Comments of Public Citizen, Inc., On Proposed U.S.-Singapore Free Trade Agreement
December 26, 2000
I. Little Need for Bilateral Agreement with Singapore
II. Under What Authority Is the Executive Branch Entering Into Negotiations With Singapore For A U.S.-Singapore FTA?
III. The U.S.-Jordan FTA model is not a template for future agreements
Public Citizen submits these comments in response to a request from the Office of the United States Trade Representative (USTR) for public comment on the proposed U.S.-Singapore Free Trade Agreement (FTA).(1) Public Citizen notes that the negotiations with Singapore were explicitly modeled after the U.S.-Jordan Free Trade Agreement (U.S.-Jordan FTA).(2) First, as has been made crystal clear in the comments of every labor and environmental group, the U.S.-Jordan model is only appropriate in the U.S.-Jordan context and is not an acceptable template for any future agreements. Second, the Clinton Administration's procedure for launching this negotiation is outrageous (without consultation with the Congress or the public -- much less a delegation of Congressional exclusive authority to set terms of international trade -- the Administration announced a major new trade agreement.) Indeed, these comments are due only days before the deal is to be completed. Third, review of the current U.S.-Singapore FTA suggests that the purpose of this agreement is to attempt to revive the publicly opposed expansion of the World Trade Organization (WTO) rather than to address U.S.-Singapore trade needs.
As described below, Public Citizen has strong reservations about whether the provisions of the U.S.-Jordan FTA will in practice provide any meaningful protection for labor rights and the environment even in the U.S.-Jordan context. The U.S.-Jordan FTA certainly is not in any way applicable to the U.S.-Singapore situation. The U.S.-Jordan model contains an unacceptable double standard with significantly stronger enforcement for commercial rights. Moreover, U.S. Jordan bilateral trade amounts to $288 million, while the U.S. and Singapore bilateral trade amounts to $34.4 billion (119 times larger than Jordan), making Singapore the tenth largest partner. Even if the U.S.-Jordan FTA model works for Jordan, there is no evidence that the same model would work in a country like Singapore, with its relatively weaker labor laws and regular violations of international environmental agreements.
The U.S.-Jordan context is unusual. Jordan has unusually comprehensive, strong domestic labor and environmental laws, and trade flows from Jordan are relatively small. Thus, the U.S.-Jordan agreement focuses on enforcement of existing labor and environmental laws and, in line with Republican "trade-related" restrictions, only covers violations that affect trade. Effective labor and environmental terms in other, broader trade deals will require a different approach. Moreover, despite these promising conditions regarding Jordan, a careful review of the U.S.-Jordan FTA text reveals that this agreement is riddled with provisions that undermine its use even regarding Jordan. Many environmental and labor advocates have already raised a variety of concerns about the U.S.-Jordan FTA's environmental and labor provisions. However, even setting aside these problems, the apparent gains made in the U.S.-Jordan FTA's environmental and labor language are eviscerated by sophisticated legal drafting, as described below.
There is little evidence of a need for a separate, bilateral U.S.-Singapore Trade Agreement, as both nations are members of the WTO, trade between the two countries is high, barriers to goods and services are low and declining, and both nations abide by international commercial agreements. According to USTR, bilateral trade with Singapore grew by more than a third between 1998 and 1999 to a total of $34.4 billion, making it America's 10th largest trading partner and the largest in Southeast Asia.(3) Although the only apparent USTR areas of concern that would be addressed by the new negotiations are services and intellectual property protection, the U.S. had a $2 billion services surplus with Singapore in 1999, and most services, investment and intellectual property issues seem to be improving without the agreement.(4)
Indeed, the Singapore National Trade Estimate Report on Foreign Trade Barriers 2000 notes that there has already been substantial improvement on these issues and that there is continued improvement expected.(5) It notes that "in recent years the government has taken significant measures to improve IPR protection," and that Singapore's "piracy rates are the lowest in Asia." Additionally, Singapore is a member of World Intellectual Property Organization, a signatory to the Paris Convention, the Patent Cooperation Treaty, and the Budapest Treaty, and has changed its national laws to be fully consistent with the WTO Trade-Related Aspects of Intellectual Property Agreement (TRIPS).
On April 21, 2000 Singapore instituted its telecommunications liberalization earlier than expected or required under WTO, allowing any foreign or domestic company to apply for license to operate telecommunications services. The Monetary Authority of Singapore has been lifting the limitations on foreign ownership of banks (which already controlled more than half of Singapore's total trade financing and banking profits), allowing four additional foreign-owned banks to become "qualifying full banks" and 8 to become "full banks."(6) Singapore has an open investment regime and allows foreign securities firms to operate on an equal footing with Singapore firms.
Singapore's tariffs for U.S. goods are zero except on alcoholic beverages. In short, there is no commercial reason for a separate bilateral trade agreement with Singapore. Most of the changes that the bilateral agreement seeks to address are already in motion in Singapore, which is rapidly engaging in market liberalization. Absent demonstrated barriers that cannot be addressed through other international bodies or agreements, there seems to be little need to conduct an additional bilateral trade agreement. These facts suggest that the purpose of this agreement is not commercial but rather political, for instance, an attempt to create momentum in the moribund Asian-Pacific Economic Cooperation (APEC) or to revive WTO expansion. Given that the administration has not sought guidance from Congress on this issue, the real negotiating objectives cannot be known.
II. Under What Authority Is the Executive Branch Entering Into Negotiations With Singapore For A U.S.-Singapore FTA?
The U.S. Constitution grants to Congress exclusive authority to set the terms of international commercial regulation.(7) However, the Constitution grants the President the exclusive authority to deal with other countries on behalf of the United States. Thus, as regards the negotiation of international trade agreements, the Congress and Executive Branch must work together. The power sharing arrangements for trade policymaking have changed over the years.
Starting in 1974, Congress offered extended-year delegations of much of its authority in this area to the Executive Branch through the mechanism known as Fast Track. When the 1974 Trade Act established Fast Track, trade negotiations focused on traditional trade matters such as tariffs and quotas and Congress set out negotiating objectives for these matters.
The current Administration sought an 8-year delegation of Fast Track trade authority from Congress in 1997 and 1998 and those requests were denied. Thus, at the current time, Congress has neither delegated its exclusive authority regarding setting the terms of foreign commerce to the Executive Branch, nor has Congress set negotiation objectives, much less goals, that Executive Branch negotiators should seek.
That the U.S.-Jordan, U.S.- Singapore and U.S.-Vietnam FTA negotiations either took place or that countries have agreed to enter into negotiations without Fast Track trade authority puts to rest the notion that Fast Track is somehow essential to the U.S. being able to negotiate trade deals. However, the recent spate of Free Trade Agreement announcements has raised more broadly the issue of Congressional-Executive Branch power-sharing in the area of international commercial policymaking.
Beyond the fundamental problems with the labor and environmental provisions referred to above and described herein, it is important to emphasize the unique context of the U.S.-Jordan agreement: the U.S.-Jordan FTA is offered to Congress as part of the general U.S. contribution to the Middle East peace process. Moreover, the volume of U.S.-Jordan trade is uniquely minuscule. Yet, proponents of the status quo trade model such as U.S. Trade Representative Charlene Barshefsky have already explicitly stated that the U.S.-Jordan FTA should be the template for resolving the impasse over U.S. trade policy and have pushed the Singapore and then Chile deals to follow the Jordan model. It is important to understand the severe limitations of the U.S.-Jordan FTA model before considering using it as a model for additional bilateral agreements such as a U.S.-Singapore FTA and for any other future trade negotiations.
A. ENFORCEMENT FOR LABOR AND ENVIRONMENT TERMS IS SIGNIFICANTLY WEAKER THAN FOR COMMERCIAL TERMS
Although the addition of labor and environmental provisions to the core text is an encouraging development, it does not mean that these considerations are given the same import as commercial concerns. In the U.S.-Jordan FTA, although labor and environmental concerns are given some consideration, the enforcement provisions govern these important public interests. While commercial interests and disputes are accorded the full force of trade law with binding arbitration, enforcement for labor and environmental violations of the agreement do not have the same high level of protection. Indeed, these issues explicitly have lower, non-binding protections in the text of the agreement, leaving the possible enforcement alternatives to those already available to the U.S. currently without the FTA.
First, the text explicitly states that the Jordan FTA dispute resolution panels' rulings are not binding(8) (Article 7-1(d)). This stands in sharp contrast to the binding panel rulings of the NAFTA and WTO. Under the Jordan FTA dispute resolution system contained in Article 17 of the agreement, if the U.S. and Jordan are not able to settle their disagreements together, each country is allowed to take "any appropriate and commensurate measure." (Article 17-2(b))
However, second, as described below, the Jordan FTA explicitly prioritizes the WTO's terms over those of the Jordan FTA. Thus, in choosing "sanctions" to enforce the Jordan FTA's terms, countries are forbidden from taking any action, such as raising WTO-bound tariff levels or removing other WTO-covered benefits, that undermines a WTO-granted right. This means that the only trade sanctions available for enforcement of the environmental or labor provisions of the Jordan FTA would be in the few areas such as textiles and apparel, in which the Jordan FTA will provide lower tariffs(9) or other special benefits. However, these "deeper-than-WTO" tariff cuts phase in over ten years.
This means that the enforcement tools available in the short and medium term for the Jordan FTA's labor and environmental provisions are largely limited to those already permitted pre-FTA. That is to say that the U.S. would be limited in its enforcement "sanctions" to using assorted ineffective proposals that are considered WTO-consistent measures. These include the items discussed in the context of the Levin China PNTR "human rights" commission, such as limiting U.S. foreign assistance to a target country, cutting off U.S. exporters' access to Ex-Im Bank financing for a target country, or not being supportive of a target country at the World Bank or IMF.
Third, the enforcement provided for the commercial terms of the Jordan FTA and the environmental and labor terms simply is not the same (with the exception being enforcement of the phased-in lower-than-WTO tariff cuts.) As regards the other commercial issues covered by the FTA, these terms get stronger enforcement than the labor or environmental provisions. For instance:
Regarding service sector trade, procurement rights and intellectual property, Articles 17-4(a) and (b) of the Jordan FTA require the use of WTO dispute resolution for benefits in these commercial sectors covered by both the WTO and the Jordan FTA. From one perspective, this provision simply requires the countries to resort to the enforcement system they would have used if there were no Jordan FTA. However, from the perspective of demanding equal enforcement of commercial terms and labor or environmental terms, this provision means that enforcement of most of the Jordan FTA's commercial terms is through binding WTO panels and the WTO's official authorization of trade sanctions for countries that refuse to implement the binding rulings. This contrasts unfavorably with the non-binding Jordan FTA panel rulings and extremely limited potential enforcement sanctions exclusively available for enforcement of the Jordan FTA's labor and environmental terms. Commercial benefits provided in services, procurement, and intellectual property that are unique to the Jordan FTA are enforceable only through the Jordan FTA dispute system. Yet, the one commercial area in which there are the most new benefits established by the Jordan FTA (intellectual property rights), there also is a special, additional enforcement mechanism provided.
In addition to access to the binding WTO dispute resolution for enforcement of some intellectual property rights (IPRs) benefits, the Jordan FTA provides additional enforcement similar to that in NAFTA, which goes beyond even what is available in the WTO for intellectual property rights. This special IPR enforcement in the Jordan FTA represents a flagrant double standard in enforcement, with the addition of special better-than-WTO enforcement for intellectual property rights, and non-binding-weaker-than-WTO enforcement for labor and environmental provisions.
Articles 4-24 through 4-28 of the Jordan FTA ("Enforcement of Intellectual Property Rights") establish a remarkably effective and powerful enforcement system that is similar to the intellectual property rights enforcement in NAFTA. These provisions require the parties to the agreement to:
- provide for payment of damages by a violator of the intellectual property rights established in the Jordan FTA to the intellectual property right holder (Article 4-24) in addition to whatever country-to-country sanctions might be used;
- ensure that the country's domestic statutory fines for intellectual property violations are "sufficiently high to deter future acts of infringement" (Article 4-25) (fines are in addition to the damages and the country-to-country sanctions noted above);
- authorize domestic authorities to enforce the FTA's IPRs by seizing "all suspected pirated copyright and counterfeit trademark goods and related implements the predominant use of which has been in the commission of the offense, and documentary evidence" (Article 4-25);
- provide for "criminal actions and border measures ex officio, without the need for a formal complaint by a private party or right holder" (Article 4-26) meaning that the government can initiate criminal proceedings against a violator of the Jordan FTA's intellectual property rights or seize goods without requiring the party holding these rights to initiate any action; and
- set the domestic burden of proof in both civil and criminal cases of enforcement to favor the IPR holder so that once a certain showing has been made, a suspected violator is effectively guilty until proven innocent. "Such presumptions shall pertain in criminal cases until the defendant comes forward with credible evidence putting in issue the ownership or subsistence of the copyright or related right" (Article 4-27).
This extraordinary enforcement system applies even to copyright infringements "that have no direct or indirect motivation of financial gain" (Article 4-28)(10). Yet, in contrast, only a non-binding panel ruling and an extremely limited set of penalties apply to enforcement of the failure simply to enforce existing labor or environmental laws even if the explicit motivation is financial gain.
Applying these provisions to Singapore, which already has extensive commercial law, only provides more access for companies than in Jordan, where the rule of commercial law, especially as to technology and intellectual property, is relatively more sophisticated.
B. THE JORDAN FTA INCORPORATES THE WTO BAN ON TREATING GOODS DIFFERENTLY ON THE BASIS OF HOW THEY ARE MADE
The GATT/WTO Article that forbids countries to treat physically similar goods differently on the basis of how they are produced or harvested is explicitly incorporated into and made a part of the Jordan FTA, along with this GATT/WTO provision's damaging interpretive notes. (Article 2-3) Making GATT Article III and its interpretive notes part of the Jordan FTA forbids countries, for instance, to ban products made using child labor or under conditions of other labor rights violations, or harvested using drift nets or other environmentally-damaging processes.
- GATT-WTO Article III has been interpreted to forbid countries to treat physically similar goods differently based on how they are produced. Inclusion of this GATT-WTO provision in the Jordan FTA carves out from under the FTA's environmental and labor clauses coverage of policies based on process and production methods. However, the conditions under which a good is made are the core concept of labor rights and undergird many environmental policies.
- Even more troubling is the combination of this provision with the provision described immediately below that gives WTO rules precedent over the Jordan FTA rules. The combination of these two provisions means that a U.S. law prohibiting entry into the U.S. market of products made with child labor, or otherwise distinguished according to how they are made, would be a violation of the Jordan FTA's trade provisions rather than a law whose non-enforcement could be a cause for action under the agreement.
C. WTO RULES TRUMP THE JORDAN FTA
The Jordan FTA contains a "savings clause" that explicitly prioritizes the World Trade Organization rules over those of the Jordan FTA. This FTA provision forbids countries to "apply a measure that is inconsistent with the Party's obligations under the WTO Agreement" (Article 1-4).
This clause is precisely the opposite of what is required. We need the more progressive terms of the Jordan FTA (or other future agreements with progressive terms) to trump the WTO's. Because the Jordan FTA is "later in time" than the WTO, under the Geneva Convention on the Interpretation of Treaties, the Jordan FTA's terms would have taken precedent over conflicting WTO terms if this backdoor "undoing" clause had not been added.
Inclusion of this provision has many implications. The narrowest possible reading of this provision would be that Jordan and the U.S. agree not to take any enforcement action under the FTA dispute resolution system that would not be consistent with their WTO obligations. As noted above, this means that no WTO-bound tariff could be raised as a trade sanction nor any other retaliation taken in any of the WTO-covered sectors, such as services.
Moreover, this means that the enforcement tools available for the FTA's labor and environmental provisions largely are limited to those already permitted pre-FTA, such as limiting foreign aid or voting against a country at the World Bank and IMF. In the longer term, as special Jordan FTA tariff cuts on some higher tariffs left in the WTO (such as those covering textiles and apparel) take effect, the U.S. could snap back these special FTA tariff cuts to WTO levels as a trade sanction.
The Jordan FTA includes some commitments and benefits not bound by WTO terms, but these are areas in which U.S. industry is seeking new rights in Jordan, such as greater intellectual property protections or access to Jordan's service market. While the terms are reciprocal, in reality, Jordanian companies will not be seeking to use these benefits to enter the U.S. market to compete with our telecommunications giants. Thus, "taking back" these benefits does not provide an opportunity for the U.S. to deny Jordan benefits as a sanction for violating a term of the Jordan FTA.
A broader reading of Article 1-4 would result in the dominance of the WTO rules not only in eliminating the use of most trade sanctions for enforcement of the Jordan FTA, but also in trumping some substantive provisions in the Jordan FTA such as on labor and environment. There are several ways in which one could argue against this interpretation.(11) However, if this question were ever tested, it would not be in the context of U.S. courts, but rather before a closed-door WTO dispute panel.
D. THE JORDAN FTA'S LABOR AND ENVIRONMENTAL PROVISIONS DO NOT SERVE AS A MODEL FOR FUTURE AGREEMENTS
The Jordan FTA contains environmental provisions in Article 5 and labor provisions in Article 6. These provisions are focused on the two countries' enforcement of their existing environmental and labor laws.
Obviously, even with the strongest language and enforcement in a trade agreement's text, this design can only work with countries that already have a full complement of high-level labor and environmental laws that have meaningful domestic enforcement provisions. Thus, while labor and environmental provisions that focus on enforcement of existing law may be appropriate for the U.S.-Jordan context, this model is not appropriate for use in the context of the Free Trade Area of the Americas. For instance, U.S. labor advocates note that Jordan has recently passed a new labor law that the U.S. labor movement regards highly. This is in strong contrast to, for instance, the situation in Chile, where repressive Pinochet-era labor law is in effect. As well, in Chile, there are no domestic pesticide standards, and many of the existing environmental laws set standards but have no enforcement mechanisms. This is exactly why the Jordan FTA model should not be applied to Singapore, which has a labor system captured by one-party rule and freedoms of association which are repressively limiting by U.S. standards.
Even still, the specific labor and environmental language of the Jordan FTA also should not provide a model for even those situations in which a focus on enforcement of existing domestic law (versus international labor standards or the requirements of multilateral environmental treaties) is appropriate. This is the case because:
- the majority of the language does not establish binding obligations;
- none of these terms apply to investment, only trade. Yet, countries often agree not to enforce labor or environmental policies in order to attract investment, including by establishment of free trade zones to which domestic regulatory laws do not apply. (The U.S. and Jordan have a bilateral investment treaty, so investment is not covered in the Jordan FTA);
- the labor and environmental obligations do not apply to state or local level non-enforcement of labor or environmental law which, though, not relevant to the Singapore legal system, is a major impediment to use of the Jordan model in other contexts such as the U.S.-Chile FTA;
- the key clause that is binding is worded in a manner that makes it very hard to trigger the labor or environment enforcement provision; and
- there is a broad escape clause for the single binding provision.
The labor and environmental provisions of the Jordan FTA include considerable amounts of well-intentioned language that is purely hortatory and unenforceable.(12) For labor and environmental provisions to be meaningful, it would require that the concepts dispatched with these unenforceable provisions be covered by enforceable provisions. For instance, there is language contained in both labor and environmental provisions concerning not "relaxing domestic environmental/labor laws." However, this clause is purely hortatory. The U.S. and Jordan have merely committed to "strive to ensure that it does not waive or otherwise derogate from or offer to waive or derogate from, such laws as an encouragement for trade with the other Party" (Article 5-1, Article 6-2).
As well, the positive language that has the countries "reaffirm obligations as Members of the International Labor Organization and their commitments under the ILO Fundamental Principles and Rights at Work" is declaratory and does not establish a binding obligation. In a related clause, the U.S. and Jordan agree that they "shall strive to ensure that such labor principles and the internationally recognized labor rights set forth in paragraph 6 are recognized and protected by domestic law" (Article 6-1). The goal is admirable, but this clause merely requires each country "to strive to ensure" the goal.
The labor and environmental provisions each have one major clause providing the "cause of action" under which a labor or environmental enforcement action could be brought. Both clauses (Article 5-3(a)) and (Article 6-4(a)) are based on the following formulation:
"A party shall not fail to effectively enforce its environmental/labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement."
This is a very hard legal standard to satisfy, with numerous subjective conditionalities each of which must be satisfied and each of which can be interpreted in many ways:
- "effectively enforce" The vagueness of what counts as effective enforcement is extremely problematic. A clear standard would be "failure to enforce." The term "effective" is not defined in the Jordan FTA text, and any two lawyers from the same country's government likely would have different definitions of this term. The potential problems of interpretation of this clause are multifaceted. For instance, if a government has failed to enforce after how many children are proved to work in violation of domestic labor law for how long on what scale (i.e., in one plant, in multiple plants in the same sector, in one free trade zone at different plants, in one entire economic sector)? Thus, how would a government (or a labor or environmental advocate interested in seeking government action on this provision) demonstrate a failure to "effectively" enforce?
- "through a sustained or recurring course of action or inaction" At issue here is what would satisfy the term "sustained." One interpretation is that the inclusion of the "or recurring" phrase means that this requirement is satisfied if a lack of government action occurred twice. But this useful interpretation is conflicted by the inclusion of a "course of action or inaction," which itself means a sustained course, not just several incidents. On the other hand, while this language is troubling, it is less damaging to prospective use of the labor and environmental terms than the related standard set in the NAFTA side agreement which requires a showing of a "persistent pattern" of non-enforcement.
- "in a manner affecting trade between the Parties" This clause, though generally problematic, is especially damaging for the environmental side. It is at least possible to make a case that a broad array of labor rights violations in many parts of the economy could affect trade between the U.S. and Jordan, if indirectly, for instance by affecting economy-wide wage levels. While not an easy case to prove for labor rights violations, it is nearly impossible for many environmental violations. How does one prove that Jordan's hypothetical, systematic, and widespread non-enforcement of domestic air pollution standards explicitly affects its apparel exports to the U.S.? This clause is a variation on the "directly related to trade" language and must be opposed in future deals. Moreover, the "between the Parties" phrase does not permit action concerning non-enforcement of labor or environmental law in the U.S. or Jordan that affects global trade patterns.
If this legal drafting were not sufficiently daunting to overcome, the one binding clause (relating to the actual cause of action for pursuing an enforcement case) in each of the labor and environmental provisions is followed by an exception clause that effectively eviscerates the binding rule.
"The Parties recognize that each Party retains the right to exercise discretion with respect to investigatory, prosecutorial, regulatory and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other environmental/labor matters determined to have higher priority. Accordingly, the Parties understand that a Party is in compliance with subparagraph (a) where a course of action or inaction reflects a reasonable exercise of such reasonable exercise of such discretion, or results from a bona fide decision regarding the allocation of resources" (Art. 5-3(b) and Art. 6-4(b)).
The first half of that paragraph simply reiterates that countries must be free to set priorities within their environmental or labor budgets. However, the second sentence of that paragraph is extremely troublesome. It states that a country is in compliance with its Jordan FTA labor and environment obligations if a country has "failed to effectively enforce its environmental/labor laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties" where:
- "a course of action or inaction reflects a reasonable exercise of such reasonable exercise of such discretion, or"
- "results from a bona fide decision regarding the allocation of resources."
Either of these exceptions is an absolute defense to lack of enforcement, which either country could make at any time. Neither exception is defined; what is meant by a bona fide decision regarding the allocation of resources? Does that provide an excuse when a government agency has gone through an official process to decide to stop enforcing labor or environmental rules? The NAFTA environmental side agreement tribunal contemplated a similar question in judging a charge of non-enforcement of the U.S. Endangered Species Act, which was caused by cutting off appropriations for certain forestry work via a "logging rider." The NAFTA side agreement panel ruled that such a legislative act with simply a statement of the nation's priorities and that only administrative inaction -- not a bona fide policy change made by the legislature -- was sufficient to trigger the non-enforcement language.(13)
Finally, at the very end of the Jordan FTA text in Article 18-2 (Miscellaneous Provisions), a special definition of "statutes and regulations" is provided that only applies to the labor and environmental provisions. The listed definition of these terms for the United States limit application of the environmental and labor provisions of the Jordan FTA to "an act of the United States Congress or regulation promulgated pursuant to an act of the U.S. Congress that is enforceable, in the first instance, by action of the federal government." (Article 18-2(b)) This definition excludes U.S. subfederal law (state and local) from coverage by the labor and environmental provisions of the Jordan FTA. This limitation on the application of these Jordan FTA terms to subfederal governments stands in contrast to the top-to-bottom coverage of the commercial provisions in the Jordan FTA.
Absent this "limiting" provision, subfederal law would be covered by the labor and environmental provisions because the Jordan FTA, if approved by Congress, will become U.S. federal law the same way NAFTA and the GATT Uruguay Round were made U.S. law. Under the principles of federalism, international executive agreements (such as this FTA, NAFTA and the Uruguay Round) become binding on the states when approved by Congress as U.S. law.(14) In contrast, the inclusion of Article 18-2 in the Jordan FTA frees the federal government from any responsibility regarding failure of subfederal entities to enforce labor and environmental policy - an exception that invites abuse.
E. Application of the U.S.-Jordan FTA model would be particularly onerous in the case of Singapore's labor market
Applying the Jordan FTA model of labor protections, with its inadequate and unenforceable labor dispute elements, is especially troubling in light of the labor market and freedom of expression issues in Singapore. The single-party regime of the Singapore government, which has existed since independence from England, strictly controls all elements of life in Singapore -- it has even prohibited chewing gum to maintain public cleanliness. Although labor unions are legally permitted, 93% of the unions and 90% of the workers are affiliated with the National Trade Union Congress (NTUC), which has a close relationship with the Singapore ruling party. Leadership of NTUC has been simultaneously representing the leadership of the Peoples Action Party (PAP) in parliament.(15) These ruling regime NTUC representatives also sit on major regulatory boards that have policy oversight of Singapore labor conditions.(16)
The Singapore Internal Security Act tightly regulates political speech. According to the U.S. State Department 1999 Report on Human Rights Practices in Singapore, the Public Entertainment Act requires a permit for any public speech. Although the constitution allows peaceful assembly and association, gatherings larger than five must obtain permits and organizations with more than 10 members must be registered with the government. No labor strikes have occurred in Singapore since 1986.(17)
Independent unions and independent thought in the NTUC are strictly limited. Supporting opposition party candidates disqualifies NTUC members from holding leadership posts in the union.(18)
There are no laws in Singapore regarding minimum wages or unemployment benefits. However, the National Wages Council -- made up of representatives from business, government and the NTUC -- negotiates annual wage increases, establishes pay structures, and makes recommendations on productivity targets.(19) In 1997, the annual guidelines focused on restraining wage inflation, focused on productivity, and tied worker remuneration to pay-for-performance, a practice that pits workers against one another and encourages unfair wage competition.
There are a substantial number of foreign workers in Singapore, and many of these lower paid workers are not covered under the Employment Act.(20) One in four workers in Singapore were foreign in 1997, concentrated in the manufacturing, construction, marine and harbor craft, and domestic industries.(21) Indigent workers can be forced into suitable work, enforceable by penal sanctions, which the International Labor organization has criticized as coercive and not in compliance with the Convention on Forced Labor. None of these conditions are covered by Singapore's labor law and thus would be outside the coverage under the U.S.-Jordan model.
The measures for labor protection in the Jordan FTA are entirely unsuitable to address labor concerns in Singapore, where labor law is made by consensus between business, government and a majority union that is essentially a wholly owned subsidiary of the single-party system. Since these three parties are increasingly moving towards a pay-for-productivity system, there is an incentive to keep tight limits on wages (thus increasing productivity) and to compete based on low wages. The high penetration of foreign workers, who are not covered by much of the labor law, further undermines the utility of using any U.S.-Jordan FTA type protections because there is no violation of domestic law if one fourth of the workers are not covered by it. Lastly, the repressive nature of Singapore's ruling party prohibits independent unions from trying to vigorously use even the unenforceable measures in Jordan-FTA model to protect themselves and advocate for better working conditions.
F. Application of the U.S.-Jordan FTA model would not prevent violations of international environmental agreements by Singapore
The massive port of Singapore has been found to be a transshipment point for a range of endangered species and toxic chemicals that are prohibited to be sold commercially. Singapore's environmental laws do not forbid this conduct, thus there is no coverage under the U.S.-Jordan model. Unless the U.S.-Singapore FTA includes separate, tougher environmental provisions to ensure that the transshipment of these goods does not occur, through tough customs rules and product origin labeling, the environmental model of the U.S.-Jordan FTA model will not cover the most important issues. Importantly, there have been several recent cases where species protected by the Convention on the Trade in Endangered Species (CITES) were either found in Singapore or bound for Singapore. Environmental groups have expressed concerned that illegally-harvested timber and prohibited traffic in ozone-depleting chemicals prohibited by the Montreal Protocol may also be transshipped through Singapore.
World Wildlife Fund Indonesia believes that Singapore is the main transshipment point for Sumatran tiger parts bound for mainland China, Taiwan and Korea. The tigers, only 500 of which remain in the wild, are used for their pelts and in a variety of medicinal products and are considered "very endangered" by CITES.(22) Earlier this year, a smuggler attempted to bring 789 jali snakes, protected under CITES, into Singapore, likely as a point for transshipment elsewhere, from Tangerang, Indonesia.(23) An investigation by the World Society for the Protection of Animals into the CITES-illegal practice of trafficking in bear products found that cruel bear bile farms export their products to markets including Singapore.(24)
The U.S.-Jordan FTA with its minuscule trade flows has important symbolic value in moving the labor and environmental issues into the center of the debate and for Middle-East peace. However, the U.S.-Jordan model is an unwise, ineffective and misguided model to use in any future free trade agreement or negotiation. The failures of the U.S.-Jordan FTA model are obvious and are considerable with regards to its application to Singapore. Unlike Jordan, which had just passed sweeping labor law changes, Singapore has few legal measures to protect workers and is regulated by consensus of business and the single-party rulers. It is impossible to hold Singapore accountable to its own laws, even if the U.S.-Jordan FTA model were particularly effective by the nature of its design. The same is true of the critical environmental issue of transshipment -- without additional language in the agreement, there would be no enforceable means beyond the status quo to seek a remedy for the transshipment of endangered species, illegal timber or illegal hazardous chemicals. The Singapore negotiations are the very reason the Jordan FTA cannot be a future model -- the already weak provisions in Jordan FTA are transparently ineffective under the conditions found in Singapore.
The Administration's attempt to quickly launch and finish a U.S.-Singapore FTA serves as a prime example of why the U.S. needs a new system for the development of international commercial policy. This negotiation seeks to use a labor and environmental model wholly inappropriate to the circumstances. This negotiation has no apparent commercial value. It is proceeding without respect to Congress' constitutionally-granted role in setting international commercial regulation and without Congressional negotiating goals.
9. 9 See, e.g., Annex 2.1 regarding elimination of tariffs on goods traded between the U.S. and Jordan. While the WTO tariff levels are in general very low after successive rounds of GATT negotiations, in some areas tariff "peaks" remain, such as the 17.5% tariff on textiles and apparel.
10. 10 This means that the Jordan FTA defines practices tolerated (albeit unhappily) in the U.S. - for instance, educational use of photocopied journal articles or press clips - as "willful copyright piracy on a commercial scale." (Article 4-28)
11. For instance, the explicit incorporation into the Jordan FTA of the problematic GATT-WTO provision and its interpretive notes (section 2 above) provides a good argument for the narrower reading of this provision.
14. There is a rather infamous GATT case known as "Beer II" that explicitly establishes this principle of Congressionally-approved trade pacts applying to state laws. (GATT, U.S. - Measures Affecting Alcoholic and Malt Beverages, DS23/R, Adopted 19 June 1992.)
15. "1999 Singapore Report on Human Rights Practices," Bureau of Democracy, Human Rights and Labor, U.S. Department of State, Feb. 25, 2000; "Partnership of Trade Unions in National Development Programmes and in Promotion of Labour Mobility in Singapore," International Institute for Labour Studies, 2000.
18. "1999 Singapore Report on Human Rights Practices," Bureau of Democracy, Human Rights and Labor, U.S. Department of State, Feb. 25, 2000; "Partnership of Trade Unions in National Development Programmes and in Promotion of Labour Mobility in Singapore," International Institute for Labour Studies, 2000.
19. "Labor Market Policies in Asian Countries: Diversity and Similarity among Singapore, Malaysia, the Republic of Korea and Japan," Employment and Training Department, International Labor Office, 1998.
21. "Labor Market Policies in Asian Countries: Diversity and Similarity among Singapore, Malaysia, the Republic of Korea and Japan," Employment and Training Department, International Labor Office, 1998.