More Than 300 Republican and Democratic State Legislators From All 50 States Urge End of Investor-State Dispute Settlement System in NAFTA

More Than 300 Republican and Democratic State Legislators From All 50 States Urge End of Investor-State Dispute Settlement System in NAFTA

DLksAu2U8AAwhSZIn Letter to U.S. Trade Representative, Lawmakers Say ISDS Undermines State Sovereignty and Lawmaking

 With all eyes on the fate of North American Free Trade Agreement (NAFTA) renegotiations, more than 300 state legislators from across the political spectrum and from all 50 states released a letter urging that the controversial Investor-State Dispute Settlement (ISDS) system be eliminated from the deal.

Whether a NAFTA replacement agreement eliminates the expansive corporate privileges and parallel “justice” system now in NAFTA will be a decisive factor in a prospective new pact’s ability to obtain support from a majority in Congress. In their letter, the bipartisan group of state legislators reiterated the longstanding position of the National Conference of State Legislatures (NCSL), the bipartisan body that represents the nation’s state legislative bodies, in opposing trade pacts that include ISDS.

While the Republican and Democratic legislators hold divergent views on most issues, including NAFTA, the lawmakers agree that NAFTA’s ISDS provisions undermine state-level policymaking and have allowed multinational corporations to pocket $392 million from taxpayers and launch attacks on toxic bans, environmental and public health policies.

“NAFTA’s ISDS provisions are a shocking attack on U.S. sovereignty,” said Texas state Rep. James White, a Republican lawmaker who signed the letter. “ISDS grants foreign investors rights to skirt domestic courts and instead initiate proceedings against sovereign governments before tribunals of three private lawyers. ISDS is also a threat to our system of federalism – as even state and local laws can be subject to ISDS suits. If ISDS is removed from a renegotiated NAFTA, it will be a step in the right direction to protect our national and state sovereignty.”

The letter highlights the dangers that ISDS poses for state sovereignty and local lawmaking. ISDS has enabled transnational corporations to challenge state laws, local land use ordinances and even court decisions in an arbitration system, where corporations seek unlimited sums of taxpayer money, including for the loss of expected future profits. To prevail, the corporations need only convince a panel of three corporate lawyers that a state law violates the expansive rights granted to them under NAFTA. The panel decisions are not subject to appeal.

Added Washington state Sen. Maralyn Chase, who serves as the Democratic Chair of the state Senate Economic Development and International Trade Committee, “In the increasingly globalized economy, it is imperative that international trade agreements protect and promote national sovereignty. With the current dispute settlement system, multinational corporations circumvent the domestic legal system of the host country for an arbitral tribunal. By removing investor-state dispute settlements from trade deals, we encourage adherence to domestic laws and regulations implemented for public good, while curbing broad corporate power.”

The state lawmakers join a formidably diverse consensus against ISDS that spans the political spectrum. During the past year of NAFTA renegotiations, GOP and Democratic members of Congress, 230 professors of law and economics, and more than 100 small businesses sent public letters to U.S. Trade Representative Robert Lighthizer urging ISDS to be removed from NAFTA. Stark criticism of ISDS has come from voices as disparate as U.S. Supreme Court Chief Justice John Roberts; pro-free trade think tanks such as the Cato Institute; U.S. Sen. Elizabeth Warren (D-Mass), and hundreds of labor, environmental, consumer and faith organizations.

In contrast, the corporate-backed proponents of ISDS have been unsuccessful in recruiting meaningful support for their cause. In May, the American Legislative Exchange Council (ALEC) orchestrated a pro-ISDS letter that garnered only 12 state legislators.

“The renegotiation of NAFTA is an opportunity to fix a flawed agreement,” said Maine state Rep. Stacey Guerin, who is the House Republican lead on the state Judiciary Committee and member of Maine’s Citizen Trade Policy Commission. “One of the biggest problems with the existing NAFTA is its failure to protect the sovereignty of U.S. states. Specifically, in Chapter 11, NAFTA provides special legal rights to foreign corporations to challenge policies they claim will reduce their profits. Over many years, state legislators on a bipartisan basis have objected to these ISDS provisions, which have been used to challenge legitimate state laws from tobacco policy to funeral home regulation to drinking water protections. The letter released today reaffirms our position and strongly supports the efforts of U.S. Trade Representative Robert Lighthizer to remove ISDS from the renegotiated agreement with Canada and Mexico.”

Added Ohio state Sen. Kenny Yuko, who serves as the leader of the Ohio state Senate Democratic Caucus, “Ohioans have long felt the pain of NAFTA and bad trade policy. We lost more than 150,000 jobs because of overseas trade, and that devastated our economy, local communities and families across the state. Over 300 lawmakers have come together to demand that one of the worst provisions of NAFTA be removed. When we stop incentivizing outsourcing, we can bring jobs back home, focus on our workers and grow American businesses.”

View the letter and full list of signers.

Published on the Citizen Trade website.

The Citizens Trade Campaign (CTC) is a national coalition whose members include Americans for Democratic Action, American Federation of Teachers, Communications Workers of America, Friends of the Earth U.S., Institute for Agriculture and Trade Policy, International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Electrical Workers, International Brotherhood of Teamsters, International Union of Bricklayers and Allied Craftworkers, International Union of Painters and Allied Trades, National Family Farm Coalition, National Farmers Union, Pubic Citizen’s Global Trade Watch, Sierra Club, UNITE HERE, United Methodist Church General Board of Church and Society, United Brotherhood of Carpenters, United Mineworkers of America, United Steelworkers, United Students Against Sweatshops and Witness for Peace, as well as regional, state, and city-based coalitions, organizations, and individual activists throughout the United States.

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U.S. Business Groups Urge Trump to Keep Canada in Nafta

U.S. business groups sought Tuesday to increase pressure on the Trump Administration to retain the existing structure of the North American Free Trade Agreement, urging U.S. officials to avoid advancing a new version of the pact that includes Mexico but not Canada.

NAFTA-North_American_Free_Trade_Agreement-1“It would be unacceptable to sideline Canada, our largest export market in the world,” wrote the heads of the U.S. Chamber of Commerce, the Business Roundtable and the National Association of Manufacturers in a letter to U.S. Trade Representative Robert Lighthizer. The business groups also called for negotiators to build in strong enforcement provisions to hold all three countries to account; avoid sunset clauses that could lead to the termination of the agreement; and exclude language allowing for new tariffs on the auto industry or other sectors.

The letter, viewed by The Wall Street Journal, comes as U.S. and Mexican officials are seeking to put pressure on Canada to make concessions soon and join in a three-way agreement—or be left out of a new two-nation pact.

The Trump administration notified Congress last month that it had struck a deal with Mexico and would formally sign a new version of Nafta as early as late November. Canada would be part of the agreement “if it is willing, in a timely manner,” President Trump told congressional leaders.

Any overhaul of Nafta would require a majority vote in support of the pact in the House and Senate to take effect. Traditionally Republican lawmakers have taken into account the views of business groups on trade issues, while many Democrats have often taken a cue from labor groups.

In recent weeks, U.S. labor groups have aligned with business groups in expressing a strong preference for including Canada.

“On this one, we happen to agree,” said Celeste Drake, trade expert at the AFL-CIO, the big U.S. union federation with affiliates in Canada. “We want the rules rewritten, but that doesn’t mean to exclude anyone.”

The upshot is that Canadian officials see limitations in the Trump administration’s latest pressure tactic of proceeding with Mexico alone, since any deal without Canada would face strong domestic opposition in the U.S.

Canadian Foreign Minister Chrystia Freeland would leave for Washington, D.C., late Tuesday for Nafta meetings this week, a spokesman said. It was unclear how long she would be there, he added. On Monday, Ms. Freeland said she had been in touch with Mr. Lighthizer, although some conversations “are better to have face to face.”

Ms. Freeland and other officials have repeatedly skirted questions about meeting an end-of-September deadline, adding that their focus is about reaching a deal that is acceptable to Canadians.

Canadian Prime Minister Justin Trudeau said Monday night that the U.S. and Canada “are not there yet” on an agreement. “We might be days or weeks away now. It might not be,” Mr. Trudeau said in a broadcast interview with Maclean’s magazine.

U.S. tensions with Canada were magnified in June, when Mr. Trump attacked Mr. Trudeau over Twitter after the Group of Seven summit in Quebec. The two leaders may have the chance to address trade concerns including Nafta next week at the United Nations General Assembly. So far a meeting hasn’t been scheduled, officials said.

In any revised version of Nafta, Mr. Trudeau has insisted on keeping a dispute-resolution system contained in Chapter 19 of the original Nafta. The system allows Canada or other countries in the pact to appeal to arbitration boards to overturn tariffs imposed on allegedly dumped or subsidized goods. Mr. Lighthizer has proposed abolishing the dispute system.

For his part, Mr. Trump has criticized Canada for a system that protects its dairy farmers. U.S. negotiators are seeking to boost American farmers’ access to the Canadian market to at least the level agreed upon in 2015 for the Trans-Pacific Partnership, the sprawling trade agreement that Mr. Trump abandoned before it got a vote in Congress.

Under a 2015 U.S. law, administration officials are supposed to publish the text of a trade agreement at least 60 days before it is signed with trading partners. Mexican officials are eager to sign a new version of Nafta before the country’s president-elect, Andrés Manuel López Obrador, takes office in December. They worry that the new leftist president could seek changes before signing the pact under his watch.

U.S. officials hope they can iron out their differences with Canada in coming days so that a text of the new agreement can be released by the end of the month. Negotiators have missed several prior deadlines.

Arthur Stamoulis

Citizens Trade Campaign

(202) 494-8826

 

 

 
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The Citizens Trade Campaign (CTC) is a national coalition whose members include Americans for Democratic Action, Communications Workers of America, Friends of the Earth U.S., Institute for Agriculture and Trade Policy, International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Electrical Workers, International Brotherhood of Teamsters, International Union of Bricklayers and Allied Craftworkers, International Union of Painters and Allied Trades, National Family Farm Coalition, National Farmers Union, Pubic Citizen’s Global Trade Watch, Sierra Club, TransAfrica Forum, UNITE HERE, United Methodist Church General Board of Church and Society, United Brotherhood of Carpenters, United Mineworkers of America, United Steelworkers, United Students Against Sweatshops and Witness for Peace, as well as regional, state, and city-based coalitions, organizations, and individual activists throughout the United States.

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‘This Is Life or Death for Us’: Mexico’s Farm Movement Rejects New NAFTA Agreement

 Donald Trump and Enrique Peña Nieto, Mexico’s lame-duck conservative president, are trying to push through new trade deal, but farmers are rising up in opposition.

43df5ed3-e0db-4f04-8436-576a40dbcd72The smooth ride to a new North American Free Trade Agreement (NAFTA) may have just hit the bumpy roads of rural Mexico. On Tuesday, leaders of Mexico’s farm movement strongly condemned the new agreement announced between the United States and Mexico, calling on the new president they supported in recent elections to get involved and slow the race to the new agreement.

“We need to push our new president to stop the signing of this agreement,” said farm leader Gerónimo Jacobo in an interview. “This is life or death for us. With NAFTA it will be a slow death. Our national sovereignty is at stake here!”

On August 27, U.S. President Donald Trump announced he had reached a deal with the Mexican government on a new version of the NAFTA. In a garbled televised phone call, the president congratulated lame duck Mexican President Enrique Peña Nieto, claiming he had fulfilled his campaign promise to “replace NAFTA” and christening the new deal “The U.S.-Mexico Free Trade Agreement.” For his part, Peña Nieto, whose party was trounced in July 1 elections, claimed the agreement as his legacy.

What was surprising to Mexico’s energized farm movement were the anti-agriculture biases in the negotiated text.

No one, though, could claim they actually had a new NAFTA. Canada, NAFTA’s other commercial partner, was left out as President Trump rushed to meet a self-declared deadline that would allow the agreement to be signed by Peña Nieto, before Andrés Manuel López Obrador takes office December 1. Canada was offered the opportunity to join the agreement, though negotiations continue.

Surprisingly, representatives from the incoming government of López Obrador (also known as AMLO) participated as observers and endorsed the new agreement. Jesús Seade, López Obrador’s designated NAFTA negotiator, raised a few small issues in the last days of the negotiations, but publicly supported the deal, a stance widely seen as trying to ensure financial stability in the transition to his new government. It was surprising because the incoming president had been a strong critic of NAFTA in the past.

Farmers: Not so fast!

What was surprising to Mexico’s energized farm movement were the anti-agriculture biases in the negotiated text. The movement had gone all-out for López Obrador and his Morena party, turning out more than 50% support across rural Mexico, unprecedented in a country in which the ruling Institutional Revolutionary Party tightly controlled the rural vote. They did so because the candidate had publicly signed on to their radical program for farm reform, the Plan de Ayala 21st Century, after Emiliano Zapata’s original rural reform program early last century. (See my previous article.)

The Plan de Ayala also called for a renegotiation of NAFTA to stop U.S. farm products from flooding Mexico with cheap, subsidized crops.

The new program called for support for small-scale farmers of maize and other staple crops as part of a campaign to restore food self-sufficiency in a country that now imports some 46% of its food, mostly from the United States. The Plan de Ayala also called for a renegotiation of NAFTA to stop U.S. farm products from flooding Mexico with cheap, subsidized crops.

The new agreement fails to allow Mexico to protect staple crops from such U.S. agricultural dumping. New research from the Institute for Agriculture and Trade Policy shows that U.S. maize (corn) has been exported in the last three years at prices 10% below what it cost to produce. Wheat has been exported 33% below the costs of production, and rice as also seen a dumping margin. All three crops are priorities for López Obrador’s new Office of Food Self-Sufficiency, to be headed by longtime farm leader Victor Suárez.

At Tuesday’s press conference, farm movement leaders rejected the new deal and called on the current government not to sign it, deferring the decision to the new president with his overwhelming mandate. (His party won 53% of the vote in a five-person race and took majorities of seats in both the House and the Senate.) In a statement, leaders said NAFTA is responsible for the impoverishment of small and medium-scale farmers.

They denounced the new agreements on biotechnology as a backdoor way to force genetically modified maize and other crops into Mexico. López Obrador has been clear since the election that his administration will no longer allow the use of GM maize and soybeans. Farmers fear the new NAFTA could compel him to do so.

López Obrador has been clear since the election that his administration will no longer allow the use of GM maize and soybeans. Farmers fear the new NAFTA could compel him to do so.

Similarly, there are rumors that an annex to the agreement would bar Mexico from putting labels on food packaging warning consumers about fattening, sugary, and unhealthy food. In other countries such measures have proven effective, and Mexico faces a growing obesity epidemic attributed significantly to imported processed food and sodas. Another provision could make it difficult for the new government to pay support prices to small-scale farmers as a way to stimulate local production.

With the actual text of the agreement still secret, farm leaders demanded that the full text be made public and that the new congress hold hearings on the agreement before it is signed.

“We have ghost towns because of NAFTA”

“Peña Neto shouldn’t sign it,” farm leader Rocío Miranda told me. “He has presided over a terrible increase in hunger. We have ghost towns in rural Mexico because of NAFTA.”

Miranda said she is very optimistic about the government’s commitment to small-scale farmers. “The new government represents the people harmed by NAFTA.” But she hopes López Obrador will step in to ensure that the new NAFTA does not contradict his ambitious rural agenda.

“The farmers’ movement is concerned,” she said, as negotiators wait to see if Canada will sign on before the end of September. “The new NAFTA could undermine our efforts to regain our food self-sufficiency.”

 

Trump’s Trade Deal: It’s Not Looking Good

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Even if NAFTA 2.0 does include some new environmental standards, how will they be enforced? The last four U.S. trade deals used an environmental “enforcement” mechanism that has categorically failed. Not once has the U.S. used the mechanism to challenge environmental abuses in a U.S. trade partner country, despite widely documented violations. Rumor has it that Trump’s NAFTA redux includes more of the same, failed enforcement terms.

Essential fix: Shield environmental policies from industry interference.

Likely outcome: A step forward, a step backward.  

For years, the trade justice movement has pushed for the elimination of a private legal system for corporationsthat’s hidden in trade deals. Corporate polluters have repeatedly used the “investor-state dispute settlement” (ISDS) system to sue governments over environmental and health policies in tribunals where corporate lawyers — not judges — call the shots. Reports suggest the current NAFTA 2.0 deal at least curtails the most egregious elements of ISDS by reining in the rights given to corporations — a testament to the momentum of the movement to eliminate ISDS.

But there’s a catch, and it’s a big one. U.S. oil and gas corporations in Mexico get to keep their broad rights. That’s right — the deal reportedly says that while most companies cannot have sweeping rights to challenge environmental and health policies in NAFTA 2.0, they’ll make a special exception for the most polluting corporations in history. It’s like saying, “From now on, we’re going to protect the henhouse by keeping all other animals away… except for foxes.”

This is a shameless and dangerous handout to corporate polluters like Exxon and Chevron, which have used ISDS to successfully challenge policies ranging from offshore drilling requirements in Canada to a court order in Ecuador to clean up toxic oil sludge. Trump’s NAFTA 2.0 would apparently let them challenge environmental policies in Mexico, using a similar set of broad corporate rights.

Essential fix: Support a clean energy economy, not fossil fuel dependency.

Likely outcome: Fossil fuel handouts.

If we are to transition to an economy based on equity and clean energy, our trade deals cannot move us in the opposite direction. For example, we must eliminate a NAFTA rule that requires the U.S. Department of Energy to automatically approve climate-polluting gas exports to Mexico, instead of evaluating whether they are in the public’s interest. But Trump’s NAFTA 2.0 reportedly maintains this handout to gas corporations, which has facilitated increased fracking in the U.S., expansion of cross-border gas pipelines, and growing dependency on climate-polluting gas in Mexico.

We’re also concerned by the Trump administration’s own admission that it sees NAFTA 2.0 as a tool to “lock in” deregulation of oil and gas in Mexico. We’ll be checking for any new rules that could restrict — for years to come — Mexico’s ability to curb fracking and offshore drilling, as described in our recent report. We’ll also be checking whether the text maintains NAFTA’s “proportionality” rule, which locks in tar sands oil extraction and fracking in Canada. Rumor has it that this rule has been eliminated, which would be a bright spot in a deal that is otherwise looking grim for our air, water, and climate.

Here’s the good news: Any NAFTA 2.0 deal still must be voted on in the next Congress. The fight for the future of trade policy doesn’t end when the Trump administration reveals the secret NAFTA text. That’s when it heats up. Stay tuned.

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Why transforming the economy begins and ends with cooperation

“When I heard about the green economy for the first time, a light bulb went off in my head. We can create businesses and jobs for ourselves.” That’s how co-op worker-owner Tim Hall explains his initial spark of inspiration.

EstebanKelly2Eventually he joined together with other unemployed Boston residents to found CERO(Cooperative Energy, Recycling, and Organics), an award-winning food waste pickup and diversion service. The name is fitting, since “CERO”—which means “zero” in Spanish—seamlessly blends their zero-waste mission with a green jobs strategy of workforce development among low-skilled workers, especially immigrants and people of color.

Cooperatives provide a sustainable and accountable way of providing goods and services—and they can help to transform our economies before it is too late. They promise a tantalizing future of sustainable social enterprise, community control, worker self-management and workplace democracy that places economic decision-making back into the hands of workers and consumers. Could co-ops dislodge capitalism and loosen its chokehold on what feels like every facet of our lives, or will they themselves become co-opted?

At some point in the last 50 years capitalism corralled the power to define everything about how we think about economics. That’s one of the benefits baked into being the dominant organizing force of the economy. But the bigger truth is that ‘the economy’ includes more than the profit-maximizing ethos of capitalism, just as ‘democracy’ isn’t the property of Congress or parliament. In democratic societies (at least in theory) we have elected and accountable representatives for everything from parent-teacher associations and children’s sports leagues to the general assemblies where members deliberate with each other in neighborhood associations and union halls.

The same is true for economics, where undemocratic, shareholder-controlled, profit-obsessed enterprises have come to be equated with the concept of business itself—and especially with commerce, money, mission and productivity. Cooperatives are for-profit businesses which operate in virtually every industry. They undergird global commerce, particularly in agriculture, energy, and local banking via credit unions, but instead of maximizing profits for their investors they are driven primarily by the interests of their members–– who may be producers on a farm, the residents of an apartment complex, the consumers of utilities and retail goods, or the workers in a factory. In co-ops the goal is to get a better price for farmers, more affordable housing for residents, higher-quality goods for consumers, and meaningful, healthy, fair-paying jobs for workers.

Is this inherently anti-capitalist? In a way, yes, because co-ops use capital to put people over profit, which inverts the profit-over-people logic of the current global economy. Worker cooperatives may be the most coherent alternative to capitalism as we know it because they put capital at the service of labor rather than the other way around. Some fall short of this ideal of course, and co-ops don’t guarantee social justice by themselves (which is why we still need social movements), but the co-op model inherently prioritizes the good of the many over the benefit of the few.

Generally speaking, the cooperative economy is better described as ‘a-capitalist’ rather than ‘anti-capitalist,’ because it can prosper in both market economies and socialist economies like Cuba, which currently has about the same number of worker co-ops as the United States. But in its desperation to legitimize and stabilize itself, capitalism is eager to co-opt at least the superficial characteristics of the cooperative economy, much as it has co-opted sustainable business through greenwashing campaigns over the last 20 years. Throughout the 20th century we have witnessed capitalism absorb cooperative elements into its structures in an attempt to reconstitute itself during its many crises.

At the same time, it’s disappointing but necessary to point out that some of the world’s largest cooperatives have managed to compete and survive against conventional businesses by mimicking the corporate cultures of late-capitalist firms. Who knew that American household brands like Land O’Lakes and Ocean Spray were both cooperatives? And when was the last time you were invited to vote in a general membership meeting of your credit union?

What’s more important than being ‘pro- ‘or ‘anti-capitalist’ is the recognition that cooperatives must figure heavily in any democratic, post-capitalist economy. This matters a great deal now, because while the contradictions and unsustainable nature of capitalism have become glaringly clear, many people struggle to articulate what will replace it. The exception is a rising consensus that cooperatives (along with small independent and family businesses) will replace the capitalist firm as the core non-governmental form of enterprise in the future. Cooperatives are an essential instrument of economic democracy.

But to succeed in this way, co-ops must stay true to the mission and guiding values. Employee-owned cooperatives force us to confront our own desire to do what it takes to live justly, sustainably, and in a participatory, people-centered way. They remove the excuse that the problem is the demands of the shareholder or the red-tape of government bureaucracy or the bullish will of a boss. When we have worker owned and controlled businesses, we must take responsibility for how well we pay ourselves, how connected our businesses are to the community and its needs, and how healthy our own workloads and quality of life truly are.

For as long as cooperatives fight to persist in a ravenous capitalist economy, these challenges will be greater, because a co-op’s products and services must rival the quality and price point of deceitful capitalist enterprises which cut corners on safety and the environment, and steal wages from workers in order to maximize benefits for their shareholders. Cooperatives are put on trial time and again because people want to imbue them with some magical or mechanical power to resolve societal problems. In the current context (or perhaps any context) this is impossible, but they do have the potential to be healthy and restorative as in the case of CERO.

The lowest income people in Boston may be on the frontlines of environmental disaster in their city, but Hall and his colleagues have found a way for their communities to become protagonists in creating solutions. Cooperatives put folks like them at the center of the economy, which means that ordinary people can use the power of business to address their needs and guide how change happens, thus helping to fulfill the promise of a democratic economy—not just voting once or twice a year but coming together to solve problems every day. The real question is this: can we as people put our full weight behind a new economic paradigm that is inclusive, inter-dependent, anti-sexist, multi-racial, anti-imperialist and liberatory?

I’ve spent 20 years as an active member of many different types of cooperative in the US, including the intimate living spaces of over a dozen shared housing co-ops and handling the day-to-day business of two different worker-run cooperatives. What I can tell you is this: by themselves such co-ops aren’t going to save us, nor are they going to transform society. But co-ops are an especially effective tool for change. They leverage innovations from the capitalist era of enterprise and turn them into a positive force within the broader spheres of human relationships, responsible resource consumption, and transparent governance and accountability— typically while staying rooted locally and showing concern for the community.

Deep transformation happens at the level of human beings, who then bring their reorientation to the structures in which they participate. Cooperatives are a vehicle to catalyze that change, but they only yoke together the people in the pilot’s seat. What ultimately matters is the disposition of the pilots themselves. We are the ones that have to change.

However, what I’ve also seen during my decades in cooperative communities is that while co-ops might not transform people, the act of cooperation often does. Not overnight, and not evenly for everyone. But the more my co-workers and housemates participated in cooperative processes like facilities maintenance, financial planning, passing a health inspection or some other shared work or act of problem-solving, the more humility, trust, empathy, stewardship and solidarity we each expressed. The habits of hierarchical, capitalist behaviors receded like the tide as we practiced interdependence and cooperation.

What we need are more opportunities to practice, screw up and improve in this way. And with more practice, we can all develop the qualities required to work through conflict and manage operations sensibly and democratically. Cooperation is the key to a new economy.

This was originally posted on the ‘Transformation’ website

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Opinion: Trump’s Policies Will Displace the Dollar

The benefits that the US reaps from having the world’s main international currency are diminishing with the rise of the euro and renminbi. And now President Donald Trump’s misguided trade wars and anti-Iran sanctions will accelerate the move away from the dollar.

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Back in 1965, Valéry Giscard d’Estaing, then France’s Minister of Finance, famously called the benefits that the United States reaped from the dollar’s role as the world’s main reserve currency an “exorbitant privilege.” The benefits are diminishing with the rise of the euro and China’s renminbi as competing reserve currencies. And now US President Donald Trump’s misguided trade wars and anti-Iran sanctions will accelerate the move away from the dollar.

The dollar leads all other currencies in supplying the functions of money for international transactions. It is the most important unit of account (or unit of invoicing) for international trade. It is the main medium of exchange for settling international transactions. It is the principal store of value for the world’s central banks. The Federal Reserve acts as the world’s lender of last resort, as in the 2008 financial panic, though we should recognize too that the Fed’s blunders helped to provoke the 2008 crisis. And the dollar is the key funding currency, being the major denomination for overseas borrowing by businesses and governments.

In each of these areas, the dollar punches far above America’s weight in the world economy. The US currently produces around 22% of world output measured at market prices, and around 15% in purchasing-power-parity terms. Yet the dollar accounts for half or more of cross-border invoicing, reserves, settlements, liquidity, and funding. The euro is the dollar’s main competitor, with the renminbi coming in a distant third.

The US gains three important economic benefits from the dollar’s key currency role. The first is the ability to borrow abroad in dollars. When a government borrows in a foreign currency, it can go bankrupt; that is not the case when it borrows in its own currency. More generally, the dollar’s international role enables the US Treasury to borrow with greater liquidity and lower interest rates than it otherwise could.

A second advantage lies in the business of banking: The US, and more precisely Wall Street, reaps significant income from selling banking services to the rest of the world. A third advantage lies in regulatory control: The US either directly manages or co-manages the world’s most important settlements systems, giving it an important way to monitor and limit the flow of funds related to terrorism, narco-trafficking, illegal weapons sales, tax evasion, and other illicit activities.

Yet these benefits depend on the US providing high-quality monetary services to the world. The dollar is widely used because it has been the most convenient, lowest-cost, and safest unit of account, medium of exchange, and store of value. But it is not irreplaceable. America’s monetary stewardship has stumbled badly over the years, and Trump’s misrule could hasten the end of the dollar’s predominance.

Already back in the late 1960s, America’s fiscal and monetary mismanagement led to the breakdown of the dollar-based Bretton Woods pegged-exchange rate system in August 1971, when President Richard Nixon’s administration unilaterally renounced the right of foreign central banks to redeem their dollars in gold. The breakdown of the dollar-based system was followed by a decade of high inflation in the US and Europe, and then an abrupt and costly disinflation in the US in the early 1980s. The dollar turmoil was a key factor motivating Europe to embark on the path toward monetary unification in 1993, culminating in the launch of the euro in 1999.

Likewise, America’s mishandling of the Asian financial crisis in 1997 helped to convince China to begin internationalizing the renminbi. The global financial crisis in 2008, which began on Wall Street and was quickly transmitted throughout the world as interbank liquidity dried up, again nudged the world away from the dollar and toward competing currencies.

Now Trump’s misbegotten trade wars and sanctions policies will almost surely reinforce the trend. Just as Brexit is undermining the City of London, Trump’s “America First” trade and financial policies will weaken the dollar’s role and that of New York’s role as the global financial hub.

The most consequential and ill-conceived of Trump’s international economic policies are the growing trade war with China and the reimposition of sanctions vis-à-vis Iran. The trade war is a ham-fisted and nearly incoherent attempt by the Trump administration to stall China’s economic ascent by trying to stifle the country’s exports and access to Western technology. But while US tariffs and non-tariff trade barriers may dent China’s growth in the short term, they will not decisively change its long-term upward trajectory. More likely, they will bolster China’s determination to escape from its continued partial dependency on US finances and trade, and lead the Chinese authorities to double down on a military build-up, heavy investments in cutting-edge technologies, and the creation of a renminbi-based global payments system as an alternative to the dollar system.

Trump’s withdrawal from the 2015 Iran nuclear deal and the re-imposition of sanctions against the Islamic Republic could prove just as consequential in undermining the dollar’s international role. Sanctioning Iran runs directly counter to global policies toward the country. The UN Security Council voted unanimously to support the nuclear deal and restore economic relations with Iran. Other countries, led by China and the EU, will now actively pursue ways to circumvent the US sanctions, notably by working around the dollar payments system.

For example, Germany’s foreign minister, Heiko Maas, recently declared Germany’s interest in establishing a European payments system independent of the US. It is “indispensable that we strengthen European autonomy by creating payment channels that are independent of the United States, a European Monetary Fund, and an independent SWIFT system,” according to Maas. (SWIFT is the organization that manages the global messaging system for interbank transfers.)

So far, US business leaders have sided with Trump, who has showered them with corporate tax cuts and deregulation. Despite soaring budget deficits, the dollar remains strong in the short term, as the tax cuts have fueled US consumption and rising interest rates, which in turn pull in capital from abroad. Yet in a matter of several years, Trump’s profligate fiscal policies and reckless trade and sanctions policies will undermine America’s economy and the role of the dollar in global finance. How long will it be before the world’s businesses and governments are running to Shanghai rather than Wall Street to float their renminbi bonds?

This article originally appeared on Project Syndicate on September 3rd, 2018.  and was from the Sanders Institute blog. 

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US, Canada will meet Tuesday, earlier than expected on NAFTA

The U.S. and Canada will resume high-level talks today, which is earlier than expected, on the North American Free Trade Agreement (NAFTA).

dairywisconsin_canadanafta_042517gettyCanadian Foreign Minister and U.S. Trade Representative Robert Lighthizer will meet to try to hammer out the final complex details of a North American agreement with the aim of including all three countries in the 24-year-old deal, according to news reports.

Discussions weren’t expected to get going again until the end of the week.

The U.S. and Canada met for most of last week without reaching a resolution. They are aiming to complete a deal by the end of the month so the three nations — Mexico, Canada and the United States — can sign an agreement by the end of November.

On Monday, Lighthizer spent was in Brussels to meet with his counterpart European Union Trade Commissioner Cecilia Malmström for the first time since President Trump and European Commission President Jean-Claude Juncker agreed in July to discuss a possible trans-Atlantic trade deal.

USTR said in a statement that Lighthizer “had a constructive meeting” with Malmström to “improve trade relations between the United States and the European Union.”

The trade ministers are set to meet again at the end of the month. In October, staff will hold further discussions on identifying and reducing tariff and non-tariff barriers, with more meetings expected in November to resolve issues in several areas, USTR said.

Malmström called the meeting “forward-looking.”

“We discussed how to move forward and identify priorities on both sides, and how to achieve concrete results in the short- to medium-term,” she said on Twitter.

Between the Canada and the United States there are still several prickly issues that are unresolved including a compromise on U.S. access to the Canadian dairy market, cultural exemptions and a dispute settlement resolution system in Chapter 19 of the NAFTA deal that allows Canada to challenge U.S. tariffs.

Last week, Canadian Prime Minister Justin Trudeau said, “we need to keep the Chapter 19 dispute resolution because that ensures that the rules are actually followed.”

“And we know we have a president who doesn’t always follow the rules as they’re laid out,” Trudeau said.

 

From The Hill

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Letter from The Citizens Trade Campaign

Trade negotiators from the U.S. and Mexico announced they’ve come to a basic understanding on how to revise the North American Free Trade Agreement (NAFTA) — but labor allies who have seen some of the secret texts are warning that, “There is more work that needs to be done to deliver the needed, real solutions to NAFTA’s deeply ingrained flaws.”

citizen-s-trade-campaignAnd with Canada not yet having signed off on even the initial framework, the ultimate renegotiation could still go in multiple directions.

SIGN THE PETITION: Help ensure that the only NAFTA replacement that can get through Congress is one that finally puts working people and the planet ahead of corporate profits.

Over a thousand civil society organiations have been very clear on what’s needed in these negotiations if we’re going to protect jobs at home, protect human rights abroad and raise wages and improve environmental conditions across the continent.

Any NAFTA replacement needs to eliminate the harmful Investor-State Dispute Settlement (ISDS) system that threatens jobs, the environment and public health.  And it needs to add strong, new labor and environmental standards with swift and certain enforcement.

Nothing short of that criteria will prevent corporations from continuing to outsource good-paying jobs in order to take advantage of sweatshop working conditions and lax environmental protections abroad.  We won’t accept anything less, and we now need our elected officials in Congress to make crystal clear that they won’t accept anything less either.

PLEASE ACT NOW:  Urge Congress to demand that good-paying jobs, human rights and a healthy environment are truly prioritized in the ongoing NAFTA negotiation.

Corporate lobbyists whose clients have benefited from NAFTA’s race-to-the-bottom in wages, working conditions and sustainability would like nothing more than a superficial NAFTA renegotiation that further enshrines special rights for powerful interests while once again leaving working people in the lurch.

Please join us in asking Congress to insist on a comprehensive NAFTA replacement that meets the long-voiced demands of working people in all three countries.

Together, we can make a difference.

George Kimball
Citizens Trade Campaign, New York State
518-833-3235
george@citizenstrade.org
https://www.citizenstrade.org/ctc/

follow us on twitter @citizenstrade

The Citizens Trade Campaign (CTC) is a national coalition whose members include Americans for Democratic Action, American Federation of Teachers, Communications Workers of America, Friends of the Earth U.S., Institute for Agriculture and Trade Policy, International Association of Machinists and Aerospace Workers, International Brotherhood of Boilermakers, International Brotherhood of Electrical Workers, International Brotherhood of Teamsters, International Union of Bricklayers and Allied Craftworkers, International Union of Painters and Allied Trades, National Family Farm Coalition, National Farmers Union, Pubic Citizen’s Global Trade Watch, Sierra Club, UNITE HERE, United Methodist Church General Board of Church and Society, United Brotherhood of Carpenters, United Mineworkers of America, United Steelworkers, United Students Against Sweatshops and Witness for Peace, as well as regional, state, and city-based coalitions, organizations, and individual activists throughout the United States.
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Trump Continues To Rush Toxic NAFTA Deal Without Canada

The Sierra Club denounces U.S.-Mexico agreement on NAFTA.

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Executive Director Michael Brune says “The only thing Donald Trump has succeeded at is taking a failed trade deal originally crafted by polluters and multinational corporations and updating it with the help of even more polluters and multinational corporations all while alienating America’s closest allies to try and score political points.”

The U.S. Trade Representative announced that it is moving forward without Canada on a proposed U.S.-Mexico trade agreement announced earlier this week. USTR announced that they will notify Congress of Trump’s intent to sign the new deal later this year, and noted that Canada will still be able to join the deal “if it is willing.” The draft deal reportedly includes weak environmental enforcement terms, fails to make any mention of climate change, and even offers special handouts to oil and gas corporations.

Today’s announcement follows reports that Trump said he would not compromise with Canada and previously threatened them with tariffs on automobiles. Earlier this week, Mexico made it clear that it wanted Canada included in any trade agreement. It has not indicated whether their position has changed. The full text of the deal will not be available to the public for another 30 days.

In response, Sierra Club Executive Director Michael Brune released the following statement:

“The only thing Donald Trump has succeeded at is taking a failed trade deal originally crafted by polluters and multinational corporations and updating it with the help of even more polluters and multinational corporations all while alienating America’s closest allies to try and score political points. This rushed, noxious deal is a shameful demonstration of Trump’s desire to favor his own political interests and those of corporate polluters at the expense of the millions of working families and communities in the U.S. and across North America. The U.S.’s trade policy should not be a pawn in Trump’s political game and Congress must fulfill its duties of rejecting any deal not in the people’s interest.”

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See here for a recent joint statement from leading U.S. environmental groups on what must be included in any NAFTA replacement deal.

Key findings from the report NAFTA 2.0: For People or Polluters?

NAFTA’s Existing Obstacles to Climate Progress

  • NAFTA allows corporations to evade climate policies by offshoring their production, pollution, and jobs to countries with weaker climate standards. Policymakers across North America regularly cite this climate pollution loophole as a reason not to enact stronger climate policies, for fear that doing so would spell job loss and a mere exporting of emissions.

  • NAFTA’s “proportionality” rule locks in tar sands oil extraction and fracking in Canada, while giving investors a permanent green light to finance new tar sands oil pipelines to the U.S. If Canada tries to meet its climate goals but remains bound by this NAFTA rule, the country will produce nearly 1,500 metric megatons more climate pollution by 2050 than if it ditched the rule. This cumulative NAFTA climate pollution penalty is twice Canada’s current annual emissions and more than 12 times greater than its 2050 climate pollution target.

  • NAFTA has facilitated a fivefold increase in U.S. gas exports to Mexico by requiring those exports to be automatically approved. This has fueled increased fracking in the U.S., expansion of cross-border gas pipelines, and a crowding out of solar and wind power in Mexico. Only 1 percent of Mexico’s electricity comes from solar and wind while half now comes from gas, which has contributed more than any other fuel type to Mexico’s increased climate pollution.

  • NAFTA could prolong the climate damage from the Trump administration’s regulatory rollbacks if NAFTA’s private legal system for corporate polluters remains intact. If “investor-state dispute settlement” (ISDS) remains in NAFTA, it could delay or weaken the re-establishment of U.S. climate policies after the Trump administration leaves.

New Climate Threats in NAFTA 2.0?

  • NAFTA negotiators have explicitly stated that they intend for NAFTA 2.0 to lock in the recent deregulation of oil and gas in Mexico, which has encouraged increased offshore drilling, fracking, and other fossil fuel extraction. A future Mexican government may want to restrict such activities to reduce climate, air, and water pollution. However, NAFTA 2.0 could bar such changes with a “standstill” rule that requires the current oil and gas deregulation to persist indefinitely, even as the climate crisis worsens and demands for climate action crescendo.

  • NAFTA 2.0 includes expansive rules concerning “regulatory cooperation” that could require Canada, the U.S., and Mexico to use burdensome and industry-dominated procedures for forming new regulations, which could delay, weaken, or halt new climate policies. These rules also could be used to pressure Canada and Mexico to adopt climate standards weakened by the Trump administration, making it harder to resume climate progress in the post-Trump era.

A Climate-Friendly NAFTA Replacement

  • To allow governments to take climate action without fearing the offshoring of jobs and pollution, NAFTA’s replacement must require each country to enforce robust climate, labor, and human rights protections, in line with the Paris accord and other international agreements. In contrast, the Trump administration is proposing weak environmental standards for NAFTA 2.0, without even mentioning climate change.

  • To prevent climate and other public interest policies from being challenged in trade tribunals, NAFTA’s replacement must include a broad “carve-out” that shields such policies from challenge, while eliminating ISDS and other overreaching rules. The Trump administration has proposed an opt-out for ISDS, but negotiators have given no indication that they plan to curtail other overreaching rules or exempt climate and other public interest policies from those rules.

  • To support a just transition to a clean energy economy, NAFTA’s replacement must allow governments to swiftly phase out fossil fuel exports. The deal must eliminate NAFTA’s proportionality rule and the rule that requires automatic U.S. approval of gas exports.

 

 

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The Agenda of the Mexican Working Class

Earlier this week, the U.S. and Mexico announced an agreement to update parts of the North American Free Trade Agreement. Below we publish an English translation of a statement from Napoleón Gómez Urrutia, president of Los Mineros (the National Union of Mine, Metal, Steel, and Related Workers of the Mexican Republic), on the deal. Gómez Urrutia returned to Mexico to take his seat in the Senate this week, after 12 years in exile on bogus criminal charges filed by the Mexican government after he led vigorous protests following the deaths of 65 miners in an explosion. Mexico will inaugurate a new president, Andrés Manuel López Obrador of the left-leaning MORENA party, on December 1, and there are high hopes that his administration will reform the country’s labor laws, which have long left most unions under the control of corrupt, state-linked leaders. The statement originally ran as a paid advertisement in Mexican newspaper La Jornada.

LosMineros-SindicatosUnidosconNapoleonGomezUrrutia

The overwhelming electoral triumph on July 1 by Andrés Manuel López Obrador in the contest for the Presidency of the Republic paves the way for a new stage in labor relations in Mexico, the United States, and Canada.

Today, the Mexican working class suffers the bad effects of decades of underdevelopment, a product in turn of the combined results of corporatism in labor relations and neoliberalism in economic policy, which violated or at best ignored the interests of workers.

TWO PROCESSES TO REVERSE INJUSTICES

There are currently two very important processes that could serve to reverse the injustices of the past and improve the life of the working class: the renegotiation of the North American Free Trade Agreement (NAFTA) and the reform of labor legislation.

On the one hand, there is the effort to conclude the renegotiation of NAFTA in the coming days, including the labor chapter and an agreement on the rules of origin in the automotive industry. It is not yet clear when a vote will be held in the U.S. Congress. Although Canada has not yet returned to the negotiating table, there is a lot of pressure on the part of multinational companies to finish the negotiations, and supposedly it is convenient for Lopez Obrador that the renegotiation be concluded by the current government, with the corresponding responsibility.

In addition, there is concern that oil companies in the U.S. want to shield themselves against Lopez Obrador’s intention to reverse at least some elements of the energy reform. [Current president Enrique Peña Nieto controversially opened up Mexico’s oil sector to foreign investors for the first time since its nationalization in 1938—eds.]

FREE AND SECRET VOTE IN COLLECTIVE CONTRACTS

It is also not clear that the interests and rights of Mexican workers will be protected in the labor chapter negotiated between Trump and Peña Nieto.

According to the existing reports, the labor chapter includes a very important section which could guarantee the rights of the workers to have a free, personal, and secret vote on their collective contracts and to choose their unions through a democratic and effective process (without the unjustified delays that currently prevail). The process would be supervised by impartial labor tribunals.

But there is a very strong doubt concerning the lack of a mechanism in the Treaty that would oblige transnational corporations to comply with these requirements, under penalty of commercial sanctions. Without this obligation, we return to the current situation where NAFTA faithfully protects the rights of capital, but does not defend the rights of workers at all.

The Democrats in the U.S. Congress (who are anticipated to be the majority after the November elections) have indicated that they would vote against a text that did not guarantee these rights, both in the criteria and in the compliance mechanism. We hope that the new government of Mexico—both the executive and legislative powers—will not endorse an agreement that does not end, once and for all, the system of corporate control over the working class, which has caused so much damage to the economy and to democracy in our country.

UNCERTAINTIES IN RENEGOTIATING NAFTA

On the rules of origin, there is a lot of noise but we do not have clarity about of its real meaning. The idea that a minimum wage of $16 per hour will be imposed on the automotive industry in Mexico, which has been disseminated in the media, is simply false. According to the most reliable reports, 40 percent of the production for the automotive chain would be limited to factories that pay $16 per hour. But there are still many doubts—for example, the time when the new salary rules will take effect and whether they will be retroactive. It is unknown what percentage of the automotive industry is currently in Mexico and how its boundaries are defined.

There are other outstanding trade issues to resolve, such as the impact of tariffs imposed by the Trump administration on the steel and aluminum industries. The abuse, harassment, and discrimination faced by Mexican workers in the U.S., attacks on immigrant families, raids and deportations without due process, and attempts to increase temporary visa programs while weakening labor protections, should also be a concern. There is no doubt that the Executive Power of Mexico must inform the new Congress about the details of all these negotiations as of September 1.

THE PENDING LABOR REFORM

On the other hand, the constitutional reform of 2017 promised to establish impartial labor courts and the right of workers to a personal, free, and secret vote on their collective contracts. These measures are fundamental for the recovery of the power and dignity of the working class. For this reason, the treacherous labor leaders, headed by Senators Tereso Medina of the CTM and Isaías González Cuevas of the CROC, tried to stifle a real labor reform with their proposal for pro-business changes to the Federal Labor Law in December of last year.

Now it will fall to the new Congress, as of September 1, to approve a secondary law that will give real effect to the constitutional labor reform as well as to the international treaties on this matter ratified by Mexico. This is a historical responsibility that we must fulfill faithfully. With these reforms, and with the ratification of Convention 98 of the International Labor Organization (ILO)–pending in the Senate since November 30, 2015—we will begin the real recovery of the rights of Mexican workers.

Napoleón Gómez Urrutia
Senator, MORENA Party

For the Spanish version, contact dan@labornotes.org.
For updates on the Mexican labor movement, in Spanish and English, we recommend following the Mexico Labor Update Facebook page.

What Would NAFTA Changes Mean for Labor?

The details are still secret, both Congresses would have to approve any deal, and at this point Canada isn’t on board. From the New York Times:

The revised deal with Mexico makes significant alterations to rules governing automobile manufacturing, in an effort to bring more car production back to the United States from Mexico. Those changes are being watched carefully by the United States auto industry, which has built its global supply chain around Nafta and expressed concern that the Trump administration’s efforts to rewrite it could raise prices of American-made cars and trucks. Automakers like General Motors and Ford have set up plants in Canada and Mexico, and American automakers routinely import car parts from other countries.

Under the changes agreed to by Mexico and the United States, car companies would be required to manufacture at least 75 percent of an automobile’s value in North America under the new rules, up from 62.5 percent, to qualify for Nafta’s zero tariffs. They will also be required to use more local steel, aluminum and auto parts, and have 40 to 45 percent of the car made by workers earning at least $16 an hour, a boon to both the United States and Canada and a win for labor unions, which have been among Nafta’s biggest critics.

So how much of a difference would this make for workers in the three countries?

AFL-CIO President Richard Trumka and the presidents of the Auto Workers, Steelworkers, Machinists, and Communications Workers released a short statement, “NAFTA Negotiations on Track but Not Done.” It says in part, “We remain committed to working with the administration to get NAFTA right. Our members’ jobs depend on it. But, as always, the devil is in the details.”

The statement from the officers of the United Electrical Workers is more critical, concluding that the deal “falls short of meeting the demands of working people.” Specifically they say the deal excludes Canada and allows the U.S. to continue to enact “right-to-work” laws.

The Citizens Trade Campaign says the deal needs “more work” and emphasizes that the game isn’t over: “with Canada not yet having signed on to even that initial framework, the ultimate renegotiation could still go in multiple directions.” The group points to two key improvements needed—the deal should “add strong, new labor and environmental standards with swift and certain enforcement” and “eliminate the harmful Investor-State Dispute Settlement (ISDS) system that threatens jobs, the environment and public health.”

What’s your take? Let us know at editors@labornotes.org and look for more comprehensive Labor Notes coverage coming soon.

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