Levin Speech on pending free trade agreements with Korea, Panama and Colombia

U.S. Rep. Sander Levin (D-MI), Ranking Member of the House Ways and Means Committee delivered a trade speech which outlined vital changes that have been made to fix the Korea and Panama free trade agreements that were flawed as originally negotiated by President Bush and he announced his support for the revised agreements. He also announced his opposition to the Colombia Free Trade Agreement implementing bill without any reference to the Action Plan on Worker Rights.

Below is the text of Mr. Levin's speech prepared for delivery:

Remarks of Sander M. Levin,
Ranking Member of the Ways and Means Committee

Congressional Democrats have been actively working to shape a new trade policy that is responsive to the changing dynamics of a global economy.  It is an approach premised on the reality that expanded trade does not automatically benefit everyone.  We have to work to shape the course of trade so that its benefits are spread more broadly.  We rejected the passive, hands-off approach of the Bush administration, and embraced expansion of trade in ways that acknowledge its impact and broaden its benefits.  

Our workers and businesses deserve to know that we are standing up for them in the global marketplace, knocking down barriers to U.S. goods and services, and fighting for rules of competition that are fair.  

Carrying out this new policy, we succeeded in pushing for the inclusion of enforceable worker rights and environmental standards in the Peru Free Trade Agreement (FTA).   At that time, we made clear that the other pending Bush Trade Agreements with Korea, Panama and Colombia did not warrant our support because they each had problems that needed to be addressed.

So while the Republican drumbeat called for the passage of these flawed trade agreements as is, we set about fixing them.   

I would like to discuss each trade agreement today.  What was wrong with the Bush versions, what we strived to change, and whether or not they deserve the support of Congress.

The U.S. - Korea FTA

Negotiation of a free trade agreement with South Korea raised a fundamental principle – whether the United States would insist on creating conditions to allow two-way trade in a key sector, where to date, trade has been one way.  What is at stake are American jobs.

For decades, South Korea has employed a unique and ever changing regulatory regime to discriminate against auto imports, while the U.S. market has been open to their goods.  As a result, U.S. automakers exported less than 14,000 cars to South Korea in 2010.  In contrast, South Korean automakers have been able to use their historically closed market to finance an aggressive push into the U.S. market, through both exports (515,000 cars in 2010) and transplant production.  In 2010, automotive trade accounted for more than 75 percent of the $10 billion U.S. trade deficit with South Korea.

The Bush administration ignored Congressional and stakeholder calls to ensure the FTA meaningfully opened South Korea’s auto market to American products made by American workers, and concluded an agreement that would have locked in one-way trade.   

The Korean Government, encouraged by Republican support for accepting the 2007 FTA, refused to discuss changes. That began to change with the election of President Obama, who as a candidate expressed his opposition to the agreement unless a major one-way street in trade was ended.  Congressional Democrats handed over our work product and the Administration began discussions with the Korean Government.  Despite continuing pressures outside and too often within the Administration to settle for less, the President resisted pressures to settle at the G-20 for less than a real change.  These pressures continued after the G-20, but for industry, labor, myself and others most involved, the need for a two way street in this key sector was a basic principle, as competition spread globally.  And the final outcome was a fundamental breakthrough.  I am providing today a one-page description of the important provisions carrying out the basic elements in the agreement that I actively support.

I encouraged the Administration to submit the fixed Korea FTA when it was completed.  I believed that would serve as evidence that the Obama Administration had a coherent trade policy that was far different from that of its predecessor and was ready to move forward on trade when it was done effectively.  

I regretted the Administration’s failure to do so.  

The challenge for the Administration now is to assume a leadership role in spelling out the advances in the revised agreement, which is especially necessary in an atmosphere of overall public skepticism about trade because of its lack of fairness, and in actively discussing any and all criticisms.

The Panama and Colombia FTAs

Panama and Colombia raise a different challenge to trade policy.  It is one that has emerged as developed economies like our own have increasingly confronted trade with and competition from developing economies with very different economic structures, laws and practices, including in the area of workers’ rights.

Workers in those developing countries must have basic rights if they are going to improve their financial standing and climb the economic ladder.  This is vital to individuals and their families; it is critical to reducing poverty and the development of a country’s middle class.  This is critical to expanding U.S. exports and U.S. jobs – the development of middle classes creates consumers and robust markets for our businesses and workers.  And it’s also vitally important to U.S. workers, who should not compete unfairly with workers whose rights are suppressed, or who are killed in the exercise of those rights.

That set off a 20-year battle:  First NAFTA, which in side agreements included inadequate labor and environmental standards and lacked any enforceability.  Moving on a different path, one framed by President Clinton as needing trade agreements to level up, not down, his administration with some active Congressional support initiated an agreement with Cambodia providing market access incentives if Cambodian enterprises adopted and enforced international labor standards.  There followed negotiation of the Jordan FTA with a provision for worker rights with enforcement.

That progress stalled and went backward with the onset of the Bush Administration, which renounced effective enforcement procedures in the Jordan labor provision, and which, working with the Republican House, negotiated FTAs that only required countries to enforce existing labor and environmental laws, regardless of how weak those laws may be.  As a result, during that period, House Democrats who believed in expanded trade but also believed it was important to shape trade to spread its benefits worked with each of our prospective FTA partners to ensure their laws reflected basic international standards.  Where that was achieved, we actively supported those agreements.   Where that was not achieved – which was very much the case with the Central America Free Trade Agreement (CAFTA) – we opposed.  
CAFTA, in many ways, crystallized why this debate is so important.  Poverty and income inequality are rampant in many of the Central American countries, as well as many other countries in Latin America.  Without basic rights, workers in those countries would not be able to seize the benefits of the FTA and move up the economic ladder.  

When Democrats gained the majority in the House, we insisted, and the Bush Administration finally gave way, and with the May 10th Agreement, trade agreements would include fully enforceable basic worker rights for the first time.  With the unwillingness of the Administration to undertake the task, we talked directly with the Peruvian Government to ensure they brought their legal structure into compliance before Congress voted on the agreement.  They did so and acted on environmental issues and I actively supported passage of the Peru FTA.

Panama

With the May 10th agreement on worker rights also incorporated into the Panama FTA, in the absence of its being undertaken by the Bush Administration, I, along with the subcommittee staff, started immediately to work with the Panama government on specific changes to their laws to bring them into compliance with the FTA based on International Labor Organization standards.  That work was interrupted when there was elected a Speaker of the Panamanian Assembly who was wanted on an arrest warrant for killing a U.S. soldier.  After the Obama Administration took over, we turned over our work product and it re-commenced discussions with Panama.

I am providing today a summary of the changes made by Panama.  Panama has now brought their labor laws into compliance and it has addressed our tax haven concerns.

This FTA deserves our support.  The United States has consistently maintained a trade surplus with Panama for over 20 years ($5.7 billion in 2010), and the trade agreement is expected to increase that surplus.

Colombia

Before he was elected, President Obama stated that he opposed the Colombia FTA because of the suppression of worker rights and the high levels of violence against workers.
Colombia is important to the United States.  It has had a democratically elected government in a vital part of Latin America, relations with whom the U.S. often neglected.  And under ATPA and GSP many Colombian goods were exported duty-free to the U.S. while American companies have faced tariffs in markets of opportunity for increased exports which tariffs would be eliminated or reduced in the FTA.  

In the spring, 2009 I went on a fact-finding trip to Colombia, a highly polarized society. Workers were without their basic rights and did not have hope that things would change.  There was continued violence against a wide range of targets, including workers and their leaders; only a modicum of progress combating the wholesale impunity from punishment for crimes of violence, even on selected key cases.  The State Department and ILO reports documented massive evidence of laws and practices limiting the ability of workers to exercise their basic international rights.  

I returned again in January of this year for another week of a wide variety of meetings. While basic conditions were persisting, what had changed was a new Administration under President Santos, expressing his intention to tackle the issues of suppression of worker rights and violence and impunity.  Some action on difficult issues like land reform was being initiated and there was a sense among many citizens that I met with that there was cause for optimism that real change for workers and their families could come to Colombia.

On return to Washington, I shared my specific observations on the opportunities provided by the FTA and the wide array of outstanding issues relating to worker rights, violence, and impunity with the Administration.  Subsequently the Obama Administration began discussions with the Santos Administration to develop an Action Plan covering issues of worker rights, violence, and impunity.

I returned to Colombia two weeks ago to again assess first-hand the elements in the Action Plan already agreed upon and those still being worked on regarding the basic issues on workers’ rights, on the changes in the legal structure and in practices inside and outside the government and on the status of actions on violence, on protection of workers and on bringing violators of their rights to justice.  

I discussed these issues with representatives of labor, individual Colombian and American companies, representatives of the Afro-Colombian population, and a variety of NGOs.
On labor rights, President Santos has begun to take important steps to improve labor conditions and address violence and impunity, toward fulfilling obligations outlined in the Action Plan.  A few key points are worth highlighting.  

First, on the widespread use of so-called cooperatives to disenfranchise workers of their rights to be represented in the workplace, the Santos Administration has just put in place potentially far reaching disciplines.  If those disciplines are interpreted as broadly as they were drafted, and if they are enforced, they represent a major, meaningful effort to prevent employers from using these sham entities or, significantly, any other form of contracting, to hide direct employment relationships.  Simply put, these new disciplines have the potential to address the complex ways in which Colombian employers have sought to suppress workers rights by avoiding directly employing workers.

Second, the Santos Administration also recently enacted legislation imposing criminal penalties, including potential imprisonment, for anti-union activity.   It is also through that legislation that the Santos Administration seeks to address another tool used by employers – collective pacts – to deter workers from organizing in any meaningful way, and which the ILO has repeatedly criticized.  Specifically, the legislation criminalizes offering better terms in a collective pact than offered to workers in union.  

While the new criminal legislation falls short of the ILO recommendation to address collective pacts, it could, if cases are brought, have deterrent value, as could the general provision criminalizing anti-union conduct.

Third, the Santos Administration has taken important steps to improve protection of threatened workers, including, by significantly expanding the scope of its existing protection program beyond labor leaders to include rank and file workers, as well as labor activists.  The Santos Administration has also committed to reform its process for determining eligibility for protection by the Fall, and also, to ensure that protection is provided far more quickly than it has been in the past.

Fourth, the Santos Administration has also committed to bring those who use violence and threats of violence to intimidate workers from exercising basic labor rights to justice – something the previous Colombian Administration also said they were committed to, though with little effect.  To date, the new Fiscalia or Attorney General has increased the number of investigators assigned to labor violence cases by 50, and has committed to add another 45 by the end of this year.  The Attorney General has also committed to revise its procedures for labor related investigations and prosecutions to ensure that both the investigations and prosecutions are thorough, and follow leads beyond the immediate perpetrators.

Fifth, beyond the areas covered by the Action Plan, the Santos Administration has taken other important steps to promote labor rights.  These include, most significantly, reaching agreement with Colombian unions to provide public sector workers bargaining rights, addressing a major ILO criticism.  President Santos also recently concluded a first ever agreement with the Colombian teachers union (FECODE), addressing issues ranging from occupational health and housing to teacher training, professional development and security of union members.
These changes have been coupled with other fundamental initiatives the new Santos Administration has undertaken during its first 10 months, including land restitution and reparations for victims and increased formalization of the Colombian economy.  

The resolve of the Santos Administration in challenging the status quo by carrying out the Action Plan will be tested by the legacy of suppression of worker rights, the history of violence and impunity, the role of entrenched interests among a relatively small powerful elite, and questions about the translation of political will at the top to those who need to execute that will.

That resolve also must be accompanied by ours.  That resolve has been tested in the Administration's design of the implementing bill.  The development of an Action Plan on worker rights represented a vital prerequisite to action on the Colombia FTA.  Unfortunately, pursuing their opposition to incorporation of workers rights in trade agreements, Republicans have rejected reference to the Action Plan in the implementing bill.  

Republican refusal to include in the implementing bill a reference to the document addressing the core issue which had prevented consideration of the FTA – the Action Plan on Labor Rights -  and the Administration’s acquiescence to that refusal are totally unacceptable.  As such, it is not satisfactory, and I will actively oppose it.

There are important reasons for including it:

First, there is a clear relationship to workers rights between those in the Action Plan and the provisions in the FTA which must be acknowledged and understood.

The Action Plan spells out and gives meaning in the particular Colombian context to the general standard contained in provisions in the FTA on basic international workers rights.  That is important because, contrary to the comments of some, enforcement of worker rights can be addressed through the dispute settlement structure in the FTA if Colombia were to fail to fulfill commitment under the Action Plan and that failure impacts the ability of Colombian workers to exercise basic labor rights.

Second, experience has shown that there are always counter pressures within Administrations and on the outside against action to enforce provisions on worker rights through use of the dispute settlement or other procedures. That has clearly been true in instances of efforts at enforcement of labor provisions in our laws regarding GSP, Jordan and CAFTA.  

Third, inclusion of a clear link between the Action Plan and the FTA sends a powerful signal to everyone in Colombia that the U.S. is serious about the fulfillments of commitments in the Plan. This will provide important leverage and encouragement to those battling for labor reforms and concrete actions on violence and impunity.

Fourth, inclusion of a clear link between the Action Plan and the FTA helps send a necessary message within our nation that trade policy is changing, including to ensure U.S. workers do not compete against workers whose rights are violated.

Fifth, the Korea FTA implementing bill will address the 2011 market access agreement which was concluded to resolve the issues that had prevented action on the U.S. Korea FTA.  Omission of this in the Korea FTA would have been indefensible. Similarly, there is no defensible reason for failing to include a reference to the Action Plan in the Colombia FTA bill.  And, there is precedent even in the case of the wholly defective NAFTA side agreements which were included in the implementing bill voted on by Congress.

Sixth, some of the issues relating to Colombia are arising in trade agreements now being negotiated, including Transpacific Partnership (TPP) which as I stated at Singapore in 2009 I favor actively pursuing.   There will be a need to resist pressures to weaken our approach to workers rights as well as the environment as well as other May 10th issues.  

This has been an important battle over one of the significant parts of a new trade policy.  Worker rights and the Action Plan deserve to be elevated, not relegated.  They need to be focused on, and not shunted aside.  The implementing bill is the only vote that a Member casts on a trade agreement and refusal to refer to the Action Plan on Workers Rights in the implementing bill is a fatal flaw.