Monthly Archives: September 2018

The NAFTA deadline is Sunday. What happens if there’s no deal?

The Trump administration’s self-imposed deadline to bring Canada into a revised North American Free Trade Agreement is Sunday — and there’s a chance negotiators will miss it.

imagesThere was a little optimism late Friday, after Reuters reported that Mexico and the US decided to hold off publishing the text of its United States-Mexico bilateral trade deal on Friday — a signal that both weren’t quite ready to move ahead without Canada.

But the prospects of a last-minute agreement with Canada remain grim after weeks of a negotiating impasse over a revised NAFTA, the trilateral trade agreement between the US, Canada, and Mexico.

President Donald Trump vented his frustration with Canada during a press conference in New York this week in which he bashed their negotiators and claimed he rejected a one-on-one meeting with Canadian Prime Minister Justin Trudeau on the sidelines of the United Nations. (Canada says it never asked for such a meeting.)

“We’re very unhappy with the negotiations and the negotiating style of Canada,” Trump said. “We don’t like their representative very much. They have taken advantage.”

“The deal is done,” he added. “Now it has to go through Congress and a lot of things have to happen.”

The deal Trump is referring to is the United States-Mexico bilateral agreement the two countries struck in August, which the president now wants to submit to Congress as a NAFTA replacement. But it’s unclear if Congress will accept a deal without Canada. Though Republican leaders have also chastised Canada in recent weeks, there’s fairly strong bipartisan support for keeping Canada part of the trade pact.

Canada knows this, which has bolstered the country’s negotiating position. Even as the Trump administration prepared to forge ahead, it’s not altogether rejecting a future deal with Canada.

“We’re going to go ahead with Mexico,” US Trade Representative Robert Lighthizer, who’s leading the negotiations, said this week. “If Canada comes along, that would be best. If Canada comes along later, then that’s what will happen. We certainly want to have an agreement with Canada.”

Which means the Trump administration might find a way to make the September 30 deadline flexible, and continue talks with Canada. How that will work practically is still unclear, but as the NAFTA deadline nears, here’s a look at how the two countries got here, and what might happen if there’s no agreement this weekend.

What is even going on with the NAFTA talks?

Trump hates NAFTA. “I don’t like NAFTA,” he said Wednesday. “I never liked it.”

Trump’s loathing of the trade agreement carried from his campaign to his presidency, and in August 2017, all three countries began talks to renegotiate the trilateral trade deal.

About a year later, the US and Mexico reached a preliminary bilateral pact that dealt with some issues between the two countries — but wasn’t exactly a NAFTA replacement. Canada then rejoined negotiations with the goal of reaching a revised agreement — NAFTA 2.0, if you will — to submit to Congress.

The Trump administration had initially pushed to reach a deal by the end of August. It was a manufactured deadline — the United States wants to sign a deal with Mexico before December 1, when the country’s new leftist president, Andrés Manuel López Obrador, takes power. (Obrador has said he wants a trilateral deal.)

The US and Canada, of course, did not reach a deal by the end of August.

But the Trump administration went ahead and notified Congress that Trump intended to sign a new trade agreement with Mexico — “and Canada, if it is willing” — within 90 days. This is required under the Trade Promotion Authority (TPA), which gives the president the power to negotiate trade deals and Congress to approve them with an up-or-down vote.

The TPA, however, demands that text for any trade agreement be delivered no later than 60 days before signing, which is how the September 30 deadline came to be. The plan was for Canada and the US to negotiate for another month, then submit the text for a trilateral deal.

Now the US and Canada are speeding toward that date without a deal. The text of any trade deal the Trump administration wants to submit to Congress will likely be published by Sunday. What it might look like is anyone’s guess.

What to expect if Sunday ends without a deal

The language of the text will likely provide clues as to whether the US is really forging ahead with a United States-Mexico bilateral deal, or still leaving an avenue open for Canada.

According to the Canadian news outlet CBC, the agreement may include at least a dozen chapters that have been agreed to by all three NAFTA partners — Canada, the US, and Mexico — which would hint that this is a trilateral agreement in-progress.

The administration already took a creative approach to TPA with their notification to Congress, and adding Canada later now would be even more unorthodox. Democrats have already challenged the administration on their bait-and-switch, saying that they can’t just replace NAFTA with an entirely new bilateral trade deal.

Ultimately, it will be up to Congress whether they’ll accept the administration’s machinations on TPA. They might, because lawmakers have little appetite for a bilateral deal. They want Canada included. “Congress seems to be making it very clear on both sides of the aisle,” Marc Busch, an international trade expert at Georgetown University, said.

Some lawmakers have adopted the administration’s posture on Canada, pressuring them to get in line or else. Rep. Steve Scalise (R-LA) warned Canada in a letter that if it “does not cooperate in the negotiations, Congress will have no choice but to consider options about how best to move forward and stand up for American workers.”

But this is likely bluster — and Canada can see right through it. “Steve Scalise can say whatever he likes,” Busch said. “Canada does have the upper hand right now.”

Canada is betting that a trilateral deal really is the only practical way forward. Canada is the US’s closest trading partner and the supply chains are so intricately intertwined. Certain provisions in the US-Mexico bilateral pact were also negotiated with the understanding that Canada would eventually be included — such as the percentages of each car that must be made in each country to avoid tariffs.

“The [US-Mexico] agreement was calibrated around the idea that Canada was going to be a part of this deal and these are really detailed calculations,” said Chad Bown, of the Peterson Institute for International Economics, said. If Canada is out, Bown added, those numbers will likely need to be recalculated.

Add to that Congress’s reluctance. Even if Trump moves ahead and signs a bilateral deal with Mexico, Congress likely won’t vote on it until next year. If Democrats retake one or both chambers, a deal without Canada is likely dead on arrival.

Which is why Canada doesn’t feel all that rushed by the TPA deadlines. Canada wants to make “a deal that works for Canada,” Busch said. “That’s exactly what Canada is doing.”

What’s the holdup?

Both the US and Canada may agree that a NAFTA 2.0 is going to happen eventually — but for now, each side seems entrenched.

The US wants greater access to Canada’s dairy market, but it’s a politically charged issue in Canada, particularly in Quebec, which has inconveniently timed provincial elections on October 1.

Canada wants to keep Chapter 19, a provision that allows for an independent mechanism to resolve special trade disputes. It also wants to keep cultural exemptions for Canadian media and the arts, a symbolic stance to defend Canadian culture.

Also looming over the negotiations are Trump’s steel and aluminum tariffs — but specifically the mechanism used to impose tariffs, Section 232, which requires a national security justification.

“Canada — more so than Mexico — is very offended by the Section 232 tariffs against its industries,” said Sarah Goldfeder, a principal at the Earnscliffe Strategy Group and a fellow at the Canadian Global Affairs Institute. Canada sees the Trump administration’s implication that the country is a national security threat to the United States as beyond insulting, particularly because Canada is a defense partner.

Canada wants some protections against these kinds of tariffs. The Trump administration initially used this as a bargaining chip — basically saying to Canada, “Let’s get somewhere on NAFTA, and then we’ll talk tariffs.” But the administration has since tiptoed away from that rhetoric, trying to separate the two negotiations.

Trump has also threatened automobile tariffs on Canada. They would hurt US consumers and manufacturers, but they would be ruinous for Canada.

Canada and the United States agreed to negotiate in private, so it’s unclear how close they might be on resolving these issues. But given comments from both the US and Canada in recent days, a last-minute consensus doesn’t exactly seem within reach.

That doesn’t mean negotiations will abruptly end if they two sides don’t reach an agreement by the Sunday deadline. Indeed, there’s a chance that missing the deadline might still allow Trump to declare victory on his US-Mexico — or “USM” — deal. Then Canada and the US could negotiate out of the spotlight for a potential NAFTA 2.0 (or as Trump would rebrand it, “USMC”) and deliver a deal to Congress at some point.

“This entire thing has been political,” Goldfeder said. “The biggest problem at the moment is that the US rhetoric is so amped up that it isn’t providing Canada with the room it needs to agree to anything.”

“What we need in this moment is to just turn the heat down,” she added.

Printed in Vox.


The EU and dozens of other countries rallied support on the sidelines of the big U.N. meeting for a new international agreement to end trade in goods used for torture and capital punishment.


The alliance is an initiative of the EU, Argentina and Mongolia that began a year ago with 57 initial members. Several other countries formally joined on Monday, pushing the membership to more than 60, including the 28 nations of the EU. The United States was not invited to join because it still allows the death penalty. Canada and Mexico are among the participants.

The EU banned the sale and export of goods used in torture and capital punishment in 2006. Now, it’s seeking to broaden the ban internationally. Malmström said countries should model their efforts after two existing international agreements: the Convention on International Trade in Endangered Species, which offers protections to tens of thousands of endangered plants and animals; and the Arms Trade Treaty, which regulates trade in conventional weapons but has not been ratified by the United States.

The European Union is rallying dozens of countries to stop the trade of torture equipment and lethal-injection drugs, which could make it harder for the United States to perform executions, a top EU official said.

The bloc will call for an alliance against trade in goods such as spiked batons and drug cocktails at the United Nations in September following an EU move last year to strengthen its own export ban, the EU’s trade chief Cecilia Malmstrom told Reuters in an interview.

“We’ve already seen that the end to some European countries exporting chemicals has made it more difficult to execute people in the U.S.,” she said. “This is of course our aim.”

Tougher EU laws, including a 2011 export ban on lethal-injection drugs, are making U.S. executions harder to perform by cutting off supplies by large-scale manufacturers of sodium thiopental, an anaesthetic in such injections.

Mongolia, which outlawed the death penalty in 2015, and Argentina, which has similar legislation to the EU, will jointly launch the initiative with the EU on Sept. 18 in New York.

Australia, New Zealand, Canada and Norway are among the first countries expected to back the plan, Malmstrom said.

“We want to ally with countries to try to stop the trade in products used for executing and torturing,” Malmstrom said.

Abolition of the death penalty is a central tenet of the EU’s foreign policy and is also a requirement for countries seeking to join the 28-nation bloc.

“We are talking about poison, chemicals used in executions, thumb screws, (electric-shock) belts,” said Malmstrom, a Swedish liberal who as a former EU home affairs commissioner and EU lawmaker met torture victims and campaigned on rights issues.

The alliance would first see governments sign up to a political commitment during the United Nations General Assembly, and then start helping local customs authorities track the transit of torture equipment and lethal-injection drugs.

If successful, the United Nations itself could eventually draw up a convention against the trade in goods used for torture and execution, which would be a legally-binding treaty.

The project marks an effort by the European Union to promote human rights after an economic crisis saw its “soft power” wane, business interests trumping rights issues and allies such as Turkey turn increasingly authoritarian.

Malmstrom said she did not expect the world’s worst human rights offenders to support the cause. Iran, Saudi Arabia and China carried out the most executions last year, according to Amnesty International.

But an alliance at the United Nations could make it harder for countries to obtain, for example, Chinese-made riot shields with electrified spikes, and bring more publicity to the issue.

“China is one of the countries that tortures its own citizens and who executes people, so they are not on the list of invitees (to the alliance) but they are open to attend (the U.N. launch),” Malmstrom said.

Originally posted on Politico and Reuters.

What’s Up with NAFTA, Anyway? Some Frequently Asked Questions

NAFTA is bad. But the reason NAFTA is bad is not because trade is bad, or even that trading with Mexico and Canada is bad. NAFTA is bad because it is a set of rules that gives advantages to employers over workers, multinational companies over local firms, and giant corporations over communities. It has cost jobs and pushed down wages in all three countries.

In particular, NAFTA set up incentives to outsource U.S. jobs (by lowering tariffs on imports from Mexico) without requiring firms that operate there to meet basic international labor standards or minimum protections for the environment. It also incentivized additional outsourcing by creating a private justice system for firms that allows them to bypass local courts and go straight to international tribunals to argue that some health and safety standard or water protection rule or any other action by a host government deprives them of their expected profits. NAFTA’s rules empower global employers, undermine unions, and weaken the ability of local, state and federal governments to be responsive to citizens.

NAFTA does not have to be this way. Its rules can be changed to put working people first. And that requires renegotiation.

I heard they’re finished renegotiating NAFTA. Are they?

Not really. On Aug. 31, the president sent notice to Congress that he had concluded negotiations with Mexico and intended to sign a deal with Mexico in 90 days (this waiting period is required by the Fast Track law). Canada was not included in this announcement, but can be included in a final deal “if it is willing.” Since talks are ongoing with Canada, and Mexico would have to agree to any changes made to accommodate Canada, the renegotiations aren’t really over. That means we have a chance to improve its labor rules and add other things important to workers, such as COOL labeling.

So, is Canada in or out?

The talks are ongoing. AFL-CIO President Richard Trumka and others have made clear Canada should be included, but whether it will be remains to be determined. (Watch a video here.)

Does Congress have to vote on a new NAFTA?  


When will Congress vote?

It seems likely that, assuming a final-final deal is reached this fall, the vote would occur in 2019.

Will the AFL-CIO support the new deal?

That depends on what the new deal looks like and how close it comes to meeting the 17 benchmarks we set out in June 2017. We don’t expect a new deal to be perfect or to incorporate every one of our recommendations. However, it must include Canada, show meaningful progress on critical issues, including by reducing incentives to outsource, protecting fundamental labor rights and freedoms for working people in all three countries, eliminating the private justice system for foreign investors known as ISDS, promoting greater North American content—particularly U.S. content—in NAFTA-traded goods, and by strengthening enforcement, not just on labor, but on all trade issues, including currency manipulation and misalignment.

On labor in particular, if the deal does not include strong and clear rules that protect working people in all three countries and require Mexico to abandon its “protection contract” system (which keeps wages down and interferes with the right to join unions), and if we cannot be confident that the rules will be swiftly and certainly enforced, it won’t be worth endorsing. A deal that doesn’t get the labor provisions and enforcement tools right won’t protect U.S., Mexican or Canadian workers and won’t reduce outsourcing. A deal that allows abuse and exploitation of working people to continue is just another corporate deal.

So…where is the text?

Most of the text is available to “cleared advisers” (which includes the AFL-CIO) now. Trumka, and officers of both affiliate and non-affiliate unions who serve as cleared advisers are studying the text right now. Unfortunately, due to the secrecy allowed under Fast Track, the text won’t be available to the public until after Sept. 27, 2018.

Do we know what it is in it?

A bit, but most of the contents are still secret. We know the labor rules are on the right track, but they do not yet include swift and certain enforcement mechanisms. We know there will be changes to ISDS that appear to be in the right direction and changes to medicine rules that appear to be in the wrong direction. And we need to learn a lot more about automobile rules of origin to figure out if they will actually promote high wage U.S. jobs. Look for more information after Sept. 27 at

When will we know if the deal meets our standards?

Trumka and other labor leaders said on Aug. 31 that, based on what we know so far, “more work needs to be done” for the deal to meet our standards, including, most importantly, enforcement tools that will ensure that all parties live up to their labor obligations and that Mexico ends it repressive protection contract system. But, since talks are continuing, that means we have an opportunity to get that work done. This is not over and the text isn’t really final. That’s where you come in. We need your help.

How can I help?

You can call or email your senator and tell them to contact U.S. Trade Representative Robert Lighthizer (the U.S. lead on the NAFTA talks) to make clear that in order to get approval in Congress, the new deal must:

  1. Include strong and clear labor standards based on the International Labor Organization’s fundamental labor rights and end the protection contract system in Mexico.

  2. Include enforcement tools that will make certain that violations are swiftly identified and fixed—or else sanctions will be promptly imposed.

  3. Eliminate ISDS (the private justice system for foreign investors) and other incentives to outsource (including in both manufacturing sectors such as auto, aerospace, steel and aluminum and in services sectors such transportation and call centers); and

  4. Put working people’s interests ahead of profits, including by eliminating giveaways to Wall Street and Big Pharma and ensuring that we can protect our food supply and provide consumers the information they want about the products they buy.

Call 855-856-7545 to be connected to your senator today!

Here are some NAFTA talking points. Please  join our trade activist list by texting TRADE to 235246.

Originally posted on the AFL-CIO websiteScreen Shot 2018-09-19 at 12.29.15 AM

Are trade wars “good. and easy to win”? Not when you’ve alienated the whole world.

There are so many issues breaking right now that it’s hard to keep track — and focusing on any one leads to feelings of guilt about neglecting the others. But it’s worth remembering that the Trump trade war still seems to be on track, and important to have a sense of its effects.

merlin_144318669_f7ae477f-3b16-40e3-ab13-478abdd37d57-jumboThe view within the Trump administration is, of course, that “trade wars are good, and easy to win.” Where does this view come from? Actually, it involves two propositions.

First, it takes the mercantilist view under which trade as a zero-sum game in which whoever sells more wins. Because the U.S. runs a trade deficit, we’re losers, and anything that reduces that trade deficit is good.

Second, it takes for granted the proposition that precisely because the U.S. exports less to other countries than we buy in return, a trade war will hurt them more than it hurts us, reducing U.S. imports more than it reduces U.S. exports.

Now, anyone who looks at the actual effects of international trade knows that the first proposition is wrong: trade isn’t just about selling stuff, it’s about getting better, cheaper stuff both to consume and to use as inputs in production. But you might assume that at least the second proposition is true: a round of tariff retaliation should reduce foreign exports to the U.S. more than it reduces U.S. exports to the rest of the world, simply because those foreign exports are bigger to start with.

But maybe not. A new study from the European Central Bank suggests that even though the U.S. runs trade deficits, a trade war would reduce demand for U.S. goods more than it would reduce demand in the rest of the world. The Bank of England has reached a similar conclusion.

Let’s be clear: these are the results of models, not actual experience, and could be wrong. But it’s still worth asking why the modelers are getting this result. The short answer is the phenomenon known in the field as “trade diversion.”

For simplicity, think of the world as three economies: America, China, and Europe. Both the ECB and the BOE are assuming scenarios in which America raises tariffs on China and Europe, with China and Europe retaliating. But China and Europe don’t raise tariffs on each other.

Such a scenario gives both foreign consumers and foreign producers a lot of options to diversify away from America. Chinese producers, facing U.S. tariffs, can sell more to Europe instead; Chinese consumers, instead of paying tariffs on goods imported from America, can seek substitutes from Europe. The story for Europe is the same. But U.S. consumers and businesses won’t have comparable flexibility.


But why assume that it’s a unilateral U.S. trade war against everyone? Because that’s what is happening. The Trump administration has isolated America on many fronts, and trade policy is very much one of them. Under different leadership, America and Europe might be working together to put pressure on China over things like intellectual property, but given who’s actually in charge, we’re on our own.

As Trump found out at the U.N., the world is literally laughing at us. And it certainly doesn’t trust us, in fact is looking for ways to cut us out of various loops. This matters for a lot of things — and trade war, it turns out, is one area where go-it-alone will be costly.

By Paul Krugman for the New York Times

What Trump means by Free and Fair Trade

What does Fair Trade mean to Donald Trump?

For some time the US President has vocalised his support on and off-line for “Fair Trade”, including in a simple CAPITALISED! two-word tweet earlier this year. But Trump’s version really has very little to do with Fairtrade as we know it – his emphasis has been on domestic jobs (no bad thing in itself) but he’s no fan of worker’s rights, nor of action on climate change. Rather, Trump’s fair trade, is a re-articulation of ‘America First’ and one that risks undermining the internationalism inherent in Fairtrade, which prioritises workers and producers whatever their nationality.

What does Fair Trade mean to UK Trade Secretary Liam Fox?

Trump isn’t the only one who has been at it. The UK Trade Secretary, Liam Fox, has taken to talking about “free and fair trade” when articulating his ambition for post-Brexit UK trade policy. And whilst he may still have appetite for a free trade deal with the United States, the Fox and Trump visions are poles apart. When Liam Fox speaks about ‘fair trade’, he is stating his support for the global system – for the World Trade Organisation and the managed process towards greater trade liberalisation.

What do we mean when we say Fairtrade?


Then we have Fairtrade (*waves*) and the wider Fair Trade movement, which exist to deliver a better deal for the people around the world who produce the food we eat and make the clothes that we wear. Fairtrade, as most of our readers will know, has a very specific meaning. It describes a system or a ‘way of doing trade’ that insists on meeting certain minimum standards and providing a monetary ‘premium’ to boost the incomes and living standards of producers. Fair Trade (two words) refers to ethical trade more broadly, articulated in the ten principles set out by the World Fair Trade Organisation.

When talking about the global trading system, those of us in Fairtrade and the Fair Trade movement have tended to talk about Trade Justice. This has helped distinguish our work on supply chains and unfair trading practices from important debates about tariffs and trade deals. A Trade Justice lens puts questions of development, human rights and power, front and centre, and recognises that not all trading partners start on an equal footing. Some countries will have an historical or geographical advantage, some may have more or less power within trade negotiations, and more or less capacity to bring challenges to the WTO.

Trump’s vision is dangerous 

For Trade Justice advocates, neither Donald Trump’s nor Liam Fox’s versions of “fair trade” really cuts the mustard, and Trump’s is particularly dangerous. The Trumpian vision of fair trade, ignores the place and power of America in the world. It portrays the US as a victim of the global system and punitive tariffs, when in reality, the United States, more than any other country, has helped to shape the existing rules, often to the detriment of smaller, less powerful nations. Cotton is an obvious example. The US is the world’s third largest cotton producer and the industry has long been subsidised, suppressing the global price for cotton, to the detriment of developing country cotton farmers in countries like Senegal and Mali. Whilst the US has reformed its regime following a WTO challenge brought by Brazil, subsidies are under debate again with the passage of a new and contentious US Farm Bill.

The negative impacts of trade liberalisation on poorer countries

Fairtrade banana farmer Marcial in Panama

And the Fox vision, shared by many global leaders, can end up prioritising investors over producers (the inclusion of corporate courts in trade deals like NAFTA is evidence of this). In pursuit of an ‘ideal’ free-trading system, it may also too easily disregard the negative impacts of trade liberalisation on particular countries or sectors, especially if the process is poorly managed. The so-called ‘banana wars’ illustrate this point. Our banana consumption is currently overseen by a rather complex arrangement of trade preferences and quotas, which aims to protect the most vulnerable exporters – small-island states in the Caribbean – whilst enabling their more competitive Latin American neighbours (dominated by US multinationals) to have greater access to the EU market over time. This ‘managed’ arrangement has arisen from WTO rulings which initially decimated the banana industry in countries like St Lucia. With support from schemes like Fairtrade, the industry has somewhat rebounded, but as the EU tariffs for Latin American countries decrease, the situation for the banana farmers in the Caribbean remains precarious.

Language can be very slippery, and with all of these different versions of ‘fair trade’, we wouldn’t blame anyone for being confused! So next time you hear a politician talk about ‘fair trade’, ask the following question: Are they making a case for trade that works for all producers and workers, especially those in the world’s poorest countries? If not, then file under ‘could do better’, and maybe give @FairtradeUK a retweet!

Read more about Trump’s isolationist agenda on Fairtrade America’s blog

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.

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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‘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.”


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

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.