Planet Not For Sale

As Obama Visits TPP Countries, New Obama Administration Report Targets Their Public Interest Policies as “Trade Barriers” to be Eliminated

Eyes on Trade - 22 April, 2014 - 20:31

As President Obama leaves on his Asia tour today to try to paper over the deep divisions that have bewitched the Trans-Pacific Partnership (TPP) negotiations, he will likely refrain from reiterating the criticisms his administration recently levied against the sensitive domestic policies of the TPP governments he will be visiting.  

The 2014 National Trade Estimate Report, published earlier this month by the Office of the U.S. Trade Representative (USTR), targets financial, privacy, health, and other public interest policies of each TPP nation as "trade barriers" that the U.S. government seeks to eliminate. The report offers unusual insight into why negotiations over the sweeping, 12-nation deal are contentious and have repeatedly missed deadlines for completion.

The policies of other TPP nations criticized by the 384-page USTR report include New Zealand’s popular health programs to control medicine costs, an Australian law to prevent the offshoring of consumers’ private health data, Japan’s pricing system that reduces the cost of medical devices, Vietnam’s post-crisis regulations requiring banks to hold adequate capital, Peru’s policies favoring generic versions of expensive biologic medicines, Canada’s patent standards requiring that a medicine’s utility should be demonstrated to obtain monopoly patent rights, and Mexico’s “sugary beverage tax” and “junk food tax.”

The Obama administration also targets seven of the 11 TPP partners, including majority-Muslim countries like Malaysia and Brunei, for restricting the importation or sale of alcohol, takes issue with several TPP countries’ restrictions on the importation of tobacco, and laments Vietnam’s restriction on the importation of “a variety of hazardous waste items.”

The Obama administration report calls for some TPP nations to adopt copyright enforcement measures akin to those proposed under the Stop Online Piracy Act (SOPA), which 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.” The report also criticizes data privacy policies, describing Canadian privacy rules as too “restrictive” and Japan’s Privacy Act as “unnecessarily burdensome.”

The report attacks six TPP nations’ rules requiring foreign takeovers of major domestic firms, including banks, to be vetted by the government. Also listed as “investment barriers” are Malaysia and New Zealand’s requirements that foreign investors obtain permission before acquiring land, and Peru and Mexico’s prohibitions on foreign acquisition of land along their national borders.

The report also critiques government procurement rules in several TPP nations that are similar to the U.S. Buy American policy in giving preference to domestic producers. This includes Malaysia’s bumiputera policies, preferences for domestically produced medicines in Vietnam’s hospitals and Japan’s preferences for local companies when contracting major taxpayer-funded construction projects.

The USTR report further accuses some TPP 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.

Here are some of the domestic policies in Malaysia and Japan -- the two TPP nations that Obama will soon be visiting -- that the report singles out for criticism: 

Malaysia

  • The report takes issue with Malaysia’s “extremely high effective tariff rates” on alcohol and its strict licensing policy for the importation of pork – strange “barriers” to highlight in a country where three out of every five people are Muslim. Malaysia’s halal standards for meat have also been targeted as a “barrier” in a companion USTR report on Technical Barriers to Trade (published in 2013, the most recent edition available). USTR is concerned that Malaysia requires “slaughter plants to maintain dedicated halal production facilities and ensure segregated storage and transportation facilities 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.
  • The report notes that while the Malaysian economy is generally open to foreign investment, the government requires that department stores and other businesses “must reserve at least 30 percent of shelf space in their premises for goods and products manufactured by bumiputera-owned small and medium size industries.” While the policy aims to provide greater economic opportunity to historically marginalized ethnic Malays, to USTR the policy is a “services barrier.”
  • The report lists as “services barriers” the limits that Malaysia’s central bank imposes on the transaction fees and credit card interest rates that financial firms can charge Malaysian consumers.
  • Malaysia’s central bank determines whether foreign banks can do business in the country on the basis of “prudential criteria” and whether the business would be in the “best interests of Malaysia.” USTR calls the latter standard “vague” and “nontransparent” just before specifying the concrete criteria that it entails: “the contribution of the investment to promoting new high value-added economic activities, addressing demand for financial services where there are gaps, enhancing trade and investment linkages, and providing high-skilled employment opportunities.” 
  • USTR critiques Malaysian policies that impact the importation of motor vehicles, including the usage of “traffic restrictions and noise standards that affect the usage of large motorcycles.”

Japan

  • The report critiques Japan’s laws protecting the privacy of citizens’ personal data, calling them “unnecessarily burdensome.” The U.S. government, according to the report, “has urged the Japanese government to reexamine the provisions and application of the Privacy Act, so as to foster appropriate sharing of data…”
  • 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.”
  • USTR critiques Japan’s regulation of nutritional supplements, citing several “barriers” that inhibit U.S. corporations’ sales of vitamins and supplements in Japan. Specifically, the report criticizes “the difficulties associated with using unregistered food additives” in nutritional supplements to be sold to Japanese consumers.
  • The report states that U.S. pharmaceutical corporations have “concerns” with “a mechanism to cut prices of medical devices in Japan.” In establishing the price of a given medical device, Japan incorporates the average price of several developed countries, including the United States, to ensure that domestic prices do not grossly exceed those of comparator countries. A number of other countries, such as Canada and Switzerland, use similar calculations to set pharmaceutical prices and control healthcare costs. But USTR takes issue with Japan’s policy, relaying the concern of the U.S. pharmaceutical industry that the cost containment mechanism could inhibit U.S. firms’ sales in Japan. 
  • USTR calls 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.” The report states that the U.S. government “welcomed” the decision of Japan’s government last year to impose a moratorium on new cancer insurance coverage from Japan Post. The U.S. government had demanded the moratorium as a condition for endorsing Japan’s entry into the TPP, citing concerns that new cancer insurance coverage from Japan Post would create unfair competition for private, U.S.-based insurance providers. Three months after Japan heeded the U.S. moratorium request, and in the same week that Japan joined the TPP, U.S.-based Aflac Incorporated announced that it had signed a deal with Japan Post that confirmed Aflac as the exclusive provider of cancer insurance in Japan’s state-owned postal offices. USTR’s report cautions Japan that before deciding to end the moratorium and allow Japan Post to offer cancer insurance or other new insurance products, the government should engage in “active solicitation and consideration of private sector views.” The report does not mention a need to solicit views on how continuing to constrain Japan Post’s insurance offerings could affect access to health insurance for Japan’s cancer patients.
  • The U.S. government report demands a standard of transparency in Japan’s postal reforms that the U.S. government itself has not been willing to follow in the TPP negotiations. The report calls for “timely and accurate disclosure” of key texts related to Japan’s postal reform, and “public release of meeting agendas, meeting minutes, and other relevant documents.”  In contrast, leaks have revealed that the United States and other TPP countries have agreed to keep TPP texts classified until four years after the agreement enters into force or talks collapse.
  • 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 those provided to Japanese schools.” Why should the government provide foreign universities the same tax breaks and taxpayer-funded subsidies that it offers to Japan’s own schools? According to USTR, meeting this request is necessary for the foreign schools “to continue to provide their unique contributions to Japan’s educational environment.”
  • The report states that “the U.S. Government has raised strong concerns” about Japan’s Wood Use Point Program for “promoting[] the use of domestic Japanese wood products over imported wood products,” while noting that the purpose of the program is “to promote the use of local wood.”  
  • 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.
Categorie: Planet Not For Sale

Administration Desperate to Announce Breakthrough on TPP in Japan, But Congress not Buying Economic or Foreign Policy Sales Pitch and Won’t Give Obama Fast Track

Eyes on Trade - 21 April, 2014 - 22:34

Public Citizen Publishes Updated List of TPP Issues That Require Resolution for a Deal to Be Made; List Largely Unchanged Since 2/14 Singapore TPP Ministerial

A major goal of President Barack Obama’s Asia trip is to revive the Trans-Pacific Partnership (TPP) after four years of negotiations have resulted in talks deadlocked over scores of issues and growing U.S. congressional and public opposition. 

Whether or not any real deal is made, a “breakthrough” almost certainly will be announced because the U.S-Japan summit is viewed as a do-or-die moment to inject momentum into the TPP process. Familiarity with kabuki theatre may be useful in interpreting the summit outcomes on TPP.

Obama arrives in Asia without trade authority and with TPP partners Japan and Malaysia aware that the U.S Congress, which has exclusive constitutional authority over trade policy, is increasingly skeptical about the TPP. January 2014 legislation to enact Fast Track authority was dead on arrival in the U.S. House of Representatives. Already in late 2013, 180 House members had announced they would never authorize the Fast Track process again; more announced opposition when the bill was submitted.

The prospect that Obama cannot deliver on whatever “compromises” he may make was heightened by a congressional sign-on letter circulating last week calling for Japan to be thrown out of TPP negotiations unless it agreed to eliminate its agricultural tariffs and major U.S. agribusiness interests calling for the same.

But at the same time, there is enormous pressure for Obama and Prime Minister Shinzo Abe to announce a breakthrough. Months of non-stop U.S-Japan bilateral TPP negotiations and ministerial-level meetings have failed to overcome sensitive agricultural and auto market access issues. Without knowing what market access gains they may achieve in return, other TPP nations have been loath to consider high-stakes tradeoffs relating to U.S. demands in TPP to extend medicine patents, limit financial regulations,  discipline state-owned enterprises, enforce labor and environmental standards, limit financial regulation.  

A checklist of these unresolved issues is included at the bottom of this memo. Despite the unprecedented secrecy surrounding the TPP negotiations, leaks of TPP documents are fueling opposition in many TPP countries as the pact’s prospective threats are revealed.  As a result, the other TPP nation governments face considerable domestic political liability for acceding to various U.S. TPP demands.

Finally, as the economic sales pitch for the TPP has faced increasing incredulity in Congress, TPP proponents have shifted to the foreign policy arguments-of-last-report used to sell flagging trade deals. The president’s Asia trip is the best possible platform to make arguments that distract from the TPP’s merits and shift the focus to broad brush narratives that connect to congressional and public anxieties about a rising China.

A report released last week by Public Citizen reveals that nearly identical foreign policy arguments have consistently proven baseless when used to sell trade deals over the past two decades. The report reviews foreign policy claims made to promote the TPP, ranging from the absurd to the counterfactual, to those that repeatedly have been disproved by the actual outcomes of similar claims made for past pacts. Repeatedly, Congress has approved trade deals based on dire predictions that failure to do so would mean diminished U.S. power,  the takeover of important markets by competitors or foreign instability, only to find that many of those predictions came true in spite of, and sometimes even because of, pacts’ enactment.

Among the report’s findings, echoed last week in a call with members of Congress and Asia policy expert Clyde Prestowitz:

  • Past free trade agreements (FTAs) failed to counter the rising economic influence of China (or Japan): From 2000 to 2011, U.S. FTAs with eight Latin American countries were sold as bulwarks against foreign economic influence in the hemisphere. The U.S. pacts were implemented and China’s exports to Latin America soared more than 1,280 percent, from $10.5 billion to more than $145 billion, while the U.S. saw only modest export growth. The U.S.-produced share of Latin America’s imported goods fell 36 percent, while China’s share increased 575 percent. Similarly, under the North American Free Trade Agreement’s (NAFTA) first 20 years, the U.S.-produced share of Mexico’s imported goods dropped from almost 70 percent to less than 50 percent, while China’s share rose more than 2,600 percent. Similarly, after hysterical claims that Japan would seize U.S. market share in Latin America by signing its own free trade agreements unless the United States approved NAFTA and other FTAs, such Japanese FTAs were signed anyway.
  • The TPP will not “contain” or isolate China: U.S. officials have repeatedly welcomed China as a prospective TPP member. How can the TPP isolate China if China can become a member? Administration officials note that China could join only if it agreed to the TPP’s rules, but those rules would give Chinese products duty-free access to the U.S. market and new foreign investor rights and privileges that would enhance China’s relative economic might within the United States. This may explain China’s statements of increased interest in joining the TPP. The TPP will not empower Pacific allies to act as a bulwark against Chinese influence, given that many of those nations see China as a partner. The report cites officials from TPP countries stating that if the TPP were to become a China-containment tool, they would no longer participate in TPP negotiations. 
  • The TPP is not a vehicle to impose “our” rules vs. China imposing “theirs”: The TPP’s actual terms undercut the false, but conveniently scary, dichotomy posed as a choice between using TPP to impose “our” rules internationally or living with rules set by China. This argument presumes the TPP to represent “our” rules, but in fact many of the TPP’s terms reflect the narrow special interests of the 600 official U.S. corporate trade advisors that have shaped them. TPP investment rules would promote more U.S. job offshoring and further gut the U.S. manufacturing base that is essential for our national security and domestic infrastructure. TPP procurement rules would ban Buy American policies that reinvest our tax dollars to create economic growth and jobs at home. TPP service sector rules would raise our energy prices and undermine our energy independence and financial stability. TPP drug and copyright terms would raise health care costs and thwart innovation. The study summarizes a recent U.S. Department of Defense report that concludes that U.S. deindustrialization poses a threat to national security and our nation’s economic wellbeing.

TPP deal vs. kabuki checklist - to actually have a TPP deal, these issues must be resolved:

 Disciplines Against Currency Manipulation

A TPP without binding currency provisions could be dead on arrival in Congress. The other TPP nations know this but still oppose such terms. While 230 members of the U.S. House of Representatives and 60 U.S. senators have written to Obama demanding currency manipulation disciplines in the TPP, U.S. negotiators haven’t initiated negotiations on this, much less secured terms. Among others, U.S. Sen. Lindsey Graham (R-S.C.), a prominent supporter of past pacts, announced he would oppose the TPP if it does not include enforceable currency disciplines.

 Enforceable Labor and Environmental Standards

As a January 2014 text leak revealed, all other TPP nations oppose many TPP Environment Chapter terms that the United States demands. This includes obligations that, if nations fail to enforce certain environmental agreements that they have signed, they will face TPP enforcement and trade sanctions. Other U.S. bottom lines that face unified opposition are a ban on trade in illegally harvested timber and endangered species, with violations subject to trade sanctions, and enforceable disciplines on fisheries subsidies. Among the TPP countries are those, including Japan, that have led unwavering opposition to disciplines on fishery subsidies, including in the context of the World Trade Organization. More broadly, the other countries have to date rejected the U.S. demand that both the environment and labor chapters be enforceable and subject to the same dispute resolution system as other TPP chapters. These are terms that Congress forced President George W. Bush to include in his pacts. If the Obama administration rolls back the labor and environmental terms included in Bush-signed agreements, it will lose almost all Democratic congressional support for the TPP. In addition, if the labor standards were enforceable, it remains unresolved how the TPP could include Vietnam, one of four countries cited by the Department of Labor for using both child and forced labor in apparel production.

 State-Owned Enterprises

After years of deadlock during which countries could not even agree on a text from which to negotiate, substantive talks are now under way but there is still no agreed text for this chapter from which to narrow down differences. To complete a deal, either the United States will have to roll back its demands, which would be extremely unpopular in Congress, or a bloc of TPP countries with numerous state-owned enterprises could have to make major concessions. 

 Intellectual Property Chapter Patent and “Transparency” Text on Medicine Pricing Rules

Most other TPP countries continue to oppose U.S. proposals to expand the scope of patentability, including terms such as new monopoly patents for new uses of already-patented drugs that would promote patent evergreening as well as terms to subject surgical procedures to monopoly patents and extend data exclusivity terms that would deliver on Big Pharma’s demands for monopoly powers that raise medicine prices. The powerful American pharmaceutical industry has declared that it will oppose the TPP if the pact reverses extreme provisions in past U.S. Free Trade Agreements (FTAs). A sizeable bloc in Congress has stated that it will oppose the TPP if such terms are included. Another contested issue is the U.S. proposal for a cynically dubbed “Annex on Transparency and Procedural Fairness for Healthcare Technologies” that would allow drug firms to challenge medicine formulary reimbursement and pricing decisions. The target ostensibly was the national health care systems in New Zealand, Australia and other TPP nations that use formulary lists to reduce health care costs. Grassroots and legislator opposition to the U.S. proposal is virulent, making concessions politically perilous. Big Pharma insists that these terms must extend beyond those contained in the U.S.-Australia FTA. Meanwhile, an increasing number of U.S. state officials and Democratic congressional supporters of the Affordable Care Act also oppose those terms, which could undermine enhanced use of formularies to reduce U.S. health care costs.

 Copyright Extensions

Hollywood- and recording industry-inspired proposals that would greatly extend copyright durations, limit innovation, restrict access to educational materials and force Internet providers to act as “copyright police” by cutting off people’s Internet access (think of the SOPA/PIPA debacle) have triggered public outrage in numerous TPP countries, leading to a negotiation stalemate. The United States has continued to demand that the TPP be used to require countries to adopt domestic copyright terms beyond international norms and aggressive copyright and enforcement provisions that would limit the public domain and Internet freedoms. A bloc of countries remains solidly opposed to various elements of these demands. There also is entrenched disagreement about whether copyright should be able to keep works of art and literature out of the public domain for 70 years after death of the author.

 Financial Regulation and Capital Controls

With the International Monetary Fund endorsing the use of capital controls to avoid floods of speculative capital that cause financial crises, it’s no surprise that there is united opposition among other TPP countries to a U.S. demand that the TPP include a ban on the use of various commonsense, macro-prudential measures, including capital controls and financial transactions taxes. While the United States has objected to an exception allowing the use of such measures, other TPP nations – including Malaysia, have stated they will not agree to a TPP that prohibits the use of such measures.

 Investor-State Dispute Settlement (ISDS)

Australia is demanding a broad exception to ISDS, which elevates individual corporations to equal status with sovereign nations and allows them to enforce a public treaty by “suing” national governments for compensation before international tribunals comprised of private-sector attorneys over claims that government actions undermine their expected future profits. The National Conference of State Legislatures, the body representing the 50 U.S. state legislative bodies, has adopted a policy of opposing any trade agreement with investor-state enforcement. The United States is demanding all countries submit to this system. Even those TPP nations that have agreed to investor-state enforcement oppose the U.S. demand that government natural resource concessions, private-public-partnership utility management contracts and procurement contracts be subject to such extra-judicial processes. The other countries also oppose a U.S. demand that the investor-state terms apply “pre-establishment” – creating a right to investment, including acquisition of land. The United States has consistently opposed an exception supported by most other TPP nations that would safeguard domestic environmental, health and other policies from the TPP tribunals.

  Mechanism for the TPP to Go into Effect

Agreement on the legal mechanisms required for implementing the TPP has proven extremely elusive. A standard provision in the implementing legislation of past U.S. trade agreements requires that, after the U.S. Congress ratifies the pact, the president withhold formal written notification of that approval from partner countries until the president certifies that the partner countries have altered their own laws and policies to comply with the trade deal. That is to say, even after both the United States and its trade partners have ratified an agreement, it takes effect only after the United States unilaterally certifies that its partners have changed domestic laws according to U.S. demands. TPP nations argue the certification process gives the U.S. government and corporations enormous leverage to force them to conform to American interpretation of trade agreement terms – some of which are often deliberately vague, opaque and contentious. This process also often delays implementation of agreements.

  Sensitive Market Access Issues

  • Agriculture: Japan’s parliament has listed five “sacred” commodities that must be excluded from TPP tariff-zeroing: rice, beef/pork, wheat, sugar and dairy. The United States reportedly had backed down on its demand, also pushed by New Zealand and other TPP nations, that Japan agree to zero tariffs for all of the hundreds of product lines under those categories. A deal that falls short of tariff zeroing but allows more U.S. rice imports is rumored. But on pork and beef, U.S. negotiators are under enormous pressure from Congress and agribusiness interests not to relent – and a standoff has ensued or months. Meanwhile, Australia wants U.S. access for its sugar exports, a demand that the United States rejected in its bilateral FTA with Australia. The United States has declared it will not negotiate new market access with countries with which it already has FTAs – in no small part to avoid the wrath of the politically powerful U.S. sugar industry, which has strong support among Democrats and Republicans in Congress. New Zealand’s main TPP demand is increased access to American and Canadian markets for its massive dairy export industry. But with dairy farmers in many U.S. congressional districts, a large bloc of Democrats and Republicans strongly oppose this demand. Yet, despite its refusal to negotiate market access with its current FTA partners, the United States has demanded access for dairy products in Canadian markets – a condition it couldn’t secure in the 1993 NAFTA and that Canada has also rejected for the TPP.
  •  Autos: The U.S. Congress insists that Japan be subject to a special bilateral agreement providing certain additional concessions relating to auto trade, insurance and access for U.S. beef. While the Abe administration agreed to this demand, the bilateral pact – a U.S. condition for Japan being included in a final TPP deal – has not been finalized, with negotiations on auto trade issues especially mired. Japan has rejected a U.S. demand that tariffs be phased out over 30 years.
  • Government Procurement: The United States wants national government contracts above a set threshold be made available to firms from all TPP countries on equal terms. But many Democratic and GOP members of Congress oppose any waiver of Buy American preferences, which would be required to implement this rule. The U.S. demand has also raised broad opposition in Malaysia, where its “bumiputera policy” – which guarantees a portion of government procurement contracts go to ethnic Malays – is key to preventing a recurrence of violent attacks against the country’s ethnic Chinese population, which dominates its business sector. Other TPP nations want the United States to guarantee that their firms will get the same access to the 50 U.S. states’ procurement activities as they would provide to U.S. firms, which U.S. negotiators have refused.
  • Apparel and Shoes: Vietnam has insisted on duty-free access for its clothing made with inputs from China and other non-TPP nations, and the elimination of U.S. tariffs on footwear. The “rule of origin” Vietnam requests would reverse a long-standing “yarn forward” rule included in past U.S. pacts to support U.S. jobs. If honored, Vietnam’s demand would increase the uncertainty that Congress would approve the TPP. 
Categorie: Planet Not For Sale

Corporate Group Launches “Fact-Based” Trade Series, Avoids Facts

Eyes on Trade - 17 April, 2014 - 19:32

When launching a new series of materials touted as “fact-based analysis,” it is unwise to begin with a distortion of the facts.  But that’s the inauspicious move taken today by the Emergency Committee for American Trade (ECAT), a corporate alliance that has launched a new “Trade Notes” series with some confused data on the record of U.S. trade under “free trade” agreements (FTAs).  

Official government data show that U.S. trade deficits have ballooned with FTA partners while actually diminishing with the rest of the world.  As we reported recently, the aggregate U.S. trade deficit with FTA partners has increased by more than $147 billion, or 443%, since the FTAs were implemented.  In contrast, the aggregate deficit with all non-FTA countries (even including China) has decreased by more than $130 billion, or 16%, since 2006 (the median entry date of existing FTAs). 

Two factors explain this proclivity toward trade deficits with FTA partner countries.  First, imports from those countries have spiked – an unsurprising result of a trade model that has incentivized offshoring and pitted U.S. workers against their lower-wage counterparts abroad.  Second, and perhaps more surprising, is that U.S. export growth to FTA partner countries, despite all promises to the contrary, has been slower than to non-FTA countries. Indeed, 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 30 percent over the last decade.

But that isn’t the takeaway from ECAT’s Trade Notes debut today.  In response to “some commentators [who] have argued that trade agreements drive growth in U.S. trade deficits,” ECAT asserts, “recent data suggest that trade agreements, on the whole, actually help to improve U.S. trade balances with FTA partner countries.” 

How can ECAT make this claim?  First, they take oil and gas out of the trade data. Echoing the refrain of many FTA proponents that burgeoning FTA deficits are just about oil imports, ECAT displays a chart that appears to show aggregate non-oil trade deficits with FTA partners diminishing and then turning into surpluses over the last decade.

But the official government data beg to differ.  Even if we remove oil and gas, the non-oil U.S. goods trade balance last year with all U.S. FTA partners was a $100 billion deficit, not a surplus. And while ECAT claims that the non-oil trade balance with FTA countries has been improving, the non-oil U.S. trade deficit with these 20 countries was larger last year than in any of the last six years. 

What, then, explains the gulf between the data and ECAT’s claim of a growing non-oil surplus with FTA countries?  The primary explanation is that ECAT – like the U.S. Trade Representative and fellow corporate conglomerates such as the Chamber of Commerce, National Association of Manufacturers, Business Roundtable, etc. – has decided to count foreign-made exports as U.S. exports.  As we’ve explained time and again, determining FTAs’ impacts on U.S. jobs requires counting only U.S.-made exports.  Instead, ECAT also counts “re-exports” – goods made abroad that are shipped through the United States en route to a final destination.  As re-exports to FTA partner countries have been steadily increasing, counting them in trade data – as ECAT does – has had an increasingly distortionary effect on the true record of FTAs (e.g. you can make the NAFTA deficit look half as big simply by counting foreign-made re-exports as U.S. exports). 

In announcing today’s new Trade Note series, ECAT President Calman Cohen stated, “ECAT member companies recognize the importance of maintaining a fact-based dialogue on the contribution of trade and investment to our national economic interest.  ECAT seeks to make a constructive contribution to that dialogue through its new Trade Notes series.”

We’re all for contributions to fact-based dialogue.  Let’s hope we start seeing some from ECAT.  

Categorie: Planet Not For Sale

Tratados de inversión revisados

Blog de Javier Echaide - 12 April, 2014 - 22:39
Por Martin Khor (*)Los tratados de inversión comienzan a ser cuestionados. Varios países los están revisando a raíz de la gran cantidad de demandas presentadas, alegando que los cambios en las políticas gubernamentales afectan sus ganancias futuras.Indonesia, por ejemplo, ya notificó a Holanda que dará por concluido su tratado bilateral de inversión y habría adelantado, además, que cancelará la totalidad de sus sesenta y siete tratados de este tipo, según informó la embajada del país europeo en Yakarta.De confirmarse esta noticia, Indonesia se sumaría a Sudáfrica, que el año pasado hizo un anuncio similar, tras la demanda de una empresa minera británica, que reclamó por pérdidas debido a las medidas gubernamentales destinadas a reparar las políticas del apartheid.Otros países también están revisando sus tratados bilaterales de inversión, impulsados por el aumento de demandas presentadas por empresas extranjeras con el argumento de que los cambios en las políticas o los contratos gubernamentales afectan sus ganancias futuras. La más importante fue presentada contra Ecuador, que debería compensar a la petrolera estadounidense OXY en 2,300 millones de dólares.El sistema que faculta a los inversores extranjeros a demandar a los gobiernos ante un tribunal internacional, evitando así la legislación nacional, es un tema de fuerte controversia en las negociaciones en curso del Acuerdo de Asociación Transpacífico (TPP).El sistema de solución de diferencias entre inversionistas y Estados está contenido en los tratados de libre comercio y en los bilaterales de inversión. Cuando se firmaron, varios países ignoraban que, en virtud de disposiciones vagamente redactadas, los inversionistas extranjeros podrían demandarlos con el argumento de que no fueron tratados con justicia o que les expropiaron sus posibles ganancias.Indonesia fue demandada por la empresa británica Churchill Mining ante el Centro Internacional de Arreglo de Diferencias Relativas a Inversiones (CIADI), con sede en Washington, con el argumento de que el gobierno había violado el Tratado Bilateral de Inversión firmado con el Reino Unido cuando se canceló su contrato con un gobierno local en Kalimantan y reclama una indemnización de mil millones de dólares. Éste es uno de los casos que llevaron al gobierno indonesio a revisar sus numerosos tratados de este tipo.India también está revisando sus tratados bilaterales de inversión, luego de que varias empresas de telefonía iniciaran juicios debido a que el Tribunal Supremo canceló sus licencias para servicios móviles 2G otorgadas en 2008 tras un escándalo de corrupción vinculado a su concesión.Pero no sólo los países en desarrollo están preocupados con el sistema de solución de diferencias entre inversionistas y Estados. La Unión Europea se muestra reticente con el mecanismo, similar al del TPP, contenido en la Asociación Transatlántica de Comercio e Inversiones (TTIP), el acuerdo que está negociando con Estados Unidos.Alemania expresó a la Comisión Europea que el TTIP no debe incluir dicho mecanismo y la ministra de Economía, Brigitte Zypries, dijo al parlamento alemán que el gobierno estaba decidido a excluir de este acuerdo los derechos de arbitraje, según informó el Financial Times. “Desde la perspectiva del gobierno federal [alemán], los inversores estadounidenses en la Unión Europea tienen suficiente protección jurídica en los tribunales nacionales”, aseveró.En Francia, la ministra de Comercio Exterior, Nicole Bricq, había manifestado su oposición a este mecanismo de arbitraje y en el Reino Unido, un informe encargado por el gobierno también presentó objeciones.La preocupación europea ante el arbitraje internacional de inversiones tiene dos causas. Las demandas también están afectando a los países de la Unión Europea. (Alemania, por ejemplo, fue llevada ante el CIADI por la compañía sueca Vattenfall, que argumentó haber perdido más de mil millones de euros por la decisión de Berlín de eliminar gradualmente la energía nuclear tras el desastre de Fukushima). Y causan alarma pública. (Un informe de dos organizaciones europeas que reveló la arbitrariedad de las decisiones, cómo el sistema está monopolizado por unas pocas grandes firmas de abogados y cómo los tribunales están plagados de conflictos de intereses conmocionó no solo a la sociedad civil sino también a las autoridades políticas europeas.)En enero, la Comisión Europea suspendió las negociaciones con Estados Unidos sobre las disposiciones del sistema de solución de diferencias entre inversionistas y Estados en el TTIP y anunció que sostendría consultas sobre el tema con la opinión pública durante noventa días.Hasta el momento, Estados Unidos insiste en mantener el sistema de solución de diferencias entre inversionistas y Estados en el TPP y el TTIP. Pero si la incipiente oposición europea afecta a las negociaciones del TTIP, podría afectar también a las del TPP, al fortalecer la posición de quienes se oponen a este mecanismo.Mientras tanto, debe esperarse que otros países quieran revisar sus tratados bilaterales de inversión. Los países en desarrollo que pretenden cancelar sus acuerdos con los países europeos pueden alegar ahora que también sus contrapartes tienen serias dudas sobre el sistema de solución de diferencias entre inversionistas y Estados.(*) Martin Khor fundador de TWN y director ejecutivo del Centro del Sur.
Categorie: Planet Not For Sale

TPP Foreign Policy Arguments Mimic False Claims Made for Past Pacts

Eyes on Trade - 10 April, 2014 - 23:47

New Report Debunks Notion of the Trans-Pacific Partnership as a Bulwark Against China, Catalogues Outcomes of Similar Geopolitical Claims Made About Pacts Since NAFTA 

As President Barack Obama’s Asia trip looms and proponents of the Trans-Pacific Partnership (TPP) increasingly pitch the deal as a bulwark against China’s rising influence, a report released today by Public Citizen reveals that nearly identical foreign policy arguments have consistently proven baseless when used to sell trade deals over the past two decades. The report reviews foreign policy claims made to promote the TPP, ranging from the absurd to the counterfactual, to those that repeatedly have been disproved by the actual outcomes of similar claims made for past pacts.

“The same old foreign policy arguments get trotted out to sell trade agreements after the economic case fails,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Repeatedly, Congress has approved bad deals based on dire predictions that failure to do so would mean diminished U.S. power,  the takeover of important markets by competitors or foreign instability, only to find that many of those predictions came true in spite of, and sometimes even because of, pacts’ enactment.”

While U.S. concerns about the implications of China’s rising economic power and influence are legitimate, the notion that the establishment – or not – of any specific U.S. trade agreement would control this process is contradicted by the record. Public Citizen’s study examines the outcomes of claims that past trade pacts would counter economic gains by Japan, Europe and China in trade-partner markets; strengthen U.S. foreign policy allies or thwart enemies; and improve U.S. national security.

Among the report’s findings:

  • Past free trade agreements (FTAs) failed to counter the rising economic influence of China (or Japan): From 2000 to 2011, U.S. FTAs with eight Latin American countries were sold as bulwarks against foreign economic influence in the hemisphere. The U.S. pacts were implemented and China’s exports to Latin America soared more than 1,280 percent, from $10.5 billion to more than $145 billion, while the U.S. saw only modest export growth. The U.S.-produced share of Latin America’s imported goods fell 36 percent, while China’s share increased 575 percent. Similarly, under the North American Free Trade Agreement’s (NAFTA) first 20 years, the U.S.-produced share of Mexico’s imported goods dropped from almost 70 percent to less than 50 percent, while China’s share rose more than 2,600 percent. Similarly, after hysterical claims that Japan would seize U.S. market share in Latin America by signing its own free trade agreements unless the United States approved NAFTA and other FTAs, such Japanese FTAs were signed anyway.
  • The TPP will not “contain” or isolate China: The report cites repeated statements by U.S. officials welcoming China as a prospective TPP member. How can the TPP isolate China if China is welcome to become a member? Administration officials note that China could join only if it agreed to the TPP’s rules, but those rules would give Chinese products duty-free access to the U.S. market and new foreign investor rights and privileges that would enhance China’s relative economic might within the United States. This may explain China’s statements of increased interest in joining the TPP. The TPP will not empower Pacific allies to act as a bulwark against Chinese influence, given that many of those nations see China as a partner. The report cites officials from TPP countries stating that if the TPP were to become a China-containment tool, they would no longer participate in TPP negotiations. 
  • The TPP is not a vehicle to impose “our” rules: The proposed TPP rules undercut the false, but conveniently scary, dichotomy used to sell the TPP: that we have a choice between using the pact to impose “our” rules internationally or living with rules set by China. This argument presumes the TPP to represent  “our” rules, but in fact many of the TPP’s terms reflect the narrow special interests of the 600 official U.S. corporate trade advisors that have shaped them. TPP investment rules would promote more U.S. job offshoring and further gut the U.S. manufacturing base that is essential for both our national security and domestic infrastructure. TPP procurement rules would ban Buy American policies that reinvest our tax dollars to create economic growth and jobs at home. TPP service sector rules would raise our energy prices and undermine our energy independence and financial stability. TPP drug and copyright terms would raise health care costs and thwart innovation. The study summarizes a recent U.S. Department of Defense report that concludes that U.S. deindustrialization poses a threat to national security and our nation’s economic wellbeing.

“Some politicians and pundits seem to hope that raising geopolitical issues that the TPP cannot affect will activate Americans’ anxieties about a rising China and distract from the real issue: Would the TPP benefit most Americans?” Wallach said. 

The report also catalogues decades of trade-pact foreign policy claims, revealing that recent administration arguments for the TPP echo, nearly word-for-word, the sales pitches used for past pacts. For example, Vice President Joe Biden recently called the TPP “a symbol of American staying power,” mirroring the 1993 NAFTA pitch by then-U.S. Rep. Dan Glickman (D-Kan.): “NAFTA has become a critical and yes, symbolic test of U.S. leadership.”

The many unfounded foreign policy claims that repeatedly have been used to push past FTAs and that are being recycled today to pitch the TPP include:

  • NAFTA: In 1993, then-U.S. Sen. John Kerry (D-Mass.) advocated for NAFTA, saying it would “contribute to the growth and the maturity of the Mexican economy and thereby alleviate some of the potential for social and political explosions which could set back progress.” But after 20 years of NAFTA, Mexico’s average growth rate ranked 18th out of the 20 Latin America nations. Indeed, NAFTA contributed to significant poverty and instability within Mexico by enabling a flood of subsidized U.S. corn that eliminated the livelihoods of 2.5 million Mexican farmers and agricultural workers. The mass dislocation contributed to a doubling of migration to the United States in NAFTA’s first seven years and fueled the violence of Mexico’s spiraling drug war. NAFTA failed to prevent the “social and political explosions” Kerry feared; if anything, it contributed to them.
  • CAFTA: In 2005, then-U.S. Sen. Bill Frist (R-Tenn.) argued for the Central America Free Trade Agreement (CAFTA) by saying: “Hugo Chavez moves Venezuela closer and closer to Castro every day. These regimes tend to work to spread their brutal methods and totalitarian philosophies, trying to infect the rest of Latin America and we simply cannot let them succeed. … By linking [Central America’s] economies with democratic capitalism, CAFTA will help gird these nations against the threats at their door.” Soon after CAFTA took effect, most CAFTA nations established close economic and political ties with Venezuela – the Dominican Republic, Honduras, Guatemala and Nicaragua all signed pacts with Venezuela to receive subsidized oil soon after CAFTA took effect.
  • Colombia FTA: In 2011, then-U.S. Rep. Geoff Davis (R-Ky.) pushed for passage of the Colombia FTA by arguing, “The trade agreement with Colombia will advance our national security interests by providing Colombians with alternatives to the drug trade.” Davis’ argument directly contradicts that of Colombia’s own Minister of Agriculture. Before the FTA was passed, the minister predicted that if the deal took effect, Colombian farmers would be unable to compete with an FTA-enabled influx of subsidized U.S. crops and “would have no more than three options: migration to the cities or other countries (especially the United States or bordering countries), leaving to work in drug cultivation zones, or affiliating with illegal armed groups.” In August 2013, thousands of Colombian farmers, facing falling incomes and displacement, blocked highways, launched a national strike and called for the repeal of the FTA.

“The TPP should be debated on the merits of its actual provisions and their likely outcomes, not on the basis of rehashed foreign policy talking points and national security hyperbole that have proved false in the past and that bear little connection to the actual TPP text,” said Wallach. 

Categorie: Planet Not For Sale

Colombia's Anti-Union Violence Remains Rampant after Three Years of the FTA-Enabling Labor Action Plan

Eyes on Trade - 8 April, 2014 - 14:57

Three years ago, the Obama administration signed a Labor Action Plan (LAP) with the Colombian government, promising that it would help rectify rampant labor rights abuses in Colombia, a country in which more than 3,000 unionists have been murdered since 1977.

Six months after its announcement, the LAP served as a fig leaf for the controversial Colombia “free trade” agreement (FTA), enabling the deal’s passage in the U.S. Congress. Trying to fend off criticism for pitting U.S. workers against Colombian workers who faced widespread labor abuses, the few Democratic members of Congress who voted for the deal pointed to the LAP as a solution to Colombia's labor rights crisis.  

Unions and congressional labor rights defenders in Colombia and the United States warned at the time of the FTA’s passage that the LAP would fail to alter the on-the-ground reality of anti-union repression. 

Sadly, they were right. 

In the three years since the LAP was unveiled, 73 Colombian unionists have been murdered, according to a report released today by Colombia’s National Union School, a group recognized by the LAP as an authoritative source of monitoring data. There were four more unionist murders in 2013 than in 2012.

Colombia’s workers have also endured 31 murder attempts and 953 death threats since the LAP was announced.  These crimes have not resulted in any captures, trials, or convictions. The overall impunity rate for unionist murders from 1977 through the present is 87%, while impunity for anti-union death threats stands at 99.9%. 

Colombia’s unions and the National Union School conclude that the decision to sign the LAP “was taken by the Colombian government as a step toward unfreezing the FTA with the United States rather than as an institutional mechanism to promote real protection of the labor and union rights that Colombian workers have lacked for so long.”

The same, unfortunately, could probably be said about some members of the U.S. Congress who were more interested in the LAP’s ability to provide political cover for the polemical Colombia FTA than its ability to provide relief to Colombia’s repressed workers.

Other members of Congress who supported the LAP with a sincere desire to improve the labor rights situation in Colombia (despite warnings from on-the-ground experts that the LAP would fail to do so) must feel betrayed by the administration officials who promised the LAP would herald such improvement.

Now the administration is making similar promises in pushing the Trans-Pacific Partnership (TPP), a sweeping deal with 11 Pacific Rim countries, including Vietnam.  While Vietnam does not share Colombia's history of widespread unionist murders, workers in Vietnam are prohibited from forming independent unions and are paid an average minimum wage of 52 cents per hour. And Vietnam's apparel industry, which could gain greater access to the U.S. market through the TPP, relies on forced labor and child labor.  

Administration officials are arguing, as they did in pushing the LAP and the Colombia FTA, that the TPP will provide an opportunity to curb labor rights abuses in Vietnam. Will the members of Congress who supported the ill-fated LAP once again buy into such promises?  Or will they heed the lesson of the ongoing repression faced by Colombia's workers?  

Categorie: Planet Not For Sale

Data Debunk for USTR Froman’s Thursday Committee Hearing

Eyes on Trade - 2 April, 2014 - 20:17

In recent weeks, U.S. Trade Representative Michael Froman has begun making outlandish claims about past U.S. trade agreements. These claims are not supported by the official  U.S. government trade data. The Office of the U.S. Trade Representative’s (USTR) recent assertions that the North American Free Trade Agreement (NAFTA) has led to a U.S. trade surplus with Mexico and Canada and that the U.S.-Korea Free Trade Agreement (FTA) has increased U.S. manufacturing exports to Korea have been met with incredulity. These pacts’ recent anniversaries have spotlighted how the trade pact model on which the Trans-Pacific Partnership (TPP) is premised has led to massive trade deficits.

The premise that NAFTA would improve our trade balance was the basis for NAFTA proponents’ promises that the pact would create U.S. jobs. Many of the same government and industry sources made the same claims to sell the 2011 U.S.-Korea FTA. These pacts’ dismal outcomes – slow or even negative export growth, rising imports and burgeoning trade deficits – are intensifying congressional opposition to Fast Track authority for the TPP.

Rather than altering the trade agreement model to avoid repeating these outcomes, USTR appears intent on trying to change the data. To generate the outlandish claims about NAFTA and the Korea FTA, USTR employs a smorgasbord of data tricks to look out for in Froman’s testimony Thursday before the House Ways and Means Committee:

USTR’s Biggest Distortion: Counting Foreign-Made “Transshipped” Products as U.S. Exports

USTR’s primary data distortion is the decision not to use the official U.S. government trade data provided by the U.S. International Trade Commission (USITC).[i] Instead, USTR cites data that include what are called “re-exports.” These are goods made abroad that are simply shipped through the United States en route to a final destination. (The USTR figures would include as U.S. exports goods taken off a truck from Canada in California’s Port of Long Beach then shipped to their final destination in Korea, or goods shipped from China, unloaded in a California port and trucked to Mexico.) Each month, USITC removes re-exports, which do not support U.S. production jobs, from the raw data gathered by the Census Bureau.[ii] But USTR uses the uncorrected data, inflating the actual U.S. export figures.

  • Using the official USITC data, U.S. export growth to countries with which we do not have FTAs has been 30 percent faster than to our FTA partners over the past decade.[iii]
  • The USITC data show U.S. average monthly goods exports to Korea are down 11 percent, imports from Korea have increased and the U.S. average monthly trade deficit with Korea has swelled 47 percent since the enactment of the Korea FTA.[iv] The total U.S. trade deficit with Korea under the FTA’s second year is projected to be $8.6 billion higher than in the year before the deal.[v]  Using the administration’s current export-to-job ratio, this drop in net exports represents the loss of more than 46,000 U.S. jobs.[vi] However since the FTA, foreign-made re-exports passing through the United States en route to Korea are up 13 percent on a monthly average basis.[vii] By counting these foreign goods as U.S. exports, USTR artificially diminishes the dramatic drop in actual U.S. exports to Korea, and errantly claims gains in some sectors.
  • Using the USITC data, the 2013 U.S. goods trade balance with NAFTA nations was a deficit of $177 billion. The combined U.S. goods and services deficit with Mexico and Canada rose (in real, inflation-adjusted terms) from $9.7 billion in 1993 to $139.3 billion in 2012 (the year of comparison used by USTR).[viii] This NAFTA deficit increase of $129.5 billion, or 1,330 percent, represents hundreds of thousands of lost U.S. jobs.[ix]  But adding re-exports has had an increasingly distortionary effect on the true NAFTA deficit, allowing NAFTA proponents to make the 2013 NAFTA goods deficit of $177 billion look less than half as large. By incorporating re-exports, USTR claims in recent press materials: “U.S. total goods and private services trade balance with Canada countries (sic) shifted from a deficit of $2.9 billion in 1993 to roughly balance in 2012 (surplus of $37 million).” But after removing re-exports and adjusting for inflation, the actual total U.S. goods and services trade deficit with Canada increased from $16.9 billion in 1993 to $49.1 billion in 2012. That’s a deficit increase of $32.2 billion, or 191 percent. Similarly, USTR claims: “U.S. total goods and private services trade balance with Mexico countries shifted from a surplus of $4.6 billion in 1993 to a deficit of $49.4 billion in 2012.” But after removing re-exports and adjusting for inflation, the actual total U.S. goods and services trade deficit with Mexico changed from a $7.2 billion surplus in 1993 to a $90.1 billion deficit in 2012. That’s a $97.3 billion decline in the U.S. goods and services trade balance with Mexico.

We Still Have Big Deficits Without Fossil Fuels (And Corn Doesn’t Explain Korea Export Crash)

Despite USTR’s claim that our NAFTA deficit is all about fuel imports, the share of the U.S. NAFTA goods trade deficit that is comprised of petroleum, petroleum products and natural gas has declined under NAFTA, from 77 percent in 1993 to 53 percent in 2013, as we have faced a surge of imported manufactured and agricultural goods.[x] Even if one removes all of these “oil” categories from the balance, the remaining 2013 NAFTA goods trade deficit was $82.9 billion. The combined NAFTA goods and services deficit in 2012 minus oil was $38.3 billion. 

Similarly, with respect to the Korea FTA, USTR claims“[O]ur trade balance has been affected by decreases in corn and fossil fuel exports, changes that are due to the U.S. drought in 2012 and change in Korea’s energy mix.”[xi] But even discounting both corn and fossil fuels, U.S. monthly exports to Korea still fell under the FTA, and the monthly trade deficit with Korea still ballooned.[xii] USTR claims that corn and fossil fuels explain the entirety of the export downfall largely by using an ill-suited 2011 versus 2013 timeframe that omits 10 months of available data and relies on a less relevant pre-FTA baseline. Usage of this less accurate timeframe produces a greater drop in corn and fossil fuel exports, and a smaller decline in exports of all other goods, than has actually occurred under the FTA when comparing the year immediately preceding the FTA with the full set of available post-FTA data. It is not surprising that the dismal FTA record remains without these products, given that of the 15 U.S. sectors that export the most to Korea, 11 of them have experienced export declines under the FTA.[xiii] No product-specific anomalies can explain away what has been a broad-based downfall of U.S. exports to Korea since the pact went into effect.

Not Adjusting for Inflation Counts Increased Prices as an Increase in U.S. Exports

USTR also inflates U.S. exports to Korea by failing to adjust for price inflation. For instance, in its recent Korea FTA news release, USTR claims: “In the two years that this landmark agreement has been in effect … exports of U.S. manufactured goods to Korea have increased … Made-in-America manufactured goods still grew their sales in Korea by 3 percent.”[xiv] Simply adjusting for inflation alone completely erases USTR’s claim of growth in exports of U.S. manufactured goods to Korea under the FTA. That is, even if one includes the distortion of re-exports and uses USTR’s timeframe, U.S. exports to Korea of manufactured goods fell slightly under the FTA after properly accounting for price increases.[xv] If one removes the re-exports (i.e., uses the official USITC data) and looks at the actual months that the FTA has been in effect, U.S. monthly exports to Korea of manufactured goods have fallen 5 percent on average relative to the year before the deal took effect. The United States has lost an average of more than $150 million each month in manufactured goods exports to Korea under the FTA. Manufacturing sectors that provide critical shares of U.S. exports to Korea, such as machinery and computers/electronics, have experienced steep export declines under the FTA (11 percent and 12 percent respectively). In contrast, of the four critical manufacturing sectors that have seen increases in average monthly exports to Korea under the FTA, none has experienced an increase of greater than 2 percent.[xvi]

Cherry-Picking Small-Dollar Winning Sectors, Omitting Major Losers to Distract from Net Losses

In its Korea FTA press release, USTR claims: “U.S. exports of a wide range of agricultural products have seen significant gains. … There were also dramatic increases in U.S. exports of key agricultural products that benefit from reduced tariffs under KORUS, including dairy, wine, beer, soybean oil, fruits and nuts, among many others.”[xvii] But the losses in U.S. meat exports to Korea under the pact alone nearly cancel out the combined export gains for all agricultural sectors that USTR touts as winners (a monthly average loss of $20.1 million in meat exports versus a combined $24.7 million monthly average gain in exports of dairy, wine, beer, soybean oil, fruits and nuts).[xviii]Average monthly exports of all U.S. agricultural products to Korea have fallen 41 percent under the FTA in comparison to the year before the deal. Ignoring this overall result, USTR singles out fruit as a winning agricultural sector under the FTA. But U.S. monthly average exports to Korea of all fruits have increased by just $312,120 under the FTA. This 1 percent increase could hardly be described as “dramatic.” USTR also highlights wine, but U.S. monthly average exports of wine to Korea have increased by just $370,378 under the FTA.[xix] The amount of wine sold in an average six minutes in the United States is worth more ($402,415) than the gain in U.S. wine exports to Korea in an average month under the Korea FTA.[xx]

Such paltry gains pale in comparison to the more than $20 million lost on average under each month of the FTA in U.S. exports to Korea of meat – one of the sectors that the administration promised would be among the biggest beneficiaries of the Korea deal.[xxi] Compared with the exports that would have been achieved at the pre-FTA average monthly level, U.S. meat producers have lost a combined $442 million in poultry, pork and beef exports to Korea in the first 22 months of the FTA.[xxii]Since the FTA, U.S. average monthly exports of poultry to Korea have fallen 39 percent below the pre-FTA monthly average. U.S. poultry exports to Korea have been lower than the pre-FTA monthly level in every single month since the FTA’s implementation. U.S. average monthly exports of pork to Korea since the FTA have fallen 34 percent below the pre-FTA monthly average, and U.S. average monthly exports of beef to Korea have fallen 6 percent below the pre-FTA monthly average.[xxiii]

Omissions and Data Tricks to Hide Massive Auto Sector Deficit Growth Under the Korea FTA

The USTR data on U.S. automotive trade with Korea under the FTA is based on a series of tricks. USTR claims: “Since the Korea agreement went into effect, U.S. exports to Korea are up for our manufactured goods, including autos … overall U.S. passenger vehicle exports to Korea increased 80 percent compared to 2011, and sales of ‘Detroit 3’ vehicles are up 40 percent.”[xxiv] In fact, exports to Korea of U.S.-produced Fords, Chryslers and General Motors vehicles increased by just 3,400 vehicles from 2011 to 2013.[xxv]  But given that pre-FTA exports of “Detroit 3” vehicles was also tiny – 8,252 vehicles – USTR can express the small increase of 3,400 cars as a “40 percent” gain. Meanwhile, 125,000 more Korean-produced Hyundais and Kias were imported and sold in the United States in 2013 (after the FTA) than in 2011 (before the FTA), when Hyundai and Kia imports already topped 1.1 million vehicles.[xxvi]

And USTR’s claim of an “80 percent” rise in passenger vehicle exports, in addition to being inflated by increases in re-exports and prices, omits the export of auto parts, which constitute the majority of the value of U.S. automotive exports to Korea. U.S. average monthly exports of auto parts to Korea have fallen 12 percent under the FTA, offsetting much of the rise in passenger vehicle exports.[xxvii] After including auto parts, excluding foreign-made re-exports, using the more FTA-relevant timeframe and adjusting for inflation, U.S. average monthly automotive exports to Korea have increased by only 12 percent under the FTA, while average monthly automotive imports from Korea have risen by 19 percent.

The disparity is even starker in dollar terms: While U.S. average monthly automotive exports to Korea under the FTA have been $12 million higher than the pre-FTA monthly average, average monthly automotive imports from Korea have soared by $263 million under the deal. The tiny gains in U.S. exports have been swamped by a surge in auto imports from Korea that the administration promised would not occur because of its additional FTA auto sector measure negotiated in 2011. In January 2014, monthly automotive imports from Korea topped $2 billion for the first time on record. The post-FTA flood of automotive imports has provoked a 19 percent increase in the average monthly U.S. auto trade deficit with Korea.[xxviii]

Using a Selective Time Frame to Measure the Outcomes of the Korea FTA

Rather than compare the post-Korea-FTA period to the 12 months prior to the FTA’s implementation (i.e., April 2011 through March 2012), USTR uses calendar year 2011 as a baseline. This means that USTR omits data from the three months immediately prior to the FTA’s 2012 implementation (January through March 2012) and replaces it with data from the same three months in 2011. This difference matters, since U.S. exports to Korea in the first three months of 2011 were 9 percent lower than in the first three months of 2012, giving USTR a lower baseline of comparison that makes the downfall in U.S. exports look less severe than if using the three most recent pre-FTA months.[xxix] In addition, USTR uses only calendar year 2013 to assess the FTA’s record, omitting 10 months of available post-FTA data (April through December 2012 and January 2014). While a comparison between 2011 and 2013 could serve as a second-best approximation in the absence of more precise data, the more FTA-relevant monthly data is readily available.

 

[i] USITC data can be found at U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb.” Available at: http://dataweb.usitc.gov/.

[ii] Census Bureau data can be found at U.S. Census Bureau, “U.S. International Trade Data,” U.S. Department of Commerce. Available at: http://www.census.gov/foreign-trade/data/.

[iii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed February 11, 2014. Available at: http://dataweb.usitc.gov/. The statistic is a comparison of the average annual growth rate of the combined inflation-adjusted exports of all non-FTA partner countries versus that of all FTA partner countries from 2004 through 2013 (adjustments have been made to account for the changes in these two categories as  non-FTA partners have become FTA partners). All data in this memo is inflation-adjusted according to the CPI-U-RS index of the U.S. Bureau of Labor Statistics (which provides indices up through 2012) and the online inflation calculator of the U.S. Bureau of Labor of Statistics (which provides an approximate index for 2013). U.S. Bureau of Labor Statistics, “Consumer Price Index Research Series Using Current Methods (CPI-U-RS),” U.S. Department of Labor, updated March 29, 2013. Available at: http://www.bls.gov/cpi/cpiursai1978_2012.pdf.  U.S. Bureau of Labor Statistics, “CPI Inflation Calculator,” U.S. Department of Labor, accessed March 10, 2014. Available at: http://www.bls.gov/data/inflation_calculator.htm.

[iv] In this paragraph and throughout, figures concerning average monthly trade levels with Korea compare data from the year before the FTA’s implementation and from the 22 post-implementation months for which data are available. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[v] The projection for export losses under the FTA’s first two years assumes that trends during the FTA’s first 22 months continue for the remaining two months for which data are not yet available. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[vi] Michael Froman, “2014 Trade Policy Agenda and 2013 Annual Report of the President of the United States on the Trade Agreements Program,” Office of the U.S. Trade Representative, March 2014, at 2. Available at: http://www.ustr.gov/sites/default/files/2014%20Trade%20Policy%20Agenda%20and%202013%20Annual%20Report.pdf.    

[vii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[viii] Goods trade data in this bullet point come from U.S. International Trade Commission, “Interactive Tariff and Trade Dataweb,” accessed February 20, 2014. Available at: http://dataweb.usitc.gov. Services trade data in this bullet point come from U.S. Bureau of Economic Analysis, “International Data: Table 12: U.S. International Transactions, by Area,” accessed February 20, 2014. Available at: http://www.bea.gov/iTable/iTable.cfm?ReqID=6&step=1#reqid=6&step=1&isuri=1.

[ix] See Robert Scott, “Heading South: U.S.-Mexico trade and job displacement after NAFTA,” Economic Policy Institute, May 3, 2011. Available at: http://www.epi.org/publication/heading_south_u-s-mexico_trade_and_job_displacement_after_nafta1/.

[x] Trade in petroleum, petroleum products and natural gas is defined as NAICS 2111 and 3241 for data since 1997 – when NAICS replaced the SIC classification system – and SIC 131, 291, 295, and 299 for data before 1997.

[xi] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xii] Corn is defined as NAICS 111150 and fossil fuels are defined as NAICS 211111, 211112, 212112 and 212113. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xiii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xiv] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xv] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xvi] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xvii] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xviii] “Meat” includes beef (defined as SITC 011), pork (defined as SITC 0122, 0161 and 0175) and poultry (defined as SITC 0123 and 0174). Dairy is defined as NAICS 2111511, 311512, 311513, 311514 and 311520. Wine is defined as NAICS 312130. Beer is defined as NAICS 312120. Soybean oil is defined as NAICS 311222 and 311224. Fruits are defined as NAICS 11310, 11320, 111331, 111332, 111333, 111334 and 111339. Nuts are defined as NAICS 111335 and 111992. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 21, 2014.  Available at: http://dataweb.usitc.gov/.

[xix] Fruits are defined as NAICS 11310, 11320, 111331, 111332, 111333, 111334 and 111339. Wine is defined as NAICS 312130. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xx] The statistic is based on an estimated $34.6 billion in wine sales in the United States in 2012, adjusted for inflation. The Wine Institute, “2012 California and U.S. Wine Sales,” 2013, accessed March 21, 2014. Available at: https://www.wineinstitute.org/resources/statistics/article697.

[xxi] “Meat” includes beef (defined as SITC 011), pork (defined as SITC 0122, 0161 and 0175) and poultry (defined as SITC 0123 and 0174). Dairy is defined as NAICS 2111511, 311512, 311513, 311514 and 311520. Wine is defined as NAICS 312130. Beer is defined as NAICS 312120. Soybean oil is defined as NAICS 311222 and 311224. Fruits are defined as NAICS 11310, 11320, 111331, 111332, 111333, 111334 and 111339. Nuts are defined as NAICS 111335 and 111992. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 21, 2014.  Available at: http://dataweb.usitc.gov/.

[xxii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxiii] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxiv] Office of the U.S. Trade Representative, “U.S.-Korea Free Trade Agreement Shows Strong Results on Second Anniversary,” USTR press release, March 12, 2014. Available at: http://www.ustr.gov/about-us/press-office/press-releases/2014/March/US-Korea-Free-Trade-Agreement-Shows-Strong-Results-on-Second-Anniversary.

[xxv] Korea Automobile Importers & Distributors Association, “New Registration,” 2014, accessed March 10, 2014. Available at: http://www.kaida.co.kr/en/statistics/NewRegistList.do.

[xxvi] Timothy Cain, “Hyundai-Kia Sales Figures,” GoodCarBadCar.net, 2014, accessed March 10, 2014. Available at: http://www.goodcarbadcar.net/2012/10/hyundai-kia-group-sales-figures.html.

[xxvii] Passenger vehicles are defined as code 300 and 301 in the one-digit End Use classification system, while auto parts are defined as 302. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxviii] Total automotive exports and imports are defined as code 3 in the one-digit End Use classification system. U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

[xxix] U.S. International Trade Commission, “Interactive Tariff and Trade DataWeb,” accessed March 10, 2014.  Available at: http://dataweb.usitc.gov/.

Categorie: Planet Not For Sale

Unasur analiza la creación de un Centro de Solución de Controversias en ...

Blog de Javier Echaide - 31 March, 2014 - 20:04
Esta es la posición de la República de Ecuador sobre la creación de un centro alternativo de arbitraje regional en materia de inversiones en el ámbito del UNASUR.

Categorie: Planet Not For Sale

U.S. Trade Deficits Have Grown More Than 440% with FTA Countries, but Declined 16% with Non-FTA Countries

Eyes on Trade - 28 March, 2014 - 13:21

The aggregate U.S. goods trade deficit with Free Trade Agreement (FTA) partners is more than five times as high as before the deals went into effect, while the aggregate deficit with non-FTA countries has actually fallen. The key differences are soaring imports into the United States from FTA partners and lower growth in U.S. exports to those nations than to non-FTA nations. Incredibly, the U.S. Chamber of Commerce website states, “For those worried about the U.S. trade deficit, trade agreements are clearly the solution – not the problem.” Their pitch ignores the import surges contributing to growing deficits and job loss, while their export “data” is inflated, using tricks described below.

The aggregate U.S. trade deficit with FTA partners has increased by more than $147 billion (inflation-adjusted) since the FTAs were implemented. In contrast, the aggregate deficit with all non-FTA countries has decreased by more than $130 billion since 2006 (the median entry date of existing FTAs). Two reasons: a sharp increase in imports from FTA partners and significantly lower export growth to FTA partners than to non-FTA nations over the last decade. Using the Obama administration’s net exports-to-jobs ratiothe FTA trade deficit surge implies the loss of about 800,000 U.S. jobs. Trade with Canada and Mexico (our first and third largest trade partners, respectively) contributed the most to the widening FTA deficit. Under the North American Free Trade Agreement (NAFTA), the U.S. deficit with Canada ballooned and the small U.S. surplus with Mexico turned into a nearly $100 billion deficit. The trend persists under new FTAs – two years into the Korea FTA, the U.S. trade deficit with Korea has jumped more than 51 percent. Reducing the massive trade deficit requires a new trade agreement model, not more of the same.

U.S. Export Growth Falters under FTAs

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 30 percent over the last decade. Between 2003 and 2013, U.S. goods exports to FTA partner countries grew by an annual average rate of only 4.9 percent. Goods exports to non-FTA partner countries, by contrast, grew by 6.3 percent per year on average. Since 2006, when the number of FTA partner countries nearly doubled with the implementation of the Central America Free Trade Agreement (CAFTA), the FTA export growth “penalty” has only increased. Since then, average U.S. export growth to non-FTA partner countries has topped average export growth to FTA partners by 47 percent.

Corporate FTA Boosters Use Errant Methods to Claim Higher Exports under FTAs

Members of Congress will invariably be shown data by defenders of our status quo trade policy that appear to indicate that FTAs have generated an export boom. Indeed, to promote congressional support for new NAFTA-style FTAs, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) have funded an entire body of research designed to create the appearance that the existing pacts have both boosted exports and reversed trade deficits with FTA partner countries. This work relies on several methodological tricks that fail basic standards of accuracy:

  • Ignoring imports: U.S. Chamber of Commerce studies regularly omit mention of soaring imports under FTAs, instead focusing only on exports. But any study claiming to evaluate the net impact of trade deals must deal with both sides 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 seen under FTAs.
  • Counting “re-exports:” NAM has misleadingly claimed that the United States has a manufacturing surplus with FTA nations by counting as U.S. exports goods that actually are made overseas – not by U.S. workers. NAM’s data include “re-exports” – goods made elsewhere that are shipped through the United States en route to a final destination. Determining FTAs’ impact on U.S. jobs requires counting only U.S.-made exports.
  • Omitting major FTAs: The U.S. Chamber of Commerce has repeatedly claimed that U.S. export growth is higher to FTA nations that to non-FTA nations by simply omitting FTAs that do not support their claim. One U.S. Chamber of Commerce study omitted all FTAs implemented before 2003 to estimate export growth. This excluded major FTAs like NAFTA that comprised more than 83 percent of all U.S. FTA exports. Given NAFTA’s leading role in the 443 percent aggregate FTA deficit surge, its omission vastly skews the findings.
  • Failing to correct for inflation: U.S. Chamber of Commerce studies that have claimed high FTA export growth have not adjusted the data for inflation, thus errantly counting price increases as export gains.
  • Comparing apples and oranges: The U.S. Chamber of Commerce has claimed higher U.S. exports under FTAs by using two completely different methods to calculate the growth of U.S. exports to FTA partners (an unweighted average) versus non-FTA partners (a weighted average). This inconsistency creates the false impression of higher export growth to FTA partners by giving equal weight to FTA countries that are vastly different in importance to U.S. exports (e.g. Canada, where U.S. exports exceed $251 billion, and Bahrain, where they do not reach $1 billion), despite accounting for such critical differences for non-FTA countries.

Chart: U.S. Trade Deficit Rises by $147 Billion with FTA Partners, Falls by $131 Billion with Rest of the World


Categorie: Planet Not For Sale

Nanotechnology Risk to Soil Health

Language:  English IATP author(s):  Dr. Steve Suppan File:  2014_02_19_Biosolids_Nanomaterials_SS.pdf Overview: Nanotechnology and its application to agriculture and food The application of nanotechnology techniques and engineered nanoscale materials (ENMs) to agricultural inputs is one of the means proposed for the “sustainable intensification” of agricultural crop production. The United Nations Food and Agriculture Organization (FAO) uses this term to describe techniques to increase yield in internationally traded crops to feed the project nine billion global population of 2050. Despite the current lack of nanotechnology specific risk assessment metrics, and nano-specific mandatory regulation, a FAO/World Health Organization expert report stated, “It is expected that...

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Administration Uses Data Omissions and Distortions to Try to Hide Dismal Korea FTA Realities

Eyes on Trade - 13 March, 2014 - 14:47

The Office of the U.S. Trade Representative (USTR) disseminated a press release yesterday riddled with false claims about the record of the U.S. “free trade” agreement (FTA) with Korea, which turns two years old this week. The release attempts to obscure the fact that two years after the pact went into effect, the actual outcomes are exactly the opposite of the “more exports, more jobs” that the administration promised: U.S. monthly goods exports to Korea are down 11 percent, imports from Korea have increased and the U.S. monthly trade deficit with Korea has swelled 47 percent.

To set the record straight, here are USTR’s claims, followed by the Korea FTA’s inconvenient realities according to the official U.S. government trade data provided by the U.S. International Trade Commission. For a detailed, data-driven review of the Korea FTA’s two-year record, click here for Public Citizen’s new report: “Korea FTA Outcomes on the Pact’s Second Anniversary.”

USTR Claim: “In the two years that this landmark agreement has been in effect…exports of U.S. manufactured goods to Korea have increased” … “Made-in-America manufactured goods still grew their sales in Korea by 3 percent”

Reality: U.S. monthly exports to Korea of manufactured goods have fallen 5 percent on average relative to the year before the deal took effect. The United States has lost an average of more than $150 million each month in manufactured exports to Korea under the FTA. Manufacturing sectors that provide critical shares of U.S. exports to Korea, such as machinery and computers/electronics, have experienced steep export declines under the FTA (11 percent and 12 percent respectively). In contrast, of the four critical manufacturing sectors that have seen increases in average monthly exports to Korea under the FTA, none has experienced an increase of greater than 2 percent.

USTR Claim: “Since the Korea agreement went into effect, U.S. exports to Korea are up for our manufactured goods, including autos” (Ambassador Froman) … “overall U.S. passenger vehicle exports to Korea increased 80 percent compared to 2011, and sales of “Detroit 3” vehicles are up 40 percent.”

Reality:  Exports to Korea of U.S.-produced Fords, Chryslers and Cadillacs increased by just 3,400 vehicles from 2011 to 2013.  But given that pre-FTA exports of “Detroit 3” vehicles was also tiny – 8,252 vehicles – USTR can express the small increase of 3,400 cars as a “40 percent” gain. Meanwhile, 125,000 more Korean-produced Hyundais and Kias were imported and sold in the United States in 2013 (after the FTA) than in 2011 (before the FTA), when Hyundai and Kia imports already topped 1.1 million vehicles. Overall, while U.S. average monthly automotive exports to Korea under the FTA have been $12 million higher than the pre-FTA monthly average, average monthly automotive imports from Korea have soared by $263 million under the deal – a 19 percent increase. The tiny gains in U.S. exports have been swamped by a surge in auto imports from Korea that the administration promised would not occur because of its additional FTA auto sector measure negotiated in 2011. In January 2014, monthly automotive imports from Korea topped $2 billion for the first time on record. The post-FTA flood of automotive imports has provoked a 19 percent increase in the average monthly U.S. auto trade deficit with Korea.

USTR Claim: “…U.S. exports of a wide range of agricultural products have seen significant gains.”…  “There were also dramatic increases in U.S. exports of key agricultural products that benefit from reduced tariffs under KORUS, including dairy, wine, beer, soybean oil, fruits and nuts, among many others.”

Reality: Average monthly exports of all U.S. agricultural products to Korea have fallen 41 percent under the FTA in comparison to the year before the deal – a decline of $125 million per month. USTR omits the overall U.S. agricultural export record in its release, apparently hoping to distract from the net decline in agricultural exports by cherry picking a few products that have seen export gains. Meanwhile, some of the agricultural sectors that the administration promised would be the biggest beneficiaries of the Korea FTA – such as the meat industry – have been among the largest losers. Compared with the exports that would have been achieved at the pre-FTA average monthly level, U.S. meat producers have lost a combined $442 million in poultry, pork and beef exports to Korea in the first 22 months of the FTA – a loss of more than $20 million in meat exports every month. Since the FTA, U.S. average monthly exports of poultry to Korea have fallen 39 percent below the pre-FTA monthly average. U.S. poultry exports to Korea have been lower than the pre-FTA monthly level in every single month since the FTA’s implementation. U.S. average monthly exports of pork to Korea since the FTA have fallen 34 percent below the pre-FTA monthly average, and U.S. average monthly exports of beef to Korea have fallen 6 percent below the pre-FTA monthly average.

USTR Claim: “…Koreans are buying more U.S. services than ever…”…  “Exports of services to Korea increased an estimated 18.5 percent between 2011 and 2013, to an estimated $19.4 billion.”

Reality: Growth in U.S. services exports to Korea has actually slowed under the FTA. While U.S. services exports to Korea increased at an average quarterly rate of 3.0 percent in the year before the FTA took effect, the average quarterly growth rate has fallen to 2.3 percent since the deal’s enactment – a 24 percent drop. The pre-FTA year used as a baseline was not an anomaly – taking into account the full 13 pre-FTA years for which data are available, the long-term average pre-FTA quarterly growth rate for U.S. services exports to Korea was 2.9 percent, 21 percent higher than the post-FTA rate.

USTR Claim: “While our trade balance has been affected by decreases in corn and fossil fuel exports, changes that are due to the U.S. drought in 2012 and change in Korea’s energy mix, both of which were unrelated to the agreement” (Ambassador Froman) 

Reality: Corn and fossil fuels do not account for most of the crash in U.S. exports to Korea since the FTA. After removing corn, average monthly U.S. agricultural exports to Korea still declined under the deal. And after removing all fossil fuels (oil, natural gas and coal), the overall post-FTA decrease in U.S. average monthly exports to Korea barely budges, shifting from an 11 percent downfall to a 10 percent downfall. Even if discounting both corn and fossil fuels, U.S. monthly exports to Korea still fell under the FTA, and the monthly trade deficit with Korea still ballooned. It is not surprising that the dismal FTA record remains without these products, given that of the 15 U.S. sectors that export the most to Korea, 11 of them have experienced export declines under the FTA. No product-specific anomalies can explain away what has been a broad-based downfall of U.S. exports to Korea since the pact went into effect. Those losses amount to an 11 percent decline in average monthly exports to Korea that, combined with a 4 percent increase in average monthly imports, have caused the average monthly U.S. trade deficit with Korea to swell 47 percent under the FTA. The total U.S. trade deficit with Korea under the FTA’s second year is projected to be $8.6 billion higher than in the year before the deal. Using the administration’s current export-to-job ratio, this drop in net U.S. exports to Korea in the FTA’s first two years represents the loss of more than 46,600 U.S. jobs.

USTR Claim: “Slow economic growth in Korea between 2012 and2013 dampened demand for imports”

Reality: Korea’s GDP growth rate for 2013 is estimated to be higher than in both 2012 and 2011. And in 2012 (the first year of the FTA), Korea’s gross national income grew 2.3 percent and final consumption expenditures grew 2.2 percent. Since enactment of the Korea FTA, Koreans have been purchasing more goods overall, while purchasing fewer U.S. goods.

USTR Claim: “KORUS has also improved Korea’s investment environment through strong provisions on intellectual property rights, services, and investment, supporting U.S. exports.”

Reality: The Korea FTA included extraordinary foreign investor privileges that incentivize the export of U.S. investment, not the export of U.S. products, thereby promoting the offshoring of U.S. jobs. The deal’s “investor-state” terms provide special benefits to firms that relocate abroad and eliminate many of the usual risks that make firms think twice about moving out of the United States. New incentives for U.S. firms to relocate to Korea under the pact include a guaranteed minimum standard of treatment in Korea and compensation for regulatory costs, including the right to obtain government compensation simply because a regulation is altered after a foreign investment is established. U.S. firms that offshore production to Korea are also empowered to skirt Korea’s domestic legal system and directly “sue” the government in World Bank and U.N. tribunals comprised of three private attorneys. Such extraordinary privileges have already incentivized widespread offshoring under existing U.S. FTAs.

Categorie: Planet Not For Sale

On 2nd Anniversary of Korea FTA, U.S. Exports Down, Imports Up and Trade Deficit Balloons, Fueling Congressional TPP Skepticism

Eyes on Trade - 12 March, 2014 - 19:32

Export Decline Hits U.S. Farmers and Auto Workers Particularly Hard, Dismal Outcomes of Pact Used as TPP Template Will Bolster Opposition to Obama Bid for Fast Track Authority

Two years after the implementation of the U.S.-Korea Free Trade Agreement (FTA), government data reveal that the Obama administration’s promises that the pact would expand U.S. exports and create U.S. jobs are exactly opposite of the actual outcomes: a downfall in U.S. exports to Korea, rising imports and a surge in the U.S. trade deficit with Korea. Using the administration’s export-to-job ratio, the estimated drop in net U.S. exports to Korea in the FTA’s first two years represents the loss of more than 46,600 U.S. jobs.

The damaging Korea FTA record, detailed in a new Public Citizen report, undermines the administration’s attempt to use the same failed export growth promises to sell an already skeptical Congress on Fast Track authority for the Trans-Pacific Partnership (TPP), a sweeping deal for which the Korea FTA was the template.

Contrary to the administration’s promise that the Korea FTA would mean “more exports, more jobs”:

  • U.S. goods exports to Korea have fallen below the pre-FTA average monthly level for 21 out of 22 months since the deal took effect.  See graph below.
  • The United States has lost an average of $385 million each month in exports to Korea, given an 11 percent decline in the average monthly export level in comparison to the year before the deal.
  • The United States lost an estimated, cumulative $9.2 billion in exports to Korea under the FTA’s first two years, compared with the exports that would have been achieved at the pre-FTA level.
  • Average monthly exports of U.S. agricultural products to Korea have fallen 41 percent.
  • The average monthly U.S. automotive trade deficit with Korea has grown 19 percent.

The U.S. exports downfall is particularly concerning given that Korea’s overall imports from all countries increased by 2 percent over the past two years (from 2011 to 2013).

The average monthly trade deficit with Korea has ballooned 47 percent in comparison to the year before the deal. As U.S. exports to Korea have declined under the FTA, average monthly imports from Korea have risen four percent. The total U.S. trade deficit with Korea under the FTA’s just-completed second year is projected to be $8.6 billion higher than in the year before the deal, assuming that trends during the FTA’s first 22 months continue for the remaining two months for which data is not yet available.

Meanwhile, U.S. services exports to Korea have slowed under the FTA. While U.S. services exports to Korea increased at an average quarterly rate of 3 percent in the year before the FTA took effect, the average quarterly growth rate has fallen to 2.3 percent since the deal’s enactment – a 24 percent drop.

“Most Americans won’t be surprised that another NAFTA-style deal is causing damage, but it’s stunning that the administration thinks the public and Congress won’t notice if it recycles the promises used to sell the Korea pact – now proven empty – to push a Trans-Pacific deal that is literally based on the Korea FTA text,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The new evidence of the Korea FTA’s damaging record is certain to make it even more difficult for the Obama administration to get Congress to delegate its constitutional trade authority via Fast Track for the TPP.”

The decline in U.S. exports under the Korea FTA contributed to an overall zero percent growth in U.S. exports in 2013, rendering virtually impossible Obama’s stated goal to double exports by the end of 2014. At the export growth rate seen over the past two years, the export-doubling goal would not be reached until 2054. While the Korea pact is the only U.S. FTA that has led to an actual decline in U.S exports, the overall growth of U.S. exports to nations that are not FTA partners has exceeded combined U.S. export growth to U.S. FTA partners by 30 percent over the past decade.

“The data simply do not support the Obama administration’s tired pitch that more FTAs will bring more exports,” said Wallach. “Faced with falling exports and rising, job-displacing deficits under existing FTAs, the administration needs to find a new model, not to repackage an old one that patently failed.”

The Korea FTA has produced very few winners; since the FTA took effect, U.S. average monthly exports to Korea have fallen in 11 of the 15 sectors that export the most to Korea, relative to the year before the FTA (see graph below). And while losing sectors have faced relatively steep export declines (e.g. a 12 percent drop in computer and electronics exports, a 30 percent drop in mineral and ore exports), none of the winning sectors has experienced an average monthly export increase of greater than two percent. Ironically, many sectors that the administration promised would be the biggest beneficiaries of the Korea FTA have been some of the deal’s largest losers.


AGRICULTURE: While the administration argued for passage of the FTA in 2011 by claiming, “The U.S.-Korea trade agreement creates new opportunities for U.S. farmers, ranchers and food processors seeking to export to Korea’s 49 million consumers,” average monthly exports of U.S. agricultural products to Korea have fallen 41 percent under the FTA.

  • U.S. average monthly poultry exports to Korea have fallen 39 percent.
  • U.S. average monthly pork exports to Korea have fallen 34 percent.
  • U.S. average monthly beef exports to Korea have fallen 6 percent.

Compared with the exports that would have been achieved at the pre-FTA average monthly level, U.S. meat producers have lost a combined $442 million in poultry, pork and beef exports to Korea in the first 22 months of the Korea deal – a loss of more than $20 million in meat exports every month.

AUTOS AND AUTO PARTS: The administration also promised the Korea FTA would bring “more job-creating export opportunities in a more open and fair Korean market for America’s auto companies and auto workers,” while a special safeguard would “ensure… that the American industry does not suffer from harmful surges in Korean auto imports due to this agreement.” The U.S. average monthly automotive exports to Korea under the FTA have been $12 million higher than the pre-FTA monthly average, but the average monthly automotive imports from Korea have soared by $263 million under the deal – a 19 percent increase. So while U.S. auto exports have risen very modestly under the FTA, those tiny gains have been swamped by a surge in auto imports from Korea that the administration promised would not occur under the FTA.

  • In January 2014, monthly auto imports from Korea topped $2 billion for the first time on record.
  • About 125,000 more Korean-produced Hyundais and Kias were imported and sold in the United States in 2013 (after the FTA) than in 2011 (before the FTA).
  • Sales of U.S.-produced Fords, Chryslers and Cadillacs in Korea increased by just 3,400 vehicles.

The post-FTA flood of automotive imports has provoked a 19 percent increase in the average monthly U.S. auto trade deficit with Korea. The Obama administration has sought to distract from this dismal result by touting the percentage increase in U.S. auto sales to Korea. This allows the sale of a small number of cars beyond the small pre-FTA base of sales to appear to be a significant gain when in fact it is not.

Read the new Public Citizen report on the Korea FTA record.

Categorie: Planet Not For Sale

March 10, 2014 CSO letter to USTR Michael Froman re: TTIP's effect on meat production

Language:  English File:  Civil Society Letter on TTIP March 10 14.pdf March 10, 2014 letter from 29 civil society groups to USTR Michael Froman regarding TTIP and its effects on meat production in the U.S. and EU.

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Comment on “Notice of Proposed Rulemaking: Aggregation of Positions”, 17 CFR Part 150 (RIN 3038-AD82)

Language:  English IATP author(s):  Dr. Steve Suppan File:  CFTC position aggregation 2.10.14 FINAL.pdf IATP comments to the CFTC on aggregation of data within its revised position limits rule.

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Comment on “Notice of Proposed Rulemaking: Position Limits for Derivatives”, 17 CFR Part 150 (RIN 3038-AD99)

Language:  English IATP author(s):  Dr. Steve Suppan File:  CFTC position limits 2.10.14 FINAL.pdf IATP comments to the CFTC on data aggregation rules to prevent excessive speculation in agricultural derivatives contracts.

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Financial Stability Board Consultation Paper

Subtitle:  “Feasibility study on approaches to aggregate OTC derivatives trade repository data” Language:  English IATP author(s):  Dr. Steve Suppan File:  FSB aggregation CP IATP Final.pdf  Comments to the financial stability board. 

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Farm to School Youth Leadership Curriculum (all lessons and worksheets)

Language:  English IATP author(s):  Erin McKee VanSlooten Author(s) (external):  JoAnne Berkenkamp, Natasha Mortenson, Vanessa Herald File:  F2SCurriculum_full_IATP_web_0.pdf Farm to School Youth Leadership Curriculum The high school level Farm to School Youth Leadership Curriculum is designed to empower youth, teach them about their local food system, engage them in meaningful, hands-on learning activities that also strengthen their school’s Farm to School program and link them directly with farmers in their community. Implementation of the curriculum in a high school setting simultaneously gives students ownership and commitment to their school’s Farm to School program, while reducing the amount of legwork and...

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The 2014 Trade Agenda: What Hole? Keep Digging.

Eyes on Trade - 4 March, 2014 - 23:33

The President’s 2014 Trade Policy Agenda, released today by the Office of the U.S. Trade Representative (USTR), violates the first law of holes: when you are in one, stop digging. Instead, it sticks to the first rule of PR, when the data is against you (e.g. when export growth under last year's trade agenda amounted to zero percent), distract. 

In the face of large U.S. trade deficits with Free Trade Agreement (FTA) partners, the report declines to count imports and counts exports when convenient. It tries to camouflage the damaging track record of past deals (“forget about the hole”) to sell to the U.S. Congress and public yet another round of FTAs (“just keep digging”). 

The report states that the administration is “working with Congress” to gain Fast Track authority to enact two sweeping and controversial new FTAs – the Trans-Pacific Partnership (TPP) and Trans-Atlantic Free Trade Agreement (TAFTA). It neglects to mention that, having seen the hole created by past Fast Tracked FTAs, members of Congress have stated in overwhelming, bipartisan fashion that they have no interest in handing the administration another shovel labeled “Fast Track.”

Much of the 2014 agenda is a copy and paste of the 2013 agenda, reiterating USTR’s stock set of talking points, such as the tired, counterfactual promise that a more-of-the-same trade policy will boost exports. In 2013, this is how USTR put it: “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.” This year they invert the sentence: “We seek to…strengthen our economy by…negotiating high standard agreements that help U.S. exporters gain access to billions of customers beyond our borders.”

But repetition does not make the argument any truer. Under the array of FTAs that have served as a template for the Obama administration’s trade policy agenda, U.S. exports grew by a grand total of 0% last year. The year before that, they grew by 2%.  At the abysmal export growth rate seen in the last two years, we will not reach Obama’s stated goal to double 2009’s exports until 2054, 40 years behind schedule. (The authors of this year’s Trade Policy Agenda opt not to highlight the ill-fated goal.)  

Also omitted is the inconvenient fact that the overall 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 30 percent over the last decade.  

Even more glaring is the report's lack of any mention of how exports to Korea have fared under the Korea FTA, which has its second anniversary in less than two weeks, despite detailing export performance to other countries. Under the Korea FTA, which served as the administration’s opening offer for the TPP negotiations, U.S. goods exports to Korea have fallen below the average monthly level seen before the FTA for 20 out of 21 months. Rather than deal with this reality, the report tries to hide it.

The data simply do not support the oft-parroted pitch that more-of-the-same FTAs are the ticket to boosting exports. 

But data is not the report’s strong suit. In defending existing deals like the North American Free Trade Agreement (NAFTA) and the Korea FTA so as to advocate for expanding on their model via the TPP and TAFTA, the report simply ignores the deals' track records. For example, on manufacturing, the report states: “to support the growth of advanced manufacturing and associated high-quality jobs here at home, in 2014 the Obama Administration will continue to pursue trade policies aimed at keeping American manufacturers competitive with their global peers.”

But official government data show that our manufacturing trade deficits have increased dramatically under the very trade policies that the administration vows to “continue to pursue.” Last year, we had a $52.4 billion manufacturing trade deficit with our 20 FTA partners. In 1993, before NAFTA was implemented and before 18 of these 20 countries had an FTA with the United States, we had a $30.1 billion manufacturing trade surplus with these same trade partners.  In the intervening 20 years, during which the United States implemented FTAs with all of these countries, the U.S. manufacturing trade balance with these trade partners fell by $82.6 billion. According to the administration’s own figures, that amounts to a loss of more than 446,000 U.S. jobs in manufacturing alone.

When directly addressing NAFTA, the report chooses to ignore one half of the trade flow equation and focus only on exports. It fails to mention that imports from Mexico and Canada under NAFTA have swamped exports, causing the NAFTA trade deficit to soar 556 percent, reaching $177 billion last year.

And while the report claims that “the agricultural sector has been a bright spot for exports,” that has not been the case under recent FTAs. The average annual U.S. agricultural deficit with Mexico and Canada in NAFTA’s first two decades reached $975 million last year, almost three times the pre-NAFTA level. Over the last decade, U.S. food exports to Mexico and Canada actually fell slightly while U.S. food imports from Mexico and Canada more than doubled.

Food exports have fared even worse under the Korea FTA – in the first year of the deal, U.S. beef, pork, and poultry exports to Korea fell by 8 percent, 24 percent, and 41 percent respectively. 

While ignoring the sluggish exports and deep deficits occurring under existing FTAs (“what hole?”), the 2014 Trade Policy Agenda advocates for the TPP by claiming it would deliver where its predecessors have failed. The report states, “TPP will expand U.S. trade with dynamic economies throughout the rapidly growing Asia-Pacific region.” 

Even if one ignores the disappointing export legacy of the deals serving as the TPP’s template, this sales pitch comes across as hollow. The United States already has FTAs with six of the 11 TPP negotiating countries, for which increased market access is largely not up for negotiation. Of the remaining five TPP countries, Japan is the only major economy, and its growth rate last year was a tepid one percent – hardly the sought-after “dynamism.” The remaining four countries include Vietnam (with an annual per capita income of $1,550), Malaysia (with an annual per capita income of $9,820), New Zealand (with a population the size of metro D.C.), and Brunei (with a population the size of Huntsville, Alabama). Are these the markets on which the administration’s history-defying promise of TPP-led export growth hinge? 

Members of Congress aren’t buying it. Most House Democrats and a sizeable bloc of House Republicans have said no to Fast Tracking the TPP. House Minority Leader Nancy Pelosi and Senate Majority Leader Harry Reid have also voiced their opposition. So has 62% of the U.S. voting public. Their message to the administration is simple: we’re in a hole. Stop asking for shovels. Find a ladder. 

Categorie: Planet Not For Sale

Farm to School Youth Leadership Curriculum (worksheets and handouts only)

Language:  English IATP author(s):  Erin McKee VanSlooten Author(s) (external):  JoAnne Berkenkamp, Natasha Mortenson, Vanessa Herald File:  F2SCurriculum_AllWorksheets_IATP.pdf #splash { position: absolute; display: none; top: 0; left: 0; width: 100%; height: 100%; text-align: center; background: #e0e0e0; opacity: .98; z-index:999; } function MM_preloadImages() { //v3.0 var d=document; if(d.images){ if(!d.MM_p) d.MM_p=new Array(); var i,j=d.MM_p.length,a=MM_preloadImages.arguments; for(i=0; i Close All worksheets and handouts of the Farm to Youth Leadership Curriculum. Download the full report or individual sections at www.iatp.org/f2s-curriculum.

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Categorie: Planet Not For Sale

New Farm to School curriculum puts high school students in charge of tapping into healthy, local foods

Language:  English IATP author(s):  Andrew Ranallo File:  2014_03_14_F2SCurric_PR.pdf MINNEAPOLIS – The new Farm to School Youth Leadership Curriculum released today connects high school students with local foods and farmers, while giving them a leadership role in developing their school’s Farm to School program. The first of its type, the curriculum was developed for 11th and 12th grade students by the Institute for Agriculture and Trade Policy (IATP) and takes students through the tasks of evaluating school lunch menus, partnering with food service staff, talking to farmers and sourcing local foods—all while fulfilling national and Minnesota curriculum requirements. “The curriculum was designed not only to teach students about their local food...

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Categorie: Planet Not For Sale