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Talking Points on U.S.-Singapore and U.S-Chile FTAs

Talking Points on U.S.-Singapore and U.S-Chile FTAs


The Administration is Using These Pacts with Two Relatively Small Nations to Establish the Model for Future U.S. Trade Policy which Flouts the "Jordan Test" and Violates Fast Track Requirements

LABOR AND ENVIRONMENT

Both pacts clearly fail the"Jordan Test" on labor and environment, reversing key U.S.-Jordan terms.

  • No parity of enforcement between labor and environmental and other measures .  Violations of labor and environmental terms result in small set-limit fines but Acommercial” violations result in trade sanctions.
  • Does not require key Jordan principle that signatories must adopt and enforce core International Labor Organization (ILO) standards. In contrast to some Democratic Ways and Means members’ statements, Chilean and Singaporean labor laws have serious problems as described in the Bush Administration’s annual State Department Human Rights report. Singapore’s dictatorship bans independent labor unions. Attempts to reform Chile’s labor law, which is the Pinochet-era law that forbids unions many basic organizing rights, has been blocked by right-wingers in the Chilean Senate for over a decade.
  • The only binding labor or environmental provisions requires countries to enforce their existing standards, allowing them to eliminate standards or maintain terrible standards without violating the rules. The Jordan FTA language requiring countries to not lower standards was eliminated.

Both pacts also fail the Fast Track negotiating objective on labor and environment requiring equivalent enforcement of all provisions (ie. same enforcement of labor/environment and of commercial terms.)


INVESTMENT

Both pacts contain the same failed investment model of NAFTA's "Chapter 11" while adding dangerous new limits on the use of capital controls during economic crisis.

  • Both pacts have “investor-to-state” corporate enforcement of regulatory takings protections a la NAFTA Chapter 11. The only difference:  NAFTA used the term "measures tantamount to” and these pacts use the term “measures equivalent to” to create this new limit on government regulation.
  • Both pacts add investment rules that are worse than what is contained in NAFTA!
    • Both contain new language demanded by the Bush Treasury Department’s ideologues banning countries from imposing currency controls during in financial crises. This is the language Rep. Barney Frank, The Economist, the Financial Times and free-trade absolutist Columbia Professor Jagdish Bhagwati have all attacked. The use of capital controls (ie. temporary freezes on currency trading) is subjected to investor-to-state claims by banks and others for penalty compensation. Under NAFTA a country is allowed to use short term currency controls in a crisis.
    • Both include the language from the failed Multilateral Agreement on Investment (MAI) which places an ABSOLUTE BAN on all investment performance requirements (ie. requiring successful environmental impact statements as a condition for investment) in signatory countries, including vis a vis investors from non-signatory countries!
  • Both pacts fail the "no greater rights" language in Fast Track (foreign investors should not be given greater rights in trade pacts than the U.S. Constitution grants to U.S.companies and citizens).  The pacts contain vague, circular language guaranteeing a Minimum Standard of Treatment for foreign investors as well as outrageous language creating regulatory takings compensation for foreign investors.
  • These pacts’ definition of investment is even broader thanNAFTA's - like the failed MAI, all of the pacts’ broad rights apply to "every asset owned or controlled, directly or indirectly" and both list stocks, derivatives, real estate, intellectual property rights, permits and contracts and more.


TEMPORARY ENTRY/NEW IMMIGRATION RULES

These pacts establish a dangerous precedent of rewriting U.S. immigration law via trade agreement by creating new categories of temporary entry visas. Attempts in the U.S. implementing legislation to “fix” these outrageous terms in the two agreements did not resolve key problems.

  • While U.S. unemployment skyrockets, the pacts create an indefinitely renewable 1-year visa for 5400 Singaporean and 1800 Chilean “professional” workers yearly. (The H-1B visa now in place for temporary entry is limited to a set three-year term with only one renewable allowed.)
  • Both pacts contain rules explicitly forbidding conditioning entry under these provisions on labor certifications. The “mock” mark ups aimed to “fix” the pacts’ avoidance of the H1-B labor conditions (such as employers’ requirement to certify that U.S. workers are not being displaced by bringing in foreign workers.) While the implementing legislation seeks to limit the damage by applying some elements of the H1-B rules, the Bush Administration stated that the two pacts’ legally binding terms would not allow key H1-B certifications to be included in the implementing bills and thus they could not and did not “fix” the problem. (Provisions of the U.S. implementing bill that violate the rules set forth in the pacts are subject to challenge in the pacts’ dispute resolution systems.)
  • Many on the House Judiciary Committee were infuriated to learn the two pacts contained such language, yet both the draft FTAA text and the CAFTA negotiations include the same immigration approach!


INTELLECTUAL PROPERTY/ACCESS TO AFFORDABLE DRUGS

These agreements threatens consumers'access to affordable medicine with patent rules that go beyond NAFTA's tough terms and that violate the Fast Track negotiating objectives set in the “Kennedy” amendment.

  • The pacts violate the "Kennedy Amendment," which directed U.S. negotiators to conform patent rules in all future pacts to the 2001 Doha World Trade Organization (WTO) Declaration on Public Health and Trade Related Intellectual Property Rights (TRIPS).
  • Both pacts set a dangerous precedent in limiting countries’ rights to use compulsory licensing:
    • Countries may only issue a compulsory license for a medicine if anti-competitive practices are proved (ie. a violation of anti-trust law) or for a national emergency.
    • Outrageously, the agreements require that if a compulsory license is issued, the full market price of the drug must be paid to obtain production rights, meaning consumer price cuts are eliminated.
    • Only governments are allowed to use such a license, meaning that a government must the ability to produce the drug itself (ie. not a private firm in the country.)
  • Unlike the WTO, this agreement does not allow countries to refuse to patent life forms, human cells and plant and animal varieties - countries must provide such patents in their domestic laws.


“ISI” PROGRAM ALLOWS DUTY-FREE TRANSSHIPMENT THROUGH
SINGAPORE

The so-called Integrated Sourcing Initiative (ISI) provisions allows electronics, computer and other high tech manufactures produced in third nations to enter the U.S. duty free if shipped through Singapore.

  • Fast Track contained no authority to negotiate such transshipment permissions, indeed in contrast Fast Track negotiating objectives call for strong rules against transshipment.
  • Attempts to “fix” this outrageous provision managed to scale back the ISI program in the Singapore FTA so that it largely replicates existing terms in the WTO Information Technology Agreement (ITA) instead of providing additional transshipment rights. However the Clinton Administration avoided seeking congressional approval of the ITA’s grant of duty-free status to a list of high tech products and instead implemented the agreement through administrative action. Thus, a vote for the Singapore agreement puts a Member on record as supporting the WTO ITA.


SERVICES

Both pacts include NAFTA-style top-down services agreements - meaning all sectors are covered unless an exception is negotiated.

  • The model used in the two FTAs transforms a broad array of essential services – including services that the Democrats have fought to defend as public services or as services to which all people must have access as a basic right – into new tradable commodities.
  • Government rights to regulate services operated in the private sector are constrained by terms included in both pacts, setting a dangerous precedent for FTAA, CAFTA and WTO GATS (General Agreement on Trade in Services) talks.


POLITICS

These pacts are an aggressive Bush Administration attack on Democrats’ trade position staked out in the Fast Track vote which must be countered and include provisions mirroring the GOP domestic attack on public services, access to affordable drugs and decent jobs.

  • Key Democratic party constituencies passionately oppose these pacts. The Teamsters, Steelworkers, AFL-CIO, Sierra Club, Public Citizen, NET, Friends of the Earth and others have made clear these votes count politically. (Teamsters scoring letter, AFL-CIO letter, etc. attached.) When Democrats vote for bad trade pacts, Democrats election prospects are damaged as we saw after the NAFTA and China-PNTR votes.
  • Democrats send a dangerous signal if a large numbers support these pacts. Democrats voting for this model of trade deal for Chile and Singapore will be attacked as inconsistent when they oppose the same rules applied in the FTAA or CAFTA.
  • These pacts include extreme NAFTA-plus terms typifying the GOP backwards trade agenda and providing Democrats an excellent opportunity to differentiate themselves from the GOP.

For more information, contact:
Public Citizen's Global Trade Watch (202) 546-4996. 

 

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