Trade deals torpedoed in Democratic House

By Don McIntosh, Associate Editor

It was the first victory in 10 years for foes of NAFTA-style trade agreements: House Democratic leaders announced June 29 they will not reauthorize “fast track.” Nor will they ratify the trade deals President Bush negotiated with Colombia or South Korea. And in two other trade agreements, with Peru and Panama, the president gave unions what they’ve been asking for — workers’ rights will have the same standing as investors’ rights.

While Congress let fast-track treaty negotiating authority expire once before, no modern trade treaty negotiated by a U.S. president has ever failed to pass Congress until now.

The turnaround comes amid widespread conviction among voters that American trade policy is killing American jobs. The United States hasn’t had a trade surplus since 1975. The U.S. trade deficit, which rose tenfold in the Clinton years, doubled again since Bush took office, setting a new record every year since 2001. Last year it reached $836 billion, equal to 6.3 percent of the U.S. economy.

Clearly, something about U.S. trade policy is enabling these trade imbalances. For a long time, U.S. unions have argued that NAFTA (North American Free Trade Agreement)-style trade deals are part of the cause. And all but one of the treaties — which the United States now has with 15 countries — were negotiated under fast track.

The U.S. Constitution gives Congress the power to regulate foreign commerce, but starting in 1974, Congress gave its power to the president by approving fast-track legislation. Under fast track, Congress agrees not to amend trade treaties and to vote them up or down soon after the president presents them. Presidents have argued it would be hard to bargain complicated trade deals if negotiating partners had to worry that Congress would later change the U.S. offer. But that’s fine with the AFL-CIO, which has opposed every trade deal bargained under fast track.

So union leaders rejoiced June 30 when fast track expired without being reauthorized by Congress. It expired once before — in 1994 — and wasn’t renewed until 2002. But fast track still restricts how Congress deals with four treaties it hasn’t yet approved — the treaties with Colombia, South Korea, Peru and Panama.

Union leaders in Washington, D.C., were alarmed May 10 when Democratic House Speaker Nancy Pelosi and House Ways and Means Chair Charles Rangel announced they’d reached a deal with the White House on trade — the Bush Administration would work to add labor and environmental commitments to the Peru and Panama deals, and the Democrats would work to pass them.

Teamsters General President Jimmy Hoffa Jr. called it a sellout. The Teamsters are an affiliate of the Change to Win labor federation.

But the details of the compromise weren’t yet spelled out, and when Pelosi and Rangel clarified the deal June 29, it was the U.S. Chamber of Commerce’s turn to cry betrayal. The deal Rangel worked out with Bush went like this: Bush would go back to the four countries and get them to amend the treaties by adding labor and environmental standards as enforceable commitments on par with the treaty commitments to trademark, patent and other investor protections. Only then would the Democratic leadership give the treaties a vote. Because fast track was scheduled to expire June 30, the Bush Administration raced to amend the treaties, and was able to conclude all four in the last three days of June.

In each case, the countries committed to abide by five “core” labor standards of the International Labor Organization — workers’ freedom of association and right to bargain collectively, and prohibition of forced labor, child labor and workplace discrimination. If the countries fail to live up to those commitments, the United States could file a trade complaint, which would be judged by a three-member panel, and then could impose punitive tariffs if the panel agreed. That’s the same process the treaty has for other kinds of commercial disputes, like cases where the trading partner discriminates against foreign companies or infringes patents or trademarks.

But it still wasn’t enough to win support for the Korea or Colombia treaties from Democrats in Congress or from labor unions.

South Korea’s economy is the world’s 13th largest — bigger than Mexico’s — so the Korea-U.S. Free Trade Agreement would have been the biggest since NAFTA. And the treaty didn’t do enough to open South Korea to U.S. imports, union leaders said. Thus it would harm U.S. industry, especially the auto industry. South Korea and the United States have a heavily one-sided trading relationship: South Korea exported more than 700,000 cars into the U.S. last year, while the United States exported fewer than 5,000 to South Korea. Also of concern was the possibility that Korea could be used as a transshipment point for duty-free export of goods made in China or North Korea.

“Our battered manufacturing sector simply cannot withstand another flawed trade deal,” said AFL-CIO President John Sweeney in a statement to the press.

The Colombia treaty failed to win support for other reasons — ongoing serious human rights violations. Colombia’s human rights record didn’t stop the Bush Administration, but members of Congress felt uncomfortable entering into economic marriage with the most dangerous country on earth for union organizers. Last year, 72 Colombian trade union leaders were assassinated by paramilitary death squads.

And the government is involved: According to witnesses co-operating with the Colombian Attorney General's office, government intelligence services provided names and security details of union activists to the death squads. The former chief of the Colombian intelligence service - who in 2002 managed a local campaign for the current Colombian president - has been arrested for conspiring with the death squads to kill union leaders.

The United Steel Workers — which helped survivors of murdered Colombian unionists sue for damages against U.S.-based multinationals — is leading the opposition to the Colombian trade pact and on June 28 testified before Congress about Colombia.

Peru and Panama aren’t beacons of workers’ rights, but they’re in a different league from Colombia. Rangel intends to lead a bipartisan delegation of members of Congress to Peru and Panama this August to press those countries to improve their labor laws. The vote on the treaties is expected in September.

AFL-CIO trade policy specialist Thea Lee says with the enforceable labor rights provisions added, the Peru and Panama treaties are actually better than the 2000 treaty with Jordan, which the AFL-CIO lauded as a step in the right direction. But the AFL-CIO is still debating what stance to take on the treaties because other problems remain — like restrictions on government buy-American mandates and the danger that American agribusiness exports could displace Peruvian farmers.

The AFL-CIO also questions whether the Bush Administration would enforce the labor rights protections. Still, Lee said, Bush is only in office for another year and a half, and a future activist president who wanted to improve workers’ rights in those countries would be able to use the trade agreement to do that.