Economics, International economy, U.S. Economy

First reactions: Labor/environment and the Trade Promotion Authority Bill

Image Credit: shutterstock

Image Credit: shutterstock

No doubt there will be a lot to discuss regarding the draft, bipartisan Trade Promotion Authority bill put forward yesterday by Finance Committee Chairman, Sen. Max Baucus (D-MT), ranking minority committee member Sen. Oren Hatch (R-UT), and House Ways and Means Committee Chairman David Camp (R-MI). I want to focus this blog post on the labor and environment mandates in the proposed new legislation. But before taking up those issues, a couple of background points. First, the bipartisan bill is likely to be only the opening gun of a potentially protracted (at least several months) debate and legislative process. The fact that three of the four top trade legislators in Congress (chairman and ranking members of Senate Finance and chairman of House Ways and Means) agree on a single bill is significant and a real boost for TPA prospects.

In assessing the bill’s future, however, three additional complicating factors have to be taken into account. One, the Obama administration “welcomed” the introduction of the bipartisan bill; but it did not at this time endorse all of its provisions. For reasons noted below, the president and USTR Michael Froman are almost certainly positioning themselves as “brokers” among competing factions in the House and Senate. Two, significantly, Rep. Sander Levin (D-MI), ranking minority member of Ways and Means, has signaled strong opposition to the draft TPA bill; and he has announced that he will introduce a competing bill. Three, the bipartisan bill, as introduced, though it differs in some important aspects from previous TPA bills, will not satisfy all- or even a majority- of the 151 House Democrats who wrote a letter some months ago, demanding that the new TPA authority break from “NAFTA style” trade bills; and adamant anti-trade elements of the Democratic coalition (labor unions, environmentalists, so-called consumer groups etc.) are already howling betrayal and lining up behind Levin.

There has been a lot of speculation as to whether the administration– pushed by some members of Congress, and outside labor unions and environmental groups– would attempt to go beyond a 2007 labor/environment compromise deal reached by the Bush administration and the then-Democratic Congress (it was called the May 10 Agreement, from the date it was announced).

Regarding the labor provisions and mandates, for many years the unions and Democratic party liberals have pushed to get by international agreement what they have not been able to achieve through domestic legislation: that is, to make binding for the United States certain International Labor Organization conventions that will dictate major changes in US labor law. Specifically, these are the so-called “core labor rights” conventions that include: freedom of association, right to collective bargaining, elimination of all forms of forced labor, abolition of child labor, and elimination of discrimination in employment. Without delving into legal weeds, as interpreted by the ILO most observers hold that, among other changes, the conventions would force repeal of state right-to-work laws, mandate equal pay/equal work rules, and remove authority exercised by President Reagan to fire striking federal workers.

The conventions go back some decades, and neither Republican nor Democratic Congresses have seen fit to ratify them. Aware that there was slim possibility that the United States and some other nations would agree to the core labor conventions, in 1998 the ILO adopted a Declaration of Fundamental Principles and Rights at Work. The Declaration incorporated the “core rights” listed above. Standing outside legally enforceable ILO conventions, the 1998 Declaration has an ambiguous legal standing. This Declaration is referenced in the May 10 agreement.

On the environment, the May 10 agreement mandated that a group of international environmental treaties be incorporated into future trade treaties, including the conventions relating to endangered species, ozone depletion, whaling, wetlands, pollution from ships, Antarctic marine life, and tuna conservation. Both the labor and the environmental provisions would be enforceable under the more general dispute settlement sections of subsequent trade agreements.

Since 2007, congressional Republicans have accepted the May 10 agreement as the template for future free trade agreements. Whatever the pressures from the Democrats and the administrations during the negotiations leading to the current bill, Republicans have successfully maintained their position and the language of the bipartisan TPA bill tracks faithfully the May 10 provisions.

Two closing thoughts: as noted above the bipartisan bill is an opening shot. Rep. Levin, in alliance with labor unions and environmental groups, may well introduce new language going beyond May 10– and the administration’s position at that point is uncertain. But Republications actually hold the whip hand here– if the president is serious about final success for the TPA, he will need a large majority of House Republican votes. So Rep. Camp and Speaker John Boehner have strong reasons to resist any changes.

Second, looking forward to the negotiations regarding the Trans-pacific Partnership Agreement, now in the final stages, while the details are secret there are numerous rumors that some TPP members are resisting the legal obligations for labor and environmental rules that the US is pushing. Particularly with relation to one section of the proposed May 10 labor rules, developing TPP countries would be well advised to resist and veto: that language dictates that, whatever their resource constraints, they must fulfill all obligations of the labor sections, potentially leaving them little leeway for resource allocation. This section has created great mischief in the existing FTAs with Colombia, Peru and Panama, where US labor unions and Labor Department officials have continually used to rules to intrude on domestic regulations and legislation and, indeed, undercut national sovereignty. Vietnam, Malaysia, Chile, and Mexico be forewarned.

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