Planet Not For Sale
While leaders from the 12 countries negotiating the controversial Trans-Pacific Partnership (TPP) agreement met around the margins of the Asia-Pacific Economic Cooperation (APEC) summit in China to discuss the agreement, activists and civil society from across the globe decided to stage some events of their own.
Throughout the week, rallies, creative actions, meetings, and town halls were planned in a number of countries to draw attention to the secret deal that threatens to limit domestic policies that promote food safety, access to medicine, internet freedom, and environmental protection. The deal would also empower corporations to sue governments in extrajudicial foreign tribunals, challenging public interest laws that they claim frustrate their expectations. (And that’s just what we know based on leaked texts, because the negotiations are taking place entirely in secret).
Over 700,000 petitions against Fast Track are delivered to U.S. Congress
In the United States, a broad coalition of labor unions, environmental, consumer, faith, online, and other groups assembled on Capitol Hill to deliver 713,674 petition signatures opposing “Fast Track,” the Nixon-era procedure that would empower President Obama to sign the deal before Congress is able to vote on it. Corporations are trying to revive Fast Track to railroad the TPP through Congress, as it would greatly limit lawmakers’ oversight over the content of the agreement by only allowing 20 hours of debate and forcing an up or down vote (with no opportunity for amendments).
The groups also launched an online campaign resulting in thousands of calls and hundreds of thousands of e-mails to Members of Congress urging them to vote “No” on Fast Track. Across the country, 20 rallies and town halls brought the anti-Fast Track message to lawmakers’ home districts.Thousands protest against the TPP in New Zealand
More than 10,000 New Zealanders took to the streets in 17 locations to protest the TPP, gaining national news attention and social media buzz, and pushing the #TPPANoWay hashtag to number 2 worldwide. Protesters were joined by lawmakers from a number of political parties, including leaders from the Green Party and Labour Party. Participants rallied against the secrecy of the negotiating process and TPP's inclusion of the controversial Investor-State Dispute Settlement (ISDS) mechanism, among other issues.
Meanwhile in Japan, 50 activists staged an action outside of Prime Minster Shinzō Abe’s official residence in opposition to the TPP. More than 100 individuals representing farmers, labor groups, consumer organizations, medical advocates, lawyers, and university professors met with Japanese lawmakers to discuss concerns related to the TPP.
A number of flash mobs were organized around Australia. Opposition to the TPP was heard in Sydney, Canberra, Perth, Hobart, Adelaide, and Melbourne. A few days later, concerns about the TPP were represented during G-20 educational forums and protests which attracted thousands.Australian protestors rally against the TPP in Perth, Hobart, and Sydney
While negotiators and corporate advisors are hiding their agenda in confidential documents, activists worldwide are spreading their concerns on the Internet, Twitter, Facebook, and e-mail blasts. While leaders and trade ministers are meeting behind closed doors in undisclosed locations, thousands of citizens are responding by gathering on the streets, in libraries, town halls, and their lawmakers’ offices.
The message of citizens across the globe is clear: we are not willing to accept a "trade" deal negotiated in secret in the interest of corporations and at the expense of our rights to safety, democracy, and health.
Is President Obama really going to sell us out on trade? Did Sen. McConnell have a full or half smile in the last press conference where he talked about Fast Track? Is Rep. Boehner really going to have a showdown with President Obama over immigration and how will that impact Fast Track? What about the news stories stating that TPP will be signed next month? Oh, and how do the XL pipeline and deal with China on carbon emissions factor in?
Comrades, don’t let the results of the elections, and the political posturing that’s happened since, drive you crazy, distract you, or cause you to lose hope. We have a path to victory! Democrats lost control of the Senate, but we did not lose control over our campaign to stop corporate-driven, job-offshoring, democracy-stifling “free trade” agreements by stopping President Obama from getting Fast Track trade authority. In fact, we have a chance to bury Fast Track once and for all.
Don’t mistake my resolve and optimism as a suggestion that our victory is inevitable. Nothing can be further from the truth. We’re going to have to dig deep and fight harder than we ever have. There’s a giant corporate lobby fighting for Fast Track because they want the Trans-Pacific Partnership (TPP) more than they’ve wanted any other trade deal. All their hopes and dreams for a global race to the bottom are wrapped up in the TPP. I live in Washington, D.C. and see the lobbying firsthand. Our opponents are out in full force. But over the past two years I’ve seen a bigger force. I’ve seen the power of us.
Truth be told, President Obama could have had Fast Track a long time ago. But we’ve been on the case day in and day out and we’ve stopped Fast Track thus far. This past Saturday, November 15, marked the one year anniversary of the game-changing letter to President Obama that Reps. Rosa DeLauro and George Miller released in which 151 Democratic members of the House of Representatives stated that, “…we will oppose ‘Fast Track’ Trade Promotion Authority or any other mechanism delegating Congress’ constitutional authority over trade policy that continues to exclude us from having a meaningful role in the formative stages of trade agreements and throughout negotiating and approval processes.” And just three days prior, on November 12 a block of Republican members of the House of Representatives sent their own letters voicing their opposition to Fast Track to President Obama. Can you believe that it’s already been a year?! Our work together has been extraordinary, truly. We’ve been steady and consistent and we surely can’t stop and won’t stop now.
While the President and some congressional leaders sit in backrooms on Capitol Hill playing poker with the lives of over 800 million people across the world, let’s play chess. The fight to stop Fast Track has always been and will continue to be won or lost in the U.S. House of Representatives. Learning about the history of Fast Track will give you insightful perspective. Above all, don’t let the opposition distract us from our strategic path to victory. The corporate lobby is hard at work spinning a narrative of the inevitability of Fast Track because Republicans gained control of the Senate. That’s simply not reflective of reality. They’re trying to psych us out. In fact, here’s what Lori Wallach thinks:
Our strategy must remain sharp and vision focused on stopping Fast Track in this current Lame Duck session of Congress and in 2015 by demanding that our representatives vote NO on Fast Track. House, House, House!
Over the past few years, I’ve had the pleasure and honor of working with activists from all over the country. I’ve been lucky to reconnect with folks who were a part of the historic Battle in Seattle and Free Trade Area of the Americas (FTAA) protests. Wow, we’ve been at this a long time! But back to my point, the World Trade Organization protests in Seattle in 1999 and the FTAA protests in Miami in 2003 remind us that we indeed do have the power to shut these “free trade” agreements down! But here’s the thing, we don’t need another Seattle to stop the TPP and Trans-Atlantic Free Trade Agreement (TAFTA). All we have to do is stop Fast Track. That’s our greatest contribution to the international campaign to stop the TPP and TAFTA. So, keep up the great work!
Gather your comrades, build your resources, stay focused on the House of Representatives and steel yourself for the fight of a lifetime. Stopping Fast Track and the Trans-Pacific Partnership is so much more than a victory for fair trade. Stopping Fast Track now is about putting business-as-usual to rest and building a space for us to shape the future and world we all want to live in. Almost every issue that we care about (good-paying jobs, food safety, access to affordable medicines, environmental protections, Internet freedom, democracy, workers’ rights and much more) will be significantly negatively impacted if Congress gives President Obama the authority to ram TPP through congress and down the throats of people across the world.
Ring the alarm, my friends! It’s time and this time is ours. Stay strong. Keep focused. Stop Fast Track!
Opposition to the Trans-Pacific Partnership (TPP), the controversial trade pact being secretly negotiated between 12 Pacific Rim nations, continues to balloon. This week 176 million workers from the world’s largest trade union added their voice to the growing list of organizations and individuals speaking out against the trade pact.
On Tuesday, the International Trade Union Confederation (ITUC) released a statement calling on governments to halt TPP negotiations. The ITUC’s opposition to the TPP is significant not only because of the union's size, but also its breadth of representation: the ITUC has 325 affiliates in 161 countries and territories, including major labor unions in 9 of the 12 TPP countries.
Sharan Burrow, ITUC General Secretary, explained the confederation's declaration of TPP opposition: “This secretive trade deal is good for some multinational corporations, but deeply damaging to ordinary people and the very role of governments. Corporate interests are at the negotiating table, but national parliaments and other democratic actors are being kept in the dark. What we do know, much of it through leaks, is that this proposed deal is not about ensuring better livelihoods for people, but about giving multinational companies a big boost to profits. Governments should shut down the negotiations, and not re-open them unless they get genuine and transparent public mandates at home that put people’s interest in the centre.”
ITUC's concerns are widely shared: the pact is being negotiated in secret, excluding the input of civil society, experts, and lawmakers, while providing significant access to corporate interests. Also addressed in ITUC's statement is the TPP's inclusion of investor-state dispute settlement, a provision which empowers corporations to "sue" national governments before extrajudicial tribunals and demand compensation for "expected future profits" if they feel a country's domestic policies have undermined special rights for foreign firms. The statement also mentions that the TPP would likely increase the cost of life-saving medicines (a worry validated by the recent leak of the Intellectual Property chapter).
Despite these concerns, TPP negotiators are moving ahead quickly to try to finish the beleaguered deal. Earlier this week, TPP country leaders met around the margins of the Asia-Pacific Economic Cooperation (APEC) forum to discuss the TPP. U.S. President Obama urged leaders to work to "break some of the remaining logjams" of the agreement. Those "logjams" include environmental protections, policies ensuring affordable medicine, and safeguards on sovereignty and democracy.
While negotiators continue to miss deadlines to close the deal, opposition continues to grow among labor unions, activists, lawmakers, environmental advocates, consumer organizations, economists, and a wide-array of other individuals and groups. Negotiators and governments should heed ITUC's call, halt the TPP negotiations, and take a moment to reflect on exactly what why there is so much disapproval of the TPP.
The report pitches the deal as a gift to small businesses.
It was financed by FedEx, the 64th largest corporation in the United States.
Why did the Atlantic Council need to call on big business to try to persuade us that TAFTA would be good for small businesses?
The report itself provides the answer: “Those [small and medium enterprises, or SMEs] that have heard of the negotiations tend to believe that TTIP is designed principally to help large companies…”
That is, small businesses do not see TAFTA as a deal that is intended to further their interests, but those of their outsized competitors.
That view makes sense, given small firms’ experience under past free trade agreements (FTAs), including the deal implemented in 2012 with Korea. The Atlantic Council’s report claims, without citing a source, that SMEs have seen exports grow under the Korea FTA.
Not according to the U.S. government. U.S. Census Bureau data reveal that both small and large U.S. firms saw their exports to Korea fall in the year the FTA was implemented (the latest year of data availability), compared to the year before implementation.
In fact, small firms have endured the steepest downfall of exports to Korea under the FTA. U.S. firms with fewer than 100 employees saw exports to Korea drop 12 percent while firms with more than 500 employees saw exports only decline by 1 percent. As a result, under the Korea FTA, small businesses are capturing an even smaller share of the value of U.S. exports to Korea (just 16 percent), while big businesses are capturing a larger share.
Perhaps anticipating small firms’ “tendency to believe” that another FTA would disadvantage them relative to their large competitors, the Atlantic Council decided to forego a broad-based, statistically-relevant survey of small firms’ views on TAFTA. Instead, the think tank “interviewed several representatives” of a few hand-picked firms.
But even this small, anecdotal exercise did not report the small businesses’ aggregate answers to fundamental questions, such as “Have you heard of TAFTA?” or “Based on what you know about TAFTA, are you in favor of such an agreement?”
Those aren’t hypothetical questions. Indeed, they were part of the Atlantic Council’s survey, which can be found online.
Why didn’t the Atlantic Council report the aggregate responses to its own survey questions? Maybe because the results were not what the think tank sought. A call to the Atlantic Council indicated that small firms who received the survey were largely unresponsive to questions about how TTIP would benefit them.
The lack of interest from small businesses comes despite the Atlantic Council’s efforts to sell the deal in the text of the survey. Abandoning any pretense of impartiality, the survey informed businesses that TAFTA was “an ambitious effort to create sustainable economic growth and job creation in the United States and European Union” before asking if they supported the deal.
Small firms’ non-responsiveness begs the obvious question: shouldn’t the fact that small businesses are not interested in cheerleading another FTA be cause for concern about the FTA? When an invitation to name the benefits of a prospective deal is met with silence, it should probably prompt one to question the deal’s merits.
It probably should not prompt one to ask FedEx to sponsor a report intent on explaining to small businesses what’s best for them.
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Forbes just published this response from Lori Wallach and Ben Beachy (GTW director and research director) to a counterfactual Forbes opinion piece by John Brinkley in support of investor-state dispute settlement.
By Lori Wallach & Ben Beachy
Even those who support the controversial idea of a parallel legal system for foreign corporations, known as investor-state dispute settlement or ISDS, likely cringed at John Brinkley’s recent attempt to defend that system. (“Trade Dispute Settlement: Much Ado About Nothing,” October 16.)
In trying to justify trade agreement provisions that provide special rights and privileges to foreign firms to the disadvantage of their domestic competitors, Brinkley wrote 24 sentences with factual assertions. Seventeen of them were factually wrong.
To his credit, it is no easy task to defend a system that empowers foreign corporations to bypass domestic courts and laws to demand taxpayer compensation for domestic policies that apply equally to their local competitors, but that they claim frustrate special privileges granted to them as foreign investors. The cases are heard by extrajudicial tribunals not bound by precedent. Decisions are not subject to substantive appeal.
Brinkley’s mission was particularly difficult given how unpopular the ISDS system has become. Indeed, one reason that the CATO Institute has come out against ISDS is the realistic concern that its inclusion in the proposed trans-Pacific and transatlantic free trade pacts could derail those negotiations.
ISDS is risky to include in a transatlantic deal
In Europe, the incoming European Commission President and the Economic Minister of Germany have both indicated that they oppose including ISDS in the U.S.-EU deal. Whether one focuses on the threat to solvency or fair competition, it’s especially risky to include ISDS in a transatlantic deal. Doing so would newly empower more than 70,000 U.S. and EU subsidiaries of cross-registered firms to demand compensation based on special foreign investor privileges—an unprecedented increase in liability for both the United States and the EU.
Around the world, governments from Australia to South Africa have started to rebuke ISDS as studies have shown countries have failed to attract more FDI by enacting ISDS agreements, while governments—and their treasuries—have come under increasing ISDS attacks by foreign firms.
Only 50 cases were launched in the first three decades of ISDS pacts. But in each of the past three years more than 50 cases have been filed annually. The current stock of 568 ISDS cases includes demands for compensation over land use policies, tobacco controls, energy and financial regulations, pollution cleanup requirements, patent standards and other policies that apply equally to domestic firms, and that often have been approved by domestic high courts.
This trend and its threat to the rule of law have led esteemed jurists from free-trade-minded nations such as Singapore, New Zealand and Australia to join the U.S. National Conference of State Legislatures (which represents our states’ majority GOP-controlled legislatures) in opposing ISDS.
Reviewing the facts
In his quixotic effort to defend the ISDS system, Brinkley made a real mess of the facts. There’s not space to go through all 17 factual errors, but it’s important to correct his biggest blunders.
For instance, Brinkley argued, “What matters is not whether [the foreign corporations] can sue, but whether they can win.” He then proceeded to misstate the win record.
In fact, the United Nations figures on ISDS case outcomes, which Brinkley cited, show that foreign corporations have gained favorable rulings or settlements in 57 percent of the ISDS cases launched to date.
Foreign corporations have “won” against Canada’s ban on hazardous waste exports, the Czech Republic’s decision to not bail out a bank, a Mexican municipality’s decision to not allow the expansion of a contaminated toxic waste facility, and a Canadian requirement for any and all firms obtaining oil concessions to contribute to research and development in the affected province.
Foreign firms and the success of their ISDS cases
Foreign firms have also proven successful in using the threat of an ISDS case to extract favorable settlements, which often oblige governments to pay large sums to the foreign firms. A government paid $900 million to a firm in one recent ISDS settlement.
ISDS settlements have also led governments to alter policies challenged by foreign corporations. An ISDS case that a U.S. chemical company launched against Canada’s ban on a toxic gasoline additive – one currently also banned in the United States – resulted in Canada overturning the ban. In another ISDS settlement, the German city of Hamburg was obliged to roll back environmental requirements on a Swedish corporation’s coal-fired power plant.
Without explanation, Brinkley chose simply to ignore all of the ISDS cases that were settled in favor of the foreign firm, distorting his “scoreboard” of ISDS case outcomes. And he did not mention that even when governments “win,” they are still on the hook for high legal costs and tribunal fees associated with defending these cases – an average of $8 million per case.
Investor-state disputes vs. state-state disputes
Brinkley’s accounting became even more confused when he conflated investor-state disputes withstate-state disputes – and similarly made a mish-mash of our critique. Brinkley appears not to realize the difference between the ISDS system, in which any covered foreign corporation claiming to have an investment in a country can drag a government to an extrajudicial tribunal to challenge its policies, and trade agreement dispute settlement in which cases may only be brought by government signatories to pacts.
He stated, for example, that “the aggrieved foreign investor can turn to a dispute settlement body at the…WTO [World Trade Organization].” False. The WTO only allows governments – not foreign corporations – to bring cases against governments.
Brinkley then picked one state-state dispute that the United States lost at the WTO and wondered why the UN did not include it in its list of investor-state cases against the United States. He added the lost WTO state-state case to his tally of investor-statechallenges that the United States has faced to date, and summarized his hodgepodge U.S. win-loss record as, “we’ll say 13-1.”
Brinkley seems unaware that in fact the United States has lost 61 out of 67state-state cases brought against it at the WTO – a 91 percent loss rate.
As for investor-state cases brought against the United States, few such cases exist thanks to the reality that 52 of the 54 countries with which the United States has an ISDS-enforced pact are not major FDI exporters. Brinkley appears strangely unconcerned that the U.S. government plans to dramatically expand its investor-state liability under the U.S.-EU deal, which would open the door to foreign investor claims from 11 of the world’s 20 largest FDI exporters.
The Loewen fluke
Brinkley also cited an ISDS case that Loewen, a Canadian funeral home conglomerate, launched against the U.S. government over Mississippi’s jury trial system and the standard common-law requirement to post bond before pursuing an appeal. (Loewen had lost a state court case battle against a rival funeral home operator.)
Brinkley argued that because the tribunal dismissed Loewen’s ISDS claim, there is no cause for concern. But the tribunal actually supported a number of Loewen’s claims on the merits. It only dismissed the case without imposing a penalty on the U.S. government thanks to a remarkable fluke: Loewen’s lawyers reincorporated the firm as a U.S. company, thus destroying its ability to obtain compensation as a “foreign” investor.
Such luck should not be expected to continue, particularly if, under the U.S.-EU deal, foreign investor privileges are granted to thousands of European firms operating here.
Before we subject our national treasury, our domestic firms or our laws to an unprecedented expansion of ISDS liability, we should take a cold, hard look at the legacy to date of this extraordinary system. It would help to start with actual facts.
Ms. Wallach and Mr. Beachy are the director and research director, respectively, of Public Citizen’s Global Trade Watch.
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Fast Track’s Chances Diminished by GOP Senate Sweep; Obama Flexibility on Japan Agriculture Market Access in TPP Reduced; Bipartisan Campaigning Against Status Quo Trade Policy Heightens Public Awareness
The GOP takeover of the U.S. Senate probably reduces the chances that President Barack Obama gets Fast Track at all before his presidency is over or that a deal is completed on the Trans-Pacific Partnership (TPP). There has been a major corporate PR campaign to push the opposite narrative. However, a close look at the interplay of the actual politics and policy on Fast Track and the TPP show that the GOP election sweep may, counterintuitively, actually not promote the corporate trade agenda.
Fast Track: The issue is not who is Senate Majority leader. The fight over trade authority is always won or lost in the U.S. House of Representatives. Recall that second-term Democratic President Bill Clinton lost a bid for Fast Track in 1998 in the GOP-controlled House with 171 Democrats and 71 GOP members voting “no.” (Clinton had Fast Track for only two of his eight years. Indeed, in the past two decades, the only president to obtain Fast Track was President George W. Bush, and winning that five-year grant required a two-year effort at the start of Bush’s first term and a lot of political capital, after which Fast Track passed by one vote in a GOP-controlled House in 2002.)
The reason that the GOP controlling the Senate could make Fast Track’s passage less likely is related to who will now be writing a trade authority bill. The old Fast Track trade authority mechanism faces a significant bloc of GOP House opposition and virtually no House Democratic support. Outgoing Senate Finance Committee Chairman Ron Wyden (D-Ore.) had undertaken an inclusive process to get input to write his own version of trade authority, which he dubbed Smart Track. That process and its outcome could have broken the bipartisan House opposition to the old Fast Track system.
But neither incoming Finance Committee Chair Orrin Hatch (R-Utah) nor the likely GOP Ways and Means Committee leader supports major changes to the old Fast Track authority delegation process. Indeed, the Camp-Baucus-Hatch bill to establish trade authority was finally introduced in January 2014 only because GOP Finance and Ways and Means leaders opposed even modest changes to the actual authority delegation process from the 2002 bill. Changes to the actual terms delegating congressional authorities are also opposed by the business lobby. Nor do Hatch or the Ways and Means GOP leaders have the inclination or the relationships to widen the base of support for a bill.
But altering the way in which Congress’ authority is delegated, to provide Congress with a more fulsome role throughout the process and with more accountability over negotiators, is necessary to build bipartisan House support for a new delegation of trade authority. Updates to negotiating objectives or the level of transparency required cannot overcome the issues at the core of the House allergy to Fast Track.
A significant bloc of House GOP does not want to delegate more power to Obama, especially as the GOP has been attacking him as the “imperial president” who grabs legislative authority for his own. Tea party activists oppose Fast Track per se and anything that empowers Obama, which leaves GOP lawmakers who support Fast Track exposed to the dreaded tea party primary threat. To make political matter worse, House GOP lawmakers know that even if the GOP votes were available to pass Fast Track on a party line vote, almost no Democrats will vote to give their own president such authority, so any fallout from future trade pacts would be owned solely by the GOP.
As a policy matter, many GOP conservatives think the lump sum delegation of various authorities granted to Congress in the Constitution busts vital checks and balances. (It empowers a president to “diplomatically legislate” by negotiating binding non-trade terms to which U.S. law must be conformed; to sign and enter into a trade pact before Congress approves it; to write legislation not subject to committee mark-up and force a vote on it within 90 days of submission; and to pre-set the rules for floor consideration.)
That is why, when Senate Majority Leader Harry Reid (D-Nev.) indicated no floor time would be provided for Fast Track this year, the Camp-Baucus-Hatch Fast Track bill (introduced Jan. 9, 2014) was already dead on arrival in the House:
- There were literally only a handful of House Democrats who supported the bill: eight out of 201 members. And three of those eight conditioned their “yes” votes on the bill also extending Trade Adjustment Assistance (TAA), which Hatch viscerally opposes.
- The House GOP leadership could not count more than 100 members as “yes” votes on the Camp-Baucus-Hatch bill. They had a bloc of members with solid “no” votes – some of whom signed letters against Fast Track in 2013 – and a large bloc who could not commit to vote “yes.” That is why the House GOP leadership never marked up the Camp-Baucus-Hatch bill or moved it toward a floor vote. And that is why House Speaker John Boehner (R-Ohio) said in May he needed to see 50 firm Democrat votes before he would move the bill.
Reid’s announcement in January certainly made it more certain that the Camp-Baucus-Hatch Fast Track bill would not be moving. But even without Reid’s opposition, Boehner could never find the 50 Democrats he needed to make up for the GOP members he could not count as “yes” votes on the Camp-Baucus-Hatch bill.
And, the House election results do not appear to fix Boehner’s math problem. To fully assess what the new House makeup means for Fast Track, the dust will have to settle on the results to see whether it is a wash, slightly harder for Fast Track to pass (e.g., if a number of Fast Track-opposing tea party GOP candidates replaced GOP members who were for Fast Track) or slightly easier (e.g., if a lot of “Wall Street” GOP candidates replaced no-on-Fast-Track Democrats.)
One more way in which GOP control of the Senate complicates the path for trade authority: Hatch also hates TAA while Wyden supported expanding it. Adding TAA to the old Fast Track process does not add new Democratic support, but not having TAA could result in literally no House Democratic support. For instance, the House’s leading Democratic Fast Track boosters, U.S. Reps. Ron Kind (D-Wis.) and Gregory Meeks (D-N.Y.) – among the eight House Democrats who supported the Camp-Baucus-Hatch Fast Track bill – said absent a TAA extension, they would not support it.
Thus, not having Wyden as Senate Finance Committee chairman actually decreases the chances that Obama will ever get a delegation of trade authority. But that would not be such a shocker anyway. Since Congress woke up to what Fast Track really means with the Fast-Tracked passage of the North American Free Trade Agreement (NAFTA) and the World Trade Organization (WTO) almost 20 years ago, Congress has allowed Fast Track to be in effect for only five of the 20 years.
TPP: The election results may also complicate Obama’s goal of signing a Trans-Pacific Partnership (TPP) deal. As the TPP misses yet another do-or-die deadline – this time a November date announced by Obama in June that was related to the imminent Asia-Pacific Economic Partnership (APEC) meeting – to get a deal, any deal, the administration might be ready to step back from its position regarding Japan and agriculture market access in the TPP. Except, the demand that the TPP include the zeroing of all agricultural tariff comes mainly from the Republicans, as does the call to throw Japan out of the TPP talks unless Japan concedes to this demand.
Both Parties Competed to Highlight Rejection of Unfair Trade in Competitive Races, Heightening Public Awareness and Further Complicating Obama’s Bid for Fast Track: Analysis of the most-watched races of the 2014 elections reveals bipartisan competition to align campaign positions with the American public’s opposition to current U.S. trade policies and the job offshoring they cause. A raft of ads spotlighting the damage caused by status quo trade policies has heightened constituents’ anger about damaging trade deals and the expectation that their newly elected representatives will reject the administration’s attempt to Fast Track more of the same deals.
Some of 2014’s most high-profile races featured both candidates competing to portray themselves as the greater opponent of unfair trade. Republican challengers sought to outdo the fair-trade voting records of Democratic incumbents by proclaiming their own rejection of existing Free Trade Agreements (FTAs), while the incumbents touted their votes against the FTAs and their opposition to Fast Track.
Incumbents who could not themselves claim a fair trade record still campaigned with the trade frame by attacking their opponents on offshoring, voicing opposition to tax policies that incentivize offshoring or citing instances of being “tough on China.” Even Senate Minority Leader Mitch McConnell (R-Ky.), with a 100 percent record of supporting unfair trade deals, was obliged to create and air an ad claiming he “fought against unfair foreign trade” after multiple ads attacked him for supporting damaging trade deals and costing American jobs.
Closely watched races in which both candidates vied to portray themselves as a stronger opponent of unfair trade included:
- Minnesota’s 8th Congressional District – Nolan vs. Mills: In the closely fought race for Minnesota’s eighth district seat – one of the most competitive races in this election cycle – incumbent U.S. Rep. Rick Nolan (D-Minn.) turned around a likely GOP pick-up after vying with Republican Stewart Mills to declare greater opposition to status quo trade. This race spotlights the difficulty Obama’s quest for Fast Track authority will face in the next Congress, as conservative GOP members campaigned against the trade status quo and thus will be expected by their voters to stop more-of-the-same trade policies. In one ad, Mills tried to convert popular rejection of existing FTAs into rejection of incumbents, blaming “politicians like Rick” for “trade deals that reward outsourcers, while killing Minnesota jobs.” Nolan, who was not in office during the votes for any existing FTAs, touted his own opposition to unfair deals. Nolan’s campaign website stated that he “has fought against ‘fast-tracking’ the ongoing TPP trade negotiations, and will continue to stand up for fair trade.” Nolan was one of 151 House Democrats to sign a letter last year against Fast Tracking the TPP. Voters opted for Nolan, who trumped Mills.
- U.S. Senate in Michigan – Peters vs. Land: In the competitive Michigan U.S. Senate race between U.S. Rep. Gary Peters (D-Mich.) and Terri Lynn Land (R), both candidates competed to make known their opposition to unpopular trade deals. Competing against Peters’ 100 percent record of opposition to FTAs, Land sought to flaunt her own anti-FTA position, stating in an ad, “My plan will save Michigan jobs by ending unfair foreign trade deals and developing new agreements that open up markets for Michigan exports.” Michigan has lost more than 250,000 manufacturing jobs (about one out of every three) since NAFTA was enacted. Peters’ campaign website touted his own fair trade record, stating, “He has stood up for Michigan manufacturers and opposed any new trade deal that does not require our foreign trading partners play by the same rules as American companies.” In the end, Peters beat Land handily although the race had long been deemed a tossup.
- U.S. Senate in Kentucky – McConnell vs. Grimes: Trade loomed large in this headline-grabbing race between McConnell and his Democratic challenger Alison Lundergan Grimes. The Senate Majority PAC launched an ad that showed video footage of McConnell expressing support for NAFTA, and stated, “Mitch McConnell’s been tragically wrong about foreign trade deals. They’ve cost America over half a million jobs.” Another Senate Majority PAC ad criticized McConnell for “pushing foreign trade deals that send Kentucky jobs to new homes far away.” As his numbers plummeted in the early fall, McConnell’s campaign ultimately was forced to respond by adopting the same frame used against him, claiming in an ad that McConnell “fought against unfair foreign trade,” despite having cast 20 out of 20 votes in favor of unfair trade since 1991. McConnell beat Grimes after running against his own voting record.
World Trade Organization Rules Against Popular U.S. Country-of-Origin Meat Labels on Which Consumers Rely
Compliance Panel Says U.S. Policy Still Violates WTO Despite Changes Made to Comply With 2012 WTO Order; U.S. Should Not Change COOL Policy
Today’s ruling by a World Trade Organization (WTO) compliance panel against U.S. country-of-origin meat labeling (COOL) policies sets up a no-win dynamic, and the Obama administration should appeal the ruling, Public Citizen said.
If the administration were to weaken COOL, U.S. consumers would lose access to critical information about where their meat comes from at a time when consumer interest in such information is at an all-time high and opposition would only grow to the administration’s beleaguered trade agenda. If the administration again were to seek to comply with the WTO by strengthening COOL, then Mexico and Canada – the two countries that challenged the policy – likely would continue their case, even though cattle imports from Canada have increased since the 2013 strengthening of the policy.
The ruling further complicates the Obama administration’s stalled efforts to obtain Fast Track trade authority for two major agreements, the Trans-Pacific Partnership and the Trans-Atlantic Free Trade Agreement. Both of these pacts would expose the United States to more such challenges against U.S. consumer, environmental and other policies.
“Many Americans will be shocked that the WTO can order our government to deny U.S. consumers the basic information about where their food comes from and that if the information policy is not gutted, we could face millions in sanctions every year,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Today’s ruling spotlights how these so called ‘trade’ deals are packed with non-trade provisions that threaten our most basic rights, such as even knowing the source and safety of what’s on our dinner plate.”
The WTO compliance panel decided that changes made in May 2013 to the original U.S. COOL policy in an effort to make it comply with a 2012 WTO ruling against the law are not acceptable and that the modified U.S. COOL policy still constitutes a “technical barrier to trade.” The panel decided that the strengthened COOL policy afforded less favorable treatment to cattle and hog imports from Canada and Mexico, despite a 52 percent increase in U.S. imports of cattle from Canada under the modified policy. The panel stated that the alleged difference in treatment did not “stem exclusively from legitimate regulatory distinctions.”
The United States has one chance to appeal this decision before the WTO issues a final, binding ruling. Under WTO rules, if the U.S. appeal fails, Canada and Mexico would be authorized to impose indefinite trade sanctions against the United States unless or until the U.S. government changes or eliminates the popular labeling policy.
Today’s ruling follows a string of recent WTO rulings against popular U.S. consumer and environmental policies. In May 2012, the WTO ruled against voluntary “dolphin-safe” tuna labels that, by allowing consumers to choose to buy tuna caught without dolphin-killing fishing practices, have helped to dramatically reduce dolphin deaths. In April 2012, the WTO ruled against a U.S. ban on clove-, candy- and chocolate-flavored cigarettes, enacted to curb youth smoking. In each of those cases, U.S. policy changes made to comply with the WTO’s decisions also have been challenged before WTO panels similar to the one that issued today’s ruling.
“The WTO again ruling against a popular U.S. consumer protection will just spur the growing public and congressional concerns about the big Pacific and European trade deals the administration is now pushing and the Fast Track authority to railroad through Congress more agreements that undermine basic consumer rights,” said Wallach.
The COOL policy was created when Congress enacted mandatory country-of-origin labeling for meat – supported by 92 percent of the U.S. public in a recent poll – in the 2008 farm bill. This occurred after 50 years of U.S. government experimentation with voluntary labeling and efforts by U.S. consumer groups to institute a mandatory program.
In their successful challenge of COOL at the WTO, Canada and Mexico claimed that the program violated WTO limits on what sorts of product-related “technical regulations” signatory countries are permitted to enact. The initial WTO ruling was issued in November 2011. Canada and Mexico demanded that the United States drop its mandatory labels in favor of a return to a voluntary program or standards set by an international food standards body in which numerous international food companies play a central role. Neither option would offer U.S. consumers the same level of information as the current labels. The United States appealed.
The WTO Appellate Body sided with Mexico and Canada in a June 2012 ruling against COOL. The U.S. government responded to the final WTO ruling by altering the policy in a way that fixed the problems identified by the WTO tribunal. However, instead of watering down the popular program as Mexico and Canada sought, the U.S. Department of Agriculture responded with a rule change in May 2013 that strengthened the labeling regime. The new policy provided more country-of-origin information to consumers, which satisfied the issues raised in the WTO’s ruling. However, Mexico and Canada then challenged the new U.S. policy. With today’s ruling, the WTO has announced its support for the Mexican and Canadian contention that the U.S. law is still not consistent with the WTO rules.
At the beginning of the year, we warned you about the upcoming trade tsunami. Well hold on to your hats everyone, because another “trade” storm is heading our way.
Trans-Pacific Partnership (TPP) negotiators are meeting in Australia this month and are aiming to finish the massive 12-country “trade” agreement.
Despite mounting evidence that the TPP should not be completed — including the leak of another part of the top-secret text earlier this week — President Barack Obama wants the TPP done by November 11. That is when he will be meeting with other TPP-country heads of state in China at the Asia-Pacific Economic Conference.
With the TPP’s threats to food safety, Internet freedom, affordable medicine prices, financial regulations, anti-fracking policies, and more, it’s hard to overstate the damage this deal would have on our everyday lives.
But the TPP isn’t the only threat we currently face. We are also up against the TPP’s equally ugly step-sisters: TAFTA and TISA. And Obama wants to revive the undemocratic, Nixon-era Fast Track trade authority that would railroad all three pacts through Congress.
The Trans-Atlantic Free Trade Agreement (TAFTA) is not yet as far along as the TPP, but TAFTA negotiations recently took place in Washington, D.C., and more are set for a few weeks from now in Brussels. The largest U.S. and EU corporations have been pushing for TAFTA since the 1990s. Their goal is to use the agreement to weaken the strongest food safety and GMO labeling rules, consumer privacy protections, hazardous chemicals restrictions and more on either side of the Atlantic. They call this “harmonizing” regulations across the Atlantic. But really it would mean imposing a lowest common denominator of consumer and environmental safeguards.
The Trade in Services Agreement (TISA) is a proposed deal among the United States and more than 20 other countries that would limit countries’ regulation of the service sector. At stake is a roll back of the improved financial regulations created after the global financial crisis; limits on energy, transportation other policies needed to combat the climate crisis; and privatization of public services — from water utilities and government healthcare programs to aspects of public education.
TPP, TAFTA and TISA represent the next generation of corporate-driven “trade” deals. Ramming these dangerous deals through Congress is also Obama’s impetus to push for Fast Track. Fast Track gives Congress’ constitutional authority over trade to the president, allowing him to sign a trade deal before Congress votes on it and then railroad the deal through Congress in 90 days with limited debate and no amendments. Obama opposed Fast Track as a candidate. But now he is seeking to revive this dangerous procedural gimmick.
Because of your great work, we’ve managed to fend off Fast Track so far. This time last year, the U.S. House of Representatives released a flurry of letters showing opposition to Fast Track from most Democrats, and a wide swath of Republicans. This is something the other side was not expecting, and they were shocked. We won that round, but Obama and the corporate lobby are getting ready for the final push.
Because Fast Track is so unpopular in the House, Speaker John Boehner has a devious plan to force the bill through Congress in the “lame duck” session after the November elections. We need to make sure our “ducks” are in a row before that.
Some members of Congress are working on a replacement for Fast Track. U.S. Sen. Ron Wyden (D-Ore.) says he will create what he calls “Smart Track.” It is not yet clear if this will be the real Fast Track replacement we so desperately need, or just another Fast Track in disguise.
Sen. Wyden will want to be ready to introduce his Smart Track bill right as the new Congress starts in January 2015. This means we have only a couple of months left to make sure his replacement guarantees Congress a steering wheel and an emergency brake for runaway “trade” deals.
With all these deadlines drawing near, it’s clear that a knock-down, drag-out fight is imminent. But we will be ready. The TPP missed deadlines for completion in 2011, 2012, and 2013 — if we keep up the pressure, we can add 2014 to that list as well. That’s why there will be a TPP/TAFTA/TISA international week of action Nov 8-14 — more details coming soon!
By Alberto Cerda, founding member of the Chilean organization Derechos Digitales (Digital Rights)
This article was published this morning (in Spanish) on the Derechos Digitales website here: https://www.derechosdigitales.org/7990/el-tpp-recluta-mas-espionaje-electronico/.
As if we don’t have enough spying on Internet users, the proposed Trans-Pacific Partnership (TPP) includes draft rules that would increase significantly the role of online service providers in keeping an eye on their users, under the pretext of combatting copyright piracy. Even if you are not an infringer, your Internet service provider (ISP) will be watching you, just in case.
The TPP is a so-called trade agreement being negotiated by the U.S. and eleven countries around the Pacific Rim. The TPP would establish binding rules for domestic policies in several fields, from agricultural goods and services to investment and public procurement. The agreement also includes new rules for enforcing intellectual property on the Internet, modeled to some extent on current U.S. law, but in an unbalanced way that fails to incorporate crucial safeguards or allow for policy evolution in the digital environment.
Draft rules under negotiation would impose on Internet service providers a legal obligation to fight against online copyright infringement. This obligation is embodied in several provisions, which would require, for example, ISPs to communicate to their users any supposed infringement committed through their accounts, take down from the Internet information that supposedly infringes on copyright, and collect information that allows identification of users that supposedly have infringed the law.
For most non-American users, these rules are new and raise a number of significant concerns about their potential abuse and misuse by the government, corporations and the big content industry.
For American users, these rules may look similar to the heavily criticized Digital Millennium Copyright Act (DMCA). But the difference is that these rules may go beyond current U.S. law – and as part of a trade agreement they would be much more difficult to overturn, because of being enforceable under international trade law – if U.S. citizens opposed the new rules, Congress wouldn’t be able to repeal them without exposing the country to possible trade sanctions.
Under current U.S. law, companies that provide Internet services are required to participate in enforcing copyright law or risk being held liable for their users’ infringement. This means that companies like AT&T, Comcast, Time Warner Cable and Verizon are required to help enforce the copyrights of the recording and motion picture industries, for example, against their own users who are purported to have infringed upon a copyright. The TPP would take this a step further by enrolling new groups to spy on us by collecting online data about their users.
First, the TPP includes provisions that would extend spying obligations not only to entities that provide Internet services, but to “any person,” thus, not only Internet-related companies would be required to enforce the law, but “any person,” whether human or otherwise. Rights holders would likely interpret this obligation as applying to the manager of a free-wifi zone at Starbucks or your favorite neighborhood cafe, to public libraries and schools, as well as to that neighbor of yours who shares her wifi by keeping it accessible and open.
Second, TPP provisions do not seem to limit this spying to the Internet. Instead they refer to online providers, which may extend the scope of the law to other digital networks, such as intranets and private networks. What does this mean? It means that not only ISPs would be spying on you by collecting user data to protect Hollywood’s copyrights, but also other providers of online services, like the private network you use at your workplace, at your university, or even at your kid’s school, even if those networks do not provide actual access to or from the Internet.
Although the TPP states that Internet service providers would not be required by law to “monitor” users, it encourages this practice. Therefore, the TPP would leave open the door for private agreements between copyright holders (such as the Recording Industry Association of America and the Motion Picture Association of America) and Internet companies for enforcing the law against Internet users (for example, see the Center for Copyright Information). This raises concerns about powerful content industry players working together to promote abusive practices to enforce their interests against supposed infringers, since, in order to prevent any liability, online service providers may collaborate with rights holders to enforce copyrights beyond what is required by the law.
In sum, the TPP would impose new obligations for spying on Internet users under the guise of enforcing copyright. This should raise concerns not only among countries that currently lack such regulations, but also among U.S. citizens, because the TPP would expand the online spy network at home.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, number 4.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, footnote 237.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, footnote 237.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, number 5.
 TPP, Intellectual Property [Rights] Chapter, Addendum III, number 1.
Opposition to the once arcane “investor-state dispute settlement” (ISDS) system has ballooned. ISDS empowers foreign corporations to bypass domestic courts, challenge governments’ public interest policies before extrajudicial tribunals and demand compensation.
Widespread resistance to ISDS has pushed the Obama administration to become increasingly defensive about its plan to expand the regime through a proposed Trans-Atlantic Free Trade Agreement (TAFTA) with the European Union (EU). The administration recently published a justification for its push for ISDS. We will address the claims made in that document on this blog over the coming weeks (for a full rebuttal to these claims, click here for our new report).
The administration’s attempt to quell the controversy surrounding the proposed expansion of ISDS via TAFTA was recently complicated when German government officials made clear that even EU member states do not want the deal to include a parallel legal system for corporations to privately enforce sweeping investor rights. TAFTA must be approved by the 28 EU member states, including Germany.
One day before the Obama administration published its ISDS defense document, Germany’s Federal Minister for Economic Affairs and Energy Sigmar Gabriel warned the European Commission that Germany may oppose TAFTA if ISDS is included in the pact. On March 26, 2014 Gabriel wrote to EU Trade Commissioner Karel De Gucht, “From the perspective of the [German] federal government, the United States and Germany already have sufficient legal protection in the national courts,” and Germany “has already made clear its position that specific dispute settlement provisions are not necessary in the EU-U.S. trade deal.”
Gabriel’s remarks echo the official anti-ISDS position of the Socialists and Democrats Group, the second largest bloc in the European Parliament, which also must approve TAFTA. The bloc explicitly opposes the inclusion of ISDS in TAFTA out of concern that it would empower foreign firms to undermine health and environmental policies.
Facing mounting governmental and popular rejection of ISDS, the European Commission has sought to make clear that it is the Obama administration that is demanding its inclusion in TAFTA. One week after Gabriel first indicated Germany’s opposition to ISDS in TAFTA, De Gucht clarified that the EU had actually already formally proposed to U.S. negotiators that ISDS be excluded, but that the U.S. government continued to insist on its inclusion: “If the United States agreed to simply drop it [ISDS]…so be it…But they don’t. I’ve already submitted it [the idea] to them, and they don’t.”
The new President-elect of the European Commission, Jean-Claude Juncker, has already suggested that he opposes ISDS in TAFTA, stating in the TAFTA section of his official policy agenda, “Nor will I accept that the jurisdiction of courts in the EU Member States is limited by special regimes for investor disputes.” The Obama administration, however, has shown no change in its insistence that ISDS be included in the deal.
The Obama administration has also become increasingly isolated at home in pushing for ISDS, as libertarian and Tea Party groups have expressed ISDS opposition alongside the labor, environmental, consumer, health and other organizations that represent the President’s base. In March the libertarian CATO Institute, for example, published an article entitled “A Compromise to Advance the Trade Agenda: Purge Negotiations of Investor-State Dispute Settlement.”
U.S. state and local governing bodies have also made clear that they see investor-state provisions as a threat to their autonomy and basic tenets of federalism. The National Conference of State Legislatures (NCSL), a bipartisan association representing U.S. state legislatures, many of which are GOP-controlled, has repeatedly approved a formal position plainly stating that NCSL will oppose any pact that contains ISDS.
Another major complication for the administration’s defense of ISDS is the crescendo of increasingly audacious investor-state cases and rulings seen in recent years. As one policy area after another has come under attack in ISDS cases, opposition to the regime has steadily grown.
Take, for example, the investor-state cases that U.S. tobacco giant Philip Morris International has launched against Uruguay’s tobacco regulations and Australia’s cigarette plain packaging law to curb smoking. The measures have been praised by the World Health Organization as leading public health initiatives. They apply equally to domestic and foreign firms and products. Australia’s highest court ruled against Philip Morris in the firm’s domestic lawsuit against the policies. But using ISDS, Philip Morris is demanding compensation from the two governments, claiming that the public health measures expropriate the corporation’s investments in violation of investor rights established in Bilateral Investment Treaties (BITs).
In another highly contentious case, Vattenfall, a Swedish energy firm that operates nuclear plants in Germany, has levied an investor-state claim for at least $1 billion against Germany for its decision to phase out nuclear power following the 2011 Fukushima nuclear disaster. This comes after Vattenfall successfully used another investor-state case to push Germany to roll back environmental requirements for a coal-fired power plant owned by the corporation.
Such extrajudicial attacks on nondiscriminatory public interest policies have made clear to the public and legislators that the standard defense of ISDS – that it is a commonsense means for foreign investors to obtain fair treatment if they are discriminated against – does not comport with the reality of the regime, fueling broader ISDS opposition.
Stay tuned for more on the growing controversy surrounding the proposed expansion of the investor-state system via TAFTA, and the Obama administration's weak defenses of the regime.
As Growing European Government Opposition to Investor-State Regime Shadows This Week’s U.S.-EU Talks, Analysis of Investment Data Reveals That Inclusion of Regime in Transatlantic Pact Would Empower Attacks Against U.S., EU Policies by 70,000 Additional Firms
The Obama administration’s precarious justifications for the investor-state dispute settlement (ISDS) regime may determine the fate of the transatlantic free trade agreement, said Public Citizen as it released a new report examining those defenses and revealing data on the U.S. and European Union (EU) firms that would be newly empowered to attack domestic policies in extrajudicial tribunals if the pact includes ISDS. Recently, the incoming European Commission president, several large voting blocs in the European Parliament and the German government have voiced opposition to ISDS.
“The ugly political spectacle of the Obama administration insisting on special privileges and a parallel legal system for foreign corporations over European officials’ growing objections is only made worse by the utter lack of policy justifications for ISDS,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “As a slew of domestic laws are being attacked in these corporate tribunals, European officials are rethinking past support for ISDS while the Obama administration just doubles down.”
The Obama administration has also become increasingly isolated at home in pushing for ISDS, as libertarian and tea party groups have expressed ISDS opposition alongside the labor, environmental, consumer, health and other organizations that represent the president’s base. The ISDS system, included in some past U.S. and EU trade or investment pacts, empowers foreign corporations to bypass domestic courts, and challenge domestic policies and government actions before extrajudicial tribunals authorized to order taxpayer compensation for claimed violations of investor rights and privileges included in the pacts.
Trying to quell the mounting controversy, the administration has issued a series of ISDS defenses that Public Citizen refutes in its new report, “Myths and Omissions: Unpacking Obama Administration Defenses of Investor-State Corporate Privileges” (PDF). The report documents the increasingly audacious use of ISDS cases to attack policies ranging from Germany’s phase-out of nuclear power after the Fukushima disaster to Australia’s landmark plain packaging cigarette law to a Canadian province’s moratorium on fracking and that country’s national medicine patent policy. In recent months, South Africa and Indonesia have joined the list of countries announcing the termination of ISDS-enforced agreements.
Using official data on cross-border investments, the report reveals that, were the U.S.-EU pact to include ISDS, it would newly empower corporate claims against domestic policies on behalf of more than 70,000 foreign firms – an unprecedented increase in investor-state liability for both the United States and the EU.
“Given the vast threats that these corporate privileges pose to our health, our environment, our democracy and our tax dollars, it’s little surprise that European officials have joined the broad chorus concerned about this extreme system,” said Wallach. “Now all eyes are on the Obama administration: Will it continue peddling baseless defenses of these corporate protections even if that means the demise of its priority U.S.-EU pact?”
The Public Citizen report details instances in which governments have rolled back or chilled health and environmental protections in response to ISDS cases and threats under existing pacts. It describes how ISDS cases have undermined the rule of law by empowering extrajudicial panels of private-sector attorneys to contradict domestic court rulings in decisions not subject to any substantive appeal. And contrary to the administration’s claims, the report explains precisely how ISDS grants foreign corporations greater procedural and substantive rights than domestic firms, including a right to demand compensation for nondiscriminatory public interest policies that frustrate the corporations’ expectations.
“Rather than try to silence critical voices with far-fetched reassurances, the Obama administration should heed widespread warnings of the threats posed by this parallel legal system for corporations and scrap its stubborn fealty to ISDS,” said Ben Beachy, research director of Public Citizen’s Global Trade Watch. “As the world rejects this extraordinary regime, we cannot afford to further embrace it.”
Additional reasons for the current ISDS controversy described in the report, which goes point-by-point through the administration’s claims, include:
- ISDS cases are surging. While treaties with ISDS provisions have existed since the 1960s, just 50 known ISDS cases were launched in the regime’s first three decades combined (through 2000). In contrast, corporations have launched more than 50 ISDS claims in each of the past three years.
- Under U.S. free trade agreements (FTA) alone, foreign firms already have pocketed more than $430 million in taxpayer money via investor-state cases. Tribunals have ordered more than $3.6 billion in compensation to investors under all U.S. bilateral investment treaties and FTAs. More than $38 billion remains in pending ISDS claims under these pacts.
- Numerous studies have failed to find that ISDS-enforced pacts cause an increase in foreign direct investment – the ostensible reason for governments to subscribe to the pacts’ extraordinary terms. As promised benefits of ISDS have proven illusory while tangible costs to taxpayers and safeguards have grown, an increasing number of governments have begun to reject the investor-state regime. But as they have moved to terminate ISDS-enforced pacts, foreign investment has grown.
- The structure of the ISDS regime has created a biased incentive system in which tribunalists can boost their caseload by using broad interpretations of foreign investors’ rights to rule in favor of corporations and against governments, and boost their earnings by dragging cases out for years.
- Purported safeguards and explanatory annexes added to agreements in recent years have failed to prevent ISDS tribunals from exercising enormous discretion to impose on governments’ obligations that they never undertook when signing agreements.
- Transparency rules and amicus briefs are insufficient to hold accountable tribunals that remain unrestrained by precedent, countries’ opinions or substantive appeals.
- State and local governments have no standing to defend the state and local policies that often are challenged in ISDS cases.
- The Obama administration has repeatedly ignored ISDS opposition from Congress, the bipartisan National Conference of State Legislatures, diverse public interest groups and legal scholars.
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What does a trade agreement have to do with the thousands of unaccompanied children risking their lives to try to cross the U.S. southern border?
Earlier this month Congresswoman Marcy Kaptur (D-Ohio) hosted a congressional briefing entitled "Economic Underpinnings Of Migration In The Americas," focusing on the role that the U.S.-Central America Free Trade Agreement (CAFTA) has played in contributing to the forced migration crisis.
Watch Congresswoman Marcy Kaptur and GTW research director Ben Beachy explain how CAFTA has exacerbated the instability feeding this crisis in the video below. Ben's prepared remarks follow.
0:00 -- Congresswoman Kaptur introduces the event
4:57 -- Ben delivers remarks
16:40 -- Congresswoman Kaptur answers a question about Fast Track
24:34 -- Ben answers a question on how to achieve a more fair trade model
CAFTA and the Forced Migration Crisis
Ben Beachy, Research Director, Public Citizen's Global Trade Watch
I’d like to start with a quote from former Representative Tom Davis, from my home state of Virginia, when he was speaking on the House floor in favor of CAFTA on July 27, 2005. He said:
“…we need to understand that CAFTA is more than just a trade pact. It's a signal of U.S. commitment to democracy and prosperity for our neighbors. And it's the best immigration, anti-gang, and anti-drug policy at our disposal…Want to fight the ever-more-violent MS-13 gang activity originating in El Salvador but prospering in Northern Virginia? Pass CAFTA …Want to begin to ebb the growing flow of illegal immigrants from Central America? Pass CAFTA.”
One day later, the House passed CAFTA, at midnight, by a single vote.
Nine years later, gang and drug-related violence in Central America has reached record highs and the “growing flow” of immigrants from Central America that Representative Davis referenced has surged.
At a minimum, CAFTA failed to stem violence and migration from Central America as Rep. Davis and other CAFTA proponents promised. But it’s worse than that. The deal appears to have actually contributed to the economic instability feeding the region’s increase in violence and forced migration.
I’m not going to argue that CAFTA is singularly responsible for the surge of Central American children trying to cross the southern border into the United States. The horrific violence in Honduras, El Salvador and Guatemala is the proximate cause of this crisis. But that violence has been fed by economic instability in those countries. And it makes sense to examine whether CAFTA has done more to mitigate or to exacerbate that instability.
The evidence, unfortunately points to the latter. Under CAFTA, family farmers in El Salvador, Guatemala and Honduras have not fared well, the economies have become dependent on short-lived apparel assembly jobs – many of which have vanished, and economic growth has actually slowed.
First, let’s look at the situation for family farmers. A number of development groups unfortunately predicted during the CAFTA debate that the deal could lead to the displacement of the family farmers that comprise significant portions of the region’s workforce. Indeed, that should have been the expected result if NAFTA, the predecessor to CAFTA, offers any indication.
NAFTA removed Mexican tariffs on corn imports and eliminated Mexican supports for small farmers but did not discipline U.S. subsidies. The predictable result was an influx of cheap U.S. corn into Mexico, which caused the price paid to Mexican farmers for the corn that they grew to fall by 66 percent, forcing many to abandon farming. An estimated 1.1 million small-scale farmers and 1.4 million other Mexicans dependent on agriculture soon lost their livelihoods. Immigration to the United States soon soared. While the number of people immigrating to the United States from Mexico remained steady in the three years preceding NAFTA’s implementation, the number of annual immigrants to the U.S. from Mexico more than doubled in NAFTA’s first seven years.
Under CAFTA, family farmers in Honduras, El Salvador, and Guatemala have been similarly inundated with subsidized agricultural imports – mainly grains – from U.S. agribusinesses. Agricultural imports from the United States in those three CAFTA countries have risen 78 percent since the deal went into effect. While these exports represent a small fraction of the business of U.S. agricultural firms, they represent a big threat to the Central American family farmers who do not have the subsidies, technology, and land to compete with the influx of grain.
And despite promises to the contrary, most small-scale farmers in those countries have not seen a boost in exports of their products to the United States. The growth in agricultural exports from El Salvador to the U.S. under CAFTA has actually been lower than global growth in agricultural exports to the U.S. And Honduras’s agricultural exports to the U.S. have been swamped by the surge in agricultural imports. Honduras went from being a net agricultural exporter to the United States in the six straight years before CAFTA to being a net agricultural importer from the United States in the six straight years after the deal took effect.
Some CAFTA proponents understood that Central America’s small-scale farmers may not fare well under the deal, but promised that displaced workers could find new jobs in the garment assembly factories, or maquilas, producing clothing for export to the U.S. These factories are not only notorious for abusing workers’ rights and paying low wages, but for leaving a country as soon as cheaper wages can be found in another low-wage country. Indeed, this race to the bottom was evident in Mexico under NAFTA. Maquila employment surged in NAFTA’s first six years. But since 2001, hundreds of factories and hundreds of thousands of jobs in this sector have been displaced as China joined the WTO and Chinese sweatshop exports gained global market share.
Apparel production in Central America’s factories has faced a similar fate. Apparel exports to the United States from each of the three countries in question – Honduras, El Salvador, and Guatemala – were lower last year than in the year before CAFTA took effect. In Honduras, apparel exports to the U.S. have fallen more than 20 percent in CAFTA’s first 9 years. Guatemala has seen a nearly 40% downfall. Jobs in the apparel factories of Central America would be expected to disappear even quicker if the controversial Trans-Pacific Partnership would take effect. The TPP contains Vietnam, where the average minimum wage is 52 cents an hour – a fraction of minimum wages in Central America, and even in China.
A final promise of CAFTA that I’ll highlight is that the pact would boost Central American economic growth. This promise was also made for Mexico under NAFTA. But since NAFTA took effect, Mexico’s average annual per capita growth rate has been just 1 percent, significantly lower than the pre-NAFTA rate. Indeed, Mexico had the third-lowest per capita growth rate in all of Latin America during the first 20 years of NAFTA.
The outcome has not been much better under CAFTA. The average annual GDP growth rates in El Salvador, Honduras and Guatemala have all been lower than the overall growth rate in Latin American developing countries in CAFTA’s first 9 years. In fact, the average annual growth rates of El Salvador and Honduras have fallen since the deal took effect, while the growth rate of Guatemala went from being above the regional average before CAFTA to falling below it since CAFTA.
These aggregate numbers of course represent thousands of individual families who have found themselves facing increased economic instability and greater difficulty in making ends meet. Thousands of youth more susceptible to the influence of gangs and drugs. And thousands of children who have decided that a life threatening journey to the United States is better than an even more life-threatening existence at home.
In sum, representative Davis was clearly wrong, as were the other CAFTA proponents who promised the deal would bring “prosperity” to Central America, thereby diminishing gang and drug-related violence and stemming the need to migrate to the U.S.
While Rep. Davis is no longer in Congress, his arguments are still here. Some members of Congress and industry lobbyists are making very similar promises regarding the proposed Trans-Pacific Partnership – which would expand the NAFTA/CAFTA model across the Pacific. They have argued, essentially, that this time will be different. That this time, a more-of-the-same trade deal will actually spur prosperity among our trade partners.
Most members of Congress, thankfully, are not buying it. Most Democrats have opposed the effort to Fast Track the TPP through Congress, as has a sizeable bloc of Republicans. For those still on the fence, it would be prudent to consider the failed legacy of past agreements before committing us, and our trade partners, to a new one.