Washington, DC -- Late last week Washington was buzzing about a trade "deal" between the Congressional Democratic leadership and the White House. The deal is based on a "concept paper" and has been commonly described as an agreement to include labor and environmental rights in future trade agreements. The business community has been singing the praises of this document while environmentalists and labor groups have been expressing reactions ranging from the skeptical to the downright hostile. Democrats from high tech exporting states are singing its praises; those from manufacturing states are dubious.
It appears, although I'm far from certain, that the agreement most directly impacts the pending trade agreements with Peru and Panama; the concern is that it may also be extended to much more controversial deals with South Korea and Colombia. On the positive side, the deal apparently does eliminate the loophole in earlier agreements by which international treaties on the environment could be violated with impunity by both parties. It also includes new language aimed at stopping the illegal logging - especially of mahogany - from Peru, and gives the environmental provision the same level of enforcement as the other parts of the agreement (although not the same as the extreme rights granted to corporations to directly attack environmental and public health measures. More on this below).
But fundamentally what the brewing controversy shows is just how far trade agreements had migrated from any reasonable balance. These deals have not been about free trade for some time, but about trade managed for the benefit of multinationals. As a result, trade has, its strongest advocates now concede, been bad for the American economy since 1995. Yesterday's New York Times hailed the good news of a shrinking trade deficit, but in a stunning "by the by" the Times also said that, as a result, the narrowed gap "would allow trade to contribute to economic growth in the United States for the first time in more than a decade." That's right -- the traded economists the Times quoted stated quite calmly that since 1995 trade has, overall, slowed down US economic growth. Why? Because the deals we have been negotiating have been so heavily stacked in favor of corporations that want to produce overseas and import into the US.
What do I mean by saying these agreements are unbalanced? Well, if a signatory to a typical trade agreement violates the patent protection rights of a US drug manufacturer to provide cheaper life saving medicines for its population, the drug company can bring a legal action against it. But if the same country brings down drug prices for import into the US by using forced labor, a union can't do anything about it. If Peru revokes a logging concession granted to US timber companies, regardless of the fairness of the original agreement, the timber company can sue for damages. But if the same US timber company illegally logs Peruvian mahogany and imports it into the US, a sustainable US hardwood competitor can't file for damages -- even under the proposed, "environmentally more friendly" terms being talked about.
Certain laws -- those which protect businesses -- are given a special priority, and companies can use trade agreements to sue governments for cash compensation if a pesky environmental or public health measure stand in the way of their profits. Neither unions nor environmental groups have the rights given to businesses to make sure that worker's rights and the environment are protected; for this they would have to depend on the US government which, under its present leadership, is hardly a reliable cop on the beat.
The agreements reached on Peru and Panama do seem to represent progress, and we applaud the Democratic leadership for their work. But we are starting from such a bad baseline -- trade deals which are neither free nor fair -- that we have a long way to go, much further than Washington has agreed to this week.