Here We Go Again: Not Every Free Trade Deal is "NAFTA-Style"

So President Obama has finalized three new free trade agreements ready for consideration by Congress: ones with South Korea, Panama and Colombia. And sure enough, it set of a trend among ideological opponents of free trade: term any free trade deal "NAFTA style." I doubt any of these knee-jerk opponents have studied either NAFTA or the trade deals they are talking about in detail. It's a talking point. It plays well. It's time tested to make people nervous. So use it. Sensationalism trumps over fact, again. FDL's David Dayen is flat in the middle of this. Noting that the Obama Administration is beginning negotiations on free trade deals with South Korea, Panama and Colombia, he shoots off his mouth:
It’s not clear why workers should herald another set of NAFTA-style trade deals...
Yes, it's not clear indeed, David. Because you have no idea what you're talking about. The trade deals the Obama administration has pursued have been nothing like NAFTA. Also, Dayen has evidently forgotten about CAFTA, the Central American Free Trade Agreement signed in by George W. Bush and approved by a Republican Congress. For him, it's apparently more important to bash a Democratic president's free trade agreement with two other countries than a Republican one with six other countries. Figures.

But I digress. Let's talk about a couple of things here: the problem with NAFTA and labor standards, and what is done differently in the recent agreements.

The Problem with NAFTA and Labor Standards:

The trade agreements President Obama has pursued and are pursuing are nothing like NAFTA or CAFTA. President Obama has consistently pursued strong labor standards as integral parts of his trade agreements, whereas NAFTA and CAFTA were deals where labor standards were not included as part of the deal. The labor agreements NAFTA are side agreements and unenforceable as part of the agreement itself.

The biggest problem with the side labor agreement on NAFTA, known as the North American Agreement on Labor Cooperation (NAALC) is that it's self enforcing, and sets no minimum standards. That is, it lets each of the three countries - United States, Mexico and Canada - make their own standards and enforce them, and complaints can only be launched if each country is not enforcing their own laws - not standards agreed upon by all three countries. The agreement merely says that each country must hold it.
Affirming full respect for each Party's constitution, and recognizing the right of each Party to establish its own domestic labor standards, and to adopt or modify accordingly its labor laws and regulations, each Party shall ensure that its labor laws and regulations provide for high labor standards, consistent with high quality and productivity workplaces, and shall continue to strive to improve those standards in that light.
Not only do they get to make their own standards under a vague "high labor standards" that is not defined in the agreement itself, it is also damn nearly unenforceable. Most of the emphasis is put on - when complaints of violations arise - for the parties to agree on a mutual plan to address it, and if a country's internal process determines that there has been no violation of its own laws by discretion, whatever that means, then, well, all is good.
A Party has not failed to "effectively enforce its occupational safety and health, child labor or minimum wage technical labor standards" or comply with Article 3(1) in a particular case where the action or inaction by agencies or officials of that Party:
-reflects a reasonable exercise of the agency's or the official's discretion with respect to investigatory, prosecutorial, regulatory or compliance matters; or

-results from bona fide decisions to allocate resources to enforcement in respect of other labor matters determined to have higher priorities;
Ah. So if the officials in a country have legal discretion to not enforce some of their labor laws, and they choose to, the other countries in NAFTA have no way to hold them accountable.

Also, a study by the UCLA Center for Labor Research and Education noted in 2004 that under the side labor agreement in NAFTA, cases concerning worker's right to organize only rise to the level of government-to-government consultations, not in fines or sanctions. That is, beating up on unions under NAFTA has no real, enforceable remedy. NAFTA's side labor agreement is ineffective, unenforceable, and sets no minimum standards. And it wasn't part of the original NAFTA agreement.

That is not the case for South Korea, Panama or Colombia agreements as submitted by Obama. I repeat, those agreements are not "NAFTA-style."

South Korea FTA:

So now that we have seen the faults of NAFTA and its lack of labor standards and environment, let's look at what President Obama has negotiated and what he is negotiating. I wrote about the South Korea deal in December, and I noted that South Korea is a high development economy and has enforced labor and environmental standards not just at parity with those of the United States but in most cases, better. I also noted that the agreement would add jobs in the US.

No one complains about how many jobs we lost to Canada under NAFTA, but more about how many we lost to Mexico. Why? Because Mexico has lower living standards, worse labor standards and enforcement, and worse environmental regulations and enforcement. When people are complaining that something is "NAFTA-style," they are really talking about the exploitation of labor in Mexico and the job losses in the US. The reason we don't talk about Canada is because with respect to labor and environmental standards, we and Canada are on roughly a level playing field. As we are with South Korea.

Furthermore, as I noted in December, South Korea is allowing us to keep a 2.5% tariff on Korean cars for 5 years while they eliminate all their tariffs right away, and we would actually cut our trade imbalance with South Korea by a few billion dollars. In addition, let's look at what's in the labor standards within the trade deal itself that the president is sending to Congress:
Labor Rights: The agreement sets high standards for protection of workers’ rights in trade agreements – including obligations for Korea to respect fundamental labor rights, not to weaken the laws that reflect those rights in any way, and to effectively enforce labor laws designed to ensure a level playing field for American workers to compete.  The agreement contains groundbreaking labor elements that were first outlined on May 10, 2007, in a bipartisan, Congressionally-led initiative to incorporate high labor standards into America’s trade agreements.  The Korean government, which has already demonstrated a significant commitment to labor rights, will be held to the same level of accountability for meeting labor commitments as it is for meeting other commitments in the agreement.
Read that last line again. The Korean government will be held to the same level of accountability for meeting labor standards as any other part of the agreement - meaning that labor rights and standards set forth in the agreement get just as much weight and legal enforcement as any other part of the agreement, for example, corporate intellectual property rights. If you want to dig in a little bit more about just what labor rights are protected under the agreement, we can. Here are the guaranteed rights of labor under the Korea FTA:
(a) freedom of association;
(b) the effective recognition of the right to collective bargaining;
(c) the elimination of all forms of compulsory or forced labor;
(d) the effective abolition of child labor and, for purposes of this Agreement, a prohibition on the worst forms of child labor; and
(e) the elimination of discrimination in respect of employment and occupation.
These are the core Labor principles as prescribed the International Labor Organization (ILO). This is quite likely unprecedented for the United States to enter in a trade agreement that, in its body, explicitly recognizes the right of workers to unionize, and explicitly recognizes the International Labor Organization standards. NAFTA's side agreement, in contrast, I remind you, contains no universal standards; it leaves it up to each country what their labor standards are. Furthermore, Korea FTA prohibits the parties to use resource allocation as an excuse not to enforce labor standards, and while the exercise of discretion is recognized, it is not without limitation:
A decision a Party makes on the distribution of enforcement resources shall not be a reason for not complying with the provisions of this Chapter. Each Party retains the right to the reasonable exercise of discretion and to bona fide decisions with regard to the allocation of resources between labor enforcement activities among the fundamental labor rights enumerated in Article 19.2.1, provided the exercise of such discretion and such decisions are not inconsistent with the obligations of this Chapter.
The Labor chapter of the agreement explicitly refers to the dispute settlement portion to resolve disputes that cannot be mutually solved, i.e. giving its resolutions the same level of consideration as any other, which includes punitive measures if a party is determined to be at fault and unable to agree to a compensatory framework. In the dispute and other process the input of labor is also guaranteed.

Colombia and Panama:

The impasse on the trade agreement with Colombia broke in our favor. Significantly in our favor. The finalized deal was announced a month ago.
During an Oval Office meeting with Colombian President Juan Manuel Santos, Obama said the pact would boost U.S. exports to Colombia by $1 billion per year and support thousands of American jobs.

The Obama administration announced a breakthrough on the long-stalled trade deal Wednesday after the Colombian government agreed to take additional steps to protect workers' rights, including the right to organize. Labor rights had been a key concern for U.S. officials given the high rate of violence against union members in Colombia.
Wow, are unionization rights becoming a cornerstone of American free trade agreements? It certainly seems that way with President Obama. The Labor standards part is also included in the agreement itself, and its provisions pretty much verbatim conform with those of the Korea FTA (and ILO principles) as mentioned above. The case is the same for Panama. Once again, input of labor is guaranteed along with those of employers.

In case of the Colombia agreement, though, the biggest concern is Colombia's continued human rights atrocities. But even some prominent Human Rights NGOs that do not approve of the agreement acknowledge that President Obama has made significant progress:
With the action plan, the Colombian government does commit to some important steps, including expanding protection programs for trade unionists and designating 100 labor inspectors to address abuses committed by the so-called “cooperatives” that limit worker rights. Our organizations appreciate both that the Obama Administration has insisted on this important linkage of advancements in protection of trade unionists as well as labor rights improvements to the FTA, and that the Santos Administration has assumed this challenge. But it takes time as well as political will to ensure that these words and plans lead to a reduction in violence and effective exercise of labor rights. The priority appears to be to finalize this before the end of the year, rather than ensuring real and lasting results. [Joint Letter from Latin America Working Group, US Office on Colombia, and Washington Office on Latin America.]
I do think that in Colombia, human rights violations are a major issue, and if someone wants to argue that we should not have an FTA with Colombia, period, until their level of violence come down, it is a view I can respect and even admire. I don't think there's anything wrong with that point of view. But it is more than far-fetched to call even the Colombia FTA a "NAFTA-style" agreement.

That's where I want to end this piece. We should have an open debate about the merits of each free trade agreement. But it is preposterous to call the agreements President Obama is negotiating "NAFTA-style." It represents, on the part of the speaker, profound ignorance about NAFTA, just what the complaints about NAFTA are, and what is in these agreement. I don't have a particular problem with people disagreeing with this trade agreement or that one. But we have got to get rid of the habit of having knee-jerk reactions, or of being so lazy that we cannot do the homework on what it is that you are opposing, and thus just labeling it "NAFTA-style."

This is - though to a smaller degree - similar to right wingers' talking point that President Obama's health reform is a "government takeover of healthcare." It has nothing to do with the truth, but it sounds nasty and it scares people. It riles people up. So they use it. The case for constantly labeling any and all free trade agreements "NAFTA-style" is equally as ignorant, dishonest. It is not factual. It is rhetoric that sounds nasty, scares people, and riles them up. It sensationalizes and helps persuade people who are already sour on NAFTA. Only one problem: It's not true.

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