At his confirmation hearing last week, Michael Froman, President Obama's nominee for United States Trade Representative (USTR), said ". . . and let me be clear, my view is that it is better to accept no [trade] agreement than a bad agreement."
Later, Mr. Froman said, "Trade policy can only work, however, if it is fair."
The Sierra Club has had a Responsible Trade Program for more than a decade, and we completely agree with both of these statements. In the context of the current model of "free trade" that the USTR is advancing through the Trans-Pacific Partnership (TPP) and has advanced in recent free trade agreements, however, these statements must be read with an inquisitive eye. What, to Mr. Froman, constitutes a "bad agreement?" And what, to Mr. Froman, is "fair" trade?
To the Sierra Club, the answers to these questions are quite clear.
Fair or responsible trade, for example, lifts up communities; raises the standards of worker rights and environmental protection; ensures that governments have the flexibility to put in place policies that protect the climate, our economy, jobs, our air and water, the safety of our food; and reins in the power of corporations.
Senator Sherrod Brown from Ohio has been a leader in defining what a responsible trade agenda looks like. In the 112th Congress, he introduced the 21st Century Trade Agreements and Market Access Act, which highlighted how trade rules can lift up U.S. manufacturing, workers' rights, and environmental standards. In this last week's confirmation hearing, Senator Brown raised one of the key elements of a responsible trade agenda: restoring the balance between corporations and governments.
Provisions in all recent U.S. free trade agreements have given incredible power to foreign corporation to sue governments in private tribunals over laws and policies which corporations allege reduce their profits. Senator Brown aptly asked Mr. Froman whether we really need extrajudicial and private enforcement system to settle investment disputes in the soon-to-be-launched U.S.-EU free trade agreement, particularly given that the U.S. and the EU have such advanced judicial systems. Mr. Froman said it's a topic "worthy of discussion."
From the Sierra Club's perspective, letting the profits of multinational corporations supersede public interest policies through private tribunals is hardly fair and must be excluded from trade pacts.
Senator Wyden, Chairman of the Subcommittee on International Trade, raised another issue critical to a fair and responsible trade agenda: transparency in trade negotiations.
While I appreciated Mr. Froman's stated commitment to transparency and consultation, it is critical to understand that transparency extends far beyond consultation and must include public participation in the formulation and implementation of trade rules.
Having recently returned from Peru, where the 17th round of TPP trade negotiations took place, I know that Mr. Froman will have much work to do in bringing real transparency and opportunities for public engagement into trade negotiations. After more than three years of ongoing TPP negotiations, not a single word of draft text has been released. Responsible trade begins with transparency and public engagement, and therefore requires that the texts and drafts of our trade pacts are made available to the public.
Finally, the other issue in the confirmation hearing that received considerable air time was that of Trade Promotion Authority, or "fast track," that Mr. Froman said he will work to advance. Fast track would allow the President to negotiate and sign trade pacts including the TPP before sending them to Congress for a vote. If fast track were approved by Congress, trade pacts could sail through Congress with no-amendments, limited debate, and a simple up-or-down vote. Fast-track authority, therefore, renders Congress unable to ensure that trade negotiations result in agreements that benefit communities and the environment. Surely that is not how a fair trade agenda should get shaped.
I hope that Mr. Froman will be provided the opportunity to explain more fully what fair trade means to him, and the Sierra Club looks forward to working with Mr. Froman to help shape a truly fair and responsible trade agenda.