Liveblog: NAFTA-style deal with Korea hearing in Ways & Means Committee
1:14 pm – Chairman Camp wraps it up: “All of our panelists showed that these trade deals will benefit the U.S.” With five out of five panelists supporting the deal, and nary a critical voice, seems like a bit of a preordained conclusion. And with that, we’ll wrap up the live blog. If you want more info on Firedoglake’s ongoing coverage of the Korea deal, see here. (Also, if you want to see what Ways & Means Committee staffers are watching after a rough hearing, check out the streaming here – looks like Kurt Russell’s Executive Decision on AMC! Isn’t this some kind of intellectual property violation? Like free cable – for the planet!)
1:13 pm – Rep. Pete Roskam (R-Ill.) related a story about how human rights advocates came to visit him about the U.S.-Colombia FTA, and “I kinda shrugged them off. I didn’t want to talk about Colombia.”
Wow. It’s pretty rough to not want to talk about how we would sign a NAFTA-style trade deal with a country where 2,850 trade unionists have been killed since 1986 – more than the rest of the world combined. Only four percent of unionist murders have been prosecuted. Over 530 unionists have been murdered during the presidencies of Álvaro Uribe (with whom the FTA was negotiated by President Bush) and his successor Juan Manuel Santos (Uribe’s former defense minister).
Show of hands: who wants to compete with workers facing such a total erosion of labor rights? More importantly, why would we ever even consider a trade deal with a government so thoroughly at odds with American values?
1:06 pm – As we documented in our report “Election 2010: The Best Defense was a Fair Trade Offense,” we documented how a record number of 75 Republicans – including many with Tea Party support – ran on fair trade themes. Tellingly, the two GOP freshmen that Camp tapped for the Ways & Means Committee – Reps. Rick Berg (R-N.D.) and Diane Black (R-Tenn.) – didn’t have campaign statements either way. Berg seemed to lean pro-FTA during the hearing, Black was hard to read (had some questions about innovation policy). Will be interesting to see where they and the other GOP freshmen come down on this NAFTA expansion to Korea. And if they respond to fair trade pressure from their districts…
12:56 pm – My vote for quote of the hearing. Pascrell: “These trade deals only make certain people affluent, and bury other people. Bury them!”
12:55 pm – Ford’s Biegun tries to defend the 65 percent deal. This is really sad – he clearly knows that it will hurt U.S. workers at Ford plants.
12:54 pm – Pascrell notes that net job creation will be negligible according to the ITC, while stopping Chinese currency manipulation could create over a million jobs. He notes that the Korea-Europe trade deal requires a majority of the inputs to a finished product to come from Korea, while the U.S.-Korea deal allows 65 percent to come from outside the country, like China. Great point! This really highlights the hollowness of the corporate argument that we have to get this deal to keep up with our competitors. The deal directly benefits U.S. competitors!
12:51 pm – Rep. Bill Pascrell (D-N.J.) says that “Free trade agreements through the last four presidents have contributed to job loss in the country, and minimizing the dignity of the American worker.” All right – first critical point of the day!
12:48 pm – Toppeta from MetLife raises a key crazy aspect of the Korea FTA – it creates rules that require both the Korea and the U.S. to allow companies to outsource their customer data to third countries, including China. Neither country could use data privacy concerns as a reason to block this outsourcing of consumer information. While Toppeta claims this will create U.S. jobs, it seems that it would only further diminish our ability to keep backoffice computer-oriented jobs from going offshore.
12:46 pm – Rep. Erik Paulsen (R-Minn.) states that trade deals are a no cost stimulus. That’s only true if they boost net exports (i.e. shrink trade deficits), which the Korea deal is not projected to do.
12:37 pm – Rep. Earl Blumenauer (D-Ore.) is hopping mad about U.S. cotton subsidies! He reminds the panel that – if the U.S. runs afoul of WTO rules – the WTO can authorize sanctions on the U.S. – and not just on the farm sector, but also on manufacturing or services. Although Blumenauer doesn’t bring it up, WTO rules also limit our ability to regulate Wall Street. If the WTO ruled against us, they could authorize retaliation against our manufacturing industries or farm sectors. So, no matter where you live, you have an interest in making sure that these rules don’t get in the way of our ability to regulate without facing WTO challenge.
12:30 pm – Paulson states, ominously: every day we don’t pass these trade agreements, someone over in Venezuela is laughing. What are they laughing at Roy? The propensity of the Bush-Clinton-Bush-Obama administrations to serially push trade deals that don’t create jobs or net export growth?
12:28 pm – Rep. Vern Buchanan (R-Fla.) asks the million dollar question again: are the FTAs sufficient or necessary to double exports? The panel – as if in choral unison – state that, “it’s a good first step.” It’s pretty rough when your first step takes you backwards, which is what the Korea FTA would do!
12:24 pm – Rep. Xavier Becerra (D-Calif.) notes that the U.S. is losing up to 1.5 million jobs due to China currency policy. Kinda puts the Korea trade deal (which is projected to cost American jobs equivalent to the loss of 90% of Detroit’s manufacturing jobs) in perspective.
12:18 pm – Rep. Richard Neal (D-Mass.) is touting the U.S.-Peru trade deal for its supposed benefits for human rights. Uh, no. The Peru trade deal has been a human rights disaster. The Peruvian government rolled back environmental protections existing prior to the FTA. This included access to sensitive Amazonian territories over which indigenous communities had control under pre-FTA Peruvian law. In response to indigenous opposition, including road blocks in the remote northern Amazonian region of Bagua, the Peruvian government dispatched the military, and the resulting confrontation resulted in over 30 fatalities. The ensuing tensions have lasted to this day.
Oil, gas and mining companies that want in on the Amazon resource rush love NAFTA-style deals, especially the provisions giving special handouts to big corporations. A few years back, the U.S. Industry Trade Advisory Committee on Energy and Energy Services (known as ITAC 6) put out its official report on the Peru FTA. This report was written by U.S. corporations and lobby groups, including Duke Energy and Halliburton, and was presented to U.S. negotiators. While ITAC reports often go through all or many of the provisions of an agreement chapter-by-chapter, the ITAC 6 report was unusually terse. Under “objectives and priorities” of the group, the report read only: “Investment provisions.” The only other analysis in the six page document (with five pages of letterhead and contact information) was: “ITAC 6 has reviewed the U.S. -Peru Free Trade Agreement and our members agree that it will lead to improvements in the trade relationship between Peru and the United States. On investment provisions and, more specifically, investor-state dispute resolution and the ability to use international arbitration, we are pleased [with] the U.S. – Peru Free Trade Agreement text…”
If you want to give multinationals yet another way to get around the will of the people, you’ll love the NAFTA-style deals with Korea, Panama and Colombia – which have these same rules.
12:09 pm – Rep. Charles Boustany (R-La.) is saying that corporations need to be spreading the message that exports create jobs. I’ve got no beef with that point at all – in fact, the country would be a lot better off if there was some basic understanding of Keynes’ macroeconomic model. But, as Paul Krugman has written, net exports (i.e. exports minus imports) is what drives increased in aggregate demand, and thus jobs: “If you want a trade policy that helps employment, it has to be a policy that induces other countries to run bigger deficits or smaller surpluses. A countervailing duty on Chinese exports would be job-creating; a deal with South Korea, not.”
12:01 pm – Rep. Dave Reichert (R-Wash.) states that “the last time we doubled exports” was over most of the 1990s and 2000s. The sheer number of years kinda casts some doubt on Obama’s ability to double exports in five years, let alone net exports.
11:48 am – Rep. Geoff Davis (R-Ky.) is echoing Tiberi’s point about getting slammed in their districts by fair traders. Whoa… he’s pivoting to Hugo Chavez!!!!!!!!! That’s when you know that argumentation is being abandoned in favor of fearmongering…
As we state in our testimony, these corporate boosters argue that it is critical to U.S. national security to pass the NAFTA-style deals because they will help bolster (for instance) Colombia against populist governments in the region. This is severely misguided: it is precisely the damage caused by NAFTA-style policies that turns people against the U.S. and leads to the economic instability on which populism feeds. Moreover, once we allow brutal regimes permanent access to our market, we lose whatever leverage we might have had to improve human rights.
11:45 am – Rep. Jim McDermott (D-Wash.) asks, is there any problem you have with taking the time to negotiate labor and environmental standards in these trade deals? Paulson says that NAM’s position is that these are social issues that should not be included in trade deals. Stallman agrees. Is this any sign of the Camp trade policy? Rollbacks of even the modest labor and environmental standards that are in some recent deals?
11:40 am – Tiberi is calling out the corporate witnesses for not promoting free trade in TV ads in Ohio, i.e. not offering him political cover in a state that has suffered mightily from offshoring.
11:38 am – Rep. Pat Tiberi (R-Ohio) praised President Obama for campaigning against NAFTA in Ohio during the primaries, and then backtracking once in office. Recall that, right after the election, the Republican leadership quickly rolled out two post-election themes: first, that its primary objective will be to unseat Obama; and second, that the GOP would be willing to work with the president to pass the pending pacts with South Korea, Panama and Colombia. These objectives are connected. If Republicans can get the president to flip-flop on his campaign commitments and take a highly unpopular position on trade, they are more likely to secure his defeat.
11:35 am – Biegun says – we need quality agreements. This is pretty impressive – five of the country’s leading advocates for the Korea FTA were asked if we could really double exports in five years (as per the president’s plan), and if these three deals were necessary. None said yes and yes, let alone cited any specific numbers. It was all happy talk about openness…
11:32 am – Paulson says, we can’t just let the pieces fall where they may – we have to get active! (Is that an anti-laissez faire statement? Sounds like managed trade to me!) Stallman says “I don’t think we can do it without signing agreements.” Not a super hearty endorsement of these 3 NAFTA style deals. Toppeta says, “we can do it with the FTAs.”
11:31 am – Rep. Devin Nunes (R-Calif.) asks a great question: is the president’s goal of doubling exports to $2 trillion a realistic goal, and are the NAFTA-style deals necessary to get there?
11:24 am – Rep. Kevin Brady (R-Texas) asks a Herger-Johnson type question. Paulson says that, we have to put up a sign on our front door that says, “we’re open for business.” It seems like supporting initiatives that would actually result in significant gains for U.S. workers – like a rebalancing of our currency policy with China – would be a much better way of showing how serious about business we are. The NAFTA-style deal seems like a sign for “we’re open to corporate ideology, go talk business with someone who cares about job creation.”
11:20 am – Ah, it’s that Dems drive “tough bargains” (I guess like tinkering around the edges of tariff phase out periods for cars), while Republicans will just accept “any old deal.” Nice try, but I don’t think it’ll provide sufficient political cover for Dems to vote for a NAFTA-style deal with Korea or Panama that still allows offshore corporations to challenge measures to rein in Wall Street excesses.
11:18 am – Rep. Charles Rangel (D-N.Y.), the former Ways & Means chair, is following Levin’s lead, and asking about whether the panelists would have supported the FTA if it didn’t address automotive trade. I’m a little unclear on the political strategy here…
11:12 am – Reps. Wally Herger (R-Calif.) and Sam Johnson (R-Texas) are asking export-focused questions. The witnesses are making the argument that “we have to stop sitting on our hands.” Paulson says that, it’s not even about the gains from a trade deal, but about sending a vision to the world that we’re not sitting still. When did our public policy debate generate into something out of a magic crystals workshop?
11:05 am – Levin asks Toppeta an interesting question: would you support the trade deal if it didn’t give handouts to Metlife and other financial service firm. Toppeta says that he would, that he would look at the broader export interests. He notes Metlife didn’t even do business in Colombia, but supported the NAFTA model being exported there. In other words, corporations are willing to support these deals on an ideological basis. Yet another indication that these deals are not about trade, exports or jobs – but about creating a pro-corporate global governance system.
11 am – Camp asks each witness how the FTAs will help the U.S. compete against China. Paulson doesn’t answer the question. Stallman says that the Korea FTA helps establish a “beachhead in Asia.” Ducker repeats the metaphor. This seems like a particularly poor taste metaphor with respect to the war-split Korea, where the U.S. Navy continues to celebrate our “beachheads” in Korea. The boosters of the NAFTA-style deal with Korea, when they cede that it won’t do much for jobs, like to turn to the foreign policy argument of cozying up close to the South Korean allies. We better ditch the military metaphors if we want anything but rejection of America from the Seoul Streets.
10:55 am – Camp is asking each witness, point blank, will these trade agreements create U.S. jobs? The witnesses either dodged the question, or just stated “yes.” No citation of how they’re getting these numbers, which are at odds with International Trade Commission’s finding that the Korea and Colombia FTAs will increase the U.S. global trade deficit.
10:53 am – Biegun is citing the gains in manufacturing in the recent recession. What?? I guess you have to lose a million jobs, then get a slight bounceback to be able to cite any gains.
10:48 am – Stephen Biegun of Ford Motor Company is up. This is a rough testimony to hear. Ford had opposed the deal, but then flip-flopped after the Obama December 2010 deal. But the U.S. government’s own numbers show that – once the agreement is fully phased in – the U.S. auto sector will be a big loser from it. The December deal doesn’t change the underlying terms that led to that conclusion.
10:45 am – According to Toppeta, beating down regulatory barriers in Korea for U.S. financial firms somehow helps create U.S. jobs. But as Rep. Sander Levin (D-Mich.) has said in the past, “We should be supportive of efforts to curb hot money, which can have a destabilizing effect on the global financial system.” This in turns causes the economy to shed jobs. The destabilizing effect of the pro-Wall Street provisions in these trade deals outweigh any so-called “headquarter effect” that Toppeta cites.
10:43 am – Toppeta from Metlife, the life insurance company, is up. Why is a financial service provider interested in a “trade” deal, you wonder? Well, it’s a bit of a dirty secret of NAFTA-style trade deals that their thousand pages of text have surprisingly little to do with trade in stuff we make here, and send abroad.
Instead, they’re about the rules that governments can follow when regulating their domestic economy, including how they regulate their financial sectors. The FTA’s Financial Services chapter reflects the pro-deregulation mentality that helped foster the worst financial crisis since the Great Depression. More than other FTAs, it has been justified for its role in pushing financial liberalization and deregulation. Bush administration fact sheets note: “The Financial Services Chapter of the United States-South Korea Free Trade Agreement … is a groundbreaking achievement, providing more extensive provisions related to financial services than ever before included in a U.S. FTA.” Citigroup stated that “it is the best financial services chapter negotiated in a free trade agreement to date.” Does Congress want to support financial services policies celebrated by an administration and firm that wrecked the economy?
10:39 am – Dave Camp did not ask Public Citizen to testify, or indeed anyone from the fair trade community, despite the fact that polls and election returns show the vast majority of the public is against these deals. We did submit testimony for the written record, which you can find here.
10:35 am – Stallman is citing figures touting eventual farm export gains from the three NAFTA-style deals. However, as we saw with U.S. trade with Mexico post-NAFTA, there is nothing in these deals to prevent countries from devaluing their currencies – effectively re-imposing tariffs on U.S. products. Korea has a history of currency manipulation, meaning that any farm trade gains could easily be wiped out – and the U.S. would just have to accept it, as our family farms continue to dwindle. See more here.
10:32 am – Stallman of the agribusiness lobby is now up.
10:28 am – Paulson is stating that we have a manufacturing trade surplus with our FTA partners. That’s only true if you include so-called re-exports, i.e. goods that are not made by U.S. workers, but which pass through U.S. ports on their way to other countries. Thanks to accounting shenanigans, these re-exports are included in the exports totals cited by the Obama administration – artificially inflating these numbers, and lowering our deficits.
10:25 am – The first witness is Paulson, representing the NAM – a key business lobby pushing NAFTA-style trade deals.
10:22 am: Levin cited the recent tax information exchange agreement between the U.S. and Panama, and called on the government of Panama to implement it. As we show here, that’s just the beginning of what needs to be changed with the Panama deal. Namely, we need to deal with the fact that the Panama FTA will allow 400,000 offshore banks and other corporations registered in Panama to challenge U.S. anti-tax haven policies for cash compensation.
10:20 am: Levin is citing the key stats on the unbalanced auto sector trade with Korea. Yep, it’s troubling. Of course, even after Obama’s tweaks to the deal in December 2010, up to 65 percent of the content in “Korean” cars could come from China or North Korea, and still get preferential treatment under the FTA. This offshoring provision helps neither U.S. nor Korean auto workers.
10:17 am: Ranking Member Sander Levin (D-Mich.) is giving his take on the three pending trade deals. He is touting his side’s role in making partial improvements to the Peru trade deal – changes which left unaddressed most of fair traders’ demands – such as the call to remove special privileges for Wall Street to attack financial stability policies and speculation taxes.
10:15 am: Camp predicts catastrophe if the U.S. fails to implement the so-called “free trade agreements” (FTAs). The high-end estimate (misleading, as I’ll show later) of 70,000 jobs “supported” by the FTA are what our country needs to create in about four hours in order to solve our employment crisis.
10:13 am: Camp is touting his committee’s new “study” showing supposedly lost U.S. exports to Colombia from the failure to enact the trade deal with that country. This is a bogus line of argument: U.S. export growth to countries we have NAFTA-style trade deals with is less than half that exports to other countries, as we show here.
10:11 am: Now the hearing on the trade deals is starting up. Camp is making a big deal of the fact that the hangover Bush deals with Panama, Korea and Colombia were, well, hungover. This line of argument is part of Camp’s effort to try to jam the administration into taking on not just one NAFTA-style deal with Korea, which would be bad enough, but also the full three deals.
10:07 am: Things are just getting started here. Since this is the first hearing of the year, Camp is announcing the subcommittee assignments. One of the casualties of the GOP sweep in last year’s elections was the loss of the total number of Democratic seats on the committee. Rep. Linda Sanchez (D-Calif.), a fair trade champion, was one who lost her committee seat.
After the new Republican majority was seated in the House of Representatives, incoming House Ways & Means Committee Dave Camp (R-Mich.) wasted no time in calling a hearing on the NAFTA-style trade deals with Korea, Panama and Colombia. If you had any doubt as to where Camp would be coming down on these job-offshoring pacts, look no further than the front page of the Ways & Means Committee webpage, newly converted into a propaganda center for more NAFTAs.
Today’s hearing, set to start any moment, is no exception. A full five out of five witnesses are supporters of the Korea deal, including:
Roy Paulson, President, Paulson Manufacturing Corporation, on behalf of the National Association of Manufacturers
Bob Stallman, President, American Farm Bureau Federation
Michael L. Ducker, Chief Operating Officer and President, International, FedEx Express
William J. Toppeta, President, International, MetLife
Stephen E. Biegun, Corporate Officer and Vice President of International Governmental Affairs, Ford Motor Company
I’ll be liveblogging and fact-checking the hearing for the next few hours, so grab some Pepto Bismol – you’ll definitely need it to stomach what you’re about to hear. Feel free to follow along: the Committee is live-streaming the hearing here.