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Talking Points on Trade Policy

It’s Not Just “Trade.”  While the public conversation over the merits of international trade agreements continues to be centered on reduced barriers to trade in manufactured goods, trade agreements now consist largely of rules for areas which were not previously considered trade:  government procurement, intellectual property, investment, and the entire service sector.  Rather than thinking about these agreements as instruments to promote trade, it is more accurate to see them as comprehensive rulebooks for all of global commerce.  In general, the rulebooks are being written in ways which benefit wealthy countries over poor ones, employers over workers, agribusiness over small farmers, property rights over human rights, and firms which engage in international commerce over small and local businesses. 

Trade Policy is a Moving Target.  With the expiration of President Bush’s “fast track” negotiating authority, negotiation of new trade deals has slowed in recent months.  Nevertheless, the United States is currently involved in negotiations over the World Trade Organization (WTO) Doha Round.  Agreements with Panama, S. Korea, and Colombia are complete, and are awaiting ratification by Congress.  Talks to create a Free Trade Area of the Americas and a Free Trade Agreement with the nations of the South African Customs Union have broken down.  NAFTA (North American Free Trade Agreement, involving the USA, Canada, and Mexico) has morphed into a new concept, the North American Security and Prosperity Partnership (SPP) which has been negotiated in secret between the three heads of state (with their ministers of trade, agriculture, energy and defense) since March of 2005.  In effect, this post 9-11 deal expands NAFTA to include security, energy and migration policies.  Meanwhile, the possibility that NAFTA would be re-negotiated is a recurring theme on the U.S. campaign trail, as well as in Mexico, where it is deeply unpopular with farmers. 

Negotiations are Not Democratic. The negotiation of agreements generally takes place in a secretive environment, more like that of corporate merger talks than like public law-making.  For example, the texts of bilateral agreements are not made public until after negotiations have been completed and cannot be amended.  

Conflicts are Resolved in Secret. The dispute resolution procedures established by the agreements also take place behind closed doors, more like the methods of commercial arbitration than like judicial procedures. 

The NAFTA Model.  Bi-lateral and regional agreements have generally followed the model set by NAFTA, which includes tariff reductions, intellectual property and investors’ rights protections, and provisions dealing with government procurement and trade in services.  Following the Democratic Party’s takeover of Congress in the 2006 election, the Bush administration agreed to make some changes in its model in order to win votes, but the essential aspects of the NAFTA/CAFTA model are intact. 

WTO Talks Never End.  At the WTO wealthy nations led by the EU and USA are demanding increased access to services markets in the developing countries, while developing countries are demanding reductions in agricultural subsidies in the rich countries.  Also at issue is the pace for reductions of tariffs on manufactured goods.  Negotiations broke down during the summer of 2006, but may pick up speed at any time.

Overlapping Agendas.   While the negotiating formats and legal structures differ between bilateral, regional, and global agreements, there are several questions which run throughout all of them:

• Agriculture – Will poor countries be able to prioritize food sovereignty including protecting domestic food production from the market impacts of subsidized imports from wealthy countries? 
• Labor – Will trade agreements provide any meaningful protection for the fundamental rights of workers, or will all the protections go to employers?
• Services – Will trade agreements be used to sweep away the ability of governments at all levels to regulate the service sector, including such vital areas as health, water supply, and education?  Will trade agreements be used to give new advantages to private companies in fields (e.g. schools, public health, and water supply) where services are now provided primarily in the public sector?
• Investment – Will investors win additional rights to sue governments for monetary compensation when government policies (e.g. environmental, human rights, or public health measures) reduce their profitability?
• Intellectual Property – Will trade agreements make it more difficult for people in developing countries to have access to affordable essential medicines and maintain access to traditional practices?

Will Workers’ Rights be Respected?  After a deal was struck May 10, 2007 between the Bush Administration and Congressional leaders, US trade negotiators incorporated internationally recognized labor principles into the Peru , Colombia, Panama, and S. Korea trade agreements.   But a footnote common to all four agreements states that the heralded labor rights language applies only to the ILO “Declaration on Fundamental Principles and Rights at Work,” and not to the actual ILO conventions which spell out the rights of workers.  This is like saying “we agree in principle with the idea of equal pay for equal work, but we will not implement practices to put this principle into effect.”  The fact that major business lobbyists said they had no problem with the new labor language, while union groups were not impressed, suggests the new language is more smoke than substance.

A New Bill of Rights for Investors.  Most post-NAFTA bi-lateral agreements contain “investor rights” provisions similar to those in NAFTA.  That means foreign firms can sue governments for monetary damages if public health or environmental laws reduce their profits (termed “indirect expropriation”).  The cases are decided in a special trade court, which would meet in secret.  After the May 10 “deal,” Bush administration trade negotiators said they would not allow foreign investors to have greater rights than domestic investors, but did not make significant changes in the language of the recent agreements.  (The WTO’s investment agreement does not currently include “investor-state” provisions.)

Trade Rules Trump Local Authority.  The WTO’s General Agreement on Trade in Services (GATS) contains many provisions which encroach on the traditional authority of state and local governments to regulate sectors such as utilities, insurance, education, health care, and real estate development.  Most of the post-NAFTA bilateral agreements have services language modeled on GATS. 

From Public Policy to Trade Rules.  In essence, “investor rights,” “government procurement,” and “trade in services” measures take decisions about important issues that are now made as part of the public policy process and transform them into commercial disputes which are resolved without any rights for citizens or their elected officials to participate.

Constructive Changes are Taking Place at the State and Local Levels

• In 2007, the New Hampshire House and Senate approved SCR 3, “a resolution urging preservation of traditional powers of state and local government under international trade agreements.”  The resolution passed the Senate on a voice vote and was approved in the House by 191 to 106. 
• Also in 2007, the legislature established the New Hampshire Citizens Trade Policy Commission, which has been meeting monthly to assess the impact of trade policy on the state.  The Commission, made up of leaders from the realms of business, labor, environmental advocacy, and other sectors, gives particular attention to the relationship between trade policy and the traditional authority of local and state government.  Similar commissions exist in Vermont and Maine. 
• Senator Sherrod Brown and Representative Michael Michaud have introduced the Trade Reform, Accountability, Development, and Employment Act of 2008, known as the TRADE Act.  The bill, which exists in slightly different forms in the House and Senate, articulates trade policies that are consistent with open, democratic government, and which put forward the importance of human rights, environmental protection, and the preservation of federalism as essential elements of trade policy. 
• Five states and 36 cities now have laws outlining “sweat free” purchasing policies for apparel.  While violating the provisions of trade agreements which require governments to be blind to the manner in which imported products are produced, these governments are asserting that there are some values which are more important than “free trade.”  

Key Messages on Pending Agreements

Colombia FTA  - Colombia, a nation dealing with decades of civil conflict, is known as the most dangerous country in the world for trade unionists.  More than 60 members of the Colombian Congress are being investigated for ties to the illegal paramilitary groups who are responsible for much of the country’s political violence.  Four million people have been displaced from their homes by civil conflict.  Afro-Colombians and indigenous Colombians have legitimate fears that a free trade agreement would undermine their historic rights to land and natural resources.  Small farmers fear the FTA would force them out of their livelihoods, much as NAFTA did to small farmers in Mexico.  This will increase the pressure on small farmers to consider growing coca in order to feed their families.  For the United States, the Colombia FTA offers more jobs outsourced to a repressed labor market, and increased access to an insignificant market.

Panama FTA – Panama is known as a center for unregulated banking and corporation laws that make Delaware look tough.  Why would we want to give Panamanian firms access to a NAFTA-like investor rights clause?

Korea FTA – This agreement remains controversial due to perceptions that it would give an unfair advantage to the Korean automobile industry.  Korean farmers and consumers fear it would flood their markets with subsidized agro-exports and unsafe meat.

The WTO – The WTO remains the largest and broadest framework for setting rules of the road for the global economy.  Formally democratic, it remains dominated by the wealthy countries and the interests of their major businesses.  Controversies remain over differences between rich and poor countries, small farmers and agribusiness interests, and global service sector firms seeking a deregulated global marketplace and those who care about public health, democratic governance, and human rights.  Whether a deal to conclude the “Doha Round” this year is likely is still in question. 

Suggested Questions for Candidates

• Given the steady loss of manufacturing jobs across the U.S., will you oppose new trade agreements which make it easier for employers to “off-shore” their operations and export products back into the U.S. market?
• Will you oppose trade agreements, like the WTO’s General Agreement on Trade in Services, which shift the regulation of essential sectors like water, health, education, and construction, from local and state government to unelected trade bureaucrats?
• Will you support a new approach to international trade agreements which places human rights, labor rights, environmental protection, and poverty reduction at the heart of negotiations rather than leaving them as after-thoughts?

Prepared by Arnie Alpert, American Friends Service Committee-New Hampshire Office, June 16, 2008