First Labor Rights Claim Under the Revised NAFTA Filed by Migrant Worker Women in the U.S. -- What Does It Mean in Terms of the New Labor Rulebook in the Region?

By Daniel Rangel

The revised North American Free Trade Agreement (NAFTA) hints at key terms that a pro-worker, pro-environment trade agreement should include, thanks to the crucial engagement of congressional Democrats. In 2019, they forced Trump to renegotiate his initial 2018 NAFTA revision to meet Democrats’ demands. The final pact won unprecedented Democratic congressional support in no small part because of enhanced labor obligations enshrined in the agreement and its novel enforcement mechanisms that many hoped could improve the living conditions of working people throughout North America.

One critique made by some progressives was that the deal targeted labor conditions in Mexico, while offering little that could improve working conditions for people north of the Rio Grande — including labor protections for Mexican migrant workers employed in the Northern neighbors.

Well, it turns out that the first demand for enforcement action for failing to comply with the new labor terms is against the United States. The petition submitted on March 23 was filed by Mexican migrant workers, Maritza Perez and Adareli Ponce, and a binational coalition of organizations led by the binational organization Centro de los Derechos del Migrante, Inc. (CDM). Other signers include the American Federation of Teachers, the Association of Flight Attendants-CWA and the United Food and Commercial Workers International Union.

From the outset, it is important to point out that this submission is not under the labor Rapid Response Mechanism (RRM) that is viewed as one of the most interesting new provisions in the revised NAFTA. RRM allows challenges against specific companies and punishes them directly for violations. RRM enforcement only applies to claims about violations of freedom of association and collective bargaining rights, which are not the focus of this complaint. So, the first test run of the RRM provisions is still pending.

Rather, this submission to the Mexican Secretariat of Labor and Social Welfare is effectively a request that the Mexican government initiate what is called a state-state enforcement claim that the United States has breached the revised NAFTA labor rules by allowing gender-based discrimination in its H-2 non-immigrant worker visa program.

The 133-page complaint basically has four lines of argument.

First, migrant women are largely excluded from the U.S. H-2 visa programs. Through systemic, discriminatory recruitment and hiring practices, women are overwhelmingly left out of both the H-2A and H-2B programs. For instance, in 2018, only 3% of all H-2A visas (for non-U.S. citizens to temporarily work in agricultural essential activities) were issued to women, while women make up 25% of the U.S. agricultural workforce.

Second, the limited number of women who get admitted to the H-2 visa program are routinely funneled into H-2B visas, which are generally less desirable because of lower wages and fewer benefits, such as free employer-provided housing. The petitioners point out that the United States issues approximately three times as many H-2B visas to women as compared to H-2A visas.

Third, even within the less desirable H-2B program, employers generally assign women to less favorable and lower-paid positions than their male counterparts.

And fourth, women that participate in H-2 visa programs experience pervasive sexual harassment and sexual violence and limits to their ability to seek legal counsel.

According to the petitioners, the United States is in violation of its obligations under the revised NAFTA by failing to enforce both the new terms of the deal and its own laws that ban these kind of practices, including Title VII of the Civil Rights Act of 1964. Specifically, the case claims violations of the United States-Mexico-Canada Agreement (USMCA) Article 23.3(1)(d), labor rights; Art. 23.5(1) and (2), enforcement of labor laws; Art. 23.7, violence against workers; Art. 23.8, migrant workers; Art. 23.9, discrimination in the workplace; and Art. 23.10, public awareness and procedural guarantees.

Notably, the petitioners rely on provisions of the revised NAFTA and on U.S. domestic law to back their arguments. This speaks to the critiques about the new deal not protecting Mexican migrant workers. Unlike the original NAFTA’s labor side deal, the revised NAFTA’s Labor Chapter is part of the pact’s core text and contains “hard” obligations that are subject to the agreement’s dispute settlement provisions. This includes obligations on the elimination of employment discrimination (Art. 23.3(1)(d)) and on the protection of migrant workers (Art. 23.8). The original NAFTA’s labor-side agreement only mentioned these subjects as “guiding principles” that the parties were committed to promote without setting common minimum standards.

While the substantive standards give tools to organizations in North America to promote the enhancement of working conditions in the United States and Canada, including for migrant workers, there are no procedural guarantees a formal state-state enforcement action will proceed. Article 23.11 of the revised NAFTA obliges the parties to designate a contact point and to provide a timely response to written submissions related to labor matters. However, whether the enforcement process is launched is solely within the discretion of the government that has been petitioned. Thus, while the strong case made in the petition has advocacy value on its own merits, we must wait for the decision of the Mexican government on whether this will become a formal USMCA case and test if substantive protections for Mexican workers employed in the United States and Canada can be enforced.

Acknowledging the existence of migrant workers protections does not mean that the labor terms in the deal treat each country the same. This imbalance is particularly visible in the procedural requirements to activate RRM, alluded to above. A complaint can be initiated against Mexico based on violations of the right to organize and union democracy rights, under legislation that complies with conditions set out in an annex of the agreement. For all relevant purposes, this refers to violations of Mexico’s 2019 reformed Federal Labor Law. However, cases against the United States and Canada are limited to violations occurring after the National Labor Relations Board or Industrial Relations Board, respectively, has already issued an order, meaning that the issue already has been subject to domestic enforcement action. In practice, what this means is that there is an exhaustion of local remedies requirement to start a RRM case against the United States or Canada and there is no such requirement if the complaint is against Mexico. Furthermore, there is not RRM enforcement between the United States and Canada. 

So, what’s next on this petition? According to the revised NAFTA rules, the Mexican government has to consider and provide a timely response to the petitioners behind this brief, but it still has significant discretion about whether to proceed with state-state dispute settlement. If it chooses to do so, the first step is to start consultations with the United States to try to reach a mutually agreeable solution. If consultations fail, Mexico could initiate a formal dispute settlement proceeding and, eventually, impose trade sanctions against the United States if a panel rules that the violations indeed exist and that the U.S. government has not done anything to redress them.

Whether the Mexican government is likely to pursue this case at all or go all the way through a formal state-state enforcement case remains to be seen. Notably, earlier this year President Andrés Manuel López Obrador (AMLO) aired a proposal to create a Bracero style immigrant labor program to allow Mexican and Central American immigrants to temporarily work in the United States to fill labor shortages. Given that this complaint spotlights bad conditions for workers under existing U.S. visa programs for foreign workers, AMLO could try to leverage the case to promote his plan. However, civil society organizations, among them the lead organization behind the complaint, have sounded alarms about a potential Bracero 2.0 program, due to the exploitative working conditions under the original program during World War II.

In any event, the complaint represents many organizations’ intentions to test if the revised NAFTA’s labor terms could be an effective tool to improve workers’ conditions in the United States, in contrast to the current model that has primarily benefited transnational capital. Now, it is for the governments of North America to treat this case, and those that follow, seriously in order to make the revised deal a floor of decency for worker protection across the region.

Mexican Labor Activist Susana Prieto, on Eve of Possible Reimprisonment, and U.S. Rep. Chuy Garcia (D-Ill.) Call on Mexican President AMLO and President Trump to Remedy Ongoing Worker Abuses and Low Wages

Celebration of New NAFTA Premature: It Won’t Help Workers Absent Action to Translate the Labor Rights in the Text into Change on the Ground

 

WHAT:     On Weds., July 8^th at 11 a.m. EDT/10 a.m. CDT, Mexican labor activist Susana Prieto will be joined by U.S. Rep. Jesús “Chuy” García (D-Ill.) to demand an end to ongoing labor abuses that undercut the U.S. and Mexican presidents’ celebration tomorrow of the new North American Free Trade Agreement (NAFTA). Prieto, a prominent labor lawyer representing exploited workers in Mexico-Texas border maquiladora factories, was released on July 1 after being held without bail for three weeks on trumped-up charges of “mutiny, threats and coercion” after trying to register an independent union to replace a corrupt “protection” union. Her case reflects myriad labor abuses throughout Mexico, where workers fighting for independent unions, better wages and COVID-19-safe workplaces face ongoing abuse and resistance. The conditions for Prieto’s release, including a 30-month internal exile, are designed to end her representation of Matamoros workers seeking independent unions and intimidate workers nationwide seeking to exercise their labor rights. She must end her Matamoros labor organizing, not leave Mexico, and relocate to the state of Chihuahua, where a prosecutor issued new warrants for her arrest. Prieto helped workers win higher wages last year while fighting for independent labor representation that the new NAFTA is supposed to promote. Recently she helped workers demand COVID-19 safety protections after many died from workplace coronavirus exposures. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China. More background on Prieto is available, here.

WHEN:    11 a.m. EDT/10 a.m. CDT/9 a.m. Juarez time, Weds., July 8

 

WHO:       Susana Prieto Terrazas, Mexican labor lawyer

U.S. Rep. Jesús “Chuy” García (D-Ill.)

Lori Wallach, director, Public Citizen’s Global Trade Watch (moderator)

 

WHERE:  To register for the press conference: https://cutt.ly/koN4s49

                  (You must register in advance to get the zoom link for the event)

Launch of New NAFTA Marred by Detainment of Mexican Labor Activist, Hundreds of Court Challenges Against New Labor Law

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

Note: The revised North American Free Trade Agreement (NAFTA) goes into effect today, July 1. The U.S. Senate passed the new NAFTA in January 2020 by a margin of 89 to 10 after the U.S. House of Representatives voted by a margin of 385 to 41 in December 2019.

On paper the new NAFTA –with improved labor terms added and extreme Big Pharma monopolies and ISDS investor rights removed – is better than the original, but it won’t benefit people unless it’s effectively enforced.

It’s a terrible start that on Day One of a deal Trump said would transform trade, a leading Mexican labor lawyer has spent weeks in jail on trumped up charges for helping workers use USMCA’s labor rights and Mexico’s new USMCA-compliant labor law is bogged down by hundreds of lawsuits aimed at derailing it.

Maybe Trump hoped to distract from myriad failures by spotlighting the new NAFTA on July 1, but it’s also the date that 100 of the 600 legal challenges against the pact’s labor rights rise to Mexico’s Supreme Court and Susana Prieto, a famous Mexican labor lawyer detained for weeks for helping workers organize a union, has a high visibility hearing.

Meanwhile, Trump’s claims that the new NAFTA will restore hundreds of thousands of manufacturing jobs have proved baseless as U.S. auto firms announced plans to increase production in Mexico from Ford’s Mustang electric SUV to GM closing U.S. plants and moving popular vehicle lines to Mexico. But the U.S. Department of Labor has certified more than 175,000 Americans as losing jobs to trade during the Trump administration’s first years while the NAFTA trade deficit jumped 88% under Trump.

The new NAFTA’s greatest impact may be that it began a long overdue rethink of the U.S. trade-pact model. The unusually large, bipartisan congressional votes on the new NAFTA showed that to be viable today, U.S. trade pacts no longer can include extreme corporate investor privileges or broad monopolies for Big Pharma and must have enforceable labor and environmental standards. The 2016 Trans-Pacific Partnership, which failed these tests, never got close to majority congressional support.

Renegotiating the existing NAFTA to try to reduce its ongoing damage is not the same as crafting a good trade deal that creates jobs, raises wages and protects the environment and public health. The new NAFTA is not a template, but rather sets the floor from which we will fight for trade policies that put working people and the planet first. Any new trade deals must include climate standards, stronger rules to stop race-to-the-bottom outsourcing of jobs and pollution, and enforceable rules against currency misvaluation and not limit protections needed to ensure our food and products are safe, our privacy is protected and big banks do not crash the economy.

BACKGROUND INFO

Susana Prieto Terrazas, a well-known Mexican labor lawyer, has been locked up since June 8 for trying to use the core labor right guaranteed by the revised NAFTA and Mexico’s new labor law; a July 1 hearing is scheduled after several punitive bail denials. Prieto, a key advocate for exploited workers in border maquiladora factories in Matamoros and Juárez, has been held without bail for three weeks on trumped-up charges of “mutiny, threats and coercion” after trying to register an independent union to replace a corrupt “protection” union in Matamoros. Prieto became well-known in Mexico for helping maquiladora workers win higher wages in factories along the Texas border last year. Recently, she supported workers demanding COVID-19 safety measures after dozens of maquiladora workers died from workplace coronavirus exposure. Wildcat strikes and mass protests have grown throughout the border region as U.S. companies and officials push for plants to reopen without safety measures. Dozens of members of the U.S. House of Representatives sent a letter yesterday demanding Prieto’s release. At June 17 hearings, members of Congress raised concerns about Prieto’s arrest with the U.S. Trade Representative, who confirmed he was closely following her case and found it a “bad indicator” of compliance with NAFTA’s revised labor standards. Prieto livestreamed her arrest as she tried to register the Independent Union of Industrial and Service Workers “Movimiento 20/32,” chosen by workers to replace a “protection” union. Last week, Prieto’s daughter delivered a letter from U.S. unions and civil society groups to the Mexican National Human Rights Commission seeking help on Prieto’s release. U.S. fair trade activists will deliver the letter to Mexican consulates nationwide on July 1. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China. The Department of Labor has certified more than one million U.S. jobs (1,015,948) as lost to NAFTA just under one narrow retraining program called Trade Adjustment Assistance, which represents a significant undercount of total jobs lost.*

The first 100 of 600 challenges to Mexico’s new labor law will hit Mexico’s Supreme Court on its July 1 reopening. The new NAFTA requires that “protection” contracts signed by unions not elected by workers all be reviewed and that contracts be approved directly by workers within four years after the revised NAFTA goes into effect. This requirement is at the heart of the reforms to Mexico’s labor laws enacted on May 1, 2019. Under the new labor law, workers in Mexico could finally have legal protections to fight to raise abysmally low wages. This would also reduce incentives to outsource U.S. jobs to Mexico, benefiting U.S. workers. Within weeks of the new law’s enactment, hundreds of corrupt local “protection” unions and other interests opposed to reform began to file what are now more than 600 lawsuits, which both try to block the law’s application to specific union contracts and workplaces and to gut the law altogether on grounds that it is  unconstitutional. Mexico’s judiciary has been out of session since mid-March for COVID-19 precautions. On July 1, the court system goes back into operation, with the first 100 challenges hitting Mexico’s Supreme Court. If the court rules against the challenged terms, Mexico will be in violation of NAFTA labor obligations that are essential if the new deal is to slow U.S. job outsourcing. This memo has the latest updates on the cases. 

The Department of Labor has certified 176,982 trade-related job losses during Trump’s presidency, and the manufacturing sector is hurting. Under the narrow Trade Adjustment Assistance worker training program alone, 176,982 workers have been certified as losing jobs to trade since the 2017 start of the Trump administration. The data mainly covers 2017-2018, as there is typically a 12-18 month gap between layoff dates and certification. Whether the new NAFTA can slow ongoing job outsourcing or the 88% increase in the overall NAFTA trade deficit during the Trump administration remains to be seen over time. What is clear now is that the U.S. manufacturing sector has been severely harmed by the ongoing COVID-19 pandemic, with 1.1 million manufacturing jobs lost in May 2020 compared with the same month last year.

*Data Note: The trade data is sourced from the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. We present deficit figures adjusted for inflation to the base month of May 2020. The overall percentage change in the U.S.-NAFTA trade deficit under Donald Trump represent the change in total goods and services trade deficit since 2016, Barack Obama’s last year, and 2019, the last full year of data available during the Trump administration. Manufacturing job data is sourced from the U.S. Bureau of Labor Statistics. The government-certified job loss data is sourced from Public Citizen’s Trade Adjustment Assistance (TAA) Database. The U.S. Department of Labor certified trade-impacted workplaces under its TAA program. This program provides a list of trade-related job losses and job retraining and extended unemployment benefits to workers who lose jobs to trade. TAA is a narrow program, covering only a subset of workers who lose jobs to trade. It does not provide a comprehensive list of facilities or jobs that have been offshored or lost to import competition. Although the TAA data represent a significant undercount of trade-related job losses, TAA is the only government program that provides information about job losses officially certified by the U.S. government to be trade-related. Public Citizen provides an easily searchable version of the TAA database. Please review our guide on how to interpret the data here and the technical documentation here.

CAFTA’s Decade of Empty Promises Haunts the TPP

Ten years ago, after a flurry of backroom deal-making, Congress passed the Central America Free Trade Agreement (CAFTA).  In the dead of night.  By a single vote.  

Exactly one decade later, today trade ministers are gathering in Hawaii to try to conclude deadline-missing negotiations on the Trans-Pacific Partnership (TPP) – a sweeping deal that would expand the CAFTA model of trade across the Pacific.

In attempt to quell the controversy surrounding the TPP, the administration is recycling the same lofty promises that were used to push for passage of CAFTA: the deal would safeguard public health, spur economic prosperity at home and abroad, and protect workers, consumers, and the environment.

After 10 years of CAFTA, the emptiness of such promises is on full display. Today in Central America, life-saving medicines are more expensive due to monopoly protections that CAFTA gave to pharmaceutical corporations – protections that are slated for expansion in the TPP.  And the headlines from several CAFTA countries do not report economic prosperity, but economic instability, drug violence and forced migration.  Meanwhile, CAFTA’s labor provisions have failed to halt the assassination of dozens of Central American union workers who were trying to end unmitigated labor abuses like wage theft.  In contrast, the pact’s foreign investor privileges, which the TPP would expand, have succeeded in empowering multinational corporations to challenge domestic laws, including consumer and environmental protections.

Worse than repeating the mistakes of the past, the TPP would repeat the mistakes of CAFTA’s present.

Making life-saving medicines unaffordable

During the debate over CAFTA, health experts warned that by handing pharmaceutical firms greater monopoly protections, the deal would restrict Central Americans’ access to more affordable generic versions of life-saving drugs.

Unfortunately, they were right.  Take, for example, Kaletra, a drug used to fight HIV/AIDS.  Under CAFTA rules, Kaletra has enjoyed monopoly protections in Guatemala, making generic versions unavailable, for the entire first decade of CAFTA.  Without a generic alternative, Guatemala’s public health system pays about $130 per bottle of Kaletra.  In contrast, the generic version of Kaletra costs less than $20 per bottle, according to the Pan American Health Organization reference price.  For Guatemala’s taxpayers, paying more than six times the generic price for Kaletra under CAFTA means less money to build schools or bridges.  For Guatemala’s HIV/AIDS patients, it can mean the difference between life and death.

Like CAFTA, the TPP is slated to include extreme monopoly protections for pharmaceutical corporations.  Indeed, the deal even omits limited provisions to protect access to affordable medicines that were included the most recent U.S. free trade agreements.  That’s why Doctors without Borders has described the TPP as not only worse than CAFTA in restricting access to medicines, but “the most damaging trade agreement ever for global health.” 

Turning a blind eye to labor abuses

One decade ago, the Office of the U.S. Trade Representative sold CAFTA as the “best ever trade agreement on labor,” boasting “world class” labor provisions.  Those provisions failed to prevent the murder of 68 Guatemalan unionists over the course of seven years without a single arrest.  In 2008, the AFL-CIO and Guatemalan unions filed an official complaint under CAFTA’s labor provisions, calling for an end to the rampant anti-union violence, wage theft, and other abuses.  It was not until six years and dozens of unionist murders later that the U.S. government moved to arbitration on the case.  Today Guatemala’s union workers still endure frequent attacks with near-total impunity.

CAFTA’s labor provisions have proven similarly ineffective in the Dominican Republic, where sugar cane workers endure 12-hour workdays in hazardous conditions without receiving legally-required overtime pay.  A Spanish priest who filed an official CAFTA complaint in attempt to rectify the abuses was informed by U.S. Department of Labor officials, “Nothing is going to happen on account of not complying.”  Indeed, nothing has happened.  Despite CAFTA’s “world class” labor provisions, the Dominican Republic’s underpaid cane workers continue laboring in squalid conditions.

Why has CAFTA, like U.S. trade agreements before and since, failed to curb widespread labor abuses?   Kim Elliot, a member of the Department of Labor’s National Advisory Committee on Labor Provisions of U.S. Free Trade Agreements, recently offered this blunt explanation: the labor provisions of U.S. trade deals “are in there because they’re necessary to get deals through Congress.”  She added, “It’s really all about politics and not about how to raise labor standards in these countries.”

Now, in attempt to get the TPP through Congress, the Office of the U.S. Trade Representative is parroting the same promise it made for CAFTA, claiming that the deal would include “the highest-ever labor commitments.”  While the TPP’s labor provisions have been described as more “enforceable” than those in CAFTA, this is nothing new.  The last four U.S. Free Trade Agreements (FTAs) already included such “enforceable” terms, but still failed to end on-the-ground offenses, according to a 2014 U.S. government report.  Colombia’s unionists have faced dozens of assassinations and hundreds of death threats despite the Colombia FTA’s inclusion of TPP-like labor provisions.  And last year Peru explicitly rolled back occupational health and safety protections for workers despite the Peru FTA’s “enforceable” labor provisions.  Neither country has faced penalties under the FTAs.  It’s unclear why the TPP’s replication of such unsuccessful labor provisions should be expected to curb the systematic labor abuses in TPP countries like Vietnam, which bans independent unions, uses forced labor, and, by the Vietnamese government’s own estimate, has more than 1.75 million child laborers.

Empowering corporate attacks on consumer and environmental protections

In contrast to CAFTA’s unenforceable “protections” for workers, the deal granted highly enforceable privileges to foreign corporations.  This includes empowering them to bypass domestic courts and challenge domestic consumer and environmental protections before extrajudicial tribunals via “investor-state dispute settlement” (ISDS).

Corporations have not held back in using this controversial parallel legal system to challenge pro-consumer policies, including government efforts to keep electricity affordable.  In 2010 a U.S. energy company with an indirect, minority stake in Guatemala’s electric utility used ISDS to challenge Guatemala’s decision to lower electricity rates for consumers.  The next day, the company sold off its minority share.  A three-person ISDS tribunal generously decided to treat the firm as a protected “investor” in Guatemala and ordered the government to pay the corporation more than $32 million.  In another energy-related CAFTA case, a U.S. financial firm challenged the Dominican Republic’s decision not to raise electricity rates amid a nationwide energy crisis.  The government decided to pay the firm to drop the case in a $26.5 million settlement, reasoning that it was cheaper than continuing to pay legal fees.

CAFTA countries also face an increasing array of ISDS cases against environmental protections.  A U.S. mining company, for example, has launched a claim against the Dominican Republic for delaying and then denying environmental approval for an aggregate materials mine that the government deemed a threat to nearby water sources.  Other U.S. investors in the Dominican Republic have threatened to launch a CAFTA claim against the government for denying environmental approval for their plans to expand a gated resort.

The TPP would dramatically expand the controversial ISDS system, newly empowering more than 28,000 additional foreign-owned firms to ask private tribunals to order taxpayer compensation for commonsense environmental and consumer protections.

Fueling economic instability

Ten years ago, CAFTA proponents promised the deal would bring economic prosperity to Central America, making it “the best immigration, anti-gang, and anti-drug policy at our disposal.”  Today, CAFTA countries Honduras, El Salvador, and Guatemala are plagued by drug-related gang violence and forced migration.  While the causes are many, “economic stagnation” has fed the crisis, according to the U.S. State Department.  CAFTA clearly failed to deliver on its promise of economic growth for the region.

Worse still, CAFTA has contributed to the region’s economic instability.  Before the razor-thin passage of CAFTA, development organizations warned that the deal could lead to the displacement of the family farmers that constitute a significant portion of Central America’s workforce, by forcing them to directly compete with highly-subsidized U.S. agribusiness.  Indeed, agricultural imports from the United States in Honduras, El Salvador, and Guatemala have doubled since the deal went into effect, while the countries’ agricultural trade balance with the United States has dropped, spelling farmer displacement. 

And despite promises that CAFTA would make up for rural job loss by creating new jobs in apparel factories, apparel exports to the United States from Honduras, El Salvador, and Guatemala have actually fallen $1.6 billion, or 21 percent, since the year before CAFTA took effect.  Not only has the promise of new factories disappeared – so have existing factories.  

If the TPP were to take effect, the apparel jobs of Central America would be expected to decline even quicker, contributing to further economic instability.  That’s because the TPP includes Vietnam, a major apparel exporter where independent unions are banned and where the minimum wage averages less than 60 cents an hour – a fraction of the minimum wages in Central America (or even in China).  Central America is already losing the race to the bottom.  It will only fall further behind if the TPP makes Vietnam the newest low-wage competitor. 

The promise-defying track record of CAFTA need not be repeated.  When the TPP negotiators meeting today in a resort hotel in Hawaii finish this round of negotiations, we are likely to hear a familiar litany of promises about how the TPP would benefit consumers, workers, and the environment.  With those promises punctured by a decade of CAFTA’s stark realities, we have a unique opportunity to say “enough is enough.” 

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

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

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

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

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

1.      Philip Morris

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

2.      Goldman Sachs  (and other Wall Street firms)

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

3.      Pfizer  (and other Big Pharma corporations)

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

4.      ExxonMobil  (and other fracking corporations)

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

5.      Time Warner  (and other Hollywood corporations)

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

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

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

7.      Chinese Corporations in Vietnam

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

50 Reasons We Cannot Afford the TPP

How would your state be impacted by the Trans-Pacific Partnership (TPP) – a controversial “free trade” agreement (FTA) being negotiated behind closed doors with 11 Pacific Rim countries? 

Click here for a state-by-state guide to the specific outcomes of the status quo “trade” model that the TPP would expand.  Get the latest government data on how many jobs have been lost in your state to unfair trade, how much inequality has risen, how many family farms have disappeared, and how large your state’s trade deficit with FTA countries has grown. 

The TPP would extend the North American Free Trade Agreement (NAFTA) model that has contributed to massive U.S. trade deficits and job loss, downward pressure on middle class wages, unprecedented levels of inequality, lagging exports, new floods of agricultural imports, and the loss of family farms.

These impacts have been felt across all 50 U.S. states.  Here is a sampling of the outcomes:

• North Carolina: North Carolina has lost more than 369,000 manufacturing jobs – nearly half – since NAFTA and NAFTA expansion pacts have taken effect.  More than 212,000 specific North Carolina jobs have been certified under just one narrow Department of Labor program as lost to offshoring or imports since NAFTA.

• Delaware: Delaware’s total goods exports to all U.S. FTA partners have actually fallen 27 percent while its exports to non-FTA nations have grown 34 percent in the last five years. 

• California: In the last five years, California’s $403 million NAFTA agricultural trade surplus became a $187 million trade deficit – a more than $590 million drop. In contrast, California’s agricultural trade surplus with the rest of the world increased by $3 billion, or 79 percent, during the same time period.  The disparity owes to the fact that California’s exports of agricultural products to NAFTA partners Mexico and Canada grew just 27 percent, or $693 million, in the last five years, while its agricultural exports to the rest of the world grew 70 percent, or $4.3 billion. Meanwhile, California’s agricultural imports from NAFTA partners during this period surged $1.3 billion – more than the increase in agricultural imports from all other countries combined.

• Michigan: Michigan’s trade deficit with all U.S. FTA partners is nearly five times larger than its deficit with the rest of the world. Michigan’s FTA deficit has grown more than three times as much as its non-FTA deficit in the last five years. Today, Michigan’s trade deficit with FTA partners comprises 83 percent of the state’s total trade deficit.

• Louisiana: Before the Korea FTA – the U.S. template for the TPP – the United States had balanced trade with Korea in the top 10 products that Louisiana exports to Korea – including everything from metal to agricultural products. Under two years of the FTA, that balance became a $9 billion annual trade deficit. 

• New York: The TPP and the Trans-Atlantic Free Trade Agreement (TAFTA) would empower 3,067 foreign corporations doing business in New York to bypass domestic courts, go before extrajudicial tribunals, and challenge New York and U.S. health, environmental and other public interest policies that they claim undermine new foreign investor rights not available to domestic firms under U.S. law.

• Texas: U.S. farmers were promised that the Korea FTA would boost U.S. agricultural exports to Korea. But U.S. exports to Korea fell in eight of Texas’ top 10 agricultural export products, from cotton to wheat to meat in the first two years of the Korea FTA.  Meanwhile, U.S. exports to Korea of beef, pork and poultry – all top agricultural exports for Texas – declined 18, 15, and 42 percent, respectively (measuring by volume).

• Nevada: The richest 10 percent of Nevadans are now capturing more than half of all income in the state – a degree of inequality not seen in the 100 years for which records exist.  Study after study has produced an academic consensus that status quo trade has contributed to today’s unprecedented rise in income inequality.  

• Minnesota: Small-scale U.S. family farms have been hardest hit by rising agricultural imports and declining agricultural trade balances under FTAs.  Since NAFTA took effect, 15,500 of Minnesota’s smaller-scale farms (24 percent) have disappeared.

Forthcoming TPP Sales Pitch So Predictable, We Decided to Predict It

In the coming days, the U.S. Trade Representative (USTR) will release its annual report on the Obama administration’s trade policy agenda.  We know that you can’t wait to see what it will say. 

Good news.  You don’t have to.  Below we present the world’s first look at the report’s contents. 

How do we know in advance what the annual trade report will say?  No, we don’t have a mole at USTR (though if any of our USTR readers would like to volunteer…). 

We have a pretty good idea of the report’s contents, given that these reports tend to recycle the same old sales pitches that the administration has been disseminating ad nauseam (figuratively and, sometimes, literally). 

Since the status quo trade platitudes have become predictable, we thought we might as well predict them. 

So, you heard it here first – below are some of the administration's standard TPP-related talking points likely to be rehashed in USTR’s forthcoming report, followed by an explanation of why they do not bear repeating:

95 percent of the world’s consumers live outside our borders.

[But our trade pacts have not helped us reach them.]

Yes, this statistic shows a basic understanding of geography and population.  But it shows little else.  The official government trade data reveal that past trade deals have not been successful in helping U.S. firms reach consumers who live abroad.  In fact, U.S. goods exports to our “free trade” agreement (FTA) partners have grown 20 percent slower than U.S. exports to the rest of the world over the last decade.

The TPP would grant U.S. firms greater access to the world's fastest-growing region.

[But the relevant TPP countries have been growing one-fourth as fast as that region.]

The United States already has FTAs with six of the 11 TPP negotiating partners.  The combined GDP of the other five countries (the ones that could offer “greater access”) has been growing at a paltry 1 percent annually over the last decade – one fourth of the growth rate of the Asia-Pacific region overall.  Yes, the region has been growing quickly.  That just happens not to be relevant to the TPP. 

Exporters tend to pay their workers higher wages.

[But jobs displaced by imports pay even higher.]

What this talking point fails to mention is that jobs lost to imports under unfair trade deals tend to pay even higher wages than jobs in exporting industries, according to new data unveiled by the Economic Policy Institute (EPI).  If a manufacturing worker making $1,020 per week loses her job to imports under a raw trade deal and gets re-hired in an exporting firm where she gets paid less than $870 per week (the actual numbers from EPI’s analysis), it’s probably small consolation that she could be making even less in a non-traded sector like restaurants.  But that is the very argument – that exporting industries pay more than non-traded industries – that the administration has been using to push for the TPP’s expansion of the trade status quo.

Their pitch omits the fact that far more jobs have been lost in the higher-paying import-competing industries than have been gained in exporting sectors under existing trade deals, judging by the burgeoning U.S. trade deficit with FTA partners, which has grown 427 percent since the deals took effect. It also does not mention that most trade-displaced workers do not actually get rehired in exporting industries, but in non-traded sectors, spelling an even bigger pay cut than the example given above.

China wants to write the rules for commerce in Asia. Instead, we should write the rules.

[We didn’t write the TPP’s rules – multinational corporations did. The TPP would hurt our national interests while failing, like past FTAs, to affect China’s influence.]

Ah yes, the boogeyman tactic.  When the economic sales pitch for a controversial new FTA falters on the existing FTA record of lost jobs, lower wages and increased trade deficits, FTA proponents frequently resort to raising the specter that without the controversial pact, the influence of a foreign opponent will rise further.  But the notion that the establishment – or not – of any specific U.S. trade agreement would affect China’s rising influence is contradicted by the record.  Proponents of the North American Free Trade Agreement (NAFTA) and NAFTA expansion pacts similarly warned that those deals were necessary to prevent rising foreign influence in Latin America.  But in the first 20 years of NAFTA, the share of Mexico’s imported goods coming from China increased from 1 to 16 percent, while the U.S. share dropped from 69 percent to 49 percent.  And from 2000 to 2011, a period in which U.S. FTAs with eight Latin American countries took effect, the share of Latin America’s imported goods coming from China increased from 1 percent to 7 percent, while the U.S. share fell from 25 percent to 16 percent.  Why should we believe the recycled pitch that another FTA would keep China’s economic influence in check?  

And the attempt to paint the TPP as a battle between “our rules” and China’s rules is absurd.  “We” did not write these rules.  The draft TPP text was crafted in a closed-door process that granted privileged access to more than 500 official U.S. trade advisors, nine out of ten of them explicitly representing corporations.  It is little surprise then that leaked TPP terms include new monopoly patent rights for pharmaceutical companies that would increase healthcare costs, limits on efforts to reregulate Wall Street, a deregulation of U.S. gas exports that could increase domestic energy prices, maximalist copyright terms that could thwart innovation and restrict Internet freedom, and new investor protections that incentivize offshoring.  Good luck selling that as advancing U.S. interests. 

The TPP is a 21^st-century agreement with strong labor and environmental standards.

[Government reports show that those standards have proven ineffective.]

The vaunted inclusion in the TPP of labor and environmental provisions that were hatched in a May 10, 2007 deal is nothing new. These provisions have been included in existing FTAs, but have proven ineffective. The George W. Bush administration, for example, included "May 10" terms in the FTA with Colombia, where anti-union violence and repression remain rampant. Indeed, a U.S. Government Accountability Office report released in November 2014 found broad labor rights violations across five surveyed FTA partner countries, regardless of whether or not the FTA included the “May 10” labor provisions. As for environmental standards, the TPP would empower foreign corporations (e.g. oil/gas companies) to demand taxpayer compensation before extrajudicial tribunals for new environmental protections in TPP countries (e.g. rejection of a proposed controversial pipeline). 

And despite recent claims to the contrary, the evidence shows no correlation between an FTA’s inclusion of the “May 10” standards and its trade balance impact. Though the Korea FTA, the U.S. template for the TPP, included the “May 10” standards, the U.S. trade deficit with Korea has grown more than 70 percent in the three years since the deal’s passage. According to the administration’s trade-jobs ratio, that equates to the loss of more than 70,000 U.S. jobs – the same number of jobs that the administration promised would be gained under the deal. 

98 percent of U.S. exporters are small or medium-sized enterprises (SMEs).

[The few small businesses that export have endured slow and falling exports under FTAs.]

Only 3 percent of U.S. SMEs export any good to any country. In contrast, 38 percent of large U.S. firms are exporters. Even if FTAs actually succeeded in boosting exports, which government data show they do not, exporting is primarily the domain of large corporations, not small businesses.

The relatively few small businesses that do actually export have endured even more disappointing export performance under FTAs than large firms have experienced.  U.S. small businesses have watched their exports to Korea decline even more sharply than large firms under the Korea FTA (a 14 percent vs. 3 percent decrease).  And small firms’ exports to Mexico and Canada under NAFTA have grown less than half as much as large firms’ exports. Indeed, small firms’ exports to all non-NAFTA countries has exceeded by more than 50 percent the growth of their exports to NAFTA partners.

Obama’s Legacy: Middle-Class Jobs, Affordable Medicine and Financial Stability, or Fast-Tracked Trade Agreements – But Not Both

New Report ‘Prosperity Undermined’ Fact Checks Administration, Corporate Lobbyists and GOP Leadership With 20 Years of Data on Jobs, Economy

Fast Tracked trade deals have exacerbated the income inequality crisis, pushed good American jobs overseas, driven down U.S. wages, exploded the trade deficit and diminished small businesses’ share of U.S. exports, a new report from Public Citizen’s Global Trade Watch shows. The report, “Prosperity Undermined,”compiles and analyzes 20 years of trade and economic data to show that the arguments again being made in favor of providing the Obama administration with Fast Track trade authority have repeatedly proved false.

President Barack Obama is expected to push Fast Track for the Trans-Pacific Partnership (TPP). The pact, initiated by George W. Bush, literally replicates most of the job-offshoring incentives and wage-crunching terms found in the North American Free Trade Agreement (NAFTA) and would roll back Obama administration achievements on health, financial regulation and more. 

“It’s not surprising that Democrats and Republicans alike are speaking out against Fast Track because it cuts Congress out of shaping trade pacts that most Americans believe cost jobs while empowering the president to sign and enter into secret deals before Congress approves them,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “In their speeches and commentary, the administration, corporate interests and GOP leadership disregard the real, detrimental impacts that previous fast tracked trade deals – which serve as the model for the Trans-Pacific Partnership – have had on America’s middle class over the past 20 years.”

With unprecedented unity among Democratic members of Congress, there will be a handful of Democratic House votes in favor of Fast Track. Last year, seven of 201 House Democrats  supported Fast Track legislation. Meanwhile, a sizable bloc of GOP House members oppose Fast Track, which would grant the president extensive new executive powers and delegate away core congressional constitutional authorities.

The new report shows a 20-year record of massive U.S. trade deficits, American job losses and wage suppression. More specifically, data show that:

• Trade Deficits Have Exploded: U.S. trade deficits have grown more than 440 percent with Fast Tracked U.S. FTA countries since the pacts were implemented, but declined 16 percent with non-FTA countries during the relevant period. Since Fast Track was used to enact NAFTA and the World Trade Organization, the U.S. goods trade deficit has more than quadrupled, from $216 billion to $870 billion. Small businesses’ share of U.S. exports has declined, while U.S. export growth to countries that are not FTA partners has exceeded U.S. export growth to FTA partners by 30 percent over the past decade.  ‘

• Good American Jobs Were Destroyed: Nearly 5 million U.S. manufacturing jobs – one in four – were lost since the Fast Tracking of NAFTA and various NAFTA-expansion deals. Since NAFTA, more than 845,000 U.S. workers have been certified under just one narrow U.S. Department of Labor (DOL) program for Americans who have lost their jobs due to imports from Canada and Mexico and offshored factories to those countries.

• U.S. Wages Have Stagnated, Inequality Soared: Three of every five manufacturing workers who lose jobs to trade and find reemployment take pay cuts, with one in three losing greater than 20 percent, according to DOL data. Overall, U.S. wages have barely increased in real terms since 1974 – the year that Fast Track was first enacted – while American worker productivity has doubled. Since Fast Track’s enactment, the share of national income captured by the richest 10 percent of Americans has shot up 51 percent, while that captured by the richest 1 percent has skyrocketed 146 percent. Study after study has revealed an academic consensus that status quo trade has contributed to today’s unprecedented rise in income inequality.

• Food Exports Flat, Imports Soared: Under NAFTA and the WTO, U.S. food exports have stagnated while food imports have doubled. The average annual U.S. agricultural deficit with Canada and Mexico under NAFTA’s first two decades reached $975 million, almost three times the pre-NAFTA level. Approximately 170,000 small U.S. family farms have gone under since NAFTA and WTO took effect.

• Damaging Results of Obama’s “New and Improved” Korea Trade Deal: Since the Obama administration used Fast Track to push a trade agreement with Korea, the U.S. trade deficit with Korea has grown 50 percent – which equates to 50,000 more American jobs lost. The U.S. had a $3 billion monthly trade deficit with Korea in October 2014 – the highest monthly U.S. goods trade deficit with the country on record. After the Korea FTA went into effect, U.S. small businesses’ exports to Korea declined more sharply than large firms’ exports, falling 14 percent.

“Big dollars for big corporations and special interests calling the shots – that’s what the American people hear when only the country’s top corporate lobbyists are shaping America’s trade agreements,” said Wallach. “With such high stakes, we cannot let the Fast Track process lock Congress and the public out of negotiations that will have lasting impacts on the livelihoods, rights and freedoms of American families, workers and businesses.”

Read the report.          

U.S. Workers Should Not Be Pitted against Child Labor in Vietnam

by Global Trade Watch intern Allie Gardner

You’ve likely heard about the proposed Trans-Pacific Partnership (TPP), a sweeping deal under negotiation that would expand the North American Free Trade Agreement (NAFTA) model of trade across the Pacific.  And you probably know of the damaging effects the TPP would have on American jobs, public health, food safety, and Internet freedom.  But have you heard what the TPP would mean for labor rights? 

Vietnam, one of the countries negotiating the TPP, is notorious for its labor rights abuses.  Today, the Department of Labor issued a report declaring Vietnam as one of just four countries in the world that uses both child labor and forced labor in the apparel sector.

Through the use of such unethical labor practices, in addition to union repression and abysmal wages, Vietnam has been able to keep its production costs low. Under the TPP, U.S. businesses and workers would be forced to directly compete with Vietnamese firms on this uneven playing field.

A report last year by the Worker Rights Consortium found the Vietnamese apparel industry guilty of “the trafficking of persons as young as twelve years old from rural areas to work in ‘slave labor factories’… in Ho Chi Minh City.”  In another recent report on Vietnam, the International Labour Organization revealed that more than nine out of ten Vietnamese factories it audited were violating the legal overtime limit for workers, who still did not earn a living wage. The average minimum wage in Vietnam is 52 cents per hour, half of the average minimum wage in China

Given Vietnam’s labor abuses, in addition to human rights violations such as an increased crackdown on political dissidents, voices ranging from the Washington Post editorial board to Human Rights Watch have lambasted the Obama administration’s plan to sign the TPP with Vietnam.  

You can add your voice to this chorus of support for labor and human rights: ask your congressional representatives to say no to Fast Tracking the TPP. Tell them that U.S. workers should not be pitted against workers in Vietnam whose basic rights are being violated.

While telling Congress to say no to unfair trade, you can also say yes to fair trade. Tomorrow is “Fair Tuesday,” an opportunity to support workers by buying fairly traded products that respect their rights.  Because the apparel and textile industries are part of buyer-driven commodity chains, consumers have the power to influence production practices by selectively buying from only those brands and companies that choose to treat their workers well. 

Just as consumer activism means telling companies we do not support unethical labor practices, political activism means telling Congress that we do not support trade deals with countries in which such labor abuses are rampant.  As this year’s holiday shopping season gets underway, say yes to workers’ rights by saying no to the TPP. 

176 Million Workers Call to Stop TPP Negotiations

Opposition to the Trans-Pacific Partnership (TPP), the controversial trade pact being secretly negotiated between 12 Pacific Rim nations, continues to balloon. This week 176 million workers from the world’s largest trade union added their voice to the growing list of organizations and individuals speaking out against the trade pact.

On Tuesday, the International Trade Union Confederation (ITUC) released a statement calling on governments to halt TPP negotiations. The ITUC’s opposition to the TPP is significant not only because of the union's size, but also its breadth of representation: the ITUC has 325 affiliates in 161 countries and territories, including major labor unions in 9 of the 12 TPP countries.

Sharan Burrow, ITUC General Secretary, explained the confederation's declaration of TPP opposition: “This secretive trade deal is good for some multinational corporations, but deeply damaging to ordinary people and the very role of governments. Corporate interests are at the negotiating table, but national parliaments and other democratic actors are being kept in the dark. What we do know, much of it through leaks, is that this proposed deal is not about ensuring better livelihoods for people, but about giving multinational companies a big boost to profits. Governments should shut down the negotiations, and not re-open them unless they get genuine and transparent public mandates at home that put people’s interest in the centre.”

ITUC's concerns are widely shared: the pact is being negotiated in secret, excluding the input of civil society, experts, and lawmakers, while providing significant access to corporate interests. Also addressed in ITUC's statement is the TPP's inclusion of investor-state dispute settlement, a provision which empowers corporations to "sue" national governments before extrajudicial tribunals and demand compensation for "expected future profits" if they feel a country's domestic policies have undermined special rights for foreign firms. The statement also mentions that the TPP would likely increase the cost of life-saving medicines (a worry validated by the recent leak of the Intellectual Property chapter).

Despite these concerns, TPP negotiators are moving ahead quickly to try to finish the beleaguered deal. Earlier this week, TPP country leaders met around the margins of the Asia-Pacific Economic Cooperation (APEC) forum to discuss the TPP. U.S. President Obama urged leaders to work to "break some of the remaining logjams" of the agreement. Those "logjams" include environmental protections, policies ensuring affordable medicine, and safeguards on sovereignty and democracy.

While negotiators continue to miss deadlines to close the deal, opposition continues to grow among labor unions, activists, lawmakers, environmental advocates, consumer organizations, economists, and a wide-array of other individuals and groups. Negotiators and governments should heed ITUC's call, halt the TPP negotiations, and take a moment to reflect on exactly what why there is so much disapproval of the TPP.  

Advocacy = Results: Proposal to Disguise Offshoring Shelved after Groundswell of Opposition

Can one person make a difference?  Hard to say.  But apparently 26,000 of them can. 

About a month ago we warned of an administration proposal to reclassify U.S. corporations that offshore their manufacturing as “factoryless goods” manufacturers.  Calling Apple a “manufacturer” – though its iPhones are made in Foxconn factories in China – defies common sense.  But why does it matter? 

Because it would mask the erosion of U.S. manufacturing incentivized by offshoring-friendly policies, including a raft of unfair trade deals.  The Orwellian proposal would undermine efforts to replace more-of-the-same policies with a fair trade model. 

Under the proposal, reported U.S. “manufacturing” jobs and wages would balloon overnight, as brand managers and programmers would suddenly be counted as “manufacturing” workers.  The broad reclassification initiative would also deceptively deflate the large U.S. manufacturing trade deficit.  U.S. imports of made-in-China iPhones would not be tallied as manufactured goods imports but as imports of Foxconn's “services,” while iPhones exported from China to, say, Europe would actually be rebranded as “U.S.” manufacturing exports.  

During an official period to comment on the proposal, Public Citizen, many labor groups, and other allies invited people to send their two cents to the administration.  The response was overwhelming. 

In short order, about 26,000 people filed comments in opposition to the “factoryless goods” proposal.  The last time the administration tried to implement this proposal, they received 10 comments.

This past Friday, the administration responded.  This announcement appeared in the Federal Register:

“Given these initial research results and the large number of public comments submitted on the topic of FGPs [Factoryless Goods Producers], OMB [the Office of Management and Budget] here announces that the FGP recommendation will not be implemented in 2017.” 

If you submitted a comment, congratulations.  According to the administration, your voice of reason contributed to a chorus that helped convince the administration to rethink the wisdom of categorizing firms that do not manufacture anything as U.S. manufacturers.  Advocacy, as it turns out, can work. 

Please place your hand above your back and pat vigorously.  But don’t break out the champagne glasses.

Thanks to the groundswell of public opposition (and the contributions of some clear-minded naysayers within the administration), the “factoryless goods” proposal has been shelved.  But it has not been dustbinned. 

OMB makes clear that the “factoryless goods” fantasy will likely emerge again, albeit in a different form:

“Without the deadline imposed by the 2017 NAICS revisions, the relevant statistical agencies will now have the opportunity to complete the additional research, testing, and evaluation needed to determine the feasibility of developing methods for the consistent identification and classification of FGPs that are accurate and reliable. This process will also be informed by questions raised in public comments. Results of this research, testing, and evaluation could lead to a different FGP proposal for consideration or implementation.”

As "factoryless goods" proponents regroup and decide what to do next, we will remain vigilant.  Future bouts of pressure will likely be needed to keep our data, and the policymaking that it informs, free of distortion.  As we push to change our trade policies, we will need to keep pushing against efforts to simply change our numbers. 

But for now, kudos.  

Administration Flooded with 26,000 Comments Opposing Proposal to Disguise Offshoring of U.S. Manufacturing

Broad Reclassification Plan Would Count iPhones Made in China as U.S. Exports; Data Tricks Would Artificially Inflate U.S. Manufacturing Jobs, Deflate Manufacturing Trade Deficits

More than 26,000 people nationwide have submitted comments opposing Obama administration proposals that would severely distort U.S. job and trade data by reclassifying U.S. corporations that offshore American jobs as “factoryless goods” manufacturers. Under a broad data reclassification plan, much of the value of U.S. brand-name goods assembled by foreign workers and imported here for sale would no longer be counted as imported goods, but rather as manufacturing “services” imports. This would deceptively deflate the U.S. manufacturing trade deficit.

The “factoryless goods” proposal, designed by the administration’s Economic Classification Policy Committee (ECPC), also would, overnight, falsely increase the reported number of U.S. manufacturing jobs as white-collar employees in firms like Apple – now rebranded as “factoryless goods producers” – would suddenly be counted as “manufacturing” workers. This shift also would create a false increase in U.S. manufacturing wages and output.

“The only reason you would classify an iPhone made in China as a U.S. export is to hide the size of our massive trade deficit,” said James P. Hoffa, Teamsters general president.

“To revive American manufacturing jobs and production, we need to change our policies, not cook the data,” said Brad Markell, executive director of the AFL-CIO Industrial Union Council. “We need to reform the trade policies that have incentivized offshoring and resulted in decades of trade deficits and millions of U.S. manufacturing jobs offshored, not cover up the evidence that our current trade policy is not working.”

One element of the proposed economic data reclassification plan would rebrand U.S. imports of goods manufactured abroad, such as Apple’s iPhone (which is assembled in China by a firm called Foxconn) as “services” imports rather than imports of manufactured goods. And if Foxconn exported iPhones to other countries, the proposed reclassifications would count the iPhones manufactured in China as U.S. manufactured goods exports, further belying the real U.S. manufacturing trade deficit. 

The economic data reclassification initiative, if implemented, could further undermine efforts to bolster U.S. manufacturing by producing a fabricated reduction of the U.S. manufacturing trade deficit.

“These Orwellian data rebranding proposals would hide the damage wrought by past trade pacts like the North American Free Trade Agreement, greasing the way for more-of-the-same, job-killing, deficit-boosting trade deals,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

The comments submitted by concerned individuals include:

• “Reclassifying jobs that have been and continue to be shipped overseas under the euphemism ‘factoryless goods’ is an insult to the citizens of the United States who want real manufacturing jobs, and know that the TPP and other NAFTA-style trade deals are not in our best interest.” – Susan Marie Frontczak, Boulder, Colorado

• “Put the tricks aside. It's time to address the bad trade policies that have led to incentivized offshoring, rather than play with rebranding.” – Merill Cole, Macomb, Illinois

• “NAFTA and GATT were a really bad idea ... TPP is worse ... and ECPC as a cover-up for unfair trade policies is just ridiculous. Bring manufacturing back to the US and stop this unfair trading with other countries.” – Aaron McGee, Madison, Wisconsin

This month, 14 members of the U.S. House of Representatives wrote to U.S. Trade Representative (USTR) Michael Froman, demanding that he immediately begin to provide Congress with accurate U.S. trade data. The letter followed an admission by USTR staff that the agency was providing Congress with uncorrected raw data collected by the U.S. Census Bureau. That data includes “re-exports,” which are goods produced in foreign countries that pass through the United States without alteration before being sold abroad.

Each month, the U.S. International Trade Commission provides corrected trade data that removes the foreign re-exports, but USTR has chosen not to use this data. By using the uncorrected data, the USTR can misleadingly appear to make more than half the $177 billion 2013 NAFTA goods trade deficit “disappear.” The USTR does this by, for instance, counting goods that are imported from China, that are not altered in the United States and that are then “re-exported” to Mexico as “U.S. exports” to Mexico.

Congress’ demand for accurate trade data from the USTR and the administration’s distortionary data reclassification proposals come as administration officials seek support for two controversial trade and investment pacts now under negotiation: the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA). The administration’s push to obtain Fast Track authority for those pacts has met strong opposition from both parties in Congress and from more than 60 percent of the U.S. voting public. 

Let’s Just Pretend We Didn’t Offshore Manufacturing

Is an iPhone made in China and exported to Europe a U.S. export?

Is an Apple executive a manufacturing worker?

Yes, and yes.  At least those could become the answers if a new proposal afoot among some in the administration is allowed to take effect.  Federal agencies grouped under the bland-sounding Economic Classification Policy Committee (ECPC) are proposing to radically redefine U.S. manufacturing and trade statistics. 

Under the proposal, U.S. firms that have offshored their production abroad – like Apple – would become “factoryless goods” manufacturers.  The foreign factories that actually manufacture the goods – like the notorious iPhone-producing Foxconn factories in China – would no longer be manufacturers, but “service” providers for the rebranded “manufacturing” firms like Apple.

It appears the administration has been reading Orwell. 

But the problem with this proposed redefinition is not merely that it offends common sense.  The “factoryless goods” proposal would deceptively deflate the size of reported, but not actual, U.S. manufacturing trade deficits, while artificially inflating the number of U.S. manufacturing jobs overnight.

While some details of the proposal remain open-ended, one thing is clear: this maneuver would obscure the erosion of U.S. manufacturing.  It would disguise the mass-offshoring of U.S. middle-class factory jobs incentivized by NAFTA-style trade deals.  It would undermine efforts to change the unfair trade and other policies that have led to such decline.  

To boost U.S. manufacturing jobs and production, we need to switch our policies, not our numbers.

The ECPC is accepting comments on their “factoryless goods” proposal until July 21.  If you’d care to offer your thoughts, click here.
  

The 3 Big Distortions of the "Factoryless Goods" Proposal
  

1.  The proposal would result in a fabricated reduction of the U.S. manufacturing trade deficit by rebranding imports of U.S. manufactured goods as “services” imports, according to recent explanations offered by officials of ECPC member agencies.  The redefinition would not affect all U.S. trade statistics, but it would distort some of the most widely-reported numbers (those calculated on a balance of payments basis), misleading the public and policymakers alike.

Take, for example, a scenario in which Apple ships iPhone parts to China to be assembled in a Foxconn factory and then sent back to the United States to be sold here.  Currently, the value of the imported iPhone minus the lesser value of the exported parts counts as a net U.S. import of a manufactured good.  This reflects the fact that Apple offshored its iPhone manufacturing to China.

But under the ECPC proposal, Foxconn, now called a “manufacturing services provider,” would not be described as having manufactured the iPhones but as having provided services to Apple.  As a result, the net U.S. import of manufactured goods resulting from Apple’s decision to offshore would be reduced. In its place would be an import of Foxconn’s factory “services.”
  

2.  The proposal would treat some goods exported by foreign factories as U.S. manufactured exports.  Take a scenario in which Apple ships iPhone parts to China that are assembled by Foxconn and then shipped to the European Union (EU).  Currently, Apple’s export of parts to China counts as the only U.S. export in this scenario. 

But the ECPC proposal, according to officials of ECPC member agencies, would instead count China’s export of the fully-assembled iPhones to the EU, less the cost of any imported parts, as a “U.S. manufactured goods export.”

The absurd logic of this rebranding is that while China manufactured and exported the iPhones, they count as U.S. manufactured exports because they were under the control of a U.S. brand.  This Orwellian proposal would spell an artificial increase in U.S. manufactured exports (on a balance of payments basis), further belying the real U.S. manufacturing trade deficit.
  

 3.  The proposal would spur a disingenuous, overnight increase in the number of U.S. “manufacturing” jobs as white-collar employees in firms like Apple – now rebranded as “factoryless goods producers” – would suddenly be counted as “manufacturing” workers. 

This change would also create a false increase in manufacturing wages, as many of the newly-counted “manufacturing” jobs would be designers, programmers and brand managers at “factoryless goods producers” like Apple. 

Reported U.S. manufacturing output would also abruptly and errantly jump, as revenues from firms like Apple would be lumped in with the output of actual manufacturers. 
  

This proposal defies common sense.  It would dramatically distort U.S. trade, labor and gross domestic product statistics.  Goods manufactured abroad and imported into the United States are not something other than manufactured goods imports.  Goods exported from foreign factories do not become “U.S. exports” when they are produced for U.S. brands.  And jobs in which workers spend zero time actually manufacturing anything are not “manufacturing jobs.”  

The offshoring of U.S. manufacturing under years of unfair trade policies cannot be undone with a data trick.  The hoped-for “renaissance” of U.S. manufacturing will come through new policymaking informed by accurate data, not politically convenient distortions.  

Second Anniversary of Colombia Pact Spotlights Administration's Failed Promise of Labor Rights Improvements, Now Recycled to Defend TPP Negotiations with Vietnam amid Worker Riots

Today, as foreign-owned factories in Vietnam lie smoldering after protesting Vietnamese workers burnt them to the ground, Obama administration officials are in Vietnam negotiating a Trans-Pacific Partnership (TPP) pact that would place U.S. workers in direct competition with their Vietnamese counterparts. 

While politics provided the spark for Vietnam’s recent worker riots, the country’s notorious working conditions fanned the flames.  According to the U.S. government, the International Labour Organization, and workers' rights groups, those conditions include “children working nine to 12 hours per day for low pay in hazardous working conditions,” forced labor, discrimination against pregnant women, blocked fire exits, prohibition of independent unions, and minimum wages dwarfed by those paid in China.

Members of Congress, U.S. labor unions and human rights groups have made clear that the U.S. government should not be contemplating a pact with a country where workers’ rights are systematically violated. 

That same argument motivated widespread opposition to the U.S.- Colombia “free trade” agreement (FTA), which took effect two years ago today. 

The Colombia pact was implemented despite warnings from Congress and labor groups that U.S. workers should not be pitted against workers in a country consistently listed as the world’s most dangerous place to be a unionist.  The Obama administration helped push the FTA through the U.S. Congress over record Democratic opposition with promises that the gross workers’ rights violations in Colombia would wane under the FTA.  The administration declared that a Labor Action Plan (LAP) signed with Colombia in 2011 as a fig leaf for the FTA would “lead to greatly enhanced labor rights in Colombia.”

After two years of FTA implementation, that promise rings hollow as Colombia’s unionists face persistent murders, death threats, and repression. 

Now, in response to growing opposition to the notion of a TPP pact with Vietnam, the Obama administration is conjuring up the same failed promise, asserting that working conditions in Vietnam will improve under the pact. 

Members of Congress are not likely to buy the recycled pitch, as the two-year anniversary of the Colombia FTA spotlights the harrowing violence still faced by Colombia’s union workers. Colombia’s National Union School, recognized by the LAP as an authoritative source of monitoring data, reports that:

• In the three years since the LAP was unveiled, 73 Colombian unionists have been murdered.  There were four more unionist murders in 2013 than in 2012.

• Colombia’s union workers have endured 31 murder attempts and 953 death threats since the LAP was announced.  These crimes have not resulted in any captures, trials, or convictions.

• More than 3,000 unionists have been murdered in Colombia since 1977. The overall impunity rate for these murders is 87%.

• Since 1977, Colombian unionists have received 6,262 recorded death threats.  Only 4 of these threats have been punished, meaning that impunity for anti-union death threats stands at 99.9%.

Undeterred by the ongoing repression of Colombian workers, U.S. trade negotiators are in Vietnam at this very moment in attempt to negotiate via the TPP an expansion of the FTA model to Vietnam, despite the country’s widespread labor abuses.  Under the TPP, U.S. workers would be placed into direct competition with Vietnamese workers facing these on-the-ground realities:

• Child labor:  According to the Vietnam government’s own estimates, more than 25,000 Vietnamese children work in hazardous conditions.  The U.S. State Department reports that Vietnam government inspectors have found “children working nine to 12 hours per day for low pay in hazardous working conditions (including poor lighting, dusty environments, and the operation of heavy machinery)…”

• Forced labor:  Individuals detained, but not convicted, for drug offenses are required to work for little to no pay in government detention centers as part of their “treatment,” according Human Rights Watch and the State Department.  Vietnam is one of just four countries in the world cited by the U.S. Department of Labor for using both forced labor and child labor in apparel production.

• Low wages:  Vietnam’s average minimum wage is 52 cents per hour.  That’s a fraction of minimum wages even in China.  And it’s one-fourteenth of the earnings of U.S. minimum wage workers who would be pitted against their Vietnamese counterparts. 

• Unsafe working conditions:  The International Labour Organization reports that even after inspecting Vietnamese garment factories on three occasions for fire hazards, 41% of the inspected factories still had inaccessible or blocked fire exits. 

• Violations of women’s rights:  Vietnamese factories have employed several discriminatory methods to try to avoid the legal obligation to provide paid maternity leave to pregnant workers. Last year the Vietnamese press revealed that one factory required female workers to sign a contract vowing not to get pregnant for their first three years of employment. 

• Union repression:  Vietnam bans independent unions.  Workers wishing to organize for their rights must affiliate their union with the Vietnam General Confederation of Labor, a self-described “member of the political system under the leadership of the Communist Party of Vietnam.”  The Worker Rights Consortium reports that Vietnamese workers attempting to form independent unions have been “subjected to sustained campaigns of prosecution and imprisonment.” 

In the face of such entrenched labor abuses, it is incredible that the administration is trotting out the same message used for the Colombia FTA: “Don’t worry –- workers’ conditions will improve once the FTA is in place.”  After two years of the Colombia deal, Colombia’s workers sadly beg to differ.  

Colombia's Anti-Union Violence Remains Rampant after Three Years of the FTA-Enabling Labor Action Plan

Three years ago, the Obama administration signed a Labor Action Plan (LAP) with the Colombian government, promising that it would help rectify rampant labor rights abuses in Colombia, a country in which more than 3,000 unionists have been murdered since 1977.

Six months after its announcement, the LAP served as a fig leaf for the controversial Colombia “free trade” agreement (FTA), enabling the deal’s passage in the U.S. Congress. Trying to fend off criticism for pitting U.S. workers against Colombian workers who faced widespread labor abuses, the few Democratic members of Congress who voted for the deal pointed to the LAP as a solution to Colombia's labor rights crisis.  

Unions and congressional labor rights defenders in Colombia and the United States warned at the time of the FTA’s passage that the LAP would fail to alter the on-the-ground reality of anti-union repression. 

Sadly, they were right. 

In the three years since the LAP was unveiled, 73 Colombian unionists have been murdered, according to a report released today by Colombia’s National Union School, a group recognized by the LAP as an authoritative source of monitoring data. There were four more unionist murders in 2013 than in 2012.

Colombia’s workers have also endured 31 murder attempts and 953 death threats since the LAP was announced.  These crimes have not resulted in any captures, trials, or convictions. The overall impunity rate for unionist murders from 1977 through the present is 87%, while impunity for anti-union death threats stands at 99.9%. 

Colombia’s unions and the National Union School conclude that the decision to sign the LAP “was taken by the Colombian government as a step toward unfreezing the FTA with the United States rather than as an institutional mechanism to promote real protection of the labor and union rights that Colombian workers have lacked for so long.”

The same, unfortunately, could probably be said about some members of the U.S. Congress who were more interested in the LAP’s ability to provide political cover for the polemical Colombia FTA than its ability to provide relief to Colombia’s repressed workers.

Other members of Congress who supported the LAP with a sincere desire to improve the labor rights situation in Colombia (despite warnings from on-the-ground experts that the LAP would fail to do so) must feel betrayed by the administration officials who promised the LAP would herald such improvement.

Now the administration is making similar promises in pushing the Trans-Pacific Partnership (TPP), a sweeping deal with 11 Pacific Rim countries, including Vietnam.  While Vietnam does not share Colombia's history of widespread unionist murders, workers in Vietnam are prohibited from forming independent unions and are paid an average minimum wage of 52 cents per hour. And Vietnam's apparel industry, which could gain greater access to the U.S. market through the TPP, relies on forced labor and child labor.  

Administration officials are arguing, as they did in pushing the LAP and the Colombia FTA, that the TPP will provide an opportunity to curb labor rights abuses in Vietnam. Will the members of Congress who supported the ill-fated LAP once again buy into such promises?  Or will they heed the lesson of the ongoing repression faced by Colombia's workers?  

Fact-checking Froman: The Top 10 Myths Used by Obama’s Top Trade Official

U.S. Trade Representative Michael Froman tried in a speech yesterday to defend the Obama administration’s beleaguered trade policy agenda: the controversial Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA) pacts and an unpopular push to Fast Track those sweeping deals through Congress.  The list of those publicly opposing the Fast Track push includes most House Democrats, a sizeable bloc of House Republicans, House Minority Leader Nancy Pelosi, Senate Majority Leader Harry Reid, and 62% of the U.S. voting public. 

In attempt to justify the administration’s polemical pacts, Froman resorted to some statements of dubious veracity, ranging from half-truths to outright mistruths.  To set the record straight, here are the top 10 Froman fables, followed by inconvenient facts that undercut his assertions and help explain the widespread opposition to TPP, TAFTA, and Fast Track.

1. Access to affordable medicines

• Froman:  “[In TPP] we’re working to find better ways to foster affordable access to medicines…” 

• Fact:  This is one of the bigger whoppers to escape Froman’s mouth during the speech.  Leaked negotiating texts reveal that U.S. proposals for the TPP go beyond prior U.S. pacts in handing large pharmaceutical corporations unprecedented monopoly patent protections that would restrict the availability of life-saving generic medicines and raise healthcare costs in TPP countries.  The U.S. TPP proposals would empower pharmaceutical firms to extend medicine patents beyond what the World Trade Organization allows, to patent even the methods for treating patients, and to re-patent existing medicines without actually inventing anything new.  A broad array of public health groups have condemned the overreaching U.S. TPP proposals, warning that they would “jeopardize many, if not millions, of lives.” 

2. Income inequality

• Froman:  “Our trade policy is a major lever for encouraging investment here at home in manufacturing, agriculture and services, creating more high-paying jobs and combating wage stagnation and income inequality.”

• Fact:  First, study after study has shown no correlation between a country’s willingness to sign on to TPP-style pacts and its ability to attract foreign investment, casting doubt on Froman’s promise of a job-creating investment influx.  But more importantly, Froman opted to ignore a big part of why U.S. workers are currently enduring such acute levels of “wage stagnation and income inequality.”  He did not mention the academic consensus that status quo U.S. trade policy, which the TPP would expand, has contributed significantly to the historic rise in U.S. income inequality.  The only debate has been the extent of trade’s inequality-exacerbating impact.  A recent study estimates that trade flows have been responsible for more than 90% of the rise in income inequality occurring since 1995, a period characterized by trade pacts that have incentivized the offshoring of decently-paid U.S. jobs and forced U.S. workers to compete with poorly-paid workers abroad.  How can the TPP, a proposed expansion of the trade policies that have exacerbated inequality, now be expected to ameliorate inequality? 

3. Internet freedom

• Froman:  “I’ve heard some critics suggest that TPP is in some way related to SOPA [the Stop Online Piracy Act].  Don’t believe it.  It just isn’t true….”

• Fact:  Froman’s attempt to assuage fears of a TPP-provided backdoor to SOPA-like limits on Internet freedom would be more convincing if a) he offered details beyond “it just isn’t true,” or b) if his statement didn’t directly contradict leaked TPP texts.  A November leak of the draft TPP intellectual property chapter revealed, for example, that the U.S. is proposing draconian copyright liability rules for Internet service providers that, like SOPA, threaten to curtail Internet users’ free speech.  Indeed, while nearly all other TPP countries have agreed to a proposed provision to limit Internet service providers’ liability, the United States is one of two countries to oppose such flexibility.

4. Corporate trade advisors

• Froman:  “Our cleared advisors do include representatives from the private sector… [but] they [also] include representatives from every major labor union, public health groups…environmental groups…as well as development NGOs...” 

• Fact:  About 90% of the members of the official U.S. trade advisory system explicitly represent industry interests.  These “advisors” are granted privileged access to U.S. negotiators and secretive trade negotiating texts.  Less than 9% of the advisors represent the union, public health, consumer, or development organizations that Froman touts.  And most of those non-industry representatives are cloistered into just two of the advisory system’s 28 committees, while 16 of the committees have zero non-business representatives.  These industry-only committees meet with administration representatives three times as often as the system’s single labor committee, as highlighted by AFL-CIO president Richard Trumka in a recent letter criticizing the lack of TPP consultation with union representatives who ostensibly serve as “advisors.”  

• Froman:  “I’m pleased to announce that we are upgrading our advisory system to provide a new forum for experts on issues like public health, development and consumer safety.  A new Public Interest Trade Advisory Committee, or PTAC, will join the Labor Advisory Committee and the Trade and Environment Policy Advisory Committees to provide cross-cutting platforms for input in the negotiations.”

• Fact:  Froman’s announcement of a new “public interest” committee – a response to the outcry over the vast imbalance of this corporate-dominated advisory system – offers too little, too late. Amid a slew of advisory committees exclusively devoted to narrow industry interests, the “public interest” now gets a single committee?  And how much influence will this committee have in changing the many core TPP provisions that threaten the public interest, now that the administration hopes to conclude TPP negotiations, which have been going on for four years, in the coming months?  Proposed as a TPP afterthought, this new committee comes across as window-dressing, not a genuine restructuring of a system that gives corporations insider access to an otherwise closed trade negotiation process.

5. Fast Track

• Froman:  Fast Track is “the mechanism by which Congress has worked with every administration since 1974 to define its marching orders on what to negotiate…”  We can use Fast Track to “require[] future administrations to require labor, environmental and innovation and access to medicines [standards]…”

• Fact:  Under Fast Track, Congress has not given the administration “marching orders” so much as marching suggestions.  Though Congress inserted non-binding “negotiating objectives” for U.S. pacts into past Fast Track bills – a model replicated in the unpopular current legislation to revive Fast Track for the TPP and TAFTA – Democratic and GOP presidents alike have historically ignored negotiating objectives included in Fast Track.  For example, Froman stated that Fast Track could be used to require particular labor standards.  But while the 1988 Fast Track used for the North American Free Trade Agreement (NAFTA) and the establishment of the World Trade Organization (WTO) included a negotiating objective on labor standards, neither pact included such terms.  The history shows that Fast-Tracked pacts that ignore Congress’ priorities can still be signed by the president (locking in the agreements’ contents) before being sent to Congress for an expedited, ex-post vote in which amendments are prohibited and debate is restricted. 

6. Currency manipulation

• Froman:  In response to a question of whether currency manipulation is being addressed in the TPP: “We take the issue of exchange rates or currency manipulation very seriously as a matter of policy…”

• Fact:  U.S. TPP negotiators have not even initiated negotiations on the inclusion of binding disciplines on currency manipulation, much less secured other countries’ commitment to those disciplines.  The U.S. inaction on currency in the TPP contrasts with letters signed by 230 Representatives (a majority) and 60 Senators (a supermajority) demanding the inclusion of currency manipulation disciplines in the TPP.  Unless U.S. negotiators take currency manipulation more “seriously,” the TPP may be dead on arrival in the U.S. Congress. 

7. Labor rights

• Froman:  “In TPP we’re seeking to include disciplines requiring adherence to fundamental labor rights, including the right to organize and to collectively bargain, protections from child and forced labor and employment discrimination.” 

• Fact:  The TPP includes Vietnam, a country that bans independent unions.  And Vietnam was recently red-listed by the Department of Labor as one of just four countries that use both child labor and forced labor in apparel production.  While Froman acknowledged such “serious challenges,” he did not explain how they would be resolved.  Is Vietnam going to change its fundamental labor laws so as to allow independent unions?  Is the government going to revamp its enforcement mechanisms so as to eliminate the country’s widespread child and forced labor?  Barring such sweeping changes, will the U.S. still sign on to a TPP that includes Vietnam?  

8. Environmental protection

• Froman:  “We’re asking our trading partners to commit to effectively enforce environmental laws…”

• Fact:  While Froman touted several provisions in the draft TPP environment chapter as requiring enforcement of domestic environmental laws, he didn’t mention the draft TPP investment chapter that would empower foreign corporations to directly challenge those laws before international tribunals if they felt the laws undermined their expected future profits.  Corporations have been increasingly using these extreme “investor-state” provisions under existing U.S. “free trade” agreements (FTAs) to attack domestic environmental policies, including a moratorium on fracking, renewable energy programs, and requirements to clean up oil pollution and industrial toxins.  Tribunals comprised of three private attorneys have already ordered taxpayers to pay hundreds of millions to foreign firms for such safeguards, arguing that they violate sweeping FTA-granted investor privileges.  Froman’s call for countries to enforce their environmental laws sounds hollow under a TPP that would simultaneously empower corporations to “sue” countries for said enforcement.

9. TPP secrecy

• Froman:  “Let me make one thing absolutely clear: any member of Congress can see the negotiating text anytime they request it.”

• Fact:  For three full years negotiations, members of Congress were not able to see the bracketed negotiating text of the TPP, a deal that would rewrite broad swaths of domestic U.S. policies.  Only after mounting outcry among members of Congress and the public about this astounding degree of secrecy did the administration begin sharing the negotiating text with members of Congress last June.  Even so, the administration still only provides TPP text access under restrictive terms for many members of Congress, such as requiring that technical staff not be present and forbidding the member of Congress from taking detailed notes or keeping a copy of the text.  Meanwhile, the U.S. public remains shut out, with the Obama administration refusing to make public any part of the TPP negotiating text.  Such secrecy falls short of the standard of transparency exhibited by the Bush administration, which published online the full negotiating text of the last similarly sweeping U.S. pact (the Free Trade Area of the Americas). 

10. Exports under FTAs

• Froman:  “Under President Obama, U.S. exports have increased by 50%...”  “Today the post-crisis surge in exports we experienced over the last few years is beginning to recede.  And that’s why we’re working to open markets in the Asia-Pacific and in Europe...”

• Fact:  U.S. exports grew by a grand total of 0% last year under the current “trade” pact model.   The year before that, they grew by 2%.  Most of the export growth Froman cites came early in Obama’s tenure as a predictable rebound from the global recession that followed the 2007-2008 financial crisis.  At the abysmal export growth rate seen since then, we will not reach Obama’s stated goal to double 2009’s exports until 2054, 40 years behind schedule.  Froman ironically uses this export growth drop-off to argue for more-of-the-same trade policy (e.g. the TPP and TAFTA).  The data simply does not support the oft-parroted pitch that we need TPP-style FTAs to boost exports.  Indeed, the overall growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 30 percent over the last decade.  That’s not a solid basis from which to argue, in the name of exports, for yet another FTA. 

Two Years after Obama's Colombia "Labor Action Plan," Death Threats against Unionists Persist Unabated

Grim Reality Contrasts with Obama Administration Promises Made to Promote Passage of U.S.-Colombia Free Trade Agreement

Death threats against Colombian union members have remained appallingly high since announcement of the U.S.-Colombia Free Trade Agreement (FTA) Labor Action Plan according to the Escuela Nacional Sindical (ENS), the group recognized in the Plan as an authoritative source of monitoring data. The data shows that unions and congressional labor rights defenders in Colombia and the United States were sadly correct in opposing the Colombia FTA on concerns of continued violence against workers, while the Obama administration’s promises about the Labor Action Plan were incorrect, said Public Citizen on the two-year anniversary of the Plan.

More than a year after the passage of the Colombia FTA and two years after the Obama administration announced a Labor Action Plan with Colombia to improve its labor rights protections, Colombia remains the world’s deadliest place to be a union member. In the year after the launch of the Labor Action Plan, union members in Colombia received 471 death threats – exactly the same number as the average annual level of death threats in the two years before the Plan, according to the ENS data relied upon under the Plan. At least 20 Colombian unionists were assassinated in 2012 according to ENS data, while the International Trade Union Confederation (ITUC) reported 35 assassinations last year. Meanwhile, many perpetrators of the over 2,000 existing cases of unionist murders remain free.

In addition, violent mass displacements of Colombians increased 83 percent in 2012 relative to 2011, when the U.S. Congress passed the FTA, according to the Consultoría para los Derechos Humanos y el Desplazamiento. The 130 mass displacements of 2012 added to the five million Colombians who have been displaced in the world’s largest internal displacement crisis. Recent acts of horrific violence and forced displacement have occurred in venues targeted for development under the FTA, such as the port of Buenaventura, according to the Washington Office on Latin America.

Sadly, Colombian unions and human rights organizations had predicted that the Labor Action Plan would not alter on-the-ground realities. Among the unionists who have received death threats since the FTA went into effect is Jhonsson Torres, a sugar cane worker who came to Washington to plead with members of Congress not to approve the FTA until and unless labor protections improved. One year ago the general secretary of Jhonsson’s union, also under death threat, was shot and killed while walking with his wife.

“Many people were shocked that the Obama administration would push a trade deal with Colombia, given the record of widespread deadly violence against unionists and human rights defenders, some of it perpetrated by the military and most of it occurring with impunity,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Now that the Obama administration is responsible for passing this agreement, the question is: what will it do to reverse this horrible trend?”

During his 2008 presidential campaign, then-candidate Obama famously opposed the Colombian FTA, stating in the third debate with Republican nominee Senator John McCain, “we have to stand for human rights and we have to make sure that violence isn’t being perpetrated against workers who are just trying to organize for their rights.”

But in April 2012, as anti-union repression remained rampant in Colombia, President Obama travelled to Cartagena to announce the implementation of the FTA. He stated, “this agreement is a win for our workers and the environment because of the strong protections it has for both – commitments we are going to fulfill.”

“The complete flip-flop from the reform trade agenda President Obama campaigned on in 2008 to the retrograde policies the administration is negotiating today with Latin American and Asian nations reveals the deep influence big business has on determining U.S trade policies that affect wide swaths of non-trade related issues,” said Wallach. “Despite members of Congress, labor unions and human rights groups in Colombia and the United States pointing out to the Obama administration the deficiencies in this Plan and the lunacy of implementing the FTA before real improvement could be measured, the sad reality is a failed promise to fix the horrifying daily reality of Colombian workers.”

Mexican Unions Say No to "Free Trade" Expansion Through the TPP

 

Above: Celeste Drake (AFL-CIO) and Melinda St. Louis (GTW) pose with representatives from Mexican unions and civil society organizations at a seminar on the dangers of the TPP in Mexico City, Mexico.

Last week, Mexico and Canada took part in their first official closed-door negotiations of the Trans-Pacific Partnership (TPP) “free trade” agreement, which the U.S. has been negotiating for the past 2 ½ years with countries in the Asia-Pacific and Latin America. The TPP would expand the North America Free Trade Agreement (NAFTA) model to 11 Pacific Rim countries (and eventually any nation in the Pacific Rim, from China to Russia to Japan, could be included).

In mid-November, Mexican officials hosted negotiators from the 10 other TPP nations in secretive talks in Los Cabos, Baja California. In response, Mexican labor, farmer and fair trade advocates, including the National Workers’ Union (Unión Nacional de Trabajadores--UNT), the National Council of Rural and Fisher Organizations (Consejo Nacional de Organismos Rurales y Pesqueros--CONORP), and the Mexican Action Network against Free Trade (Red Mexicana de Acción Frente al Libre Comercio--RMALC), organized a half day seminar raising concerns about Mexico’s participation in the TPP on November 14 in the Mexican Senate building.

The seminar launched a regional political alliance between partners from Canada (Common Frontiers), the United States (AFL-CIO and Public Citizen), and Mexico (the organizations listed above and others). Senators Fidel Demedicis Hidalgo and Isidro Pedraza Chavez also participated in the seminar and expressed concern about the lack of transparency in the TPP process. The organizers presented this statement to the Mexican press at the end of the seminar (translated below).

Two decades of “Free Trade” is enough: Say No to Expansion through the Trans-Pacific Partnership (TPP)
Statement of UNT, CONORP and RMALC of Mexico
November 14, 2012

"According to the United States government, big business and the Mexican Ministry of Economy, the TPP is the most ambitious free trade agreement that has ever been proposed in terms of the extent of issues it aims to address, but what the enthusiastic promoters of the trade agreement are hiding is that the true intention is to deepen and complete the commitment made by our country in NAFTA and other free trade agreements signed with various countries.

Through TPP the sectors and powers that have benefited from the previous generation of trade agreements will be strengthened and even larger swaths of our economy will be at the disposal of transnational corporate monopolies. This is the trend of the new era of trade liberalization in the 21st century.

Al Jazeera Asks: Will Colombia's Protesting Workers Be Heard?

This week, as we mark 100 days since the implementation of the Colombia-U.S. Free Trade Agreement, volatile protests against General Motors indicate that working conditions have not improved for Colombian workers. Colombia remains the most dangerous place in the world for union organizers, and seven union leaders have been killed this year.

Watch Al-Jazeera's video on the GM workers, who have stictched their mouths shut in a hunger strike, here.

 

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, 21^st 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 issues 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 21^st century NAFTA on steroids!

As a part of the “historic” TPP negotiations, it is time for your laws to truly reflect your new “21^st 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 “21^st 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 21^st century, dear neighbor.

 

Follow Public Citizen's Global Access to Medicines on Twitter: https://twitter.com/#!/PCMedsAccess
Read more at our webpage: http://citizen.org/Page.aspx?pid=4955

Korea trade deficit balloons under NAFTA-style deal

Last October, President Obama and House Republicans teamed up to pass a NAFTA-style deal with Korea, even though the government's own projections showed it would increase the U.S. trade deficit.

That deal ended up going into effect on March 15 of of this year (despite many Koreans' opposition to the rights given multinationals under the pact, not to mention the opposition of many here at home).

We now have the first full month of data on the deal, and it's not looking good.

The deal, sold as a way to increase job-creating U.S. exports, actually saw job-displacing imports rise much more quickly in its first full month. As Inside U.S. Trade reports,

The U.S. trade deficit in goods with South Korea tripled during the first full month the U.S.-Korea free trade agreement was in force, amid a slight decrease in the overall U.S. goods and services deficit that month, according to April trade data released last week by the Commerce Department. The bilateral FTA went into effect on March 15.

The U.S. goods trade deficit with South Korea grew to $1.8 billion in April, with imports totaling roughly $5.5 billion compared to exports of $3.7 billion. That was a larger bilateral deficit than the $0.6 billion recorded in March, where imports totaled $4.8 billion and exports were $4.2 billion. In April 2011, the U.S. goods deficit with Korea was $1 billion.

On auto trade, the bilateral deficit with South Korea climbed to $1.65 billion in April from $1.45 billion the previous month. While U.S. exports of autos and auto parts stayed the same over both months at roughly $100 million, imports from Korea rose to $1.76 billion in April from $1.56 billion the previous month. The data were released June 8.

While it's difficult to draw too many conclusions from a single month of data, rest assurred that workers concerned about offshoring of jobs and trade displacement are going to be watching these numbers closely for many months and years to come. If the trade deficit (in autos and more generally) continues to climb, it will be very difficult for policymakers to sell more NAFTAs (like the proposed TPP) to an already skeptical public.

Implementation of Colombia Trade Deal a New Low for Workers and the Environment

It is oddly fitting that U.S. Trade Representative (USTR) Ron Kirk would celebrate today’s implementation of the U.S.-Colombia trade deal at the U.S. Chamber of Commerce. After all, even as the U.S. government’s own projections showed that this pact and a similar one with Korea would increase the U.S. trade deficit, both USTR and the Chamber worked overtime to misrepresent this and other likely impacts.
 
At a time when nearly four out of ten Americans are unemployed or simply not participating in the labor force, it is unconscionable to implement a trade deal with Colombia – the unionist murder capital of the world.  At a time when multinational mining and other extractive industries are displacing poor Colombians, it is unthinkable for this pact to privilege these same corporations with special rights to challenge Colombia’s social and environmental mitigation policies in supranational tribunals. The Colombian government’s own pre-pact assessment anticipated the likely consequence of this deal: rural Colombians “would have no more than three options: migration to the cities or to other countries (especially the United States), working in drug cultivation zones, or affiliating with illegal armed groups.''

The failed North American Free Trade Agreement has virtually identical rules as the Colombia pact, and we know how that worked out: increased job insecurity and more corporate attacks on public interest policies outside of national judicial systems. These rules weren’t a good idea when it came to Mexico: they’re even worse when it comes to Colombia.

In October, President Obama set a new low by pushing a controversial U.S.-Colombia trade deal that attracted the highest level of Democratic opposition to a Democratic president’s trade initiative in history. Instead, record high levels of Republican support were marshaled, only because the Tea Party-supported members of Congress flip-flopped on their campaign commitments by voting for a trade deal that undermines American jobs and sovereignty.

If the administration continues the course on the failed trade policies of the Bush-Clinton-Bush years (as it seems to be with the nine-nation Trans-Pacific Partnership), it can expect continued outrage from people across the political spectrum.

Statement in Response to Obama’s Implementation of Colombia Free Trade Agreement (FTA)

Statement of Lori Wallach, director of Public Citizen’s Global trade Watch:

Given the number of unionists murdered in Colombia has increased every year since the trade deal was signed and the same labor violations that led candidate Obama to oppose the deal remain it is obscene that he has certified that conditions have improved and thus the trade deal is ready to go into effect. Since 1986 nearly 3,000 union activists have been killed in the country, the rate jumped to 48 last year.

Obama’s actions kill any leverage the U.S. had to stop the violence against union organizers and sends the wrong message about the human rights situation in Colombia which makes this so-called “trade deal,” which is really nothing more than special perks for big business that will harm most people in both countries, doubly damaging.

In 2008, candidate Obama made his opposition to the Colombia FTA clear, saying he opposed the deal, “because the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements.”  That violence has not stopped. Instead, President Obama has changed his position.

 The politics of Obama’s action with this trade deal are totally inexplicable given this is not just another NAFTA, which polling shows most American despise, but one with the country that is globally notorious for murdering unionists and a deal that was passionately despised by the very union voters on whom Obama will rely to win key swing states and volunteer for the vaunted Obama campaign ground game.

In 2008 candidate Obama also said, “I realize that changing your position to suit the politics of the moment might be smart campaign tactics but isn't the kind of strong, principled leadership America needs right now.” I am sure that after the President’s actions this weekend announcing that the same terrible labor conditions in Colombia are suddenly ok and pushing implementation of another NAFTA-style trade agreement leaves many Americans wishing that President Obama behaved more like candidate Obama.

The agreement allows corporations from anywhere around the world with offices in Colombia and the U.S. to challenge U.S. or Colombian public interest regulations and laws before a secret tribunal of three commercial lawyers to demand the laws are dumped and tax payer dollars are paid in compensation.

                                                               ###

Program to Give Access to NAFTA Trucks Violates the Law

Public Citizen, the Teamsters, and the Sierra Club filed an opening brief earlier this week on our lawsuit to stop the Obama administration's illegal program to allow unsafe Mexico-domiciled trucks to travel throughout the United States. It's the latest development in the story about how NAFTA may force the United States to lower its highway safety standards by permitting Mexico-domiciled trucks on its roads.

NAFTA included a requirement that all three countries’ highways be fully accessible to trucking companies based in any NAFTA nation by 2000, an item pushed by large U.S. trucking firms seeking deregulation and lower wages. However, the Department of Transportation studies have found that Mexico-domiciled trucks have much worse safety records than U.S. trucks, so public opposition has stymied attempts to open all U.S. highways to these trucks. In 2007, Congress put strict conditions on any pilot program that would evaluate the performance of Mexico-domiciled trucks on U.S. highways.

The Obama administration chose to ignore some of Congress’s conditions when it initiated a pilot program this October. Under the program, Mexico-domiciled trucks entering the United States do not need to show that they are built to U.S. safety standards, nor do drivers of these trucks need to meet all physical standards required of U.S. drivers. Furthermore, the administration did not follow proper procedures when conducting an environmental impact assessment. The program does not even serve its stated purpose of evaluating the ability of Mexico-domiciled trucks to operate safely in the United States, since there is no plan to collect a statistically valid sample of program participants. Finally, Congress insisted that any pilot program achieve comparable access for U.S. trucks in Mexico, but due to the limited availability of certain fuels, the program does not guarantee reciprocal access to Mexico for U.S. trucks.

For more background on NAFTA trucks, visit our landing page on the issue.

(Image courtesy of the Missouri Department of Transportation)

Now They Tell Us: Korea FTA Auto Tweaks Were Useless

In the run-up to the congressional vote on the Korea FTA, the Obama administration claimed that its small tweaks to the Korea FTA's auto provisions would lead to greater exports of U.S. autos to Korea. The relaxation of Korean environmental and safety standards for imported U.S. vehicles was supposed to soften the blow of the clobbering that U.S. automakers would suffer when U.S. tariffs on Korea vehicles were lifted under the FTA. Trusting this claim, Congress passed the Korea FTA last month. Now Bloomberg is reporting that the tweaked auto provisions were all for naught:

When Back Seung Chul bought a new car in Seoul, he didn’t even look at imported models from General Motors Co. (GM), Chrysler Group LLC and Ford Motor Co....

Back’s decision -- he bought a Sportage R sports utility vehicle from Hyundai (005380) affiliate Kia Motors Corp. -- suggests that a new U.S.-Korea trade deal won’t mean a leap in sales in the Asian country for U.S. automakers, which accounted for just 1.1 percent of the market last year. The agreement, likely to take effect Jan. 1 after it was signed by President Lee Myung Bak in Seoul today, calls for the phasing out of South Korea tariffs on U.S. vehicles.

“It is highly unlikely American cars will do well in the Korean auto market,” said Kang Sang Min, a Hanwha Securities Co. analyst in Seoul. “Local automakers like Hyundai and Kia can make good cars and offer quick, convenient service.”

The article also discusses the widespread preference for fuel-efficient vehicles in Korea, since Koreans must buy gasoline at double the price of U.S. consumers. Somewhat ironically, the Obama administration's efforts to have Korea relax its fuel efficiency standards for imported U.S. vehicles will only solidify the negative perceptions of U.S. vehicles in Korea.

In sum, Koreans' preference for domestic vehicles over U.S. vehicles - not safety regulations - is the reason that sales of U.S. vehicles have lagged. We warned about this in our comments to the U.S. International Trade Commission (USITC) about the methodology that they would use to predict the impact of the FTA upon the U.S. auto sector. Even though the USITC did not adopt the modifications to their methodology that we recommended, its report still predicted that the annual U.S. auto trade deficit would rise by hundreds of millions of dollars under the Korea FTA. Although Bloomberg's reporting on this issue can be viewed as better late than never, it is certainly too late for the thousands of U.S. auto workers who will likely lose their jobs from the Korea FTA.

Job-Killing Trade Deals Pass Congress Amidst Record Democratic Opposition

Obama and Tea Party Flip Flop on Fair Trade Campaign Commitments

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

With nine percent unemployment and Americans desperate for job creation, it is unconscionable that President Obama and House Republicans would push through a trio of NAFTA-style job-killing trade agreements that even the government’s own studies show will increase the U.S. trade deficit.

This represents a complete flip-flop for President Obama, who won crucial swing states by pledging to overhaul our flawed trade policies. So it is no surprise that a sizeable majority of Democrats in Congress voted against these agreements, against Obama and for American jobs.

Today a larger share of House Democrats voted against a Democratic president on trade than ever before. It took Bill Clinton nearly eight years of NAFTA job losses, sell outs and scandals to have nearly two-thirds of the House Democrats vote against him on trade.

Given the strong Democratic opposition, ultimately it was the Tea Party GOP freshmen who passed these job-killing deals despite their campaign commitments at home to stand up for Main Street businesses, against more job offshoring and for Buy American requirements. The three pacts explicitly ban Buy America procurement policies. The Korea FTA is projected to increase the trade deficit, with seven U.S. industrial sectors hardest hit and job losses of 159,000 in its first seven years.

Members of Congress that voted for these job-killing agreements – backed by Wall Street and America’s most notorious job-offshoring corporations and harmful to American workers, small business and consumers – will face a reckoning as the damage of these pacts hits home. We promise to closely track and publicize every development.

Everyone is asking what the Obama administration could have been thinking to push the sorts of NAFTA-style trade deals that polls show majorities of Democrats, Independents and even GOP voters oppose as job killers, especially after the lesson of the 1993 NAFTA vote, when a Democratic president’s blurring of the distinctions between the parties on trade and jobs caused a disgruntled base to stay home. 

Every election cycle, more Democrats and GOP are campaigning against these sorts of NAFTA-style trade pacts. Given this and the high unemployment rate, it will be very rough for those officials who then betrayed folks at home and voted for these deals loved only by Wall Street and job-offshoring corporations.

Record of Congressional Democratic Opposition to Democratic Presidents on Trade Pacts

- 82.3% of House Democrats opposed the Colombia FTA (158 Democrats against, 31 for)

- 67.7% of House Democrats opposed the Korea FTA  (130 Democrats against, 59 for)

- 64.1% of House Democrats opposed the Panama FTA (123 Democrats against, 66 for)

- 60.6% of Democrats opposed NAFTA (1993)

- 35% opposed the WTO (1994)

- 65.56% opposed China PNTR (2000)

 

Record of Congressional Democratic Opposition to GOP Presidents on Trade Pacts

- 62.6% opposed the Chile FTA (2003)

- 62.14% opposed the Singapore FTA (2003)

- 41.3% opposed the Australia FTA (2004)

- 39.32% opposed the Morocco FTA (2004)

- 92.6% opposed the Central America Free Trade Agreement (2005)

- 40.4% opposed the Bahrain FTA (2005)

- 87.6% opposed the Oman FTA (2006)

- slightly more than half opposed the Peru FTA (2007)

Trade disaster: Congress votes tomorrow

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

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

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

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

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

Here’s why:

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

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

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

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

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

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

At least 18,600 jobs offshored by corporations signing pass-the-FTAs ad

As part of the corporate ad campaign to push congressional passage of the NAFTA-style trade deals with Korea, Colombia, and Panama, the heads of 32 corporations placed an "open letter" in yesterday's National Journal Daily (subscription only). Thing is, many of these very corporations are certified by the U.S. government as having offshored thousands of jobs under past U.S. trade agreements. That's right, the advertisement claiming that these Bush-era FTAs are needed to create U.S. jobs is sponsored by many chronic trade-agreement offshorers of, um, U.S. jobs.

Moreover, while these CEOs claimed that these deals would create U.S. jobs, the government’s own official studies predict an increase in the U.S. trade deficit from the deals. And, an independent economist projected the net loss of hundreds of thousands of jobs from the pacts. The historical record of similar trade agreements is that the United States has slower export growth to countries we have NAFTA-style deals with than with other countries.

In reality, it's likely that these corporations are licking their chops waiting for the offshoring opportunities that will come with another batch of unfair trade deals. Thanks to the Department of Labor's Trade Adjustment Assistance (TAA) data on workers laid off due to imports and offshoring, we can see how these corporations have taken advantage of past unfair trade deals to ship jobs overseas. (And, given it provides a list of corporate offshorers, we can also see why the Republicans in Congress are keen to kill off this program that provides training and extended unemployment benefits to workers whose are certified as casualties of trade pacts, offshoring, and rising imports.)

We have a searchable form of the TAA database on our website. There you can see that some of these 32 corporations have shipped a combined 18,600 American jobs overseas since 2001. Consider that an example rather than a full accounting of the damage, as TAA is a narrow program that excludes many workers who may well have lost their jobs to trade pacts and imports but who do not meet the program's criteria. If a broader range of trade-related job loss is utilized, the Department of Labor reports over 35,000 workers who have lost their jobs at these companies due to trade since 2001.

Just to pick out a few examples, Whirlpool took advantage of NAFTA and shipped over 1,000 jobs at their Fort Smith, Arkansas facility to Mexico in 2008. Caterpillar, a major backer of the proposed trade pact with Colombia, laid off 338 workers at its Mapleton, Illinois facility when it shifted their work to Mexico. And it looks like Texas Instruments was getting a head-start on the offshoring possibilities offered by the Korea trade deal when it shipped 149 jobs at its Attleboro, Massachusetts facility to South Korea, Mexico, and China in 2005. It just so happens that electronics is going to be the hardest-hit sector in terms of the ballooning deficit from the Korea pact, so the remaining Texas Instruments workers in the United States should be wary.

This ad came the day of Obama's big jobs speech, and it turned out that he slipped in one definitely anti-jobs pitch, advocating for the passage of the Korea, Colombia, and Panama pacts. (Although this time, unlike in the State of the Union address, he did not make the dubious "70,000 jobs supported" claim.) If this isn't bad enough, Larry Summers, Obama's former director National Economic Council, last month argued that "We should not oppose offshoring or outsourcing."

After the jump is a list of the incidents of offshoring at the corporations that signed the letter pushing the three trade pacts:

(UPDATED 9/12/11)

U.S. Trade Representative's New Jobs Strategy

Last week, amid mounting signs that the job market may be deteriorating further, Tim Robertson, Director of the California Fair Trade Coalition, interviewed U.S. Trade Representative (USTR) Ron Kirk about the implications of the Korea, Colombia, and Panama trade deals. In the course of the interview, Kirk seemed to suggest that the Obama administration's trade policy encouraged shrinking the number of jobs in the United States. According to Kirk, our massive trade deficit is inconsequential since the imports constitute goods that "we don't want to make in America." He explains:

Let's increase our competitiveness... the reality is about half of our imports, our trade deficit is because of how much oil [we import], so you take that out of the equation, you look at what percentage of it are things that frankly, we don't want to make in America, you know, cheaper products, low-skill jobs that frankly college kids that are graduating from, you know, UC Cal and Hastings [don't want], but what we do want is to capture those next generation jobs and build on our investments in our young people, our education infrastructure. Our advanced services like [at the architecture firm where we met], there's no reason in the world ... why would we not want to capture the economic benefit of that here in America? I mean, I would argue that that is exactly the reason that we're doing it.

With the unemployment rate at nine percent, it's hard to fathom a government official saying that the United States should pass up jobs, even if those jobs don't require a degree. Shoes are arguably some of the "cheaper products" that Kirk references. The Washington Post recently ran a piece about New Balance's shoe plant in Maine where the workers are glad to be keeping their jobs, contrary to Kirk's assertion that we don't want to make them anymore:

“We want to fight really hard to keep this business in Maine,” said Lori Cook, 28, a single mom with two kids. “I’d like to keep my job.”

The Korea trade deal, projected to result in the loss of 159,000 U.S. jobs, will not just displace workers in the apparel industry, however. The Korea FTA will increase the U.S. deficit in cutting-edge industries, including electronics and motor vehicles, costing us even the "next generation" jobs that Kirk extolls. The Korea, Colombia, and Panama trade deals clearly endanger President Obama's job creation agenda, and USTR Ron Kirk should go back to the drawing board to formulate a trade policy that creates jobs instead of one that eliminates them.

Op-Ed Round-Up

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

 

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

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

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

Read the entire piece here.

 

 

Congress should reject proposed trade agreements and insist on better policies

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

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

Read the entire piece here.

 

US-Colombia free trade agreement bad idea for both countries

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

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

Read the entire piece here.

 

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

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

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

Read the entire piece here.

 

Free Trade Pacts Will Cost Tennesseans Jobs

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

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

Read the entire piece here.

  

 So-called 'free' trade agreements harm American workers

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

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

Read the entire piece here.

 

 
 
Say no to new trade deals and start over

Editorial

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

Read the entire piece here.

 

Open borders, trade deals are ruinous for America

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

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

Read the entire piece here.

 

Trade deals are no deal for US

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

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

Read the entire piece here.

 

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

By Tom Burga, president of the Ohio AFL-CIO

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

Read the entire piece here.

 

 Trade pacts bad for California agriculture

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

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

Read the entire piece here.

 

 
Wisconsin Farmers Union opposes free trade pact with Korea

By Darin Von Rudin, president of Wisconsin Farmers Union

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

Read the entire piece here.

 

 
Rep. Schrader is confused on international trade

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

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

Read the entire piece here.

 

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

By Jessica Lettween, director of the Minnesota Fair Trade Coalition

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

Read the entire piece here.

 

Choose voters over donors on free trade

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

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

Read the entire piece here.

 

Obama's trade policy clearly shortsighted

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

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

Read the entire piece here.

 

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

 

Dylan Ratigan on Tax Cheating and the Unfair Panama Trade Deal

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

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

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

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

Read the whole article.

White House Rocked by Protests Against Unfair Colombia Trade Deal

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

Click here for more pictures.

Read the press advisory after the break.

Comparing apples to bloody oranges

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

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

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

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

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

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

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

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

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

Two closing thoughts.

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

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

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

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

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

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

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

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

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

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

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

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

Trade Looms Large in NY Special Election

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

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

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

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

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

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

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

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

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

Scott Walker's NAFTA trade package

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

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

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

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

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

See the full list of signatories after the jump.

Australia government's new investment rules: offshore no more

Australia's government broke new ground with its recent commitment to move away from the controversial investor-state system. In the Julia Gillard government's trade policy statement, it wrote:

Some countries have sought to insert investor-state dispute resolution clauses into trade agreements. Typically these clauses empower businesses from one country to take international legal action against the government of another country for alleged breaches of the agreement, such as for policies that allegedly discriminate against those businesses and in favour of the country’s domestic businesses.

The Gillard Government supports the principle of national treatment – that foreign and domestic businesses are treated equally under the law. However, the Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses. Nor will the Government support provisions that would constrain the ability of Australian governments to make laws on social, environmental and economic matters in circumstances where those laws do not discriminate between domestic and foreign businesses. The Government has not and will not accept provisions that limit its capacity to put health warnings or plain packaging requirements on tobacco products or its ability to continue the Pharmaceutical Benefits Scheme.

In the past, Australian Governments have sought the inclusion of investor-state dispute resolution procedures in trade agreements with developing countries at the behest of Australian businesses. The Gillard Government will discontinue this practice. If Australian businesses are concerned about sovereign risk in Australian trading partner countries, they will need to make their own assessments about whether they want to commit to investing in those countries. [emphasis added]

The last point is fantastic: why should any government be in the business of facilitating offshore investment? That's what insurance markets are for.

Now, the government just has to stick to its guns in the Trans-Pacific FTA talks.

Obama’s Korea Trade Deal Undermines Future of U.S. Auto Industry, Finds Government Report

The newly released study by the U.S. International Trade Commission (USITC) on the South Korea Free Trade Agreement’s (FTA) supplemental auto deal found that the already hard-hit U.S. auto industry is in for more pain under the Obama administration’s FTA with South Korea. The study was requested following a December 2010 “supplemental deal” that exempted some U.S. autos from having to meet stringent Korean auto safety and environmental standards.

The latest study confirms that, even with the supplemental agreement, very few U.S. autos will be sold in Korea, and a huge increase in Korean auto imports into the U.S. is predicted.

Moreover, the new study did not alter the previous findings that the bilateral and global balance in autos will worsen under this agreement, nor that the U.S. will see an increase in its overall global trade deficit.

The USITC’s newest findings were not unexpected, because in undertaking their congressionally mandated studies of each trade pact, the agency assumes an agreement is fully implemented and tariff reductions are already phased in. The December supplemental deal did not change the ultimate tariff phase outs, only the timelines over which tariffs go to zero. The USITC’s initial 2007 study on the Korea FTA found that the U.S. auto deficit would increase by $531-708 million as a result of the pact.

The House GOP leadership didn’t like that finding, so they requested a new one that incorporated the changes made to the pact in 2010.

In the new study, the USITC noted that slightly improved numbers on U.S. net exports to Korea “stem from changes to the economic environment (e.g., the recent economic downturn) and declines in trade flows in 2009.”

Bizarrely, House Ways & Means Committee Chairman Dave Camp (R-Mich.) celebrated the new study, touting an estimate that the supplemental deal will increase U.S. auto exports by $48-66 million to Korea. But Chairman Camp fails to note that his new study does not change the initial troubling finding that U.S. imports from Korea will also increase $907 million.
 
The findings of the new USITC study, though already bad news for U.S. autoworkers, are also likely to be underestimating the actual damage and inflating the prospective benefits of the FTA and supplemental agreement, for several reasons:

• The USITC refused to incorporate into its modeling more realistic assumptions about Korean consumer preferences, which are overwhelmingly biased in favor of domestically made goods.
• The USITC also did not incorporate into its model the fact that “South Korean” autos can be made with up to 65 percent Chinese or North Korean content, and still receive the privileges of the deal.
• The USITC did not address the concern that members of Congress, industry and unions had that the “transplant” Korean companies now producing in the U.S. South might reduce their employment there, as tariffs are phased out and it becomes easier to simply ship Korean-made cars to the United States.
• The USITC also does not attempt to model the specific non-tariff barriers that Korea promised to remove in the December negotiations, for instance exemptions from safety standards for U.S. automakers that sell below 25,000 cars a year in the Korean market and the exemptions from environmental standards from the years 2012 to 2015. The agency simply assumes that all non-tariff barriers are removed. (The USITC’s model assumes that any difference between the price of U.S. autos in the world market and the price of U.S. autos in the Korean market are attributable to a black box that is deemed one big “non-tariff barrier.” That price differential is simply assumed to disappear.)

Given Koreans are already disinclined to buy foreign cars, a high profile exemption of U.S. cars from having to meet Korea’s strong safety and environmental standards will only exacerbate Korean consumers’ notions that imports are inferior.

President Barack Obama campaigned and won on overhauling our unfair trade policies. Instead, what Americans face with the Korea FTA is the same Bush NAFTA-style agreement, with slightly altered auto tariff schedules. The Korea trade deal is still projected to increase the overall U.S. trade deficit and cost 159,000 U.S. jobs. The Korea deal requires the kind of financial deregulation that contributed to the economic crisis. The FTA’s labor chapter still contains Bush’s ban on reference to the International Labor Organization conventions when enforcing its weak labor standards. This agreement even allows South Korean goods to be given the benefits of the agreement even if such goods contain inputs or parts from North Korea, despite our sanctions on trade with that country. And it still has sovereignty-eroding, public-interest-policy-chilling rules that allow multinational corporations to sue governments in private, foreign tribunals for taxpayer money. There are nearly $9.1 billion in claims in the 14 so-called investor-state cases outstanding under NAFTA-style deals. None of them relate to traditional trade concerns; all of them relate to environmental, public health and transportation policy.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Korea FTA Benefits China at the Expense of U.S. and South Korean Workers

We’re continuing our series of facts in response to the Korean Embassy’s misleading claims on the Korea Free Trade Agreement (FTA). Our full response can be viewed here. This is the final installment, focusing on the Korea FTA’s lax domestic content requirements for autos.

Lori Wallach’s Huffington Post piece: “The FTA allows its benefits to accrue to autos that contain only 35 percent U.S. or Korean content.”

Korean Embassy’s claim: “The KORUS FTA stipulates that 35% of the components used to manufacture products (under the build-up method/net cost method) or 55% of the components of the final product (using the build-down method) must originate in one of the two countries to be eligible for preferential treatment. A 45% maximum foreign content rule under the Korea-EU FTA corresponds with the minimum 55% domestic contents rule under the KORUS FTA (using the builddown method). Also, the EU’s standard foreign content rule was 40%, not 45%.” Elsewhere, the Embassy has gone further, stating that the build-up and build-down methods “are supposed to be equivalent to each other. The 20% difference between the methodologies reflects the operation cost in the final product processing stage and manufacturers’ dividends, etc.”[i]

Facts: These two methods are not equivalent. Multinational companies have pushed for rules that intentionally allow them the discretion to include as much as 65 percent content from outside the FTA countries, at the expense of workers in both the U.S. and South Korea.

As the United Autoworkers and others have repeatedly noted, Korean automakers have the option to use the “build-up” method to calculate the domestic value content under the US-Korea FTA, which requires that only 35 percent of the value of the motor vehicle be comprised of domestic parts to qualify for FTA benefits. This method allows – but does not require – that importers deduct certain “fringe” costs like transportation when calculating the maximum permissible share of content from non-FTA countries.[ii]

The EU-Korea FTA provides for only one way for automakers to calculate the domestic value content. Under the EU-Korea FTA, a Korean motor vehicle qualifies for FTA benefits only if its foreign content comprises 45 percent or less of the vehicle.[iii] Put differently, the minimum domestic value content for the EU-Korea FTA is 55 percent. Given that the EU-Korea FTA mandates that 55 percent of the value of a Korean auto must be of domestic components, while the “build up” method of the US-Korea FTA mandates that only 35 percent of the value of a Korean auto must be of domestic components, Korean automakers will be able to put a much greater portion of Chinese components into vehicles destined for the United States, undercutting auto production in the United States.

Members of Congress and fair trade groups have long raised concerns about the low percentage of originating content required for goods to qualify for duty-free FTA treatment. The Labor Advisory Committee for Trade Negotiations and Trade Policy has warned that the lax rules of origin in the Peru, Oman, and Korea FTAs would allow large quantities of goods from third countries such as China to enter the United States duty-free under the FTAs.[iv] Reports on previous FTAs have made similar points.[v] However, industry representatives have successfully pushed the U.S. Trade Representative to include lax rules of origin in FTAs.[vi]

---

[i] http://www.koreauspartnership.org/pdf/Other%20Issues.pdf

[ii] See Annex 6-A of the Korea FTA,  Available at: http://www.ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_upload_file680_12704.pdf. See also: International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW), “The Social and Economic Impact of the US-South Korea Free Trade Agreement (KORUS FTA),” September 14, 2010, Available at: http://www.imfmetal.org/files/10102608591310005/UAW_KORUS_FTA_ENGLISH.pdf

[iii] See Protocol 1 of the E.U.-Korea Free Trade Agreement, Available at: http://trade.ec.europa.eu/doclib/html/145192.htm

[iv] Labor Advisory Committee for Trade Negotiations and Trade Policy, “The U.S.-Oman Free Trade Agreement,” November 15, 2005, at 9, Available at: www.citizenstrade.org/pdf/omanLACreport_11152005.pdf

Labor Advisory Committee for Trade Negotiations and Trade Policy, “The U.S.-Peru Free Trade Agreement,” February 1, 2006, at 1, Available at: www.citizenstrade.org/pdf/peruLACreport_02012006.pdf

Labor Advisory Committee for Trade Negotiations and Trade Policy, “The U.S.-Korea Free Trade Agreement,” April 27, 2007, at 28, Available at: http://ustraderep.gov/assets/Trade_Agreements/Bilateral/Republic_of_Korea_FTA/Reports/asset_upload_file698_12781.pdf

[v] See Labor Advisory Committee for Trade Negotiations and Trade Policy, “The U.S.-Singapore Free Trade Agreement,” February 28, 2003, at 14-15. Available at: http://ustraderep.gov/assets/Trade_Agreements/Bilateral/Singapore_FTA/Reports/asset_upload_file77_3220.pdf

[vi] For example, the Industry Sector Advisory Committee on Transportation, Construction, Mining, and Agricultural Equipment urged USTR to allow the build-down method to calculate the domestic content for autos in the Chile FTA after the initial draft agreement only included the build-up method. The final agreement allowed the both methods. See ISAC 16, “Report for the Chile Free Trade Agreement,” February 2003, at 6; USITC, “U.S.-Chile Free Trade Agreement: Potential Economywide and Selected Sectoral Effects,” June 2003, at 80; Chapter 4 of U.S.-Korea FTA.

Tariffdega Nights: The Latest Ballad of Ricky Bobby

Adam McKay, the writer and director of such Will Ferrell classics as Talladega Nights: The Ballad of Ricky
Bobby, has always had a political streak. His Funny or Die website featured the hilarious video with all the "SNL presidents" calling for Wall Street reform, and his movie "The Other Guys" tackled corporate corruption in its closing credits.

His engagement with policy runs deep. He maintains a blog over at the Huffington Post, where he recently questioned offshoring of jobs. And on comedian Marc Maron's excellent podcast, McKay recently said the following:

McKay: You have to raise trade tariffs. We only pay 2%... India has a 40% tariff, China has 22%, we only have a 2% tariff. That's crazy! You notice no one talks about that. You could almost say that one issue alone could change our whole nation if we went to a 10% trade tariff.

Maron: Because it would encourage manufacturing?

McKay: All the manufacturing would come back here. Wal-Mart couldn't be making that money anymore. You'd see factories spring up all over this country. And you could get rid of all those subsidies, the 48 billion, you could get rid of the Bush tax cuts...

By the way, we could literally balance the budget and fix the economy right now in 10 minutes. That's how easy it is. The problem is the wall of white noise and misinformation and anger that gets in the way of it where they justify everything...

How about Mitch McConnell in Kentucky voted against the Made in America provision for the stimulus package, and he's in the poorest state in the country? Against the Made in America provision, but no one talks about that. Instead it's about liberals, it's about gay marriage...

It would be pretty unusual to hear this policy advocated in Washington policy circles. But then again, as a long running Pew poll shows, there is a wide gap between the general public and elite respondents (defined as Council on Foreign Relations members) when it comes to trade policy.

Gingrich lauds loss of jobs to Mexico

As Alex Seitz-Wald at Think Progress reports, possible Republican presidential candidate Newt Gingrich is saying NAFTA worked because it created jobs in Mexico. On a call in show, Gingrich said:

    CALLER: Back in the ’90s I remember Ross Perot saying that there was going to be the giant sucking sound of jobs if NAFTA passed. I think it ended up being true, right? And I know you were a big free trader.

    GINGRICH: Yeah, well, I don’t think it was true in Mexico. I think the fact is that NAFTA allowed us to build jobs in Canada, the United States, and Mexico, in competition with China. I mean, our big competitor is not Mexico. Our big competitor is China and India. And I’d rather have jobs close to the United States than have jobs overseas in places like China and India. That’s why I was in favor of it. … So in a sense, I’d like our neighborhood to be fairly well off and fairly prosperous.

I doubt too many fair trade Tea Party folk will rally behind a guy who shows so little concerns for "Making it in America."

Moreover, as EOT readers know, it's false that NAFTA has somehow benefited Mexico at the expense of the United States: it has been lose-lose for working people in both nations.

Today's revelation that the Pentagon is flying drones over Mexico to track down narcotraffickers is just the latest revelation that NAFTA prioritized the corporate bottomline at the expense of sustainable, non-drug related job creation.

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

Trade party at the cattle farm

Princeton economist Uwe Reinhardt had an interesting post on trade last week on the NYT website that will probably spark some debate. He writes:

The economist’s case for free trade is cobbled together from the toolkit labeled normative economics, a branch of economic analysis that seeks to identify what is efficient and what is not and, thus, what is good policy and what is not — and, therefore, what should and should not be done.

I have already written several posts that were critical of that branch of economics. My objection to this approach is the dictatorial, collectivist nature of normative analysis.

In a nutshell, in that branch of inquiry, economists view the world as a giant cattle farm to be managed in ways that maximize the collective weight of the cattle, totally in abstraction from the welfare of any individual animal. We call the collective weight of the cattle social welfare.

The cattle-farm model then allows us to say, with a straight face, that if a public policy bestows a gain of $2,000 on George but makes Martha $1,000 poorer, social welfare has been increased.

This dictum underlies the economist’s case for free trade. The cattle farm is global. Free-trade analysis pays little attention to the love people have for their own nation, which makes them assign more weight to the welfare of fellow citizens than to that of citizens of other countries.

The post - along with Reinhardt's post from last month - couldn't have come at a more appropriate time.

Many proponents of what they deem "free trade" (not to mention "free trade agreements" that have little to do with actual free trade) have been ramping up the cattle farm happy talk recently.

Take for instance this well-assembled video clip on the virtues of "free trade". I highly recommend the three minute clip, because it captures exactly what is wrong with the cattle farm metaphors.

In the simple world of Fritz and Lou (the characters in the clip), free trade makes about as much sense, as well, a division of labor at your workplace or home. That's because the simple stories we use to talk about the benefits of division of labor between individuals are at their core the same stories we use to talk about the benefits of trade between nations.

But nations are different than people, because there's more than one person in a nation. And as the recent protests in Wisconsin remind us, there is a class division in America. The trade policies that we have pursued have benefited one (increasingly tiny but insanely wealthy) class at the expense of another. And not only has the upper class not been redistributing their newfound gains to the rest of us (an operating assumption that underpins the classical free trade story), but they're actually calling for ripping off the few bandaids and burial insurance policies that are in place.

This themes are are also raised in "Free Trade Doesn't Work," a readable book by Ian Fletcher, now a fellow with the Coalition for a Prosperous America. Reinhardt and Fletcher are asking many of the same questions, making many supporters of status quo trade policies uncomfortable in the process.

Pushing Obama on Latest Class Snuggle

Today, workers’ rights and fair trade advocates gathered at Lafayette Square in Washington, D.C. ahead of President Obama's address to the Chamber of Commerce. They urged President Obama to defend American jobs and oppose NAFTA style “free trade” agreements such as the Korea FTA. Groups represented included the National Nurses United/California Nurses Association (NNU) and ThinkProgress, among others. Donna Smith of NNU stated, “the Chamber of Commerce represents Wall Street and corporate greed, not working people. It encourages employers to roll back rights and living standards for working people. It promotes the outsourcing of U.S. jobs, and spends hundreds of millions of dollars at home to influence Congress to achieve tax breaks for big business and block reforms for working people.” Some of those present also voiced their distaste with President Obama’s support for the to Korea trade deal, which stands in stark contrast with his campaign promises on trade. 

Belief vs. Reality in West Lafayette Park

The Washington Post reported an interesting tidbit today:

"That's been a big piece of the business community's mantra for a long time: trade," said Daley, who was an adviser to President Bill Clinton on NAFTA and became Obama's chief of staff last month. "Just about every Republican I've engaged with in one way or the other at social events or calls, when I got the job . . . all of them that I've talked to, they all go right to Korea and the trade issue, because I think there's a belief that, you know, that can help the economy."

So, there you have it. Some businesses and some Republicans believe that the Korea FTA will help the economy, so the White House is making it a priority.

But, as we've documented, the projections show that the reality of the Korea FTA will be a net negative for the economy. And, as Roll Call reported yesterday, plenty of small business groups and Republicans are against the deal:

Opponents of free-trade deals say they can swing tea party backers to their side. Michael Ostrolenk, national director of StopUSKoreaNAFTA.org, said his center-right libertarian group favors free trade but opposes the South Korea deal because it would cost U.S. jobs and sovereignty.

In other words, there's a formula for uniting the country (as opposed to just west Lafayette Park residents) around trade expansion, but the Korea FTA ain't it.

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.

 

 


 

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.

U.S. Workers Don't Care if Korea Buys Tomorrow the U.S. Exports Germany Bought Today

Over at the White House blog, U.S. Trade Representative Ron Kirk continues his tendency to play loose with the facts of the U.S. International Trade Commission (USITC) study. He says:

The tariff cuts alone in the U.S. - Korea trade agreement will increase exports of American goods and services by $10 to $11 billion.  We expect this agreement to create 70,000-plus jobs for American workers in a wide range of economic sectors from autos and manufacturing to agriculture.

In reality, the USITC study that the administration has been citing predicts that U.S. exports in the sectors analyzed will increase by $4.8-5.3 billion, but imports will increase by $5.1-5.7 billion due to the Korea FTA. This leads to a net increase in the deficit of between $308 million and $416 million.  The “$10 to $11 billion” figure that Kirk is citing refers to the increase in exports to only Korea, but does not account for declines in U.S. exports to other countries that the FTA will induce. Because of the way that bilateral trade agreements affect global trade flows, about 50% of the increase in exports to Korea are merely U.S. exports to third countries shifting to Korea. In other words, 50% of the “$10 to $11 billion” does not represent new exports, only exports that have changed destination.

Put differently, U.S. workers don't care if Korea buys tomorrow the U.S-made products Germany bought today. This creates no new jobs, although it may increase carbon emissions with the longer shipping times. Couple this with the fact that the USITC shows that U.S. workers’ net exports will be lower after the deal is implemented, and U.S. workers have every reason to oppose this deal.

Furthermore, as much as Ron Kirk hopes that the agreement will create jobs in the auto sector, the government's own projections suggests that jobs will be lost in the auto sector. The study predicts that the auto deficit will increase by $531-708 million ( See our memo on the topic here). Although the USITC model does not allow the total number of jobs in the U.S. economy to change, it predicts that a substantial number of jobs in the auto sector will shift away from autos to other sectors of the economy (see Table 2.4 on page 2-15 in the USITC report). Thus, contrary to Kirk's expectations, U.S. auto workers will be losers in this Korea FTA.

Video: Korea Trade Deal Reality Check

While President Obama and corporate lobbyists attempt to sell the Korea trade deal, South Korean farmers and a mass of labor and environmental organizations in the United States are strongly and clearly opposed. Protesters depicted in the video below urged the South Korean government to abolish the trade deal “fearing it would harm both agricultural producers and cattle farmers.”

Public outrage about the deal in the United States is no surprise as a September 2010 NBC/WSJ poll found that 69% of Americans believe free trade agreements with other countries have cost jobs in the United States. View a compilation of statements in opposition to the Korea trade deal here.

In another protest in Seoul on Sunday, Lee Chun-seok, spokesman for the main opposition Democratic Party, accused the government of making "massive concessions against our national interests," his party said. "We cannot find the principle of reciprocity anywhere in the agreement."

It is clear that President Obama did not take stock of American citizens’ opinions nor South Koreans’ welfare when reaching a decision to push the Korea trade deal. Now it is up to the 112th Congress to decide whether to settle for the deeply flawed pact or reject another NAFTA-style deal with no realistic promise of benefitting Americans or South Koreans.

Industrial Policy IS Sexy - CRT

The following is recent dispatch from the Climate Reality Tour - a movement building bike tour. My bike partner and I are biking from West Virginia to the U.N. Climate Talks in Cancún to connect the dots between Globalization policies and global climate change.

+++ For most folks, there might be nothing less sexy than industrial policy. An abstract government process for deciding how to intervene in the globalized marketplace to support what major industries - often quite polluting ones. It lacks the high-speed flare of bike culture (in which we are awash), the colorful bouquet of community gardening, the human drama of environmental justice struggle.

But green industrial policy might just be what saves the planet. It’s a tragic that it’s sultry allure is lost on us.

We were impressed in our interview with Bill Londrigan, the President of the Kentucky AFL-CIO, how deeply he understood the need for holistic green industrial policy – one that moves rapidly to phase out dirty industry and replace it with green jobs. “Hopefully we can make some rational decisions about where we need to go… to make sure we can evolve to where [energy and industry] aren’t harmful to the environment” Londrigan says. “And the government could play a great role.”

But we are talking more than your typical one-time weatherization jobs and beyond just the renewable energy sector. Green industrial policy can tie the other threads together, and create jobs and healthier communities in the process. As has been discussed, if we shifted our food, transit, and energy policy we could address the injustice and unsustainability in those systems. We can imagine regional bike manufacturing with green energy, and labor-intensive local food systems underwritten by our government. This would be welcome industrial policy to shift from unsustainable centralized corporate status quo.