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TRADE: Deal Rekindles Hopes and Fears over U.S. Policy

Ellen Massey and Eli Clifton

WASHINGTON, May 14 2007 (IPS) - A new U.S. policy to include internationally recognised labour and environmental standards in future trade deals with foreign countries has received mixed reactions in the United States.

Some industry groups say that the policy could be used to justify more protectionist trade policies, while others believe it will usher in a greater number of trade pacts.

Activists for generic AIDS drugs have been critical of the deal, arguing that little is being done to help break the monopoly of U.S. drug companies in providing AIDS drugs in the developing world.

The new trade deal would limit the extent to which drug companies can expand their monopolies on AIDS drugs. However, rules that prevent generic drug manufacturers from relying on clinical test data from brand-name companies continues to work in favour of large pharmaceutical companies, say AIDS drugs activists.

“When it comes to public health, the United States should aspire to a higher standard: first, and at minimum, to do no harm; and second, to use international agreements to address access-to-medicines, efficient innovation of medical technologies and other pressing global public health priorities,” said a statement released Monday by Health GAP (Global Access Project). “Trade agreements modified in accord with the May 11 announcement will fail to meet that test.”

The new policy, announced Thursday, is the first bipartisan economic compromise since the Democrats took control of Congress in January. It calls for enforceable labour rules to be written into the text of trade deals.

The required labour laws would protect foreign workers’ right to organise unions and bargain collectively, and would ban forced labour, child labour and workplace discrimination.

The deal also includes environmental protections like requiring U.S. trade partners to enforce environmental laws already in place and comply with several international environmental agreements.

The new policy will directly affect pending trade agreements with Peru, Panama, Columbia and South Korea, pacts for which negotiations have been in the works for months.

Labour and business organisations have scrambled to react to the somewhat sudden compromise between the George W. Bush administration and Democrats in the House of Representatives.

The AFL-CIO, the nation’s largest labour confederation, and which closely monitors U.S. trade policy, commended lead Democratic negotiator Rep. Charles Rangel for the improvements in workers’ rights and environment standards in the pending Peru and Panama Free Trade Agreements, but opposed the Columbia and South Korean agreements and renewal of the president’s Fast Track Trade Authority.

The Fast Track Trade Authority gives the president the ability to negotiate trade agreements that Congress can approve or disapprove but cannot amend.

President Bush’s Fast Track Authority ends Jun. 30 and these agreements could serve as the basis for renewal of the fast track authority when the president formally requests it.

Some business groups have applauded the new policy.

“The new consensus between the administration, Congress and the private sector will translate into trade policies that are good for business, consumers, workers and farmers,” said Jim Owens, chairman and CEO of Caterpillar Inc., and a co-chairman of the Business Roundtable’s International Trade and Investment Task Force.

The National Retail Federation (NRF), the world’s largest retail trade association, said Friday that the deal was “a significant breakthrough” that would put new impetus behind the World Trade Organisation multilateral trade talks and renewing the president’s fast track authority.

“This has the potential to be very important for reauthorisation of the president’s trade negotiating authority, and pending and future trade agreements including the Doha Round talks at the World Trade Organisation,” said NRF Vice President and International Trade Counsel Erik Autor.

A U.S. coalition working specifically to resuscitate the stalled multilateral trade talks, known as the Doha Round, saw a new consensus in Washington because of the new policy and said this in fact bodes well for the talks.

“By coming together, our leaders in Washington are sending a signal that the U.S. is ready to lead on trade,” said Scott Miller, director of Global Trade Policy for Procter & Gamble and a co-chair of the American Business Coalition for Doha.

But several trade organisations and policy makers say they are reserving judgment on the negotiated policy until they have time to examine the details of the agreement.

Sen. Chuck Grassley, ranking member of the Committee on Finance, which oversees trade deals, agreed that the deal has “created momentum for renewing trade promotion authority” but said he still couldn’t pass a final judgment until he saw “the actual text of what’s to be added to our trade agreements”.

The National Association of Manufacturers (NAM), an industrial trade association, expressed similar concern about intellectual property provisions in the policy.

“This agreement reached yesterday frankly is not the trade policy that the NAM would have designed,” said NAM President John Engler in a statement.

Another powerful U.S. industry group, the United States Chambre of Commerce, said that provisions relating to intellectual property rights protections should be revisited when Congress and the Bush administration develop the structure for renewal of the president’s trade negotiating authority.

“In light of changes to certain provisions under this agreement, we will continue to make the case in the Congress that America’s innovative industries should receive the highest level of promotion and protection in our trade agreements,” said Tom Donohue, the Chambre’s president.

Some even expressed anxiety that the provisions on labour and the environment may slow down the push, largely fuelled by business groups, for trade deals.

“We hope that the provisions on labour and the environment will not be used for protectionist purposes,” said Autor of the NRF. “We will work to ensure that this agreement will be used to advance the cause of free trade and the economic and job growth that comes with free trade.”

Labour, environmental and humanitarian groups in the United States have long urged Congress to block pending agreements put forward by the Bush administration and similar accords now under negotiation for failing to protect labour rights or the environment and for pushing developing nations deeper into poverty.

U.S. lawmakers are considering trade deals with Colombia and Peru that include some of the most controversial aspects of the so-called “free trade” agreements.

Critics say the deals have regulations that place corporate privilege over human rights, while promoting exploitation of workers and the environment.