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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Read the full memo here.

NAFTA a way to restart Keystone Pipeline?

The Obama administration made a lot of us environmentalists happy with yesterday's decision to reject the Keystone XL pipeline.

Given that the Canadian government and corporations appear to be steaming mad about this, it's worth all of us reflecting on what their next move could be. A NAFTA case, for one, does not seem out of the question.

(If it seems far-fetched that Canadian entities might pursue these options, think of how much energy they've put into this pipeline. Compare this with how relatively little energy they've put into opposing U.S. financial regulations, yet in that case, they've already threatened to invoke NAFTA to derail the Dodd-Frank financial reform legislation.)

On what basis might a Canadian corporation, say, challenge the decision to reject the pipeline? The pending case against the Sultanate of Oman brought by U.S. investor Adel A Hamadi Al Tamimi under the US/Oman FTA is instructive. (That FTA is modeled on NAFTA.)

Mr. Al Tamimi is a UAE native, naturalized U.S. citizen and real estate developer in New England who invested in Oman through two UAE shell companies.  In 2006, his companies concluded ten-year lease agreements with the Oman Mining Company LLC (OMCO, a state-owned enterprise) related to a limestone quarrying/crushing operation.  OMCO committed to “use its best endeavors” to obtain “the necessary environmental and operating permits.”  In August 2007, OMCO told al Tamimi’s companies that the permits had been obtained, and that he was contractually required to commence operations,  which he did in September. Within weeks, officials from the Commerce and Environmental Ministries told al Tamimi that the final permits had not been obtained, and various stop-work orders were issued. 

As al Tamimi states, “OMCO now had to make a choice: it could fulfill its obligations under the Lease Agreements, which would mean disobeying or confronting the Environmental and Commerce Ministries, or it could use whatever leverage it had over the Companies and exert every effort to get them to suspend their operations until a solution could be found to the permitting issues. It chose the latter.”

By April 2008, al Tamimi had ceased operations.  Al Tamimi racked up various environmental fees, which he apparently did not pay.  In April 2009, OMCO told al Tamimi that he was in violation of environmental laws,  and in May 2009, he was arrested.  After being convicted of stealing and breaking environmental laws by a criminal court in November 2009, his conviction was overturned by an appeals court in June 2010.

Tying this back into the FTA rules... In 2011, al Tamimi launched an investor-state case under the Oman-U.S. FTA. He alleges that Oman expropriated his property rights by terminating the leases and bringing “the full force of the police power of the State to ensure cessation of all activities…”  He additionally claims that Oman undermined “his legitimate expectations” that he would be able to conduct quarrying operations and failed to provide “protection and security,” in violation of the U.S.-Oman FTA’s fair and equitable treatment (FET) standard.  He also says that other quarrying operations which he “believes to be owned and controlled by nationals of Oman” have been allowed to operate quarrying operations, in violation of the FTA’s national treatment obligations.

Similar arguments could be constructed in the Keystone case under NAFTA. TransCanada could point to a long string of overtures by the U.S. government that led it to develop "legitimate expectations" (as that is defined under trade law) that it would be able to build the pipeline, going from the private assurances in favor of the pipeline (recently revealed by FOIA documents to Friends of the Earth) and ending in the December 2011 payroll tax cut (which included Keystone-related provisions).

Those "expectations" could be then measured against what could be characterized under the FET standard as an arbitrary decision-making process, as when the Obama administration delayed the pipeline decision in November 2011 until after the presidential election.

TransCanada could point to some domestic pipeline operators that have not confronted similar hurdles as a basis for a National Treatment claim under NAFTA, while they could point to any lost expected future earnings as a basis for an "indirect expropriation" claim.

Stranger cases over much smaller sums of money have been launched before. There's been an outrageous string of cases against El Salvador over mining permitting issues. Over $350 million in compensation has already been paid out to corporations in a series of investor-state cases under NAFTA-style deals. This includes attacks on natural resource policies, environmental protection and health and safety measures, and more. In fact, of the over $12.5 billion in the 17 pending claims under NAFTA-style deals, all relate to environmental, public health and transportation policy – not traditional trade issues. For a full rundown of these NAFTA-style cases up until now, see this link.

If all of this seems like an outrage, it is. And what's worse is that the Obama administration is considering putting similar investor rules in a NAFTA-style deal with nine nations, called the Trans-Pacific FTA. Stay tuned for more on this!

Songs of Protest Occupy APEC

While world leaders met inside well-secured hotels and facilities last weekend during the Asia-Pacific Economic Cooperation, the streets of Waikiki were occupied with voices of dissent.

First, on Friday, union workers from the International Brotherhood of Electrical Workers (IBEW) went on strike against the phone company Hawaii TelCom. Striking workers protested against the company’s export of Hawaii jobs to Saipan and its demand to reduce crucial worker benefits.  The opportunity to demonstrate the connection to APEC and the current negotiations between the Trans-Pacific Free Trade Agreement (FTA) countries was not lost on workers and civil-society. IBEW and UNITE-HERE Local 5 sponsored a rally and teach-in on the FTA that was attended by labor groups, international allies and local activists. Hundreds poured in during the rally to denounce APEC’s conference of bankers, corporations and politicians and the secret negotiations seeking to expand a NAFTA of the pacific.

The following day many more protesters and Occupiers marched from Honolulu to the center of Waikiki chanting and voicing their opposition to APEC’s free trade talks. (Read more about the march here.) But the most creative outlet to decry the summit’s intent on corporatizing the world came from renowned Hawaii guitarists and singer Makana. The artist was invited to perform at an APEC gala held inside Hale Koa hotel. He surprised world leaders by not only wearing a t-shirt that read “Occupy with Aloha,” but also by singing protest ballad called “We are the Many.” Check out the performance below:


Read more about Makana occupying APEC here.

What Big Bird Could Teach the WTO

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

More on the details of the case after the jump.

Op-Ed Round-Up

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

 

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

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

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

Read the entire piece here.

 

 

Congress should reject proposed trade agreements and insist on better policies

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

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

Read the entire piece here.

 

US-Colombia free trade agreement bad idea for both countries

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

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

Read the entire piece here.

 

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

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

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

Read the entire piece here.

 

Free Trade Pacts Will Cost Tennesseans Jobs

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

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

Read the entire piece here.

  

 So-called 'free' trade agreements harm American workers

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

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

Read the entire piece here.

 

 
 
Say no to new trade deals and start over

Editorial

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

Read the entire piece here.

 

Open borders, trade deals are ruinous for America

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

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

Read the entire piece here.

 

Trade deals are no deal for US

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

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

Read the entire piece here.

 

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

By Tom Burga, president of the Ohio AFL-CIO

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

Read the entire piece here.

 

 Trade pacts bad for California agriculture

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

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

Read the entire piece here.

 

 
Wisconsin Farmers Union opposes free trade pact with Korea

By Darin Von Rudin, president of Wisconsin Farmers Union

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

Read the entire piece here.

 

 
Rep. Schrader is confused on international trade

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

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

Read the entire piece here.

 

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

By Jessica Lettween, director of the Minnesota Fair Trade Coalition

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

Read the entire piece here.

 

Choose voters over donors on free trade

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

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

Read the entire piece here.

 

Obama's trade policy clearly shortsighted

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

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

Read the entire piece here.

 

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

 

Corporations push for WTO attack on green jobs

The Obama adminsitration is deliberating whether to get involved in a WTO attack on Canada's green jobs program, according to today's Inside U.S. Trade.

Last September, Japan announced that it would be challenging the Canadian province of Ontario's renewable energy program. As IUT reports:

The Ontario program, known as a "feed-in tariff" (FIT), enables producers of wind and solar energy to sell that electricity into the Ontario grid at a higher rate than what the government regulator offers for conventional energy. That higher rate can be up to six times greater than the rate for conventional energy, sources said.

However, producers can only qualify for the program if they use specific amount of Ontario goods and services in establishing that renewable capacity. The domestic content requirement for projects that entered commercial operation in 2010 was 50 percent, and that increased to 60 percent in 2011, sources said.

The U.S. solar industry source contrasted this with "buy local" elements in the U.S. state and local green energy initiatives, which include a FIT program in Washington state and other renewable energy incentive programs in Massachusetts and Michigan.

Unlike the Ontario measure, these programs do not condition participation in the program on the use of domestic content. Instead, these U.S. programs allow both domestic and foreign producers to participate, but offer a small bonus for firms that use domestic content, the source said.

The source argued that this added bonus is not significant enough to affect the competitiveness of firms that do not source locally. The Ontario program, by contrast, completely excludes companies that do not produce a significant part of their product in the province, this source said.

While highlighting the differences between the U.S. and Canadian programs, this source made it clear that the U.S. solar industry opposes any type of local content requirement, and supports an initiative proposed among Asia-Pacific Economic Cooperation countries to phase out such requirements in the green energy sector.

This source acknowledged that U.S. state and local programs that provide a bonus for firms that source locally may also violate WTO rules, but suggested that these programs are not commercially significant.

In other words, Buy Local programs are fine, so long as they're not effective. Once green jobs policies start actually accomplish their goal of incentivizing local production (i.e. meaning something), that's when we launch a WTO attack.

As the sources cited by IUT note, multinational corporations aren't so much worried about the economic impact of a single green jobs program in a single Canadian province.

Instead, they appear to be worried that the program will set an example that will inspire other nations, states and localities to take comparable action. In other words, Ontario's FIT could have a positive demonstration effect by showing people that you can work together to democratically determine alternatives to the decimation of manufacturing jobs and our climate.

Under WTO rules, third countries can join a WTO attack initiated by another country. The good news (or what passes for good political news in the current climate) is that Obama's trade officials worry that, if they join the attack, it could boomerang and affect U.S. green jobs programs.

The bad news is that they are even having this discussion. Why take the side of solar panel companies that are apparently worried that they don't support enough local jobs to qualify? At a time when long distance shipping is contributing massively to global warming, it seems irresponsible not to look for ways to incentivize firms to produce, and purchase, locally.

Scott Walker's NAFTA trade package

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

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

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

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

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

See the full list of signatories after the jump.

The Korea FTA: Putting Corporations Before the Public Interest

We’re continuing our series of facts in response to the Korean Embassy’s misleading claims on the Korea Free Trade Agreement (FTA). Our full response can be viewed here. This time, the focus is on the Korea FTA’s investor-state dispute resolution mechanism that threatens public interest laws.

Lori Wallach’s Huffington Post piece: The Korea FTA’s investor-state dispute resolution mechanism “empowers foreign investors to skirt domestic courts and seek cash compensation for regulatory costs before foreign tribunals…”

Korean Embassy’s claim: “The investor-state dispute resolution mechanism in the KORUS FTA is a common feature of free trade agreements and bilateral investment treaties, of which there are more than 3,000 worldwide. NAFTA has an identical investor-state dispute resolution chapter. Since it took effect in 1994, Mexican and Canadian companies have filed 18 requests for arbitration against the U.S. government. They have won none of them.” Elsewhere, the Embassy adds that, “Some opponents of the FTA have alleged that this section will provide Korean companies with rights greater than those afforded to U.S. companies. Not only is that not true, it is directly rebutted in the text of the agreement which says, ‘foreign investors are not hereby accorded greater substantive rights with respect to investment protections than domestic investors under domestic law where, as in the United States, protections of investor rights under domestic law equal or exceed those set forth in this Agreement.’”[i]

Facts: Opposition to the investor-state system is at an all time high, in part because of such callous attitudes from governments. In July of last year, 110 members of Congress sent a letter to President Obama opposing the investor-state mechanism in the Korea FTA, among other provisions.[ii] A bipartisan group of 146 legislators (including the majority of House Democrats) cosponsored the TRADE Act, which called for elimination of the investor-state system. And in September 2010, over 550 faith, family farm, environmental, labor, and consumer protection organizations signed a letter to President Obama urging that he remove the investor-state mechanism from the Korea FTA.[iii]

The Embassy would like to portray the investor-state dispute settlement mechanism as mundane and uncontroversial. Nothing could be farther from the truth. In October 2010, Korean legislators and members of the U.S. Congress sent a joint letter to President Obama and President Lee that called on them to change the text of the FTA to eliminate the threat of investor-state lawsuits.[iv] The recent joint statement of Korean lawmakers, labor unions, farmers and civil society groups highlighted in Lori Wallach’s Huffington Post piece reiterates the deep concern of Koreans that the investor-state mechanism would allow multinational corporations “to bring our government to the foreign arbitration tribunals to demand compensation over public policy standards, even those that apply to domestic and foreign corporations alike.”[v]

Language cited by Embassy is non-binding. To counter the fact that the FTA’s clear language in Chapter 10 does provide Korea firms operating here better rights than domestic firms, the Embassy quotes a provision of the FTA (e.g. “foreign investors are not hereby…) that is in the preamble of the agreement and thus non-binding. The non-binding nature of the preamble was noted most recently by the U.S. State Department in the Grand Rivers et. al. vs. United States investor-state arbitration under NAFTA, which stated: “the key to interpreting the provisions of the NAFTA must be the text itself, as informed by the treaty’s context, object, and purpose, only to the extent those additional sources are relevant to, and consonant with, the substantive provision at issue. This approach is grounded in the well-accepted principle that general objectives can shed light on treaty provisions, but cannot impose independent obligations on treaty signatories.”[vi]

Korea Trade Deal Won't Help Kentucky Bourbon Sales

Check out this op-ed in the Louisville Courier-Journal to find out why. It's by our very own Todd Tucker, who also happens to be a Kentucky native.

 

Korea Trade Deal Won't Help Kentucky Bourbon Sales

 
"With Congress expected to consider a NAFTA-style trade deal with Korea in the coming weeks, distilled spirits companies have been claiming that Kentucky bourbon sales will take off in Korea if the deal is approved. But this claim is misleading, and it papers over the expected job loss from the Korea deal..."

Read the entire piece here.



Op-Ed Lays Out Risks Korea Trade Deal Poses to Oregon

An op-ed by in today's Register-Guard (Eugene, Ore.) lays out the risks that the U.S.-Korea trade deal poses to Oregon and the U.S. - and calls for Sen. Ron Wyden to oppose it. The piece is by Gordon Lafer, an associate professor at the University of Oregon’s Labor Education and Research Center.

 

NAFTA-style Korea trade treaty would cost U.S. jobs

"As chairman of the Senate’s subcommittee on International Trade, Oregon’s own Sen. Ron Wyden will play a key role in determining whether the [U.S.-South Korea Free Trade Agreement] is approved or shelved, and he is officially undecided on the issue... There is really only one reason for elected officials to support these treaties: to curry favor with big-money corporate donors. While the American people are against more NAFTAs, the U.S. Chamber of Commerce and the nation’s biggest corporations are salivating at the prospect..."

Read the entire piece here.

 

Grand River Case Shows U.S. Open to Financial Liability in NAFTA Attacks on Public Health Laws

The State Department published the NAFTA award in Grand River Enterprises Six Nations, Ltd. et. al. v. United States of America last week, a month after it was dispatched privately to the parties. The case was brought against the United States by a Canadian tobacco corporation that sold tobacco on reservations in the U.S. and three Canadian members of the Haudenosaunee indigenous group who owned or did business with the corporation. The claimants argued that implementation of the deal that U.S. states made with tobacco companies in the 1990s and later to address underage smoking and public health concerns about tobacco violated their NAFTA rights. The award, and other associated documents, is available here: http://www.state.gov/s/l/c11935.htm

While the United States thankfully prevailed in the case, the award raises serious concerns about NAFTA-style investment rules. Among the top concerns from my initial read of the award:

Even when governments win NAFTA disputes on the merits, taxpayers are on the hook for the multi-million dollar costs of arbitration. In this case, U.S. taxpayers had to cover nearly $3 million in legal and arbitration fees, despite the U.S. emerging victorious. (paragraph 241) The investor-state system is becoming so expensive that hedge funds are creating special financing vehicles to loan money to corporations and individuals pursuing attacks on national policies. While private companies can profit off of this system, taxpayers are left with nothing but liability for these often meritless claims.

NAFTA attacks allowed against public health measures. The U.S. states’ settlement with the tobacco companies was a complex response to a complex political and regulatory problem. In 1998, 46 U.S. states entered into a settlement agreement with Philip Morris Inc., R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corp., and Lorillard Tobacco Company, (“participating manufacturers” or PMs) to resolve claims that the states had filed seeking to recoup medical expenses incurred for treating smoking-related illnesses of indigent smokers and to pay for smoking reduction programs.  As part of the settlement agreement, the PMs agreed to pay the states over $246 billion over the next 25 years,  and to restrict marketing directed at children. 

Election 2010: The Best Defense Was a Good Fair Trade Offense

Our 2010 election report is out!

Get all the details of how trade factored into the campaigns here.

 
House Democrats that ran on fair trade platforms in competitive and open-seat races were three times as likely to survive the GOP tidal wave than Democrats who ran against fair trade.

The GOP tsunami obliterated many candidate-specific features of the midterm contests, but trade, job offshoring and/or government purchases of foreign-made goods were a stunningly persistent national focus of midterm election campaigns, with 205 candidates campaigning on these issues. A record number of 75 Republicans adopted some fair trade messaging as well, 43 of whom won their races. More than sixty races became "fair trade offs," where both the Democrat and Republican ran on fair trade themes. Only 37 candidates campaigned in favor of more North American Free Trade Agreement (NAFTA)-style trade agreements - about half of these candidates lost.

There were also a record 220+ campaign ads on trade.

Read the press release, view the full report, and watch all the ads here.

Nationwide, candidates attack jobs and tax dollars going overseas, but why?

Check out this AlterNet piece by Lori Wallach and Todd Tucker to find out.

 
"This election season, hundreds of candidates across the country are campaigning on their opposition to jobs and tax dollars going overseas. This makes sense, given poll returns that show opposition to unfair trade practices is one of the few things that unite Americans of different incomes and political parties. But many of the politicians’ 30-second television ads do not explain why this offshoring is happening..."

Read the entire piece here.

The Political Genius of Sarah Palin: How One Facebook Post Sparked a Mass GOP Fair Trade Wave

There is some conventional wisdom that the GOP is more united than Democrats in favor of unfair trade deals. See for instance this ridiculous aside from the White House in the New York Times Magazine this weekend:

Rouse and Messina see areas for possible bipartisan agreement, like reauthorizing the nation’s education laws to include reform measures favored by centrists and conservatives, passing long-pending trade pacts and possibly even producing scaled-back energy legislation.

This is silly. Polls show that GOP and independent voters are at least as opposed to these deals as the Democratic base. (See here and here.) And, nowhere in the "everything and the kitchen sink" 48 page GOP "Pledge to America" unity document do they talk about trade or offshoring - showing that there is not a heckuva lot of GOP unity in support of unfair trade.

GOP candidates are responding to the public support for fairer trade. This cycle, we're seeing a much higher number of GOP running on fair trade than in the last two cycles, including pledging to renegotiate trade deals and end tax loopholes for companies that offshore jobs. Some are even attacking their Democratic incumbents' votes against fair trade (a vote for China PNTR, for instance).

But the message that I have seen probably 100 GOP candidates run on in this cycle is attacking the incumbent Democrat for voting for a stimulus bill with Buy America provisions criticized as weak.

Long-time readers will recall that we covered this issue in detail back in early 2009:

• In one corner, we had Sen. John McCain (R-Ariz.) - who campaigned against Buy America, and then lost a major Senate vote to remove Buy America requirements entirely from the stimulus bill.
• In another corner, we have President Barack Obama, who campaigned in favor of Buy America, but whose adminsitration pushed back on the stronger versions of the requirement.
• In another corner, we have the fair traders and economic justice types - who wanted to pass a stimulus bill, and one with strong Buy America provisions. The price imposed by the trade point people on the Hill and the administration was to ensure that countries we've signed trade deals with would be treated as if they were "American" for the purposes of the legislation.
• Finally, we have the American people: eighty six percent of Americans say that the stimulus should "require that government-funded infrastructure and construction projects use American-made materials and products to the greatest extent possible", including 79 percent of Republicans. The Buy America portion of the stimulus bill was by far more popular than the underlying bill itself.

Enter Sarah Palin. Despite never having clarified her views on trade policy on the VP campaign trail (or in her previous run for governor of Alaska), Palin raised eyebrows earlier this year when she attacked the stimulus bill for not requiring that all money be spent here in America. Palin wrote on her Facebook wall about the stimulus bill:

“We were promised it would provide “green jobs” for Americans, but 80% of the $2 billion they spent on alternative energy went to purchase wind turbines built in China!”

At the time, I figured that this was just an accidental or not fully thought-through Facebook post. Little did I know that Sarah Palin was an absolute genius whose Facebook post would spark a mass GOP fair trade wave: virtually every GOP candidate across the country is today campaigning on this loophole in the stimulus bill.

So, what would be the solution to this problem? Well, for starters, we'd have to revisit the procurement commitments in the World Trade Organization (WTO) and other unfair trade deals in order to get even close to 100% true Buy America rules in government spending.

Even many free traders feel very strongly that there are moral, environmental and economic reasons to ensure that our tax dollars are used to support local jobs and production. But, as we've long argued, the WTO closes off this key, sovereign policy space. (See our book "States' Rights and International Trade" for more.) Luckily,

• there are a number of both Democrats and GOP that are specifically campaigning on this fair trade sub-theme of reforming procurement rules;
• a majority of House Democrats have already signed up to legislation (the TRADE Act) which would bring the procurement provisions of our trade deals up to a fair trade standard; and
• fair traders like Sen. Sherrod Brown (D-Ohio) and the U.S. Steelworkers are working diligently to monitor the stimulus bill and ensure that as much of it as possible is used to Buy American.

But Sarah Palin has pointed out the way forward: rather than falsely assume a bipartisan consensus in favor of Bush's trade deals with Korea and other countries, let's build on the true bipartisan consensus in favor of fair trade in government procurement and in other policy areas.

(Ed note: In the last two election cycles, Public Citizen has brought you detailed analysis of around 100 competitive and open seat congressional races. We found that the role of trade and offshoring increased in 2008 relative to 2006, and by all indications, 2010 will set a new record. Of about 170 races we are tracking, trade is playing in about 90 percent of them (150). That's right, we'll be releasing detailed candidate profiles of over 350 candidates - GOP, Democratic, and some third party.)

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

Find Layoffs Caused by Outsourcing and Imports

The Trade Data Center that we launched last week contains so many data products that they can almost be lost in a blur. Right now I’d like to take some time to zoom in and profile the most exciting new data product – the overhauled Trade Adjustment Assistance (TAA) database. The TAA database, available here, tracks specific layoffs that have occurred due to rising imports or outsourcing, as certified by the Department of Labor.

Some readers may be familiar with the TAA database that Public Citizen has maintained for years.  Our new database is an overhauled version of this.  Whereas the previous database only gave the workplace location in the form of the city and state, you can search the new database by congressional district, county, and metropolitan area!  It also gives information about the foreign country implicated in many of the layoffs.

Plus, the new database consolidates the databases of the regular TAA program and the NAFTA-TAA program, which operated between 1994 and 2002, so we can be sure of exactly how many jobs were lost due to imports or outsourcing in a given locality.  Take a look at the FAQ on the database or the technical documentation for more information on these topics.

I’ll give a few examples of how to use the database.

Last month, the corporate members of the President’s Export Council released a letter advocating for the passage of the Bush-negotiated Korea, Panama, and Colombia Free Trade Agreements (FTAs), claiming that passage would boost exports. They ignored the fact that the growth of exports to FTA partners has lagged behind exports to other countries, as we showed in our recent report.  It is possible that these corporations are pushing for FTAs since it would facilitate the export of American jobs rather than American goods. We can investigate this with the help of the TAA database.

Let’s pick Xerox, one of the corporate members of the President’s Export Council. First, we enter “Xerox” into the “Company” search box.

Uncheck the “Denied Petitions” box under the “Cause” option so that the search results include only layoffs that have been certified by the Department of Labor as occurring due to offshoring or rising imports.

Then click “Search”

The first result is a Xerox copier factory in Webster, NY that laid off 450 workers when it outsourced work to Mexico in 2000.  In total, 1613 Xerox workers have been certified under the TAA program.  Does Xerox support FTAs because it thinks that it can export more products with FTAs or is it chomping at the bit to outsource more jobs, which the FTAs would facilitate?

You can query the database for all trade-impacted workplaces in a certain geographic area, such as congressional district. 

Simply select the state and input the desired district number – with a leading zero if it is a single digit – and it will pull up all the workplaces in that district. Make sure to uncheck the “Denied Petitions” checkbox if you only want the certified workplaces. Let’s pick Connecticut’s 5th district.

There are 79 certifications covering 6,021 laid off workers. Rep. Chris Murphy, who represents Connecticut’s 5th district, should carefully consider becoming a cosponsor of the TRADE Act since unfair trade has been so harmful to his constituents.

Finally, don’t forget to check out our Google map that displays the location of all of the TAA-certified workplaces and gives information about each. Double click a part of the map to zoom into your town and explore how unfair trade has impacted your community.

California says NO to more job-killing FTAs

As thousands of Californians struggle to find employment, state leaders are sending a message to Washington to hold off on more free trade agreements (FTAs) that fuel the "race to the bottom." Last week, the California legislature passed Assembly Joint Resolution 27 a vote of 48 to 27. The resolution urges the U.S. Congress to oppose the Colombia FTA.

Lead sponsor Asm. Torrico explains why it's important for the U.S. Congress to take a stand for fair trade:

 

Although it is unlikely that the Colombia FTA will be taken up by Congress imminently, the South Korea FTA - another Bush-negotiated trade pact - is making its way toward Congress quickly. State legislators in several states have been weighing in with the Obama administration on the South Korea FTA in recent weeks. They have been asking that he hold true to his campaign promises to change the failed trade model by fixing the Bush- Korea FTA. 

Companies Based in Third Countries Could Use Korea FTA Investor-State Enforcement

 

From the Wall Street Journal comes news that German-based engineering conglomerate Siemens is seeking a bigger slice of the government contracts pie:

The new top U.S executive at Siemens AG is taking aim at business with the federal government, hoping he can take advantage of the German industrial conglomerate's scale to win a bigger share of that steady customer's order flow.

Eric Spiegel, chief executive of Siemens Corp., the U.S. division of Siemens, says his operations currently bring in about $1 billion a year from the U.S. government, a figure he hopes to double by 2015. The effort puts the company up against tough competitors like General Electric Co. and Honeywell International Inc., but Mr. Spiegel believes new spending will come in areas like energy efficiency and health care, where Siemens has products such as offshore wind turbines, MRI scanners and high-speed trains.

If you stroll over to our Korea-U.S. corporate investment maps, you’ll find that Siemens is invested all over the United States and Korea.  Siemens has 147 establishments in 39 states. 

With its investments in the United States and Korea, Siemens could stand to benefit from a loophole in the Korea FTA’s investor-state enforcement mechanism.  The United States or Korea could only deny the benefits of the investor-state enforcement to a foreign investor under two circumstances (see Article 11.11 here for the text. The first circumstance deals with situations in which the U.S. or Korea has sanctions or “not normal economic relations” with the third country where the investor is based, which would apply mostly to firms based in Iran, North Korea, Burma, Cuba, etc.  The FTA outlines a second possible way to deny the benefits of the investor-state arbitration:

A Party may deny the benefits of this Chapter to an investor of the other Party that is an enterprise of such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of the other Party and persons of a non-Party, or of the denying Party, own or control the enterprise. [emphasis added]

Given that Siemens has 1,800 employees and annual sales of 1.2 billion Euros in Korea, it could merely change its country of incorporation with the stroke of a pen and argue that it has substantial business activities in Korea in order to sue the U.S. government under the Korea FTA. It could also do the same to Korea.  This re-incorporation issue arose very recently in the Pacific Rim CAFTA case. Just a year before Canada-based Pacific Rim filed its CAFTA suit against El Salvador for denying it permission to mine gold, Pacific Rim re-incorporated in the United States, which gave it access to the CAFTA investor-state enforcement rights.
 

Since the government contracts that Siemens is pursuing would be classified as an “investment agreement” under the Korea FTA, it would be free to bring cases.  In fact, this is not hypothetical possibility: Siemens has already successfully brought a case under the Germany-Argentina Bilateral Investment Treaty.  The case involved a contract between Siemens and Argentina to establish a system of migration control and personal identification.

The possibility of Siemens or a similar corporation using the Korea FTA to challenge the handling of U.S. government contracts is yet another reason why the investment chapter of the Korea FTA must be fixed.

Introducing: Maps of Corporations to Gain New Rights to Sue Under Korea FTA

We now have exclusive Google maps of the locations of corporations that would gain new rights to challenge public interest laws under the Korea FTA. Click here to explore the maps on our website or look below the jump to view them.

These maps show that the threat of corporate challenges of public interest laws under the Korea FTA is not just a theoretical possibility.  And, given that so many NAFTA investor-state cases have challenged local and state laws , the maps are a wonderful tool to explore which corporations could challenge laws in your community whether you're in the U.S. or Korea!

Check out our memo on the dangers of the investor-state enforcement provisions of the Korea FTA.  Also check out the list of firms that would gain new rights to sue the U.S. under the Korea FTA.

A broad coalition has sounded the alarm on these dangerous new corporate rights.  Among the members of the coalition are 110 members of the House of Representatives who sent a letter to President Obama on July 22, stating:

Implementing [the Korea FTA] without major changes to the text will…make the U.S. government vulnerable to compensation demands in foreign tribunals raised by Korean companies doing business within our borders.

AFL-CIO President Richard Trumka has added his voice to the chorus, saying:

Our negotiators should go back to the table to address the imbalanced market-access provisions in the agreement and to revisit the flawed investment, procurement, and services provisions as well.

Lori Wallach on HuffPo: "Turn Away from the Cliff on Trade, State Legislators Group Tells Obama"

Check out Lori Wallach's latest piece on the Huffington Post:

Turn Away from the Cliff on Trade, State Legislators Group Tells Obama

"It says a lot when the new trade policy platform adopted by the bipartisan National Conference of State Legislatures (NCSL) is more progressive than where the Obama administration is signaling it may be heading on trade.

"On the other hand, the "Free Trade and Federalism" resolution passed at the NCSL's annual conference in Louisville yesterday largely restates Obama's campaign commitments to fix the most damaging aspects of the North American Trade Agreement (NAFTA) model.

...

"So what the heck was the administration thinking - politically or policywise - when President Obama announced a few weeks ago that he wanted to resolve some outstanding commercial issues with one of Bush's leftover NAFTA-style trade deals and get Bush's Korean Free Trade Agreement to Congress in early 2011?"

Read the entire piece at the Huffington Post.

NCSL Calls for Trade Reform as Korea FTA Battle Looms

Today, the National Conference of State Legislatures approved a resolution calling on the Obama administration to make significant reforms to the U.S. trade agreement model. This is yet another indication of the nationwide, bipartisan demand for the administration to implement the president’s campaign commitments to trade reform. 

The NCSL policy, “Free Trade and Federalism,” sets forth what the leading state legislator organization deems an acceptable trade policy. The Korea FTA does not meet the NCSL’s standards.

Read our press release here.

ONI Debate Heats up...in Bermuda

Yesterday, eight insurance lobbying groups released a letter opposing Senator Merkley’s amendment to the financial re-regulation bill that we discussed last week.   Merkley’s amendment would strip out a provision in the bill that allows a newly-established Office on National Insurance (ONI) to unilaterally negotiate and approve international insurance agreements that give foreign insurers broad new privileges.  The ONI could then preempt state laws that conflict with the agreements.

It’s not surprising that big insurers would launch an attack on the right of states to regulate their insurance markets. What is surprising is that one of the lobbying groups signing onto the letter is the Association of Bermuda Insurers and Reinsurers.  Yes, that’s right, insurance corporations that have benefited from the lax tax laws in Bermuda for years are now looking to tear down regulations through the ONI.

As small as Bermuda may be (only 68,000 people live on the island), Bermuda is second only to the U.K. as a home to foreign insurers in the United States. About 17 percent of foreign insurers in the U.S. are incorporated in Bermuda, compared to 18 percent that are incorporated in the U.K.

So, we must ask Senators who have not yet committed to supporting the Merkley amendment: Will you fight to preserve the right of states to regulate their insurance markets, or will you let tax-skirting insurance corporations in Bermuda erode crucial consumer protections?

(Thanks to Flikr user p_snelling for the photo)

Office of National Insurance: Subverting Democracy?

Proponents of NAFTA-style trade agreements are trying to pull a fast one on us by sneaking some devastating provisions into the Senate financial reform bill.  Right now there is language in the bill that creates an Office of National Insurance (ONI) within the Treasury Department that would strike down state insurance policies if the ONI believes that they violate trade agreement rules.  The ONI would also be able to negotiate and approve new agreements that give foreign insurers greater rights without having to ask for approval from Congress first.  Senator Jeff Merkley is leading the charge with an amendment to the bill that would prevent this dangerous seizure of state and congressional authority. Click here to urge your Senator to support Merkley’s amendment.

Think this is something that only threatens states like New York, where there are lots of foreign companies? Think again. Consider the stakes for Sen. Susan Collins of Maine, where the following foreign-owned insurance companies could benefit from an international trade pact drive towards lower regulation:

Great-West Lifeco Inc., based in Canada

Cunningham Lindsey Group Inc., based in Canada

Willis Group Holdings Limited, based in the U.K.

In fact, there are foreign insurance companies in every state in the Union that could take advantage of any new rights that the ONI would give them.  Check out the chart below to see the number of foreign insurance firms operating in your state.  Keep in mind, however, that the presence of even one firm would be enough to create problems for state insurance regulations.

  

Green Job Offshoring Reignites Buy America Debate

Last month, an American University think tank made this startling conclusion: 79 percent of the $2 billion in clean energy grants under a U.S. Treasury/ Energy Department stimulus initiative have gone to foreign - not U.S. - companies. By industry estimates, the program has lead to well over a thousand net job losses in manufacturing.

While President Obama ran and won (and has since advocated) a green industry agenda that creates jobs in the U.S., the AU report finds that the Energy Secretary and American Wind Energy Association stating for the record that the grant program did not have immediate U.S. manufacturing job creation as a major goal.

Yesterday, Sen. Sherrod Brown (D-Ohio) joined Sens. Bob Casey (D-Pa.), Chuck Schumer (D-N.Y.) and Jon Tester (D-Mont.) in calling for a suspension of the grant program until legislation can be passed that makes sure the federal agencies prioritize U.S. job creation. In Schumer's words, "We should not be giving China a head start in this race at our own country's expense."

And as the New America Foundation showed, all of this is part of a longer term "green trade deficit" the U.S. has yet to address.

This latest kerfuffle has reignited last year's debate about Buy America provisions. People need to remember two things: Buy America has been shown to aid U.S. job creation, and neither the stimulus bill nor this latest Brown amendment change long-standing U.S. policy.

GOP Turnaround on Buy American: Genuine Concern or Opportunism?

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

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

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

Minnesota: New Front in Fight for Public Interest, Eh?!

Minnesota is moving to encourage renewable energy by slapping a tariff on coal energy produced in North Dakota, and challenging the global economic order in the process.

And so opens another front in a much larger battle for the legal and policy space to enact common sense public interest regulations and curb the corporate profit crusade. It's a fight that's vital to the creation of a economic model that averts climate catastrophe and provides dignified living for workers.

Penalizing unsustainable or unethical products, or supporting sustainable and ethical ones, is seen by public interest groups across the globe as a key tool for improving labor conditions and environmental standards. But free-market fundamentalists have long insisted that 'similar' products, in this case electricity, must be treated 'similarly'.

Disgracefully, substantial differences in the ways a product is made are purposefully erased for policy-makers so corporations can hunt for cheaper inputs and thus higher profits. A toy made by a toxic-pollution dumping factory vs. a clean factory? Same. Clothes made with slave labor vs. union labor? Same. Energy generated in a way that fuels climate change vs. renewable energy? Its all the same under corporate free-market logic.

But the corporate types have been winning. They've gotten their faulty logic inscribed in our global trade pacts like NAFTA and the WTO, which provide harsh penalties for transgressions. In so doing they've been able to use the bogeyman of trade sanctions to stifle innovative, quality of life-improving policy tools.

On His Way Out, Corzine Dismisses Public Call for New Direction on American Trade Policy, Vetoes Reform Bill

New Jersey Governor Rejects Bill Passed by State Legislature That Would Safeguard State's Regulatory Authority From Trade Agreements

New Jersey Gov. Jon Corzine on Monday vetoed cutting-edge legislation that would have safeguarded job-creation programs, Buy America/Buy New Jersey procurement preferences and renewable source energy policies from being undermined by trade agreements. The Jobs, Trade and Democracy Act required a vote by the state Legislature before the state could be bound by federal government officials to conform state policies to the non-trade regulatory constraints imposed through certain trade agreements. The bill was designed to ensure that the practice and principles of American democracy, from federalism to checks and balances, are safeguarded in this era of globalization, Public Citizen said.

The New Jersey bill Corzine vetoed dovetails with the federal Trade Reform Accountability Development and Employment (TRADE) Act, which provides for improved state-federal consultation on trade agreement matters. That bipartisan legislation has 133 co-sponsors in the U.S. House of Representatives, including New Jersey congressional Reps. Robert Andrews, Rush Holt, Frank Pallone, Donald Payne, Steve Rothman and Chris Smith.

"Its hard to understand why Gov. Corzine would oppose the efforts of people in New Jersey as well as state and local officials nationwide who are demanding new accountability over federal trade negotiators so they do not negotiate away states abilities to create jobs using smart procurement policies and regulate health, energy and other services," said Lori Wallach, director of Public Citizens Global Trade Watch division. "How New Jersey chooses to spend its taxpayers dollars to pursue local economic development or design policies to make health care affordable should be decided by New Jersey citizens through their democratically elected Legislature with approval by their governor - not imposed top-down by foreign trade pacts."

The legislation (S. 1802), which passed the New Jersey General Assembly in May (61-13-3) and the state Senate in December (32-6), would have required state legislative approval of federal government requests in order for New Jersey to be bound to conform its policies to the non-tariff provisions of future trade agreements, including these agreements service sector, procurement and investment rules. Todays trade agreements have drastically expanded scopes, which include the imposition of new constraints on non-trade policies over which state and local governments traditionally have had jurisdiction, such as those affecting environmental protection, financial service regulation, land use and economic development, access to affordable healthcare and medicines, and more. State and local officials have increasingly become aware that todays trade agreements are invading the non-trade policy space reserved for state officials through an insidious sort of international pre-emption. Five other states - Hawaii, Maine, Maryland, Minnesota and Rhode Island - have recently enacted legislation similar to that which Corzine vetoed.

California Legislature Wants a New Way Forward

The California legislature spoke loudly for fair trade last week. The Senate voted 23-13 and the Assembly 50-29 to rethink the state’s future trade pact commitments by passing AB 1276, a new trade oversight law.

California, perhaps more than any other state, understands that NAFTA-style trade agreements are certainly about more than simply trading goods and services. Unfortunately, Californians have learned this after spending way too many tax dollars warding off corporate claims, totaling nearly $1 billion, against NAFTA challenges of state environmental and public interest regulations including a state ban on gasoline additive MTBE and mining regulations. Under NAFTA, foreign investors are given special rights, among which is the ability to sue governments in a private NAFTA tribunal if the corporation feels that a new regulation/policy affects their bottom line. Just a few months ago, rumblings surfaced of another possible trade challenge against the state’s new low carbon fuel standards.

Even more troubling is that in the midst of painful economic hardship, vital economic development policies like “Buy-local/Buy California,” could also easily fall prey to trade challenges under various trade pact procurement agreements.

Assembly Member Nancy Skinner, author of AB 1276, is fed up with trade rules that hamstring legislators and explained recently:

It has become increasingly clear that international trade rules do affect state sovereignty. Many common state procurement, investment or other policies could be challenged under the rules of various trade agreements. AB 1276 is a step to ensure that while we are encouraging expanded trade, we are also safeguarding the state legislature’s jurisdiction over decisions with respect to non-trade policies.

AB 1276 recognizes that the state’s decision to commit state procurement, services and investment laws to the terms of trade agreements falls under the jurisdiction of the state legislature. Currently, the federal government consults only with the governor’s office which has exercised full decision-making power over state commitments to trade pacts. AB 1276 brings these decisions out of the back room and into a forum where they can be fully vetted and assessed to determine whether or not new commitments will benefit the state.

If Governor Schwarzenegger signs AB 1276 into law, California will join Maryland, Rhode Island, Hawaii, Minnesota, and Maine in establishing a democratic process for deciding whether or not to commit the state to harmful future trade agreement terms.

Chilling Policy While the World Burns

Team Obama made some news recently when they went out of their way to criticize a (relatively modest) border adjustment tax measure included in the Waxman-Markey climate legislation as part of last-minute negotiations with Ways and Means trade subcommittee chair Sander Levin (D-Mich.).

For the uninitiated, a border adjustment tax in the climate context is a charge placed on imports from countries that do not have comparable carbon emission reduction schemes. It's intended to ensure that U.S. industries do not lose competitiveness as a result of a domestic cap-and-trade scheme, and that the carbon reduction in the U.S. is not canceled out by an increase in emissions in say China as a result of increased, cap/trade-induced offshoring to that country.

It's political commonsense that a strong border adjustment tax is about the only way you're going to get Midwestern (and many others besides) senators to vote for a climate bill. At a time of high unemployment and manufacturing job loss, it's pretty difficult to ask members to vote for a bill that (without adequate green industrial policy and trade measures) will make matters worse.

That is why it is so surprising that Obama would choose to criticize this measure on the basis of WTO compatibility, as Lori explained here.

What was even more surprising was that the WTO put out a report just days before, appearing to give the WTO seal of approval to border adjustment taxes, something that had Paul Krugman giddy (but which others warned against getting too giddy about). It's odd to say the least that Obama would position himself to the right of the commerce-uber-alles WTO.

Maine Lets Lawmakers Decide

Last Friday, Maine became the fifth state to safeguard democratic decision-making in international trade negotiations. LD 1257, introduced by Rep. Sharon Treat (D-Hallowell), passed unanimously by the legislature, and signed into law by Governor Baldacci on June 12, establishes a sensible process for responding to requests from the United States Trade Representative regarding state commitments to non-tariff provisions of trade pacts like subfederal procurement provisions. In short, since committing to these provisions of trade pacts has the potential to affect state laws, the state government has decided to let the Maine legislature make the call.

“Trade agreements have major implications for state laws and policy, and can override our environmental, public health and even insurance laws,” said Rep. Treat. “Right now, states have little to no say in the details of trade policy, and often find out about these agreements after the fact. This law will help ensure that the Maine Legislature is ‘in the loop’ and that a Governor cannot bind the state to a treaty’s provisions without specific legislation authorizing that action.”

Sarah Bigney, an organizer for the Maine Fair Trade Campaign which supported LD 1257 says:

"The fact that this bill passed unanimously through both chambers goes to show that this is not a partisan issue. State's rights are very important to Mainers. We at the Maine Fair Trade Campaign feel that legislation our state and country pass, like important environmental and public health laws, must not be subject to challenge in the name of profits. Our coalition of 53 organizations across the state is very proud of the Maine Legislature and Governor Baldacci for continuing to lead the way on fair trade policy."

Maryland, Rhode Island, Hawaii, and Minnesota are the other states that have established legislative approval processes similar to Maine. 

New Jersey Takes a Closer Look at Trade Agreements

The Bergen County Record reported today that the New Jersey Assembly voted to keep a closer eye on both on how international trade agreements affect New Jersey and the process by which New Jersey commits to comply with their terms.

The Assembly approved the bill, the Jobs Trade and Democracy Act last week, 61-12. It would require the Legislature to approve of any measure that would "bind" the state to a trade agreement, and would designate four legislative "liaisons" to work on trade with the governor's office and the federal government.

The proposal would also establish a Citizens' Commission on Jobs, Trade and Democracy to "monitor trade negotiations and disputes, assess the social, environmental and economic impacts of trade agreements."

States like Maryland, Rhode Island, Hawaii, Minnesota that have passed similar legislation and Maine, California, New York, Iowa and Nevada that have introduced similar legislation this year are doing their best to improve what is a terribly flawed federal-state consultation process on trade policy.

The bill would also set up a Citizens Commission on Trade similar to those already operating in Maine, Vermont and New Hampshire (and not too far off from the kind of committees on trade operating in Washington and Utah). These commissions monitor the impact of trade policy on their states, with particular attention to how pending trade deals can affect state law.

While critics cited in the article argue that this legislation creates unnecessary bureaucracy, increasing numbers of state legislatures are becoming more vigilant about the affects of trade agreements on their local economies and state laws and are calling for a greater role in the trade policymaking process.

The article closes with a quote from National Conference of State Legislatures' trade specialist Doug Farquahar.

“It's brought more attention to the issue" of how states are affected by trade laws, said Farquahar. "And so it just puts a lot more pressure on the United States Trade Office."

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

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

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

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

The 1988 Fast Track went even further, specifying that:

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

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

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

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

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

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

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

Pacific Rim Uses CAFTA to take on Mining Regs in El Salvador

Canadian mining company Pacific Rim Corp. has responded to grassroots efforts against its proposed mining project in El Salvador by filing a CAFTA investor suit against the Salvadoran government.  

Communities in northern El Salvador, worried about the environmental impacts of proposed mining projects, campaigned vigorously along with environmental, religious and human rights organizations to hault what would be El Salvador's first large-scale mine in 70 years. They were successful in convincing President Tony Saca to rethink issuing the permit for Pacific Rim's El Dorado mine.

The Miami Herald explains:

President Saca fears mining would cause cyanide contamination of water much in the way it did in the 1950s at the El Dorado mine, the same underground mine in the eastern region of Cabañas which Pacific Rim wants to reopen and expand.

''I won't give any mining exploitation permits because mining is definitively harmful,'' Saca said.

Saca's position has been echoed by his successor, president-elect Mauricio Funes, whose left-wing FMLN party ended 20 years of right-wing rule with their victory in the March elections. Funes will officially take power in June.

El Salvador is not alone in choosing to preserve natural resources over mining projects that do not bring long-term employment and whose profits will flow out of the country. And Pacific Rim is not alone in using NAFTA or CAFTA investor rights to challenge local decisions over mining. The United States is currently fending off a $50 million NAFTA investment suit over California's mining regulations.

Although Pacific Rim is a Canadian company that shouldn't even be eligible to utilize investor rights under CAFTA (an agreement between the United States and five Central American countries), they have found a way around this problem. Pacific Rim Mining Corp. will bring this investment suit through its Nevadan subsidiary, Pac Rim Cayman LLC! As with all NAFTA and CAFTA investor-state cases, the case will be decided outside of domestic courts by a panel of arbitrators.

And all this talk of a Panama FTA, which contains the same kind of investor rights found in NAFTA and CAFTA could makes matters much worse. Panama is home to an estimated 350,000 subsidiaries of foreign mulinational companies. Just as Canadian company Pacific Rim used its Nevadan subsidiary to file a CAFTA investor suit against El Salvador, so could any of the 350,000 parent companies use their Panamanian subsidiaries to take the United States government to task over environmental and other public interest regulations.

NAFTA: A Familiar Hurdle for California's Environmental Regulators

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

The Associated Press reports:

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

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

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

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

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

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

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

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

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

California Calling for Trade Reform

California Assembly Member Nancy Skinner (D-14), Chair of the Assembly's Natural Resources Committee, introduced AB 1276 last Friday. This groundbreaking legislation proposes vital trade reform to help safeguard California's environmental regulations and local economy in future trade agreements.

California, perhaps more than any other state, has seen first-hand how corporations can use trade rules to challenge domestic policies that have nothing to do with trade. California’s Attorney General’s office has already spent several years assisting with the federal defense of a NAFTA Chapter 11 investment case targeting a California ban on gasoline additive MTBE (settled in 2005). Today, California’s regulators are on the defensive again awaiting a decision on Canadian mining company Glamis Gold’s NAFTA Chapter 11 suit over the state’s mining regulations.

The proposed legislation, coauthored by State Senator Loni Hancock, recognizes that current trade agreements establish rules that could have implications for a host of legislative policy priorities, including state procurement policy. AB 1276 would make sure that in the future state legislators have a chance to review some of these potentially contricting trade rules and would require legislative approval before any state official commits California to comply with certain provisions of proposed trade agreements. Similar legislation has passed in Maryland, Rhode Island, Hawaii, and Minnesota.

Buy Keynesian

My colleague John Schmitt has written an interesting column suggesting the following:

The President could rewrite the current "Buy American" restriction to allow US recovery funds to be spent on US goods — as well as those from any country that passes an economic stimulus program that is at least as large (as a percent of their national GDP) as the package ultimately passed here. Call it a "Buy Keynesian" plan.

The "Buy Keynesian" clause would let the President thread the political needle. He gets to keep the "Buy American" provision that many taxpayers (and Senators) are demanding. And, when foreign leaders accuse him of protectionism, he can rightly respond that their goods have been excluded not because they are foreign, but because their countries aren't pulling their weight in the international recovery.

This is a great idea, and obviously a great way to reflate the economy. Which of course means that it's  WTO illegal. Check this out from the WTO procurement agreement:

With respect to all laws, regulations, procedures and practices regarding government procurement covered by this Agreement, each Party shall provide immediately and unconditionally to the products, services and suppliers of other Parties offering products or services of the Parties, treatment no less favourable than:

            (a)        that accorded to domestic products, services and suppliers; and

            (b)        that accorded to products, services and suppliers of any other Party.

And unfortunately, there is no Keynesian exception to the national-treatment and most-favored nation obligation. Yet another reason that I am coming to the point of view that EVERY policy proposal ith any WTO implications should include both the proposed domestic measure, and a proposed sense of Congress that the WTO should be renegotiated to allow policy space for the measure.

Buying America; Playing in Peoria

Do you remember this campaign graphic from the Obama campaign in Pennsylvania? Obama promoted Buy American policy in television and radio ads and even committed to renegotiating existing trade agreements to remove their limits on Buy American procurement. We thought you'd be interested in what President Obama had to say about "Buy America" policies on the campaign trail, especially given this Thursday he will be in Peoria visiting a plant operated by Caterpillar, the corporation leading the attack against Buy America provisions in the Stimulus Plan:

When asked in writing: "Do you support renegotiating trade agreements so they will allow us to use "Buy America" and "Buy Local" procurement policies? Obama answered "Yes" in a May 2008 Candidate Questionnaire (PDF) from the Oregon Fair Trade Campaign.

Obama ran paid TV attack ads in North Carolina against John McCain's opposition to Buy American provisions.

Obama also ran a radio ad attacking John McCain's opposition to Buy America after McCain slammed Obama's European trip at a biker rally. At the rally, McCain said he would rather listen to the "roar of 50,000 Harleys" than the cheering of 200,000 Berliners. An Obama ad retorted that McCain was a phony for opposing a requirement that the government buy American-made motorbikes. "But when it comes to his record," the announcer says, "American-made motorcycles like Harleys don't matter to John McCain. Back in Washington, McCain opposed the requirement that the government buy American-made motorcycles."

Finally, check out David Sirota's piece for lots of great details of Obama's commitments to voters to support Buy America policies.

According to a recent poll (PDF), an overwhelming 86 percent of Americans support the Buy America provisions in the stimulus. (See the video embedded below for more on this poll.)

Buy America policies seem to play pretty well in Peoria.

Minnesota Makes Its Move

Minnesota recently became the fourth state (joining Maryland, Hawaii, and Rhode Island) to take decisive action to promote fair trade policies at the state level. Minnesota legislators passed a statute requiring that the state legislature, in addition to the governor, give approval before the state may commit to any new international trade agreement’s procurement provisions. Minnesota adopted this change and established a Trade Policy Advisory Group to assist the governor and the legislature in understanding the impact of international trade agreements on the state.

This tide has swelled slowly over the past few years and is expected to increase as state legislators around the country are now faced with the responsibility of addressing job loss and major economic setbacks that have crippled budgets from California to New York. Rhode Island went even further as its bill requires legislative approval for commitments in services and investment in addition to procurement. These provisions are of great consequence because under NAFTA and similar agreements, not only can countries challenge state laws as barriers to trade, but corporations can also launch trade suits against state policies in trade tribunals. Foreign investors have used NAFTA' s Chapter 11 investor-state enforcement system to challenge domestic state court rulings, state environmental laws, local land use policies, public health measures and even the provision of public postal services.

States are wise to empower their legislatures to approve these decisions given the potential of the agreements’ provisions to limit any number of new policy options. Once a state has agreed to be bound to a trade agreement, it becomes extraordinarily difficult to rescind the offer. Therefore the consequences, pro and con, should be thoroughly understood by state legislatures before agreeing to the terms.

States that are not taking the opportunity to consult their legislature about these matters are liable to overlook important considerations that may cost the state heavily in years to come. Just a few procurement policies that have been used to stimulate local economic development and spur job creation that could run afoul of “trade” rules include: “Buy Local” preferences for local suppliers, anti-offshoring measures that encourage the use of in-state workforces, local services procurement, and even “green” procurement policies that require recycled content or renewable energy use over less eco-friendly options. Policymakers should be free to pursue these critically needed policies, without being handcuffed by the services, investment and procurement rules contained in trade agreements.

During the recent campaigns, Democrats and Republicans alike offered proposals to boost economic development with “Green Jobs” and American innovation. Yet little attention has been paid to potential conflict between these economic rescue efforts and current U.S. trade rules. If we are to rebuild our state economies, we’ll need all the tools and options available. If your state isn’t one of the four mentioned above, contact your local representatives and encourage them to take action.

"I want the WTO to tell us we can't do this... because then we won't have a WTO."

Josh Holland had a great piece on Alternet a while back that talked about how the WTO will need to be shrunk, sunk or otherwise renegotiated to allow Obama's green jobs plans to go forward without challenge or sanction. He does fresh reporting on an issue we've been raising for a while:

It's a story that's gotten little attention during the campaign. The traditional media have found the time to analyze Sarah Palin's wardrobe in great detail, take a hard look at whether or not the fact that Joe Biden was raised in Scranton, Penn., will win over white folks from the "Heartland" and ponder the all-important question of whether a mainstream, centrist Democrat like Barack Obama is in fact a crypto-Maoist. But they haven't bothered to point out that much of what both the Democratic and Republican nominees are promising on the campaign trail would likely be found "illegal" according to the rulings of shadowy trade tribunals that have the power to impose daunting financial penalties against the U.S. government if it were to stray from the economic orthodoxy known as "neoliberalism."

That's what "free trade" deals are about: limiting by treaty the policy space in which lawmakers can operate. As such, both of the presidential candidates are boxed into a cage of their respective parties' creation. It's the dirty secret of the 2008 campaign.

Recently, AlterNet asked Van Jones, founder of Green For All and author of The Green Collar Economy, about this issue, and he responded with defiance. "I want the WTO to tell us we can't do this," he said, "because then we won't have a WTO. I want the free traders to stand up in front of the world and explain to Americans why some people are going to tell you that you can't have clean energy and you can't have your home retrofitted (with American-made products) because it is more efficient for it to be made in Asia or Germany, that you can't bring Detroit back to build wind turbines. I want the free traders to defend having an overseas body to declare this agenda illegal. I want that fight."

WTO case against U.S. auto industry bailout??

We've been warning about this for some time, but there is an ongoing WTO threat to our plans to usher in a green energy revolution here in the U.S. See this news on the U.S. auto bailout, which includes several greening components:

The European Union might complain to the World Trade Organisation about U.S. plans to help its stricken car industry, European Commission President Jose Manuel Barroso said on Friday.

Democrats in the United States Congress are trying to draw up a $25 billion bail-out for American automakers, who are struggling to survive the financial crisis.

"We are in the process of analysing the plan. The plan has not yet been presented yet. Of course, if it is illegal state aid, we will act at a WTO level," Barroso told Europe 1 radio.

       

Honestly, I've even been a doubter at times as to whether these challenges would ever materialize. But as this news shows, whenever there is real money on the line - and the green revolution is nothing if not MONEY - there will be a WTO challenge.

United States and China teaming up to push toxic toys?

As state (and some federal) legislators across the United States have been working feverishly to keep toxic toys away from children, the U.S. government is working to derail other countries' efforts to do the same.

Which country do you think the U.S. government is partnering with to attack toy-safety standards? It couldn't possibly be China (the source of a flood of unsafe imports in recent years to the U.S.), could it?

According to Inside U.S. Trade:

The U.S. and China this week both pressed Brazil at the World Trade Organization on import licensing procedures for toys put in place last year in order to help ensure the safety of imported toys, and claimed that the procedures have caused unnecessary delays for exporters trying to ship toys to the Brazilian market.

The two countries raised the issue in an Oct. 19 meeting of the WTO Committee on Import Licensing. While the manufacturing and shipment of toys largely occurs in developing countries such as China, Malaysia and Thailand, toy companies such as Mattel that are headquartered in the U.S. and design products here are also interested in the issue, sources said.

For the third level of irony/disgust in this situation, please see our recent post about Delegate Jim Hubbard from Maryland who received troubling correspondence from the Chinese government regarding legislation he introduced to remove toxic toys from Maryland shelves.

It's really nice that in the face of a product-safety crisis here at home, the U.S. is using scarce government resources to attack other countries' regulations, at the behest of Mattel and with China no less.

Trade Takes Center Stage in Campaign Ads

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

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

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

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

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

After we give the swindlers their deficient capital...

The Boston Globe discusses "what's next after the financial crisis". Here's what we and some other advocates are saying:

Now come the second thoughts on globalization.

Never before have world markets been so integrated. And yesterday's concerted interest rate cuts by central banks in the United States and other countries from Britain to China was a signal that the financial crisis rippling around the globe has grown too big for any one of them - even the US Federal Reserve - to contain on its own.

It also could mark the start of an effort to overhaul the global financial system conceived at the 1944 summit in Bretton Woods, N.H., which set the rules of international commerce for industrial countries...

Critics of global trade and finance, long a vocal minority in many countries, including the United States, have based much of their opposition on such historical factors as job migration. Now they see their cause gaining momentum as lawmakers push for tougher oversight and financial restrictions to stem the mayhem in world markets. US Representative Barney Frank, Democrat of Newton, has called for stepped-up regulation of investment banks and other financial institutions.

"There's going to be a large push for re-regulation," said Lori Wallach, director of Public Citizen's Global Trade Watch, a policy advocacy group in Washington. Wallach said trade pacts have undermined safeguards for workers and consumers worldwide.

"We're seeing the fruits of three decades of deregulation of the financial markets," said Tonya Hennessey, project director at CorpWatch, an antiglobalization group in San Francisco. "Because of that, we've had this complex packaging of securities sold around the world. There's no choice but to go back to strong regulation."

Offshoring of Child Care Reaches New Heights

The Onion gives satirical coverage to the offshoring of health care debate. (HT to Ben Muse.)

NAFTA Health Care Suits and Melamine Milk

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

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

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

Sound familiar?

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

What does this mean for us?

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

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

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

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

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

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

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

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

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

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

Consumers/States Against Trade Premption Insurance Bill

A host of consumer and subfederal officials - including yours truly - are questioning a provision in H.R. 5840, an insurance bill on the House floor today. You can find their letters on the topic here, but today's Congress Daily has the main scoop:

Public Citizen, the Center For Economic Justice, and the U.S. Public Interest Research Group sent a letter Monday to lawmakers asking that they vote against the legislation by Financial Services Capital Markets Subcommittee Chairman Paul Kanjorski, D-Pa. The bill would allow the proposed office to establish federal policy on international insurance matters, ensuring that state laws are consistent with international trade agreements.

The groups argue the bill would give the office too much latitude to interpret international agreements on matters that are under congressional purview. They fear that such authority would allow the office to pre-empt state consumer protection laws.

"There is no way to predict -- and thus provide safeguards for -- all of the U.S. consumer protection measures that might annoy foreign insurance firms in the future. Thus, the very concept of empowering any federal agency to enforce such international commercial agreement obligations for foreign governments and firms against U.S. states is fatally flawed," the groups wrote.

Biden's Son, WTO, Internet Gambling, Sleaze thread

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

The New York Times reported over the weekend that Robert Hunter Biden, vice-presidential candidate Joe Biden's son, did some lobbying work of trade relevance:

Federal lobbying records show that Hunter Biden’s firm was hired in June by lawyers for J. Russell DeLeon and his wife, Ruth Parasol, billionaire expatriates who founded a Web site called PartyPoker. Their company, PartyGaming P.L.C., which later went public in London, stopped doing business in the United States after President Bush signed a bill into law in 2006 aimed at curbing online gambling.

Wyeth Wiedeman, a lobbyist hired by Mr. DeLeon and Ms. Parasol, said Mr. Biden helped put together a lobbying campaign to persuade Congress to pass a law that would clarify the question about whether online gambling was legal prior to 2006. Mr. Wiedeman said the Justice Department has been examining the couple and others involved with the PartyPoker site.

Mr. Wiedeman said Mr. Biden visited a House member from North Carolina to discuss the issue...

Published accounts have said that Ms. Parasol, a lawyer who now lives in Gibraltar, started out as an adviser to her father’s telephone sex-chat business and then operated pornographic Web sites before turning to online gambling.

Hunter Biden could not be reached for comment. David Wade, a spokesman for the Obama campaign, said Mr. Biden’s involvement in the lobbying effort “gives much ado about nothing a whole new meaning.” He said Mr. Biden was hired by PartyGaming’s law firm, Sharp & Barnes, to provide expert advice because he specialized in electronic commerce and served on a working group on Internet gambling issues when he worked at the Commerce Department in the Clinton administration.

There is no report that any of this was connected in any way to the presidential campaigns. To see the official document detailing the $50,000 in lobbying expenditures by Biden for the gambling company investors in the gambling company, click here. (Taken from the Senate Office of Public Records.)

PartyGaming was shut out of the U.S. market when Congress passed an Internet gambling ban in 2006. Interestingly, although their lawyers PartyGaming's investors' lawyers paid Biden Biden's company thousands of bucks to lobby Congress for clarification that online gambling provision was legal prior to 2006, the company actually stated in their public offering documents that they knew it probably was illegal... and that they didn't care. As Kurt Eichenwald reported:

The Justice Department and numerous state attorneys general maintain that providing the opportunity for online gambling is against the law in the United States - and PartyGaming does it anyway. Indeed, of its $600 million in revenue and $350 million in profit in 2004, almost 90 percent came from the wallets and bank accounts of American gamblers.

To justify this, PartyGaming walks a very thin line. Providing online gambling is not illegal per se in the United States, the company argues - federal prosecutors just say it is. The company has already received an e-mail message from the Louisiana attorney general demanding that it cease providing online gambling in that state; PartyGaming simply ignored the communication and waited for additional action that never came.

The company's prospectus - a British document that is not available in the United States - at times reads something like a legal brief, citing American case law to support the company's position that no prosecution would ever take place.

Still, in its offering documents, PartyGaming makes no secret of the fact that even if the company's view of the law proves wrong, it is banking on its executives' belief that there is little that law enforcement can do - or will do - to prosecute. "In many countries, including the United States, the group's activities are considered to be illegal by the relevant authorities," PartyGaming says in its offering document. "PartyGaming and its directors rely on the apparent unwillingness or inability of regulators generally to bring actions against businesses with no physical presence in the country concerned."...

Now, as the largest company pushing into the United States market, PartyGaming is best positioned to benefit if the question of online gambling is decided in its favor. Already, the World Trade Organization and foreign governments are siding with companies like PartyGaming and against the United States.

LATE last year, for example, the W.T.O. agreed with the Caribbean island nation of Antigua that United States legislation criminalizing online betting based in other countries violated global laws. An appellate body at the trade organization upheld the principal conclusions in that ruling in April.

And it has still been upheld, as we reported on recently in our lawsuit against the Bush administration.

UPDATE: 9/17: The NYT has issued a correction, stating that:

An article on Saturday about a decision by R. Hunter Biden, a son of Senator

Joseph R. Biden Jr.

, to quit working as a

Washington

lobbyist included an incorrect identification from Senator

Barack Obama

’s campaign for the clients of a law firm, Sharp & Barnes, that had hired the senator’s son to lobby on an online-gaming issue. The firm’s clients are two investors, J. Russell DeLeon and Ruth Parasol — not the company PartyGaming P.L.C.

I corrected the info above.

VT Legislator Reacts to Interference on E-waste Bill

On July 3rd, we posted that two state bills in Maryland had seen interference from the People's Republic of China (PRC) before they had the opportunity to come to a vote, cited as "barriers to trade" in conflict with the U.S. commitments under the World Trade Organization (WTO). Since then, we have been updated on the developments of a similar case in Vermont and wanted to share.

State Senator Ginny Lyons (D-Chittenden County) recently issued a statement on August 12th responding to the correspondence she received from the PRC regarding her bill on electronic waste. This letter from the Chinese Government also referenced U.S. commitments under the WTO as reason for asking Lyons to "cancel" or "revise" her bill. To which Sen. Lyons responds:

"The People's Republic of China questions the authority of the Vermont legislature to enact legislation to protect human life and the environment. This attempted interference by the People's Republic of China in the democratic process in Vermont is alarming and threatens basic principles of our system of government. Common sense solutions to health issues at the state and local level should not be subject to international pressure."

She stresses that, "This is part of a disturbing trend toward undermining states's rights. It's simply not OK for other governments to feel that they have a right to intervene in our state legislative process in this way. It wouldn't matter whether the bill addressed by the Chinese government was about health care, workers' benefits, land use permitting, or in this case, electronic waste recycling, the underlying principle is the same: respect for democratic decision-making. And so, we have to let folks in Washington DC and in Beijing know that this is an unacceptable intrusion."

This statement follows the unanimous passage of Sen. Lyons' resolution on this issue by the National Conference of State Legislatures (NCSL) Labor and Economic Development Committee at their annual meeting in July. The resolution asks that, at minimum, USTR issue a statement to NCSL "affirming that states’ abilities to pass laws and regulations protecting human health and the environment should not be abridged, and that USTR will aggressively defend states’ regulatory powers as a matter of U.S. federalism."

The Forum on Democracy and Trade released a preliminary analysis of the allegations by the People's Republic of China claiming that Sen. Lyons' bill is inconsistent with the WTO Agreement on Technical Barriers to Trade (TBT). The analysis finds the following:

"The TBT Agreement, which states that "Members should ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade." Under this strict "necessity test," trade values arguably trump other public policy values unless there is no conceivable alternative policy that is less burdensome on trade."

And states in conclusion:

"As illustrated by this event, other countries could and are beginning to use the trade system to apply pressure to state legislatures and to impact the state legislative process. Since trade promotion authority has expired, states see an opportunity to evaluate the process for providing input on trade issues and to improve federal-state communication. A new system for improving communication between states, USTR, and Congress should be a strong priority for the next Congress and President to ensure that our democratic system of government is protected."

We wholeheartedly agree with the Forum's conclusion and hope that state legislators will act on this opportunity to improve their role in the process. (If you are a state legislator and would like to get involved in a working group devoted to these issues, please email: [email protected].)

Corporate America Wins with Trade!

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

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

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

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