Wallach: Trade Not Just for Special Interests

Posted July 18, 2010 at 8:20am

The July 14 Web article “Big Business to Congress: Approve Stalled Trade Deals” on corporate demands to pass the leftover Bush-era trade pacts mischaracterized my organization’s perspective on the Korea free-trade agreement. Our view is that renegotiating the most threatening aspects of President George W. Bush’s Korea FTA text offers an opportunity to begin to unify Americans, and thus Congress, in favor of new rules for trade expansion.

[IMGCAP(1)]The Korea FTA text, signed before the financial crisis, includes deregulation terms that contradict current efforts to stabilize the global economy. The pact’s labor chapter includes a footnote that explicitly bans reference to the International Labor Organization’s core conventions, yet such conventions establish the platform of international labor rights jurisprudence that are necessary to the pact’s labor provisions’ effective operation.

The Bush text also includes the extreme foreign investor rights and private investor-state enforcement that President Barack Obama criticized during his campaign. These terms pose special threats because so many Korean firms are established here and would be newly empowered to attack U.S. environmental, financial, health and other policies in foreign tribunals. This would expose the U.S. government and taxpayers to expansive financial liabilities related to compensation demands. Canadian firms have used the North American Free Trade Agreement, the only other pact with a major capital-exporting country that includes these terms, to bring a series of cases that have cost millions in U.S. government legal costs, even in cases we won.

These are problems of equal importance to the barriers to U.S. exports that were left unaddressed in Bush’s agreement with respect to autos and beef. Fixing these problems does not require a total renegotiation, but rather specific limited fixes. Were such changes made and the commercial issues addressed, such a revised pact could obtain greater support from Congress and from organizations that have opposed past NAFTA-style FTAs.

The Obama administration’s negotiation of new trade pacts, in the context of the Trans-Pacific Partnership process, provides an opportunity to start from scratch in considering how to deliver the new American trade agreement model, as President Obama promised during the campaign. More than 150 Members of Congress have co-sponsored the TRADE Act, which ensures that trade agreements must deliver for the majority, not only a few special interests.

Lori Wallach is the director of Public Citizen’s Global Trade Watch division.