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TRADE-US: Details of Compromise Reveal Few Policy Changes

Emad Mekay

WASHINGTON, Jun 25 2007 (IPS) - The George W. Bush administration and Congressional leaders Monday finalised a legal text for congressional consideration of pending free trade agreements (FTAs), a move that could pave the way for approval of several pacts, but which has left advocacy groups suggesting that Democrats have reneged on promises that led them to power last fall.

Agreeing on the formal text opens the way for Congress to pass FTAs with Peru, Panama, Colombia and Korea, with at least one coming as early as next month.

The text implements a bipartisan agreement reached on May 10 between the White House and Republican lawmakers on one hand, and Democratic legislators, who seized Congress last November on a platform of changing the way the administration conducts trade policy.

The agreement also comes at a time when U.S. trade partners have taken similar measures to amend the text of the agreements. This makes it more likely that some of the deals will pass.

The Peruvian government has approved the FTA text, while earlier this month, Colombia’s legislature passed an FTA with the United States by a vote of 55-3.

Business lobby groups want to see such deals clinched here before Congress goes into its summer recess in August and before Trade Promotion Authority (TPA), also known as “fast track”, which gives the U.S. president the power to approve deals with little Congressional intervention, expires on Saturday.

U.S. FTAs with Panama and Korea must be signed by the week’s end.

“I now look forward to Congressional action on the Peru agreement in July, and the agreements with Colombia, Panama and Korea as soon as possible,” said U.S. Trade Representative Susan C. Schwab.

Republicans say they want to conclude at least the Peru deal before August.

“Now that this important work is done, we can move forward on implementing our pending free trade agreements. I hope that we are able to complete Congressional action on the Peru free trade agreement before the August recess,” said Republican Congressman Jim McCrery.

Despite initial trepidation, business groups hailed Monday’s announcement as a step in the right direction.

“The list of trade expansion objectives is long and time is short, so it’s good to see a consensus being reached,” said John Engler of the National Association of Manufacturers, an industry group that advocates opening more markets for U.S. goods.

“The sides have cleared a path to finalise a number of important FTAs. This should be the catalyst for broader agreement during an important week for negotiators,” he said.

Under the May 10 agreement, the White House agreed to demands by Congressional Democrats to incorporate stronger labour and environmental protection standards in the FTAs.

But many advocacy groups that looked at the legal text issued Monday say they feel let down by Democrats.

Essential recommendations of labour unions, environmental, consumer, and family farm groups appear to have been ignored.

“The Democratic majority arrived with a fair trade mandate from a public strongly opposed to staying the course on the failed Bush trade agenda,” said Lori Wallach, director of Public Citizen’s Global Trade Watch division, who analysed the legal text after its release.

“It is incomprehensible why any Democrats would ever prioritise reviving Bush trade deals opposed by their entire base and the majority of congressional Democrats over launching their own proactive trade agenda,” she said.

Public Citizen notes that the text keeps the controversial “Chapter 11” provision, leaving sweeping powers to foreign investors intact. The provision is opposed here based on the incentives for U.S. firms to move offshore and lay off U.S. workers.

Last week, several organisations issued a report charging that the May 10 deal with the administration also included provisions that could benefit Citibank, the largest shareholder in ProFuturo AFP, a private company authorised to compete against the public social security system, in the Peru FTA by allowing the privatisation of the social security system in the Latin American nation.

“Provisions of the Peru FTA could empower foreign investors providing private retirement accounts in the privatised system to demand compensation from the Peruvian government in U.N. and World Bank tribunals if the widely unpopular social security privatisation were reversed,” the report said.

The groups say the FTA with Peru is similar to the Bush administration’s attempt to privatise the U.S. Social Security system, which Democrats fought.

“Now the same corporate forces that tried to destroy our Social Security, under the guise of ‘free trade,’ are trying to destroy the social security system in Peru. Congress rejected Social Security privatisation in 2005 and should reject it again in 2007 – whether it’s for Americans, Peruvians or Canadians,” said William McNary, president of USAction, a grassroots group working on issues of social and economic justice. “The promise of a secure retirement shouldn’t stop at America’s borders.”

Wallach also said that the text increases the cost of medicine for developing countries and preserves rules that have resulted in hundreds of thousands of farmers losing their livelihoods in poor nations. *****

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