AFL-CIO offers a “just” trade policy for the 21st century

“We cannot afford another trade agreement that privileges substandard new opportunity for investors over good jobs for workers,” the AFL-CIO says in testimony for the U.S. Trade Representative (USTR).

In the 34-page document the AFL-CIO presents its views on crucial elements of the proposed Trans-Pacific Partnership Trade Agreement (TPPTA), and says it is looking forward “to working with the Obama Administration to create a just trade policy for the 21st century.”

U.S. negotiations are set to begin in mid-March with TPPTA, involving at least seven Asia-Pacific governments. The United States already has bilateral free trade agreements (FTAs) with four of them: Australia, Chile, Peru, and Singapore.

A remarkable feature of the AFL-CIO position is that it deals with far more than strictly trade union issues, narrowly defined. For example, among “new issues for consideration,” it lists “valuation of currency” as an important trade union issue now ignored by existing agreements. “The U.S. cannot effectively export to countries that intervene systematically to keep their currency artificially low in relation to the dollar, as China, in particular, is doing.”

Only seven pages of the submission to USTR are devoted to improving the labor chapters of existing agreements. By contrast, the paper has 17 pages of non-labor chapters on issues that need to be improved. Among the most important are those that would fall in chapters on:

Investment. This seven-page section emphasizes that foreign investors in the U.S. can now “claim rights above and beyond those that our domestic investors enjoy,” and that this broad definition of investment should be narrowed to cover “only the kinds of property now protected by the U.S. constitution,” thereby excluding claims for losses from expected profits not met, for example.

Another examples of a recommended change in the investment template: a hostgovernment will be permitted to ensure that investment activity is conducted in a way sensitive to environmental and labor rights.

Procurement. A government will have the right “to require a supplier to comply with generally applicable laws regarding fundamental principles and rights at work.”

Intellectual property. “Our FTAs have provided excessive protection for the producers of brand-name pharmaceuticals,” thereby jeopardizing access to affordable medicines, particularly to developing countries.

Consumer protection. Both our domestic and trade policies must be crafted to prevent dangerous consumer and industrial goods from reaching our shores. Safety inspectors should get enhanced rights to inspect the facilities of a country exporting toxic products.

(The full text of the AFL-CIO submission is available at
http://www.regulations.gov/search/Regs/home.html#docketDetail?R=USTR-2009-0041
Scroll down to USTR2009-0041-0100.)

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Balance investor rights with responsibilities

It’s time to replace a foreign trade/investment model that has not worked, as Thea Mai Lee, AFL-CIO policy director, has repeatedly emphasized in Congressional testimony and talks at conferences dealing with the current economic crisis.

In Congressional testimony on May 14, she singled out a critical but often ignored element that belongs in a new trade/investment model: a “balanced” treatment of foreign investment.

“While we understand and support the importance of protecting the rights of investors,” she said, “we believe that existing investment provisions in U.S. investment and trade agreements are imbalanced in two crucial aspects:

“First, they significantly enhance the rights of investors vis-à-vis governments, but they fail to establish commensurate responsibilities for investors, particularly with respect to workers’ rights and the environment.

“Second, they give substantive rights and procedural advantages to foreign investors that are not available to domestic investors. This raises the possibility that investment tribunals can be used to circumvent the democratic process and to achieve regulatory outcomes in a secretive and inaccessible forum. Certainly the experience with the investment chapter of the North American Free Trade Agreement (NAFTA) and current BITs [bilateral investment treaties] reinforces these concerns.”

As now written, she said, the pro-investor language “facilitates and accelerates the offshoring of American jobs – precisely because for the most part there has been no commensurate set of investor obligations.”

Lee is co-chairing a subcommittee of the State Department’s advisory committee on international economic policy to review and critique the draft model BIT.

The United States has 40 BITs in force and 10 Free Trade Agreements with provisions protecting investment, plus a separate multilateral agreement under the World Trade Organization for the same purpose.

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