Mr. Chairman and members of the subcommittee, on behalf of Public Citizen’s 200,000 members, thank you for the opportunity to share our research on the outcomes of current U.S. trade policy. Public Citizen is a nonprofit research, lobbying and litigation group based in Washington, D.C. Founded in 1971, Public Citizen accepts no government or corporate funds. Public Citizen’s Global Trade Watch division focuses on how the current globalization model and its implementing mechanisms, including the World Trade Organization (WTO) and the North American Free Trade Agreement (NAFTA), affect Public Citizen’s goals of promoting democracy, economic and social justice, health and safety, and a healthy environment.

 

First, I would like to recognize the leadership of Subcommittee Chairman, Senator Byron Dorgan, who has tirelessly worked to focus attention on the failings of our current trade regime and the need for change. Chairman Dorgan has methodically tracked the outcome of the current policies and plays a vital role in insisting that if these results are not acceptable, then the model can and must be changed.

 

Unfortunately for all of us living with the results, the data supporting the need for a new direction in trade policy are extremely compelling. I pray that this hearing helps spur the needed changes. Since the Fast Track system devised by President Nixon was passed in 1974, the agreements it enabled have undermined the interests of most American workers, firms and farmers. Economic damage has been but one outcome. The principle and practice of democracy also has been a casualty. This testimony first focuses on economic outcomes and then describes domestic policies that have been undermined via trade pacts.

 

This is avoidable damage. A bad process – Fast Track – has enabled bad policy, which in turn has had terrible results. There is nothing inevitable about the negative outcomes my testimony describes. A new policy can achieve better results. Minimally, we must avoid expanding the current failed policy, for instance via a Doha Round WTO escalation or via more NAFTA-model “free trade agreements” (FTAs).

 

The summary of the damage thus far? Before Fast Track we had balanced trade and rising living standards; since then the U.S. trade deficit has exploded as imports surged, and now we have a deficit equal to 6 percent of our GDP. A deficit of this magnitude is widely agreed to be unsustainable, exposing the U.S. and global economy to risk of crisis, shock and instability. The average American worker is only making a nickel more per hour in inflation-adjusted terms than in 1973, despite impressive productivity gains, while income inequality has jumped to levels not seen since the Robber Baron era. During the NAFTA-WTO era, we have lost three million U.S. manufacturing jobs, one of every six in that sector, devastating local tax bases on which our schools and hospital rely and undermining our ability to produce the basic good essential for our national security and infrastructure. And now, we are even becoming a net food importer!

How have we gotten into this mess? The U.S. Constitution gives Congress exclusive authority to “regulate commerce with foreign nations” (Article I-8.) The Federalist Papers discuss why this structure – and the inherent checks and balances it established – was vital based on the experience of living under a regime where trade policy was determined by the executive – the king in the case of the American colonies. The goal was to ensure that U.S. trade policy was set by the branch of government closest to the people so as to preclude the ability of the president to favor friends of allied foreign governments rather than considering the national interest. Fast Track delegates away to the executive branch Congress’ constitutional authority to control the contents of U.S. trade agreements, as well as numerous other important powers. Happily, another Boston Tea Party or a revolution are not needed to rectify the concentration of trade authority in the hands of the executive, as it is within the power of Congress to do so.

 

We need a new mechanism for negotiating trade agreements that puts a steering wheel – and when necessary, brakes – on our trade negotiators so that Congress and the public are back in the driver’s seat. Only by replacing the unbalanced, outdated Fast Track trade authority delegation system can we chart a new course on trade that can harness trade’s benefits for the majority.

 

For those members of the Commerce Committee not in office in 1993 when NAFTA was considered, I respectfully urge you to review the floor debate during which the Commerce Committee’s Vice Chair, Senator Ted Stevens, wisely inquired whether the limits imposed by Fast Track on the Senate are even permissible under the Constitution. Senator Stevens noted that an Article I-7 clause 1[1] provides the Senate a right to amend revenue measures. Trade agreements, by merit of their setting tariff levels, are revenue measures. Fast Track eliminates the Senate’s constitutional right to amend. This is a point worth consider in thinking about what system should replace the Fast Track delegation mechanism. The conclusion of this testimony addresses this issue in more detail.

 

Fast Track must be replaced. Fast Track enabled trade agreements are devastating the U.S. middle class while increasing poverty and instability overseas. The following data summarizes the outcomes of our current policy. This is not speculation about what could occur or projections based on various assumptions. Following are the actual outcomes, replete with footnotes and details thanks to Global Trade Watch’s research director, Todd Tucker.

 

 

The average American worker is only making a nickel more per hour in inflation-adjusted terms than in 1973, the year before Fast Track was first passed. In 1973, the average American worker made $16.06 hourly in today’s dollars. That same worker only makes $16.11 today, despite U.S. workers’ average productivity nearly doubling since 1973. Better trade policy can do better for America’s workers than this pathetic 0.28 percent raise. Were it not for trade agreements that pit American workers in a race-to-the-bottom with poverty-wage workers worldwide, U.S. workers would see wages increase in a way that more closely tracks productivity increases. Trade pacts that require companies to respect workers’ rights to organize a union would empower workers in developing countries to fight to raise their wages also.

 

Special protections included in “free trade” agreements for certain sectors, such as Big Pharma, increase consumer prices. As bad trade deals push down our wages, these deals also include provisions that directly jack up consumer prices. Special protections for Big Pharma included in WTO and NAFTA required the United States to provide them longer monopoly patent protections. Did the U.S. Congress really intend to extend U.S. drug patent terms from the pre-WTO and pre-NAFTA 17-year terms to the WTO and NAFTA-required 20-year terms? And, what is such protectionism doing in a “free trade” agreement? The University of Minnesota’s School of Pharmacy found that the WTO and NAFTA windfall patent extensions cost U.S. consumers at least $6 billion in higher drug prices and increased Medicare and Medicaid costs nearly $1.5 billion just for drugs then under patent.[2] The University of Minnesota study only covers medicines that were under patent in 1994, so the total cost to us is much higher.[3]

 

How our trade policy is suppressing American wage levels. Trade’s downward pressure on our wages comes from both the import of cheaper goods made by poorly-paid workers abroad (displacing goods made by better-paid U.S. workers) and threats during wage bargaining by employers that they will move overseas. The result is growing inequality among Americans, with workers losing while the richest few enjoy massive gains. The pro-Fast Track Peterson Institute for International Economics estimates that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends.[4] Most proponents of the NAFTA-WTO status quo trade model acknowledge this connection. But they argue that even so, U.S. workers win when imports produced by low-paid workers overseas increase because it means cheaper stuff for all of us. However, in fact when the actual data is plugged into the trade theory, the reality is quite different.

 

Now for the vast majority of Americans, the gains in lower prices from trade are being outweighed by wage losses – meaning net losses for most. When the non-partisan Center for Economic and Policy Research applied the actual data to the trade theory, they discovered that when you compare the lower prices of cheaper goods to the income lost from low-wage competition under our current policy, the trade-related losses in wages hitting the vast majority of American workers outweigh the gains in cheaper priced goods from trade. U.S. workers without college degrees (over 70 percent of us) lost an amount equal to 12.2 percent of their wages, so for a worker earning $25,000 a year, the loss would be more than $3,000 per year![5] Talk about unfair trade. We need new trade agreements and policies that guarantee that the gains from trade outweigh the losses for most Americans.

Before Fast Track we had balanced trade; since it was instituted, the U.S. trade deficit has exploded as imports surged. The pre-Fast Track period was one of balanced trade for the United States and rising living standards for most Americans. In fact, in 1973, the United States had a slight trade surplus, as it had in nearly every year since World War II. But in every year since Fast Track was first implemented, the United States has run a trade deficit. And since Fast Track got us into NAFTA and the WTO, the U.S. trade deficit surged from under $100 billion to nearly $800 billion – that is six percent of national income! This huge trade deficit is widely agreed to be unsustainable, meaning unless we implement policies to shrink that deficit, the U.S. and global economies are exposed to risk of crisis, shock and instability.

 

Imports into the United States from the countries with whom the United States has FTAs are growing considerably faster than exports from the United States, meaning our FTAs are actually increasing the U.S. trade deficit. USTR has claimed that U.S. exports to countries with which we have FTAs beat non-FTA exports, however to come up with the data they use to support this claim, they conveniently exclude the three FTA nations with which we have the biggest deficits: Mexico, Canada and Israel. When you put these nations back into the calculation, the U.S. annual export growth rate 2001-2006 to our FTA partners is 22.67 percent – below U.S. exports to non-FTA nations and to the world as a whole. In fact, the Bush administration itself knows well that U.S. FTAs lead to growth in bilateral trade deficits. In an October 2006 speech to a Korean audience, Deputy USTR Karan Bhatia said that it was a myth that “The U.S. will get the bulk of the benefits of the FTA. If history is any judge, it may well not turn out to be true that the U.S. will get the bulk of the benefits, if measured by increased exports. From Chile to Singapore to Mexico, the history of our FTAs is that bilateral trade surpluses of our trading partners go up” [italics added].[6]

 

 

The United States has large and growing trade deficits with all of its major FTA partners and with the group of FTA nations as a whole. And in the cases of Mexico and Jordan, we went from small surpluses to large deficits. There are no tricks here: all 13 FTA nations are presented in order of accession. Since USTR didn’t adjust for inflation, we didn’t either. USTR included several FTA nations that haven’t had a full calendar year of FTA treatment (and others like CAFTA nations whose U.S. exports temporarily crashed due to the Administration’s embarrassing textile rules of origin mix-up): we give the administration benefit of the doubt and compare the full year-to-year trade balance. As you can see, the small surpluses we now (and perhaps temporarily) enjoy with the tiny CAFTA markets do not outweigh the large and growing deficits with our more important FTA partners. Numbers in bold and in parentheses represent deficits.

 

Country	Entry Date	Date of Entry Trade Balance	2006 Trade Balance	$ Change from Entry to Present
Israel*	1985	($651,386,137)	($11,062,816,493)	($10,411,430,356)
Canada	1989	($13,010,182,276)	($104,807,513,391)	($91,797,331,115)
Mexico	1994	$530,787,754	($82,493,273,675)	($83,024,061,429)
Jordan	2001	$110,019,449	($797,938,097)	($907,957,546)
Chile	2004	($1,771,368,610)	($3,330,114,125)	($1,558,745,515)
Singapore	2004	$3,001,393,110	$4,161,051,450	$1,159,658,340
Australia	2005	$7,278,102,445	$8,592,539,836	$1,314,437,391
Morocco	2006	$49,296,037	$322,704,253	$273,408,216
CAFTA-DR	2006
El Salvador		($203,985,314)	$240,060,256	$444,045,570
Guatemala		($457,372,341)	$195,816,702	$653,189,043
Honduras		($603,278,117)	($163,867,841)	$439,410,276
Nicaragua		($592,042,526)	($820,712,923)	($228,670,397)
Bahrain	2006	($119,873,998)	($161,641,962)	($41,767,964)
Total FTA Deficit			($190,125,706,010)

Now the United States is even poised to become a net food importer! Unbelievably, due to this import surge, the United States is even becoming a net food importer. While U.S. farmers were told by NAFTA-WTO supporters that they would be “breadbasket to the world,” nearly 300,000 family farms have been shuttered since the pacts went into effect.[7] Now we’re importing massive amounts of the grains and feeds we also export, and running a deficit in most categories of foods that wind up on our dinner table, including fruits, vegetables and more.[8] We can reverse this mess, and we must to avoid major economic damage.

 

Over 3 million American manufacturing jobs – 1 in out of every 6 – lost. The U.S. manufacturing sector has long been a source of innovation, productivity, growth and good jobs.[9] But by the end of 2006, the United States had only 14 million manufacturing jobs left – nearly 3 million fewer than before NAFTA and the WTO.[10] The U.S. Labor Department has a list of nearly 1.7 million U.S. workers that have specifically lost their job to trade during the NAFTA-WTO era – and that is under just one narrow program that excludes many of the trade pacts’ victims.[11] Further, the non-partisan Economic Policy Institute estimates that as many as 7 million additional manufacturing jobs could have been supported in the U.S. economy were it not for this massive trade deficit caused by our bad trade policy.[12] The good news is that this outcome is neither random nor inevitable: bad policy led to bad results. We can change our trade policy-making process and get good agreements that create good jobs – and rebuild our now-dwindling ability to manufacture the products on which our nation’s very security and well-being rely.

 

Devastation of America’s manufacturing base is eroding the tax base that supports our schools and hospitals. The erosion of our manufacturing base during the Fast Track era means fewer firms and fewer well-paid workers to contribute to local tax bases. Research has shown that the broader the manufacturing base, the wider is the local tax base and offering of social services.[13] With the loss of manufacturing, fiscal resources that could be used for social services declined,[14] while welfare enrollments increased.[15] This has resulted in the virtual collapse of some local governments.[16] These “trade” pacts also undermine our access to essential services by requiring that many services be privatized and/or deregulated so that public services are transformed into new for-profit commodities that only those who can afford to purchase can obtain.[17]

The off-shoring of American jobs is moving rapidly up the income and skills ladder. Economy.Com estimates that nearly one million U.S. jobs have been “off-shored” since early 2001 alone, with 1 in 6 of those in Information Technology, engineering, financial services and other business services.[18] Progressive Policy Institute, a pro-NAFTA-WTO think tank, found that 12 million information-based U.S. jobs – 54 percent paying better than the median wage – are highly susceptible to off-shoring.[19] Independent academic studies put the number of jobs susceptible to off-shoring much higher. Alan Blinder, a former Fed vice-chair, Princeton economics professor, and NAFTA-WTO supporter, says that 28 to 42 million service sector jobs (or about 2 to 3 times the total number of current U.S. manufacturing jobs) could be off-shored in the foreseeable future.[20] Yet, if we were to implement policies to forbid off-shoring of certain types of jobs to nations that do not provide adequate privacy protections for confidential health and financial data for example, we could have a much lower rate of job off-shoring. Europe already has this policy in place.[21]

 

Bad trade policy downgrades quality of U.S. jobs available. Trade affects the types and quality of jobs available – and our wage levels – not the number of total jobs. We lost millions of manufacturing jobs during NAFTA and WTO, but overall unemployment has been fairly stable as new service sector jobs were created. Proponents of the NAFTA-WTO status quo often raise this point to claim that recent trade policies have not hurt most American workers. But, what they do not mention is that the quality of jobs available to the majority of U.S. workers – and the wages we can earn – have all been degraded by our trade policy. For instance, the average worker displaced during this period from manufacturing went from earning $40,154 to $32,123 when re-employed.[22] The loss of workers’ bargaining power caused by so many off-shored U.S. jobs – first in manufacturing, now in services too – means stagnant wages for all of us. Under NAFTA and WTO we are forced to compete in the same labor market as poor countries’ less-than-$1 per day workers in a perpetual race-to-the-bottom.

 

The inequality between rich and poor in America has jumped to levels not seen since the Robber Baron era. The richest 10 percent of Americans are taking nearly half of the economic pie, while an even more elite group – the top one percent of the income distribution – is taking nearly a sixth of the pie. Rich Americans’ share of national income was stable for the first several decades after World War II but shot up 40 percent for the richest 10 percent and 124 percent for the richest 1 percent between 1973 and 2005 – the Fast Track era.[23] Nearly all economists agree that our trade policy has partially driven this widening inequality. We must replace the trade policies causing this rift. Reversing this trend is vital to the health of American democracy.

 

How could American workers’ productivity double, but wages stay flat? Trade policy shifts during the Fast Track era also have had a direct impact on American workers’ ability to bargain for higher wages. In the past, American workers represented by unions were able to share in the economic gains generated by productivity increases – by bargaining for their fair share. But since the Fast Track-enabled NAFTA and WTO went into effect, as many as 62 percent of U.S. union drives face employer threats to relocate abroad, according to U.S. government-commissioned studies. And indeed, the factory shut-down rate following successful union certifications tripled since NAFTA went into effect.[24] Meanwhile, these deals forbid federal and state governments from requiring that U.S. workers perform the jobs created by the outsourcing of government work. Such “anti-off-shoring” policies – as well as prevailing wage laws designed to ensure goods wages for construction work – are subject to challenge in foreign tribunals for violating the pacts’  rules. The Fast Track-hatched trade agreements’ attack on America’s working families’ ability to lift themselves up has led increasing numbers to turn against any active expansion of international trade.[25] We need a new way to make U.S. trade agreements that guarantees working families’ get a fair shake.

 

The worldwide gulf between rich and poor has also widened since Fast Track. Remember all the hype about how these trade agreements would reduce poverty in the developing countries? We still hear this line today. Yet, the reality is that the corporate globalization era policies enabled by Fast Track have increased income inequality between developed and developing countries. Income inequality has also increased between rich and poor within many nations under this retrograde trade model. In 1960, the 20 richest nations earned per capita incomes 16 times greater than non-oil producing, less developed countries. By 1999, the richest countries earned incomes 35 times higher, signifying a doubling of the income inequality.[26] According to one United Nations study, the richest 1 percent of the world’s population receives as much as the poorest 57 percent.[27] According to another UN study, “in almost all developing countries that have undertaken rapid trade liberalization, wage inequality has increased, most often in the context of declining industrial employment of unskilled workers and large absolute falls in their real wages, on the order of 20-30 percent in Latin American countries.”[28] The gap is worsening over time, but a trade policy designed to benefit the majority can turn this trend around.

 

Progress on growth and social development in poor countries slows during the Fast Track era. Increasing economic growth rates mean a faster expanding economic pie. With more pie to go around, the middle class and the poor have an opportunity to gain without having to “take” from the rich – often a violent and disruptive process. But the growth rates of developing nations slowed dramatically in the Fast Track period. For low- and middle-income nations, per capita growth between 1980 and 2000 fell to half that experienced between 1960 and 1980! The slowdown in Latin America was particularly harmful. There, income per person grew by 75 percent in the 1960-80 period, before the International Monetary Fund (IMF) began imposing the same package of economic, investment, and trade policies found in NAFTA and the WTO. Since adopting the policies, per capita income growth in Latin America plunged to 6 percent in the 1980-2000 period. Even when taking into account the longer 1980-2005 period, there is no single 25-year window in the history of the continent that was worse in terms of rate of income gains. In other world regions, growth also slowed dramatically, while in Sub-Saharan Africa, income per person actually shrank 15 percent after the nations adopted the policy package also required under the WTO and NAFTA![29] Improvement measured by human indicators – in particular life expectancy, child mortality, and schooling outcomes – also slowed for nearly all countries in the Fast Track period as compared with 1960-80.[30] In numerous Latin American countries, people have risen up at the ballot box to elect new governments that reject these failed policies and who are implementing better alternatives – providing a hopeful example to the world.

 

Poverty, hunger and displacement on the rise. The share of the population living on less than $2 a day in Latin America and the Caribbean rose following the implementation of NAFTA-WTO-style policies. And the share of people living on less than $1 a day (the World Bank’s definition of extreme poverty) in the world’s poorest regions, including Sub-Saharan Africa and the Middle East, has increased during the same period,[31] as the IMF and World Bank and then WTO imposed this model. According to the Food and Agriculture Organization, global efforts toward reducing hunger have “stalled completely worldwide” during the WTO era.[32] During the Fast Track era, as nations have begun adopting NAFTA-WTO style policies – from Mexico[33] to China[34] and beyond – the displaced rural poor have had little choice but to immigrate to wealthy countries or join swelling urban workforces where the oversupply of labor suppresses wages, exacerbating the politically and socially destabilizing crisis of chronic under- and unemployment in the developing world’s cities. After NAFTA, Mexican immigration to the United States jumped 60 percent after over a million campesinos lost their livelihoods to NAFTA-style policies.[35] Desperation and social instability is growing among many poor nations’ vast rural populations. According to the Indian government, thousands of farmers bankrupted by trade policies commit suicide every year, leaving their children and families without alternate means of support.[36] Both American workers and farmers and our counterparts in poor countries are all suffering under the current trade and globalization system – united, they represent a global majority for a change of course.

 

Developing countries that did not adopt the package fared better. In sharp contrast, nations that chose their own economic mechanisms and policies through which to integrate into the world economy had more economic success. For instance, China, India, Malaysia, Vietnam, Chile, and Argentina since 2002, have had some of the highest growth rates in the developing world over the past two decades – despite largely ignoring the directives of the WTO, IMF or World Bank.[37] It is often claimed that the successful growth record of countries like Chile was based on the pursuit of NAFTA-WTO-like policies. Nothing could be farther from the truth: Chile’s sustained rapid economic growth was based on the liberal use of export promotion policies and subsidies that are now considered WTO-illegal.[38] It is only now that many of these countries are bringing their policies down to the WTO’s anti-development strictures that their economies are beginning to unravel.

 

 

Many people are surprised when they first learn that actual trade between countries is only one element of the policies established and enforced by NAFTA and the WTO, which also require that countries alter wide swaths of domestic non-trade policy or face sanctions. NAFTA and the WTO are dramatically different from all other trade agreements that preceded them. Traditionally, trade agreements focused on tariffs, quotas and border customs inspections. NAFTA and the WTO exploded the boundaries of what was included in trade pacts, establishing over 800 pages of non-tariff policies to which signatory countries must conform their domestic laws. Those new agreements set constraints on signatory countries’ domestic food safety standards, environmental and product safety rules, service-sector regulation, investment and development policy, intellectual property standards, government procurement rules, tax policy and more. A key WTO and NAFTA provision specifically requires each signatory country to ensure the conformity of all of its laws, regulations and administrative procedures to the agreements’ terms.[39] Other WTO and NAFTA signatory nations – and foreign investors through NAFTA and its various extensions such as the Central America Free Trade Agreement (CAFTA) and other bilateral FTAs – can challenge U.S. national or local policies before an international tribunal for failure to comply with the agreements’ terms. Nations whose policies are judged not to conform to the agreements’ rules are ordered to eliminate them or face permanent trade sanctions.

 

One commenter called NAFTA a “hunting license” for those seeking to challenge state laws in the name of “free trade.”[40] Unfortunately, the evidence has borne this out, as a range of non-trade issues reserved for state and local governments − such as local prevailing wage laws and other procurement policies; state and local “Buy America” procurement policies; low-cost health care programs; higher education policy; and state funding for public services, the environment, and even local libraries − are now under current NAFTA or WTO jurisdiction, or are being targeted for such by trade negotiators around the globe. The U.S. State Department, lobbying about how a state law might violate WTO, pressured Maryland state legislators to drop a procurement policy aimed at promoting human rights in Nigeria. California Governor Schwarzenegger vetoed a California law requiring a portion of highway pavement to use recycled tires because this would violate trade agreement procurement rules.

 

The United States is the country which has faced the largest number of WTO challenges to its laws, and has lost 86 percent of such cases. The diversity of U.S. laws that have been successfully challenged using WTO or NAFTA is stunning. The United States has been ordered by a NAFTA tribunal to open its road to Mexico-domiciled trucks regardless of whether the vehicles or drivers meet U.S. safety standards. Under the WTO, U.S. tax, environmental, anti-dumping, safeguard, procurement and gambling policies have all been challenged. The United States has been the number one target of challenges at the WTO, where domestic laws are almost always ruled against in tribunal hearings. The United States’ record at the WTO is also unique in that its win record for cases it has brought against other countries at WTO is lower than the average win rate, as you can see in this table.

 

The United States has lost an array of WTO attacks against domestic public interest laws, a pattern which extends to successful WTO attacks on other nations’ environmental, food safety and other public interest laws. The United States weakened gasoline cleanliness standards after a successful WTO assault on Clean Air Act regulations by several countries. Even though the United States signed a global environmental treaty called the Convention on International Trade in Endangered Species, American rules requiring shrimp fishers not to kill sea turtles were diluted after a WTO challenge to U.S. Endangered Species Act regulations enforcing the treaty. The U.S. Marine Mammal Protection Act was weakened after Mexico threatened WTO action to enforce an outstanding ruling against the law under the General Agreement on Tariffs and Trade (GATT). Now the dolphin-safe label no longer means that tuna caught with dolphin-deadly encirclement nets is banned from U.S. stores, but that tuna can bear the dolphin-safe label as long as no dolphin death was observed! These are only a few of the negative results of nine years of WTO implementation.

Domestic laws having nothing to do with trade have been successfully attacked, including the U.S. ban on Internet gambling. A WTO enforcement panel just ruled that the United States government failed to comply with a 2005 final WTO order to change certain laws related to the U.S. ban on Internet gambling. The WTO Internet gambling ruling implicates large swaths of state and federal gambling law unrelated to online gaming as potential trade barriers, and a follow-on WTO challenge already has been threatened by the European Union. The ruling clears the way for Antigua, which challenged the ban, to demand compensation from the United States, and if an agreeable deal cannot be struck, to impose trade sanctions. To exact compliance, Antigua could suspend benefits it extends to the United States under other WTO agreements. Antigua could, for instance, suspend its observance of copyright and patent protections required by the WTO to a degree deemed equivalent to Antigua’s commercial losses from its Internet gambling operations being excluded from the U.S. market. One of the most significant consequences of the WTO’s 2005 ruling is that an array of common state gambling regulations such as gambling bans, state lotteries or exclusive Indian gaming rights, which have the unintended effect of keeping out private European lotteries and casinos, were implicated as trade violations and placed in jeopardy of future challenges. In 2005, 29 state attorneys general wrote the Bush administration seeking withdrawal of the gambling sector from WTO jurisdiction. The WTO GATS agreement allows nations to “take back” service sectors from WTO jurisdiction, but only after compensating trading partners for lost business opportunities. The Bush administration has refused to do so.

 

Multi-million dollar cases against the United States are pending under NAFTA’s “Chapter 11” foreign investor protection enforcement system, while the cost of successfully defending just one NAFTA Chapter 11 attack on U.S. law cost $3 million. 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. A Canadian tobacco company is using the private NAFTA tribunals to attack the U.S. tobacco settlements. A California regulation requiring the backfilling of open-pit mines has been challenged by a Canadian mining enterprise, which plans to develop a giant open-pit cyanide gold mine in Imperial Valley, California, and which owns and operates similar mines around the world. These are among the 48 cases or claims 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 14 of the 48 cases finalized, some $36 million in taxpayer funds have been granted to five corporations that have succeeded with their claims. These cases include successful attacks on a government’s use of zoning laws and operating permits to regulate a toxic waste dump closed for contamination problems, the ban on cross-border PCB trade, the ban of a toxic chemical and logging regulations. 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.

Imports of food into the United States have soared under the WTO and NAFTA while inspection has declined and “equivalence” rules requires us to accept food that does not meet our standards. The WTO and NAFTA have resulted in a dramatic increase of dangerous food being imported into the United States.[41] The rules of these agreements have also greatly restricted the United States’ ability to protect the public from unsafe food. Imported food is more than three times more likely to be contaminated with illegal pesticide residues than U.S.-grown food, according to new analysis of FDA data. Meanwhile U.S. food imports have skyrocketed, U.S. inspections of imported food have declined significantly.[42] Imports of Mexican crops documented by the U.S. government to be at a high risk of pesticide contamination have dramatically increased under NAFTA, while inspection has decreased. Approximately 74 U.S. import inspectors are responsible for inspecting nearly 2.4 billion pounds of imported meat and poultry. Food-borne illness is on the rise globally and in the United States due in part to the “globalization” of the food supply. NAFTA and WTO require the United States to accept imports of food meeting “equivalent” but no U.S. safety standards. For instance, the Uruguay Round Agreements Act made statutory changes to the Federal Meat Inspections Act and the Poultry Products Inspection Act that in 1995 resulted in a minor, seemingly insignificant change to the U.S. meat and poultry regulations, when the words “equal to” were replaced with the word “equivalent” – a statutory change in the trade implementing legislation that was then used to change the regulations applying to imported meat.[43] Under the trade agreement-required new rules, more than 40 nations’ meat inspection systems have been declared equivalent and imports are now allowed and obtain USDA labels, even though some of this imported food is inspected by company employees, not independent government inspectors as required under U.S. law.[44]

 

Fast Track was designed 30 years ago as a way to deal with traditional tariff and quota-focused trade deals. Today’s “trade” agreements affect a broad range of domestic non-trade issues like local prevailing wage laws, Buy-America procurement policy, anti-off-shoring measures, food safety, land use and zoning, the environment and even local tax laws. Congress, state officials and the public need a new modern procedure for developing U.S. trade policy that is appropriate to the reality of 21^st century globalization agreements.

 

Fast Track’s structural design ensures Congress cannot hold executive branch negotiators accountable to meet the negotiating objectives Congress sets in Fast Track legislation. Thus, simply adding new negotiating objectives to the existing Fas