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Public Citizen's Pocket Trade Lawyer: The Alphabet Soup of Globalization

December 1, 2005

Globalization is a defining phenomenon of our time. The current model, corporate economic globalization, is a version of globalization which is being implemented by a new array of international commercial agreements. While these pacts are called "trade" agreements, today's international commercial agreements no longer focus solely on traditional trade matters, such as reducing tariffs and quotas. Instead, the main mechanisms of globalization, such as the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), contain a comprehensive set of one-size-fits-all policies to which signatory countries are required to conform their domestic laws and regulations. These pacts prioritize commerce over other goals and values, in part by setting constraints on what environmental, food or product safety, social justice and other policies our national, state and local governments may implement. Yet, while institutions and agreements like the WTO, NAFTA and a whole alphabet soup of other globalization mechanisms and institutions have deep and direct impacts on many facets of the daily lives of people everywhere, the meaning and implications of their terms are often unintelligible. First, the agreements are written in a technical trade jargon which we have dubbed "GATTese." In GATTese, words with a clear meaning in common usage have entirely different meanings or implications. In some cases, one or two words are shorthand for entire twenty-year bodies of trade law jurisprudence that simply are not evident on the face of the term. Second, words used in trade and investment agreements have extremely precise legal meanings which can turn on the slight difference in a verb's tense. Since the text of these agreements are often only available in English (or perhaps also French), non-native speakers are put at a disadvantage from the start. Third, there are certain basics of legal interpretation that most non-lawyers simply do not know which can mask completely the meaning of trade agreement language. The actual provisions of some of the key mechanisms of globalization -- such as the WTO and NAFTA -- are so drastic that simply being able to understand what they mean for our environmental, food safety, social justice and other laws and policies is one of critics' strongest arguments. Meanwhile, innocent errors in interpretation made by critics are often used by proponents of corporate-managed trade to undermine the credibility of legitimate criticisms. This guide is intended to help people go to the legal sources with an understanding of some of the most essential specialized terms, language and legal quirks of globalization's instruments. Its goal is to empower the maximum number of people to be able to make their own informed decisions about the often intentionally murky provisions hidden in policies and agreements promoting corporate globalization.

NAFTA Chapter 11 Investor-State Cases: Lessons for the Central America Free Trade Agreement

February 1, 2005

This report describes how Canadian cattle producers are using NAFTA to demand $300 million in compensation from U.S. taxpayer funds, claiming that the Canadian cattle import ban instituted after mad cow disease was found in Canada violates their NAFTA rights. In addition, a Canadian tobacco company is using the private NAFTA tribunals to attack the U.S.tobacco settlements. These claims are among the 42 cases filed thus far by corporate interests and investors under NAFTA's "Chapter 11" investor provisions, which grant foreign interests more expansive legal rights and privileges than those enjoyed by U.S. citizens or corporations. With only 11 of the 42 cases finalized, some $35 million in taxpayer funds have been granted to five corporations that have succeeded with their claims. An additional $28 billion has been claimed from investors in all three NAFTA nations. The U.S. government's legal costs for the defense of just one recent case topped $3 million. Seven cases against the United States are currently in active arbitration. The report documents how "fixes" to the NAFTA investor protection model required by Congress in the 2002 "Fast Track" legislation were not included in the proposed CAFTA. CAFTA's investment provisions include several cosmetic, ineffective tweaks to the NAFTA investor protection language, but otherwise expand the system of new privileges and private enforcement to investors in six additional nations. These rights include the ability to demand compensation when public health and environmental policies -- even when applied equally to domestic and foreign firms -- might undermine a foreign firm's profitability. On this ground and others, CAFTA fails to meet Congress' most significant Fast Track requirement regarding investment rules in future pacts by granting foreign firms greater rights when operating within the United States than U.S. firms or residents enjoy under constitutional property rights interpreted by the U.S. Supreme Court. CAFTA was signed in 2004 but has not yet been brought up for congressional consideration; support for the deal is limited, in part because of its investment provisions. The United States has not yet lost a case, thanks to an array of lucky technical breaks -- such as an investor relocating into the United States and thus losing foreign investor standing under NAFTA. However, with the overall win-loss ratio of NAFTA investor-state cases running around 50-50, it is just a matter of time before a NAFTA claimant is successful against the United States.

Down on the Farm: NAFTA's Seven-Years War on Farmers and Ranchers in Florida

August 1, 2001

In the summer of 2001, family farmers and ranchers throughout North America are struggling. During the 1993 debate over the fate of the North American Free Trade Agreement (NAFTA), Florida farmers and ranchers as well as farm communities across the U.S. were promised that NAFTA would provide access to new export markets and thus would finally bring a lasting solution to farmers off-and-on struggles for economic success. Now, seven years later, the evidence shows the income of independent Florida farmers has declined, consumer prices have risen while some giant agribusinesses have reaped huge profits. Florida has lost 1,000 small and medium sized farms since NAFTA went into effect. Total net income for "farm operations" in Florida increased between 1993 and 1999 but all of the income gain was in corporate farms. When corporate income increases are eliminated farm income drops steeply in Florida. During the seven years of NAFTA, net farm income for non-corporate Florida farm operations fell 74.4% between 1993 and 1999 from $51.4 million to $13.4 million. These bad outcomes for independent farmers are defining the growing national debates over President Bush s proposals to establish Fast Track trade authority and to expand NAFTA to 31 other Latin American and Caribbean nations through the Free Trade Area of the Americas (FTAA). This report documents the results that are causing farmers concern about NAFTA and its model of export-oriented agriculture. This special Florida supplement to a recent national report on NAFTA s agriculture-sector outcomes examines the impact of NAFTA on Florida farmers. For the past seven years, Florida vegetable growers, especially tomato and bell pepper growers, have been facing intense pressure from increasing imported vegetables from Mexico. Florida s citrus crop, the jewel of Florida s agriculture production, is already facing increased pressure from Mexico and will face even further import threats if President Bush is granted Fast Track trade authority. President Bush has announced he is seeking trade authority to negotiate FTAA NAFTA expansion which could result in Florida facing severe competition from powerhouse citrus producer Brazil. Farmers raising beef cattle in Florida who have seen incomes decline as farmgate prices for beef have collapsed in Florida under NAFTA would face new FTAA imports from beef giants Argentina and Brazil. Moreover, sugarcane farmers, who received special protection from Mexican sugar imports when NAFTA was negotiated, face even greater threats from FTAA nation Brazil which dominates the world sugar trade. Brazil has announced that access tothe U.S. for its citrus, beef, and sugar is a non-negotiable requirement for any FTAA deal. The complete executive summary and access to the full report are available via the link below.

Down on the Farm: NAFTA's Seven-Years War on Farmers and Ranchers in the U.S., Canada and Mexico

June 1, 2001

In the summer of 2001, family farmers and ranchers throughout North America are struggling. During the 1993 debate over the fate of the North American Free Trade Agreement (NAFTA), U.S. farmers and ranchers were promised that NAFTA would provide access to new export markets and thus would finally bring a lasting solution to farmers' off-and-on struggles for economic success.Now, seven years later, the evidence shows farm income has declined, consumer prices have risen and some giant agribusinesses have reaped huge profits. These outcomes are defining the growing national debates over President Bush's proposals to establish Fast Track trade authority and to expand NAFTA through the Free Trade Area of the Americas (FTAA).This report reveals the basis for farmers' concern about NAFTA and its model of export-oriented agriculture. For the past seven years, Midwestern and Plains states wheat farmers; ranchers in Montana, Texas and other states; vegetable, flower and fruit growers in California; lumber mill owners in Louisiana, Arkansas and Washington; vegetable growers in Florida; chicken farmers nationwide and others have suffered declining commodity prices and farm income while a flood of NAFTA imports outpaced U.S. exports to Canada and Mexico. Yet it was not farmers in Mexico or Canada who benefitted from U.S. farmers' woes. Millions of campesinos throughout Mexico have lost a significant source of income and left their small corn farms. Some became farm laborers working in squalid conditions for poverty wages on large plantations growing produce for export to the U.S. Others moved to Mexico's cities where unemployment is high. Canadian grain and dairy farmers also face steeply rising debt during the NAFTA era. This report also documents the rise in Mexican staple food prices, such as in tortilla prices, even as the price paid to Mexican corn farmers dropped 48%. However, NAFTA has brought seven years of good fortune to many of the agribusinesses that pressured Washington, Ottawa and Mexico City to negotiate and ratify NAFTA's corporate- managed trade terms. Since NAFTA stripped away many safeguards for the folks who produce raw agricultural products, relative power and leverage has grown for large agribusiness conglomerates to exert pressure on both farmers and consumers. In Washington D.C., the Bush Administration is pushing forward with an ambitious plan to expand the NAFTA model throughout the hemisphere through FTAA. President George W. Bush and his principal trade policy advisors have stated that they intend to make the debate about NAFTA expansion and Fast Track (which they want to rename "Presidential Trade Promotion Authority") a referendum on NAFTA. Public Citizen agrees that the debate over NAFTA expansion indeed, the national conversation about the premises and direction of U.S. trade policy should be decided on the basis of the real-life results of NAFTA and the model on which it is based. In this report, we show how independent farmers in the U.S., Mexico and Canada have seen agricultural prices plummet, farm incomes collapse and critical domestic agriculture safety net programs dismantled. International free trade agreements and the domestic policies which furthered implementation of the export-oriented model, such as the U.S. "Freedom to Farm Act," have proved to benefit only the largest agribusinesses while the majority of farmers and consumers have lost.

Coming NAFTA Crash: The Deadly Impact of a Secret NAFTA Tribunal's Decision to Open U.S. Highways to Unsafe Mexican Trucks

February 1, 2001

Report documents that Mexico's truck safety regulations are virtually non-existent, that Mexican trucks have far more safety deficiencies than U.S. trucks, that a disproportionate number of Mexican trucks crossing the border have been taken out of service for serious safety violations, and that the U.S. lacks enough inspectors to check incoming trucks. Further, Texas border communities within the commercial border zone in which Mexican trucks are permitted have seen a dramatic increase in highway fatalities and serious injuries from crashes involving trucks with Mexican registrations, the report found.

Purchasing Power: The Corporate-White House Alliance to Pass the China Trade Bill Over the Will of the American People

October 1, 2000

The passage of China Permanent Normal Trade Relations (PNTR) by the U.S. House of Representatives in late May 2000 over the overwhelming will of the American people was the result of the most forceful and aggressive corporate legislative campaign in history. Despite four-to-one public opposition, the bill was passed by the use of unprecedented amounts of corporate money in political contributions, advertising, lobbying and rented "experts," as well as the application of the White House s full resources. To fulfill their own overlapping goals, the corporate coalition and the White House worked in such tight coordination that the General Accounting Office has reported that federal law on Executive branch lobbying practices was violated. Deaf to pleas from even pro-PNTR House Democrats, the administration launched the China PNTR crusade to build a legacy for the President knowing it would damage Democrats chances to regain a House majority. To celebrate the House PNTR vote, President Clinton went out that night to a corporate political fund-raiser boycotted by many Democratic House Leaders. The corporate interest was in eliminating the annual Congressional review of China trade and to obtain unconditional, unlimited access to the U.S. market for goods produced in China. The day after the House vote, the Wall Street Journal and other papers finally reported that the corporations were not so much interested in access to the Chinese market to sell goods there, but rather sought guaranteed U.S. access for goods they could produce in China with its remarkably high-quality, cheap, government-controlled labor and lax environmental controls. Passing China PNTR was an important priority for both players for another important and symbolic reason: the proponents of corporate globalization and corporate managed trade had been defeated for five years by a determined citizen s movement that recognized that the corporate and White House globalization agenda was benefitting narrow corporate interests at the expense of working families and the environment. The Clinton administration and the corporate lobbies had pushed the North American Free Trade Agreement (NAFTA) and the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) which established the World Trade Organization (WTO) through the Congress during the administration s first term. While the NAFTA and WTO fights required concerted corporate lobbying and public relations efforts, obtaining political support for expanding existing globalization policies had become much more difficult. Polling showed that people had become aware of the all-too-real down sides of what its proponents dubbed "free trade," but was increasingly revealed to be corporate managed trade. Several years after NAFTA's passage when its negative impacts became apparent, public opinion, never supportive of the corporate-White House trade agenda, turned frosty. Significant relocation of high-wage manufacturing jobs to Mexico, increased border pollution and health problems, and the declining safety of America s increasingly imported food supply made the public increasingly skeptical of the promises and projections made by the "free trade" proponents. The complete executive summary and access to the full report available via the link below.

Deals for NAFTA Votes II: Bait and Switch

November 1, 1997

As this report documents, many of the policy-related promises "announced" today where never satisfied when first made in 1993. Thus, it appears the Clinton Administration is trying to recycle them to sell again in their current scramble for fast track votes. Report available online with the following "NAFTA's Broken Promises" series (http://www.citizen.org/publications/articles.cfm?ID=6825&relatedpages=1&catID=114&secID=1038): - The Cost to Tennessee of Our Failed Experiment With NAFTA - The Cost to Michigan of Our Failed Experiment With NAFTA - The Cost to Massachusetts of Our Failed Experiment With NAFTA - The Cost to New Jersey of Our Failed Experiment With NAFTA - The Cost to Illinois of Our Failed Experiment With NAFTA - The Cost to Wisconsin of Our Failed Experiment With NAFTA - The Cost to Florida of Our Failed Experiment With NAFTA - The Cost to California of Our Failed Experiment With NAFTA - The Cost to Maine of Our Failed Experiment With NAFTA - The Cost to Indiana of Our Failed Experiment With NAFTA - The Cost to Kansas of Our Failed Experiment With NAFTA - The Cost to Minnesota of Our Failed Experiment With NAFTA - The Cost to New York of Our Failed Experiment With NAFTA - The Cost to Pennsylvania of Our Failed Experiment With NAFTA - The Cost to Texas of Our Failed Experiment With NAFTA - The Cost to Missouri of Our Failed Experiment With NAFTA