Free trade -- the difference a decade makes.
Today the Senate passed CAFTA-DR, 54-45, but the real battle over the bill is coming up in the House, where even the Blue Dog Caucus (largely southern and southwestern Dems) opposes.
I've been painstakingly avoiding following the CAFTA debate, and thereby forming an opinion about it. The free trade debate is the most complicated and polarizing debate in American politics, splintering both parties, and it's probably the one real issue that will continue to define the centrist from the left or liberal wing of the Democrats. The agreements themselves are behemoths (NAFTA was over 1200 pages long.) Both sides tend to make awful arguments, rendering the debate difficult and depressing. On the anti- side, you get endless stupidity like this: "Under the guise of the war on terror, free trade agreements oppress opposition by calling anyone who demands their human rights a terrorist for threatening their company's profit-making ability". Oh. (That PDF brochure is linkable off the site Stop CAFTA, which is the first hit for "CAFTA" on Google. To be fair, Stop CAFTA also links to this far more reasonable and informative (though out-of-date) criticism of CAFTA, from the Washington Office of Latin America. On the other side, CAFTA supporter Pat Roberts (R-KS) perfectly summed up the pro-free-trade side's cynicism in today's New York Times, piously claiming that "I'm concerned about environmental concerns in these countries, and the labor concerns in regard to these countries, but trade agreements are not the appropriate forum for addressing these issues." I agree with Roberts to some extent here -- Jagdish Baghwati makes the same argument about the need to limit trade agreements to trade rather than expanding them to legislate on peripheral trade issues very convincingly -- but it would be easier to take Roberts seriously if he didn't have a recent AFL-CIO rating of 17 and a recent LOCV rating of 0 (both out of 100).
The CAFTA debate does give a view into the prevailing forces within the parties at a point in time though. And, among Democrats, things have changed a lot since 1993. For instance, the Senate roll call for NAFTA was 61-38, with Bryon Dorgan (D-ND) abstaining, and that was with a 57-43 Democratic advantage in the Senate. 27 Democrats, just under half the caucus, supported NAFTA back then. And there was no clear ideological -- though definitely a regional -- split among the voters (liberals Leahy (D-VT), Harkin (D-IA), Moseley-Braun (D-IL) and Kennedy (D-MA) voted yea; conservatives Exen (D-NE), Heflin (D-AL) Shelby (D-AL) voted nay).
The CAFTA roll call, by contrast, saw only 10 of the 44 Senate Democrats support the bill -- Lieberman, out of Senate for his mother's funeral, would have made it 11 -- and this time there was a fairly clear ideological split in the voting with basically the remaining moderate-to-conservative Democrats voting yea and the liberals voting nay. (12 of 55 Republicans voted nay, marking roughly the same support the party showed for NAFTA). Of the Dem Senators who were around back in 1993, Feinstein (D-CA) switched to support CAFTA having rejected NAFTA. Kerry (D-MA), Kennedy (D-MA), Harkin (D-IA), Johnson (D-SD), Dodd (D-CT) and Leahy (D-VT) went the other way.
Anti-Bush partisan sentiment marked part of this shift of course, and the fact that there was no Democratic president pushing the agreement like there was in 1993 (plus, no lingering resentment toward Ross Perot). But the shift also marks the rising popular opposition to free trade agreements brought about by the 2000-2001 recession, the initially jobless recovery and the resulting (and largely overstated) fear of outsourcing.
Was CAFTA supportable? Last week's Economist made the sensible argument that, while it needed to pass in order to signal support for free trade, the agreement is stupid and politically retrograde. US tariffs on Central American products are already extremely low. And it's silly to make the future of free trade dependent on the future of bad little trade deals -- the Bushies painted themselves into a corner where "if this agreement goes down, it will signal to the rest of the world that America's leadership role in trade is being abdicated., as the Bushies' trade rep puts it. The future of free trade is global and administerable through the WTO which, even Joseph Stiglitz argues, has begun to prove itself independent of narrow American interests and increasingly (though certainly not sufficiently) interested in promoting fair trade, particularly for African agriculture. Both capitalistic and "fair" trade advocates, from both the first and developing worlds, should fight their battles in that forum, not through bi- or multilateral agreements. (And obviously the WTO needs more reform and more transparency; it needs forces to make it more like the current World Bank and less like the current IMF. But that's more achievable if critics of current trade law focus their energies there and not in the US House and Senate.)
There were two basic problems with NAFTA that might make a agreement based on that model unsupportable. The first ties back to the Economist's argument: trade deals between a big rich country and a little poor country or countries, when not immediately supervised by a global referee, result in a lot of bullying by the big rich country of the small country. Stiglitz explains one example in The Roaring Nineties:
After the agreement bringing free trade between America and Mexico was signed, America looked for new ways to keep out those goods that were successfully competing with the United States. It tried to keep out Mexican avocadoes, for example, claiming they would bring with them fruit flies that would destroy our California crops. When the Mexicans responded by allowing U.S. Department of Agricultures inspectors into their country , and they could not find evidence of fruit flies, the Americans said, "But of course, they are small and hard to see." Then the Mexicans offered to sell avocadoes only to the Northeast in the middle of the winter -- the cold air would be instant death to any fruit fly -- and America still baulked... Only when Mexico threatened to retaliate by throwing up trade barreiers to American corn did America come to its senses.
The second problem with NAFTA was its dark secret: investor protections, contained in the infamous "Chapter 11". In a nutshell, investor protection law, as inscribed in NAFTA's Chapter 11 (and, according to Stiglitz, with consequences unknown to the Clinton Admin during negociations, although that's hardly a defence of their not having lawyers to comb the document in search of corporate-lawyer shinanegans) meant that a multinational firm, once set up in a foreign country under a given set of labour and environmental laws, can sue that country's government for damages if the government deigns to change those laws. This has actually happened in Ontario by an American firm manufacturing the gasoline additive MMT; in California by a Canadian firm manufacturing the chemical additive MBTE; and, worst of all because due to the weaker government there, in San Luis Potosi, Mexico, by an American firm that wanted to re-open a toxic waste dump, as detailed in this appalling expose by Bill Moyers' NOW.
This, by the way, isn't to be confused with the standard liberal argument against CAFTA that it only forces participating countries to enforce their own weak labour laws rather than enshrine new ones under ILO auspices (a more viable variant on the complaint is that CAFTA doesn't include provisions for enforcing current labour laws). As a free trader, I don't have much sympathy for this argument (and even less for the screams of the American sugar lobby that has been corrupting American politicians, and destroying the Everglades, since time immorial. They were even tangentially mixed up in the Lewinsky scandal. I'm not kidding.) International agreements shouldn't force countries to upgrade their own labour standards, for exactly the same reason that they shouldn't allow multinationals to sue (or unduly pressure) governments that do change their standards. A company that moves into a developing country has to accept that country's laws, which fit its (and not the AFL-CIO's) own development status. But the company also has to accept the risk that the those laws will change, just like it would at home. In fact labour and environmental law should change as the developing country gets richer. To the extent possible, provisions and funds should be included in trade agreements to prevent multinationals from meddling in other countries' domestic politics beyond what the national election laws allow. Given how likely such meddling is, I'm also very open to the argument that the trade deals should mandate funds to assist the home governments in their monitoring and enforcing of current nationally-approved labour and environmental standards, though this isn't a dealbreaker for me. (Some of these funding provisions have apparently been added to CAFTA to help it slide through).
Between the pious and hypocrtical odes to the increasingly murky concept of comparative advantage and (naturally) "freedom" from the Bush Admin's CAFTA proponents (even as they, once again, bought of the sugar industry) and the (often equally) pious and hypocritical complaints from opponents of free trade about those poor Central American workers (even as the presidents of the six candidate countries have lobbied hard for the agreement to pass, granted against a degree of domestic political and popular opposition), I haven't yet read anything that clears up the investor protections issue, which would determine my vote on CAFTA. I hate "pox on both houses" journalism and the culture of cynical centrism. But when it comes to trade, it's actually pretty appropriate.
Update: While doing some belated research, I stumbled on an old post from the blog Tisiwoota. The author directs readers to a May press release from three Democratic House members, including Henry Waxman of California, and to excerpts from an L.A. Times article (no longer available online) about another problematic aspect of the bill: it rather dramatically extents the pharmaceutical comapanies' rights to patent extentions in the affiliated countries over what was allowed under NAFTA. Additionally, according to the Times, it contains disincentives to generic drug manufacturers (such as a new requirement to run their own clinical trials) that may make it more difficult for developing countries to invoke the public health compulsory licensing provision under WTO law to produce their own generics. It's hard to know if these provisions would actually provoke the potential health crisis in CAFTA countries, but the possibility would be enough to make me vote against the bill. Thumbs down on CAFTA.
I've been painstakingly avoiding following the CAFTA debate, and thereby forming an opinion about it. The free trade debate is the most complicated and polarizing debate in American politics, splintering both parties, and it's probably the one real issue that will continue to define the centrist from the left or liberal wing of the Democrats. The agreements themselves are behemoths (NAFTA was over 1200 pages long.) Both sides tend to make awful arguments, rendering the debate difficult and depressing. On the anti- side, you get endless stupidity like this: "Under the guise of the war on terror, free trade agreements oppress opposition by calling anyone who demands their human rights a terrorist for threatening their company's profit-making ability". Oh. (That PDF brochure is linkable off the site Stop CAFTA, which is the first hit for "CAFTA" on Google. To be fair, Stop CAFTA also links to this far more reasonable and informative (though out-of-date) criticism of CAFTA, from the Washington Office of Latin America. On the other side, CAFTA supporter Pat Roberts (R-KS) perfectly summed up the pro-free-trade side's cynicism in today's New York Times, piously claiming that "I'm concerned about environmental concerns in these countries, and the labor concerns in regard to these countries, but trade agreements are not the appropriate forum for addressing these issues." I agree with Roberts to some extent here -- Jagdish Baghwati makes the same argument about the need to limit trade agreements to trade rather than expanding them to legislate on peripheral trade issues very convincingly -- but it would be easier to take Roberts seriously if he didn't have a recent AFL-CIO rating of 17 and a recent LOCV rating of 0 (both out of 100).
The CAFTA debate does give a view into the prevailing forces within the parties at a point in time though. And, among Democrats, things have changed a lot since 1993. For instance, the Senate roll call for NAFTA was 61-38, with Bryon Dorgan (D-ND) abstaining, and that was with a 57-43 Democratic advantage in the Senate. 27 Democrats, just under half the caucus, supported NAFTA back then. And there was no clear ideological -- though definitely a regional -- split among the voters (liberals Leahy (D-VT), Harkin (D-IA), Moseley-Braun (D-IL) and Kennedy (D-MA) voted yea; conservatives Exen (D-NE), Heflin (D-AL) Shelby (D-AL) voted nay).
The CAFTA roll call, by contrast, saw only 10 of the 44 Senate Democrats support the bill -- Lieberman, out of Senate for his mother's funeral, would have made it 11 -- and this time there was a fairly clear ideological split in the voting with basically the remaining moderate-to-conservative Democrats voting yea and the liberals voting nay. (12 of 55 Republicans voted nay, marking roughly the same support the party showed for NAFTA). Of the Dem Senators who were around back in 1993, Feinstein (D-CA) switched to support CAFTA having rejected NAFTA. Kerry (D-MA), Kennedy (D-MA), Harkin (D-IA), Johnson (D-SD), Dodd (D-CT) and Leahy (D-VT) went the other way.
Anti-Bush partisan sentiment marked part of this shift of course, and the fact that there was no Democratic president pushing the agreement like there was in 1993 (plus, no lingering resentment toward Ross Perot). But the shift also marks the rising popular opposition to free trade agreements brought about by the 2000-2001 recession, the initially jobless recovery and the resulting (and largely overstated) fear of outsourcing.
Was CAFTA supportable? Last week's Economist made the sensible argument that, while it needed to pass in order to signal support for free trade, the agreement is stupid and politically retrograde. US tariffs on Central American products are already extremely low. And it's silly to make the future of free trade dependent on the future of bad little trade deals -- the Bushies painted themselves into a corner where "if this agreement goes down, it will signal to the rest of the world that America's leadership role in trade is being abdicated., as the Bushies' trade rep puts it. The future of free trade is global and administerable through the WTO which, even Joseph Stiglitz argues, has begun to prove itself independent of narrow American interests and increasingly (though certainly not sufficiently) interested in promoting fair trade, particularly for African agriculture. Both capitalistic and "fair" trade advocates, from both the first and developing worlds, should fight their battles in that forum, not through bi- or multilateral agreements. (And obviously the WTO needs more reform and more transparency; it needs forces to make it more like the current World Bank and less like the current IMF. But that's more achievable if critics of current trade law focus their energies there and not in the US House and Senate.)
There were two basic problems with NAFTA that might make a agreement based on that model unsupportable. The first ties back to the Economist's argument: trade deals between a big rich country and a little poor country or countries, when not immediately supervised by a global referee, result in a lot of bullying by the big rich country of the small country. Stiglitz explains one example in The Roaring Nineties:
After the agreement bringing free trade between America and Mexico was signed, America looked for new ways to keep out those goods that were successfully competing with the United States. It tried to keep out Mexican avocadoes, for example, claiming they would bring with them fruit flies that would destroy our California crops. When the Mexicans responded by allowing U.S. Department of Agricultures inspectors into their country , and they could not find evidence of fruit flies, the Americans said, "But of course, they are small and hard to see." Then the Mexicans offered to sell avocadoes only to the Northeast in the middle of the winter -- the cold air would be instant death to any fruit fly -- and America still baulked... Only when Mexico threatened to retaliate by throwing up trade barreiers to American corn did America come to its senses.
The second problem with NAFTA was its dark secret: investor protections, contained in the infamous "Chapter 11". In a nutshell, investor protection law, as inscribed in NAFTA's Chapter 11 (and, according to Stiglitz, with consequences unknown to the Clinton Admin during negociations, although that's hardly a defence of their not having lawyers to comb the document in search of corporate-lawyer shinanegans) meant that a multinational firm, once set up in a foreign country under a given set of labour and environmental laws, can sue that country's government for damages if the government deigns to change those laws. This has actually happened in Ontario by an American firm manufacturing the gasoline additive MMT; in California by a Canadian firm manufacturing the chemical additive MBTE; and, worst of all because due to the weaker government there, in San Luis Potosi, Mexico, by an American firm that wanted to re-open a toxic waste dump, as detailed in this appalling expose by Bill Moyers' NOW.
This, by the way, isn't to be confused with the standard liberal argument against CAFTA that it only forces participating countries to enforce their own weak labour laws rather than enshrine new ones under ILO auspices (a more viable variant on the complaint is that CAFTA doesn't include provisions for enforcing current labour laws). As a free trader, I don't have much sympathy for this argument (and even less for the screams of the American sugar lobby that has been corrupting American politicians, and destroying the Everglades, since time immorial. They were even tangentially mixed up in the Lewinsky scandal. I'm not kidding.) International agreements shouldn't force countries to upgrade their own labour standards, for exactly the same reason that they shouldn't allow multinationals to sue (or unduly pressure) governments that do change their standards. A company that moves into a developing country has to accept that country's laws, which fit its (and not the AFL-CIO's) own development status. But the company also has to accept the risk that the those laws will change, just like it would at home. In fact labour and environmental law should change as the developing country gets richer. To the extent possible, provisions and funds should be included in trade agreements to prevent multinationals from meddling in other countries' domestic politics beyond what the national election laws allow. Given how likely such meddling is, I'm also very open to the argument that the trade deals should mandate funds to assist the home governments in their monitoring and enforcing of current nationally-approved labour and environmental standards, though this isn't a dealbreaker for me. (Some of these funding provisions have apparently been added to CAFTA to help it slide through).
Between the pious and hypocrtical odes to the increasingly murky concept of comparative advantage and (naturally) "freedom" from the Bush Admin's CAFTA proponents (even as they, once again, bought of the sugar industry) and the (often equally) pious and hypocritical complaints from opponents of free trade about those poor Central American workers (even as the presidents of the six candidate countries have lobbied hard for the agreement to pass, granted against a degree of domestic political and popular opposition), I haven't yet read anything that clears up the investor protections issue, which would determine my vote on CAFTA. I hate "pox on both houses" journalism and the culture of cynical centrism. But when it comes to trade, it's actually pretty appropriate.
Update: While doing some belated research, I stumbled on an old post from the blog Tisiwoota. The author directs readers to a May press release from three Democratic House members, including Henry Waxman of California, and to excerpts from an L.A. Times article (no longer available online) about another problematic aspect of the bill: it rather dramatically extents the pharmaceutical comapanies' rights to patent extentions in the affiliated countries over what was allowed under NAFTA. Additionally, according to the Times, it contains disincentives to generic drug manufacturers (such as a new requirement to run their own clinical trials) that may make it more difficult for developing countries to invoke the public health compulsory licensing provision under WTO law to produce their own generics. It's hard to know if these provisions would actually provoke the potential health crisis in CAFTA countries, but the possibility would be enough to make me vote against the bill. Thumbs down on CAFTA.
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