Whirlpool: Taking Tax Dollars, Taking Jobs

It can barely get greedier than this: We're in tough economic times, so Whirlpool receives $19 million in taxpayer funds to create jobs. Then it turns around and announces it will shutter its Evansville, Indiana refrigerator plant and displace the 1,100 workers there. Disgusting.
And where, you might ask, will those jobs go? They'll follow so many other lost family-supporting jobs on the NAFTA train to Mexico.

But workers are hoping to make the planned Evansville closing a turning point in the battle for American manufacturing, and are fighting to keep the plant open. The president of the national AFL-CIO, Richard Trumka, is scheduled to speak tomorrow at a major rally to keep plant open. Many hundreds are expected to join the demonstrations from across the region and the country.

The union representing the Whirlpool workers, IUE-CWA Local 808, is fighting fiercely. Financial Secretary of Local 808, Barbara Reich, lays it bare on evening news of the local Fox affiliate:

We need to bring to the attention of the American public when a so-called - in my opinion - American company gets American tax dollars, $19 million American tax dollars to create jobs, then they should not be taking existing American jobs to Mexico or China... We need those jobs right here in this community.

Sister Reich is right. It's a long shot that the plant will stay open, but workers are rallying to a higher cause. Under the influence of unfair NAFTA/WTO-style trade policies, manufacturing job loss has hobbled the country's economic prospects. Working people in Evansville are fighting not just to keep the plant open, but also to change the policies of "taking these jobs to other countries."

That's why solutions like the TRADE Act that correct our failed trade policies, are a crucial element of this fight. Indiana Representatives Visclosky, Donnelly, and Carson have endorsed the comprehensive reform legislation, but 8th District Rep. Brad Ellsworth, who is expected to speak at the rally and whose hometown is Evansville, has yet to sign on. Hopefully he'll see the light and join the growing reform consensus.

Mobilization and protest are another critical element of the fight. So tomorrow - Friday, February 26th - working families will assemble in Evansville to say, enough!

Continue reading "Whirlpool: Taking Tax Dollars, Taking Jobs" »

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GOP Turnaround on Buy American: Genuine Concern or Opportunism?

Mike Elk over at Campaign for America’s Future points out that the leadership of the Republican Party has flip flopped over the limited “Buy American” provisions in the stimulus bill.  This debate is particularly salient now, since the U.S. just watered down the Buy American requirements when it comes to Canada. Mike Elk explains how Michael Steele has made a U-turn on Buy American:

GOP Chairman Michael Steele blasted the Obama administration in a fund-raising email earlier this week for allowing stimulus money designated for clean energy solutions to be spent on overseas companies. Which is interesting, because stimulus money going to overseas firms was the direct result of conservative opposition to attempts to keep that money in America.

Notwithstanding Republican leaders’ huffing and puffing about “protectionism” one day and offshoring the next, Buy American isn’t a partisan issue.  As Mike points out, 86 percent of Americans support the Buy American provisions of the stimulus legislation, including 79 percent of Republicans.  If the Republican Party’s position on Buy American has actually changed, then they should say it loud and clear.  As of now, though, it just seems that Steele is attacking the Obama administration simply for partisan gain.

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Why Countries Sign Trade Deals "Against Their Interest"

"If NAFTA-like trade deals are so bad for developing nations, why are they lining up to get on board?"

Hand out enough fair-trade leaflets on campus, and you'll get asked this question soon enough by some smart ass from the Libertarian Debating and Choral Arts Society, or whatever the equivalent is at your school.

The Wall Street Journal provides clues that should inform your answer:

Manuel Medina-Mora has long had ambitions of running Citigroup Inc. He is getting closer.

After more than a decade as chief executive at Grupo Financiero Banamex, the Mexican banking company that is one Citigroup's choicest businesses, the 59-year-old Mr. Medina-Mora resigned last week to devote more attention to a daunting new job. The Mexican banker has to somehow turn around Citigroup's struggling consumer-banking operations world-wide...

Mr. Medina-Mora's growing power reflects his leadership of operations that stayed out of the headlines as much of Citigroup suffered through the financial crisis. Banamex and other Citigroup operations in Latin America overseen by Mr. Medina-Mora had $12.1 billion in net revenue last year, or about 20% of the total for Citigroup's core businesses.

Michael Mayo, a managing director and banking analyst at Calyon Securities, says Mr. Medina-Mora "has led one area of Citigroup that hasn't had significant issues." Banamex is a favorite of Mr. Pandit, who has praised its "universal bank" model of cooperation between different parts of the bank as Citigroup's future.

"We're going to export it around the world," Mr. Pandit said in 2008. The CEO has dispatched executives to Mexico to learn more about Mr. Medina-Mora's successful formula.

(Exporting the "universal banking" model around the world? Where have we heard that before?)

Turning to a helpful magazine profile of "the most influential and important people in Nafta commerce and finance" in the magazine Global Finance, we learn that:

Manuel Medina-Mora has been chairman and CEO of Citi Latin America and Mexico since 2004. Citi was a key promoter of Nafta and provides corporate finance for Mexican and foreign companies through its Banamex Mexican subsidiary. He started his career with Banamex in 1971 and in 1990 led Banamex’s privatization. In 1991 he became the deputy president responsible for Grupo Financiero Banamex-Accival’s strategy and corporate development and was appointed its CEO in 1996 and CEO of Banamex from 2001 to 2006.

In other words, local corporate honchos look North, see a way to climb up the corporate ladder by privatizing a national asset, advocating for a flawed trade deal, and letting a bigger corporation get in on a piece of the pie. And by the way, said flawed trade deal gives the big foreign corporation outrageous rights to make sure that the pie keeps coming.

By the time millions of your countrymen are left out of work and your country has been taken over by drug-traffickers, you've got a golden elevator up to a new global throne.

Folks, Mexico didn't sign up for anything. People like Medina-Mora signed Mexico up for NAFTA. Now, the rest of Mexico is left trying to pick up the pieces.

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New Year’s Resolutions for the Obama Administration

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

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

The resolutions are:

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

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

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Americans Say NAFTA-style Agreements = Job Losses

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

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

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

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

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

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

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

Read the report here

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The Return of the NAFTA Election Cycle?

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

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

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

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

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

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Jagdish Bhagwati gets it. He really gets it.

Jagdish Bhagwati, "free trader" extraordinaire, gave an interview to Reason Magazine, and made some very fair trade-sounding points:

There is another thing to worry about. When you look at a trade agreement like NAFTA, it’s about that thick (holds his hands about two feet apart). When I debate people like Lori Wallach of Public Citizen, she arrives with a lot of books, and among them is this NAFTA treaty she carries for effect. I hope she gets a hernia from doing this often enough, because it looks pretty heavy to me. I wouldn’t be carrying it around. Anyway, she shows this book and asks, “Is this free trade?” And mad as she is, she’s right to raise that issue. You should be able to say maybe in 10 pages that in these sectors we are going to liberalize and so on. But nine-tenths of what’s in these agreements are things which have nothing to do with trade. Labor standards, environmental standards, intellectual property rights. If I were Jane Fonda, in order to sell more workout tapes, I could put into the agreement a clause that the president of Mexico has to do his exercise to my tapes. And it would go in, because ours is a lobbying culture and nobody really would know that it’s there. Because who opens these things except the lobbyists?

So many developing countries are now waking up to the fact that they’re being sold a bill of goods in the form of trade agreements.

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U.N. Report Shows Global Wages Falling

On Nov. 3 the U.N. agency on labor, the International Labor Organization (ILO), released a 15-page report finding that real wages fell in countries around the world, including the U.S. and some other wealthy nations, raising questions about whether workers are sharing in any global economic recovery.

The report included data from 35 countries, and found that monthly wages have fallen almost 2 percent in the U.S. since January 2009. The ILO found that inflation-adjusted wage growth fell sharply around the world in 2008 to 1.4 percent, down from 4.3 percent in 2007, and wages continued to fall in a number of countries in 2009.

This continuing drop in real wages around the world illustrates the need for trade policies and agreements that protect workers’ rights and prevent a further “race to the bottom” in global wages. Fair traders have long warned that trade agreements such as NAFTA, CAFTA, and other NAFTA-type trade agreements would deflate wages and threaten workers’ rights. The ILO’s report on the drop in real wages for workers in the global economy is disturbing and makes a strong case for renegotiating these pacts and preventing new trade agreements based on the flawed NAFTA model.
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The Stuff Nightmares Are Made of…

Just in time for Halloween, we’ve found a truly scary article about unprecedented NAFTA expansion: Erik Heinrich of CNN predicts that the upcoming conclusion of a “free trade” agreement between the European Union and Canada will likely begin a push for a NAFTA-EU trade zone, which would encompass nearly a billion people and would account for more than half of the world’s total GDP.

The president of Canadian Manufacturers & Exporters, the country’s largest trade and industry association, has said “the largest benefits will come from economic integration,” referring to increased foreign direct investment and access to government procurement, the very provisions of NAFTA fair traders have flagged as some of the most damaging aspects of the agreement and others based on the NAFTA model.

According to Steven Schrage of the Center for Strategic and International Studies (CSIS), (who opines that “it makes sense to integrate NAFTA with the EU,”) the Bush administration had a NAFTA-EU deal on its radar, but failed to make progress: “The ball is in the Obama administration’s court.” CNN does concede that a NAFTA-EU trade deal would likely be met with stiff opposition in the United States.

What an interesting way to sell this deal to the Obama administration: “The Bush administration thought this was a great idea!” I am comforted that Obama has expressed that he is fully aware of what he calls “NAFTA’s shortcomings” and has made a variety of trade promises that suggest he has no interest in continuing the Bush administration’s failed trade initiatives. As for Congress, the desire for a new trade agenda is illustrated by support for the Trade Reform, Accountability, Development and Employment (TRADE) Act, which currently enjoys support from 123 Democrats and two Republicans in the House of Representatives, including 10 committee chairs, 52 subcommittee chairs, and wide swaths of the Democratic Blue Dog Coalition, Congressional Black Caucus, Congressional Hispanic Caucus, and the New Democrat Coalition.

It still freaks me out, though.
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Walking the Line

ImHungryStopNAFTAUp here in the Global Trade Watch field loft, we love a good picket line. This one, however, brings a special joy to our heart. Autoworkers from the UAW's Local 174 based in Romulus, Michigan made a trek down to Brownsville, TX to protest our broken NAFTA-style trade policies. 

The Brownsville Herald Reports that the picketers denounced the greed that drives NAFTA-style globalization:

"We are losing our jobs on this side, and (American corporations) are paying workers low wages on the other," Local 174 UAW President John Zimmick said at the protest, wiping a sweaty brow. "Why can’t they pay workers what they are worth?

Its heartening to see these unionists take a 28 hour drive to stand in solidarity with their brothers and sister autoworkers, regardless of nationality. These UAW leaders and activists demanded better for auto employees in both the U.S. and in Mexico. The Herald continues:

This was the second demonstration staged by the group, which took to marching in front of the Hidalgo-Reynosa International Bridge Monday afternoon. At that time, workers also gathered at a street corner on the Mexican side of the bridge to protest what they said were unfair layoffs at a TRW Automotive maquiladora in Reynosa. TRW Automotive is a supplier for Ford Motor Co. and Chrysler.

"We want trade, but we want it to be just," said Martha Ojeda, executive director of the Coalition for Justice in the Maquiladoras, adding that the 600 TRW Automotive workers dismissed from their jobs did not receive severance pay or unemployment benefits as they would in the United States.

Couldn't have said it better ourselves. We need FAIR trade, just trade, like envisioned in the TRADE Act to rebuild our economy. That's why the TRADE Act is supported by nearly half the House Democrats and two Republican Representatives as well.

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CAFTA Signatory Honduras Falls Victim to a Coup

Recently ousted Honduran President Manuel Zelaya was in Washington, DC earlier this month and met with Secretary of State Hillary Clinton. Zelaya was roused from bed at gunpoint by the Honduran military, forced on a plane, and flown to Costa Rica in June. Since then, the de facto government has violated civil liberties left and right: The Huffington Post reports that Zelaya supporters have been killed, hundreds of people have been assaulted by armed forces, and over a thousand have been illegally detained. Meanwhile, press and media outlets have been shut down and journalists have been arrested and detained. 

Zelaya was criticized by Honduran elites for his progressive policies: During his tenure, Zelaya’s administration raised the minimum wage, gave out free school lunches, provided pensions for the elderly, distributed energy-saving light bulbs, decreased the price of public transportation, expanded scholarships for students, and passed legislation to protect the environment. He enjoys broad popular support, especially from unions, human rights groups, indigenous groups and peasant associations. 

The situation in Honduras has a number of important implications: Fair traders have long argued that NAFTA-style deals promote instability and now Honduras, a signatory to CAFTA, has suffered Central America’s first coup since the Cold War. CAFTA was approved in Honduras by local elites, the same interests who are threatened by Zelaya’s progressive policies. The instability in Honduras is an illustration of how NAFTA-style trade agreements can undermine democratic governance in member nations.
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Protesters Counter Government of Colombia’s PR Campaign


On Tuesday, Public Citizen’s Global Trade Watch division joined with other organizations to host a successful protest of Colombia’s current PR campaign at Union Station. GTW staff worked with several other public interest groups, including Witness for Peace, TransAfrica Forum, International Labor Rights Forum, the Latin American Working Group, and the Colombia Human Rights Committee. The Teamsters also came out in force.

The backstory here is that the government of Colombia has spent almost a million dollars on a PR campaign in Washington, D.C., supposedly to try to change perceptions about the country and boost tourism. A sprawling, elaborate display has been set up at Union Station, with representatives handing out free flowers and coffee. The location is suspicious – Union Station is where congressional staffers flock every day before and after work, staffers whose bosses may have to vote on the pending Colombia FTA. The campaign’s media work is being coordinated by a former Bush administration trade official, and business representatives connect the effort to the Colombian government’s desire to promote the U.S.-Colombia FTA. The agreement would basically expand NAFTA to the country with the highest level of unionist murders in the world.

We came together with other public interest organizations to illustrate how Colombia has earned the reputation it is trying to reverse, through mass discrimination against indigenous peoples, forced displacement, and ongoing violence against union organizers, workers, and human rights defenders. In order to counter the rosy picture being painted inside, protesters used street theater to show how the proposed Colombia FTA would protect Colombian and American business interests while allowing for continued abuse of Colombia’s workers and indigenous population. Protesters marched outside Union Station for several hours, and constructed a memorial to honor the growing list of victims of violence and impunity in Colombia. The protest disrupted foot traffic going in and out of the station, and garnered coverage from several media outlets, including local ABC, FOX, and NBC channels. Stories were also published in Roll Call and the Washington City Paper.

For more information and to learn how you can help to counter the government of Colombia’s campaign, go to http://www.nomorebrokenhearts.net/. Check out more photos from yesterday's protests after the jump.

Continue reading "Protesters Counter Government of Colombia’s PR Campaign" »

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NAFTA Case Shows Financial Rescue Measures Open to Trade Pact Attack

I'm just back from a relaxing vacation of kayaking, eagle-watching, gun-shooting and salmon-eating, and I've got a bit of a long post stored up in me. So, you've been warned.

Before there was the New Great Depression, or whatever the latest term of art is for the current economic meltdown, there was a series of financial crises that wracked developing countries in the 1990s. And there's one NAFTA case that followed from these government responses to crises that provides a unique insight into how trade and investment treaties limit policy space in response to financial crises.

Going back to 1994, we saw Mexico's Peso Crisis, which came mere months after NAFTA went into effect. As a response, the incoming Ernesto Zedillo administration launched the Programa de Capitalización y Compra de Cartera, a financial rescue plan very similar to the packet of policies launched by the U.S. government in response to our crisis: the government bought non-performing loan portfolios from troubled banks in return for interest-generating government notes redeemable 10 years later. As a condition for participation in the program, banks had to raise additional capital from outside sources.

One of the 11 banks that participated in the program was BanCrecer, a subsidiary of a bank-holding company called Grupo Financiero BanCrecer (GFB). One of the outside sugar-daddies GFB saddled up to for capitalization was the Fireman's Fund Insurance Company (FFIC) of Novato, California. FFIC is owned by Allianz of America, a Delaware corporation owned in turn by Allianz AG of Germany. Allianz of America also owns Allianz Mexico, which in the mid 1990s was trying to ramp up some insurance business in Mexico.

So, to get Allianz's foot in the door, FFIC lent (via dollar-denominated mandatorily convertible five-year subordinated debentures issued by GFB) $50 million to GFB in September 1995. But GFB continued to have financial difficulties, and by 1998-99 was working with JP Morgan and Allianz to find a foreign corporation willing to buy BanCrecer, in coordination with Mexican regulators.

Allianz throughout was looking out for its own financial position, and by summer of 1999 was looking for an emergency parachute from the crumbling BanCrecer empire. It's best possible option appeared to be a reimbursement for the debentures along the lines of what some Mexican investors had gotten for their peso-denominated debentures around the same time period. But in August 1999, the Mexican Central Bank denied one of FFIC/ Allianz's parachute plan, and over 2000-01, BanCrecer was auctioned off to another Mexican bank and GFB began to be liquidated, in coordination with Mexican regulators.

By October 2001, FFIC had launched a NAFTA investor-state case against Mexico, claiming that its investment was expropriated by Mexico, among other claims. There are lot of ins and outs to the case (which you can read about on Todd Weiler's website here), but there are a few points (which I draw primarily from the July 2006 award) that are instructive for anyone thinking about how trade and investment treaties limit governments' policy space in crisis situations:

Continue reading "NAFTA Case Shows Financial Rescue Measures Open to Trade Pact Attack" »

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Three Amigos Summit Ends

Yesterday marked the conclusion of the North American Leaders Summit in Guadalajara, Mexico. President Obama, Canadian Prime Minister Stephen Harper, and Mexican President Felipe Calderon held a joint press conference to answer questions from reporters and discuss outcomes of the conference. Importantly, NAFTA expansion was not addressed at all during the press conference, and the agreement was not referenced in the joint statement released by the three leaders. 

For more, see Global Trade Watch's press release.

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OK, We Get It.

President Obama is meeting as we speak with Mexican President Calderon and Canadian Prime Minister Harper, us trade wonks aren't in denial that there's some pretty big issues on the front burner ahead of NAFTA. Drugs cartels and violence. Immigration. Economic meltdown. Anyone? Anyone?

Here's our full statement:

Ok, We Get NAFTA Renegotiation Isn't Obama's Top Priority (Amidst Economic Armageddon) but Americans Expect Him to Deliver on His Commitments to Fix Our Job-Killing Trade Policies...
President Obama's Guadalajara, Mexico, "Three Amigos" meeting Sunday with Mexican President Felipe Calderon and Canadian Prime Minster Stephen Harper can't but remind Americans of Obama's oft-repeated campaign commitment:  "One of the first things I'll do as president will be to call the Prime Minister of Canada and the President of Mexico and work with them to fix NAFTA."
The North American Free Trade Agreement (NAFTA) is not slated to be a major topic of conversation at the summit. But with U.S. unemployment nearing 10 percent, polls showing Americans' anger about NAFTA-style trade policies and Obama spending this week campaigning in battleground states on the impact of his economic policies, the president cannot forget, "It's the global economy, stupid."
Millions of Americans are still waiting for Obama to deliver on his campaign commitment: "NAFTA's shortcomings were evident when signed and we must now amend the agreement to fix them." Since the election, President Obama has reaffirmed his plan to renegotiate NAFTA - including in the face of Canadian Prime Minister Stephen Harper's pressure not to do so during Obama's February Canada trip.
That NAFTA - its expansion, not renegotiation - is not the main topic of this summit is noteworthy. The Three Amigos process was created for "deepening" NAFTA among its first three nations and pushing NAFTA expansion to 34 nations in the hemisphere through a now-dead Free Trade Area of the Americas (FTAA). Now instead of more NAFTA being discussed, the main trade talk will be about problems caused by NAFTA, among other trade irritants to be aired in bilateral sessions. (Mexico and Canada have trade challenged U.S. truck safety, dolphin protection, food labeling laws and more.)
Americans expect relief from the NAFTA trade model that has led to the loss of five million manufacturing jobs - one out of every three- since NAFTA. Last year, Obama committed to fix the core provisions of NAFTA that push down wages, cost U.S. jobs and lead to unsafe food imports. Instead of discussing tweaking the edges of NAFTA, he targeted: 
  • NAFTA's EXTREME FOREIGN INVESTOR PRIVILEGES THAT PROMOTE OFFSHORING  Obama answered "yes" to the question: "Will you commit to renegotiate NAFTA to eliminate its investor rules that allow private enforcement by foreign investors of these investor privileges in foreign tribunals and that give foreign investors greater rights than are provided by the U.S. Constitution as interpreted by our Supreme Court thus promoting offshoring?"  He also said: "While NAFTA gave broad rights to investors, it paid only lip service to the rights of labor and the importance of environmental protection. We should amend NAFTA to make clear that fair laws and regulations written to protect citizens in any of the three countries cannot be overridden simply at the request of foreign investors."
  • NAFTA's MISSING LABOR RIGHTS  "We'll add binding obligations to protect the right to collective bargaining and other core labor standards recognized by the International Labor Organization. And I will add enforceable measures to NAFTA, the World Trade Organization (WTO), CAFTA [Central America Free Trade Agreement] and other Free Trade Agreements (FTAs) currently in effect." "The rights of working people should be equal to those of commercial interests and their protections in trade agreements should be the same. Again, this was a fundamental failing in the NAFTA and CAFTA agreements." 
  • NAFTA'S PROCUREMENT POLICY MEDDLING   Obama answered "yes" to the question: "Do you support renegotiating trade agreements so they will allow us to use "Buy America" and "Buy Local" procurement policies?"

Continue reading "OK, We Get It." »

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Business Leaders Lobby Obama to Push Through Harmful FTAs

Reuters reported on Wednesday that the leaders of six major U.S. business groups have called for President Barack Obama to back speedy passage of NAFTA-style “free trade” agreements (FTAs) with Colombia, Panama and South Korea. Wisely, the president has yet to send Congress any of the bilateral trade deals negotiated by former president George W. Bush with the three nations.  In addition to pressing for passage of the three pending trade agreements, the groups urged Obama to pursue “major market-opening agreements with the Asia-Pacific and beyond,” essentially advocating for even more NAFTA-style FTAs. 

In a letter to the president, the associations acknowledged that trade agreements can ship jobs overseas, and stated that "[T]rade agreements can have adverse effects on specific industries, workers and communities…”. Actually, this is true, and Obama knows it. On the campaign trail, President Obama repeatedly expressed opposition to NAFTA and promised to usher in an era of U.S. trade policy that would require respect for labor rights, environmental standards, and human rights. The Colombia FTA is especially controversial due to the repressive regime of President Álvaro Uribe. Colombia has a longstanding and egregious record of violations of labor and human rights, especially with regard to those of its indigenous and Afro-descendant peoples. 

In addition to gaining a reputation as a notorious corporate tax haven, Panama has some of the most secretive, least transparent banking and financial laws in the world. This is exactly the wrong approach to the current global financial crisis. This problem would be made worse by the FTA.

It is up to Americans as taxpayers and voters to ensure that the new administration does not bend to the will of agents of corporate globalization, and instead works to fulfill its campaign promises. 

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Tantamount To, Equivalent To

One of the most controversial provisions in trade and investment agreements is the following provision, taken from CAFTA: "Article 10.7.1: No Party may expropriate or nationalize a covered investment either directly or indirectly through measures equivalent to expropriation or nationalization (“expropriation”)..." CAFTA goes on to say:

The Parties confirm their shared understanding that:...
3. Article 10.7.1 addresses two situations. The first is direct expropriation, where an investment is nationalized or otherwise directly expropriated through formal transfer of title or outright seizure.
4. The second situation addressed by Article 10.7.1 is indirect expropriation, where an action or series of actions by a Party has an effect equivalent to direct expropriation without formal transfer of title or outright seizure.
(a) The determination of whether an action or series of actions by a Party, in a specific fact situation, constitutes an indirect expropriation, requires a case-by-case, fact-based inquiry that considers, among other factors:
(i) the economic impact of the government action, although the fact that an action or series of actions by a Party has an adverse effect on the economic value of an investment, standing alone, does not establish that an indirect expropriation has occurred;
(ii) the extent to which the government action interferes with distinct, reasonable investment-backed expectations; and
(iii) the character of the government action...

Virtually every NAFTA investor-state case has claimed that certain policies were "tantamount to" an expropriation (the language was changed to "equivalent to" in the post-NAFTA period). We did a report that touched on some of these issues back in 2005. As we wrote then:

NAFTA’s investment rules give foreign investors new rights that go significantly beyond the rights available to U.S. citizens or business under the Takings Clause of the Constitution. In the 1993 Concrete Pipe case, the U.S. Supreme Court held that “our cases have long established that mere diminution in the value of property, however serious, is insufficient to demonstrate a taking.” In contrast, NAFTA Chapter 11 tribunals have defined compensable takings as “the incidental interference” with the use of property that need only cause a “significant” or “substantial” impairment of an investment. Thus, in the Metalclad case, a municipality’s denial of a construction permit to a U.S. company seeking to expand an existing toxic waste facility on land it had purchased was found to be an indirect expropriation requiring compensation under NAFTA. Rather than fixing the problems caused by NAFTA’s loose rules and troubling case history, the USTR has merely made cosmetic changes in the new FTA’s foreign investor protection provisions. For instance, one “fix” the USTR attempted in CAFTA was to eliminate the phrase government actions “tantamount to” an expropriation that appears in the NAFTA text as activity requiring compensation. However, that change is merely cosmetic. The new FTAs still require compensation for “indirect” expropriations, which is the operative term NAFTA panels have relied on in finding regulatory takings. Indeed at least two NAFTA panels have held that the “tantamount to” clause in NAFTA is redundant and does not expand upon the scope of NAFTA’s terms requiring compensation for direct and indirect expropriation. The Bush administration could have conformed the new FTAs to U.S. law which, among other things, requires the demonstration of a near total takings of the property as a whole before a regulatory takings is found, but failed to do so. The end result is that foreign firms are still being granted substantive and procedural legal rights that go beyond what is provided in the U.S. Constitution as interpreted by the U.S. Supreme Court.

These provisions not only expose governments to liability that they often would not have under domestic law with domestic investors, but can also chill policy initiatives. As we said in our report:

A March 16, 2002, article in the Toronto Globe and Mail surprised Canadian health officials who were preparing to issue a new regulation on cigarette labeling. The newspaper reported that Philip Morris, the U.S. tobacco giant, was considering a Chapter 11 investor-state suit under NAFTA because of a proposed public health rule that would ban the words “light” and “mild” from cigarette packaging, terms that have misled smokers into believing that they were using a safer product.

In a submission to the Canadian government, Philip Morris argued that the proposed ban of the descriptors “light” and “mild” would be “tantamount to an expropriation” of its tobacco trademarks containing those words in violation of NAFTA Article 1110, because it had invested millions “developing brand identity and consumer loyalty.”...

While Philip Morris has told Public Citizen that it is not moving forward with the threatened NAFTA case, the Canadian public health legislation is not moving forward either. A spokesperson for Physicians for a Smoke Free Canada thinks that the Philip Morris threat as well as threatened domestic court action has played a role in stalling passage of this important public health policy.

Continue reading "Tantamount To, Equivalent To" »

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FTAs = Destabilization

Fair traders have long maintained that NAFTA-style trade deals promote instability.

The case of Mexico clearly showed this, with massive amounts of post-NAFTA rural displacement leading to sharp increases in immigration and narcotrafficking, leading the country to the brink of failed statehood.

Earlier this month, the thesis was proved again in Peru. In 2007, Peruvian fair-traders warned against signing the FTA, arguing that it would incentivize further rainforest destruction. Sure enough, within months of the deal going into effect, huge parcels of the Amazon were sold off to developers, and indigenous forest-dwellers were locked in a life-or-death battle with the government.

Now, over the weekend, fair trader Manuel Zelaya (president of Honduras) was ousted in the region's first military coup since the Cold War. Opposition to CAFTA ran high in Honduras, but local elites signed the deal anyway. This led to a groundswell of support for a president that kept getting more and more progressive, most recently signing onto the Bolivarian Alternative of the Americas, an alternative to NAFTA-style FTAs. The country's elites wanted to block these changes, so pushed a coup. (More information on how you can take action is available here.)

Looking ahead, as the debate continues in the United States over the Panama FTA, some comments made by that country's peasant leaders are worth considering. He said of the FTA:

In Panama, the poverty rate is nearly 40 percent, and it is even higher for the rural areas (65 percent) and indigenous communities (95 percent). If we experience even a fraction of what happened to Mexico in terms of the flood of subsidized U.S. agricultural products, our rural population will disintegrate and look for any survival option – including immigration to the United States.

This kind of trade agreement will only increase hunger and misery in the indigenous and peasant sectors of Latin America, pushing our countries even faster into the arms of leftist governments, which has already happened in South America proper.

The message is clear: if you want increase in desperation and polarization, push FTAs. If you want preservation of democracy and stability, choose fair trade.

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NAFTA Bullet Dodged in Flawed Glamis Case; Severe Threats Remain

Luke Eric Peterson broke the news this morning that Glamis Gold Co. lost its NAFTA claim against the United States. Here is our response below, and some background on the case:

For Immediate Release: June 9, 2009                   

U.S. Dodges Bullet on NAFTA Glamis Case: Mining Firm's Claim Had Major Flaws, but Four Foreign Investor Cases against U.S. Totaling Over $6 Billion Still Pending

       WASHINGTON, D.C. -A NAFTA tribunal's dismissal of Glamis Gold Inc.'s challenges against California's mining regulations is not surprising given severe flaws in Glamis' claim and the ruling does nothing to remedy the serious problem of NAFTA providing foreign investors special rights to attack domestic health and environmental laws, Earthjustice, Earthworks, Public Citizen and Sierra Club said today.

       The panel's decision in the Glamis case does not affect the outcome of the four other NAFTA challenges pending against the United States in which foreign investors are demanding more than $6 billion in U.S. taxpayer compensation. The Glamis case attracted considerable attention because it involved a firm claiming to be a Canadian foreign investor under NAFTA in order to file a challenge over a mining claim available only to U.S. residents that it had acquired through its domestic subsidiary. Further, Glamis claimed that California mining regulations had caused an indirect taking of the mining claim's value and thus NAFTA required the firm to be compensated. Yet, in fact, Glamis remained free to sell its valuable mining rights or to operate the mine following California's mining laws.

       "It is no surprise that this long-delayed NAFTA case was dismissed given the major flaws in Glamis' claim. In addition, there would have been serious political ramifications if a foreign corporation had been able to use NAFTA to be awarded millions of our tax dollars because it did not want to comply with non-discriminatory mining regulations that protect public health, the environment and the cultural and religious practices of an Indian tribe," said Lori Wallach, director of Public Citizen's Global Trade Watch division. "Today's dismissal does nothing to fix the underlying problems with U.S. trade agreements' foreign investor rights rules, which are replicated in the leftover Bush trade pacts with Panama, Colombia and Korea the Obama administration inherited."

       "Happily for California's taxpayers and environment, the panel ruled against Glamis' attempts to avoid having to play by the same rules as everyone else," said Margrete Strand Rangnes, director of the Sierra Club's Responsible Trade program. "But the fact that Glamis' claim was even possible, that a foreign company could try to undermine U.S. environmental laws in the name of higher profits, shows why our trade agreements' foreign investor rules must be altered."

Continue reading "NAFTA Bullet Dodged in Flawed Glamis Case; Severe Threats Remain" »

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Meet the New USTR Website, Same as the Old USTR Website

President Obama's promises during the campaign to shift our trade policies got the base psyched. Yet in the first five months of the administration, the most oft-touted shift in the USTR's workplan (working "rigorously" to pass a Bush FTA doesn't count as a shift, and thankfully appears to be put off for the moment) has been the upgrade to a new website.

We've taken a look at the website, which is purtier and more consistent with other Obama campaign and admin webpages, and here are some things we noticed:

  • Up until yesterday, this link had Panama, Colombia, Korea as agreements in force. This was corrected this morning.
  • A lot of the specific trade agreement pages seem to have lost a lot of their material. For instance, look at this cached page on the Panama FTA, which includes advisory committee reports, and then compare with the new page. The old link that would have gone to the advisory pages doesn't work.
  • The Fast Track / Trade Promotion Authority page seems to be removed. (Maybe I'm wrong, but I couldn't find it.) If USTR is looking for content, we've got a book for them to post - The Rise and Fall of Fast Track Trade Authority!

We're going to be migrating to a new website in the coming months, and the years of planning for it already has me nervous. So, some bumps in the road seem inevitable. The thing that is most concerning about the USTR's new website is the lack of meaningful reference to Obama's trade commitments on the campaign - which would seem like the biggest update needed, with some of the full-throated advocacy of bad trade deals tamped down or removed.

So, here's my question for "Ask the Ambassador" (a new "interactive" feature for the website): When will the Bush talking points on trade come down, and the Obama talking points on trade go up? (Some illustrative examples suggested after the jump:)

Continue reading "Meet the New USTR Website, Same as the Old USTR Website" »

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Corporates Out of Step in Today's Hearing on Investment, Panama, etc.

The House Ways & Means Trade Subcommittee had a hearing on investor protections in U.S. trade and investment agreements. I gave testimony for the record, which you can read here.

As we detail in our recent book, "The Rise and Fall of Fast Track Trade Authority," investment rules in trade deals are a classic non-tariff, non-trade provision. We wrote:

Largely flying under the radar, the 1984 act dramatically expanded the subject matter and the types of agreements that the president was authorized to negotiate. Title III of the act authorized the president to collect information on (and enter into agreements related to the elimination of) "barriers to international trade in services" and "the trade distortive effects of certain investment-related measures." Service and investment barriers were defined as denial of "national treatment and restrictions on the establishment" of service operations and investments; "foreign industrial policies;" "export performance requirements;" and "direct or indirect restrictions on the transfer of information into, or out of" a given country.

The 1988 Fast Track went even further, specifying that:

The principal negotiating objectives of the United States regarding foreign direct investment are --

(i) to reduce or to eliminate artificial or trade-distorting barriers to foreign direct investment, to expand the principle of national treatment, and to reduce unreasonable barriers to establishment; and

(ii) to develop internationally agreed rules, including dispute settlement procedures, which --

(I) will help ensure a free flow of foreign direct investment, and

(II) will reduce or eliminate the trade distortive effects of certain trade-related investment measures.

This delegation of Fast Track produced NAFTA. And despite efforts in the 2002 Fast Track and the May 2007 deal to change the investment provisions in the "cookie cutter" trade template, U.S. trade agreements' investment provisions (such as those in CAFTA and now in the U.S.-Panama FTA) have delved ever more deeply into regulatory policy space. And indeed, in today's hearing, Thea Lee of the AFL-CIO in particular pointed out that the [preambular] language added as a part of the May 2007 deal is non-binding in nature.

One of the richest debates at today's hearing was the nature of the changes made to investment provisions of trade deals since 2002, in particular with respect to so-called exceptions (i.e. protections for governments from having to cough up cash or change laws in response to successful trade-pact challenges by foreign investors and governments) for prudential/ financial and tax measures. You don't often get that kind of substantive debate in a congressional hearing, and perhaps it was too substantive for some, judging by the small attendance by the end of the hearing. As it happens, these so-called exceptions are a subject of our latest report on Panama's tax-haven practices and the U.S. FTA.

Continue reading "Corporates Out of Step in Today's Hearing on Investment, Panama, etc." »

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Louise Slaughter, Presente!

The Conference Board of Canada just released a report that looks at the impact of the fair-trade sweep in the last two U.S. elections.

It takes the anti-democratic analytical perspective that things said during campaigns don't matter. So we have the inevitable comparison that only Nixon could "open" China, and only Obama could "save free trade," apparently because he campaigned against NAFTA-style policy.

While it's a well-worn trope that Democratic Party candidates lie to their base in the primaries to win their support, the important difference this time was the specificity of Obama's critique of NAFTA, some of which you can read about here. To be certain, we have no idea what his eventual policies will be, but we do know that this is not your father's Democratic primary in terms of the specificity of the commitments. It is a new day in regards to the trade-policy orientation of the president.

As for the congressional politics, the notion that the legislative branch will just roll over on its commitments seems incorrect as well. All you have to do is look at today's Roll Call story for evidence of Congress' collective backbone, and that they won't take the Panama FTA lying down:

“I’m getting really pis*ed off,” said House Rules Chairwoman Louise Slaughter (D), who represents a region of New York that has suffered under the North American Free Trade Agreement. “Obama’s got to get a he*l of a lot of stuff up through here, and to start out by bumming out about half of us doesn’t strike me as a wise move.”

Rep. Mike Michaud (D-Maine), co- chairman of the House Trade Working Group, singled out House Majority Leader Steny Hoyer (D-Md.) in his criticism of his party leaders’ desire to advance the Panama deal. The working group includes several prominent Members, including six committee chairmen and 17 subcommittee chairmen.

“As a Democratic leader, I don’t think it’s helpful to vulnerable Members to ask them to support a Bush-negotiated trade deal,” Michaud said. “As a Democratic leader, [Hoyer] should not be encouraging the White House to move forward on this.”...

During a meeting last month with representatives from the Office of the U.S. Trade Representative, Slaughter spoke on behalf of about 20 Members in voicing concerns with the Panama deal. The USTR attendees seemed “receptive,” she said, but have not contacted her since the meeting.

“I carried on awful,” Slaughter said of the hourlong meeting. “We’re not just going to take all of this stuff lying down anymore.”...

Rep. Marcy Kaptur (D-Ohio), one of the Members who attended the USTR meeting, said Slaughter repeatedly reminded USTR officials that she chairs the powerful Rules Committee.

“She made it very clear that she didn’t intend to move any of those bills,” Kaptur said. “I hope it gets someone’s attention over at the White House.”

The author of the report's obliviousness to a changed landscape within the Democratic Party shows through in the citation of the U.S.-Peru Free Trade Agreement, which the Conference Board notes passed, but doesn't mention that a majority of the majority Democrats opposed.

The Conference Board report is off in a number of other regards. First, it says that Obama will ask for Fast Track (i.e. Trade Promotion Authority). I have not seen that anywhere, and I don't think it is correct. He may ask for some form of delegated authority, but it is unlikely to be Fast Track. In fact, the quote that the Conference Board cites indicates that Obama is looking to change the form of delegated authority by establishing new checks and balances on the process. As the campaign commitments cited above note, Obama has said he will "replace Fast Track." (Our recent book - "The Rise and Fall of Fast Track Trade Authority" - offers a variety of alternative arrangements that could boost the legitimacy of trade deals.)

Finally, far too many Canadian sources are spreading misinformation about the Buy America/n provisions in the stimulus bill. As we've explained many times, the stimulus bill is ONLY an improvement for Canada. For the Buy America provisions related to federal grants to states for transit projects,  U.S. products have always been given a 25 percent price preference over products from Canada (and other trade-pact partner countries). For the Buy American provisions related to federal procurement, U.S. products (specifically iron, steel, and manufactured products for stimulus-funded projects) received a 6 percent preference, and now they receive a 25 percent preference. But... wait for it... so. does. Canada., and all of our other trade-pact partners. Pre-stimulus rules were more generous to Canada than Canada is to us under its WTO-NAFTA commitments, and the post-stimulus rules are more generous than the pre-stimulus rules.

So, friends to the north, don't hate, appreciate! (And don't worry, we know that our friends in labor and the environmental community are already far ahead of their government and elites on this question.)

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NAFTA: A Familiar Hurdle for California's Environmental Regulators

Last Thursday, California, yet again, proved itself to be a laboratory of innovation, by becoming the first state in the nation to require low-carbon fuels.

The Associated Press reports:

The California Air Resources Board voted 9-1 to approve the standards, which are expected to create a new market for alternative fuels and could serve as a template for a national policy that has been advocated by President Barack Obama and Democrats in Congress.

California state legislator Fran Pavley led the fight to reduce emissions in California by introducing the Global Warming Solutions Act (AB 32) which Governor Schwarzenegger signed into law in 2006. However, the Bush administration stalled implementation of this legislation with a variety of obstacles and it wasn’t until January 2009 that California was given the green light to fully implement the Global Warming Solutions Act.

Now…even after California has cleared the Bush preemption hurdles, officials may have to fight against backdoor international preemption of some of these landmark regulations!Emissions

International Business Times reports that Canadian trade lawyers are beginning to grumble about these new environmental measures possibly violating NAFTA and the WTO.

The measures to slash such emissions would force refiners to consider the carbon footprint of the fuels they produce, a potential blow to synthetic crude upgraded from Alberta's oil sands, whose production emits more carbon-dioxide than conventional oil.

However, the state may have no business imposing such rules on oil produced in other countries, a Canadian lawyer said, and the provisions may violate international trade treaties.

"There's definitely a NAFTA case and a WTO case. There's no doubt in my mind about it," said Simon Potter, a partner at the McCarthy Tetrault law firm whose practice includes trade and competition law.

If a Canadian company were to, as Potter hints, file a NAFTA case, it would be the third major NAFTA investor case launched against California environmental regulations. The first major suit was in response to California’s ban on a harmful gasoline additive MBTE that was leeching into the water system. After five years, the case was finally settled with California’s ban intact. The California Attorney General’s office is yet again helping the federal government fend off a suit brought by Canadian mining company Glamis Gold over California’s mining regulations.

State legislators in California have objected in the past to the kind of backdoor preemption of state regulations encouraged in current trade agreements and have urged the federal government to consult with state legislatures about new trade commitments that could compromise states’ ability to regulate. This legislative session, Assembly Member Nancy Skinner introduced AB 1276 which would add more oversight to the process by which state commits to comply to certain provisions of future trade agreements. 

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NAFTA Ch. 11 Suit to Keep on Truckin

When Congress and President Obama eliminated funding for a controversial NAFTA trucking program last month, the Mexican government, claiming this was a violation of NAFTA, responded by raising tariffs on a variety of U.S. goods.Truck

Now, Mexican trucking companies are also getting involved and demanding compensation from the United States government. CANACAR, a trade association representing Mexican trucking companies, has filed a notice of arbitration which initiates the NAFTA investor-state challenge process. Inside U.S. Trade reports that the U.S. State Department vowed to fight CANACAR's claim "vigorously".

Under NAFTA, investors are given special rights and if they feel their ability to make profit has been compromised by a regulatory change, they are empowered under NAFTA to seek compensation directly from the trading partner country.


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The 800 Lb. NAFTA in the Room

I would have loved to have been a fly on the wall when President Obama - who ran as a fair trader - breached the the tiny matter of renegotiating the world's largest trading relationship with Canadian Prime Minister Stephen Harper - an unabashed anti-fair trader.Obama canada

Seems like it would be hard not just to break the ice, but to bust through the inherent iciness of that setup. Not real quotes:

"So. You come here often? Kinda chilly, huh? Nippy even. Like Chicago... But - hey - about this NAFTA..."

The meeting was certainly a loaded affair, with heavies on both sides of the border monitoring to ensure that NAFTA fixes that put working people first would stay on the agenda. The AFL-CIO and Canadian Labour Congress sent a joint letter to President Obama and Prime Minister Harper, which reminds the North American leaders that the world's largest trading relationship hasn't always worked for the majority of us:

The North America Free Trade Agreement (NAFTA) was sold on the promise that it would bring net benefits in more and better jobs and faster growth. While NAFTA did succeed in increasing trade and investment flows, it did not (and could not) have created more net trade related jobs in all three countries, and those jobs that were created were often less stable, with reduced pay and fewer benefits, than the largely unionized manufacturing jobs that were displaced. Income inequality grew in all three countries.

NAFTA has failed so badly to deliver for North American workers that there's no avoiding an elephant of these proportions. As GTW's Director Lori Wallach mentions to Reuters , President Obama promised change on trade policy, and change on trade policy is what people are still hoping for:

"You can't campaign ... repeatedly about how you are going to fix NAFTA and otherwise reform U.S. trade and globalization policy and then not do it," said Lori Wallach, director of Public Citizen's Global Trade Watch. "Everyone's going to be watching to see that he delivers on those promises."

And again in today's WP:

"I am happy for him to frame his way of positioning the issue any way he wants, as long as he actually delivers on the issue," said Lori Wallach, the director of Public Citizen's Global Trade Watch division. "If down the road Obama doesn't deliver on the policy, there will be a whole lot of really upset people."

We'll be watching to see what comes of the meeting, but preliminary reports show no sign of Obama caving on the weighty topic.

(Photo Courtesy of Flickr user Jeff Macpherson)

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Congress Passes Buy America in Stimulus

On votes of 246-183 in the House and 60-38 in the Senate, Congress passed the biggest economic stimulus package of all time, which included Buy America provisions. The Washington Post has a truly touching story about how fair-trade champion Sen. Sherrod Brown (D-Ohio) flew from his mother's memorial service to cast the deciding vote. Our hearts and prayers go out to Sen. Brown and his family.

Here's the final version of the language:

    Sec. 1605. Use of American Iron, Steel, and Manufactured Goods. (a) None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron, steel, and manufactured goods used in the project are produced in the United States.

    (b) Subsection (a) shall not apply in any case or category of cases in which the head of the Federal department or agency involved finds that--

    (1) applying subsection (a) would be inconsistent with the public interest;

    (2) iron, steel, and the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality; or

    (3) inclusion of iron, steel, and manufactured goods produced in the United States will increase the cost of the overall project by more than 25 percent.

    (c) If the head of a Federal department or agency determines that it is necessary to waive the application of subsection (a) based on a finding under subsection (b), the head of the department or agency shall publish in the Federal Register a detailed written justification as to why the provision is being waived.

    (d) This section shall be applied in a manner consistent with United States obligations under international agreements.

The conferees' report made the following note regarding Buy America provisions:

Section 1605 provides for the use of American iron, steel and manufactured goods, except in certain instances. Section 1605(d) is not intended to repeal by implication the President's authority under Title III of the Trade Agreements Act of 1979. The conferees anticipate that the Administration will rely on the authority under 19 U.S.C. 2511(b) to the extent necessary to comply with U.S. obligations under the WTO Agreement on Government Procurement and under U.S. free trade agreements and so that section 1605 will not apply to least developed countries to the same extent that it does not apply to the parties to those international agreements. The conferees also note that waiver authority under section 2511(b)(2) has not been used.

It seems that this last sentence refers to the president's ability to waive Buy America requirements for countries that aren't parties to procurement agreements with the U.S. (i.e. Brazil, India, China, for starters.) It's actually fairly troubling that the president has so much discretion in these matters in the first place. The history of this power is that Congress, in 1979 on a fast-tracked vote, decided to waive much of its authority over procurement, handing it to the president, who could then waive the requirements to comply with flawed trade deals. Clearly, this whole system - born as it was of a kind of double delegation of legislative powers - needs a major rethink.

In other news, our colleagues Terry Stewart and Elizabeth Drake put out a useful paper debunking some of the myths surrounding Buy America perpetrated by corporate-backed think-tanks. It's chock full of useful material. Here is something I did not know:

Myth #5: Insisting on the use of domestic goods will reduce the effectiveness of the recovery plan by imposing unreasonable requirements where U.S. goods are unavailable or prohibitively expensive.33

The Facts: This assertion ignores the language of the recovery bills and U.S. experience applying similar provisions in the past. First, both the House and Senate versions of the Act allow domestic sourcing requirements to be waived where the relevant goods “are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality.”34 This waiver provision is also included in the Buy American Act,35 and data relied upon by Hufbauer and Schott indicate that such non-availability waivers were necessary to permit foreign sourcing for only 0.29 percent of all federal contract dollars spent in 2007.36

Moreover, the House and Senate bills permit domestic sourcing requirements to be waived where their application would increase the cost of the overall project by more than 25 percent.37 The 25 percent threshold reflects cost competitiveness standards that currently apply in Buy America requirements attached to federal highway and mass transit funds.38 Similar cost waivers are available for direct federal contracting under the Buy American Act, though they have been set at different levels administratively.39 Such cost waivers were needed to justify 0.20 percent of the federal government’s spending on foreign manufactures for domestic use in 2007 – a mere 0.01 percent of all federal contracting dollars spent.40

Clearly, unavailability and cost differences present obstacles to domestic purchasing in only a tiny portion of contracts, and, where such issues do arise, procurement officials are able to use their waiver authority to address them. The same will be true under the economic recovery plan.
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Canadian Businesses Support "Buy Canada"

We've reported on the disappointing efforts of offshore-happy corporations like Caterpillar to invoke the "Shock Doctrine" and roll back "Buy America" rules already on the books and consistent with our trade obligations. We've reported on the hypocritical campaign by the Canadian government to accomplish the same, even though they committed even fewer types of procurement contracts to the WTO than we did.

But one question has been nagging me: what kinds of "Buy Canada" policies are actually on the books? Turns out there are a few major examples

Another major difference between here and there is that the business and exporters' associations actually support Buy Canadian policies (including the Manufacturers and Exporters of Canada, where my friend Birgit works!)

And a recent USTR report shows that the Europeans are making good use of their flexibilities under the WTO:

In 2004, the EU adopted a revised Utilities Directive (2004/17), covering purchases in the water, transportation, energy, and postal services sectors. Member States were mandated to implement the new Utilities Directive by the end of January 2006, but some EU Member States still have not implemented it. This Directive requires open, objective bidding procedures, but discriminates against bids with less than 50 percent EU content that are not covered by an international or reciprocal bilateral agreement. The EU content requirement applies to U.S suppliers of goods and services in the following sectors: water (production, transport, and distribution of drinking water), energy (gas and heat), urban transport (urban railway, automated systems, tramway, bus, trolley bus, and cable), and postal services.

Congrats EU and Canada!  Nice to see we're all doing what we can to support a local industrial base!

(Please let me know if you know of other local content requirements - especially in transportation infrastructure funding - that we should highlight.)

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Pretending there's a problem

Canada's Globe and Mail had a must read editorial from a few days ago on Buy America. Here's a preview:

This week's horror and hysteria over a U.S. move to “protectionism” like the Smoot-Hawley tariffs of the 1930s, leading to global “trade war” and disaster – was sheer myth. The Buy American clause and the ensuing “backdown” by Congress meant nothing. Those policies have been in place for decades; they still are...

So what's up? Whence the frenzy? Good question, different answers. Stockwell Day and Stephen Harper get to look vigilant and militant, standing on guard for us, while nothing is really at stake. Barack Obama gets to look presidential. He says sternly that he's against bad things, knowing no vetoes or actions will follow. John McCain wants to repeal the offending clause so the world won't think the U.S. has “gone back” to protectionism, which it never left, but maybe the world won't think so now...

Derek Burney, Canadian corporate mouthpiece, calls for even less regulation and protection than we now have, on the grounds, as they say in the Obama White House, that you never let a serious crisis (or a fake one) go to waste. ...

I especially like Michael Ignatieff's demand that Stephen Harper phone Barack Obama on this. I'd like to overhear that one. Uh, I'm calling to pretend there's a problem. … Fine, I'm taking the call to pretend the same thing. [Silence. Silence. Silence.] We agree, then. … Yes, good talking to you...

It's like the murder on the Orient Express: It turned out everyone participated, but they all did it for their own reasons.
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The American People is Ready for a Change with Buy America

I was on Washington Journal this morning opposite Birgit Matthiesen of the Manufacturers and Exporters of Canada. The subject? Buy America, and how it is consistent with existing domestic and international law. And a few digs at the WTO's procurement agreement while we're at it.

Here's the video; let me know what you think.

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McCain Amendment to Prohibit Buy America Crashes and Burns

Back in the general election, Obama bashed McCain for his comment that Buy America provisions were "disgraceful," as in this paid television ad below:

(See this ad and over a hundred others in our online database of paid election trade ads.)

If there was any doubt that McCain was fo' real, an amendment he introduced yesterday to the stimulus bill cleared that up. Senate Amendment 279 to the American Recovery and Reinvestment Act of 2009 (H.R. 1) listed as its purpose: "To prohibit the applicability of Buy American requirements in the Act to the utilization of funds provided by the Act."

This would have gone considerably farther than our current law and WTO commitments, since we have always been allowed to do most if not all of what is in the stimulus package. In essence, had it passed, it would have put the Senate on the record as opposing even the WTO-legal parts of Buy America. It would have also announced to America that, even when domestic policy proposals do NOT violate WTO obligations, we will not pass them if someone might THINK that they do. I'm not a total sovereignty hawk, but, wow...

Luckily, the amendment crashed and burned at around 8:30 pm last night, with only 31 senators (all GOP + Lieberman) supporting. All the Dems plus 9 GOP opposed. Find out how your senator voted! And then let them know what you think about it!

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Broken Promises from Buy America Opponents

Back in 1992, economist Gary Hufbauer of the Peterson Institute for International Economics famously predicted that NAFTA would create 170,000 new jobs, because the U.S. would be running a $9 billion trade surplus with Mexico.

But, as we know, our Mexican trade surplus instead turned into a raging deficit, now at $91 billion, accounting for an estimated 1 million lost manufacturing jobs.

By 1995, when we were already running a $23 billion deficit with Mexico, Hufbauer famously told Bob Davis at the Wall Street Journal that, "The lesson to me is that I should stay away from job forecasting." (Bob Davis, "Free Trade is Headed for More Debate," WSJ, 4/17/95.)

Unfortunately, Hufbauer has broken his occupational promises like they were so many NAFTA job-creation promises. And while economists like to preach that blue collar workers should lose their jobs when they screw up, there is no such accountability for the neoclassicals.

In a new paper for Peterson, Hufbauer and colleague Jeffrey Schott estimate that the Buy America provisions of the stimulus package would create 1,000 to 1,900 jobs, but destroy 6,500 to 65,000 jobs due to foreign retaliation. While the job creation estimates are based on something approaching a sound methodology, the job destruction estimates are pulled out of a hat, and retaliation is simply assumed.

But as we pointed out this morning, the rumors of retaliation are part of a joint scare campaign by right-wing governments and corporations that have offshored U.S. jobs. For the right-wing Canadian administration in particular, this is a continuation of their attacks on Obama that began in the Ohio primaries.

But the allegations of trade-law violations are misleading, as Hufbauer and Schott at least have the decency to point out:

While US commitments under the [World Trade Organization's Government Procurement Agreement] cover many federal government entities and 37 states, the proponents of Buy American provisions argue that a large portion of the projects funded by the stimulus bills are not covered in the GPA. For example, there is a general exclusion for federal funds destined for mass transit and highway projects. Moreover, many of the 37 states that acceded to the GPA also reserved sensitive procurement areas, such as motor vehicles, construction-grade steel, and construction services... [emphasis added]

Existing laws already provide Buy American preferences for much of the public procurement authorized in the stimulus bill...

Of course the bigger question continues to be why political leaders signed up government procurement rules – a quintessential, non-trade domestic issue – to comply with so-called “trade” agreements in the first place. It's clear that, going forward, these rules need to be changed. But the immediate task is to put America back to work.

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Rightwing Canadian Government Trying to Sabotage Obama Administration

A lot of the hairbrained editorializing on the Buy America provisions in the stimulus package suggests that Obama will get cross-ways with the Europeans and Canadians if he were to implement the measures, and that a trade war would be provoked.

This is ridiculous. As we pointed out last year during the Ohio primaries, the rightwing Canadian government tried to sabotage the Obama candidacy with the NAFTA-gate leaks. Now they're trying to do the same to his administration. Think of Canadian Prime Minister Stephen Harper as a little Karl Rove of the North.

As we've been pointing out, there has been a massive corporate lying campaign about the iron and steelHarperStencil2 provisions for U.S. transit projects. Now, corporations have teamed up with Canada and some of the knuckle-dragging EU governments to throw just enough fake spin to try to fool U.S. policymakers into thinking these measures are WTO-illegal. They're not.

And, as it turns out, Canadians actually want the right to invest in themselves as well. Read this from the Toronto Star:

By using "trade war" rhetoric, [Canadian International Trade Minister Stockwell] Day appears to have positioned the Conservative government with big American corporations already gunning for new President Barack Obama by attacking the package now being worked out by Congress in response to Obama's election pledges. News emerged yesterday that Canada's ambassador to the U.S., Michael Wilson, has fired off a letter to U.S. legislators warning the rules would be a disaster for business and workers in both countries.

"Unfortunately, rather than working co-operatively and practically for an exemption, Canadians politicians ... have been publicly lecturing Americans about their `international obligations' and the theoretical virtues of global free trade," wrote Erin Weir, economist with the United Steelworkers' Canadian arm, in The Progressive Economics Forum.

"This argument is not correct in the current economic context and certainly will not be very persuasive south of the border."

Scott Sinclair, senior trade analyst with the Canadian Centre for Policy Alternatives, agrees. "As far as I can tell," he says, "the provision included in the stimulus package will not violate U.S. international treaty obligations." He cautions that Day "should know better," adding: "I think there is a back story here.",,,

"I think they want to knock Obama off balance and gain influence over his trade policy from the outset," said Sinclair. "They are enlisting the support of foreign governments, and so you have (British Prime Minister) Gordon Brown and Stockwell Day talking about it."...

NDP Leader Jack Layton agrees Ottawa is "failing to do what other countries are doing to ensure some of the work in government procurement has a big Canadian component." Says Layton: "Instead of doing his homework, Day is huffing and puffing – and this isn't a house that can be blown down."

We should work together "to ensure both of our stimulus packages work" he says, and concentrate on the dumping of cheap steel on the Canadian market from offshore.

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Becerra Roundup

Obama's courting of Rep. Xavier Becerra (D-Calif.) for USTR continues. Here's a news round up.

Here's Mark Landler from the NYT:

If President-elect Barack Obama appoints Representative Xavier Becerra, Democrat of California, as his chief trade negotiator, it would punch several political tickets at once for Mr. Obama.

Mr. Becerra, who has emerged as the leading candidate to become United States trade representative in the Obama administration, is known as a defender of workers’ rights and as a skeptic of trade agreements. That would please union backers of Mr. Obama, who spoke in the campaign about reopening the North American Free Trade Agreement...

Trade experts said the appointment of Mr. Becerra would suggest that Mr. Obama intended to make good on his campaign pledges to hold existing and new trade deals to tougher scrutiny.

Mr. Becerra, who entered Congress in 1992 and serves a district in Los Angeles, voted in favor of Nafta but now says he regrets it. In 2005, he helped lead the Democratic opposition to the Central American Free Trade Agreement, emerging as an impassioned voice for the rights of workers. The deal passed the House by two votes...

Some analysts suggested that choosing Mr. Becerra would be a gesture to Mr. Obama’s Democratic base after a series of economic appointments — Timothy F. Geithner as Treasury secretary and Lawrence H. Summers as a top White House adviser — that were viewed as sympathetic to business.

“We’re comfortable with it,” said Thea M. Lee, public policy director of the A.F.L.-C.I.O. “President-elect Obama has signaled that he wants trade policy to go in a different direction. The choice of Congressman Becerra indicates that he is going to hold trade policy to a high standard.”

And David Sirota over at Open Left:

Beccera hasn't accepted yet, but if he does, my initial reaction is that this is a solid choice. No, it's not perfect - Beccera voted for the landmark China PNTR deal in 2000 and for the Peru Free Trade Agreement. But perfect shouldn't be the enemy of the damn good.

Getting a U.S. Trade Representative who is on record against the NAFTA trade model and with votes against CAFTA and Oman is a huge change from both the Bush administration and the Clinton administration. And it's not just a good pick because it's a change from really bad Trade Representatives, the selection itself is good - and way, way, way better than what it could have been. The selection suggests Obama is serious about reforming our trade policies, and it should be applauded.

Here's John Nichols in the Nation:

Becerra has a long history of engagement with trade debates. That made it particularly significant when, in 2006, he announced that "it has become very obvious that our system for devising trade agreements, so very important to this country's functioning around the world, has not only broken, but it has broken completely."

Becerra is not a resolute fair-trader like Ohio Senator Sherrod Brown, Vermont Senator Bernie Sanders or Ohio Representative Marcy Kaptur. Like Obama, he's a mixed bag who will still need to be prodded by activists, especially as new debates about trade in services evolve. Becerra backed NAFTA as a House freshman, and has voted for several other trade deals. He has since acknowledged, however, that he was wrong to support schemes that may increase commerce but tend to concentrate "the benefits of that commerce in the hands of very few." That's encouraging. Even more encouraging is the fact that since his election to the House in 1992, Becerra has consistently opposed the "fast-track" model for negotiating trade agreements. When Congress grants fast-track authority to a president, it cedes to the trade representative most of its ability to shape policy, retaining only the right to accept or reject a final agreement. If Obama and Becerra simply develop a new approach to negotiating trade agreements, one that involves consultation with Congress, it will be much more likely that labor, consumer and human rights concerns will be addressed.

It is on those human rights issues that Becerra has been a particularly strong player in recent years. The Congressman delivered a national Spanish-language radio address last spring in which he defended the Democratic rejection of Bush's proposed Colombia free trade agreement on the grounds that, "Colombia still remains a dangerous place for those who advocate for worker rights. More than 2,500 labor leaders have been assassinated in Colombia since 1986. What would we say if labor leaders were being assassinated in our country every day, just for standing up for their rights as workers? That is what is happening in Colombia today." The message Becerra delivered was radically at odds with that of Republican and DLC free-traders. If he keeps delivering it as trade representative--along with other fair-trade themes he has articulated--Becerra could become the face of the change in trade policies that Obama promised, and that working people here and abroad can believe in.

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Palin finally states NAFTA views, but cares more about jerks

Here at EOT, we were disappointed that - unlike many gubernatorial candidates in the '06 races - now-Gov. Sarah Palin (R-Alaska) never clarified her views on NAFTA or the WTO - big issues in a state very much concerned with sovereignty and local control.

And we weren't much happier when these views did not become clarified in the vice-presidential debates, whereas now-VP-elect Joe Biden had made a series of commitments on fair trade to Iowa activists in the primaries, not to mention a long voting record that was trending fair trade.

Now, as Palin goes back to Alaska, we have the first glimmer of recogniStevemartinjerk782937 tion on the trade debate, as the NYT reports...

Fox News quot[ed] unnamed McCain campaign officials as saying that Ms. Palin had not known that Africa was a continent, not a country, and claiming that she did not know which countries were covered by the North American Free Trade Agreement.

Ms. Palin told reporters in Alaska that the anonymous criticism was “cowardly,” and that she had discussed the campaign’s position on Nafta at her debate prep sessions.

“I remember having a discussion with a couple of debate preppers,” she said. “So if it came from one of those debate preppers, you know, that’s curious. But having a discussion about Nafta — not, ‘Oh my goodness, I don’t know who is a part of Nafta.’ ”

“So, no, I think that if there are allegations based on questions or comments that I made in debate prep about Nafta, and about the continent versus the country when we talk about Africa there, then those were taken out of context,” Ms. Palin said. “And that’s cruel and it’s mean-spirited, it’s immature, it’s unprofessional, and those guys are jerks, if they came away with it taking things out of context and then tried to spread something on national news. It is not fair and not right.”

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Millionaire Mark Penn Misunderstands the Youth on Trade

That Mark Penn is at it again. After trying to revise the past on trade a few weeks ago, he is now trying to revise the present. From his Politico column:

While Bush got 45 percent of young voters in 2004, Obama is likely to open up a 20-point gap with this bloc; they grew up knowing only Bill Clinton or George W. Bush as president.

In the latest Zogby poll, Obama won the crucial moderate vote by 2-to-1, 60 percent to 30 percent. Obama wins nearly nine in 10 liberals as well, putting together a strong center-left coalition and leaving John McCain with a big margin only in the sizable conservative bloc.

In contrast, this election is scrambling the votes of  working-class and wealthier voters...

These new moderate voters are better-educated, more in tune with the information age and far removed from the traditional labor base of the Democratic Party. They are more open to trade and sensitive to tax increases. They also oppose the Iraq war, but they want to see strength in national security. They overwhelmingly will favor new energy policies for ethanol and other biofuels, solar power and wind power.

Penn makes some questionable leaps from some questionable sources. Zogby has come under fire for its poll methodology, which is not fully randomized. But, whatev. If we're citing them, it would be important to note that Zogby polls find that these so-called moderates and young voters are overwhelmingly anti-NAFTA.

Moving beyond Zogby to the more reputable Democrarcy Corps Greenberg poll,  Battleground voters of all ages are overhwhelmingly against NAFTA, with Generation Y even more so than Generation X.

There is an important generational “hump” in feelings about NAFTA in battleground states, with Gen X’ers feeling warmer than both Gen Y and Baby Boomers. All generational cohorts are nevertheless cool to NAFTA.

The hump effect disappears nationally, but all age cohorts are still overwhelmingly anti-NAFTA. By the way, the battleground states in the survey are not just Rust Belt states, but also southwest and Rocky Mountain west.

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Trade Takes Center Stage in Campaign Ads

As the clock ticks rapidly toward the November 4, 2008 elections, the evidence is increasingly irrefutable that the only path to the White House and Congress is through, and definitely NOT around, the bread-and-butter impact of the global financial crisis on American families. A recent poll release by Bloomberg/Los Angeles Times added volume to a growing chorus of voter surveys indicating that there really isn't much point in candidates skirting the issue of the "serious economic crisis" now cited by more than 75 percent of Americans.

It's hardly surprising then that the leading issue across the nation is also the leading issue in the hard-fought Midwestern swing states, where the structural shifts in the U.S. economy away from "real economy" domestic industrial production in favor of Wall Street-led financial services in recent decades has been most in evidence. A recent Ohio Newspapers poll (PDF), found that 55 percent of likely voters thought free trade agreements - such as NAFTA - have been bad for Ohio's economy, with only 17 percent saying that such agreements had been good for the economy.

With this in mind, more than 70 (and climbing) television ads in federal races feature trade this election season (more than double the 2006 ad count), making it one of the hottest items on the 2008 political stage. For just one sample, see Ohio's 15th Congressional District where both sides of the congressional race for retiring Rep. Ralph Regula's (R-Ohio) seat feature ads on trade. Democrat John Boccieri's ad promises to "fight against trade policies that ship our jobs overseas," while Republican Kurt Schuring promises "fairer trade policies that would create jobs."

Public Citizen's Global Trade Watch division will be continuing to monitor the role that trade and globalization issues play in the 2008 elections, including a full analysis of the role trade and globalization positions play in shaping the actual outcome of both the presidential and over 100 congressional races. Our Trade in the 2008 Elections report will be released the morning of November 5th, just hours after the polls close.

Disclosure: Global Trade Watch has no preference among the candidates.

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Diaz-Balart skewers NAFTA with song (old)

I was digging around recently in our archives, and I came across this gem that I thought I would share. It's a 1993 floor statement by Rep. Lincoln Diaz-Balart (R-Fla.), who was once a fair trader, and voted against NAFTA, WTO, China PNTR and several times against Fast Track. But that was back in the Clinton years, when the oppo was in charge. Under Bush, he's been an ardent anti-fair trader, voting wrong on each of the 12 votes during that time period. But we can always remember, can't we Linc?   

SAY `NO' TO NAFTA -- (BY LOWELL J. REYNERTSON) (Extension of Remarks - October 19, 1993)
[Page: E2473]
HON. LINCOLN DIAZ-BALART in the House of Representatives

Mr. DIAZ-BALART. Mr. Speaker, I rise today to share with you a song written by one of myLincoln_db constituents, Mr. Lowell J. Reynertson, that warns us of some of the evils of the North American Free-Trade Agreement. I would like to commend Mr. Reynertson for his efforts and clever lyrics. Mr. Reynertson played this song at a recent town meeting in my district and I want to share it with the rest of the House of Representatives.

Shout from the rafta, SAY NO TO NAFTA, for it will send all U.S. workers down the drain.
Why do we hafta, still get the shafta, to pull this off I guess they think we have no brain.
Let's ram this NAFTA, right up their afta, the mandate vote to change our ills is still our aim.
If we pass NAFTA, we must be dafta, which means the lobbying of beggars still remain.
We're not as stupid as we look, we know when we are being took,
most heard it said I'm not a crook, it's time we played things by the book.
Our nations debt would go away, if living wages we'd OK,
so that in comfort all could stay, and income taxes gladly pay.
There'll be no lafta until here afta, if all these grafta NAFTA draftas get their say.
Let's stand united and not be slighted, and we can send these trouble-makers on their way.
We've gorged the greedy, ignored the needy, which has resulted in our buying power shot.
For change indeedy with mouths to feedy, we must awaken all the powers that we've got.
Let's make the people understand, a living wage all could demand.
If we would unionize this land, then everything would be so grand.
Let's put this country on a roll, and not get deeper in the hole.
There's far too many on the dole, so decent jobs would be our goal.
We'd be productive, and not corruptive, if opportunities existed as before,
But if we hafta, put up with NAFTA, then all the hopes and dreams we made would be no more.
But should this grafta, stick us with NAFTA, then we must tax-exempt all U.S. goods we make.
Restore these taxes, by raising taxes, on those that sold out all good labor by their take.
We know that then we must compete, impossible would be this feat.
Without our way of life deplete, from NAFTA's draftas sly deceit.
So if our servants sell us out, their days are numbered, few will doubt.
We'll rise and shout, you've made your clout, is mainly what this song's about.

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Michigan Rout, and Latest Zogby Poll Findings

(Disclosure: Global Trade Watch has no preference among the candidates.)

In conventional wisdom, Michigan is one of the most fair-trade states in the nation. A recent poll found by a two-to-one margin, Michiganers were against NAFTA and the WTO, and the hottest congressional incumbent challengers in the state are focusing squarely on fair trade.

So what's a candidate that digs NAFTA and the WTO to do in Michigan? Apparently not compete there, according to the latest news on the McCain campaign's efforts in the state. According to the NYT:

Mr. McCain’s struggles in Michigan were clear at the campaign stop at a factory in Belleville in July, where he found himself peppered with questions about his support for free trade by workers who believe it has cost the state jobs.

At the same time, McCain has told an editorial board that he favors cutting off trade with Iran.

Obama, in a recent interview with the Detroit Free Press editorial board, said the following:

Q: You’ve been accused of flip-flopping on the issue of free trade. Some key advisers of yours — Bob Rubin, Jason Furman — have some strong pro-NAFTA, pro-free trade histories, yet you’ve said some pretty harsh anti-NAFTA things in the primaries and made what you said was a protest vote on CAFTA. … What specifically can and should the country do to distribute what you call the costs and benefits of globalization more equitably?

A: That last point you made is exactly where I stand about free trade. I am a free trade proponent. I strongly believe in it. But I also believe that my job as president is to promote free trade as a tool of American prosperity, and not simply assume that every free trade deal is a good deal for America. It’s not.

Click on the link for the full interview.

In other news, Zogby and the pro-NAFTA Inter-American Dialogue released a poll on NAFTA and the Colombia FTA this week. While there's been some criticism of the methodology of their interactive surveys, I'll summarize some of the findings here below.

  •  By margin of nearly three-to-one, likely voters believe that the United States should revise or withdraw from NAFTA. I’ll call this combination of positions the “anti-NAFTA” position.
  •  Anti-NAFTA voters outnumber pro-NAFTA (“leave it the same”) voters in every demographicDonkey_elephant group, regardless of party affiliation, region, age, race, union membership status, whether they come from a small or large town or rural area, marital and parental status, religion, gender, education and income level, passport possession status, whether they identify as being a resident of “my city or town,” “America,” or “Planet Earth,” and frequency of shopping at Wal-Mart … even voters that identify as NASCAR fans and the investor class match the pattern.
  • The demographics that most identify with anti-NAFTA sentiment were progressives (81%), liberals (71%), Democrats (71%), union members (68%) and those that never shop at Wal-Mart (66%) – which one might expect. But similarly anti-NAFTA were self-described internationalists (residents of “Planet Earth,” 71%) and Hispanics (65%). This undercuts the claim sometimes made by pundits that anti-NAFTA sentiment is motivated by xenophobia. Other particularly anti-NAFTA groups were those with incomes of between $25-35 thousand a year (67%), divorcees/widowers, and those that did not identify with Judeo-Christian religion (both 65%). These percentages factor in both pro-NAFTA and unsure/unfamiliar responses.
  • The demographics that least identify with anti-NAFTA sentiment are Asians (49%), and those that identify as conservative or very conservative in ideology (46% each). While anti-NAFTA sentiment does not garner majority support in these demographics, anti-NAFTA sentiment still outranks pro-NAFTA sentiment once the unsure/unfamiliar are excluded.
  • Speaking of which, pundits sometimes claim that most or many people are pro/unsure/unfamiliar on NAFTA, so that candidates would better off avoiding the topic. But the Zogby poll contradicts this notion. With the exception of those demographics noted above, anti-NAFTA sentiment tops 50% support for every demographic.
  • By a margin of around 2.5 to one, Catholics and voters in the armed forces are more anti- than pro-NAFTA. Both are considered important demographics in this election.

The Zogby poll also asked questions about what the U.S. Congress should do about the Colombia FTA.

  •  Anti-FTA voters (those that wanted the FTA defeated or revised) outnumbered pro-FTA voters by 2.3 to 1.
  • Anti-FTA voters outnumbered pro-FTA voters in every demographic group, regardless of party affiliation, region, age, race, union membership status, whether they come from a small or large town or rural area, marital and parental status, religion, gender, education and income level, passport possession status, whether they identify as being a resident of “my city or town,” “America,” or “Planet Earth,” and frequency of shopping at Wal-Mart … even voters that identify as NASCAR fans and the investor class match the pattern.
  • The only demographic exceptions – which were nonetheless close to evenly split were among those that identified as Republican or conservative. But voters farther to the right – the “very conservative” and “libertarian” – agreed with their more progressive fellow voters.
  •  Because of the relatively high numbers of Americans who are unfamiliar/unsure on the Colombia FTA, there were few demographic groups were the anti-FTA position topped 50%. Among those were anti-FTA topped 50% were: progressives (64%), internationalists (56%), liberals (55%), those that never shop at Wal-Mart and in civil unions (both 54%), Democrats (53%), and African-Americans (51%).

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Latest on the FTA with Republic of Damocles

(Disclosure: Global Trade Watch has no preference among the candidates.)

Rossella Brevetti of BNA reports on the status of the 3 NAFTA expansions that W. has left hanging like a sword of Damocles for the next election:

House Majority Leader Steny Hoyer (D-Md.) Sept. 23 confirmed the widely held view that Congress will not take up any of the stalled free trade agreements before the Nov. 4 presidential and congressional elections but said that "we'll see what happens after that."

"No action's going to happen on trade before the election. We'll see what happens after that," he said during a question-and-answer period after a speech at the Center for American Progress. Hoyer had been asked whether he saw any action on the Bush administration's stalled trade agenda in light of the financial crisis that has rocked Wall Street.

And here's a now dated interview with Austan Goolsbee, Obama economic advisor, in the Chicago Tribune.

Q: Why does Obama want to amend NAFTA?

A: NAFTA's many things. It's a thousand pages long, it's riddled with loopholes. There are parts of it that are good. So his view from the outset is not that we should abolish NAFTA but that we should put environmental and labor agreements into the core of the agreement. NAFTA is not a state-of-the-art treaty. The most vocal proponents vastly overstated what it would do … rebuild manufacturing in the U.S., reduce illegal Immigration. If you're not going to open up the dialogue to all sides and take into account the people left out, you're not going to do any favors to the cause of open markets...

Q: Why has the campaign gone quiet on trade issues?

A: The biggest issue by far is taxes, alternative energy, health care and then if there's a fourth, it's probably issues with housing, the credit crunch and how to get the economy moving again. You might be putting excess importance on just trade. It's falling into the Republican trap to say that this involves trade agreements. It is more critical for us to address our fundamentals than arguing about whether we should sign a free trade agreement with Panama. That is an issue of symbolic importance.

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NAFTA Health Care Suits and Melamine Milk

Embassy, Canada’s Foreign Policy Newsweekly, reports that Melvin J. Howard, an Arizona businessman, frustrated after failed attempts to open private surgical centers in Canadian provinces, is asserting the rights NAFTA gives private investors: He is suing the Canadian government for over $150 million in lost expenses and profits!

Or at least he’s trying to - he's filed the first round of paperwork.

Canadian consumer advocates, legislators, and health care professionals will be up in arms! Rightfully so. Canadians have been assured time and time again that their federal trade negotiators have safeguarded their health care system and not ceded control to private investors.

Sound familiar?

This case would expose all sorts of vulnerabilities for health care services, many of which were discussed in a report issued by Public Citizen a few months ago.

What does this mean for us?

First off, the United States is just as vulnerable as Canada to these kinds of NAFTA investor suits. That is bad news since foreign investors have succeeded five times with NAFTA Chapter 11 claims, and $35 million in public funds have been paid in compensation to foreign investors by governments.

Furthermore, this example brings attention to the kinds of challenges legislators might face as they try to bring desperately needed reform to our health care system. Options on the table, like the single-payer systems proposed in 16 states and pharmaceutical purchasing plans, are among the many reform measures vulnerable to investor challenges.

Luke Eric Peterson, investor-state guru, thanks his lucky stars Canada already had a single-payer system in place before NAFTA:

A few years ago, lawyers working for the Romanow Commission warned that if Canada had been bound by NAFTA-type obligations in the 1960s, we might never have seen our single-payer government health insurance scheme brought into being. Quite simply, the price of paying off all of the private insurance operators might have been too high and the government would not have introduced a single-payer system.

That analysis doesn’t bode well for our own reform efforts in the United States. Peterson also discusses possible NAFTA hurdles a future pharmacare plan might face:

Concerns have long been raised that the NAFTA’s “expropriation” provisions might prevent governments from bringing private sectors of the economy into the public fold.  For example, Liberal proposals for a national Pharmacare plan raised questions as to whether such a public scheme might encroach upon—or, in NAFTA terms, expropriate—the turf of private insurers. If that were the case, Ottawa might need to compensate any U.S. investors who lost their business-line at the hands of the government.

Peterson points out that at the very least, if Howard brings his case to a NAFTA tribunal, we’ll get a chance to see some of NAFTA’s ambiguous language clarified.

On an even more disturbing health-care note, let’s shift to China.  At the end of last year, we discussed the recall of dangerous toys and dog food imported from China. Unfortunately, regulators this time around failed to protect Chinese consumers from baby formula which contained melamine, a chemical additive found in plastics and fertilizers (the same additive found in the dog food that was making pets sick last year).

The NY Times reports that 3 babies have died from the contaminated baby formula, with at least 6,244 babies sickened. 

The reason behind melamine in baby formula?  A mad dash for increased profits.

Continue reading "NAFTA Health Care Suits and Melamine Milk" »

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Coolness to NAFTA Strong - Especially in Battleground States

The latest Democracy Corps / Greenberg Quinlan Rosner poll shows that a significantly greater percentage of likely voters (henceforth voters) are “cool” rather than “warm” to “NAFTA and international trade agreements” (henceforth NAFTA), and that the “economy and jobs” (henceforth jobs) are their top concern. In both instances, the coolness to NAFTA and concerns about jobs are significantly stronger in battleground states than in the nation as a whole. Battleground states include Colorado, Iowa, Indiana, Florida, Michigan, Minnesota, Missouri, Montana, North Carolina, North Dakota, New Hampshire, New Mexico, Nevada, Ohio, Pennsylvania, Virginia and Wisconsin.

•    A majority (52 percent) of battleground voters rank jobs as their top concern among 10 issues, including energy, Iraq and health care. The figure is 48 percent in the nation as a whole.
•    Twice as many battleground voters are cool as are warm to NAFTA (43-22 percent). Out of 17 issues and personalities, only four are less popular (state of the economy, gay marriage, George W. Bush, and Iraq War) than NAFTA. The battleground negatives on NAFTA are nearly twice that of the rest of the country, which are 38-26 percent cool-to-warm. NAFTA’s negatives in the rest of the country rank roughly in the middle of the 17 issues and personalities. (Congress, immigration and big corporations also have higher negatives than NAFTA in the country as a whole.)
•    While liberals and Democrats are very cool to NAFTA, independents and moderate-to-conservative Democrats and liberal-to-moderate Republicans are warier of NAFTA than their more partisan fellow voters. This is true in both battleground states and the nation as a whole.

•    A majority of battleground voters are cool to NAFTA regardless of level of electoral participation, region, past presidential favorite, degree of loyalty to McCain or Obama, party affiliation, ideology, who they supported in the primary, what they think is the top concern facing the country, gender, age, generational cohort, race, educational level, union membership status, marital status, parental status, religion, how they feel about the direction of the country, and which party controls their congressional district.
•    In battleground states, there is little variation in the coolness to NAFTA. The following numbers refer to the percentages that are cool-warm-neutral on NAFTA.
•    The coolest attitudes to NAFTA are among Catholics (52-18-24), and irregular Catholics (59-17-24), who are seen as a key constituency in this year’s race.
•    Also very cool to NAFTA are Northeasterners (51-19-23), coast dwellers (51-19-23), white rurals (50-16-23), voters in congressional districts that are won by Democrats with a small margin (51-21-20), voters in Missouri (56-12-21), Wisconsin (50-19-23), “light blue” states (50-20-23), potential but unfirm McCain supporters (51-23-19), independents (51-21-20), Hillary supporters (51-18-24), and men without college education (52-16-25).

Continue reading "Coolness to NAFTA Strong - Especially in Battleground States" »

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Making a story where there isn't one

(Disclosure: Global Trade Watch has no preference among the candidates.)

Philip Elliott of the AP writes an unusual story the headline of which is "NAFTA Bashing off the Democrats' Agenda" and the lede of which is: "The once-decried free trade deals of the primaries have been all but abandoned as political boogeymen."

Yet the story goes on to say that both Obama and Clinton campaigned and won primaries based on their NAFTA criticism, and all of the people cited argue that trade is and was a potent political issue.

So what's the evidence for the proposition in the lede and headline?

During the Democrats' nominating convention here this week, nary a mention arose about the North American Free Trade Agreement or its peers... Part of the reason Obama has gone silent on NAFTA is because it riles up some unions and staunch Democrats, but not independent and swing voters. NAFTA is an easy target because some voters blame such trade deals for lost jobs, but its details don't work well in 30-second soundbites.

This last sentence might have been the lede: I think I would advise anyone running for office not to talk about investor-state mechanisms in their nomination speech too, much as I am fascinated by the topic.

The para is also off on its politics: independents and swing voters are MORE trade-skeptical than Democrats, as this Pew poll from May shows:

In general, Republicans express more positive views than do Democrats about the impact of free trade agreements on the United States. Still, as many Republicans see free trade agreements as a bad thing as a good thing (43% vs. 42%). Democrats, by 50% to 34%, say free trade agreements are bad for the United States. A narrow majority of independents (52%) views free trade agreements as bad for the country.

Solid majorities of Democrats (64%), independents (64%) and Republicans (55%) say that free trade agreements lead to job losses - rather than create jobs - in the United States. There also is fairly broad agreement that free trade agreements lower, rather than raise the wages of American workers. Democrats, by nearly four-to-one (57% to 15%) say that free trade agreements slow the economy down rather than make it grow; this also is the prevailing view among independents (50% vs. 18%).

Continue reading "Making a story where there isn't one" »

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No NAFTA Change Possible? Think Again. 299 Times.

(Disclosure: Global Trade Watch has no preference among the candidates.)

Whenever the prospect of renegotiating NAFTA is brought up - whether in the context of the Trade Act now moving through Congress, or in regards to Barack Obama's campaign pledges - the counterargument is that the pact simply can't be renegotiated. The argument seems to be that the U.S.-Canada relationship is so fragile that it can't be touched or both countries will slink back into isolationism like it's 1799.

The reality? Since 1794, the U.S. and Canada have negotiated 299 agreements and treaties. That means our relationship with Canada has formally changed on average about 1.397 times every single year.


After the category of defense treaties, the trade category is what we've renegotiated most frequently with Canada. Other types of treaties, such as those related to highways or aviation, don't come anywhere close.

Taking just trade agreements alone, we've had at least 44 since 1935, meaning that on average our trade relationship with Canada has changed more than every two years. Since the 1988 U.S.-Canada pact was signed, we've had 28 trade agreements with Canada, including several changes to NAFTA. That's an average of 1.4 changes a year to our trade relationship alone over 20 years. The only difference from fair traders' demands for NAFTA renegotiation is that those changes were mostly in a pro-corporate direction. (Click here to download our spreadsheet of all these agreements, which is a major undercount, since they exclude almost any treaty or agreement no longer in effect.)

In sum, enough with the excuses. The basic NAFTA model - at nearly 15 years old - is long due for an overhaul.

(Thanks to our amazing and now departed interns Rebecca Riddell, Isaac Raisner and Amy Bruno for their help on compiling this list from USTR and State Department sources.)

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Corporate America Wins with Trade!

This is quite the impressive jam by the Oregon Fair Trade Campaign (ORFTC)...

They do a great job of cutting straight to the heart of the the Consumer Electronics Association's silly-ness. US exports grow faster on average with countries when we have no NAFTA-style trade pact. The Colombia FTA can do nothing but wreak more havoc on the US economy and job market. We've already lost more than 3 million good manufacturing jobs since NAFTA, with the electronics industry itself having dealt its fair share of pink-slips. Now they go around highlighting the few jobs their members have not yet sent overseas as a reason to keep paving the way for them by passing unfair trade deals! Do they really expect a "thank you" from the American worker?

The truth is that the Fat Cat CEOs who stand to gain from FTAs would simply love another round of trade deals to make sure they can ship out the rest of the jobs wherever they please, whenever they please. As long as they can escape progressive, pro-worker regulation that ensures shared prosperity and sustainability, they'll be supporting any and every trade deal, no matter how horrendous the abuses of the regimes themselves or the abuses of their paramilitary allies.

Hats off to the Oregon Fair Trade Campaign for this one. World-class spoofing, indeed! My favorite is the part where they slam the bus as being too "low-brow" a mode of transport. Kudos.

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The Punditocracy: Speaking for the Wretched of the Earth

For those of us who get dizzy listening to the circular logic of the paragons of Punditocracy (especially of the capital P variety), Roger Bybee's (Fairness and Accuracy in Reporting) excellent historical round-up of Fareed Zakaria's noxious views on trade and globalization issues offers a welcome breath of cold, clean facts  after some pretty serious doses of post-Doha death vertigo from the 'powers that be'...

Fareed Zakaria, now the highly influential editor of Newsweek International, author of The Post-American World, and host of Fareed Zakaria GPS, constructed a landmark of unintended irony when he regally pronounced that “the downtrodden beg to differ” with protesters of corporate globalization (Foreign Affairs, 12/13/99).

Those who demonstrated against the World Trade Organization at the famous “battle of Seattle” in 1999, he asserted, were displaying the hubris of the “rich and privileged,” who were delivering “a familiar plea for the downtrodden of the world” by challenging the WTO’s promotion of sweatshops and environmental degradation in the impoverished Third World.

In other words, Zakaria denounced the arrogance of those who presume to advocate for the world’s poor—while appointing himself, the son of a prominent Indian attorney and politician, as the poor’s spokesperson. “There’s just one problem: The downtrodden beg to differ,” Zakaria declared.

In his eyes, the Third World’s poor eagerly welcome Western investment on any terms as a vast improvement over their current misery. Microscopic wages, long hours and heartless management in sweatshops, along with befouled air and water, might seem horrific to wealthy Westerners, but are gratefully welcomed by the desperate people of nations like Mexico, China and India. “In fact, if the demonstrators’ demands were met, the effect would be to crush the hopes of much poorer Third World workers,” he declared (12/13/99)...

On globalization, Zakaria zealously denounces opponents of corporate-determined trade agreements as seeking to impose utopian rules for the global economy that are widely rejected, especially by the most wretched of the earth....

Zakaria’s “anti-democratic” and “minority” accusations invert reality in...critical ways....

A recent multinational Chicago Council/ WorldPublicOpinion.org poll (released 4/25/07) found majorities in most poor nations insisting that globalization be accompanied by global standards to prevent a “race to the bottom.”

“Strong majorities in developing nations around the world support requiring signatories of trade agreements to meet minimum labor and environmental standards,” the survey concluded, citing data from China, India, Thailand, the Philippines, Argentina and Mexico. “Nine in 10 Americans also support such protections for workers and the environment.”

Elites in Third World nations, in contrast, staunchly opposed such standards, the study noted:

The leaders of less developed nations have generally opposed including language mandating minimum standards for working conditions and environmental protections in trade deals, arguing that such rules are protectionist and would undermine their ability to compete in major markets such as Europe and the United States.

“It has often been assumed that when leaders of developing countries argue against including labor or environmental standards in trade agreements, they represent the wishes of their people,” added Steven Kull, director of WorldPublic Opinion.org. “However, it appears that these publics would like to see the international community put pressure on their governments to raise their standards.”

These findings directly contradict Zakaria’s simplistic worldview that the free-trade agenda of America’s political and business elite reflects overwhelming public sentiment in both poorer nations and the U.S.

And, closer to home (and to the other salient topic of the day - the upcoming November polls - about which Zakaria is busy confusing the American electorate daily), Bybee reminds us of the ultimate price yet to be paid by those candidates who forget that the people actually know what's going on...

While elites across the globe support unregulated globalization, majorities in both the U.S. and poorer nations essentially seek to restructure globalization so that it benefits everyone—as signified by the flipping of 37 congressional seats in the 2006 mid-term elections from “free trade” advocates to supporters of “fair trade” (Global Trade Watch, 12/13/06)."

Gotta love it when the real elites try to carve their niches by claiming to speak for the poorest of the poor. Frantz Fanon must be spinning in his grave!

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Latest Bush Move on NAFTA Trucks

See our latest statement here.

Bush Administration Defies Congress, Extends Dangerous Cross-Border Truck Pilot Project for Two More Years

Statement of Lena Pons, Policy Analyst, Public Citizen

In announcing today that it would extend its cross-border trucking pilot project for two more years, the Bush administration continues to flout Congress at the expense of highway safety. This is the latest of many moves by the administration to give Mexico-domiciled carriers operating authority in the United States beyond a limited border zone despite lawmakers’ clear instructions to the contrary.

More at the link.

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Will the real Bill Richardson please stand up?

Gov. Bill Richardson (D-N.M.) was the Democratic Whip on NAFTA, then he ran for president and opposed the Peru FTA (and feigned surprise at the existence of the NAFTA investor-state mechanism), and now he says this, according to the NY Observer:

Bill Richardson thinks that when it comes to Barack Obama's position on Nafta, an agreement which he calls "a plus, a slight plus, at least for my state," voters should look at Illinois Senator's record.

"He voted for the Peru Free Trade Agreement," said Richardson, who immediately proceeded to make it clear that he was in no way speaking for Obama or his campaign. "You've got to be realistic," he said, and "you've got to deal with globalization."

Richardson said that during his ill-fated candidacy, he became more aware of the antagonism to Nafta in the Midwest, and the anxiety about free trade among the middle class around the country.

"I'm a free-trade Democrat. I'm also an endangered species in the Democratic Party," said Richardson.

We reported last year on Richardson's 10% fair trade voting record while in Congress, where he only voted right on one out of 10 major trade votes. He voted right on the Canada FTA, but wrong on Fast Track a whopping 5 times (1983, 1984, 1988, 1993, and 1998), and on Israel FTA, 1991 Fast Track disapproval, NAFTA and the WTO. And here's what he told a N.H. audience when campaigning in that state last year, where he called the investor-state mechanism not terribly progressive.

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Obama campaign fights back on Fortune interview

(Disclosure: Global Trade Watch has no preference among the candidates.)

Say what you will about Obama's trade positions, but you can't deny that they learned the lesson of Al Gore and John Kerry that you must fight back when attacked or misquoted. The Obama campaign has established a Fact Check operation to respond to absolutely everything, including what they claim is a  misrepresentation of Obama's trade views in a Fortune Magazine interview. Particularly interesting was his statement to Nina Easton on NAFTA and immigration, which I don't think has ever been said by a major party candidate:

And by the way, just going back to NAFTA for a second, I don't dispute that there may have been some modest aggregate benefit in terms of lowering prices on consumer goods for example. But I would also argue that not only did it have an adverse affect on certain communities that saw jobs move down to Mexico but for example our agricultural section pretty much devastated a much less efficient Mexican farming system. But from a pure economic, you know if you're just an economist looking at this in an abstract way you would say well a more efficient producer displaced a less efficient producer in Mexico, there's nothing wrong with that. As a practical matter those are millions of people in Mexico who are displaced. Many of whom now are moving up to the United States, contributing to the immigration concerns that people are feeling. And so, those human factors should be taken into account. They may not override or every single decision that we make in respect to trade, but to pretend those costs aren't there, that those costs aren't real, and my job as president to take those into account, I think, does no service to free trade. And its part of what has fed the protection incentive and the anti-immigration incentive that is out there in both parts and you know I think that if we manage trade more effectively, if we're better partners, if we are thinking about the dislocations that occurs as a consequence of it, if were true to our belief that labor and environmental standards should be a part of raising living standards around the world instead of a race to the bottom, then we can have free trade and it will be sustainable and we will have political support over the long run.

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Trade on the Trail: Into the General

(Disclosure: Global Trade Watch has no preference among the candidates.)

There's a lotta news on trade in the trail, so let's just get into it. Just as DLC leader Al From bemoans the lack of "free trade" Democrats, Fortune Magazine's Nina Easton reports:

The general campaign is on, independent voters up for grabs, and Barack Obama is toning down his populist rhetoric - at least when it comes to free trade.

In an interview with Fortune to be featured in the magazine's upcoming issue, the presumptive Democratic nominee suggests he doesn't want to unilaterally blow up NAFTA after all.

"Sometimes during campaigns the rhetoric gets overheated and amplified," he conceded, after I reminded him that he had called NAFTA "devastating" and "a big mistake," despite nonpartisan studies concluding that the trade zone has had a mild, positive effect on the U.S. economy.

Does that mean his rhetoric was overheated and amplified? "Politicians are always guilty of that, and I don't exempt myself," he answered.

Obama is also courting labor backing today:

Obama still needs to make amends with many in the labor movement; at least a dozen AFL-CIO unions, including the powerful American Federation of State, County and Municipal Employees and the International Association of Machinists and Aerospace Workers, backed his Democratic rival, Hillary Rodham Clinton. The AFL-CIO allowed its unions to make their own endorsements during the primaries.

The labor federation has been critical of Obama's decision to hire economist Jason Furman as economic policy director because of his ties to corporate America and support of free trade. Obama said he would tell them Furman is experienced in presidential campaigns and adds to a wide range of economic views on his campaign.

"He's not whispering in my ear and he's not shaping my core beliefs about what is needed in the American economy," Obama told reporters Tuesday on his campaign plane. "He's one of my economists. And so I will suggest to them that looking at one staff person and getting nervous about it probably doesn't make sense."

Naomi Klein writes:

Barack Obama waited just three days after Hillary Clinton pulled out of the race to declare, on CNBC: "Look. I am a pro-growth, free-market guy. I love the market." Demonstrating that this is no mere spring fling, he has appointed the 37-year-old Jason Furman, one of Wal-Mart's most prominent defenders, to head his economic team. On the campaign trail, Obama blasted Clinton for sitting on the Wal-Mart board and pledged: "I won't shop there." For Furman, however, Wal-Mart's critics are the real threat: the "efforts to get Wal-Mart to raise its wages and benefits" are creating "collateral damage" that is "way too enormous and damaging to working people and the economy ... for me to sit by idly and sing Kum Ba Ya in the interests of progressive harmony".

Obama's love of markets and his desire for "change" are not inherently incompatible. "The market has gotten out of balance," he says, and it most certainly has. Many trace this profound imbalance to the ideas of Milton Friedman, who launched a counter-revolution against the New Deal from his perch at the University of Chicago. And here there are more problems, because Obama - who taught law at Chicago for a decade - is embedded in the mindset known as the Chicago School.

On the GOP side, McCain is planning tours of Canada and Colombia to vocally support trade pacts with those countries:

Canadian officials are watching the election attentively, too. Obama, who four years ago declared NAFTA had been beneficial, recently talked about reopening NAFTA to strengthen enforcement of labor and environmental standards. McCain has been thumping Obama on that, arguing that such a step not only would hurt trade, but undermine the credibility of the United States abroad.

"You know what message that sends? That no agreement is sacred to him," McCain told reporters Thursday in Boston.

And Dick Cheney weighs in:

"Some politicians seem determined to unravel the bipartisan consensus on free trade -- a consensus epitomized by the North American Free Trade Agreement (NAFTA)," said Cheney in direct reference to Obama's stated intention of renegotiating the 1994 pact between United States, Canada and Mexico if he is elected to the White House.

"In a time when even NAFTA is being called into doubt -- when candidates can draw cheers by denouncing trade deals with our next-door neighbors -- then we're at risk of going down a very destructive path," Cheney added.

In what appeared to be an underpinning of Republican Senator John McCain's pro-free trade stance in his election campaign, the vice president warned that protectionism "is the refuge of a tired, fearful nation -- and that is not the United States."

And that wily Peter Mandelson can't keep his mouth shut either:

"Who would have thought, 10 years ago, that you would hear serious U.S. presidential candidates putting NAFTA in question? Or calling into question the desirability of concluding a world trade round?" Mandelson said in prepared remarks before a business luncheon in New York.

"We need to be straight with Americans and Europeans about just how badly disengagement from the global economy would hurt their political and economic interests. And that means being honest about the extent to which protectionism is a dead end," Mandelson said.

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Folks in Montana are what?

Labor11a There has been a series of news items over the last few months that suggest that the presidential candidates are softening their trade positions just because they don't have a No to NAFTA symbol tattooed on their forehead. Here is one example from a few days ago, but there have been others that we've written about.

Here's a quote from the recent article:

Hillary Rodham Clinton and Barack Obama have been largely silent on the issue of free trade agreements as the primary season is set to end Tuesday in Montana and South Dakota, where agriculture and exports reign supreme.

The article then references the support of Sen. Max Baucus (D-Mont.) and former Sen. Tom Daschle (D-S.D.) and some corporate ranchers for trade deals as evidence that these states are in love with the status quo.

But this is ridiculous. As we've written before, "more exports" does not equal rural prosperity. In fact, often times the opposite is true, since prices matter more than volume.

Politically, it's boneheaded analysis as well. Baucus gets unbelievable heat for his dogged attachment to the status quo, as when the Montana legislature gave him a smackdown last year over his support for Fast Track for Bush. And Democrat Jon Tester unseated Republican Conrad Burns last year with this message:

Recent trade agreements put our jobs and the viability of family farms and ranches across Montana in jeopardy by handing off trade advantage to foreign interests. Jon Tester will fight for Montana priorities in the U.S. Senate by standing firmly opposed to unfair trade agreements that hurt our communities and way of life. While Sen. Burns voted for tax giveaways to companies that outsource American jobs, Tester will protect American jobs in the U.S. Senate.

Tester stayed true to his promise by voting against the NAFTA expansion to Peru last year.

And you can bet that Daschle's spotty record on fair trade didn't help him any when the GOP ran a "social conservative" against him. If you want to set the record straight, check out on the real deal in Montana and elsewhere, check out our election report here.

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