the trans-pacific partnership: worse than nafta?

7/27/2019 The Trans-Pacific Partnership: Worse than NAFTA?

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North Carolina Policy WatchCrucial Conversation

The Trans-Pacific Partnership:Worse than NAFTA?

September 2013Lori Wallach

Public Citizens Global Trade Watch


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U.S. Income Inequality at Levels

not Seen Since Robber Baron Era Increased inequality is prediction of free trade theory, question is degree of effect

Trade affects t y pesof jobs available in U.S., wage levels

DoL: average manufacturing worker displaced went from earning $40,154 to$32,123 when reemployed

Labor arbitrage affects wages economy-wide. Despite major U.S. productivitygains, Fed actions leading to temporary wage gains in late 90s, during WTO-NAFTA era median wages hovered at 72 level

Gains from trade liberalization on import side. But what is net? Cheaper imports netloss in wages is key measure ($3,000 net loss 2007 Economic Policy Institute)

Samuelson (2004 Journal of Economic Perspectives); As offshoring moves to higherwage sectors, no longer true that more liberalization always increases welfaregains

Wealthy Americans share of natl income stable for first several decades afterWWII. Share jumped 45% for wealthiest 10% and 125% for wealthiest 1% from 1973-2010 as current globalization regime went into effect

Richest 10% now taking about half of U.S. economic pie


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North Carolina Hit Hard North Carolina lost 374,612 manufacturing jobs (46.2%) during the NAFTA-WTO period

(1994-2012), according to BLS. NC went from 30% private sector jobs in manufacturingto 13.7%. This is total manu. employment-both jobs created by exports & jobs displaced by imports.

202,293 NC workers certified as losing jobs from imports or offshoring. (DoLtracks

spec ific trade-displaced workers at spec ific workplaces who apply for TradeAdjustment Assistance benefits. This program is difficult to qualify for and this figureonly includes those workers who knew to apply and then were certified.

NC unemployment rate 3rd highest in U.S. - 5 yrspost fin. crash, nearly 10% still.

Some of the 2092 NC firms with workers certified as trade casualties and its not alltextiles and furniture and its not all from back when

325 LA-Z-Boy Casegoods, Wilkesboro Furniture - 2010

667 Thomasville Furniture, Lenoir Furniture - 2007

1566 Renfro Corporation,Mt. Airy Socks - 2006 1451 Technology, Inc. ,Charlotte Printed circuit boards- 2002

736 Daimler Trucks North America, Cleveland - 2007

250 Connextions, Inc., Concord , Online Customer Services -2010

856 Dell Products LP, Winston-Salem, Desktop Computers - 2008

229 Flextronics America, Creedmoor Automated Vending Machines-2012

(REGULARLY UPDATED DATA ATWWW.TRADEWATCH.ORG ON THE Trade Data Center)


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In 2012, total volume of U.S. food exports stood only 1 percenthigher than in 1995, the year that WTO took effect/year after NAFTA.

Imports of food into the United States in 2012 skyrocketed 97%

above 1995 level.

Several widely publicized but short-lived surges in U.S. food exports

under NAFTA and the WTO represented spikes in international prices

Trade Agreements and Agriculture Trade Outcomes U.S.

.


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And, its Not Just the Old Deals Bad Outcomes of Recent Free Trade Agreements with Korea, Colombia, Panama2011 - Obama administration promised concrete benefits for each FTA : greater U.S.access to the Korean auto market, significantly increased labor r ights and worker

protections in Colombia, and enhanced tax transparency and labor rights in Panama.

Korea Trade deficit Up: In fi rst year of Korea FTA, U.S. goods exports to Korea

declined by 10% (down $4.2 bill ion) compared to year before FTA implementation.Imports from Korea soared. Overall U.S. trade deficit with Korea jumped 37%. Thisrepresents the net loss of 40,000 American jobs according to a recent study.

All NC MoCs opposed Korea FTA except Rep. Price.. On the day of vote, he said: Thecutting-edge industries that have transformed our state into a global leader in science andtechnologyhave depended on access to international markets for their success. [The FTAwill] help U.S. manufacturers boost our exports [in such critical sectors.]

After 1st year of Korea FTA, U.S. exports to Korea of LED lights, photovoltaic cells &similar high-tech manufactured goods plunged 41% compared to year b4 FTA. Theseenergy-saving products have become among NCs most important exports.

Colombian unionist threatened: More than a year into Colombia FTA and two+ yearsafter Obama administration announced a Labor Action Plan, Colombia remainsworlds deadliest place to be a union member. Threats against unionists havepersisted unabated - 471 death threats. At least 20 Colombian unionists wereassassinated in 12 per data used for Labor Action Plan. Int l Trade UnionConfederation says 35 assassinated.

Money laudering and tax evasion continued unabated in Panama.


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WWII-1990s: Bretton Woods Era

The BrettonWoods Era

GATT 1947

Trade in goods Tariffs and

quotas

IMF

Gold standard Short-term

trade floats

World Bank

Financerebuilding of

Europe & Japan

How Did We Get into this Mess?The Hijacking of U.S. Trade Agreements


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(Early 90s topresent day)

Corporate Globalization Era

WTO(binding disputesettlement)

NAFTA,

CAFTA , Free TradeAgreements

GATT


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.

These pacts are not Free TradeFree trade is an appealing brand, but not what is contained in the 900 pages ofnon-tariff rules of the WTO or NAFTA? Or, now in the 29 chapters of the draftTPP. Are Adam Smith and David Ricardo rolling in their graves?

Candid revelation from the WTOs 1stDirector General: "We are writ ing the

consti tution for a single globaleconomy."

-Renato Ruggerio, WTO DG 1995

WTO is " the place where governments

collude in private against their domesticpressure groups."

-Anonymous WTO off icial quoted in the

Financial Times Apr il, 1998


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Not m a in ly a b out tra d e but a system of en fo rc ea b le g lob a l g ove rna nc e p rom otedb y la rg e c orpo ra tions a nd not sub jec t to c ha ng es b y those w ho w ill live w ith resu lts.If the m od el is no t wo rking for m ost of us, why c ont inue m o re o f the sam e w ith TPP?

Starkly different from past of intl trade between nations that focused on tariff cutting, liftingquotas. Rather, trade agreements as mechanisms of diplomatic legislating of domesticnon-trade policies. Behind-the-border policies decided by trade negotiators advised by

600 official corporate trade advisors - not legislators or those who will live with results.

NAFTA, WTO, CAFTA, KORUS, FTAs All the Same

Model - Now TPP aka NAFTA on Steroids?

Each Member shall ensure the conformity of its laws,

regulations and administrative procedures with itsobligations as provided in the annexed Agreements.- Agreement Establishing the WTO

Permanence : no changes w/o consensus of all signatorynations. Limits room for progress, responses to emergingproblems

Binding - unlike most labor, health, environmental treaties).Rules enforced in extra-judicial tribunals.

Government-government enforcement: countries must gut their laws. Trade sanctionsimposed.

Investor-state enforcement: taxpayers must compensate foreign corporations. No dueprocess. No outside appeals.


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TPP: Whos Now Involved

Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, U.S., &

Vietnam plus Canada and Mexico Join in Early 2013 and Japan recently

BUT: TPP IS A DOCKING AGREEMENT: OPEN ANY

COUNRTY THAT AGREES OT TERMS - CHINA, RUSSIA, ETC.


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The Context and Timeline for TPP

Shortly after passage of NAFTA (1993), the Clinton administration initiated talks for NAFTA-style free trade blocs in the Asian-Pacific and Western hemisphere - Asian PacificEconomic Cooperation (APEC) FTA and Free Trade Area of the Americas (FTAA)

APEC FTA & FTAA unravel - countries in each region came to loggerheads over pactsscope , model (NAFTAs results reveal problems, U.S. insists on expanding NAFTA model).

Coalitions of the willing in each region ink NAFTA-style pacts: Trans-Pacific StrategicEconomic Partnership Agt (Brunei, Chile, New Zealand and Singapore) and CAFTA.

U.S. corporations chronic job offshorers, agribz monopolists, Big Pharma, Wall Streetpush for U.S. to join the Asian Pacific NAFTA. Sept. 2008, Bush notified Congress U.S. will

join Trans-Pacific Strategic Economic Partnership Agreement (Oz, Peru and Vietnam join).

In 2009, Obama pledges inclusive review, but never done. Nov. 2009, Obama surprisedCongress by announcing U.S. will engage in TPP. TPP misses 2011 and 2012

negotiating deadlines. Oct. 2012, Mexico & Canada join; Japan to join July 21, 2013,

Jan. 2013 SoU: Obama declares TPP and TAFTA as priorities for 2013 trade agenda.

Today, 19 rounds of TPP negotiations have been held. The U.S. and 11 other countries are

now involved. Deadline for f inal deal: end of 2013


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Most Secretive Trade Negotiation, Ever

Negotiations start in 2008 with Pres. Bush. 19rounds of negotiations under Obama. A draft TPPtext exists.

Until last month, even Congress cannot see the

TPP draft text. State legislators, governors, pressand public still locked out.

Over 600-plus official U.S. corporate tradeadvisors have access to, influence over process.

What we know about the TPP is from texts that were leaked to the public andfrom bird-dogging negotiations.

Growing congressional anger about extreme secrecy.- GOP House Oversight Chair Issa, other MoCs denied observer status to negots- Democratic Chair of Senate Finance Committee denied access to draft texts.- Sen. Warren opposes Froman for USTR over secrecy

This is the le a st tra nsp a re nt tra d e ne g o tia t io n I ha ve e ve r seen.

-Former U.S. trade official Gary Horlick, a TPP supporter


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Some TPP Countries Demand Special TPP

Visas for Skilled Workers to Come Here U.S. FTAs with Singapore (2003) and Chile (2004) included special FTA

visas. A total of 6,800 special FTA visas every year. These nations insiston maintaining their FTA visas when their FTAs are folded into TPP.

Vietnam, Malaysia, New Zealand and Australia are demanding the sametreatment in TPP that Chile and Singapore will get.

What is immigration policy doing in a trade agreement?! Great

question In TPPese, it is called Mode 4 of Service Delivery: Movementof Natural Persons Across Borders to Deliver Services


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Power to Foreign Corporations to Attack our Laws

in Investor-State Dispute Resolution Tribunals

Directly attack the U.S. governments before foreign tribunals organized by the UNand World Bank demanding our tax dol lars to compensate loss of expected future

profits from labor, health, safety, land use, and other domestic laws.

Skirt domestic courts, laws. Cases are decided by 3 corporate lawyers who rotatebetween suing governments for corporations & being judges

TPP would empower foreign corporations to:

Foreign corps raised to equal status as U.S. govt toprivately enforce a public treaty raiding our govtTreasury funds

There is NO outside appeal. If U.S. govt loses, ourtax dollars get paid to compensate foreigncorporations

Austral ia refuses to be submitted to these tribunalsin TPP new conservative govt reaffirms

Over $365 mill ion in public funds paid under NAFTA alone over land use,

timber, water rights, public health, environment. Recent award in one U.S.BUT case is $2.3 Bill ion!


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More on Investor-State Dispute Resolution Foreign investors given greater rights, privi leges above domestic law /firms. Compensation for

regulatory costs/policy changes (Vattenfall, Phillip Morris, Eli Lilly, Exxon, etc.)

ISDR challenges against wide array of consumer, health and safety polic ies, environmental and land-use laws, regulatory permits, financial regs & other public interest polices that investors allegeundermine expected future profits.

Under all U.S. FTAs/BITs, investors have already pocketed over $3B in taxpayer money via ISDR

cases, while more than $15B remains in pending claims. More info: Table of Foreign Investor-StateCases and Claims under NAFTA and Other U.S. Trade Deals, Publ ic Citizen memo, June 2012.

Available at: ht tp: //www.citizen.org/documents/investor-state-chart.pdf

US submitted to jurisdiction of World Banks ICSID (Intl Centre for Settlement of InvestmentDisputes) and or UNs UNCITRAL (UN Commission on Intl Trade Law) for investor-state enforcement.

Tribunals operate behind closed doors - lack basic due process. Rulings not bound by precedent. Nooutside appeal. Annulment for l imited errors.

Unlike domestic judges, tribunalists paid by hour . Govts usually ordered by tribunal to pay for shareof tribunal costs, even if case dismissed. Costs chill govt action. Filing alone is serious threat:

Average cost is $8M, 1 case now underway legal costs to govt $50M-plus

Absolute tr ibunal discretion to set damages, compound interest, allocate costs No limi t to amount of money tribunals can order govts to pay corps/investors Compound interest starting date if violation new norm ( compound interest ordered by tribunal

doubles Occidental v. Ecuador $1.7B award to $3B plus

ISDR has birthed an entire industry of specialized lawyers and tribunalists (many serving both roles)

and specialized equity funds that finance what is lucrative business of raiding government treasuries.


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Epidemic of Corporate Bandits Raiding

our Treasuries Using Investor-State

The number of ISDRcases has soared over

last decade. Last yearcumulative number oflaunched investor-statecases was ninetimes cumulativeinvestor-state caseloadin 2000, even thoughtreaties with investor-state provisions haveexisted since the 1950s.

TPP would mean1000s of additionalcross-registeredcorporationsempowered to

attack U.S. laws.


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Some of the Investor-State Cases

Attack on Post-revolution Increase in Egypts Minimum WageVeolia vs Egypt: June 2012 (France-Egypt BIT). The company argues that changes to local labor laws including recent increases in minimum wages have impacted negatively on the company despite contractprovisions designed to buffer the concessionaire from the financial implications of any such legal changes.

Attack on South Africas Black Economic Empowerment PolicyPiero Foresti & Others v. South Africa: Mining investors claim S. Africas Black Economic Empowerment lawviolated investment treaties even thought it implemented new South African constitution post Apartheid.

Attack on Canadian medicine patent policy by Eli Lilly$500M Claim because Canadian high court invalidated patents on 2 drugs that didnt perform as filed

Attack on El Salvadoran Water, Mining Safety PoliciesPac Rim v. El Salvador: mining- years of ISDR in very politicized case stall out passage of ban on mineralmining; tribunal voids CAFTA claim, still order govt to pay costs, continues claims based on domestic law

Attack on Canadian Toxic Chemical BanEthyl v. Canada ban reversed, Corp. paid $13 M for lost profits while ban was in effect US states bansame chemical, MMT a gasoline additive

Canadian Firm Attacks U.S. Domestic Court RulingLoewen v. U.S.: U.S. civil court judgment considered covered govt action in contract fight of 2 private firms.Canadian firm reorganized as US corp., loses foreign status before collecting

Attack on Australian, Uruguayan Cigarette Health Laws by Phillip Morris

Chevron Attacks Ecuador to halt court-ordered payment for Amazon pollut ion


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TPP: New Floods of Unsafe Imported Food

We would be required by TPP toimport meat and poultry that doesnot comply with U.S. safetystandards.

Under TPP, food corporations canattack domestic safety standards inforeign tribunals

Food labels considered tradebarriers in recent trade suits

Several TPP countries are majorseafood exporters to U.S. andCanada Now we can (and do) sendback shrimp, fish from Vietnam, etc.But TPP would make strong safety

standards into illegal trade barriers


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TPP = The Sons of SOPA?

Internet Service Providers

required to police user-activity. ie police YOU. And, cutpeople off from access.

Mandatory fines for individuals

non-commercial copies - treatedthe same as large-scale for-profit copyright violators.

Innovation stifled.

Even temporary buffer copiesor breaking digital locks to uselinux could subject users tofines.

U.S. TPP Proposal:


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And, what about the actual trade issues in TPP?

GDP of original TPPParties, Billions of Dollars

Australia 1,237Singapore 223Chile 203

Peru 154Brunei 12Malaysia 238New Zealand 141Vietnam 104TOTAL 2,312

When talks started, US already had FTAs w/ 4

nations comprising 80% of GDP of TPP countr ies

3 large economies joined. But U.S. has tariff -zeroing deal with Mexico and Canada with NAFTA.

U.S. job creation-export opportunit ies with others?

Vietnam - annual income per person = $1,174

New Zealands 4.3 million or Bruneis 417,000people (GDP together less than Iowa)

Malaysia, annual per person income = $8,432

So, big possible gain is Japan BUT

Japan has history of currency devaluation. Early 12, industry letter calling forcurrency manipulation disciplines in TPP. USTR refused. Recently 60 Senators -17 GOP & 43 Dems (Hagan and Burr) and 230 of the 435 House members demand

TPP has disciplines against currency manipulation. Not on table Japans ruling party (LDP) has listed exclusion of rice, beef, pork, wheat and

dairy as condit ion for TPP participation

Non-tarif f barriers have meant lit tle access for U.S. autos

Plus, special considerations: State-Owned Enterpr ises, and especially for NC Textile-Apparel Rules of Origin ( Yarn Forward and Vietnam)


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Howd We Lose Control & Get Into this Mess?How Ca n 60 Sena to rs Be Ig no red ? Mee tFa st Tra c k

U.S. Constitution gives Congress exclusive authority over trade. Checkand balance created by Founders (1773 Boston Tea Party hangover)

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay theDebts and provide for the common Defence and general Welfare of the United States; but allDuties, Imposts and Excises shall be uniform throughout the United States; To borrow moneyon the credit of the United States; To regulate Commerce with foreign Nations, and among theseveral States, and with the Indian Tribes;

For 200 year, Congress set our trade policy and wrote our laws

In 1973, Ric ha rd Nixo n c oo ke d up

Fa st Tra c k . It wa s a stea lthy too l to

g ra b BOTH powe rs: shift ing

eno rm ous c ont ro l o ve r tra d ea g re em ents to the Exe c utive Bra nc h

a nd va st new p ow er to

d ip lom a tic a lly leg isla te on

non- t ra d e m a tte rs


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Power to select trade partners. 90 day notice of intent to startnegotiations, but Congress has no means to stop launch.

Power to set terms, including on non-tariff issues under authority of

Congress and state legislatures and sign deals before Congress votes.Agreement entered into with 90 day notice before signing, butCongress has no means to stop signing.

Power to write legislation, skirt congressional review/amendment (no

committee mark ups of trade agtimplementing legislation) anddirectly submit for a vote legislation adopting trade agreement text asfederal law and making all changes to conform existing federal lawsto pacts terms. Non-conforming state laws are pre-empted.

Power to override congressional leaders control of House & Senate

floor schedules and force votes. (45 days after submission goes toHouse floor, privileged vote within 15 days. After 15 days in committeein Senate, ejected to floor with mandatory vote in 15 days)

Leg isla t ive lug e run: override of normal voting rules - all amendments

banned, 20 hours debate maximum in Senate too.

Five major congressional authorities delegatedaway in one lump sum by Fast Track


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Candidate Obama said he would replace Fast Track I wil l ensure that Congress

plays a strong & informed role in our intl economic policy & in any future agts. wepursue and in our efforts to amend existing agts.

Avoided asking for trade authority and what would foreseeably be a major battlerequiring massive poli tical capital in first term (Avoided Clinton mistake of doingNAFTA before health care)

Now that Obama is seeking trade authority Finance and Ways & Means CommitteeLeaders Baucus, Hatch and Camp dust ing off Bushs 2002 Fast Track bill !

Will Democrats who dislike Obamas trade policy (ie. TPP!) & GOP whodislike Obama give him this extreme power few Presidents have had?

Fast Track was a remarkable anomaly upending 200 years of Congress control of

trade agreements AND opening a door to a form of diplomatic legislating by executivebranch trade negotiators. Fast Track empowers trade negotiators set on non-tradematters under authority of Congress and state legislatures.

At stake are constitutional issues of checks and balances, federalism, roles of thebranches that has transpartisian appeal.

Polls show that a majority of Americans - Democrats, GOP and Independents opposemore of the same NAFTA-style agreements. And Fast Track is inherently outrageous.

TPPs such a grandiose, arrogant overreach i t can be made very vulnerable. Plenty topiss off everyone and their mother Democrats, GOP, Independents united

Current Situation on Fast Track


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Our Trade Mess Is Not an Act of God.

Or an AccidentPolicy Put in Place via an Outdated, Anti-

Democratic Process THAT CAN BE CHANGED!

Learn more, form your own opinion on pros and cons:

www.exposethetpp.org the basics on TPP here and abroad

www.tradewatch.org on Fast Track and detailed reports on TPP

Get involved:

Local NC organizations working on TPP NC AFL-CIO, Witness for Peace,Natl Council of Textile Organizations

National Organizations U.S. Business and Industry Council, AmericanJobs All iance, Electronic Frontiers Forum

Contact your members of Congress: Whether there is Fast Track & what happens on TPP is his or her decision

the trans-pacific partnership: worse than nafta?

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