Labor, Environment, US Trade Deals

♠ Posted by Emmanuel in at 7/20/2007 12:38:00 AM
I have recently featured a few of articles from the new online magazine American.com. Like with all other sources, however, it's good to know what sort of biases they hold to get a feel for their editorial agenda. So, I went snooping for information on the editors of this magazine. It turns out that the editor of American.com is no other than the co-author of Dow Jones 36,000, James K Glassman. I borrowed this book circa 2002 and the earnestness of their mistaken belief had me laffing so long even my momma thought that my mind was gone. What's more, American.com is published by the American Enterprise Institute, so draw your own inferences about its position on the power of free markets, yadda-yadda. As always, caveat emptor.

Anyway, American.com has two new articles on the inclusion of labor and environmental issues in American trade deals. The first piece by Robert Rogowsky and Eric Chyn is a bit more sanguine in noting that, historically, improving labor standards has gone hand in hand with enabling trade deals:

Imposing labor standards on U.S. trade policy is not new. The McKinley Act of 1890 restricted imports produced by prison labor. In 1947, Article XX (e) of the first version of the Global Agreement on Tariffs and Trad (GATT) acknowledged the right of nations to restrict trade in items produced by forced labor. Since then, labor standards have been incorporated into virtually every part of U.S. trade law: The Generalized System of Preferences (GSP) in 1974, Section 301 of the Trade Act of 1974; the Caribbean Basin Economic Recovery Act (CBERA) in 1983; the Andean Trade Preference Act (ATPA) in 1992; the Overseas Private Investment Corporation (OPIC); the Multilateral Investment Guarantee Agency (MIGA); and the North American Free Trade Act (NAFTA) in 1994.

Of these initiatives, the GSP program has had the most far-reaching influence over labor standards for U.S. trade partners. Created in the Trade Act of 1974 to promote growth in developing countries, the program was modified in 1984 when Congress began requiring GSP beneficiaries to meet core labor standards set by the International Labor Organization (ILO). Today, 143 developing countries and territories in the GSP program must meet these labor obligations in order to export roughly $25 billion worth of duty-free goods (excluding textiles and apparel) to the United States. Failure to take steps to afford these rights jeopardizes a country’s GSP status for some or all of their products.

Enforcement of these obligations has affected the treatment of workers in developing countries. Since 1984, 15 GSP beneficiaries have been sanctioned for worker rights violations. Seven countries remain subject to suspended benefits. Many more nations have corrected problems to avoid suspension. For example, in November 2000, Swaziland modified its constitution to guarantee better protection of worker rights in order to qualify for GSP benefits. Around the same time, Uganda took steps to ensure that labor officials were enforcing recent legislation. Recently, Uganda initiated a new industrial court that will address labor issues, and posted labor inspectors in each district of the country. In addition, a new legal structure has been put in place to improve labor-management relations in the Ugandan textile sector.

These same ILO standards are addressed within the text of U.S. Free Trade Agreements (FTAs). The 15 partners in U.S. trade agreements have made notable efforts to realize these rights. In Morocco, for instance, a comprehensive new labor law went into effect in 2004 to combat child labor, reduce the work week, periodically review the minimum wage, improve worker health and safety, address gender equity in the workplace, promote employment of the disabled, guarantee rights of association, and prohibit employers from taking actions against workers because they are union members. Similarly, the Costa Rican government is taking steps to create a better environment for workers. The government has issued new administrative guidelines to deal with anti-union activities and increased the Ministry of Labor budget by 25 percent between 2002 and 2005, strengthening enforcement and labor official training efforts. Thirty-seven new labor court judges have also been appointed to address a backlog of labor cases in the judicial system.

These developments highlight only some of the results of established U.S. trade policies on labor standards in developing countries. It is true that the recent exposure of labor standards violations in Jordan, a U.S. free trade partner, shows that trade commitments are not a panacea. Active enforcement and monitoring efforts complement trade agreement labor measures. Nonetheless, the economic incentive to trade duty-free with the United States is a profound one, and those interested in raising global labor standards have used previous U.S. trade preference agreements to create change rather effectively for a long time. Meanwhile, current talks between Congress and the White House also give reasonable hope that U.S. trade policy will continue to promote labor development.

For a less sanguine outlook, here is former Assistant US Trade Representative P. Welles Orr. In a nusthell, his argument is that Democrats have reneged on a deal with the White House to include labor and environmental standards in trade deals in exchange for the extension of Bush's fast-track authority and the passage of a host of bilateral deals. Orr accuses the Dems of negotiating in "bad faith" for they seem to be on the anti-trade "fast track to nowhere":
So much for the new spirit of bipartisanship on trade policy offered by Congressional Democrats this past spring. That olive branch of a commitment to work with the Administration to pass newly inked and important bilateral free trade agreements with Peru, Panama, Colombia and Korea—agreements that included new provisions on labor and environment standards demanded by Democrats—got rudely yanked as Congress left town for the July 4th recess.

Implicit in this deal, described by Speaker Nancy Pelosi in May as “a new day in trade policy,” was an agreement to at least talk about terms for extending presidential Trade Promotion Authority (popularly known as “fast track”) which expired on June 30. This congressionally conferred authority allowed the White House to negotiate all details of a trade deal and submit it for a simple up or down vote in Congress, ensuring that America can present a consistent position during negotiations. Without it our negotiating partners won’t come to the table. Without it the U.S. cannot effectively lead the Doha Round to a successful conclusion or strike new two-way or regional pacts to open up foreign markets to sell more U.S. goods and services.

All that aside, Pelosi, House Majority Leader Steny Hoyer, Ways and Means Committee Chairman Charlie Rangel, and Trade Subcommittee Chairman Sandy Levin announced on June 29th that the Colombia and Korea agreements were effectively dead and that fast track was basically not in the cards. They also said, apropos of the Peru and Panama agreements, that they now will not support the deals unless domestic labor laws in those countries are changed to comply with the labor standards in the FTA before the deal takes effect.

The White House, including United States Trade Representative (USTR) Susan Schwab, didn’t see this double-cross move coming, especially since Rangel, with the presumed blessing of Pelosi and others, had been negotiating in good faith with the Office of the USTR about the labor and environmental language. While the negotiations were intense, Rangel and Senate Democrats won the day and got just about everything they asked for. One would think this a truly unique political victory engineered under the guise of honest-to-goodness Executive-Legislative branch bipartisanship. But no, somewhere along the line, House leaders concluded that they had bit off more than they and the rank and file Democratic caucus could chew. Trade votes, they quickly remembered, are politically costly, and the bipartisan trade deal just didn’t seem as worthwhile as they once thought. As a result, they have retreated from their promises.

This is both bad faith and pure political obstructionism. For the Bush Administration, it couldn’t come at a worse time. Amid the seemingly intractable situation with the war in Iraq, presidential poll numbers in the tank and a legislative drubbing on the immigration bill, the one bright spot the White House was counting on was success in advancing the trade agenda. Extension of fast track authority was central to this plan. By declaring fast track dead for the foreseeable future, Congress has effectively stopped the President from trying for a breakthrough in the Doha Round of trade talks. U.S. trade diplomats are now left without the necessary imprimatur of American “good faith and credit” negotiating authority required by our trading partners. More importantly, the U.S. will now be left in the dust, as our trading partners and some of our biggest competitors, such as the EU and China, blaze ahead with new market opening bilateral and regional agreements of their own. In the end, the losers are our own farmers and manufacturers, whose products, services and intellectual property are left at a competitive disadvantage.