Planet Not For Sale
WTO Orders U.S. to Gut U.S. Consumer Country-of-Origin Meat Labeling Policy, Further Complicating Obama Fast Track Push
Final WTO Ruling Spotlights How Trade Pacts Can Undermine U.S. Consumer, Environmental Policies, Orders Rollback of Popular Consumer Law; Vilsack Says Congress Must Act
Today’s final ruling by the World Trade Organization (WTO) Appellate Body against popular U.S. country-of-origin meat labeling (COOL) policy spotlights how trade agreements can undermine domestic public interest policies, Public Citizen said today. The WTO decision is likely to further fuel opposition to Fast Track authority for controversial “trade” pacts that would expose U.S. consumer and environmental protections to more such challenges. (A list of some of the past public interest policies undermined by trade pacts is below.)
COOL requires labeling of pork and beef sold in the United States to inform consumers the country in which the animals were born, raised and slaughtered.
“The president says ‘we’re making stuff up,’ about trade deals undermining our consumer and environmental policies but today, we have the latest WTO ruling against a popular U.S. consumer policy. Last week, Canadian officials announced that our financial regulations violate trade rules, and earlier this year, the Obama administration, in response to another trade agreement ruling, opened all U.S. roads to Mexico-domiciled trucks that threaten highway safety and the environment," said Lori Wallach, director of Public Citizen’s Global Trade Watch.
In a May 1, 2015, letter, Agriculture Secretary Tom Vilsack informed Congress that it will need to repeal the COOL law or else change it if the final WTO ruling were to go against the United States. In contrast, in his recent speech at Nike, President Barack Obama said, “Critics warn that parts of this deal would undermine American regulation – food safety, worker safety, even financial regulations. They’re making this stuff up. This is just not true. No trade agreement is going to force us to change our laws.”
“Today’s WTO ruling, which effectively orders the U.S. government to stop providing consumers basic information about where their food comes from, offers a clear example of why so many Americans and members of Congress oppose the Fast Tracking of more so-called ‘trade’ pacts that threaten commonsense consumer safeguards,” said Wallach. “The corporations lobbying to Fast Track the TPP must be groaning right now, as this ruling against a popular consumer protection in the name of ‘free trade’ spotlights exactly why there is unprecedented opposition to more of these deals.”
Today’s decision on the final U.S. appeal of a 2012 initial ruling against the COOL policy paves the way for Canada and Mexico, which challenged COOL at the WTO, to impose indefinite trade sanctions against the United States unless or until it weakens or eliminates COOL, which is supported by nine in 10 Americans. Last year, consumer groups wrote to the administration requesting it use the ongoing Trans-Pacific Partnership (TPP) negotiations as leverage to demand that Canada and Mexico drop the case instead of rolling back the policy. But they received no response.
Today, the WTO Appellate Body upheld a 2014 compliance panel ruling, which said that changes made in May 2013 to the original U.S. COOL policy, in an effort to make it comply with a 2012 WTO ruling against the law, were not acceptable. The Appellate Body decided that the modified U.S. COOL policy still constitutes a “technical barrier to trade.” It decided that the strengthened COOL policy afforded less favorable treatment to cattle and hog imports from Canada and Mexico, despite a 53 percent increase in U.S. imports of cattle from Canada under the modified policy. The Appellate Body upheld the earlier panel ruling that the alleged difference in treatment did not “stem exclusively from legitimate regulatory distinctions.”
Today’s ruling is not subject to further appeal. The decision initiates a WTO process to determine the level of trade sanctions that Canada and Mexico are authorized to impose on the United States as retaliation for COOL.
Today’s ruling follows a string of recent WTO rulings against popular U.S. consumer and environmental policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths.
Changes made last year to comply with the WTO’s decision are now being challenged in WTO compliance proceedings. This comes after the U.S. revoked a long-standing ban on tuna caught using dolphin-deadly nets following an earlier WTO ruling. In January 2015, the Obama administration announced it would allow Mexico-domiciled long haul trucks on all U.S. highways after losing a North American Free Trade Agreement challenge and being threatened with sanctions on more than two billion in U.S. trade flows.Consumer groups warn that the trucks pose significant safety threats, while environmental groups warn that they do not meet U.S. emissions standards.
In response to previous WTO rulings, the United States has rolled back U.S. Clean Air Act regulations on gasoline cleanliness standards successfully challenged by Venezuela and Mexico; Endangered Species Act rules relating to shrimping techniques that kill sea turtles after a successful challenge by Malaysia and other nations; and altered auto fuel efficiency (Corporate Average Fuel Economy) standards that were successfully challenged by the European Union.
The Fast Tracked legislation that implemented the WTO enacted a patent extension sought by pharmaceutical interests that consumer groups had successfully defeated for decades. The Uruguay Round Agreements Act amended the U.S. patent law to provide a 20-year monopoly – replacing the 17-year term in U.S. law and increasing medicine prices by billions by extending the period during which generic competition would be prohibited. The bill also watered down the Federal Meat Inspection Act and the Poultry Products Inspection Act both of which required only poultry and meat that actually met U.S. safety and inspection standards could be imported and sold here and allowed imports that meet “equivalent” standards with foreign nations certify their own plants for export.
The COOL policy was created when Congress enacted mandatory country-of-origin labeling for meat – supported by 92 percent of the U.S. public in a recent poll – in the 2008 farm bill. This occurred after 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program.
In their successful challenge of COOL at the WTO, Canada and Mexico claimed that the program violated WTO limits on what sorts of product-related “technical regulations” signatory countries are permitted to enact. The initial WTO ruling was issued in November 2011. Canada and Mexico demanded that the United States drop its mandatory labels in favor of a return to a voluntary program or standards set by an international food standards body in which numerous international food companies play a central role. Neither option would offer U.S. consumers the same level of information as the current labels. The United States appealed.
In a June 2012 ruling against COOL, the WTO Appellate Body sided with Mexico and Canada. The U.S. government responded to the final WTO ruling by altering the policy in a way that fixed the problems identified by the WTO tribunal. However, instead of watering down the popular program as Mexico and Canada sought, the U.S. Department of Agriculture responded with a rule change in May 2013 that strengthened the labeling regime. The new policy provided more country-of-origin information to consumers, which satisfied the issues raised in the WTO’s ruling. However, Mexico and Canada then challenged the new U.S. policy. With today’s ruling, the WTO has announced its support for the Mexican and Canadian contention that the U.S. law is still not consistent with the WTO rules.
President Obama seems unaware that his controversial trade agenda could undermine the Wall Street reform agenda of his first administration.
Fortunately, Senator Elizabeth Warren has been reminding him of this contradiction and the threat it poses to financial stability. Last week, in a speech about the president's trade agenda, she stated, “Anyone who supports Dodd-Frank [the post-crisis Wall Street reform law] and who believes we need strong rules to prevent the next financial crisis should be very worried.”
Unfortunately, Obama responded over the weekend by dismissing Senator Warren’s concerns and defending his controversial push to Fast Track through Congress the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Free Trade Agreement (TAFTA).
In an interview, Obama seemed unnerved by the notion that this agenda could “unravel” Wall Street reform. Indeed, it is unnerving – because it’s true.
Just four days after Obama brushed away Sen. Warren’s concerns as “pure speculation,” Canada's Finance Minister Joe Oliver has declared that the Volcker Rule – a centerpiece of the Dodd Frank Wall Street reform law – violates the North American Free Trade Agreement (NAFTA). Not only would the TPP replicate many of NAFTA’s pre-crisis, deregulatory rules that threaten financial regulations – it would expand them further.
“I believe, with strong legal basis, that this [Volcker] rule violates the terms of the NAFTA agreement,” states Oliver. If our trading partners are already invoking existing U.S. trade pacts to issue clear threats against Wall Street reform, why would we undertake an unprecedented expansion of this trade model’s threat to financial stability via the TPP and TAFTA?
For the first time, the TPP and TAFTA would empower the world's largest banks, including 19 of the 30 biggest non-U.S. banks, to “sue” the U.S. government before extrajudicial tribunals over U.S. financial regulations. And unlike any past U.S. trade pacts, the TPP would empower foreign banks to challenge new U.S. financial protections on the mere basis that they frustrated the banks' "expectations."
The deals are also slated to include deregulatory provisions that literally were written under the advisement of Wall Street banks before the financial crisis – provisions that would conflict with bans on risky derivatives or policies to prevent banks from becoming “too big to fail.” Sen. Warren and other Senators warned the administration about these pre-crisis provisions in a letter last December, concluding that the TPP “could make it harder for Congress and regulatory agencies to prevent future financial crises.”
And Senator Warren isn’t the only canary in this mine. Leading members of the House of Representatives, including House Financial Services Committee ranking member Rep. Maxine Waters, have issued similar warnings about TAFTA’s threats to U.S. financial stability measures. The Americans for Financial Reform – a coalition of more than 200 groups leading the push for Wall Street reform – has repeatedly detailed how TPP and TAFTA provisions conflict with commonsense financial protections.
Prominent economists like Simon Johnson, former chief economist for the International Monetary Fund, have explicitly backed Warren’s concerns. And in a speech last year, Federal Reserve governor Daniel Tarullo plainly stated that proposals “to include limitations on prudential requirements in trade agreements would lead us farther away from the aforementioned goal of emphasizing shared financial stability interests, in favor of an approach to prudential matters informed principally by considerations of commercial advantage.”
But, you may be thinking, surely President Obama would not want to roll back Wall Street reform, right? Fast Track’s threat, unfortunately, is larger than Obama, because Fast Track would outlast Obama. Fast Track would also give blank-check powers to whoever is president after Obama to pursue additional binding agreements to which U.S. domestic laws, including financial regulations, would have to conform. Senator Warren spotlighted this threat in her response to Obama this week, stating, “If that [next] president wants to negotiate a trade deal that undercuts Dodd Frank, it will be very hard to stop it.” While an attempt to undermine Dodd Frank via normal legislation would require 60 votes in the Senate, a Fast-Tracked trade deal that undermines Dodd Frank could be implemented with a simple majority.
But even if no future trade agreements would be shoved through Fast Track’s back door, the existing trade pacts – TPP and TAFTA – present plenty of cause for concern. Indeed, the two deals pose greater threats to U.S. financial regulations than any past U.S. trade or investment deals. That’s largely because, for the first time, they would allow the world’s most powerful banks to use the notorious “investor-state dispute settlement” (ISDS) system – a parallel legal system for multinational firms – to challenge U.S. financial regulations.
Under current U.S. pacts, none of the world’s 30 largest non-U.S. banks may bypass domestic courts, go before extrajudicial tribunals of three private lawyers, and demand taxpayer compensation for U.S. financial policies. Were the TPP and TAFTA to be enacted, 19 of the world’s 30 largest non-U.S. banks would be so empowered - from the UK’s HSBC (notorious for enabling money laundering by drug cartels) to France’s BNP Paribas (notorious for evading U.S. sanctions). These global banks have many subsidiaries in the United States, any one of which could serve as the basis for an ISDS challenge against U.S. financial regulations if the TPP and TAFTA were to take effect.
One of the largest banks that that would be newly empowered to challenge U.S financial protections is Deutsche Bank, a German megabank that received hundreds of billions of dollars from the U.S. Federal Reserve in exchange for mortgage-backed securities in the aftermath of the financial crisis. The Association of German Banks, led by Deutsche Bank’s CEO, has already made clear that it has “quite a number of…concerns regarding the on-going implementation of the Dodd-Frank Act (DFA) by relevant US authorities.”
The ISDS threat is not hypothetical – foreign firms have already used ISDS to attack financial measures, such as when a Netherlands investment company demanded hundreds of millions of dollars from the Czech Republic for choosing not to bail out a bank during the country’s banking crisis. The foreign firm was irked that the bank in which it had a minority share did not receive a government bailout while other banks did. An ISDS tribunal of three private lawyers ordered the government to pay the firm $236 million.
Fast Track’s threat to U.S. financial regulations is also unprecedented because the TPP, according to U.S. TPP negotiators, would be the first U.S. trade pact to empower foreign banks to launch ISDS cases against U.S. financial regulations on the basis that those regulations violated a special guarantee of a “minimum standard of treatment” for foreign investors. ISDS tribunals have interpreted this ambiguous obligation as requiring governments to maintain a “stable and predictable regulatory environment” that does not frustrate foreign firms’ “expectations.” That is, regulations should not significantly change once a foreign investor has invested – even if the government is trying to prevent or mitigate a financial crisis.
Due to such sweeping interpretations, this vague government obligation has become the basis for three out of every four ISDS cases brought under U.S. pacts in which the government has lost. Unlike past U.S. trade pacts, the TPP would newly subject U.S. financial regulations to this broad and oft-used obligation.
President Obama did not address these realities when dismissing Senator Warren’s warnings about the threat Fast Track poses to Wall Street reform. Indeed, he seemed eager to simply call Sen. Warren “absolutely wrong” and move on. The U.S. public deserves an honest debate, not defensive one-liners, when something as sensitive as financial stability is on the line. Let’s hope Senator Warren keeps stoking that debate.
Seven Corporations that Could Sponsor Obama’s Controversial Trade Deal (If His Nike Endorsement Falls Flat)
President Obama apparently has a flair for irony. He selected the headquarters of offshoring pioneer Nike as the place to pitch the controversial Trans-Pacific Partnership (TPP) trade deal in a major speech on Friday. As Obama tries to sell a pact that many believe would lead to more U.S. job offshoring and lower wages, why would he honor a firm that has grown and profited not by creating U.S. jobs, but by producing in offshore sweatshops with rock bottom wages and terrible labor conditions?
Less than 1 percent of the 1 million workers who made the products that earned Nike $27.8 billion in revenue in 2014 were U.S. workers. Last year, one-third of Nike’s 13,922 U.S. production workers were cut. Most Nike goods, and all Nike shoes, are produced overseas, by more than 990,000 workers in low-wage countries whose abysmal conditions made Nike a global symbol of sweatshop abuses.
This includes more than 333,000 workers in Nike-supplying factories in TPP nation Vietnam, where the average minimum wage is less than 60 cents per hour and where workers have faced such abuses as supervisors gluing their hands together as a punishment. Instead of requiring Nike to pay its Vietnamese workers more or ending the abuse they endure, the TPP would allow Nike to make even higher profits by importing goods from low-wage Vietnam instead of hiring U.S. workers.
If using an offshoring pioneer to rally support for the beleaguered TPP does not succeed for some reason, here are seven other U.S. corporations that Obama might consider as equally fitting backup options:
1. Philip Morris
Sure, Philip Morris International – the world’s second-largest tobacco corporation – may not be the world’s most-loved corporation, but Obama would find an enthusiastic TPP corporate sponsor in the firm. Philip Morris has explicitly lobbied for controversial TPP provisions that would empower multinational corporations to bypass domestic courts, go before extrajudicial tribunals of three private lawyers, and challenge domestic laws that millions of people rely on for a clean environment, a stable economy, and healthy communities. Indeed, Philip Morris is already using this parallel corporate legal system, known as “investor-state dispute settlement,” to attack landmark anti-smoking policies from Australia to Uruguay. The TPP would newly empower thousands of multinational corporations to launch “investor-state” attacks against countries’ health, environmental and financial protections. In one fell swoop, the deal would roughly double U.S. exposure to “investor-state” attacks against U.S. policies.
2. Goldman Sachs (and other Wall Street firms)
If Obama’s Nike promo falls flat, maybe he should turn to a Wall Street bank as the next TPP corporate cheerleader. It’s no surprise that Wall Street firms like Goldman Sachs love the TPP. The deal includes
binding rules, written before the financial crisis under the advisement of the banks themselves, that would require domestic policies to conform to the now-rejected model of deregulation that led to financial ruin. And for the first time, the TPP would empower some of the world’s largest 20 banks to directly challenge new U.S. financial protections before extrajudicial tribunals on the basis that the regulations frustrated the banks' "expectations."
3. Pfizer (and other Big Pharma corporations)
Pharmaceutical corporations like Pfizer are likely candidates for further corporate TPP-peddling given that the pharmaceutical industry has lobbied for the TPP more than any other. Small wonder – the deal offers pharmaceutical corporations a buffet of handouts that would allow them to raise medicine prices while restricting consumers’ access to cheaper generic drugs. One TPP chapter would give pharmaceutical firms expanded monopoly protections that would curb access to essential medicines in TPP countries like Vietnam, where it is projected that 45,000 HIV patients would no longer be able to afford life-saving treatment. Another TPP chapter would establish new restrictions on government efforts to cut medicine costs for taxpayer-funded programs such as Medicare, Medicaid and veterans' health programs. A third TPP chapter would empower foreign pharmaceutical corporations to directly attack domestic patent and drug-pricing laws in extrajudicial tribunals.
4. ExxonMobil (and other fracking corporations)
Maybe Obama’s next TPP photo op should be in front of a natural gas fracking drill owned by TPP-supporting ExxonMobil, the world’s largest publicly traded natural gas corporation. Natural gas firms are hopeful about TPP provisions likely to spur a surge in natural gas exports. For the rest of us, that would mean an expansion of dirty fracking and an increase in electricity costs. Implementing the TPP would require the U.S. Department of Energy to automatically approve natural gas exports to TPP countries, waiving its prerogative to determine whether those exports, and the resulting incentive for more fracking, would be in the public interest. As states like New York ban fracking to protect against health and environmental dangers, the TPP would move in the opposite direction. Indeed, the TPP would open the door to more “investor-state” attacks on anti-fracking protections, like the one Lone Pine Resources has launched against a Canadian fracking moratorium that prevents the firm from fracking under the Saint Lawrence Seaway.
5. Time Warner (and other Hollywood corporations)
Hollywood corporations like Time Warner Inc. already have been partnering closely with the Obama administration in stumping for the TPP – recent leaks reveal that the Motion Picture Association of America literally has asked the administration to vet the corporate alliance’s pro-TPP statements. The corporations are pining for stringent TPP copyright protections that could threaten Internet freedom by pushing Internet service providers to police everyday content sharing, resulting in blocked or censored websites. Leaked proposals for the deal would even make the common, non-commercial sharing of copyrighted content (e.g. remixed songs, reposted video clips) a prosecutable crime.
6. Red Lobster (and other corporations using imported fish and seafood)
U.S. chain restaurants and agribusinesses that profit from imports of fish and seafood, at the expense of U.S. independent fishers and shrimpers, could also serve as willing backers of Obama’s TPP pitch. The deal would likely reduce or eliminate U.S. tariffs on imports of more than 80 types of fish and seafood products, increasing further the already massive flow of fish and seafood imported into the United States. Even without the TPP, the U.S. Food and Drug Administration (FDA) only physically inspects less than 1 percent of imported fish and seafood for health risks, despite that the Centers for Disease Control and Prevention has found that imported fish are the number one cause of U.S. disease outbreaks from imported food. The TPP would exacerbate this public health threat by enabling more fish and seafood imports from major exporters like Malaysia and Vietnam, where widespread fish and seafood contamination has been documented. For example, the FDA has placed 193 Vietnamese fisheries on a “red list” due to risk of salmonella contamination.
7. Chinese Corporations in Vietnam
If Obama is willing to use Nike to promote the controversial TPP despite its reliance on low-wage labor in Vietnam, maybe he’d be willing to also solicit TPP endorsements from the Chinese corporations that are setting up shop in Vietnam in hopes of using the TPP to undercut U.S. businesses. The Chinese and Vietnamese press report that many Chinese textile and apparel firms are now building factories in Vietnam in hopes of taking advantage of the TPP’s planned phase-out of U.S. tariffs on apparel imported from Vietnam. This not only would place U.S. textile producers in direct competition with Chinese-owned firms using low-wage labor in Vietnam, but also would eliminate the jobs of workers in Mexico and Central America who now make the clothes that were made in the United States before the North American Free Trade Agreement and Central America Free Trade Agreement. In addition, the TPP’s gutting of Buy American policies would newly empower Chinese firms operating in Vietnam to undercut U.S. businesses to get contracts for goods bought by the U.S. government, paid for by U.S. taxpayers. For all firms operating in TPP countries like Vietnam, the United States would agree to waive "Buy American" procurement policies that require most federal government procurement contracts to go to U.S. firms, offshoring U.S. tax dollars to create jobs abroad.
Third Year of Korea FTA Data Released, Show Failure of Obama’s ‘More Exports, More Jobs’ Trade Pact Promises, Further Burdening Fast Track Prospects
Trade Deficit With Korea Balloons 104 Percent as Exports Fall and Imports Surge Under Korea Pact Used as TPP Template
Today’s release of U.S. government trade data covering the full first three years of the U.S.-Korea free trade agreement (FTA) reveals that the U.S. goods trade deficit with Korea has more than doubled. In addition, today’s U.S. Census Bureau data show Korea FTA outcomes that are the opposite of the Obama administration’s “more exports, more jobs” promise for that pact, which it is now repeating with respect to the Trans-Pacific Partnership (TPP) as it tries to persuade Congress to delegate Fast Track authority for the TPP.
U.S. goods exports to Korea have dropped 6 percent, or $2.7 billion, under the Korea FTA’s first three years, while goods imports from Korea have surged 19 percent, or $11.3 billion (comparing the deal’s third year to the year before implementation). As a result, the U.S. goods trade deficit with Korea has swelled 104 percent, or more than $14 billion. The trade deficit increase equates to the loss of more than 93,000 American jobs in the first three years of the Korea FTA, counting both exports and imports, according to the trade-jobs ratio that the Obama administration used to project gains from the deal.
“As if the odds for Fast Track were not already long enough, with most House Democrats and many GOP members stating opposition, today’s unveiling of a job-killing trade deficit surge under the Korea FTA puts a few more nails in Fast Track’s coffin,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Who’s going to buy the argument about Fast Track and the TPP creating ‘more exports, more jobs’ when Obama’s only major trade deal, used as the TPP template, was sold under that very slogan and yet has done the opposite?”
In contrast to the decline in U.S. goods exports to Korea in the FTA’s first three years, U.S. goods exports to the world have risen 2 percent during that time, despite the strengthening value of the dollar. And the 104 percent surge in the U.S.-Korea goods trade deficit under the FTA starkly contrasts with the 5 percent decrease in the global U.S. goods trade deficit during the same period.
Record-breaking U.S. trade deficits with Korea have become the new normal under the FTA – in 35 of the 36 months since the Korea FTA took effect, the U.S. goods trade deficit with Korea has exceeded the average monthly trade deficit seen in the three years before the deal. In January 2015, the monthly U.S. goods trade deficit with Korea topped $3 billion – the highest level on record.
The administration has tried to deflect attention from the failure of its Korea FTA by claiming that its poor performance has been caused by economic stagnation in Korea. However, Korea’s economy has grown during each year of the Korea FTA, while U.S. exports to Korea have not.
U.S. exports to Korea are actually even lower than today’s numbers indicate and the U.S.-Korea trade deficit is even higher, when properly counting only made-in-America exports. The exports data in today’s U.S. Census Bureau release include “foreign exports” – goods made abroad, imported into the United States and then re-exported without undergoing any alteration in the United States. Foreign exports support zero U.S. production jobs, and their inclusion artificially inflates U.S. export figures and deflates U.S. trade deficits with FTA partners.
Each month, the U.S. International Trade Commission (USITC) reports the official U.S. government trade data with foreign exports removed, typically within two days after the U.S. Census Bureau releases the raw data. USITC likely will release the Korea trade data without the distortion of foreign exports by Thursday, May 7, at which point the more accurate – and even more negative – record of the Korea FTA will be made available at http://www.citizen.org/documents/Korea-FTA-3-years.pdf.
As the fight intensifies against Fast Track for the controversial Trans-Pacific Partnership (TPP) - with new members of Congress and more than 2,000 U.S. groups declaring their opposition - the Obama administration has decided not to switch its talking points, but to state the same ones more loudly.
The administration seems particularly fond of flogging this one in recent TPP-defending speeches, press releases, and Internet memes: “Almost 95% of the world's consumers are outside America’s borders.”
No one is questioning the veracity of this demographic observation. The question is what it has to do with the TPP.
Not much, as it turns out. Here's why the "95%" statistic is irrelevant for the TPP:
- U.S. products already enjoy tariff-free access to consumers in most TPP countries. The United States already has Free Trade Agreements (FTAs) with six of the 11 TPP negotiating countries, meaning tariffs on U.S. products already have been zeroed out. And in Japan, which comprises 88 percent of the combined gross domestic product of the TPP countries that do not already have a U.S. FTA, the average applied tariff is just 1.2 percent. New Zealand’s average applied tariff is 1.4 percent. Such low barriers are why prominent economists like Paul Krugman have scoffed at the economic significance of the TPP, and why a U.S. government study projects 0.00 percent U.S. economic growth even if all TPP countries eliminated all existing tariffs on all products.
- The remaining three TPP countries account for just 1.7% of the world’s consumers. That includes Brunei, which has a population about the size of Mobile, Alabama.
- In the two TPP countries that actually have sizable populations and average tariffs above a mere 1.5 percent, most people do not earn enough money to purchase many U.S. exports. In Vietnam, the average person earns just $1,740 per year. In Malaysia, which has one third as many consumers as Vietnam, per capita annual income is $10,430. Neither country represents significant purchasing power for exports of U.S.-made products.
- Even if the TPP represented significant new market access, TPP-style "trade" deals have not succeeded in helping U.S. firms reach consumers outside our borders. The official U.S. government trade data reveal that U.S. goods exports to our existing FTA partners have grown 20 percent slower than U.S. exports to the rest of the world over the last decade.
Where did the administration get such a weak talking point? The Chamber of Commerce. The corporate alliance has been trumpeting the same 95% statistic for at least the last three years. It appears that rather than create its own sales pitch for the TPP, the administration decided to borrow one straight from the multinational corporations behind the deal.
Given that this particular talking point is about 95% irrelevant for the TPP, maybe the administration should ask the deal's corporate backers for a new one.
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Hatch Bill Would Revive Controversial 2002 Fast Track Mechanism That Faces Broad Congressional, Public Opposition
Today’s Proposal Replicates Language of Failed 2014 Bill, Would Expand Same Broken Trade Model That Has Led to $912 Billion Trade Deficit, Loss of Millions of Manufacturing Jobs, Attacks on Public Interest Policies
The trade authority bill introduced today would revive the controversial Fast Track procedures to which nearly all U.S. House of Representatives Democrats and a sizable bloc of House Republicans already have announced opposition. Most of the text of this bill replicates word-for-word the text of the 2014 Fast Track bill, which itself replicated much of the 2002 Fast Track bill. Public Citizen calls on Congress to again oppose the outdated, anti-democratic Fast Track authority as a first step to replacing decades of “trade” policy that has led to the loss of millions of middle-class jobs and the rollback of critical public interest safeguards.
In the past 21 years, Fast Track authority has been authorized only once by Congress – from 2002 to 2007. In 1998, the U.S. House of Representatives voted down Fast Track for President Bill Clinton, with 71 GOP members joining 171 House Democrats.
Today’s bill explicitly grandfathers in Fast Track coverage for the almost-completed Trans-Pacific Partnership (TPP) and would extend Fast Track procedures for three to six years. The bill would delegate away Congress’ constitutional trade authority, even after the Obama administration dismissed bipartisan and bicameral demands that the TPP include enforceable currency manipulation disciplines. The trade authority proposal would not require negotiators to actually meet Congress’ negotiating objectives in order to obtain the Fast Track privileges, making the bill’s negotiating objectives entirely unenforceable.
“Congress is being asked to delegate away its constitutional trade authority over the TPP, even after the administration ignored bicameral, bipartisan demands about the agreement’s terms, and then also grant blank-check authority to whomever may be the next president for any agreements he or she may pursue,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Rather than putting Congress in the driver’s seat on trade, this bill is just the same old Fast Track that puts Congress in the trunk in handcuffs. I expect that Congress will say no to it.”
Instead of establishing a new “exit ramp,” the bill literally replicates the same impossible conditions from past Fast Track bills that make the “procedural disapproval” mechanism to remove an agreement from Fast Track unusable. A resolution to do so must be approved by both the Senate Finance and the House Ways and Means committees and then be passed by both chambers within 60 days. The bill’s only new feature in this respect is a new “consultation and compliance” procedure that would only be usable after an agreement was already signed and entered into, at which point changes to the pact could be made only if all other negotiating parties agreed to reopen negotiations and then agreed to the changes (likely after extracting further concessions from the United States). That process would require approval by 60 Senators to take a pact off of Fast Track consideration, even though a simple majority “no” vote in the Senate would have the same effect on an agreement. In contrast, the 1988 Fast Track empowered either the House Ways and Means or the Senate Finance committees to vote by simple majority to remove a pact from Fast Track consideration, with no additional floor votes required. And, such a disapproval action was authorized before a president could sign and enter into a trade agreement.
“Chairman Hatch said he would never accept changes that make it possible for Congress to remove Fast Track from an agreement that does not measure up, and he got his way,” said Wallach. “What is being advertised as a new safeguard is not an exit from Fast Track’s confiscation of Congress’ policymaking prerogatives, but new curtains hung over the same brick wall.”
Today’s bill faces long odds for approval. Members of Congress who supported past trade initiatives have been angered by the extreme secrecy of TPP negotiations and the administration’s refusal to include currency disciplines in the pact.
The bill proposed today makes only minor adjustments to the Hatch-Camp-Baucus Fast Track bill that was dead on arrival in the House when it was introduced in 2014. At the time, only eight out of 201 House Democrats supported the bill and House GOP leaders could not count more than 100 members as “yes” votes. Since then, 14 of the 17 current freshman Democrats in the House have signed letters opposing Fast Track despite pressure from the administration. And, in contrast to past Congresses, a sizable bloc of freshmen GOP members has refused to declare support for Fast Track despite a corporate lobby push.
“This bill is a repeat of the Fast Track proposal that died a quick death one year ago,” said Wallach. “The only difference is that that congressional opposition to the very concept of Fast Track authority has grown.”
The bill comes despite broad and growing opposition to Fast Track and the TPP. A 2015 bipartisan poll from the Wall Street Journal and NBC News shows that 75 percent of Americans think that the TPP should be rejected or delayed. In recent weeks, voters in Maryland, Oregon, Washington, Connecticut, Colorado and other states protested against Fast Track, citing the devastating impact past Fast Tracked pacts have had on local jobs, small businesses and farmers. Recent data show that similar trade deals have already pushed the United States to the precipice of a historic $1 trillion trade deficit, contributed to the loss of five million American manufacturing jobs and increased U.S. income inequality.
Today’s bill, sponsored by U.S. Senate Finance Committee Chair Orrin Hatch (R-Utah), House Ways and Means Chair Paul Ryan (R-Wis.) and Finance Committee Ranking Member Ron Wyden (D-Ore.), failed to attract a single House Democratic sponsor. Today’s bill would:
- Empower the executive branch to unilaterally select partner countries for a trade pact, determine an agreement’s contents through the negotiating process, and then sign and enter into an agreement – all before Congress voted to approve a trade pact’s contents, regardless of whether a pact met Congress’ negotiating objectives;
- Authorize the executive branch to write legislation containing any terms the White House decides are “necessary or appropriate” to implement the pact. Such legislation would not be subject to normal congressional committee review and markup, meaning this and future administrations could include in a Fast Tracked trade bill whatever terms it desired;
- Require votes in both the House and Senate within 90 days, forbidding any amendments and limiting debate to 20 hours, whether or not Congress’ negotiating objectives were met.
An analysis of today’s bill shows that:
- The Hatch bill includes several negotiating objectives not found in the 2002 Fast Track authority, most of which were also in the 2014 bill. However, the Fast Track process that the legislation would re-establish ensures that these negotiating objectives are entirely unenforceable. Whether or not Congress’ negotiating objectives are met, the president could sign a pact before Congress approves it and obtain a yes or no vote in 90 days. Democratic and GOP presidents alike have historically ignored negotiating objectives included in Fast Track. The 1988 Fast Track used for the North American Free Trade Agreement and the establishment of the World Trade Organization included a negotiating objective on labor standards, but neither pact included such terms. The 2002 Fast Track listed as a priority the establishment of mechanisms to counter currency manipulation, but none of the pacts established under that authority included such terms.
- Some of the Hatch bill negotiating objectives advertised as “new” are in fact identical to what was in the 2014 bill and were referenced in the 2002 Fast Track. For example, the 2002 Fast Track included currency measures: “seek to establish consultative mechanisms among parties to trade agreements to examine the trade consequences of significant and unanticipated currency movements and to scrutinize whether a foreign government engaged in a pattern of manipulating its currency to promote a competitive advantage in international trade.” (19 USC 3802(c)(12)) The so-called “new” text in the Hatch bill repeats word-for-word what was in the 2014 Fast Track bill: “The principal negotiating objective of the United States with respect to currency practices is that parties to a trade agreement with the United States avoid manipulating exchange rates in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other parties to the agreement, such as through cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means, as appropriate.” Even if Congress had the power to ensure that this negotiating objective was met, the language of this negotiating objective itself does not require enforceable disciplines on currency manipulation to be included in the TPP or other deals obtaining Fast Track treatment. Despite the requests from bipartisan majorities of both houses of Congress that enforceable currency manipulation disciplines be included in the TPP, the Hatch negotiating objective lists “enforceable rules” as just one approach among several non-binding options for the TPP and other Fast Tracked deals.
- Provisions that are being touted as improving transparency, by empowering the Office of the U.S. Trade Representative (USTR) to develop standards for staff access to negotiating texts, would in fact provide a statutory basis for the unacceptable practice of requiring congressional staff to have security clearances to view any draft trade pact text and would fail to match even the level of transparency seen during the Bush administration’s trade negotiations. A close read of a new provision requiring USTR to post a trade agreement text on its website 60 days before signing reveals that this timing would be 30 days after the agreement was initialed and the text locked, meaning the text would only become public after it was too late for the public or Congress to demand changes.
- Today’s bill includes a new negotiating objective related to human rights: “to promote respect for internationally recognized human rights.” But since the bill does not alter the fundamental Fast Track process, the president still would be able to unilaterally pick countries with serious human rights abuses as trade negotiating partners, initiate negotiations with them, conclude negotiations, and sign and enter into the trade agreement with the governments committing the abuses, with no opportunity for Congress to require the president to do otherwise.
- The bill’s terms regarding labor and the environment replicate those of the 2014 Fast Track bill, which in turn memorialize the provisions of the “May 10, 2007” deal that, according to recent government reports, have proven ineffective. While the May 10 provisions went beyond the 2002 Fast Track objectives regarding labor, a U.S. Government Accountability Office report released in November 2014 found broad labor rights violations across five surveyed Free Trade Agreement (FTA) partner countries, regardless of whether or not the FTA included the labor provisions of the May 10 deal.
- What the bill’s co-sponsors are touting as “strengthen[ing] congressional oversight” is actually the renaming of the 2002 Congressional Oversight Group as the “House Advisory Group on Negotiations” and the “Senate Advisory Group on Negotiations.” This exact language was also in the 2014 bill.
For additional, in-depth analysis of the Hatch bill provisions, visit www.citizen.org/fast-track-2015.
Here's something you won't see every day: an op-ed jointly written by analysts at Public Citizen and the Cato Institute. Often divided on issues of trade policy, we find common ground in opposing the proposed expansion, via the Trans-Pacific Partnership, of a shadow legal system for foreign corporations. Read about it in today's The Hill. Here's an excerpt:
By Simon Lester and Ben Beachy
On the precipice of the biggest congressional trade debate in decades, a once-arcane investment provision has become a lightning rod of controversy in the intensifying battle over whether Congress should revive Trade Promotion Authority (TPA), also known as “fast track,” for the Trans-Pacific Partnership (TPP). Sen. Elizabeth Warren (D-Mass.) calls this provision a system of “rigged, pseudo-courts.” The Republican leadership of the House Ways and Means Committee defends it as “a vital part of any trade agreement.”
But this is not your standard partisan congressional battle. Inside Congress and out, criticism and support for this parallel legal system, known as investor-state dispute settlement (ISDS), crosses the political spectrum. Analysts with the Cato Institute and Public Citizen usually stand on opposing sides of trade policy issues, but we find common ground in opposing this system of special privileges for foreign firms.
The TPP would extend this controversial system, found in some existing trade pacts and investment treaties, to new countries and tens of thousands of new companies. Under ISDS, “foreign investors” – mostly transnational corporations – have the ability to bypass U.S. courts and challenge U.S. government action and inaction before international tribunals authorized to order U.S. taxpayer compensation to the firms.
Pacts with ISDS are often promoted as simply prohibiting discrimination against foreign firms. In reality, they go well beyond non-discrimination, and create amorphous government obligations that have given rise to corporate lawsuits against a wide array of policies with relevance across the political spectrum. Foreign corporations have used this system to challenge policies ranging from the phase-out of nuclear power to the roll-back of renewable energy subsidies. Nearly all government actions and inactions are subject to challenge, covering local, state, and federal measures taken by courts, legislators and regulators.
Take, for example, the recent U.S. Supreme Court rulings that companies cannot patent human genes or obtain abstract software patents favored by patent trolls. Foreign holders of those patents could use ISDS to claim that these decisions interfere with their patent rights and ask an international tribunal to order compensation from the U.S. government...
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How would your state be impacted by the Trans-Pacific Partnership (TPP) – a controversial “free trade” agreement (FTA) being negotiated behind closed doors with 11 Pacific Rim countries?
Click here for a state-by-state guide to the specific outcomes of the status quo “trade” model that the TPP would expand. Get the latest government data on how many jobs have been lost in your state to unfair trade, how much inequality has risen, how many family farms have disappeared, and how large your state’s trade deficit with FTA countries has grown.
The TPP would extend the North American Free Trade Agreement (NAFTA) model that has contributed to massive U.S. trade deficits and job loss, downward pressure on middle class wages, unprecedented levels of inequality, lagging exports, new floods of agricultural imports, and the loss of family farms.
These impacts have been felt across all 50 U.S. states. Here is a sampling of the outcomes:
- North Carolina: North Carolina has lost more than 369,000 manufacturing jobs – nearly half – since NAFTA and NAFTA expansion pacts have taken effect. More than 212,000 specific North Carolina jobs have been certified under just one narrow Department of Labor program as lost to offshoring or imports since NAFTA.
- Delaware: Delaware’s total goods exports to all U.S. FTA partners have actually fallen 27 percent while its exports to non-FTA nations have grown 34 percent in the last five years.
- California: In the last five years, California’s $403 million NAFTA agricultural trade surplus became a $187 million trade deficit – a more than $590 million drop. In contrast, California’s agricultural trade surplus with the rest of the world increased by $3 billion, or 79 percent, during the same time period. The disparity owes to the fact that California’s exports of agricultural products to NAFTA partners Mexico and Canada grew just 27 percent, or $693 million, in the last five years, while its agricultural exports to the rest of the world grew 70 percent, or $4.3 billion. Meanwhile, California’s agricultural imports from NAFTA partners during this period surged $1.3 billion – more than the increase in agricultural imports from all other countries combined.
- Michigan: Michigan’s trade deficit with all U.S. FTA partners is nearly five times larger than its deficit with the rest of the world. Michigan’s FTA deficit has grown more than three times as much as its non-FTA deficit in the last five years. Today, Michigan’s trade deficit with FTA partners comprises 83 percent of the state’s total trade deficit.
- Louisiana: Before the Korea FTA – the U.S. template for the TPP – the United States had balanced trade with Korea in the top 10 products that Louisiana exports to Korea – including everything from metal to agricultural products. Under two years of the FTA, that balance became a $9 billion annual trade deficit.
- New York: The TPP and the Trans-Atlantic Free Trade Agreement (TAFTA) would empower 3,067 foreign corporations doing business in New York to bypass domestic courts, go before extrajudicial tribunals, and challenge New York and U.S. health, environmental and other public interest policies that they claim undermine new foreign investor rights not available to domestic firms under U.S. law.
- Texas: U.S. farmers were promised that the Korea FTA would boost U.S. agricultural exports to Korea. But U.S. exports to Korea fell in eight of Texas’ top 10 agricultural export products, from cotton to wheat to meat in the first two years of the Korea FTA. Meanwhile, U.S. exports to Korea of beef, pork and poultry – all top agricultural exports for Texas – declined 18, 15, and 42 percent, respectively (measuring by volume).
- Nevada: The richest 10 percent of Nevadans are now capturing more than half of all income in the state – a degree of inequality not seen in the 100 years for which records exist. Study after study has produced an academic consensus that status quo trade has contributed to today’s unprecedented rise in income inequality.
- Minnesota: Small-scale U.S. family farms have been hardest hit by rising agricultural imports and declining agricultural trade balances under FTAs. Since NAFTA took effect, 15,500 of Minnesota’s smaller-scale farms (24 percent) have disappeared.
As the Obama administration seeks to Fast Track the controversial Trans-Pacific Partnership (TPP) through Congress over public and congressional opposition, it has resorted to a familiar tactic – promising job gains from the deal on the basis of unfounded assumptions. We have repeatedly warned against dubious TPP jobs claims by spotlighting the inaccuracy of the administration’s job claims for the last major trade pact – the 2012 Korea “free trade” agreement (FTA). The Korea FTA was used as the U.S. template for the TPP.
The White House promised that the Korea FTA would create 70,000 jobs based on a report issued by the U.S. International Trade Commission that projected an increase in U.S. goods exports and a decrease in the U.S. goods trade deficit with Korea. In contrast, in the first three years of the Korea pact, U.S. goods exports to Korea have fallen while our goods trade deficit with Korea has surged.
We have shown that, plugging the actual U.S. government trade data into the ratio that the administration used to project job gains from the pact, the first three years of the Korea FTA’s outcomes defy the administration’s “more exports, more jobs” slogan for the deal, providing a cautionary tale for the job claims the administration is currently using to sell the TPP.
The Washington Post’s Fact Checker columnist Glenn Kessler has similarly taken on the administration’s TPP job claims, describing them as a baseless fabrication. But in today’s Post, Kessler takes issue with our fact-checking of the administration’s Korea FTA jobs promise.
Kessler seems to think that we are producing our own jobs projection for the Korea FTA, when we are actually fact-checking the administration’s jobs projection – a projection that Kessler acknowledges “would have earned Pinocchios if it had come to our attention at the time.” It is unclear why Kessler is now assigning Pinocchios to us for calling out the administration’s bogus Korea FTA jobs claim, rather than to those who actually made the claim.
In our recent press release on the third anniversary of the Korea FTA, we stated:
The U.S. goods trade deficit with Korea has ballooned an estimated 84 percent, or $12.7 billion, in the first three years of the Korea FTA (comparing the year before the FTA took effect to the projected third full year of implementation)…The surge in the U.S. trade deficit with Korea under the FTA equates to the loss of nearly 85,000 American jobs, according to the trade-jobs ratio that the administration used to promise job gains from the deal.
Kessler’s primary critique of this statement appears to be that we did not replicate the administration’s flawed methodology of only counting exports and disregarding imports when debunking the administration’s jobs projection. Such a misleading approach – ignoring half of the trade equation – contradicts standard economics and empirical data showing the job-displacing impacts of imports, which Kessler even acknowledges in his column today.
As an example of the administration’s one-sided trade accounting, the Office of the U.S. Trade Representative’s (USTR) factsheet on the third anniversary of the Korea FTA touted that 21,255 additional vehicles were exported to Korea under the FTA. It made no mention of the 461,408 additional vehicles imported from Korea during the same time period (using the administration’s same cut of the automotive trade data). That is, for every additional vehicle the United States exported to Korea under the FTA, it imported more than 21 additional vehicles from Korea. The net effect has clearly been a loss for U.S. auto workers. It is not only contrary to mainstream economics, but common sense, to only look at exports and ignore imports when assessing trade’s impact on jobs.
Indeed, when Kessler did a Fact Checker column in January debunking the administration’s “concocted” claim that the TPP would create 650,000 U.S. jobs, he stated that the study used as the basis for that claim actually showed that “the net number of new jobs [projected for the TPP] is zero” because the study “found that imports would increase by virtually the same amount as exports.” That is, Kessler presumed that $1 in imports had a job-displacing effect equivalent to the job-supporting effect of $1 in exports, which matches the calculation used in our press release. (For what it’s worth, respected economists estimate the dollar-for-dollar job-displacing effect of imports may be even greater than the job-supporting effect of exports.)
But even if we were to abandon the common-sense approach that Kessler presumed in January, defy standard trade accounting, and only count exports, U.S. goods exports to Korea fell by more than $2 billion in the first three years of the FTA. Were we to replicate the administration’s exports-only approach, then our fact-check of the administration’s Korea FTA promises would need to say something to the effect of:
The estimated $2.6 billion decline in U.S. goods exports to Korea in the FTA’s first three years equates to the loss of 17,400 American jobs, according to the trade-jobs ratio and exports-only methodology that the administration used to promise job gains from the deal. That methodology ignores the impact of imports and the significant increase in the U.S. trade deficit with Korea since the FTA was implemented. Including imports, the surge in the U.S. trade deficit with Korea under the FTA equates to the loss of 85,000 American jobs, according to the trade-jobs ratio that the administration used to promise job gains from the deal.
The takeaway is the same. Any (reasonable) way you slice it, the administration’s job gains promise for the Korea FTA is the opposite of the deal’s outcome thus far. Indeed, over the Korea FTA’s first three years, the actual results have been consistently the opposite of the specific export growth and job gain figures that the Obama administration used to sell the Korea FTA. And that gets back to our main point: rely on similar promises now being made for the TPP to your own peril.
Kessler also takes issue with our time frame, implying that we should have counted the trade data from January and February of 2012 as part of the results of the Korea FTA, despite the fact that the FTA actually took effect on March 15, 2012. Our measurement compares U.S. trade with Korea in the 12 months before the Korea FTA took effect (April 2011 to March 2012) with the third full year of the FTA’s implementation (April 2014 to March 2015).
Kessler dislikes this approach, which he criticizes as “trying to be very precise.” Instead, he states it would be more “appropriate” to compare calendar years. But the selective timeframe for which Kessler advocates would errantly count pre-FTA months as occurring since the FTA, while eliminating the most recent months of actual Korea FTA data.
The Fact Checker column also bizarrely faults us for adjusting for inflation. Typically, trade flow studies are criticized if they fail to perform the standard adjustment for inflation, since this would misleadingly count price increases as export or import increases. Nonetheless, Kessler considers the adjustment for inflation as “an effort to manipulate the data further.” Why? Because “the price of goods could decrease.” It is precisely because the price of goods could decrease (or increase) that it is important to adjust for inflation. We do so by using a standard inflation adjustment from the U.S. Bureau of Labor Statistics, thereby eliminating the effect of shifts in goods prices. (And, for what it’s worth, if we were trying to “manipulate” the data rather than be scrupulous with it, we would not be the ones controlling for inflation. Failing to adjust for inflation would make the increase in the U.S. goods trade deficit with Korea during the FTA’s first three years appear even larger than it is in real terms, not smaller.)
After deciding to replicate the administration’s usual data distortions of not counting imports, counting non-FTA months as occurring since the FTA, and not adjusting for inflation, Kessler then performs his own assessment of the Korea FTA outcome, claiming that U.S. exports increased by $2.3 billion in the FTA’s first three years.
This claim is in need of a fact check, as we have not been able to replicate it with any cut of the data. If you use the selective timeframe preferred by Kessler (comparing calendar years 2011 and 2014) and skip the inflation adjustment, you get a $750,000 increase in U.S. exports, not a $2.3 billion increase. (And that "increase" owes entirely to price increases - after a standard inflation adjustment, it becomes a real export decline of more than $1 billion.) Even if you misleadingly count foreign-produced goods as “U.S. exports,” as the administration often does, you get a $1 billion increase in exports – still less than half of Kessler’s claim (and still a real decline in U.S. exports merely by properly accounting for inflation).
The only way we see to get a $2.3 billion increase in U.S. exports to Korea is by mistakenly axing an entire year of the FTA and comparing 2014 with 2012 (as if the FTA did not take effect until 2013 – one year later than its actual implementation date). Even with this blunt error, you would still need to use the arbitrary calendar year timeframe, fail to adjust for inflation, count foreign-produced goods as “U.S. exports,” and ignore imports altogether.
Using the accurate FTA time period and excluding foreign-made goods, our total goods exports to Korea actually have fallen since the Korea FTA took effect (whether or not one properly controls for inflation). Rather than acknowledge this aggregate outcome, the Fact Checker column highlights a few specific products as having “shown real gains in the past three years” of the Korea FTA. This is another common maneuver of USTR: while overall U.S. agricultural exports to Korea increased an estimated zero percent in the FTA’s first three years, for example, USTR focuses on a $78 million gain in cherry exports. The cherry-picking in today’s Fact Checker column, however, includes products, such as apparel, that have actually not seen export gains. U.S. apparel exports to Korea actually have fallen $43 million, or 37 percent, in the Korea FTA’s first three years.
Unfortunately, this exports decline has been more the rule than the exception under the Korea FTA, as overall U.S. goods exports to Korea have fallen. Meanwhile, imports from Korea have risen, and the U.S. trade deficit with Korea has surged. The point that we have repeatedly made stands: the outcome of the FTA thus far is a far cry from the administration’s promise of “more exports, more jobs.” We would do well to keep that failed promise in mind as we now hear its echoes in the administration’s sales pitch for the TPP.
Food sovereignty: an alternative paradigm for poverty reduction and biodiversity conservation in Latin America
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TPP Leak Reveals Extraordinary New Powers for Thousands of Foreign Firms to Challenge U.S. Policies and Demand Taxpayer Compensation
Unveiling of Parallel Legal System for Foreign Corporations Will Fuel TPP Controversy, Further Complicate Obama’s Push for Fast Track
The Trans-Pacific Partnership’s (TPP) Investment Chapter, leaked today, reveals how the pact would make it easier for U.S. firms to offshore American jobs to low-wage countries while newly empowering thousands of foreign firms to seek cash compensation from U.S. taxpayers by challenging U.S. government actions, laws and court rulings before unaccountable foreign tribunals. After five years of secretive TPP negotiations, the text – leaked by WikiLeaks –proves that growing concerns about the controversial “investor-state dispute settlement” (ISDS) system that the TPP would extend are well justified.
Enactment of the leaked chapter would increase U.S. ISDS liability to an unprecedented degree by newly empowering about 9,000 foreign-owned firms from Japan and other TPP nations operating in the United States to launch cases against the government over policies that apply equally to domestic and foreign firms. To date, the United States has faced few ISDS attacks because past ISDS-enforced pacts have almost exclusively been with developing nations whose firms have few investments here.
The leak reveals that the TPP would replicate the ISDS language found in past U.S. agreements under which tribunals have ordered more than $3.6 billion in compensation to foreign investors attacking land use rules; water, energy and timber policies; health, safety and environmental protections; financial stability policies and more. And while the Obama administration has sought to quell growing concerns about the ISDS threat with claims that past pacts’ problems would be remedied in the TPP, the leaked text does not include new safeguards relative to past U.S. ISDS-enforced pacts. Indeed, this version of the text, which shows very few remaining areas of disagreement, eliminates various safeguard proposals that were included in a 2012 leaked TPP Investment Chapter text.
“With the veil of secrecy ripped back, finally everyone can see for themselves that the TPP would give multinational corporations extraordinary new powers that undermine our sovereignty, expose U.S. taxpayers to billions in new liability and privilege foreign firms operating here with special rights not available to U.S. firms under U.S. law,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “This leak is a disaster for the corporate lobbyists and administration officials trying to persuade Congress to delegate Fast Track authority to railroad the TPP through Congress.”
Even before today’s leak, U.S. law professors and those in other TPP nations, the U.S. National Conference of State Legislatures, the Cato Institute and numerous members of Congress and civil society groups have announced opposition to the ISDS system, which would elevate individual foreign firms to the same status as sovereign governments and empower them to privately enforce a public treaty by skirting domestic courts and “suing” governments before extrajudicial tribunals. The tribunals are staffed by private lawyers who are not accountable to any electorate, system of legal precedent or meaningful conflict of interest rules. Their rulings cannot be appealed on the merits. Many ISDS lawyers rotate between roles – serving both as “judges” and suing governments for corporations, creating an inherent conflict of interest.
The TPP’s expansion of the ISDS system would come amid a surge in ISDS cases against public interest policies that has led other countries, such as South Africa and Indonesia, to begin to revoke their ISDS-enforced treaties. While ISDS agreements have existed since the 1960s, just 50 known ISDS cases were launched worldwide in the regime’s first three decades combined. In contrast, foreign investors launched at least 50 ISDS claims each year from 2011 through 2013. Recent cases include Eli Lilly’s attack on Canada’s cost-saving medicine patent system, Philip Morris’ attack on Australia’s public health policies regulating tobacco, Lone Pine’s attack on a fracking moratorium in Canada, Chevron’s attack on an Ecuadorian court ruling ordering payment for mass toxic contamination in the Amazon and Vattenfall’s attack on Germany’s phase-out of nuclear power.
“By definition, only multinational corporations could benefit from this parallel legal system, which empowers them to skirt domestic courts and laws, and go to tribunals staffed by highly paid corporate lawyers, where they grab unlimited payments of our tax dollars because they don’t want to comply with the same laws our domestic firms follow,” Wallach said.
U.S. Exports Down, Imports from Korea Up and Job-Killing Trade Deficit With Korea Balloons 84 Percent on Third Anniversary of Korea Pact, Which Is TPP Template
Three years after implementation of the U.S.-Korea Free Trade Agreement (FTA), government data reveal that the administration’s promises that the pact would expand U.S. exports and create American jobs proved to be the opposite of the pact’s actual outcomes. The post-Korea FTA decline in U.S. exports to Korea and a new flood of imports from Korea have resulted in a major surge in the U.S. trade deficit with Korea that equates to nearly 85,000 lost U.S. jobs. The abysmal FTA record deals a fresh blow to the administration’s controversial bid to Fast Track the Trans-Pacific Partnership (TPP), for which the Korea FTA served as the U.S. template.
“Three years ago we heard the same ‘more exports, more jobs’ sales pitch for the Korea FTA that the administration is making for the TPP, but the reality is that tens of thousands of U.S. jobs have been lost as exports have fallen and trade deficits have surged,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The only silver lining of the Korea FTA debacle is that it further cripples the administration’s push to Fast Track the TPP, which was literally modeled on the Korea deal, perhaps saving us from more of the same pacts that offshore jobs and push down middle-class wages.”
Contrary to the administration’s promise that the Korea FTA would mean “more exports, more jobs,” U.S. International Trade Commission and U.S. Department of Agriculture data reveal that:
- The U.S. goods trade deficit with Korea has ballooned an estimated 84 percent, or $12.7 billion, in the first three years of the Korea FTA (comparing the year before the FTA took effect to the projected third full year of implementation). In January 2015, the monthly U.S. goods trade deficit with Korea topped $3 billion – the highest level on record.
- The surge in the U.S. trade deficit with Korea under the FTA equates to the loss of nearly 85,000 American jobs, according to the trade-jobs ratio that the administration used to promise job gains from the deal.
- U.S. goods exports to Korea have fallen an estimated 5 percent, or $2.2 billion, in the first three years of the Korea FTA.
- Had U.S. exports to Korea continued to grow at the rate seen in the decade prior to the Korea FTA’s implementation, U.S. exports to Korea in the FTA’s third year would have been 24 percent, or $9.8 billion, higher than they are actually projected to be.
- Imports of goods from Korea have risen an estimated 18 percent, or $10.5 billion, in the Korea FTA’s first three years.
- U.S. exports to Korea of manufactured goods have stagnated under the Korea FTA, growing an estimated zero percent in the first three years of the deal. U.S. manufactured imports from Korea, meanwhile, have grown an estimated 18 percent under the FTA. As a result, the U.S. manufacturing trade deficit with Korea has grown an estimated 44 percent, or $10.1 billion, since the FTA’s implementation.
- U.S. exports to Korea of agricultural goods have stagnated under the Korea FTA, growing an estimated zero percent in the first three years of the deal – even as U.S. agricultural exports to the world increased 6 percent during the same period. U.S. agricultural imports from Korea, meanwhile, have grown an estimated 28 percent under the FTA. As a result, the U.S. agricultural trade balance with Korea has declined an estimated 1 percent, or $72 million, since the FTA’s implementation.
Given the bleak data, the Office of the U.S. Trade Representative (USTR) may repeat past efforts to try to obscure bad Korea FTA results. Congressional upset about the pacts is fueling opposition to the administration’s push to Fast Track the TPP through Congress. Typical USTR data omissions and distortions regarding the Korea FTA include:
- The USTR likely will count foreign-produced goods as “U.S. exports,” falsely inflating the export figures that can be reported. It is by using this raw Census Department data versus the corrected official U.S International Trade Commission (USITC) trade data that USTR falsely claims that U.S. exports to Korea have grown and were at a record level in 2014. Despite congressional demands to stop using the distorted data, USTR continues to report export figures that include “foreign exports,” also known as “re-exports.” These are goods made abroad that pass through the United States before being re-exported to other countries. By U.S. Census Bureau definition, foreign exports undergo zero alteration in the United States, and thus support no U.S. production jobs. Each month, the UCITC removes foreign exports from the raw data gathered by the U.S. Census Bureau. But the USTR regularly uses the uncorrected data, inflating the actual U.S. export figures and deflating U.S. trade deficits with FTA partners like Korea. In the first three years of the Korea FTA, foreign exports to Korea have risen an estimated 13 percent, or $284 million, which the USTR may errantly count as an increase in “U.S. exports.”
- The USTR might misrepresent the relatively small increase in U.S. exports to Korea of passenger vehicles under the FTA as a large percentage increase, while omitting both that the touted increase amounts to an estimated 23,000 more passenger vehicles exported from a base of fewer than 15,000 and that imports of passenger vehicles from Korea have surged by an estimated 450,000 vehicles – from about 863,000 to more than 1.3 million in the first three years of the FTA. This trick was included in the USTR’s press release on the FTA’s second anniversary. While U.S. automotive exports to Korea have increased an estimated $686 million in the FTA’s first three years, U.S. automotive imports from Korea have ballooned an estimated $6.4 billion. As a result, the U.S. automotive trade deficit with Korea has increased an estimated 36 percent, or $5.7 billion, in the FTA’s first three years.
- The USTR also may claim, as it did in its press release on the Korea FTA’s second anniversary, that the decline in U.S. exports to Korea under the FTA is due to decreases in exports of fossil fuels and corn. But even after removing fossil fuels and corn products, U.S. exports to Korea still have declined by an estimated $1.4 billion, or 4 percent, in the first three years of the FTA. Product-specific anomalies cannot explain away the broad-based drop in U.S. goods exports to Korea under the FTA.
- The USTR also may try to dismiss the decline in U.S. exports to Korea under the FTA as due to a weak economy in Korea – another claim made in the USTR’s press release on the FTA’s second anniversary. But the Korean economy has grown each year since the FTA passed, even as U.S. exports to Korea have shrunk. Korea’s gross domestic product in 2014 is projected to be 9 percent higher than in the year before the FTA took effect, suggesting that U.S. exports to Korea should have expanded, with or without the FTA, as a simple product of Korea’s economic growth. Instead, U.S. exports to Korea have fallen an estimated 5 percent in the first three years of the FTA.
Coalition of NGOs Releases Nanotech Recommendation Reflecting Concern About Use of Nanotech In Foods
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Hace cincuenta años, durante la reunión anual de 1964 del Banco Mundial en Tokio, los gobiernos de veintiún países en desarrollo votaron en contra de la creación de una nueva sección del Grupo del Banco Mundial a través de la cual corporaciones extranjeras podrían llevar a juicio a gobiernos y eludir sus sistemas de justicia nacionales. Esta nueva sección del Banco Mundial se llamaría el Centro Internacional de Arreglo de Diferencias relativas a Inversiones (CIADI). Los veintiún gobiernos incluían a los diecinueve países latinoamericanos presentes, así como a Filipinas e Iraq. El histórico voto fue apodado el “No de Tokio”.  Puede haber sido el voto colectivo más grande en la historia en contra de una iniciativa del Banco Mundial. Y tal vez la única vez que todos los representantes de América Latina votaron “no”.Así que escribo en parte para celebrar que el “No de Tokio” cumple cincuenta años. Pero también escribo porque es hora de reconocer que la historia ha demostrado lo justificado de ese voto de 1964.¿Cuáles fueron los veintiún países que votaron “no”? Permítanme citar al entonces representante de Chile, Félix Ruiz, quien habló en nombre de los países latinoamericanos:“Los sistemas jurídicos y constitucionales de todos los países de América Latina, miembros del Banco, brindan actualmente al inversionista extranjero iguales derechos y protección que al nacional; prohíben la confiscación y la discriminación y establecen que toda expropiación por causa justificada de utilidad pública debe ir acompañada de justa indemnización, determinada, en última instancia,por los tribunales de justicia. El nuevo sistema sugerido daría a un inversionista privado, por la circunstancia de ser extranjero, derecho a reclamar contra un Estado soberano fuera del territorio nacional, prescindiendo de los tribunales nacionales. Esta disposición es contraria a las normas jurídicas tradicionales de nuestros países y, de hecho, establecería un privilegio a favor del inversionista extranjero colocando al nacional en una situación de inferioridad.”En suma, el nuevo sistema era tanto innecesario como injusto.El CIADI siguió avanzando, a pesar de los votos negativos. Cabe señalar que Brasil nunca se sumó, y de hecho no ha aceptado el sistema en ninguna ocasión.Quienes siguen de cerca a la Organización Mundial de Comercio (OMC) y su mecanismo para resolver disputas tal vez perciban la ironía: una de las reglas fundamentales del avance neoliberal actual hacia una “ultra-globalización”, tal como establece la OMC, es que las regulaciones nacionales deben tratar del mismo modo a inversionistas locales y extranjeros. La ironía, por supuesto, es que la existencia del CIADI parece sugerir que los defensores de la ultra-globalización no consideran problemático que los inversionistas extranjeros reciban un tratamiento privilegiado.A la luz del historial del CIADI durante las décadas siguientes, las críticas al “No de Tokio” fueron proféticas. El CIADI pasó a ocupar el centro de la escena con el auge de los tratados neoliberales de comercio, tanto bilaterales como multilaterales, que empezaron a reproducirse a partir de la década de los años 80. Cuarenta años después de que el primer caso fuese presentado ante el CIADI, en 1978, se han sumado otros 48 sólo durante el 2012.Al mismo ritmo en que se ha multiplicado el número de casos presentados ante el CIADI, se han multiplicado las críticas –en particular por parte de Estados soberanos, pero también cada vez más por parte de abogados especialistas en comercio. Los argumentos son que las reglas del CIADI, en primer lugar, están cada vez más orientadas a favorecer a los inversionistas por sobre el Estado (¿les suena familiar?) y, en segundo lugar, que son demasiado estrechas en su enfoque en derechos “comerciales” (esto es, el inversor privado extranjero), en vez de cubrir también cuestiones “no comerciales” más amplias. Por ejemplo, ¿no debería un gobierno tener derecho a proteger una cuenca de agua de los efectos destructivos de la extracción de oro? ¿No debería ese gobierno, de hecho, ser recompensado en vez de enjuiciado por el CIADI?  ¿Y por qué debería poder el inversor, en tanto que actor no estatal, llevar a juicio al gobierno, mientras que otros actores presumiblemente no estatales como las comunidades afectadas no están siquiera autorizadas a escuchar las presentaciones muchas veces secretas ante el CIADI? (Es cierto: las comunidades pueden presentar testimonio como amicus curiae –si es que encuentran un abogado dispuesto a redactar una a nombre de ellos–. Pero no hay ninguna seguridad de que esos testimonios sean leídos por los abogados certificados por el Banco Mundial que se ocupan de los casos particulares.)El destacado abogado de comercio George Kahale III causó revuelo recientemente al declarar de manera pública que los tribunales del CIADI, ante los cuales se había presentado algunas veces, son cada vez más parciales en pos de favorecer a los inversionistas extranjeros. Y dado que el CIADI no falla de acuerdo a precedentes legales ni permite apelaciones basadas en revisiones judiciales, no hay forma de corregir dichos fallos.De hecho, al expandirse la cantidad de casos considerados por el CIADI, las críticas verbales han empezado a verse acompañadas por acciones. Bolivia, Ecuador y Venezuela –todos partes de aquel “No de Tokio” – han abandonado el CIADI; Sudáfrica está en proceso de establecer una nueva ley de inversiones que permita a las corporaciones extranjeras presentar sus reclamos sólo a las cortes nacionales; Indiaestá llevando a cabo una revisión de sus tratados a la luz de varios juicios de corporaciones; Indonesia ha anunciado su voluntad de no renovar sus acuerdos bilaterales de inversión; Australia decidió no incluir estos derechos corporativos en su tratado de libre comercio de 2005 con Estados Unidos. Documentos filtrados de manera reciente sugieren que varios de estos países están intentando al menos reducir los derechos de los inversionistas (y, así, el poder del CIADI) en el Acuerdo Estratégico Trans-Pacífico de Asociación Económica (TPP por sus siglas en inglés). Lo mismo puede decirse de países de la Unión Europea—y de manera notoria Francia y Alemania–, que están expresando preocupación por este tipo de normas.Pero, un momento: ¿no se derrumbará la economía global sin estos derechos de los inversionistas y su órgano principal, el CIADI? ¿No desaparecerán las inversiones extranjeras? Bueno, en realidad no. Un caso ilustrativo es Brasil, uno de los destinos favoritos de la inversión extranjera pero también un país que nunca ha aceptado esta clase de normas. Puede hacerse una afirmación más amplia: si los inversionistas extranjeros consideran que están por hacer una jugada riesgosa pueden simplemente recurrir a las empresas de seguros de riesgo. Y, como los inversionistas locales, tienen la posibilidad de recurrir a las cortes nacionales que correspondan.Decir “No” al CIADI es cada vez más urgente. Si el Acuerdo Estratégico Trans-Pacífico y la Asociación Transatlántica para el Comercio y la Inversión son aprobados, tal como espera el presidente de los Estados Unidos, Barack Obama, el número de casos presentados ante el CIADI seguirá aumentando. Y podemos esperar aún más acciones por parte de los inversores, propensos a demandar a gobiernos no sólo por expropiaciones directas (el propósito original del CIADI) sino también por formas “indirectas” de expropiación como las regulaciones ambientales o sociales que puedan reducir sus futuros márgenes de ganancia.Así que aquí va un llamado a los veintiún países que con toda razón dijeron “No” en Tokio hace cincuenta años. Celebremos este aniversario exigiendo a los actuales gobiernos que se retiren del CIADI pues pone en riesgo la democracia, la justicia y el bien común.Para tomar prestado un slogan que viene al caso: Cincuenta años son suficientes.(Traducción de Víctor Goldgel)- Robin Broad es Profesora en Desarrollo Internacional en la Escuela de Servicio Internacional de la American University en Washington, D.C.Notas Los países que votaron “no” fueron los siguientes: Argentina, Bolivia, Brasil, Chile, Colombia, Costa Rica, República Dominicana, Ecuador, El Salvador, Guatemala, Haití, Honduras, Iraq, México, Nicaragua, Panamá, Paraguay, Perú, Filipinas, Uruguay y Venezuela. Fuente: Antonio R. Parra, The History of ICSID (Oxford: Oxford University Press, 2012), pp. 66-67.  Ver Andreas F. Lowenfeld “The ICSID Convention: Origins and Transformation” Georgia Journal of International and Comparative Law, (2009) 38, pp.47-62; y Fiezzoni, Silvia “The Challenge of UNASUR Member Countries to Replace ICSID Arbitration,” Beijing Law Review, (2011) 2, pp. 134-144. Extracto de la declaración de Felix Ruiz, Gobernador por Chile, el 9 de septiembre de 1964 en Tokio, citado en: Parra, Antonio R. The History of ICSID, Oxford: Oxford University Press, 2012, p.67. . Ver también pp. 66-68. Versión en español: http://bit.ly/1BuJkAb Este no es un ejemplo hipotético. Ver los documentos relativos al caso del CIADI Pac Rim Cayman Islands vs Republic of El Salvador, que le ha costado al gobierno de El Salvador más de 12 millones de dólares sólo por este juicio.
In the coming days, the U.S. Trade Representative (USTR) will release its annual report on the Obama administration’s trade policy agenda. We know that you can’t wait to see what it will say.
Good news. You don’t have to. Below we present the world’s first look at the report’s contents.
How do we know in advance what the annual trade report will say? No, we don’t have a mole at USTR (though if any of our USTR readers would like to volunteer…).
We have a pretty good idea of the report’s contents, given that these reports tend to recycle the same old sales pitches that the administration has been disseminating ad nauseam (figuratively and, sometimes, literally).
Since the status quo trade platitudes have become predictable, we thought we might as well predict them.
So, you heard it here first – below are some of the administration's standard TPP-related talking points likely to be rehashed in USTR’s forthcoming report, followed by an explanation of why they do not bear repeating:
95 percent of the world’s consumers live outside our borders.
[But our trade pacts have not helped us reach them.]
Yes, this statistic shows a basic understanding of geography and population. But it shows little else. The official government trade data reveal that past trade deals have not been successful in helping U.S. firms reach consumers who live abroad. In fact, U.S. goods exports to our “free trade” agreement (FTA) partners have grown 20 percent slower than U.S. exports to the rest of the world over the last decade.
The TPP would grant U.S. firms greater access to the world's fastest-growing region.
[But the relevant TPP countries have been growing one-fourth as fast as that region.]
The United States already has FTAs with six of the 11 TPP negotiating partners. The combined GDP of the other five countries (the ones that could offer “greater access”) has been growing at a paltry 1 percent annually over the last decade – one fourth of the growth rate of the Asia-Pacific region overall. Yes, the region has been growing quickly. That just happens not to be relevant to the TPP.
Exporters tend to pay their workers higher wages.
[But jobs displaced by imports pay even higher.]
What this talking point fails to mention is that jobs lost to imports under unfair trade deals tend to pay even higher wages than jobs in exporting industries, according to new data unveiled by the Economic Policy Institute (EPI). If a manufacturing worker making $1,020 per week loses her job to imports under a raw trade deal and gets re-hired in an exporting firm where she gets paid less than $870 per week (the actual numbers from EPI’s analysis), it’s probably small consolation that she could be making even less in a non-traded sector like restaurants. But that is the very argument – that exporting industries pay more than non-traded industries – that the administration has been using to push for the TPP’s expansion of the trade status quo.
Their pitch omits the fact that far more jobs have been lost in the higher-paying import-competing industries than have been gained in exporting sectors under existing trade deals, judging by the burgeoning U.S. trade deficit with FTA partners, which has grown 427 percent since the deals took effect. It also does not mention that most trade-displaced workers do not actually get rehired in exporting industries, but in non-traded sectors, spelling an even bigger pay cut than the example given above.
China wants to write the rules for commerce in Asia. Instead, we should write the rules.
[We didn’t write the TPP’s rules – multinational corporations did. The TPP would hurt our national interests while failing, like past FTAs, to affect China’s influence.]
Ah yes, the boogeyman tactic. When the economic sales pitch for a controversial new FTA falters on the existing FTA record of lost jobs, lower wages and increased trade deficits, FTA proponents frequently resort to raising the specter that without the controversial pact, the influence of a foreign opponent will rise further. But the notion that the establishment – or not – of any specific U.S. trade agreement would affect China’s rising influence is contradicted by the record. Proponents of the North American Free Trade Agreement (NAFTA) and NAFTA expansion pacts similarly warned that those deals were necessary to prevent rising foreign influence in Latin America. But in the first 20 years of NAFTA, the share of Mexico’s imported goods coming from China increased from 1 to 16 percent, while the U.S. share dropped from 69 percent to 49 percent. And from 2000 to 2011, a period in which U.S. FTAs with eight Latin American countries took effect, the share of Latin America’s imported goods coming from China increased from 1 percent to 7 percent, while the U.S. share fell from 25 percent to 16 percent. Why should we believe the recycled pitch that another FTA would keep China’s economic influence in check?
And the attempt to paint the TPP as a battle between “our rules” and China’s rules is absurd. “We” did not write these rules. The draft TPP text was crafted in a closed-door process that granted privileged access to more than 500 official U.S. trade advisors, nine out of ten of them explicitly representing corporations. It is little surprise then that leaked TPP terms include new monopoly patent rights for pharmaceutical companies that would increase healthcare costs, limits on efforts to reregulate Wall Street, a deregulation of U.S. gas exports that could increase domestic energy prices, maximalist copyright terms that could thwart innovation and restrict Internet freedom, and new investor protections that incentivize offshoring. Good luck selling that as advancing U.S. interests.
The TPP is a 21st-century agreement with strong labor and environmental standards.
[Government reports show that those standards have proven ineffective.]
The vaunted inclusion in the TPP of labor and environmental provisions that were hatched in a May 10, 2007 deal is nothing new. These provisions have been included in existing FTAs, but have proven ineffective. The George W. Bush administration, for example, included "May 10" terms in the FTA with Colombia, where anti-union violence and repression remain rampant. Indeed, a U.S. Government Accountability Office report released in November 2014 found broad labor rights violations across five surveyed FTA partner countries, regardless of whether or not the FTA included the “May 10” labor provisions. As for environmental standards, the TPP would empower foreign corporations (e.g. oil/gas companies) to demand taxpayer compensation before extrajudicial tribunals for new environmental protections in TPP countries (e.g. rejection of a proposed controversial pipeline).
And despite recent claims to the contrary, the evidence shows no correlation between an FTA’s inclusion of the “May 10” standards and its trade balance impact. Though the Korea FTA, the U.S. template for the TPP, included the “May 10” standards, the U.S. trade deficit with Korea has grown more than 70 percent in the three years since the deal’s passage. According to the administration’s trade-jobs ratio, that equates to the loss of more than 70,000 U.S. jobs – the same number of jobs that the administration promised would be gained under the deal.
98 percent of U.S. exporters are small or medium-sized enterprises (SMEs).
[The few small businesses that export have endured slow and falling exports under FTAs.]
Only 3 percent of U.S. SMEs export any good to any country. In contrast, 38 percent of large U.S. firms are exporters. Even if FTAs actually succeeded in boosting exports, which government data show they do not, exporting is primarily the domain of large corporations, not small businesses.
The relatively few small businesses that do actually export have endured even more disappointing export performance under FTAs than large firms have experienced. U.S. small businesses have watched their exports to Korea decline even more sharply than large firms under the Korea FTA (a 14 percent vs. 3 percent decrease). And small firms’ exports to Mexico and Canada under NAFTA have grown less than half as much as large firms’ exports. Indeed, small firms’ exports to all non-NAFTA countries has exceeded by more than 50 percent the growth of their exports to NAFTA partners.