May 21, 2012
To: SPEEA Council
Members
From: SPEEA Legislative and Public Affairs Committee
Subject: PRE-SUBMITTED NEW BUSINESS: Support For The Principles Of Trade Reform Promoted By The Coalition For A Prosperous America And Supported By The AFL-CIO.
Background
The Coalition for a Prosperous America (CPA) is a national non-profit
organization made up of American manufacturers, farmers and organized labor. This multi-sector coalition advocates for trade
policy reform to better serve national economic interests. (www.prosperousamerica.org)
After six months of deliberation, CPA recently released guiding
principles for Congress and the Administration as they negotiate the
Trans-Pacific Partnership and other future trade agreements (see enclosed).
In addition to stressing balanced
trade and a national economic
strategy, the CPA principles address: reciprocal market access, unfair competition with state-owned commercial enterprises, currency manipulation, rules
of origin, trade law enforcement,
the impact of foreign consumption taxes,
import surges/product safety in
agricultural imports, the protection of domestic procurement policies, trade agreement sunsets and strong labor
provisions.
CPA leadership has directly requested SPEEA’s support of these
principles. Almost 90 other businesses and organizations have already signed on
to CPA’s “21st Century Trade Agreement Principles”.
Related SPEEA
Motions
M11-036 (September 20,
2011): SPEEA recognizes the value of CPA and recommended SPEEA share
information about CPA with a wider audience of labor and other community based
groups.
M11-009 (March 10, 2011): SPEEA endorses a policy of supporting legislative and
policy actions that prevent or discourage China or other countries from
manipulating the exchange rate of its foreign currency.
M11-003 (February 1,
2011): SPEEA opposes ratification of the three trade agreements negotiated
between the US and Korea, Columbia and Panama. The SPEEA Council opposes the
Trans-Pacific Partnership as long as it conforms to the NAFTA model. The
Council authorizes SPEEA staff and delegates to lobby in Congress to reject the
agreements.
SPEEA L&PA
Committee Recommendation
The SPEEA Legislative and Public Affairs Committee recommends
passage of this motion.
MOTION
It is moved that: The SPEEA Council support the principles of trade reform promoted by the Coalition for a
Prosperous America and supported by the AFL-CIO. As such, SPEEA will be signatory to the “21st
Century Trade Agreement Principles” document to be shared with Congress and the
Administration.
Pros
Cons
|
COALITION FOR A PROSPEROUS AMERICA |
Virtually
everyone agrees that U.S. trade agreements with other countries can and should
be improved to better serve our national economic interests. However, we
have lacked broad agreement on just exactly what those improvements should
be. We now have multi-organizational agreement that comprehensively
specifies what a 21st Century Trade Agreement should contain to benefit
America.
We invite
your company or organization to consider and sign-on to this document called "21st Century
Trade Agreement Principles."
CPA led an
exhaustive, multi-organizational committee effort, for six months, to create
and explain thirteen core principles that should be in any future trade
agreement.
Committee
members included:
*
John Arnett, Copper and Brass Fabricators Council
* Charles Blum, IAS Group and CPA Director of Government
Relations
* Bill Bullard, Ranchers-Cattlemen Action Legal Fund, United Stockgrowers of America
* Celeste Drake, AFL-CIO
* Dave Frengel, Penn United
Technologies, Saxonburg PA
* Bill Hickey, Lapham-Hickey Steel
Corp, Chicago IL
* Cass Johnson, National Council of Textile Organizations
* Joe Logan, CPA Agriculture Co-Chair and Ohio Environmental
Council
* Brian O'Shaughnessy, Revere Copper Products
The goal was
to create solid principles from a macro-economic perspective to provide a
unified, multi-sector agreement to guide Congress, the Administration and trade
negotiators. The committee considered major past trade failings including
persistent trade deficits, state owned enterprises, lack of enforcement, and
foreign government tactics to replace any trade concessions with new barriers
and subsidies. We considered U.S. interests and past performance, rather
than ideology.
This is a
perfect time to consider these 21st Century Trade Agreement Principles.
We are not facing the pressure of a pending trade agreement, but the federal
government is in negotiations for a new multi-lateral agreement, the
Trans-Pacific Partnership. By considering and adopting these 21st Century
Trade Agreement Principles, your company or organization can help the U.S. establish
a framework for a coherent national trade policy, which then can be used to
measure whether future trade agreements deserve support or not.
We now are
seeking signatory companies or organizations across the country. (At this
stage, we are not inviting individual persons to sign on.) If you are
affiliated with or employed by a company or organization, please ask your
management or leadership to sign-on to these "21st Century Trade Agreement
Principles".
Sincerely,
Brian
O'Shaughnessy
Chief Co-Chair, Coalition for a Prosperous America
Chairman, Revere Copper Products, Rome NY
Trade agreements are business contracts
between countries. They involve rights and obligations, concessions and
benefits, performance and breach. The United States has stated that it will
negotiate “21st Century Trade Agreements” which presumably will improve upon
those of the 20th Century. New trade agreements must include the following
principles to benefit America.
1. Balanced Trade: Trade agreements must contribute to a national goal
of achieving a manageable balance of trade over time.
Comments: Sustained net exports are needed to offset the
cumulative trade deficits of recent decades to ultimately achieve a long term,
manageable trade balance. This is a results oriented, quantitative goal. Trade
agreement negotiations focused upon procedural, tariff and subsidy concessions
often ignore trade balance outcomes. Further, an “export only” goal ignores the
net trade balance. The U.S. national interest lies in reducing and eliminating
its currently massive trade deficit and resulting foreign indebtedness.
2. National Trade, Economic and Security
Strategy: Trade agreements must
strive to optimize value added supply chains within the U.S. - from raw
material to finished product - pursuant to a national trade and economic
strategy that creates jobs, wealth and sustained growth. The agreements must
also ensure national security by recapturing production necessary to rebuild
America’s defense industrial base.
Comments: The U.S. has tended to pursue trade liberalization as
an end in itself. Instead, trade negotiations should be conducted to further a
national trade, economic and security strategy. The U.S. has lacked a strategy
to produce more of what the nation consumes, in both the civilian and defense
markets. Conversely, our major trading rivals pursue strategies to ensure
persistent trade surpluses and promote the offshoring
of U.S. manufacturing. As a result, the U.S. is losing critical mass of
production capacity and skilled workers. The term “optimize value added supply
chains” is intended to establish that the full supply chain has more value than
the sum of its parts in terms of increased production, employment, innovation
and growth. Trade negotiations should further - and their success should be
measured by achievement of - those goals not just for selected sub-parts but
for the supply chain as a whole.
3. Reciprocity: Trade agreements must ensure that foreign country
policies and practices as well as their tariff and non-tariff barriers provide
fully reciprocal access for U.S. goods and services. The agreements must
provide that no new barriers or subsidies outside the scope of the agreement
nullify or impair the concessions bargained for.
Comments: Reciprocity is a fundamental tenet of trade law. This
principle rejects the proposition that the U.S. should lead with trade barrier
reductions, even without equivalent concessions from the other country, as a
strategy to persuade other countries to eventually and
voluntarily lower their barriers. The best approach is to extract those
concessions during bargaining to ensure fully reciprocal access. Further, past
trade agreements have permitted the other country to erect substitute trade
barriers, which are not explicitly covered by the terms of the agreement, that nullify the benefits of the concessions. Any
new agreement must address the problem of substitute barriers or subsidies
through explicit, enforceable language.
4. State Owned Commercial Enterprises: Trade agreements must encourage the transformation of
state owned and state controlled commercial enterprises (SOEs) to private
sector enterprises. In the interim, trade agreements must ensure that SOEs do
not distort the free and fair flow of trade - throughout supply chains - and
investment between the countries.
Comments: The growth of state owned or state controlled
commercial enterprises (collectively SOEs) in global commerce is a substantial
and disruptive trade challenge. SOEs are inherently subsidized, ungoverned by
and/or resistant to market forces. They crowd out private commerce and are
often government policy tools. SOEs should not gain the benefits of new trade
agreements or be allowed to disrupt commerce or investment in the private
market. By their nature, SOEs disrupt downstream competition, which must be
addressed. Trade agreement language should (1) deny new preferences to SOEs and
(2) include provisions - whether duties, quotas or other means - that restrict
the impact of SOEs commercial and investment activities.
5. Currency: Trade agreements must classify prolonged currency
undervaluation as a per se violation of the agreement without the need to show
injury or intent.
Comments: Fair and market determined exchange rates are
fundamental to realizing the benefits of a trade agreement. Persistent currency
undervaluation nullifies and impairs concessions obtained through bargaining.
General agreement exists that persistent currency undervaluation is a problem,
but the approach has been to engage in multilateral, diplomatic negotiations
separate from trade negotiations. The diplomatic approach has borne no fruit.
This principle makes clear that currency valuation issues must be a part of a
trade agreement, and not treated separately.
6. Rules of origin: Trade agreements must include rules of origin to
maximize benefits for U.S. based supply chains and minimize free ridership by
third parties. Further, all products must be labeled or marked as to country(s)
of origin as a condition of entry.
Comments: Rules of origin determine whether a product or its
components “originate” within a contracting country(s) and thus qualifies for
favorable tariff treatment. Without rules of origin, any product could be
trans-shipped from third countries without restriction, causing free ridership
problems where third countries benefit without negotiation-extracted concessions.
Stronger origin rules will tend to benefit supply chains within the U.S. while disincentivizing the utilization or trans-shipment of third
country products. Rules may vary by product; however, the preservation and/or
expansion of the U.S. supply chain should be a substantial governing principle.
7. Enforcement: Trade agreements must provide effective and timely
enforcement mechanisms, including expedited adjudication and provisional
remedies. Such provisional remedies must be permitted where the country deems
that a clear breach has occurred which causes or threatens injury, and should
be subject to review under the agreements’ established dispute settlement
mechanisms.
Comments: Effective enforcement is key
to political support for trade agreements and the trading system itself.
Current enforcement mechanisms are too expensive, time consuming and beyond the
means of many affected industries to be effective. The problem is exacerbated
by the lack of transparency of the details of other countries’ compliance.
Provisional remedies would permit a contracting country to take immediate
action in applicable cases, while preserving the right of the other country to
challenge the provisional action through ordinary dispute settlement
mechanisms.
8. Border Adjustable Taxes: Trade agreements must neutralize the subsidy and
tariff impact of the border adjustment of foreign consumption taxes.
Comments: Foreign consumption (indirect) taxes are charged to
U.S. exports, and they are rebated when foreign companies export to the U.S.
Because of our reliance upon income (direct) taxes, the U.S. is unable to
reciprocate. The result is that U.S. exports are double taxed and foreign
imports to the U.S. are largely untaxed. This is a major cause of offshoring and our persistent trade imbalance. This
principle must apply equally to negotiation, performance and enforcement of all
trade agreements.
9. Perishable and Cyclical Products: Trade agreements must include special safeguard
mechanisms to address import surges in perishable and seasonal agricultural
product markets, including livestock markets.
Comments: The WTO and past trade promotion authority statutes
recognize that producers of perishable and seasonal agricultural products are
particularly susceptible to trade surges arising from over-production, adverse
weather or other causes. Short shelf life and/or short selling season
characteristics result in producers being unable to store the products until
prices rise. Immediate and automatic relief based upon price and/or quantity
measures are necessary to prevent irreparable industry harm in these sectors.
10. Food and Product Safety and Quality: Trade agreements must ensure import compliance with
existing U.S. food and product safety and quality standards and must not inhibit
changes to or improvements in U.S. standards. The standards must be effectively
enforced at U.S. ports.
Comments: Past negotiations have often treated health, quality
and safety standards as trade barriers without sufficient regard for important
public safety and quality goals. The result has sometimes been downward
harmonization of safety and quality measures under a trade facilitation
rationale. Enforcement as to imported products should effectively equal
enforcement as to domestic products.
11. Domestic Procurement: Trade agreements must preserve the ability of
federal, state and local governments to favor domestic producers in government,
or government funded, procurement.
Comments: Domestic taxpayers, globally, expect their tax
dollars to be spent on domestic production. Government procurement is, in large
part, a policy tool rather than true free market commerce. The federal, state
and local governments of the United States are, collectively, the biggest
consumers in the world. True reciprocity cannot exist because there is a
mismatch in the size of - and transparency of - government procurement markets.
12. Temporary vs. Permanent Agreements: Trade agreements must be sunsetted,
subject to renegotiation and renewal. Renewal must not occur if the balance of
benefits cannot be restored.
Comments: Trade negotiators agree to language based upon
expectations and judgment in pursuit of national goals. However, goals may not
be achieved or expectations may not be met. Just as business contracts do not last
forever, neither should agreements between countries. Therefore, it is prudent
to make such agreements time-limited to ensure that they continue to provide
balanced benefits as circumstances change. If a balance does not materialize,
the agreement should be renegotiated or discontinued.
13. Labor: Trade agreements must include enforceable labor
provisions to ensure that lax labor standards and enforcement by contracting
countries do not result in hidden subsidies to the detriment of U.S.-based
workers and producers.
Comments: Fair labor standards will simultaneously improve U.S.
competitiveness and increase worker prosperity in other countries, enabling
them to become consumers of U.S. goods. In the 2002 Trade Promotion Authority
(TPA) statute, Congress instructed trade negotiators to pursue goals including:
“to promote respect for worker rights and the rights of children consistent
with core labor standards of the ILO...and an understanding of the relationship
between trade and worker rights”. Congress further defined those core labor
standards as: “(A) the right of association; (B) the right to organize and
bargain collectively; (C) a prohibition on the use of any form of forced or
compulsory labor; (D) a minimum age for the employment of children; and (E)
acceptable conditions of work with respect to minimum wages, hours of work, and
occupational safety and health.”