Congress okays NAFTA-like deals with Australia and Morocco

By Don McIntosh, Associate Editor

In July, the U.S. Congress passed two more trade agreements that were opposed by organized labor, despite a late-breaking controversy about provisions that will make it harder for Americans to re-import low-cost pharmaceuticals.

Both treaties passed under so-called “fast-track” rules that Congress renewed in 2002, which prevent lawmakers from amending trade agreements the president negotiates. The U.S.-Australia Free Trade Agreement passed the House July 14 by 314-109, and the Senate the following day 80-16. The U.S.-Morocco Free Trade Agreement passed the Senate July 21 by 85-13, and the House the following day 323-99.

Of the Oregon congressional delegation, U.S. Representative Peter DeFazio was the only member to vote against the U.S.-Australia treaty, which he called a “Xerox of our old and failed policies.” DeFazio was joined by Representative David Wu in voting against the Morocco agreement. Representatives Earl Blumenauer, Darlene Hooley, Greg Walden and Brian Baird from Southwest Washington — and Senators Ron Wyden and Gordon Smith — voted for both agreements.

[Senators John Kerry and John Edwards, the Democratic nominees for president and vice president, did not cast votes on either.]

As with other NAFTA-style trade agreements, the Australia and Morocco pacts aren’t just about reducing tariffs. They also create a new class of rights for investors and patent-holders. And they restrict countries’ ability to use government purchasing to promote local employment, environmentally-benign production methods, or international human rights.

The two new trade agreements are substantially similar. Yet the two countries could hardly be more different.

Australia has an English-speaking population of just under 20 million, a parliamentary democracy, and a First World economy. It’s a high-wage country, with a per capita gross domestic product of $28,900 a year [which compares favorably to the United States’ $37,800.] Its exports are mostly agricultural, and it buys more from the United States than it sells. Australia is the 15th largest buyer of U.S. goods and services, accounting for about 1.7 percent of U.S. exports.

Morocco, on the other hand, is a predominantly Muslim North African nation of 32 million, ruled by a king, with a Third World economy and a per capita GDP of $4,000 a year. It has 52 percent literacy and nearly 20 percent unemployment. And it’s an insignificant trading partner for the U.S. – most of Morocco’s imports come from Europe, while Morocco ranks number 70 as a market for U.S. goods.

Pharmaceutical Lobby Adds Trade Treaty Language

Backers expected the two treaties to go through Congress without much debate. But two days before the House vote on the Australia deal, the New York Times published an article about a provision in the agreement that gives drug patent-holders the right to prohibit the re-export of their products. The Morocco treaty contains a similar provision.

“Why are pharmaceuticals in this agreement?” Congressman Peter DeFazio asked on the House floor the day of the Australia vote. “Because this Administration and their special trade representatives say this is a template for all future agreements. They want to renegotiate our agreement with Canada to prohibit the reimportation of less expensive pharmaceuticals because it is undermining the obscene profits of the pharmaceutical industry.”

In practical terms, neither treaty is expected to affect U.S. drug consumers: Australia already prohibits drug re-export, because its drugs are state-subsidized. And there had been no plans to reimport pharmaceuticals from Morocco. It was the precedent that bothered the provision’s critics.

“It is an attempt to thwart those in this country who want to find a way to put downward pressure on prescription drug prices,” declared North Dakota Senator Byron Dorgan during the Senate debate on the Australia agreement.

Dorgan is one of several sponsors of a Senate bill that would make it legal for Americans to import prescription drugs from countries where government price caps make the drugs less expensive. A similar bill passed the House in July 2003 (with the support of all the Democratic members of Oregon’s delegation). When the Senate reconvenes in September, it is expected to debate Dorgan’s bill and a rival bill.

The re-importation issue put Oregon Congressman David Wu in an odd position. In November, Wu spoke in favor of re-importation at a union-led rally in Tigard, but two weeks later voted for a Medicare law that made aiding re-importation illegal. In June, Wu introduced a bill of his own to legalize re-importation (no co-sponsors as of yet), but a month later voted for the Australia treaty, which bans re-importation from that country.

Governments: Enforce Your Own Labor Laws

Ever since the 1999 demonstrations in Seattle at a meeting of the World Trade Organization (WTO), there has been greater public attention to the labor and environmental impacts of the new breed of trade agreements.

Unions and environmental groups want trade agreements to have enforceable protections of workers’ rights and the environment, just as they now have enforceable protections of patents, trademarks and copyrights.

Their pressure doesn’t appear to have altered the language of the trade agreements, but the Office of the U.S. Trade Representative (USTR), which negotiates trade agreements at the direction of the president, has adopted new rhetoric. Standard verbiage now accompanies the public announcement of each new agreement, including the claim that the agreement promotes labor and environmental standards.

That claim is nothing more than hot air, union trade policy experts say. While patents and copyright protections break new legal ground, with detailed rules and sanctions, the provisions on labor and the environment ask only that countries enforce their own laws — however weak or strong they may be. And penalties for failing to enforce those laws are paid by the offending government … to itself, to be spent on future enforcement.

Even that was too much for the king of Morocco: A side agreement adds that these sanctions can apply only when there is a “sustained or recurring failure to effectively enforce domestic law and the failure affects trade between the United States and Morocco.”

Unlike Australia, where the labor laws are stronger than those of the United States, Morocco has a history of workers’ rights abuse. In its June 2003 country report for Morocco, the International Confederation of Free Trade Unions reported “widespread violations of basic workers’ rights.”

But appearances matter, and in anticipation of the trade treaty going before the U.S. Congress, Moroccan King Muhammad VI instituted a new labor law, effective June 8, that raises the minimum employment age from 12 to 15, reduces the work week from 48 to 44 hours, and guarantees the rights of association and collective bargaining. And, the USTR announced, the U.S. Department of Labor is giving Morocco $9 million to fund “improved industrial relations, activities to combat child labor, and enforcement of the new labor code.”

The USTR has presented the Morocco agreement as a step toward a “Middle East Free Trade Area,” which President Bush envisions would be negotiated by 2013.

More Trade Agreements On The Way

The United States now has so-called free trade agreements with Canada, Mexico, Jordan, Chile, Singapore, Australia and Morocco. Three other agreements are signed and awaiting congressional ratification: Bilateral agreements with the Dominican Republic and Bahrain, and a multilateral pact known as the Central America Free Trade Agreement. If it passes, CAFTA will bind the United States in a NAFTA-like free trade zone to Honduras, Nicaragua, Costa Rica, El Salvador and Guatemala.

And still other agreements are in negotiation, with Panama, Colombia, Ecuador, Peru, Thailand and a group of five Southern African nations – Botswana, South Africa, Lesotho, Swaziland and Namibia.

The AFL-CIO, the premier U.S. confederation of trade unions, opposed the just-passed Australia and Morocco agreements on principle, says AFL-CIO trade expert Thea Lee, but didn’t spend a lot of energy fighting them.

“We knew we were going to lose,” Lee said.

The agreements had a very low political profile, she said, and neither Australia nor Morocco are major U.S. trading partners.

Instead, the AFL-CIO’s trade policy priority has been the defeat of CAFTA. The treaty was signed by President George W. Bush on May 24, but Lee thinks its supporters may not have enough votes in Congress to ratify it. Lee and others predict the president will delay a vote until after Election Day to protect CAFTA’s congressional backers from voter backlash. Kerry and Edwards have said they do not support the treaty in its current form.

© Oregon Labor Press Publishing Co. Inc.