Politics, Peru and a Presidential Primary?

How did a U.S. trade agreement with Peru of all countries become a political hot potato in the recent Congressional Black Caucus CNN debate? With repeated polls showing that strong majorities, including a majority of Republican voters, consider our current trade policies to be damaging for themselves and the nation, trade is an issue on which candidates seek to differentiate themselves.

Enter the Peru trade pact. It was negotiated by President Bush to expand the North American Free Trade Agreement (NAFTA) model to yet another Latin American country. Every and any NAFTA expansion agreement sparks ire among Democratic party base groups and increasingly among traditionally GOP-leaning small business owners, farmers and ranchers. Sens. Barack Obama and Hillary Clinton have been racing to out-anti-NAFTA each other as they have scrambled to adopt the critical perspective on our trade status quo that former Sen. John Edwards brought to the race and the majority of the American public shares.

Last spring, after winning a majority in Congress in part thanks to the election of scores of candidates running against the NAFTA trade model, Democratic congressional trade leaders demanded changes to several pending NAFTA expansion pacts that President Bush had completed the previous year. Bush agreed to add improved labor and environmental standards, however, the core NAFTA provisions most responsible for downward wage pressures and job loss remained untouched, as did limits on imported food and product safety standards and inspection.

Thus, the majority of House Democrats, 12 of 18 House committee chairs and every Democratic presidential candidate for president opposed the Peru NAFTA expansion, except Obama and Clinton. Why? During Monday night's debate, Obama explained that he was for the Peru FTA because it contained improved labor standards.

That answer must have sounded odd - and depressing - to many Americans whose manufacturing, professional and service sector wages are currently being flattened by global labor arbitrage under NAFTA-style agreements or to those who have lost one of those three million U.S. manufacturing jobs that were sent offshore or to a farmer who has seen the U.S. become a net food importer under our current trade deals.

Strong labor standards in trade agreements are necessary, but they are not sufficient to alter trade agreements' damaging economic outcomes on Americans in the short and medium terms. Including forceful labor standards in trade pacts is essential to paving the long path toward a more just global economy. Labor rights requirements in trade pacts will provide workers in trade partner countries with essential tools to organize for improved wages and conditions over many decades as part of creating a social contract that may take a century to establish, as it did in our own country.

However, a future president has a duty to secure tangible gains for Americans who are losing their jobs and seeing their wages stagnate today, and who fear for their children's futures in the coming decades. That requires changing the status quo trade model by eliminating provisions that promote immediate offshoring of U.S. production and jobs.

What does real change in the trade realm include? To start with, a future president must remove the 'foreign investor' privileges that were pushed into our 'trade' agreements starting with NAFTA by many of the 500-plus official corporate trade advisors granted a special role in the process under the then-existing Fast Track trade negotiating system. These foreign investor privileges subsidize offhsoring by removing the risks to U.S. firms otherwise associated with the race-to-the-bottom strategy of developing country production.

Like NAFTA and other NAFTA expansions, the Peru pact guarantees that U.S firms will receive a 'minimum standard of treatment" where they relocate, removing the uncertainties of dealing with Peruvian law. The pact also allows U.S. firms to avoid the uncertainties of Peruvian courts by empowering them to privately enforce the agreement's investor guarantees using World Bank and UN tribunals. How could this possibly be in the interest of most Americans?

Or consider how NAFTA and its expansions gut various job-creating U.S. federal and state procurement policies. The Peru FTA bans application of Buy America programs and other federal and state domestic procurement preferences unless specific exceptions are taken. All firms operating in Peru, including European or Chinese firms, must be given the same access as U.S. firms to outsourced U.S. government work, undercutting Congress' authority to ensure that U.S. workers are employed with these tax dollars so they recirculate in our economy to create U.S. jobs and strengthen local firms.

The Peru agreement's inclusion of these damaging NAFTA provisions is why presidential candidates' positions on the pact have become a debate-worthy test of commitment to real change. It is also why not one union, environmental, faith, consumer, or family farm group supported the deal.

With voters bringing up trade, offshoring and unsafe imports at every campaign stop, there's plenty of time for all of the candidates to develop proposals that will truly address the serious challenges we now face in the trade and globalization realm.

Comments

[factanonverba]

As a Latin American, I have to wonder why we even bother engaging with the United States. If it is not one thing, it is another. The trade we have with the US is infinitesimal in the grand scheme of things for the US but for us it is rather significant. For every country in the region, it is at least 20% of the dollar volume of trade and in some cases it approaches 50%. But for you it is a drop in the bucket. On the contrary when we approach the EU, the reception is far better. Apart from bananas, Europe gives Latin America preferential tariff treatment. So it is any wonder Latin American trade with Europe is growing while trade with the US is stagnating. And it is a double whammy for US because our currencies are pegged to the dollar or in several cases actually is the dollar. With the decline of the USD, so also declines the purchasing power of our pesos.
No doubt, Latin America has also begun to look inward and even begun to question the economic model. Venezuela is clearly headed in another direction and that spells trouble for the region. Apart from Nicaragua, Cuba, Bolivia and to a lesser extent Ecuador, Chavismo finds little if any support. Brazil, Uruguay, Chile and Argentina may have left of center governments but friends of Hugo they are not. In Colombia, Chavez' support for the FARC has led to billboards nationwide that simply state "Chavez callate" borrowing the phrase from King Juan Carlos of Spain. These TLCs or FTAs in English would do much to help to curb the influence of Chavez in the region because they bring jobs. But even then there is a danger for us because it exposes our agriculture sector to American agribusiness.