Eyes on Trade

Civil society from around the globe are in Lima, Peru for the 17th round of Trans-Pacific Partnership (TPP) negotiations to tell negotiators that a trade agreement that prioritizes the rights of corporations above the well-being of citizens is not acceptable. For the latest news, click here at 5pm today (May 17) to participate in a webinar hosted by activists in Lima.

Several Peruvian organizations have joined together to launch the No Negociable! (Not Negotiable!) campaign to highlight the grave threats that the TPP poses to Internet freedom, the environment, workers' rights, and public health.

Events kicked off on Wednesday when Peruvian activists took part in a press conference  to express their concerns about the TPP:

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+Julia Cesar Cruz (Red Peruana de Pacientes y Usarios), representing Peruvians living with HIV, tuberculosis, and cancer, said that patients of these diseases and others are terrified about how the TPP proposals could affect the lives of those living with chronic illness. She called on President Humala to follow through on his campaign promise to guarantee access to medicines for Peru’s poorest.

+Jose de Echave (CooperAcción) expressed concerns about how TPP’s investment chapter would allow crucial policies to protect indigenous communities and the environment to be challenged.

+Juan Jose Gorritti (CGTP) rejected a trade agreement model that does not respect workers' rights and encourages a race to the bottom.

+Crisólogo Cáceres (ASPEC) expressed concerns about how the TPP would impact consumer rights and privilege corporations over consumers.

+Alejandra Alayza (RedGE) spoke about a Peruvian petition that will be sent to President Humala. (Spanish speakers can find a video of Alayza speaking at the press conference here).

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Several other civil society events have been planned during the round, including an all-day public forum, a protest, and the delivery of signatures to President Humala.  

Stay tuned to Eyes on Trade, as well as our Twitter and Facebook pages, for periodic updates from Lima.

Today: You can also learn more about what is happening on the ground by connecting to a webinar hosted by activists in Lima. To take part in the interactive webinar, join this link TODAY, Friday, May 17th, at 5 PM EST.

First House Hearing Today on the Trans-Atlantic Free Trade Agreement

Submission of more than 10,000 public comments on the Trans-Atlantic Free Trade Agreement (TAFTA) to the U.S. Trade Representative’s (USTR) docket last week punctured the notion that the pact will avoid the controversies that have dogged past trade deals. The cause of controversy is that negotiations will focus primarily on “behind-the-border” policies and “regulatory and other non-tariff barriers,” given tariffs between the United States and EU are already quite low.

Critical comments were submitted by a panoply of consumer, farmer, labor, environmental, health and tech groups concerned about the negotiations being used to roll back critical public interest safeguards. In addition, nearly 10,000 comments were generated in 32 hours after an email sent by Rep. Alan Grayson (D-Fla.) alerted the public that the deal is slated to include controversial “investor-state” provisions. The investor-state proposal would empower foreign corporations to skirt U.S. legal systems and directly challenge domestic health, environmental and other public interest policies before extrajudicial foreign tribunals authorized to order taxpayer compensation. The investor-state system has generated controversy across the political spectrum. Conservatives have objected to the notion that the United States would be subjected to the jurisdiction of United Nations and World Bank tribunals. Progressives have viewed the system as a backdoor means to attack domestic health and safety policies.

To date, most U.S. agreements including investor-state enforcement have been with developing countries. TAFTA would break that mold, empowering corporations to circumvent the U.S. and EU court systems, not typically criticized for being unfriendly to investors, to attack U.S. and EU policies in extrajudicial tribunals. As a result, foreign firms operating in the United States would enjoy greater rights than those provided to domestic firms. Moreover, because many European firms are established here, U.S. taxpayers would face unprecedented liability from investor-state suits, in contrast to past U.S. pacts with developing countries whose firms have relatively few investments in the United States.

In contrast to the bulk of public comments on TAFTA, the four witnesses presenting to the House Ways and Means Trade Subcommittee in Congress’ first hearing today on proposed TAFTA negotiations all represent business interests. This includes two witnesses representing the trans-Atlantic coalition of large corporations that has pushed for TAFTA negotiations for years. The business interests view TAFTA negotiations as a means to eliminate an array of consumer, environmental and other public interest safeguards that they have identified as “trade irritants.” The corporate agenda is closely mirrored by the official framework for talks announced in February in a report of a high-level U.S.-EU government commission, advised by many of the same corporate interests. 

Despite growing public scrutiny of the  TAFTA proposal, President Obama met this week with British Prime Minister David Cameron, to discuss how to rush the completion of this sweeping “trade” agreement by the end of next year. Obama and Cameron announced plans to launch formal talks during the G8 Summit in Northern Ireland next month.

What Generated 10,000 Comments in 32 Hours: Proposed Inclusion of the “Investor-State” System that Would Empower Foreign Corporations to Challenge the U.S. Government in Extrajudicial Tribunals, Undermine Domestic Public Interest Policies, and Cost U.S. Taxpayers Millions

U.S. and EU officials have confirmed that they plan to include  in TAFTA a mechanism included in  prior U.S. “free trade” agreements (FTAs) called “investor-state dispute resolution.” This mechanism, which is facing growing controversy in many countries, elevates foreign corporations to the level of sovereign governments, empowering them to privately enforce the terms of a public treaty. This is done with trade pact terms that authorize individual foreign firms and investors to skirt domestic laws and courts and directly challenge signatory countries’ public interest policies before foreign tribunals, demanding taxpayer compensation for claims that those policies undermined investors’ expectations. The cases are decided by panels comprised of three private sector attorneys, unaccountable to any electorate, who rotate between serving as "judges" and bringing cases against governments for corporations.

Foreign investors have used the broad “rights” granted by this system, which are superior to those afforded to domestic firms, to demand taxpayer compensation for environmental, energy, land-use, toxics, water, mining, labor, and other non-trade domestic policies that they allege undermine their “expected future profits.” A recent Bloomberg exposé “Coup d’Etat to Trade Seen in Billionaire Toxic Lead Fight” details one such case under the U.S.-Peru FTA. When an investor-state tribunal rules in favor of the foreign investor, the government must hand the corporation an amount of taxpayer money decided by the tribunal. There is no appeal mechanism. Even when governments win, they often must pay for the tribunal’s costs and legal fees, which average $8 million per case, wasting scarce resources to defend public interest policies against corporate challenges.

More than $380 million in taxpayer compensation has already been paid out to foreign corporations in a series of investor-state cases brought under the North American Free Trade Agreement (NAFTA) and related U.S. FTAs. Of the over $14 billion in the 18 pending claims under NAFTA-style deals, all relate to environmental, energy, land use, public health and transportation policies – not traditional trade issues. In November 2012, U.S. pharmaceutical corporation Eli Lilly used the investor-state provisions of NAFTA to attack Canada’s entire legal basis for granting patents, demanding $100 million in compensation.

The investor-state system was initially established to provide a venue for foreign investors to obtain compensation when a government expropriated an investment in a country that did not have a well-functioning domestic court system. In the past, it was included in pacts between a developed and developing country with the developed country firms launching investor-state cases against developing country governments. The United States was not exposed to significant liability under this regime because the only agreement that included a major capital-exporting country was NAFTA. Ninety percent of investor-state challenges against the United States under NAFTA have come from Canadian firms. Inclusion of this regime in an FTA with the EU would expose U.S. taxpayers to enormous new liabilities.

The global World Trade Organization rules do not include private enforcement. Thus, EU corporations currently do not enjoy greater legal privileges than U.S. firms and cannot directly challenge the U.S. government in foreign tribunals over U.S. domestic policies. If TAFTA is enacted with investor-state provisions, EU corporations would be newly empowered to demand U.S. taxpayer compensation for being required to comply with the same policies enacted by Congress and state legislatures that apply to domestic firms. U.S. corporations would gain the same privileges in EU countries.

 Growing Public Outcry over TAFTA

When Rep. Grayson alerted citizens of TAFTA’s proposed inclusion of the investor-state regime, nearly 10,000 individuals submitted comments within 32 hours to denounce the extreme provision as an affront to democracy and the public interest. In addition, more than 370 groups and individuals filed concerns and remarks on the deal in response to USTR’s invitation for public input. Below are links to comments submitted by the diverse array of organizations concerned about TAFTA’s threats to food safety, climate change policy, family farmers, Internet freedom, workers’ rights, access to medicines, financial regulation and other critical public interest objectives.

Public Citizen: http://www.citizen.org/documents/TAFTA-comments.pdf

Rep. Alan Grayson (D-Fla.): http://graysonforcongress.com/news/grayson-army-opposes-corporatocracy-nearly-10000-submit-comments-against-trade-deal-sell-outs

Sierra Club: http://action.sierraclub.org/site/DocServer/TTIP__Federal_Register__May_10.pdf?docID=13041

AFL-CIO: http://www.regulations.gov/contentStreamer?objectId=09000064812db32c&disposition=attachment&contentType=pdf

National Farmers Union: http://nfu.org/images/stories/policy/05%2010%2013%20Transatlantic%20Trade%20-%20USTR.PDF

Electronic Frontier Foundation: https://www.eff.org/deeplinks/2013/05/dear-us-trade-rep-dont-shut-the-public-out-from-us-eu-trade-negotiations

Coalition for Sensible Safeguards:

http://www.regulations.gov/contentStreamer?objectId=09000064812da20b&disposition=attachment&contentType=pdf

Consumer Federation of America: http://www.consumerfed.org/pdfs/TTIP-Comments-Consumer-Federation-of-America.pdf  

Library Copyright Alliance: http://www.librarycopyrightalliance.org/bm~doc/lca-ttip-comments-final-10may13.pdf

U.S. Public Interest Research Group: http://www.regulations.gov/contentStreamer?objectId=09000064812dac68&disposition=attachment&contentType=pdf  

Food and Water Watch: http://www.regulations.gov/contentStreamer?objectId=09000064812da8d4&disposition=attachment&contentType=pdf

International Association of Machinists and Aerospace Workers: http://www.regulations.gov/contentStreamer?objectId=09000064812bff6b&disposition=attachment&contentType=pdf  

Citizens Trade Campaign: http://www.regulations.gov/contentStreamer?objectId=09000064812d898d&disposition=attachment&contentType=msw8

United Steelworkers:

http://www.regulations.gov/contentStreamer?objectId=09000064812d8ce7&disposition=attachment&contentType=pdf

Center for Food Safety: http://www.regulations.gov/contentStreamer?objectId=09000064812da7a4&disposition=attachment&contentType=pdf    

Public Knowledge: http://publicknowledge.org/files/PK%20TTIP%20comments.pdf

Communications Workers of America: http://www.regulations.gov/contentStreamer?objectId=09000064812d7715&disposition=attachment&contentType=pdf

Center for Democracy and Technology: https://www.cdt.org/files/pdfs/CDT-TTIP-Comments-5-10-13.pdf

Center for Digital Democracy: http://www.centerfordigitaldemocracy.org/sites/default/files/CDDUSTRMay102013.pdf  

Maine Citizen Trade Policy Commission: http://www.regulations.gov/contentStreamer?objectId=09000064812dc78a&disposition=attachment&contentType=pdf

Knowledge Ecology International: http://keionline.org/sites/default/files/KEIcomments_TTIP_9May2013.pdf

Percy Ramírez / Oxfam America
Today, Bloomberg published an in-depth piece highlighting the secretive public policy “coup d’etat” that allows corporations to use trade agreements to attack domestic health, environmental, and other public interest policies they feel undermine their ability to make a profit. The use of this "investor-state" system, which was once considered a last resort for companies that had been wronged by countries with weak legal infrastructure, has exploded in recent years as a first-resort way to circumvent strong domestic legal systems. In 2012, corporations used the system to launch a record-breaking 62 new cases against sovereign governments.

Outlined in the article are some of the most egregious cases, including that of Doe-Run/Renco, the company that, after refusing to fulfill its contractual obligations to clean up the pollution of a lead smelter that caused lead poisoning in 99.7% of the community’s children, is now suing Peru under the Peru-U.S. "free trade" agreement (FTA) for $800 million. The story also mentions the record-breaking $1.8 billion judgment that Occidental Petroleum Corp. won against Ecuador last year -- a staggering penalty imposed on Ecuador's taxpayers that amounts to 16% of the country’s external debt.

As the number of investor-state cases balloons, more and more countries are expressing concerns and opting out of investor-state provisions. Despite U.S. pressure, Australia has refused to be a party to the investor-state provisions in the Trans-Pacific Partnership (TPP).  In April, 12 Latin American governments met at a summit focused on investor-state concerns, resulting in a declaration by seven of the governments to coordinate efforts to replace the investor-state regime.  Bolivia and Venezuela have already pulled out of the International Centre for Settlement of Investment Disputes (ICSID), and in March, Ecuador moved to annul its Bilateral Investment Treaty (BIT) with the US.  Other countries such as Brazil, India, and South Africa have either outright rejected the investor-state regime or have made strides to abolish investor-state clauses. Hopefully, these steps forward, combined with increased media attention, will motivate more countries to discard harmful investment provisions that threaten crucial environmental, health, and regulatory policies aimed at improving the lives of the majority.  

Click here to check out the full Bloomberg article.

After First Year of U.S.-Korea FTA, U.S. Exports to Korea Down 10 Percent, Imports from Korea Up and Deficit With Korea Swells 37 Percent, Contradicting Obama Promises of U.S. Export and Job Growth

Just-released government trade data, covering the first year of implementation of the U.S.-Korea Free Trade Agreement (FTA), shows a remarkable decline in U.S. exports to Korea and a rise in imports from Korea, provoking a dramatic trade deficit increase that defies the Obama administration’s promises that the pact would expand U.S. exports and create U.S. jobs, Public Citizen said today.

The coincidence of the dismal trade data coming out just before the Korean president’s Wednesday address to a joint session of Congress can only heighten attention to the gap between the administration’s promises and the outcomes of its trade agreements.

“The Korea pact’s damaging outcomes being the opposite of the administration’s promises will certainly complicate the administration’s current efforts to use the same claims about export expansion to persuade Congress to delegate away its constitutional trade authority or to build support for the administration’s next trade deal, a massive 11-nation Trans-Pacific Partnership (TPP) based on the same model,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

U.S. export growth to countries with NAFTA-style pacts like the U.S.-Korea FTA has been particularly lackluster; growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the past decade.

In contrast to the Obama administration’s promise that the U.S.-Korea FTA would mean “more exports, more jobs,” U.S. goods exports to Korea have dropped 10 percent (a $4.2 billion decrease) under the Korea FTA’s first year, in comparison to the year before FTA implementation. U.S. imports from Korea have climbed 2 percent (a $1.3 billion increase). The U.S. trade deficit with Korea has swelled 37 percent (a $5.5 billion increase). The ballooning trade deficit indicates the loss of tens of thousands of U.S. jobs.

“Most Americans will not be shocked that another trade agreement has increased our trade deficit, because they know that these NAFTA-style deals are losers, but anger toward the politicians who keep supporting these deals is soaring,” said Wallach. “The question is why any member of Congress would buy the same tired promises that once again have proven false and cede to the administration’s demands that Congress give away its constitutional authority over trade to allow the administration to Fast Track into effect yet another deal, TPP, that will increase our trade deficit and cost U.S. jobs.”

The decline in U.S. exports under the Korea FTA contributed to an overall disappointing U.S. export performance in 2012, placing the United States far behind Obama’s stated goal to double U.S. exports by the end of 2014. At the sluggish 2012 export growth rate of 2 percent, the United States will not achieve the president’s goal until 2032, 18 years behind schedule.

“The sorry Korea FTA numbers beg the question: How can the administration call for a rebirth of American manufacturing and job growth while pushing the TPP, a sweeping deal that would expand the failed Korea FTA model to low-wage countries like Vietnam, ban Buy American provisions and offshore tens of thousands more U.S. jobs,” said Wallach.

Many of the sectors that the Obama administration promised would be the biggest beneficiaries of the Korea FTA have actually been some of the deal’s largest losers:

• U.S. pork exports to Korea have declined 24 percent under the first year of the FTA relative to the year before FTA implementation.
• U.S. beef exports have fallen 8 percent.
• U.S. poultry exports have plunged 41 percent.

The U.S. deficit with Korea in autos and auto parts increased 16 percent in the first year of the FTA. U.S. auto imports from Korea have surged by more than $2.5 billion under the FTA’s first year. FTA proponents have shamelessly touted “gains” in U.S. auto exports without revealing that this increase totaled just $130 million, with fewer than 1,000 additional U.S. automobiles sold in Korea relative to the 1.3 million Korean cars sold here in 2012.

Read additional analysis of the government data on U.S. trade with Korea under the U.S.-Korea FTA.

In Final Appeals Ruling, WTO Orders Canada to Roll Back Green Jobs Program

A World Trade Organization (WTO) final ruling against Ontario’s successful renewable energy incentives program, which has reduced carbon emissions and created clean energy jobs, underscores the threat the WTO poses to a clean energy future, Public Citizen and Sierra Club said today.

In November 2012, the WTO ruled that Ontario’s incentives program for renewable energy companies at home – or “feed-in tariff” program – violates WTO rules that forbid treating local or domestic firms and products differently from foreign firms and products. On Monday, the WTO struck down Canada’s appeal of that initial ruling in a decision that went even further to condemn the green jobs program as a violation of WTO rules.

“By ordering the rollback of a successful program that is reducing carbon pollution and creating green jobs after recently sacking three popular U.S. consumer protection policies, the WTO is destroying whatever shred of legitimacy it still had after years of imposing its anti-consumer, anti-environment dictates,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Just like the WTO rulings ordering the U.S. to gut popular laws on country-of-origin meat labels, dolphin-safe tuna labels and limits on candy-flavored cigarettes marketed to kids, this latest attack against an initiative promoting renewable energy, localization and green job creation is simply unacceptable.”

Ontario’s renewable energy incentives program was established under the Green Energy and Green Economy Act of 2009. It increases incentives to develop clean and safe renewable energy by guaranteeing that the provincial public electricity utility, Ontario Power Authority, will pay a preferential price for 20 years to companies for the wind, solar and other clean energies they produce. Although the program is new, it already has achieved significant success, including contracts for an estimated 4,600 megawatts worth of clean energy and the creation of more than 20,000 jobs in just two years.

“As people around the world grapple with consequences of the climate crisis, their governments should and must use every tool available to reduce dangerous carbon pollution and create new clean energy jobs,” said Ilana Solomon, Sierra Club trade representative. “To avoid climate chaos, the WTO needs to get out of the way of innovative and successful climate solutions and job creators.”

The Sierra Club and Public Citizen support calls of Canadian allies, including the Council of Canadians, to keep Ontario’s renewable energy incentives program in place.

Last week 12 Latin American governments gathered in Guayaquil, Ecuador to craft a common response to an increasingly common menace: costly "investor-state" suits in which foreign corporations are dragging sovereign governments to extrajudicial courts to demand taxpayer compensation for health, environmental, and other public interest policies.   

Ecuador, the host of this "Ministerial Conference of Latin American States Affected by Transnational Interests," has taken a particularly hard battering from the investor-state system enshrined in NAFTA-style Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs).  The country currently faces a ruling from one tribunal to hand $2.4 billion to Occidental Petroleum after Oxy broke Ecuador's hydrocarbons law, while confronting a ruling from another tribunal that the government should breach its own Constitution and block the enforcement of an $18 billion court ruling against Chevron for massive pollution of the Amazon.  Many of the other countries present have also faced a taxing litany of investor-state cases in recent years: Mexico (e.g. losing $170 million in a NAFTA-created tribunal to the same U.S. agribusinesses that, under the same NAFTA, displaced over two million farmers), Argentina (e.g. losing a slew of cases to foreign financial firms for using financial regulations to mitigate the country's 2001 financial crisis), Guatemala (e.g. losing $13 million to a railroad company that failed to build a railroad because the tribunal thought that the government had failed to fulfill the company's expectations), etc.  

These countries have indeed been "affected by transnational interests."  And they are tired of it.  

So they put together a conference, officiated by Ecuador's foreign minister Ricardo Patiño, to address the investor-state system that has empowered a multitude of foreign corporations to mount a skyrocketing number of challenges against the public policies of sovereign goernments.  Several civil society organizations from around the world attended to deliver presentations on the dangers of the investor-state system.  I was there on behalf of Public Citizen and summarized the exceptionally broad privileges that unaccountable tribunals have granted to foreign investors in this Wild West frontier of international law, and the equally broad array of public interest policies that have been directly attacked as a result.  Cecilia Olivet of the Transnational Institute detailed the deep conflicts of interest among the private attorneys who alternate between acting as judges in investor-state tribunals and as prosecuting lawyers who bring the cases on behalf of corporations.  Martin Khor of the South Centre explained that while attacks on public interest policies have grown under this investor-state system, foreign investment (the ostensible objective for such an extreme system) has not--study after study has shown no correlation between binding a country's policies to this anomalous regime and attracting foreign direct investment.  

At the end of the day, seven of the governments present signed a declaration to coordinate efforts in seeking to replace the investor-state regime with an alternative investment framework that respects sovereignty, democracy, and public wellbeing.  They announced the launch of an International Observatory, a intergovernmental commission based in Latin America to audit investor-state tribunals, draft alternative investment agreements, and collaborate in strategies for reform.  The group will be headed by an executive committee that will help Latin American countries exchange information about emergent investor-state cases and collaborate in mounting defenses against such claims.  Representatives from the remaining five governments participated as observers and are now taking the declaration back to their capitals to discuss joining the emerging Latin American coalition.  

By launching this effort, these dozen Latin American countries are joining a mounting effort by governments to halt, renegotiate, or leave the now-notorious investor-state system.  Australia has publicly refused to sign on to the proposed expansion of the extreme regime in the Trans-Pacific Partnership FTA, despite significant U.S. pressure to do so.  India has moved to abolish investor-state dispute clauses in FTAs.  South Africa is re-examining its policy on investor-state disputes and has refused to renew BITs with the EU.  And now Ecuador's National Assembly is considering a bill to terminate its investor-state-embodying BIT with the United States.  Last week's conference adds another dash of momentum to this growing global push to ditch this rather radical regime.

The following media release was issued by the global Our World is Not for Sale (OWINFS) network rejecting a panel report released yesterday at the World Trade Organization (WTO). Public Citizen's Global Trade Watch is a participating member of OWINFS.

April 24, 2013 -- Global Civil Society Expresses Rejection of the Report, “The Future of Trade: The Challenges of Convergence”

Contact: Deborah James +41 (0) 76 652 6813

Civil society experts from the global Our World Is Not for Sale (OWINFS) network expressed rejection of the panel report “The Future of Trade: The Challenges of Convergence,” released today at the World Trade Organization (WTO), both in terms of its content and process.

Last year, at the time of the launching of the panel, OWINFS sent a letter to Pascal Lamy objecting to the formation of the panel, in terms of its lack of diversity, such as its exclusion of LDCs, its inclusion of only one Latin American and one African, its exclusion of the United Nations Conference on Trade and Development (UNCTAD), and its paucity of participation by civil society beyond the private business sector.

Today, at the launching of the panel’s report, we reiterate our criticism that we “find the process of the composition of the panel to have been autocratic and not in keeping with the rhetoric of a member-driven organization.” It was clear that even despite the best efforts of representative organizations such as the International Trade Union Confederation (ITUC), which participated in the panel, to include issues such as “to have the dominant context of inequality and unemployment recognised and the trade regime located in the context of a failed model of globalization,” such concerns were not included in the final text.

Two representatives of the OWINFS network intervened in the public discussion of the report at the WTO. Deborah James told the audience that based on this lack of representation, “it is thus no surprise that even though the report alleges to be focused on not immediate issues but the future, the report them makes specific recommendation to accept Trade Facilitation – which is the current demand of developed countries – for the proposed Bali package!

“At the same time, the report does not call for approval of the LDC (Least Developed Country) package demanded by the LDCs. And it does not deal with emergence of the Food Crisis and need for more policy space for developing countries to feed their poor including increasing livelihood of their poor farmers, which we all know is the emphasis of the G33 proposal. These – along with a fundamental re-taking up of the Implementation agenda issues – are the first steps of the changes needed to be made towards the transformation of the global trading system, to address historical inequities and asymmetries between developed and developing countries, and between benefits for corporations, and the negative impacts on workers and farmers. And I am quite aghast that the report even goes so far as to endorse the long-term developed country proposals that were explicitly rejected by developing countries in Cancun, of course I’m talking about the Singapore issues of competition policy and investment.

“So this report does not have any legitimacy; because it does not reflect the membership of the WTO, and therefore, with all due respect to the hard work of the participants, it must be said that it has no role in the future of the negotiations. This is a point that has already been made by several members at the last General Council meeting. But I also fail to see any way that this report reflects any future pathway of using trade for development, which is not even appear to be its goal, but rather I’m afraid that we must conclude that it is more reflection of the Secretariat’s continued emphasis on helping developed countries achieve their negotiating goals of simply expanding liberalization for the benefit of their corporations, rather than addressing the serious challenges facing the multinational trading system in terms of fundamental transformation needed to achieve trade for the true benefit of development and job creation.

Another member of the OWINFS network, Sanya Reid Smith of the Third World Network, said:

“I would like to thank the panelists for their work. I’ve just been speed-reading, so I haven’t finished reading it thought yet. From what I’ve read so far: in addition to concerns raised by OWINFS, I would repeat that at the beginning, the report says that trade is a means, not and end. Presumably for developing countries, development is the end goal. So it is interesting then that the report is about convergence of trade regimes, not convergence of levels of development. Usually in development, we talk about developing countries reaching desired levels of development, ie a convergence of development levels. So report seems to be about a convergence of trade regimes regardless of the levels of development as fixed time specific goals based on actual levels of development. (And as have seen, because of the financial crisis or HIV/AIDS etc, countries can actually go backwards in objective development indicators like life expectancy). This is despite the fact that there is a commitment to Special and Differential Treatment (SDT) throughout the WTO's rules. I recognize that the comments of some panelists who said that they personally don't believe in convergence at any cost, but the report itself appears to recommend violating or amending current WTO rules on SDT including for LDC status which is set objectively by UN.

Also I am shocked to see that proposal by one developed WTO Member to multilateralise the FTAs appears taken up as recommendation.

So as to future of this report, this panel was established by the Director General, Lamy, on his own responsibility. WTO Members did not choose panel members and did not set terms of reference or review the report before it came out, or agree to the text. So as raised by WTO Members in the past, the report does not seem to be grounds for basis for ministerial conference or any further work."

 

OWINFS is a global network of NGOs and social movements working for a sustainable, socially just, and democratic multilateral trading system. www.ourworldisnotforsale.org.

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As the Obama Administration gets ready to negotiate a Trans-Atlantic "Free Trade" Agreement (TAFTA) with the European Union that takes aim at a host of health, financial, environmental and other regulations, a smorgasbord of corporate representatives (and a sprinkling of consumer groups) voiced their wishes for the pact this week. The occasion was a standing-room-only "stakeholder session," hosted by the administration's Office of Management and Budget and the European Commission, to get input on what TAFTA should or should not entail.  

What neutral territory did the administration choose to consider such a critical question?  Perhaps one of the many government-owned venues in downtown DC?  Nope.  They went with the headquarters of the Chamber of Commerce.  The Chamber's not exactly a disinterested party in a pact that could implicate a wide swath of U.S. regulation used to balance big business's quest for profits with the public's quest for financial stability, a healthy environment, safe products, and affordable medicines.  The venue choice is akin to the Environmental Protection Agency hosting a forum on offshore drilling...on an offshore drill.  

But at least the administration granted public interest groups like us some time to offer input.  As in, a half hour.  Total.  For all consumer groups.  In a 1.5-day-long forum otherwise filled almost exclusively by industry representatives.  If relative allotment of time is indicative of the relative importance the administration attributes to industry views on TAFTA vs. the views of everyone else, big business "stakeholders" hold 76% of the administration's attention, technical standards organizations hold 11%, and the opinions of the rest of us are worth 13%. 

During that half hour, I squashed Public Citizen's initial take on TAFTA, one of the largest "trade" deals proposed to date, into a five-minute statement.  For a nutshell view of what's at stake in TAFTA, here's the statement:

Oral Statement for the U.S.-EU High Level Regulatory Cooperation Forum

April 10, 2013; Public Citizen’s Global Trade Watch; Ben Beachy, Research Director

Public Citizen welcomes the opportunity to comment on regulatory cooperation between the United States and EU in the context of the recent decision to launch negotiations for a Trans-Atlantic Free Trade Agreement, or TAFTA. Public Citizen is a national, nonprofit public interest organization with 150,000 members that champions citizen interests before Congress, executive branch agencies and the courts. Public Citizen believes that advancement of consumer well-being must be the primary goal of any U.S.-EU pact.

We are skeptical that a deal built on regulatory convergence, as proposed for TAFTA, will serve consumer interests. Consumers have different priorities in different countries. Differences in regulatory standards between countries with different constituent priorities should be expected and respected as the legitimate outgrowth of trade between democratic nations, such as those contemplating TAFTA. However, the process leading to the launch of TAFTA negotiations has been characterized by attempts to eliminate regulatory distinctions for the sake of narrow business interests. It is not apparent that any efficiency gains resulting from regulatory convergence would a) significantly accrue to consumers rather than just to those business interests, b) outweigh consumers’ loss of ability to set the regulations that affect them, or c) justify the considerable expenditure of limited government resources to engage in multi-year negotiations between Parties with already low tariffs. Before adopting a regulatory convergence approach, the U.S. and EU should establish a transparent process to study these critical questions.

If TAFTA proceeds with the approach of trying to establish uniform standards, then the established standard should be set as a regulatory floor, not a ceiling. This approach safeguards the ability of a country to establish stronger standards in response to emerging consumer demands or unforeseen policy challenges and crises. Given that trade agreement rules are not easily altered and that negotiators cannot see into the future, such flexibility is essential. A common regulatory floor set at the highest standard of any involved country would still provide efficiency gains without sacrificing consumer protections. The U.S. and EU should exclude from the pact any sector or area where they cannot agree on this floor-not-ceiling framework.

Any standard-setting terms in TAFTA must strengthen consumer protections in critical policy arenas. To ensure food safety, for example, any rules implicating food health standards or labeling must be limited to requiring that policies be applied equally to domestic and foreign goods. Each nation must be allowed to set non-discriminatory standards and labeling policies based on consumer demands and priorities alone. To ensure financial stability, any harmonized standards must set a floor of strong financial regulation based on the most robust post-crisis reregulation efforts of the U.S. and EU. The agreement must explicitly safeguard measures such as non-discriminatory bans on risky products, facially neutral limits on firm size, and capital controls – now officially endorsed by the IMF. Any deal should also establish a more effective exception for prudential measures than seen in the WTO.

To ensure climate security, any agreement must provide policy space for signatory countries to respond to the emerging climate crisis with stronger policies to control greenhouse gas emissions. This includes allowance for feed-in tariffs, emissions-based taxation, and performance standards. Consumers’ access to an open Internet and affordable medicines, meanwhile, should not be implicated by TAFTA. Overreaching patent and copyright provisions in past “trade” agreements, the Stop Online Privacy Act (rejected by the U.S. Congress) and the Anti-Counterfeiting Trade Agreement (rejected by the European Parliament) have threatened such access. The U.S. and EU already provide robust patent and copyright protections without the addition of such sweeping terms. To ensure the protection of these consumer rights, this prospective agreement must exclude intellectual property provisions.

Any agreement must not include the extreme investor-state system included in past U.S. and EU trade and investment deals. The investor-state mechanism uniquely empowers foreign investors to directly challenge sovereign governments over contested public interest policies in tribunals that operate completely outside any domestic legal system. The ostensible premise for such an extreme procedure is that some domestic legal systems are too corrupt, incompetent or ill-equipped to hear foreign investors’ claims. Since neither the U.S. nor any EU member state is likely to assert that this description befits the legal system of any TAFTA nation, the anomalous investor-state system is absolutely unacceptable for TAFTA. So are the open-ended rights provided to foreign investors, but not domestic firms, under this system. Inventive tribunals have imputed, for example, a right of investors to obtain government compensation for any policy that contravenes their expectations. The U.S. government has rightly argued that such broad terms, which have enabled the current surge in costly investor-state cases, would cause the government to lose the right to regulate in the public interest.

Given that TAFTA could implicate a wide swath of domestic non-trade policies, including those named here, the respective legislatures must establish binding goals for the negotiations before talks begin, and should be consulted regularly to ensure those objectives are being fulfilled. Any resulting agreement should not be signed unless and until the U.S. and EU legislatures approve the proposed text through a vote that affirms it has met the established objectives. The process must also be open to the public. Negotiating texts and country submissions for TAFTA must be made publicly available so that stakeholder groups, including those not granted preferential access to official trade advisory committees, can give meaningful input on the critical policy decisions at issue. Negotiators should consult not just with the industry groups that have been disproportionately consulted in past agreements, but with the more diverse array of stakeholders that is required to represent the consumer interests that should stand at the heart of any deal.

Thank you. 

A report released yesterday by the United Nations Conference on Trade and Development (UNCTAD) reveals that foreign corporations are taking governments to court under the notorious investor-state system at an alarming and increasing rate. In 2012, 62 new investor-state cases were filed - of the known 518 cases to date – which is the highest number of investor-state cases ever filed in a year. In 68% of these cases, it was a developing country whose health, environmental or other public policy was being directly challenged by a foreign firm. The report noted that the firms that have launched investor-state cases to date are predominantly U.S. corporations. These cases are decided by tribunals that sit outside of any domestic legal system, typically comprised of three private sector attorneys. Of the cases publicly decided in 2012, 70% of the victories went to the foreign investor, requiring the government to compensate the firm. 

Investor-state arbitrations in 2012 revealed an increasing trend in foreign investors' attacks against states’ nondiscriminatory public interest policies, including changes to domestic regulatory frameworks concerning nuclear energy and currency stability, revocation of mining and oil licenses (often in response to contract violations), and numerous other government measures affecting public health, financial stability, access to essential services and the environment. The UN report concluded that the “trend of investors challenging generally applicable public policies, contradictory decisions issued by tribunals, an increasing number of dissenting opinions, [and] concerns about arbitrators’ potential conflicts of interest all illustrate the problems inherent in the system.”

In addition to setting the record for most new cases filed in a year, 2012 also broke the record for the largest ever investor-state "award," the taxpayer-funded penalty that a tribunal orders a government to pay to a foreign investor when the tribunal rules against the government. In Occidental v. Ecuador, the tribunal ordered Ecuador to pay Occidental Petroleum Corporation around 1.8 billion dollars, which rose to more than $2.4 billion with interest and fees -- roughly the government's annual expenditure on health care for half the country. The tribunal ruled against Ecuador for the government's termination of an oil contract that Occidental had violated (which the tribunal acknowledged).  To calculate the historic penalty imposed on Ecuadorian taxpayers, two of the tribunalists used logic described by the third tribunalist as "egregious."  

These disturbing trends underlie the growing demands to reform the investor-state dispute system. Upon releasing the report, James Zhan, Director of UNCTAD’s Division on Investment and Enterprise, said that the rise in the investor-state system's "cross-cutting challenges...gives credence to calls for reform of the investment arbitration system.” He noted, “the [investor-state] mechanism is already a source of considered reflection in numerous bilateral and regional [trade and investment] negotiations.” 

One of those negotiations is the Trans-Pacific Partnership (TPP), the sweeping NAFTA-style "trade" deal under negotiation between the U.S. and 10 Pacific Rim nations, which, according to the leaked investment chapter, would expand the investor-state system even further. But the "considered reflection" of other TPP countries has made them wary of binding themselves to a system that has delivered a mounting number of costly attacks on the public interest policies of 95 countries. Australia has already refused to sign on to any investor-state provisions. Other countries may follow their lead. In the meantime, global resistance to the extreme investor-state system is growing, with countries like Brazil, India, South Africa, and Ecuador rejecting its threats to democratic policymaking in the public interest. As investor-state cases continue to soar, public and governmental opposition is following suit. 

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

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

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

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

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

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

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

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

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

Report Indicts Health, Financial, Religious and Other Sensitive Policies as “Trade Barriers” to be Eliminated, Spotlighting Contentiousness of TPP Negotiations

The Obama administration released this week a report that takes aim at a litany of sensitive domestic policies in countries currently negotiating the Trans-Pacific Partnership (TPP), identifying the policies as “trade barriers” that the United States seeks to eliminate. The target list of  TPP nations’ domestic policies, published in the 2013 National Trade Estimate Report by the Office of the U.S. Trade Representative (USTR), offers unusual insight into why negotiations over the sweeping, 11-nation deal are contentious and have repeatedly missed deadlines for completion, said Public Citizen today. 

The 406-page USTR report indicts a wide array of public health policies, financial regulations, politically sensitive manufacturing and agricultural policies and even religious standards as “trade barriers” that should be dismantled. USTR levies such criticism against policies in all current and prospective TPP negotiating parties, including New Zealand’s popular health programs to control medicine costs, an Australian law to prevent the offshoring of consumers’ private health data, Vietnam’s post-crisis regulations requiring banks to hold adequate capital, and Canada’s standards requiring cheese to be made from milk.  

For Malaysia, a predominantly Muslim country, the USTR report admonishes the government for “requiring that slaughter plants maintain dedicated halal facilities and ensure segregated transportation for halal and non-halal products.”  Instead, the report suggests that the government should conform its notions of Islamic meat-processing requirements to those established by Codex Alimentarius, an international food standards body at which multinational food corporations play a central role. USTR also takes issue with restrictions on importation of pork and alcohol in this TPP negotiating country where three out of every five consumers are Muslims.

“Even before the Obama administration’s not-so-diplomatic target list of other countries’ domestic policies, the Trans-Pacific Partnership was on rocky ground, with negotiators from many countries rejecting U.S. demands to expand patent monopolies for foreign pharmaceutical corporations and to subject their financial, health and environmental policies to foreign investor challenges before international tribunals empowered to order government compensation,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “By openly listing the domestic policies in other TPP countries that it wants dismantled, the Obama administration can only intensify growing public concern about the TPP in these countries.”

USTR reserves some of its most detailed policy critiques in the National Trade Estimate Report for Japan, which recently announced its intent to join the TPP negotiations. The report devotes 16 pages to castigating food labeling policies for providing too much information to consumers, outlining how exactly the country should restructure its public insurance system, urging the government to grant tax benefits to foreign universities, and bemoaning Japan’s preference that its military equipment be made domestically. (The United States has similar rules on military procurement.)

The report also takes aim at Japan’s agricultural policies, recommending, for example, the weakening of protections for domestic rice farmers because “Japanese consumers would buy U.S. high quality rice if it were more readily available.” The political party of Japanese Prime Minister Shinzo Abe, backed by powerful farmer groups, has approved a policy position that would require the country to exclude rice, wheat and barley, beef and pork, sugar and dairy products from tariff eliminations in the TPP. In contrast, the USTR report explicitly names all but one of these sensitive sectors (sugar) as high-priority targets for liberalization. 

For several TPP countries, USTR’s National Trade Estimate Report encourages the adoption of copyright enforcement measures akin to those proposed under the Stop Online Piracy Act (SOPA) that was defeated in the U.S. Congress. For example, the report notes that the Obama administration “has also urged Chile…to amend its Internet service provider liability regime to permit effective action against any act of infringement of copyright and related rights.”

When addressing some TPP countries, the USTR report accuses national governments of broad corruption or even incompetence. For example, the report states that two of Peru’s three federal branches of government lack the “impartiality” or “expertise” required to fulfill their responsibilities.

USTR also chooses to mount public criticisms against TPP countries for “trade barriers” that are so specific in definition and trivial in consequence as to seem motivated by comically narrow U.S. corporate interests. For example, the report lambasts Singapore’s import restriction for “non-medicinal chewing gum,” Canada’s high tariff on “breaded cheese sticks,” and Peru’s refusal to import “cars over five years old.”  

Among the report’s hundreds of pages, the following commentaries on TPP countries are some of the most revealing:

Vietnam

• USTR cites Vietnam’s “new regulations aimed at improving the capital position of the banking industry” as a new form of trade restrictions. The report particularly blames new capital adequacy requirements for causing “difficulties” for banks.

• USTR takes note of Vietnam’s decision to block importation of “cultural products deemed ‘depraved,’” listing the policy as a “nontariff barrier.”

• The report targets Vietnam’s ban on the shipment of certain products through the country en route to other destinations. These “barriers to trade” include restrictions on the trans-shipment of “hazardous waste items,…frozen animal by-products, and offal.”

• The report states that the “United States continues to urge Vietnam to undertake more aggressive actions to combat the rising problem of intellectual property infringement, including digital piracy.” Such urging, according to the report, has produced initial government conversations with Internet service providers about cracking down more on content that “rights holders” (e.g. U.S. media corporations) see as infringements – a key component of the Stop Online Piracy Act (SOPA) defeated in the U.S. Congress.

• The report concludes its remarks on Vietnam by casually and categorically accusing the country of “widespread official corruption and inefficient bureaucracy.”

Singapore

• Despite praising Singapore for having “the second lowest rate of software piracy in Asia,” the report still alleges that the country has “insufficient deterrent penalties for end-user software.” 

• The report notes that despite Singapore’s increasing allowance for foreign ownership of domestic banks, “Singapore has indicated that it will not allow foreign controlling stakes or takeovers of its three major local financial institutions.” That is, the report lists Singapore’s unease with foreign takeovers of its most critical banks as a barrier to trade.

• The report bemoans the fact that most “foreign law firms with offices in Singapore cannot practice Singapore law…”  The report takes note of the fact that even when permitted to practice law in Singapore, foreign law firms are not allowed to litigate in Singapore’s courts based on their understanding of Singaporean law.

• The report singles out Singapore’s taxes on alcohol, tobacco and motor vehicles, noting that they are imposed “for social and/or environmental reasons.” While USTR does not explicitly call for the dissolution of these taxes, it apparently finds cause to highlight the measures in a report devoted to unwelcome trade barriers.

Peru

• USTR levies a series of blanket accusations against the Peruvian government, lambasting two of the three federal branches. The report plainly states, “Both U.S. and Peruvian firms remain concerned that executive branch ministries, regulatory agencies, the tax agency, and the judiciary often lack the resources, expertise, or impartiality necessary to carry out their respective mandates.” The report gives no further arguments to support the unabashed questioning of the federal government’s fairness and competency.

• USTR notes that a data privacy law in Peru “has caused concern among companies dependent on cross-border data flows.” Those companies, according to the report, are particularly concerned about Peru’s requirement that consent must be obtained from Peruvians before acquiring their confidential information.

• The report cites Peru’s disinterest in U.S. used goods as a trade barrier, “including used clothing and shoes (except as charitable donations), used tires, cars over five years old, and heavy trucks (weighing three tons or more) more than eight years old.”

New Zealand

• USTR channels “strong concerns” regarding the Pharmaceutical Management Agency (PHARMAC), the New Zealand government agency that administers the country’s successful medicine cost-containment policies. These concerns, the report notes, come from “U.S. stakeholders,” – that is, U.S. pharmaceutical companies who have long opposed New Zealand’s programs to contain medicine costs. USTR accuses PHARMAC of not providing these “stakeholders” with adequate “transparency, timeliness, and predictability.” In addition, the report takes issue with the fact that PHARMAC is expanding its cost containment policies into sectors, such as medical devices, that previously went “unregulated.”

• The report notes that “rights holders” (e.g. U.S. media corporations) are somewhat supportive of New Zealand’s new law to crack down on allegations of online copyright infringement. But the report then expresses annoyance with the fee that U.S. media conglomerates have to pay under the law to take action against an alleged infringement. The onerous fee required is $21.

Mexico

• The first investment barrier cited by the report is that “Mexico’s oil and gas sector remains largely closed to private investment…” USTR acknowledges that this is because “the Mexican constitution mandates state ownership of hydrocarbons.”

• USTR sees fit to spotlight the Mexican laws that prohibit “foreign ownership of residential real estate within 50 kilometers of the nation’s coasts.” The report frames the inability of U.S. citizens to buy up Mexico’s coastland as an “investment barrier.” 

• The report offers Mexico unsolicited advice for how to change its government procurement policies, including a recommendation that state-level procurement transparency standards be “harmonized…to avoid corruption and foster competition.”

Malaysia

• The report admonishes the government of this predominantly Muslim country for “requiring that slaughter plants maintain dedicated halal facilities and ensure segregated transportation for halal and non-halal products.”  Instead, the report suggests that the government should conform its notions of Islamic meat requirements to those established by Codex Alimentarius, an international food standards body at which multinational food corporations play a central role.

• USTR also takes issue with Malaysia’s restrictions on importation of pork and alcohol, products traditionally forbidden for the three out of every five Malaysians who are Muslim.

• The report states, “the U.S. Government continues to raise concerns about the procurement process in Malaysia.” The stated concern is that “Malaysia has traditionally used procurement to support national public policy objectives.” The particular objectives provoking USTR consternation include “encouraging greater participation of bumiputera [ethnic Malays and indigenous groups] in the economy, transferring technology to local industries, reducing the outflow of foreign exchange, creating opportunities for local companies in the services sector, and enhancing Malaysia’s export capabilities.”

Chile

• The United States has, according to the report, “urged Chile…to amend its Internet service provider liability regime to permit effective action against any act of infringement of copyright and related rights.” Similar provisions were soundly rejected by the U.S. public and Congress as part of the ill-fated Stop Online Piracy Act (SOPA), due to widespread concern that the provisions would enable a sweeping crackdown on user-generated content, stifling innovation and restricting Internet freedom. 

Canada

• The report conveys concerns of the U.S. pharmaceutical industry, mentioning the Notice of Intent filed last year by U.S. pharmaceutical corporation Eli Lilly, in which the company announced plans to use NAFTA’s investor privileges to directly challenge Canada’s entire patent policy. This investor-state attack was launched in response to Canadian courts’ invalidation of a patent on an Eli Lilly medicine for which the firm had not met Canada’s patentability standards. USTR also notes another recent patent invalidation – for Pfizer’s Viagra – that has yet to produce a NAFTA investor-state case. USTR’s inclusion of these cases could be intended to provide political backing for the U.S. corporate challenges to Canadian patent law, which have generated wide-spread consternation among public health officials.

• The report takes issue with Canada’s policy that major foreign investments and acquisitions must be reviewed to ensure that they offer a “net benefit” to the country. This standard, according to USTR, is “overly broad.”

• USTR laments that Canadian provincial policies to control alcohol distribution “greatly hamper[] exports of U.S. wine and spirits to Canada.” The report particularly blames “province-run liquor control boards,” which enact policies closely resembling those used by U.S. state-level counterparts, such as the Pennsylvania Liquor Control Board.

• After describing a Canadian project to consolidate a wide array of federal government data, the report criticizes a stipulation that companies involved in the consolidation will not be permitted to move the government data outside of Canada. USTR implies that the Canadian government should not have qualms with the offshoring of a wide range of government data because doing so aligns with “today’s information-based economy.”

• The report blasts Canada’s popular supply management program for sensitive dairy and poultry products. While the program provides support and stability to Canadian farmers, USTR explains that it “severely limits the ability of U.S. producers to increase exports to Canada…”

• USTR singles out one item as an illustrative example of U.S. “dairy products” that have been particularly impaired by Canada’s import barriers: “breaded cheese sticks.”

• The report disparages Canada’s “compositional standards for cheese,” which USTR blames for blocking U.S. “dairy” products from being sold in Canada. The primary standard that USTR cites as concerning is Canada’s establishment of “a minimum for raw milk in the cheese making process.”

Brunei

• The report chastises Brunei for a military procurement process that does not “publically disclose” the rationale behind all military contract decisions.

Australia

• USTR expresses frustration with Australia’s resistance to the offshoring of its citizens’ private data to foreign countries via cloud computing and offshore storage. The report particularly singles out Australia’s new law barring offshore storage of confidential health records. USTR urges “a risk-based approach to ensuring the security of sensitive data as opposed to a geographical one.” However, the same paragraph notes that Australia’s reticence is indeed based on risk, as the country “cites the U.S. Patriot Act” as “presenting a legal and regulatory risk associated with cloud computing.” U.S. lawyers have long expressed similar concerns – that the Patriot Act threatens the data privacy of U.S. citizens. The report does not attempt to defend the Act.

• In its remarks on Australia, the report devotes an entire section to “Blood Plasma Products and Fractionation.” In no unclear terms, the report states, “The United States remains concerned about the lack of an open and competitive tendering system for blood fractionation in Australia.” USTR apparently would like U.S. companies to have an equal chance to separate the blood of Australian citizens.

Japan (likely future TPP partner)

• The report expresses disapproval of Japan’s food labeling policy, which “mandates that all ingredients and food additives be listed by name along with content percentages, and include a description of the manufacturing process.” In a time when consumers are demanding ever more information about the products they consume, USTR complains that Japan’s progressive labeling policy is “burdensome” and “risks the release of proprietary information to competitors.”

• The report is careful to state that “the U.S. Government remains neutral as to whether Japan Post [a state-owned postal, banking and insurance conglomerate] should be privatized.” Still, USTR makes clear that “the U.S. Government continues to monitor carefully the Japanese government’s postal reform efforts.” USTR further clarifies that such monitoring is far from “neutral,” stating that the U.S. government will continue “to call on the Japanese government to ensure that all necessary measures are taken to achieve a level playing field between the Japan Post companies and private sector participants in Japan’s banking, insurance, and express delivery markets.” Thus, while USTR respects Japan’s decision over whether its single largest public entity should be privatized, USTR is eager to remind Japan that the entity should be stripped of the standard preferential treatment that governments typically channel through public entities to benefit consumers.

• USTR chastises Japan for not opening all of its military procurement contracts to foreign companies. The report expresses annoyance for Japan’s “general preference” that “defense products and systems be developed and produced in Japan.” National security arguments apparently have no standing “when a foreign option exists that could fulfill the requirements more efficiently, at a lower cost…” (Unless those arguments are made in the United States – U.S. Buy American laws cover military procurement.)

• According to the report, the U.S. government is “urging[] the Japanese government to work with foreign universities to find a nationwide solution that grants tax benefits comparable to Japanese schools.” Why should the government provide private, foreign universities the same sort of tax breaks that it affords to Japan’s own schools? According to USTR, meeting this rather anomalous request is necessary for the foreign schools “to continue to provide their unique contributions to Japan’s educational environment.”

• USTR accuses Japan’s government of using policy advisory groups that are too often “opaque,” noting that “nonmembers are too often not uniformly offered meaningful opportunities to provide input into these groups’ deliberations.” The critique mirrors, nearly word for word, criticisms levied against USTR itself for administering a non-transparent and exclusive official trade advisory system comprised almost entirely of corporate representatives. USTR continues by urging Japan “to ensure that ample and meaningful opportunities are provided for all interested parties, as appropriate, to participate in, and directly provide input to, these councils and groups.” U.S. stakeholder groups have continually made the same recommendation to USTR to open the closed-door trade advisory system, though “meaningful” changes have yet to be seen.

• USTR takes aim at Japan’s politically sensitive rice import policies, calling them a “highly regulated and nontransparent” system that “limits meaningful access to Japanese consumers.” The report laments that most U.S. rice under the system does not reach Japanese consumers, and argues that they “would buy U.S. high quality rice if it were more readily available.” To substantiate this claim of Japanese consumers’ unrealized preference for U.S. rice, the report cites “industry research.”

• In quick succession, the report individually targets Japan’s policies on rice, wheat, beef, pork and dairy products, taking issue with tariffs, quotas, and state distribution systems. These targeted agricultural sectors are among the most politically sensitive in the country, and have been named by Japan’s ruling Liberal Democratic Party as sectors that must be excluded from tariff eliminations in the TPP.

In December we reported that Eli Lilly, the fifth-largest U.S. pharmaceutical corporation, had announced its intent to use the extreme foreign investor privileges enshrined in NAFTA to directly challenge Canada's entire basis for granting patents.  Eli Lilly's audacious attempt, sparked by Canadian courts' invalidation of an Eli Lilly medicine patent, marks the first time a patent-holding pharmaceutical corporation has tried to use the extraordinary investor privileges provided by U.S. “free trade” agreements (FTAs) as a tool to push for greater monopoly patent protections, which increase the cost of medicines for consumers and governments. Because Canada has dared to enforce its own patent policy, Eli Lilly is demanding $100 million in compensation from Canadian taxpayers. 

We've just released an updated and expanded analysis of this worrisome NAFTA attack, available here.  In this expanded briefing paper, we uncover more bogus but dangerous legal claims that Eli Lilly asserts as backing for its attempt to take down Canada's entire legal basis for granting patents.  For example, the corporation accuses Canada of using a patent policy that "contravenes" the company's "expectations."  Eli Lilly claims that NAFTA guarantees the company the "right" to see its expectations fulfilled by the Canadian government.  To make such a cavalier claim, the company ignores the consistent opinions of multiple governments (including the U.S. government) that even NAFTA's sweeping investor protections guarantee no such "right," instead drawing on the inventive interpretations of FTA investor-state tribunals comprised of three private attorneys.  As the U.S. government stated in another NAFTA investor-state case, "if States were prohibited from regulating in any manner that frustrated expectations – or had to compensate for any diminution in profit – they would lose the power to regulate." 

Eli Lilly also invokes the national treatment privileges that NAFTA provides to investors (that governments should treat foreign and domestic investors alike), but instead of using NAFTA's already broad provisions, the company decides to invent a wholly new goverment obligation to foreign investors.  Eli Lilly complains that Canada's patent standards are different from those found in the U.S. and EU, and then asserts that Canada is obliged by NAFTA to enforce those foreign standards.  The notion of such a bizarre obligation is rather unprecedented even among the musings of creative investor-state tribunals.  In short, Eli Lilly is alleging that Canadian taxpayers should fork over $100 million because their government enforced its own patent laws rather than those of other countries.  

Not yet finished, the company alleges an additional national treatment violation by claiming that the Canadian courts' invalidation of its patent for an ADHD drug gives a prohibited advantage to Canadian generic firms that are now allowed to sell the drug.  Um, of course the removal of patents helps generic producers – it always does, but it does so regardless of whether the generic firms and/or the patent holders are foreign or domestic. Were Eli Lilly’s skewed logic to be accepted by the investor-state tribunal, any invalidation of a foreign investor’s patent, regardless of the basis, could be construed as a violation of FTA-protected investor privileges. 

Finally, Eli Lilly argues that Canada's invalidation of its patent monopoly in accordance with the country's established patent policy constitutes an "indirect expropriation" of the pharmaceutical giant's investment.  This avant garde legal claim, one rejected by most nations' courts, would require a government to compensate a corporation even for a nondiscriminatory regulatory policy that happens to diminish the value of the company's "property" (including, according to Eli Lilly, a patent monopoly).  In making this allegation, Eli Lilly skirts the fact that even NAFTA allows nations the flexibility to determine their own patent policy standards, and that such autonomously-defined standards cannot be the basis for claims of "expropriation."  

As far-fetched as Eli Lilly's allegations are, the anomalous investor-state system enshrined in NAFTA-style deals now empowers three attorneys sitting on a FTA-created tribunal (a body that has become notorious for imaginative and sympathetic approaches to investor claims), to determine the validity of Canada's patent policy.  Unfortunately, this radical system would be expanded by the Trans-Pacific Partnership (TPP), a NAFTA-style deal being negotiated between the U.S., Canada, and nine other countries.  The TPP's leaked investment chapter would extend the scope of NAFTA's investor privileges to explicitly cover "intellectual property," making it easier for pharmaceutical corporations to launch Eli-Lilly like attacks on sovereign governments' patent polcies. 

Will Eli Lilly prove successful in undermining Canada's patent laws to protect its patent monopoly in the ironic name of "free trade?"  The outcome of the corporation’s investor-state attack under NAFTA is critical for those seeking to safeguard countries’ ability to determine their own patent standards, a prerogative that is essential for preventing patent “evergreening” and ensuring access to affordable medicines. It is critical not just so that Canadian taxpayers can make sure that the demanded $100 million goes to more worthy ends than enhancing Eli Lilly’s profit margin, but to avoid emboldening other pharmaceutical firms contemplating the launch of similar investor-state demands against other governments that dare to set their own patent policies. As the Eli Lilly case gets underway, negotiations for the TPP and its proposed expansion of the investor-state system continue. Stopping the NAFTA expansion deal presents health advocates with today’s biggest opportunity to halt the advance of the system that empowered Eli Lilly’s audacious threat.

For more analysis of this threat, click here to see our newly expanded briefing paper.  

The 2008 global financial crisis reaffirmed the need for robust regulation to address the increasingly reckless banking and financial sector. One of the most important regulatory tools in this post-crisis era of reform is the use of capital controls to regulate cross-border finance, a policy that even institutions long-opposed to capital controls, such as the International Monetary Fund, have now formally recognized as beneficial. However, there is growing concern that the rules of trade and investment treaties may not provide enough policy space for countries to take advantage of these necessary regulatory measures.

In response to this concern, a task force convened in June of 2012 in Buenos Aires, Argentina to review the rules of the WTO and various Free Trade Agreements (FTAs) and Bilateral Investment Treaties (BITs) and examine the extent to which global trade rules are compatible with the ability to deploy effective capital control regulations. The result of this meeting is a comprehensive report released this month titled Capital Account Regulations and the Trading System: A Compatibility Review, which is comprised of chapters written by experts from around the globe (including Todd Tucker, former Research Director at Global Trade Watch and former editor-in-chief of Eyes on Trade).

The report highlights several alarming areas where trade and investment treaties conflict with and impede the ability to use important regulatory tools such as capital controls.  It goes on to offer several changes that should be made to outdated trade policies to ensure that countries have sufficient policy space to take the regulatory measures necessary to avoid future financial crises.

Unfortunately, despite concerns expressed by members of civil society, economists, policymakers, and various other international experts, the current negotiations of the Trans-Pacific Partnership (TPP) are on track to lock in the antiquated trade model of extreme deregulation, including a prohibition of bans on risky financial products and a restriction on now widely-endorsed capital controls.

Click here to check out the full report.

On Friday we sent out a press release exposing the export-chilling, deficit-expanding, job-eroding track record of the Korea Free Trade Agreement (FTA) on the first anniversary of its implementation.  That same day, the U.S. Trade Representative (USTR) sent out a press release singing the export-boosting praises of the Korea FTA.  What could explain this riddle of dueling press releases?   

Some basic data tricks.  USTR’s press release relied on five sleights of hand to gussy up the unsightly Korea FTA data and generate some misleading, albeit rose-colored, conclusions:

• Cherry-picking.  Overall U.S. exports to Korea have fallen 9 percent under the FTA.  USTR first tries to get around this inconvenient fact by simply “disregarding” particularly large exports that declined (e.g. corn) so as to produce a sanitized illusion of an increase in “total U.S. exports.” (By “total U.S. exports” they mean “some U.S. exports, excluding particularly important export sectors that would contradict our argument of a total export increase.”)  USTR saves most of its FTA-touting words for some narrow sectors that were export-increasing exceptions to the export-falling rule of the Korea FTA.  For example, while total U.S. agricultural exports to Korea have plunged 29% under the FTA, USTR spotlighted export rises in specific agricultural products like soybeans and grape juice.  Such “soybean-picking” avoids the essential question: what has been the total effect of the Korea FTA on U.S. exports and jobs?  The inconvenient answer: a loss. 

• Using the wrong timeframe.  The USTR press release acted as if the Korea FTA was in effect for the full 2012 calendar year, though it only took effect on March 15, 2012 (hence the timing of the press release).  The agency errantly compared the full year of data for 2011 with the full year from 2012, claiming the results to be due to the Korea FTA.  This timeframe starts and ends too soon.  An accurate assessment of the Korea FTA’s legacy would begin the data comparison with the first full month in which the FTA was actually in effect: April 2012 (vs. April 2011).  Also, the timeframe would not stop with the end of 2012, but with the most recent month for which we have data: January 2013.  Perhaps USTR decided to omit January because it marked the highest monthly U.S.-Korea trade deficit on record.  Whatever their reasons, the timeframe mistake skews each starry-eyed data point that USTR presents in its release. 

• Ignoring imports.  As per usual, USTR has examined only one side of the trade equation.  The word “imports” doesn’t appear once in their press release.  But in the same way that exports are associated with job opportunities, imports are associated with lost job opportunities when they outstrip exports, as dramatically seen under the Korea FTA.  Under the deal, the U.S. trade deficit with Korea has swelled 30 percent, costing tens of thousands of U.S. jobs.  By ignoring rising imports, USTR claims a gain for auto manufacturers under the FTA.  But while U.S. auto exports to Korea have increased by $65 million under the deal, U.S. auto imports from Korea have ballooned by $2.3 billion.  The resulting 18 percent increase in the U.S. auto trade deficit with Korea is a net loss for U.S. automakers, not a net gain. 

• Counting foreign-made “exports.”  USTR once again inflates the value of U.S. exports by counting goods that actually are made overseas – not by U.S. workers.  These “re-exports” are goods made elsewhere that are shipped through the United States en route to a final destination.  To assess what the Korea FTA has actually meant for U.S. jobs, our release eliminated re-exports in calculating the 9 percent drop in U.S.-made exports to Korea under the deal. 

• Forgetting about inflation.  It appears that USTR forgot to adjust its numbers for inflation, an omission that artificially magnifies the value of U.S. exports in 2012 relative to 2011.  All of the data contained in our press release is properly inflation-adjusted to show a truer picture of U.S. exports under the Korea FTA – a picture that unfortunately does not look too pretty without all of USTR’s cropping and airbrushing.    

If we want trade policy that behooves the majority, rather than an expansion of the damaging Korea FTA model, then we have to look honestly at the Korea FTA track record.  If instead we twist the data to make mistakes look like successes, we are binding ourselves to the replication of failure.  

Though U.S.-Korea Free Trade Agreement Outcomes Are Abysmal, Obama Pushes for Trans-Pacific and European Agreements Based on Same Model

WASHINGTON, D.C. – The actual outcomes of the U.S.-Korea Free Trade Agreement (FTA) that took effect one year ago, March 15, have been exactly the opposite of what the Obama administration promised, Public Citizen said today. Despite government data once again demonstrating the damage caused by yet another “trade” agreement based on the model of the North American Free Trade Agreement (NAFTA), the Obama administration is trying to sell massive Trans-Pacific and European agreements based on the same model with the same false promises.

U.S. export growth to countries with pacts like the U.S.-Korea FTA has been particularly lackluster; growth of U.S. exports to countries that are not FTA partners has exceeded U.S. export growth to countries that are FTA partners by 38 percent over the past decade. In contrast to the Obama administration’s promise that the U.S.-Korea FTA would mean “more exports, more jobs,” U.S. goods exports to Korea have dropped 9 percent (a $3.2 billion decrease) since the Korea FTA took effect, in comparison to the same months in the year before FTA implementation. U.S. imports from Korea have climbed 2 percent (an $800 million increase). The U.S. trade deficit with Korea has swelled 30 percent (a $4 billion increase). The January data from the U.S. International Trade Commission show that the U.S. trade deficit with Korea skyrocketed 81 percent above December’s level, topping $2.4 billion – the largest monthly U.S. trade deficit with Korea on record. The ballooning trade deficit indicates the loss of tens of thousands of U.S. jobs.

“I suspect that most Americans are likely to be angry with the politicians who got us into another one of these NAFTA-style deals, rather than surprised at the damaging outcome. Polls show that majorities of U.S. independent, Democratic and GOP voters consistently oppose these deals because they think they are bad for their families and the American economy,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The Obama administration is inviting the public to focus on the debacle of its Korea Free Trade Agreement by using the same failed claims to push a Trans-Pacific FTA with 10 Asian and Latin American nations that is literally based on the Korea FTA text.”

The decline in U.S. exports under the Korea FTA contributed to an overall disappointing U.S. export performance in 2012, placing the United States far behind Obama’s stated goal to double U.S. exports by the end of 2014. At the sluggish 2012 export growth rate of 2 percent, the United States will not achieve the president’s goal until 2032, 18 years behind schedule.

“The data show that these Obama administration-supported FTAs are undermining the national goals set by the president of boosting our exports, reviving U.S. manufacturing and creating American jobs,” said Wallach. “This kind of data makes everyone wonder just why the administration keeps pushing so-called ‘trade’ agreements like the Korea FTA, and now the Trans-Pacific Partnership, that facilitate offshoring, ban Buy American provisions and erode manufacturing jobs, utterly contradicting the president’s domestic agenda.”

Many of the sectors that the Obama administration promised would be the biggest beneficiaries of the Korea FTA have actually been some of the deal’s largest losers. U.S. pork exports to Korea have declined 18 percent under the FTA relative to the same months in the year before FTA implementation, while beef exports have fallen 9 percent and poultry exports have plunged 41 percent. While U.S. auto exports to Korea have increased 7 percent under the FTA, U.S. auto imports from Korea have surged 17 percent, causing an 18 percent rise in the U.S. auto trade deficit with Korea.

Read additional analysis of the government data on U.S. trade with Korea under the U.S.-Korea FTA.

Chevron is using the investor-state system to avoid paying $18.2 billion to residents of the contaminated Lago Agrio region in Ecuador (pictured above).
As global criticism of the investor-state dispute system mounts, Ecuador is taking concrete steps to secede from pacts that enshrine this system, which exposes the country to direct attacks on its public interest policies from foreign investors.  In 2009, Ecuador formally withdrew from the International Centre for Settlement of Investment Disputes (ICSID), an institution which facilitates foreign corporations' legal claims against sovereign governments' policies. On Monday, President Rafael Correa put forth a bill to request that Ecuadorian lawmakers annul Ecuador's Bilateral Investment Treaty (BIT) with the United States, declaring that such treaties “favor foreign investors over human beings.”

The U.S.-Ecuador BIT binds Ecuador to the controversial investor-state system, which uniquely empowers foreign investors to directly challenge a country’s environmental, health, and other public interest laws by claiming that they violate BIT-created investor privileges and threaten “expected future profits.” These cases skirt national court systems and are instead decided by private three-person tribunals composed of arbitrators who bill by the hour. If a corporation wins, taxpayers of the losing country are expected to foot the bill, with no cap on the awarded amount (and even if a country “wins,” they often have to pay exorbitant court fees).

Ecuador has seen some of the most egregious examples of these cases, so it is not surprising that President Correa would want to protect Ecuador’s citizens from further lawsuits.  For instance, after 18 years of persistence, residents of Lago Agrio in the Ecuadorian Amazon won a historic ruling of $18.2 billion dollars against Chevron for the massive contamination of the region between 1964 and 1990 which is alleged to have caused a cancer epidemic and decimated local indigenous groups.  Instead of complying with the Ecuadorian court’s ruling, Chevron has so far made good on its promise of "a lifetime of appellate and collateral litigation" in order to avoid paying out the award.  To evade justice, Chevron launched an investor-state case against Ecuador under the same U.S. BIT that Correa now seeks to annul.  The tribunal in that case ordered the Ecuadorian government last year to interfere in the operations of Ecuador’s independent court system so as to stop enforcement of Chevron's $18.2 billion penalty. 

To add insult to injury, last October Ecuador was slammed with a record $1.8 billion judgment in a case filed by Occidental Petroleum -– the highest amount to ever come out of an ICSID tribunal. The company launched the case against Ecuador under the same U.S. BIT that Correa hopes to annul.  Occidental asked for billions in damages after the company violated a contract with the government, prompting the government to terminate Occidental's investment as contemplated by Ecuadorian law.  To impose a $2.4 billion penalty on Ecuador's taxpayers (including interest and fees), the investor-state tribunal employed astonishing leaps of logic that a dissenting member of the tribunal described as "egregious." 

Ecuador is not alone in its resistance to the harmful investor-state system. As the “egregious” judgments continue to pile up (tribunals have already awarded over $3 billion to foreign corporations under U.S. BITs and free trade agreements, and more than $15 billion is still pending), more countries are denouncing the investor-state system:

• The Brazilian Parliament has refused to ratify any investor-state agreements.
• India has made a move to abolish investor-state dispute clauses in Free Trade Agreements (FTAs).
• South Africa is re-examining its policy on investor-state disputes and has refused to renew BITs with the EU. 
• Bolivia and Venezuela have also pulled out of ICSID.

Unfortunately, a leaked draft text of the investment chapter tells us that these harmful rules are being replicated and expanded under the Trans-Pacific Partnership (TPP), a NAFTA-style "free trade" agreement currently under negotiation between the U.S. and 10 Pacific Rim nations. Australia, a TPP negotiating Party, has already refused to be subjected to investor-state dispute settlement as part of the deal, and other TPP negotiating Parties have grown increasingly wary of the prospect.  Now more than ever, it is crucial that other countries join the lead of Ecuador, Australia, et al. and refuse to bind themselves to a radical system that puts their environmental quality, public health, and sovereignty at risk.

The just-released monthly trade data from the U.S. International Trade Commission reveals an expanding U.S. trade deficit with the world as U.S. exports dropped and imports rose in January, relative to December of last year.  But the deficit picture is even starker for U.S. trade with Korea under the tenth month of the Korea Free Trade Agreement (FTA).  While U.S. goods imports from all countries rose 3% in January, U.S. imports from Korea soared 18%.  While U.S. goods exports to the world slipped 6%, exports to Korea fell 8%.  And while the U.S. trade deficit with the world climbed 21% in January, the deficit with Korea jumped 81%.  January's U.S. trade deficit with Korea topped $2.4 billion -- the largest monthly deficit with Korea on record.  In short, another month of trade with Korea under the Korea FTA has produced another month of remarkably large job-displacing trade imbalances. 

The U.S.-Korea trade imbalances of recent months are remarkable not just in comparison with most other U.S. trade partners, but in comparison to how U.S. trade with Korea looked before the Korea FTA took effect in March of last year.  In nine of the ten first months of the FTA's implementation, including the most recent month, U.S. exports to Korea fell below pre-FTA levels (relative to the same months in the prior year), spelling an overall 9% fall in exports under the FTA.  In six of those ten months, including the most recent month, U.S. imports from Korea exceeded pre-FTA levels, yielding a 2% increase in imports under the FTA.  As a result, the U.S. trade deficit with Korea under the FTA's first ten months is 30% -- or $4 billion -- larger than in the same months before the deal took effect.  The graph below summarizes this none-too-pretty picture for U.S. jobs, depicting the difference between Korea trade levels under the FTA (April 2012-January 2013) and those occurring in the same months one year earlier, before the FTA took effect.  

As Obama administration trade negotiators meet in Singapore this week to hash out the details of the Trans-Pacific Partnership, a massive expansion of the Korea FTA model, they should take a gander at this data. If the Obama administration hopes to fulfill its promise of a rebirth in U.S. manufacturing, a restoration of middle-class wages, and a recovery of decent jobs, it cannot afford to sign another sweeping FTA that expands upon the Korea FTA's sorry track record.  

This guest post comes from Dominique Aulisio, a concerned community member from Lakeland, FL:

Earlier this year, Alisa Simmons, Global Trade Watch’s National Field Director, came to Florida to speak at engagements in nine cities throughout the state to expose and explain the Trans-Pacific Partnership (TPP) agreement. The speaking tour came together thanks to a true grassroots effort on the part of individuals and organizations determined to push past the silence on the TPP from the Obama administration and the media. Together we organized events in Tallahassee, Jacksonville, Gainesville, Orlando, Lakeland, Tampa, Immokalee, Lake Worth, and Miami. At each stop, community members who are aware of the negative impacts of NAFTA or are simply wary of expanding corporate power came out to learn about the TPP.

In Orlando, community members and Central Florida Jobs with Justice met with Senator Nelson and Senator Rubio’s offices. We thanked Senator Nelson for signing onto Senator Al Franken’s (D - Minn) letter concerning jobs and labor standards in the TPP. We asked that both Senators demand a release of the TPP negotiating text for review by Congress and the public. We also asked that they vote “No” on “Fast Track,” which would allow the Obama administration to ram approval of the TPP through Congress, without members having a chance to say what should or should not be in the secretive TPP text.

Throughout the speaking tour stops, we found that most attendees had never heard of the TPP before the tour. Many reacted with surprise and anger when they learned about the provisions the Obama administration is secretly negotiating that give more power to corporations. Many responded with comments about “global corporate governance” and “loss of national sovereignty” when they learned about the private tribunals the TPP will create to allow corporations to sue countries for impacting profits by enforcing their own environmental and labor laws. Participants were stunned when they learned that aspects of the Stop Online Piracy Act (SOPA) are being swept under the rug in the TPP, and that there are provisions included to ease offshoring of jobs, decrease food safety standards, and decrease access to medication. One student at Florida State University said, “It just sounds preposterous that it’s being allowed to happen.”

In each city, participants showed great interest in learning more about the TPP and educating their communities. A truly diverse and vibrant network has sprung up organically to facilitate further trainings and organize demonstrations throughout Florida. Various actions are taking place across the state this week, culminating with a march on Saturday the 9th, as negotiators meet for the 16th round of TPP talks in Singapore. We are thrilled that so many people across the state feel as passionate as we do about stopping the TPP, and we invite others across the country to join in on the week of action. Communities in Florida are convinced that the TPP is a bad deal for us here in the States and also find it crucial to show solidarity with people around the world who will be negatively impacted by the TPP. 

More Than 400 Civil Society Groups Call for Transparency and Core Principles for International Economic Pacts, While the AFL-CIO Releases New Organizational Resolution Criticizing Direction and Process of TPP Talks

WASHINGTON, D.C. – With the sixteenth round of Trans-Pacific Partnership (TPP) negotiations slated to begin today in Singapore, opposition to the deal in the United States continues to mount. More than 400 groups representing a diverse range of causes – from labor rights, to environmental conservation, to public health, to Internet freedom and much more – have signed on to a letter to Congress calling the lack of transparency in TPP negotiations “inconsistent with democratic principles” and outlining expectations of how key issues should be addressed in commercial agreements of the 21st century.

Adding to the criticism, on February 27, the AFL-CIO released an executive council statement questioning the current path of TPP negotiations. It stated, “The United States cannot afford another trade agreement that hollows out our industrial base and adds to our substantial trade deficit.” It continued, “We do not need another trade deal that simply boosts corporate profits by encouraging offshoring good jobs while undermining wages, benefits and worker rights. We must do better.”

Members of Congress have been signaling their growing concern with the TPP process and substance with respect to threats to American manufacturing and Buy American procurement preferences, the undermining of Internet freedom and more.

President Barack Obama has called for completion of the TPP, which would be the largest U.S. trade agreement since the 1995 World Trade Organization, by early October. To date, Congress and the public have been denied access to draft texts of the massive pact, which has been under negotiation for three years.

Only five of the TPP’s 29 chapters pertain to traditional trade matters. The rest would set policies to which the U.S. Congress and state legislatures would be required to conform U.S. non-trade policies relating to regulation of energy and other services, financial regulation, food safety, procurement policy, patents and copyright policy, and more.

The draft pact also includes NAFTA-style foreign investor rules that facilitate job offshoring by removing many of the risks and costs of relocating U.S. production to low-wage countries. Among TPP negotiating countries is Vietnam, the lower cost offshoring alternative to China.

The Office of the U.S. Trade Representative (USTR) just released the 2012 annual trade report and 2013 trade agenda of the President.  It reads a bit like a used car salesman trying to do his best with a lemon.  The report/car’s well-polished sheen looks pretty… until you take a peek under the hood. 

Take the first sentence: “Trade is helping to drive the success of President Obama’s strategy to grow the U.S. economy and support jobs for more Americans.”  Almost makes you forget that last year’s non-oil trade deficit rose to a five-year high, implying the loss of millions of jobs, doesn’t it?  How about the second sentence: “The Obama Administration’s trade policy helps U.S. exporters gain access to billions of customers beyond our borders to support economic growth in the United States and in markets worldwide.”  That’s an interesting way to frame a year whose sluggish two percent export growth rate put us 18 years behind schedule in achieving Obama’s export-doubling goal.  The report continues on with its pitch, trying its darndest to pretty up what amounts to a year of ugly trade policy impacts for workers and consumers, and what appears to be more of the same planned for the 2013 trade agenda. 

Before you buy this “certified pre-owned” trade policy, let us help interpret some of the report's glossy claims:

Fast Track

The report’s first page features these two sentences: “To facilitate the conclusion, approval, and implementation of market-opening negotiating efforts, we will also work with Congress on Trade Promotion Authority. Such authority will guide current and future negotiations, and will thus support a jobs-focused trade agenda moving forward.”  Those lines have prompted a frenzy of press speculation that the Obama administration could ask Congress for Fast Track, the controversial tool that presidents from Nixon to Bush II have used to seize Congress' constitutional prerogative to set trade policy.  Fast Track has been newly euphemized as "Trade Promotion Authority." (It's not a "clunker," it's a "mechanic's dream.")  Much of the press hubbub has been over whether or not Congress would or should revive the "politically contentious" Fast Track authority for Obama. But that's not the right question. We should be asking: what kind of trade negotiating system should replace Fast Track?  It's time for a modern, democratic trade negotiating process to replace an autocratic Fast Track system that predates disco. 

It's interesting that the administration decided to devote two lone sentences to Fast Track in a 382-page report. Why not be more forthright in heralding a new push for Fast Track?  Because when asking for something unpopular, it makes sense to whisper.  And Fast Track is vastly unpopular.  Before being allowed to die in 2007, Fast Track was a Nixon-conceived attempt to sidestep checks, balances and other pesky features of a democratic republic by taking from Congress its Constitution-granted prerogative to determine trade policy. In one fell swoop, Fast Track 1) delegated away Congress’ authority to choose trade partners and set the substantive rules for “trade” pacts that have deep ramifications for broad swaths of non-trade domestic policy, 2) permitted the executive branch to sign and enter into FTAs before Congress voted on them, 3) forced a congressional vote on FTAs, and 4) suspended amendments and truncated debate when that vote occurred.  It was under this legislative luge run that we got NAFTA, CAFTA, the Korea FTA, etc.  Fast Track's extreme approach has created many an opponent (right, left, and center), spurring politically costly battles for past presidents that have attempted to wrest the unpopular authority from Congress.  

If Fast Track carries such political liability, why is the Obama administration pursuing it?  Well, according to today's report, it's to “facilitate” the passage of FTAs like the TPP (see below).  But if the TPP is such a “high-standard” agreement, what’s the harm in letting Congress get a good look at it, rather than handcuffing their involvement with Fast Track?  Doing so would save Obama the political grief of a Fast Track fight.  Or maybe there’s something even more objectionable about the TPP itself that requires Fast Track’s unparalleled sequestration of congressional power to get the deal enacted?  

Again, the choice is not Fast Track or no Fast Track.  It's Fast Track or a sensible model of trade policymaking for a modern democracy.  A new model of delegated authority would respect Congress' responsibility to play the lead role in determining the outcome of “trade” deals that intend to rewrite policies regarding financial regulation, immigration, climate and energy policy, healthcare, food safety, etc.  

Trans-Pacific Partnership

USTR reiterates throughout the report its standard definition of the Trans-Pacific Partnership (TPP) as “a high-standard regional trade agreement that will link the United States to dynamic economies throughout the rapidly growing Asia-Pacific region.” (italics added)  The primary problem with this pitch is that we’re already quite linked with these economies -- as in, 90 percent linked.  The United States already has trade deals with six of the seven largest TPP negotiating economies, which constitute 90 percent of the combined GDP of the negotiating bloc.  The TPP “dynamic economies” with which we don’t already have liberalized trade include Vietnam, where annual income per person is $1,374, and Brunei, which has a population smaller than Huntsville, Alabama.  As we’ve said time and again, this deal is not primarily about trade. 

What is it about?  It's about banning Buy American policies that support U.S. jobs; discreetly enacting provisions of the congressionally-defeated, Internet-freedom-threatening Stop Online Piracy Act; restricting safety standards for imported food; empowering foreign investors to directly challenge governments’ public health and environmental policies while demanding taxpayer compensation for “expected future profits;” counteracting efforts to reregulate Wall Street; giving pharmaceutical corporations better tools to undermine drug cost containment policies; and more.  USTR appears to have omitted such details in today's report.   

Under a section entitled “Inclusion of stakeholders at Trans-Pacific Partnership negotiations,” USTR boasts that “Stakeholder engagements and briefings provided an opportunity for the public to interact with negotiators from all of the participating countries and provide presentations on various trade issues, including public health, textiles, investment, labor and the environment.”  We have indeed given such presentations…while TPP negotiators were simultaneously scheduled to be on the other side of the negotiating venue.  It’s hard to engage trade negotiators who are supposed to be in two places at once.  We do appreciate the attempt at engagement, but would appreciate a more concerted effort. 

After patting its back for being “open” and having “unprecedented direct engagement with stakeholders,” USTR includes this: “At the same time, the Administration will vigorously defend and work to preserve the integrity of confidential negotiations, because they present the greatest opportunity to achieve agreements that fulfill U.S. trade negotiation objectives.”  Here USTR is trying to explain the equivalent of a used car's missing motor: an unbending commitment to not release the TPP negotiating text.  While claiming “unprecedented” engagement with stakeholders, USTR’s decision to keep the TPP negotiating text secret from the public, the press, and even congressional offices is “unprecedented” among 21st-Century trade deals of this scope.  The World Trade Organization (WTO), hardly a paragon of transparency, posts key texts online for public review. In addition, when the last major regional “trade” agreement (the Free Trade Area of the Americas) was at the same stage as the TPP is now, the text was formally released by the U.S. and other negotiating governments (in 2001). It’s hard to claim genuine engagement with stakeholders when those stakeholders cannot see the thing in which they hold such a stake. 

Trans-Atlantic FTA

The report reiterates President Obama’s State of the Union surprise: that the United States intends to not just negotiate a NAFTA-style pact spanning the Pacific (the TPP), but also one spanning the Atlantic. In brief discussion of the Trans-Atlantic FTA (TAFTA), the report says, “Such a partnership would include ambitious reciprocal market opening in goods, services, and investment, and would offer additional opportunities for modernizing trade rules and identifying new means of reducing the non-tariff barriers that now constitute the most significant obstacle to increased transatlantic trade.”  But this deal, even more than most, is not about trade.  Says who?  USTR itself.  U.S. Trade Representative Ron Kirk, in a briefing on the deal said that the administration has resisted including the word “trade” in the name of the deal “because it is so much broader than trade.” 

With tariff levels already quite low between Europe and the United States, this FTA appears to be primarily about those “non-tariff barriers” standing in the way of “regulatory coherence.”  What might such opaque terms mean?  In the past, they have been code for a lowest-common-denominator approach to reducing all those safety, environmental, health, financial stability and other domestic regulations that corporations have not been able to roll back via domestic pressure.  “Trade” deals provide a handy forum in which to write binding rules that contravene such regulations.  What regulations in particular might be on the hoped-for chopping block?  European firms have already taken aim at U.S. financial regulations, while U.S. corporations have long been annoyed by Europe’s tougher policies against unsafe food, GMOs, and carbon emissions.  Big agribusiness, oil and gas, chemical, and financial firms on both sides of the Atlantic may be hoping to undermine such policies in a new TAFTA, to the detriment of, well, just about everyone else. 

Exports and Jobs

The report informs the reader that “Data from 2012 showed that every $1 billion in U.S. goods exports supported an estimated nearly 5,400 American jobs...”  Good to know.  What about an additional $1 billion in imports?  As per usual, USTR trumpets the gains of exports without looking at the other side of the trade equation.  In the same way that exports are associated with job opportunities, imports are associated with lost job opportunities when they outstrip exports, as dramatically occurred last year.  The non-oil U.S. deficit in goods rose six percent in 2012 to $628 billion, the largest non-oil U.S. trade deficit in the last five years.  According to the Obama administration’s own math, that degree of negative net exports implies the loss of 3.4 million jobs.  That data from 2012 didn’t make it into the report. 

Readers of Eyes on Trade know that U.S. exports to Korea under the Korea FTA have been faring particularly poorly: they fell 10 percent in 2012 after the deal took effect (compared to the same months for 2011).  How did USTR deal with this inconvenient truth in its annual report?  It didn’t.  With respect to the three FTAs implemented in 2012, the report states “…in 2013 we will work with Korea, Colombia, and Panama to ensure that the bilateral trade agreements that went into effect last year continue to operate smoothly…”  A ten percent fall in exports for a deal that was sold under the unrelenting promise of “More Exports. More Jobs?”  Real smooth.  It seems that these are not the things one mentions in an annual report when one’s accompanying agenda for the next year includes more of the same FTAs (e.g. TPP), sold under the same “More exports. More jobs” pitch.   

Buy American and Green Procurement Policies

Wonder why our exports and job growth has been so sub-par recently?  USTR thinks it has found the answer—that scourge of our economic woes called “localization.”  Here’s what the report has to say on the topic: “We are also actively combating “localization barriers to trade” – i.e., measures designed to protect, favor, or stimulate domestic industries, service providers, and/or intellectual property (IP) at the expense of goods, services, or IP from other countries…Localization barriers to trade that present significant market access obstacles and block or inhibit U.S. exports in many key markets and industries include: requiring goods to be produced locally; providing preferences for the purchase of domestically manufactured or produced goods and services; and requiring firms to transfer technology in order to trade in a foreign market…Building on progress made in 2012, the localization taskforce will coordinate an Administration-wide, all-hands-on-deck approach to tackle this growing challenge in bilateral, regional, and multilateral forums…” 

Before the USTR dedicates the few hands it has on deck to scour the globe for pernicious localization policies, it might want to check out a few of our own.  Namely, Buy American.  This program, widely-supported among Republicans, Democrats and independents, provides a textbook example of USTR’s definition of a “localization barrier.” Buy American explicitly “provides preferences for the purchase of domestically manufactured or produced goods,” by requiring that U.S. tax dollars be spent on domestic firms when the U.S. government purchases construction equipment, vehicles, office supplies, etc.  Did USTR have in mind the elimination of this job-supporting program? Their trade agenda would certainly indicate so –- the TPP and other FTAs ban the Buy American treatment for any foreign firms operating in new FTA partner countries. 

“Localization” also implicates Buy Local and other green procurement policies that governments are increasingly using to transition to a greener economy.  Ontario, for example, has employed a renewable energy program that requires energy generators to source solar cells and wind turbines from local businesses so as to cultivate a robust supply of green goods, services, and jobs.  The program has earned acclaim for its early success in generating 4,600 megawatts of renewable energy and 20,000 green jobs.  But one group hasn’t had much acclaim to offer: the WTO.  In a ruling at the end of last year, the WTO decided that the successful program’s local requirements violate WTO rules.  Today's report confirms indications that USTR now also intends to take on such climate-stabilizing “barriers to trade." Last month, the United States initiated a WTO case against India, attacking buy-local components of its solar energy policy.  A refurbished trade agenda that undermines an urgently-needed clean-energy agenda?  Sounds like a lemon.