Obama Trade Czar Testifies on NAFTA Expansions – Liveblog
The Ways and Means Committee is having its second hearing on the NAFTA expansions to Korea, Panama and Colombia. The hearing is also looking at problematic attempts to expand the World Trade Organization’s restrictions on domestic regulations, and the Trans-Pacific Free Trade Agreement (FTA). The U.S. Trade Representative, Ron Kirk, is testifying. I’ll be live-blogging, and attempt to provide a real-time fact check. (If you want to watch the live feed, go here.)
10:25 am: Chairman Dave Camp (R-Mich.) kicked off today’s hearing, and his earlier testimony with pro-corporate trade groups, with the claim that:
As you know, these agreements have the potential to add over $10 billion to our economy and will help to reinforce critical strategic partnerships. Using the President’s own measure, that kind of expansion to our exports could create up to 250,000 new American jobs.
This is a distorted reading of a distorted method. President Obama’s 70,000 jobs number is an illegitimate pairing of Commerce Department jobs-exports multipliers, married to a completely different methodology from a different agency, the International Trade Commission – which does not make jobs estimates. Obama then only considers one quadrant of the International Trade Commission’s findings (bilateral exports), but fails to take into account the impact of imports, or the ITC’s projected increase in the overall global trade deficit from the Korea FTA. Camp takes the distortion a step further by flipping the ITC’s methods on its head, as we go into more detail here. In any case, this mega-distorted simulation finds – Tea Party folks, hold your hats – that the job gain from the Korea FTA comes primarily in the service sector, government jobs, to be exact.
10:28 am: Ron Kirk gave a pretty brisk statement, overviewing most every trade issue inherited from the Bush administration. Kirk is reiterating the administration’s line on the NAFTA expansions to Panama and Colombia: we want to finalize them, but we’re still working behind the scenes. Camp lashed out at Kirk, saying he wanted them moved faster. That’s Panama, the tax haven; Colombia, the union murder capital of the world. For the record.
10:31 am: Camp says, “The time for generalities has passed… we need benchmarks for moving forward.” Kirk says, “I want to do that, Mr. Chairman. But we’re using the same process we used last year, to talk with our partners.”
10:32 am: Camp asks, “Is there anything left to do on Panama?” Kirk notes only labor rights issues. Does this mean that Panama is no longer a tax haven, despite their failure to pass the OECD test on tax haven abuses that even the Cayman Islands passed?
10:34 am: Ranking Member Sander Levin (D-Mich.) is questioning Kirk. He mentions that his concerns with Panama were “very specific.” A few labor problems, a few tax problems – but no questioning of the NAFTA-style provisions incorporated into all these deals that make regulating Wall Street more difficult, that will make fighting tax havens more difficult. Panama, and the panoply of banks registered there, will be able to challenge efforts by future administrations to fight tax haven abuses in Panama, as we lay out here.
10:36 am: Kirk is stating that the administration’s trade policy is to get the highest standards in every area. This seems like a pretty thoroughgoing endorsement of the investment and financial services provisions in these trade deals that give Wall Street huge handouts they don’t need.
10:40 am: Rep. Wally Herger (R-Calif.) is haranguing Kirk with Obama’s repeated comments in favor of the NAFTA expansion to Colombia. I would totally agree that Obama’s repeated comments on Colombia are misguided, for totally different reasons. Every time he does so, Obama reminds those “bitter” working class voters that he’s willing to sign a deal that goes against their economic interests. It’s clear from Herger’s comment that these comments also aren’t satisfying the corporate community. So, what are these comments getting him?
10:43 am: It’s clearly hurting Kirk that he can’t send the Panama and Colombia deals to Congress, saying he “wants to do that. But we can’t.”
10:45 am: Rep. Sam Johnson (R-Texas) is bonding with Kirk (a former Dallas mayor) about Texas and football.
10:46 am: Johnson makes a rhyme: “we signed these deals in two-thousand seven, but now it’s two-thousand eleven.”
10:47 am: Kirk says, “some people were skeptical of me coming from Texas, since we are pro-trade. We have a passion for exports in Texas.”
10:50 am: Kirk is citing an African proverb: “you should take no comfort from a hole in my side of the boat.” I actually love that quote – it captures what even conservative economists admit, that trade liberalization would increase income inequality – but benefit those at the top. That is, even the most conservative take on the issue is that, for trade deals to be beneficial, they would have to be coupled with massive tax increases on the wealthy to transfer the benefits to workers, who see their relative share of the pie go down. But that agenda – trade liberalization, if it involves transfers from the rich – “isn’t going anywhere in the House“, as Dave Camp said today with respect to even modest unemployment insurance reform.
10:53 am: Rep. Jim McDermott (D-Wash.), the new ranking member on the Ways & Means Committee’s trade subcommittee, is pressing Kirk to more rigorously protect intellectual property of U.S. software abroad. This is a clear way that “free trade” agreements actually increase barriers to trade, by getting the State in the business of telling private entrepreneurs what they can sell, where and when. This is a double standard my colleague Dean Baker has called a lot of attention to.
10:55 am: Kirk cites the May 10, 2007 deal as the basis of the administration’s approach to trade policy, supposedly because it brought the various sides of the trade debate together. Actually, as the Post reported, this deal failed to address most of the key issues raised by labor, and union leaders were treated pretty darn roughly in the process of hashing it out.
11:29 am: Rep. Dave Reichert (R-Wash.) is taking the distortions of methodology a step further. Rather than looking at the projections of job losses if the FTAs are implemented, he is making the claim that failure to pass the deals will create jobs. Um, Panama? A tiny market the size of a U.S. city. Kirk seems to acknowledge this criticism, but states that “every market is an opportunity.” Okay, even taking that claim at face value, where’s the (political or economic) cost-benefit analysis of Obama taking up Bush’s leftover NAFTA expansions, widely hated by the voting public?
11:33 am: Not only is Kirk not backing away from the NAFTA-style provisions that allow corporations to challenge public interest laws for cash compensation, he’s actually touting a potential investment treaty with China that would allow Chinese firms to challenge U.S. environmental and financial regulatory laws for our taxpayer money.
11:38 am: And not just truly Chinese firms, but also any firm that happens to register in China from any country.
11:40 am: Kirk touts the supposedly major concessions that the tax haven nation of Panama made to Tim Geithner. Actually, Panama hasn’t yet passed the legislation to eliminate bank secrecy. Legislation that deals with a small part of the problem has been submitted to Panama’s National Assembly. Local banks and legislators have promised to push against this vote.
11:45 am: Rep. Pete Roskam (R-Ill.) is whining about the problems that Illinois companies face when they offshore U.S. jobs to China. Apparently the Chinese government tries to regulate them, and doesn’t always do what they want. So Roskam is pushing for NAFTA-style provisions in an investment agreement with China, that would offer these offshoring firms political insurance against being too regulated in China. Hard to work up much sympathy for these offshorers…
11:48 am: Kirk is claiming that every congressional district has “at least tens of thousands of workers that will benefit from this agreement.” What? 10,000 x 435 ? That’s equal to 4.35 million. From a Korea trade deal?? Seems like Kirk is wondering a bit off script there. The Obama administration has been pretty religious about sticking to their “support 70,000 jobs” claim. If you want to see, on a district by district basis, the jobs that are at risk from the Korea FTA, see this feature.
11:56 am: Rep. Lloyd Doggett (D-Texas) notes that the ITC study shows negligible gains at best from the three NAFTA-style deals. Doggett asks for assurances that Panama will be fully compliant and implement banking secrecy changes before the FTA is submitted to Congress. Kirk dodges the question, says that the Treasury is taking the lead on the issue. Doggett says, “just as you can be declared legally dead after not being seen for seven years, Panama has not taken action on tax haven commitments for seven years.”
12 pm: Rep. Adrian Smith (R-Neb.) is touting agriculture as gainer from these FTAs. Actually, these deals do nothing to address currency manipulation, and Korea has historically been a user of these tools. You can drop tariffs by 20 percent, devalue your currency by 50 percent, and that’s the same as an effective tariff increase of 30 percent. Mexico devalued right after NAFTA was signed, and there was nothing the U.S. could do under the agreement. Moreover, low-wage Asian economies already have FTAs with Korea at zero tariffs. So, it’s a bit of an illusion to think that agriculture has been or will be a beneficiary.
12:04 pm: Rep. Adrian Schock (R-Ill.) is asking, “who are these labor groups that oppose these deals?” He notes that teachers’ unions and others have been concerned about human rights issues in Colombia, but questions their legitimacy. Pretty callous attitude towards union murders in the union murder capital of the world.
12:21 pm: Rep. Erik Paulsen (R-Minn.) is pushing Kirk for a time-line on Trans-Pacific FTA talks, or NAFTA with ‘Nam. Kirk is ch0mping at the bit to wrap that one up too. Can you even imagine the political fallout for a NAFTA style deal with the Socialist Republic of Vietnam? Workers won’t like it, and neither will the Tea Party.
12:28 pm: Rep. Bill Pascrell (D-N.J.) is noting that the Trans-Pacific FTA allows the administration to overhaul our trade policy. He’s bringing up the lack of democracy in Vietnam, and state control over businesses there.
12:29 pm: Camp is closing the hearing. I gotta say, he runs a really efficient hearing. He sticks strictly to the amount of time for each member, and is pretty focused and concise in his questioning. Now, if only he could use it for fair trade rather than NAFTA-style trade…