Reports from the Economic Front

a blog by Marty Hart-Landsberg

Telling Lies About Trade

Warning: The trio of agreements being pushed by the US government–the Transpacific Partnership, The Transatlantic Trade and Investment Partnership, and the Trade in Services Agreement—are all dangerous to our health and well-being.

President Obama claims otherwise.  For example, as Lauri Wallach notes:

President Barack Obama has launched unprecedented attacks on the very notion that the [Transpacific Partnership] pact could undermine public interest policies. For instance, in a high profile May 2015 speech at Nike headquarters, Obama said that critics’ warnings that the TPP could “undermine American regulation — food safety, worker safety, even financial regulations” was “just not true.” He said: “They’re making this stuff up. No trade agreement is going to force us to change our laws.”

Well, here is something not made up.  In December, the WTO ruled that the US County-of-Origin-Labeling (COOL) law for meat (beef, pork, and poultry) violates global trade rules and authorized Canada and Mexico to impose more than $1 billion in trade sanctions on the US each year until the US Congress repeals it.

Canadian and Mexican governments won an initial WTO ruling against COOL in 2011.  The Obama administration tinkered with the law in 2013 hoping to avoid sanctions, but both governments pressed their case.  Finally, in May 2015 the WTO tribunal ruled that COOL still violated the Technical Barriers to Trade Agreement (TBT) and in December authorized the sanctions.

The Technical Barriers to Trade Agreement, in the words of the WTO, “aims to ensure that technical regulations, standards, and conformity assessment procedures are non-discriminatory and do not create unnecessary obstacles to trade.” More specifically that means that a country cannot pass legislation related to the process of production of a good that might hurt sales of a foreign good even if the legislation was not designed for that purpose.

Perhaps not surprisingly, many in the US House and Senate, with the urging of the Secretary of Agriculture, are now calling for the elimination of the law despite the fact that it enjoys strong popular support.

According to a Food Safety News report:

Canada and Mexico initially sought more than $3 billion in retaliatory tariffs. The United States Trade Representative (USTR) said this was a dramatic overestimation of damages and argued that the WTO set allowable tariffs at no more than $43.22 million and $47.55 million for Canada and Mexico, respectively.

WTO decided . . . that Canada could impose $780 million in retaliatory tariffs for COOL, and Mexico could impose $228 million. . . .

Over the summer, many in Congress called for a full repeal of COOL for beef, pork and chicken, and the House of Representatives passed a bill which would do just that. Others . . . said action had to wait at least until WTO had approved tariff levels. Sen. Debbie Stabenow (D-MI) offered up a bill to make COOL on meat voluntary. . . .

“The WTO has warned us multiple times, and Congress has ignored the warning,” said Sen. Pat Roberts (R-KS), chairman of the Senate Committee on Agriculture, Nutrition and Forestry, in reaction to WTO’s decision Monday. “This is no longer a warning. Retaliation is real. Now more than ever, we need to repeal COOL.”

Unfortunately, this is not the only US product law successfully challenged.  In November, the WTO ruled for Mexico against the US dolphin-saving labeling program for tuna, citing it as a violation of the TRT.  As the Sierra Club explains:

Since 1990, the United States has maintained a “dolphin-safe” labeling program for tuna that allows consumers to choose to purchase tuna caught in a manner that does not kill dolphins. The “dolphin-safe” label has contributed to a 97-percent reduction in dolphin deaths since the 1980s in Pacific waters where dolphins and tuna cohabitate.

[The November] ruling marks the fourth time that the WTO has ruled against the U.S. label in the last four years and means that the U.S. could face WTO-authorized trade sanctions for maintaining the dolphin-saving label.

What makes the three proposed new agreements noted above especially threatening is that they all include an investor-state dispute settlement mechanism.  The WTO only allows governments to sue governments.  These investor-state dispute settlement mechanisms allow corporations to directly sue governments.  This is a critical change, one that will greatly increase the number of challenges to US consumer protection, environmental, and health and safety laws.

Who is Obama kidding?

eight_col_tpp

UPDATE: On December 18, one week after the WTO approved trade sanctions on the US, the US Congress terminated the COOL law as part of its approval of the 2016 omnibus spending bill.

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