Trump SOTU Trade Message: An Advance Fact-Check

Donald Trump is likely to misrepresent the facts and inflate his record on trade as he hits the midpoint of his presidential term and delivers his second State of the Union address. We offer this handy guide to help sort fiction from fact. While the administration’s trade reform effort includes some key steps in the right direction, it remains a work in progress with uncertain outcomes.


Past Trump Mischaracterization



UNFAIR TRADE: President Trump says he has “turned the page on decades of unfair trade deals.”

(a claim made in last year’s address)


Transformation of U.S. trade policy remains a work in progress, with uncertain outcomes. The signing of the North American Free Trade Agreement (NAFTA) 2.0 text on November 30 was the first step in a long process, and further improvements are necessary for a final package to pass Congress much less for revisions to stop NAFTA’s ongoing damage to workers and the environment. Only very limited revisions were made to the U.S.-Korea Free Trade Agreement. There is still a danger that the ongoing trade battle with China could end in one-time purchases of U.S. exports that would do nothing to address China’s underlying unfair trade practices and deliver the necessary structural changes to alter long-term trends. Contrary to his promises to do something about trade imbalances, the trade deficit is up 13 percent under Trump. By the time Trump announced he would formally shelve the Trans-Pacific Partnership (TPP) agreement, it was a moldering corpse that could never muster a majority in Congress, meaning his role was in the pact’s burial, not in authoring its demise.



TRADE DEFICIT: Trump says that U.S. trade relationships are more “balanced” and “reciprocal,” but he has yet to fulfill his campaign promise to bring down the trade deficit: “We have a massive trade deficit with China, a deficit we have to find a way quickly, and I mean quickly, to balance.”


On the one clear measure that Trump set for himself as a benchmark for success – bringing down the U.S. trade deficit – he is failing – with the largest China deficit ever recorded and a 13 percent increase in the U.S. trade deficit with the world during the Trump administration. As our Trump trade deficit tracker shows, the U.S. trade deficit has grown significantly under Trump. The latest quarterly government data (released in November – the 2018 annual data is a shutdown victim and a new release date has not been announced) reveals the highest U.S. goods trade deficit in a decade for the first three-quarters of 2018, up 13 percent since the start of the Trump administration. During Trump’s presidency, the U.S. trade deficit with China has risen (also 13 percent) to the highest ever recorded, while the deficits with the world and with NAFTA nations specifically have steadily grown.



USMCA V. NAFTA: Despite an effort to rebrand NAFTA with a new name, Trump’s renegotiation has not fixed the problems of original NAFTA.  


Trump’s claim to have created a totally different kind of agreement is a deceitful sales pitch, similar to those used for decades by US presidents to hawk previous trade deals. After a year of renegotiations, the NAFTA 2.0 text signed on November 30 revealed improvements for which progressives have long campaigned, the addition of damaging terms that we oppose, and critical unfinished business. Unless the administration works with congressional Democrats on critical changes to the signed agreement, the pact is unlikely to be passed. One way in which NAFTA 2.0 is dramatically worse than the original is the addition of a slew of new monopoly rights for pharmaceutical companies that would help them avoid competition from generic products and keep medicine prices high. While the NAFTA 2.0 labor provisions are an improvement over previous U.S. trade agreements, unless strong labor and environmental standards are subject to swift and certain enforcement—which is not the case with the NAFTA 2.0 text—U.S. firms will continue to outsource jobs, pay Mexican workers poverty wages, and dump toxins in Mexico.



JOB OUTSOURCING: Trump says he has slowed outsourcing and is succeeding on “Buy America, Hire American,” but the data do not support this claim. 


Outsourcing of American jobs has continued and not only the high-profile GM and Carrier mass job losses while Trump’s corporate tax policies create incentives for more outsourcing and his promised Buy American reforms lag. GM’s factory closures at the end of 2018 spotlights the ongoing loss of American manufacturing jobs. One of the first companies that Trump met with once taking office, GM closed five plants affecting thousands of workers after expanding production in Mexico. Because of the outsourcing incentives in trade agreements like NAFTA as well as the pro-outsourcing tax bill signed by President Trump, firms will continue to outsource jobs. Even tax dollars that could be used to boost U.S. production continue to be offshored. A government-wide assessment on procurement spending President Trump requested never saw the light of day. Various new “Buy American” executive orders include recommendations but not requirements to expand the policy, making Trump’s “Buy American, Hire American” promises mainly rhetoric without policy action. Case in point: the NAFTA 2.0 text maintains the old NAFTA rules that require the waiver of Buy American procurement preferences with respect to Mexico.



CHINA TRADE: Trump may tout his actions to try to address China’s unfair trade practices, but whether he stays on track, adds the missing elements of a China trade plan and delivers remains to be seen.



Six months after the first set of U.S. tariffs on China, bilateral discussions have yielded little concrete progress. Meanwhile, Trump has failed to take action against trade advantages gained through misaligned currency values nor limit investment by Chinese-government-related entities in the United States. Though one of Trump’s campaign promises was to declare China a currency manipulator on Day One, four semi-annual reports by Trump’s Treasury Department have failed to name any country a currency manipulator. Trump has chosen to rely on criteria created by the previous administration that ensure no action is taken.



USMCA PAYS FOR BORDER WALL - NOT: Though Trump may claim the opposite, NAFTA 2.0 will NOT pay for the border wall between the United States and Mexico.


There are no provisions in NAFTA 2.0 that would directly or indirectly fund the border by putting money into the U.S. Treasury from the Mexican government. When trade generates money for a government’s treasury, it is via payment of border taxes, called tariffs. But even if NAFTA 2.0 raised tariffs, which it does not, that money would not go into a Trump-wall-fund. So, the same issue that caused the showdown would remain: Congress must allocate general revenue to the wall. But there is no such tariff revenue to be had. U.S.-Mexico trade has been duty-free under NAFTA for more than a decade. When NAFTA went into effect in 1994, Mexico agreed to duty-free treatment of everything with a 15-year phase-in. The revised deal does not add new tariffs. Moreover, perhaps the strongest evidence that nothing in NAFTA 2.0 forces Mexico to pay for Trump’s border wall is that Mexico, which has made clear it will not pay, signed the deal.



NAFTA 2.0 FATE IN CONGRESS: Trump says that NAFTA 2.0 can pass easily, but that is not what the vote count suggests.


Thanks to the midterm elections, only a revised NAFTA deal that can win significant Democratic support will get through Congress. Democrats in Congress are insisting that NAFTA 2.0’s  giveaways to Big Pharma are eliminated. And also that tougher labor and environmental standards are added, because the deal Trump signed  won’t stop corporations from outsourcing American jobs. Trump’s deal is not the transformational replacement of corporate-rigged NAFTA that Americans need. But if the administration works with congressional Democrats on needed improvements, there is a path to passing the revised NAFTA with a broad bipartisan vote.


NAFTA WITHDRAWAL: Trump says he could just withdraw from NAFTA if Congress doesn’t act on the renegotiated deal.



While Trump has the authority to withdraw, neither withdrawing from NAFTA nor maintaining NAFTA 1.0 will raise wages in Mexico (where average annual Mexican wages are down 2 percent with Mexican manufacturing wages now 40 percent lower than in China) that will stop the offshoring that transforms middle-class jobs into sweatshop jobs, or reverse NAFTA’s destruction of nearly a million American middle class jobs.



MEXICO V. U.S. IN NAFTA: Trump says the United States was a victim of the original NAFTA.


Trump’s notion of NAFTA as a plot by Mexico to hurt U.S. workers is absurd. NAFTA was the brainchild of U.S. presidents, was negotiated with input from hundreds of U.S. corporate trade advisors, and has been devastating to working people in both Mexico and the United States alike. Since NAFTA was signed, U.S. real wages are flat and real wages have actually declined in Mexico.


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Can you say "Déjà vu" in Spanish?

Dear Neighbor:

Congratulations on your inclusion in the elite group of states that are currently negotiating the Trans-Pacific Partnership (TPP) Agreement! Your acceptance into this proposed “historic, 21st century trade agreement” means that much of the “burden” of making laws and regulations for your nation will be taken off of you. No worries; lobbyists for Hollywood and American pharmaceutical companies and more than 600 official “corporate trade advisers” to the Office of United States Trade Representative (USTR) will help take care of the details.

Sorry to mention it, but we’re afraid many of your laws pertaining to intellectual property (IP), affecting issuesACTA Rises from Internet privacy to access to affordable medications, might need a little “tweaking” to ensure they comply with the specifications of U.S. corporate “advisers.” The USTR’s demands at the TPP negotiations read like a wish list from the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Recording Industry Association of America (RIAA), and YOU have the opportunity to grant all their wishes.

You see, the condition the U.S. imposed for Mexico to get a seat at this corporate banquet was that Mexico agree to accept everything that the other countries already have negotiated over the past three years. Sure, NAFTA required some nasty changes to your IP laws. Remember the millions your government wasted trying to lift the U.S. patent on common yellow beans that a bio-prospector filed after NAFTA? Well, wait until you get a look at the 21st century NAFTA on steroids!

As a part of the “historic” TPP negotiations, it is time for your laws to truly reflect your new “21st century” status. For instance, you need to expand pharmaceutical patent protection and create new pharmaceutical monopolies in Mexico. You also need to extend copyright protection to device memory buffers and criminalize circumvention of technological protection measures, limiting fair and educational uses of all kinds of literary and artistic content. Overall, you are expected to introduce new, draconian provisions into Mexican law to lengthen, strengthen and broaden IP monopolies in Mexico.

The strict IP enforcement in this scenario may seem very familiar to you. In fact, you fought off a very similar – although less extreme – attack on your privacy and rights on the Internet in 2011 in the form of the Anti-Counterfeiting Trade Agreement (ACTA). Some objections to ACTA expressed by Mexico Senator Carlos Sotelo Garcia in September 2010 included the opaque nature of the ACTA negotiations, stringent IP enforcement measures (championed by the U.S.), and the “erosion” of access to information technology for approximately thirty million Mexican citizens.

A look at any current media coverage of the TPP will reveal a scene that is eerily familiar and equally concerning. Sorry to break the news, but the opacity of the TPP negotiations makes the ACTA process look like a pinnacle of open government. The TPP has been negotiated entirely in secret, with the only glimpse of the text coming from leaks of the IP, investment and other chapters. Furthermore, each of the negotiating nations has agreed to keep all documents besides the finalized text a secret for four years following the conclusion of negotiations, whether it is ever finalized or not. So whereas the same report by Senator Garcia implemented a working group to review the provisions of ACTA, no such legislative oversight would be possible in the TPP. Apparently the only way to get a look at the “21st century agreement” – even for legislators of the countries in the negotiations – is to introduce a resolution demanding they be allowed to see how trade negotiators are rewriting a nation’s laws. In the U.S, the chairman of the Senate committee with official jurisdiction over TPP, U.S. Sen. Ron Wyden (D-Ore.), has done just that. Yup, the chairman of the Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness and his staff were explicitly refused access to even the U.S. negotiators’ proposal to the TPP negotiations.

The legislature of Mexico has already expressed its opinion of trade agreements that restrict privacy and rights on the Internet. On June 21, 2011, the Mexican Congress passed a resolution that urged that the Federal Executive not become a signatory of ACTA:

The Standing Committee of the H. Congress, respectfully urges the Federal Executive Power to, within the framework of its powers, instruct the ministries and agencies involved in negotiating the Anti-Counterfeiting Trade Agreement (ACTA), not to sign the Treaty.

Reading this sort of language coming from the national legislature of a sovereign nation, one might draw the conclusion that ACTA is doomed in that country. But foreign corporate interests have found another foothold in the laws of Mexico – in the form of the TPP. You may have believed that ACTA was dead in Mexico, but, like el chupacabras, it is rising again and this time it is even stronger.

Welcome to the 21st century, dear neighbor.


Follow Public Citizen's Global Access to Medicines on Twitter:!/PCMedsAccess
Read more at our webpage:

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Just Relax, Canada. U.S. Pharma Will Handle It

Dear Fellow Canadians:

Welcome to the Trans-Pacific Partnership (TPP) negotiations! Since you are fresh off a bruising fight getting provisions that protect Internet freedom and privacy into Canada’s copyright Bill C-11, I’m sure that you are exhausted with defending your rights. Take heart. With the TPP, you will not have much of a say on laws or policies threatening your privacy, rights on the Internet or access to affordable medicines. Instead, lobbyists from major American industries and some 600 “corporate trade advisers” have helped lay out some of what the Office of the United States Trade Representative (USTR) expects from you.

These are the same industries that forced major concessions on C-11’s approach to digital locks despite near-universal criticism. Hundreds of pages of new non-trade policy contained in the most sweeping “free trade agreement” could face a mere up or down vote in the House of Commons. And the USTR proposes intellectual property provisions that cover dramatically more than copyright law. They touch a wide range of IP issues.

You thought NAFTA was a pill? Sure, Big PhRMA used NAFTA to attack our drug formulary system and all of those compulsory licenses for affordable meds. But back then, our government drew a line. Despite some considerable hysteria from the U.S. drug industry giants, you did not give away all of our policy space. This time, however, the TPP gives Prime Minister Stephen Harper a way to write all of us a real prescription for high drug prices and cement his view of Canada as an extended playground for corporate America.

Here are some of the highlights of the U.S. proposed IP chapter:

• Expand patent evergreening and create new pharmaceutical monopolies, raising medicine costs;

• Dramatically increase the life of a copyright term from 50 years in most cases under C-11 to 95 years;

• Increase penalties for circumvention and reduce the exceptions for individuals; and

• Establish an American-style notice-and-take down system for online copyright infringement.

This seems like a lot. If you were worried, however, that we had some duty to at least read the proposals for the law and voice our democratic concern, fear not. Negotiators act in secret. The only glimpse of the actual agreement so far has come from leaked copies of the text from the IP, Investment and other chapters. Remember in the good old days of ACTA when the University of Ottawa filed an access-to-information request but received a blacked out document with only the title visible? Expect similar treatment during TPP negotiations. While lobbyists and corporate liaisons are granted electronic access to the agreement, your parliamentary representative might have to walk down to the Department of Foreign Affairs and International Trade to speak personally with The Honourable Ed Fast P.C. , M.P., Minister of International Trade.

Moreover, if you are distressed by the fact that our respectable Department of Trade will have lots of work reviewing all the work done so far once Canada’s negotiators get hold of these secret drafts, you will be relieved to hear that Canada has a lesser role in the negotiations. By coming late to the table, Canada has achieved a second-tier position. This status requires Canada to agree to all the settled chapters, which its officials have not even read, and Canada cannot veto current provisions. Thus, not even lobbyists or the trade minister need concern themselves with settled provisions. The TPP negotiations shut individual citizens and even members of parliament and ministers out of the process.

The public response to C-11 proved that civil engagement has made a difference on intellectual property issues in Canada. The people—frustrated, fearful and bedraggled—woke up to the oppressive measures of industry groups and fought hard. But this is far from the end. In upcoming years, we might still witness the implementation of a multinational corporations’ wish list, which seeks to criminalize copyright infringement, implement ACTA-plus provisions and restrict Canadians’ access to affordable medicines. Through the TPP, the USTR seeks to achieve all these goals and more—without too much of a voice from us. Will we allow American industry to dictate to the Canadian people our rights—or stand up and demand that Canada step down from these negotiations?

Follow Public Citizen's Global Access to Medicines Program:!/PCMedsAccess

James Cormie is a legal intern at Global Access to Medicines Program.  Originally from Edmonton, Alberta, James blogs on issues of trade, IP, and international law.

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Op-Ed Round-Up

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


The Hill masthead

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

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

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

Read the entire piece here.



Congress should reject proposed trade agreements and insist on better policies

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

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

Read the entire piece here.



US-Colombia free trade agreement bad idea for both countries

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

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

Read the entire piece here.


HuffPo logo

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

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

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

Read the entire piece here.



Free Trade Pacts Will Cost Tennesseans Jobs

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

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

Read the entire piece here.


MilwaukeeJS logo So-called 'free' trade agreements harm American workers

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

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

Read the entire piece here.


Say no to new trade deals and start over


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

Read the entire piece here.



Open borders, trade deals are ruinous for America

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

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

Read the entire piece here.



Trade deals are no deal for US

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

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

Read the entire piece here.


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

By Tom Burga, president of the Ohio AFL-CIO

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

Read the entire piece here.


Redding Record Searchlight Trade pacts bad for California agriculture

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

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

Read the entire piece here.


Wisconsin Farmers Union opposes free trade pact with Korea

By Darin Von Rudin, president of Wisconsin Farmers Union

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

Read the entire piece here.


Rep. Schrader is confused on international trade

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

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

Read the entire piece here.


Minneapolis Star-Tribune logo 
Free trade agreements jolt the economy, but not in a good way

By Jessica Lettween, director of the Minnesota Fair Trade Coalition

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

Read the entire piece here.


The Hill masthead

Choose voters over donors on free trade

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

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

Read the entire piece here.


Winona Daily News

Obama's trade policy clearly shortsighted

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

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

Read the entire piece here.


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


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New Data Feature: Jobs at Risk from the Korea FTA

In previous additions to the Trade Data Center, we have examined the impact of past unfair trade deals such as NAFTA in your community through official government job loss data. But now we wish to look into the future. Or, rather, a future. A future where Congress has voted to approve the Korea Free Trade Agreement (FTA), putting at risk thousands of jobs.

We have tallied the number of jobs in each congressional district and state that are in industries predicted to be harmed by the Korea FTA. The U.S. International Trade Commission projects that implementation of the Korea FTA will lead to a combined $2 billion rise in the U.S. trade deficit in electronics, motor vehicles and parts, other transportation equipment, metal products, iron-containing metals, textiles, and apparel (among other sectors), which could endanger the jobs of workers in those industries. We have determined the approximate number of jobs at risk from the Korea FTA in each state and congressional district with data on individual facilities in these industries and a little programming magic. (Data nerds – you know who you are – can read about how we did it here).

Viewing the number of jobs at risk in your state and congressional district is easy. Just go to the page with the database here, select your state, and type in your congressional district or "Statewide" for your statewide numbers, and click "search". It gives you a breakdown of the jobs in each of the seven sectors most at risk from the Korea FTA.


Korea FTA vulnerable jobs pre-search 

Korea FTA vulnerable jobs post-search

In the current job climate with almost 10 percent unemployment, we can't afford another job-killing NAFTA-style trade deal like the Korea FTA. Click here to contact your representative and help stop the Korea FTA.

You can explore other great features in the Trade Data Center here.

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

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

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

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


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Bombshell Australian Report Finds FTAs "Oversold"

Productivity commission image for blog Yesterday, the Australian Government's Productivity Commission released a 400-page report examining the effects of Australia's "Free Trade" Agreements (FTAs). The Productivity Commission is the Australian Government’s independent research and advisory body on economic and social issues. The Age reports:

The Productivity Commission has told the government there is little evidence to suggest Australia's six free-trade agreements have produced ''substantial commercial benefits''....

Copyright provisions inserted in the US-Australia Free Trade Agreement could eventually cost Australia as much as $88 million per year....

The report also rails against investor-state lawsuit provisions like NAFTA's Chapter 11 that allow foreign corporations to sue sovereign governments for taxpayer compensation when governments take necessary action to protect the health and safety of their citizens: "There does not appear to be an underlying economic problem that necessitates the inclusion of ISDS [Investor-State Dispute Settlement] provisions within agreements.....Experience in other countries demonstrates that there are considerable policy and financial risks arising from ISDS provisions." The report goes on to note that millions of dollars of taxpayer funds has been paid out to multinational corporations due to corporate lawsuits filed under NAFTA's investor-state dispute settlement provisions. 

The report recommends that the Australian government "seek to avoid the inclusion of investor-state dispute settlement provisions in [FTAs] that grant foreign investors in Australia substantive or procedural rights greater than those enjoyed by Australian investors."  Australia excluded investor-state lawsuit provisions from the U.S.-Australia FTA due to justified fears that foreign corporations would demand compensation if environmental or public interest laws reduced their "expected profits."  The Australian trade negotiators would be wise to heed the well-reasoned recommendations of the Productivity Commission and ensure that investor-state lawsuit provisions are excluded from the proposed Trans-Pacific Partnership.
The report notes that the totality of evidence on FTAs "suggest that the economic value of Australia’s [FTAs] has been oversold." That sounds familiar. Oh, that's right, Public Citizen found that the same was true for U.S. FTAs in our September report, "Lies, Damn Lies, and Export Statistics: How Corporate Lobbyists Distort the Record of Flawed Trade Deals," in which we revealed that U.S. exports to FTA partners have grown at half the pace of U.S. exports to the rest of the world. There seems to be a consensus developing here.

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Trade Data Center Launched

TDC logo 2 

Today, we launched the Trade Data Center, a new tool for researching and illustrating the impacts of trade policy on local communities. It’s free and contains previously unavailable information that’s packaged in an easy-to-understand, customizable and user-friendly format.

Check it out!

Travis McArthur, our trade and finance researcher and lead Trade Data Center creator, put it best:

“Whether you are a seasoned trade hand or just beginning to look into globalization, or whether you are for or against fair trade, the Trade Data Center will have something for you. We hope that this will serve as a resource for journalists, policymakers, researchers, students – anyone with an interest in the impact of trade policy. It really is your one-stop-shop, and we’ll be updating it frequently with new features.”

You can read our press release here.

More about the new tools available through our Trade Data Center after the jump...

Continue reading "Trade Data Center Launched" »

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FAIR's "CounterSpin" and The Thom Hartmann Program Feature Our FTA Export Penalty Report

CounterSpin, Fairness and Accuracy in Reporting's (FAIR) nationally-syndicated radio show, airs its interview with our research director, Todd Tucker, today. It sets the record straight about our new report, "Lies, Damn Lies, and Export Statistics." You can listen below; the segment begins at 18:19.

TNT on FAIR's CounterSpin, 9.24.10

Todd was also on the Thom Hartmann Program last week talking about the report. Check it out; the segment begins 1/3 of the way through.

TNT on Thom Hartmann, 9.17.10


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Can Clinton’s Confession of Failure be Obama’s Catalyst to Get Trade Right?

In David Sirota’s write up “Can Clinton’s Contrition Contribution,” Sirota asks whether Bill Clinton’s frank admission that his trade policies were a failure (see here for the Eyes on Trade post) will give President Obama the impetus to deliver a real change to U.S. trade policy.

And it’s a good question.

Clinton has confessed what many people have been saying all along: his Administration’s push for trade liberalization and deregulation across many sectors has failed many in the U.S. and overseas, with its failure to produce (or even retain) jobs here domestically, and its encouragement of bad labor, environmental and safety practices here and abroad.  However, as clear as this seems, Obama would have to make some serious changes if he wants to not repeat the same errors Clinton committed. As Sirota pointed out, President Obama might be compelled “to fire the same Clinton economic aides who now work in his administration,” the same advisors that Clinton said “were wrong” on trade. Furthermore, steering away from Clinton-Bush era trade policy would mean that Obama needs to abandon the language found in leftover trade agreements like the Colombia FTA, the Panama FTA and even perhaps the Trans-Pacific Partnership which, will being branded as an 21st century trade agreement is still a relic from the former Bush Administration.

However, evidence from his campaign shows that Obama knows this, so perhaps this will be the push that he needs. Maybe, seeing Clinton’s apology will give him the impetus to begin changing these policies and prevent him for make the same mistakes that Clinton has confessed he has to live with everyday.

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Ask an economist!

Our friends at the Triple Crisis blog have an interesting feature where they are taking your questions for economists in advance of the IMF / World Bank meetings. Are there financial reform proposals you want to hear more about? Submit your questions here.

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Happy April Fool's Day!




Contact: Nanahcub Nayrb, 202-454-5108

China Currency Value Rises 40%, U.S. Predicted to Enjoy First Trade Surplus with China Since 1985

After Overnight Renminbi Appreciation, Trade with China to Actually Provide Benefits to U.S. Workers, Domestic Firms

WASHINGTON - With Congress poised to pass the "Nixon Did It in '71 Currency Manipulation Fix-It Act," which would impose surcharges on Chinese imports, China today appreciated the value of its currency 40 percent relative to the U.S. dollar, Google News reported.

The Obama administration predicted that its goal of doubling U.S. exports in five years would be met well ahead of time with the United States expected to achieve a trade surplus with China for the first time since 1985. China is also expected to begin transferring billions in stimulus funds to the United States to create 2.4 million American jobs to replace the U.S. jobs lost to China since 2001.

Trade wonks were stunned.

"Years ago, I made a bet with Fred Bergsten that I would eat my shoe if anything like this ever happened," said Walli Lorach, co-director of Public Citizen's Global Trade Watch. "I guess I'm going to spend the afternoon looking for a good leather recipe."

In a gesture of goodwill and reciprocity between the two countries, President Barack Obama pledged that the United States would continue to purchase billions in Chinese goods, although at a fair price, and would safeguard the value of China's billions in Treasury bills by not devaluing the dollar.  

In another tale from the bizarro world of U.S. trade policy, a news conference organized by Sen. John McCain to call for the Obama administration to revive the Bush-Clinton-Bush trade agreement model in Trans-Pacific Partnership (TPP) negotiations was disrupted by angry tea party protestors screaming "No NAFTA with 'Nam!"


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A little TPP-themed lolcat for your amusement:


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Lori Wallach's Op-Ed in Today's Edition of The Hill


The Hill masthead


Obama’s trade policy opportunity

By Lori Wallach

Contrary to the clamor from the U.S. Chamber of Commerce and newspaper editorials, the Obama trade agenda is not stalled - it is in formation.

This week, negotiations started on President Barack Obama’s first potential trade agreement - the Trans-Pacific Partnership. Will the administration transform the TPP process that Bush initiated in 2008, so as to translate Obama’s campaign trade reform commitments into a new approach that that works for more people and thus rebuild bipartisan consensus for trade expansion? Or, will the administration revert to the Bush-Clinton-Bush trade pact model, and intensify the associated economic and political damage?

Creating a new policy is necessary in this era of globalization, if Americans are to enjoy the economic security of good jobs and an end of the crisis-inducing financial casino, a clean environment, and safe food and products.

Indeed, creating a new trade policy will determine the success of much of the Obama administration’s domestic agenda given that today’s agreements extend far beyond tariffs and quotas to set parameters for numerous non-trade polices. Trade-pact investment and procurement rules will affect whether the billions being invested in the Green Economy will translate into American jobs. Trade-pact service sector rules define the policy space available to re-regulate finance and reform health insurance. Trade-pact rules implicate efforts to combat climate chaos.

The large agribusiness firms and job-offshoring multinationals who claim Obama’s trade agenda is stuck were the few beneficiaries of the 1990s pacts like the North American Free Trade Agreement and World Trade Organization. They oppose establishment of an Obama trade policy. They seek continuation of the status quo, starting with adoption of Bush’s leftover NAFTA-style pacts with Colombia, Korea and Panama. To revive this failed model - most recently rebuffed when a majority of House Democrats opposed Bush’s Peru agreement that mirrors the remaining three - would be a grievous policy and political mistake.

The goods news is that a diverse bloc in Congress has built consensus around a new approach designed to achieve trade expansion that can deliver U.S. job creation, consumer safety and environmental protection. A majority of House Democrats, including 12 full committee and 56 subcommittee chairs, have sponsored the Trade Reform, Accountability, Development and Employment (TRADE) Act, as have 23 Blue Dogs, 19 New Democrats and 30 Congressional Black Caucus members. The bipartisan legislation sponsored by Rep. Mike Michaud (D-Maine) and Sen. Sherrod Brown (D-Ohio) translates Obama’s trade reform commitments into a new trade-pact model - building on the initial reforms Democratic trade committee leaders extracted from Bush in 2007.

The TRADE Act’s provisions on what future pacts should and should not include provide a roadmap for trade expansion at a time when the damage wrought by the NAFTA-WTO model has transformed trade politics. In the past two elections, 72 congressional candidates that campaigned against the trade status quo and for a new approach replaced those who voted for NAFTA, CAFTA, and China’s WTO entry. GOP and Democratic 2008 candidates ran over 140 campaign ads on trade, as did the Democratic House and Senate national campaign committees. This reflects the strong public demand for a new American trade policy.

Not surprisingly, polling shows bipartisan opposition to the old trade regime across diverse demographics. Since NAFTA and WTO went into effect, the U.S. lost net 5 million manufacturing jobs (one out of four in that sector) while American median wages remained stagnant despite productivity gains as corporations used the pacts’ investor protections to relocate and arbitrage their labor costs absent a floor of labor standards. Various environmental and health laws were attacked before trade tribunals. Unsafe food and product imports swelled. The trade deficit exploded from $102 billion to a height of $807 billion, with dire consequences for global economic stability. Quite simply, the old model has not worked for most Americans - nor for most in other nations, as is highlighted by the Doha Round WTO expansion deadlock.

For the Obama administration to succeed, it must not only update the trade-pact model, but also remedy our China trade disaster and update the 2001 Doha Round agenda. Treasury’s April 15 decision on China’s currency manipulation will be critical in determining the success of Obama’s goal of creating 2 million net new jobs from expanded exports. We would suffer net job losses and an enormous trade deficit were imports - to which China is the largest single contributor - to follow their current trend.

Time is overdue to dispense with the claim that critics of the past model are anti-trade. The question is trade under what terms. The bipartisan consensus that marked decades of U.S. trade votes was shattered with the 1990s advent of the NAFTA trade agreement model. Replacing the failed 1990s trade-pact experiments with the new American trade policy Obama promised and Americans expect is the way forward.

Wallach is director of Public Citizen’s Global Trade Watch.

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USTR’s 2010 Trade Policy Agenda: The Good, The Bad, and the Bizarre

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

Relative to last year’s March 1 report, the 2010 Trade Policy Agenda released today by the Office of the U.S. Trade Representative (USTR) excludes some troubling elements, such as the call for rapid action on the leftover Bush trade pact with Panama, the demand that climate policy conform to trade rules and the reference to renewed presidential trade authority. But at the same time, the report unfortunately fails to deliver the new fair trade agenda that President Barack Obama promised during the campaign and that is needed for our country’s economic recovery.

It also continues to mimic the misrepresentations that the Bush administration borrowed from the U.S. Chamber of Commerce with respect to only considering the role of exports on U.S job creation, as if the U.S. did not have a massive job-killing trade deficit. An example is the hilarious statement about 10 million U.S. jobs being supported by exports in 2008 – a year we had a $696 billion deficit – without any reference to the net U.S. jobs effect of the flood of imports underlying that deficit. The report also fails to mention that 5 million net U.S manufacturing jobs – one out of every four – have been lost since the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA) went into effect, or the downward pressure our current trade policies are putting on wages across the economy.

Continue reading "USTR’s 2010 Trade Policy Agenda: The Good, The Bad, and the Bizarre" »

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USTR Citing the Chamber of Commerce's Slanted Website?

USTR trade data CoC Given that the Chamber of Commerce is fiercely lobbying against the fairer trade model supported by President Obama and members of Congress (and against almost everything else the Obama administration is trying to achieve), it is shocking that the USTR’s webpage of links to trade data includes the Chamber of Commerce’s slanted “trade benefits” website. The USTR webpage lists all government agencies and then only the Chamber as sources of trade data – no unions, no universities, just the country’s main corporate lobby.

Did they miss the wonderful trade data resources of the Economic Policy Institute (EPI), the AFL-CIO, or our searchable Trade Adjustment Assistance database? Or, maybe the USTR staff just hasn’t had a chance to update the webpage in the 14 months since Bush left?—Actually, no, the page says that it was last updated on July 29, 2009.

On the other hand, maybe it’s not an oversight? While most of the administration is engaged in mortal combat with the Chamber, USTR Ron Kirk seems to be all warm and fuzzy toward the Chamber. Consider his comments at a speech there last year:

I couldn't think of a better, more welcoming environment than being right here at the Chamber….I was really excited about the opportunity to come and be with you today because -- I think I've got this thing figured out now, after 60 days; I've got it all down. But considering some of the audiences that I've been in over the last 60 days, I needed a little bit of home cooking, so to speak. So I feel like I'm very much preaching to the choir, and if so, please don't be offended.

This cuddly view of the Chamber is inconsistent with pursuing a new, fairer trade model, which the Chamber strongly opposes. Over half of Democrats in the House have endorsed this new vision for trade policy – by formally sponsoring the Trade Reform Accountability Development and Employment (TRADE) Act. (The Chamber has launched a campaign against the Democrats’ initiative.)

The Chamber of Commerce’s website purports to show the trade “benefits” for each state. The problem is that the Chamber’s website only covers states’ exports, as if the United States were not being swamped in a flood of job-killing imports.  Imports represent goods that American consumers and businesses have purchased from other countries that they could have purchased from U.S. manufacturers employing U.S. workers.  

The Chamber’s website says virtually nothing about the harmful effects of our massive trade deficit that accrued since the Chamber’s beloved NAFTA, WTO and similar trade deals went into effect. (Indeed, our trade deficit increased from $25 billion in 1993 to $263 billion in 2009 with NAFTA countries alone.)  EPI estimated that if we had balanced trade with Canada and Mexico, the U.S. economy could have supported about one million more jobs in 2004. Yup, the Chamber of Commerce site also makes no mention of the nearly 5 million manufacturing jobs that we've lost since NAFTA and WTO went into effect – that’s one out of every four manufacturing jobs.  Balanced trade could help U.S. businesses, but instead the large U.S. trade deficit is a significant drag on growth that is killing U.S. manufacturers and American jobs.

Plus, the Chamber dodges the wage stagnation that has plagued the U.S. during the era of Fast Track and NAFTA-WTO model trade deals. And it does not even get into all of the horrible import safety problems – tainted food, toys and more – or the trade tribunal attacks on key consumer, toxics and environmental law.

What is even stranger about the USTR linking to the Chamber  is that the Chamber has relentlessly attacked President Obama’s major policy priorities.  The Wall Street Journal has called the Chamber’s assault “the biggest undertaking in the Chamber's 100-year history.” Last year, the Chamber spent $140 million lobbying to prevent the administration from passing  health care reform, financial sector reregulation, and climate change legislation.

Instead of heaping praise on an organization that is attacking his boss’ goals and citing the Chamber as a reliable source of trade information, perhaps USTR Kirk could achieve more progress by  advancing the new trade model that so many members of Congress have endorsed.

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Things USTR Should Give Up For Lent


Now that Fat Tuesday is over, we've thought of ten things USTR should give up for Lent to avoid unnecessary policy failure and political disaster, if not eternal damnation:

  1. Going to the first Obama-era Trans-Pacific Partnership (TPP) talks (March 15-19) to represent the "U.S. position" without having consulted with the congressional Democrats and Democratic base groups who expect USTR to deliver on Pres. Obama's campaign commitment to create a new U.S. trade agreement model.
  2. Allocating limited USTR resources to trade negotiations that hold few prospects for expanding exports or creating jobs. (Um, for instance like the TPP - given the U.S. already has trade pacts that zero out tariffs with the four prospective TPP partners - Australia, Singapore, Chile and Peru - that comprise over 85% of the combined GNP of countries involved in TPP talks.)
  3. Continuing to ignore the growing China trade disaster. (Even as the 2009 annual trade data showed that the global economic crisis had suppressed overall trade flows, China's share of the U.S. trade deficit increased.)
  4. Disregarding the TRADE Act, given it represents the majority view among House Democrats about what TPP and other trade negotiations should and should not include.
  5. Only discussing exports, not imports - and the related Bush-era talking points. (Giving this up would be aided by disconnecting the direct hotline between the offices of USTR Ron Kirk and Chamber of Commerce President Tom Donohue.)
  6. The Doha Round - after all these years, it's pretty clear that the agenda forced in 2001 ain't cutting it. Time for a new agenda for multilateral trade expansion.
  7. The hangover Bush FTAs with Colombia, Panama and Korea. (What Democrats have forgotten the 1994 congressional midterm wipeout lesson about what happens when a new Democratic president pushes a NAFTA-related trade agreement inherited from a Bush?)
  8. Prioritizing WTO compliance over necessary climate solutions.
  9. Obsession with killing food safety rules in other countries. (Has Michelle Obama read the 2009 National Trade Estimates report?)
  10. Empty rhetoric on transparency and accountability (in favor of actually doing the comprehensive, inclusive trade policy review promised in early 2009.)

And, just as giving up most of the things that people give up for the 40 days of Lent is actually a good idea for the rest of the year too, we think these should stick.

Have a good Ash Wednesday!

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New Blog on the Triple Crisis

Kevin Gallagher of Boston University / GDAE and Jayati Ghosh of Nehru University in India have just launched a blog on the Triple Crises confronting the world on finance, development and environment called the TripleCrisis.Com. Here' s their opening post:

Crises are not new to the world economy, or to developing countries. Indeed, our current predicament is a convergence of at least three crises: in global finance, development, and environment.  These areas are seemingly disparate but actually interact with each other in forceful ways to reflect major structural imbalances between finance and the real economy; between the higher income and developing economies; between the human economic system and the earth’s ecosystems.  This blog seeks to contribute to a more open and global dialogue around these three crises: about how they interact, and how they can collectively be solved.

Gallagher and Ghosh are both economists and good friends of Public Citizen, and I look forward to seeing what they do with TripleCrisis.Com.

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A Year After Implementation of Peru Free Trade Agreement, U.S. and Peru Left with Broken Promises, No New Trade Model

Public Citizen Report Details Decline in Peru’s Labor and Environmental Conditions

On the one-year anniversary of the implementation of the U.S.-Peru Free Trade Agreement (FTA), it has become clear that the hopes and predictions of proponents of the trade deal have failed to materialize, Public Citizen said today. Instead, as critics of the deal had feared, environmental and labor conditions in Peru have deteriorated rapidly since the congressional passage of the FTA in late 2007 and implementation in early 2009. In a brief report released today, Public Citizen outlines some of the broken promises and labor and environmental problems.

The Peru FTA text included several reforms with respect to labor and environmental standards relative to the normal Bush trade pact model, which was based on the North American Free Trade Agreement (NAFTA) and the Central America Free Trade Agreement (CAFTA). These changes were added following a May 2007 deal between the Bush administration and some congressional Democrats.Peru FTA protest

Despite the revised environmental language, the Peruvian government rolled back environmental protections existing prior to the FTA so as to implement the FTA’s foreign investor rights to access forestry, mining and other natural resource concessions. This included access to sensitive Amazonian territories over which indigenous communities had control under pre-FTA Peruvian law. In response to indigenous opposition, including road blocks in the remote northern Amazonia region of Bagua, the Peruvian government dispatched the military, and the resulting confrontation resulted in 34 fatalities – making the Peru FTA the first U.S. trade agreement to result in an immediate body count. 

Despite the revised labor language, in Peru today under the FTA, Peruvian employers can use subcontracting and outsourcing legal loopholes that greatly limit workers’ ability to unionize; child labor and forced labor continue unabated.

“The initial outcomes of the Peru FTA’s implementation demonstrate that major reforms remain to be undertaken if a new American trade agreement model is to be created that can deliver broad benefits to people in the countries involved while protecting the environment,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division.

Starting in 2008, the U.S. House Committee on Ways and Means Chairman Charlie Rangel (D-N.Y.) and Trade Subcommitee Chair Sandy Levin (D-Mich.) protested the Bush administration authorizing the FTA to go into effect despite the García administration failing to implement key labor and environmental reform commitments. A January 2009 letter from Rangel and Levin to Bush U.S. Trade Representative Susan Schwab noted that the García administration adopted new loopholes that could allow enhanced use of company subcontracting to crush unionization drives.

The Peruvian government’s true intentions became clear at a U.S. Chamber of Commerce victory event the
day the Peru FTA was signed into law, when Peruvian President Alan García told the audience of lobbyists for U.S. multinationals: “Come and open your factories in my country so we can sell your own products back to the U.S.” (U.S. Chamber Magazine, December 2007. Accessed July 13, 2009.)

Recent comments filed by unions and other civil society groups concerning the administration’s proposal to initiate Trans-Pacific Partnership (TPP) agreement negotiations focus strongly on the need for major reforms to be made to the trade agreement model used for the Peru FTA. TPP talks, which would include Peru, would provide the Obama administration with the opportunity to implement the president’s trade reform campaign commitments that included the issues unaddressed in the May 2007 deal, and to replace the current damaging Peru FTA text with a new trade pact model.

Read the full report here.

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New Year’s Resolutions for the Obama Administration

With a number of important and high profile trade battles to be fought this year that will have far-reaching impacts on the U.S economy and domestic policy, we thought we’d suggest some New Year’s resolutions for president Obama to adopt on U.S. trade policy.

These resolutions are solutions that the administration needs to commit to in 2010, based on what's likely to move in the trade sphere this year. They hold President Obama to his campaign promise to deliver trade policy reform, and they’ll also help to fix the economy and keep good jobs in America.

The resolutions are:

  1. Push to modify World Trade Organization (WTO) limitations on domestic financial services regulation, in light of the economic crisis. Go here for details.
  2. Conduct a comprehensive review of trade agreement policy as promised during the campaign
  3. Announce formal new trade agreement approach that brings trade pacts into congruence with the administration’s domestic priorities and goals
  4. Pass climate legislation with meaningful border equality measures
  5. Pass second major stimulus bill with robust Buy America provisions to create jobs
  6. Pass food safety bill with serious import safety protections
  7. Use the Trans-Pacific Partnership talks to devise a replacement for the NAFTA model; we either need a new way or no deal
  8. Renegotiate remaining Bush trade agreements with South Korea, Colombia, & Panama to fix NAFTA model problems and bring them in line with the TRADE Act.
  9. Give the WTO’s “Doha Round” agenda a much needed burial and develop a new agenda related today's challenges aimed at fixing WTO problems, from financial services deregulation to limits on climate crisis redress space
  10. Fight for a China trade policy that supports jobs and also ensures product and food safety for both countries

Obama has already resolved to do a lot of these, but just as with most New Year’s resolutions, he’s somewhat fallen off the wagon.  We’re here to help him resolve anew and stick to it!

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Americans Say NAFTA-style Agreements = Job Losses

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

A poll conducted by the Pew Research Center in November has found that the public holds deep misgivings about the WTO and trade agreements like NAFTA.

In an atmosphere of 10 percent unemployment, about 52 percent of those surveyed believe that "free trade" agreements lead to job losses, while only 13 percent believe that the agreements create jobs. The remainder of those surveyed didn't have an opinion, refused to answer, or thought trade agreements didn't affect employment.

Only 11 percent of respondents believed that free trade agreements make the wages of Americans higher, but 49 percent believed that trade agreements reduce American wages.

The survey also reveals quite a disconnect between the views of the foreign policy elite and the views of the public at large: 88 percent of the members of the Council on Foreign Relations believe that these trade agreements are a good thing for the United States, which is more than double the proportion of ordinary Americans who believe the same.

Another interesting finding in this poll is the degree of opposition to "free trade" agreements among Republicans and independents. About 36 percent of both Republicans and independents believe that trade agreements are a bad thing, which is a greater degree of opposition that even Democratic voters exhibit.

Democratic candidates for Congress must keep in mind that in order to prevail in the midterm elections they must retain the independent and Republican voters that they gained in 2008, so running on a fair trade platform can only help expand their appeal.

Read the report here

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The Return of the NAFTA Election Cycle?

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

As we throw out the old calendar and enter an election year, Democratic and Republican party leaders are busy figuring out their electoral strategies.  Various Democratic strategists, for their part, are running through the familiar arguments about appealing to independent voters versus rallying the base.  Arguing for a rally-the-base approach, Democratic strategist Steve Rosenthal reminds us that voters punished the members of Congress who pushed though a bad trade pact one fateful election cycle:

In 1994, the year Republicans swept to power in the House and Senate, union members were demoralized and stayed home because the Clinton administration had fought vigorously to pass NAFTA and backed down on health care reform.

Economist Paul Krugman also argues this NAFTA point while discussing the Republican strategy: “The idea that NAFTA was a big plus for Clinton, coming from Rahm Emanuel of all people, is just too bone-headed for words.”

Fortunately for everyone involved, the choice between fair trade and NAFTA-style agreements is not a choice among appealing to liberal, conservative, or moderate voters.  Polls have demonstrated that voters of all stripes are fed up with the NAFTA model, particularly in swing states.  Fair trade candidates elected in 2008 now have the seats in Congress to prove it, which makes clear that support of the NAFTA model is a losing strategy, while supporting the TRADE Act might be a way to win.

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Giving thanks

  • I'm thankful that there is a fair-trade groundswell in Congress, with positive forward-looking legislation like the Trade Act occupying an important space in the national debate.
  • I'm thankful that there's still no ratified Colombia, Panama or Colombia FTAs - those awful holdovers from the Bush era.
  • I'm thankful that Dubai Ports World never took over U.S. ports. As we predicted, the UAE government is taking ever more control over Dubai World, and it's not clear where it's going to end.
  • I'm thankful Eyes on Trade has never gotten a review this bad.
  • I'm thankful that I don't have a nail bed whose production was offshored to China.Pic_bedofnails_b
Mr. Engman, who left a job in banking last June to become chief executive at Shakti, said he saw only one major threat to his business, which imports its mats from India. “Now, lots of people are producing nail mats more cheaply,” he said. “In China.”
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Weissman takes helm of Public Citizen

Rob Weissman, a longtime advocate for the public interest, becomes Public Citizen's third president today. You can see our Rob's stand on the issues here, and our press release here. Here's his welcome video:

I am very excited about Rob for several reasons. First, I have known Rob for ten years. When I was a waiter at Cafe Luna, Rob was a great tipper and patient customer - two qualities I weight heavily when considering someone's character. There are many well-known individuals who I served who were neither.

Second, Rob was the one who convinced me to take the job at PC's Global Trade Watch division. He is a real rare creature in Washington in that he shows as much respect to young activists as he does to old pros. There are certainly some meetings I go to where many people don't give you the time of day unless you have been around town for 30 years, and then not always. Rob is decidedly not such a person, and is consistently kind and encouraging - but also tough, challenging students and others to step up and take responsibility.

Third, Rob is a real expert on issues of corporate accountability, and in particular of corporate globalization. Here's what he had to say about pending FTAs:

“Designed by the world’s largest corporations, our global trading system benefits those who designed it. Trading rules, including those in existing and pending free trade agreements, strip power away from democratically elected governments. Trade rules prevent our federal government and our states (as well as other governments) from protecting consumers and the environment. They interfere with efforts to promote community development and the preservation of good-paying jobs. They give pharmaceutical companies the right to price gouge the world’s poor, and help agribusiness eliminate family farms.

“When it comes to trade, we need a redirection. We need trade rules that enhance democracy and ensure that trade advances rather than undermines the things we want from an economy: safe products, good-paying jobs and decent livelihoods, vibrant communities and a healthy planet.

“The Trade Reform, Accountability, Development and Employment (TRADE) Act offers us a way to achieve this redirection. There is overwhelming public support for the course correction that the TRADE Act would achieve; the only question is whether the public can be organized to overcome the entrenched interests supporting the trade status quo.”
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In Memory of Nick Skala, Former GTW Intern

The following comes from former GTW policy analyst Mary Bottari, the member of our team who worked most closely with Nick.

Dear Friends,

I wanted to share with you how shocked and incredibly saddened I was to learn that former GTW intern and Northwestern law student Nick Skala died in his sleep over the weekend at the home of his good friend and mentor Dr. Quentin Young. In his 27 years, Nick made quite an impact, especially publicizing and organizing around the issue of single payer health care. As the Research Director for Physicians for a National Health Program (PNHP), he contributed to many of their research projects including the groudbreaking study demonstrating that the vast majority of American bankruptcies are due to health care costs.

When he applied to GTW, Daphne and I interviewed him and decided to hire him immediately. He started last summer, then had to leave DC to return to Chicago because the Illinois Speaker decided to put the single payer bill he had been working on to a vote. He continued to work with me while working the bill. He knew a boatload about the insurance industry and quite a bit about banking too. Over the summer, he educated me about how the insurance industry and the reinsurance industry were regulated by states and did some quick letters and memos that helped us stall a vote on a bill that would have allowed the Department of the Treasury to preempt prudential state insurance regulations, due solely to trade concerns.

He quickly grasped the rules of the WTO General Agreement on Trade in Services (GATS) and even the GATS financial services agreement and wrote a series of memos on related topics, including the WTO legality of the Obama health plan. When he returned to law school, he decided to pursue the complex WTO issues by taking a business law class and critiquing the economic reform proposals put forward by progressive economist Nouriel Roubinis from a GATS perspective. He got an A from his law professor, and a hedge fund manager who reviewed the paper later called him up to grill him on the WTO and how the rules might be useful to their firm...! I was fortunate enough to see him a few weeks ago and hear about his exciting summer internship with the House Judiciary Committee. He had the plum assignment of reading and cataloging Karl Rove's emails. In his free time, he helped the single payer advocates organize their effective protests and strategies on the hill.

He was brilliant, inventive, inexhaustible and the world is a better place for his efforts. I hope folks will consider making a donation to PNHP in his honor.

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USTR Can Do Better at Fulfilling its FOIA Responsibilities

[Editorial note: This post is written by guest blogger Steve Charnovitz. The views expressed herein are solely those of the individual contributor and do not necessarily reflect those of Public Citizen.]

I want to thank Public Citizen for inviting me to be a guest blogger this week. I believe this invitation is especially noteworthy given that I am a free trader. Many blogs do not welcome a diversity of views, but clearly Public Citizen does.

For my Monday post, I want to address is USTR's handling of Freedom of Information Act (FOIA) requests. Or rather I should say mishandling, since their actions certainly violate the spirit of FOIA if not its letter.

One of the most unfair and least accountable aspects of World Trade Organization policy is accession, that is, the negotiations that occur when countries seek to join the WTO. As I have explained in my paper, “Mapping the Law of WTO Accession," now posted on SSRN, the WTO routlnely demands that applicant countries agree to higher obligations than ordinary members have (i.e., applicant WTO-plus obligations). These discriminatory requirements sometimes arise in bilateral accession negotiations that precede the multilateral negotiations.

Continue reading "USTR Can Do Better at Fulfilling its FOIA Responsibilities" »

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Were YOU Made in America?


Here's one for the PR Spin On Crack files. Courtesy of the AFL-CIO blog, this is too rich not to share:

Over the Memorial Day weekend, J.C. Penney advertised a silkscreen T-shirt bearing the slogan, “American Made.” Yet when Joe Allen, a retired apparel manufacturer in the Dallas area, bought the T-shirt, he found it actually was made in Mexico—”of USA fabric.”

...Here’s what J.C. Penney spokesperson Kelly Sanchez had to say:

You indicate that there was a shirt that depicted the slogan “American Made.” This type of slogan is referring to the actual person wearing the shirt and not to the manufacturing of the merchandise.

Emphasis added. So my question is, does this imply that J.C. Penney is going to wade into the immigration debate?

Anyway, also on the topic of failing to invest in the U.S. economy, if you haven't been following the IMF funding debacle, Mark Weisbrot has a nice primer at the Guardian Unlimited.

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Work for (a) Change, with GTW

Public Citizen's Global Trade Watch division is hiring for several positions, including for a researcher/blogger, media/communications person, and a deferred or outplaced law associate (if you don't know what this is, it's not you)! The most exciting part of this job? You get to work with the glamorous Eyes on Trade posse.

Please circulate to people you know who may be interested. More details are after the jump.

Continue reading "Work for (a) Change, with GTW" »

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Wake Up and Smell the New Day on Trade!

Here's another alarm for those who've had their heads buried undeThink Credence: Fair Trade Sun on the Riser the covers since before November of 2006: Wake up and smell the New Day on Trade!

347 public interest organizations (and counting) have joined forces to welcome the new fair-trade president and newly upgraded fair trade Congress and express their excitement to work together to reform our broken trade policies.

The letter, spearheaded by the Citizens Trade campaign along with its member groups and state affiliates, reads:

The recent election demonstrated a relentless demand from the American public for trade reform. Across the country, from the Presidency to both chambers of Congress, successful candidates in 2008 ran against the failed status quo and for a new approach. With this election, 42 newly elected Senators and Representatives committed to changing our past trade model. They join over two dozen fair traders elected in 2006 – making a combined total of 71 fair-trade reformers who replaced those supporting the North American Free Trade Agreement (NAFTA), the Central America Free Trade Agreement (CAFTA) and our current China trade policies.

Signatories said they look forward to working the Congress and the Obama administration to correct our failed trade policies of the past. Specifically groups cited a desire to fix past deals like NAFTA, CAFTA and the WTO, as well as the hangover Bush NAFTA-type deals with Panama, Colombia, and South Korea and that they be renegotiated along the lines of the real reform outlined in the TRADE Act.

Wipe the crust from your eyes America, and see the trade reform start a flowin!

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Yet another dead institution trying to revive itself

CEPR, Essential Action and results have the scoop on another dead institution trying to revive its power. They did a press call talking about the issue. Mark Weisbrot had this to say:

The IMF answers mainly to the U.S. Treasury Department, with some minor influence from Europe," said CEPR economist and Co-Director Mark Weisbrot. "Treasury is using its influence just as it did 10 years ago during the East Asian economic crisis, to channel international bailouts through the IMF and to determine the conditions attached to such lending, and to select the recipients of such aid according to its own political preferences."

Weisbrot noted that during the Asian financial crisis, the U.S. Treasury department scuttled proposals for an Asian Monetary Fund, which could have prevented much of the damage that occurred, in order to maintain the IMF/Treasury monopoly on bailouts in the region.

Weisbrot called for countries with large surpluses of international reserves to channel any aid to developing countries outside of the IMF, either through regional, multi-lateral, or bi-lateral arrangements.

"Competition is necessary, and will also improve the performance of the IMF," said Weisbrot.

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IMF: Moving Past Harmful Conditions in Current Meltdown?

According to Mark Landler, the International Monetary Fund may be trying to take advantage of the current crisis to resurrect itself from its near-death experience, but there are no signs that this means a return to old-IMF-style conditionalities:

On Wednesday, the International Monetary Fund announced it would lend up to $100 billion to healthy countries that are having trouble borrowing as a result of the turmoil in the global markets. And the Federal Reserve said it would commit up to $30 billion each to Brazil, Mexico, South Korea and Singapore, to enable those countries to more easily swap their currencies for dollars...

The loans will carry none of the strings that usually accompany fund money, including demands to raise interest rates and cut public spending...

That prospect troubles some critics, who contend that the fund is prescribing the same radical measures that caused unnecessary pain in some Asian countries during that region’s financial crisis a decade ago...

Suspicion of the fund is a global phenomenon: the Korean government declared it would not take any loans. Feelings there are still raw from the Asian financial crisis, during which the fund forced South Korea and other countries to raise their interest rates sharply.Mr. Strauss-Kahn, a former French finance minister, said he was aware of resistance stemming from the Asian crisis and was trying to tailor loans more closely to the conditions in the countries.

Stay tuned to see if the IMF's promises are kept.

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The Thrilla in Mozilla

There's a couple of housekeeping announcements I'd like to make.

First of all, Public Citizen's brilliant design guru, James Decker, has launched the new Eyes on Trade blog header. If you like what you see, show James some love in the comments!

Second, you may have noticed some new names in the contributors list in recent weeks. There will be more to come, as some new members of the PC Global Trade Watch team premiere their own blog posts. In addition to Brandon Wu, Kate Pollard, Lori Wallach and me, you'll be seeing more regular posts from deputy director Bill Holland, organizers Michael Crawford, Sarah Edelman, and James Ploeser, and media/ South Africa expert Ann Eveleth.

Rounds of virtual applause, please!

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Stay Tuned... We're Moving Past The Fast Track

Regular readers of the blog will notice that our posting has dropped off a bit in recent weeks.

The reason? We've been busy with several long papers that we'll be releasing soon on Fast Track and what will replace it. One is a history paper of the various mechanisms that the United States has used over 219 years to deal with the executive-legislative branch co-responsibility for trade agreement negotiations and approval. It concludes that Fast Track is not inevitable, necessary, or even desirable to promote trade expansion. A second piece compares Fast Track's treatment of state and local officials to processes used by other federal democracies like Canada.

We think you'll enjoy 'em, and you'll be hearing more about them in the coming weeks.

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Dit Bud is Voor U / Este Bud é pra você

I've loved hearing the stories in recent days about all the righteous working class anger at Budweiser being bought out by the Belgian-Brazilian InBev company. Of course, many of the buy-outs and attempted buy-outs of the last few years stem from the overvalued dollar / trade deficit. If we're giving the world more cash as we consume their products, they've got to turn around and do something with the Benjamins. As it turns out, the acquisition of U.S. companies is one way to do it.

As a lover myself of smaller breweries of the kind profiled in Imbibe Magazine, I don't always have a lot of sympathy for the trials and travails of large corporate beer producers. But unlike Coors, both Bud and Miller are unionized, so hopefully the Bud sell-off will not result in any change in that. The Teamsters are sure to hold ImBev's fat to the fire on that one.

This_buds_for_you As with many other commodities and services, government efforts to keep beer production local, organic and/or union are seriously hindered by WTO (previously GATT) and NAFTA rules. Here's an NYT article from 1992:

The Canadians say the tax credits that many states offer companies, based on annual production of beer in the state, discriminate against them. The Anheuser-Busch Companies, controlling nearly half the beer market in the United States, for example, gets $21 million of annual tax savings from a brewery in Columbus, Ohio, the Canadians complained to GATT.

Canadian beer executives say a GATT panel has now ruled in favor of the Canadians. The ruling has not been made public, and officials of GATT and of the United States and Canada have declined to comment. If the reports are true, it would be the first time that American state laws were found in violation of international trade laws.

How could this happen? Here's Ruth Walick:

Because of its success in reducing world tariffs and preventing tariff wars, the GATT in the 1970s turned to nontariff barriers (NTBs). NTBs comprise an array of national laws, procedures, regulations, permits, standards and other government requirements. In the American federal system, many NTBs also result from the exercise of powers by state and local governments.

Since state and local governments are bound by the national Supremacy and Foreign Commerce Clauses of the Constitution, rulings by GATT dispute settlement bodies carry the potential for preemption of state and local government laws and regulations. For example, in a 1991 dispute settlement, a GATT panel upheld a Canadian complaint against a constitutionally sound Minnesota tax favoring small breweries (the so-called "Beer II" case), which effectively nullified the Minnesota tax. 

As we rage on in Queens pubs about the Bud takeover, let's also look through our beer goggles at the root causes.

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Major trade bill dropped today: our statement

Here's our press release:

Public Citizen Supports Landmark Trade Expansion Legislation

TRADE Act Addresses American Public’s Demand for Change During Presidential Campaign With a New Way Forward on Trade, Globalization

WASHINGTON, D.C. -  Following a presidential primary season highlighting broad public concern about current trade policies, the Trade Reform, Accountability, Development and Employment (TRADE) Act introduced today by Sen. Sherrod Brown (D-Ohio) and Rep. Mike Michaud (D-Maine) reveals a way forward to a new trade and globalization agenda that could benefit more Americans, said Public Citizen. The bill is supported by a broad array of labor, consumer, environmental, family farm and faith groups and more than 50 House and Senate original cosponsors.

“The TRADE Act is exciting because it describes concretely new trade and globalization policies that many Americans would support and shifts the debate toward future consensus about what we are for, rather than focusing on opposition to the current model,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division.

The legislation requires a review of existing trade pacts, including the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO) and other major pacts, and sets forth what must and must not be included in future trade pacts. It also provides for the renegotiation of existing trade agreements and describes the key elements of a new trade negotiating and approval mechanism to replace Fast Track that would enhance Congress’ role in the formative aspects of agreements and promote future deals that could enjoy broad support among the American public.

“Corporate interests have hijacked past trade pacts to get special protections - patent extensions that jack up drug prices, subsidies for offshoring production and more. The TRADE Act tips the scales back in balance with a trade agenda that also suits workers, the environment and everyday consumers,” said Wallach. “The special interests who pushed our current trade pacts claimed that opponents of NAFTA and WTO were anti-trade, which was never true .We invite them to show their commitment to trade expansion by supporting the TRADE Act, which will build a new American consensus in favor of trade.”

According to a May 2008 Pew Research Center poll, 48 percent of respondents believe free trade agreements are bad for the country, including 42 percent of Republicans and 52 percent of Independents. Only 35 percent of respondents consider them positive. A Wall Street Journal/NBC poll released in January 2008 found that 58 percent of Americans think “globalization has been bad … because it has subjected American companies and employees to unfair competition and cheap labor.”

These polls reflect many Americans’ negative experiences under our current trade model. Since 1975, when Fast Track was first enacted, the U.S. trade balance has shifted from a slight surplus to an unsustainable $709 billion deficit in 2007. A net 4.7 million manufacturing jobs have been lost, and while American worker productivity has doubled, American median wages are only 1 percent above 1970s levels. Since NAFTA and the WTO went into effect, an array of domestic public interest laws have been successfully attacked while imports of unsafe food and products have surged.

“Presidential primary candidates from both parties responded to the American public’s demand for trade policy change, and both leading Democratic candidates committed to renegotiating bad trade deals like NAFTA,” said Wallach. “This bill provides the specifics of what a broad array of labor, consumer, environmental, faith and family farm groups representing millions of Americans expect for a future trade agenda.”

The TRADE Act’s sponsors, Brown and Michaud, highlighted how the legislation offered specific positive trade policy solutions to the public’s concerns.

“The TRADE ACT will help Congress and the White House craft a trade agreement that benefits workers, business owners and our country. We want trade, and we want more of it,” said Brown. “The TRADE ACT is a critical first step on a new path for trade.”

Added Michaud, “The TRADE Act is a tremendous step forward in fixing our broken trade policies by setting out a new course on trade that will benefit businesses and workers in the U.S. This legislation outlines what a good trade agreement must and must not include. In this election year, with trade such a major focus of the debate, it’s important that the American people and the presidential candidates hear our message on trade. This legislation will help shape the debate on trade for years to come.”      


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

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Maine rocks fair trade

This is some great footage from the Maine Fair Trade Campaign's recent convention, with none other than our own Lori Wallach, making the case for a different trade model. Fair trade champion Rep. Mike Michaud (D-Maine) also riles up the crowd about 6 minutes in:

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Forward motion on debt and the IMF

I'm just getting back from vacay, but there's a few things I wanted to drag out of my email backlog and share.

First, in case you hadn't heard, the Jubilee Act passed the House. This is a major victory for the global justice movement, as it not only expands debt cancellation  for 24 additional impoverished countries, but also rolls back some of the conditionality that has been used to turn developing countries into basketcases.  The vote was 285-132, with many GOP joining the vast majority of the Dems in passing the legislation (only Reps. Jason Altmire (D-Pa.), Chris Carney (D-Pa.), Brad Ellsworth (D-Ind.), Kirsten Gillibrand (D-N.Y.), Nick Lampson (D-Texas) and Gene Taylor (D-Miss.) among Dems voted no - the first 5/6 are freshmen!)

I recently asked some friends who work on IMF issues to rebut the statement: "The IMF is dead." A few have responded. Mark Weisbrot also had a good column in the LA Times talking about how the IMF is dying, but is still not dead yet:

The collapse of the IMF creditors cartel has been a huge blow to U.S. influence. It was most pronounced in Latin America, where most of a region that used to be referred to as the United States' "backyard" is now governed by states that are more independent of Washington than Europe is.

The problem is that poorer developing countries, especially in Africa, remain dependent on foreign aid from the IMF (and the World Bank and other sources) to fund their basic budget and import needs. This can be harmful to their development and their people. In recent years, the IMF -- insisting that such measures are necessary to hold down inflation -- has imposed conditions that limit their public spending and, according to the fund's own internal evaluation, have prevented these countries from spending aid money on urgent needs, such as healthcare and education.

These countries need to join the rest of the developing world in breaking free of the IMF's policy conditions. The U.S. Congress may consider legislation that would pressure the IMF to use some of its huge gold reserves for debt cancellation and to limit the IMF's control over policy in poor countries. These would be important steps forward for the world's poor.

Our bud Rob Weissman had a similar piece at Huffington Post:

Although the Fund has promised that it would reform the way it imposes conditions on poor countries, a new report from Eurodad, the European Network on Debt and Development, finds that, over the last six years, IMF conditions have not changed in number or kind.

One thing has changed, however. Impressed by the IMF's repeated failures, middle-income countries have paid back their loans to the Fund, and are not taking out any news ones.

This in turn has two consequences. For now, at least, the IMF has lost its hold over most middle-income countries -- but it maintains its iron grip on the world's poorest countries. And, the Fund is experiencing a financial crunch of its own. It had depended on the interest payments from middle-income countries to support its budget.

Developing countries are not shedding tears over the IMF's financial distress. "At long last, the IMF is experiencing first hand serious budget cuts," says Cheikh Tidiane Dieye of Environment and Development in Africa (ENDA), based in Senegal. "The poetic justice of this is palpable. In Senegal, the IMF has mandated budget cuts for years. As a result, we have been unable to invest in health care, education and other essential services. If the IMF's loss of financial power is accompanied by a loss in political power, this could be good news for all Africans."

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Friday Film Fun: Caravan/Prague: The Uneasy Road to Change

Katie Clifford, Global Trade Watch intern extraordinaire, wrote up a quick blurb on Caravan/Prague: The Uneasy Road to Change. We'll leave you with this on a beautiful Washington, DC Friday afternoon:


"Caravan/Prague: The Uneasy Road to Change is a film by Zack Winestine that chronicles a bicycle caravan as it makes its way across Europe in order to shut down the annual meeting of the World Bank and IMF.

"Representative of the power for change that can result from definitive action by a small number of people, Caravan is one of many examples of people around the world taking a stand against the corporate control of global trade policies. This firsthand account is an honest and inspirational look at one groups' fight to ensure that fair trade becomes a reality."

In the meantime, you can take your own stand against corporate-dominated trade and tell your congressperson to publicly oppose the Colombia NAFTA expansion. No cross-continental bike riding necessary!

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"Don't call me protectionist"

Sen. Sherrod Brown (D-Ohio), in an op-ed in the most unlikely of places, the Wall Street Journal editorial page:

We take for granted our clean air, pure food and safe drinking water. But these blessings are not by chance: They result from laws and rules about wages, health and the environment. Trade agreements with no rules to protect our health, the environment and labor rights inevitably create a race to the bottom and weaken health and safety rules for our trading partners and for our own communities.

But cheerleaders for current U.S. trade policy, while mostly shrinking from a debate about the issues that matter to middle-class America, insist that those of us who want more trade - but trade under a very different set of rules - are protectionists.

Senator Brown goes on to highlight an argument we've made many times at Eyes on Trade regarding the most damaging provisions of the Colombia FTA:

"Supporters sell [the Colombia FTA] as a free-trade agreement, a great opportunity for American companies because it eliminates tariffs on our products. If that were true, the agreement would be a few lines long. Instead, we have a trade agreement that runs nearly 1,000 pages and is chock full of giveaways and protections for drug companies, oil companies, and financial services companies, and incentives to outsource jobs now held by Americans."

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Exhibit B in non-permanence of neoliberalism: IMF is dead

After the demise of Fast Track this week, Exhibit B shows again how movable the neoliberal institutions are. From the FT earlier this week:

The board of the International Monetary Fund voted on Monday to cut 15 per cent of its staff and sell about $11bn (€7bn, £5.5bn) in gold reserves in one of the biggest shake-ups of its funding since it was founded.

The IMF plan to cut 380 jobs and sell 403.3 tonnes of gold, about an eighth of its reserves, still has to be approved by other authorities...

“We think it is time to retool and move away from pure lending towards a business model that offers a group of experts to help countries adopt the right policies,” the IMF said.

You can just smell the spin when a LENDING institution claims it's going to be doing a mite less lending, and instead be a stable for otherwise unemployed experts. In fact, as friends who have worked at the IMF tell me, all of the IMF's economists are here on work visas. Some of them have been here 20 years, and have houses in Silver Spring, and kids at Sidwell Friends. If they're fired, they must go home.

But what's a deported Malawian central banking expert to do back home? Well, the Malawian central bank or government might be a good place to drop off a job application. But tragically, after 30 years of IMF structural adjustment, there isn't much of a government left to go back to. Indeed, thanks to the stunning success of the IMF at shrinking the size of developing country governments to the size where you can drown them in a bidet, neoliberal economists have made themselves unemployable.

The IMF's financial difficulties comes from the fact that it has no more borrowers. Latin Americans got peeved and created their own Bank of the South. Asians got peeved and decided to just hoard ever greater dollar reserves on their own (contributing to our own current account problems, but that's for another time.) Currently, Turkey accounts for most of the IMF's lending portfolio. As Mark Weisbrot and Erinc Yeldan showed a few years ago, this hasn't been particularly good for Turkey. And then, this happened:

Turkey's economy can withstand global economic turmoil, Economy Minister Mehmet Simsek told Reuters, to the point that a new IMF stand-by agreement is not needed and is indeed "unlikely."

Oh, well. Despite the IMF chief Dominque Strauss-Kahn''s declaration this week that "the IMF is back," it's pretty clear that it's down for the count. One down: two to go (WTO and World Bank - both are in critical condition.)

If you're in DC this weekend and would like to participate in some of the civil society events planned, the Bank Information Center has a webpage that is a great resource.

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Our side's brains speak into a camera

Listen here to our friends Ha-Joon Chang and Kevin Gallagher, sharing wisdom from their new books. Thanks Tim for putting this together!

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Liability in a globalized world

Much of the U.S. consumer movement has encouraged the development of punitive damages, mostly because of the massive holes in our regulatory and social safety net structure. Now, the New York Times reports that other countries are pushing back when asked to enforce U.S. punitive damage awards.

Still, as Europe rolls back its own social safety net, some European analysts are looking more favorably on the U.S. punitive damages' system as a stopgap measure to protect consumers. Ironically, U.S. courts, as reported in the article, are rolling back and limiting punitive damages claims... but with no social safety net to take its place. Seems like both continents are moving rightward, although in Europe, the frog may be getting so slowly boiled that there's less screaming about this issue. In the U.S., we may already be too boiled to tell.

Actually, we're not just moving back to a neutral place where there are no punitive damages. Through trade deals like NAFTA, corporations are actually creating systems of corporate "punitive damages" where the force of the law is used to their enrichment. Occasionally, they're claiming corporate-style punitive damages at the same time that they're using NAFTA to attack traditional pro-consumer punitive damages. From the NYT:

Foreign lawyers and judges are quick to cite particularly large American awards. Julian Lew, a barrister in London, recalled a Mississippi court’s $400 million punitive award against a Canadian company in 1995 with scorn. “It did bring America into total and utter contempt around the world,” Mr. Lew said.

The Canadian funeral home multinational, Loewen, at the bottom of this case actually used NAFTA to try to collect investor-state damages from the U.S. government for the attitude problems of the Mississippi "jury of your peers," in a case that the U.S. lost on the merits (the overall case was won on a technicality). We document the history here. Whatever one thinks of the tactics used by the Mississippi lawyers and judge, it seems like quite an overreach to make the U.S. government liable under NAFTA for these local problems that are just part of the institutional reality of this country.

Also, as we documented in our toy report, corporations are actually using offshoring as a way to limit their liability to consumers. As even the American Enterprise Institute's Doug Besharov conceded:

“[f]or many American claimants, the full enforceability of products liability laws stops at the shoreline. The situation worsens every year as imports fill more and more of the United States market... [the lack of liability creates an] artificial price advantage [that] will help [foreign producers] build market share, at the expense of United States consumers and insurers as well as competitors.”

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Freedom from Progress

Unlike many of the Capitol Hill staffers on this fair Saint Patrick's Day, we did not start the morning off with an 8 am beer. So here we are, at work, trying not to let vague feelings of ancestral oppression drive us to drink. But in an effort to come up with something kitschy for the big green day, I was looking around my desk for a hook, and found one in Ed Gresser's new book Freedom from Want. (Which, has a green cover... see?)

Freedom300 This slim volume by the former USTR official and Baucus staffer was put out by Soft Skull Press. For those of you who were graffiti heads in the 1990s, you'll remember that this is the same press that put on William Upski Wimsatt's Bomb the Suburbs. And books by graphic novelist Seth Tobocman, and even a book about the Seattle WTO protests. Which one of these things is not like the other? I am pretty sure Gresser is the only Soft Skull author to have high end Washington think tank book readings, at the Carnegie Endowment and I believe earlier in the year at the Naval Barracks as well. A little editorially confusing, and a little strange why a mainstream publishing house wouldn't publish such an impassioned defense of status quo trade policies.

The basic premise of the book will come as a surprise to anyone who reads editorial pages or fought the Peru FTA last year: namely, that mainstream American liberals applaud the global justice movement. The fact that there is still a near-total consensus among elites in favor of our trade policy is dodged by pointing out the rare exceptions: Senator Bernie Sanders of Vermont, a random quote by Gov. Howard Dean, also of Vermont.

Gresser's mission with the book is to convince the hordes of liberals under the sadistic control of the Citizens Trade Campaign that they should instead embrace the Clinton trade legacy because, in no particular order, countries have traded since the dawn of time, unemployment is low, people in developing countries prefer manufacturing jobs to agriculture jobs, colonialism was really a period of "Victorian Globalization" and freedom, FDR liked to trade with other countries, and Ed knows a distracting amount about Chinese and Greek classic civilization.

Indeed, the book is the 2.0 version of a USTR press release: dodging the major critiques made by the global justice movement in favor of obfuscation, only with tedious historical tangents (i.e. "For two centuries China has been the shape-shifter among the powers. Like the little god Proteus in Homeric legend...") , and chatty asides about the physical appearance of Clinton-era bureaucrats (i.e. "pugnacious, white-haired Bob Cassidy with his boxing-thickened ear").

Ed's book is a useful refresher on the kinds of lines that elite Democrats use when in office, and it will be particularly useful for the many younger folks in the movement who can't remember when we had a Democratic president. Unlike elite Republicans, who tend to ignore the global justice movement's critiques altogether, elite Dems do actually make an attempt to respond, and justify their favored policies with some reference (however strained) to social justice.

So there actually is a chapter on trade and the environment that addresses environmentalists' critique of the WTO dispute settlement system. But it drags you into the weeds pretty quickly in an attempt to create doubt about what environmentalists are saying. The enviro critique doesn't have to be disproved, just rendered sufficiently questionable that an uninformed activist might say, "Oh, I guess it's pretty complicated and the truth is probably somewhere inbetween." There's also the attempt to race and class bait, and suggest that global justice advocates are somehow against the poor at home and abroad because supposedly the sweatshop movement doesn't want there to be factories in developing countries and wants U.S. consumers to pay high prices for imported shoes.

In short, counter-information will be the name of the game to the extent that the 1990s cast of characters on economic policy are revived in a Dem-run D.C. It's tougher to confront this stuff than the simple Bush-bashing and Tom Friedman-dissing than has become de rigeur over the last 8 years. Our side needs to reflect on our own thoughts about working class strategy, about democracy and participation, and about rolling back neo-liberalism in favor of a system that allows policy space at home and abroad. In short, be prepared to hear arguments in favor of child labor cast in progressive-sounding rhetoric, fight the urge to gag, do your homework, and respond as forcefully as possible!

Finally, I'll fight the urge to post some Dropkick Murphy's, and instead get as close to Irish as I'll get today: a cover of U2's excellent activist anthem Sunday Bloody Sunday by slam poet / NIN-protege Saul Williams. Enjoy!

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Book Recommendation: Bad Samaritans

I'm pretty sure that I've recommended my prof Ha-Joon Chang's Bad Samaritans' book in the past, based on some advance chapters I had seen. Now that I've read the book fully through, let me double up on that recommendation and say that I think it is the finest and most accessible distillation of his ideas to date, and it's even getting grudging praise from the mainstream press. Thom Hartmann has a much longer review just published, but let me point out a few highlights:

  • This is a book about globalization that you could buy for your parents. Ha-Joon is a very witty guy who has appropriated the best of Thomas Friedman's anecdote-heavy style, and turned the conclusions on their head. For instance, in a chapter on whether the poorest countries should adopt neo-liberal trade policy and compete with the big guys, Ha-Joon darkly muses on whether he would win any parenting awards by subjecting his own son to grinding labor market competition.
  • The examples skew towards the U.S. and Europe, rather than more recently developed countries in Asia, which I think only makes it more accessible for the non-globe trotting audience here in the U.S. There are some great historical examples from the U.S., Europe and Japan about how the popular press and punditry hundreds of years ago (and even more recently in Japan) tried to discourage them from branching out into different production now thoroughly associated with the countries.
  • He doesn't dodge some of the difficult debates in economic development, such as whether democracy is necessary for development, boldly noting that the U.S. was not a democracy in the formal sense until 1965. He also doesn't pander to the anti-corruption line, as he explains that latest neo-liberal trap. Corruption may be wrong, but it's only in certain instances that it retards development.
  • Finally, Ha-Joon makes analysis of imperialism a lot less frightening to your middle-of-the-road reader. It's presented in a factual way related to power in the global economy, with all the best in British political economy as opposed to sectarian tradition (the chapter on FDI has a great line from the Keynesian economist Joan Robinson: the only thing worse than being exploited by capital is not being exploited by capital.) He also clearly exposes the parallels between the unequal treaties of the 19th century, and WTO policies today.
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Labor standards do not equal rising living standards

To listen to some of the recent chatter in the presidential debate about trade policy, you would think that the only problem with NAFTA is that it didn't contain core international labor standards in the main body of the text. As we've pointed out, core labor standards are only the beginning of what needs to be fixed with the failed NAFTA model, and many labor unions think even the labor standards achieved in the Peru FTA - supported by all the top contenders for president - didn't take us to where we need to be on that issue alone.

But this debate even obscures a larger issue: that labor standards are not going to put food on anyone's plate. As our own Lori Wallach notes over at Huffington Post,

Strong labor standards are necessary, but they are not sufficient to alter trade agreements' damaging economic outcomes for Americans. Labor rights requirements in trade pacts will provide workers in trade partner countries with essential tools to organize for improved wages and conditions over many decades as part of creating a social contract that may take a century to establish, as it did in the United States. However, a future president has a duty to secure tangible gains for Americans who are losing their jobs and seeing their wages stagnate today, and who fear for their children's futures in the coming decades. That requires changing the status quo trade model by eliminating provisions that promote immediate offshoring of U.S. production and jobs. The foreign investor protections included in these agreements directly incentivize offshoring by removing the risks normally associated with relocating to low-wage developing countries.

Indeed, the *best* case scenario for labor rights in an FTA over the short-to-medium term is that there is a lawsuit brought by the U.S. government against a developing country for failure to comply with labor rights (subject to multiple and difficult to meet conditions). This could be awesome, no doubt about it, and would provoke an important debate. But lawsuits alone will not put food on the table in either the U.S. or Mexico.

How did we get into the position where labor rights became the outer horizon of the thinkable? For some insight on the question, I highly recommend this article by Robert Howse, "From Politics to Technocracy". Howse is probably more sympathetic to the overall GATT-WTO agenda that we here at EOT, which makes some of his insights all the more interesting. His read on history is that the basic trade policy infrastructure was drawn up in a time of Keynesian welfare states in developed countries, where "one simply assumed a certain toolbox of effective nontrade policy instruments, and the stability and viability of the social bargains within states as well, or at least the stability of institutions that construct and reconstruct such social bargains." In other words, many in the group assumed massive domestic redistributive interventions in the "free market" were just fine, while they should be limited in actions between governments internationally. All of this, it was thought, could be technocratically managed, if one were to restrict "politics" to the domestic sphere.

But the growth of neoliberalism in the 1970s and 1980s (which I would argue was fed by this very group of trade lawyers) decimated the ability/willingness of states to have effective domestic responses to economic problems.

Continue reading "Labor standards do not equal rising living standards" »

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Stimulating? Or, well, not so much?

As congressional leaders, the Bush administration and presidential candidates tout the stimulus plan (that probable $600 check you'll be getting in the mail to spend and thereby help the U.S. economy) they forgot one thing: nothing anyone buys here is made here. Thus, the plan may be well, less than stimulating.

Alan Tonnelson, U.S. Business and Industry Council, has much more on this in the Pittsburgh Post-Gazette. Some highlights:

  • "Consumer goods are the types of purchases likeliest to be made with rebate or other stimulus dollars that are spent (as opposed to saved). Yet in 2006 -- the last year for which detailed data exists -- more than 61 cents out of every dollar Americans spent on such goods was spent on imports. In 1997, that figure was about 38 cents."
  • "Failed trade policies deserve much of the blame. Starting with the North American Free Trade Agreement in 1993, too many recent U.S. trade deals have focused too tightly on helping multinational companies move jobs and production offshore, instead of opening foreign markets to U.S. made goods."
  • "Americans for now may have no choice but to accept that many of the stimulus plans' benefits will leak overseas, and that near-term economic performance will be modest at very best. But it's not too early to insist that U.S. leaders start recreating the foundations for solid, healthy growth -- and stop making policy as if the global economy and the trade-related mess they created didn't exist."

So when you do your stimulus check spending, think about all the things you can buy that are made in the U.S.! Or at least try to think of one thing you can buy that is still made in the U.S...

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NAFTA and WTO: job killer, or slave overseer?

Anyone who has spent time in social or political movements knows that language and slogans are often painfully fought out in overcaffeinated and excruciatingly long meetings in poorly lit rooms. When I was active in the sweatshop movement in the late 1990s / pre-9-11 2000s, the topic of discussions was whether our movement was "anti-globalization," "anti-corporate globalization," anti-Global Apartheid, "pro-people's globalization," or all or none of the above.

Immediately after 9-11, there were the long meetings about how and whether we should rhetorically connect the imminent war/invasion to the IMF/World Bank protests supposed to be happening in late September, 2001. And of course there is constant hand-wringing about the terms "free trade" and "fair trade," and what if anything any of these terms mean.

Such convos aren't really my cup of tea. If you like any of these titles, peg 'em on. But in doing the research on our most recent toy report, I got a bit of a labeling bug too, this time around whether we should call NAFTA or WTO a "job-killing" agreement:

The shift of U.S. toy production to China has been a long time in the making. 1972 was the first year that America imported Chinese toys, following President Nixon’s visit to the country.  China was first granted normal trade relations status in 1981, meaning it faced lower tariffs than a communist country would otherwise face. This status was renewed every year through 2001. By 1986, China was actively liberalizing its economy and lobbying for membership in what would become the WTO, and was rapidly expanding its U.S. toy exports. By 1991, China had overtaken Japan as the number one U.S. source of foreign-made toys. Throughout the 1990s, the Clinton administration passed nearly a dozen trade agreements with China,  which continued to edge out other countries for U.S. toy market share. By the end of the decade, China accounted for a majority of toys sold in the United States.  When Congress approved China’s WTO membership in 2000, Chinese-produced toys already accounted for nearly 57 percent of U.S. toy purchases – a figure that has increased to 74 percent (nearly $15 billion) since that time.

These facts illustrate a point we try to make regularly on this blog, that many of the industrial impacts in terms of jobs occurred as tariffs were lowered (in the GATT or preference programs for poor countries) prior to NAFTA and the WTO. So when movement folks say that NAFTA is a "job-killing agreement," they:

  • are saying in a roundabout way that the U.S. trade deficit continued to increase after NAFTA, and with NAFTA countries in particular. With trade policy that either mandated balanced trade (s/t that is NAFTA and WTO-illegal) or under trade that automatically balanced due to exogenous factors, there would have been jobs in tradable sectors here that aren't here now; or
  • NAFTA's (essentially) permanent reductions in tariffs and investor rights incentivized companies that wouldn't have done so otherwise to relocate production overseas, thus reducing jobs in tradable sectors that might have been here otherwise.

When most people say NAFTA is a job-killing agreement, they do NOT mean that the total number of jobs in the US somehow declined (unemployment has been fairly constant, except during the late 1990s thanks not to trade policy but to Alan Greenspan). They are making a point about jobs in TRADABLE sectors (ie. primarily manufacturing), and linking either in a macro sense to the deficit, or in a micro sense in terms of the incentives affecting individual business decisions. Indisputably, there are fewer union jobs and fewer manufacturing jobs than there used to be, and we've been in a trade imbalance scenario, so somehow that has to be explained.

So why do corporations even fight for these trade policies, if they had already offshored so much of their production prior to NAFTA and the WTO? I think the short answer is that it's an unholy alliance between a few exporters (think Caterpillar and agri-business), with a lot of industries that have already offshored production (think toys, apparel) and want to lock in duty-free access for their products coming back into the U.S. market, and with the whole of the multinational corporate lobby (esp. the services and pharmaceutical sector, but also the above) who want some insurance against progressive political change. There's no quicker way to get backdoor, international deregulation at the state, local and national levels of government than pushing these deals.

So perhaps a more apt metaphor for NAFTA rather than "job-killer" is "slave overseer" or "prison guard." The new neoliberal world order begun in the 1970s has prejudiced people both in the U.S. and abroad, and agreements like NAFTA and WTO from the 1990s and today merely serve as an enforcement apparatus to lock in and maintain this state of affairs.

The problem remains that people would probably rather see themselves as dignified workers losing a job rather than as prisoners or slaves. So, I'm taking suggestions - best metaphor wins!

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Numerology, lingerie, and a half-hearted post

Dean makes a funny about numerology and David Brooks today:

David Brooks' column is full of nonsense on trade this morning. The point is to propagandize on behalf of current trade policy, which is taking a beating in popular opinion as of late. Brooks includes a wide range of factors which are somehow supposed to imply that the current trade policy is good.

Just to to take a couple of my favorites, Brooks points out from 1991 to 2007 the trade deficit grew to $818 billion from $31 billion. "Yet, .... during that time the U.S. created 28 million jobs and the unemployment rate dipped to 4.6 percent from 6.8 percent."

Let's see, according to my calculator, the sun came up 5,840 times during this period. Therefore, by Brooks logic, trade must facilitate astronomical processes. For those familiar with economic theory, the expected impact of trade would be on wages, not the number of jobs. And most workers have seen very small wage gains over this 16 year period as the bulk of the benefits of productivity growth have gone to highly-paid workers.

Brooks also cites a study by Robert Lawrence and Martin Baily that purports to show that 90 percent of the jobs lost in manufacturing are due to domestic causes. I have no idea what this is supposed to show. A trade deficit of 6 percent of GDP (now closer 5 percent) corresponds to at least 3 million lost manufacturing jobs. Does it make any difference for anything in the world how these lost jobs are divided between the loss of existing jobs or the failure to create new jobs? It certainly doesn't matter for any economic theory with which I am familiar.

Brooks also extols the fact that the people in this country have lots of kids -- that's great if you like global warming, otherwise it doesn't seem like such a great thing. Perhaps the best line is that the United States "benefits from low levels of corruption." This is probably because actions like having a CEO wreck a company, and then get a hundred million dollar severance package, are perfectly legal.

Tasini talks sweatshop lingerie:

When you slip on your Victoria Secret garb, remember this: it comes to you partly due to the wonders of so-called "free trade." And, in particular, that little Victoria Secret garment (I guess "little" is redundant in this context) may even hail from Jordan--which was supposed to be the poster child for how one forges the "right" kind of so-called "free trade" deal. But,  instead, Victoria Secret exposes the exact fallacy of so-called "free trade."

Billy Bragg takes on the corporate power mongers, in another in our series of Top 10 Best Songs About Trade:

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Protectionism Killing Economy? Um, no.

CNBC asked today at 6:30 am on Squawk Box is "Protectionism Killing Economy?"

Lori Wallach, director of Public Citizen's Global Trade Watch division debated John Fund of the Wall Street Journal, but really it wasn't much of a debate.

Watch it here (if it doesn't appear via the link, search for "Lori Wallach"):

Protectionism Killing Economy?
Protectionism Killing Economy?

A few of my favorite parts:

  • John Fund: "[Alan Greenspan] is a pure free trader no matter what his economic analysis might lead him to say."
  • John Fund: "The majority of Democrats in Congress voted for it" (note: the Dem vote was 108 supporting to 116 opposed)

Lori Wallach: "A majority opposed it actually..."

John Fund: "If you add in the Senate a majority of Congress supported it."
Lori Wallach: "They haven't voted yet. Check your facts!"
  • Host: "We can't dictate the laws of these countries but we can open markets..."

Lori Wallach: "You just made my case. If these trade agreements were just about trade we wouldn't be having this debate...Have you guys read the agreement? Have you?" [silence]

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U.S. Chamber of Commerce: we hate Americans

Chamber of Commerce President Thomas Donohue: "You know, when you come to immigration and trade -- I've sort of come to the point that I don't blame the politicians as much as I blame their constituents." This was regarding Fast Track's expiration and the immigration bill.

Hat tip to Alan Tonelson.

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