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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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November 21, 2017

Import Alert: Careful What You Eat During Thanksgiving

Trade Deals Like NAFTA Have Led to a Surge of Imported Food, Threatening Food Safety in America

There’s a good chance that some of the food you will eat during Thanksgiving was produced outside the United States. In fact, about 50 percent of fresh fruit and 94 percent of seafood consumed in the United States is imported. But even though Americans are consuming more imported foods today than ever – largely due to trade deals like the North American Free Trade Agreement (NAFTA) – the vast majority is never inspected before it reaches your plate.

Since 1993, U.S. food imports from Mexico and Canada have tripled, increasing from 10.6 million to 32.2 million metric tons. During the same time, U.S. food imports from the rest of the world grew as well, but only at half the rate.

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While the average American diet relies more and more on imported food, safety regulations and food inspections have not kept up. Only one percent of most food, including dairy, seafood and fruit, are inspected by federal regulators. Less than ten percent of meat and poultry is inspected.

Yet, “trade” agreement rules, like those in NAFTA, require us to import meat and poultry from any processing facility in any country that is deemed to have “equivalent” safety standards, even if core parts of U.S. food safety requirements are not met. Before NAFTA, only meat and poultry from individual processing plants in Canada and Mexico that met U.S. safety and quality standards – and that were certified as doing so by U.S inspectors – could be sold here. NAFTA not only required us to allow imports produced under the other countries’ differing standards, but required us to accept meat from any and all processing plants in Mexico and Canada that were certified as complying with those countries’ domestic standards, not necessarily U.S. standards.

The non-partisan Government Accountability Office describes the federal oversight of food safety as an area of “high risk for fraud, waste, abuse, and mismanagement, or most in need of transformation.” Their 2016 report says one of the top obstacles to food safety is that “a substantial and increasing portion of the U.S. food supply is imported, which stretches the federal government’s ability to ensure the safety of these foods.”

Unfortunately, things may get worse. President Trump has proposed a budget cut of $83 million to the food safety programs administered by the Food and Drug Administration, which oversees 80 percent of the U.S. food supply.

Recent polling shows that food safety is one of the top issues voters are concerned about in the ongoing NAFTA renegotiation. That’s why a coalition of labor, environmental, family farm, consumer, and faith organizations representing over 12 million people has demanded that the renegotiated NAFTA require all imported food to meet U.S. safety standards and mandate more robust inspection. Plus, the groups are demanding that a NAFTA replacement restore the country-of-origin labels on meat that were eliminated in 2016 after the Canadian and Mexican governments successfully attacked the popular U.S. policy as an illegal trade barrier.

NAFTA’s food safety rules are a recipe for disaster. So as you sit down to enjoy your Thanksgiving meal, be careful what you eat!

November 16, 2017

News Analysis: Next Round of NAFTA Talks May Bring Renegotiation to an Inflection Point if Canada and Mexico Refuse to Engage on U.S. Proposals

From Lori Wallach, Director, Public Citizen’s Global Trade Watch

Renegotiation of the North American Free Trade Agreement (NAFTA) faces a critical juncture as the fifth round of talks officially starts Friday in Mexico City.

At issue is whether Canada and Mexico will engage on a series of proposals to significantly reshape NAFTA that were submitted by the United States during the fourth round of talks in October – and, if they refuse, how the administration will respond. Also at issue if they do engage is what additional proposals the administration will put forward to deal with the abysmal labor standards and wages in Mexico. How these issues play out will greatly affect the fate of NAFTA.

The U.S. proposals from October would reverse some of NAFTA’s incentives to outsource investment and jobs from the United States and are among reforms that Democratic and Republican members of Congress, labor unions and other NAFTA critics spanning the political spectrum have demanded for decades. More than 930,000 U.S. workers have been certified under just one narrow government program as losing their jobs to NAFTA.

The administration has made clear that the choice facing Canada, Mexico and the corporate lobby is either a new approach or no NAFTA. Ironically, the corporate lobby’s strategy increases the likelihood of a no-NAFTA future.

The corporate lobby’s response to the administration’s proposals to eliminate NAFTA job outsourcing incentives suggests that the new reality of a different NAFTA or no NAFTA is being dismissed as a bluff, or that the corporate lobby prefers no NAFTA. Whether a case of magical thinking or ideological rigidity after years of corporate interests dictating U.S. trade policy, the fifth NAFTA renegotiating round will reveal whether the corporate lobby has persuaded the governments of Canada and Mexico to join a game of high-stakes poker that increases the odds of the no NAFTA outcome.

Given that the U.S. Chamber of Commerce, National Association of Manufacturers, Business Roundtable, Coalition of Service Industries, PhRMA and other business lobbies have spent decades and hundreds of millions to insert protections and policies unrelated to trade into U.S. “trade” agreements, they may prioritize defending the protections they won. But why associations representing U.S. farmers and ranchers would get on that ideological bandwagon is inexplicable. The Farm Bureau and commodity groups have joined the Chamber in the our-way-or-the-highway approach that paves the way to a no NAFTA outcome. But the agriculture sector is most reliant in sustaining NAFTA and its duty access for U.S. exports.

If the United States were to withdraw from NAFTA, the pact’s implementing legislation would authorize the president to proclaim a reversion of trade terms between the three countries to the Most Favored Nation tariff levels of the World Trade Organization (WTO). Forty-six percent of U.S. tariff lines, 50 percent of Mexican tariff lines and 76 percent of Canadian tariff lines are duty-free under the WTO, and the existing tariffs would be drastically lower than those before NAFTA because the WTO tariff cuts have been fully implemented. The current average WTO Most Favored Nation applied tariffs on a trade-weighted basis for the United States, Mexico and Canada are respectively 2.4, 4.5 and 3.1 percent.

However, agriculture is the outlier: U.S. exports to Mexico, beef, pork, poultry and wheat would face significant tariffs. (Almost all U.S. corn exports to Mexico, by far the largest U.S. agricultural export, would be duty-free. Mexico went duty-free for yellow corn for all WTO countries in 2008, thus 95 percent of U.S. corn exports to Mexico would be duty-free without NAFTA. A large share of U.S. soy exports also would be duty-free under Mexico’s WTO tariff rates.) Just assuming hypothetically that the president withdrew from NAFTA and chose not to revert to duty free treatment for Canada under the 1988 U.S.-Canada Free Trade Agreement, which was suspended not terminated when NAFTA was enacted, WTO tariffs for Canada would be significant for U.S. exports to Canada of wheat, barley, dairy and beef. 

That farmers have the most to lose under the no-NAFTA outcome and do not have a dog in the fight over auto-sector rules of origin or foreign investor protections, for instance, makes even more perverse their participation in the Chamber’s dangerous game of trying to shut down any discussion of the U.S. NAFTA restructuring proposals that enjoy wide support outside the corporate lobby groups.

U.S. Trade Representative Robert Lighthizer’s response to team status quo’s declaration that the proposed reforms are non-starters was to declare: “These changes of course will be opposed by entrenched Washington lobbyists and trade associations.” The corporate lobby has been in a full meltdown since, operating under a premise that somehow rejecting the proposals will make them go away.

In contrast, Lighthizer has raised a tantalizing prospect: a new trade agreement model could rebuild broader consensus for trade expansion, creating a new bipartisan coalition to pass a NAFTA replacement. The proposals that have triggered the corporate hissy fit would further this goal. There is wide support in Congress and among unions, small businesses and consumer groups for the October U.S. proposals to:

  • Eliminate some investor protections that make it cheaper and less risky to move American jobs to low-wage Mexico,
  • Roll back waivers of Buy American and other domestic procurement preferences that outsource U.S. tax dollars rather than reinvesting them to create jobs at home,
  • Tighten the rules of origin so that goods with significant Chinese and other non-NAFTA content would no longer enjoy NAFTA benefits, and
  • Require NAFTA countries to review the agreement every five years to ensure it is meeting desired outcomes and affirmatively agree to extend it.

Assuming that the countries can engage in real negotiations at the fifth round, the next step toward building broad consensus for trade expansion will involve the administration creating proposals to raise labor and environmental standards and wage levels in Mexico. There is no real remedy to NAFTA’s outsourcing incentives unless a new NAFTA raises Mexican wage levels. Canada’s proposal for a new NAFTA labor chapter is much closer to what unions in all three countries seek than the already-rejected Trans-Pacific Partnership (TPP) labor and environmental standards language that has served as the template for U.S. proposal to date. At the same time, the U.S. administration is exploring what new approach could remedy the clear failings of the labor provisions in past U.S. pacts, a problem made glaringly clear with the recent Central America Free Trade Agreement ruling that persistent, severe labor abuses in Guatemala did not violate the standard U.S. trade-pact labor rules included in that pact.

Also key to attracting large blocs of voters in favor of a revised deal will be not adding the TPP’s extended monopoly protections for pharmaceutical firms or terms rolling back food safety and financial regulation. The administration is inclined to support these terms, but various TPP signatories led by Canada rejected the very provisions last weekend, which derailed efforts to sign a TPP-11 deal.

In an odd role reversal, longtime critics of NAFTA hope Canada and Mexico will engage on the U.S. reform proposals during the fifth round. In contrast, if the NAFTA partners mimic the corporate lobby’s dismissive non-started approach, this round of talks could be the beginning of the end for NAFTA.

Given that low wages and lax environmental standards in Mexico draw firms to relocate production and jobs from the United States, the best outcome for workers in all three countries from the ongoing NAFTA renegotiations is a new agreement that raises standards. Indeed, raising wages in Mexico is essential to reversing American job outsourcing to its southern neighbor, where average manufacturing wages are now 9 percent lower in real terms than before NAFTA. However, because NAFTA includes provisions that explicitly incentivize outsourcing, and almost a million American workers have been certified as losing their jobs to NAFTA, and every week NAFTA helps corporations outsource more middle-class jobs, no NAFTA is better than more years of the current agreement.”

November 02, 2017

Asia Trip Spotlights Chasm Between Trump Campaign Rhetoric on Trade and Action, Raising Political Stakes for Meaningful Deliverables

WASHINGTON, D.C. – With President Donald Trump beleaguered on many fronts, the stakes for delivering on his trade promises are high as his first trip to Asia features the very nations Trump targeted with the heated trade critique that helped him win the presidency. Undoubtedly there will be announcements of “breakthroughs,” so below we offer some indicators to measure the actual trade outcomes.

Trump pledged to make U.S. trade policy “a lot better” for working people, starting with day-one action to reverse the China deficit, renegotiating or ending the “job-killing” Korea Free Trade Agreement (FTA) and reducing the U.S. trade deficit with Japan. But so far, beyond formally burying the Trans-Pacific Partnership (TPP) – a pact widely acknowledged as already dead for a lack of majority congressional support – Trump has accomplished nothing on the Asia trade front.

The lack of action is especially problematic because many of Trump’s trade critiques – including those raised by Democrats for decades - are correct. Since his election, the situation is getting worse and whether Trump can deliver on his pledges to bring down the trade deficit and create American manufacturing jobs will be  measurable via monthly government trade and jobs data.

  • The latest monthly U.S. goods deficit with China reached $35 billion (August), the largest in nearly two years. The China deficit is on track to be higher in Trump’s first year than in 2016. Absent real changes in China trade policy, Trump cannot deliver on his pledge to bring down the U.S. trade deficit and create American jobs given China typically represents nearly half of the overall U.S. goods and services deficit.
  • After doubling the U.S.-Korea goods trade deficit in its first four years, the Korea FTA is again on track for another large deficit by the end of Trump’s first year in office with the auto industry centered in his politically crucial Midwest states slammed while U.S. farmers have yet to see the promised gains.

Ironically, the trip also spotlights the hollowness of the panicky claims from the corporate lobby. No, Asian nations have not signed an alternative trade deal, the Regional Comprehensive Economic Partnership (RCEP), with China after the TPP’s demise. RCEP is as stuck as ever. No, the TPP did not go forward minus the United States. Expect claims of ‘general agreement’ on that goal on the sidelines of the Asian Pacific Economic Partnership summit in Vietnam. But in fact, the administration’s decision to roll back the investor-state dispute settlement (ISDS) corporate rights and tribunals in the North America Free Trade Agreement (NAFTA) renegotiations reflects an issue that has bogged down Japan’s efforts to get the remaining 11 countries to enact TPP. No, Trump has not launched a China trade war. Indeed, the promised trade actions on steel and aluminum are mired and the 100-day plan touted this spring proved to be a repackaged list of things China promised the Obama administration.

Some less-than-obvious indicators of concrete action would include:

 CHINA: Will Trump terminate negotiations for a U.S.-China Bilateral Investment Treaty (BIT) that the Obama administration nearly completed? Or, as China demands, revive this deal that would make it easier to outsource more American jobs to China? China has indicated some “new” trade deals could be in the offing during Trump’s visit. One way to unpack whether these are simply rewarmed promises from the past or real change will be the fate of the China BIT, an expansive treaty started by the Bush administration and almost completed by Obama. The pact, which China is keen to sign, would give Chinese firms broader rights to purchase U.S. firms, land and other assets and newly expose the U.S. government to demands for compensation from Chinese firms empowered to attack U.S. policies in extra-judicial ISDS tribunals. Former Goldman Sachs executive-turned National Economic Council chief Gary Cohn reportedly shut down plans to terminate the China BIT negotiations earlier this year.

Given that the administration is demanding a major roll back of the ISDS provisions in NAFTA, it would be notable if Trump does not shut down the China BIT, which provides special protections to firms that outsource to China and simultaneously would greatly expand U.S. ISDS liability. Because only a small portion of foreign investment in the United States is now covered by ISDS agreements, to date the United States has avoided paying corporations over ISDS claims. But with China continuing to invest aggressively throughout the United States, a BIT with China would greatly increase U.S. liability. According to a soon-to-be-unveiled Public Citizen database on the footprint of Chinese investment here, total investment reached over $45 billion in 2016 including over 40 acquisitions of American assets worth at least $50 million each, a high-water mark for inbound investment. Buyers include large Chinese conglomerates with ties to the government like Dalian Wanda as well as state-owned enterprises like the Chinese sovereign wealth fund, China Investment Corporation. Chinese investors have entered U.S. sectors similar to those in which foreign investors have launched the most egregious ISDS cases worldwide such as energy and pharmaceuticals. These 2016 deals include Chinese purchases of over 100 oil wells in Texas and a pharmaceutical distribution center in Kentucky.

KOREA: Will Trump push for changes to the 2012 U.S.-South Korea Free Trade Agreement (FTA) or will his visit focus only on North Korea? How to peacefully resolve North Korea’s nuclear escalation is a thorny question. What should happen with the Korea FTA is an entirely separate question that is not complicated. Civil society organizations and many Democrats in Congress opposed the U.S.-Korea FTA in 2011 when the deal was before Congress because at its heart are new rights and powers for corporations to raise medicine prices and attack environmental, health and financial stability safeguards and to get duty free access for goods with significant Chinese content.

U.S. exports to Korea actually declined after the pact. U.S. average monthly exports to South Korea have fallen in nine of the 15 U.S. sectors that export the most to South Korea, relative to the year before the FTA. U.S. exports to South Korea of agricultural goods have even fallen 5.4 percent in the first five years of the FTA. As with most other U.S. FTAs, imports into the United States soared. Thus, the U.S. goods trade deficit with Korea increased by 85 percent in five years. The U.S. goods trade deficit with Korea is once again deteriorating as imports from Korea grow faster than U.S. exports to Korea, reaching $2.3 billion in the latest available monthly data (August 2017).

A broad network of Korean civil society organizations, trade unions, public health organizations similarly opposed the U.S.-Korea deal. Opposition Korean parliamentarians raised many of the same concerns over corporate rights and ISDS, financial stability, access to medicines and more.  The deal sparked violent clashes among parliamentarians after parliament was physically barricaded to avoid a vote and then when tear gas was unleashed in the legislative chambers.

JAPAN: Will Japan agree to a bilateral U.S. trade agreement and/or specific measures to reduce what is the third largest bilateral U.S. trade deficit (behind only China)? The U.S.-Japan goods trade deficit was $74 billion in 2016, and Japan has been a permanent fixture on the U.S. Treasury Department’s “monitoring list” for currency manipulation. It is unclear whether Trump can achieve much to address the deficit or the bipartisan call for binding disciplines on currency manipulation, which Japan rejected in the context of the TPP. But, interestingly, the administration’s position on ISDS in NAFTA is thwarting the Abe administration’s efforts to salvage the widely-rejected corporate rights enshrined in the TPP via a “TPP-11” deal. Many TPP countries, including Malaysia, Vietnam, Australia, and others, had only accepted the ISDS provisions under extreme duress to make a deal with the United States. But recent comments by U.S. Trade Representative Robert Lighthizer about the U.S. proposals to radically roll back the ISDS provisions in the context of the NAFTA renegotiations has emboldened the opposition to these provisions among the TPP-11 nations. Lighthizer’s explanation of why investors do not need ISDS were widely circulated in Australia, New Zealand, and elsewhere.

The New Zealand government, for instance, had been supporting Abe’s efforts to salvage the TPP with minimal changes, but New Zealand’s recently elected new Prime Minister Jacinda Arden, announced this week that her government would “do our utmost to amend the ISDS provisions of the TPP” and that her Cabinet has “instructed trade negotiation officials to oppose ISDS in any future free trade agreements.” Adding this bombshell to the reported 50 requests by the TPP-11 countries to freeze or amend the deal’s clauses, including shelving intellectual property provisions on pharmaceutical data, the prospects for a TPP-11 deal in Vietnam are diminishing.  Even in Japan itself, the political foundation within Abe’s ruling Liberal Democratic Party (LDP) is on much shakier ground for a TPP-11 deal.  Koya Nishikawa, a former agriculture minister and LDP leader who was key in delivering needed support from the powerful farm caucus for the TPP, recently lost his seat in the Japanese Diet.  Without Nishikawa, Japan’s already skeptical agricultural sector may not be supportive of a TPP deal.

  • On TPP-11 dynamics: Jane Kelsey, University of Auckland, kelsey@auckland.ac.nz;
  • English-speaking expert from Japanese civil society on TPP-11 and Japan’s political dynamics surrounding trade: Shoko Uchida, Director, Pacific Asia Resource Center, kokusai@parc-jp.org

October 26, 2017

In Epic WTO v. Flipper Case, Trade Organization Ruling in Favor of U.S. Dolphin-Safe Tuna Labeling Program May Reflect Concerns About Trump Criticisms of WTO

U.S. Gutted Ban on Dolphin-Deadly Tuna After 1991 Trade Case; Today’s Ruling Means U.S. Dodges $163 Million in Sanctions for Voluntary Labels That Replaced Ban – But Mexico Can Appeal Decision

WASHINGTON, D.C. – After two decades of successful trade attacks that led to the gutting of a U.S. ban on tuna caught in a manner that harms dolphins, today’s World Trade Organization (WTO) ruling was a welcome if unexpected shift that may reflect the institution’s response to intensive pressure by the Office of the U.S. Trade Representative to reform the WTO’s dispute resolution process and President Donald Trump’s threats to withdraw from the body, Public Citizen said.

At issue in today’s ruling are voluntary labels that provide consumers with information to enable them to choose dolphin-safe tuna. The labels were put in place after the U.S. eliminated its ban on dolphin-deadly tuna after losing previous WTO cases. Millions in American taxpayer funds have been spent defending attack after attack on dolphin protections at the WTO.

“The WTO is a political institution, so this ruling may be motivated by a sense of self-preservation, given that the administration has spotlighted how WTO tribunals order countries to gut domestic policies based on unaccountable tribunals making up new obligations to which countries never agreed,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “At another politically fraught moment for the WTO shortly after the 1999 Seattle WTO protests, when a ruling against Europe’s ban on asbestos was seen as substantiating protestors’ claims about the body, a surprise reversal also was issued.” 

Today’s ruling is subject to appeal by Mexico. Public Citizen called on the Trump administration and the Mexican government to include language in North American Free Trade Agreement (NAFTA) renegotiations explicitly affirming the current U.S. labeling program so as to shut down any future disputes after 25 years of trade-pact attacks on U.S. dolphin-safe labeling policies. The initial 1991 tuna-dolphin case, dubbed GATTzilla v. Flipper, instigated environmental and consumer group engagement on “trade” agreements.

Today’s ruling focused on whether a 2016 strengthening of the enforcement provisions of the U.S. dolphin-safe tuna labeling regulations with respect to countries other than Mexico made the policy compliant with WTO rules. The WTO repeatedly had declared that the policy discriminated against Mexico, and that rules that limited exceptions for policies aimed at conserving natural resources or protecting animal life or health did not apply. Most recently, an April 2017 WTO decision authorized Mexico to impose an annual $163 million in trade sanctions against the United States, concluding that 2013 changes to the policy still did not meet WTO rules. The April ruling set the amount of sanctions Mexico could impose after the WTO ruled against the U.S. labeling program in 2011, upheld that ruling on appeal in 2012, ruled in 2015 that the initial U.S. changes to the policy did meet WTO rules and upheld that decision on appeal.

Today’s decision means that the United States will not immediately face the previously authorized $163 million in annual trade sanctions.

The decision is the latest development in an ongoing trade impasse between the U.S. and Mexico on dolphin-safe tuna that started in 1991. The current round of attacks started in 2008 with the WTO repeatedly ruling against the U.S. dolphin-safe tuna labeling program even though it is strictly voluntary and accessible to Mexican fishing fleets should they opt to use dolphin-safe tuna-fishing methods just as U.S., Ecuadorean and other nations’ fleets do. Tuna that does not meet the dolphin-safe standard still can be sold in the United States without that label.

“To make sure that the attack on dolphin-safe tuna ends once and for all, a formal and final settlement of the case safeguarding the policy must be part of NAFTA renegotiations,” Wallach said.

Short overview and background of the case: 1991-2017  

October 20, 2017

How Progressives Can & Must Engage on NAFTA Renegotiations

Findings from National Poll

Trade stands out from every other policy issue because Donald Trump’s unhappiness with the status quo is shared by virtually all progressive advocacy groups and nearly all Democratic Members of Congress who are otherwise fighting Trump every day. It is urgent for progressives to engage on trade because Trump has triggered the renegotiation of the North American Free Trade Agreement (NAFTA), which will likely conclude early next year or sooner if the president gives the six-month notice provided for in NAFTA to withdraw the U.S. as a signatory. The president also has the ‘fast track’ authority won by President Obama that guarantees him a vote 90 days after he submits an amended agreement to the Congress, with amendments, Senate filibuster and supermajority voting forbidden.

At a time of great peril for our democracy and deepening public opposition to Donald Trump on many fronts, he wins high marks from voters on handling trade and advocating for American workers: 46 percent approve of his handling of trade agreements with other countries, 51 percent, his ‘putting American workers ahead of the interests of big corporations’ and 60 percent, how he is doing “keeping jobs in the United States.”[1]

The Republicans continue to hold an advantage over Democrats on handling the economy in polling.[2] And frankly, Democrats’ advantage in the generic congressional ballot is not as impressive as it should be (8-point lead among registered voters but only 5 among likely voters), as Democrats in Congress seem focused on everything but economic issues.  The Democrats’ silence on the trade issue this year and in the 2016 presidential election – even though three-quarters of House and Senate Democrats opposed trade authority for the TPP – contributed mightily to Trump’s victory in many of the Rustbelt states and to the Democrats’ current disadvantage on the economy.

Progressives need to communicate that they are fighting for American jobs, for raising incomes and wages and for putting the interests of American workers before corporations who shaped NAFTA and are now using it to accelerate job outsourcing, which our research showed is viewed by voters as the greatest threat to America’s living standards.

Fighting for the right major changes to NAFTA is broadly popular among Trump voters as well as the college educated and diverse Clinton voters who are more conflicted about trade, TPP and NAFTA. Focusing on NAFTA in the right way and calling out Trump on what changes he is really fighting for allows progressives to speak powerfully on the economy, lagging wages and American jobs.

Outsourcing and trade agreements

What Donald Trump knows and all progressives must understand is that for voters, the trade issue is not about trade agreements per se. It is about the outsourcing of good paying American jobs that these agreements facilitate.

What many activists will find most challenging is how little voters dwell on the agreements themselves and how uncertain most of them are about their effects on the economy, jobs and living standards. Even though TPP was debated nationally in the presidential contest and championed by Trump and Obama, only 59 percent of voters in our recent poll could identify it now. In focus groups conducted this summer, Trump and Clinton voters struggled to remember what TPP was all about.

A sizeable number are unsure of NAFTA’s impact: 15 percent unsure on the economy, 20 percent on jobs and 26 percent on whether it damaged the environment.

People do hold strong views, become animated in focus groups, and connect the dots to their daily lives when ‘outsourcing’ is brought up. Nearly 60 percent view ‘outsourcing’ negatively, with nearly half intensely negative; only 11 percent view ‘outsourcing’ favorably, putting it in the same league with Vladimir Putin.[3]  Just hearing the word in focus groups made both non-college educated voters in the Midwest states and college-educated Seattle voters see red: those are “middle income jobs,” companies who outsource are “traitors” and “should be financially penalized.”

It is outsourcing that is at the heart of people’s anger with CEOs and big corporations that pursue profits by shifting investments to places with much cheaper labor costs, without any loyalty to their country, company and employees. That anger unites college graduates and white working class voters: 59 percent of the latter react negatively to outsourcing, and the college voters are almost 10-points more negative.

Progressives’ entry point to the trade debate is not the trade agreement themselves, but the outsourcing that people view as the biggest and growing threat to decent paying American jobs. NAFTA renegotiations give progressives an opportunity to talk about an economy where jobs don’t pay enough to live on, which will improve their standing on the economy, while also advocating for changes to NAFTA and the U.S. approach to trade that can really lead to more, better paying American jobs. 

Beyond partisanship

NAFTA is divisive and polarizing – but progressives hoping to ignore the issue allow Trump to continue to prevail on American jobs. If progressives make ‘outsourcing’ the entry point into the trade debate, they can unite Democrats and Trump voters around effective criticisms of NAFTA and messages demanding Trump deliver major changes.

Our research shows Democratic voters become critical of trade agreements and NAFTA when they realize how corporate special interests are lobbying in secret to include provisions that provide special powers to corporations to sue the U.S. government before tribunals of corporate lawyers over our laws to demand taxpayer money or insert provisions into NAFTA to reverse Dodd-Frank Wall Street regulations. This was also true over the course of the TPP debate, as Democrats and progressives became educated about these very same issues. Our recent research showed that college graduates are more anti-corporate than the white working class – which explains why they react more strongly to an anti-corporate NAFTA message and against Investor-State Dispute Settlement (ISDS) and its corporate tribunals.

Together, a critique of NAFTA for facilitating outsourcing and failing to put American workers ahead of corporations shifts Democrats even more dramatically against NAFTA.

Wide support for changes to NAFTA

Support for changing NAFTA is broad. A 43 percent plurality wants to see major changes to NAFTA, while just 39 percent are looking for more modest adjustments. Even fewer Trump and white working voters are looking for small changes. After hearing criticisms of NAFTA – effectively simulating the national debate on NAFTA that is unfolding – the bloc demanding major changes comes to dominate among minority voters (59 percent), metro residents (57 percent), college graduates (55 percent), and Clinton voters (51 percent) too.  

Getting this strategic context right enables progressives to focus the battle on what changes need to happen. If Trump isn’t really pushing for the kinds of changes that are most important for voters, he could be marginalized by the NAFTA debate itself.

Voters’ Top Priorities for NAFTA Change Not Same as Trump’s

The strongest attack on NAFTA is a change the administration is failing to prioritize – and one that is critically important to the progressive agenda on trade and to progressives speaking about an economy that must produce more better-paying American jobs.

The most convincing argument for major changes says that American workers are losing because NAFTA lacks enforceable “labor and environmental standards so companies can move U.S. jobs to Mexico to pay workers poverty wages” and dump pollutants and “import those products back to the U.S. for sale.” Over 80 percent of Trump voters and over 60 percent of Clinton voters found that a convincing argument against the current NAFTA. But new terms to remedy this do not appear to be at the top of the Trump trade agenda in the leaked stories about the negotiations.

The second strongest critical argument focuses on how NAFTA has facilitated the outsourcing of good “middle class jobs to Canada and Mexico” and continues to do so every week. That was a convincing argument to 85 percent of Trump voters and 61 percent of Clinton voters.

In the next tier are arguments about the safety of our food, which also receives an intense reaction. NAFTA limits our ability to ensure food safety, which is very concerning to 63 percent of Trump voters, 54 percent of white working class voters and 42 percent of college graduates.

College graduates express a lot of concern after hearing about Investor-State Dispute Settlement – or the “special powers” given to corporations to “sue the government over our health and safety laws” for unlimited “U.S. taxpayer money.” This raised concerns among 60 percent of college graduates.

Interestingly, one of Trump’s main critiques – the trade balance - scored lower and had the lowest intensity. The key here is that progressive critiques of NAFTA are the ones that voters find most concerning.

Impact of Messaging

The strongest message that gets to Trump voters, but also rings powerfully true for Clinton voters, focuses on how NAFTA facilitates outsourcing, producing an economy where people haven’t seen a pay increase in years, which will continue to worsen unless NAFTA changes.  Rather than leveling the playing field for us, NAFTA “make[s] it easier for companies to outsource jobs to Mexico” where they “can pay employees less” so since NAFTA went into effect, our wages have “been flat.” It says that major changes are needed to NAFTA or else it will continue to give the “greenlight to corporations to outsource American jobs, pushing down wages for everyone in the US.”

By transforming the trade debate into a big economic argument with outsourcing as the main problem, progressives become the advocates for more American jobs with higher wages and salaries.

After a simulated debate where everyone heard competing arguments, half a trade-outsourcing message focused on the ongoing job loss and wage decline, and half a trade-outsourcing message focused on corporate power and privileges, voters are much more likely to believe NAFTA has been damaging and demand major changes. They are more likely to say it is bad for the economy and jobs.

While the shifts are considerable no matter which argument and message, those who heard about ongoing job losses and wage decreases were much more likely to become convinced NAFTA has hurt their own ability to get good, decent-paying jobs (+21-point shift versus +13 point shift). That is the most important change if progressives are to use the NAFTA debate to improve their credibility on the economy.

 

[1] This memo is based on a national phone survey of 1,000 registered voters, using 60 percent cell phones, conducted September 30-October 6, 2017 by Citizen Opinion on behalf of Public Citizen. The polling was preceded by six focus groups among white working class Obama-Trump voters in Macomb County, MI and Oak Creek, WI and college educated Clinton voters in Seattle Washington in July 2017.

[2] According to a June 2017 NBC/Wall Street Journal poll of 900 adults nationwide, the Republican Party has a 7-point advantage over the Democratic Party on dealing with the economy (36 to 29).

[3] Vladimir Putin viewed favorably by 15 percent of adults nationwide in a Bloomberg poll conducted July 8-12, 2017.

October 11, 2017

As Battle Over NAFTA Investor Protections Heats Up, Trinational Coalition Delivers 400,000 Petitions Demanding Elimination of Corporate Rights and Tribunals

Investor-State Dispute Settlement Becomes Key Measure of Whether NAFTA Renegotiations Will Benefit Working People or Expand Corporate Power

WASHINGTON, D.C. – Growing public opposition to the expansive corporate privileges at the heart of the North American Free Trade Agreement (NAFTA) took center stage as the fourth round of NAFTA talks began today in Washington, D.C. U.S., Mexican and Canadian civil society organizations delivered more than 400,000 petitions demanding that NAFTA’s expansive corporate rights and protections and Investor-State Dispute Settlement (ISDS) be eliminated during renegotiations. [Still photos and video available of delivery event.]

“If you want to know how trade deals like NAFTA have been rigged against working people and our communities, all you need to do is to look at the Investor-State Dispute Settlement process,” said Chris Shelton, president, Communications Workers of America.

“Americans want trade deals that will add new protections for our environment, create American jobs and raising wages, not another corporate giveaway by a phony populist like Trump, said CREDO political director Murshed Zaheed. “If Trump doesn’t use NAFTA renegotiation to eliminate the Investor State Dispute Settlement provision it will further expose his administration as craven crony capitalists masquerading as faux populists.”

“The Teamsters are North America’s supply chain union. With members in long-haul trucking and freight rail, air, at ports and in warehouses, as well as members in manufacturing and food processing, this union has a big stake in trade policy reform,” said Jim Hoffa, general president, Teamsters. “We will be monitoring the modernization of a flawed and failed NAFTA, and fighting to make sure that the new NAFTA works for working families.”

U.S. officials are expected to table a proposal on the controversial NAFTA investment chapter during this week’s negotiations. NAFTA’s investor protections and ISDS make it less risky and expensive for corporations to outsource jobs and empower them to attack domestic policies that protect public health and the environment by going before tribunals of three corporate lawyers who can order unlimited compensation to be paid to the corporations by taxpayers.

Last month, more than 100 small business leaders sent a letter calling for elimination of ISDS in NAFTA. Organizations representing U.S. state legislatures and state attorneys general and hundreds of prominent economics and law professors also have declared opposition to ISDS, as has a group of Republican members of the U.S. House of Representatives. Conservative U.S. Supreme Court Chief Justice John Roberts has warned about the threat of ISDS. But corporate interests are scrambling to defend the controversial regime they use to attack domestic laws and raid taxpayer funds.

While just 50 known ISDS cases were launched in the first three decades of this shadow legal system, corporations have launched more than 50 claims in each of the past six years. More than $392 million in compensation has already been paid out to corporations to date after NAFTA ISDS attacks on oil, gas, water and timber policies, toxics bans, health and safety measures, and more. More than $36 billion in NAFTA ISDS attacks are pending.

“People from the Yukon to the Yucatan are united in demanding an end to NAFTA’s corporate privileges that promote job outsourcing, lower wages and attacks on health safeguards,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “A NAFTA replacement deal that benefits people and the planet cannot grant corporations powers to skirt our laws and courts and demand unlimited taxpayer compensation from tribunals of corporate lawyers.”

“NAFTA is strewn with handouts to corporate polluters that must be eliminated, starting with the free pass for chronic job offshorers to attack air, water, and climate protections in tribunals of corporate lawyers,” said Ben Beachy, director of Sierra Club’s Responsible Trade Program. “Any NAFTA replacement must stop protecting multinational corporations and start protecting the workers and communities across North America who have endured decades of damage under this raw deal.” 

"ISDS makes big corporations feel safer moving jobs around the globe to wherever workers are the most exploited and environmental regulations are the weakest, and it also puts democratically-enacted public interest laws in jeopardy both at home and abroad,” said Arthur Stamoulis, executive director of Citizens Trade Campaign. "While many changes are needed to make a NAFTA replacement deal work for working families and the planet, if trade negotiators maintain ISDS, we’ll know the NAFTA renegotiation has been hijacked by special interests intent on preserving corporate power.”

"ISDS effectively usurps democratic governance, and makes it impossible for elected governments to create policy that benefits ordinary citizens without the threat of a corporate lawsuit,” said Carli Stevenson, campaigner, Demand Progress. “As we fight to preserve the free and open internet in the United States, we stand with activists worldwide against attempts by any corporation to use trade agreements to make their profits sacrosanct and act against the interests of citizens, workers, and consumers. ISDS should not be a part of any trade agreement."

 “ISDS empowers mega-corporations to attack democratic values, human rights, and environmental protections and force governments to award their corruption and greed with unlimited payments of our tax dollars,” said Matt Nelson, Executive Director of Presente Action. “The reality is clear, forces pushing the ISDS have no loyalty to their governments or the people, only to their pipedreams to rule our public institutions like their own private castles."

“Investor-State Dispute Settlement puts power in the hands of international tribunal that do not have the best interests of workers, public health, and the environment, but rather benefit corporations looking to make a profit or gain more power,” said Patrick Carolan, executive director, Franciscan Action Network. “This is not in line with Catholic Social Teaching and Franciscan values which emphasizes the need for just and fair laws for all people.”

“Big Pharma is already demanding more extensive provisions on intellectual property in NAFTA to extend their market monopolies on medicines even longer. At the same time, it’s also pushing to expand NAFTA’s investment chapter to include intellectual property claims. This would mean pharmaceutical giants could use the system of closed-door tribunals to try to overturn important, long-standing features of a country’s laws on patents or other aspects of intellectual property, in pursuit of yet more profits for the one of the most profitable industries in the world, said Richard Elliott, executive director, Canadian HIV/AIDS Legal Network.

Organizations involved include:

AFL-CIO

Canadian HIV/AIDS Legal Network

Center for International Environmental Law

Citizens Trade Campaign

Corporate Accountability International

Council of Canadians

CREDO Action

Communications Workers of America

Daily Kos

Demand Progress

Democracy for America

Derechos Digitales

Food and Water Watch Action Fund

Franciscan Action Network

Friends of the Earth

Global Exchange

Good Jobs Nation

Institute for Agriculture and Trade Policy

Interfaith Workers Justice

International Corporate Accountability Roundtable

International Labor Rights Forum

Just Foreign Policy

Leadnow

Machinists Union

Maryknoll Office for Global Concerns

Open Media

Our Revolution

People Demanding Action

Presbyterian Church (U.S.)

Presente Action

Progressive Congress Action Fund

Public Citizen’s Global Trade Watch

Sierra Club

SumOfUS

Teamsters

Trade Justice Network (Canada)

United Church of Christ

United Electrical Workers

September 22, 2017

Comments Concerning the Costs and Benefits to U.S. Industry of U.S. International Government Procurement Obligations

An excerpt from Global Trade Watch's official comment submission on U.S. procurement obligations is below. For the full report, please click here

Public Citizen welcomes the opportunity to submit comments to the U.S. Department of Commerce and the Office of the U.S. Trade Representative (USTR) on U.S. government procurement obligations in trade agreements. Public Citizen is a nonprofit consumer group with more than 400,000 members. A mission of Public Citizen is to ensure that in this era of globalization, a majority can enjoy economic security; a clean environment; safe food, medicines and products; access to quality affordable services; and the exercise of democratic decision-making about the matters that affect their lives.

In the context of a creeping expansion of the scope of “trade” agreements negotiated behind closed doors with hundreds of official corporate advisors, Americans across the political spectrum have become aware and upset about the ways in which today’s “trade” pacts conflict with their goals and values. As agreements have expanded far beyond traditional matters such as cutting tariffs and limiting quotas, more Americans have become engaged in demanding a new approach. As a result, the status quo U.S. trade policy model now faces unprecedented crises politically, economically and socially.

Thus, a review of trade-pact procurement terms is timely. These terms constrain how the public can direct our federal and state officials to spend our tax dollars. The rules require firms operating in trade partner countries to be treated like U.S. firms – and foreign goods to be treated as if they were made in America – with respect to many types of government contracts over a set dollar-value threshold, with some limits for U.S. defense agencies and some products. Effectively, these rules offshore our tax dollars rather than investing them to create jobs and innovation at home. As a result, currently “Buy American” now actually means companies and products from 60 countries must be given the same access to U.S. government contracts as U.S. firms and products for all but the lowest-value contracts. And 37 U.S. states are bound to such rules with respect to the 45 signatory countries of the World Trade Organization (WTO) Agreement on Government Procurement (GPA).

These terms also eliminate a reason that U.S. businesses profiting from U.S. government contracts choose to produce domestically. Such firms advocate for the current trade pact procurement rules because they allow them to relocate production to low-wage countries with U.S. trade pacts – profiting from leaving their U.S. workers behind and often also avoiding U.S. tax obligations – and still obtain lucrative taxpayer-funded contracts. Fifty-six percent of the top 50 U.S. government federal contractors in FY 2016 were certified under just one narrow U.S. government program as having engaged in offshoring, and 41 percent of the top 100 FY 2016 contractors were certified as having offshored American jobs. More than a third of total U.S. government contract spending in FY 2016 went to firms certified as having offshored jobs. This totaled $176 billion in U.S. federal government contracts in 2016. As a candidate, President Donald Trump pledged to punish firms that offshore American jobs. However, in 2017 the flow of federal contract awards to major offshorers has continued, with United Technologies, for instance, receiving 15 new awards despite offshoring 1,200 of its 2,000 Carriers job to Mexico, and notorious offshorer General Electric obtaining scores more. As described in this submission, a U.S. president has the unilateral authority to reverse the waivers to Buy American policies that facilitate this business conduct.

In addition to supporting job offshoring, the current trade pact rules on government procurement also limit the criteria governments can use to describe the goods and services they seek and what conditions may be imposed on bidders. The terms reflect the interests of U.S. corporate trade advisors interested in acquiring access to procurement opportunities in other countries and thus limiting the conditions and terms governments may require of them. But the rules apply reciprocally, meaning that they also severely constrain the ability for U.S. citizens and our elected officials to use procurement as an important policy tool. If the federal government – or a state – does not conform its policies to these constraints, then countries that are part of the agreement can challenge our policies in foreign tribunals that can impose trade sanctions against the United States until our laws are eliminated or changed.  

Given that total U.S. government procurement activity is $1.7 trillion, the implications are significant. When able to set criteria on government purchases, the U.S. federal government and our state governments have the capacity to spur innovation and further other policy goals by creating demand for specified goods and services or those produced under specified conditions. However, currently, the trade agreements with procurement terms to which the United States is a signatory impose constraints on the federal government and, to differing degrees, the 37 U.S. states now bound to comply with some of these trade pact terms. It is worth noting that in the early 1990s, when U.S. states were asked to opt in to being bound to the WTO’s GPA, few governors or state legislatures recognized that doing so would result in a form of international pre-emption that would severely limit their policymaking. As states became more aware of the threats posed, fewer and fewer were willing to become bound to these terms. By the mid-2000s, fewer than a dozen states opted in to these policy constraints in the last Free Trade Agreements (FTA) negotiated by the George W. Bush administration. Reflecting this reality, the Trans-Pacific Partnership did not cover state procurement. However, 37 U.S. states remain bound to WTO procurement policy constraints.

As this submission enumerates, the current procurement terms in U.S. trade pacts represent bad economics and limit domestic policy space, and must be eliminated. Even if the underlying notion of offshoring our tax dollars and imposing one-size-fits-all policies about how taxpayer funds may be expended was a good one in general, doing so is a losing proposition for the United States. The U.S. procurement market is much larger than any but that of the European Union. Thus in exchange for some U.S. firms obtaining some contracts in significantly smaller procurement markets, access on equal terms to U.S. firms is provided to the entire massive U.S. procurement market for any firm operating in a trade partner nation or for goods produced in such a nation, including with respect to firms from nations that provide no reciprocal access, such as China. Improved statistical reporting and information exchange is essential to track the exact impact of such terms.

Notably, a U.S. president has the authority to unilaterally exit the WTO GPA by providing 60 days written notice to the WTO Director-General and thus eliminate U.S. obligations with respect to 41 of the 45 WTO GPA parties with which we do not have FTAs. WTO rules do not provide for penalties in response to such an action. The procurement provisions of various FTAs can be eliminated or altered through renegotiation. With respect to U.S. law effectuating these international law obligations, a U.S. president also has unilateral authority to eliminate the waiver for trade pact partners of domestic procurement preferences. This element of our trade agreements is implemented by regulation, rather than in the trade agreement implementing legislation. The economic and social benefits of overhauling the U.S. approach to trade pact procurement terms are sizable.

September 11, 2017

North Korea Crisis No Reason to Preserve Failed Trade Deal; U.S. Exports to South Korea Dropped, Deficit Nearly Doubled Since Pact

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

 “How to peacefully resolve North Korea’s nuclear escalation is a thorny question, but what should happen with the 2012 U.S.-South Korea Free Trade Agreement is an entirely separate question that is not complicated. We opposed the U.S.-Korea Free Trade Agreement in 2011 when it came before Congress because we knew that any deal that has at its heart new rights and powers for corporations to offshore jobs, raise medicine prices and attack environmental, health and financial stability safeguards is bad for people and the planet.

In its five years in effect, this U.S.-Korea trade agreement proved even worse than expected. The unique outcome is that U.S. exports to South Korea actually declined after the pact was implemented. As with most other U.S. FTAs, imports into the United States soared. Thus, the U.S. goods trade deficit with Korea increased by 85 percent in five years. U.S. average monthly exports to South Korea have fallen in nine of the 15 U.S. sectors that export the most to South Korea, relative to the year before the FTA. U.S. exports to South Korea of agricultural goods have even fallen 5.4 percent in the first five years of the FTA.

Claims that U.S.-Korean cooperation on a mutually shared existential priority will somehow be undermined by cancelation of a trade deal that has done the opposite of what was promised is absurd. The 28,000 U.S. troops stationed in Korea are just one demonstration of U.S. support for South Korea and commitment to its defense. Hysterical foreign policy arguments are always the claim of last resort in support of a failed trade agreement, and time and again they have proved meritless. Given the broad public opposition to the FTA in Korea, ending a deal negotiated in secret with 500 official U.S. advisers representing corporate interests would be viewed by many in Korea outside the foreign policy elite as good news.”

Background information and our previous press release summarizing the Korea FTA five-year data release by the U.S. International Trade Commission on May 4, 2017

With respect to the economics of the deal’s termination, Korean tariffs would not rise to 14 percent as suggested by former-U.S. Trade Representative Robert Zoellick. An oped he wrote that ran earlier this week says levels “could” rise, a hedge to cover the reality that he is citing Korea’s bound World Trade Organization tariff rates, not their actual applied rates. (It is the “applied” rate that reflects the actual tariffs charged while the “bound” rate is the highest level to which a country could raise tariffs although only on a Most Favored Nation basis, which means with respect to all countries.) The relevant data is the applied trade weighted mean tariff level provided by the World Bank, which for Korea is 4.78 percent. The United States is at 1.63 percent. (The applied trade weighted mean is the actual average tariff level based on actual trade flows.)

 

May 4, 2017, Public Citizen press release

Today’s Five-Year Korea FTA Data Show March Imports from Korea Higher than Any Month But One Since Pact Started: What Is Trump’s Plan for Pact?

U.S. Trade Deficit With Korea Has Soared as U.S. Exports Fell, Imports Jumped Under 2012 U.S.-Korea Free Trade Agreement

 WASHINGTON, D.C. – Despite the Trump administration’s tough rhetoric about the U.S.-Korea Free Trade Agreement (FTA) pact, imports from Korea in March 2017 were higher than any month but one in the pact’s five years in effect.

Today’s release of new U.S. Census trade data for the first full five years of the Korea FTA spotlight statements from both President Donald Trump and Vice President Mike Pence in the past month that the agreement’s outcomes are not acceptable. While the Trump and Pence statements were notable for coming despite escalating military tensions on the Korean Peninsula, what the administration will do about the pact and when remains a mystery.

“Our trade deficit with Korea has increased dramatically under this agreement Trump bashed on the campaign trail, and workers in the swing stats that elected  Trump  have been hardest hit, so what will Trump do about it,” asked Lori Wallach, director of Public Citizen’s Global Trade Watch.

While then-Representative Pence voted to pass the agreement in 2011, now-Vice President Pence, in an April 2017 trip to Seoul, declared the pact to be “falling short” and needing review and reform. Later that month, Trump declared of the Korea deal: “We’ve told them that we’ll either terminate or negotiate. We may terminate.”  Trump spotlighted the “job-killing trade deal with South Korea” in his nomination acceptance speech and on the stump, where he also often noted that “this deal doubled our trade deficit with South Korea and destroyed nearly 100,000 American jobs.”

Many of Trump’s trade-related campaign pledges were broken in his first 100 days, calling into question the prospects for action on the Korea pact. A powerful White House faction opposes the trade policy changes that Trump promised would deliver more American jobs and lower deficits

The agreement, sold by the Obama administration with a “more export, more jobs” slogan, has resulted in U.S. exports to Korea declining 7.8 percent ($3.7 billion) and imports from Korea increasing 13.1 percent ($8.1 billion) by the end of its fifth year. The 85 percent trade deficit increase with Korea under the pact – from $14 billion in the 12 months before the pact went into effect on March 15, 2012 to $26 in its fifth year – came in the context of the overall U.S. trade deficit with the world decreasing by 5 percent.  While U.S. goods imports from the world decreased by 7.1 percent, goods imports from Korea increased by 13.1 percent.

Defenders of the pact claim the results stem from weakness in Korea’s economy, but in fact Korea’s GDP has risen by 15 percent from 2011 to 2016 while unemployment rates have averaged 3.4 percent, hardly the indicators of a weak economy.  

Meanwhile, the U.S. service sector trade surplus with Korea has increased by only $2 billion from 2011 to 2015 a growth rate of 29 percent in its five years in effect that is notably 64 percent slower than our services surplus growth over the five years before the FTA went into effect. (Service sector data for the full fifth year of the deal will be released in October.)

Despite the Korea FTA including more than 10,000 tariff cuts, 80 percent of which began on Day One:

  • Record-breaking U.S. trade deficits with Korea have become the new normal under the FTA – in 59 of the 60 months since the Korea FTA took effect, the U.S. goods trade deficit with Korea has exceeded the average monthly trade deficit in the five years before the deal.
  • Since the FTA took effect, U.S. average monthly exports to Korea have fallen in 10 of the 15 U.S. sectors that export the most to Korea, relative to the year before the FTA.
  • The auto sector was among the hardest hit: The U.S. trade deficit with Korea in motor vehicles grew 55.7 percent in the pact’s first five years. U.S. imports of motor vehicles from Korea have increased by 64.2 percent, or $6.4 billion by the fifth year of the Korea FTA.
  • Exports of machinery and computer/electronic products, collectively comprising 27 percent of U.S. exports to Korea, have fallen 20.6 and 20.1 percent respectively.
  • U.S. exports to Korea of agricultural goods have fallen 5.4 percent in the first five years of the Korea FTA, despite almost two-thirds of U.S. agricultural exports by value obtaining immediate duty-free entry to Korea under the pact. U.S. agricultural imports from Korea, meanwhile, have grown 45.4 percent under the FTA. As a result, the U.S. agricultural trade balance with Korea has declined 8.1 percent, or $554 million, since the FTA’s implementation. The Obama administration promised that U.S. exports of meat would rise particularly swiftly, thanks to the deal’s tariff reductions on these products. However, despite U.S. officials’ promises that the pact would enhance cooperation between the U.S. and Korean governments to resolve food safety and animal health issues that affect trade, South Korea has imposed temporary bans on imports of American poultry in each of the last three years, including 2017. Comparing the fifth year of the FTA to the year before it went into effect, U.S. poultry producers have faced a 78 percent collapse of exports to Korea – a loss of 82,000 metric tons of poultry exports to Korea. U.S. pork exports have also dropped 1 percent.

July 18, 2017

NAFTA Plan Does Not Describe Promised Transformation of NAFTA to Prioritize Working People

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

 Note: Today, the Trump administration published a document on its NAFTA renegotiation objectives. Under the 2015 Fast Track law, the administration must publish “a detailed and comprehensive summary” of its specific negotiating objectives 30 days before formally beginning trade talks.

“This document does not describe the promised transformation of NAFTA to prioritize working people that some voters were expecting based on President Trump’s campaign pledges.

More than 910,000 specific American jobs have been certified as lost to NAFTA under just one narrow program, but this document does not make clear whether NAFTA’s job offshoring incentives or its ban on Buy American procurement policy will be eliminated or labor or environmental standards better than the widely rejected one in the TPP will be added.

The document is quite vague so while negotiations can start in 30 days, it’s unclear what will be demanded on key issues, whether improvements for working people could be in the offing or whether the worst aspects of the TPP will be added making NAFTA yet more damaging for working people. The administration should follow the European Union’s practice and make public its actual proposals being shared with Mexico and Canada prior to talks starting.

The Trump administration has a very narrow pathway to both achieving the president’s campaign pledges on NAFTA and passing a new NAFTA deal. Achieving Trump’s campaign-promised NAFTA deficit-lowering and U.S. job creation goals will require changes to NAFTA that GOP congressional leaders and the corporate lobby oppose and about which this document remains vague. Even if a bloc of GOP rank and file members may support elimination of NAFTA’s investor offshoring incentives and Buy American ban, which are necessary to achieve Trump’s goals, a sizeable bloc of Democratic votes will be needed to pass a new NAFTA of that sort. But GOP congressional leaders and the corporate lobby are demanding TPP elements be added to NAFTA and that will push away Democrats. Some aspects of that TPP agenda can be seen in today’s document because much of the text repeats the negotiating objectives of the 2015 Fast Track bill, which GOP leaders and the corporate lobby loved and most congressional Democrats, a sizeable bloc of GOP congressional members and labor and civil society groups opposed.”

June 15, 2017

NAFTA Legacy Series: Mexico’s Lost Opportunity

With NAFTA renegotiations about to begin, Public Citizen has compiled the latest information on how NAFTA’s outcomes measure up to its proponents’ promises. This is the fourth of a four-part expose.

To hear President Trump’s version of NAFTA, Mexico was the big winner. The reality is that NAFTA cost more than two million Mexicans lost their livelihoods related to agriculture. Mexican workers’ real wages are 9 percent lower or $1,500 less than in the year before NAFTA with median manufacturing wages of $2.50 per hour sufficient to support basic needs.

After the first two decades of NAFTA, Mexico’s real gross domestic product per capita growth rate has been a paltry 18.6 percent, ranking 18th out of the 20 countries of Central and South America. In contrast, from 1960 through 1980, Mexico’s per capita gross domestic product grew 98.7 percent. Mexico would be close to European living standards today if it had continued its previous growth rates.

And Mexican taxpayers have forked over $204 million to corporations attacking domestic laws in front of NAFTA tribunals of three corporate lawyers whose decisions are not subject to appeal.

The Mexican people – like people in the United States - were promised that NAFTA would strengthen their economy and raise wages. But after more than 20 years of NAFTA, over half of the Mexican population, and over 60 percent of the rural population, still fall below the national poverty line.

Mexican farmers suffered the worst under the agreement. Before NAFTA, Mexico only imported corn and other basic food commodities if local production did not meet domestic needs. But NAFTA eliminated Mexican tariffs on corn and other commodities and required revocation of programs supporting small farmers. Amidst a NAFTA-spurred influx of cheap U.S. corn, the price paid to Mexican farmers for the corn that they grew fell by 66 percent, forcing many to abandon farming. From 1991 to 2007, about 2 million Mexicans engaged in farming and related work lost their livelihoods. The price of tortillas – Mexico’s staple food – shot up 279 percent in the pact’s first ten years, even as the price paid to Mexican corn farmers plummeted.

To read more on NAFTA’s effects on Mexico, please click here

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