target by EU agribusinesses. The European Association of Dairy Trade acknowledges that the standards “were devised as a means of addressing the risk of food borne illnesses...”  But the industry group then complains that complying with the standards “is both highly cumbersome and expensive.”

• Ractopamine growth-drug-fed pork: The American Meat Institute protests that “the EU continues to maintain its unjustified ban on meat produced with beta-agonist technologies, such as Ractopamine Hydrochloride.” Ractopamine is a drug approved in the United States to increase beef, turkey and pork muscle mass. It has been banned or limited in 160 nations (including EU member countries, Russia, and China) due to potential risks to human and animal health. The National Pork Producers Council has made clear that TAFTA should be the vehicle for erasing the EU ractopamine ban: “U.S. pork producers will not accept any outcome other than the elimination of the EU ban on the use of ractopamine in the production process...”

• Fruits with higher pesticide residue: The California Table Grape Commission “is also concerned about European pesticide maximum residue levels (MRLs)…many of the MRLs established are at levels significantly lower than corresponding U.S. MRLs.” CropLife America, an agribusiness conglomerate that includes Monsanto, similarly complains that the EU does not allow as much pesticide residue on food as the United States permits – a “trade barrier” to be dismantled via TAFTA. The corporate alliance takes issue with European limits on pesticides that contain “endocrine disrupters” – a type of chemical linked with cancer and birth defects – complaining that European restrictions on such toxins “prevent U.S. agricultural and food products from entering the EU.”

Investor Privileges: Agribusinesses Empowered to Attack Food Safety Laws Directly

U.S. and EU corporations and officials have called for TAFTA to grant foreign firms the power to skirt domestic courts, drag the U.S. and EU governments before extrajudicial tribunals, and directly challenge food safety laws that they view as violations of TAFTA-created foreign investor “rights.” The tribunals, comprised of three private attorneys, would be authorized to order unlimited taxpayer compensation for domestic policies perceived as undermining agribusiness firms’ “expected future profits.” Such extreme “investor-state” rules have already been included in U.S. “free trade” agreements, forcing taxpayers to pay firms more than $400 million for toxics bans, land-use rules, regulatory permits, water and timber policies and more. Just under U.S. pacts, more than $14 billion remains pending in corporate claims against medicine patent policies, pollution cleanup requirements, climate and energy laws, and other public interest polices. The EU is proposing an even more radical version of these rules for TAFTA, offering firms a new tool to roll back food safety rules.

Fast Track: Railroading Democracy to Railroad Safeguards?

How could a deal like TAFTA get past Congress? With a democracy-undermining procedure known as Fast Track – an extreme and rarely-used maneuver that empowered executive branch negotiators, advised by large corporations, to ram through unfair “trade” deals by unilaterally negotiating and signing the deals before sending them to Congress for an expedited, no-amendments, limited-debate vote. As a candidate, President Obama said he would replace this expired, anti-democratic process. But now he is asking Congress to grant him Fast Track’s extraordinary authority – in part to sidestep growing public and congressional concern about pacts like TAFTA. We must ensure that Fast Track never again takes effect and instead create an open, inclusive process for negotiating and enacting trade agreements in the public interest.

Beware of Outlandish Claims About Economic Benefits of U.S.-EU ‘Free Trade’ Deal

This Week’s U.S. International Trade Commission Study Assumes Total Elimination of U.S.-EU Consumer, Environmental, Financial Policy Differences, Follows British Embassy’s 50-State Rehash of Discredited 2009 Study Based on Similar Assumption

On Thursday, the U.S. International Trade Commission (USITC) sent a report to the U.S. Trade Representative (USTR) on the projected economic impact of the Trans-Atlantic Free Trade Agreement (TAFTA), a report that is premised on the ridiculous assumption that 100 percent of the differences between U.S. and EU health, safety, environmental and financial regulations will be eliminated. Given that the report, which is not being made available to the press or public, relies on a premise that can only lead to fanciful results, U.S. negotiators should not consider it, much less use it to guide their approach to the agreement.

That study comes two days after yet another think tank report that recycled a litany of flawed assumptions from a 2009 study on TAFTA, chopping up baseless findings to present a 50-state version of imaginative projections of economic gains from a similar dismantling of public interest safeguards.

The core premise of these studies is the unproven business mantra that rolling back Wall Street reforms, food health standards and medicine safety regulations will somehow deliver economic gains to us all. The main contribution of the recent flurry of studies is the addition of extra gloss and fancy printing to the old, debunked assumption that such an assault on consumers, workers and the environment would have zero costs.

In its request for Thursday’s study, the USTR asked the USITC to assume an impossible outcome of U.S.-EU negotiations: “that any known U.S. non-tariff barrier will not be applicable” to imports from the EU if the sweeping deal were to take effect. By the USTR’s own definition, “non-tariff barriers” include differences in domestic financial regulations, food safety standards, product safety rules and other U.S. public interest safeguards that TAFTA apparently would render null. 

Even the most fanciful pro-TAFTA study, the 2009 ECORYS study prepared for the European Commission that has been regularly rehashed, including in a British Embassy report this week, avoided such an outlandish assumption, stating, “It is unlikely that all areas of regulatory divergence identified can actually be addressed … because this would require constitutional changes … ; because there is a lack of sufficient economic benefit to support the effort; …because of consumer preferences…; or because of political sensitivities.”

On Tuesday, the findings of the 2009 study were revived in another TAFTA-touting study, commissioned by the British Embassy in Washington, the Bertelsmann Foundation and the Atlantic Council. That glossy piece recycled the 2009 study’s improbable assumptions – breaking them down to state-by-state projections – to hypothesize the “gains” that TAFTA could deliver to each state if public interest safeguards were sufficiently weakened. The study assumes that TAFTA would eliminate one of every four “non-tariff barriers” – from the Volcker Rule at the center of Wall Street reform to safety standards for children’s toys to the U.S. ban on beef linked to mad-cow disease – at no cost to consumers.

While ignoring costs, the report uses a computable general equilibrium model to generate projections of hypothetical economic gains, despite studies showing that this methodology is inchoate and unreliable when studying non-tariff policies. Past studies using this cost-ignoring, gain-inflating methodology have still producedmeager projections for TAFTA’s “gains.” A pro-TAFTA study whose findings were recycled in Tuesday’s report estimated that, if TAFTA would significantly dilute or eliminate public interest regulations, the deal could produce a tiny 0.2 – 0.4 percent blip in U.S. gross domestic product (GDP). According to economists, that’s a smaller contribution to GDP than was delivered by the latest version of the iPhone. 

The list of “non-tariff barriers” slated for elimination in the underlying 2009 study includes food safety standards such as “Grade A dairy safety … rules and inspection requirements” for milk and financial stability measures such as the Sarbanes-Oxley Act that enacted accounting and anti-fraud standards to prevent a recurrence of Enron-like corporate accounting scandals. The study ignored the predictable social and economic costs that would result from such extreme regulatory rollback, such as an increase in the incidence of foodborne illness and a rise in financial instability.

Tuesday’s report, like its predecessors, made clear that TAFTA is not primarily about trade. Acknowledging that tariffs between the United States and the EU are “already quite low,” USTR and EU officials have made clear that TAFTA’s primary focus will be on the “elimination, reduction, or prevention of unnecessary ‘behind the border’” policies, such as the health, financial and environmental regulations targeted by Tuesday’s study. Attempts to exclusively measure the economic impact of TAFTA-prompted tariff reductions have produced embarrassingly meager results, estimating that even in the unlikely scenario of 100 percent tariff elimination, TAFTA would deliver economic benefits equivalent to three extra cents per person per day.

Gussying Up Old Assumptions: Today’s TAFTA-Touting Report Is a Re-Run

If you say something enough times, does it become true?  That seems to be the calculation of some proponents of the Trans-Atlantic Free Trade Agreement (TAFTA), a sweeping deal that would require the U.S. and EU to conform domestic safeguards to deregulatory rules currently being negotiated under corporate supervision.  Pro-TAFTA think tanks have been rehashing the same set of starry-eyed prognostications of TAFTA economic benefits at a frequency (and concern for accuracy) that rivals iterations of the “Fast and the Furious” movie series. 

But repetition does not truth make.  As we’ve pointed out time and again, these reports keep using sweeping assumptions to project that TAFTA would bring a surprisingly miniscule economic blip.  And to get that blip, they assume that we’ll be willing to watch corporate-advised TAFTA negotiators dismantle a swath of health, environmental, financial, and other safeguards.  Click here for our retort to this parade of studies. 

Another TAFTA-touting report came out today, commissioned by the British Embassy in Washington, the Bertelsmann Foundation, and the Atlantic Council (whose advisors include executives from J.P. Morgan and Big Pharma). 

The report offers 71 glossy pages of rewarmed speculations.  Here are the five main takeaways:

1. The “new” study is not really new.  It is largely a recycled version of another recycled version of a study that appeared in 2009.  Today’s report hypothesizes what TAFTA could mean for each U.S. state, assuming economic gains primarily from the weakening of financial regulations, climate policies, food and product safety standards, data privacy protections and other “trade irritants.” Those “gains” were tabulated about four years ago, dusted off in a study disseminated in March, and sliced up by state in today’s report.

2. The study confirms again that TAFTA is not about trade.  Since tariffs (an actual trade issue) are “already quite low” between the EU and U.S., pro-TAFTA government officials have readily stated that TAFTA’s primary goal is not tariff reduction, but the “elimination, reduction, or prevention of unnecessary ‘behind the border’” policies, ranging from Wall Street reforms to milk safety standards to GMO food labels. 

That’s why attempts to measure the economic impact of TAFTA-prompted tariff reductions have produced embarrassingly meager results.  A frequently cited pro-TAFTA study estimates that even in the unlikely scenario of 100% tariff elimination, TAFTA will deliver economic benefits equivalent to three extra cents per person per day.  To project a higher benefit, the study released today had to not just repeat this unrealistic assumption of 100% tariff reduction, but also assume that TAFTA would reduce health, financial and environmental regulations that have been euphemistically renamed “non-tariff barriers.” 

3. The study assumes zero downside of eliminating consumer and environmental safeguards. Today’s study assumes that TAFTA would eliminate one out of every four “non-tariff barriers” – from the Volcker Rule at the center of Wall Street reform to safety standards for children’s toys to the ban on beef linked to mad-cow disease – at no cost to consumers.  In addition to an obvious social and environmental toll, such a degradation of safeguards would also result in quantifiable monetary costs for U.S. consumers and the broader economy.

For example, the 2009 study on which today’s report relies counts “Grade A dairy safety…rules and inspection requirements” for milk and “a US ban on the import of uncooked meat products” in the case of “a health risk” as “non-tariff barriers” that could be slated for dismantling under TAFTA. The elimination of such consumer protections would likely result in greater incidence of food-borne illness in the United States, which would not only increase the medical costs of affected consumers, but would reduce their productivity levels and number of days at work, spelling a negative impact on aggregate economic output.

In financial services, the study names the Sarbanes-Oxley Act of 2002 as a “non-tariff barrier” on the target list of EU businesses and officials. The Act created enhanced accounting and anti-fraud standards to prevent a recurrence of the Enron, WorldCom, and other corporate accounting scandals that destroyed billions of dollars of U.S. investments. Undermining such critical financial reregulation via TAFTA would risk a return to such costly scandals. Today’s study ignored such costs.

4. The study uses contested models with assumptions that can turn economic losses into gains.  While ignoring costs, today's study strives to capture all theoreticaly plausible benefits by relying on assumptions-laden methods, such as using a computable general equilibrium (CGE) model to assess removal of “non-tariff barriers” (NTBs).  A U.N. study has questioned the reliability of this inchoate approach. It argues, “ongoing liberalization policy efforts to eliminate the restrictive effects of NTBs are proceeding with little economic analysis…the modeling of NTBs using general equilibrium modeling techniques is still in its early stages.” The U.N. study tested the usage of differing assumptions in a CGE model to estimate the economic effects of NTB removal and found that a change in the assumptions meant that the net economic effect of NTB removal actually switched from positive to negative for some countries (even before taking into account the above costs).  If today’s study performed any such testing of assumptions, it did not reveal the results. 

5. The study assumes a massive rollback of Buy American and Buy Local policies.  Another assumption of today’s study is that TAFTA would eliminate one half of all “procurement barriers,” a euphemism for popular policies like Buy American and Buy Local to ensure that U.S. government projects, funded by U.S. taxpayers, are used to create U.S. jobs.  It is rather fanciful to think that the U.S. Congress, state legislatures, or the U.S. public would accept such a clear-cutting of policies that enjoy 90% support.  Indeed, today’s study assumes an even greater undercutting of Buy American and Buy Local than the EU negotiators themselves are hoping for. In a leaked EU position paper on government procurement, the EU explicitly names 13 U.S. states and 23 U.S. cities it is targeting for rollback of Buy Local policies.  Today’s study assumes that the U.S. will offer to eliminate Buy Local in about twice as many states as the EU itself requested.

For more information on the lineage of TAFTA-touting studies from which today’s rosy report descended, click here to see our factsheet.  

Bloomberg, Health Experts Denounce Obama's Gift to Big Tobacco in the TPP

The Obama administration has drawn sharp criticism from leading health organizations, U.S. state representatives, and New York mayor Michael Bloomberg by caving to pressure from Big Tobacco to abandon safeguards for tobacco control policies in the Trans-Pacific Partnership (TPP), the pending "free trade" deal with 11 Pacific Rim countries. The administration has scrapped a proposal to provide a "safe harbor" for tobacco control measures.

Instead the administration will issue a proposal in the current Brunei round of TPP negotiations that clears a path for tobacco corporations to use the TPP to directly challenge governments' progressive public health measures.  

In response to the announcement, a major victory in tobacco corporations' effort to use TPP-like deals to roll back anti-smoking safeguards, Dr. Gregory Connolly of the Harvard School of Public Health stated, "Our government’s trade policy is promoting the tobacco epidemic." 

The American Cancer Society, the American Heart Association, the American Lung Association, and the Campaign for Tobacco Free Kids denounced the Obama administration’s decision to cave to Big Tobacco's TPP demands at the expense of public health. Legal and health experts at the Harvard School of Public Health, Georgetown University Law Center, and Action on Smoking and Health blasted the TPP proposal, finding it "will do little to protect governments’ right to regulate tobacco." The state of Maine's Citizen Trade Policy Commission concluded, "it would be better to not offer this text at all than to give the false impression that the United States is serious about protecting government authority within the TPP to regulate tobacco to protect health." 

Articles spotlighting the administration’s TPP backtracking have appeared in many prominent news sources, including the Washington Post, Bloomberg, the Wall Street Journal, and Reuters.

New York City mayor Michael Bloomberg also weighed in on the TPP controversy by releasing a scathing op-ed in yesterday’s New York Times. Bloomberg noted that not only would the U.S. proposal restrict tobacco control measures and significantly decrease the price of cigarettes, but also expose TPP governments to direct "investor-state" challenges launched by tobacco corporations against public health laws:

If the Obama administration’s policy reversal is allowed to stand, not only will cigarettes  be cheaper for the 800 million people in the countries affected by the trade pact, but multinational tobacco corporations will be able to challenge those governments — including America’s — for implementing lifesaving public health policies. This would not only put our tobacco-control regulations in peril, but also create a chilling effect that would prevent further action, which is desperately needed.

He's right. The TPP's extreme investor privileges would empower tobacco corporations to skirt domestic legal systems and attack tobacco control policies before extrajudicial tribunals as a means of intimidating policymakers who would dare to enact such safeguards. The Obama administration's proposal does nothing to limit, or even to address, this empowerment of Big Tobacco.

Unfortunately, the investor-state threat is not a hypothetical one. Phillip Morris has already used such investor privileges in other treaties to attack landmark anti-smoking laws in Australia and Uruguay after failing to undermine those health laws in domestic courts.  As Andrew Martin points out in Bloomberg, Philip Morris has been leading Big Tobacco's battle to pressure the Obama administration to weaken tobacco-control safeguards in the TPP.

The Obama administration's caving to that pressure makes clear the TPP's very real threat to public health.  As Laurent Huber of Action on Smoking and Health stated, the new tobacco-friendly proposal for TPP "will mean more lives lost, both here in the US and abroad.” It is more crucial than ever to expose the TPP and to stop it from being fast tracked through Congress. Our health depends on it. 

TAFTA: Corporations Express Fear of Democracy

The Trans-Atlantic Free Trade Agreement (TAFTA) negotiations have only just begun, but already hundreds of corporations are weighing in to let negotiators know what they hope to get out of the agreement.  In many cases, multinational corporations submit their views to both sides, and one shudders to imagine teams of European and U.S. negotiators lining up with identical talking points representing the views of “their” corporations, and speedily agreeing on “uncontroversial” sections that favor the interests of corporations over consumers.

Many of the large corporations use their comments to signal their support of “science-based regulation” over “political” considerations (read: support for a weakening of safeguards, such as labels for genetically-modified food, over popular backing for those safeguards).  Here is a selection of some official corporate statements to that effect on TAFTA and food and product safety, submitted either to the U.S. Trade Representative or the Joint EU-U.S. Solicitation on Regulatory Issues:

 Food Safety

• “Science-based risk assessment, as the foundation for regulatory decisions, must not be overruled by an incorrect (and politically driven) application of the precautionary principle, as currently applied by the EU” (Croplife America, a lobbying group of U.S. pesticide corporations that includes genetically-modified-organism (GMO) giant Monsanto)
• “Finally, the EU’s political approach in regulating crops enhanced with traits achieved through modern biotechnology procedures is a concern to U.S. wheat producers. The EU biotechnology approval process is slow and often influenced more by politics than science, creating uncertainty and deterring new investment in wheat research… Science and market preferences, not politics, should be the determinants.” (U.S. Wheat Associates)
• “The current 'asynchronous approval' situation is caused by many factors, including risk assessment guidelines that are not aligned and increasing politically-motivated delays in product approvals.” (National Grain & Feed Association and North American Export Grain Association, lobbying groups comprised of the largest U.S. agribusinesses, such as Cargill and Archer Daniels Midland)
• “International trade rules fully support trade in products of biotechnology for planting, processing and marketing, subject to science-based regulation… Politically motivated bans or moratoria by WTO member states are not consistent with members’ WTO obligations.” (National Corn Growers Association)
• “The implementation of production standards based on politics or popular thought instead of science will do nothing more than eliminate family operations and drive up costs to consumers.” (National Cattlemen's Beef Association, a factory-farm-supporting lobbying group for the beef industry)
• “What is deeply concerning about the EU’s overall approach to SPS [sanitary and phytosanitary] issues, however, is that its political body is frequently given the ability to override the EU’s own scientific authority’s findings to instead establish restrictions on products based typically on animal welfare or consumer preferences.” (National Milk Producers Federation & U.S. Dairy Export Council)

 Product Safety

• “Significant barriers to further alignment, namely politics and differences in regulatory approach, remain on both sides of the Atlantic. Our experience has also shown that politics and differences in regulatory philosophy are fundamentally the root causes for differences in toy safety standards… Frequently, standards that are stricter than their international counterparts are promulgated due to political influence or the (often unstated) desire to erect technical barriers to trade, and not predicated by science or risk factors.” (Toy Industry Association and Toy Industries of Europe)
• “We would like to highlight the fact that these regulatory differences are often politically motivated… We regret that the differences in regulations in the EU and US are often caused by the result of politics rather than a different approach to ensuring safety.” (Toy Industries of Europe)
• “Such discussions need to take place between technical, not political or administrative, entities and need to make business sense for the organizations involved.” (ASME, a lobbying group for engineers -- the first U.S. "non-profit" entity convicted for violating antitrust laws)

But what do these corporations mean when they use the word “political?"  One possibility is anything they happen to disagree with. 

But let’s give them slightly more credit than that –- what happens if we substitute the words democracy/democratic for politics/political?  After all, the "political" bodies the corporations fear are the democratically elected representatives of the people. 

Now we see:

• Croplife (i.e. Monsanto) complaining about the European Commission’s democratically driven application of the precautionary principle, which restricts GMOs.  
• U.S. agribusinesses decrying democratically-motivated delays in approving GMOs and other products that raise food safety concerns.  
• The beef industry worrying about production standards based on democracy or "popular thought."
• Big Dairy concerned that the EU’s democratic body prioritizes "animal welfare [and]consumer preferences."  
• Toy corporations fearing that democratically motivated regulations will lead to stricter "toy safety standards."  
• ASME wanting to keep democratic entities out of the room so that regulation “makes business sense for the organizations involved."

The idea that we can choose science over democracy when making our regulations is, of course, nonsense.  Science doesn’t tell us how we should decide between safer toys and cheaper toys (or larger profits for toy companies).  Science doesn’t tell us how cautious we should be about eating food that has been genetically modified to increase farm industry profits.  Science doesn’t tell us how to value cheaper meat and milk versus safeguards that limit the use of antibiotics or acidic carcass cleaning and that allow animals to live in a cage large enough to turn around in. 

Science can inform the unavoidable trade-offs in our policy choices.  But in the end we, the people, not they, the unelected trade negotiators and their corporate advisors, must decide how to strike the balance.

As the TAFTA negotiations get underway, this attempt by industry insiders to concoct an argument that they should be involved in writing regulation, but our democratically elected bodies should not, is yet another reminder of the danger of allowing an agreement to be negotiated behind closed doors, with hundreds of corporate “advisors,” and without transparency to the public or even our democratically elected representatives.

Obama Administration Stands Firm on ‘Dolphin-Safe’ Tuna Labels; Will the WTO Authorize Trade Sanctions?

In Round 3 of Epic WTO v. Flipper Case, Mexico Hints That It Will Seek Trade Sanctions Against U.S. Over Response to Latest WTO Ruling Against Popular Dolphin-Safe Labels

In a creative response to a 2012 World Trade Organization (WTO) ruling, the National Oceanic and Atmospheric Administration (NOAA) has issued a new regulation supported by Public Citizen that strengthens the criteria for dolphin-safe labeling. Mexico, which challenged the policy, sought a rollback of the labeling program and has indicated that it may challenge the new regulation and seek WTO authorization to impose trade sanctions against the United States.

NOAA’s welcome announcement puts the spotlight back on the WTO, which must decide if it will accept the policy as meeting WTO rules or continue its legacy of undermining dolphin protection.

A U.S. ban on the sale of tuna caught with dolphin-deadly purse seine nets was gutted in 1997 after 1991 and 1994 trade challenges by Mexico and other nations. The ban was enacted after six million dolphins were killed by the nets. Outrage over the rollback triggered a new era of trade activism. Mexico’s latest challenge targeted the voluntary labeling policy that replaced the ban on dolphin-deadly tuna. This market-oriented approach provides consumers with information so they can decide if they prefer dolphin-safe tuna.

“Public Citizen applauds NOAA’s approach, which breaks with years of the U.S. government weakening consumer and environmental policies attacked at the WTO,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “We are now left to wait and wonder if the WTO will continue its anti-environmental, anti-consumer rights legacy or finally side with Flipper and consumers’ right to make informed decisions about the food we purchase.”

In a controversial move, the WTO ruled in 2012 that the U.S. labeling program, for which many countries’ tuna qualifies, violated WTO non-discrimination rules because tuna caught in the Eastern Tropical Pacific (ETP) had to meet additional criteria to qualify for the label. The ETP is the only region where dolphins are known to congregate above schools of tuna. Thus, dolphin-safe criteria for that region are set by the Inter-American Tropical Tuna Commission (IATTC), an international body that includes Mexico, and apply to all fishers operating there.

The U.S. labeling regime is voluntary. If U.S. or Mexican fishers choose to use the dolphin-safe methods stipulated by the regime, their tuna qualifies for U.S. dolphin-safe labels. Tuna not meeting the standard can be sold in the United States without the label. U.S., Ecuadorean and other tuna fleets chose to meet the dolphin-safe standard. After decades of refusing to transition to more dolphin-safe fishing methods, Mexico challenged the labeling program at the WTO. The WTO ruled against the policy even though the same standards applied to U.S. fishers, though the alleged discrimination resulted from Mexican fishers’ decision not to meet the standard, and though Mexican tuna could be sold in the United States without the dolphin-safe label.

NOAA’s new policy, supported by Public Citizen and other consumer and environmental groups, addresses the discrimination claim by strengthening the criteria used to assure that tuna caught in other regions and sold under the dolphin-safe label is caught without injuring or killing dolphins. Even before this improvement, the labels contributed to a more than 97 percent reduction in tuna-fishing-related dolphin deaths in the past 25 years. The labels allow consumers to “vote with their dollars” for dolphin-safe methods.

Mexico has stated that it is “analyzing all the available legal mechanisms” to push the United States to alter its response, which includes requesting WTO authorization to impose trade sanctions against the United States. WTO approval of such sanctions would continue the saga of WTO interference with countries’ environmental policies and reinforce the anti-WTO public sentiment spurred by last year’s spate of anti-consumer WTO rulings. In April 2012, the WTO ruled against the Obama administration’s flavored cigarettes ban used to curb youth smoking, and in June 2012 it ruled against the popular U.S. country-of-origin labeling (COOL) program used to inform consumers where their meat comes from.

If the WTO decides that the new policy does not meet its requirements, Mexico can impose trade sanctions against the United States until the policy is altered to the WTO’s satisfaction. If sanctions are authorized, the administration may find the best response to be maintaining the new regulation and negotiating a settlement with Mexico. This was the European Union’s approach after a WTO ruling against its ban on artificial beef hormones that is widely popular with consumers. U.S. environmentalists have won repeated court cases stopping attempts by the George W. Bush and Clinton administrations to weaken the regulations defining the criteria for obtaining a dolphin-safe label under the current law. Thus, absent a negotiated settlement, the administration would face the prospect of having to seek a congressional rollback of a widely popular law, effectively asking Congress to feed Flipper to the WTO.

“The troubling trend of repeated successful WTO attacks against America’s dolphin protection and consumer information policies shows how the terms of our current ‘trade’ agreements can undermine core environmental and consumer safeguards,” said Wallach. “As the Obama administration now seeks to expand the same sort of rules in new Trans-Atlantic and Trans-Pacific pacts it is negotiating, the public is taking note.”

Will the Trans-Atlantic Spying Scandal Kill the Trans-Atlantic "Trade" Scandal?

The newest Snowden-facilitated leak – that the U.S. National Security Agency (NSA) has been spying on European governments – is the latest hurdle to appear in the steeplechase-resembling race to launch negotiations for the Trans-Atlantic Free Trade Agreement (TAFTA). 

The revelation has sparked ire from European officials, unleashing a torrent of warnings today that TAFTA negotiations, slated to start next week, may be doomed before they begin. 

Amid reports that the NSA bugged the offices and infiltrated the hard drives of EU government officials, EU officials have made clear that they are not in the mood to trust U.S. trade negotiators.  Yesterday the EU Commissioner of Justice stated, “We cannot negotiate over a big trans-Atlantic market if there is the slightest doubt that our partners are carrying out spying activities on the offices of our negotiators.”  At this point, that doubt seems more than slight. 

But EU nations aren’t the only ones in the crosshairs of the NSA’s Cold-War-style espionage ambitions.  The Guardian revealed yesterday that Mexico and Japan, members of the similarly-sweeping Trans-Pacific Partnership (TPP) “trade” pact, appear on a list of 38 foreign embassies and missions that the NSA lists as spying “targets.”  (It kind of belies the moniker of “partnership” when you spy on your “partners.”)  The revelation could bring the sort of rift with TPP countries that we are now seeing with TAFTA countries. 

For TAFTA, that rift didn’t begin with the most recent NSA spying scandal.  U.S. and European corporations have explicitly called for the deal to be used as a way to water down critical safeguards, prompting waves of criticism from consumer, environmental, health, farmer, labor, and tech groups on both sides of the Atlantic. 

The National Corn Growers Association, which recently went to bat for Monsanto in a Supreme Court case pitting the genetically-modified-organism (GMO) giant against an Indiana farmer, asked that TAFTA be used to “end the moratorium” on GMOs in Europe.  That already contentious proposition became all the more so when non-approved strains of GMO wheat were found in Oregon one month ago. 

Meanwhile, corporations the likes of Verizon have called for such deals to be used to ensure that privacy policies do not limit the “seamless” flow of personal data across borders – a particularly taboo request in the wake of revelations that Verizon has been handing to the NSA the private phone data of anyone carrying a Verizon phone.

Even more incredible, corporations the likes of Chevron have asked that TAFTA grant foreign corporations the power to directly challenge sovereign governments over environmental and health policies in tribunals that operate completely outside any domestic legal system.  The EU negotiating mandate for TAFTA has granted this request, incorporating the extreme “investor-state” enforcement mechanism.  That incredible provision alone generated over 10,000 ire-filled comments from U.S. citizens within 32 hours in response to a single email from Rep. Grayson in May. 

Such controversial components of the deal have generated a crescendo of controversy surrounding TAFTA.  Ironically, the NSA has now added to the cacophony of opposition.   Corporate America cannot be pleased.  The NSA’s overreaching national security agenda has jeopardized their overreaching corporate agenda to use TAFTA to roll back financial, climate and food safety standards that make doing business less convenient.  If the two agendas would cancel each other out, perhaps we could get on with an agenda that’s actually supported by the public – from environmental stability to public health to personal privacy. 

Amid G8 Hoopla, Much-Hyped U.S.-EU Deal Hits Snags Before Negotiations Even Start

Projections of Pact’s Boost to Economic Growth Inflated, While Contentions over Data Privacy, Food Safety and Other Issues Exacerbated by Recent Developments

In the wake of President Barack Obama’s announcement at the G8 Summit of the imminent launch of negotiations on the Trans-Atlantic Free Trade Agreement (TAFTA), the benefits of such a deal remain in question. Further complicating the pact are rifts between EU member states on its contents, recent U.S. revelations about the National Security Agency’s indiscriminate collection of private data, and wheat supplies contaminated by unapproved genetically modified organism (GMO) varieties.

Tariffs between the United States and the EU are already quite low, thus projections of gains from this deal rely on hypothetical efficiency gains from changes to domestic regulatory standards. Yet, even studies used to project a “benefit” from the deal indicate that neither consumers nor legislators would allow most food safety standards, financial stability measures and environmental protections to be dismantled in the name of reducing “barriers.” France’s recent stand on preserving its cultural promotion policies that resulted in the sector being excluded from the EU’s negotiating mandate for the talks is an example of the obstacles corporations face in trying to remove many non-trade domestic policies. Those studies, however, do not take into consideration the economic and social costs of rolling back the long list of health, environmental and consumer safeguards targeted by the multinational corporations now driving the trade agreement’s agenda.

“The claims that this deal will somehow be an economic cure-all and generate significant growth are simply not supported by any reliable evidence, but we do know that the talks are based on the demands of U.S. and EU corporations that have been pushing for decades to eliminate the best consumer, environmental and financial standards on either side of the Atlantic,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “This ‘deal’ is shaping up to be just another vehicle for the largest U.S. and EU corporations to sneak in provisions they cannot enact through open democratic processes and leave citizens exposed to another financial crisis, unsafe foods and severe burdens on Internet freedom and innovation.”

Studies projecting efficiency gains from TAFTA have employed theoretical models that, according to the U.N., rest on “strong assumptions” that when modified can cause the theoretical gains to disappear. Meanwhile, actual empirical evidence from prior attempts at “non-tariff barrier” elimination has indicated negligible efficiency gains. Certain costs and uncertain benefits spell a net loss to the economy from any deal targeting critical safeguards.

The use of GMOs in the United States has long been a contentious U.S.-EU trade issue, but now faces growing scrutiny after the discovery of unapproved genetically modified wheat in Oregon. The revelation has made European consumers, already averse to genetically altered foods, all the more resistant to the calls of U.S. agribusinesses to reduce or eliminate European restrictions on GMOs via TAFTA.

Another point of controversy remains telecommunications security. As Deputy United States Trade Representative Michael Punke noted, the NSA’s indiscriminate spying on customers’ telephone records will make negotiations with the EU, whose data privacy protections are significantly more rigorous than those in the U.S., much more difficult. EU law requires U.S. corporations to meet seven privacy criteria before transferring Europeans’ phone, health and financial records to the United States, in part due to (now confirmed) fears that the U.S. government could access the private data.

In addition, the deal’s proposed expansion of the notorious “investor-state” system would empower foreign corporations to skirt U.S. legal systems and directly challenge domestic health, environmental and other public interest policies before extrajudicial foreign tribunals authorized to order taxpayer compensation. After U.S. Rep. Alan Grayson (D-Fla.) sent a single email to supporters last month to alert them to this extreme provision, about 10,000 people lambasted the investor privileges within 32 hours in comments to the Obama administration. The flood of concern signaled the public outcry that should be expected if U.S. negotiators pursue the expansion of investor privileges through TAFTA, Wallach said.

Obama's Top Trade Official Nominee: The Good, The Bad, and The Ugly

Yesterday was the Senate Finance Committee's confirmation hearing for Michael Froman, Obama's pick to be the next U.S. Trade Representative (USTR).  

If confirmed, Froman would replace Ron Kirk, who left his post as the top U.S. trade official in March to take a job at a corporate law firm that specializes in defending multinational corporations against claims of vast environmental damage, including helping Chevron evade payment of $18 billion in damages for decades of pollution in Ecuador's Amazon.  

We've been a tad skeptical of Obama's pick of Froman, given his Wall Street roots and his role in crafting the much-maligned North American Free Trade Agreement (NAFTA) and the deficit-plagued Korea FTA.  

Here's what went down at yesterday's hearing, divided by the time-honored categories of good, bad, and ugly: 

The Good (maybe)

• Sen. Sherrod Brown (D-Ohio) raised the fact that "Wall Street and industry-friendly European regulators are now seeking to use any means they can to roll back some of the reforms" enacted since the 2008 financial crisis to rein in banks' excessive risk-taking.  Specifically, he mentioned that big banks on both sides of the Atlantic are trying to use the newly-hatched Trans-Atlantic Free Trade Agreement (TAFTA) as a backdoor means of attacking controls on risky derivatives, too-big-to-fail regulations and other Wall Street reforms included in the Dodd-Frank reregulatory law.  Froman responded by promising, "There is nothing that we are going to do through a trade agreement to weaken our financial regulation, to roll back Dodd-Frank, or to roll back the efforts that the administration and Congress have worked on for the last four years to reform our financial regulatory system here."  Really?  If honored, Froman's promise would represent an about-face in U.S. trade policy.  USTR is currently pushing provisions in the Trans-Pacific Partnership (TPP) that would prohibit bans on risky derivatives, counteract too-big-to-fail regulations, and bar capital controls -- the very deregulatory moves that Froman says are now off the table.  Will Froman halt USTR's legacy of helping banks use "trade" deals to water down financial regulation?  Given Froman's Citigroup stomping grounds, we're skeptical.  But so long as Froman's in the business of promising change, we're in the business of holding him to that promise.   

The Bad

• Sen. Brown also highlighted the incredible proposal to include the extreme investor privileges of past NAFTA-style deals in the U.S.-EU deal (TAFTA). The proposal -- to empower foreign corporations to circumvent domestic courts and directly challenge health and environmental policies before extrajudicial tribunals authorized to order taxpayer compensation -- sparked a flood of critical comments from the public to USTR last month.  Brown asked, "Do we need an extrajudicial and private enforcement system when U.S. and European property rights are...advanced and protected already?"  Froman dodged the question, saying the matter was a "topic worthy of discussion."  More aptly, it's a topic worthy of an answer.  The appropriate response to Brown's yes-or-no question would have been, "No. Empowering foreign corporations to completely circumvent our courts is unnecessary for investor protection, insults basic democratic tenets, and threatens consumers' health and taxpayers' wallets."  

• Sen. Ron Wyden (D-Ore.) raised the extraordinary secrecy shrouding the Obama administration's trade negotiations to date.  Wyden has blasted USTR's incredible decision to keep the negotiating text of the sweeping TPP pact, affecting everything from food safety to Internet freedom, hidden from the U.S. public and even from members of Congress.  Not even the Bush administration attempted that degree of secrecy.  Wyden asked, "If confirmed, will you make sure that the public...gets a clear and updated description of what trade negotiators are seeking to obtain in the negotiations so that we can make this process more transparent in the future?" Wyden further asked that negotiating texts be placed online.  Froman responded by saying he agrees with the principle of transparency.  But instead of committing to a meaningful fulfillment of that principle by releasing the TPP text online (as done under Bush), he reiterated USTR's general desire to seek input from "stakeholders."  It is of course difficult for stakeholders to provide meaningful input if they cannot see the thing in which they have a stake.   

The Ugly

• Froman (and Obama) plan to pursue Fast Track: "If confirmed, I will engage with you to renew Trade Promotion Authority. TPA is a critical tool."  Fast Track, cynically rebranded "Trade Promotion Authority," is indeed a tool.  A battering ram sort of tool.  A tool that, before allowed to expire, was used to shove unpopular "trade" deals like NAFTA through Congress by empowering the executive branch to negotiate and sign the sweeping pacts before sending them to Congress for a no-amendments, limited-debate, expedited, post-facto vote.  Click here for a full analysis of Fast Track's democracy-curtailing, NAFTA-enabling track record.  If past is precedent, any attempt from Froman to refurbish this antiquated legislative ramrod would prove vastly unpopular among the U.S. public and Congress.  We'll see if Froman, despite the political liability, makes good on his threat to, as one of his first acts, pick a Fast Track fight.  

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

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

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

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

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

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

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

Mexico and Canada Openly Threaten Retaliation

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

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

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

Background on COOL, the WTO Dispute and the USDA Rule

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

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

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

Businesses Crowd Corporate-Hosted Government Hearing on Trans-Atlantic "Trade" Deal

As the Obama Administration gets ready to negotiate a Trans-Atlantic "Free Trade" Agreement (TAFTA) with the European Union that takes aim at a host of health, financial, environmental and other regulations, a smorgasbord of corporate representatives (and a sprinkling of consumer groups) voiced their wishes for the pact this week. The occasion was a standing-room-only "stakeholder session," hosted by the administration's Office of Management and Budget and the European Commission, to get input on what TAFTA should or should not entail.  

What neutral territory did the administration choose to consider such a critical question?  Perhaps one of the many government-owned venues in downtown DC?  Nope.  They went with the headquarters of the Chamber of Commerce.  The Chamber's not exactly a disinterested party in a pact that could implicate a wide swath of U.S. regulation used to balance big business's quest for profits with the public's quest for financial stability, a healthy environment, safe products, and affordable medicines.  The venue choice is akin to the Environmental Protection Agency hosting a forum on offshore drilling...on an offshore drill.  

But at least the administration granted public interest groups like us some time to offer input.  As in, a half hour.  Total.  For all consumer groups.  In a 1.5-day-long forum otherwise filled almost exclusively by industry representatives.  If relative allotment of time is indicative of the relative importance the administration attributes to industry views on TAFTA vs. the views of everyone else, big business "stakeholders" hold 76% of the administration's attention, technical standards organizations hold 11%, and the opinions of the rest of us are worth 13%. 

During that half hour, I squashed Public Citizen's initial take on TAFTA, one of the largest "trade" deals proposed to date, into a five-minute statement.  For a nutshell view of what's at stake in TAFTA, here's the statement:

New Legal Analysis Shows How Obama Administration Can Avoid Trade Sanctions by Strengthening Popular Consumer Country-of-Origin Meat Labels Ruled Against by WTO

As May 2013 Deadline Looms, WTO Compliance Process Begins; USDA Sends Draft COOL Regulations to OMB

WASHINGTON, D.C. – The United States can avoid trade sanctions by strengthening consumer labeling rather than gutting the popular county-of-origin labeling (COOL) meat labeling program against which the World Trade Organization (WTO) ruled in 2012, said Public Citizen as it released a new legal analysis prepared for several consumer and farm groups by the trade law firm Stewart and Stewart.

“Ensuring American consumers’ right to know where their meat comes from must be the Obama administration’s priority,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The American public’s antipathy toward our current trade policies would be greatly intensified if a WTO ruling empowered big agribusiness corporations to sell mystery meat here, despite U.S. consumers and Congress demanding these labels on which we all rely in grocery stores nationwide.”

By July 2013, the United States must respond to three 2012 WTO rulings against popular consumer policies, including the country-of-origin meat labels, “dolphin-safe” tuna labels and a U.S. ban on clove-, candy- and cola-flavored cigarettes that was aimed to curb youth smoking. As of May 23, 2013, Mexico and Canada, which attacked the U.S. meat labels at the WTO, can obtain authorization to impose trade sanctions against the United States that would remain in effect until the policy is altered.

The new legal analysis shows how the United States can meet WTO rules by strengthening existing regulations to provide more information and more accurate details to consumers. The U.S. Department of Agriculture sent new draft COOL rules to the Office of Budget and Management on Friday.

Background:  After 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program, Congress enacted mandatory country-of-origin labeling for meat in the 2008 farm bill. The policy requires American retailers to label certain foods with the country (or countries) in which animals were born, raised or slaughtered. In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO countries are permitted to apply. Canada and Mexico suggested that the United States should eliminate mandatory labeling and return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food firms play a central role. Neither option would provide U.S. consumers with the same level of information as the current U.S. labels.

View the report here.

Victory for Public Health in Australia, But Big Tobacco Threatens Counterattack through Trade Pacts

Last week, public health advocates rejoiced when Australia’s High Court (its Supreme Court equivalent) upheld the country’s landmark tobacco control “plain packaging” laws against a legal attack from Big Tobacco.  Phillip Morris, British American Tobacco, Imperial Tobacco, and Japan Tobacco had sued the government, arguing that the new requirement to sell cigarettes packages with large health warnings rather than brand trademarks would constitute an uncompensated taking of their intellectual property rights. Ultimately, the court ruled that the public health law did not violate the constitution of Australia, where smoking kills 15,000 people each year. Starting on December 1^st, all cigarettes and tobacco products will be sold in plain, brand-free packages with graphic health warnings. 

Australian Attorney-General Nicolos Roxon welcomed the ruling as “a watershed moment for tobacco control around the world.”

Despite this legal victory for public health at Australia’s highest court, unfortunate provisions in trade and investment pacts provide Big Tobacco with additional avenues to attack Australia’s plain packaging policies in foreign tribunals. Internationally, the law already faces attack at both the World Trade Organization (WTO) and through an obscure investment treaty.

Only hours after the ruling, Ukraine filed a formal complaint against the law at the WTO, arguing that the plain packaging law violates Australia’s commitment under the WTO and requesting the establishment of a formal disputes panel. Honduras and the Dominican Republic have also filed complaints. When asked if he thought the big tobacco companies were behind Ukraine's decision to launch its WTO case, Australia’s Trade Minister Craig Emerson said that he was "not aware of tobacco being a big industry in Ukraine, so one would wonder why it would have a big interest in this".

Australia’s plain packaging is also being challenged by tobacco company Philip Morris under the Hong-Kong-Australia bilateral investment treaty (BIT). The U.S. company incorporated a subsidiary in Hong Kong in order to launch the attack through this obscure treaty. A tribunal of three private sector lawyers constituted under the United Nations Commission on International Trade Law (UNCITRAL) will conduct the arbitration to decide whether the laws have had a significant negative impact on Philip Morris’ investment in Australia.

The extreme investor rights contained in the BIT pose particular threats to the case for plain packaging policies. According to Dr. Kyla Tienhaara, a trade law expert at Australian National University (ANU), “The investor-state dispute under the Hong Kong treaty is particularly concerning for supporters of the legislation. Unlike the WTO, there’s no exception under the treaty for public health measures. And unlike in the Australian Constitution, 'expropriation' (the act of a government taking private property) is defined very broadly.”

These cases, which demonstrate the danger of allowing investors a supranational avenue to attack public interest laws, have strengthened Australia’s commitment to not allow foreign investors to sue its government before panels of international trade arbitrators. Australia has refused to be subjected to investor-state dispute settlement in the Trans-Pacific Partnership (TPP), which is being pushed by multinational companies including Philip Morris.  (The TPP's leaked investment chapter, meanwhile, reveals that the pact would require all other countries, including the US, to allow foreign investors to sue their national governments).  

Australia is facing pressure domestically in response to this rejection of investor-state suits in TPP. The Australian Chamber of Commerce and Industry (ACCI) has launched a “Right to Sue” campaign, and has sent a letter to the Prime Minister urging the government to consider including ISDS (Investor-State Dispute Settlement) in future FTAs. (You can find a good analysis of the misleading claims of the campaign and letter here.)

Through progressive tobacco regulation policies, Australia has set an important precedent in placing a higher value on domestic public health policies over foreign investor rights. Unfortunately, trade and investment pacts provide Big Tobacco with second and third avenues to subvert the will of the Australian people and its highest court. The good news is that other countries will inevitably follow Australia’s lead on tobacco control policies.  Hopefully they will also follow Australia's prudent decision to reject extreme foreign investor rights in trade pacts like the TPP.  

America, meet your meat master

Happy Fourth of July! As our fearless leader Rob Weissman articulates in this note here, your holiday meat could be much more mysterious come next Fourth of July:

If you’re looking forward to grilling up some hamburgers and hot dogs, think about this: Where does the food you’re eating come from?

That simple question is going to be a lot harder to answer after a ruling from the World Trade Organization (WTO), which decreed last week that such basic consumer information as country-of-origin labels on meat are “unfair trade barriers” to multinational corporate profits.

If you don’t eat meat, know that the WTO ruling could be extended to country-of-origin labels for produce. So maybe next summer it’s the potato salad and corn on the cob, too.

Like me, you might find this hard to swallow. If you’ll excuse a mixed metaphor, mystery meat (and lettuce) is not my cup of tea.

But it’s standard operating practice for the WTO, which in recent months has proclaimed that U.S. “dolphin-safe” tuna labels and a U.S. ban on clove-, candy- and cola-flavored cigarettes both violate WTO trade rules.

Last November, I shared some of my thoughts about the WTO's lower panel ruling against the country-of-origin labels (COOL) for beef and pork that were created by the 2008 U.S. Farm Bill. Canada and Mexico had challenged the U.S. law, claiming that it violated their rights under the WTO's Agreement on Technical Barriers to Trade (TBT). (See here also.)

Last Friday, that ruling was upheld by the WTO's Appellate Body - specifically, by an AB division composed of Ujal Singh Bhatia of India, Ricardo Ramirez Hernandez of Mexico and Peter Van den Bossche of Belgium. In fact, it's the third consecutive WTO attack on a popular U.S. consumer protection or information policy to go down this year. (See the attacks on dolphin-safe labels and cancer prevention through cigarette controls.)

Like in those other cases, the Appellate Body doubled down on key aspects of the lower panels' rulings. And like those other cases, the implications go far beyond the specific measure at issue. Indeed, many other country of origin labels and consumer information policies are now at greater risk of challenge in the future.

We'll go through some of the specifics after the jump.

TPP could undermine Medicare, Medicaid and Veterans’ Health - hurting seniors, military families and the poor

You've read about how the leaked chapter of the Trans-Pacific Partnership (TPP) that surfaced yesterday will outsource our judicial system and allow corporations to attack our laws.

But did you know that an earlier leaked text shows that the TPP could also undermine Medicare, Medicaid and Veterans' Health? This could hurt access to affordable medicines for our seniors, military families, and poor.

Indeed, it has been an open secret among trade negotiators that U.S. pharmaceutical companies have pushed to limit drug price containment measures, such as through the recent bilateral trade deals with Korea and Australia.

But, in our new public interest analysis, Public Citizen shows that Medicaid, Medicare, the Department of Defense’s TRICARE program for active military personnel, and the Veterans Health Administration and the 340B program are all threatened by the TPP.

We also show how proposed changes to Medicare championed by President Obama would clearly risk violating the TPP. Throughout, we show how trade tribunals are less likely to defer to national healthcare regulators than do national judges, including conservatives like Justices Scalia and Thomas. We conclude with suggested changes to the TPP to insulate smart drug price containment strategies.

Read the full memo here.

Congress Stands up for Dolphins, Pushes Back on WTO

Rep. Ed Markey (D-Mass.), the ranking member on the House Natural Resources Committee, joined 42 colleagues in sending a strong letter to President Obama urging him to push back on the recent WTO ruling against dolphin-safe tuna labels.

In a press release, Markey said “The American people deserve to know whether or not the fish they eat was caught by killing Flipper... Dolphin-safe labeling of canned tuna has been successful in protecting the species and giving consumers informed choices.”

The letters calls the WTO decision "misguided," and says that "the U.S. intends to maintain the strong dolphin-safe standards, and not to water them down." The letter goes on:

The implication of the recent WTO ruling ... is that the U.S. should expend significant regulatory resources around the globe in an untargeted fashion, or alternatively, that imports from Mexico could utilize the dolphin-safe labels without having to meet the same requirements as tuna caught by U.S. or other nations' fleets. Neither result is acceptable, and 'complying' in either way simply invites further WTO litigation from other nations, not to mention serious disruption of the canned tuna market in the US and loss of consumer confidence in environmental laws and labels.

The letter included some notable signatories, including:

• Ranking Members: Berman (Foreign Affairs), Frank (Financial Services), Markey (Natural Resources), and Miller (Ed and Labor)
• Ways & Means Committee Members: Blumenauer, Doggett, Pascrell, Stark, and Van Hollen.
• Oceans Subcommittee of Natural Resources Committee: Faleomavaega, Pallone, Bordallo and Pierluisi.
• Voted for the Uruguay Round Implementation Act (implementing the WTO): Berman, Corrine Brown, Maloney, Markey, Moran, and Waters. Reps. Meeks and Towns - along with Moran, members of the so-called CAFTA 15 for their vote for that trade deal - also signed the letter.

See press release here, and letter here (PDF). See our further discussion of this ruling here.

The magic of government and the legitimacy of international legal orders

In the comments section, Scott Lincicome refers to Lori Wallach’s piece in the HuffPo and apparently is ruffled by the tone.

If only you could see what Public Citizen’s membership and our allied organizations wanted us to publish! We were pretty restrained, and actually understating the political damage this ruling will have on the WTO’s long-term legitimacy.

The fact of the matter is that Public Citizen expended a decent amount of energy trying to lay out for the Appellate Body a way through this morass. We thought that (as a legal matter) there was a way that the lower panel ruling could be overturned and allow the institution to save face. In retrospect, I’m not exactly sure why we did this, because the tone deafness of the Appellate Body ruling is startling.

Scott also dislikes our characterization of the WTO ruling as an “order.”

The relevant passage of the HuffPo piece is: “The ruling, issued Wednesday, was on the final U.S. appeal which means that now the U.S. has 60 days to begin to implement the WTO's orders or face trade sanctions.” Some version of that formulation has appeared consistently in our publications throughout the years.

I could “order” Scott to take down his blog, but he would not need to comply with that “order.” At the other end of the spectrum is an “order” delivered at the barrel of a gun or by a vengeful Norse god, with which compliance is strongly advised.

Somewhere in between is that magical thing we call modern government. The Supreme Court doesn’t have an army, but non-acquiescence with its decisions is rare, because elites believe that the benefits in social order (the other kind of "order") outweigh the costs to complying with disagreeable decisions. The Court in turn exercises (typically) great deference to the political bodies, or it becomes politicized and sees its legitimacy damaged.

Likewise, a WTO “order” backed by the threat of trade sanctions is as close to forced compliance as it gets in international law at peacetime. (The Bank of International Settlements or UN human rights agencies don’t have powers like this.) On the spectrum of meaningfulness of “orders,” the WTO is substantially closer on the spectrum to what modern governments do than my order to Scott to abort his blog. Indeed, by triggering political economic consequences, the WTO agreements create automatic constituencies for compliance, in addition to those that think complying with WTO panels is good per se.

The WTO Appellate Body, just like our own domestic Supreme Court discovered in the New Deal era, cannot be blind to how its rulings actually play out in the real world if it hopes to retain its authority.

In this case, I think we’ve laid out pretty well the politics behind the FSPTCA – a menthol ban is unlikely to happen (not because California Democrats want to protect tobacco industry jobs but because of reasonable regulatory distinctions). However, a roll back of a ban on cloves might happen if the administration doesn't stick to its guns.

Those politics are unlikely to change, and the WTO doesn’t require them to in order to begin compliance proceedings.

If, as a practical matter, the only way that U.S. could comply would be exempting imports from incremental regulatory schemes (and thus, yes, leading to more teenage experimentation with cigarettes than would be true with the FSPTCA whole and intact), then the TBT Article 2.1 ruling becomes the same as an order backed by trade sanctions to eliminate or water down the flavored cigarette ban now in place. Presumably, when some U.S. industries are hit by trade sanctions, the demands for watering down the FSPTCA will grow, increasing the likelihood of that outcome over time.

If the AB is going to get in the habit of putting countries’ backs against the wall on sensitive matters of public health, you’re going to see a lot more demands for non-compliance and non-payment of compensation. My question for the WTO’s supporters is how that state of affairs advances your goals.

Again, we were genuinely surprised by the AB’s ruling. We thought that the public interest stakes were very clear (as they were in EC-Asbestos), and that the AB would find some grounds for overturning the lower panel ruling (say on likeness) and thus allowing the institution to save face.

The fact that they were unable to act in self-preservation (and made a political decision that now is having predictable political consequences) is a bad sign for those that hope to see the WTO remain a legitimate force in global affairs.

Will DIOCOSEFLRD save tobacco rules from the WTO?

The WTO ruling against U.S. measures to reduce teen smoking continues to make waves, with folks like Daniel Ikenson, Scott Lincicome, and my old trade professor Steve Suranovic weighing in - mostly with straw man arguments or the straight libertarian push for less regulation. These are probably not the folks that have a lot invested in maintaining the Family Smoking Prevention and Tobacco Control Act (FSPTCA) to begin with.

We've laid out the essential timeline issues with compliance here. One of the more novel arguments for compliance comes from trade lawyer Rob Howse, who has commented on the issue at IELP here, here and here. In addition to recommending an extention of the FSPTCA's ban to menthol (which I've said is likely to be politically difficult if not impossible), Rob has suggested that the U.S. could comply by making a better case that the exclusion of menthol from the ban is justified. Towards this end, Rob advanced a novel interpretation of Article 21.5 of the WTO's Dispute Settlement Understanding (DSU), which reads:

“Where there is disagreement as to the existence or consistency with a covered agreement of measures taken to comply with the recommendations and rulings such dispute shall be decided through recourse to these dispute settlement procedures, including wherever possible resort to the original panel. The panel shall circulate its report within 90 days after the date of referral of the matter to it.  When the panel considers that it cannot provide its report within this time frame, it shall inform the DSB [Dispute Settlement Body] in writing of the reasons for the delay together with an estimate of the period within which it will submit its report.”

Rob seems to be saying that, while an Article 21.5 compliance panel could not overturn the AB’s ruling, it might be able to deem that the U.S. is acting consistently with the ruling if it had more data and studies justifying the U.S. approach.

There is a debate as to the legal merits of this argument, but it seems unlikely that the same panel that ruled against the FSPTCA once would think differently a second time around.

Brazil's flavored cigarette ban now targeted

Unless you're an avid reader of Spanish and Portuguese language news wires, you probably missed Brazil's announcement last month of a ban on all flavored cigarettes: cloves, chocolates, and even menthols. Both importers and domestic firms are subject to the same limits.

Here's the announcement in Portuguese, and some of the earlier history from February, including the draft. The text of the final Brazilian measure reads (rough tranaslation courtesy of Google translate):

Sweet surrender?

Over the last few posts (see here and here), we’ve explained the two major findings in the recent WTO ruling against U.S. efforts to reduce teen smoking.

The question inevitably becomes: what happens next?

There is a strong presumption under the WTO’s Dispute Settlement Understanding (DSU) that the U.S. will begin to remove the ban on clove cigarettes in 60 days, i.e. early June 2012. In this particular case, I wouldn’t be surprised if the WTO urged compliance by August 2012, right in the middle of the U.S. election season. But the outer bound for compliance is likely to be July 2013, or 15 months from the date of adoption of the Appellate Body report.

More details after the jump.

Cancer prevention three months too soon

Welcome to Week Two following the WTO’s cancerous decision to rule against the U.S. measures to reduce teen smoking. As Rep. Henry Waxman (D-Calif.) said:

I am deeply disappointed in the WTO’s decision in the clove cigarette case, which has serious public health implications for United States efforts to reduce youth smoking.

The Family Smoking Prevention and Tobacco Control Act gave the FDA broad authority to protect the public’s health. It also directed immediate action to reduce youth tobacco use, including a ban on clove and candied-flavored cigarettes. Importantly, the law made no distinction in where a cigarette is manufactured because a cigarette -- no matter where it is made -- is addictive and deadly. I believe the WTO’s interpretation is wrong on the merits and wrong in its interference with our efforts to protect the American public from tobacco’s devastating effects.

I am committed to working with the Administration to advance our shared goal of ending the tobacco epidemic among our young people and ensuring that the U.S. ban on clove and candied-flavored cigarettes remains in place.

This is an encouraging sign that legislators may be heeding the call of thousands of Americans who have taken action under the Consumer Pledge urging principled non-compliance with the ruling.

We went over the main part of the decision – rendered by the Appellate Body’s three-person panel of Peter Van den Bossche (Belgium), Ricardo Ramirez-Hernandez (Mexico) and Shotaro Oshima (Japan) – in last week’s post. As we noted, this is the first time that the WTO has found a violation of the Agreement on Technical Barriers to Trade (TBT) Article 2.1.

But there was one major aspect of the ruling that we didn’t get to discuss: the finding that the U.S. violated TBT rules by having the sweet tobacco ban (enacted in July 2009) go into place on September 2009 rather than December 2009. In other words, the WTO found that the U.S. began fighting cancer three months too soon.

On Tobacco Appeal Ruling, WTO Shows its Anti-Health Stripes

We’ve done a quick read through of today’s World Trade Organization (WTO) Appellate Body ruling against the U.S. measures to reduce teen smoking. (For our statement, see here, and for a more detailed background into the lower panel ruling, see our analysis here.)

This is a landmark ruling against one of the few policy achievements of the Obama administration: Rep. Henry Waxman’s (C-Calif.) Family Smoking Prevention and Tobacco Control Act (FSPTCA), which included a targeted measure to reduce teen smoking by targeting “starter flavorings” in cigarettes – like cola, chocolate, strawberry and clove.

The FSPTCA also contemplated an eventual ban on menthol cigarettes, but deferred this for further study. The reason? Not protectionism, nor arbitrary decision making. The reason was because – as we learned with the Prohibition Era with alcohol – banning products consumed by large numbers of adults can create a black market and upsurge in crime if not handled appropriately. Oh, and lest we think that the consumer protection lion Waxman went soft, it was also because the U.S. Supreme Court struck down previous federal tobacco legislation for exactly this reason.

So, wisely, the Waxman bill took a targeted and incremental approach.

But as we pointed out on the blog last September, the key flaw in the WTO’s analysis on whether the FSPTCA discriminated against Indonesian clove cigarettes was that it compared the treatment the FSPCTA gave to cloves and menthol, rather than comparing cloves to cola and other flavors. One of these things – menthol – is not like the other, as Big Bird from Sesame Street might have said. (See killer Big Bird video "app" here.)

The Appellate Body not only did not overturn this aspect of the September 2011 lower panel ruling – it doubled down. Indeed, it seems that the Appellate Body was almost determined to show how poorly suited the WTO is to considering matters of public health. In several key respects, the Appellate Body ruling was even more anti-health than the lower panel ruling.

Public Citizen Applauds Obama Administration’s Efforts to Defend Consumer Country of Origin Meat Labeling; Appeal of WTO Ruling Necessary First Step

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

 

Public Citizen commends the Obama administration for taking the necessary step of appealing the harmful World Trade Organization (WTO) ruling against U.S. consumer labeling. In November 2011, a WTO panel ruled that the U.S. country of origin labels on meats (COOL) violated the organization’s rules.

The implications for this ruling are dire, especially in the context of a decades- long battle to ensure that consumers know the source of their meat. After overcoming countless obstacles, from presidential vetoes to adverse Supreme Court rulings in cases brought by food processors, it was only in 2009 that a meaningful country of origin labeling regime was finally implemented.

The legitimacy of the WTO is likely to be further undermined if the organization’s Appellate Body upholds the lower panel ruling. Such an outcome would provide evidence to consumer groups that the WTO allows anti-consumer forces a second (or third) bite at the apple, even when these interests do not succeed in their efforts to undermine consumer safeguards through purely domestic legal and political means.”

The Obama administration is considering expanding some of these anti-consumer rules in the first trade deal it is negotiating – the nine-nation Trans-Pacific Partnership trade agreement. The WTO ruling (and two others in 2011 against dolphin-safe labels on tuna and anti-smoking measures) shows that a new approach to trade agreements is needed – one that puts consumers, the environment and communities first.

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Public Citizen is a national, nonprofit consumer advocacy organization based in Washington, D.C. For more information, please visit www.citizen.org.

Choking on sugarcoating

Last night, the Office of the U.S. Trade Representative (USTR) released its hefty, annual Trade Policy Agenda and Annual Report. This statutorily mandated annual tome offers a good opportunity for Congress and the public to understand what USTR thinks it's doing, or what the agency wants us to think it's doing.

Unfortunately, the Trade Policy Agenda is (once again) an exercise in sugar-coating so extreme that it's surprising it got past Michelle Obama's nutrition advisers.

We've detailed how, after some initial honesty in the 2009 Trade Policy Agenda, USTR by President Obama's second year was back to the same old Bush administration rhetoric on trade policy. The 2012 agenda is in that latter vein as well. Here are just some of the flaws in the latest report:

Trade without a net (calculation). As we've detailed on this blog many times over (see here and here), one of the administration's biggest sins in its recent push for the Korea and Colombia trade deals was its claim that these deals would boost bilateral exports by $12 billion, without noting that the government's own numbers project that the deals will increase job-displacing imports more than job-creating exports. In other words, these deals are projected to be a net negative for job creating exports. We were kinda hoping that the administration might stop misrepresenting its own research once they got Congress to pass these deals. But this seems to be a case of repeating the same incorrect line so many times that you start to believe it's true.

American-made smoke and mirrors. The very first page of the Trade Agenda mentions the "Made in America" theme twice. But USTR is actually pushing the exact opposite of Made in America. Not only have our trade deals meant that imports of products Made-Overseas swamp exports of products Made-in-America, but these pacts also require that the U.S. roll back Buy American requirements for our trading partners. In fact, today, the morning after the Trade Agenda touting Made in America was published, USTR issued a determination stating that Korean-made products will be treated as if they were American for U.S. government procurement purposes.

Korea deal hurts U.S. auto sector. Everyone loves to love on the auto sector these days, and the Trade Agenda paints the Korea deal as a boon to Detroit. But once again, the government's actual numbers show that Korean auto imports will outstrip U.S. auto exports under the deal. Moreover, the harebrained (and high profile in Korea) exemption of U.S. autos from having to meet Korean auto safety and environmental standards will read like a "Do Not Buy American cars for your teen" label to every concerned Korean mother and father.

No mention of significant WTO attacks. The Trade Agenda also celebrates U.S. participation in the World Trade Organization (WTO) in 2011, but fails to mention the most important news: the U.S. lost not one, not two, but three high-profile WTO attacks on U.S. consumer protection policies. As the majority of WTO members cheered from the sidelines, three panels of nine unelected foreign "judges" ruled that U.S. efforts to reduce teen smoking and inform consumers about the origin of meats and the impact of tuna fishing on dolphins violate WTO rules. These three rulings were the first ever under controversial terms of the WTO's Agreement on Technical Barriers to Trade, and could open the U.S. up to trade sanctions. (Now, if you bother to look through the full 393 pages of the extended Annual Report, these disputes are mentioned, albeit with insufficient detail or balance to develop an informed view.)

Working hard to export less. Significant USTR resources are being expended on the Trans-Pacific Partnership (TPP). The Trade Agenda touts U.S. exports to the eight TPP nations (supposedly to point out how awesome the deal will be for U.S. exports), but fails to mention that USTR already put FTAs in place with the four most significant nations on the list (Peru, Chile, Singapore and Australia). Oops.

Tucker on ABC on WTO attack on food labels

See our own Todd Tucker on ABC News last night discussing the WTO attack on consumer labels:

 

Public Citizen Applauds Obama Administration’s Appeal of Trade Ruling Against U.S. Dolphin Protection Measures

Public Citizen commends the Obama administration for taking the necessary step of appealing today the harmful World Trade Organization (WTO) ruling against U.S. consumer and dolphin protection measures.

In September 2011, a WTO panel ruled that the U.S. dolphin-safe tuna labeling law violates WTO rules. The labels have been enormously successful in reducing dolphin deaths by tuna fishers – a major problem in the past, when tuna fleets set upon dolphins to catch tuna, since the two species associate with one another in the Eastern Pacific Ocean. The label allows consumers to “vote with their dollars” for dolphin-safe methods. Mexico successfully challenged the U.S. standard after decades of refusing to transition its fishing fleet to more dolphin-safe fishing methods.

The ruling’s implications are dire, especially in the context of a decades-long battle to save dolphins. This struggle has been beset by countless trade-related obstacles: 1991 and 1994 rulings under the WTO’s predecessor organization led to the U.S. eliminating the more potent import ban of dolphin-unsafe tuna, and environmentalists fighting successfully in U.S. court to block the Clinton and Bush administrations from also watering down the voluntary labeling policy. These groups narrowly blocked this executive branch effort, which U.S. courts deemed “Orwellian” and “a compelling portrait of political meddling.” The legitimacy of the WTO is likely to be further undermined if the WTO’s Appellate Body upholds the lower panel ruling. Consumer and environmental groups will see that the WTO allows anti-environmental forces a second (or third) bite at the apple, even when such forces fail in their U.S. legal and political efforts to undermine a domestic policy to which they object.

The Obama administration is considering expanding some of these anti-consumer and environmental rules in the first trade deal it is negotiating: the nine-nation Trans-Pacific Free Trade Agreement. The WTO ruling – and two others in 2011 against country-of-origin labels on meat and a ban on sweet cigarettes used to entice teens into smoking – show that a new approach to trade policy is needed, one that puts consumers, the environment and communities first.

Public Citizen Applauds Obama Administration’s Continued Efforts to Reduce Teen Smoking

Appeal of Trade Pact Ruling Necessary First Step

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

Public Citizen commends the Obama administration for taking the necessary step of appealing the harmful World Trade Organization (WTO) ruling against U.S. efforts to reduce teen smoking.

In September 2011, a WTO panel ruled that the U.S. ban on flavored cigarettes – which are used to entice teens into smoking through cola, strawberry and clove flavors – violated WTO rules because one of these flavors (clove) is predominantly found in imports from Indonesia, another WTO member.

It would pose an unacceptable barrier to public health if any time a good is imported it has to be excluded from regulation, so this appeal is necessary both to defend the law and discourage further WTO attacks on consumer protection policies.

Corporate interests have been relentless in attacking anti-smoking measures, which took a giant leap forward with the signing into law of the 2009 Family Smoking Prevention and Tobacco Control Act (FSPTCA). The flavored cigarette ban was a key plank of the FSPTCA, which envisions a possible future ban on other flavored cigarettes such as menthols. One of the other major planks of the FSPTCA – enhanced warning labels – is currently being attacked by tobacco companies in federal courts. The legitimacy of the WTO is likely to be further undermined if the agency’s Appellate Body upholds the lower panel ruling.

Consumer and public health groups will see that their policy priorities are being undermined by industry in domestic courts when there is a U.S. law basis for a claim, and in the WTO when there is not. The combined effect is fatal to the viability of public interest regulation.

The Obama administration is considering expanding some of these anti-consumer rules in the first trade deal it is negotiating – the nine-nation Trans-Pacific Free Trade Agreement. The WTO ruling (and two others in 2011 against country-of-origin labels on meat and dolphin-safe labels on tuna) shows that a new approach to trade policy is needed – one that puts consumers, the environment and communities first.

Pledge asks Congress to stand up for consumers’ right to know what’s on the dinner table

Just when we thought that that the World Trade Organization (WTO) couldn’t do worse, it managed to wrap up 2011 with a series of dreadful decisions. The international body ruled against our country-of-origin labels on meat, dolphin-safe labels on tuna, and our ban on candy and clove flavored cigarettes. These are all US consumer policies we rely on to allow us to protect children’s health and make informed decisions. Thanks to such rulings, our government will have to either water down or eliminate these safeguards, or face trade sanctions.

It begs the question: Will this be last holiday season that you have a right to know where your food comes from, and how the environment, animals and people were impacted in its production?

We hope not. The press and Congress may be asleep at the wheel on this issue, but consumers can sound off the alarm by asking their congressional leaders to sign the Consumer Rights Pledge—a pledge to protect policies from the attacks of Big Business and a shameful WTO.

Todd Tucker Talks Food Safety with Thom Hartmann

Our own Todd Tucker stopped by the Thom Hartmann program to explain how two recent WTO rulings might undermine consumers' right to know exactly what they are eating.

Check out the full interview here:

WTO Turnaround: Food, Jobs and Sustainable Development First!

GTW will be heading to Geneva next week to join the global civil society response to the World Trade Organization's 8th Ministerial Conference. Our colleague Deborah James from Our World Is Not For Sale Network wrote this informative piece, published in Common Dreams, which explains the current complexities facing the multilateral trading system and our global call from civil society for a "WTO Turnaround".

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WTO Turnaround: Food, Jobs and Sustainable Development First!

by Deborah James

December 15-17, 2011, Trade Ministers will convene in Geneva, Switzerland for an 8^th WTO Ministerial Meeting. After many failed Ministerial meetings and nearly ten years of negotiations, the Doha Round of WTO expansion is at a crossroads. Increasingly, developed countries have tried to push aside agreements to negotiate on key developing country issues intended to correct the imbalances within the existing WTO, which formed the basis of the development mandate of Doha. Instead, rich-country governments appear to be re-packaging the old liberalization and market access demands of their corporate interests as so-called “21^st century” issues. This Ministerial will determine the future path of WTO negotiations, and the global Our World Is Not for Sale (OWINFS) network is calling for a fundamental transformation.

November 30 marked the 12^th anniversary of the massive protests against the World Trade Organization (WTO) in Seattle, Washington, which succeeded in preventing the launch of the so-called “Millennium Round” of WTO expansion negotiations. Developing countries, led by African ministers and buoyed by massive street protests, opposed the launching of a new round of liberalization, focusing instead on their demands to fix the problems left over from the last round. Two years later, after receiving promises from rich countries that the next round would focus on development, these same countries acquiesced to a new “Doha Round.”

Throughout the last ten years, negotiations have collapsed several times, but have always been re-started. Unfortunately, the development mandate has been all but abandoned, with negotiations shifting to focus on the desires of corporations in rich countries, in services, agriculture, and manufactured goods, to achieve greater access to markets in developing countries. Nevertheless, they came perilously close to concluding in the summer of 2008. Since then, the emergence of the economic crises has resulted in a global re-think of the neoliberal economic model by citizens around the world, with resulting domestic pressure against governments to further entrench such a calamitous economic paradigm.

photo: RonnieHall

In many countries – such as Brazil, India, South Africa, and China – leaders are no longer willing to roll over to U.S. and EU demands, as their geopolitical power has grown along with their economies. A key demand of the United States, roiling under the surface of the negotiations, is that these countries should no longer be treated as developing countries – although they have far more poor people than all of the Least Developed Countries (LDCs) combined. The Obama administration decided that since it could not get much of a stimulus package through the Republican-controlled House, the U.S. would focus on increasing exports to these “emerging markets” as a way to boost U.S. economic recovery. But since many of these countries did enact stimulus programs adequate to the size of their economies, and were thus faster on the road to recovery after the crisis than the United States, they are understandably reluctant to bail out the U.S. economy at the expense of their own jobs and development potential. (Unfortunately, past experience with WTO and bilateral trade agreements demonstrates that they are net job losers, thus exposing the jobs claim as a cover-up for pushing the trade agenda of corporate donors.)

COOL Ruling Not COOL

As we noted last week, the WTO has just issued a major ruling against U.S. country-of-origin labels (COOL) on meats. The decision confirms the direst predictions when the WTO was established, which questioned the wisdom of setting internationally binding rules against consumer protection.

The ruling and its six supporting annexes are hundreds of pages long, so going through all of them will take some time. Here are some additional items that we did not include in our longer analysis from Friday.

COOL is hearted by consumers

COOL is very popular, as the Obama team noted during the proceedings:

Numerous polls also indicate strong consumer support for mandatory country of origin labeling. Among the polls cited in various submissions received by USDA during the regulatory process are the following:

• 92 percent of respondents in a 2007 Consumers Union poll believed that imported foods should be labeled with their country of origin
• 88 percent of respondents in a 2007 Zogby poll indicated that they want all retail foods labeled with country of origin information
• 95 percent of respondents in 2007 Zogby poll indicated that they have a right to country of origin information for food
• 82 percent of respondents in a 2007 Food & Water Watch poll supported mandatory country of origin labeling
• 82 percent of respondents in a 2004 nationwide poll conducted for the National Farmers Union supported country of origin labeling
• 86 percent of respondents in a 2002 survey for Packer magazine supported country of origin labeling

However, the panel didn’t explicitly mention these polls. Throughout much of the proceedings, it was treated as an open question whether consumers actually wanted COOL.

Democracy is impermissibly uncertain; hortatory is the new mandatory

This WTO decision is the most recent of three cases with deeply troubling implications for consumers. In September, the WTO also ruled against U.S. efforts to reduce teenage smoking and dolphin mortalities. In the dolphin case, the purely voluntary dolphin-safe labeling scheme was deemed “mandatory,” despite the fact that tuna not having the label was and is sold in the U.S. After that ruling, we joked that “voluntary is the new mandatory.”

But this COOL ruling takes this joke to sad new levels, so that “hortatory is the new mandatory.”

Here’s why.

Your Ignorance is Agribusiness' Right, says WTO

Consumers and the environment are at risk following a series of World Trade Organization (WTO) rulings against popular U.S. policies.

As we noted earlier today, the agency issued a landmark ruling against U.S. efforts to reduce consumer confusion about the origin of the foods they eat. This followed two decisions from September against U.S. measures to reduce teen smoking and dolphin deaths. If the decisions are upheld on appeal, the United States will have to water down or eliminate its country-of-origin labels (COOL) for meats, dolphin-safe tuna labels, and ban on flavored cigarettes directed at kids.

These rulings confirm the worst fears of members of Congress and advocacy organizations, who warned of the dangers of expanding the scope of trade agreements beyond border tariffs into the domestic policy arena. This expansion was pushed by anti-regulation corporations, with substantial assistance from “free-market" ideologues who saw the WTO as a delivery mechanism for light-to-no touch regulation. (Ironically, these WTO decisions have negative implications for both more “free-market” and “interventionist” oriented consumer and environmental protection policies, as we explain below.)

What this ruling means for consumers

When the WTO rules against a country's policy, that country has to change the law to comply, or risk trade sanctions. In this case, Mexico and Canada (the "complainants") were successful in their challenge of U.S. labels.

The U.S. will have to get rid of COOL, or water down the policy to Canada and Mexico's satisfaction. Mexico's position was that the U.S. should simply revert to voluntary COOL, or utilize a weaker standard utilized by a global body known as Codex Alimentarius. But this is what the U.S. used to have that consumers wanted to move past. So it's unclear what would satisfy those countries.

The Obama administration may appeal the ruling, although the track record of successful appeals is very limited: the WTO rules against challenged policies 90 percent of the time, and upholds these rulings at the appellate stage an even higher percentage of the time.

The broader worry is that this ruling leaves the door wide open to attacks on similar consumer policies - not only in the U.S., but all WTO member countries - many of which use COOL.

After the jump, we provide more background on how we got here.

WTO Rules Against Country-of-Origin Meat Labeling Law: Third Ruling Against U.S. Consumer Safeguards in 2011

The World Trade Organization’s (WTO) ruling today against another highly popular U.S. consumer policy – country-of-origin labeling (COOL) for meat cuts and products – will only intensify public opposition to more of the same backwards trade pacts, Public Citizen said. A panel report released today announced that Mexico and Canada have succeeded in their WTO attack on the labeling rule; today’s WTO ruling is the third this year against popular U.S. consumer or environmental measures.

“Today’s ruling makes very clear that these so-called ‘trade’ pacts have little to do with trade between countries and a lot to do with our major agribusiness corporations being free to sell mystery meat in the United States, with neither consumers nor our elected representatives in Congress able to ensure its safety, much less even know where it is from,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

After 50 years of state efforts to institute COOL for meats, and federal experimentation with voluntary COOL for meat, Congress passed a mandatory COOL program as part of the 2008 farm bill. In their successful WTO challenge, Mexico and Canada argued that the mandatory program violated the limits that the WTO sets on what sorts of product-related “technical regulations” WTO signatory countries are permitted to apply. In their filings to the WTO, Canada and Mexico suggested that the U.S. should drop its mandatory labels in favor of a return to voluntary COOL, or to standards suggested by the Codex Alimentarius, which is an international food standards body at which numerous international food companies play a central role. Neither option would ensure that U.S. consumers are guaranteed the same level of information as the current U.S. labels.

Today’s decision follows WTO rulings this year against U.S. “dolphin-safe” tuna labels and a U.S. ban on clove, candy and cola flavored cigarettes.

“These three rulings – with the WTO slapping down safe hamburgers, Flipper and children’s smoking prevention policy – make it increasingly clear to the public that the WTO is leading a race to the bottom in consumer protection,” said Wallach.

In today’s ruling, the trade panel specifically found that COOL labeling requirements violated the Agreement on Technical Barriers to Trade (TBT), one of 17 agreements administered by the WTO. While the WTO has ruled on nearly 200 disputes, the TBT had played a major role in only a few cases thus far.

“There has been widespread concern that this provision could empower a WTO panel to second-guess the U.S. Congress, courts and public by elevating the goal of maximizing trade flows over consumer and environmental protection,” said Todd Tucker, research director for Public Citizen’s Global Trade Watch. “Today’s ruling shows that consumers’ concerns were well-founded.” 

“The Obama administration is in the process of negotiating its first-ever trade deal – the Trans-Pacific Free Trade Agreement – and so far it looks like it will replicate many of the anti-consumer rules present in the WTO terms and the North American Free Trade Agreement,” noted Wallach. “These WTO rulings show the need for President Obama to start fulfilling his campaign pledges to create a trade policy Americans can believe in and stop expanding the old trade pact model.”

###

Sherrod Brown Tosses the Panama FTA

Well, not quite. But, man, that FTA text does look pretty heavy, and like it could put a hurtin' on some of the senators in the room that are against fair trade.

But here's a floor speech from fair trade champion Sen. Sherrod Brown (D-Ohio) on the night the Senate voted on the Panama, Korea and Colombia trade deals. It's about 30 minutes, and a very eloquent description of why these trade deals are no longer primarily about "trade," but about how we regulate our domestic economy. Brown's TRADE Act would go a long way to getting "trade" policy right.

Trade disaster: Congress votes tomorrow

A message from Lori Wallach, Director of Public Citizen's Global Trade Watch

You don't hear from me often. Over the past year, I have spend most of my time on Capitol Hill, meeting with members of Congress, educating them about our current flawed trade policy and how we can create a trade model that works.

I have been working to get a majority on Congress to say NO to the three devastating NAFTA-style trade deals signed by Pres. Bush that now Pres. Obama is trying to ram through Congress.

But today, I urgently need a favor from you. It will take about five minutes. Congress will vote on these job-killing, unsafe-import-flooding deals on Wednesday. I need you to pick up the phone and call 1-800-718-1008 right now to stop the three unfair trade deals with Korea, Colombia, and Panama.

Take 5 minutes to save jobs. Dial 1-800-718-1008 and tell your Representative to vote NO on all three flawed trade deals.

Here’s why:

• The Korea trade deal is the largest offshoring deal of its kind since NAFTA. If approved, the deal will displace 159,000 American jobs in the first seven years. Even the official U.S. government study on the Korea pact says that it would increase our trade deficit, and it hits the "jobs of the future” sectors hardest – solar, high speed trains, computers. [Learn more]
• We should have never even discussed a new trade deal with Colombia, the world capital for violence against workers. More unionists are assassinated every year than in the rest of the world combined. In 2010, 51 trade unionists were assassinated. Do you think we would consider a trade deal with a county where 51 CEOS were murdered? So far in 2011, another 22 have been killed, despite Colombia’s heralded new "Labor Action Plan.” [Learn more]
• The Panama agreement has many of the same problems as the other two deals -- undercutting the reregulation of the big banks and speculators who destroyed our economy and empowering foreign investors to attack U.S. health, safety, labor and environmental laws before foreign tribunals. But, Panama is also one of the world’s largest tax havens. There, rich U.S. individuals and over 400,000 corporations take advantage of the offshore financial center, many dodging paying the taxes our communities desperately need. This FTA would undercut our current tools to fight tax dodging and money laundering. [Learn more]

Stop the trade deals that replicate the failed policies of the past. Call your Representative today.

Behind the scenes and throughout the country, our team has done everything we can do to try and get through to the leaders in Congress to stop these trade agreements. But it looks like many of our leaders in Washington—both Democrats and Republicans—are siding with corporate lobbyists instead of learning from the experience of working Americans.

YOU know the reality of these trade deals better than corporate lobbyists—and Congress needs to listen to you.

Please call 1-800-718-1008 right now.

Speak out with millions of Americans against the job-killing trade deals that only reward fat cats, off-shore our jobs and undermine our environmental and financial stability safeguards.

WTO is the big kid on the seesaw

The recent WTO attacks on U.S. consumer and environmental policies (see here, here and the one about to be announced here) have revived discussion of whether current trade agreements leave enough space for countries to regulate in the public interest.

Those who think not can cite to the fact that the WTO rules against challenged policies 90 percent of the time. Those who think yes often cite the WTO agreements’ so-called “exceptions” clauses. For instance, the WTO’s General Agreement on Tariff and Trade (GATT) Article XX reads in part:

“Article XX: General Exceptions

Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, or a disguised restriction on international trade, nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:

(a) necessary to protect public morals;

(b) necessary to protect human, animal or plant life or health;…

(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement, including those relating to customs enforcement, the enforcement of monopolies operated under paragraph 4 of Article II and Article XVII, the protection of patents, trade marks and copyrights, and the prevention of deceptive practices;…
 
(g) relating to the conservation of exhaustible natural resources if such measures are made effective in conjunction with restrictions on domestic production or consumption;…”

Sounds pretty sweet, doesn't it? Similar provisions are contained in the WTO’s General Agreement on Trade in Services (GATS) Article XIV.

While the WTO’s proponents argue that these exceptions help preserve sovereign policy space, these defenses are unsuccessful over 96 percent of the time. Put differently, countries that actually go out of their way to invoke the so-called "defenses" are even less successful than those that simply lay down and take the beating. 

We can break down the record of these exceptions in more detail.

Typically, when the WTO Appellate Body and panels examine the exceptions, they take three steps.

Say that Australia wanted to defend its anti-smoking policies from WTO attack by invoking GATT Article XX(b) above. The panel would first establish whether it fell within the scope of the subparagraph (b) by determining whether the policy was connected to the protection of human health.

Then, the panel would inquire whether the policy were “necessary” to protect human health, a step which itself is typically broken up into "weighing and balancing" the legitimacy of the aim of the policy (yes, the WTO gets to make a call on the legitimacy of the policies the officials you elected pass), the contribution of the policy to achievement of the aim, the trade restrictiveness of the measure, and whether a less trade restrictive policy option is available.

All these factors are not weighed equally, as it turns out: the trade-related metrics are the big kids on this seesaw.

Flipper gets axed by the WTO

Today, U.S. efforts to reduce dolphin deaths by corporate tuna fishers through dolphin-safe labels on tuna were found to violate the WTO. This follows last week's ruling that U.S. efforts to reduce teen smoking violated the trade organization's rules. These smackdowns of major consumer regulations will be followed by a third in the near future, when the WTO is expected to rule against country of origin labeling for beef.

What this ruling means for consumers and dolphins

When the WTO rules against a country's policy, that country has to change the law to comply, or risk trade sanctions.

The U.S. will have to get rid of the dolphin-safe labels, or water down the policy to Mexico's satisfaction. Mexico's long-standing position (reiterated in this case) is that it should get to receive a dolphin-safe label, even though tuna corporations there use methods to capture tuna that are dangerous for dolphins.

The U.S. currently defines "dolphin-safe" as tuna not caught using dangerous purse-seine nets anywhere in the world. For tuna caught in the Eastern Pacific, a unique region where dolphins and tuna swim together, additional steps are required to earn the label.

Shipping fleets of the U.S. and many developing countries (like Ecuador) operating in the Eastern Pacific have been able to meet these higher standards, thereby giving greater assurance to consumers that their tuna purchases are not harming dolphins.

In contrast, much of the Mexican fleet has chosen not to take such steps. Mexico has advocated use of a distinct standard that even the WTO acknowledges is weaker than the U.S. standard. The WTO ruling wrote of that distinct standard:

... taken alone, it fails to address unobserved adverse effects derived from repeated chasing, encircling and deploying purse seine nets on dolphins, such as separation of mothers and their dependent calves, killing of lactating females resulting in higher indirect mortality of dependent calves and reduced reproductive success due to acute stress caused by the use of helicopters and speedboats during the chase. 7.739 We also note that, to the extent that the AIDCP standard addresses setting on dolphins and not other fishing techniques that may also result in adverse effects on dolphins, it would also not provide an effective or appropriate means of fulfilling the US objectives in this respect.

Nonetheless, the WTO ruled against the U.S. standard. (We explore more of the details of the ruling below.)

Initial reports indicate that the Obama administration will appeal the ruling, although the track record of successful appeals is very limited and the WTO rules against challenged policies 90 percent of the time.

The broader worry is that this ruling leaves the door wide open to attacks on similar environmental and consumer policies - not only in the U.S., but all WTO member countries.

What this ruling means for trade policy

All three of these cases have something in common: none of them related to efforts by the U.S. to intentionally discriminate against foreign goods, nor to protect our own producers. Indeed, in the beef and dolphin cases, no discrimination could even be proved. (In the smoking case, a finding of "discrimination" was established in a biased analysis we detail here.) This alone would suggest that a trade organization has no business passing judgment on such policies.

But we are in a new era of trade policy, where even non-discriminatory, reasonable, even-handed, popular policies (some with virtually no impact on international trade) can be ruled against.

What's more, all three consumer policies could be considered very "free market"-oriented. Rather than the big old government telling Americans what they can and can't consume, the dolphin and beef policies simply require honesty in labeling, so that the consumer can decide on their own free will what to consume, and let the market works its magic.

We've long known that more interventionist government policies (like import bans) can run afoul of trade rules. Indeed, the two adverse rulings at the WTO's predecessor organization in the early 1990s against the U.S. ban on dolphin-unsafe tuna led to the eventual removal of that effective and popular policy tool. Now, with today's ruling, we learn that even regulation by more "free market" means is on the WTO chopping block.

This is going to make it harder for the Obama administration to sell similar anti-consumer trade initiatives like the trade deals with Korea, Panama and Colombia to free-marketeers and environmentalists across the political spectrum.

The long saga of protecting dolphins

After passage of various dolphin protection laws in the 1980s, the U.S. fishing industry abandoned the cruel and environmentally devastating practice of surrounding dolphins with mile-long purse seine nets to trap the schools of tuna fish swimming under the hunting mammals.  The practice had led to the death of millions of dolphins in the Eastern Tropical Pacific, where dolphins accompany schools of tuna.  The U.S. laws forbid the sale of tuna caught with purse seine nets.

In 1991, a General Agreement on Tariffs and Trade (GATT) tribunal ruled that this ban violated GATT rules forbidding discrimination. With the debate over NAFTA’s passage raging, Mexico decided not to impose trade sanctions when the United States maintained the laws. The U.S. prohibition was again successfully challenged under GATT by the European Union in 1994.

After NAFTA’s passage, the Clinton administration launched an intense effort to change the U.S. law to bring it into compliance with the initial ruling, while Mexico threatened a new WTO case to enforce the old ruling. After a lengthy battle with Congress, the Clinton administration managed to pass a new policy that removed the ban on U.S. sales of tuna caught with purse seine nets.

However, an attempt by the Clinton and Bush II administrations to weaken the related labeling law defining what could be labeled “dolphin safe” was reversed after a series of U.S. court cases.

What Big Bird Could Teach the WTO

When I was a kid, a particular Big Bird sketch on Sesame Street made a strong impression on me: "One of these things is not like the other":

It turns out that Big Bird could teach the WTO a thing or two.

As we wrote earlier this week, and have been discussing over at the IELP blog, the WTO ruled against a rare public health victory: namely, the Family Smoking Prevention and Tobacco Control Act of 2009 (FSPTCA).

This legislation included a number of provisions, but one that attracted a lot of attention was its ban on flavored cigarettes that often serve as starter cigarettes for teenagers because of their sweet taste. The ban included candy, cola and clove flavored cigarettes, but did not include menthol flavored cigarettes in its initial ban.

You or I can disagree with the reasoning, but there was a reason for that particular design: while some kids smoke menthols, so do large numbers of adults, specifically in the African American adult community. As the Obama administration documented in its submissions in the case (quoted at length below in language that would make University of Chicago, Cass Sunstein and the Freakonomics crowd blush), immediately withdrawing menthol from the market would increase hospital visits, and overnight create a massive black market for the cigarettes.

(And not that the administration argued this in its legal case, but can you imagine the political blowback of banning a product (menthol cigarettes) that is predominantly smoked by blacks, that will increase crime and smuggling in predominantly African American neighborhoods (many of which are already struggling), while leaving untouched regular tobacco products that are more often smoked by whites, whose neighborhoods are often less crime-ridden? This would be a pretty harsh blow to race relations in the U.S., and undermine support for public health regulation period.)

By my read, the architects of the FSPTCA had some pretty sound logic for their incremental approach, which contemplated restrictions on menthol in the future, after the efficacy of the teenage-targeted measures could be tested.

Returning to the clip above, as Big Bird shows us, one of the bowls of birdseed is substantially larger than the other three. The WTO panel did not study up on their Sesame Street when ruling against the FSPTCA. In the ruling, the panel decided that menthol and clove were "like products," and that (because Indonesia exported the latter to the U.S.) a ban on the latter was "discriminatory" within the WTO's Agreement on Technical Barriers to Trade (TBT).

While menthol and clove are both "flavored cigarettes," so are cola- and candy-flavored cigarettes. The U.S. argued, plausibly in my mind and to paraphrase Big Bird, that "one of these things is not like the other." Specifically, menthol. Why? Significant numbers of adults smoke them, particularly in the African American adult community. For that reason, it poses significant adverse effect risks that the others did not.

Cloves and candy flavored cigarettes, however, are not only flavored, but they are trainer cigarettes that appeal to teenagers in significant numbers, but not to adults in significant numbers.

U.S. measures to reduce teenage smoking deemed WTO violation

U.S. measures to reduce teenage smoking violate World Trade Organization (WTO) rules, according to a panel ruling released late last week. Indonesia successfully argued that the U.S. Family Smoking Prevention and Tobacco Control Act (FSPTCA) of 2009 violated WTO rules. The ruling opens the door to more teenage tobacco addiction, while further imperiling the legitimacy of a WTO that rules against environmental, health and other national policies 90 percent of the time.

The FSPTCA took a series of unprecedented and bold measures to combat teenage smoking, including the banning of many forms of flavored cigarettes. There is substantial evidence that tobacco companies produce and market these cigarettes as "starter" or "trainer" cigarettes in order to hook teenagers into a lifetime of nicotine addiction.

However, as the U.S. noted in its defense in the WTO case, the U.S. did not ban all types of cigarettes. In particular, regular tobacco and menthol cigarettes were excluded from the ban. The justification for these exclusions was that, unlike candy flavored or clove cigarettes, large numbers of adults are also hooked on regular and menthol cigarettes. To abruptly pull these products out of the market could cause a strain on the U.S. healthcare system (as lifetime addicts would instantly seek medical treatment for wrenching withdrawal symptoms) and might lead to a rise in illicit black market sales and associated crime. Nonetheless, various studies were ordered on the feasibility of banning menthol cigarettes in the future.

The FSPTCA banned candy and clove cigarettes regardless of where they were produced or who produced them. But Indonesia successfully argued that, since its exporters are the primary providers of clove cigarettes to the U.S. market, the FSPTCA constituted de facto discrimination, in violation of WTO rules under the Agreement on Technical Barriers to Trade (TBT). The WTO panel accepted this argument, despite the fact that the FSPTCA was totally non-discriminatory and many U.S. cigarette makers (such as those that make cola-flavored cigarettes) were also blocked from making these harmful products.

This severe blow to consumer protection comes on the heels of two other WTO rulings against America's dolphin-safe tuna and beef country-of-origin labels, and are likely to put a significant damper on the Obama administration's efforts to pass trade deals with South Korea, Colombia and Panama that contain similar anti-consumer rules.

More on the details of the case after the jump.

The Korea Trade Deal Horror Show

 

Watch and share this original Global Trade Watch production about the Korea trade deal. To take action, visit: http://bit.ly/meCLGp.

 

FDA Foreign Food Inspections Under Threat

We have yet more bad news on the food safety front. Two weeks ago, news came that U.S. consumers would be barred from knowing if the tuna they're eating was caught using methods potentially fatal to dolphins. Last week we found out that the WTO would prevent country-of-origin labeling on beef from foreign countries sold in the U.S. Now comes word that the meager FDA inspections of foreign food facilities that have given U.S. consumers a modicum of protection against dangerous food will likely be rolled back.

Inside U.S. Trade reports today that proposed cuts to the FDA's 2012 budget could cripple the FDA's ability to conduct food safety inspections at foreign facilities that export food to the United States, according to a leaked FDA document.

FDA inspections of foreign facilities were set to be strengthened in the coming years. The Food Safety Modernization Act, enacted in January, requires the FDA to double the number of inspections of foreign facilities every year over 2012-2016 to protect U.S. consumers from contaminated foods.

The new proposal, contained in a bill approved by the House Appropriations Committee, would fund the FDA's food programs in 2012 at only 90 percent of their 2011 levels, and at only 79 percent of the level requested by the Obama administration to ensure full implementation of foreign food facilities inspections. The FDA is supposed to conduct at least 600 inspections of foreign facilities in 2011, but it will likely have to conduct much fewer next year if the proposed cuts become a reality.

This week, Food and Water Watch released a report examining the threat that uninspected Chinese food imports pose to U.S. consumers' safety. Since China entered the WTO in 2001, the volume of imports of Chinese food into the United States by tonnage has increased by almost 200%, and the share of Chinese imports as a proportion of food consumed in the U.S. has skyrocketed for some key products, reaching 70 percent for apple juice, 43 percent for processed mushrooms, and 78 percent of tilapia. During the same period, several food safety scandals erupted in China, sickening hundreds of thousands of people there and killing thousands of pets in the United States. Nevertheless, between June 2009 and June 2010 the FDA conducted only 13 food inspections in China.

The bill slashing the FDA’s foreign inspections budget is expected to be voted on in the House next week. Given the repeated food safety incidents in China and now news of the tragic deaths in the E. coli contamination case in Germany, the need to fully fund increased food inspections at foreign facilities has never been clearer.