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  • Eyes on Trade is a blog by the staff of Public Citizen's Global Trade Watch (GTW) division. GTW aims to promote democracy by challenging corporate globalization, arguing that the current globalization model is neither a random inevitability nor "free trade." Eyes on Trade is a space for interested parties to share information about globalization and trade issues, and in particular for us to share our watchdogging insights with you! GTW director Lori Wallach's initial post explains it all.

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June 25, 2015

State Department Lambasts Human Rights Violations in TPP Nations Vietnam and Brunei, Further Complicating Push for Controversial Pact

New Report Cites Political Prisoners, Criminalization of Homosexuality, Mistreatment of Women, Child Labor Among Abuses of TPP Negotiating Parties

The U.S. Department of State’s revelations about grave human rights abuses in Vietnam and Brunei add new hurdles for the Obama administration’s push for the already controversial Trans-Pacific Partnership (TPP), Public Citizen said today. The revelations came in the department’s annual human rights report, released today.

The report details jailing of political dissidents and anti-union repression in Vietnam, as well as Brunei’s enactment of a sharia-based penal code that punishes homosexuals and single mothers, who could be stoned to death once the code is fully implemented later this year. Vietnam and Brunei are two of the 12 nations negotiating the TPP.

Democrats and Republicans in Congress have criticized the TPP’s inclusion of countries notorious for human rights violations. Recent congressional letters have spotlighted Vietnam and Brunei as inappropriate trade pact partners given the severe human rights issues in those nations spotlighted by past State Department reports.

“Having the State Department report grave human rights conditions in several TPP countries even when they are under the spotlight of ongoing negotiations fuels members of Congress’ ire about this already unpopular pact,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

In today’s report, the U.S. Department of State spotlights Brunei’s enactment in May 2014 of a new penal code that criminalizes homosexual and extramarital relations. When Brunei’s code is fully implemented, these and other “crimes” are slated to be punishable by flogging, dismemberment and death by stoning.

With respect to Vietnam, the report spotlights “arbitrary or unlawful killings,” “continued [efforts] to suppress political speech through arbitrary arrest, short-term detentions without charge, and politically motivated convictions,” and restrictions on press freedom due to government censorship and “pervasive self-censorship due to the threat of dismissal and possible arrest.” It also focuses on Vietnam’s continuing repression of basic labor rights, including a ban on independent unions, use of forced labor and widespread child labor. The report notes that the Vietnamese government itself has estimated that there are 1.75 million child laborers in Vietnam.

Despite Congress’ passage of Fast Track this week, the push to gain congressional approval for the TPP becomes more politically fraught as 2016 draws nearer, with presidential contenders from both parties recently adding their voices to the widespread criticism of the pact. The human rights violations unveiled in today’s U.S. Department of State report will only fuel broader opposition to the pact among members of Congress, the public and presidential candidates. 

June 23, 2015

Despite Fast Track Vote, Americans Know Trade Deals Fail Miserably, Will Oppose Trans-Pacific Partnership

Statement of Robert Weissman, President, Public Citizen

Following elaborate legislative contortions and gimmicks designed to hand multinational corporations their top priority, today the U.S. Senate paved the way for Fast Track legislation that aims to advance the corporate wish list known as the Trans-Pacific Partnership (TPP), as well other trade deals.

Those contortions were necessary because the American people overwhelmingly oppose these deals, notwithstanding an endless barrage of propaganda.

They oppose these deals because they know from personal experience that the NAFTA model fails miserably.

They know that these deals will mean more export of jobs, more downward pressure on wages. They know that these deals will undermine our ability to maintain and adopt strong environmental and consumer protections. They know that these deals are designed to help giant corporations, and not communities.

Today’s action means that Congress will tie its hands to prevent it from exerting positive influence over negotiations of the TPP. It means that the final TPP agreement will very likely include provisions empowering foreign corporations to sue our own government for policies that they claim impinge on their expected future profits. It means that the final TPP will very likely include provisions that will extend Big Pharma monopolies, raising prices for consumers and health systems – and, even in the United States, and especially in the poorer TPP countries, denying people access to needed medical treatment. It means that the final TPP will very likely include provisions undermining our food safety.

What it doesn’t mean is that Congress must pass such a TPP. When the inexcusable and anti-democratic veil of secrecy surrounding the TPP is finally lifted, and the American people see what is actually in the agreement, they are going to force their representatives in Washington to vote that deal down. Members who fail to do so can expect their constituents to hold them accountable. 

June 19, 2015

Hillary Clinton Says No to Fast Track while Bill Clinton Tries to Defend Fast Tracked Deals

As Fast Track for the controversial Trans-Pacific Partnership (TPP) moves to the Senate, where its path is fraught at best, presidential candidate Hillary Clinton has just stated that if she were in the Senate today, she'd probably vote "no" on Fast Track. She adds that she "certainly would not vote for it" if she was not "absolutely confident" that a separate bill to assist workers who lose their jobs to trade (Trade Adjustment Assistance, or TAA) would be enacted.  

Today's Senators should have no such confidence.  Many of them say "no" outright to the notion that it's a fair deal to Fast Track trade pacts that would offshore the jobs of middle-class workers in exchange for a small amount of assistance for some of those laid off workers.  (Know what's better than handing someone some cash after you eliminate their job?  Letting them keep their job.)  

But even those Senators who might be willing to vote yes on Fast Track in exchange for TAA would have to take a huge gamble that TAA would actually become a reality.  If they would vote for Fast Track before TAA passes both houses of Congress, Republicans - many of whom deeply oppose TAA - would have little incentive to help Democrats pass TAA.  Greg Sargent of The Washington Post explains, "But there’s no way to be certain Republicans will deliver on TAA, because many of them don’t really care about worker assistance and they’d already have achieved the Fast Track they want." 

The lack of "absolute confidence" on TAA has already pushed some fence-riding Senate Democrats to make the same calculation as Hillary Clinton and declare that they do not intend to vote for Fast Track

Just the day before the presidential candidate stated her opposition to Fast Track, her husband attempted to defend the legacy of past Fast Tracked trade deals that he helped usher into existence.  In an interview with Jon Stewart on The Daily Show, Bill Clinton got his facts wrong in his defense of the North American Free Trade Agreement (NAFTA) and NAFTA expansion pacts - the unpopular status quo trade model that Fast Track would expand.  (At the same time, Clinton offered a few critiques of provisions in pending trade agreements that ironically came from the NAFTA-style pacts he was defending - see below.) 

Some correcting of the former president's misstatements is in order: 

Clinton implied that our huge NAFTA trade deficit is due primarily to oil: “They [Mexico] were one of our biggest oil suppliers before we were self-sufficient in oil. So we did have a trade deficit there.

The surge in the U.S. trade deficit with NAFTA partners Mexico and Canada was not due to oil, according to U.S. government trade data. Even after removing oil, the U.S. non-oil goods trade deficit with Mexico and Canada went from an average of $2.3 billion in the five years before NAFTA to an average of $43.5 billion in the five years after NAFTA (adjusted for inflation). In 2014, the U.S. non-oil goods trade deficit with NAFTA partners topped $95.7 billion, more than 42 times the pre-NAFTA level.

Clinton stated: "And the analysis of all of our trade agreements with countries with lower per capita incomes than we have shows that on balance the countries that we have trade agreements with, we tend to have balanced trade."

Not according to the government data from the U.S. International Trade Commission. The United States actually had a $177.5 billion combined goods trade deficit with its 20 Free Trade Agreement (FTA) partners in 2014. That FTA trade deficit has increased by about $144 billion, or 427 percent, since the FTAs were implemented. Using Clinton’s comparison to only those FTA partners “with lower per capita incomes than we have” would eliminate Australia and Singapore, making the FTA trade deficit even higher, at $201.3 billion.

Clinton also claimed: "What happened is that in general our trade deficits have been bigger with countries we don’t have trade agreements with.”

It’s unclear what Clinton means by this. If he means the aggregate U.S. trade deficit with our 20 FTA partners is smaller than our total trade deficit with all other countries in the world combined, then yes, that is obviously true, as our 20 FTA partners constitute just a fraction of the global economy. If he means that the United States has a larger trade deficit with individual non-FTA countries than with individual FTA countries, that is only true for China. After China, our two largest goods trade deficits are with NAFTA partners Mexico and Canada.

Indeed, Clinton offered China - the outlier - as proof of his argument, saying, "we have no trade agreement" with China but "we have a humongous deficit" with China. Stewart interjected, "but some would say the larger problem was not NAFTA, but China joining the WTO.” Clinton responded, "Well the larger problem, whether they joined it or not, we had a huge trade deficit before they joined the WTO. And at least when they got into the WTO, they had to agree to rules and if we vigorously enforced the trade deals, we had a forum to resolve it…"

Stewart was right to point out to Clinton that we actually do have a different kind of trade agreement with China, thanks to China's entry into the World Trade Organization (WTO) in 2001, which precipitated a massive increase in the U.S. trade deficit with China.  Since China's WTO entry, the U.S. goods trade deficit with China has increased $237 billion or 211 percent. While the U.S. trade deficit with China grew 90 percent in the five years before China’s WTO entry, it expanded 146 percent in the five years thereafter, notwithstanding Clinton’s claim that the WTO offered a “forum” to force China to comply with certain rules. 

In addition, the former president repeated an Obama administration talking point by implying that the TPP would "not just let China write all the rules for Asia."  Never mind that the TPP rules were written to advance narrow special interests that would undermine the broader U.S. national interest.  Or that China appears to actually like the TPP's rules, as China has expressed interest in joining the pact.  Or that the track record of past U.S. FTAs defies the notion that the establishment of a trade deal would affect China's rising influence. 

Stewart also slipped up at one point in the interview in stating that "NAFTA has been very beneficial, I think, for Mexico." Actually, many economists agree that NAFTA has been a disappointment for Mexico. Mexico’s average annual growth per capita in NAFTA’s first two decades ranked 18th out of the 20 countries of Central and South America, according to the Center for Economic and Policy Research. And NAFTA's agricultural provisions contributed to the loss of livelihood of an estimated 2.5 million Mexican farmers and agricultural workers, which fueled a doubling of immigration from Mexico to the United States in NAFTA's first seven years. 

Despite Bill Clinton's errant defenses of the NAFTA model he helped birth, he also offered a few surprising critiques of provisions that were part and parcel of that model.  For example, he said "we shouldn't have a trade enforcement mechanism where a group we don't know picks the lawyers."  Is this a reference to the controversial investor-state dispute settlement (ISDS) system, included in NAFTA?  The TPP would dramatically expand this system by newly empowering thousands of foreign corporations to bypass domestic courts, go before tribunals of private lawyers that sit outside of any domestic legal system and challenge the laws we rely on for a clean environment, essential services, and healthy communities.  It's a little late for Bill Clinton, whose signature trade pact was the first major ISDS-enforced U.S. deal, to criticize ISDS.  But if he is indeed opposed to its expansion via the TPP, let's hear it.  

Clinton also acknowledged, implicitly, that status quo trade deals have led to the loss of U.S. manufacturing jobs, stating, "But it’s also true that there have been a lot of independent studies which show that we have a net loss of manufacturing jobs at the low end."  Indeed, nearly 5 million U.S. manufacturing jobs – one out of every four – have been lost on net since NAFTA took effect, and more than 57,000 U.S. manufacturing facilities have closed. Again, Clinton is about two decades late in raising this concern. Even so, it's timely, as the TPP would extend NAFTA’s special protections for firms that offshore U.S. jobs, while forcing U.S. workers to directly compete with workers in Vietnam making less than 60 cents an hour.

Clinton then emphasized the recent stagnation of middle class wages, but did not connect this to the status quo trade model that, according to an academic consensus, has contributed to downward pressure on median wages.  A recent National Bureau of Economic Research study confirmed this linkage, concluding that "offshoring to low wage countries and imports [are] both associated with wage declines for US workers."  

Clinton even implied that new trade deals should not be enacted until middle wage stagnation has been fixed, stating, "so we've got to first make sure that our people are going to be alright and that we have a sensible economic policy at home."  Ironically, the enactment of such deals contributed to the downward pressure on wages in the first place.  If the wage gap is actually to be bridged, it will require not only new domestic efforts, but a new trade model.  

Bill Clinton is an unlikely advocate for that model.  Hillary Clinton, if she continues to speak against Fast Track, has a chance to be a better one. 

June 18, 2015

House Punts Fast Track Problem Back to Senate; Path to Approval Unclear

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

Today, the House employed yet another procedural gimmick to punt the Fast Track problem back to the Senate, where its fate remains at best unclear as Americans’ concerns that more of the same trade policy would kill more jobs and push down our wages remain unaddressed.   

Because Republican House members would not support the Trade Adjustment Assistance (TAA) part of the Senate-passed Fast Track package last week, the GOP leadership today had to resort to a Fast Track-only vote, but what exactly that achieves is unclear. Senate Democrats, including those needed to obtain cloture for a stand-alone Fast Track bill, are demanding that the TAA be reinserted into the Fast Track bill or be passed by both chambers before agreeing to support Fast Track.  In addition, key Democratic senators are insisting on the fulfilment by Senate Leader Mitch McConnell of a promised vote to reauthorize the Export-Import bank – which was the condition for the deciding bloc of Senate Democrats to support cloture on Fast Track in the first instance in May. Meanwhile, House GOP lawmakers remain strongly opposed to TAA and Ex-Im reauthorization. As House Democratic Leader Nancy Pelosi stated today, there is no clear path for enactment of TAA. Yet yesterday, White House spokesman Josh Earnest said that President Obama requires both Fast Track and TAA to come to his desk.

That two years of effort by a vast corporate coalition, the White House and GOP leaders – and weeks of procedural gimmicks and deals swapped for yes votes – has resulted in this continuing standoff and no Fast Track enacted spotlights the dim prospects not only for adoption of Fast Track but also for the Trans-Pacific Partnership (TPP).

This weekend, the millions of Americans across the political spectrum actively campaigning against Fast Track will intensify their efforts to ensure the Senate permanently retires the Nixon-era scheme. America needs a new process for negotiating and approving trade agreements if we are to achieve deals that create American jobs and raise our wages.

June 16, 2015

Representative Who “Deeply Regrets” NAFTA Vote Warns Congress Not to Flip-Flop on Fast Track

Today the House of Representatives narrowly passed a procedural rule, inserted into an unrelated legislative package last night, that gives defenders of the unpopular status quo trade model six weeks to try to revive the Fast Track package that was put on life support last Friday. They will not succeed so long as they continue to face the wall of dogged, diverse grassroots pressure that delivered Friday’s landmark fair trade victory.  

Even so, the Obama administration and congressional proponents of more-of-the-same trade deals will try to badger the many members of Congress who voted down the Fast Track package into switching their votes. They will likely reiterate the tired litany of false promises that members of Congress and the U.S. public have heard time and again when being sold unpopular trade pacts.

In a poignant speech before today’s vote, Rep. Alcee Hastings (D-Fla.) warned against trusting such promises. In 1993, Rep. Hastings cast a controversial vote for the North American Free Trade Agreement (NAFTA) – the deal that spawned the status quo trade model that Fast Track would expand.  Today, Hastings stated:

In the 20 plus years that I’ve served in this body, I can think of only three votes which I deeply regret making and one of those was in support of NAFTA. In the years since, I’ve seen, after NAFTA, a decrease in American jobs, a rollback of critical environmental protections, here and in Mexico where I was promised that the environmental circumstances in the maquiladoras would be cleared up – and they were not – and a stagnation of wages that has prevented the financial upward mobility of working class and middle class Americans and has ground poor Americans into poverty beyond belief.

Rep. Hastings made clear that he has learned from NAFTA’s broken promises and urged his colleagues to stand firm by continuing to oppose Fast Track’s expansion of the trade status quo:

If we’re going to create trade policy that is worthy of future generations, then we must ensure that policy strengthens—not weakens—labor rights. It must strengthen—not weaken—environmental protections. It must ensure other countries responsibility to adhere to basic human rights. It must expand and strengthen our middle class, not squeeze hardworking Americans in favor of corporate interests. The legislation included in this rule today is part of a trade package that does nothing to bolster these important priorities.  

If past is precedent, the White House and congressional leadership will also try to make special deals with members of Congress who voted against the Fast Track package on Friday, offering promises of political cover or special goodies – from bridges to import safeguards – if they would be willing to face the wrath of their constituents and flip-flop on Fast Track.  But a review of the last two decades of trade-vote dealmaking reveals that such promises made to extract unpopular trade votes have also been consistently broken, leaving members of Congress exposed to voters’ anger over their decision to defy the opinion and interests of the majority.

Here again, Rep. Hastings’ experience offers a cautionary tale.  In deciding how to vote on NAFTA, Florida representatives like Hastings were concerned that the deal could lead to an influx of underpriced tomatoes from Mexico, displacing Florida’s tomato farmers and the state’s many tomato-related jobs. To extract their votes, the Clinton administration promised Florida representatives that the U.S. government would take measures to safeguard Florida tomato growers if NAFTA led to a surge in tomato imports.

The Clinton administration never fulfilled this promise. Before NAFTA, Florida had a $700 million tomato industry with 250 growers.  Within two years of NAFTA, tomato imports from Mexico soared, Florida’s tomato revenues dropped to $400 million and the state’s tomato industry shrank to just 100 growers.  No meaningful import safeguards were enacted by the Clinton administration, the George W. Bush administration or the Obama administration. Today, imports of tomatoes from Mexico are up 247 percent since NAFTA’s implementation.  Florida’s tomato growers have now filed a lawsuit to obtain the safeguards that they, and Florida’s representatives, were promised 22 years ago.

Rep. Hastings learned the hard way that promises used to extract “yes” votes on unpopular trade deals rarely materialize. His colleagues have the opportunity to learn the easy way – by heeding Rep. Hastings’ warning and maintaining opposition to Fast Track. 

June 15, 2015

Fast Track Down

Originally posted at The Huffington Post

By Lori Wallach, Director, Public Citizen's Global Trade Watch

The Fast Track trade authority package was rejected Friday because two years of effort by a vast corporate coalition, the White House and GOP leaders -- and weeks of deals swapped for yes votes -- could not assuage a majority in the House of Representatives facing constituents' concerns that more of the same trade policy would kill more jobs, push down wages and open a Pandora's box of other damaging consequences.

Proponents of Fast Tracking the almost-completed, controversial Trans-Pacific Partnership (TPP) say they are coming back this week for another try. And the White House was on full tilt this weekend trying to pressure House Democrats to flip their votes.

But the path to enactment of Fast Track remains unclear, even as the corporate coalition, White House and GOP leaders remain hell bent on finding it.

To understand what comes next, it's worth unpacking what exactly happened on Friday and how we got there.

The sum of it was that Byzantine procedural gimmicks designed to overcome what polls show is broad opposition to Fast Track by GOP, Democratic and Independent voters backfired.

Since the Fast Tracked 1994 North American Free Trade Agreement revealed what really was at stake with the arcane Nixon-era procedure, getting any Congress to delegate years of blank-check Fast Track authority has been a very hard sell. Since 1988, only Presidents Ronald Reagan and George W. Bush persuaded Congress to grant the multi-year Fast Track delegation President Barack Obama seeks. In 1998, 171 House Democrats and 71 GOP rejected President Bill Clinton's request. As a result, Congress has only allowed Fast Track to go into effect for five of the past 21 years.

Given past trade pacts have resulted in significant American job loss, the small bloc of Democratic Senators willing to support Fast Track authority insisted the 2015 bill include an extension of Trade Adjustment Assistance (TAA). TAA is a program that provides retraining benefits for workers who lose their jobs to trade that was first enacted during the Kennedy administration. GOP leaders also had to make a promise, already broken, to win over the deciding bloc of Senate Democrats, that votes to reauthorize the Export-Import Bank would be scheduled before it expired at the end of June.

Many GOP Senators and Representatives oppose TAA, which provides glaring evidence of our current trade policy's damage in the form of a casualty list of the millions of Americans losing their jobs to bad trade policy. Major conservative groups, such as the Heritage Foundation, decry it as a welfare program for unions. And both have waged a fierce effort to kill the Ex-Im Bank.

To top it off, the GOP congressional leadership added a $700 million cut to Medicare to offset the cost of the TAA program -- undoubtedly egged on by GOP campaign consultants eager to revive the deadly effective 2012 and 2014 campaign ads against Democrats attacking them for cutting Medicare in the context of an Obamacare pay-for provision. (They expected that the Democrats would vote for TAA and the GOP against, a perfect 2016 election set up.)

And the hard-fought Senate battle was the easy part.

In the face of the expected fewer than 30 Democratic House votes for Fast Track, the GOP leaders had to maximize House GOP votes for the Fast Track-TAA bill passed by the Senate in order to send it to the president's desk for signature. To do this, the GOP House leaders concocted a fantastical procedural gimmick. They used an arcane procedure called "dividing the question" and a "self-executing rule" (seriously, that what it's called).

Those moves temporarily cracked the Senate-passed bill into three pieces to set up separate votes on Fast Track and TAA. Thus, the GOP could vote no on TAA while voting yes on Fast Track. And the self-executing rule mean that if the House passed the rule for consideration of the Fast Track-TAA package, then the Medicare pay-for language in the package would be deemed passed. Then the rule also would put all of the pieces back together -- if both the TAA and Fast Track votes got majorities. And, Fast Track would be enacted.

Apparently, the House GOP leadership believed that Democrats' strong conceptual support for TAA meant that Democrats would deliver the votes to implement the Fast Track almost all oppose, allowing the GOP to vote for Fast Track and against TAA.

Except that only 40 Democrats agreed to play by the GOP's rules. The TAA half of the package went down with 302 no votes and only 126 yesses and headlines worldwide reported Fast Track's derailment. (Only 86 of the 245 House GOP voted for the TAA half of the package.)

No doubt House Democrats would have preferred to be able to support a multi-year extension of TAA, a program that would provide benefits for tens of thousands of American workers each year hurt by past trade deals. But the version of TAA that the GOP had on offer was woefully underfunded, even without taking into account the many additional workers who would lose jobs were the TPP to go into effect. And, it excluded government service workers, farmers, fishers and more. And, it still included a significant cut to Medicare dialysis funding.

But from a wider perspective, the GOP strategy required Democrats to vote for TAA knowing that this would result in the Fast Tracking of a TPP they recognize would result in hundreds of thousands of job losses and downward pressure on all Americans' wages and empower whomever is president for the next six years to Fast Track who knows what additional job-killing trade deals.

As she announced her opposition to TAA, Democratic House Leader Nancy Pelosi summed it up: "Its defeat, sad to say, is the only way that we would be able to slow down the fast track."

And that gets to what comes next. Under the House rules, if the GOP House leaders want to call for a revote on TAA, it must occur by Tuesday night. Or they must pass an extension to extend that option. For a TAA revote to succeed more than 90 Representatives would have to flip to supporting TAA. Passing the TAA half of the bill would then enact Fast Track.

But that seems improbable for the pro-Fast Track GOP, given their own views on TAA to say nothing of the political peril that would cause given the passionate opposition by conservative groups. Plus, there is plenty of ire about how the procedural gimmick imploded.

Because before the Fast Track bill was derailed, the rule enacting the Medicare cuts was narrowly passed on an almost party-line vote. So, instead of putting all of the Democrats on the record for Medicare cuts, the GOP leadership put all but 34 House GOP on the record voting for big Medicare cuts.

Will Democrats flip en masse? Their hard choice on TAA came last week. Painful though it was, even considering the meager TAA program on offer, they decided not to play into the GOP plan to pass Fast Track.

That then leaves Fast Track supporters with various other unappealing options. The House GOP could pass a new rule that allows for a vote just on Fast Track. But given the narrow margin on that part of the package, this approach would only work if all of the 27 Democrats who voted for Fast Track and TAA were willing to become responsible for passing Fast Track without TAA. And they must do so now that Democratic Leader Pelosi has made public her opposition to the Fast Track bill and concerns about the TPP it would railroad into place.

Plus, winning this strategy would require all of the GOP who voted for Fast Track after TAA failed and it was clear the second vote was only symbolic to vote for Fast Track when it counted.

If that approach succeeded, Fast Track still would not be passed. Rather, it would trigger a conference to try to reconcile the different House and Senate bills. And then a conference report would have to be passed by the Senate and House.

Friday's outcome was a testament to the strength and diversity of the remarkable coalition of thousands of organizations that overcame a money-soaked lobbying campaign by multinational corporations and intense arm-twisting by the GOP House leadership and the Obama administration. The movement now demanding a new American trade policy is larger and more diverse than in any preceding trade policy fight. It includes everyone from small business leaders and labor unions to Internet freedom advocates and faith groups to family farmers and environmentalists to consumer advocates and LGBT groups to retirees and civil rights groups to law professors and economists.

The final chapter for Fast Track, which will greatly affect the fate of the TPP, will be written in the coming weeks.

June 12, 2015

Defeat of Fast Track Package Highlights Americans’ Concerns About More of the Same Trade Policy – Senate-Passed Bill NOT Adopted

Statement of Lori Wallach, Director, Public Citizen’s Global Trade Watch

The Fast Track package sent over from the Senate was rejected today by the House because two years of effort by a vast corporate coalition, the White House and GOP leaders – and weeks of procedural gimmicks and deals swapped for yes votes –could not assuage Americans’ concerns that more of the same trade policy would kill more jobs and push down our wages.

Passing trade bills opposed by a majority of Americans does not get easier with delay because the more time people have to understand what’s at stake, the angrier they get and the more they demand that their congressional representatives represent their will.

Welcome to the weekend as the millions of Americans across the political spectrum actively campaigning against Fast Track will intensify their efforts to permanently retire the Nixon-era scheme and replace it with a more inclusive, transparent process that instead of more job-offshoring can deliver trade deals that create American jobs and raise our wages.

Today the allegedly unstoppable momentum of the White House, GOP leadership and corporate coalition pushing Fast Track to grease the path for adoption of the almost-completed, controversial Trans-Pacific Partnership (TPP) deal just hit the immovable object called transpartisan grassroots democracy.

The crazy gimmicks employed to try to overcome what polls show is broad opposition to Fast Track actually backfired. Yesterday, the House GOP leadership put most GOP representatives on record in favor of cutting Medicare by $700 million with a vote on a procedural gimmick. Today, it was Democrats’ ire about a gutted version of a program to assist workers who will be hurt by the trade agreements Fast Track would enable that was the proximate cause of the meltdown. That program was included only to try to provide cover for the two dozen Democrats who would even consider supporting Fast Track at all.

Today’s outcome is a testament to the strength and diversity of the remarkable coalition of thousands of organizations that overcame a money-soaked lobbying campaign by multinational corporations and intense arm-twisting by the GOP House leadership and the Obama administration. The movement now demanding a new American trade policy is larger and more diverse than in any preceding trade policy fight. It includes everyone from small business leaders and labor unions to Internet freedom advocates and faith groups to family farmers and environmentalists to consumer advocates and LGBT groups to retirees and civil rights groups to law professors and economists. 

Liveblogging the Fast Track Fight

The historic fight over Fast Tracking the largest expansion to date of the status quo trade model is underway on the floor of the U.S. House of Representatives. Here we are liveblogging the debate, with real-time evaluations of the veracity of our representatives' arguments for or against Fast Track.

BREAKING: The House has just voted down the Fast Track package, dealing a major blow to the push for more-of-the-same trade deals and a major victory to the diverse coalition pushing for a new trade model. But the fight is not yet over. See here for a statement from Global Trade Watch director Lori Wallach.

Rep. Pascrell: "We want fair deals that help our workers. That's what this is all about."  True: The Trans-Pacific Partnership (TPP) includes special protections for firms that offshore U.S. jobs and would pit U.S. workers against workers in Vietnam making less than 60 cents an hour. 

Rep. Beyer: "We have to do something different -- something smart, honest, brave, bold, and based on the almost unanimous consensus of American economists."  Bogus: Something "different" would suggest something other than expanding the status quo trade model by extending NAFTA's job offshoring incentivesthe labor and environmental standards model of Bush's last four FTAsthe parallel legal system for foreign corporations that has enabled a surge in attacks on environmental and health policies under existing pacts, etc.  And this notion of a "unanimous consensus of American economists" would be news to Paul KrugmanJoseph StiglitzRobert Reich, and other eminent economists who have supported past trade deals but have come out against the TPP. 

Rep. Sanchez: "There is nothing in this that requires other countries to bring their labor laws into compliance before this agreement takes effect."  Correct: We are supposed to take it on faith that Vietnam would halt its systematic labor rights violations before the TPP would grant preferential U.S. access to Vietnamese goods. Vietnam's labor leaders have bluntly rejected that notion, stating "Promises of future reforms by the Vietnamese government should not be trusted. If fast track were passed before the above abuses are actually stopped, the hope of any real reprieve for Vietnam’s oppressed workers would fade." Similar faith was requested for the Colombia FTA, for which a non-binding "Labor Action Plan" was signed. In the four years since, more than 100 Colombian unionists have been assassinated and more than 1,300 other unionists have endured death threats. 

Rep. Tiberi: "We have a trade surplus with the 20 countries that we have a trade agreement with." False: We have a $177.5 billion goods trade deficit with our 20 FTA partners, which has grown 427 percent since those deals took effect. The FTA trade deficit surge owes to soaring imports into the United States from FTA partners and lower growth in U.S. exports to those nations than to non-FTA nations. Rep. Tiberi's claim errantly counts foreign-made goods as “U.S. exports.” He includes in "U.S. exports" goods made elsewhere that pass through the United States without alteration before being re-exported abroad, despite that they support zero U.S. production jobs.

Rep. Kaptur: "It's a great deal for Wall Street. It's a great deal for transnational corporations. But for [the] Main Street shrinking middle class and millions more of our workers, it's another punch to the gut." Amen: The TPP includes deregulatory provisions that literally were written under the advisement of Wall Street banks before the financial crisis. It would empower foreign banks and transnational corporations to bypass domestic courts, go before extrajudicial tribunals of private attorneys and demand taxpayer compensation for commonsense health, environmental and financial protections. For the rest of us, the deal would put downward pressure on middle class wages, increasing income inequality and spelling a pay cut for all but the top 10 percent.

Rep. McClintock: "This is not some new power. It just restores the same negotiating process that has served us well since the 1930's."  Nope: Fast Track wasn't created in the 1930's.  It was crafted by Nixon in the 1970's.  And unlike 1970s-era trade agreements that were narrowly focused on cutting tariffs and quotas, today's deals impose binding rules on a sweeping range of non-trade policies, undermining Congress’ authority over patents, copyright, financial regulation, energy policy, food safety, procurement, Internet policy and more. That's why Fast Track for sweeping TPP-style agreements is so controversial and why Congress has only allowed it to go into effect for five of the last 21 years. 

Rep. Velazquez: "New York lost more than 374,000 manufacturing jobs since NAFTA and the World Trade Organization agreements." That's right: And New York is not alone. Across the 50 states, the record of the status quo trade model that the TPP would expand has been lost jobs, lagging exports, increasing trade deficits, and depressed wages. Click here to see how your state has fared under the status quo trade model

Rep. Dold: "Ninety-five percent of the world's consumers are outside of the United States" Irrelevant: Less than 2 percent of those consumers live in TPP countries with consequential tariffs, most of whom live in Vietnam, where wages are too low to afford most U.S. exports.

Rep. Levin: "You put some language into this bill on currency. It's like every other negotiating objective. It's not even Swiss cheese, with lots of holes.  It's the weakest kind of cheese that has no real substance to it...Those negotiating objectives really are not meaningful, they're so vague. And it's the person who negotiates it who judges whether those vague negotiating objectives have been met." Indeed: Cheese metaphors aside, Congress' negotiating objectives in the 2015 Fast Track bill, as in past Fast Track bills, are not enforceable. The bill does not condition a president’s Fast Track privileges on trade negotiators actually meeting Congress’ negotiating objectives. Under past iterations of Fast Track, Democratic and Republican presidents alike have simply ignored Congress' negotiating objectives, including ones regarding currency manipulation. 

Rep. Meehan: "If we're not setting the rules on global trade, China will."  False dichotomy: “We” did not write these rules.  The draft TPP text was crafted in a closed-door process that granted privileged access to more than 500 official U.S. trade advisors, nine out of ten of them explicitly representing corporations.  It is little surprise then that leaked TPP terms include new monopoly patent rights for pharmaceutical companies that would increase healthcare costslimits on efforts to reregulate Wall Street, a deregulation of U.S. gas exports that could increase domestic energy prices, maximalist copyright terms that could thwart innovation and restrict Internet freedom, and new investor protections that incentivize offshoring.  Good luck selling that as advancing U.S. interests. Also, the notion that the establishment – or not – of any specific U.S. trade agreement would affect China’s rising influence is contradicted by the record

Rep. Lewis: "This Congress must be a headlight and not a taillight or history will not be kind to us." On point: History has already not been kind to members of Congress who vote against the majority U.S. public opposition to more-of-the-same trade deals. In recent elections, incumbents who voted for status quo trade deals have been unseated by fair trade candidates who attacked their votes against the majority. 

Rep. Cuellar: "Who are those companies [who are] exporting?  Ninety-three percent of those companies in Texas are small and medium size, so therefore this is how we create good jobs here in the United States."  Misleading: Most exporting firms are small and medium size simply because most firms overall are small and medium size. The more relevant question is what share of small and medium businesses depend on exports for success. In Texas, just one out of ten small and medium businesses export any good to any country, while more than half of the state's large corporations are exporters. Exporting is primarily the domain of large corporations, not small businesses.  Moreover, small businesses have actually seen their exports decline and their export shares shrink under the trade model that the TPP would expand.

Rep. DeLauro: "Fast Track denies public scrutiny. It denies debate in this House. And it relinquishes our congressional authority and does not allow us to amend a piece of legislation that will have such an effect on people's lives in this country...This trade agreement is only going to hurt [workers'] ability to have a job and to increase their wages. If we want to change that, then our job today is to vote down this bill, say no to Trade Adjustment Assistance, and say no to Fast Track."  Mic drop.

June 11, 2015

Why the Founding Fathers Would Oppose Fast Track

Tomorrow members of Congress plan to take a controversial, career-defining vote on Fast Tracking the largest expansion to date of the unpopular status quo trade model.  A majority of the U.S. public, most House Democrats and a sizeable bloc of House Republicans stand in opposition.

The coalition opposing Fast Track for the Trans-Pacific Partnership (TPP) is larger and more diverse than in any preceding trade policy fight, including Internet freedom advocates, family farmers, environmentalists, Main Street businesses, labor unions, feminists, faith groups, consumer advocates, development organizations, LGBT groups, and retirees. The breadth of the opposition reflects the wide scope of broadly-held goals that the sweeping TPP pact would undermine:  middle class jobsWall Street reformfood safetyInternet freedoma clean environment, and affordable healthcare, to name a few. 

But if that weren’t enough for members of Congress still on the fence, a new legal analysis reveals that the TPP may also undermine the U.S. Constitution. 

That’s the conclusion of Alan Morrison, a constitutional law professor and associate dean at George Washington University Law School who has practiced law for 45 years, taught at six law schools including Harvard, and argued 20 Supreme Court cases.

Morrison warns in a letter to Congress that the TPP’s proposed expansion of a controversial parallel legal system for foreign corporations, known as “investor-state dispute settlement” (ISDS), “improperly removes a core judicial function from the federal courts and therefore violates Article III of the Constitution.” 

TPP’s expansion of ISDS would newly empower thousands of foreign corporations to bypass the entire U.S. legal system and challenge U.S. laws before private international tribunals comprised of three attorneys.  

These three individuals would not be constitutionally appointed and salaried U.S. judges, but private lawyers who are paid by the hour.  As Morrison points out, "many of those who serve as arbitrators in one ISDS case represent investors challenging governments in another."  The three ISDS lawyers, though acting like a court, would not be bound by a system of legal precedent.  They would be authorized to rule against U.S. laws and order U.S. taxpayer compensation in decisions that could not be appealed on the merits or reviewed in U.S. courts.

If you think that the Founding Fathers might have frowned on this system, you’re not alone.  The U.S. Constitution states in Article III that U.S. courts, presided over by salaried U.S. judges, have judicial authority over challenges to U.S. laws.  Instead, the TPP would empower an ad-hoc group of three bill-by-the-hour private lawyers operating outside of the U.S. legal system to issue binding decisions on corporate challenges to U.S. laws. 

Morrison concludes, “The Administration owes it to Congress and the American people to explain how the Constitution allows the United States to agree to submit the validity of its federal, state, and local laws to three private arbitrators, with no possibility of review by any U.S. court.”

The TPP’s expansion of this constitutional aberration would threaten the policies that we rely on for a clean environment, stable economy and healthy communities.  Since ISDS tribunals, unlike U.S. judges, are not bound by legal precedent or substantive appeal, they are free to concoct broad governmental obligations to foreign investors and then rule against environmental, financial and health policies. 

Indeed, they are incentivized to do so, since some of the tribunalists, unlike U.S. judges, get paid and picked by those who launch the cases (i.e. foreign investors).  Imagine if the plaintiff (or defendant) in a U.S. court case got to select and pay the judge.  The more that ISDS tribunalists rule in favor of foreign investors and against government policies, the more they boost investors’ interest in launching further ISDS cases and picking them as the highly-paid tribunalists.

It is little surprise then that ISDS tribunalists have repeatedly used creative interpretations of foreign investors’ rights to rule against public interest policies under existing ISDS-enforced pacts.  This includes ISDS rulings against the Czech Republic’s decision not to bail out a bank, a Canadian province’s nondiscriminatory requirement for oil corporations to support local research and development, and a Mexican municipality’s decision not to authorize a waste facility near a nature reserve that is an UNESCO World Heritage Site and home to indigenous communities.  

Pending ISDS cases include a U.S. natural gas firm’s challenge of a Canadian moratorium on fracking, a Swedish energy company’s case against Germany’s phase-out of nuclear power after the Fukushima nuclear disaster, and Philip Morris’ ISDS attacks on anti-smoking policies from Uruguay to Australia.

While ISDS tribunals cannot directly require governments to overturn laws, their imposition of massive penalties on taxpayers can have that effect. Morrison explains: 

If a law is found to be inconsistent with an investor protection provision, it may remain in effect, but other investors could also bring claims seeking U.S. taxpayer compensation. Thus, an adverse arbitral decision under TPP may well result in repeal or amendment of the offending law…Indeed, the mere instigation of an ISDS proceeding has resulted in other governments, including Germany and Canada, reversing specific regulatory decisions as part of compensation packages for investors.

The TPP would dramatically expand the threat posed by this constitutionally-suspect system, as the deal would roughly double U.S. exposure to ISDS attacks against U.S. laws.  The TPP would newly empower more than 1,000 additional corporations in TPP countries, which own more than 9,200 additional subsidiaries in the United States, to launch ISDS cases against the U.S. government. No other U.S. pact has subjected the United States to such an increase in ISDS liability.

What kinds of U.S. laws and regulations would be vulnerable to corporate challenge under this unprecedented expansion of U.S. ISDS liability?  Morrison spells out some examples:

  • E-cigarette regulations: “If Congress decided to regulate [e-cigarettes] after enactment of the TPP, a non-U.S. investor from a TPP country that makes e-cigarettes here could ask an ISDS panel to rule that its investment-based expectations were improperly violated and thus that it is entitled to damages under the minimum standard of treatment provisions.”
  • Water rationing for drought-stricken California: “A similar challenge could be made by a TPP investor who owned farm land in California and objected to an intensification of mandatory water rationing for farms enacted after the TPP goes into effect, even if such rules also applied to U.S. owners of land that would be adversely affected by them.”
  • A $15 minimum wage: “Or the non-U.S. TPP-owner of restaurants in Los Angeles could demand arbitration over a post TPP-enactment of an increase in the minimum wage to $15 an hour, which, he claims, violates his investment-based expectations when he decided to purchase the restaurants.”

Such TPP threats are among the many that have spurred today’s widespread opposition to Fast Track.  After years of mounting evidence that the TPP would threaten middle class stability and commonsense consumer and environmental safeguards, members of Congress have plenty of reasons to vote “no” on Fast Track tomorrow.  But for those who need yet another reason, the TPP’s apparent violation of the U.S. Constitution should suffice.   

June 10, 2015

New Public Citizen Report Documents Systematic Bipartisan Betrayals on ‘Deals’ Made by Presidents, Congressional Leaders in Exchange for Trade Votes

Broken Promises, Lost Elections: Goodies Promised in Exchange for Trade Votes Don’t Materialize, Don’t Shield Representatives From Voters’ Wrath

As the Obama administration and GOP congressional leaders resort to promising special favors in attempt to entice members of Congress to buck majority opinion and support Fast Track, a report released today by Public Citizen reveals that such promises to extract controversial trade votes consistently have been broken, exposing representatives to angry constituents and electoral losses.

Facing bipartisan congressional opposition to Fast Track trade authority and polls showing majority U.S. public opposition, the Obama administration has moved beyond trying to sell Fast Track on its merits and is now offering rides on Air Force One, promises of infrastructure legislation and pledges to help representatives survive the political backlash of a “yes” vote on Fast Track. GOP congressional leaders are promising post-hoc policy fixes to trade laws and more. A comprehensive review of the past two decades of such trade vote deal-making shows that promises of policy changes, goodies for the district and political cover for unpopular trade votes rarely materialize, contributing to electoral upsets for representatives of both parties who trade their votes.

“Members of Congress should know better than to trust an exiting president’s promises of political cover or to rely on vote-yes-now-goodies-later deals for voting ‘yes’ on such a controversial, career-defining issue as Fast Track,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “Our research of scores of deals over the past 20 years shows no matter who the president or congressional leadership is, almost all of the promises made in the heat of a trade vote go unfulfilled, and representatives who vote ‘yes’ are repeatedly left in political peril.”

Already the first promise of the 2015 Fast Track battle has been broken. U.S. Sen. Maria Cantwell (D-Wash.) and colleagues cast deciding Senate votes after obtaining commitments that Congress would have votes to reauthorize the Export-Import Bank before its June 30, 2015, sunset. Now GOP leaders have made clear this will not occur. Whether Ex-Im will ever be reauthorized is in doubt.

Members of Congress repeatedly have endured such trade vote-swapping deals gone wrong as pledged import safeguards have not materialized, promised funds for community development or worker assistance have proven illusory, and dreams of new infrastructure projects have remained dreams. Among current members of Congress featured in the report who experienced deals for trade votes gone bad are:

  • U.S. Rep. Robert Aderholt (R-Ala.) and the Empty Sock: Aderholt still awaits changes to the Central America Free Trade Agreement (CAFTA) to protect his district’s now-devastated sock manufacturers.  President George W. Bush promised this in 2005 to obtain Aderholt’s “yes” vote for CAFTA. 
  • U.S. Rep. Sam Farr (D-Calif.) Flower Deal Wilts: Farr voted for the North American Free Trade Agreement (NAFTA) after the Clinton administration promised to safeguard the California cut flower sector from import surges. After four years of ballooning flower imports from Mexico displaced California producers, Farr voted against giving President Clinton Fast Track in 1998.
  • U.S. Rep. Alcee Hastings (D-Fla.) Tomato Wipeout: Hastings and other Florida representatives voted for NAFTA on the basis of the Clinton administration’s promises to protect Florida’s tomato growers from destabilizing surges in tomato imports from Mexico. But the Clinton administration did not honor its pledge when, within two years of NAFTA, tomato imports multiplied, Florida’s tomato revenues dropped more than 40 percent, and the number of Florida tomato growers fell 60 percent.

“Even in the rare case where a promise to ‘fix’ a controversial trade deal has been upheld, the acclaimed tweak has failed to offset or outlast the damage wrought on local communities,” said Ben Beachy, research director of Public Citizen’s Global Trade Watch. “Voters do not tend to remember boasts of finite safeguards or worker assistance funds, while mass layoffs, farm foreclosures and news reports on inequality provide fresh, ongoing reminders of how their member of Congress voted on Fast Track and Fast Tracked deals.”

For some members of Congress, the decision to cast controversial trade votes in exchange for empty promises of political cover has exposed them to such constituent ire as to lead to electoral defeat:

  • Former U.S. Rep. Robin Hayes (R-N.C.) provided the final votes to pass Fast Track in 2002 and CAFTA in 2005, after telling his constituents he would oppose both. He flip-flopped on the basis of promises that failed to prevent thousands of trade-related job losses in his district, many of them at textile factories. In the 2008 election, a former textile worker, Larry Kissel, decisively beat Hayes after hammering him for his trade vote swaps.
  • Former U.S. Rep. Matthew Martinez (D-Calif.) stated support for Fast Track in 1997 as an apparent quid-pro-quo for President Clinton’s promise to approve a highway extension project in his district. Martinez never got the highway, but he did lose his job. In 2000, Martinez, an 18-year incumbent, lost 29 to 62 percent to a primary challenge by Hilda Solis, who ran against his support for Fast Track.

“This report provides a somber warning to members of Congress who may be approached by the Obama administration or GOP congressional leader to vote for Fast Track in exchange for promised new programs or policies to ameliorate feared damage or in exchange for unrelated goodies for the district,” said Wallach. “The trade votes and the damage wrought by bad trade agreements last forever, with voter ire only escalating over time, while our research shows that few deals made for trade votes are met and the few that are often fail to remedy the feared problems.”

Today’s report includes an annex of 92 promises made for trade vote support. Only 17 percent of these promises were kept, even though many were memorialized in the text of trade agreements’ implementing legislation. The overall finding of the report is that if appropriated funds are not locked in an account and if the policy change or amendment to a trade pact is not made before the trade vote, funding and follow-through is not likely to be forthcoming after the vote. Promises to seek future renegotiations of trade agreement provisions or to take action in future negotiations were broken most of the time. Of the past 64 policy promises designed to put a gloss on a contested agreement and give political cover to members of Congress, just seven were kept and 57 broken. Public Citizen also documented 28 pork barrel deals made in exchange for “yes” votes on trade agreements, of which nine were kept and 19 broken. 

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