Monthly Archives: August 2017

No More Trickle-Down Trade Deals

A renegotiated NAFTA that subordinates workers will meet the fate of the now-dead Trans-Pacific Partnership.

 

Trucks wait in the queue for border customs control to cross into U.S. at the Bridge of Americas in Ciudad JuarezFree trade be damned. People don’t need any more free trade. They need jobs. And not just any jobs. They need good jobs with living wages and decent benefits. NAFTA betrayed the citizens of the United States, Canada and Mexico because it was based on the same servility to the rich that trickle-down economics was. Under trickle-down, the wealthy and corporations got the biggest, fattest tax cuts. Everyone else supposedly was to benefit somehow someday. A microscopic pinch of the immense monetary gift granted to the high and mighty was supposed to magically appear in everyone else’s pockets. It never did.

And that’s the problem with NAFTA. Its negotiators placed corporations on a pedestal, awarding them rights and privileges that no human, no labor organization, no environmental group got. Again, the wrong-headed idea was that if corporations made big bucks, some of the benefits would trickle down to workers. That never happened.

NAFTA was great for corporations. It provided incentives for them to move to the lowest-wage, lowest-environmental regulation location – that being Mexico. Profits, dividends and CEO pay all rose as corporations like United Technologies uprooted profitable American factories – like its Carrier plant in Indiana – and moved them to Mexico. There, dirt-poor wages and lack of environmental regulation provide even higher profits, dividends and CEO pay.

 

Workers in none of the three NAFTA signatory countries saw any benefits. Wages in the United States and Canada stagnated. In Mexico, wages are actually lower than before NAFTA. The poverty rate in Mexico is almost exactly the same as it was in the mid-1990s, before NAFTA took effect.

 

ECONOMIC POLICY INSTITUTE
The rich got richer; wages stagnated for the rest.

How will Trump’s administration impact you?

 

NAFTA ensured there was no wall between the United States and Mexico for corporations to scale. Humans get stopped at the border, but not corporations. United Technologies faced no barriers this year when shipped manufacturing from Indiana to Mexico. It was the same for Rexnord, which closed its ball bearing plant in Indianapolis this year and sent it across the border to Mexico, no problem. As the United States’ trade deficit with both Canada and Mexico skyrocketed in the 20 years after NAFTA took effect in 1994, the United States lost 881,700 jobs. That figure is three years old, so it does not include United Technologies and Rexnord moving 1,600 Indiana jobs to Mexico. Since NAFTA, more than 60,000 factories closed in the United States.

Clearly part of the lure is wages. While a manufacturer may pay $20 an hour in the United States, it’ll only pay $20 a day in Mexico, where the average manufacturing wage is $2.49 an hour. Labor organizations there are almost always completely controlled by corporate employers, rather than by the workers. So securing raises is nearly impossible.

And while many formerly American manufacturers moved just across the border to special industrial areas, overall job growth in Mexico was not significant. That is because subsidized corn exported from the United States bankrupted huge numbers of small Mexican farmers and many corporations have moved their factories again, this time from Mexico to even lower-wage China and other south Asian countries.

That’s just great for rich investors and fat cat CEOs. It’s been horrible for workers in Mexico, Canada and the United States. What has trickled down has been toxic – lost jobs, stagnant wages and worry. The difference in the way NAFTA treats corporations and workers is stark. Corporations get special perks in the main NAFTA document. The rights of workers are dealt with in an addendum. They’re an afterthought.

Corporations can sue governments

NAFTA gives corporations an extraordinary privilege. They can sue governments for what they contend are “lost profits” if they don’t like regulations or legislation. They don’t have to present their cases to real judges in open court, either. They get to go before a tribunal of corporate lawyers whose decision cannot be appealed by the governments ordered to pay unlimited billions of tax dollars to the corporations. Corporations can force governments to pay if lawmakers protect citizens by, for example, banning a neurotoxin or limiting sale of dangerous products.

There’s no counterpart for workers. NAFTA provides no way for the Carrier workers laid off in Indianapolis by United Technologies to sue. The workers can’t ask three hand-picked worker-jurists in a secret court for income lost because the corporation moved to Mexico to make even bigger profits on the backs of underpaid workers there. There’s no way for Mexican workers to sue when a corporation endangers worker health with pollution or when a company-controlled labor organization pushes down wages.

In fact, NAFTA’s labor addendum bows to corporations before even mentioning workers. The addendum’s preamble says the NAFTA signatories resolved to expand markets for goods and services and to enhance corporate competitiveness globally. Then, after that, the preamble says a goal is to create new jobs, improve working conditions and living standards, and protect “basic” workers’ rights.

Frankly, that’s offensive. Workers’ concerns must be primary in this renegotiation. That includes wages, working conditions and corporate pollution. Wages must rise in Mexico or the migration of U.S. and Canadian corporations to south of the border locations will never stop.

A renegotiated NAFTA that subordinates workers will meet the fate of the now-dead Trans-Pacific Partnership (TPP) free trade deal. An uprising and uproar from workers, environmentalists, faith organizations, community groups and others killed the TPP before it ever reached Congress. The humans in the United States, Canada and Mexico won’t be tricked or trickled down on again.

From the Huffington Post

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NAFTA: a blueberry grower’s view

Frederic Coville and Elizabeth White began working with blueberries in 1910. As a result of their work, by 1916 blueberries were a valuable crop in the Northeastern U.S.

1Since that time, American farmers, American universities, and American nurseries have invested millions of hours and dollars developing better varieties of blueberries and perfecting the protocol to successfully grow them.

American produce companies who have profited marketing American-grown blueberries to American customers are investing those profits in Mexican farms.

The Mexican farms are planted with blueberry varieties that are products of American breeding programs. The American blueberry farmer has invested his money, the productivity of his land, and the sweat off of his back, proving the best of these varieties and developing the protocols of how to grow them.

When an American company starts large farms in Mexico using the best of American blueberry varieties, planted with growing protocols proven in America, and they couple this technology with cheap land, cheap unregulated labor, and minimal environmental regulations, they can produce large volumes of fruit at a cost far below the cost to farm in America.

If the trade is not beneficial to both trading countries, then do not trade for that specific item.

The U.S. consumes over 80% of all blueberries grown in the world. The blueberry farms planted in Mexico by American produce marketing companies were planted for the sole purpose of shipping low-cost fruit into the American market and making a high profit. These profits are made at the expense of the American blueberry farmer, and under the disguise of free trade. There is a big difference between “free trade” and “fair trade.”

Trade started in the Stone Age. It is based upon the premise that if I have something you want or need and you have something I want or need we can negotiate a trade and both of us will benefit. Early trade was barter. Goods traded for goods. You selected what you traded for and how you traded. Trade was “managed.”

Later, money was introduced. Money separated the buying from the selling. From the marketer’s view point it is all trade. Money is made on the transition of goods back and forth.

From the grower’s view what is traded, the volumes traded, and when it is traded is critical. The American consumer is entitled to blueberries 365 days a year. American blueberry farmers cannot deliver blueberries 365 days a year. We have a need for imported blueberries. If blueberry trade is managed in terms of timing and volume, then all parties benefit. This is a good definition of fair trade.

A fair trade agreement needs to be managed. It needs to be crop specific and it does need to manage the volume and timing of what is traded. If the trade is not beneficial to both trading countries, then do not trade for that specific item. It makes no sense to allow a product developed in America to be grown or produced in Mexico and sold in America at prices and volumes that destroy the American farmer who helped develop it.

It is time we put “America First.”

Ken Murray is a Georgia blueberry grower.

Podcast on Dismantling Corporations

An activist ahead of his time, Richard L. Grossman, a community organizer, galvanized work on a variety of progressive causes during his remarkable four-decade career.

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In this speech Grossman provocatively calls for dismantling “the thousand largest corporations off the face of the earth.”

Ralph Nader called Richard Grossman the preeminent historian of corporations. In his writings and teaching Grossman warned us that unchecked corporate power would lead to the destruction of democracy. He said that the American revolution was fought less against the King but “against the crown corporations, the Hudsons Bay and East India Corporations.” And he believed that it is time to remember that fight and assert sovereignty of the people over corporations and the corporate state.

Richard Grossman’s research showed him that in the original intent of American revolutionaries corporations did not have rights, they only had privileges, and only those that we the people bestow on them. They were to be limited by a revocable charter that specified what they were allowed to do; it’s board and officers were to be fully liable for any harms the corporation did; and they initially had none of the free speech rights that go along with person-hood.

If Richard Grossman were still alive today in 2017 he would be shocked to see that corporations and bankers from Exxon to Goldman Sachs, from General Dynamics to Lockheed Martin, from Wells Fargo to pipeline builder Energy Transfer, no longer are limited to purchasing influence by buying congress people one by one – but now own and run large parts of the government directly.

This is a fascinating podcast in 2 parts: listen to Part 1

Part 2   begins with an intriguing archival speech on the history of corporations that TUC Radio recorded in Washington DC. at the 1996 Teach-In organized by the International Forum on Globalization. The segment ends with two important projects Grossman worked on just before his death: A law to criminalize hydro-fracking and corporations as a class or group.

In the Preface to his 1993 pamphlet, Taking Care of Business, Richard Grossman wrote:
“Corporations cause harm every day. Why do their harms go unchecked? How can they dictate what we produce, how we work, what we eat, drink and breathe? How did a self-governing people let this come to pass? – Corporations were not supposed to reign in the United States.”

Richard died of cancer on November 22nd, 2011 – he was only sixty-eight. He was one of the lucid people who first described not just the history of corporations but the now global challenge to democracy and personal and state sovereignty that they pose.

Read more about Richard Grossman here.

FANCY A NAFTA SNACK?

Free trade is vital to food production. As North America’s economy has become more integrated, so too have the supply chains that put food on store shelves. One example is found inside a bag of snack mix, full of cereal and cheese bits. This is the cross-border journey of one component – a cereal hoop, like the one shown above – as it evolves from field crop to savoury snack.

Product starts in Canada

Corn is Ontario’s second-biggest crop by acreage and Canada’s third most-valuable crop by sales. But it’s not the sweet kind you eat with butter in the summer. Known as grain corn, maize or dent corn, it is high in starch, low in sugar, and used in everything from pig feed to ethanol. After harvest, the Ontario farmer trucks his corn to a grain company’s elevator in the southwestern part of the province.

Border crossed once

The United States is the world’s biggest grower of corn, but supplements domestic supplies with imports. The Ontario corn is moved by train or truck to a U.S. mill in Illinois, Idaho or elsewhere. The corn is dry milled into flour for food production.

Border crossed twice

The corn flour is sent to an Ontario food processor, where it is baked and puffed into cereal hoops, the familiar shape found in many popular snacks. Most of Ontario’s corn mills have closed, and the large ones in the U.S. have come to dominate much of the North American industry.

Border crossed three times

The corn, now in the form of cereal hoops, makes its third tariff-free trip across the Canada-U.S. border. The cereal hoops are shipped to a U.S. food processing factory, where they are spiced and combined with other cereal pieces and salty bits, bagged and boxed for retailers.

Border crossed four times

The snack mix makes its way across the border for a fourth time, to warehouses and grocery stores. Free trade’s main features – tariff elimination, regulatory harmonization and streamlined border clearances – have helped food and agricultural producers adopt just-in-time delivery schedules that are key to fresh goods and efficient production.

“Since the implementation of the North American free-trade agreement, we have developed some of the most integrated supply chains in the world,” says Susan Abel of industry group Food and Consumer Products of Canada. As U.S. economist Stephen Blank puts it, we don’t merely sell finished goods to each other, we make things together.

 

CREDITS: Reporter Eric Atkins, Multimedia Editor Matt Lundy, Photography Fred Lum, Interactive Developer Jeremy Agius

 

From the Canadian Globe and Mail 

Globalization and the End of the Labor Aristocracy

Twenty-first century imperialism has changed its form.

In the 19th century and the first half of the 20th century, it was explicitly related to colonial control; in the second half of the 20th century it relied on a combination of geopolitical and economic control deriving also from the clear dominance of the United States as the global hegemon and leader of the capitalist world (dealing with the potential threat from the Communist world).

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It now relies more and more on an international legal and regulatory architecture—fortified by various multilateral and bilateral agreements—to establish the power of capital over labor. This has involved a “grand bargain,” no less potent for being implicit, between different segments of capital. Capitalist firms in the developing world gained some market access (typically intermediated by multinational capital) and, in return, large capital in highly developed countries got much greater protection and monopoly power, through tighter enforcement of intellectual property rights and greater investment protections.

These measures dramatically increased the bargaining power of capital relative to labor, globally and in every country. In the high-income countries, this eliminated the “labor aristocracy” first theorised by the German Marxist theorist Karl Kautsky in the early 20th century. The concept of the labor aristocracy derived from the idea that the developed capitalist countries, or the “core” of global capitalism, could extract superprofits from impoverished workers in the less developed “periphery.” These surpluses could be used to reward workers in the core, relative to those in the periphery, and thereby achieve greater social and political stability in the core countries. This enabled northern capitalism to look like a win-win economic system for capital and labor (in the United States, labor relations between the late 1940s and the 1970s, for example, were widely termed a “capital-labor accord”). Today, the increased bargaining power of capital and the elimination of the labor aristocracy has delegitimated the capitalist system in the rich countries of the global North.

Increasing inequality, the decline in workers’ incomes, the decline or absence of social protections, the rise of material insecurity, and a growing alienation from government have come to characterise societies in both developed and developing worlds. These sources of grievance have found political expression in a series of unexpected electoral outcomes (including the “Brexit” vote in the UK and the election of Trump in the United States). The decline of the labor aristocracy—really, its near collapse—has massive implications, as it undermines the social contract that made global capitalism so successful in the previous era. It was the very foundation of political stability and social cohesion within advanced capitalist countries, which is now breaking down, and will continue to break down without a drastic restructuring of the social and economic order. The political response to this decline has been expressed primarily in the rise of right-wing, xenophobic, sectarian, and reactionary political tendencies.

21st Century Imperialism

The early 21st century has been a weird time for imperialism. On the one hand, the phase of “hyper-imperialism”—with the United States as the sole capitalist superpower, free to use almost the entire world as its happy hunting ground—is over. Instead, the United States looks significantly weaker both economically and politically, and there is less willingness on the part of other countries (including former and current allies, as well as those that may eventually become rival powers) to accept its writ unconditionally. On the other hand, the imperial overreach that was so evident in the Gulf Wars and sundry other interventions, in the Middle East and around the world, continues despite the decreasing returns from such interventions. This continued through the Obama presidency, and it is still an open question whether the Trump presidency will lead to a dramatic reduction of this overreach (“isolationism”) or merely a change in its direction.

The latter point is important, because there is little domestic political appetite in the United States for such imperial adventures, due to the high costs in terms of both government spending and the loss of lives of U.S. soldiers. The slogans that recently resonated with the U.S. electorate, such as that of “making America great again” were in that sense somewhat self-contradictory—looking towards an imagined past in which the American Dream could be fulfilled relatively easily (at least for some), without recognising that this was predicated upon the country’s global hegemony and far-flung empire. The global context of imperialism is a complex one, in which the contours shift constantly. Recent political changes in various countries of the North have meant that global strategic alliances are also much more fluid than at any time over the past half century. The most talked-about current examples are the changing attitude of the Trump administration towards the United States’ traditional enemy, Russia, and the complicated international politics emerging in Europe, with the Brexit vote and the emergence of right-wing political forces in a number of other European countries. But it is also evident in other parts of the world, notably in China, where traditional friends and foes are no longer so easily demarcated. Yet there is another sense in which the fundamentals of the imperialist process have not changed, even as the forms in which they are expressed are altered.

Defining imperialism broadly, as Lenin did—as the complex intermingling of economic and political interests, related to the efforts of large capital to control economic territory—it’s clear that imperialism has not really declined at all. Rather, it has changed in form over the past half century, especially when we embrace a more expansive notion of what constitutes “economic territory.” Economic territory includes the more obvious forms such as land and natural resources, as well as labor. These are all still hugely contested: The wars for oil in the Middle East, the continuing attempts at land grabs in Africa, and the struggle over the fruits of extraction of natural resources in parts of Latin America and Asia all testify to this.

But the struggle over economic territory also encompasses the search for and effort to control new markets—defined by both physical location and type of economic process. Understanding territory in this way helps us understand how imperialism is still very much alive and kicking, even though some of the more classic features (such as direct colonial control and annexations) are less in evidence.

One of the key aspects of recent capitalist dynamism has been its ability to create new forms of economic territory, bring them within the realm of capitalist economic relations, and therefore also subject them to imperialist control. Two forms of economic territory that are increasingly subject to capitalist organization and imperialist penetration today are 1) basic amenities and social services (earlier seen as the sole preserve of public provision) and 2) the generation and distribution of knowledge. A major feature of our times is the privatization of areas that, until recently, were generally accepted as public responsibilities. Basic amenities like electricity, water, and transportation infrastructure, and social services like health, sanitation, and education all fall into this category. Of course, the fact that these were seen as public duties does not mean that they were always fulfilled. Indeed, expanding public provision and access to high-quality public infrastructure and social services has only come about historically as the result of prolonged mass struggles. And issues of inequality in access have always existed. Nevertheless, the fact that provision is no longer necessarily in the public domain, and that private provision is increasingly seen as the norm, has opened up huge new markets for potentially profit-making activity. This has been a crucial way of maintaining demand, given the saturation of markets in many mature economies, and the inadequate growth of markets in poorer societies.

Opening up such markets has occurred through a combination of inadequate public provision and changes in economic policy to encourage private investment. The expansion of the global bottled water industry, for example, is partly a result of the failure of adequate public delivery of potable water. Meanwhile, global institutions—including formal organizations such as the World Bank, the International Monetary Fund (IMF), and the World Trade Organization (WTO), as well as more informal bodies such as the World Economic Forum—have actively encouraged private investment in formerly public sectors. This is a more complicated expression of the imperialistic drive for control over economic territory than the direct annexation of geographic territory, but that does not make it any less consequential.

Another new form of economic territory, increasingly subject to imperialist penetration, relates to knowledge generation and dissemination. The privatization of knowledge and its concentration in fewer and fewer hands—especially through the creation and enforcement of new “intellectual property rights”—have become significant barriers to technology transfer and social recognition of traditional knowledge. This is evident in the case of access to medicines, even essential and life-saving drugs. Patents reward multinational companies, allowing them to monopolize production, set high prices, or demand high royalties. Similarly, control over seed patents, overwhelmingly held by multinational agribusinesses, has enabled monopoly control over crucial technologies for food cultivation across the world, even in the poorest societies. The cases of medicine and food are comparatively well known and highly controversial, but much the same is true for industrial technologies, as well as knowledge for mitigating and adapting to adverse environmental changes (themselves resulting from the production systems created by global capitalism).

It’s not just that national and international institutional structures that should provide checks and balances to the privatization of knowledge are more fragile and less effective than they used to be. Rather, it’s that they are actively working in the opposite direction. The numerous “trade agreements” that have been signed across the world in recent years have been much less about trade liberalization—already so extensive that there is little scope for further opening up in most sectors—and much more about protecting investment and strengthening monopolies generated by intellectual property rights.

International Economic Agreements

The past two decades have witnessed an explosion in the treaties, agreements, and other mechanisms whereby global capital imposes it rules upon governments and their citizenries. Unlike the conditions imposed on developing countries by the IMF and the World Bank, these rules apply even to countries that are not debtor-supplicants to international financial institutions. They require all countries to restrict their policies, though these restrictions are especially damaging to the prospects of autonomous economic development in the “periphery” of the world capitalist economy.

The Multilateral Trading System

In terms of the multilateral trading system, the Uruguay Round of the General Agreement on Tariffs and Trade (signed off in 1994) moved to a single-tier system of rights and obligations, under which developing countries have to fully implement all rules and commitments. This was a quid pro quo for access to developed-country markets in agriculture, textiles, and clothing—sectors that had previously been highly protected. This has constrained the possibilities for autonomous development in the peripheral countries, reducing the policy choices open to them and denying them some of the most important instruments that had been used by countries of the current capitalist “core” in their own industrialization.

For example, the Agreement on Trade-Related Investment Measures (TRIMS) does not allow practices like local content specifications, designed to increase linkages between foreign investors and local manufacturers. The Agreement on Trade-Related Intellectual Property Rights (TRIPS) not only allows for the concentration and privatization of knowledge as noted above, but also restricts reverse engineering and other forms of imitative innovation that have historically been used for industrialization. It has forced the extension of patent rights in many countries, allowing the patenting of life forms. Under this new property regime, a large and powerful multinational company can, for example, sue a poor small farmer in a developing country for setting aside part of the harvest as seed for the coming year, on the grounds that this violates the company’s patent rights. The Agreement on Subsidies and Countervailing Measures (SCM) prohibits subsidies that depend upon the use of domestic over imported goods, or that are conditional on export performance. Ongoing negotiations in the World Trade Organisation on Non Agricultural Market Access (NAMA) are currently proceeding on the basis of much deeper tariff cuts in developing countries, which will further deprive them of a crucial policy instrument to support their infant industries.

The Agreement on Agriculture (1995) contained fine print that effectively allowed the developed countries to continue the massive subsidization and protection of their own agriculture sectors (and agri-business interests), but prevented developing countries from doing even a small fraction of this. Most developing countries are allowed only subsidies of 10% or less, while most developed countries only have to reduce certain agricultural subsidies, while maintaining and even increasing some others. Developing countries (like India) that attempt to provide some protection to farmers and to ensure food security are coming up against constraints imposed by the agreement. All subsidies, even in developing countries, are measured in relation to 1986-88 prices, not current prices, so even low subsidies run afoul of the 10% limit. Instead of recognising the ridiculous nature of this clause, the developed countries are resisting any change and have only agreed to provide a “Peace Clause”—applying only to certain countries and only for a limited period, preventing any case being brought to the dispute settlement panel of the WTO until the matter is finally resolved.

BY JAYATI GHOSH

Read more on Dollars and Sense

Is Democratic and Sustainable Trade Possible?

A look at the renegotiation of the North American Free Trade Agreement under the Trump Administration

OLYMPUS DIGITAL CAMERAFor over two decades activists have called for a renegotiation of NAFTA—the North American Free Trade Agreement. It seemed like a long shot that the U.S., Canada, and Mexico would ever upend this agreement, but many advocates of a just economy refused to give up the quest.

Now, finally, after years of agitation, on August 16th renegotiations of NAFTA will start. Twenty-three years after the detrimental trade agreement went into effect, we are finally getting our chance to reconsider its provisions. The good news ends there.

 

On July 17th, the United States Trade Office released its objectives for the NAFTA renegotiation. The formal objectives, though vague in many respects, are clear enough to dampen hopes of a fair trade agreement.

Millions of people whose livelihoods depend or depended on agriculture have lost jobs, farms, or income in the decades following NAFTA. The impact has been felt most acutely in Mexico, where subsidized corn from the North has decimated a way of life, but small-scale farmers and farmworkers in all three countries have felt the impacts. Thousands of non-agricultural jobs also disappeared and wages decreased for many remaining jobs.

These are some of the key reasons so many sustainable agriculture advocates, unions, environmental organizations, and citizens have called for a renegotiation of this unfair “free trade” agreement.

After over two decades, the impacts we have seen from NAFTA are the inevitable effect of trade agreements that are negotiated in a closed process in which corporate lobbyists have sway over government officials. In addition, in 1994, when NAFTA first went into effect, our government, as was true of governments around the world, was only beginning to understand the impact of climate change and the policies needed to mitigate it. In 2017, we understand that small-scale farmers are already impacted by climate change. Unpredictable and changing weather has made an already precarious undertaking more difficult. Migrant farmworkers have had to change migration patterns to keep up with changing crop cycles. Farm and factory workers have also seen an increased risk of heat stress as temperatures soar at their workplaces.

 

The July 17th objectives on the NAFTA renegotiation do not address any of the concerns about a corporate-led negotiation process. There is an environmental section of the objectives, but not a single mention of climate change, the most pressing human and environmental challenge of our time. The objectives do contain a few nice buzzwords about farms and jobs, but no meaningful action steps.

 

Investor-State Dispute Settlement (ISDS).
If there is any doubt as to the inadequacy of these objectives, there is one key provision to watch: Investor-State Dispute Settlement (ISDS). This is the provision that allows corporations to sue governments that enact environmental or public health laws that reduce expected corporate profits. This is no dormant provision or idle threat. Last year the Canadian energy company TransCanada sued the United States, asking for $15 billion when the Obama administration put a stop to the Keystone XL Pipeline.

It cannot be overemphasized: people and planet will not and cannot come first until ISDS is eliminated from NAFTA and other trade agreements. Local and national governments need to be able to enact laws that mitigate and reverse climate change, create healthy and well-paying jobs, and promote agroecology and sustainable agriculture without fear of lawsuits by corporations out for the bottom line at any cost.

Read the whole article on HuffPo by Dana Geffner, Executive Director of Fair World Project

The places in America most exposed to a trade war

When President Trump talks trade, it’s often about fighting to get back the jobs the United States has lost. He focuses on sweeping measures, such as rewriting the free-trade agreement with Canada and Mexico, or new taxes to make imports more expensive and boost competing American goods.

trade-map-980.jpgThe bold actions Trump has proposed could succeed in preserving jobs or bringing them back to American shores. However, they could also end up having unintended negative consequences, economists say. Barriers to imports, for example, could cut into the profits of American manufacturers by raising prices on parts and supplies. They could spark retaliation from other countries and even a harmful trade war, where countries take turns hiking restrictions to undercut each other’s goods and services, raising prices for consumers in the process.

The effect of a trade war on U.S. communities could be significant and widespread, according to research from the Brookings Institution’s Metropolitan Policy Program. Nearly 6 million U.S. jobs are directly tied to exports. Another 6 million are indirectly tied to trade — for example, the driver who transports a truck load of widgets to the port.

While exposure to trade differs substantially across the country, every U.S. metro area has some exposure, with at least $1 out of every $20 generated in the local economy coming from exports. Most cities get much more. That means these cities have a lot to gain as well as potentially lose from major changes to trade policy, said Joseph Parilla, a fellow at the Brookings Institution’s Metropolitan Policy Program.

Parilla says that America’s largest cities have big and diverse economies, including sources of economic growth that can’t be traded with other countries, such as tourism or government. But small towns are much more likely to have specialized in one or two industries that are tied to trading abroad.

The Brookings data ranks the cities that are most dependent on exports and with the most export-related jobs. Small Midwestern cities that export auto parts and other manufactured goods appear high on the list, as do coastal cities that export chemicals and petroleum byproducts.

Topping the list is Columbus, Ind. — the home base for engine-maker Cummins Inc. and other automotive manufacturers, and the hometown of Vice President Pence. About half of its local gross domestic product, a broad measure of economic activity, is tied to exporting abroad.

The geographic distribution of trade has interesting implications for politics, and for Trump. Brookings calculates that the counties that voted for Democratic presidential candidate Hillary Clinton actually produced most of America’s exports in goods and services — about 58 percent in 2015, compared to 42 percent for Trump.

However, because Clinton voters are concentrated in large, economically diverse cities, exports actually account for a greater proportion of economy in counties that voted for Trump than in counties that voted for Clinton. That means Trump voters would likely end up feeling the heaviest effects from changes to trade, Parilla says.

Read the whole article on the Washington Post

International Day against WTO and Free Trade Agreements SEPTEMBER 10

On the 10th of September 2003, while protesting outside the WTO ministerial in Cancun, Mexico, farmer Lee sacrificed his life by stabbing himself. That tragic incident exposed  the destructive effects of WTO and its trade liberalisation efforts on the lives of millions of peasants globally.  In memory of Lee and the continuing struggles of peasants in resisting the neo-liberal agenda of WTO, La Via Campesina marks September 10 as the International Day Against WTO and Free Trade Agreements. 

Demonstrators Gather Outside Indonesia's WTO Conference

We will soon be posting updates about the events and actions that will be planned for this year.

It is a more fitting tribute to let Lee tell his own story, from a statement he distributed in Geneva and later minutes before his death in Cancun:


I am 56 years old, a farmer from South Korea who has strived to solve our problems with the great hope in the ways to organize farmers’ unions. But I have mostly failed, as many other farm leaders elsewhere have failed.

Soon after the Uruguay Round Agreement was sealed, we Korean farmers realized that our destinies are no longer in our own hands. We cannot seem to do anything to stop the waves that have destroyed our communities where we have been settled for hundreds of years. To make myself brave, I have tried to find the real reason and the force behind those waves. And I reached the conclusion, here in front of the gates of the WTO. I am crying out my words to you, that have for so long boiled in my body:

I ask: for whom do you negotiate now? For the people, or for yourselves? 

Stop basing your WTO negotiations on flawed logic and mere diplomatic gestures. 
Take agriculture out of the WTO system. 
Since (massive importing) we small farmers have never been paid over our production costs. What would be your emotional reaction if your salary dropped to a half without understanding the reasons?

Farmers who gave up early have gone to urban slums. Others who have tried to escape from the vicious cycle have met bankruptcy due to accumulated debts. For me, I couldn’t do anything but just look around at the vacant houses, old and eroding. Once I went to a house where a farmer abandoned his life by drinking a toxic chemical because of his uncontrollable debts. I could do nothing but listen to the howling of his wife. If you were me, how would you feel?

Widely paved roads lead to large apartments, buildings, and factories in Korea. Those lands paved now were mostly rice paddies built by generations over thousands of years. They provided the daily food and materials in the past. Now the ecological and hydrological functions of paddies are even more crucial. Who will protect our rural vitality, community traditions, amenities, and environment?

I believe that farmers’ situation in many other developing countries is similar. We have in common the problem of dumping, import surges, lack of government budgets, and too many people. Tariff protection would be the practical solution.

I have been so worried watching TV and hearing the news that starvation is prevalent in many Less Developed Countries, although the international price of grain is so cheap. Earning money through trade should not be their means of securing food. They need access to land and water. Charity? No! Let them work again! 

My warning goes out to all citizens that human beings are in an endangered situation. That uncontrolled multinational corporations and a small number of big WTO Members are leading an undesirable globalization that is inhumane, environmentally degrading, farmer-killing, and undemocratic. It should be stopped immediately. Otherwise the false logic of neoliberalism will wipe out the diversity of global agriculture and be disastrous to all human beings.


This post is an edited version of an article that appeared in Countercurrents.org in 2003. Read the original article here.

Replacing NAFTA: Eight Essential Changes to an Environmentally Destructive Deal

For more than two decades, the North American Free Trade Agreement (NAFTA) has harmed communities across Canada, Mexico, and the U.S.—particularly people of color and lower income families—by undermining environmental protections, eliminating jobs, increasing air and water pollution, eroding wages, and fueling climate change.1

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Widespread public opposition to such trade deals has swelled. As leading environmental organizations, we have long called for a fundamentally different approach to trade – one that prioritizes the needs of people and planet.

Thus, our basis for evaluating any NAFTA renegotiation is clear: Does it support – not undermine – a more stable climate, clean air and water, healthy communities, Indigenous peoples, and good jobs? If a deal is delivered that fails to reflect these broadly-shared priorities, we will work with our labor, health, consumer, family farm, and other allies to ensure that it meets the same fate as the Trans-Pacific Partnership (TPP).

To transform NAFTA from a polluter-friendly deal into one that supports environmental protection, any renegotiation must include, at a minimum, these eight changes:

1. Eliminate rules that empower corporations to attack environmental and public health protections in unaccountable tribunals.
NAFTA’s investor-state dispute settlement (ISDS) system has empowered multinational corporations like ExxonMobil to bypass our courts, go to private tribunals, and demand money from taxpayers for policies that affect corporate bottom lines. Corporations have used NAFTA to challenge bans on toxic chemicals, the decisions of environmental review panels, and protections for our climate. They have extracted more than $370 million from governments in these cases, while pending NAFTA claims total more than $35 billion.

2 The cases are heard not by judges, but by corporate lawyers outside the normal court system.

Broad corporate rights, including ISDS, must be eliminated from NAFTA to safeguard our right to democratically determine our own public interest protections. 2. Add strong, enforceable environmental and labor standards to the core text of agreement. NAFTA’s weak and unenforceable environmental and labor side agreements facilitated a race to the bottom in which corporations could offshore jobs to exploit lower environmental and labor standards in another country. Any deal that replaces NAFTA must create a fair playing field by requiring each participating country to adopt, maintain, and implement policies to ensure compliance with domestic environmental laws and important international environmental and labor agreements, including the Paris climate agreement, and treaties protecting Indigenous rights. In addition, each country must be required to eliminate fossil fuel subsidies, which encourage climate pollution while distorting trade, and must make commitments to tackle critical conservation challenges related to illegal timber trade, illegal wildlife trade, and fisheries management. These commitments must be included in the core text of the agreement and made enforceable via an independent dispute settlement process in which trade sanctions are used to correct labor and environmental abuses.

3. Safeguard energy sector regulation by overhauling overreaching rules. NAFTA’s energy chapter limits

Canada’s ability to restrict production of climate-polluting fossil fuels such as tar sands oil.3 The chapter, written before awareness of climate change was widespread, must be eliminated. Other NAFTA rules allow renewable portfolio standards, low-carbon fuel standards, and other climate-friendly energy regulations to be challenged for impeding business for foreign fossil fuel firms.4 Such rules must be narrowed to protect climate policies in each country.

4. Restrict pollution from cross-border motor carriers.

NAFTA encouraged a rise in cross-border motor carrier traffic without doing anything to mitigate the resulting increase in harmful vehicle emissions. 5 Any deal that replaces NAFTA must require cross-border motor carriers to reduce emissions in order for their goods to benefit from reduced tariffs. In addition, all cross-border commercial vehicles must be required to comply with all state and federal standards to limit pollution.

5. Require green government purchasing instead of restricting it.

NAFTA’s procurement rules limit governments’ ability to use “green purchasing” requirements that ensure government contracts support renewable energy, energy efficiency, and sustainable goods.6 NAFTA’s replacement must require signatory governments to include a preference for goods and services with low environmental impacts in procurement decisions.

6. Bolster climate protections by penalizing imported goods made with high climate emissions.
NAFTA allows firms to shift production to a country with lower climate standards, which can spur “carbon leakage” and job offshoring.7 To prevent this, and encourage greater climate action from highemissions trading partners, each country must be required to impose a border tax on imported goods made with significant climate pollution.

7. Require governments to prioritize policies that minimize climate pollution.
While NAFTA restricts climate policies that limit trade or investment, any replacement deal must instead put climate first. This includes requiring governments to use a “climate impact test” for policymaking, in which potential climate impacts of policy proposals are reported and weighed.

8. Add a broad protection for environmental and other public interest policies. NAFTA’s many overreaching rules restrict the policy tools that governments can use to protect the environment and other broadly-shared priorities. NAFTA includes no provision that effectively shields public interest policies from such rules – only a weak “exception” that has consistently failed to protect challenged policies.8 Instead, any deal that replaces NAFTA must include a broad “carve-out” that exempts public interest policies from all of the deal’s rules. Any NAFTA renegotiation must be conducted through an open process that invites the public to help formulate U.S. positions and to comment on negotiated texts after each negotiating round. Bolstered by resurgent support for a new trade model, we commit to push for this environmental overhaul of NAFTA, and against any polluter-friendly deal that masquerades as change.

References
1 “NAFTA: 20 Years of Costs to Communities and the Environment;” Council of Canadians, Institute for Policy Studies, Red Mexicana de Acción Frente al Libre Comercio, the Sierra Club, and Sierra Club Canada; March 2014. 2 “Table of Foreign Investor-State Cases and Claims under NAFTA and Other U.S. ‘Trade’ Deals,” Public Citizen, October 2016. 3 The “proportionality clause,” Article 605, requires Canada to export a set proportion of its fossil fuel production to the U.S. Under this rule, efforts to curtail fossil fuel production could result in insufficient domestic supplies. Gordon Laxer and John Dillon, “Over a Barrel: Exiting from NAFTA’s Proportionality Clause,” Parkland Institute and Canadian Centre for Policy Alternatives, May 2008, pp. 27-29. 4 Such regulations could be challenged under the “national treatment” rules in NAFTA Articles 301, 606, and 1202. Robert K. Stumberg, “NAFTA Services and Climate Change,” The Future of North American Trade Policy: Lessons from NAFTA, Boston University, Pardee Center Task Force Report, November 2009, pp. 13-19. 5 For documented examples of increased trucking emissions under NAFTA, see Shelia Holbrook-White, “NAFTA Transportation Corridors: Approaches to Assessing Environmental Impacts and Alternatives,” Texas Citizen Fund and the Sierra Club, October 11, 2000. 6 Federal green procurement initiatives could be challenged for inadvertently having a disproportionate impact on foreign firms (under NAFTA Article 1003), for having the unintended “effect of creating unnecessary obstacles to trade” (under Article 1007.1), or for focusing on how a product is made, rather than how it is used (under Article 1007.2). 7 Meera Fickling and Jeffrey J. Schott, NAFTA and Climate Change, Peterson Institute for International Economics, September 2011, pp. 4 and 15-16. 8 Article 2101 of NAFTA incorporates the “general exception” of the World Trade Organization’s General Agreement on Tariffs and Trade. However, this “exception” does not apply, for example, to NAFTA’s restrictive investment rules. At the World Trade Organization, this “exception” has failed as a defense for challenged policies in all but one instance. “Only One of 44 Attempts to Use the GATT Article XX/GATS Article XIV ‘General Exception’ Has Ever Succeeded,” Public Citizen, August 2015.

These organizations partnered to author this paper:
350.org * Center for Biological Diversity * Center for Food Safety * Defenders of Wildlife * Earthjustice * Food & Water Watch * Friends of the Earth * Global Exchange * Green America * Greenpeace USA *Institute for Agriculture and Trade Policy * League of Conservation Voters * Natural Resources Defense Council * Sierra Club * US Human Rights Network

Corporate Trade Deals, Climate Change, and Mass Deportation

In the debate over immigration, one critical question is often missing: Why? Why do people decide to leave their family, friends, and community; embark on a long and life-threatening journey; and start over in a country that may treat them as second-class citizens? Among the many answers is one underreported fact: U.S. trade deals have contributed to the economic instability that has forced so many immigrants to leave home.

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Sierra Club partnered with the Labor Council for Latin American Advancement and the Center for Popular Democracy on a briefing paper that connects the dots between unfair trade, climate change, and forced migration.

Corporate deals like the North American Free Trade Agreement (NAFTA) and the Central America Free Trade Agreement (CAFTA) have eliminated jobs, exacerbated climate change, and destabilized communities in the U.S., Mexico, and Central America. These impacts, along with other root causes, have fed increasing insecurity, displacement, and violence, forcing many to leave their homes, communities, and families.

We need a new trade approach that allows immigration to be a true, free choice. After resettling in the U.S., many immigrants must live with the daily risk of their lives being torn apart once again, this time by a knock on the door from immigration agents seeking to deport them. Indeed, mass deportation currently threatens to tear apart millions of families across the U.S. Meanwhile, many immigrants also must endure the risks and harms that come with living in pollution hotspots, such as dangerous levels of air and water pollution. No one should be forced to leave home and family, whether by an unfair trade deal, climate change, or deportation.

We need a fundamentally new approach to trade – one that supports workers, healthy communities, and climate justice in all countries. To achieve this vision of trade justice built on solidarity, we must reject the xenophobic approach of Donald Trump, which is rooted in border walls, attacks on immigrants, and climate change denial.

Read more on the Sierra club factsheet here