Strikes Hit U.S. Factories in Mexico as Corrupt Unions Again Sell Out Workers

This week, the city of Matamoros, Mexico is again seeing wildcat strikes as expected annual wage increases have been traded away by corrupt unions.

Though the revised North American Free Trade Agreement (NAFTA) includes improved labor rights terms and Mexico enacted significant labor law reforms in 2019 – both of which could help workers in Mexico to organize and win real changes in their lives – little has changed on the ground.

That’s why workers in factories along the Texas border are on strike right now.

They are part of a growing independent labor movement seeking to oust corrupt “protection” unions and transform working conditions in Mexico, where real wages since NAFTA was enacted 25 years ago are 40% lower than manufacturing wages in China.

The 20/32 Movement

The story of the Tridonex plant, operated by a subsidiary of Philadelphia auto parts maker Cardone, spotlights the glaring enforcement failures for both Mexico’s new labor law and the revised NAFTA.

While Cardone still claims to be Philadelphia’s largest manufacturing employer in 2016, the company announced it was sending 1,500 of the city’s union jobs to Matamoros. It sent another 200 in the years since.

In 2019, workers in dozens of maquiladoras in Matamoros, including Tridonex, began organizing work stoppages demanding pay raises enacted by the new Mexican president Andrés Manuel López Obrador. Their demands – a 20% salary increase and a one-time bonus of 32,000 pesos – helped launch the 20/32 Movement.

After numerous wildcat strikes protesting not only factory bosses but also the corrupt unions that collaborate with them to lock in low wages and bad working conditions, the movement won.

After the 2019 victory, Tridonex workers petitioned to join the independent union that was born in the strikes: the National Independent Union of Industry and Service Workers, or SNITIS. The local labor board refused to allow an affiliation vote.

In the spring of 2020, the region was again at the center of labor controversy as workers launched wildcats strikes while factory management defied COVID-19 closure orders. Against this backdrop, Tridonex workers marched on the local labor board, which was still refusing to issue the decision to send the workers’ union dues to SNITIS.

Months later, a lawyer and labor advocate who represents workers at Tridonex and other factories during the strike, Susana Prieto Terrazas, became a target of reprisals by the local powers-that-be. Arrested and wrongfully charged with instigating a riot, Susana was held in jail for a month on trumped-up charges of “mutiny, threats and coercion.”

Amidst growing international pressure, including from the U.S. Congress, she was released under coercive conditions, including banishment from Matamoros, designed to stop her from representing independent unions.

After her release, the governor of Chihuahua, Matamoros’ neighboring state to which Prieto was banished, issued new arrest warrants for which she has a hearing on February 25. Since then, Susana has been subjected to repeated threats on her life and safety. In early January, she sent a desperate plea to Mexico’s president, who had promised her protection but failed to follow through.

It has been a year since Tridonex workers petitioned to change their union, and to this day, the company has not held a vote and the local labor board has not acted.

Not only are the actions of Tridonex a clear violation of Mexico's new labor law reforms and the protections provided under the revised NAFTA, the story provides a clear-cut case of what outsourcing incentivized by race-to-the-bottom trade deals looks like on the ground: decent union jobs are sent to countries where wages are far lower and where gross labor violations are routine. Good jobs are transformed into bad jobs, and union security is replaced by exploitation and violence.

Unless Mexico’s labor law reforms and the revised NAFTA are enforced, nothing will change.

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Rethinking Trade - Season 1 Episode 25: Rethinking Trade in 2021: What Are We For?

With Georgia’s run-off elections shifting control of the Senate to the Democrats, the party will have a lot more room to pursue progressive reforms than in previous years. What does this mean for fixing our rotten trade rules, and what kinds of policies should we be pursuing?

In part one of this episode, we address this question by discussing the TRADE Act of 2009. Co-sponsored by 135 members of the House and developed with a coalition of labor, environmental and other civil society organizations, the TRADE Act laid out a comprehensive vision for trade policies that would promote employment and development while protecting the environment and public health. But a lot has happened since then, from the harsh lessons COVID-19 had taught us about the facilities of hyperglobalization to the growing climate crisis to Big Tech’s monopoly choke hold. So how would progressives build on the vision of a decade ago?

In part two, we look at President-Elect Biden’s commitment to impose a moratorium on new trade deals until major investments are made to protect U.S. workers, and we discuss how important it is that this period also include a process of rethinking and fixing U.S. trade policy to work for people and the planet.

 

Transcribed by Sally King

Ryan: Welcome back to rethinking trade where we don't just talk about trade policy, we fight change it. I'm Ryan and I'm joined once again by our in house trade expert, Lori Wallach. Lorie, it's hard to know exactly how to start this episode, given the shocking things that have happened in the last week and a half in the United States. I'm sure more is to come. One thing that's not changing, however, is the results of the Georgia election and the fight for control of the Senate, which will no doubt have an impact on the fight for good trade policies in the coming year and years. I know many of our listeners are wondering whether these results will help deliver new trade rules that work for working people and the planet. To introduce this new political moment, though, I wanted to do two things. First, I wanted to actually step backwards a bit to just over a decade ago to discuss a comprehensive trade bill that you know a lot about called the TRADE Act. And then I want to talk about the more immediate trade deal moratorium that President-elect Biden has committed to. Let's start with the Trade Reform, Accountability, Development and Employment Act or TRADE Act. What was this bill? Or why is it important for us to be discussing it today?
Lori: So the TRADE Act was a comprehensive vision of a different kind of trade and investment policy that would promote employment, development, accountability, promote the environment and public health. And it was developed from the bottom up from members of Congress who would oppose the old NAFTA/WTO model of trade agreements, and a vast set of citizens groups, family, farm groups and consumer groups, labor unions and environmental groups, faith groups and small business groups. And it basically came out of a process that was a year long, that was basically started with discussions, what would it be? What would we be for? What do we want? What are the outcomes we want, and then some of the trade wonky allies sat down and start writing the technical trade language that would get to those results. And then there was an iterative editing process, until ultimately, with the members of Congress and the outside groups that basically are like the core constituency of the Democratic Party, a fully articulated version of what kinds of trade agreements, how to review the old ones. And if they weren't working, fix them, and how to replace the fast track trade authority with a new process that would put an emergency brake and a steering wheel on the negotiations, to make sure that the substantive vision in the TRADE Act was going to be the outcome for agreements negotiated under this new process. And the thing that's the most amazing about this is a 60, page long, detailed bill ended up with something like 150 c0-sponsors, agreeing that this should be the new way forward on trade.


Ryan: And what is what is this bill mean, now 10 years later, do you think we need a new TRADE Act for today?


Lori: For sure, because at that point, the focus was on a lot of issues that are still around with serious problems, offshoring of jobs, race to the bottom wages, multinational companies, abusing workers and developing countries and effectively violating people's basic human and labor rights to maximize their profits. And really bad environmental practices and attacks on our best existing environmental and health and safety laws. All those issues were issues already. And those issues were dealt with in the TRADE Act. But now there's been a decade more experience of what does and doesn't work as far as the rules and trade agreements and whether they can change the behavior of these dangerous multinational corporations. But then there are a whole set of issues that weren't at the forefront when the TRADE Act was being created. Climate we knew, but we didn't know that it was the do or die crisis of our future. Or at least a lot of people didn't. Some smart people did. The whole sort of issues around the massive digital monopolies, the Amazons, the Googles, Facebook, the platforms that have both become enormous threats it to small businesses to the safety of consumers with their unsafe imported products that sneak around normal tax and other obligations small businesses have to face, but also their monopoly of information and their training and our private information as if it were commodity, those issues were really not engaged then. And those issues are now some of the outrageous tie the hands of government rules that big companies are trying to insert into trade agreements. And then finally, I think the TRADE Act, though it was way ahead of its time, also didn't fully incorporate the degree to which multinational companies would be using the so called trade agreements to dodge things like financial regulation, and anti trust breaking up monopolies broadly, not just the big tech companies, and trying to systematically undermine the space government's had domestically to ensure that the economy works for most people. So all of the outrageous problems that were surfaced with COVID of these hyper brittle globalized supply chains, where the only thought was efficiency, not web and corporate profits, not whether consumers could get goods they needed for their health and safety and to deal with emerging crises. So those are things that any new trade policy going forward is going to need to deal with up front that the TRADE Act did not.

Ryan: And I will drop a link in the description of this podcast episode where you can learn more about the TRADE Act from Public Citizen's website. Laurie, for part two of the podcast, I wanted to talk about President Elect Biden's commitment to impose a moratorium on trade deals, meaning he would not negotiate any new deals until we've, quote, made major investments here at home and our workers and our communities, equipping them to compete and win in the global economy. That includes investing in education, infrastructure and manufacturing, here at home and quote, why is it important that Biden stick to this plan, and maybe you could just tell us a little more about this plan.

Lori: It's important that Biden's stick to his promise about a moratorium on new trade agreements. And that also that that moratorium practically means that they're not going to continue with the negotiations that the Trump administration started. For free trade agreements with the United Kingdom, or with Kenya, or for new rules that big tech wants at the WTO to handcuff all of our governments from protecting our privacy and holding these monopolies accountable. All of that stuff needs to go on hiatus. And a lot of it just needs to get dumped. Because number one, a lot of the existing rules directly conflict with the goals and policies that the Biden administration itself has said it will prioritize as part of its build back better plan. So expanding by American and by America, reinvesting our tax dollars, into creating innovation and jobs, and improving our infrastructure here violates existing trade rules, giving subsidies to create the industries of the future, necessary for our resilience and ability to respond to future crises necessary to improve our economic resilience in this global economy, necessary to address economic injustice by investing in communities of color and poor parts of the country that have not had real investments for decades to create jobs, and move the economies in these regions. Those kinds of subsidies, depending on how they're done will violate WTO and NAFTA rules against subsidies or breaking up the big tech firms regulating the banks making sure we have affordable health care, depending how any of that is done, or all of the most common sense things we need to do with respect to the climate crisis with respect to energy, for instance, a bunch of those violate or conflict with the service sector, corporate guarantees and the WTO and all of our free trade agreements. And that's just serve a sampling of the problem. So to do what the bytom ministration is guaranteeing they're going to do domestically, not about trade, they need to fix the existing rules, they should not be doubling down on damnation and problems they need to fix the existing rules. And then the number two reason why this moratorium is critical is we need to get the rules, right.
So we know what didn't work. We know what the policy disasters of that have been. And we now have seen that political disasters, that these corporate rigged rules that leaves so many Americans clobbered and feeling hurt and aggrieved have caused. So we need to take the damn time to have the conversation in Congress, in the administration, with outside stakeholders in, in labor in the environmental and consumer and small business and family farm and faith communities, everyone who could be engaging needs to be engaging in sorting out what do we want trade policy to do? The new US Trade Representative nominee Catherine Thai said exactly right. trade is not an end until itself. It is a tool to use to promote our values and our goals. So as a country, we need to have a discussion about how do we make a new trade policy for the future that actually promotes not undermine undermines where we want to go with climate and saving the planet; with creating good jobs and improving people's wages, and dealing with racial and economic inequalities that have blighted our nation for decades. What are we going to do? As a nation? How do we want to go building an infrastructure that's not just safe, but creates innovation gets us ready to be part of the climate solution, not part of the disaster? All of those questions need to be thought out in the context of "Oh, that tool that's called trade, the rules we've been using make it worse, how do we actually make it better? How do we harness that tool to promote our goals, not have the old policies undermine the things we care about." And without a moratorium to basically put the steamroller in neutral and pull it off, and park it and have a thoughtful discussion. We're going to just be continuing the disaster, or a lot of us are going to be distracted from being able to put our shoulders to fighting what for what we're for. Because we'll be in these stupid backwards repeated fights to stop the bad stuff. And you know, we'll do it and you know, we can. We stop the TPP, US activist united. But what a dang waste of time as compared to having this hiatus and having time to think about how we're going to go forward together.


Ryan: And how can civil society organizations like the ones that you've mentioned, how can folks like that and grassroots activists, like many of our listeners, helped shape this process to ensure that it results in real progressive changes in our trade policies?


Lori: Well, that's the perfect question. So the first thing is, we have to make sure that the moratorium is real. And that includes those agreements, including the WTO, big tech agreements, the UK and Kenya free trade agreements, and any new investment agreements with ISDS or without are not going forward. First thing to do about that is I recommend folks call members of Congress, email text, right? They're members of Congress with a two part message. Number one, I want this moratorium on trade, and I want to be reliant needs to include all the leftover Trump agreements. And number two, right to me member of Congress, and tell me what the new trade policy is going to be after this moratorium, I want to be part of creating that I want you to be part of creating that we need to replace our old trade policy. You want to get the members of Congress thinking about it, and you want to get them engaged. So open that discussion, you don't have to have the answers. And then number two, to help you think about the answers go to our website, tradewatch.org and rethink trade. Both of those are places where number one, you can see what was in that trade at. But number two, you can start thinking for yourself what's most important to you, in a good trade policy, what things should always be in trade agreements, obviously, they all have to have a floor of decency that companies have to meet if they want to get the benefits of the trade agreements, certain labor and wage standards, certain environmental standards, certain human rights standards, they don't pay, they don't play. And number two, there's certain things trade agreements can never have again, some of them obvious like, for instance, big new protection monopolies for Big Pharma, to jack up medicine prices, the Investor State Dispute Settlement system that has corporations empowered to attack our governments. Basically, the bottom line is all of us progressives, labor unionists, activist, environmentalist, small business people, people of faith, we banded together and we made Trump have to go renegotiate his renegotiate NAFTA. And the deal we got was not perfect. It's not what we're for. We all said it. It's just the floor from which we are going to continue the fight and build onward. So this next piece of business is to remind Congress that NAFTA ain't the fix the new NAFTA is where we start from, and to get them engaged and get your brains engaged. This is that turning around moment, an enormous amount of hard works been done till now. So now, at that point, what do we for? What do we want? We will use this moratorium after winning this moratorium to actually turn around and actually rethink trade. So we get trade policies that support the goals and values that we all support.


Ryan: Rethinking trade is produced by public citizen's global trade watch, I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we're doing to fight for fairer and more equitable trade policies.

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Defenders of Trade Policy Status Quo Say Black and Latino Workers Not Hurt by U.S. Trade Policies, Despite Data to the Contrary

Last week, we published a report showing past U.S. trade policies have had a disproportionately negative impact on Black and Latino workers. Defenders of the trade status quo are arguing that our focus on trade-related job loss, downward pressure on wages and income inequality was off base. 

Their main substantive argument was one made for decades by defenders of the trade policy status quo: Even if some workers lost jobs, we all ended up better off because we had access to less expensive, imported stuff. 

Except, that has not been true for most of us for many years. As job offshoring moved up the wage ladder, the losses we suffer in wages now significantly outweigh the savings we get as consumers. Said who? The grandfather of modern trade economics, Nobel laureate Professor Paul Samuelson.

According to standard trade theory, while specific workers who lose their jobs due to imports may suffer, the vast majority of us gain from trade “liberalization” because we can buy cheaper imported goods.

However, as jobs have been offshored from more sectors of the economy and job offshoring has moved into higher wage jobs, this is no longer necessarily true. 

Professor Samuelson published a startling 2004 academic paper that mathematically shows how the offshoring of higher-paid jobs to countries like China and India can cause U.S. workers to lose more from reduced wages than they gain from cheaper imported goods. I recommend reading the paper, even if you skip the mathematic formulas through which he proves this point. Because this is the scholar whose groundbreaking work applying the theory of free trade to modern economic realities is the basis of the trade-liberalization-is-a-net-gain-for-all fact so widely accepted. Except, it no longer holds true, and he explains quite clearly why this is the case.

A few years before Professor Samuelson’s paper, the non-partisan Center for Economic and Policy Research (CEPR) applied the actual trade flow, consumer price and employment and wage data to the theorem. They found that when you compared the lower prices of cheaper goods to the income lost from low-wage competition under status quo trade policies, the trade-related wage losses outweigh the gains in cheaper goods for the majority of U.S. workers. The CEPR study found that U.S. workers without college degrees (61% of the workforce) lost an amount equal to about 10% of their wages, even after accounting for the benefits of cheaper goods. That meant a net loss of more than $3,500 per year for a worker earning the then-median annual wage of $35,540.

At the time, CEPR’s findings were widely attacked. And then Professor Samuelson’s paper showed that what they found was not a fluke or some anomalous years of data, but rather the new reality.

Since then, other proponents of trade liberalization have published papers discussing permanent, significant trade-related wage losses for many – for instance David Autor and colleagues with respect to China trade. And there also is broad consensus in the economics field that the wage suppressing feature of trade liberalization is a major contributor to income inequality here. The other critiques of our report on trade-impacts on Black and Latino workers fall into the category of distracting statistical gymnastics and misdirection.

We point out that in the decades since the North American Free Trade Agreement (NAFTA) and China’s entry into the World Trade Organization (WTO), the United States has lost millions of higher-paying manufacturing jobs. We found that Black and Latino workers were disproportionately employed in nine of the ten sectors hardest hit.

The standard counter argument that the U.S. economy created millions of jobs during the same period is irrelevant. Even if overall unemployment remained low because lower-paying service sector jobs were being created, Black and Latino workers disproportionately lost better-paying manufacturing jobs, and as a result they suffered significant wage losses. Trade policy shapes the quality or types of jobs available for people of different education levels, and thus affects wages. Other factors, such as fiscal and monetary policy, generally have a greater influence on the total number of jobs available in an economy.

Or as a National Bureau of Economic Research study puts it more formally: “Offshoring to low wage countries and imports [are] both associated with wage declines for U.S. workers. We present evidence that globalization has led to the reallocation of workers away from high wage manufacturing jobs into other sectors and other occupations, with large declines in wages among workers who switch.”

Speaking about wages, the standard counter argument critics have also raised, that average hourly wages have grown in the past two decades, is the same as saying there has been inflation. What counts is inflation-controlled real median wages – what our earnings can buy and how much the majority of us are making.

Economists now widely name “increased globalization and trade openness” as a key explanation for the unprecedented failure of wages to keep pace with productivity, as noted in Federal Reserve Bank research. Even economists who defend status-quo trade policies attribute much of the wage-productivity disconnect to a form of “labor arbitrage” that allows multinational firms to continually offshore jobs to lower-wage countries.

And finally, critics raised the most recent go-to, if false, argument about automation and technology having caused manufacturing job loss, not trade. If you want to see the data, check out this paper but here’s the gist of it:

First, investment in automation actually slowed during the post-2000 period of mass manufacturing job loss. However, during that period, the U.S. trade deficit exploded. Researchers have found that job displacement from technology is at its lowest level in decades now, even as the automation-not-trade argument has become increasingly popular among defenders of the trade status quo.

Second, data often used to show that automation-caused manufacturing job loss are premised on a basic misinterpretation. The popular view is that, because the value of what is being produced in the U.S. manufacturing sector has grown even as millions of manufacturing jobs were lost, each manufacturing worker is producing more because factories were automated.

Labor economist Susan Houseman at the Upjohn Institute showed that this story is based on the mistaken assumption that productivity growth reflects the rise of automation. In fact, the growth in U.S. manufacturing output comes mainly from just one sector: computers and electronics and has to do with how new iterations of machinery are valued. Overall manufacturing output today is only 8% higher than in the 1990s and remains lower than before the Great Recession.

Bottom line: Even accounting for Americans’ access to cheaper imported goods, the current trade model’s downward pressure on wages outweighs those gains, making most Americans net losers. And sadly, given our nation’s history of structural racism that has permeated the workplace, education, housing and more, our report’s findings may have been foreseeable: While working-class Americans of all races and ethnicities lost from the trade policies enacted by the United States over the past several decades, Black and Latino workers were overrepresented relative to their share of the workforce in industries that were hardest hit, and they lived in parts of the country that were slammed.

Add to that all of the non-trade corporate protectionism that lards up our “trade” agreements and no doubt we need to rethink our trade policies. At issue is what rules of the global economy can deliver for the most people and remedy past wrongs – not whether we should trade or not.

It is important to differentiate between free trade and our current “trade” agreements. Because one of the critiques to our study, by the conservative group National Taxpayers Union, focused on tariff cuts, it’s worth noting that today’s trade pacts are not mainly about cutting tariffs to expand trade. 

For instance, most of the chapters of the NAFTA, USMCA or WTO – as well as the now thankfully-defunct Trans-Pacific Partnership (TPP) – actually have nothing to do with traditional trade matters like cutting tariffs, opening quotas, standardizing customs procedures and the like. Instead, these pacts set binding rules to which every signatory country must conform their medicine patents and pricing, financial regulatory, food safety, government procurement and other policies. 

Consider the raw protectionism for pharmaceutical companies in these pacts that help pharmaceutical firms avoid generic competition for longer and keep prices high. As we envision the philosophers of free trade - Adam Smith and David Ricardo - rolling in their graves at a high velocity at the prospect of  “free trade” agreements mandating that governments provide new rent-seeking opportunities for protected industries, let us contemplate how we got into this mess. 

With 500 official U.S. trade advisors representing corporate interests historically given special access to the policy process, while the public, press and largely Congress have been shut out, it should not be surprising that corporate interests thoroughly captured the U.S. trade policy process. 

By hijacking the good name of “free trade” and taking advantage of a uniquely non-transparent policymaking process, they transformed trade agreements into delivery mechanisms for an array of retrograde policies – many of which failed when pursued in Congress and state legislatures. 

Instead of fighting about whether there was damage, given the data and people’s lived experience verify it, hopefully we can focus forward together on what new approach could deliver for more people in this country and around the world. 

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Rethinking Trade - Season 1 Episode 24: How US Trade Policies Disproportionately Impact Black and Latino Workers

In this episode, Lori is joined by Dolores Huerta, co-founder with Cesar Chaves of the United farm Workers and renowned civil rights activist, to discuss our Trade Discrimination report. This new research reveals how decades of corporate-rigged trade policies have disproportionately impacted Black and Latino workers.

In her decades of labor and civil rights activism, Huerta has witnessed how corporate-rigged globalization has gutted Latino and Black livelihoods and communities nationwide.

Trade Discrimination: The Disproportionate, Underreported Damage to U.S. Black and Latino Workers From U.S. Trade Policies, published this week at Public Citizen’s Global Trade Watch, details how U.S. structural, race-based social and economic inequities that undermine the economic and social welfare of people of color have been further exacerbated by U.S. trade policies. You can find the report here.

Transcribed by Sally King

Ryan: Hey, everybody, and welcome back to rethinking trade. We have a special episode this week because Global Trade Watch has just released a report called Trade Discrimination the Disproportionate Underreported Damage to U.S. Black and Latino Workers from U.S. Trade Policies. You can find the report linked in the description of this episode or at tradewatch.org joining Lori and I to discuss the very real stories behind all the data in the report is legendary labor leader Dolores Huerta. Dolores co-founded the National Farmworkers Association, which later became the United Farm Workers. And she's been a tireless voice for social and economic justice for half a century. Dolores, thank you so much for being here.

Dolores: Well, thank you very much for having me.

Ryan: Lori, why don't you get us started by telling us a little bit about this report. What does the report cover? And what are some of the big takeaways in it?

Lori: Well, the best part of this podcast is Dolores. So let me quickly lay out what the report is about. So a lot of people generally know about the damage that's been caused by corporate-led hyperglobalisation the kind of model that's been implemented over the last several decades by so-called trade agreements like NAFTA, the North American Free Trade Agreement, or the World Trade Organization. But that mass outsourcing. And now as we learn with the COVID-19 crisis, the unreliable supply chains. That damage really has been mischaracterized as something that particularly impacted white working-class Americans. And in fact, in his 2016 presidential campaign, Donald Trump, basically, you know, hasted progressive critique of corporate globalization and job outsourcing and bad trade agreements. But he reframed it into a narrative of resentment with racialized appeals to target white working-class voters as the victims.

 And the reality is this new report called Trade Discrimination finds in looking at the government data on impacts of these trade agreements is that the trade-related decline of us manufacturing and the outsourcing of union call center jobs has had a dire impact on racial minorities. And in fact, in many ways, the damage has fallen disproportionately on people of color in the United States, from these race to the bottom trade agreements. And to some degree, we saw at the 2020 election, working-class voters, namely people who make $50,000 or less coming back to the Democrats in a big swing. That was that and union voters are two of the big reasons why Biden beat Trump. And so now it's kind of on the Democrats to prove to those working-class voters who are giving the democrats another chance that they got it, that the damage is real, and that the Democrats are going to do a new trade policy that actually delivers for working-class people. But part of the deal is the Democrats have to understand who the damaged parties are, and that they have a working-class problem, not just a white working-class problem. So here are the highlights of what our report of both surveying the other studies that have been done, but we did a lot of original data crunching shows with respect to how and why Black and Latino workers have suffered disproportionate injury. First of all, Black and Latino workers were disproportionately employed in the manufacturing industries that were the hardest hit by offshoring and import competition. So for instance, Black workers are about 10 and a half percent of the entire labor force when NAFTA starts, but they represented 14%, paper manufacturing 12% and chemicals 12% in transportation equipment, the auto sector trucks. So those are sectors that got flattened by NAFTA and China entering the WTO. Latinos were just under 9% of the labor force, but they were 12 and a half percent of the workers in manufactured fabricated metals, they were 12% of furniture 10 and a half percent of plastics and rubber. And the beverages industry are lots of imports are not coming from Mexico, had both over-represented African American Latino workers. Now, if you look at the sectors that got hit, and the sectors we have the biggest new trade deficits, you have just massive job losses, where the Bureau of Labor Statistics, for instance, shows that black workers have lost nearly a half a million manufacturing jobs since NAFTA and the WTO. And so it was in part because the workers were in the sectors that there were explosions of deficits in manufacturing industries are offshoring. But that also then caused a huge stagnation in wages, because wages were basically flat in those industries, as there were lots of workers who no longer have those jobs now fighting for the same jobs, fewer numbers of them, compared to, you know, hospitality, and leisure, which pays a lot less to start with, didn't have great growth in wages, but they grew.

So as those jobs were disappearing, the other thing that really clobbered Black and Latino workers were where the jobs were leaving from. So the 20 US states that are the least racially diverse, had only 20% of all government certified trade job losses during NAFTA and WTO. But, for instance, the 15 states that are home to 85% of the total Latino population in the US represent over half of the certified trade job losses. The 15 states that are home to 85% of the Black population accounted for basically 3 million of the 4 million total manufacturing job losses. So not only was it that African Americans and Latinos were in the sectors of the economy clobbered, but they were in the parts of the country that got clobbered. And so cities like Detroit, Chicago, Pittsburgh, New York, Cleveland, that were incredibly hard to hit. We're also locations where Latinos had come particularly from Mexico several decades ago, more recently from Central America, to seek better lives in the manufacturing sector. 6 million black workers fleeing from racial terror and poverty in the Jim Crow South had fled to the manufacturing sector in the north and create vibrant communities in the first half of the 1900s. So this devastation in the sectors and in the parts of the country in the numbers of jobs also resulted in basically reinforcing existing structural racism because black and Latino workers who lost their jobs ended up having a much harder time than their white counterparts finding a replacement job According to the Bureau of Labor Statistics. Certainly part of that is just racial discrimination, hiring, and promotion, etc. But then, the phenomenon basically of increased competition for a reduced number of well-paying jobs available to people without college degrees, then exacerbates these underlying racial discriminatory practices. So basically, after 25 years of NAFTA and WTO, the racial gaps in wage levels are in some areas wider have basically not closed with, for instance, black men earning 75 cents and Latino men earning 64 cents for every dollar earned by white men, black women earning 88 cents and Latinas 78 cents for every dollar earned by a white woman. And instead of getting better, those gaps have either stayed or gotten worse, which, you know, partially is our structural racism, but a big piece of it is the disappearance of the good union, middle-class jobs, that the trade agreements basically incentivize to be offshored and fostered a huge wave of job-killing imports. So that is the sum of this study, it challenges the conventional wisdom. And then the real question is what happened on the ground, and Dolores has been traveling around the country speaking in communities for decades. And so it's our honor to have her here to basically describe some of what this is actually meant practically that's the data, but what it meant to people. And you were one of the people who predicted this in the early 1990s. So, Dolores, I wanted you to tell a little bit of the stories that you were telling me back then, of what you thought was going to happen both to the apparel workers Latinas, in LA, two people working in making blue jeans on the border to people in the Central Valley, in the various Green Giant and other plants. And then what also happened to people in Mexico under this corporate trade regime?

Dolores: Well, we saw, what happened is that workers were devastated that the loss of workers is terrible. And we're talking about thousands and thousands of workers that have been left without jobs throughout the United States. And not only in Los Angeles, with places like Texas, places in the south, places in New York, the whole garment industry with his were totally destroyed. And every time that they talk about the trade wars, the one thing they forget to mention is that the corporations are really behind all of this, you know, like you have a right now in the United States, we have all of these 99 cent stores and dollar stores or whatever, that, you know, sell the cheap goods that come from China and other places. But none of the manufacturing has been done in the United States by us workers.

And it's had a devastating effect on our economy and on the workforce, but also on the political scene. So when you have so many people that are clamoring for jobs in the United States, and when you go to some of these cities in the Midwest, particularly where you had all of these factories, and you see these abandoned buildings, and then, of course, it's affected the tax base, because you don't have money coming into these cities, for schools, for libraries for job training programs, for infrastructure. So the economic impact of all of this has been, it just affected the United States terribly. And we see it played out when you have all of these people that put us in this last election, that vote for Donald Trump because people are angry because they don't have jobs. And then we see all of the homeless people on our streets. And, again, you think, "How can this happen?' When we are the richest country in the world, in the United States of America, and we have so many people in poverty, so many people that are homeless, people that have to work two jobs just to be able to pay the rent and pay food. And of course, now with a pandemic, that has also affected us workers. I mean, the devastation continues. And this in this whole notion that somehow people have to work for free, that workers shouldn't be given a living wage, they shouldn't be given a pension plan, they shouldn't be given a medical plan. And, and we don't have, it's the working people that really hold up a society, not only by creating the economic base in the income base, the revenue base of our society. So when you have the basis of your society, that is deteriorated to such a point, that it affects everything. And so, and I think it's also a moral ground when you think about it, that workers should be expected to work for minimum or less than minimum wages, literally for free, when even when they work, they cannot earn enough money, to be able to afford a home or to have a living wage. And so it's almost like making slavery, normal and legal.

Lori: And that is a phenomenon that you've just beautifully described that under the government data explaining what happened after NAFTA in WTO, has hit African American and Latino workers, disproportionately hard. So that 20 US states that are the least racially diverse, had only one-fifth of the government certified trade-related job loss, but the 15 states that are 85% of the total Latino population, they account for over half of the trade job loss of 1.6 million jobs. So I'm thinking about some of the places where Latino workers had built vibrant, middle-class communities, like the industrial workers in Chicago, like many people whose families had migrated to these factory union jobs to create a wonderful middle-class existence in the industrial sector. And I know you travel all over the country, what what are what's happening in those in those communities, Milwaukee has a very strong Latino community relating to the auto sector. And as well, obviously, the textile and apparel sectors all across the country, what's happened with these communities? Where El Paso where lembu hair obrera has organized valiantly, but they still lost 25,000 sewing jobs. What is your experience of what's going on in these communities now?

Dolores: Well, people live in poverty, they live in extreme poverty. And a lot of people they have to go to the service jobs, which of course, don't pay very well. And so again, it just means an increase in poverty, but it only affects people in terms of their income levels, but their educational levels so that people can't afford to go to college, that people can afford to have businesses. And then of course, it also displays itself in terms of delinquency, the maybe addiction to us in substance abuse, and of course, the it affects the health. And we've seen the pandemic, how the over the COVID-19 has affected Hispanics, and people are getting infected at a higher rate, people are dying at a higher rate. So it has all of these manifestations that come with poverty. And so it is, you might it reaches deep into the community. And it affects all of the social strata, the educational policies that I just mentioned. And it puts people at risk, basically, for everything that possibly could happen to people that are in poverty is happening to them. And then of course, and I do believe that part of the mass incarceration policies also have to do with the lack of job opportunities, because we have seen the mass incarceration that kind of came at the same time, as you have mentioned before, in your reports, that the mass incarceration systems coincide with these global trade policies and the export of jobs to other countries here in the United States. I think whoever does these social designs, I don't know whether they plan it this way, or it just happens that way. But it seems like they do coincide so that people's lives are not only do they have to live in poverty, but their whole careers and features are taken from them when they are when they are jailed. And you have these harsh criminal sentences that keep people in prison for years and years and years.

Lori: I'm wondering, as you've traveled around the country, and you are a heroine in so many Latino communities where you're celebrating you speak across the country, what you actually observed in Latino communities. And how have they been how what is your experience of how they've been directly impacted by the job loss from NAFTA from China trade? Do you have some memories personally, because you've been traveling the country for so many years that you actually have lived the timeline, from the highest rate of unionization and the strongest manufacturing base? You've lived through the whole period of deindustrialization. And what are your personal memories of some of these communities and what you've seen this shift do?

Dolores: Well, I think one of the hardest areas that have been hit I mentioned before, was the on the educational level. And even here in California, for instance, or we are like the fifth largest economy in the world, and that we could actually be a country and, again, have one of the richest states that we have in the United States of America. And yet we have such high poverty rates. For instance, in terms of the amount of money that is going to for education for our children in California, where California where that was going to school many decades ago, we were number one in the country, in terms of the amount of money that we gave per student, per education. Now we are number 39 in the country. And this is ability adversely affected people, young people of color. And, and it's not just in California, it's the same thing that happens when you go to Arizona, when you go to Texas, when you go to the Midwest, in Chicago, when you go to New York State, you have the same thing that is happening now that our children of color, are not getting an equitable education. And, and so this is true all over the United States of America. And it seems that somehow, is our black and brown communities expand and we know that they are growing in the United States of America get the amount of money that is there for education is shrunk. And it is shrunken in such a major way that all of these young people of color are not getting an equitable education. And this is, of course, going to have a lot of impacts in terms of the future of our country. When all of these young people, I mean, you know, hundreds of thousands every other graduate from high school. And of course, you have the ones that don't even finish high school, that this is going to have a big effect on our economy in the future.

Lori: Certainly the deindustrialization. But also now increasingly, the offshoring of union call centers, the offshoring of information technology, jobs, and medical transcription, jobs, and engineering jobs, this race to the bottom has gutted the tax bases of cities, and small towns across the country. And so that the students who are relying on the public schools, versus who have a way to buy their way into a private school to get a good education, what you're saying is, those are the students that are being the most impacted, which then just continues a trend of poverty.

Dolores: Yeah, and at the same time, these are the populations that are growing the fastest.

Lori: So for the future of our country, the rising majority, under this paradigm of race to the bottom, globalization, which has stolen so many good jobs and gutted the tax base, is basically creating a majority population that has not will have neither the quality education of previous generations. And that will not find the jobs that pay well, for people who don't have higher education, it's a real catch-22 is you said, it's like some kind of social design.

Dolores: And when you think about the only way that poor people can survive, again, I mentioned a little while ago, where you have all of these outlets that sell goods that come from China. And when we think about, you know, this is the only way that poor people can survive, is to, they're the ones that actually go to those stores for the things that they need. And so the system and perpetuates itself, it doesn't really give any remedies that just say people sustain themselves by going to the dollar store, even for groceries, you know, because they sell groceries now. And this is the only way that they can possibly survive is by being the consumers and sustainers of this poverty system.

Lori: So that is a downward spiral for sure. And when Joe Biden was running for president, he talked a lot about his build back better plan. And one of the things that's a big priority, and that plan is creating more manufacturing capacity, doing more investment in domestic jobs and education. And he has basically tried to think about how not only can we get out of the COVID economic crunch, but that when we come on the other side of it, we've actually invested to be in a better place than before the COVID-19 crisis happened. Do you have a sense that Joe Biden understands these very real dynamics that you're describing? And that he can we'll do something about it?

Dolores: I don't know. I think that's the question. The big question is, how do you get these corporations to cooperate? Because they don't really, I don't think they care. As long as prophets have their motive, and they want to make as much money as possible. I think they're going to continue to the system that gives them the greatest wealth. And I don't know that Joe Biden can rein them in, or what he can do to save them, you got to come back to the US, and you've got to pay taxes in the United States of America. You know, we recently lost proposition 13 here in California that we were all working on, that proposition would have been in $12 billion, 60% of it would have gone to our local communities, which are hurting because of COVID-19. And the other 40% would have gone to our school systems. But the corporations that they, you know, they got together and they spent all this money that they could, and ended the tax of this money that would have come in for this $12 billion would have come in from the wealthy corporations like Amazon, Disney, Chevron, only 10% of the wealthy corporations that work in California would have valued 2% of the money would have come from those very mega-corporations, but they did everything that they could to defeat it. So I think that is like a mirror that really shows that these wealthy corporations don't give a damn if our kids get an education or not. They don't really care if people live in poverty. And so the big question is, how was the president-elect, Biden going to rein these corporations and even when you're talking about, about, you know, Medicare for all, they will not stand up to the big pharmaceuticals and, and these big insurance companies, which is, the only way that we can get Medicare for All is by taking these, these people are out of the health business and, you know, giving the money to doctors and hospitals and nurses and the people that do tend to the, to the people that are sick, and not to these middle managers. And I don't know Joe Biden's going to be able to do that. He back down on Medicare already, because they just have such a powerful lobby, powerful communication systems. And the general public has no clue about what it what that even means, you know, they call it, quote-and-quote, socialism, and something that you have to be afraid of?

 Lori: Well, one thing you told me back during NAFTA, when we were moping, and in, in a very blue mood about how we would get some of the California Democratic members of Congress to vote against NAFTA. And, you know, I remember saying, boy, they're really convinced they don't want to vote against NAFTA, all these corporations are telling them, they have to vote for NAFTA. And I remember you saying something, like, we're just gonna have to make them do it, we're gonna have to organize. And that's been your whole life. That's something you've taught me, you've taught generations of people, that the companies don't want to do the thing that's good for the people, you have to make them do it. And so it strikes me that in a weird way, the COVID-19 crisis provided a lesson for a lot of people who aren't the working people who already knew that this system was rigged against them. All those people who you know, don't work in a factory, don't do a service job that isn't a doctor or a lawyer suddenly have this experience of somehow in the richest country in the world, they couldn't get the things they need it because we don't make it anymore. And it was suddenly a wake-up call that here we are, and they couldn't get masks, and no one could make masks and someone could die because they couldn't have a ventilator. And we couldn't make ventilators. And it just makes me wonder as you know, your that you are the Empress of organizing, what your view is about how we can leverage this unifying experience of how screwed we are in a country that can't make things anymore, to try and get some of the people who haven't really cared about what happens to the people who make things. But because they're the people who buy things, they're now also the people who are on the losing end of this version of trade and globalization. What is your view of how we can basically organize the people who make the stuff we're used to the people who bought the stuffing cans to make Joe Biden do the right thing?

Dolores: Well, I think it will continue the organizing, and I have a lot of hope. I mean, we have seen all the young people that are marching out there and on the issues of racial justice. And somehow I have said this before, but I know back in the 60s and the 70s, we had a cultural revolution in the United States of America. But you know, that's when the LGBTQ movement got, really, you might say, it grew so much, and the environmental justice movement was just starting. The woman's movement was like, in its second or third phase. The Civil Rights Movement made a lot of changes. And but I think this next revolution and ethics got it, the young people that wasn't gonna have to lead it. And it's got to be an economic revolution. I think before it might have been iffy because people didn't really feel the pain that much. But now I think people are not only feeling the pain but seeing the pain because you can't walk down a single street without or any city in America without seeing homeless people on the street. It's so it's all very, very visible now, and maybe doubted that we were going to this pandemic, this might be a good time to really start uplifting those messages and explaining to people like you do with your great work that you're doing on the research so that you can actually show people the data, as you're doing and say, "Look, this is what it looks like this is what's happening." And so, especially younger people that may have said, Well, I don't know how this all happened, I was just, you know, born into this, this system and this situation. And you can say, "No, this is how it happened. And these are the people that are making it happen. Okay, so now it's time for us to address this, and do it in a mass way," the way that people are now organizing around racial justice. And I think we saw one little piece of this when the republicans were trying to get rid of Obamacare. And so you had people demonstrating at the opposite of all of these senators, and Congress people that were involved in trying to get rid of Obamacare, and they back down. So it's got to be that same type of organizing. And I know it's a little bit more difficult with the virtual organizing. But I think the main thing is that we have to get people to understand and to see this, to see what's happened, because people really can't take action until they understand. And once they understand, then we can go for the solutions, and then put the pressure on the big corporations.

Lori: Ladies and gentlemen, you heard it here. First, Dolores Huerta, one of the deans of political organizing strategy and progress in the United States of America has given us our marching orders. And that is Dolores. That is spot on. And we can't tell you how much we appreciate the honor, you've honored us by coming to be on this podcast and sharing your wisdom. And so we will see you at the barricades as we fight for a trade system that is just for working people. And that puts the corporations on the receiving end of the limitations, not the environment, not the workers, not our health. Thank you so much.

 Dolores: Now, thank you for inviting me, and thank you for sharing your wisdom and your research and all of your great energy. Thank you very much, Lori. I feel honored.

Ryan: Rethinking trade is produced by Public Citizen's Global Trade Watch, I would encourage you to visit rethink trade org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we're doing to fight for fairer and more equitable trade policies.

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Must-Read Piece on the WTO

By Lori Wallach

Farah Stockman has done a great service in writing about the World Trade Organization (WTO) in Thursday’s New York Times in a way that is compelling and accessible. The siloed, practically religiously devoted defenders of the WTO (the Knights Templar WTO) are in a tizzy that the secrets of the palace are being revealed, but the comments section on the New York Times website shows how eager most people are to understand how this organization has failed them and what would do better.

The op-ed merits a read and share to get as many eyes on it as possible, and the comments are some of the most informative and interesting of any piece I’ve seen.

Read The W.T.O. Is Having a Midlife Crisis!

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Season 1 Episode 23: U.S. Officials Are Blocking Global COVID-19 Vaccine Access at the WTO

World Trade Organization (WTO) rules undermine access to COVID-19 vaccines and medicines. That’s why scores of countries are demanding that the WTO’s monopoly protections for pharmaceutical corporations be temporarily waived so COVID-19 vaccines and treatments can be produced worldwide. This is essential to ensure enough affordable doses to end the pandemic and save lives.

But U.S. trade officials are blocking the waiver, insisting that even during this deadly global pandemic, Big Pharma profits should come first. The question is: Will this position change under a Biden administration?

Click here to take action.

Click here to learn more.

Transcribed by Sally King

Ryan: Welcome back to rethinking trade, where we don't just talk about trade policy, we like to change it, and Ryan and I'm joined once again by our new house trade expert, Lori Wallach, the World Trade Organization is meeting, as we record this podcast, and one of the items on their agenda, it's going to have a huge impact on the world's access to COVID-19 vaccines and treatments. That's because the WTO intellectual property rules were designed to protect the Big Pharma giants, not the people who need medicines to survive. Lori, could you tell us what is happening right now at the WTO? What trade related intellectual property rights are. And what they have to do with the covid 19 pandemic?

Lori: So let's take one step back, the World Trade Organization enforces a dozen plus agreements, including the old trade rules which are called GATT, the General Agreement on Tariffs and Trade, that's the part that really is about trade. One of those other agreements is the thing you just mentioned Trade Related Intellectual Property rights which is often called TRIPS. That is basically the antithesis of free trade, that is a set of monopoly protections. Every WTO signatory country is obliged to guarantee to big pharmaceutical corporations, and that includes a guarantee of a 20 year monopoly for any medicine, it creates periods of exclusivity over the data used to prove a drug is safe so that the generic manufacturers sometimes have to wait even longer. All of those kind of rules of course are really the opposite of what you think of for free trade, right? Competition. Those are rules designed to block competition to give monopoly powers to pharmaceutical firms they can charge any damn price they want for medicines. So in the face of having that imposed on 160 countries worldwide. Were all the least developed countries are required to have these very stringent monopoly protections for big pharmaceutical firms, a set of countries like South Africa and India came in with a proposal now supported by dozens of countries, and that was to waive those pharmaceutical company monopoly rights for temporarily anything during the COVID crisis that is necessary for the production of treatments of vaccines and the technologies around the production so the actual medicines and also the know how to produce them. And it's really obvious why to do this. We need to get billions of doses of vaccines, hundreds of millions of doses of treatments, and the only way the whole world is going to get better is if the whole world is better. It's an epidemic. So it's actually in the interest of people all around the world to get enough of the vaccine made so that there's no one who can't get it, and quickly. But right now the way that WTO rules are set up, if a country, for instance, simply copied the vaccine, or insisted that the company provide the know how for how to copy the vaccine that it would be in violation of these WTO rules, and a country's imperative to save lives with subject country to indefinite trade sanctions. So a developing country would have huge penalties billions of dollars put against its actual exports needed to keep this country going because they put people's lives first. And what would that process actually look like if a country was held in violation?

Lori: Well let's just be super concrete, because Sadly, this is not the first time this has happened during the peak of the AIDS epidemic when hundreds of 1000s people were dying antiretroviral treatments were available, but they were so prohibitively expensive that throughout the developing world in Brazil and South Africa. People are dying needlessly for whom, if generic versions of these medicines could have been produced their lives would have been the life of a person in the US or Europe with AIDS, which is basically the antiretrovirals would make it a treatable pill perennial but treatable disease. Instead of having a chronic treated disease, people all over the global south are dying and countries started to want to make their own medicines and some developing countries have the capacity. India can do it. Argentina can do it. South Africa. Brazil. And the United States, on behalf of its big pharmaceutical companies, basically threatened to go to the WTO and attack those specific countries for violating these trade agreement pharma monopoly rules, instead of basically helping those countries try and save the lives of their people who had HIV or AIDS. And that case ended up blowing up because that was, for folks who remember, when Al Gore was running for president, people from amped up or falling around busting into his event screaming, “Greed kills.” That was a WTO trips case. That was the get them to back down the Clinton Administration on these attacks using WTO against HIV AIDS medicines. So what happens with the sanctions is practical. One of these WTO tribunals decides that some countries, health law is a violation of the WTO rules. And then the country is told you have 90 days to get rid of that regime for making medicine available that pharmaceutical generic company. And if you don't, then we're going to impose penalties on all of your exports what that means practically is for instance, every good that a developing country would export will be hit with a huge tariff on the way into other countries. So that basically it's like a strangle. It's basically we're going to choke you to death if you don't change and we're going to do that by cutting off your exports.

Ryan: I know there's an effort underway right now to pressure the US and other countries to support this waiver at the WTO and prioritize responding to the pandemic over protecting Big Pharma intellectual property rights. But ultimately, who has the power to change the US position here, and also what are the prospects of this position changing under the incoming Biden administration?

Lori: Ryan, that is exactly the question to ask. So, who has the power to change this? This is a position that's taken in the executive branch, it doesn't require Congress to pass anything, whomever is the President and the President's top trade official the US Trade Representative decides the positions the United States would take at the World Trade Organization, the United States sits in a council it's called the general council, with the other countries who are signatories to the WTO the general council takes positions. If the United States, which under the Trump administration has joined Europe and a handful of other countries who are the homes of the big pharmaceutical corporations to block this proposal if the US changes sides, something the bind administration could do without Congress again and then what it would look like is instructions go from the White House to the US representatives of the WTO in Geneva, and they go to that meeting which the next one right now the meeting, we're going to say the wrong thing. The US is going to say the wrong thing. So when it needs to get in January, that General Counsel the US can go in and say we now join those countries that want to temporarily waive the WTO special monopoly protections for Big Pharma. It's a temporary waiver until the epidemic crisis is over, it only applies to those medicines and technologies, with respect to vaccines and treatments for this crisis, but we join putting public health first, that's all it would take. And who can make that happen? Well, that's us. So we all need to be taking action to contact our members of the House, or members of the Senate. And frankly, as soon as Joe Biden is sworn in the White House which will be taking, of course, the usual hotline emails and letters. And the reason to get Congress engaged is this is not a one off. So these WTO rules in this particular waiver is extremely urgent. It's literally going to make the difference between life and death of people the world in relation to the COVID-19 epidemic. But this is a fight that we started with the NAFTA renegotiation. When we got the most extreme Big Pharma giveaways that Trump added to the old NAFTA making it worse; we got that out. But we need, as the United States of America, to have a new position, about these kinds of farmer protections in trade agreements, they don't belong there at all. It's not just that the WTO rules should be waived but rather we negotiate these terms. So we're putting people's health. First, yes we want to reward innovation. So when a company comes up with a great invention there are ways to reward that but the amount of time. And what's the balances between people getting access to medicine, and the gluttonous profits that these big pharma companies make is a real problem, because this is something where on the first day, the Biden administration can show. They're going a different way on trade, you're going to put people over profits to kind of put health over Big Pharma. And this is one of those things they can do on their own, if we all join in and push them to do it.

Ryan: And if you go to rethinktrade.org you can scroll to the bottom to the take action section and you can send a letter from there to your representative and senators. and on the eyes on trade blog, which I'll link in the bio of this episode, you can read more about the WTO TRIPS issue. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how to fight for fair or equitable trade policies.

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Rethinking Trade - Season 1 Episode 22: Biden Administration Part 1

President-elect Biden’s appointment of the next top U.S. trade official has taken on enormous political and symbolic value. In just a few weeks, the White House is going to look a lot different – but what about U.S. trade policy? On this episode, we examine whether the new president’s political commitment to fixing some of the worst aspects of the old corporate-rigged trade agenda will become reality, or if the office of the U.S. Trade Representative will function as a gateway for big corporations to write the rules.

 

Transcribed by Garrett O’Brien

Ryan: You're listening to rethinking trade with Lori Wallach. Welcome back to Rethinking Trade everyone and welcome to the last full month of the Trump administration. In just a few weeks, the White House is going to look a lot different as will the world of trade policy. So today, we're going to focus on a few things related to the new administration, from the people being tapped to lead it to some of the policy elephants looming in the room. Lori, let's talk first about the Biden administration as it currently stands. As far as the future of trade policy, what positions matter the most? And what are you seeing in terms of personnel choices so far?

 

Lori: Well, what candidate Biden said was three things. First, he basically announced a moratorium on new trade agreements, which he just reiterated this week. He said that until there were major investments in US production, in healthcare, in training, there would not be any new trade agreements. And that's right, because there needs to be a new US trade agreement bottle that builds off the new floor that the revised NAFTA set. He has said that he wants to greatly expand Buy American procurement, domestic preferences, and how the US government spends its money, which is the right thing to do. And to do that he also as a candidate said that he would fix the trade agreement rules that currently forbid this and make Buy American really mean “Buy American plus 60 other countries” who get waivers to Buy American and our tax dollars get offshored. So that's something we're going to need to watch carefully both that they don't do new trade agreements, and that they fix the Buy American rules in the old trade agreements. And then the third thing he said he wanted to do is a variety of priorities relating to revitalizing the US economy, investments in infrastructure, health care for more affordable for more people, more affordable medicines, and a bunch of those things as well, his priority climate initiatives, run into some of the bad old corporate rigged rules of our trade agreements. So some of that stuff is going to have to get fixed. So with all of that is what they've said, then it's who is going to do what, and the most single important job and the appointment that matters the most in the short term is the US Trade Representative that is a cabinet level appointment, and is an independent agency, and it's the lead trade policy setter for any administration. And so far, they haven't announced someone, there are some good candidates in the mix, everyone seems to think, who would be able to put forward a pro-people pro-planet agenda, but there are also some worrisome characters, and who gets that nod is going to be very symbolic, because it's going to represent either a political commitment to fixing the old corporate rigged trade agenda, or if the wrong persons in that position, it's going to be signal that it's going to be a war. And there are huge policy and political implications for that, not the least of which is hard to imagine: a president who is a democrat who's not prioritizing trade wants to get into a family feud with congressional Democrats, unions, and other base groups, and have a lot of them fighting with the administration against the administration about either a bad USTR choice or bad trade policies versus fighting side by side to try and promote the administration's non-trade agenda. There are some other appointments that have already happened that are important. One of those is Treasury. So Janet Yellen is the number one, she is a little bit too much the standard view of economists typically on trade, not sort of focusing on all the non trade rules that undermine things ostensibly she would before. The deputy, the top deputy, is a guy who was in the Obama administration. His name is Wally Adeyemo, and he is a guy who Senator Elizabeth Warren has been praising, but my past dealings with him had him as a pretty strong advocate for the Trans Pacific Partnership. And having negotiated on behalf of Treasury, where he was Deputy Chief of Staff during the previous administration, during the Obama administration, the very weak provisions in the TPP that didn't do anything to discipline currency cheating. On the other hand, he was also the guy who put his foot down and demanded that there was a limit on financial data transfers, so that Treasury could stay on top of fishy business if there was another financial crisis. So I would say the biggest thing to watch is if any of the really bad guys end up at USTR and probably number one in that list is a guy who'd love that job, who there have been a few news stories about maybe being thought about for the job. You knock me over with a feather if this comes true, but Rahm Emanuel, corporate hack extraordinaire, man who sat on tapes of criminal behavior of police in a police-related shooting in Chicago for a year, a man who I suspect if he got named to even dog catcher if there was such a title for the administration would probably cause street protests in Chicago, among other places. But Rahm Emanuel aspires to a new job in this administration, and, h having been effectively persona non grata in Chicago, so I guess he's looking to move east again. And there are a lot of people considered persona non grata for this administration, but his name has been associated with the USTR gig, and that would be catastrophic.

 

Ryan: You already answered my next question, actually, when you were talking about Biden's Buy America plans. So let's just jump on to the sort of final question. This is sort of part two of the podcast, I suppose. When you were talking about Wally Adeyemo you mentioned the Trans Pacific Partnership. And we didn't want to have to talk about this, but because it's been in the news, we have to, and that is the Regional Comprehensive Economic Partnership or the RCEP a lot of news outlets have been talking about the RCEP as sort of China's Trans Pacific Partnership, and they've been using that framing to suggest that Biden should try to rejoin the TPP. Or at least you know, the question is being asked, but this is not an accurate depiction of the RCEP. So my question for you, maybe you can tell me in the listeners, what is the Regional Comprehensive Economic Partnership? How does it differ from the TPP? And why is this framing of it so problematic?

 

Lori: Well, I'll start with the last part, which is the same people who are trying to push us into the terrible corporate-rigged, job killing, big tech helping, medicine price increasing, environment destroying, climate disaster fueling TPP are just recycling their same old efforts. But their hope is somehow the Biden administration will not have learned the political lesson of how the Obama administration pushing TPP right through the presidential election helped make Donald Trump president, but also that most of what's in the TPP directly contradicts what Biden has said is his priority domestic agenda. So what they're basically, what the usual suspects, which are, you know, the usual corporate hacks and the lobbyists and the front groups that, you know, claim to be think tanks, who are cycling this stuff up and there are lots of op eds, lots of “Oh, no, we're left behind.” They're arguing their newest slice of this is to talk about this Asian agreement. So here's the backstory. At the time that the TPP was started, some countries in a grouping called ASEAN, which is basically the Southeast Asian countries, it's anchored with Malaysia and Indonesia and Vietnam and the Philippines and Thailand, they decided that they would, because they weren't invited to TPP, they would have a negotiation that involved they're having a free trade agreement with Japan, with Korea, and with China, who are the big countries in the region. And then they invited New Zealand and Australia as well. So there is some overlap between TPP countries and RCEP countries. But way back when the idea was these are going to be what they called two different kind of mega regionals. But it was never China's agreement. It was the ASEAN countries agreement, so it was never going to be something exactly like the TPP because the ASEAN countries in the TPP were the ones who were saying, “hey, let's not go so deep on all this non trade stuff.” So the RCEP was under negotiation even longer than the TPP. The RCEP was under negotiation for almost 12 years. And ultimately what happened last month, is they decided that they either could have a deal like the TPP that was dead on arrival and no country would or most countries wouldn't implement. Or they could basically roll it way back. So the final deal looks nothing like a TPP or even what they had in mind with the RCEP when they started. It's a lot more like a brand, a label, than a trade agreement. So to put this in perspective, unlike the TPP this agreement doesn't get rid of all tariffs. It largely doesn't even cover agriculture at all — the most contentious area where tariffs were zeroed out and TPP. It does not have Investor State Dispute Settlement, ISDS, which was the heart of the TPP. It does not have intellectual property rules, Big Pharma patent goodies and the copyright rules not in there. It has the most modest service sector rules not forcing countries to privatize and liberalize service sector. It does not have digital trade rules to lock big tech privileges in place and limit governments from regulating. Its main thing is it has common, what are called Rules of Origin, which simply has to do with what kind of product has what kind of test to see if it meets the terms of agreement is it the last step of processing has to be in one of the countries in the group? Or is it does a certain value has to be X percent of the value comes from countries in the deal. And you know, that's something because all of those countries already have free trade agreements, this is not a big economic deal. In fact, the one country that could have actually made a big deal, which was India, quit the whole thing like a year and a half ago and just said, “We don't even want part of this reduced brand.” So the other countries all have deals with each other. And even though this doesn't really have much in the department of contents, the common rules of origin are really the only there there, which is why I really say it's a brand. But you know, the folks who have been saying, “TPP we should do it” have been saying that all along. You know, frankly, if they thought they could get away with it, they would say we need to have TPP to avoid an alien abduction or a zombie apocalypse. I mean, they would make any damn argument. So, you know, to some degree, that the RCEP is a competing deal and we're left out Heaven forbid or it's China's deal, that has as much validity as doing the TPP to avoid a zombie apocalypse. It's just it's a non sequitur goofiness. But of course, they're gonna bring that up ‘cause you know, people know there is no zombie apocalypse. And people don't know what those three initials are RCEP even mean. So that is something we're going to need to stay on top of. My sense is politically, the Biden folks, even if they would be inclined to buy the bologna, understand this would be a political third rail that would undermine their domestic priorities and basically doom the Biden presidency from day one.

 

Ryan: And this is probably just the first example of many that we'll see of attempts to reestablish the status quo corporate rigged trade policy set, in the Biden administration.

 

Lori: I mean, the reality is that if they want to use it, the incoming administration has enormous leverage on trade. The previous administration, US Trade Representative Bob Lighthizer, broke a lot of furniture. So at the WTO, with respect to China, there is a lot of leverage sitting there that this administration could use. It would be an enormous mistake if they just lifted the China tariffs, which thankfully, this morning, President-elect Biden said he wasn't going to do or if they just decided, “let's start appointing WTO tribunalists and get that system working again,” which so far, they have not said they're going to do. But if they would do that, it would just be like, you know, it would be like having someone on third base with a known home run hitter at the plate, and then deciding that they would just, you know, basically, with all the bases loaded, decide to foul themselves out. I mean, it would just be a huge waste of potential leverage and ability to actually get some of the things done that working people and the planet need as far as trade policy. Now, the flip side of that is that having basically broken all the furniture and the world didn't end, a Biden administration that wants to do the right thing inherits also from the Trump administration, a lot more policy tools. So everyone said when Lighthizer started doing things like tariffs on China, or jamming up the WTO, everyone said, “Oh, my God, it's going to be the end, perhaps the earth will fall off its axis and hurl into the sun. Or at least we'll have a major worldwide depression.” And these are the kinds of arguments that get made every time someone wants to do something to use trade policy leverage to try and actually change the rules. And Lighthizer did it. And he had the spine to do it. And all these horrible things didn't happen, which basically demonstrates that if the right person is chosen for the trade representative’s job, then that person has a lot of leverage and has a lot of new tools to actually do the right thing. But you are spot on right, Ryan, that we are going to have to fight and keep the pressure on because, you know, there is a whole set of former Obama administration, former Clinton school people who are getting a bunch of top jobs. And you know, look, just at Secretary of State was a big, you know, “oh, we should be inside the TPP. If we're not inside, then other people will write the rules.” That's Tony Blinken. Now, I doubt he knows the rules basically favor China because I don't think he's going to be a total squish on China. But there are a bunch of people who have that mindset, that sort of State Department's silo, “I don't know what's in there. But I'm sure it's good for us to be in some agreement.” So there's going to be work to do, for sure there's going to be work to do. But I think what we need to do is basically keep the focus on the political price of doing the wrong stuff, and to try and keep the pressure on with a big welcoming, thank you hug of the president-elect, following through on the things he promised: moratorium on new agreements, fix the old agreements so that we can have the Buy America expansion and the climate policies and health policies we need. And then hopefully, we'll spend that time in the moratorium figuring out what a good trade model is, and we can build on the progress that was made in the NAFTA revisions.

 

Ryan: Rethinking trade is produced by Public Citizen's Global Trade Watch, I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we're doing to fight for fairer and more equitable trade policies.

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Will Biden push a pro-people and planet trade agenda?

There is a lot to celebrate about the end of a presidency marked by racism and xenophobia, false promises to working people and record tax breaks for the wealthiest one percent.

The fact is, Trump failed to deliver an end to job offshoring or to revitalize U.S. manufacturing. Nor did he achieve changes to the Chinese government’s predatory practices or reduce our unsustainable trade deficit.

But his 2016 promises to do so were powerful because they connected to real and severe damage that many Americans suffered from so-called “trade” policies.

Now more than ever, we must prevent a continuation of the pro-corporate trade agenda that too many past presidents have pushed – both Republicans and Democrats.

In order for President-elect Joe Biden to deliver on his most fundamental promises to the American people, he must create a new approach to trade.

And if he fails to deliver, no doubt a right-wing autocrat will seek the presidency by exploiting many Americans’ anger over offshoring and trade job losses.

Many core elements from Biden’s “Build Back Better” plan conflict with existing U.S. trade agreements and policies, including those related to major Buy American investments in infrastructure, climate-related energy policies and standards, expanding access to affordable health care and medicines, and more.

That’s because the corporate guarantees and constraints on government action that are baked into current “trade” pacts — and the race-to-the-bottom regime of hyperglobalization they promote — conflict with Joe Biden’s goals of creating the good jobs necessary to battle economic and social inequalities, ensuring all Americans have affordable healthcare and medicines, and averting climate catastrophe.

The good news is, President-elect Biden has made some big promises on addressing our current, corporate-rigged trade rules, including:

  • Imposing a moratorium on “new trade agreements until we have major investments in American workers, including (a) modern, job-creating infrastructure, (b) widespread investments in education and worker training” and “targeted support for American manufacturers, and (c) specific investments in communities to build up research and manufacturing hubs.”
  • Appointing “experts from organized labor and the environmental movement to work in trade negotiating and enforcement positions” and making sure that “labor and environmental advocates are at the table from day one in future trade deals.”
  • Aggressively pushing “for strong and enforceable labor provisions in every trade deal my administration negotiates – and not sign a deal unless it has those provisions.”
  • Opposing “the ability of private corporations to attack labor, health, and environmental policies through the Investor-State Dispute Settlement (ISDS) process” and opposing “the inclusion of such provisions in future trade agreements.”
  • Banning fossil-fuel subsidies, slapping tariffs on imports that produce high amounts of carbon and putting emission reduction commitments into trade deals.

Our job is to build the public pressure needed to make these promises realities.

One early indicator of President-elect Biden’s trade policy plans will be who he appoints as U.S. Trade Representative – the top U.S. trade official.

As they say in Washington, “personnel is policy,” so this decision will tell us a lot.

Unfortunately, some of the candidates being floated are the same old, revolving door, corporate lobbyists and neoliberal fanatics who got us into our current trade policy mess.

We need a USTR who represents the growing Democratic consensus that our trade policies and pacts need a major overhaul.

Joe Biden will inherit a policy and political landscape on trade totally transformed since the Obama presidency ended.

This moment presents significant opportunities to reshape U.S. trade policy to benefit working people, consumers and the planet’s environmental health.

Sign our activist volunteer form to help us win new trade rules that raise wages, lessen economic inequality, counter the climate crisis and challenge corporate power.

While we continue to monitor numerous trade deals being negotiated by the Trump administration as well as the implementation of the revised NAFTA deal, we are building momentum to win big, progressive trade policy changes in 2021.

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The Asian Regional Comprehensive Economic Partnership, Lots of Hype, But Not Really a Big Deal…

By Lori Wallach, Director of Public Citizen's Global Trade Watch

The Regional Comprehensive Economic Partnership (RCEP) that was signed today among 15 Asian nations is more of a brand than a major trade deal. Negotiations that boosters of the Trans-Pacific Partnership (TPP) once tried to spotlight as a worrisome Asian-led competitor that should spur the United States into TPP ultimately fizzled into an exercise that has become newsworthy for simply ending.  

Amidst all the breathless hype about the pact covering 30% of the global economy and 30% of the global population, there has been little attention to the deal’s limited terms. Unlike the TPP, an agreement with 30 chapters of which only six actually focused on trade, the RCEP is about trade, although with many limits:

  • RCEP’s actual trade terms are limited in that it does not cover all goods or zero out tariffs and excludes most agricultural goods.
  • RCEP’s coverage of the service sector is not comprehensive.
  • RCEP does not include the controversial Investor-State Dispute Settlement (ISDS) regime.
  • RCEP does not set uniform product standards.
  • RCEP does not have a procurement chapter.
  • RCEP does not address state-owned enterprises.
  • RCEP does not have enforceable “digital trade” rules.

Just as the U.S. Congress rejected the overreaching TPP, many countries involved in the decade of RCEP negotiations rejected the old corporate-favored trade-pact model. India exited the process altogether. Although some of the remaining countries aspired to a TPP-style deal, it became apparent that either there would be a much more limited agreement or no agreement.

India’s exit is one reason the pact will have little effect on the global or U.S. economy. Optimistic projections are for 2/100s of a percent in growth gains. The pact’s impact also is limited by the fact that most of the nations involved already have trade deals among themselves. Some RCEP proponents hope it could somehow magically unjam various configurations of China, Japan and Korea trade talks that have dragged on for years. But that a decade of RCEP negotiations resulted in more of a brand than a trade deal suggests otherwise. RCEP’s main benefit probably is its rules of origin (ROO), which will replace the ROOs of the various bilateral and plurilateral pacts among the RCEP signatories.

And no, RCEP is not “China writing the rules.” RCEP is not a Chinese initiative, but rather came from the Association of Southeast Asian Nations (ASEAN*). The RCEP final text, which connects the ten ASEAN nations with Australia, China, Japan, New Zealand, and South Korea, is based on ASEAN terms.

The RCEP will not go into effect until its signatories conduct domestic approval processes. But because of its relatively “shallow” terms, approval is not expected to be controversial. This contrasts with the TPP’s fate. It remained scores of votes short of approval in the U.S. House of Representatives from when it was signed in February 2016 until the end of the lame-duck session of Congress in December 2016. In 2017, shortly after being sworn in, President Trump formally pulled the plug with a notification that the United States would not be ratifying the TPP.

*ASEAN members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

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COVID-19 Vaccine Access vs. Trump Trade Protections for Pharma

By Mariana Lopez

Disponible en Espanol aqui

U.S. trade policies have made it difficult for patients to access the medicines they need for far too long. The Trump administration has only exacerbated this problem.

Last week, the United States joined several other countries to block a temporary waiver of World Trade Organization (WTO) rules that require all WTO signatory countries to guarantee pharmaceutical firms expansive monopoly protections for medicines and medical technologies. These WTO terms could create legal barriers and undermine efforts to produce enough affordable doses of an eventual COVID-19 vaccine and other medicines and medical equipment necessary to end the COVID-19 epidemic and save lives worldwide.

While Republican and Democratic administrations alike have prioritized Big Pharma’s interests in trade pacts and policies, this latest development comes in an entirely unprecedented context: More than 1.1 million people have died from COVID-19 in the past ten months and many more will absent widespread access to vaccines, treatments and life-saving medical equipment.

Public Citizen was among 400-plus of civil society groups worldwide to support India and South Africa’s proposed waiver to sections of the WTO’s Trade-Related Aspects of Intellectual Property (TRIPS) agreement that guarantee pharmaceutical firms expansive monopoly protections

Dozens of WTO member countries agreed, arguing that the waiver would help countries disproportionately affected by COVID-19, especially those with limited manufacturing capacity to supply their populations with vaccines and other medicines, personal protective equipment, ventilators, and other pandemic-related medical goods.

The pandemic has revealed the flaws in the hyperglobalized system of production that corporate-backed trade policies and intellectual property barriers have created. In addition to access to critical medicines and medical supplies being undermined by trade-pact monopoly protections for drug and medical device manufacturers, long, thin supply chains mean production problems in one nation quickly translate into shortages worldwide of medicines or chemicals needed to make medicines and components of ventilators and other medical equipment. With individuals, hospitals and even entire nations, struggling to access PPE and critical medical goods during this time, the temporary waiver that India and South Africa proposed would help ease affordable access and address growing inequities within and between nations.  

According to a Geneva-based trade official, India tried to persuade the United States and others to “put people’s lives before anything else.” Trump administration officials at the WTO didn’t see it that way.

The U.S. government’s position was: “Weakening IP [intellectual property] protection and enforcement would be counterproductive to our global fight against Covid.” This despite numerous studies showing that extending IP exclusivities for pharmaceutical companies has led to higher prices for medicines, not to greater investment in innovation or development of affordable treatments and vaccines.

Public Citizen estimates that taxpayers have contributed at least $70.5 million to develop Gilead’s Remdesivir, an experimental COVID-19 treatment. Meanwhile, according to Doctors Without Borders, Gilead has signed non-transparent deals with several handpicked generic companies, excluding much of the world’s population from access to the drug. Additionally, not one pharmaceutical company has opted into the voluntary program, CTAP, created by the World Health Organization, which encourages global sharing of IP, data and technology to increase access to COVID-19 treatments. “These recent actions by pharmaceutical corporations show that relying on their exclusive rights and limited voluntary actions is not the solution in a global pandemic,” said Doctors Without Borders

The battle over a temporary WTO waiver continues, with the issue expected to resurface at a WTO meeting in early 2021. As Public Citizen’s Burcu Kilic noted in a recent The Guardian op-ed, there is a strong case for suspending pharmaceutical monopoly powers during the pandemic. Simon Lester, of the libertarian CATO Institute think tank, also supports the waiver to remove obstacles so that “all governments can and will take certain measures to protect the public health of their citizens.”

U.S. opposition to waiving the WTO protections for Big Pharma is not the first time the Trump administration has prioritized pharmaceutical corporations’ interests over public health. In 2018, President Donald Trump signed a trade agreement with Mexico and Canada that included giveaways to pharmaceutical companies that would have exported pharma-friendly U.S. medicine policies to Mexico and Canada and locked them in here. But for the efforts of consumer, labor and faith groups and Democratic members of Congress, the new North American Free Trade Agreement (NAFTA) would have established an additional barrier to fighting for accessible and affordable medicines.

The rapid development and equitable distribution of lifesaving vaccines, treatments and medical equipment is not a partisan nor Global North versus Global South dispute. Amidst a global pandemic, it is a human imperative. 

Please tell your member of Congress to take a stand here.

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Acceso a Vacuna de COVID-19 v. Protecciones Comerciales de Trump para Farmacéuticas

English Translation: COVID-19 Vaccine Access vs. Trump Trade Protections for Pharma

Escrito por Mariana Lopez, Traducido por Alma Andino

Las políticas de comercio estadounidenses han hecho medicinas esenciales inaccesibles para pacientes por demasiado tiempo. La administración de Trump solo ha exacerbado esta crisis.

La semana pasada, los Estados Unidos, junto con varios otros países, bloqueó una moratoria de las reglas de la Organización Mundial del Comercio que requieren que todos los países miembros de la OMC garanticen protecciones y control monopolizado sobre medicinas y tecnología médica para corporaciones farmacéuticas. Estas obligaciones podrían crear barreras legales y contrarrestar los esfuerzos para producir suficientes dosis económicas de una vacuna contra el COVID-19 y otras medicinas y equipo médico necesario para controlar la pandemia de COVID-19 y para salvar vidas.

A pesar de que las administraciones Republicanas y Demócratas  han priorizado por igual los intereses de corporaciones farmacéuticas en políticas y acuerdos de comercio, este último desarrollo llega en un contexto sin precedentes: más de 1.1 millones de personas han muerto de COVID-19 en los últimos diez meses. Muchos más morirán si no tienen acceso a vacunas, tratamientos y equipo para salvar vidas.

Public Citizen fue uno de más de 400 grupos de sociedad civil del mundo que apoyaron una moratoria de apartados del Acuerdo sobre los Aspectos de los Derechos de Propiedad Intelectual relacionados con el Comercio (ADPIC) de la OMC,propuestapor India y Sudáfrica; estas secciones garantizan protecciones expansivas de monopolio para corporaciones farmacéuticas.

Decenas de países en e la OMC acordaron, argumentando que esta moratoria ayudaría a países desproporcionadamente afectados por COVID-19, especialmente aquellos con capacidades industriales limitadas que están luchando para proporcionar a sus poblaciones vacunas y medicina, equipo protectivo, ventiladores, y otro equipo médico.

Esta pandemia ha expuesto defectos en el sistema hyper-globalizado de producción que fue creado por políticas de comercio promovidas por corporaciones y por barreras de propiedad intelectual. Además del limitado acceso a medicinas críticas y equipo médico causado por protecciones de monopolio instauradas en acuerdos “comerciales, las cadenas de producción son largas y frágiles. Esto implica que problemas de producción en un país causan escasez global de medicinas y partes necesarias para hacer medicinas, ventiladores, y otro equipo médico. Mientras individuos, hospitales y naciones enteras luchan para acceder equipo médico crítico durante esta época, la moratoria propuesta por India y Sudáfrica ayudaría a facilitar el acceso económico y a combatir las crecientes desigualdades dentro y entre países.

De acuerdo con un oficial de comercio basado en Ginebra, India intentó convencer a los Estados Unidos y otros países para que “priorizaran las vidas por encima de todo”. Representantes de la administración de Trump en la OMC no estaban de acuerdo.

La posición del gobierno americano es: “La debilitación de protección y aplicación de IP [propiedad intelectual] sería contraproducente para la lucha global contra el COVID.” Sin embargo, varios estudios han demostrado que la extensión de derechos de IP para corporaciones farmacéuticas ha causado precios médicos más altos, en lugar de mayores inversiones en innovación o desarrollo de tratamientos y vacunas económicos.

Public Citizen estima que los contribuyentes estadounidenses han contribuido por lo menos $70,5 millones para desarrollar Remdesivir de Gilead, un tratamiento experimental contra el COVID. Mientras tanto, según Médicos Sin Fronteras, Gilead ha firmado tratos clandestinos con varios compañias genéricas, excluyendo a la mayoría del mundo de acceder a esta droga. Adicionalmente, ni una compañía farmacéutica ha entrado en el programa voluntario, CTAP, creado por e la Organización Mundial de la Salud que fomenta el intercambio de IP, información, y tecnología para aumentar el acceso a tratamientos para el COVID-19. “Las acciones recientes de corporaciones farmacéuticas muestran que confiar en sus derechos exclusivos y acciones voluntarias limitados no es la solución en una pandemia global”, según Médicos Sin Fronteras.

La lucha sobre esta moratoria sigue y probablemente emergerá de nuevo en la reunión de la OMC al principio de 2021. Como ha notado Burcu Kilic de Public Citizen en un op-ed reciente en The Guardian, hay buenas razones para suspender los poderes de monopolio de las compañías farmacéuticas durante la pandemia. Simon Lester, del instituto libertario CATO, también apoya la moratoria para eliminar barreras para que “todos los gobiernos pueden tomar y tomen medidas para proteger la salud pública de todos sus ciudadanos.”

La oposición de Estados Unidos contra la moratoria de protecciones de la OMC para compañías farmacéuticas no es la primera vez que la administración de Trump ha priorizado intereses de corporaciones farmacéuticas sobre salud pública. En 2018, Trump firmó un acuerdo transnacional que incluía el trasplante de políticas a favor de corporaciones farmacéuticas a México y Canadá. Sin los esfuerzos de grupos de consumidores, sindicatos, y grupos religiosos, y congresistas demócratas, el nuevo Tratado de Libre Comercio de América del Norte (TLCAN) habría establecido más barreras contra la lucha por medicinas accesibles y económicas.

El desarrollo rápido y la distribución equitativa de vacunas, tratamientos y equipo médico no es una disputa partisana o nacionalista, tampoco es una lucha entre el Norte y el Sur Global. En una pandemia global, es un imperativo humano.

Por favor pida a su congresista que haga lo correcto.

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Rethinking Trade - Season 1 Episode 21: China Phase 2

Donald Trump has made a big deal out of his “big deal” with China. But the first phase of this plan, with trade rules that actually encourage U.S. companies to outsource jobs to China alongside agreements by the Chinese government to increase purchases of U.S. goods, has pretty much flopped.

The second phase, meant to contain stronger labor protections and other rules that would’ve actually made a difference here and in China, never happened. That’s a real problem, because U.S. trade policy with China has enormous implications for working people both in the U.S. and in China, where labor conditions remain bleak.

On this episode we break down Trump’s China trade deal and how it became yet another one of his broken promises to working people.

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Lori, back at the beginning of the year, Trump was making a big deal out of what he called his “Phase 1 trade deal with China.” He made perhaps a bigger deal out of what would follow, Phase 2. But Phase 2 is pretty much MIA right now. Let’s talk a bit about this deal and maybe you can help us figure what the hell happened to Phase 2.

Lori:

So, China trade has obviously been a big deal in the last couple of years. And there are two different things going on. There are the tariffs that were put in place to try to counteract China’s subsidies and their misalignment of their currencies. All of which are basically ways in which China, the government working very closely with companies, some of the companies are owned by the government or military, figures out ways to make sure that goods sent to the US actually are priced at below what they really cost to make. Meanwhile, they come up with ways to make sure that goods that went from the US to China become too expensive to be competitive. This boils down to what some people call “trade cheating” and there are lots of different ways to go about it. So, those tariffs that got put in place under regular old trade law, domestic law, and called Section 301 of the Trade Act and that basically allows tariffs to be put in place to counter the subsidies another country is using. So, to some degree doing that domestically was leverage ostensibly to then set up a negotiation to get China to change the underlying policies that create those subsidies that rewire those counterbalancing tariffs to make the goods when they come here fair. So, overtime, basically what happened is they were not paying every time the goods came here it just became too expensive for Chinese foods to come here so China stops sending goods here. That’s when you can negotiate usually to change the policy in this instance though the Phase 1 deal instead of dealing with the things that ostensibly those tariffs were supposed to be countering like slave labor and forced labor and cheating on currency values to make the Chinese currency artificially lower so the products are cheaper than they really are or good old government subsidies paying companies. No of that stuff was actually covered in Phase 1. Instead, Phase 1 actually had stuff in it that makes it easier to offshore US jobs and invest in China. So, Phase 1 had things like Wall Street has new rights to invest in China, in new sectors. How is it a good idea to make it easier for dollars to go to China to create jobs there? Or Phase 1 had China agreeing to stricter protections of intellectual property rules which seem counterintuitive in the sense that the US is a good place to invest because basic rights and the rule of law operates here. So somehow making it easier for companies to be able to have their cutting-edge designs and technologies protected if they're made in China it is still not clear about why that is a good thing for US workers. It all boils down to its not. So, Phase 1 was what China was willing to do and that was in part because it was in China’s interest. It’s a thing that can help China get more money to invest in monopolizing what it sees as industries of the future and they have a plan for that called China 2025. So Phase 1 didn’t really get a lot of love in congress from Democrats and certainly didn’t get anything from unions because it basically was against the interest of workers so then we heard well that’s all that China agreed to do. There is no doubt they were doing it without us telling them that we wanted them to, it’s in their interest. So Phase 2 was supposed to be the real stuff, the hard stuff, labor rights and keeping out forced labor goods made by Uighurs and dealing with the currency manipulations that make it very hard for US exports to get into China and get their goods dumped here and very importantly there was supposed to be disciplines on subsidies. That’s the stuff that would’ve made a difference on working people here and that never happened and now it looks like it never will.

Ryan:

Speaking of things never happening, before we get too much into Phase 2, I wanted to go back to Phase 1 real quick. How much of Phase 1 actually happened? What did and didn’t happen in that window? And, you know, is that something that was just sold to the public or were there real things going on in the background there?

Lori:

So, there were two levels to Phase 1. One was things China ostensibly was going to do to change their policies. And a bunch of those things were things China wanted to do anyway. They were going to make it easier for US dollar investment to happen in China because they wanted the money to make more jobs in China. China was going to say that they were going to protect intellectual property better because they wanted US companies to relocate their production there and bring their technology there. So, those were policy shifts China was making whether they get enforced is a different matter. The sort of meat and potatoes part of phase1 was supposed to be agreements by the Chinese government to purchase specific amounts of more US goods and that in itself was really kind of bullshit because having one time purchase agreement of “I will buy more stuff over the next two years” in no way phases out China trade problems. That’s just useful for Trump to say, “Oh look I got China to buy some stuff before the election.” But even as narrow as that was as an idea, those sales haven’t happened. So, there were specific requirements to buy more US agricultural exports that is maybe at 30% of the level of what should be necessary to meet that commitment. There were promises to buy more US liquid natural gas. Separate from the environmental disaster that plan is, that has not come to fruition. So, the meat and potatoes part basically ended up with some potato peels and a couple of bones. It was not as narrow as that would have been. The “We’re selling a lot of stuff” outcome that they promised. And the policy stuff was stuff China was already doing bit it’s against our interest. It promotes outsourcing so that the whole current picture of the so-called Phase 1 has come to pass.

Ryan:

And that would be a good time to bring up the question of the day, which is where is Phase 2? Does it exist or is it just another one of Trump’s broken promises to American workers?

Lori:

There is no Phase 2 China trade negotiation. There will not be a Phase 2 China trade deal. I mean for one thing, there is only a limited amount of time before the end of this president’s term, I can’t presuppose the outcome of the election but looking at the state of the relationship between the US and China there are not even conversations about the preceptive second phase deal but also there is, I would say, it is more likely that Donald Trump is going to get us back into the Paris Climate Treaty than there is going to be a Phase 2 deal under the Trump administration with China. Which is to say fat chance.

Ryan:

So, it sounds like Phase 2 is probably not happening. Does that matter? what is the significance of it not happening?

Lori:

You bet it matters! That was all the stuff that was supposed to help US workers and US small businesses. So, Phase 1 was, you know, what the big banks wanted, what the biotech companies wanted, what Pharma wanted. Phase 2 was all the stuff that was supposed to make a difference to try to stop the flood of subsidies imported Chinese goods that are wiping out US production but also you know ostensibly how investment decisions are made has to do with where companies think that they can export from and what the import competition is going to be. So, if you don’t actually fix those actual underlying structural issues in China you either have to fix those or you have to figure out how to actually just stop some of that Chinese stuff from coming in if it’s going to be unfairly subsidized. And Phase 2 was all of that. It was all the stuff that really mattered. It is really only the tariffs that are keeping us from having an ever bigger Chinese deficit and if you don’t fix the underlying problems you’re not going to actually create the kind of trade relationship between the US and China that would actually put people first.

Ryan:

And we’ve said this many times on the show but we do need a new progressive approach to China that centers labor, human, and environmental rights above the multinational corporation and authoritarian government collusion that we have now. After November we’re gonna have to carve that path regardless of who wins. In closing, maybe you could give a snapshot of what they could look like and what kind of policy changes it might entail.

Lori:

So, the good news is that there are now 30% tariffs on $350 billion worth of Chinese goods as the background. And that is a Section 301 tariff and it was painful to get there a lot of people could argue with the way in which it was done but the reality is that it’s the new normal and that creates a lot of leverage. That leverage basically has shifted the trade deficit with China. So, it hasn’t fixed the trade problem, but it has brought down the bilateral deficit. So not the trade is shifting to other countries, so you need a broader trade policy that deals with the same issues: cheating on currency, subsidies, in other countries. But I would say that with respect to China, there are two things to think of going forward especially because you have that leverage from those tariffs. One are there any ways that the US and China actually can negotiate on some rules that are kind of the Phase 2 menu of fixes? I’m skeptical about it but it’s worth trying and the way to try it is to put up the leverage. And we’ve got that leverage from those tariffs. But we might be the biggest import market but we’re not the only import market. So, we need other partners in Europe, in Japan, in Canada, in Australia et cetera to join us in shutting down the markets available to China if it continues  its current practices. The reason why our tariff regime has helped bring down the bilateral deficit but hasn’t helped change China's practices is because the current practice can continue and there are still other places where goods made in that cheating way can continue to go. So yes, there is negotiation strategy but also there has to be a recognition that to some degree unless the pain level gets a lot higher for the Chinese government, maintaining their status quo is something they are going to not change unless given from their perspective would be painful but the pain of not doing so gets a lot higher. So, then you get to what the hell do we do. And we have a lot of capacity domestically that has not been used. So for instance, with respect to labor rights and human rights, under existing law right now we could be shutting down imports from for instance we could have under existing law we could have a ban on imports of all goods connected to the Uighur slave labor camps and to goods suspected to be made by people in forced labor in China. And you basically could as a president put that in place under existing authority congress is delegated by statute. Or for instance, we could right now ban Chinese firms from listing on the US stock markets effectively do that by requiring to actually provide all the information that US firms must provide about who owns the firms and what the investment status is all things that a lot of the government owned or People’s Liberation Army military-owned firms will not make public. So that basically we aren’t having our stock market fuel investment that is unfair and that is against US workers. With respect to specific sectors of the economy, we also have a lot of laws that let us put countervailing measures against what is effectively subsidizing goods by dumping toxins and undermining environmental standards. So not only can you just keep stuff out for a human and labor rights violation, but you can basically sanction countries for importing goods that either violate multilateral environmental agreements or are like subsidized by a matter of dumping their toxics and polluting. So, these are all tools that a new president has that the old president has had and not used and those tools using domestic law are going to have to be an important part of dealing with China. And finally, we need to actually, through existing domestic law or imposed domestic law, deal with the currency issues. So right now China is holding onto so many US dollars in their reserve that even if they are not actively intervening in currency markets to bring down the value of their currency they are bringing down the value of the US dollar to a place where our exports aren’t competitive. So this all sounds quite wonky and confusing and down in the weeds, the cut to the chase on this whole question is we have international tools, we have domestic tools. A lot of what is going to happen is going to happen domestically and there are going to be a lot of bumps in the road along the way that folks are just going to have to hitch up their  seatbelts and go for the ride.

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

 

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Rethinking Trade - Season 1 Episode 20: Fast Track

The most damaging U.S. trade agreements were hatched using the same process: “Fast Track.” Fast Track empowers the executive branch to unilaterally select partner countries for trade deals, decide their contents, and negotiate and sign them – all before Congress gets to vote on the matter. 

Meanwhile, hundreds of official U.S. trade advisors representing corporate interests have special access to texts and negotiators. Under Fast Track, when Congress finally has a say, it is limited to a “yes” or “no” vote with limited debate and amendments forbidden. 

The result? Wide swathes of U.S. law and policy entirely unrelated to trade get rewritten with the public and Congress locked out, and the U.S. is locked into corporate-rigged agreements with trade sanctions imposed on us if Big Pharma does not get special protections, food imports that do not meet U.S. safety standards are prohibited or foreign investors do not get better treatment when they offshore investment. 

But there’s good news: Fast Track only exists if Congress grants it. And the last grant ends on July 1st, 2021. That means soon, we will have a chance to create a new process with the public and congress playings the lead role in the formative stages of trade deals with more accountability over trade negotiations.

Transcribed by Garrett O’Brien

Ryan: Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Lori, all of the most damaging trade deals of recent years have happened under a system called fast track. Fast track allows the executive branch to unilaterally select partner countries for trade deals, decide the agreement's contents, and then negotiate and sign them all before Congress gets to vote on the matter. You literally wrote the book on fast track, or rather the book exposing and opposing it. Can you tell us what fast track is exactly, and why it is such a big deal for those looking to transform our current corporate-rigged trade policies?

Lori: So, Fast Track Trade Authority is kind of the root of all evil of how we’ve gotten into this disaster of corporate rigged trade agreements. So, I want to take a step way back to the founding of the country. The United States was created in part because of a trade war. Which is to say the Boston Tea Party everyone learns about in grade school involved tariffs, taxes on imports on tea and other goods imposed by the King of England against the colonies because he wanted to raise money to finance his war with France, imposed in way that really messed with people’s lives and they went “that was the last straw” – they wanted a rebellion. And when the Founders wrote the Constitution they were steeped, pun intended, in that example. So they gave exclusive constitutional authority over trade to the United States Congress, with the logic that this was the body closest to the people and they didn’t want the same scenario as with the king, the president, being able to unilaterally impose terms of trade that were not in the national interest or moreover favored some foreign entanglement over what would be good for workers and businesses and consumers in the country. And so, Article 1 (8) of the U.S. Constitution is one of the starkest, most clean checks and balances. It makes clear that Congress has exclusive authority over tariff levels but also setting the terms of commerce between the nations. And separately the Constitution gives the Executive branch exclusive authority to negotiate with foreign sovereigns. So, to negotiate a trade agreement, Congress sets the terms and then the Executive branch is supposed to go out and negotiate it. And in the history of the country there were different ways that those authorities were coordinated, typically Congress calling the shots and the Executive branch doing the negotiations. 

Enter Richard Nixon. Now here’s a shocker, he wanted to consolidate more power in his control. So, he proposed a new trade authority that would consolidate, really, Congress’ trade authority but moreover piece of Congress’ core function, legislating, under the president’s right to proclaim changes to U.S. laws after setting terms in negotiations with foreign countries in the context of trade. 

Now if this sounds like a form of, if you will, diplomatic legislating, where Congress gets put in a deep freeze and one president and his or her trade negotiators are suddenly both setting the terms of international commerce and rewriting wide swathes of U.S. law – BINGO! That’s exactly what it is. Now, ultimately Congress said ‘no it's not constitutional to simply have the president dictating changes to US law; and the deal they settled on, on which Congress got the short end of the stick, was the Fast Track Authority which for the first time in the history of the country allowed U.S. trade negotiators new authorities to start writing in trade agreements policies and things like procurement and product safety standards and worker safety standards and food standards. And then in 1988, Ronald Reagan took what was Nixon’s initial incursion into diplomatic legislating and made it a deregulation corporate power tool by expanding the areas that trade negotiators could set rules binding on the US Congress and all the state legislatures to also service sector regulations, everything from education and healthcare to energy and transport, intellectual property so what length of patents for big pharma or whether textbooks copyrights would make education more expensive. And effectively, suddenly, our trade agreements went from being about trade, thanks to Fast Track, into being kind of slow-motion coup d'états.

Ryan: Under the Fast Track system, when a trade deal is created, just remind us again, Congress literally doesn’t have a say in it until it comes to the floor for a vote and even then they can’t edit it, correct?

Lori: So, the way Tast Track works is hard to even fathom. Effectively when Congress passes fast track, they have set a five-year or ten-year term where they have created effectively a Fast Track factory, and in that factory, they hand the keys over... as soon as that legislation is in place a president can unilaterally, number one, pick any country to negotiate with and Congress has no say, Congress can think it’s a really bad idea to have that country as a trade partner, too bad so sad you’ve thrown away any control. Number two, the Executive branch gets some negotiating objectives that are general but are like, taped up on the wall of the Fast Track factory, “here’s how it’s supposed to go” but there’s no accountability. So, the Executive branch, the president, can negotiate whatever terms it wants. Number 3, it can sign and enter into the agreement before Congress has any vote either on what country or what terms. Then number 4, and this is a shocker, the Executive branch writes legislation that is going to Congress. It is the only legislation the Executive branch writes. It is exempted from having to go to congressional committees for normal what is called a markup and it’s in review as that piece of legislation goes right into a hopper to go right to a vote. And then number five, the rules for consideration of this legislation written by the Executive branch that Congress has not had any say on what would rewrite wide swathes of US law to implement an international executive agreement to which the U.S. is bound and would face trade sanctions if they violate. That vote is preset as yes or no with no amendments, 20 hours of debate only allowed and that’s even in the Senate so there’s no filibuster, there’s no normal process. It’s a legislative luge run at the end for an agreement on the front-end Congress has had no role in for legislation that has, and can, rewrite wide swathes of legislation that has nothing to do with trade. If this hadn’t been the system that was used to pass more than a dozen really unhelpful agreements people wouldn’t believe it was possible or constitutional.

Ryan: Maybe you could talk about some of the specific historic examples and also like the Fast Track has been on your radar for a long time so maybe talk about some of the moments in which people have confronted the fast track system and tried to get rid of it.

Lori: So, here’s the good news: this is also looking forward to the fact that, yay, Fast Track in its current Fast Track factory closes its doors on July 1st 2021 there was a delegation that was passed  for six years in 2015. So, there have been long gaps as more and more members of Congress, but also the public, has realized that this is a lunatic way to make policy and it has resulted in these corporate-captured agreements that are doing a lot of damage economically for sure. But not only there has been more and more resistance by chunks of Congress to give away this authority. 

So for instance fast track lapsed for the period between 1995 and 2002 that was sort of fallout from all the badness that happened with NAFTA and the WTO and members of Congress realized. There was a knock-down drag-out Fast Track fight that got Fast Track reauthorized for a short period of time in 2002 but then that ended in 2007 and it took a knock-down drag-out fight in 2015 to pass it by very few votes and that authorization is going away. 

So now is the moment when the whole thing can be redone, and a new kind of trade authority can be created that puts a steering wheel and emergency brake on these negotiators. Because the kind of really bad stuff that has happened is, for instance, in the World Trade Organization, and the NAFTA, but mainly in the World Trade Organization agreement, one of the ways that corporate interests were able to use the broad fast track delegation was to achieve something that the big pharmaceutical corporations were trying to do for decades. So Big Pharma had been trying to get the US patent system changed. A patent is a monopoly license. For decades the US law had been that a patent lasted for 17 years. So for 17 years the maker of a medicine could have the right to set any price, to decide how much of it could be produced, to not license production to anyone else, and this system of monopoly patents on medicines and the duration of the medicine monopolies is part of why medicine prices are so high. So, people can remember say you know, ibuprofen, is now sold as Nuprin and other brands, Motrin, when that was under prescription, each tablet was the equivalent to almost $100 today. Now you can buy a whole container for $12 with 300 tablets. So that is the difference between something under monopoly license. So, 17 years is what we had, in the WTO negotiations U.S. negotiators pushed on the whole rest of the world and then basically rewrote U.S. law to 20 years of monopoly. And this is something consumer groups had worked with a variety of members of Congress to stop over and over and over for decades when Big Pharma was trying to do it in Congress, and we won. It got done through the back door of the Uruguay Round, which created the World Trade Organization. The World Trade Organization’s implementing bill passed on this legislative loser on the Fast Track, literally, just has a provision in the thousands of pages that said “strike 17 replace with 20” and that quickly U.S. patent law was written to give Big Pharma a longer monopoly to raise medicine prices by billions and there was no debate, there was no discussion, something that had been rejected in democratic processes was undone through the back door of a trade agreement  and there are scores of examples like that. For instance, we didn’t import any meat or poultry that didn’t at least meet U.S. safety standards. In the NAFTA and the WTO implementing legislation passed on Fast Track was another of these changes and again none of this stuff can be amended when it comes to Congress it just goes right through and it changed the words from “must be equal to US standards” to “must be equivalent to” and now we import an enormous amount of meat and poultry from countries whose inspection safety systems are not only not similar to ours but are diametrically opposed in key ways, for instance not having continuous inspection, not having the same risk standards, et cetera. So, these are just a handful of the examples of the really bad things that got rammed down our throat thanks to this procedure.

Ryan: And you mentioned this earlier but the current Fast Track period ends next year which means whoever wins in November will have to decide reauthorization. Are you anticipating another public fight around this?

Lori: I suspect that whomever is elected president, there will not be any trade authority immediately but there could be a fight over it. I think in Congress there is a real appetite to rethink a new model of trade authority that has Congress have a more robust role on the formative stages of trade agreements to shape what the contents are and also to have more accountability over negotiations to make clear that Congress has a role in all negotiations. But also I suspect if Biden is elected, the Biden administration is not as likely to ask for a new authority given that Biden has promised he’s not going to focus on new trade agreements but rather focus initially on trying to get U.S. policies in place to try to fix the economy and get our own house in order. If Trump is reelected, he probably will ask for Fast Track authority right away and I doubt he would get it. Not only because Congress wants to have a big rethink about it in general but also because many in Congress think the president has basically bent the rules of the current system and many in Congress are not of a mind to extend more authority. 

But there will be a big knock-down drag-out fight over that because the corporate interest that want the status quo will be wanting to see an extension of what is an incredible corporate power tool.  I mean from their perspective, it allows behind-the-borders non-trade policies to be set in a context where hundreds of corporate trade advisors have privileged access to otherwise secret documents, secret negotiations, access to negotiators while congress is left Cooling its heels. And Congress, the press, and the public are basically excluded from even seeing the documents much less than having a more fulsome role, as would be the case if these policies were made in the sunshine of democratic policies.

Ryan: Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

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Donald Trump Bestows Pledge to America’s Workers Presidential Award to Entities That Offshore American Jobs and May Be Importing Uyghur Slave Labor Goods

By Matthew Groch and Sarah Grace Spurgin

The September 23, 2020, White House event with Ivanka Trump and Commerce Secretary Wilbur Ross was supposed to generate good economic news for President Donald Trump by spotlighting the best of U.S. business entities and all the great things they were doing for U.S. workers.

Except, four of the nine businesses being spotlighted as winners of the inaugural Pledge to America’s Workers Presidential Awards have been certified by the U.S. Department of Labor for offshoring American jobs. Those businesses include Lockheed Martin Corporation, Northrop Grumman Corporation, Oberg Technologies LLC., and Textron Inc. And the National Retail Federation, which also received the award, represents a batch of companies that have relocated much of their production to low-wage countries and have come under attack from human rights groups sourcing good produced by Uyghur and other Muslims ethnic minorities whom the Chinese government has locked up in prison campaigns in the western Xinjiang region of China.

It is no surprise that after recent reports of over 300,000 American jobs having been lost to offshoring and trade during Trump’s presidency, the administration would want to try to distract from its actual record. So, you’d figure they would check up on the entities getting the awards.

One recipient of the award was Lockheed Martin. The firm promised it would commit $100 million in new training over five years when it signed the pledge in 2018. Despite a history of offshoring U.S. jobs (including since 2017), Lockheed Martin has received over $140 billion in federal contracts from the current administration.

Lockheed Martin was not the only award recipient who received federal contract dollars while shipping out U.S. jobs.  Textron Inc. has also received billions in federal contracts from the Trump administration while being certified as outsourcing U.S. jobs during the Trump presidency… and it still got an award!

The National Retail Federation (NRF) was also a recipient of the new award. The NRF is a trade association made up of thousands of retailers across the world, including big names such as Nike, Cisco and L.L. Bean. These three firms combine for a cool $104,508,450 in federal contracts awarded during the Trump administration (most of which went to Cisco) despite each having a history of certified job losses to trade or offshoring U.S. jobs, according to the U.S. Labor Department Trade Adjustment Assistance (TAA) program. In fact, according to TAA data L.L Bean has offshored jobs as recently as March of this year and Trump still deemed them deserving of the Pledge to the American Worker Award.   

These three firms (and others in the NRF) have been called out by various human rights organizations for continuing to source products from the Xinjiang region of China, where the Chinese government has imprisoned Uyghurs and other Muslim minorities, forcing them to work for low wages under brutal conditions.

The U.N. estimates more than a million Muslims have been detained in these camps. Trump’s own State Department has accused Chinese officials of subjecting Muslims to torture, abuse “and trying to basically erase their culture and their religion.”

Yet, the Trump administration chose to honor the trade association representing the companies called out by name by 72 Uyghur rights groups and over 100 civil society organizations.

Since its inception, Trump’s “pledge” has seemed to be strong on PR pageantry and weak on substance. For instance, there is no accountability or even tracking about whether firms are meeting their pledges.

The selection of these entities for awards underscores that the Trump administration has not delivered on many of Trump’s pledges to American workers. For example, although in 2016 Trump promised Carrier workers in Indiana that he’d save their jobs, 1,300 of those jobs have been offshored to Mexico. And although Trump vowed to punish corporations that ship jobs overseas, his administration has lavished more than $425 billion in federal contracts on companies that are certified to have offshored jobs.

So, congratulations to the inaugural class of Trump’s Pledge to America’s Workers Presidential Awards — shining examples of how to exploit workers at home and abroad.

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Lori Wallach: Global Trade Agenda in a Post-Covid-19 World

Lori Wallach, Director of Public Citizen's Global Trade Watch, discusses the role trade agreements will play in a post-COVID-19 world and how they may shape domestic rules and policies on the digital economy.

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Current Trade Deficit Is 22% Higher Than Same Period in 2016

August 2020 Data Show the Largest Monthly Trade Deficit Since August 2006

WASHINGTON, D.C. – An inflation-adjusted analysis of today’s latest Census Bureau trade data conducted by Public Citizen shows that the $424.8 billion trade deficit in the first eight months of 2020 is more than 22% higher than the $347 billion deficit during the same period in 2016.

The August 2020 monthly deficit of $67 billion is also the largest monthly deficit since August 2006, an unexpectedly large growth in the trade deficit given that the value of trade flows declined 15% overall (down $570 billion) compared to last year because of the global COVID-19 crisis.

“The overall 2020 deficit is on track to be larger than in 2016,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division. “The Labor Department has certified more than 200,000 more American jobs offshored since 2016, with more than $425 billion in government contracts granted to firms that offshored jobs.”

Public Citizen’s analysis of the new U.S. Census Bureau trade data also showed:

  • The eight-month 2020 deficit in manufactured goods is 12% higher than in 2016.
  • The August 2020 trade deficit is the largest monthly deficit since August 2006. August’s 2020 goods and services trade deficit rose from $63.4 billion in July 2020 to $67.1 billion, a 5.9% increase. Imports grew 3.17% in August relative to July, from $231.6 to $239 billion, while exports only grew 2.15%, to $171.9 billion, and remain below the $209.6 billion in February 2020 before the pandemic.
  • The August 2020 monthly trade deficit in goods ($83.8 billion) is the highest on record. And the 2020 eight-month trade deficit in goods ($579.7 billion) is 7.32% higher than during same period in 2016, when it was $540.2 billion (in inflation-adjusted dollars). The U.S. trade deficit in goods decreased 3.6% in inflation-adjusted terms from $601.3 billion in the first eight months of 2019 to $579.7 billion in the same period in 2020.
  • The August 2020 surplus in services trade was the smallest since January 2012, at $16.76 billion.

  • The goods deficit with Mexico hit a record high of more than $16 billion in August 2020. The trade in goods deficit with North American Free Trade Agreement (NAFTA) partners is almost 19% higher in the first eight months of 2020 relative to the same period in 2016, but down 11% relative to 2019 even as Mexican exports to the U.S. began to expand significantly in June.
  • The China trade-in-goods deficit is down relative to 2016, but there is a “trade diversion” effect of imports increasing from other countries.
  • The 2020 eight-month trade in goods deficit with China of $194 billion is 20% smaller compared to 2016, when it was $244 billion in inflation-adjusted dollars for the January to August period. The China deficit is down more than 17% in inflation-adjusted terms from 2019, when it was $236 billion in the first eight months.
  • In inflation-adjusted dollars, the goods trade deficit with the rest of the world (excluding China) increased from $365.7 billion to $385.3 billion in the first eight months of 2020 relative to the same period in 2019, a more than 5% rise.

 

*Data Note: Trade data is sourced from the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. We present deficit figures adjusted for inflation to the base month of August 2020 and expressed the data in constant dollars, so the figures represent actual changes in the trade balances. We also offer the “nominal” figure, which is the number you will see in the U.S. Census Bureau data for figures earlier than 2020. Some economists view the nominal data as more accurately reflecting the overvalued U.S. dollar.

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Virtual Press Conference: Promises Made, Workers Betrayed: Trump's Bigly Broken Promise To Stop Job Offshoring

President Trump has awarded more than $425 billion in federal contracts to corporations listed among those responsible for offshoring 200,000 American jobs during the Trump era, according to a new report released today by Public Citizen’s Global Trade Watch.

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House Passes Bill to Catch Dangerous Imported Products

Public Citizen Supports Increased Import Safety Inspections, Lauds Passage of the “Consumer Product Safety Inspection Enhancement Act”

WASHINGTON, D.C. – The U.S. House of Representatives today passed H.R. 8134, the Consumer Product Safety Inspection Enhancement Act, which will enhance Consumer Product Safety Commission (CPSC) inspection of the more than one million-per-day e-commerce shipments that currently enter the U.S. under “de minimis” rules that skirt normal Customs procedures, including safety inspections. More information about this problem is available in Public Citizen’s congressional testimony here. Lori Wallach, director of Public Citizen’s Global Trade Watch released the following statement:

“Right now, American consumers shopping online are being exposed to a flood of counterfeit and dangerous products with none of the more than one million packages a day coming in from China alone getting inspected thanks to a de minimis rule that lets such shipments skirt normal Customs procedures. This legislation will require safety inspectors be posted at the ports of entry where now hundreds of millions of uninspected packages enter and head to U.S. consumers who ordered goods online. 

Public Citizen thanks U.S. Rep. Jan Schakowsky (D-Ill.) for her leadership on this issue and calls on U.S. Senate Majority Leader Mitch McConnell (R-Ky.) to bring this bill protecting American consumers to the Senate floor for a vote.”

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Rethinking Trade - Season 1 Episode 19: Kenya and the Environment

The changes needed to support living-wage jobs, to combat the climate crisis, to make medicines accessible for all...
Much of it won’t be possible unless we overhaul our corporate-rigged trade system. Trade Expert Lori Wallach and Activist Ryan Harvey explore ways to make our progressive trade vision a reality. Rethink Trade is an initiative of Public Citizen's Global Trade Watch.

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Ryan:

Lori, a lot of our listeners may have seen the New York Times piece a few weeks back entitled Big Oil Is in Trouble, Its Plan: Flood Africa with Plastic. What it reveals is that chemical and oil and gas companies, who are facing growing opposition to plastic bags and other plastic goods that create a waste problem (including China cutting them off from plastic waste imports), they want to use Africa as a dumping ground. Their plan is to use Kenya as a lever to undermine African countries’ plastic laws protecting against plastic waste and they are using the US-Kenya trade deal negotiations to do this. This is sort of a classic example of how trade deals can chip away at, or get rid of, a country’s domestic environmental regulations, and that’s what we’re going to be talking about today. Can you give us all a bit of an introduction to this specific case, and also how and why trade rules have this type of authority?

 

Lori:

I’m going to take the second question first, because the predicate to understanding the situation with Kenya, and the US Free Trade Agreement that is being negotiated, is to be aware that a lot of the contents of so-called “trade agreements” have nothing to do with trade. But rather that impose new limits on government regulatory authority on behind-the-border issues like whether you can ban plastics waste or say, no more use of single-use plastic bags, or that create new rights or privileges for corporations, monopoly protections for pharmaceutical firms to charge high prices for medicines or rights for foreign investors to operate without meeting local laws. So those rules typically are enforced through a provision that is in most trade agreements that says “the signatory country shall conform domestic laws, regulations, and administrative procedures to the terms of the agreement,” that’s the language in the WTO version. 

What that boils down to is you can have a country like Kenya, because here’s the situation there, that has signed onto an actual multilateral environmental agreement called the Basel Convention that recently designated plastic waste as a hazardous waste that can be banned under that international agreement you can ban the shipment across borders of that good as an environmental priority, and Kenya is a country that’s a leader throughout sub-Saharan Africa in establishing strong plastics wastes laws so they don’t allow single use bags like a lot of US states and cities but also they have other policies. You could have that as your domestic national law, but then if in your trade agreement stuck into some chapter like the one where this would probably be is something called “technical barriers to trade.” It’s just to set the standards that the big companies get wedged into trade agreements that get designated as a “illegal trade barrier.” So suddenly your domestic law is in violation with a so-called trade agreement and your domestic law has nothing to do with trade but you can face trade barriers, actual sanctions, against your real trade, against your exports as a developing country, you can have tariffs, taxes put on it, for not changing you domestic law on something like an environmental protection and that is what is at the heart of that New York Times exposé. 

When word got out that the US negotiators had been lobbied by some interest in oil and gas and the chemical industry to use the Kenya agreement to try and set a policy that would make Kenya reverse its toxics pollution rules with respect to plastics and therefore become open as a dumping ground for these companies’ waste, but also for the sale of petroleum based products like single-use plastic bags. So that’s how something totally unrelated to trade that is a totally reasonable domestic environmental law can get sacked through closed-door trade negotiations.

Ryan:

And in Kenya’s case, I mean you touched on this a bit, were talking about pressure being applied before the ink touches the paper-- there’s also plenty of ways companies can attack environmental regulations after a deal is signed, particularly through, no discussion about trade deals and environmental regulations could be complete without bringing up, Investor State Dispute Settlement System (ISDS). How do these tactics work and how have they been used to attack environmental protections? Maybe you could just give us a little introduction to that.

Lori:

There are three ways that these trade agreements rules end up undermining domestic laws. One is just good old pressure. So, in the negotiations like this you have, behind closed doors, an industry lobbyist who is an official US trade advisor. There are 500 official US trade advisors with ties to corporations there are a handful of unions and even smaller handful of environmental groups; very few interests to counter to corporate interests pushing for deregulatory, pro-polluter policies in trade agreements, and they just pressure the countries as they’re negotiations, “you better change blah blah law or we won’t do this trade agreement” or “we’ll cut off your access to the US” so that’s one way it works. The second way it works is that you actually do the negotiation, you jam in these kind of non-trade rules. A classic is for instance, bad rules that got slipped into the revised NAFTA that create more obstacles for Mexico and Canada having good laws in Genetically Modified Organisms (GMOs). So, unrelated to trade per se but consumer, environmental protections. And then once they’re in the agreement they can be challenged from one country attacking another in tribunals in where, if you don’t get rid of that law, you face trade sanctions, border taxes on your actual trade, your export, until you do. 

You know a really ugly example of that is the US took a case on behalf of Big Ag, agribusiness, to attack the European ban on artificial growth hormones in meat, they went to one of those tribunals this one at the World Trade Organization, the rules are so slanted and the tribunals are so unfair that the WTO tribunal said, “Sorry Europe you banned these growth hormones which are associated with various cancers so that your farmers can’t use them but it's beyond what is allowed under the food standards of the WTO, so you can’t keep the stuff out. And if you continue to do so, you have to pay.” And the US imposed over 200 million dollars of sanctions on the European Union’s exports to the US of other stuff unrelated to meat, and did so for over a decade because they were trying to force the European Union to back down. 

Now, most countries back down right away. The US did it so a variety of countries, Mexico and Canada, attacked our labeling of meat with respect to where it's grown, harvested, and slaughtered, the so-called Country of Origin laws, in the face of a billion dollars of potential future trade sanctions we just caved and gutted the law. So that’s one way. The other way is the investor-state tribunals, and that is when a private interest, not just a government trying to enforce another government’s commitments in a trade agreement, but a private entity can try to challenge a government, elevated like it’s its own government, and extract cash for not meeting trade agreement rules.

 The bottom line of all of this is in Kenya they’re doing the right things on plastic pollution and the US should be cooperating with Kenya to promote those kind of environmental and health initiatives, not use a trade agreement to create a basically booby-trap that is going to blow up laws unrelated to trade because some corporations get those provisions jammed into a trade agreement.

Ryan:

So, I guess that would bring us to our final question which is one that I’m sure listeners are asking as well, which is how can we reverse course? How can trade rules be written that not only prevent these attacks from happening in the first place but enforce rules that protect environmental regulations and standards from the get-go and are there any examples right now of those types of rules in action?

Lori:

So, we have to think about this on two levels. The first is the Kenya agreement itself. The plastics issue is just one example of why the US negotiating anything like our like our past trade agreements with the country of Kenya, under any circums­­­tance, but particularly right now, is a ridiculous idea. And there is no upside for development, for the environment or if you look at it just nationally, for US jobs, for US exports, but if you look at it on the flipside for what’s going to happen in Kenya, its counterproductive if were trying to have this agreement either help workers or the environment in either country or for that matter build our foreign relations and reputation. If you see your member of Congress or even better next time you are near a computer send him an email, make a call, to make sure they know that you don’t want this US-Kenya agreement going forward. It’s just not the right thing to be doing probably at all, certainly not now.

 And the second thing is the model. Now could there be a US-Kenya agreement that includes trade that could be for people and promoting, improving health standards, environmental protection, human rights protections? Of course. The problem is that that is not the model we have. So with the renegotiation of the NAFTA we took an agreement that was like 20 rungs below Hell and we brought it up to the crust. But that ain’t no agreement that is a good agreement, it’s one that hopefully means, the new agreement means, that there will be less harm done by a NAFTA.

 If you want to actually have a good agreement, you need to actually start with what the goals are, which is how do you actually improve people’s livelihoods? How do you use the agreements to set standards that companies have to meet in order to get the benefits of the agreement? Versus today’s agreements which put handcuffs on countries and tell them all the things they have to do for corporations. And that is a bigger discussion that is probably starting and will start perhaps after the election. But for right now, I think the best thing to do is to make sure your members of Congress know, no US-Kenya agreement under these circumstances, and then go to tradewatch.org and also rethinktrade.org and become part of the discussion of what a good trade agreement could look like because there is a way to do this right and the only way we’re going to get there is if we’re all informed and fighting for it.

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

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Since 2017, Hundreds of Thousands of American Jobs Were Offshored, Trade Deficit Is Up 18%

Since 2017, hundreds of thousands of additional U.S. jobs have been offshored and the trade deficit has grown, according to U.S. Department of Labor and Census Bureau data:

300,000 More American Jobs Lost to Trade

  • More than 300,000 American jobs have been lost to offshoring and trade during Trump’s presidency, as certified by the Labor Department. The Economic Policy Institute said total trade job loss is much higher — estimating 700,000 jobs lost to China alone in Trump’s first two years.
  • Nationwide, 311,427 American jobs have been government-certified as lost to trade since 2017, with 202,543 explicitly listed as offshored, but the total number is higher. These numbers represent only the workers that the Labor Department approved for Trade Adjustment Assistance (TAA), a voluntary program that workers must know about apply for and thenprove that trade caused their job loss in order to receive assistance. And, the TAA numbers do not include all 2019 or most 2020 because of processing lags.
  • Since 2017, General Motors closed U.S. plants and moved popular vehicle lines to Mexico; Ford announced its new Mustang electric SUV will be made in Mexico; Boeing offshored 5,800 jobs, General Electric offshored 2,046, and United Technologies offshored 1,572 jobs. The Machinists and Steelworkers have lost dozens of facilities to offshoring during this period.
  • Although then-president-elect Donald Trump promised to stop Carrier workers’ jobs from being offshored, almost 600 of the union workers at Carrier’s Indianapolis plant lost their jobs and all 700 of Carrier’s Huntington Indiana jobs were offshored to Mexico. Carrier parent firm United Technologies offshored at least 1,572 jobs according to Trade Adjustment Assistance
  • Michigan’s trade-related job loss has more than doubled over the last three years. Michigan has hemorrhaged jobs to offshoring with a 211% increase in trade-related job loss. (From 2017-2019 TAA-certified job loss was 15,675 compared to 7,428 for 2014-2016.) It’s getting worse: Michigan suffered a 308% increase in trade-related job loss in 2019 over 2018.

The trade deficit is 18% higher than in 2016

  • S. Census Bureau data show that the U.S. trade deficit in the first seven months of 2020 is 18% higher than it was during the same period in 2016. This is especially troubling because trade volumes crashed 15% due to the COVID-19 pandemic. (Inflation adjusted: $356 billion trade deficit January-July 2020 compared to $302 billion during the same period 2016.)
  • In July 2020, the U.S. had the largest monthly goods trade deficit ever recorded and the largest overall monthly trade deficit since July 2009 during the global financial crisis and recession.

The manufacturing sector expansion that began in 2016 flattened in 2018, with significant declines starting early in 2019

  • Trump didn’t “create” a manufacturing boom. The U.S. Institute for Supply Management’s Purchasing Managers Index (PMI), a gold standard measure for the sector’s status, shows manufacturing growth began in 2015 and continued into 2018. The PMI data show that the manufacturing upswing began to flatten in 2018 and began a decline in late 2018 that continued through 2019 – all well before the COVID-19 crisis.  

Chart 1

U.S. Institute for Supply Management Purchasing Managers Index

  • The U.S. has not experienced a “blue-collar job boom.” Annual average manufacturing job gains during the entire 2010-2019 recovery was 166,000, which accounts for the 500,000 gain in U.S. manufacturing jobs from 2016 to 2019. Since 2017, there has been no jump relative to prior years, and total gains account for a small fraction of the 4.5 million manufacturing jobs lost since 2000.
  • More workers filed for government aid for trade job loss through the Trade Adjustment Assistance program in 2019 than in 2017, per the 2019 annual report from the Labor Department. (There were 1235 TAA filings in 2019 versus 1091 TAA filings in 2017.) The number of workers who are certified as losing jobs to trade has remained high during Trump’s presidency: 88,000 in 2019; 77,499 in 2018; and 95,505 in 2017.)
  • Mishandling of the COVID-19 crisis has wiped out 750,000 American manufacturing jobs. See here for live version of the Economic Policy Institute graphic below that shows jobs per month.

Chart 2

U.S. has created new incentives to offshore jobs

  • The 2018 tax law created new incentives to offshore jobs, with a 21% corporate tax rate for income earned domestically, but a 10.5% tax rate for profits earned offshore.
  • The “Phase-One” Trump-China trade deal made it safer and easier for big corporations to offshore with new investor and intellectual property protections for firms that move production to China. But there’s nothing in the deal to end forced labor in China or require basic worker rights or environmental protections to stop the race to the bottom. The agreement also lacks disciplines against China’s massive subsidies, which make it impossible for U.S. firms to compete with Chinese products.

 

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ITC Hearing - Global Trade Watch's Lori Wallach Testimony

The United States International Trade Commission (USITC) Investigation on “COVID-19 Related Goods: The U.S. Industry, Market, Trade, and Supply Chain Challenges” Testimony of Lori Wallach, Public Citizen’s Global Trade Watch

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Rethinking Trade - Season 1 Episode 18: Trade Deficit

Candidate Trump pledged he would swiftly eliminate the huge job-killing U.S. trade deficit, end job outsourcing and rebuild manufacturing. Did he? The government collects data on each issue, and it’s been a triple fail.

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Amongst the daily diet of Trump lies, we hear a whole lot about his great trade achievements. Thankfully there’s actually data that tracks these outcomes and we’ve been tracking that data. What are the big numbers you see Lori, and what do they mean on the ground?

Lori:

So, Trump came up with a bunch of pledges that he would transform our trade policies. He said he would get rid of the trade deficit which is ginormous and is a drag on growth but also represents us importing things we used to make here instead of employing people to make the things we buy. He said that he would end job outsourcing meaning US companies relocating production to low wage countries to make things that they then ship back here to sell, that they used to make here, and he said he would do all of this quickly and he also said he would rebuild manufacturing and the government actually tracks every month what US trade balances and flows are. So, we have trade deficit data and it’s the same measure over time so we can compare it to before he was in office, same thing with the jobs data. So, the big top line I would say is that if you compare the trade deficit in Trump’s last year of this term in office and you got 7 months of data by the beginning of September, we had seven months of data for 2020, its almost 13% higher, the trade deficit, than when he entered office. So, not only didn’t he get rid of what he identified as a job-killing trade deficit but in fact the Trump trade deficit is bigger than say the same period in the last year of the Obama administration.

Ryan:

Another data point that we pulled out is that the July 2020 deficit is the largest monthly deficit since July of 2008.

Lori:

In the midst of the financial crisis. Yep. So, not only is that pretty stunning but also, the fact that the 340-billion-dollar trade deficit in the first 7 months of 2020 is larger than the already ginormous 300 billion dollar deficit during the same period during 2016, it’s also in the context of the COVID crisis having crashed trade volumes. So, we see that the actual overall flow in trade is down and as a result we see that if you compare 2020 to 2019 the deficit is down and despite there being a decrease overall in trade of 15%, COVID related, the trade deficit is up almost 13% relative to 2016. That is not what Trump promised. And it’s not what he’s saying. So, the data is his own government’s data and it’s equally compelling when it comes to the issue of outsourcing. Trump said he’d get rid of outsourcing. But the reality is, 300,000 plus more jobs have been certified by the department of labor under the Trump administration as having been lost to trade and that is just under one narrow program called Trade Adjustment Assistance. That’s not even the whole count of the loss because that Trade Adjustment Assistance is basically a system where you can get extended unemployment benefits and retraining money but you have to know about it You have to prove your job was lost to trade and so it is by proponents of our current trade rules considered maybe a 1 out of 10 count of the actual loss. 300,000 certified jobs. So, not the end of outsourcing that Trump promised.

Ryan:

We dig into the trade adjustment assistance numbers in a previous episode so folks should go back and give a listen if you want to get deep into that data.

With the deficit Lori, normally the reduction in trade would create a reduction in the deficit but that hasn’t been happening. Is that due to the inept way Trump has handled the pandemic or the lack of a way to deal with a health crisis of this magnitude or are there other things at first in that

Lori:

So, the economic impact of the COVID crisis certainly is related to our hyper globalization system implemented for the past 25 years agreements like the world trade organization and NAFTA where we have really concentrated supply chains so that we are so reliant on imports from just 1 or 2 countries for things we vitally need every day so that when you have people in the country get sick and the factories get sick so when the factories close down or the ports close down or a country like China where a lot of the personal protective equipment we use and medicine is made decide reasonably, the government decides that they the need the stuff for people in their own country, we end up with both huge worse health impacts we can’t get the things to be healthy and safe but also economic impacts in this over integrated hyper globalized economy. So, it is certainly the case that when we saw the fall off in trade it wasn’t a shock we saw that after the global financial crisis. What’s shocking is that when trade falls off 15% the US trade deficit doesn’t follow. And that is in part because of things that happened way before trump this whole hyper globalized regime of NAFTA and WTO, but it also reflects the things he didn’t do in the 3 and a half year plus he has been president. So, there was a lot of talk about how for instance on day one he would hold China accountable for manipulating currency. We are going to have a future podcast on how this currency manipulation business works. The difference is that if a country holds too many dollars it holds up the value it buys dollars in currency markets it holds up the valley of the dollar or if it basically intentionally takes actions to reduce the value of its currency both things mean that effectively you’re subsidizing exports from your country to the US and you’re making it too expensive for things made here to be sold in your country. Well, trump never dealt with that with China. So, the section 301 tariffs have reduced some imports from China but relative to systematic dealing with some of these structural imbalanced causes, he didn’t take action and he also never took action on the thing that you can do to improve demand in the us which is Buy American. He made a lot of executive orders and announcement and got a lot press about improving buy American but they never actually followed through so instead of having billions more of government purchases of us made stuff were still purchasing with our tax dollars basically outsourcing them to purchase stuff made elsewhere despite having a law if it was being enforced properly that Trump could have done that unilaterally without congress that would have reversed. So some of that dynamic is stuff that needed to get fixed that still needs to get fixed that has not gotten fixed.

Ryan:

Let’s talk more broadly about manufacturing and the purchasing managers index (PMI). Our research director asked me to ask about that and I said sure and then I was like I have no idea what that is. So maybe you can tell me and the listener what this is?

Lori:

PMI is basically an indicator of the health of the manufacturing sector in that it basically is forward orders for inputs for an equipment and so you can see it’s an index in a sense that it is looking forward to what activity is happening now that can project what will be happening in a month or two or six or a year after. So people looked at the PMI index so if its 50% or better its basically constant if it's higher than 50% growth in the sector if it's lower it contracting in a sector and the reality is that the manufacturing sector started to grow in the last couple of years of the Obama administration and that growth continued into the first two years of the Trump administration and you can see that whether you look at the bureau of labor statistics numbers of manufacturing jobs or if you look at the PMI there’s an upward trajectory over a four year period. So, if you start to look in 2019 well before the COVID crisis in the middle of the year you start to see the job numbers but also the PMI flattened then it actually starts to decline. So, the Trump administration likes to say that they were going gang-busters that they were creating so many manufacturing jobs, that they were doing something miraculous then COVID ruined it. Well, actually they were on the same trajectory as the previous administration for 2 years and then they flattened out, and then COVID happened. So, the notion that somehow the administration is the great champion of manufacturing jobs, it is true that a lot of manufacturing jobs were created in the first two years of the Trump administration just like they were in the last 2 years for the Obama administration but that sadly ended well before the time that the COVID crisis hit and in some states there are not net losses in manufacturing jobs it's generally fairly flat and because there’s been mass outsourcing still like in Michigan the rate of outsourcing has been related to trade-related job losses has been two times higher fast than it was in the three years previous to trump in some states the numbers are really not good.

Ryan:

These numbers and this data is all fairly depressing and I guess a bit not surprising do you think that Trump is getting away with selling one story and obviously living another?

Lori:

I think that we have the same problem on issue after issue which is people who want to believe trump has fixed a problem don’t want to hear that factual evidence to the contrary and shut it out and people who think Trump is a disaster are happy to season any evidence reinforcing that. And the big question to me practically is in states where manufacturing and trade really affect day to day the communities top to bottom are people's lived experiences what they’re thinking about. Did those jobs they were promised to happen? Did they stay? Is there still outsourcing? I suggest the big picture data how compelling it is doesn’t actually in most people’s lives have as much impact on what they actually seem. Just a guess. At least what they seem now we have all that data out in front of folks so it’s a pretty compelling and not a great picture

Ryan:

Where can fold find this data?

Lori:

So to make it more accessible we’ve actually taken the trade adjustment assistance database the Department of labor’s database and we have it at tradewatch.org you can go to our trade data center and what we’ve done is made it more accessible because we’ve geomapped is so you can put in your congressional district or your city or your zip code and you can get a list generated of the certified trade-related job loss near you which unfortunately is not a feature of the department of labor’s website or if there is a specific company you want to know what they’ve been up to you can put in a company name and search so that’s act tradewatch.org. as far as this trade data you can also go top tradewatch.org and look at our landing page every month have the new trade data and we basically crunch the numbers so you don’t have to so we do the inflation controlling and we compare it to the previous year to the previous period in the end of Obama administration so we basically do the math so you can see the chase points. So as far as the purchase managers index if you’re really into that you can actually just google PMI and you can see it over time on line but we also talk about the PMI in each of our monthly trade releases which you can once access at tradewatch.org, come one come all, our whole job is to make this information accessible to everyone can see what the actual facts are.

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

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Rethinking Trade - Season 1 Episode 17: Democrats on Trade

Many Americans are confused – does any U.S. political party stand for trade policy that puts working people first? Since the late 1980s, Democratic and Republican presidents alike have systematically sided with corporate elites in support of “free trade” deals like NAFTA. 

While most Congressional Democrats have sided with working people against them, a few have joined the overwhelming majority of Republicans who support and pass corporate-rigged trade deals. Trump railed against such deals, and then pushed new ones packed with giveaways for Big Pharma and Big Tech corporations.

In this episode, we untangle the confusing politics of trade. 

Rethinking Trade with Lori Wallach

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Lori, it’s not a secret to anyone that the 2016 presidential debate, and now the 2020 one, have made the trade issue politically confusing. Now, you’ve long been part of the movement for alternative trade rules that limit corporate power, protect workers, consumers, and the planet, but your adversaries have often been Democratic presidents like Bill Clinton and Barack Obama who presided over significant negotiations of some really bad trade deals. People like Donald Trump have preyed upon this fact and painted themselves as the alternative to the Democrat’s bad trade deals. At the same time, it’s often been Democrats in the House and Senate who’ve been the champions of the alternative trade rules people like you have advocated for — not to mention that all of these bad trade deals were also supported by most of the Republican party. Let’s talk a bit about the Democratic party’s complicated relationship with trade policy. Where do we start?

Lori: 

The story about trade politics is not so much partisan as it is one’s philosophy about the economy and who ought to be prioritized. And there has been a broad dichotomy historically between the presidential wing of the Democratic party, which has quite systematically sided with corporate elites, versus the congressional wing, which has quite systematically sided with working people. 

So you have a dynamic where Democratic and Rrpublican presidents alike have pushed the same corporate rigged trade agreements, trade policies, trade model, that see the rules of the global economy as an extension of privileges and powers for big companies, including a lot of things that are flat out protectionist. Starting with NAFTA, U.S. trade agreements had literally rent seeking monopoly protections, anti-free trade for Big Pharma. Why would you put a monopoly patent in a free trade agreement? Because it was for the corporations. And presidents of the Republican and Democratic variety sided with that, but the congressional situation has been quite different. 

Congressionally, the Democrats have led the opposition to these corporate rigged agreements and have promoted alternatives, whereas the Republicans in Congress have followed their presidential wings and have overwhelmingly supported agreements like NAFTA, the WTO, China’s entry into the WTO. So, if you look historically you’ve got this battle that is Democratic presidents pushing, along with Republican presidents pushing, the same kind of trade agreements for decades. You have Republicans in Congress voting for them overwhelmingly and you have Democrats in Congress voting overwhelmingly against them to the point where with a bunch of these agreements you literally have, you know, five Democrats, fifteen Democrats, when there are hundreds of Democrats in Congress and it is always the vast majority of Republicans in Congress voting for, but it might be a Democratic or Republican president pushing the same-old-same-old. And that split has led to a lot of political confusion when then Donald Trump comes on the scene, which by the way could have been Bernie Sanders on the scene or could have been Senator Warren on the scene as a president. It had to do with basically breaking that bipartisan presidential consensus in favor of the same-old-same-old.

Unfortunately, the way Trump did it was not to push the progressive alternatives that Democrats in Congress, and unions, and consumer groups like ours, and environmental groups have been pushing. He did break the old consensus but not necessarily in favor of people or the planet, it was a much more nationalist, corporatist view but a different take.

Ryan:

One of the things Trump did was he really utilized NAFTA, the North American Free Trade Agreement, in 2016 as an example of the “Democrats’ bad trade deals” and while it was signed by Bill Clinton it was introduced by Republican president George H.W. Bush wasn’t it? And didn’t a lot of Democrats oppose NAFTA at first?

Lori: 

So, the politics in NAFTA is the perfect example of why this is so jumbled and hard to understand. 

The concept of NAFTA came from Ronald Reagan. It and the negotiation of the WTO, the so-called GATT [General Agreement on Tariffs and Trade] Uruguay Round, were Reagan ideas of how, effectively, to get around an overwhelming Democratic majority in Congress that was systematically blocking his privatization and deregulation of the service sector and that was blocking the extension of patent giveaways for Big Pharma. The idea was to use this sort of Trojan Horse work-around of the trade agreements. So, the history of NAFTA is that Reagan came up with the idea and in fact Reagan initially started the precursor, the US-CAN [Canada] negotiations. Then George Bush the first [Senior] picks up the NAFTA negotiations, he doesn’t just introduce it, he signs it, it’s his deal. It was signed before he was out of office. He negotiated that deal and he signed it. But because of the dynamic I described where the Democratic presidential wings have often been indistinguishable from the Republicans on trade, then Bill Clinton picks up the old NAFTA as a sort of political maneuver and creates some meaningless unenforceable side agreements in the environment and labor and pushes the exact thing that Bush has signed, that Reagan has envisioned, through Congress. But the political dynamic was bloody because while almost every Republican in Congress voted for the NAFTA, the majority of Democrats fought their own Democratic president and voted against. 

And there was a block, I would say a larger block overtime, of 100 Democrats who voted with Clinton, their president- a lot of goodies were given away- but 160 Democrats voted against. What’s super interesting is that in short order by the time there’s a push for NAFTA extensions to other countries in Latin America, in 1998, and people had seen the effects of three years of NAFTA, the vote had totally shifted. 171 Democrats voted against, only 29 Democrats voted for their own democratic President Bill Clinton having the trade authority called Fast Track to extend NAFTA throughout the Americas because in those three years not only had everything that Democrats in Congress who voted against, and the opposition was led by the Democratic house leadership, Gephardt, the number one Democrat, Bonior, the number two Democrat in the House, they led the fight against NAFTA, against their own president, from the Capitol, from the leadership offices of the Congressional Democrats, not only had everything they had warned about come true, but an enormous number of worse things had happened. So, by the time the lived experience had caught up to the warnings of the Democratic congressional leadership to their rank in file members, Congress denied Bill Clinton having trade authority for the rest of his term because there weren’t enough Democrats to go along with the overwhelming number of Republicans who passed it, even by a narrow margin. So, from that point on President Clinton never had trade authority again.

Ryan: 

So, another big thing that happened I guess before that under the Clinton presidency and this is as NAFTA had begun taking its devastating effect on US factory workers and Mexican farmers and so many others, there was also the World Trade Organization. And the WTO is widely seen as a Clinton baby because he was president when it was signed, and he was also president when China was brought into it back in the year 2000. Maybe talk a little about how Congressional Democrats reacted to these developments at the time.

Lori:

The NAFTA fight helped the Democrats lose the House. The midterm elections 1994 had an enormous fall-off in turnout for union households and working people who just basically saw a Democratic president passing this agreement they knew was going to devastate them and in short order had started to lead to mass outsourcing in Wisconsin, in Michigan, and other states. Democratic base voters basically stayed home in 94 and the Democrats lost the House because of the NAFTA fight. 

And the dynamic of that politics had such damage that on the congressional wing, as well as the outcomes of these agreements, the opposition tightened up but Clinton continued to push the same bad framework, and the WTO is a perfect example of that as well as China’s entry into it and that would be the 2000 PNTR, Permanent Normal Trade Relations, vote. But also in 1999 the U.S. was the leader in trying to push a huge expansion for the WTO to include more corporate rights and powers and to basically impose more non-trade dictates against people on the planet into the WTO and the Democrats in Congress were out there in the front of these marches in Seattle in 1999 during the protest. I have a wonderful picture up in my office of David Bonior, then the number two Democrat, and three or four committee chairs, Maxine Waters and George Miller, all marching arm-in-arm with protesters in Seattle against the Democratic president’s attempt to expand the WTO. 

But again, Clinton’s role really taints the politics because people think of Democrats — Clinton — they don’t realize the Democrats in Congress were leading the fights against these very proposals. Nancy Pelosi as a member of Congress, not yet the Speaker, led the congressional fight in the house against China PNTR. It was run out of her congressional office to whip the votes to try and get a ‘no’ vote. And that is another example where more Democrats were induced by Clinton to support it, 73, where 150 voted against, so double were against, but an overwhelming number of the Republicans voted for it. And that was kind of the turning point. Because after that China PNTR vote in 2000, after more cases against important US public interest laws were being ruled against at the WTO, as more and more job outsourcing started under NAFTA and then once China was in the WTO in 2001, 2002, mass outsourcing to China which now had guaranteed access to the US at the very favorable US very low tariff rates established in the WTO, Democratic opposition in Congress really started to consolidate against the model. The lived experience of the wreckage both the attacks, and domestic, environment, consumer laws, and also the job loss. 

And from that point on there was nothing like the big chunks of votes for China PNTR, which, you know, 73 Democrats was a minority but it was not an insignificant number, same thing as the NAFTA minority of the party voted for it but not an insignificant number. From that point on it was super lopsided. So, for instance when the fast track came up in 2002 and now George Bush the second [Junior] was president, 190 Democrats voted against it, 21 voted for it. Or with CAFTA, 190 Democrats voted against it, 15 voted for CAFTA. And that shift has basically followed through to the current day where with a Democratic president in 2015, 160 Democrats voted against Fast Track for TPP for their own president and 28 only were willing, for their own president’s key priority of the entire congressional session, to vote for it. 

Ryan:

And that’s another thing Trump took a lot of credit for: stopping the TPP. Whereas you’re describing, it was actually dead on arrival when he took office.

Lori:

Yeah, you know, it’s a myth that he stopped TPP. To the extent that he had a role, it was burying the molding corpse that had been left out in the sun rotting dead for a year. So, the 2015 fight on Fast Track where originally, thanks to the Democrats in Congress, Obama lost that vote. He went back and made a deal with the Republican, threw out a trade assistance program for workers who lose jobs to pay off the Republicans to get them to switch and for more Republicans to vote for it, narrowly passed the trade authority that was then used to close the TPP deal. But the TPP deal gets closed and throughout all of 2016, it’s sitting there unable to get within 60 votes of passage in the House of Representatives which is a big honking deal because typically, if a trade agreement is stuck, it’s stuck by 10, 15, 20 votes and then the president basically buys those votes by promising a bridge here, or a package there, or a congressional special this-and-that from the president and this was such a wide margin because there was almost no Democratic support. Even the 28 Democrats who voted for trade authority two years earlier were not willing to say that they would vote for the TPP.   

So the agreement sat there for an entire year, couldn’t get through Congress… even the effort in the lame duck session after Trump has won, Democratic disaster, the Obama administration is still trying to pass TPP and at that point the Democrats in Congress just, you know, were smearing furious and doubled down in their “no” votes, Trump came in to an agreement that couldn’t get through Congress and then officially gave notice it wouldn’t be approved. That’s what he did. We didn’t actually withdraw; we gave notice that we would not be sending notice of approval and the other countries moved on without us.

But, unfortunately, because Clinton is the guy who is seen as pushing WTO expansion in Seattle, Clinton was the guy who pushed the NAFTA through Congress, the WTO through Congress, China into the WTO, and then President Obama pushed TPP, it’s super confusing for a lot people who aren’t paying attention to the nitty gritty of the Congressional votes. So someone like Trump can exploit that and make it seem like Democrats, writ large, are for these policies when in fact every single time a president has been derailed from doing more harm: Clinton when he lost his trade authority thanks to Democrats in 1998, Bush when he was not able to get new trade authority after his 2002 authority ran out, Obama when TPP was stopped, that’s all Democrats in Congress saving all of our bacon. 

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

 

 

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Rethinking Trade - Season 1 Episode 16: Online Retail Giants Sneak Attack by Trade Pact

Online retail giants like Amazon have been quietly stuffing trade agreements with terms that handcuff governments from protecting consumers or breaking up the online behemoths. What these corporations and their government co-conspirators call “digital trade” rules are in fact designed to forbid governments from protecting our privacy, holding the online giants accountable for dangerous or fake products they sell us, and empowering us to control our personal data. 

“Digital trade” rules being pushed in U.S. trade deals give some of the world’s largest corporations further control over our personal data and the online-retail market.

Transcribed by Garrett O’Brien

Ryan:

Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach.

Lori, it’s not a secret to anyone that the 2016 presidential debate, and now the 2020 one, have made the trade issue politically confusing. Now, you’ve long been part of the movement for alternative trade rules that limit corporate power, protect workers, consumers, and the planet but your adversaries have often been Democratic presidents like Bill Clinton and Barack Obama who presided over significant negotiations of some really bad trade deals. People like Donald Trump have preyed upon this fact and painted themselves as the alternative to the Democrat’s bad trade deals. At the same time, it’s often been Democrats in the House and Senate who’ve been the champions of the alternative trade rules people like you have advocated for — not to mention that all of these bad trade deals were also supported by most of the Republican party. Let’s talk a bit about the Democratic party’s complicated relationship with trade policy. Where do we start?

Lori: 

The story about trade politics is not so much partisan as it is one’s philosophy about the economy and who ought to be prioritized. And there has been a broad dichotomy historically between the presidential wing of the Democratic party, which has quite systematically sided with corporate elites, versus the Congressional wing, which has quite systematically sided with working people. 

So you have a dynamic where Democratic and Republican presidents alike have pushed the same corporate rigged trade agreements, trade policies, trade model, that see the rules of the global economy as an extension of privileges and powers for big companies, including a lot of things that are flat out protectionist. Starting with NAFTA, US trade agreements had literally rent-seeking monopoly protections, anti-free trade for Big Pharma. Why would you put a monopoly patent in a free trade agreement? Because it was for the corporations. And presidents of the Republican and Democratic variety sided with that, but the Congressional situation has been quite different. 

Congressionally, the Democrats have led the opposition to these corporate rigged agreements and have promoted alternatives, whereas the Republicans in Congress have followed their presidential wings and have overwhelmingly supported agreements like NAFTA, the WTO, China’s entry into the WTO. So, if you look historically you’ve got this battle that is Democratic presidents pushing, along with Republican presidents pushing, the same kind of trade agreements for decades. You have Republicans in Congress voting for them overwhelmingly and you have Democrats in Congress voting overwhelmingly against them to the point where with a bunch of these agreements you literally have, you know, five Democrats, fifteen Democrats, when there are hundreds of Democrats in congress and it is always the vast majority of Republicans in Congress voting for, but it might be a Democratic or Republican president pushing the same-old-same-old and that split has led to a lot of political confusion when then Donald Trump comes on the scene, which by the way could have been Bernie Sanders on the scene or could have been Senator Warren on the scene as a president. It had to do with basically breaking that bipartisan presidential consensus in favor of the same-old-same-old.

Unfortunately, the way Trump did it was not to push the progressive alternatives that Democrats in Congress, and unions, and consumer groups like ours, and environmental groups, have been pushing. He did break the old consensus but not necessarily in favor of people or the planet, it was a much more nationalist, corporatist view but a different take.

Ryan:

One of the things Trump did was he really utilized NAFTA, the North American Free Trade Agreement, in 2016 as an example of the “Democrats’ bad trade deals” and while it was signed by Bill Clinton it was introduced by Republican president George HW Bush wasn’t it? And didn’t a lot of Congressional Democrats oppose NAFTA at first?

Lori: 

So, the politics in NAFTA is the perfect example of why this is so jumbled and hard to understand. The concept of NAFTA came from Ronald Reagan. It and the negotiation of the WTO, the so-called GATT Uruguay Round, were Reagan's ideas of how effectively to get around an overwhelming Democratic majority in Congress that was systematically blocking his privatization and deregulation of the service sector and that was blocking the extension of patent giveaways for Big Pharma. The idea was to use this sort of Trojan Horse work-around of the Trade Agreements. So, the history of NAFTA is that Reagan came up with the idea and in fact Reagan initially started the precursor, the US-CAN negations. Then George Bush the first picks up the NAFTA negotiations, he doesn’t just introduce it, he signs it, it’s his deal. It was signed before he was out of office. He negotiated that deal and he signed it. But because of the dynamic I described where the Democratic presidential wings have often been indistinguishable from the Republicans on trade, then Bill Clinton picks up the old NAFTA as a sort of political maneuver and creates some meaningless unenforceable side agreements in the environment and labor and pushes the exact thing that Bush has signed, that Reagan has envisioned, through Congress. But the political dynamic was bloody because while almost every Republican in Congress voted for the NAFTA, the majority of Democrats fought their own Democratic president and voted against. And there was a block, I would say a larger block overtime, of 100 Democrats who voted with Clinton, their president, a lot of goodies were given away, but 160 Democrats voted against. What’s super interesting is that in short order by the time there’s a push for NAFTA extensions to other countries in Latin America, in 1998, and people had seen the effects of three years of NAFTA, the vote had totally shifted. 171 Democrats voted against, only 29 Democrats voted for their own democratic President Bill Clinton having the trade authority called Fast Track to extend NAFTA throughout the Americas because in those three years not only had everything that Democrats in Congress who voted against, and the opposition was led by the Democratic house leadership, Gephardt, the number one Democrat, Bonior, the number two Democrat in the House, they led the fight against NAFTA, against their own president, from the Capital, from the leadership offices of the Congressional Democrats, not only had everything they had warned but an enormous number of worse things had happened. So, by the time the lived experience had caught up to the warnings of the Democratic Congressional leadership to their rank in file members, Congress denied Bill Clinton having trade authority for the rest of his term because there weren’t enough Democrats to go along with the overwhelming number of Republicans who passed it even by a narrow margin. So, from that point on President Clinton never had trade authority again.

Ryan: 

So, another big thing that happened I guess before that under the Clinton presidency and this is as NAFTA had begun taking its devastating effect on US factory workers and Mexican farmers and so many others, there was also the World Trade Organization. And the WTO is widely seen as a Clinton baby because he was president when it was signed, and he was also president when China was brought into it back in the year 2000. Maybe talk a little about how congressional Democrats reacted to these developments at the time.

Lori:

The NAFTA fight helped the Democrats lose the House. The midterm elections 1994 had an enormous fall-off in turnout for union households and working people who just basically saw a Democratic president passing this agreement they knew was going to devastate them and in short order had started to lead to mass outsourcing in Wisconsin, in Michigan, and other states. Democratic base voters basically stayed home in 94 and the Democrats lost the House because of the NAFTA fight and the dynamic of that politics had such damage that on the Congressional wing, as well as the outcomes of these agreements, the opposition tightened up but Clinton continued to push the same bad framework, and the WTO is a perfect example of that as well as China’s entry into it and that would be the 2000 PNTR, Permanent Normal Trade Relations vote, but also in 1999 the US was the leader in trying to push a huge expansion for the WTO to include more corporate rights and powers and to basically impose more non-trade dictates against people on the planet into the WTO and the Democrats in Congress were out there in the front of these marches in Seattle in 1999 during the protest. I have a wonderful picture up in my office of David Bonior, then the number two Democrat, and three or four committee chairs, Maxine Waters and George Miller, all marching arm-in-arm with protesters in Seattle against the Democratic president’s attempt to expand the WTO, but again Clinton’s role really taints the politics because people think of Democrats — Clinton — they don’t realize the Democrats in Congress were leading the fights against these very proposals. Nancy Pelosi as a member of Congress, not yet the Speaker, led the Congressional fight in the house against China PNTR. It was run out of her congressional office to whip the votes to try and get a no vote. And that is another example where more Democrats were induced by Clinton to support it, 73, where 150 voted against, so double were against, but an overwhelming number of the Republicans voted for it. And that was kind of the turning point. Because after that China PNTR vote in 2000, after more cases against important US public interest laws were being ruled against at the WTO, as more and more job outsourcing started under NAFTA and then once China was in the WTO in 2001, 2002, mass outsourcing to China which now had guaranteed access to the US at the very favorable US very low tariff rates established in the WTO, Democratic opposition in Congress really started to consolidate against the model. 

The lived experience of the wreckage both the attacks, and domestic, environment, consumer laws, and also the job loss, and from that point on there was nothing like the big chunks of votes for China PNTR, which, you know, 73 Democrats was a minority but it was not an insignificant number, same thing as the NAFTA minority of the party voted for it but not an insignificant number. From that point on it was super lopsided. So, for instance, when the fast track came up in 2002 and now George Bush the second was president, 190 Democrats voted against it, 21 voted for it. Or with CAFTA, 190 Democrats voted against it, 15 voted for CAFTA. And that shift has basically followed through to the current day where with a Democratic president in 2015, 160 Democrats voted against Fast Track for TPP for their own president and 28 only were willing, for their own president’s key priority of the entire congressional session, to vote for it. But, unfortunately, because Clinton is the guy who is seen as pushing WTO expansion in Seattle, Clinton was the guy who pushed the NAFTA through congress, the WTO through congress, China into the WTO, and then President Obama pushed TPP, it’s super confusing for a lot people who aren’t paying attention to the nitty gritty of the congressional votes. So someone like Trump can exploit that and make it seem like Democrats writ large are for these policies when in fact every single time a president has been derailed from doing more harm: Clinton when he lost his trade authority thanks to Democrats in 1998, Bush when he was not able to get new trade authority after his 2002 authority ran out, Obama when TPP was stopped, that’s all Democrats in congress saving all of our bacon. 

Ryan:

And that’s another thing Trump took a lot of credit for: stopping the TPP. Whereas you’re describing, it was actually dead on arrival when he took office.

Lori:

Yeah, you know, it’s a myth that he stopped TPP. To the extent that he had a role, it was burying the molding corpse that had been left out in the sun rotting dead for a year. So, the 2015 fight on Fast Track where originally, thanks to the Democrats in Congress, Obama lost that vote, he went back and made a deal with the Republicans in Congress threw out a trade assistance program for workers who lose jobs to pay off the Republicans to get them to switch and for more Republicans to vote for it narrowly passed the trade authority that was then used to close the TPP deal. But the TPP deal gets closed and throughout all of 2016, it’s sitting there unable to get within 60 votes of passage in the House of Representatives which is a honking deal because typically, if a trade agreement is stuck, it’s stuck by 10, 15, 20 votes and then the president basically buys those votes by promising a bridge here, or a package there, or a congressional special this-and-that from the president and this was such a wide margin because there was almost no democratic support. 

Even the 28 Democrats who voted for trade authority two years before were not willing to say that they would vote for the TPP. So the agreement sat there for an entire year, couldn’t get through congress and the horrific mistake, I think, of the Obama administration was instead of sending cabinet officials around to campaign for Hillary Clinton in 2016, they were sending cabinet officials all across the country to those very swing states: Wisconsin, Michigan, to try to put pressure on Democrats to support the TPP for a lame-duck vote after the 2016 election. They were so obsessed with TPP. In my home state in Wisconsin, I am convinced, having the Ag Secretary and others running up and down those Mississippi, Minnesota, border state counties pushing TPP was part of how for the first time ever those districts went for Trump. Because people there lost tens of thousands of jobs to NAFTA, WTO, China and so we saw basically even the effort in the lame-duck session after Trump has won, Democratic disaster, the Obama administration is still trying to pass TPP and at that point the Democrats in congress just, you know, were smearing furious and doubled down in their no votes, Trump came in to an agreement that couldn’t get through congress and then officially gave notice it wouldn’t be approved. That’s what he did. We didn’t actually withdraw; we gave notice that we would not be sending notice of approval and the other countries moved on without us.

Ryan: 

Yeah, so that’s a pretty horrific story about the TPP’s role in the 2016 campaign. Do you think anything has changed today?

Lori: 

I think that is the big question. So, Trump is going to try to say that he fixed things — the data show he hasn’t. He campaigned on stopping outsourcing and getting rid of the deficit. His own labor department has certified 300,000 jobs as lost due to trade under the Trump administration and his trade deficit is bigger than when he took office and it remains to be seen if the Democrats at the presidential level and their campaign leaders have learned the sad lesson. Clearly, they see the downside of touting the corporate rigged status quo but whether they’re going to promote the kind of alternatives that we support, I think that remains to be seen, I think that could be important for how this election ends.

Ryan:

Rethinking trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit Rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in work we are doing in the fight for fairer and more equitable trade policies.

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Global Corporate Ambulance Chasing: Law Firms Recruiting Corporations to Attack COVID-19 Policies in ISDS ‘Corporate Courts’

By Melanie Foley

Many governments have taken urgent actions to stem the COVID-19 pandemic, save lives, protect jobs, counter economic disaster and ensure people’s basic needs are met.

But now, multinational corporations are poised to launch a wave of attacks against governments to demand compensation from taxpayers for these COVID-19 policies using the Investor-State Dispute Settlement (ISDS) regime.

ISDS grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.

With ISDS included in many trade and investment agreements, more than 1,000 ISDS attacks have been launched against climate, financial, mining, medicine, energy, pollution, water, labor, toxins, development and other non-trade domestic policies. Corporations have been awarded millions or even billions of taxpayer dollars, and some countries have chosen to revoke their democratically enacted policies in order to reduce their payouts. 

How do we know that COVID-19 policies are the next ISDS target?

The law firms that profit enormously from the ISDS system have been advertising to multinational corporations about the lucrative opportunities to use ISDS to attack government actions. And, specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases.

The law firms have specifically targeted pandemic policies such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand washing and sanitation, and more. All of these policies apply equally to domestic and foreign companies. But thanks to ISDS, foreign multinational corporations can launch cases and rake in taxpayer money in compensation.

“It is unfortunately very likely that a whole spate of ISDS attacks on governments’ COVID responses will begin to be filed,” said Lori Wallach, director of Public Citizen’s Global Trade Watch in her weekly Rethinking Trade podcast. “And the reason why is, under this regime, an enormous amount of money can be made by both the lawyers and the corporations. It is a legalized raid on treasuries.”

Public Citizen and more than 600 organizations from around the world are sounding the alarm. These labor, consumer, environmental, development and other civil society organizations sent a letter in July to heads of government worldwide urging action to avoid this new ISDS threat. They outlined an array of practical steps governments could take to immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever.

The powerful and diverse group of organizations from the United States includes the AFL-CIO, CWA, the Presbyterian Church USA, the United Methodist Church, Greenpeace and the Sierra Club. International signers include Oxfam, Doctors Without Borders, Friends of the Earth International and Action Aid.

For many decades, the United States was a leading proponent of this system and forced it on their trading partners. But public outrage over ISDS has been growing for years and was one of the reasons why the Trans-Pacific Partnership (TPP) could not get support to pass in Congress.

And thanks to civil society’s campaigning, ISDS was largely eliminated in the new NAFTA. (The original 1995 NAFTA was the first trade pact to include ISDS.) The unusually large, bipartisan votes in the Senate and House for the new NAFTA set a new standard that to be politically viable, U.S. trade pacts can no longer include extreme ISDS terms.

The agreements the United States is currently negotiating with the United Kingdom and Kenya, while potentially damaging in other ways, are reportedly not going to have ISDS. Other countries also have taken steps to withdraw from ISDS, including Bolivia, Ecuador, South Africa, India and Indonesia.

“These coming COVID cases should be exhibits 1, 2 and 3 of why other countries should also exit the regime,” advised Wallach.

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Rethinking Trade - Season 1 Episode 15: What’s the Real Story With All the “Buy American” Hype?

Since the 1930’s, “Buy American” rules have required that the U.S. government purchase goods – from cars and computers to planes and paper – that are made in the United States. But these rules that recycle our tax dollars to support jobs and promote domestic innovation have been severely undermined by our trade policies in the last few decades.

Today, “Buy American” really means that companies and products from 60 countries must be given the same access to the almost $600 billion spent annually in U.S. government contracts as U.S. firms and products. Effectively, we now outsource our tax dollars to support jobs in other countries.

On this episode, we unpack these policies and examine both Donald Trump and Joe Biden’s recent Buy American policy proposals.

Transcribed by Kaley Joss

Ryan:

Welcome back to Rethinking Trade, where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in-house trade expert Lori Wallach.

Lori, a lot of people may have seen that Trump just issued an executive order on ‘Buy American’ rules. And last month Joe Biden announced his own Buy American plan. Before we dig into both of these, why don’t you just give us a brief overview of what Buy American rules are in general.

Lori: 

So, since Franklin Delano Roosevelt was president, the U.S. has had, as part of its federal law, a preference that when the federal government procures things, from cars and trucks for government fleets, to office furniture and desks and phones to paper, whatever it is, that the purchases are made of goods that are made in America. The idea is two-fold: first is to recycle tax dollars back into the economy, creating jobs and supporting communities in the United States. So, it’s a virtuous circle, where you have a job, you pay your taxes and those taxes come back into your community to buy things that are made in the community for people who paid those taxes.

The second thing is its an industrial policy tool for innovation-- because the government, by making long-term contracts in certain areas and setting certain criteria, can basically help a private market get created. A classic example is fuel-efficiency standards for automobiles. We all think of CAFE when we hear that, the corporate average fuel economy standards, that reference what the average is when you buy a car. But there are also federal requirements that a fleet of cars produced by a maker must have a certain average fuel efficiency standards. But initially, before that became required of all cars sold in the US, the US government fleet had to meet those rules.

So for a number of years, to create a demand, to create a market, to have the companies put the money and research into designing those more fuel efficient, economical cars, the government started setting standards that they had to meet for government purchases. So, if GM or Ford or Chrysler wanted to get a government contract, which of course is very lucrative because the government buys a lot of cars, then they had to have their cars be more fuel efficient and better for the environment. And after a number of years of the government fleet having that requirement and the investment being made, it was made federal law that all cars had to meet those standards. That kind of conditionality is done for various purposes. 

Another thing under that category is called prevailing wage laws, which apply also. Buy American is procurement of goods and services, Buy America is government money for construction, road building, schools and water systems. For Buy America, the contracts have to have prevailing wages, which means basically wages at the prevailing union wage in an area, so you can’t have subcontracts that are trying to cheat good, middle-class union jobs. So those kinds of policies, to reinvest, to innovate and to ensure conduct is rewarded, the conduct we want by government contracts, is what Buy America and Buy American laws are about. Again, Buy American from the thirties, and Buy America since the 1980s.

Ryan: 

So, what’s this executive order all about? We’ve talked about this on the podcast before, but there are already these rules as you’ve just explained. So why do we need an executive order to recognize these rules? Or maybe you can explain what this is and what is it actually doing?

Lori: 

So, there are two things that have been going on. First of all, the Buy American and Buy America rules have waivers. And one of the waivers is a ‘public interest’ or ‘national interest’ waiver, and effectively what that means is price.  And it’s not defined. The rule is not ‘if you can find something that is 25% cheaper, go for the foreign good and bypass the Buy American requirement’. Instead, it’s just open ended. So, a lot of agencies have started to waive Buy American broadly. If they find something that’s even 5% cheaper from another country, they just waive Buy America standards saying that it’s in the ‘national interest’ to do so, without thinking about, for instance what the COVID crisis has made so apparent: we need some production domestically. We need diverse sources of imports, and we need some domestic production so we have a reliable supply of essential goods. We cannot have a situation where we allow an entire sector, like we have in the manufacturing of antibiotics, or we have in a lot of PPE manufacturing, we can’t have that all hollowed out. 

So, by having these waivers we have gutted Buy American. But the biggest waiver is within trade agreements. And there’s a really sad and ugly story behind this. Big multinational manufacturing corporations wanted to outsource production of their cars, or for General Electric of their turbines and generators and lighting systems, of Boeing their airplanes, they still wanted to be able to get government Buy American-required contracts. But if they were doing their work in Mexico or China or wherever, obviously they wouldn’t qualify. So they got the genius idea of trying to ram into trade agreements yet another un-trade-related item, and that is just a made-up rule that any country that has a US trade agreement is considered American for buy-American purposes. So this waiver that’s now in place excuses Buy American rules, so that US government agencies get, basically, to waive Buy American privileges for 60 other countries. So “Buy American” now is Buy American or Japan or Korea or Mexico or Canada or all of Central America or a boatload of other countries- all of our free trade partners. And that waiver has meant practically that Buy American is now basically gutted.

Ryan: 

So, just to be clear, the New NAFTA also contains these waivers, correct?

Lori: 

It does. And this is the hypocrisy in all of this. That waiver system is something that, by statute, any US president can cancel, unilaterally. So for three and a half years, Donald Trump has had the ability, simply by executive order- one of the few things he really could have done legitimately by executive order- to just end that trade agreement waiver. It is a statutory delegation of authority for the President to be able to, basically, just issue what the list of waiver countries are. And it’s something that can be changed at any time. And as well, in the World Trade Organization (WTO), you can get out of those procurement rules that are in the agreement itself, without any penalty. 

Trump did a very early, first year in office, 2017 “Buy American Hire American'' executive order. And instead of fixing this huge exception that eats the rule, that executive order said that we have to have compliance with our international agreements. So basically it was a hoodwink, where I guess Trump hoped no one would realize what he was saying was “Hi! It’s Buy America Hire America, except we won’t!”, because he was saying to follow the current rules, that don’t actually let us buy American.

Now, this most recent order repeats some of that language, but for the first time it has a new thing. And my theory is that it has this new thing because it’s something that actually the Biden presidential campaign did. Which is, before Trump did this latest executive order, about a month ago, the Biden administration issued an order on what they were going to do on trade and domestic supply chains. And the most interesting thing in there in a way was is that they had in there a clause in this policy plan that says ‘we are going to change our trade agreements to make Buy American real,’ instead of saying ‘we’re going to change Buy American, to prioritize trade agreements.’ That is a pretty stunning shift for Biden, because that’s not necessarily a position Biden has had, but is definitely where the country is heading. The COVID crisis has made everyone realize, even people who have been big supporters of these trade agreements, realize we need to have some domestic manufacturing. We need to diversify our imports, but we also need to make some of this stuff for emergencies, like PPE and essential medicines. So that, I am guessing, is why this new Trump Buy American has a clause that orders our top trade official, the US Trade Representative, to renegotiate our trade agreements to allow domestic purchase, only of a variety of essential medicine supplies: PPE, medicines, supplies, etc. It’s sort of a catch-up, so that now both of the contenders in the US presidential race are taking a position that is much more similar to what the public position is. Polling shows repeatedly that people want, at like 80% of the public want Buy American rules strongly enforced, and want to reinvest their tax dollars into having the government buy American-made goods, so now both the Democratic and the Republic contender are suggesting we fix the trade agreement rules so we really do have Buy American. 

Now, whether or not that happens I suspect is going to take a lot of activism, because there are a lot of multinational corporations that have enjoyed having it both ways- they produce in Mexico, China, Vietnam and then they find a way to be able to still be able to get a government contract. Perversely, I actually think some the horror of the COVID-19 crisis could provide an opportunity for more people in this country to demand these kinds of changes with our procurement policy, to reinvest in building some production capacity for essential goods, for medicines, for PPE, for basic communications and electronics equipment, the things that we vitally need just to be healthy and secure, because up until now, unless you lost a job to outsourcing, or you were in a community that was devastated by outsourcing, and there are many of them across the country, but there are also a lot of people who haven't been directly touched, you may not have personally experienced how dangerous and devastating this model of hyperglobalization, under which we have been living, is for all of us. And that system is not from God, it’s one set of policies, one set of corporate rigged rules that incentivize those behaviors, 

So, there’s more of an interest in changing the rules to change the outcomes, because now everyone is facing the experience of “Oh my lord, my family isn’t safe because I can’t get a damn mask!” Or, “what do you mean we simply can’t make ventilators? We created the technology, the patents on the technology are here, what do you mean people could die because they can’t breathe?” Or, “my kid’s going to get infected because they can’t get the pump for the bottle for Purell, because it’s only made in China now, and that injection molding with the metal spring is not possible here?” 

People have lived with the results in a way that I think could build the demand to actually have not just our Buy American policies change, but the trade agreements change. So that yes, we can get the benefits of trade, of which there are many of them, but so we can basically remove the overreach into domestic policy space, in areas like: Why the hell are trade agreements dictating domestic procurement policies? States, through their state legislators, should decide how state dollars are spent when the state procures, not a trade agreement! The federal government, through Congress, should decide what the priorities are. I mean, hell, just think of it as climate policy. We are going to need to create a whole new set of demand for different kinds of technology for climate, or we’re going to kill ourselves and the planet. So how are we going to actually use policy tools to create those incentives if we’re not allowed, through government purchasing, to direct funds for that kind of innovation? So I think through the COVID-19 crisis and the climate crisis, there’s more awareness. So I think, if people get informed and get activated, we can actually see these changes come to fruition. 

Ryan:

Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in the work we are doing to fight for fairer and more equitable trade policies.

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Reps. García, Schakowsky, and 107 Members of Congress Urge Mexican President López Obrador to Drop Charges Against Activist and Protect Labor Rights

Today Reps. Jesús “Chuy” García (IL-04), Jan Schakowsky (IL-09), and 107 Members of Congress sent a letter to Mexican President Andrés Manuel López Obrador urging him to ensure Mexican state governments drop politically motivated charges against labor lawyer Susana Prieto Terrazas. The letter also urges Mexico to ensure states comply with the labor rights guaranteed by the US-Mexico-Canada Agreement (“USMCA”).

The US-Mexico-Canada Agreement, implemented on July 1 of this year, requires each of its signatory countries to respect workers’ rights. Last year, Mexico passed labor law reforms that strengthen collective bargaining and independent unions in the country.

Susana Prieto Terrazas, a Mexican labor rights activist, was imprisoned in June by the state government of Tamaulipas after years of organizing along the US-Mexico border. She was released on conditions that prevent her from continuing labor advocacy and require her to move to the Mexican state of Chihuahua, where the government has issued a warrant for her arrest.

“To protect workers’ rights in the United States, we must defend the rights of workers around the world and in Mexico. I’m sending a letter with more than 100 colleagues to call on Mexican President López Obrador to ensure that Mexico respects workers’ rights and ends its political persecution of labor activist Susana Prieto Terrazas,” said Congressman Jesús “Chuy” García. “American legislators cannot stay silent while corporate interests and corrupt politicians undermine the law to extract profits at the expense of working people. When the US-Mexico-Canada Agreement passed Congress, we were told it would protect workers’ rights and labor standards in the US and Mexico. But if state governments in Mexico can willfully violate basic labor rights provided by Mexican law and affirmed by the USMCA, these protections are meaningless.”

“Mexico must live up to its obligations under the USMCA and enforce labor laws completely and uniformly throughout the country,” Congresswoman Jan Schakowsky said. “Anything less than this is unacceptable, will render these labor protections meaningless, and will require action by U.S. Trade Representative Robert Lighthizer. I look forward to continuing to work with my colleagues in the U.S. as well as my counterparts in Mexico to strengthen workers’ protections across North America.”

 The rights of workers across North America must be enforced, including in Mexico, said Congressman Joaquin Castro, Chair of the Congressional Hispanic Caucus and Vice Chair of the House Foreign Affairs Committee. “The U.S.-Mexico-Canada Agreement (USMCA) has new labor provisions to guarantee worker’s rights to organize for better conditions and higher wages, and must be respected. The United States Congress needs to ensure our trading partners live up to their commitments to expand the rights of workers.”

A PDF of the letter can be found here.

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Trump Trade Deficit 6.5% Higher than Obama’s Last Year, Not Eliminated as Then-Candidate Trump Promised

Trump Trade Deficit Increases Even as Trade Flows Show COVID-19 Effect, Dropping 15% in First Six Months of 2020 Compared to Same Period in 2019

The U.S. trade deficit in the first half of President Donald Trump’s fourth year in office remains 6.5% higher than in the same period in President Barack Obama’s last year, despite a 15% overall fall-off in trade flows related to the global pandemic, new trade data released by the U.S. Census Bureau shows.

“Worldwide COVID-19 has reduced trade flows, so the fact that Trump’s trade deficit is larger than  the same period in the last year of the Obama administration shines a big fat spotlight on Trump’s failure to ‘eliminate’ the trade deficit, which he promised endlessly as a candidate in 2016,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Even as trade flows overall dropped 15%, the U.S. trade deficit in the first six months of 2020 was only down 9% relative to the same period in 2019. This is in part because imports from Mexico have begun to rise significantly. 

The new U.S. Census Bureau trade data showed that:

  • The effects of the COVID-19 pandemic on commerce in general and trade in specific are evident in the six-month 2020 data: Comparing the trade flows in the first 6 months of 2019 to the same period in 2020, U.S. trade has decreased 15%.
    • Total U.S. goods and services exports in the first half of 2020 were $1,066 billion relative to $1,266 billion  in 2019. Imports in the first half of 2020 were $1,341 billion versus $1,563 billion  in 2019.
  • The six-month 2020 trade deficit is 6.5% higher than the deficit for 2016, the year before Trump took office, even as the COVID-19 effect reduced the deficit 9% compared to the first six months of 2019. Comparing the first half of Obama’s last year in office (January to June 2016), the overall trade deficit increased 6.5% rising from $257 billion to $274 billion in inflation-adjusted terms. (The unadjusted figures provided in the government data base show a rise from $238 billion to $274 billion.)
    • The overall U.S. goods and service trade deficit with the world dropped 9% in first half of 2020 relative to the same period in 2019 from $301 billion to $274 billion in inflation-adjusted terms (The unadjusted figures provided in the government data base show a drop from $297 billion to $274 billion.)
    • The U.S. trade deficit in goods decreased 7.5% in inflation-adjusted terms from $446 billion in the first six months of 2019 to $412 billion in the same period of 2020. However, the trade deficit in goods during these months is still 3% higher than the one experienced in the same period of 2016, rising from $399 billion to $412 billion (inflation-adjusted dollars).
  • The China deficit is down relative to Obama’s last year, but there is “trade diversion” effect of imports increasing from other countries. 
    • The trade deficit with China decreased 22% in inflation-adjusted terms going from $169 billion in the first half of 2019 to $132 billion in the first half of 2020. It is also smaller compared to 2016, when in inflation-adjusted dollars, it was $173 billion for January to June.
    • In inflation-adjusted dollars, the goods trade deficit with the rest of the world (excluding China) increased from $277 billion to $280 billion in the first half of 2020 relative to the same period in 2019.
  • The deficit with North American Free Trade Agreement (NAFTA) partners is 11% higher in the first half of 2020 relative to the same period in Obama’s last year in office but down relative to 2019 even as Mexican exports to the U.S. began to expand significantly in June.
    • The NAFTA deficit in the first six months of 2020 was $97 billion, 11% higher than the same period in 2016 when it was equivalent to $88 billion in inflation-adjusted dollars. (In nominal terms the goods trade deficit with NAFTA parties increased by 18%, or $15 billion.)
    • The goods trade deficit with NAFTA parties decreased by $19 billion in inflation adjusted terms compared to the same period in 2019, largely because of measures taken to prevent the spread of COVID-19.
    • Even as the COVID-19 pandemic narrowed the trade deficit with NAFTA parties during the first half of 2020 compared to 2019, the reduction was not as large as expected given the jump of Mexican exports in June. According to the data released by Mexico’s statistics authority Mexico’s statistics authority (the National Institute of Statistics and Geography), Mexican exports, of which more than 80% are destined to U.S. markets, grew 75.5% in June relative to May. This resulted in Mexico posting a six-month January to June surplus of $2.6 billion even as Mexican exports decreased overall 12.8% compared to June 2019, Mexican imports dropped almost 10% more in the same period (22.2%).
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Rethinking Trade - Season 1 Episode 14: Did You Buy PPE Made by Uyghur Forced Labor in China?

China has 1.8 million Uyghurs and other Muslim ethnic-minorities locked up in concentration camps in western China. Others are being shipped all over the country as forced-laborers to a network of factories supplying Nike and a slew of other U.S. companies, including those producing PPE. You may be buying these products thanks to loopholes in U.S. trade laws that are supposed to ban the sale of forced labor goods.

On this episode we discuss efforts currently underway to end the exploitation of China’s Muslim political prisoners, the latest from the Xinjiang Uyghur Autonomous Region, and how good trade policies rooted in human and labor rights could prevent such nightmare scenarios in the first place. Learn more about the campaign at enduyghurforcedlabour.org.

Transcribed by Kaley Joss

Ryan: 

Welcome back to Rethinking Trade, where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in-house trade expert Lori Wallach. 

So Lori, Public Citizen is part of a campaign that was announced last week calling on brands and retailers to stop doing business in the Xinjiang Uyghur Autonomous Region (XUAR) of China. For those who don't know much about the situation, what exactly is going on there and why have 190 organizations across the world signed on to this call?

Lori:

So while a lot of the world is very focused, understandably, on the COVID crisis, an enormous human rights crisis is underway in the western part of China. The Chinese government operating out of Beijing has rounded up almost two million Muslims, many of them Uyghurs, a turkic ethnic group in the western part of China, and locked them up in concentration camps under the ostensible claim that they're ‘countering Islamic extremism.’

But the reality, just like the government in Beijing has attacked Tibetans, has attacked any group that has any notion of autonomy of its own culture, it is really a genocide against the culture and perhaps literally people are being killed. There is torture. These are concentration camps. And there's a lot of forced labor. People are being shipped across China from the camps, but even inside the camps there is forced labor, and horrifically a bunch of it is PPE. The New York Times had an exposé on that just this week. There were five plants in Xinjiang that produced PPE a year ago. There are now 51 plants making face masks, 17 of which officially are part of the forced labor operation. 

Ryan: 

For those of us in the United States, this is especially relevant also because a number of U.S. companies are actually benefiting from this system of forced labor. That is sadly not a new thing. When it comes to the Chinese government's labor abuses, they've often come as a result of collaboration between state and U.S. and other international firms, especially since China's entry into the World Trade Organization, right?

Lori:
Yes, that is unfortunately true. So just to put into perspective what's going on, there was another New York Times exposé in the beginning of March, March 1, that showed how many of these forced labor Uyghur workers are in a plant making Nike shoes. So throughout the supply chain of goods that can come into the U.S., thanks to China's entry into the WTO, without any conditions or any special human rights surveillance and with low tariffs, are goods that are being made by literally millions of political prisoners. 

And this is a crisis of such a scale that the U.S. Holocaust Museum Center for the Prevention of Genocide has recently determined there's a reasonable basis to believe that crimes against humanity are being committed there. Yet many U.S. companies are using this forced labor. The U.S. consumer to a large degree is either unaware, or if aware, has really no way to see that these products are kept out, or are distinguished under the current law since under WTO,  you can't really distinguish a good based on what's happening on a human rights basis, for instance. Now, there is legislation called the Uyghur Forced Labor Prevention Act, that's bipartisan, that is in the House and the Senate, that would just simply assume any goods coming from the Xinjiang part of China, the western part of China,  are likely to have forced labor content. It has a presumption, that can be rebutted, that any such goods from that region cannot come in because they're forced labor products. The company that wants to bring it in has to prove by clear and convincing evidence standard that the entire supply chain, not just their factory, is clean of forced labor. 

Ryan:

So, you kind of answered this but aside from the obvious fact that there's goods being produced in the Uyghur region and then sold elsewhere, what does this all have to do with trade policy and how have trade policies made the situation possible? But also, is this even legal under current trade rules? 

Lori: 

So, there is a chance that that law could get challenged at the WTO. But thank goodness the WTO enforcement system is basically not functioning at the moment because the U.S. is objected to the way it is not very fair or transparent.

So, the back story is that since the 1930s there has been law in the Tariff Act of 1930 that prohibits the import to the United States of goods “mined, produced or manufactured wholly or in part” by convict, forced or indentured labor. And obviously that's a very broad prohibition. The hitch was that the law had an exception called the Consumptive Demand, which basically allowed goods and services even if they were made by forced labor, if the good was not made in the U.S. in a sufficient supply to meet domestic demand, which basically guts the law. In 2016, President Obama signed a piece of legislation that closed that loophole. And as a result, ostensibly, it is now U.S. law that forced labor groups have to be kept out. And that change was actually motivated by child labor in the cocoa industry, in seafood, but also about what was going on in cotton, as well as what was not as extreme repression against Uyghur people, but already was some pretty dire circumstances in China and also in sub-Saharan Africa relating to cotton. So the Customs and Border Patrol has taken a few actions since that law

changed in the beginning of 2016, and it's certainly a lot better. I mean, there are like 40 actions in the 90 years of the original law with the exception and now there have been 15, 20 actions since. But the problem is, you under the law basically have to prove that there is forced labor. What the Uyghur Forced Labor Prevention Act would do is just simply presume— it would flip the burden of proof, so that Customs doesn't have to prove that a particular good, one by one, is made with forced labor and therefore meets the Trade Act of 1930 ban. But rather the presumption becomes, if it is coming from the basically Uyghur Autonomous Region, sometimes called the XUAR, then you presume it is forced labor, and the company has the burden of proving it's not. Which is to say, all that stuff will be stopped until a company can show it is clean. That would really put teeth into the existing law, because if customs had to prove product by product, you would not be able to make much of a dent. But if the Uyghur Forced Labor Prevention Act went into effect, that would just shut down the imports from the area with very few exceptions, and that would send a very strong signal to China, which is the least the U.S. can do, given the horrific circumstances that right now the government in Beijing is largely getting away with.

Ryan: And to close this out maybe, this sounds like policies that are designed to kind of put out fires after they've started. What would be some trade rules and enforcement mechanisms that would prevent these types of things from happening in the first place? You know, it shouldn't take a situation of this magnitude to take action on something as obviously wrong as, you know, forced prison labor. 

Lori:

It is a sad state of affairs that you need two million people in concentration camps being tortured, murdered, forced into labor, indoctrinated, stripped from their homes, young women bundled up onto planes and buses and shipped all over China where they don't actually speak the language of where they've been settled, they’re not allowed to go home. You would assume none of that would have to happen to have some rules of decency in the global economy. But unfortunately the way that the WTO and most of our free trade agreements work, there really is no floor of decency. There's no standard that says, “you can't have the benefits of this trade agreement unless you do X Y or Z.” 

Rather, they're written where, instead of having a floor, there's a ceiling. You can't distinguish between goods based on the human rights of the workers; you can't distinguish with the goods based on how much they're paid; you can't distinguish between the goods, as long as they're physically the same, according to their environmental impacts in the production process. That is a ‘bass-ackwards’ way of thinking about it. So, both for human decency and morality stopping forced labor, but frankly as well for the climate crisis that we face, we need to turn the rules the other way around, where we're seeing the standards for which every company and every country must comply in order to get the benefits of the trade rules and the labor standards in the news.

The labor standards in the new NAFTA make some attempt to do that in a very narrow way. And we will see, as an experiment, it's a baby step. It's certainly a step in the right direction, but it doesn't fix the problem. We will see how effective that approach is. But yeah, you just need to basically condition access into countries on meeting human standards for labor rights, human rights and the environment and safety.

 

And the thing is, those rules exist. It's not a matter of saying “Hey, you can't sell anything here unless you do everything the same way as U.S. law requires.” No, all of the countries that are also partners in trade agreements, are, as sovereign nations, signatories to things like the International Labor Organization's conventions that guarantee basic labor rights. They're all signatories, China included, to the United Nations’s two major human rights treaties, one on economic rights and one on political rights. It basically is going to take changing the rules, to give the human rules the priority over the commercial rules, because right now it's the other way around. And in fact, if the Uyghur Forced Labor Prevention Act were passed and the WTO were working, China probably could have declared an illegal trade barrier. So that makes it pretty clear as well as doing things like passing this emergency ban on these goods, we need to redo the rules of the global economy. 

Ryan:

Thanks so much Lori. If you're listening to this, take a look at the links in the description of this episode. There is a link to the campaign to end Uyghur Forced Labor in China. There's also a link to the house bill, the Uyghur Forced Labor Prevention Act.


Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and find out how you can get involved in the work we are doing to fight for fairer and more equitable trade policies.

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Hyperglobalization Undermines Response to COVID-19 Crisis

Latest Data Reveal Growing U.S. Trade Deficits in Ventilators, Masks and Other Coronavirus-Related Gear as Shortages Reemerge, Reflecting U.S. Overreliance on Imported Goods to Battle Pandemic

Public Citizen's Global Trade Watch released an updated series of trade flow and country-of-origin data infographics on medical goods used to battle COVID-19 ahead of tomorrow’s U.S. House Ways & Means Committee hearing on critical supply chains, trade and manufacturing.

The newest feature is:

In addition, the web feature includes updated data showing:

Decades of hyperglobalization have undermined our resilience against the COVID-19 crisis. Even into summer 2020, the U.S. still cannot make or get critical goods people need with shortages again emerging of personal protective equipment (PPE) as infection rates rise. More than 40,000 U.S. manufacturing facilities have been lost to 25 years of corporate-rigged trade policies that made it easier and less risky to move production overseas to pay workers less and trash the environment.

Having the world’s largest trade deficit year after year means the U.S. is extremely reliant on other countries to provide essential goods. As the COVID-19 crisis emerged in early 2020, U.S. government officials urged U.S. firms to expand exports to China of the limited U.S. domestic production of key medical goods instead of considering U.S. residents’ needs. Effective implementation of the Defense Production Act (DPA) to purchase and domestically allocate PPE, ventilators and more would have preempted the export frenzy we see in the data. Unfortunately, Americans are still in the dark about the extent to which these critical emergency powers have been used to control exports of critical supplies.

After decades of outsourcing and corporations buying up competitors to consolidate control of production sectors and shuttering “redundant” production facilities, many critical goods are now mainly made in one or two countries. When workers there fall ill or governments prioritize their own peoples’ needs before exporting goods away, a worldwide shortage of masks, gloves, medicine and more can quickly develop.

And, under current practices and policies, it’s hard to quickly increase production. Long, thin globalized supply chains mean parts needed to make any one product may come from dozens of countries. If one link in the chain breaks because it is difficult to source inputs and components from a specific country or region, it becomes impossible to scale up domestic production during a crisis. And, monopoly patent protections in many trade agreements expose countries to sanctions if they produce medicine, ventilators and more without approval by and payment to pharmaceutical and other firms.

With policymakers and the public distracted, corporate lobbyists are pushing for more of the same trade policies that hatched the unreliable supply chains now failing us all. Instead, we must fundamentally Rethink Trade. The goals should be healthy, resilient communities and economic well-being for more people – not the current priority of maximizing corporate profits.

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Rethinking Trade - Season 1 Episode 13: Trade-Related Job Losses Have Continued Under Trump

Despite Donald Trump’s 2016 campaign promises to “bring back jobs,” trade-related job losses have continued under the Trump administration. Under the Labor Department’s narrow Trade Adjustment Assistance program alone, 176,982 workers have been certified as losing jobs to trade since 2017. Trade-related job losses have been especially high in California, Michigan, Ohio, Michigan, Virginia, and Washington state.

On this episode we break down these figures and discuss Public Citizen’s Trade Adjustment Assistance Database, the online portal where you can search by zip code, state, company name and more for trade-related job losses across the United States. 

Transcribed by Mariana Lopez and Sarah Grace Spurgin

Ryan: 

Welcoming back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. We are joined once again by our in-house trade expert, Lori Wallach. Despite promises to bring back jobs, trade-related jobs have continued under the Trump administration. Public Citizen just released some data about this, and I wanted to discuss that with you today, Lori, as well as the system through which we obtain this kind of data. Let’s start with the numbers. What’s in this new report?

Lori: 

What we found is that almost 180,000 workers were certified by the U.S. government as having lost their jobs to trade since the beginning of the Trump administration, just through the middle of 2019 (so it’s not even current data). That data is part of what’s called Trade Adjustment Assistance (TAA). It’s really a big undercount relative to what the total job loss to trade has typically been, because it only applies to certain kinds of jobs, and workers have to know to apply, and then you have to fill out a quite detailed form that proves your job loss is trade-related. So just under that TAA program, 167,982 have been certified under the Department of Labor as lost jobs to trade since the 2017 start of the Trump administration. And some states have gotten particularly walloped. The largest by far by number of job losses is California, but Michigan, Pennsylvania, Ohio are in the top five. And Virginia and Washington state are up in the top ones too. 

Ryan: 

These numbers look pretty similar to numbers from past administrations, but Trump of course is running around talking about how he’s bringing the jobs back and keeping jobs here to begin with. Shocking. But why are we still losing just as many jobs as before?

Lori: 

Well I think there are two different things. One is the trade policies themselves. So the new NAFTA, which Trump signed in 2018, was such a disaster—it wouldn’t have stopped job outsourcing and it would have locked in high medicine prices (there were new goodies for pharma)—that the renegotiation had to be renegotiated. So it was much delayed and only went into effect just now, July 1st. So we had, despite the promise of a quick new NAFTA, the old NAFTA in effect. There have been various trade sanctions against China and our trade deficit with China did decline, but unfortunately because of the big systematic problems, like currency cheating (the thing Trump promised to fix on day one of his presidency), well nothing has been done. So as a result, even though the trade deficit with China has gone down, it was kind of like squeezing a balloon. The deficit just moved over to Vietnam and other countries as compared to actually overall us having a smaller deficit and less jobs being lost to trade. So that’s number one on the trade front. 

Number two is that the President promised that they would stop giving government contracts to companies that were outsourcing jobs. And that would have been a huge incentive for a bunch of companies that are notorious job outsources to knock it off. But instead there was a lot of rhetoric about Buy American, hire American, but in reality, the campaign promises by Trump about no more government contracts to outsourcers has totally been ignored. So billions in government contracts have been awarded to Boeing, General Electric, United Technologies, and other firms that have been certified under that narrow database as outsourcing. So Given we know the TAA only covers the tip of the iceberg, it is pretty scary that even under that limited assessment, we seeing Boeing’s outsourced almost 6,000 jobs during the Trump administration (53 billion dollars in contracts), GE outsourced more than 1,000 jobs (6 billion dollars in contracts), United Technologies—that’s the company that Trump made such a big fuss about (“they’re not going to be allowed to outsource”)—1,000 jobs gone. They got 9 billion dollars in contracts. So both on the trade front and on the Buy American front, not a lot has actually changed. 

Ryan: 

Something significant to me in this story, and you just touched on it with the federal contractors that are still receiving federal contracts while continuing to outsource, is the role of Trump donors, meaning companies that have donated to Trump while also outsourcing jobs. Maybe you can talk about some of that stuff. And aren’t there rules against federal contractors outsourcing jobs? 

Lori: 

Well Trump promised there would be new rules that banned companies that got federal contracts from outsourcing jobs, but that’s not what happened actually. So there were things the administration could have done. For instance, Trump didn’t use—he failed to use the authority he already has under existing law to basically stop the throwing away of Buy American for corporations in countries that we have free trade agreements with or that are WTO procurement partners. And he also could have taken administrative action to basically condition, make one of the review topics for getting a government contract, the history of the company with outsourcing. But none of that was done. The result basically is, by not using authority under the Procurement Act of 1949 or the Trade Agreements Act of 1979, Trump didn’t use the authority he had with respect to those procurement outsources. And as a result these companies that, yes may have given him campaign contributions but for sure were outsourcing during his presidency, still got these very lucrative contracts. And that’s part of why you don’t see the numbers changing. 

Ryan:

Can we go back to talking about some of the specific data here? You’ve described the TAA database, you know, you’ve described this as being something as the tip of the iceberg. So there’s probably more, but maybe you could describe again some of the data and how significant it is?

Lori:

You bet. So this program, Trade Adjustment Assistance, if you apply for it and you get accepted, you get an extended unemployment benefits period, you can get retraining money, once it’s been proved you lost your job to trade. You can be trained for a new job. 

And the problem is there is about a two year lag, maybe a year-and-a-half lag when things are quick, so we don’t have the data for any of 2020. And we don't have all of 2019, we have about half of it. But even so, between 2017 and the beginning of 2019, 176,000 workers were certified by the Department of Labor as losing jobs to trade. And again, the reason it’s an undercount is number 1) it only covers certain kinds of jobs. So depending on what role you had in a factory or what sector you were in, but number 2) workers need to know to file, so either if they had a union or the company did it, but it’s kind of a pain in the butt, because there’s a lot of information. 

Now it’s a good program, I suggest people try and file with their State Department of Labor, but you have to provide a certain amount of data to be able prove your case that you’re trade related loss. Yet, even with only really the 2017-2018 data, we see almost 180,000 jobs, but for instance you see 16,000 of those came out of California, but then almost 10,000 from Michigan. Almost 10,000 from Virginia, Washington state 9,000. Pennsylvania almost 9,000. Ohio 8,000+. Illinois 8,000+. Georgia and Texas both around 8,000. And it is North Carolina, 6,000, if that’s the tip of the iceberg of the ongoing job loss to trade under Trump, the prospect of what we’re going to see through 2020, much less just even the full damage of his first 2 years, is a lot bigger.

And that is not what was promised up when Trump said he was going to quickly get rid of the trade deficit and quickly bring back lots of jobs and stop outsourcing. 

Ryan:

That’s a lot of jobs. And it sounds like a lot of data. Maybe you could tell folks how they can access this data? And also I know there's an interesting story of public interest legal success in the fact that we even have access to this data. Maybe you could talk about that for a little bit as well.

Lori:

So the Trade Adjustment Assistance data, anyone can look at. Go to our website, tradewatch.org, go to the Trade Data Center, and you will see a box to click on to get to the TAA database. 

We have gotten the raw data from the Department of Labor under a standing FOIA settlement- Freedom of Information Act settlement, so that we make it searchable. So up until the last couple of years, the data was only available literally on PDFs, scanned in paper copies of often handwritten applications. And so it was impossible to search. You couldn’t aggregate the numbers, you couldn't break it up by state, it was just useless. 

So back in basically 1996 or 1997 we settled the FOIA lawsuit with the Department of Labor trying to get the raw data so we could actually search it, and try and tabulate the trends, and so every quarter since then we’ve received the raw data from the Department of Labor and we hired someone to build a searchable database. So that people can put in your zip code, you can put in your Congressional district, you can put in your town’s name and your state, you can put in the name of a company, you can put in a sector, the economic sector, it’s searchable in lots of different ways. You can do it by map and drag out an area, a town or state where you want to see what happened. You can get all the data mapped, but you can also download, anyone can get an Excel file so you can actually search. That’s how we can basically quickly keep tabs on everything. 

Now again, it’s a year-and-a-half to two years behind when the job loss happens before it goes through the process and gets certified. So if you’re looking and you know in your hometown, ‘I remember that outrageous outsourcing to Mexico that happened right around Christmas 2019-- why isn’t that in there?’ like the Carrier case, the United Technologies case, that Trump made such a big deal about and the jobs went anyway, that’s not in there because it’s such a lag.

So you know if you can remember something that really pissed you off about job outsourcing in 2018, type in the name of the company, type in your town, and you find it. Anyone can use it, it’s free to use, and yes because we basically sued under the Freedom of Information Act, Public Citizen's lawyers were able to make this data not just available but searchable, so useful to everybody. And it basically puts the truth to many president’s, including this one, claims of how these agreements would create jobs, not lose jobs, and you can actually look at the data of what happened and you can look at X town and 100,000 jobs in a state over the period of NAFTA. 

For instance, things you wouldn't expect, El Paso, Texas is the number one NAFTA job loss impact location. You’d expect it to be Detroit. Nope, actually, in small geographic area El Paso has more concentrated job loss. Or you can do it by sector. You can do it by time. So if you know from your town that’s been clobbered by these race-to-the-bottom corporate-rigged trade agreements, you want to go see your member of Congress who has been a little shady on whether or not we should replace our failed trade model, you can run your zip code, you can run your Congressional district, and you can have the list. And the list will say the date, the company, the address. 1,000 jobs, 800 jobs. 5 jobs. 4,000 jobs. And it lets you actually know the real people who were affected by these failed trade agreements and why we have to fight to replace them.

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House Trade Subcommittee Chair Blumenauer Shines Light on Consumer, Environmental, Animal Welfare Threats in U.S.-UK Pact

By Melanie Foley

The June 17, 2020 House Ways and Means Committee of the U.S. House of Representatives hearing with U.S. Trade Representative (USTR) Robert Lighthizer featured a very important exchange on trade pacts and regulatory standards. Ways and Means Trade Subcommittee Chair Earl Blumenauer (D-Ore) said to the USTR:

 

Currently, the United States spends too much money subsidizing large corporations and doesn’t adequately help the majority of small and mid-size farmers. And it subsidizes manufactured food at the expense of fresh, healthy food. We’ve entered into phase two of our agreements with the United Kingdom. I hope that our negotiators can focus on tearing down protections and barriers to trade, like quotas and price control measures, and spend less political capital on areas where our countries may have reasonable policy differences.

I think too often we hide behind requiring “science-based” justifications for other nations’ sanitary or phytosanitary measures without allowing flexibility on values and public inquiry. Many large agricultural interest folks point to scientific studies on pathogen rinses for poultry. You know, maybe we should be asking about our production process that requires us to wash chickens in chlorine in the first place. Can’t reasonable people have concerns about slaughterhouses in the United States? Anybody who has watched the news recently understands that the United States policy on slaughterhouses needs a much closer review.

With pesticides, our regulations do not set a high enough standard to determine their effects on our environment, and how those environmental effects impact our health. Should we really export our weak standards to another country, who has legitimate public policy concerns and may provide better protection? For genetically modified wheat or meat, altered by growth hormones, is it possible in a democracy where consumers have input might choose to restrict these practices other than interfering with American commerce?

As with all negotiations, there are some priorities that we will push harder than others, but I would hope you will focus your attention and that of your team on protectionist hurdles for our farmers, rather than areas of legitimate policy differences. American families need national and international agricultural policies that address our common welfare and allow for targeted regulations that promote health, address climate change, and put people ahead of corporate interests. I would hope that you and your staff would be willing to help us explore these differences to determine where there are legitimate policy differences, rather than simply protectionist impacts. Would it be possible for us to work with your team to explore this?

Rep. Blumenauer described in detail how this FTA could lock in lax U.S. food safety standards — on massive agribusiness subsidies, pesticides, slaughterhouses, chlorinated chicken and more — and export these to the United Kingdom.

This position reflects decades of trade policy that preceded the World Trade Organization (WTO). Namely, if a domestic regulatory policy does not discriminate against foreign goods – by providing less favorable treatment to imports relative to domestic goods – why should trade agreements meddle with that domestic standard?

To put it another way, if citizens in a democratic process decide that they want laying hens or livestock treated humanely or want genetically-modified and non-GMO goods separated and labeled so consumers can choose, why should trade agreements label such policies illegal and require their elimination in the face of trade sanctions?

Lighthizer’s response was unfortunate:

On this issue of agriculture, I’ll repeat what I’ve said before. Number one, agricultural policy is set by the United States Congress, not by the U.S. trade representative. So, the issues you raised I know are difficult issues and are being fought out in Congress. And Congress will come to some conclusion and I’ll be guided by what Congress says. For right now, the reality is that for what we want and what we insist from our trading partners is equal access, fair access based on science. The difference between big and small corporate farmers, I don’t know much about that. I would say that the United States has the best agriculture in the world. It has the safest, highest standards. We shouldn’t confuse science with consumer preference. If consumers have a preference for one thing or another, they should certainly exercise their preference, but it is not the role of the U.S. trade representative to change agriculture policy. I am dictated that by the agriculture department, but mostly by the United States Congress. So, what I’m going to do is try to insist on science-based restrictions and to the extent there are restrictions that are not science-based we will object.

At a Senate Finance Committee hearing later that same day, Lighthizer doubled down on his commitment for so-called “science-based” standards, saying:

They now, in terms of some maximum [pesticide] residue levels, they actually have: if there’s any detection at all, the product is unacceptable. To me, that is just plain protectionism. And making every regulation science-based is the equivalent of getting rid of protectionism. It’s the equivalent of getting rid of any other non-tariff trade barrier, and it's something I’d wish, if anything, I would say Europe is going in the wrong direction, not in the right direction. They’re being controlled by protectionist interests, and well, let me just leave it at that. Protectionist interests.

In my judgement, we have to insist on science-based standards, for our farmers, and I would say this, this standards thing is not just an ag issue, right. I mean they’re using standards in industry too. It’s a higher art in ag, but they use it in industry too. We have to insist on it, and to the extent people deny us access, we shouldn’t give them a trade agreement, and if we don’t have a trade agreement, in my judgment, we ought to be taking trade actions against them. And I’m looking right now at whether or not right now some of these actions, I want to consult with you and your staff, whether or not right now we shouldn’t be looking at a 301 on some of these things. It’s getting so far out of control where they say, literally, if there’s any detectable residue, the product is unacceptable. That’s just nothing to do with science…

One of the things, on the UK, you know on this rinse on poultry, this so-called chlorinated chicken, that these people have, it’s going to be a huge problem. And I’ve made it clear that this is not going to be an agreement, that I’m bringing back an agreement to the United States Congress that excludes our agricultural products on a nonscientific basis.”

Lighthizer’s perspective represents U.S. agribusiness. Blumenauer’s perspective has a much larger base of support – not just his constituents in Oregon, but many U.S. and UK consumers.

In a recent joint letter, dozens of U.S. and UK labor, environmental and other organizations expressed their concerns that an FTA could pose risks food safety, digital privacy, animal welfare, financial regulation and much more.

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USTR Says No ISDS in US-UK Free Trade Agreement

By Melanie Foley

At a June 17, 2020 hearing of the Ways and Means Committee of the U.S. House of Representatives, Rep. Lloyd Doggett (D-Texas) asked the U.S. Trade Representative Robert Lighthizer an important question. Doggett, one of Congress’ leading critics of the controversial Investor-State Dispute Settlement (ISDS) regime, inquired: 

Do you envision in the agreements that you're currently negotiating to maintain the progress that we made in the USMCA with regard to dispute resolution so that when we're dealing with a developed country like the United Kingdom, we rely on a mature legal system rather than a closed dispute resolution system following the precedent that you set in Canada and which is applied successfully in Australia?

The reply from Lighthizer, the administration’s top trade official, was one word: “Yes.”

In layman’s terms, this exchange confirms that ISDS will NOT be part of the U.S.-United Kingdom Free Trade Agreement (FTA) that is currently being negotiated!

ISDS grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.

With ISDS included in many trade and investment agreements, more than 1,000 ISDS attacks have been launched against climate, financial, mining, medicine, energy, pollution, water, labor, toxins, development and other non-trade domestic policies. Taxpayers have shelled out millions or even billions of taxpayer dollars to corporations in individuals ISDS awards. Some countries have revoked democratically enacted policies in order to reduce their payouts or settle a case. 

ISDS being off the table in U.S.-UK trade talks is a major victory for the vast, international movement that has been fighting ISDS for decades. It reinforces that the U.S. rollback of ISDS in the revised North American Free Trade Agreement (NAFTA) represents a new U.S. policy that will carry forward. ISDS was largely eliminated in the new NAFTA. (The original 1995 NAFTA was the first trade pact to include ISDS.)

The United States has historically been a leading proponent of this system and forced it on its trading partners.

But public outrage over ISDS has been growing for years and was a significant reason why the Trans-Pacific Partnership (TPP) could not get close to majority support to pass the U.S. Congress. The unusually large, bipartisan votes in the House and Senate for the new NAFTA set a new standard that to be politically viable, U.S. trade pacts can no longer include extreme ISDS terms.

One important part of Doggett’s question was that he specifically mentioned the ISDS provisions of the new NAFTA with respect to Canada. The new NAFTA totally eliminates ISDS between the United States and Canada, a change that goes into effect on July 1, 2023, three years after the new NAFTA went into effect. Between the United States and Mexico, ISDS is significantly scaled back. The revised pact eliminates the extreme investor rights relied on for almost all payouts, but allows a small group of U.S. oil and gas companies that have contracts with a specific Mexican government agency to still make claims related to those contracts using the most dangerous ISDS rights. Doggett clarified, and Lighthizer confirmed, that this will not be the approach with the United Kingdom.

Lighthizer did not comment on whether ISDS would be a part of ongoing trade negotiations with less developed countries. This is of note because Kenya started FTA talks with the United States just last week. Nearly 7,500 public comments were submitted to the U.S. government urging an approach to Kenya trade talks that puts people and the planet first, including by excluding ISDS.

And, the ISDS threats still looms large because there are thousands of existing agreements that include the corporate-favoring tribunals. Indeed, countries around the world are under a potentially devastating new ISDS threat. The law firms that profit enormously from the ISDS system have been advertising to multinational corporations about the lucrative opportunities to use ISDS to attack government actions to address the COVID-19 pandemic.

The law firms have specifically targeted pandemic policies such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand washing and sanitation, and more.

Specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases.

That’s why more than 600 labor, consumer, environmental, development and other civil society organizations from around the world are sounding the alarm. These groups sent a letter in July to heads of government worldwide urging action to avoid this new ISDS threat. They outlined an array of practical steps governments could take to immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever.

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Rethinking Trade - Season 1 Episode 12: The New NAFTA: Only Improvements on Paper or Real Change?

Last week we discussed the new North American Free Trade Agreement and some of the key improvements we won after years of organized public pressure. The new NAFTA took effect on July 1st. The text requires significant new labor rights and includes strong enforcement. But corporations paying Mexican workers starvation wages are conspiring with right wing Mexican state officials to thwart any real change. The Mexican national government is not stepping up, and the new Mexican labor law is pinned down under a barrage of legal attacks.

In this episode, we breakdown some of these hurdles and discuss how political pressure, grassroots campaigning, and civil society monitoring efforts are needed to translate the new NAFTA’s improvements on paper to real material differences in workers’ lives.

Transcribed by Kaley Joss

Ryan:

You're listening to rethinking trade with Lori Wallach. Welcome back to Rethinking Trade, where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in-house trade expert Lori Wallach. 

So, Lori, last week, we discussed the new North American Free Trade Agreement, the USMCA, and talked about the campaign to improve it. Anyone who follows the campaign knows that there's a lot that still needs to be done to make some of the deal’s improvements real, especially on the labor front. So, for starters, maybe you could just give us an overview of what some of those changes are, and then we'll get into how they might happen. Lori:

So the new NAFTA can be looked at as having two sets of changes: bad things that were in there that got whacked, like investor-state dispute settlement, and then potentially useful things that got added, like the new labor standards and perhaps most importantly their enforcement through a system called the “rapid response enforcement mechanism” on paper.

Those new labor standards and enforcement mechanisms are definitely an improvement over the old NAFTA, which had non-binding labor-side agreements that, even if they were ever used properly, couldn't result in any real enforcement. The trick is going to be the enormous amount of pressure, campaigning and monitoring that will be necessary to translate these improvements on paper into real improvements for workers' lives in Mexico or in the U.S..

So you know, the first thing to think about is what actually has to be done to set up this new mechanism and whether it's on track. Then second of all, what are the cases? How are we actually going to see things change on the ground? 

Ryan:

So while we're on the topic of things on the ground, let's talk about two of the elephants in the room—that's the case of Susana Prieto Terrazas and also the onslaught of lawsuits challenging Mexico's labor law reforms that are now moving. 

Lori:

So, you know the way these things work together is that the new NAFTA required certain changes in Mexico's domestic labor law that basically implemented changes made to Mexico's constitution in 2017. Among those things were guaranteed reviews of all existing contracts made by unions, because of existing, corrupt employer-protection unions who are hired to protect the boss. They've registered contracts that lock in low wages and bad working conditions. So, under the new Mexican labor law that the new NAFTA requires in four years, every one of these old contracts has to be reviewed, and either voted by the workers in a secret ballot vote to be continued or replaced by a real contract that represents workers interests. And, the new labor law requires the right to see the contract before there's a vote, which was not the case in the previous law. Now, the workers who are going to live under the contract take it to approve it, which was not the case before. A lot of these old protection contracts are completed before the first workers are even hired. And then finally, the ability to have accountability over the union officials that workers are represented by with respect to budgets of the Unions, etc.. The thing that's very worrisome is there are now over 600 challenges in the Mexican court system against implementation of that new labor law. And they're almost all filed by these corrupt protection unions, who cynically, disgustingly are claiming it violates basic workers rights and the ILO (International Labour Organization) conventions to make these reforms efforts effect fully the ILO conventions. The cases have been working their way up towards the Supreme Court of Mexico. At a certain point a few months ago, a body that is part of the federal judiciary system in Mexico concentrated all the cases in particular courts. The Supreme Court, who knows when though, but they will decide in the interim. The law is kind of on hold. It definitely doesn't apply to a bunch of the fake contracts that have effective injunctions against them, but it could be all thrown out as unconstitutional.

Second problem is that there is hands-on obstruction of these new rights, even when they are not under challenge, and that includes the case of Susanna Prieto. We've talked about the situation before she was arrested under trumped-up fake charges of causing a riot relating to her excellent work to try and actually file in the labor court, the certification of a new union that got rid of a fake old union. She's a lady who is very well known in Mexico, because she's the person who helped workers get real wage increases last year in the border maquiladora factories and Juarez, Matamoros. She also helped workers fight to get COVID protection safety in the workplace this year, and then she was swooped up in jail. She was denied bail punitively and repeatedly. It was not safe, obviously. Like in the U.S., Mexican jails have COVID issues. And then, her third bail hearing was July 1, the day the new NAFTA went into effect. And instead of having a bail hearing, the prosecutor said we have got a deal for you: We’ll let you out of jail, but only if you promise not to go back to the city where the workers you represent are and never go back to the labor Court. The labor court is where you would need to visit to file for workers’ rights and against this temporary suspension of her arrest. It's sort of like a plea bargain, how she is currently out of jail, but in a condition that is totally outrageous and undermines the ability for workers to have the basic labor rights, which are not just required in the new NAFTA, but provided for in Mexico's constitution and in their laws.

Ryan: 

And can these labor abuses, in the case of Susanna Prieto, could those become a case under the new NAFTA? 

Lori:

Well, it's worth understanding a little bit about how that rapid response system works, a little bit of nuts and bolts. The quick answer is yes, it probably could be, but the way this works under this system is that usually when you enforce a trade agreement, one country sues another country, it goes for tribunal and takes years to get to the end result. And then typically the enforcement is trade sanction tariffs against a country for violating a provision. The problem with that in the labor situation is that the actual companies who are doing the bad stuff are not feeling any pain directly. 

So, the rapid response system, basically, is set up so that if a country, say the U.S., files a complaint with Mexico saying “Hey, this situation with Susana Prieto is a violation of the following provisions of NAFTA,” and given a particular company has been involved, say there's a particular company for which she was trying to file this new Union, that company would be implicated. Then Mexico has a certain number of days to respond and they can either say “Hey, that's not what really happened” and try to make the U.S. back down, or they can cure it and fix the problem.

Then the U.S looks at the response and either says, “Okay, it's fixed” or, “I guess there's not a problem,” or the US can say, “No, not buying that” and file the next step (which is basically like a formal claim). It gets heard by a tribunal of Labor experts which is not the usual ‘trade lawyers make the decisions,’ which is good. It's much quicker—it's not quick, but it's much quicker than the normal years and years. And in the beginning this tribunal has the right to go to Mexico to investigate and interview in Mexico. The Mexican government's required to provide them access, and then this tribunal can order, in the first instance of a violation, that the company involved either directly be hit with trade sanctions or fines. And then if it's ongoing, they can have their products denied access into the U.S., just literally blocked on the border. So there is some real threat there. There are all kinds of curly cues of where things can go awry, and it’s not super speedy, but it's like a six-month process. So that could become one of the first tests of whether or not the new NAFTA’s labor standards and enforcement have teeth, outside of the sort of official response mechanisms and monitoring efforts. 

Ryan:

Maybe to close us out for this episode you could talk about some of the ways in which labor unions, civil society organizations and progressive groups here can play a role in making sure that some of these new standards and requirements are respected and enforced?

Lori:

Well to quote Frederick Douglass, “Power concedes nothing without demand.” So we are going to have to keep a really bright spotlight on the situation and have continuous pressure on both the U.S. government to take the necessary actions, but also, with our partners in Mexico, on the Mexican Government to implement all of these commitments. And you know, our counterparts in Mexico are going to be doing their best to help these cases and fight for their rights, but it is only going to really be a successful use of the gains in the new NAFTA if workers and activists and frankly members of Congress in all of North America are united together trying to improve standards for workers throughout the hemisphere, which first and foremost starts with workers in Mexico finally having real rights to form a union and fight for better conditions and higher wages. 

Ryan:

That's all for today. Thank you all for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch, where we don’t just talk about trade, we fight to change it. Visit rethinktrade.org today to get involved in our campaigns and help us fight for global economic justice.

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Press Conference: Labor Activist Susan Prieto and U.S. Rep. Jesús “Chuy” García (D-Ill.)

Press Conference: Mexican labor activist Susana Prieto joined U.S. Rep. Jesús “Chuy” García to demand an end to ongoing labor abuses that undercut the U.S. and Mexican presidents’ celebration of the new NAFTA.


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

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

 

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

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

 

WHO:       Susana Prieto Terrazas, Mexican labor lawyer

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

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

 

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

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

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Law Firms Are Recruiting Corporations to Attack COVID-19 Policies in ISDS ‘Corporate Courts,’ Warn 600-Plus Civil Society Groups From 90 Nations

Corporations Could Claim Billions From Taxpayers in ISDS Cases Against Pandemic Protections

The threat of Investor-State Dispute Settlement (ISDS) claims from multinational corporations for compensation from taxpayers for governments’ COVID-19 responses is dire, warned more than 600 labor, consumer, environmental, development and other civil society organizations today in a letter to heads of government worldwide.

In the letter, the groups revealed that numerous law firms specializing in ISDS lawsuits attacks are trolling for multinational corporations to attack government actions, such as restrictions on business activities to limit the spread of the virus and protect workers, requirements for manufacturers to produce ventilators, mandatory relief from mortgage payments or rent for households and businesses, measures to ensure access to clean water for hand-washing and sanitation, and more.

Specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases. As governments are taking urgent actions to stem the COVID-19 pandemic, save lives, protect jobs, counter economic disaster and ensure people’s basic needs are met, some law firms are advertising about the opportunities to use ISDS to profit from these necessary government actions.


The controversial ISDS mechanism is written into many trade and investment agreements and grants rights to multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits, on claims that a nation’s policy violates their rights. Their decisions cannot be appealed.


The 630 organizations are calling on governments to take practical steps that would immediately suspend the use of ISDS over pandemic response measures, as well as to put an end to the risks of all ISDS cases forever. Organizations signing the open letter include:

  • Major U.S. labor and civil society groups, including the AFL-CIO, Sierra Club, Public Citizen, United Auto Workers (UAW), NRDC, United Brotherhood of Carpenters, Communications Workers of America (CWA), Methodist Board of Church and Society and the Presbyterian Church USA;
  • International and regional union confederations including the International Trade Union Confederation, Public Services International, IndustriALL, the Trade Union Confederation of the Americas, and the International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF);
  • International environmental and development groups such as Oxfam, Greenpeace, Friends of the Earth International, Action Aid, Third World Network, the European Environmental Bureau, the Asian Peoples’ Movement on Debt and Development and the Arab NGO Network for Development; and
  • Global health networks such as the Médecins Sans Frontières (Doctors Without Borders), Peoples’ Health Movement, Access Campaign and the International Treatment Preparedness Coalition.

View the letter and the full list of signatures.

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As Mexican President Comes to D.C., Abuse of Mexican Labor Activist Susana Prieto Escalates, Casting Pall on New NAFTA

Prieto’s July 1 Prison Release Conditioned on 30 Month Internal Exile, End of Her Matamoros Labor Organizing, Not Leaving Mexico and Relocation to Chihuahua Where Prosecutor Has Issue New Warrants for Her Arrest

The extreme conditions imposed in exchange for Mexican labor lawyer Susana Prieto Terrazas’ July 1 release from jail after three weeks of imprisonment on trumped-up charges undermine the labor rights guaranteed by the new North American Free Trade Agreement.

Prieto revealed the conditions imposed on her for the next two and a half years:

  • Banishment to the state of Chihuahua, meaning the end of her labor activism in Matamoros, which is in Tamaulipas;
  • A ban on visiting the Labor Court where independent unions would be certified;
  • A ban on leaving Mexico; and
  • Payment of “reparations” for emotional suffering by government officials who were present when workers protested outside the Labor Court.

Additionally, on July 4, Prieto announced that two arrest warrants had been issued for her by a prosecutor in Chihuahua, where her release order required her to relocate on July 5. “Confirmado. Tengo dos ordenes de aprehension en Chihuahua. La Carcel que me impone ilegalmente la jueza de Tamaloupis,” she posted on Facebook. [Confirmed. I have two arrest warrants in Chihuahua. The prison that the judge of Tamaloupis illegally imposes on me.]

The legal process that resulted in her release – called a suspensión provisional del proceso (provisional suspension of the process) – has never been used in Mexico in the context of labor rights or human rights advocates. Its use in this context sets an extremely dangerous precedent for labor rights and human rights in Mexico. The process is akin to a plea bargain, and in the past has been used to suspend criminal charges pending completion of probationary terms and payment of restitution.

Prieto , a key advocate for exploited workers in border maquiladora factories in Matamoros and Juárez, was held without bail for three weeks on trumped-up charges of “mutiny, threats and coercion” after trying to register an independent union to replace a corrupt “protection” union in Matamoros. Growing outrage about a jailed Mexican labor activist, bogged-down labor reforms and threats to Mexican workers pressured to return to factories plagued by COVID-19 was not the scenario the U.S., Mexican or Canadian governments imagined for July 1, the date the revised North American Free Trade Agreement (NAFTA) went into effect.

U.S. fair trade activists delivered the letter to Mexican consulates nationwide on July 1. After decades of worker intimidation, Mexican manufacturing wages are now 40% lower than those in China.

Prieto became well-known in Mexico for helping maquiladora workers win higher wages in factories along the Texas border last year as part of a growing independent labor movement. Recently, she supported workers demanding COVID-19 safety measures after dozens of maquiladora workers died from workplace coronavirus exposure. Wildcat strikes and mass protests have grown throughout the border region as U.S. companies and officials push for plants to reopen without safety measures. At June 17 hearings, members of Congress raised concerns about Prieto’s arrest with the U.S. Trade Representative, who confirmed he was closely following her case and found it a “bad indicator” of compliance with NAFTA’s revised labor standards. Prieto livestreamed her arrest as she tried to register the Independent Union of Industrial and Service Workers “Movimiento 20/32,” chosen by workers to replace a “protection” union. Last week, Prieto’s daughter delivered a letter from U.S. unions and civil society groups to the Mexican National Human Rights Commission seeking help on Prieto’s release.

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

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

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

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

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

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

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

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

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

BACKGROUND INFO

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

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

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

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

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Rethinking Trade - Season 1 Episode 11: New NAFTA’s Start Marred by Labor Activist’s Arrest

After a multi-year campaign by unions, civil society groups and congressional Democrats won critical improvements to the bad NAFTA 2.0 deal Trump signed in 2018, the new North American Free Trade Agreement goes into effect on July 1.

But it’s a bad start: a leading Mexican labor lawyer, Susana Prieto Terrazas, has spent weeks in jail on trumped up charges for helping workers use USMCA’s labor rights, and Mexico’s new USMCA-compliant labor law is bogged down by hundreds of lawsuits aimed at derailing it.

In this episode we discuss the decades-long movement against the original NAFTA, that pact’s outcomes, the recent Replace NAFTA campaign and the cross-border effort to free Susana Prieto Terrazas.

Transcribed by Kaley Joss

Ryan: You’re listening to Rethinking Trade with Lori Wallach. I’m Ryan, and I’m joined once again by our in-house trade expert, Lori Wallach.

So, Lori, Wednesday is a big day, because it's the day when the new NAFTA is going to be implemented. This is something that you’ve worked extremely hard on, not just in the last few years, but in the last few decades. Maybe you can tell us first about NAFTA, and what the new NAFTA is. 

Lori: So NAFTA, the North American Free Trade Agreement, was this radical, corporate experiment in using the brand “Free Trade Agreement,” to implement a set of new corporate rights and powers and to constrain government regulatory authority on a wide scale, on issues that never would have gotten through Congress as normal legislation. So at the heart of NAFTA are foreign investor rights that made it easier, cheaper, less risky to outsource U.S. production jobs to much lower-wage Mexico. These investor rights basically took away a lot of the potential threats that would otherwise be associated with outsourcing jobs and investment. And in short order, we saw a mass movement of higher wage union jobs from across the United States, not just the Midwest but California, New York, Texas, that in NAFTA’s 25 years resulted in over a million government-certified NAFTA job losses, which some of the pro-NAFTA think tanks say is an undercount of one out of ten of the real damage. 

Also, at the heart of NAFTA were corporate tribunals called investor state dispute-settlement tribunals, where corporations were empowered to go before tribunals of three corporate attorneys to demand taxpayer compensation for any domestic law, or government action, court decision that the corporations claimed undermined their NAFTA investor rights. Over the decades of NAFTA, $400 million dollars were paid out in taxpayer money, to corporations attacking tax expansions, water policies, timber policies and energy policies. There is no outside appeal in these cases, and there is no limit to what the corporations can get paid. 

And finally, NAFTA had, at its heart, some very strong limits on its government policies that are pro-people, pro-planet. So, for instance, it did not have any disciplines on subsidies for agribusiness, but it had rules banning certain food policies that were designed to protect small farmers. So, in the course of NAFTA, even in its first 10 years, according to the Mexican government, more than two million campesinos, small independent farmers, were pushed off their land. And NAFTA even made the Mexican government change the Mexican revolutionary-era constitution, to allow U.S. agribusiness to buy up farmland. 

Very quickly, migration of desperation from Mexico to the U.S. expanded enormously, as workers first went to the borders, where they were seeing dollar-an-hour jobs in these U.S. plants that had moved to Mexico. But so many more people lost their jobs, that even those low wage jobs couldn’t contain people's needs. There was a wave of really NAFTA-forced migration to the U.S.. NAFTA’s been a loser for people on the planet for all three countries, but there've been some big multinational corporations that loved it. And, because the NAFTA experience has been so devastating, and there are whole parts of the country—El Paso, Texas, Parts of Los Angeles—where there are a lot of Latino workers, the African-American new union-based middle classes of Milwaukee, Wisconsin, Detroit, Michigan—people were just devastated. And, there’s been a lot of pushback from Congress to fix NAFTA.

So when NAFTA renegotiations were announced, there was some hope that actually, things might get fixed. But, the first new renegotiated NAFTA that Donald Trump announced, actually kind of made things worse. It didn’t fix the bad stuff that promoted outsourcing, and it added a variety of new giveaways for Big Pharma that would have locked-in high U.S. medicine prices, and exported our medicine/Pharma monopoly ripoff pricing policies to Mexico and Canada. So it wasn’t a big shocker that the Democrats in the House of Representatives said, “Uh, no thank you.” And they ultimately, after a year of a standoff where Trump tried to ram that bad NAFTA 2.0 deal through Congress and Congress said “No,” finally that deal got renegotiated a second time, Trump got forced to take the Big Pharma giveaways out, to improve the environmental and labor standards, and to implement a totally different enforcement system for labor that might have some chance of raising wages in Mexico, which obviously is critical for people there, and also is critical to stop the race-to-the-bottom outsourcing. 

And that deal passed with very wide majorities of Democrats and Republicans in both the House and the Senate. And on July 1, it’s supposed to go into effect. But some of the things that were supposed to happen before it went into effect, especially Mexican labor rights, just aren’t looking so good. 

Ryan:

So speaking of those labor rights, and the coalition that fought against Trump’s original NAFTA 2.0, maybe you can talk about the coalition that formed around the original NAFTA’s implementation, and how that same coalition of different types of organizations are working together now to address future trade policies and advocate for changes for people and the planet.

Lori:
The original NAFTA fight really birthed the fair-trade movement in the United States. At that point, the labor unions and the environmental groups were fighting over the Clean Air Act. The consumer groups and the family farm groups were fighting over a dairy bill, and no one was really working together on trade. But NAFTA was such an obvious threat to everyone’s interests, because it had become this cauldron, where every corporate interest from Wall Street, to the food processors, to oil and gas companies, to the chronic outsourcing of manufacturing companies like GE. They all had thrown all their favorite ingredients into this toxic soup, and so, really, a lot of groups that were fighting with each other sat down and realized, well, hell we have a lot more in common trying to fight this corporate nightmare NAFTA than we have in fighting each other. So let's put those to the side. We’ll keep having them over those specific issues, but lets get united together across the country with all of our different organizations—labor, environmental, faith, family farms, women's groups, consumer groups—and let's figure out if united we can actually try and beat the corporations.

And in 1993, on November 17 in the House of Representatives, NAFTA was almost defeated. In fact, two weeks earlier there was a large majority against NAFTA. Then President Clinton bought the votes one by one, trading a project there, a highway there. NAFTA narrowly passed and went into effect February 1, 1994, and the disaster was ongoing.

The groups that started that fight back in the early ‘90s stayed together. And as the evidence of the disaster that was these corporate-rigged trade agreements became more evident, they started to have successes: stopping the expansion of the WTO, stopping a hemisphere-wide NAFTA expansion called Free Trade Area of the Americas, stopping a 30-country investor-state dispute settlement agreement called the Multilateral Agreement on Investment, ultimately making it possible for the Trans-Pacific Partnership to get through the U.S. Congress for the year after it was signed. And then that was the coalition of groups that basically made it impossible for Donald Trump to railroad through the House of Representatives his NAFTA 2.0 deal that was worse than the original. And that’s ultimately the group that forced the renegotiation of the renegotiated NAFTA. 

So that now we have an agreement that, though certainly not the model going forward, is better than the original NAFTA. It might have some chance of improving the labor situation in Mexico, which would be a big deal. It doesn’t have the investor-state dispute settlement at all between the U.S. and Canada, and it is much scaled back between the U.S. and Mexico. Got rid of some outrageous mandatory natural resource export rules, but left in place the bad agriculture rules, the problems with food safety and added some really retrograde rules that have to do with limiting the government's ability to regulate in what they call “digital trade,” which is what we’d all think of as our online privacy and the liability of the big online platforms. So, it’s a mixed bag. It’s better than the original for sure. It was worth passing this so that we don’t have the old thing. 

But again, it's like the difference from being in the twelfth rung below Hell, and we’re now, you know, a ring above the surface, but our butts still are getting grilled. This is not the agreement that we want! We want something that is aspirational, that is actually, objectively good for people and the planet. So, yes, big improvement, something to be proud of, but again, there’s a lot more work to be done to build on the gains that were made between the NAFTA renegotiation and the kind of agreement we’d really be for. 

Ryan:
So one of the more significant of those changes was in the labor rights and the labor standards. We just received news recently, from Mexico, that independent labor activist Susana Prieto Terrazas has been arrested on bogus charges, and it does not look good, considering Mexico’s commitment to sweeping labor reforms. Maybe to close us out, you could just talk a bit about the challenges facing improved labor standards in the new NAFTA, and how society can play a role in making sure those changes are made real. 

Lori:
So, there’s no doubt that the new NAFTA on paper is an improvement over the old one. But it remains to be seen if real people’s lives get improved: if in Mexico people for the first time are allowed to actually organize independent unions that can fight to raise their wages, if their working conditions will improve, whether that will incentivize U.S. companies to not see Mexico as a labor-union-free, low-wage, torment-the-worker zone, and if as a result there’d be less outsourcing from the United States of manufacturing jobs. We do know, under the new NAFTA, corporations will lose the investor-state attack rights. We do know policies like mandatory natural resource exports are out. But the real change, the real thing, is still to be seen: will the new NAFTA translate to improvements on the ground of labor rights for Mexican workers where they can fight to improve their conditions?

And this situation with Susana Prieto is really bad news. She is a very well known, very brave organizer and labor lawyer. She was involved in fighting for rights of workers along the U.S.-Texas border last year. You probably saw in the news a lot of what were called ‘wildcat strikes’ of workers at maquiladora plants, which are where workers at the border manufacturing plants in Matamoros and Juarez, Mexico fought to get pay increases. Totally inspiring. They did strikes, they got renegotiated contracts, they got pay increases. She was one of the folks who helped workers there achieve that goal. And she’s been incredibly forceful fighting for workers now that they’re being pushed to go back into their plants when it's not safe. COVID is increasing and maquila workers are dying from exposure to the coronavirus in these plants. She’s been pushing to get health and safety improvements and to not reopen the plants until workers have personal protective equipment,and there's plexiglass between their stations, et cetera. She was swooped up on false charges of mutiny, among other things, and not only jailed but now denied bail twice. She is locked up 200 kilometers away from where she lives in the capital of one of the border states, in what is a really dangerous situation. Like in the U.S., the Mexican jails have very high incidences of COVID-19. She’s been denied bail, locked up, they don’t want her organizing and they don’t want her helping the workers. And the thing she was fundamentally trying to do was one of the guarantees in the new NAFTA. That is, to have workers vote for their own union leadership, to file a petition to get rid of an old, fake ‘protection’ company union and replace it with a real union that represents the workers. That’s one of the essential guarantees of the new NAFTA, and that is basically what she was arrested for trying to file.

So it is super ominous, she has been in jail for three weeks, the federal government- the president of Mexico- has not intervened. It’s obvious that some right-wing governors in some states in Mexico are heavy-handed in trying to defeat the labor reform. But, now it’s the issue of AMLO, the president of Mexico, as well, because he hasn’t done anything to, hell, get her out on bail, much less to ensure that the labor law reforms that he enacted in Mexican law, great improvement, and on paper in NAFTA, much better, actually result in improvements people's lives. It really is casting a very dark shadow over the July 1st enactment date of the New NAFTA that Susana Prieto is in jail. And frankly, a bunch of those corrupt unions that she’s been fighting against have tried to legally challenge the new labor law, which would be implemented with NAFTA. So we are all going to have to really be on our toes.

If you tune into our rethinktrade.org website, you can get updates about what’s going on. We’re going to be tracking Susana’s situation, and also the status of the labor law reforms. If you want to read a legal memo about those issues, it’s posted at tradewatch.org. Working with our counterparts in Mexico, we intend to fight tooth-and-nail to actually make real the changes we want on paper in the NAFTA renegotiation fight. 

Ryan:

That’s all for today, thank you all for listening. Rethinking Trade is produced by Public Citizen's Global Trade Watch. I would encourage you to visit rethinktrade.org, as well as tradewatch.org to educate yourself and find out how you can get involved in the work we’re doing to fight for fairer and more equitable trade policies.

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Jailed Mexican Labor Activist’s Immediate Release Demanded by Major U.S. Unions, Faith and Civil Society Groups in Letter Delivered Today to Human Right Commission

June 8 Arrest and Detainment of Mexican Labor Lawyer Susana Prieto Threatens to Overshadow Planned July 1 Start Date for New NAFTA

A group of powerful U.S. organizations demanded the immediate release of imprisoned Mexican labor lawyer Susana Prieto Terrazas, who was arrested on June 8 on trumped-up charges for “mutiny, threats and coercion.” Prieto’s daughter delivered a letter from the groups to the Mexican National Human Rights Commission today.

Prieto, an advocate for labor rights of workers in maquiladora factories near the Mexico-U.S. border, has defended workers who are protesting for improved safety measures against COVID-19 in reopened plants. Dozens of maquiladora workers have died after being exposed to the coronavirus. She recently sought to register a new independent union to replace a company-connected “protection” union. This is a core protection guaranteed by the revised North American Free Trade Agreement (NAFTA) and Mexico’s 2019 revised national labor law.

The arrest of Prieto and punitive bail denials that threaten her life given the high incidence of COVID-19 in collective settings such as jails, spotlights the ongoing labor rights crisis in Mexico. Growing focus on Prieto’s detention is overshadowing the July 1 start date of the revised NAFTA.

Members of Congress raised concerns about Prieto’s imprisonment to USTR Robert Lighthizer during a congressional hearing on June 17. Lighthizer said he was closely monitoring the case, “take[s] this very seriously,” found it to be a “bad indicator” of compliance with the new labor standards, hoped “[Mexico] can work it out themselves” but that “we’ll take action if appropriate.”

As well as facility-specific rapid response labor enforcement cases, the revised NAFTA allows NAFTA governments to charge each other with violations of their obligations. The dispute resolution process in the pact could result in Mexican imports to the United States facing tariffs if a NAFTA tribunal determines Mexico is not meeting its labor rights obligations.

The letter, signed by the American Federation of State, County and Municipal Employees (AFSCME), Citizens Trade Campaign, Communications Workers of America, International Association of Machinists and Aerospace Workers, International Brotherhood of Teamsters, Maryknoll Office of Global Concerns,  NETWORK Lobby for Catholic Social Justice, Our Revolution, Presente.org, Public Citizen, Service Employees Union International, United Auto Workers, United Brotherhood of Carpenters, United Methodist Church Board of Church and Society and the United Steelworkers, is available here in English and Spanish.

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Rethinking Trade - Season 1 Episode 9: The Hong Kong Protests VS. China's Democracy Crackdown

Hong Kong is at a significant crossroads—and its special trade status with the US has become a central point of leverage in determining the outcome of this crisis. 

One year ago, millions took to Hong Kong’s streets in response to the Chinese government’s attempts to limit free speech, protest and unions rights. The protests would become one of the largest sustained protest movements in recent history, and would succeed in derailing repressive legislation that Chinese leadership was pushing through the Hong Kong legislature. But last month, China moved to skirt that legislature and impose from Beijing a national security law that threatens the freedoms of the Chinese government’s critics. It would allow HK residents to be arrested for criticizing the Beijing government and jailed in mainland China. 

In this episode, Lori and Ryan discuss the protest movement and the central role US trade policies are playing in influencing the future of Hong Kong.

Transcribed by Kaley Joss

 

Ryan:

You're listening to rethinking trade with Lori Wallach.

 

Welcome back to Rethinking Trade, where we don't just talk about trade policy, we fight to change it. I'm Ryan, and I'm joined once again by our in house trade expert Lori Wallach. So, Lori, today marks 1 year since the start of these mass protests in Hong Kong. They are against an extradition law that was widely seen as opening the door to people in Hong Kong getting prosecuted and imprisoned in China. Recently, these protests flared up again because of a new national security law that China is imposing in Hong Kong. As we both know, the US-China and US-Hong Kong trade relationship have been a central part of that story on the show. We're going to talk about Hong Kong’s “special status” in relation to the US. We're going to talk about the protests, and how this all has to do with our trade policies. So, first, Lori can you describe Hong Kong’s special status in relation to the US, and what some of the trade issues are that have been involved in the recent discussions around Hong Kong?

 

Lori:

Hong Kong has a special treatment in the trade world. Hong Kong has its own seat at the World Trade Organization, separate from China. Also, in US law there's a statute called the Hong Kong relations act which was passed in 1992. This  basically guarantees that, as long as China continues to hold up the promises made to Hong Kong in the 1997 agreement between China and England, when England handed Hong Kong over to China, Hong Kong gets treated basically as a separate entity. What that means, practically, is that for instance when China is judged to be dumping products at below the cost of production and a penalty is put on Chinese imports, imports from Hong Kong don't get hit. Or, China has its own tariff schedule, Hong Kong has a different tariff schedule. Other differences are what the border taxes are, and if there's a penalty, like the section 301. But there is a condition to that, which is every year the US government has to certify that Hong Kong is in fact being given those special rights and treatments that China committed to. If that certification ends, then the 1992 Hong Kong Relations Act allows US presidents to basically withdraw that special treatment. That would mean higher tariffs on goods from Hong Kong, limits on investments from corporations incorporated in Hong Kong, and a variety of other penalties would then be able to be imposed.

 

Ryan:

So, recently, Donald Trump and Mike Pompeo made a move which a lot of people in Hong Kong seem to be supporting, even though it's venturing into unknown territory. Maybe you could talk about what that maneuver was.

 

Lori:

So, part of the Hong Kong Relations Act requires a certification every year by the Secretary of State. This certifies that in fact Hong Kong is being treated autonomously, with respect to free speech rights, independent unions and the like. If that certification is done, then the special, preferential treatment included in the Hong Kong Relations Act is continued. For the first time since the act was passed in 1992, the Secretary of State Pompeo did not certify autonomy. This was notable, and was big news. Now, the president could, at any point, start to effectively impose detrimental pressure on Hong Kong, and therefore pressure on China. 

 

This is one of things I'd love to hear your perspective on, because I know you've been talking organizer to organizer with activists in Hong Kong. I'm interested in hearing more details about what's going on in the protests there. I do know the motto of the protests has been “If we bleed you bleed,” which is to say, to mainland China, ‘if you cut off our rights then we're happy to have economic damage befall you’. That seems, maybe, to be part of the reason why the protest movement is happy that the U. S. decertified. Maybe, for once, Trump will actually follow through and do something that creates economic pain for China. That so far has not happened with respect to the Hong Kong actions. It's been shameful actually, but not surprising in the least, because in the whole year of these protests Trump has signaled he's with the president of China Xi as compared with the protesters. But I'm curious, Ryan, what you've picked up as far as why folks on the streets want pressure, and also how those protests are going?

 

Ryan:

One thing to keep in mind, is that there's been, you know, a year of sustained protests in Hong Kong. Some of these protests have been absolutely massive, with estimates of over 1,000,000 people. On several different occasions there's been lots of violence from the police. Some of the protests have been pretty violent as well. There's been fights between citizens in the streets as well as fights in parliament. It's a very significant situation, and a year of that will obviously harden people. I've spoken to groups from the more left wing progressive groups, as well as more middle of the road groups and the business community. The vibe generally that a lot of people indicate seems to be a general alignment on some big topics: cutting off the special status and seeing what that can do, agreeing with sanctioning targeted officials. This comes too after years of history. In 2014 there were huge protests in Hong Kong, and again back in 2003. This is just a recent development, but I think what's new is China's place in the world. There is a big question right now about what the future looks like, in terms of the US and China, and I think a lot of folks in Hong Kong are asking that question amongst themselves. 



One thing that happened at the end of last year- so these protests began on this day a year ago, in June, and within a few weeks it became clear that this extradition law wasn't gonna fly. So, it was suspended. I think about a month later it was actually removed, and then a few months later was it was completely off the books. That was a pretty big victory, but the protest didn't stop because they saw what was coming. They're living in a place where their legislator is only partially elected, part of it is actually appointed by members of the corporate sector, which is really interesting. The results of that have been a pro-Beijing legislator for a very long time. That changed in November. 

 

The elections in Hong Kong really swept pro-democracy people into parliament. It became clear to China that their attempts to pass any sort of an extradition law or any sort of laws governing activity in Hong Kong, wasn't gonna fly. So they just made this move, and said, well, “we’re making a declaration in the name of national security.” Under Hong Kong's relationship with China, they're technically allowed to do that. But, national security, as many people in Hong Kong we tell you, actually doesn't fall under criticizing the Chinese national anthem, or mocking the flag. There's actually strange overlapping interest between the streets, as in grassroots protest organizations, NGOs, student groups and people from the business sector. The interest comes in that there's a lot of people worried about what extradition could mean for them. A lot of people talked about the quote “white gloves in Hong Kong”, referencing Hong Kong's role as a money laundering hub for elites from China, so there's a lot of people who have a stake in the game. That's why I think we've seen such coalescing of people around the specific issues, such as cutting off the special status. 

 

Lori:

I think it's incredibly powerful and inspiring having watched what's happened in Hong Kong. The stakes are extremely high, as Hong Kong is this tiny island totally surrounded by China, officially controlled by China. China is notorious for not having rule of law or rights for citizens, and yet you have seen this incredible social solidarity of, as you said, a very diverse set of interests. Many of them are for protecting specific rights, a way of life of free speech and freedom. Some certainly are protecting commercial interests, because Hong Kong is operating commercially very differently than China. But, unified in a way that beat [overthrew] a head of state, officially appointed from Beijing. And Beijing made sympathetic leader Carrie Lam, withdraw outrageous policy proposals. So it is both inspiring what they accomplished and then kind of crushing to see how Beijing just, autocratically imposed a new measure which would go into effect. It literally would make a lot of what everyone listening to this podcast, and what you Ryan and I, do every day, a crime, which is criticizing the government. You could be swooped up out of your home and dragged off to a not-real court in Beijing, and then chalked into jail indefinitely in Beijing. For folks in Hong Kong, which is such a different culture that in Beijing, it's a life or death matter. It strikes me at this moment- we're in the United States, where tens of millions of Americans who have also, an incredibly inspiring way, taken to the streets over a life and death matter, which is historic structural racism in this country. It is really really hard, and difficult. Scary confrontations have happened between very established powers and people's aspirations to fight for their rights. There is a way in which the situations are entirely different, but also are both really inspiring examples of people power. Having spent a considerable amount of time in Hong Kong with friends there, but also during the WTO ministerial, their powerful protest movements there, or ‘the year of endless protests’ in a way is probably a foreshadow of the continuing work in the U. S., as we are also in a long term fight for basic rights.

 

Ryan:

Absolutely, and I think, in a way to look at Hong Kong there's two things. One, it comes as part of this wave of global, unprecedented protests and shifting political events around the world. Especially since the economic crisis. And, it also comes in this time where China is asserting itself globally as a real power. Hong Kongers are looking at that, at their place in the world in between these two super powers, and they're taking initiative to try to create their future in the way they want it, rather than it being dictated from outside. And I think that that kind of ties into stuff that you've been writing about and talking about recently, especially sparked by the covid-19 and the pandemic. But, also it's been coming for a while- there are big shifts happening in the world, and we're in this moment where new ideas or even old ideas that are still good ideas have a new place at the table.

 

We're pushing some of those in the trade world. Maybe you could talk about the situation out of Hong Kong, in the US and China, conversations you've been having about a progressive approach to China, and how our trade policies with China need to change?

 

Lori:

I think that as we look at the economic relationship between the U. S. and China it cannot be divorced from the broader geopolitical dynamic between the US and China. You've described it as sort of a babble of different views about how society and economy should be organized, neither of which are entirely inspiring. However, by many orders of magnitude, the situation in China, with respect to basic rights for people to express their opinions; protest; organize for themselves in their workplaces, as unions or as individuals fighting for control of their communities, of the land that gets grabbed out from under them; fight against pollution- all of those basic fundamental rights are denied in the Chinese system. They’re criminalized, there's no rule of law. And, there are a couple hundred very powerful families who are integrated in the Chinese ruling government system, through the Communist Party in China, and through the economic system. Very government affected and controlled. Many of them owned companies, and as we think forward about what a better relationship between the US and China would entail, the economics of it include something that has to do with us, not China. Which is, as the COVID crisis has shown, the hyper-globalization of our economy through decades of corporate trade agreements has gotten rid of the redundancy of production, and has created extremely long brittle supply chains which are to rely on one country. That country happens to be China, but if that one country were England it would still be a problem. This lesson is we need redundant supply chains in different parts of the world, and we need some domestic capacity. So, that when countries, reasonably, are looking to take care of their own citizens, and send their own supplies to domestic needs, we have some ability in critical goods to make some portion of what we need. That way we can balance the way the global economy production occurs so that we have more capacity domestically. We don't have to be totally self reliant by any means, but some capacity. We cannot have a scenario where we don't make, at all, certain medicines and certain active pharmaceutical ingredients, in the continental size country like the United States. And, we need to diversify the supply chains in trade. So that, heaven forbid, there is a natural disaster or whatever it is, that knocks out production as it did in China, and we see huge crashing imports, we don't end up quickly with major shortages that make our situation worse. But, all of that aside, that's medium term and long term thinking. The short term question is, is the US going to actually do anything to protect people in Hong Kong? Or, is President Trump just gonna stand by, and let the Beijing dictatorship crush free speech and democracy in Hong Kong. 

 

Ryan:

Rethinking trade is produced by Public Citizen's Global Trade Watch, where we don't just talk about trade policy, we fight to change. Visit rethinktrade.org today to get involved in our campaigns and help us fight for global economic justice.

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Rethinking Trade - Season 1 Episode 10: ISDS Corporate Attacks Against COVID-19 Emergency Measures

Governments are taking emergency action to fight COVID-19, counter economic disaster and ensure peoples’ basic needs are met. Now corporate law firms are targeting those actions for outrageous Investor-State Dispute Settlement (ISDS) attacks.

ISDS law firms are actively recruiting multinational corporations to sue governments before a panel of three corporate lawyers to obtain unlimited taxpayer compensation for government actions related to the COVID emergency. These ISDS tribunals can even order compensation for multinationals’ loss of expected future profits and there is no outside appeal.

In this episode, Lori explains the immediate ISDS danger and breaks down the regime’s history of attacking environmental protections, consumer safety regulations and democracy itself. 

Transcribed by Mariana Lopez 

Ryan: Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I am Ryan, and I am joined once again by our in-house trade expert Lori Wallach.  So Lori, as we both know, the best and worst things can emerge in times of crisis and just recently amidst the coronavirus pandemic, we’ve seen one of the ugliest aspects of corporate trade policy rear its head once again: Investor State Dispute Settlement Tribunals. The internet now is flooded with blogs, webinars and other content from corporate law firms fishing for clients to attack governments and demand compensation over health measures taken during the  pandemic. Before we get into those gory details, maybe you can just tell us about how ISDS policies work and, you know, what these law firms have been saying. 

Lori: Investor State Dispute Settlement or ISDS is an outrageous scheme where trade agreements and agreements called bilateral investment agreements grant new rights and powers to multinational corporations to sue governments before a panel of three corporate lawyers. Those lawyers award the corporations unlimited sums to be paid by us, taxpayers, including for the loss of expected future profits. The corporations only have to convince the lawyers that a country’s domestic law, or policy, or safety, regulation or court decision violates their special foreign investor rights. And these decisions are not subject to appeal. The amount that gets awarded has no limit. So, literally it is a parallel system of injustice, where multinational corporations can skirt domestic courts, raid our treasuries, undermine our laws and are given an enormous amount of new powers relative to governments or to all of us, the people who are ostensibly represented by our governments. 

Now if that seems like something from a science fiction novel and too crazy to be true, first of all, it was included in the original NAFTA (that was the first trade agreement that had it) and the Trans Pacific Partnership Agreement went up in flames in the U.S. Congress in part because that agreement expanded those outrageous corporate powers. And there have been hundreds of rulings where corporations have extracted billions of dollars from numerous countries’ tax payers, after these corporate tribunals have ruled against toxic bans, mining limits, water safety programs and an enormous number of energy policies. Such that, for instance, just for North America, just under NAFTA, almost 400 million dollars has been paid out after successful corporate attacks on an array of public interest safeguards. 

Ryan: And so these law firms are trying to find clients willing to pursue cases under this system as a result of the coronavirus?

Lori: So globally right now, governments are taking actions to save lives and stop the pandemic. These kinds of actions are unprecedented in modern times, even as the need has been clear. But because the ISDS system is so invasive, many of the things governments are doing can be subject to corporate claims for hundreds of millions in compensation. And the kinds of things to consider are, for instance, based on previous crises like the financial crisis that hit, cases could arise, corporations could attack and demand compensation from things many governments are doing: restricting and closing business activities to limit the spread of the virus and protect workers, securing resources for healthcare workers by requisitioning the use of private hospital facilities, or putting manufacturers under orders to produce ventilators, or PPE or other emergency medical goods, or mandating relief from rent and mortgage payments to avoid people being turned out to the streets, or a bunch of countries have passed policies preventing foreign takeovers of strategic businesses stricken by the virus. Other countries have required utility companies to freeze bills and suspend disconnections to assure there’s access to clean water for handwashing. Other countries have done compulsory licensing and other actions to make sure medicines and tests and vaccines are affordable. A lot of countries are doing debt restructuring. All of those things may be applied equally to both foreign and domestic firms. But under ISDS, foreigns firms have special rights under special tribunals. They could demand compensation for any of those very necessary, even extraordinary kinds of actions that governments around the world are taking. 

Ryan: Can you explain more about how the ISDS regime works and what exactly these tribunals, you know, what do they look like, provide for big companies and how they impact regular people, public health and the planet. Maybe you can talk about some of the cases. 

Lori: So let me go back to some of these COVID threats. So, for instance, there were a whole series of cases after various financial crises, for instance in Argentina, where the government did things like suspend utility payments and require companies to keep water and electricity going. And foreign companies who were invested in those kinds of utilities were able to go to a tribunal where they pick one of the judges (the corporation picks one judge, the government picks another judge and then those two pick a third). The judges are paid by the house, so it is in their financial interests--they get hundred and hundreds an hour to keep the tribunal going as long as possible. And a corporation literally says, “Government of Argentina, your taxpayers owe me. You have to pay 100 million dollars because you made me keep my electricity flowing even though during this crisis people couldn’t pay the bills. And I know you did that to all the Argentine companies too, but I am foreign investor, and I have special foreign investor rights under ISDS, and I can go to this tribunal. So we’re going to have these three private attorneys decide outside your court system, just for me, the foreign investor, how much taxpayers are going to pay me, because in the middle of a crisis you took crisis actions that apply to domestic and foreign companies.”

And under that kind of regime, there have been repeated rulings in favor of the corporations. I mean one of the—there are several infamous ones about governments insisting that foreign water companies keep the water going and/or cancelling contracts when they weren’t purifying water systems when foreign companies had bought privatized water systems in developing countries. And on a regular basis, these corporate tribunals order the taxpayers of poor countries, and some wealthy countries too, to pay the corporations. I mean to some degree there is nothing like losing one of these cases to start getting public opinion to turn. Germany, with many corporations using that regime to collect hundreds of millions, was a place that was a cheerleader for ISDS until the government of Germany decided to phase out nuclear power after the Fukushima disaster and to strengthen the rules for coal-fired electric plants as part of their Paris commitments. And in both instances, foreign companies sued the German taxpayers and forced settlements where hundreds of millions were paid out because Germany changed a policy. And that change applied to German companies too, but the foreign investors went to ISDS and they got the money. And this has been a systematic problem of over 1,000 known cases. Already more than a dozen have resulted in payouts of more than a billion dollars, including for future loss of profits. And by the end of 2018, because the 2019 data is not yet available, governments worldwide ordered to pay or agreed to pay investors in just the cases we know about, because a lot of ISDS cases are secret. Eighty-eight billion dollars we know about have been paid out. And that’s not counting the developing countries that have billions and billions in outstanding ISDS payments. If you don’t pay under this regime, the corporation can seize one of your nation’s ships or seize your assets, your foreign reserves in another country’s banks, or try and take one of your national airline’s planes if it lands in a country where they have a court order to force the payment. It’s so outrageous you couldn’t make it up, except it’s the reality. 

Ryan: If we got rid of ISDS tribunals, what would a fairer, more equitable tribunal system look like?

Lori: Well there should be no parallel system of justice just for multinational corporations. They’re hardly an underprivileged class that needs special rights. So the answer is there should be no ISDS. Those agreements should be abolished. The original idea of the system when it was concocted with a more narrow scope, was that European companies and governments, invested in what were about to become their foreign colonies, would flee during the period of independence because the court systems in parts of the Caribbean and Africa and Asia weren’t set up. So the idea was, here is a system for these colonial investors in the transition to independence that will keep them staying invested( Royal Dutch Shell in Indonesia, etc.). And the system has overtime morphed to be this incredible corporate power scam. 

It may have been a bad idea to start with, but when it was just compensation for expropriation, you had to get your money back if your oil rig was taken, that’s one thing. Now it's just a vast system of if you change your regulation, a company thinks that’s unfair, they go in front of a bunch of corporate attorneys whose incentives are to rule for the companies because the companies start the cases, the governments can’t sue a corporation. So the tribunalists in the system want to curry favor with corporations because they’re the ones who start cases and hire the judges. It’s just so corrupt and unfair. There is no way to fix it. And what’s super disappointing is, in the face of worldwide opposition and numerous countries–South Africa, India–leaving the old ISDS regime, Europe is trying to repackage the same old thing with a new coat of paint and call it a global investment court and basically pretend (multilateral investment court is the formal name, the MIC) it is something other than ISDS even more formalized. The only answer is to get rid of the whole parallel rights for corporations. 

Ryan: And Lori, I am sure a lot of listeners are wondering how real is the threat of ISDS cases around coronavirus. But then also maybe we can talk about some of the good news, which is that the tide has turned on ISDS in some places: the new NAFTA having shredded the original deal’s ISDS rules and also both Donald Trump and Joe BIden giving some indication of opposition to ISDS tribunals. 

Lori: It is unfortunately very likely that a whole spate of ISDS attacks on governments’ responses to the COVID crisis will begin to be filed. And the reason why is, under this regime, an enormous amount of money can be made by both the lawyers and the corporations. It is a legalized raid on treasuries. And so, one of the ways we know that these cases are already being designed is that online every law firm you can imagine that has work in this area is trolling for clients. There are webinars, there are podcasts, there are advertisements about how exactly investors ought to structure their corporate holdings to be able to maximize their use of this system, to come out of the crisis in the best way. And it even—in some of these unlined platforms of the law firms, they describe “have you lost money because of this?” It’s, you know, sort of global, corporate ambulance chasing. 

And there are some very specific things governments are going to have to do to avoid being just slayed by this, at the very time economies and jobs are shaky and health costs are up. I mean the most important thing countries can do is just to restrict the use of ISDS and all its forms with respect to any claims relating to COVID. That is narrow if they don’t want to get rid of ISDS all together, and there are different technical ways you can do that. You can do that in a multilateral agreement among the countries who sign these treaties, you can do it unilaterally, but you can have limited effect because the tribunals can just ignore the government and rule against you and then seize your government airline’s plane to pay off the corporation. But there are ways for governments to restrict the use. There certainly should be a suspension for all the cases ongoing right now while governments are focused on fighting COVID-19. There are almost 400 open ISDS cases against 83 countries right now. So there’s no bandwidth to deal with this. But one of the countries, Bolivia, has already asked tribunals in two cases to suspend proceedings, and in both cases the tribunals rejected the request and just kept going. A third thing is to make sure that no public money is spent paying the corporations for decisions during the pandemic. And really it’s two different things: don’t pay your ISDS awards, make them so that the corporations have to go to domestic courts and try to seize your stuff (it delays it), but also if you have carved out ISDS that may be existing in your agreements that may be covering anything that covers COVID, you basically can protect yourself from having to pay. Obviously, countries should stop negotiating, signing and ratifying new agreements that include ISDS, and they should terminate their existing agreements with ISDS, which if you look at our website (tradewatch.org) we’ve done a study that shows that the countries that got out—Bolivia, Ecuador, Indonesia, India, South Africa-—have not seen drops in foreign direct investment. In fact, some of them had their credit ratings go up, because there isn’t this potential huge liability of corporate money grabbing. And then, obviously, every country should be reviewing all of their agreements that might include ISDS because they just don’t fit the reality of too much corporate power in the global economy and even more so in this crisis. 

And that gets to the good news. So, for many decades the United States was one of the leading proponents of ISDS, it was shoving it down every other countries’ throats. And as we saw during the Obama Administration with the fight over the Trans Pacific Partnership (TPP) in Congress, pretty much on a bipartisan basis, ISDS has lost support. And a lot of people claimed, “well maybe it wasn’t really opposition to ISDS that derailed the TPP, maybe it was just that Republicans didn’t like Obama and didn’t want him to have that vote.” But the reality is, the United States Congress just passed, by overwhelming House and Senate majorities, a new North American Free Trade Agreement that totally eliminates the existing ISDS between the United States and Canada, under which dozens of Canadian environmental laws have been attacked and millions paid out, and largely whacked ISDS between Mexico and the U.S.. And new U.S. trade agreements with the UK, Kenya, etc. aren’t going to have ISDS anymore. So if even the U.S., on a bipartisan basis, is stepping back, and you have lots of developing countries that have gotten out of their ISDS enforced agreements, then progress in the right direction is happening. And the Europeans need to stop pushing the same-old-same-old under a different brand, their multilateral investment court. 

I mean, hell, we are going into a U.S. presidential election where Vice President Biden, who in the past supported these agreements, on the record, in writing, has been answering campaign questionnaires saying his future trade agreements will not have ISDS (that’s a stupendous shift). And Trump has been behind agreements that already don’t have ISDS, so that’s a big shift domestically. Every activist should be happy about the work that people in the U.S. have done for decades to get there. And, you know, all these COVID attack cases are exhibits one, two and three of why every other country should abandon, ditch, get rid of, terminate, their ISDS agreements and liability. 


Ryan: That’s all for today. Thank you all for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org, to educate yourself and to find out how you can get involved in the work we are doing to fight for fairer and more equitable trade policies.

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Rethinking Trade - Season 1 Episode 8: Crisis at the World Trade Organization

Today, the World Trade Organization is in a major crisis of its own making, with its over-reaching enforcement regime derailed, its Director-General abruptly announcing his resignation and legislation introduced in both chambers to terminate Congress’ approval of the organization. 

When the WTO was launched in 1995, we were promised by an array of corporations and politicians that it would usher in a new era of win-win globalization that would deliver higher wages and good jobs. Instead, as activists and union members warned, the WTO has facilitated a race to the bottom in wages and mass job outsourcing, especially after China joined in 2001. The WTO has ruled again scores of U.S. policies, including environmental and consumer protections. 

What happens next at WTO affects us all. In this episode Lori digs in the history of the organization and describes the significance of its current crisis.

Transcribed by Kaley Joss

Ryan:

You’re listening to Rethinking Trade with Lori Wallach. Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan and I’m joined once again by our in-house trade expert Lori Wallach. So Lori, the World Trade Organization protests in 1999, the Battle in Seattle, that was my gateway into political activism. And we just celebrated the 20th anniversary of that event a few months back, but today we’re going to be talking about the WTO right now. Because it’s facing a significant crisis. Before we get into that, maybe you could just tell us what the World Trade Organization is, where it came from, and what some of the major issues have been in the fight against it. 

 

Lori: 

So, the WTO is an international commercial agency. It sometimes gets called a trade agreement, but most of its contents have nothing to do with trade. It is the global commerce agency that replaced an agreement called the General Agreement on Tariffs and Trade, which was a global trade agreement created in the fall of 1947. It was one of the so-called Bretton Woods agreements that came after World War II and the economic and social crisis that followed, where actually a bunch of Keynesians sat around and tried to come up with some good rules. They had a thing called the “International Trade Organization,” it had labor standards, it had currency disciplines, it’s not totally different than the agreement we’ve been fighting for these days. But the U.S. Senate objected—we got the GATT. The GATT was really about trade, border tax cutting, and quota cutting. And that’s what we traded under for many decades. It worked pretty well for the U.S., until in the ‘80s Ronald Reagan and the folks around him who were uber-deregulatory, big about corporate power and rights, wanted ways to get around the fact that there was a durable Democratic majority in Congress. 

 

In Germany, a neoliberal chancellor wanted to deal with busting up his unions, Margaret Thatcher was in cahoots in the same mindset as Kohl and Reagan. And they came up with this really elegant, but rotten, but effective strategy of shifting out of democratically accountable public venues like parliaments to close door trade negotiations, and the Uruguay Round of GATT negotiations was launched in 1982. It resulted in replacing the entire GATT. The GATT becomes one of twenty-plus agreements in force by this gargantuan new World Trade Organization which suddenly sets top-down, one size fits all rules for all kinds of stuff, totally unrelated to trade. 

 

So to start with, there are a bunch of just flat out corporate protectionism. New monopoly protections, classic sort of rent-seeking protectionism for patents and copyright monopolies—monopolies in a free trade agreement. Every country is required to make in their domestic laws certain guarantees for corporate rights and all kinds of new limits on behind-the-border type policies on food safety, product safety, energy policy, banking regulation. In one fell swoop, basically like some quiet, corporate coup d’etat. This thing labelled “free trade agreement” gets rolled in like a Trojan Horse. And actually, what’s on the inside is an enforceable system of global governance literally by, for, and to a large degree (given the revolving door of the staff), of multinational corporations. And every signatory country was obliged to conform it’s domestic laws to these rules. And if they didn’t, they faced indefinite trade sanctions, fines, cash, it was suddenly an enforceable system of governance. And if this sounds like I’m exaggerating, let me actually read the key clause in the agreement established in the WTO. “Each signatory country shall conform its domestic laws, regulations, and administrative procedures to the attached agreements,” and the attached agreements are a whole bunch of rules limiting service sector regulation, food and product safety regulation, giving new corporate rights for investors, for intellectual property, that every country was supposed to make its domestic laws meet. That’s the WTO. It started on January 1st, 1995. 

 

Ryan:

And since the WTO was launched, they’ve tried several times to launch new rounds of talks to expand their power and scope and it hasn’t quite worked out the way they wanted it to. It's becoming increasingly clear now that they’re in a real serious crisis. But there have been a few things recently that have happened as well. What’s going on over there and how significant is the situation at the WTO?

 

Lori:

So the WTO’s actual outcomes have helped doom it. It hasn’t helped that it’s tried to grab more power and scope, but it’s the record of what’s actually happened. So, during the period since the WTO went into effect, just for instance with the US, we’ve lost a quarter of our manufacturing jobs, nearly 5 million, with 60,000 factories shuttered. This really took off after the 2001 entry of China into the WTO. The U.S. went from a goods and services trade deficit before the WTO of 125 billion, which was not great but now, it’s 617 billion, as in almost a 400% increase. And then, add to that all of the WTO’s obscene corporate protectionism and bans on common sense consumer safeguards, we have seen law after U.S. law challenged in WTO tribunals. We’ve lost 93% of the WTO attacks against our public interest policies and that’s led to roll backs of country of origin labelling for consumers of meat, rollbacks of protections of dolphins, clean air act regulations and gasoline cleanliness, endangered species acts, sea turtle safeguards and more. And this system is so lopsided that you know, we’ve lost 93% of the public interest cases but we’ve lost 90% of the 79 cases brought against the US at the WTO. Which just is a perverse irony, the U.S. was the biggest pusher of establishing the WTO, and we’re the number one target of the WTO enforcement actions. Just under a third of all the WTO cases are against U.S. policies and laws. So, the WTO didn’t deliver on the glorious and great gains that were promised certainly to people in the U.S. and Europe. And for developing countries, like some of the developed countries, there have been some major problems. 

 

So we’ve seen this gutting out of middle class jobs and the attack on environmental laws, but the attack on public interest laws have been worldwide. So for instance, India Ghandian-era law constitution and laws that forbid the patenting of seeds and medicines were ruled to be a WTO violation. Of course, those policies are about trying to keep a country with a billion poor people being able to have seeds to plant to feed themselves and have access to medicine. Attacks on policies such as Europe’s ban on the use of artificial hormones on raising meat or Europe’s labelling and approval process for genetically modified organisms. There have been attacks on development policy like the banana trade policy that was basically a development policy that Europe had with its former colonies in the Carribean and Africa. So time after time the WTO rules against people-policies for corporate policies, but also how now there is in Congress a new wave growing of bipartisan upset about the WTO. The WTO’s unelected, unaccountable tribunal started also just making up policies, making up laws, and then enforcing them against countries. And that was irritating when it started to actually cause problems for some businesses who had been WTO boosters and then saw the WTO just making up rules and enforcing them that no country ever signed onto. 

 

Ryan:

And what has all that added up to today?

 

Lori:

Well, pretty much a meltdown at the WTO. So, starting with the Obama administration the U.S. you know, was furious with the WTO making up policies and sticking them on countries and was criticizing the enforcement system for not being very transparent, or timely or fair, and the Trump administration came in and stepped that up a level yet. Actually, the Bush two administration kinda started it, Obama stepped it up, then Trump went into overdrive. And the Trump U.S. Trade Representative Robert Lighthizer just flat out refused to appoint more judges to the final tribunal of the WTO, and he basically put it out of business at the end of 2019. So right now the WTO enforcement system is derailed, which given how bad its ruins are, is nothing to be too upset about actually. And the WTO hasn’t been able to complete any major negotiations basically since it was established. You know the Seattle Round obviously melted down, there was a 10-year skirmish over what was called the Doha Round of WTO expansion, but that was ultimately derailed. So it’s not negotiating, it’s not enforcing a lot of the rules that are locking in really crazy, extreme neoliberal 1980’s ideas. Meanwhile things that are at the cutting edge of concern, things like climate change, and issues around income inequality and in this COVID crisis access to essential medical goods, are either not covered in the WTO or covered in a way that makes things worse. So given the deadlock on enforcement and the deadlock on negotiations, it was not totally surprising but totally shocking when, just recently, the guy who was the head of the World Trade Organization, which is kind of a coveted position (and the guy still had a couple years on his term—a Brazilian diplomat named Roberto Azevedo) he announced he was leaving this fall. Almost two years early. Now that body that is very jammed will also be headless, so to speak. 

 

Ryan:

Recently Representative Defazio and Senator Hawley introduced a bill to withdraw the United States from the World Trade Organization. Can you talk about that a little bit?

 

Lori:

So when the U.S. Congress voted on what was called the Uruguay Round Agreements Act, which gave Congress’ approval to the WTO, it was so controversial that then-Senator Bob Dole (generally a free trade guy) insisted, given all the sovereignty implications of all the non-trade policies being imposed by the WTO, that every fifth Congress have a report on the outcomes and activities of the WTO and a privileged guaranteed vote to reverse the U.S. approval of the agreement. And a privileged vote means the kind of cloture and other rules in the Senate that block things up don’t apply... you get a vote. It gets pushed out of committee after a certain number of days, so the committees can’t block it. It gets a vote. And the agreement, the legislation, Article 125 of the Uruguay Round Agreements Act, has this five year option of withdrawing congressional approval. So first a conservative Republican Senator from Missouri named Josh Hawley put it in the Senate, and then shortly after two Democratic House full committee chairs, Congressman Peter Defazio and Congressman Frank Pallone, submitted the House version. 

 

Now, the way it’s written, both the House and Senate have to send it to the President within 90,what are called, legislative days. It’s not calendar days, it’s a little bit longer. And if they do that within 90 days when the report that’s required gets sent, then it would withdraw the U.S. Congressional consent for the WTO. Now, there are all kinds of complications with that because the House can’t get the 90 days vote in, given when the resolution was submitted. And even if Congress’ approval of the legislation was withdrawn, it’s not clear that it actually gets the U.S. out of the WTO, and that’s assuming Trump wouldn’t veto it. And that’s assuming it would pass, all of which are things that I think you can’t assume. But, the bottom line of the whole situation is, there is a decent likelihood there will be House and Senate votes where members of Congress are going to have to express what they think about the WTO. It’s kind of a free vote to express your concerns without any potential liability. Because of the timing, the technical problems, it’s not a vote to get out of the WTO even if, actually, the House and the Senate both supported the resolution by majorities. 

 

Ryan:

So let’s say that the US did leave the WTO or that the WTO did fall apart. What does the alternative to it look like? You kind of wrote the damn book on it—what could an alternative system look like?

 

Lori:

Well first of all, folks can still get that book Whose Trade Organization?. I think the best way to think about it is “what are the rules we want?” So, “what are the goals we want?” Is the first question, and then you think about the rules. Versus the way the WTO was created was: here’s a model, the whole neoliberal smorgasbord of policies, of corporate rights, of corporate protections, of intellectual property rules, of limits on regulation, and service sector and financial deregulation, and let’s see what happens! No, you go the other way around, so what do you want? You want living, family supporting jobs and wages. You want labor and human rights so that people can advocate for themselves. You want an agreement that is compatible with a living planet and doesn’t exacerbate climate crises, in fact, as part of a transition to a lower carbon economy. You want to make that sure food is safe and the services we rely on are reliable and affordable and safe. 

 

So if you think about it that way and you look at the WTO, basically in a certain way, you kinda want to go back to the ITO, the International Trade Organization. Which is, you take all of those WTO agreements, you just whack and bury a bunch of them. You don’t need a trade-related intellectual property agreement. There shouldn’t be protectionist patent and copyright monopolies in a trade agreement—they do not go there. That is just pharma and the content industry trying to ride on the good name of trade. You don’t need rules limiting what kind of food safety or environmental standards or product safety standards—you know the basic rule is as long as you treat domestic and foreign goods the same, the democratic process in the country that’s going to have the stuff in their market decides whether or not it can have pesticides and how much, and whether there should be GMOs and how they should be labelled. That’s not a trade issue. The discrimination treating foreign goods worse, that could be a trade issue. But as long as you don’t discriminate, the level of protection, the level of consumer information, that’s a democratic choice. So a bunch of those things need to get cut out of the system, then the stuff that’s missing needs to be put in. Which comes back around to the ITO. 

 

So that old International Trade Organization connected to the International Labor Organization’s conventions on labor rights- that needs to be the floor on which trade happens. It didn’t have an environmental component—it would be very easy to use the kind of language that’s now in the revised NAFTA that talks about multilateral environmental agreements that countries have, as sovereigns signed onto, becoming the floor on environment that countries have to meet to get the benefits of the trade agreement. Equally, there are human rights standards through the United Nations. We have international rules on the people’s side that should become a floor on which trade is predicated. And then things like currency manipulation—there were rules against currency manipulation in those days relating to the IMF, which had a different kind of function then, that were in the ITO. We definitely need to make sure there are currency rules. There were also antitrust rules to break up anticompetitive practice, which obviously in the global economy we need. And we need rules (and there are various versions of these in some places) to stop tax cheating and the use of tax havens to get an advantage and starve governments. So if you take out the stuff that shouldn’t be in there and you put in the stuff that should be in there, it focuses mainly on trade—trade and what the terms should be for when trade happens. Those are the kind of agreements that could really get the benefits of trade without all the corporate baggage attached. 

 

You know, when I think about what’s happened to the WTO and what we want, it makes me think back of walking around the Senate building with Ralph Nader during the fight in 1994 about approving the WTO. And he used to say to Senators, “if this darn agreement were ever fully implemented, the results would be so outrageous that people would want to get the hell out of it. And hopefully we don’t have to go through all the pain and suffering that’s going to ensure before we know it was a bad idea and we get out.” Well, it’s been 25 years and it is overdue to get out. But the other thing he said regularly was, “it’s not that there is no alternative, there are many alternatives. We just need rules that actually work for people and the planet, not corporations.” So stay tuned to the news about what’s going to happen with the WTO, could be at a turning point, sure would be overdue time to see something different as the rules of the global economy. 

 

Ryan:

That’s all for today, thank you all for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself, as well as find out how you can get involved in the work we’re doing to fight for fairer and more equitable trade policies.

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Rethinking Trade - Season 1 Episode 7: The Loophole That Lets Amazon Deliver Uninspected Imports to Your Door

Nearly 2 million imported products we buy online every day enter the United States and are delivered to consumers’ doors without any inspections. That’s thanks to a trade law loophole that also lets these imports dodge the fees that brick-and-mortar stores pay for the same products. 

Amazon and other E-commerce giants pushed for this change to what is called de minimis import policy, and it has facilitated a new flood of fake and unsafe imports that threaten consumers while undermining local businesses.

Transcribed by Lauren Martin

Ryan:

Welcome back to Rethinking Trade where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert, Lori Wallach. With all of us sheltering at home, more and more people are reliant on e-commerce for their shopping needs. So today, we’re going to talk about a little-known piece of the e-commerce world, which is because of a sneaky change to trade to trade laws, a lot of products we’re bringing into our homes are not even inspected. Lori, maybe you can describe this situation and explain kind of why it matters to folks like us?

 

Lori:

So normally when we think of the products that we buy, we assume that they’ve been inspected by the Consumer Product Safety Commission or the Food and Drug Administration or the USDA depending on what they are. And typically, that applies to imports, not at the level you’d want, it’s too low of an inspection rate, but the way that this is done is things that are most worrisome get targeted by risk for deeper inspection for imports. Except, thanks to a sneaky change to trade law, anything that comes in — most of e-commerce shipments, I might add at under $800 of value totally skirts normal customs procedures and all inspections from any U.S. safety agency. That is called “de minimis” importing. De minimis refers to the amount below which an import isn’t subject to customs laws. And for years, it was $200. So anyone who’s travelled into the U.S. before 2015 will remember that customs form, that paper form they made you fill out on the plane before you got back into the U.S., and it said “are you bringing back more than $200 worth of stuff?” That was the de minimis, and as long as the stuff you were bringing was less than $200, you just wrote “no” and that was the end of it. If you were over $200, you had to list what it was and you might have to pay a border tax on it, a tariff, and it might be subject to getting you pulled aside for inspection. In 2015, there was a push to change that from $200 to $800. What that means now is that an enormous amount of stuff including a bunch of things that are potentially very hazardous, like car airbags and fancy safety devices for kids from car seats for kids to fancy jogging strollers, to the really high-end helmets for motorcycles and biking, to a lot of different athletic equipment like hoverboards all of those things now come in under the de minimis which means none of it’s inspected. And it meant an explosion of imports. It’s called Section 321 under the statute that sets up de minimis. But today, about 1.8 million shipments, individual packages, are released every day, being imported without being inspected thanks to raising the de minimis from $200 to $800. And all the new things that can come in. Today about 1.8 million shipments a day are being released as de minimis with no inspection for safety, actually really no recording of what they are. That includes a million-plus air shipments, so air express, small packages, from e-commerce purchases just coming from China every day. None of this stuff is inspected.

 

Ryan:

When you say not inspected, you mean literally not inspected at all, not inspected for safety, not inspected for anything?

 

Lori:

I mean, you can bring this stuff in, listing only the most basic information. You don’t know where it originated from, you don’t know technically what it is. You can describe it in vague language. There’s none of the import codes, so you can’t have an idea if you’re an inspector that it’s in that category of dangerous things. It isn’t inspected for safety, it isn’t inspected for even what it is, and it gets around normal border tariff taxes, it’s just a huge loophole.

 

Ryan:

And I’m assuming it wasn’t parents that were lobbying for bike helmets that weren’t inspected, and it wasn’t drivers who wanted seatbelts that weren’t inspected. Who was pushing for this change to be made in the de minimis rules?

 

Lori:

So in 2015, folks will remember there was a knock-down, drag-out fight over trade authority, over Fast Track trade authority for the Trans Pacific Partnership. And there were other bits and pieces of the legislation that was written to extend Fast Track. But the fight and the focus was on Fast Track. One of those pieces was a change from $200 to $800 of this de minimis standard, and it was quietly but ferociously pushed by two sets of interests: the express delivery industry so the UPSs, the Fedexs, the DHLs — and by the e-commerce industry so the Amazons, the Walmarts, etc.. Both of those sectors said “hm, we actually if we got this higher, could be bringing in lots of stuff from China and other countries, much cheaper and much more quickly without the bother of inspections.” That is otherwise the rule of thumb for every brick-and-mortar store, and that was the rule for every package over $200 in value.

 

Ryan:

And the way they do this is, just on the business end when I order something from Amazon, I’m considered the importer, and so legally it’s me that’s importing this product directly and Amazon’s acting like they’re not involved. 

 

Lori:

Part of the problem is the change in the statute from $200 to $800. And that happened before the Trump administration. Part of the problem though is the ruling that was issued during the Trump administration which allows the importation of entire shipping crates full of individually addressed packages creating a myth that when Amazon in a fulfillment center in China makes 10,000 individual packages and puts them in a multi-ton shipping crate, each individual consumer is the person who is importing. So each individual package has to be under $800 to sneak in under this loophole. The whole shipping crate isn’t considered. Yes, every time one of us makes an order, we’re the “importer of record,” not the big e-commerce platform that on any given day is importing hundreds of dollars of goods. 

 

Ryan:

So companies like Amazon are obviously making a lot of extra money because of this. Who’s being harmed by this? How is this affecting other businesses, brick-and mortar-shops?

 

Lori:

This scam of importing through this de minimis, hundreds of millions of dollars of potentially unsafe, potentially fake when I say fake, I don’t mean knock-off Gucci bags, I mean it says it’s an airbag, but it’s not really one, and you rely on it and die. It says it’s the fancy $800 stroller that’s impact resistant but it isn’t and your kid gets hurt. Those goods coming in not only expose us all to safety risks, but also, brick-and-mortar stores who are selling the same stuff are put at an enormous disadvantage relative to the Amazons, the Ebays, etc. Because, if say, your favorite local bike store decides they’re going to sell a very high-end bike, a $700 bike, and they want four of them in stock, and they buy the four of them, and they’re subject to tariffs, it’s $2,800. The ability for you as a consumer to buy the $700 bike online, and bring it in under the fake Amazon platform, under the fake notion that you are the importer versus Amazon, means you never have to pay that border tax. So, Amazon ends up undercutting the brick-and-mortar guys, who actually, you probably went to the brick-and-mortar place to check out the bike but then, the reason why it’s so much cheaper on Amazon than in the brick-and-mortar places is this de minimis cheat. And what is that money? Those are tax dollars that aren’t going into U.S. infrastructure, social security, other programs that we like and care about. Instead it goes into Amazon’s profit margin. 

 

Ryan:

And some of these companies like Amazon, they’ve actually built infrastructure around this loophole. There was this great piece in ProPublica talking about these warehouses along the Canadian and I think also the Mexican border for packages going into the U.S., but they were all subject to the loophole, right?

 

Lori:

So the big online monopolists have figured out numerous ways to exploit this loophole they created in the 2015 bill. First, they put fulfillment centers in China and it’s not just them the original ruling on this stunt came from Zara, the women’s clothing store. Any online package fulfilled directly in China from the Zara fulfillment center same thing for Amazon you can put 10,000 of those individual packages into a shipping crate and each individual purchaser of an item is considered the importer, not Amazon who arranged the shipping crate. So that’s scam number one. Scam number two and that required getting a special exception from the Trump administration from the customs department. Scam number two: They have created warehouses, as you said, along the border with the U.S. and Mexico and the U.S. and Canada. So the way that one works is they bring the goods into Mexico or Canada, and they keep them what’s called “in bond.” That means it’s landing there, but it’s on it’s way to someplace else. So it’s not going to be entered into customs in Mexico or Canada. Because the actual ultimate consumer is in the U.S. So they bring in big shipments of whatever is the good, and then it’s packaged into individual consumer packages, which are put on trucks, driven across the border to a U.S. post office in a U.S./Mexico or U.S./Canada border town, and because of NAFTA there is no tariff when a good crosses from Mexico to the U.S. or Canada to the U.S. Therefore it goes into the U.S. system under the de minimis so no inspection and duty-free and it enters basically from big warehouses full of large amounts of these goods that basically the package gets picked and packed there and then shipped on a truck across the border and put in U.S. mail. The third sort of related scam is using the de minimis, basically online platforms using third party sales, so not even like an Amazon fulfillment warehouse, basically is setting up an avenue for a tsunami of goods from totally unregulated, mysterious, and often unknown fulfillers. The third-party stuff is kind of the scariest of all, where basically because of the exponential growth of e-commerce as a means by which Americans buy products, consumers are being widely exposed to serious health and safety risks by fake products produced anywhere in the world, which get millions of potential customers for sales and delivery. That’s not just made easy and quick by listing as a third-party seller on a well branded e-commerce platform, but has an air of legitimacy and a false sense of security so that a good that would normally be pulled from some unreputable third-party seller whizzes right through with no inspection, and frankly the consumer doesn’t even know. Those are three really scary ways that the big online giants are using this loophole.

 

Ryan:

So how do you tackle a problem like this? What are potential solutions to this and how can they be implemented?

 

Lori:

The simplest fix is just to take the de minimis level back from $800 down to $200. That was a sneak attack amendment. People weren’t paying attention. No one even thought through necessarily what it would mean. Now that we see the outcomes, it should be brought back. But that would require Congress to pass it, House and Senate, and the prospect of that happening anytime soon is not great. And not only because of the big express shipment lobbying operations and Amazon and Ebay and Walmart and all the companies that would object, all the retailers, Zara and everyone else who enjoys using this loophole, but also cause right now even as people are more and more reliant on e-commerce because of the COVID crisis, Congress’ bandwidth to do stuff that isn’t immediate urgent COVID disaster is more limited. So, in the interim, the Trump administration can fix this by executive order. They have it within their hands, the Buy America, Hire America alleged administration, to fix this major trade scam. And the way to do it is basically Section 321, the way it’s written, gives enormous discretion to the Treasury Secretary to decide how the program will be administered. So you can’t unilaterally change that $800 is the amount, but you can basically determine what should or shouldn’t be subject to the waiver. So for instance, it seems pretty obvious that every good that is on the Consumer Product Safety Commission’s High Risk List because they do a risk assessment, they know of products like the hoverboards that were blowing up, burning, and burning down people’s houses. That’s on the list. Car seats, because there have been so many dangerous fakes brought in, that’s on the list. Certain other sports equipment, like helmets, where there’s so many dangerous bicycle fake helmets, etc., that’s on the list. Lots of toys with magnets in them, which little kids will swallow then have their guts ripped up internally there are right this day things that have allegedly been taken off these websites, these e-commerce platforms, you can find all these things if you look on these websites because these third-party marketers keep popping back up. All of those products should just not be subject to de minimis. Zero of those products should be getting in through this loophole. And it’s easy because the Consumer Product Safety Commission has a specific list. And so all those goods should not be subject. Similarly, if you’re thinking about fairness just as far as brick-and-mortar stores, and you’re thinking about the income lost for the government, it makes a hell of a lot of sense to say something like, “no product subject to more than a pick your amount-ten, percent border tax should be subject to de minimis.” That way you’re not making a huge thumb on the scale against brick-and-mortar companies, and you’re making sure you’re not gutting out revenue. And you could say, you know, the standard of Section 321 is for the convenience and the efficiency. Alright, you could say it’s inconvenient or not very efficient to bother collecting tariffs if it’s less than a 10% tariff on an $800 value good. But when it’s actually $100 of revenue versus $80 or more, hm, that makes more sense. So you could limit the amount of the tariff category and you’d knock a bunch of stuff out. Those are some things you could do right away as well as reversing the customs order that allows the scam of having whole shipping crates of individual packages somehow pretend not to be the e-commerce platform’s import, but pretend to be the customer’s import. Those three changes right away would fix about 90% of the problem. So given those three things would fix 90% of the problem, and the executive branch, the Trump administration, can do it solo, and they claim to be standing up for American companies and American consumers and trade, guess the big question is, what the hell are they waiting for?

Ryan:

That’s all for today, thank you all for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we’re doing to fight for fairer and more equitable trade policies.

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Video: Sen. Bernie Sanders Discusses Impact of Hyperglobalization on COVID-19

To date, more than 100,000 people are dead in the United States, and more than 30 million Americans have lost their jobs. Decades of corporate-rigged trade deals – paired with Trump’s inability to coordinate an effective COVID-19 response – are making the pandemic’s effects more devastating. COVID-19 and the shortages of critical medical supplies and shattered supply chains spotlight everything wrong with both the Trump administration and the current rules for the global economy.

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Rethinking Trade - Season 1 Episode 6: As U.S. Pressures Mexico to Re-open NAFTA Factories, Workers Protest

COVID-19 deaths are still on the rise across Mexico. Despite government orders to close all non-essential firms, some U.S. factories have continued operating–with little consequence. Now the U.S. ambassador and hundreds of multinationals are demanding the country prioritize corporate interests over the safety of Mexican workers – by reopening factories now.

With the new NAFTA going into effect on July 1, how will the COVID-19 crisis impact the deal’s new worker-protection requirements and Mexico’s related labor reforms?

Transcribed by Lauren Martin

RYAN HARVEY: Welcome back to Rethinking Trade where we don’t just talk about trade policy, we fight to change it. I’m Ryan and I’m joined by our in house trade expert, Lori Wallach. Lori, we’ve all been seeing and consuming tons of news about the coronavirus, but one thing we’re not hearing too much about is Mexico. A lot of the products we use everyday are made in Mexico. What’s been going on in Mexico?

LORI WALLACH: Well, there is considerable spread of coronavirus there and COVID illness. It started a little bit later than the U.S. but there was widespread community spread by the beginning of March, on March 30th the progressive president of Mexico, AMLO, called for a basically shelter at home order and shut down all non-essential businesses. The sort of really gruesome story is that a lot of U.S. corporations that are producing in Mexico, many brand name companies that left the U.S. under NAFTA, have stayed open and particularly in the northern part of Mexico what’s often known as the maquiladora. So, in the border cities across from Texas and California and Arizona there have been considerable horrible outbreaks in factories where social distancing wasn’t respected, where personal protective equipment wasn’t given to workers, and where clearly the work was not essential. So, one of the stories that has gotten into the U.S. press (because most of it hasn’t) is the Lear company, they’re making car seats- obviously not essential- over a dozen workers there died after workers started showing up at the infirmary at the plant saying they had symptoms and they were sent back to work, etc. Unfortunately that is not unique, there have been in Honeywell plants, in [can’t tell what company she’s referencing 2:30] Motors plants, there have been a variety of episodes like that and there’s been a lot of activism which is, you know, powerful, inspired, where really workers saw the situation basically corporate greed, NAFTA corporate greed, versus their health and life. And a lot of workers-against really hard odds in Mexico because you can get beaten up at least, if not worse, for exercising your labor rights- workers protested. An inspiring story but unfortunately not the norm is workers at a factory called TPI Composite, they make the wind blades for electric generating windmills, five hundred workers went out on strike as someone in the plant had died and people were sick, and they got the company to basically furlough them all at full pay. And that is not typical- most of the places that are closing, it’s a struggle to get paid. And also, companies keep popping back up, they’re ignoring the order or they have sort of complicity with local officials. And if that weren’t enough, the U.S. and U.S. corporations have launched this really, really, intense pressure campaign for the Mexican government and those plants, the Mexican workers, to basically put these corporations interests ahead of the life and health of these Mexican workers. And the National Association of Manufacturers sent a letter, the U.S. ambassador to Mexico has just played a really evil role, he has been pressuring the  government with threats that the U.S. companies will just take off and produce elsewhere if they don’t reopen those companies regardless of the health complications. And maybe one of the most outrageous things he said was in a tweet: “There are risks everywhere,” said Chris Landau, “but we all don’t stay at home for fear we’re going to get in a car accident. The destruction of the economy is also a health threat.” As if somehow going to make non-essential goods, so a U.S. company can profit, at a time when the outbreak in Mexico is growing, growing, growing, is equivalent to the threat of a car accident. Versus industrial suicide by being forced into a dangerous situation. That is the situation of the Mexican government, it’s been uneven in it’s response in some respects it’s stood up to this pressure and in some instances it’s suggested that it will basically be reopening soon.

HARVEY: Speaking of labor laws in Mexico and labor standards in Mexico, one of the reasons we’re talking about this in our podcast about trade is because the new NAFTA is going into effect on July 1st, and in the new NAFTA there are new and somewhat significant labor standards that have also coalesced with a labor law reform in Mexico. Maybe you can talk about what those standards look like and what this current situation might mean for the new NAFTA’s implementation.

WALLACH: So the new NAFTA is slated to go into effect on July 1st in all three countries, and there could not be a less auspicious time. Because the improved labor standards and the really landmark enforcement system on paper in the agreement that the Congressional House Democrats forced the administration to add, so folks will remember in 2018 the NAFTA 2.0 text came out and the Democrats said “no!” The labor and environmental standards aren’t sufficient, nor their enforcement to stop outsourcing, it will just get worse, plus, there are outrageous new giveaways for pharma. The House Democrats basically drew a line in the sand and there was almost a year long stare down and ultimately the administration backed down and renegotiated the renegotiated NAFTA. So, the deal that’s going to go into effect on July 1 now has some useful improvements. But, like everything in life, there’s what’s on paper and then there’s what actually happens. So, there are at least 3 factors. And when I say it’s really inauspicious this is happening during COVID it’s because some of it’s going to be disrupted by the priority necessarily on the COVID response. So, number one, there are a bunch of court challenges against a new Mexican labor law that was passed to basically bring Mexican labor law into conformity with the obligations in the agreement. So, under the current Mexican labor law, there is what’s called a tripartite system where there is a lot of power in the state level in each Mexican state so that, for instance, if there are conservative governments that support the business perspective the tripartite system is one sort of, the decision is about whether contracts are legit, etc, it’s one union person, one business person, and one government person. So already, you’ve got a prospect of the business people and the government people on the wrong side of the workers. But then, under Mexican labor law, there really has not been under the old law, a way to ensure Mexican workers are actually voting to elect their own unions. So there’s this plague of what are called protection contracts, which are contracts typically signed for the first worker enters into the plant, between the boss and these sort of racket unions that are paid to do a contract, to satisfy the requirements of Mexican law, but the workers don’t get to vote on it, the function is to protect the boss and to have low wages. So there are 700,000 of those protection contracts and one of the things that’s in the Mexican new reformed labor law is revoting those and the NAFTA requires they are all reaffirmed over the period of four years. So that the fake contracts get dumped and people get real unions. And then how is it going to be decided if the contract has really been revoted and there’s no real union contract there, it’s more of the same fake stuff, there’s a bunch of new institutions that have to be set up. So the new Mexican labor law sets up the institutions, sets up those new rights, and it’s been challenged over four hundred lawsuits, some have been dismissed but a bunch are still going forward and they're not getting decided. Because, just like in the U.S., the courts are basically shut down for anything but urgent criminal matters. So the labor law itself is still a little bit up in the air and that is necessary for the reforms to go into effect. But then the second thing is, a whole bunch of new institutions need to get set up. And that involves the U.S. coming through with the funding it promised to help do that, and some additional staffing support, but also the Mexican government which promised to increase funding and promised to establish a bunch of new really national labor relations board type institutions which replace these state level tripartite bodies. And so the national system is still plugging ahead but obviously in the way of every country plugging ahead with resources diverted to COVID, with priorities of everyone, I mean obviously with all the worker safety issues the labor department is just focused on emergency labor worker safety issues and COVID as they can be on trying to set up these new institutions. And then the third piece of it has to do with, really, the kind of oversight and political and press really, if you will, spotlighting of what’s going on and pretty much everything is COVID, COVID, COVID. So even some of the high profile labor disaster situations like at Goodyear where a lot of workers were locked out to try to have an independent union and members of Congress who wanted to investigate got locked out, that’s not been resolved. Some of the outrageous conduct in call centers has not been resolved vis a vis contracts at least there’s been now a criminal case filed against a call center in Mexico City that was staying open even as workers were getting sick. But there’s just not the level of focus or attention by civil society, by parliamentarians here or in Mexico, by the press. So all of those things leave a slightly, you know, less auspicious likelihood of the kind of improvements we were hoping for and we’re all going to have to stay on it. 

HARVEY: It’s interesting because we’re actually watching in real time a labor law reform through a trade agreement happening and it’s pretty compelling so why is this something, do you think, that people should be paying close attention to, and what does it mean for the future of North American work?

WALLACH: So, we keep hearing in the context of COVID “we’re all in this together.” And that is an entirely true slogan with respect to workers wages, conditions, futures, in North America. Because we are so integrated after 25 years of NAFTA, for U.S. workers and the recovery that’s going to have to happen economically, given the wreckage being caused by the COVID disaster, as we think about both how jobs are going to be restored, what wage levels will be available, but also, we think about how we rebuild our resilience, our ability to make the basic things we desperately need to be safe, both the medical goods that we found ourselves unable to make or get, but also thinking forward to the next potential disaster be it, you know, infrastructure related or weather related, we are, thanks to the system of hyperglobalization, really, really not resilient in the face of any crisis. Part of the answer to that is a North American answer, to move some of that production out of China, obviously a bunch of it needs to come domestically to the U.S., but also with respect to what’s going to happen with workers here, and wages here, this NAFTA rewrite experiment with improved labor standards and enforcement has got to be made to work. Because, unless wages rise in Mexico, the prospect for U.S. workers having decent wages and, or manufacturing being situated in the U.S. for that, two thirds of the workforce that does not have a college degree, that many of whom had previously a middle class union manufacturing job, it is not an either or, it is not the jobs are in Mexico or the jobs are here. As we’ve seen with this crisi, we don’t have any redundancy. Everything’s been moved to one plant far away, if that plant goes down or we need a bigger supply we’re just stuffed. So this is a moment to think about how we rebuild our manufacturing sector in the U.S., but in North America as well, with redundancy and resilience and distribution of jobs in more countries. And so making sure that those hard-fought labor standards in NAFTA and their enforcement actually make a difference, is every damn person’s business in the United States, not just in Mexico. 

HARVEY: That’s all for today, thanks for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch.org to educate yourself and to find out how you can get involved in the work we’re doing to fight for fairer and more equitable trade policies.

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Rethinking Trade - Season 1 Episode 5: A Progressive Shock Doctrine on Globalization?

To try to address human needs during the COVID-19 crisis, many governments have shredded the concepts and laws underpinning corporate-managed hyper-globalization. A quick return to business-as-usual is not likely.

In this episode, we discuss Lori’s recent piece in Le Monde Diplomatique, where she identifies four main ways in which the current moment provides unique opportunities to win significant structural changes to make the global and domestic economy fairer, more resilient and more sustainable.

What comes next depends largely on how we mobilize today. With many people who had been sheltered from the ravages of hyperglobalization now personally affected and fuming about the United States not being able to make or get essential goods needed to save lives, it’s time for a progressive “Shock Doctrine.”

Transcribed by Lauren Martin

RYAN HARVEY: Welcome back to Rethinking Trade, where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert Lori Wallach. So Lori, you just wrote this big piece in Le Monde Diplomatique called “The State Steps in To Save Global Economics,” and in the intro you say, "trying to respond to COVID-19 has essentially forced governments to override the rules and the ideological underpinnings that define corporate globalization, and that there are ways that this upheaval could be organized into structural change to the neo-liberal hyperglobalized order." And then finally you describe what the world looked like before this era and how there are already some models from before that could be resurrected. Do you want to explain the piece briefly? 

WALLACH: The basic gist of it was that, for all of the horror and pain of this pandemic, it is revealing things about the inherent structural, frailty downsides, damage, inequities of our current so-called neo-liberal, globalized, corporate-led regime that create conditions for organizing for some big structural changes. And in the way Naomi Klein often talks about corporations seizing moments of disaster, “the shock doctrine,” to double down on policies that benefit them, in a certain way in this moment, the things that are being revealed are the things that show the corporate-rigged system is the problem, which means there’s a moment, perhaps (if we do the work) for organizing something like a progressive “shock doctrine,” to use this awareness of the status-quo’s problems to get some of the long-standing structural changes to make the rules of both our national economies and the way they connect globally to work for more people and to safeguard the planet’s environment.  

HARVEY: In the article, you list these four main reasons why the COVID-19 crisis could unhinge the current corporate-led, globalization regime. And the first one you bring up is forced solidarity. Do you want to explain this part? 

WALLACH: The pandemic has forced most residents of developed countries – many for the first time – to personally experience pain and anxiety from this regime of corporate-rigged hyperglobalization. For a long time, millions of industrial workers and small farmers and their neighbors in gutted communities, typically not in our major coastal cities, in the United States but also throughout the developing world, knew that this system was a disaster. It had hit them personally. But now we are seeing so many other people who haven’t been affected, suddenly realizing that there are inherent, unaddressed menaces to this system that they could ignore in better times, that they thought wasn’t their problem, it was those other people’s problem. That means, in a way, we’ve been forced into a solidarity, a way of the makers and the buyers, to realize this is a system that really doesn’t work for any of us. This is really important for two reasons. First, it’s mainly been the developed countries’ governments that have been pushing the trade and investment agreements that formalized and implemented the system of hyperglobalization, and that the politics in these countries could be shifting because of this experience, is key for change. A corollary to that is that it’s been the marginalized people in the developed countries who have become ripe for the picking by right-wing, nationalist political forces and this forced solidarity of a common problem, could help shift domestic politics. But also it’s the suddenness of the catastrophe—say, in contrast to the slower, frog in pot, climate boil—that can really awaken many people who have felt insulated from the damage of hyperglobalization. This is to the point where you even have publications like The Economist and the Financial Times, that have cheerlead-ed the whole Davos-mentality, neoliberalism, globalization is values in themselves, have suddenly started to editorialize that maybe some more regional and localized production has merits, and that we shouldn’t only think of the efficiency gods, but rather also think about issues like reliability and resilience. That is a tremendous shift.  

HARVEY: That kind of is a perfect intro to your second point, which is that there is not likely to be a return to “business as usual,” that this crisis has also seen some of the rules that define “business as usual” tossed out the window.  

WALLACH: Well, this is a very pivotal point. On the one hand, people in countries all over the world have just witnessed their governments break every rule that their government said absolutely could not be broken. Because in the face of having to deal with a crisis, no one in the governments are making the usual excuses of, “well we’re so sorry we can’t do that very sensible thing because of the World Trade Organization (WTO) or a free trade agreement or an economic partnership agreement, or investor state dispute settlement.” There is no thinking about what those rules are. There’s thinking about how the heck people’s lives are going to be saved and goods are going to be produced and people’s needs are going to come first ahead of these rules. And it’s very hard to put that genie back in the bottle, because the sort of the self-enforced “we must follow these rules,” “resistance is futile,” that entire concept has been chucked out the window. You do see some really improbable officials, really people who are the high priests of the current globalization system, saying things like recognizing that in the heat of a crisis you can’t let the market allocate scarce resources, that you have to actually make the government make sure that the health sector delivers for people and not allow speculation and concentration.  

Well, to a lot of people I'm talking to, they're saying, you know, that sounds really sensible to be the rule when there isn't a crisis, also, when it comes to essential goods. Why should we have rules that promote monopolies, thin unreliable supply chains, inequality, etc.? So in a way, as a practical matter, because the premises have gotten shattered, but also because things are not going to go back to normal in a matter of weeks, there's going to be a period of time where governments are going to have to be much more engaged. And we've just seen dozens of countries, when push came to shove, decide they needed to try and make sure they had medical supplies for their residents. The U.S. was one of the last to look into this, but the rest of the world started thinking about these issues. We have both as an intellectual matter, but as a practice, a context where basically the smashing of the golden calf of efficiency and globalization as a goal is going to be in place for a while. And that creates openings. 

HARVEY: And one of those openings, Lori, is what we're seeing now in the debate around corporate globalization. And what you point out in the piece is that this debate is no longer a left versus right paradigm. And you say that while acknowledging the dangers of ceding this critique to the far right. Why don't you tell us a bit about this point, and also how you see progressives engaging in this kind of terrain. 

WALLACH: So while all of these paradigms of globalization have been smashed in the short term, team status quo, the corporations, a lot of officials are in a totally tone-deaf way, claiming that the answer is to double down, that we need to cut all the tariffs on all the medical goods, somehow that will make things better. Well, obviously, that's not the problem. The problem is no redundancy, not enough capacity, no system for organizing priorities of where supplies go, where the sickest people are. So while team status quo is trying to use this opportunity to double down, what's emerging is a new dynamic that is, if you will, team status quo for the old policies and the corporatists vs. populists from the Bernie Sanders, Elizabeth Warren progressive populist spectrum all the way over to say the Josh Hawley, very conservative Missouri Republican senator version, all of whom are calling for interestingly similar structural changes that have the government much more involved in making sure that the economy that comes out of this crisis is one that is more resilient to deliver necessary, essential goods to people, that strengthens our national resilience, our national security, in a broad sense, national security, our health, our infrastructure, etc. And that divide is super interesting because you basically have more of a chance of having structural changes when you have broken out of some of the binary left-right dynamics in this country. 

The example of this, for instance, is, listen to this: quote, this pandemic also exposed a Grand-Canyon-sized fault in our supply chain. We don't make critical products in America anymore. It's a threat to our health, our national security and our economy. Americans have long known about this problem. Washington is just waking up to it. And Wall Street was hoping it wouldn't get caught. End quote.

So that sounds like Bernie Sanders or Elizabeth Warren, pick your choice. But it is neither of them, could be. That actually was the guy, Josh Hawley, the Missouri Republican. So what's ending up happening is odd combinations of Democrats and Republicans are coming together with solutions where, for instance, you have Pramila Jayapal, co-chair of the Congressional Progressive Caucus, and that guy Hawley, both calling for a guaranteed national income to be paid by the government to basically get around the inefficiencies of all of these different loan programs and bailout programs, or the money goes to the companies, and then they're supposed to pay people's salaries. And that kind of really smashing of partisan lines is the moment when there are opportunities to make really big change. Now, at the same time, we have to be super careful because the left and the right in the populist space can both identify the problem and even identify some of the policies that are to be the fix. 

But it's super perilous if it is the right part of the spectrum that owns that, because part of the biggest fix here is accountability and democracy. And you're not going to get those kinds of fixes from the likes of, say, a Steve Bannon who can do the critique of what's wrong with the current system, but also was, you know, in love with authoritarianism. This gets back to where we started, which is this is a moment where progressives need to really step up. It's not going to happen by accident. The changes will happen if we organize for them.

HARVEY: And Lori, point four is a really big point, and obviously this is a really short show, but let’s talk about rebalancing relations with China and decentralizing the global production economy. What could this look like? 

WALLACH: Well the fourth factor in all of this is something that was starting to happen before this crisis. And this crisis has sort of shone a spotlight on, which is, not just in the United States but in countries around the world, there’s a growing recognition that the role China, as the government, and it’s government-structured economic system in this current structure of globalized economy is really unsustainable, unhealthy, perilous, to both numerous countries’ essential-goods supply chains like medicine and personal protective equipment (PPE), but also serve more broadly to their infrastructure. Heaven forbid the next crisis is that there is a horrible computer virus, not a medical virus that is introduced that crashes our electric grid. And part of that virus destroys some of the switches and mechanical aspects of the system and we need a lot of new electric-grade steel, and we need to remake a lot of infrastructure. Right now we are way too reliant on imports that could take weeks and weeks to get to us, if they’re available to us, to be able to do that.  

There is this notion that interestingly started in the military supply chain world, so there are Republicans thinking about it, about just practically not having us over-reliant on any country. Separate from China, just any country. And I think it really started to come to mind when the Twin Cities had that bridge fail, that horrible disaster some years ago. And that bridge was closed for a lot longer than it needed to be and snarled up that whole community because we couldn’t make that kind of steel to have a long-span bridge. We had to wait for it to be floated up from Brazil or sent over from China. And so that moment had a lot of people who do infrastructure planning and people in the Pentagon saying “Hmm, now that is a problem.” Heaven forbid, from the Pentagon’s perspective, we’re in a war and supply chains got cut. And various people who think about national infrastructure start thinking about, Heaven forbid, we had a major west coast earthquake or name your problem, how would we fix things? So all of that got the right thinking about these practical issues.  

Of course, more on the left, there’s been a lot of concern about how U.S. corporations have plotted with the Chinese government in a mutually-beneficial (at the time) co-habitation of the Chinese government wanting the technology, the know-how, the investment, the employment. The U.S. corporations were enticed with “here’s a billion-plus consumers,” but what they really wanted was “here are a billion-plus people who can work with no labor rights and very low wages,” and the result has been a system where in many different sectors there is an over-reliance on production in China, if not of an entire good, some key element or part or component, or input (the raw material- chemical, steel, etc.) that has become really only made in China, or too much of it is made in China so that there really isn’t redundancy, there isn’t diversification. And to some degree, this crisis is making the whole world realize we need redundancy, we need diversification, but it’s really hard to separate the China factor out of that because it has been the Chinese government’s plan over time, as part of a geopolitical strategy, to dominate in different sectors.

And in the same time that the U.S. and most of Europe, not all of Europe, but a lot of Europe have made words like ‘industrial policy,’ i.e. a plan to invest in dominating a sector in the West, it's become a dirty word. But in China you actually saw a government with goals, making plans, and putting a lot of money, subsidies – you hear a lot about China ‘cheating’ – it’s subsidizing that stuff and then trading it. Or reducing the currency value to make goods that could be exported competitive, not by their actual intrinsic value but because you’re rigging the exchange rate to make imports expensive and exports less expensive. All of those tools the government of China has employed, and in the last 30 years it was to get multinational companies to come in. But now that they have the technology, the subsidies are increasingly not given to foreign companies, they’re actually only being given to the indigenous-created Chinese companies that now have the same technology they got from the foreign companies that were enticed by the labor. And you have increasingly some of the U.S. companies that were the big multinationals that were benefitting from the cheap labor and promised the market who are themselves starting to get squeezed. And at the same time as this sort of military, we-need-redundancy, the big companies are less excited about the prospects of their profits in China, because they’re being squeezed out by the now-new Chinese companies that are getting subsidized. 

You've always had progressives extremely concerned about issues like corporate concentration and issues around labor rights and human rights in China, where, let's be blunt, lot of workers right now in those Chinese plants, that are exporting things to the U.S., are Uighurs and other politically persecuted groups who are in forced labor situations.

So all of that's come together to have a lot of governments, including across the political spectrum in the U.S., a lot of politicians and people, starting to think about the fact we just need a more diversified way of producing. And some governments have gotten very active in that direction. The Japanese government just announced billions of dollars of government funds to get Japanese companies to move from China back to Japan for the sake of redundancy. I think that that also creates a moment when people are thinking about where things are made, to think about how we can have policies both in the global sphere, but also domestically that can try and revitalize more production in more places. Which is to say, some more robust domestic and regional production, not autarchy, which is just the technical word for self-reliance. But redundancy. So, of course, we're still going to have trade.

The question is, under what rules? And can we diversify the sources of those imports, so we're not only overly reliant on one place or if there's a problem, everything falls apart. But also, can we have some more domestic production, which is not only a matter of our security and resilience, but also could have some great corollary benefits in creating some more middle-class jobs for a lot of the folks who have been partially marginalized by this current system.

HARVEY: Lori, speaking of some of these rules, in the conclusion in your piece, you paint a picture of what the pre-neo-liberal era looked like and you describe some of the older rules that exist that can still be utilized today. And you also talk about new rules moving forward. Why don't you close us out with what some of those rules look like?

WALLACH: I think that the key thing for everyone to keep in mind is, there are lots of policy tools to get different outcomes, some of which we've seen succeed in the past. The real issue is getting the goals right. So if we want an economic regime that prioritizes things like getting people the essential goods they need reliably, that prioritizes having more localized and regional production, which both helps for the redundancy that leads to resilience and reliability, but also has the corollary benefit of more production jobs for more people, which is an income inequality remedy, but also honestly at this point, is an urgent aspect of addressing the climate crisis, to not be schlepping things from one production facility at the lowest environmental standard in one part of the world to the whole rest of the world spewing carbon along the way. If our goals are like that, then the tools we can use our many. A couple that I write about are just things that I think a lot of people have forgotten about.

But for instance, before the mid 1990's, establishment of things like the World Trade Organization and free trade agreements like NAFTA, every trade agreement that had been established, including the GATT, the General Agreement on Tariffs and Trade (the post-World War Two standard of trade) they all treated trade in food differently from other goods. Why? Everyone needs food to survive. So those trade agreements ensured that governments had lots of policy space to determine how to make sure there were affordable, reliable supplies of food. So they allowed things like supply management. So you set up a quota system. You have a certain amount of imports, but you always have a certain amount domestic production. That way you knew, no matter what you had both, if you had a bad harvest, you had imports. And if something happened overseas, you had domestic production or stockpiles or subsidies. And that logic, I think, makes sense for food, as we're about to see now with the [COVID-19] crisis in meat packing and the overconcentration in that sector. But also, it should apply to other critical sectors like medicine. The combination of domestic and regional manufacturing and trade is how you maximize your resilience.

Similarly, as far as how you would distribute around the world this kind of production without it being sort of random or playing favorites of the day between countries or companies, there was a whole system that existed until the WTO went into effect which phased it out. And that's it was called the multi-fiber arrangement. It was a managed trade system that distributed production quota, in that case for textiles and apparel. But it was a way to make sure that either countries with smaller industrial capacity, so the Caribbean islands, smaller African countries, or countries with higher wages, the U.S., Europe, would still be part of producing in that sector, so that all the jobs and investment wouldn't run to the lowest wages like it did as soon as the MFA, the multi-fiber arrangement went away. When the multi-fiber arrangement system went away, the corporate-managed trade logic, within years concentrate production in China and a few other Asian countries that had the lowest wages and standards. And those industries in Africa, the Americas, the Caribbean, obviously the U.S. and Europe, were just decimated. The system of basically negotiating a system of quota guarantees that each country can have some level of protected production so that there's some basic fallback.  

And another thing to think about from the past is the kind of rules that we're in, the thing that was supposed to be the WTO before the WTO. That was the thing called the ITO, the International Trade Organization. A sort of quirk of trade history is that the WTO wasn't the first idea of having a global body. The first idea was something that came out of the discussions after World War II. A lot of Progressive's got together and created an agency that—brace yourself, it sounds like, wow, it's taken 50 years to get back to that—sets the International Labor Organization labor standards and competition, anti-trust standards and rules against currency mismanagement as a mandatory floor on which the trade rules were situated. The idea was to elevate human needs without imposing lots of one-size-fits-all dictates. It took international standards. Countries had agreed to as sovereigns and said, OK, here are the other things about equality and wages and fair competition and currency cheating we've all agreed on as countries. And now our trade agreements are cutting of tariffs, are opening of markets. It's going to be premised on our agreement on all that other stuff.

And that ITO, unfortunately, was basically blown up by the U.S. Senate, which didn't want that kind of set of rules. And the GATT was actually just this provisional thing that was just the tariff rules that was in a way like an annex to this ITO that got tanked. But that ITO structure, and there's a full treaty that would obviously would have to be updated, but conceptually it shows how you would re-prioritize different international rules and institutions to create a more lift-up global trade regime, not a race-to-the-bottom one. And, you know, these are just some of the ideas. Entire books, papers, treatises have been written about this. The trick is going to be the fight to win the debate about what the goals are, because these policy tools, there are many of them, lots of good ideas. The battle is going to be really about this moment leading to a more progressive vision of the rules nationally as well as internationally.

Because here's the thing: it could go either way. This crisis is showing the vulnerabilities, but the contest next is of power and politics. It's not a lack of policy options. I think that unless progressives in numerous countries organize to demand an end to business as usual, post the urgency of the crisis, we could see a mildly adjusted version of the status quo. Or we could find ourselves actually subject to some kind of right-wing nationalist alternative. That's on us. Cause like those on the left, the likes of Steve Bannon can critique the extreme failings of hyperglobalization. But the alternatives offered by those who love authoritarianism, like him, certainly will not be the democratic accountability that really is a core antidote to the failings of hyperglobalization. 

HARVEY: That's all for today. Thank you all for listening. Rethinking Trade is produced by Public Citizen's Global Trade Watch. I encourage you to visit RethinkTrade.org, as well as TradeWatch.org to educate yourself and to find out how you can get involved in the work we're doing to fight for a fairer and more equitable trade policies.

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Civil Society Organizations and Concerned Activists Submit Nearly 7,500 Comments on Proposed U.S.-Kenya Trade Agreement

By Melanie Foley

In March 2020, the Trump administration notified Congress of its intent to negotiate a Free Trade Agreement (FTA) with Kenya after a meeting between the U.S. and Kenyan presidents.

Public Citizen submitted formal comments to the U.S. Trade Representative explaining why negotiating a standard U.S. FTA with Kenya is a very bad idea in general, and doing any trade negotiations that are not focused on COVID-19 response at this time is counterproductive.

The amount of trade between Kenya and the United States is small, but if Kenya negotiates a standard FTA with the United States, it will be forced to give up strong laws banning certain genetically modified foods and protecting consumers’ privacy online. And Kenya will become vulnerable to floods of subsidized U.S. agribusiness products that could wipe out local farmers.

It remains unclear why Kenyan President Uhuru Kenyatta would sign his country up for a raft of new anti-development obligations under a U.S. FTA when Kenya already enjoys largely duty-free access to the U.S. market under the African Growth and Opportunity Act (AGOA).

From comments Kenyatta made after meeting with Donald Trump, it appears that Trump suggested that AGOA would end and Kenya would be left hanging. Yet, barring a coup, Trump will not be the president when the next AGOA renewal is to take place in 2025, so he could not veto it if that was the threat. And second, Congress, not the executive, has the authority to renew AGOA, which it does as a routine matter with little to no opposition. The negotiations should not be an attempt to break up or undermine AGOA or Kenya’s primary trading bloc, the East African Community. Indeed, the mere suggestion of these talks may have already given the appearance that the administration is attempting to do just that.

The European Union’s fateful decision to revoke the preferences under the Lomé Convention should be a cautionary tale for the administration. The Lomé signatories — African, Caribbean and Pacific nations including many former European colonies — could compete in the global market with these preferences and based their economies around them. But in 2000, the European Commission announced the end of Lomé and the beginning of reciprocity-based Economic Partnership Agreements (EPAs). The divide-and-conquer approach of negotiating EPAs with blocs of Lomé members plus the revocation of special preferences not only harmed the economies of these countries, but also proved to be a political blunder, embittering the states against the European Union. 

The timing of this FTA is also highly questionable. As the world grapples with the COVID-19 crisis, the United States should not prioritize negotiating a new trade agreement, much less one that could undermine public health and safety protections. The only trade that the countries should be discussing now is how to maximize both nations’ access to urgently needed medical equipment, supplies and medicine. This point was recently emphasized by 400 civil society groups from around the world in an open letter urging governments to halt all trade and investment treaty negotiations during the COVID-19 outbreak and refocus on access to medical supplies and saving lives. It is bad policy and bad politics to take advantage of a distracted public to double-down on the neoliberal, corporate-dominated trade model that has contributed to mask and medicine shortages.

The Citizens Trade Campaign (CTC) — a national coalition of environmental, labor, consumer, family farm, religious, and other civil society groups — also submitted comments on a potential U.S.-Kenya deal. The CTC’s members are a diverse and powerful group, including the American Federation of Teachers, Americans for Democratic Action, Communications Workers of America, Friends of the Earth U.S., Institute for Agriculture and Trade Policy, Interfaith Working Group on Trade and Investment, International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Electrical Workers, International Brotherhood of Teamsters, International Union of Bricklayers and Allied Craftworkers, International Union of Painters and Allied Trades, National Family Farm Coalition, National Farmers Union, Public Citizen, Sierra Club, UNITE HERE, United Methodist Church General Board of Church and Society, United Brotherhood of Carpenters, United Mineworkers of America and United Steelworkers, as well as state-based coalitions, organizations and individuals throughout the United States.

Submissions from the CTC, Public Citizen, and nearly 7,500 individual trade justice advocates outlined the same set of demands. If there is to be a U.S.-Kenya trade agreement, it must:

  • Be negotiated transparently, replacing the corporate advisory system with an on-the-record public process;
  • Include strong human rights, labor and environmental standards with swift and certain enforcement;
  • Exclude Big Pharma monopoly rights that raise medicine prices;
  • Exclude investor protections that incentivize the offshoring of jobs and empower corporations to attack democratic policies in unaccountable foreign tribunals;
  • Promote balanced agricultural trade that safeguards the interests of small, independent farmers to strengthen rural communities;
  • Require imported food, goods and services to meet U.S. consumer and environmental standards;
  • Eliminate limits on procurement policy that forbid Buy American and other Buy Local policies, offshoring U.S. tax dollars; and
  • Protect digital privacy by excluding e-commerce rules that shrink the policy space of Congress and U.S. regulators.

Even as the timing for the launch of any new trade agreement negotiations are inauspicious and the goals unclear, what the recent debate over the renegotiated North American Free Trade Agreement (NAFTA) spotlighted is that public opinion around what can and cannot be in a U.S. trade agreement has changed. The support the new NAFTA received from both parties in both chambers of Congress and from some sectors of civil society was in the context of revising an existing agreement. Trying to fix an existing bad deal like NAFTA to reduce its ongoing damage is very different from creating a truly good trade deal that generates jobs, raises wages and protects the environment and public health.

Any new U.S. trade agreement being negotiated from scratch – including a potential agreement with Kenya – must build from the floor set by the new NAFTA. That is because the measure of such a new agreement will be whether it can actually benefit people, with the alternative being no agreement. In contrast, the alternative to the new NAFTA was the status quo of the old NAFTA.

For a tabla rasa deal to enjoy support, the bar will be higher than the revised NAFTA. That means no special protections for foreign investors or Big Pharma, stronger rules to stop race-to-the-bottom outsourcing of jobs and pollution, binding climate standards, and no limits on the policymaking processes or public interest protections needed to ensure that our food and products are safe, our privacy is protected, monopolistic online firms are held accountable and big banks do not crash the economy again.

Public Citizen and our allies are poised to monitor these negotiations and outcomes. We will ensure the public is apprised of how terms of a potential U.S.-Kenya trade agreement will affect peoples’ jobs, health and safety and the environment. We will fight fiercely to sustain the improvements for which we have long advocated that were included in the new NAFTA and to promote the critical improvements that remain to be made so that any new U.S. trade agreement actually benefits most people, rather than replicating past failed trade-pact models that have benefited large commercial interests to the detriment of most.

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Rethinking Trade - Season 1 Episode 4: The Looming COVID-19 Medicine Shortage

The COVID-19 crisis revealed how reliant the United States has become on imported masks, respirators and other essential medical goods. The latest news is about medicine shortages. Decades of bad trade and tax policies have incentivized pharmaceutical corporations to outsource the production of many categories of drugs – and also production of the Active Pharmaceutical Ingredients (APIs) that are drugs’ key ingredients. Most APIs come from just two countries, China and India. As workers there have fallen ill and plants have been closed for social distancing, production has dropped. In many categories, there is no domestic production to make up the difference.

Transcribed by Lauren Martin

RYAN HARVEY: Welcome back to Rethinking Trade where we don’t just talk about trade policy, we fight to change it. I’m Ryan, and I’m joined once again by our in-house trade expert, Lori Wallach. Lori, today we’re going to be talking about a topic that’s been in the news recently, and that is this forecast that we might be looking at a shortage of medicines in the US sometime soon. What is all this about and what are some of the major issues at play in this forecast?

LORI WALLACH: The prediction that you’re seeing now, that we’ll fall short of the medicines we need, not medical supplies, is related to the broader problem of how our system of hyperglobalization has made us very vulnerable to getting everything we need to be safe and to fight this virus from one or two countries. There are two different, related issues. First is where medicine itself is actually made, and then there is where the things that go into medicine, which are called active pharmaceutical ingredients, APIs, are actually made. There are 156 essential, critical medicines that every hospital has.  The stuff on the crash cart, the stuff that every floor of every hospital has,96% of those critical 156 drugs are produced just in China and India. And even before the COVID crisis there were potential shortages and short supplies in 63 of those 156 drugs. China, obviously, has had a big slowdown, because people there got sick. And both China and India have stopped exporting a lot of their medical supplies. So that means, even if there are countries that produce medicine, they can’t get the inputs. And a lot of generic finished medicines actually come from India. So all in all, because there’s no redundancy, because a handful of really big companies have concentrated production and made a lot of money that way in a few very low wage countries, we could end up seeing shortages.

HARVEY: That term you used Lori, redundancy, we’ve talked about that in previous podcasts. Can you just remind the listener what we mean when we say redundancy?

WALLACH: It’s a production issue, and it means that there isn’t just a sole source of a supply, or just one or two. So redundancy is something that, basically, you would think of in every critical system. So if you have an emergency plan, about, say, how to get out of town if there’s a terrorist attack, you have plan A: a car, plan B: the train, plan C: the bicycle. Those are all redundant ways to meet your goal. And so in a lot of companies, for a very long time, they would have redundant production. So in order to make sure they could make the final product, they would have two or three sources. Maybe one that was their own factory and then two other suppliers outside that made the key parts. And so they had lots of different options in case their factory had a problem or one of the other factories had a problem. They had redundancy in their supply chain.

But over time, in the medical sector very dramatically, a handful of really big companies have been buying up their competitors. And once they buy, one pharmaceutical company buys the other one, they don’t just keep running the same plants and making the same stuff and getting double the income.  They typically close down the production capacity that’s considered an efficiency. That would mean less costs. Translated out that means they fire all the people who are in the other plant and then they have wherever outsourced work is in India, in China, wherever, they add another shift or they add more people. And now the one company has only its production capacity- maybe a few more hours, a few more workers- but that whole different factory that once existed if something happened to company A’s production, company B’s production was there, now it’s just company A that bought up company B and shut down that production. So we see that for instance, the big pharma companies, they don’t want to change that, because it’s super profitable to basically have all this production in China and India, where people are paid very little, the environmental costs are extremely limited, and then they import the goods back to sell at a high, high price here.

HARVEY: And, maybe we can talk about how this situation came to be. A couple decades ago, what did this industry look like, and how did it change over the last few decades of neoliberal trade policies and other really corporate driven, corporate rigged policies pushed in the international trade arena?

WALLACH: So the pharmaceutical industry looked a lot more like every other industry, which is companies had redundancy in their supply chain so they either made some of the parts themselves or they had two or three sources of it, and there were a lot more competitors. I mean if you’re old enough, you remember a bunch of airlines that don’t exist anymore, and you remember a bunch of telephone companies that don’t exist anymore, and you remember a bunch of car models and brands that don’t exist anymore. So we don’t notice it as often with the pharmaceutical companies cause they’re not really brand names in the way we know, “hmm, there’s no more Plymouth, there’s no more Pontiac, no more Saab, there’s no more Oldsmobile.” But in fact, these companies have been consolidating and consolidating so that there is a really short list of really big companies that both do medicine and medical supplies.

But some of the pharmaceutical companies just do pharmaceuticals, but you know, they buy up and shut down their competition. It helps their monopoly. They have monopoly licenses called patents to sell their medicines for whatever price they want, then heaven forbid another company comes up with something that is a different medicine that can compete, so they buy them up and put them out of business.  As a result we have a very limited supply, and right now we need to gear up to make more of a lot of things. So things where the supplies are really short right now are the drugs that are being used for COVID:Like the sedatives that are being used when you have to put someone on a ventilator, because it’s obviously, you’re going to be fighting against having something down your throat. They’re going to put you in an almost induced coma. And the supply chain is both way too concentrated, but also elements of it, like the second stage(not just the active pharmaceutical ingredient but the compounding) ironically for instance, a lot of [them] were made in the Lombardy region of Italy, whichhich has been the hardest hit, the first area where really there was a huge COVID outbreak. So when we have both limited suppliers and limited alternatives for the parts, the APIs and the actual production is too concentrated in a few places- antibiotics in Lombardy- then the whole world can have economic and health problems that are actually worse than the medical problem that the drugs are needed to combat.

HARVEY: So, Lori, you mentioned Big Pharma earlier, but I wanted to talk a little bit more about their role in this whole process. Not just in accumulating large amounts of money and of outsourcing jobs to countries with lower wages and less restrictions to, you know, participate in the race to the bottom, but they’ve also been active in here in the US on domestic policy and also influencing other trade policies. Maybe you could talk a little about that.

WALLACH: So, the big pharmaceutical companies have done a couple different things. One, they’ve pushed for trade agreements that include these extreme monopoly protections and that basically make other countries—poor, developing countries with low wage workers—sign up for the special protections, so that they can outsource their production there and still get the monopoly guarantees. Then, number two, they have fought for tax policies in the US so that they can literally ship their corporate headquarters someplace else and then claim that they get a lower tax rate because they’re a foreign company. That’s called an inversion. So a lot of the big US pharmaceutical companies are incorporated in Ireland because it’s a tax haven. And then number three, they have pushed for other tax policies that have let them actually charge them. American companies can charge the Irish company basically a business expense for the patents that are held in the US. They take it as a business deduction. So they’re dodging taxes basically twice while getting more incentives to outsource. And that whole combination of policies in the face of also no anti-trust policies to speak of, certainly not in our trade agreements and not very strong any place except Europe, means that these companies keep consolidating and consolidating and consolidating until there are just a few, so there’s no competition between them. And they are able to rig the policies so that the countries also aren’t making these companies face market competition terms.

HARVEY: When you brought up Ireland, it made me think. I was looking through the TAA database,which is up on the Public Citizen website, and when I was looking up medical supplies, I was noticing a lot of outsourcing to Ireland. Is that because manufacturing jobs are going to Ireland, or was this part of that process you were describing?

WALLACH: You can see this fluky trend of the pharmaceutical corporations trying to dodge taxes, if you look either at the Trade Adjustment Assistance database that tracks certain certified job losses caused by trade by the government, or if you look at trade flows in pharmaceuticals. So if you look at TAA you see this weird situation where all these pharmaceuticals factories that used to employ workers in New Jersey, in Pennsylvania, in California, in Wisconsin, in Illinois, you see them certified as job loss outsourced to Ireland. Well, the company relocated to Ireland as a corporation to dodge taxes, but they’re not opening big factories there. Then they’re outsourcing the production to some contract company that is, for instance, in India, or in China or some other low wage venue, and that contract company is getting the APIs down the supply chain from some other company almost certainly in India or China, and those companies are sourcing some of the things that make the APIs from within their own countries. So we have basically seen both job loss,but more importantly in the short term now, a lack of reliable supply caused not by acts of God but by specific trade and tax policies. Because you can also see if you look at the trade data of the value of pharmaceutical goods, it looks like Ireland is our number one trade partner. That’s what  it most looks like if you look at value of imports of pharmaceutical goods. But that’s just because of the corporate patent licensing scam. In factif you look at the volume, where the stuff actually comes from, it’s all coming from China and India.

HARVEY: On that point, since we should wrap up, what are the solutions here? What’s currently being done regarding securing adequate supply lines of APIs, and also what kind of policies are needed? What could help change this scenario to something a lot better?

WALLACH: Maybe if there’s any good thing that comes out of this COVID crisis it is that governments start to take seriously the warnings that have been issued for years. That they need to have certain essential goods produced closer to home and also to have stockpiles.

So in 2014 the Department of Defense did a study, and it was looking simply at the military readiness in medical supplies for an emergency like a pandemic or, heaven forbid, a war. And what that study (and again, six years ago) determined was that supply chains are so incredibly thin, capacity to manufacture was so limited, and so much of it was relying on China, a country that could be on the other end of a dispute whether directly or through proxies, that the US military was in enormous peril of not having the supply of essential goods and medicines that were necessary. And no one did anything about it. 

So what should happen? Different layers. In the short term, we need to figure out where we will have these shortages and quickly start to gear up production using for instance, the Defense Production Act, to turn the kinds of facilities that are making now certain kinds of clean production (because obviously pharmaceutical production has to have very strict controls) to be able to make some of what we may not be able to get in the global market. Number two is thinking forward. We need to think about how both the making of key medicines but also the components of them, the APIs, can have production if not increased in the US, which is in itself a good idea, but also production increase, if you will, in the region. And the importance of that is emphasized by if you look at the critical list. There are 156 drugs that are basically in every crash cart, in every hospital, they’re the medicines you have to have. And right now 96% of those, 96% of those, are produced outside of the US and not even nearby. So if we think of what we want to have here and what we want to have in neighbors, in the Caribbean, which before all the companies started merging the Caribbean actually interestingly and Puerto Rico (part of the US but in that neck of the woods) there were tax incentives and other programs to have pharmaceutical manufacturing there. Or, in Mexico and Canada there is a sort of North American and the Caribbean redundancy in the medicine supply chain with APIs and the actual production. And then the final piece of it is, obviously, the government has entirely mismanaged the situation. We still need stockpiles even if it’s the case that we need to be having the ability to ramp up production and we need more production capacity. I mean that’s the thing about redundancy, there’s a continuum from “it’s lean, it’s mean, it’s super profitable” and the whole damn thing goes to hell if one thing goes out of place, versus having enough redundancy that if you need to gear up production in the face of some crisis, you actually have the hardware to be able to make what you need to be healthy. And there’s short-term and long-term ways in which we can and we really must make those changes. That’s certainly one thing everyone’s learning the hard way from this crisis.

HARVEY: That’s all for today. Thank you all for listening. Rethinking Trade is produced by Public Citizen’s Global Trade Watch. I would encourage you to visit rethinktrade.org as well as tradewatch,org today to educate yourself and find out how you can get more involved in the work we’re doing to fight for fairer and more equitable trade policies.

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