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BEFORE THE SUBCOMMITTEE ON TERRORISM, NONPROLIFERATION, AND TRADE
COMMITTEE ON FOREIGN AFFAIRS
UNITED STATES HOUSE OF REPRESENTATIVES

TESTIMONY OF YVETTE PENA LOPES
INTERNATIONAL BROTHERHOOD OF TEAMSTERS
HEARING ON TRADE, FOREIGN POLICY AND THE AMERICAN WORKER

MARCH 28, 2007, AT 10:00AM
ROOM 2172 RHOB

International Brotherhood of Teamsters
25 Louisiana Avenue, N.W.
Washington, D.C. 20001
(202) 624-8741

Chairman Sherman, Ranking Member Royce, and Members of the Subcommittee, thank you for inviting me to testify today on behalf of the 1.4 million union members of the International Brotherhood of Teamsters on this important topic. The issue of trade and how it impacts workers and our national security has always been a top priority for the Teamsters Union under the leadership of General President Hoffa. I hope that the Administration and all of your colleagues take seriously what has been highlighted today, because U.S. workers, in fact, all workers, are being negatively impacted by our trade policies. So much is being threatened and very little is being done.

Ideally, trade and globalization policies should be used as a tool to advance the priorities of the American people, the worker, and American foreign policy and national security interests. In reality, U.S. trade policies have not achieved this; in fact, our trade policies have achieved the opposite effect in all areas. And instead of stopping, rethinking, and trying a different direction, this Administration continues to just push forward more of the same-- pushing U.S. workers closer and closer off a cliff. The Teamsters are hopeful that with your leadership, and the Leadership of this new Congress, the status quo will change.

Effects of an Uneven Trading Relationship on the American workforce

The United States trade deficit hit $764 billion in 2006. We have lost more than 3 million manufacturing jobs since 2000. One in six manufacturing jobs has disappeared. This poses a serious threat, not just to the many families and communities who have been crushed as a result of this loss, but also our research and development capacity as a country. We are losing our capability to supply our military troops with uniforms, ammunition, and other essential items. If this trend continues, we will be completely dependent on other countries to provide everything to us. Our manufacturing loss is, in fact, a matter of national security.

It is not just manufacturing jobs that are being lost, but service jobs as well. The Progressive Policy Institute found that 12 million information-based U.S. jobs are highly susceptible to off-shoring. Independent academic studies have projected a much higher number.

Foreign ownership of U.S. debt has reached more than $3 trillion, a dangerous level that is another potential threat to our national security. Great Britain, China, Korea, Japan hold the largest share of our debt; China alone holds $353.6 billion of U.S. Treasury securities. Conceivably, they could cash out anytime and leave us in a financial crisis.

American workers are the most productive in the world. Since 1980, labor productivity has increased over 80 percent, but the real median wage has increased only 2 percent over a quarter century. The average American worker is making only a nickel more per hour in inflation-adjusted terms than in 1973, the year before Nixon first used Fast Track to grab Congress' constitutional trade authority. Better trade policies can do better for America's workers than a nickel more per hour. Were it not for trade agreements that pit U.S. workers in a race to the bottom with poverty-wage workers worldwide, U.S. workers' wages would better reflect productivity increases. And workers in developing countries would be better equipped to fight for higher wages.

Today, America has the most unequal distribution of income and wealth of any developed country in the world. Income and wealth are more unequally distributed in America today than at any time since the 1920s. CEO's on the other hand are doing quite well. The average CEO of a major American corporation earned twenty times that of an average worker in 1980, today the average CEO earns 431 times what the average worker earns.

There are some who like to argue that U.S. workers win when imports increase because when goods are produced by low-paid exploited workers overseas, they are cheaper for all of us. Yet, the Center for Economic and Policy Research applied the actual data to the trade theory.

The center discovered that when you compare the lower prices of cheaper goods to the income lost from low-wage competition, U.S. workers without college degrees -the vast majority of US workers - lost an amount equal to 12.2 percent of their current wages. That is to say, under our current policy, the losses in wages from trade outweigh the gains in cheaper prices from trade. For a worker earning $25,000 a year, this loss would be slightly more than $3,000 per year.

NAFTA Has Failed Workers

I would also like to discuss the direct impact the North American Free Trade Agreement (NAFTA) has had on U.S. and Mexican workers. In 1994, when NAFTA was passed, we were promised that it would generate large numbers of net new jobs. We were told that not only would this happen, but Mexico would also benefit greatly and see a rise in their middle-class. Just like during the CAFTA debate and the Oman FTA debate, Labor was called isolationists, protectionists and nativists because of our strong opposition to NAFTA and these other agreements.

I wish we could say that our worst fears were wrong, but in fact, everything we feared came to fruition. Instead of the promised nirvana, we face a growing trade deficit with Mexico and Canada that has displaced production that supported roughly 660,000 manufacturing jobs and one million total U.S. jobs. The one million jobs displaced by NAFTA would have paid $800 per week or more in 2004.

NAFTA has not fared well for Mexico either. Mexico saw a rise of its low-wage maquiladora industries, which are actually now moving to China in search of even lower wages. The agricultural sector in Mexico was devastated under NAFTA, leaving Mexican small farmers unable to provide a living for their families. How can we expect these farmers to compete with U.S. subsidies and call that fair or even free trade?

Millions of Mexican workers and their families feel forced to risk their lives to cross the border to find work here in the U.S. because they cannot make a living at home, despite the promises of NAFTA. Like the U.S., wages in Mexico have not increased as promised either. In fact, according to the Economic Policy Institute's Revisiting NAFTA, average household labor income in 2004 was 15 percent lower than incomes in 1994.

And yet, as FTAs continue to be considered by Congress, the argument continues to be made that life will get better, that labor laws and their enforcement will be improved, wages will increase and the desperation of workers from these countries trying to immigrate here will cease. We are still waiting and I think we will forever be waiting unless we change the model and maybe even redoing what has been done. We hear Teamster members often ask, "Can't Congress just make NAFTA go away?"

For the Teamsters, NAFTA has also meant fighting to ensure that unsafe trucks are not able to enter the country from Mexico. General President Hoffa has led the Teamsters in this fight, and so far, we have been successful in ensuring that unsafe trucks do not enter the U.S. This issue has demonstrated first hand for the Teamsters that these FTAs not only impact our workers thru the off-shoring of jobs, but also by threatening U.S. domestic regulation and giving our trading partners rights to our infrastructure and to jobs that would not have existed otherwise.

NAFTA included a requirement that all three countries' highways be fully accessible to trucking companies based in any NAFTA nation, an item championed by large U.S. trucking firms seeking lower-waged Mexican drivers. Just recently the Administration announced a pilot program to allow Mexico-domiciled trucks broad access to the U.S. highway system. This action is reminiscent of the Dubai Port debacle, where the Bush Administration is willing to risk our national security by giving unfettered access to America's transportation infrastructure to foreign companies and their government sponsors while ignoring the safety and security of the American people.

This recent announcement is the latest in a 12-year-long NAFTA fight. A NAFTA tribunal ordered the United States to allow Mexican-domiciled trucks to enter the United States, and Mexico is threatening trade sanctions if the United States fails to comply. It is because of NAFTA that this issue continues to resurrect itself even though the House voted in 2001 to effectively ban Mexican trucks from traveling beyond the currently permitted commercial zones. The Senate then followed that action by passing comprehensive safety guidelines, commonly referred to as the Murray-Shelby provisions that prevented the DOT from expending money to review applications of Mexican carriers until certain conditions were met. At this time these conditions have still not been met.

NAFTA has also meant more threats to workers trying to organize in the U.S. It has been appalling to see workers who want to organize, but are afraid to because of the looming threat that the company will move to Mexico or China where workers are paid less and labor laws are more lax. That is what NAFTA has done to our workers. That is what China PNTR has done to our workers-increased their employer's control and threat over them-increased their job insecurities. And these are not just Teamster stories, or U.S. union stories, but stories that happen everyday around the globe.

Time for a New Model Because the Current Trade Model Has Hurt Workers

Beginning with the Labor Chapter

Because we have spent years opposing these disastrous trade deals, from NAFTA to China PNTR, to Free Trade Area of the Americas (FTAA), to Fast Track, to CAFTA and Oman FTA, there is an impression out there that we are against all trade. It is not that we are against "trade", we are against the current trade model and the current Fast Track process that is used to formulate our trade policies.

These policies are killing U.S. jobs, and not doing much good for foreign workers. They have fueled a race-to-the-bottom that must now end. Instead of scrapping the old model and trying a new one, we continue to see a "one-size-fits-all" model that fails to uplift workers and bring about trade and social justice. The U.S.-Peru FTA, which is currently being renegotiated, is just like CAFTA, the Oman FTA, and the Colombia FTA. If you take CAFTA, and just add "Peru", you virtually have the same agreement.

The fact is that we need an entirely new set of rules that link market access to strengthening protection for workers as laid out in the International Labor Organization's (ILO) 1998 Declaration on Fundamental Principles and Rights at Work: the freedom of association and the right to organize and bargain collectively, and prohibitions on child labor, forced labor, and discrimination in employment. Each of these must be made enforceable requirements. Currently, even though meeting the Core ILO standards is not enforceable in the FTAs, USTR has actually left out "discrimination in employment" when listing the ILO standards. This was done in the Trade Promotion Authority process, which is outrageous in and of itself.

The labor chapter must also be subject to the same binding dispute settlement and enforcement mechanisms as commercial provisions. No government should gain a comparative advantage in global markets by keeping labor costs down by violating its own workers' human rights. It is time to end this current climate of allowing companies to profit by taking advantage of vulnerable workers in one country to produce goods to sell to a more wealthy consumer in another country. This is not how the U.S., the greatest country in the world should promote trade-on the backs of exploited workers.

It is appalling to the Teamsters Union that the USTR continues to not only use this same failed NAFTA/Fast Track model in country after country, but it is also disconcerting to us who we are entering FTAs with. Our union brothers and sisters are being killed and nothing is being done about it except for negotiating and signing FTAs with the countries that allow this to happen.

As members of the Committee most likely know, one of our own-Gilberto Soto, was killed in El Salvador on November 5, 2004 while on assignment for the Teamsters to build a network of Central American Port workers. The Salvadoran government never conducted an objective investigation of the murder and continues to obstruct the work of the country's Human Rights Ombudsman, Dr. Beatrice de Carrillo, who has been investigating the assassination and cover up of Soto's death.

Dr. Carrillo has received death threats for examining Soto's killing and other human rights violations in El Salvador. The Teamsters are presenting her with a Human Rights award in the end of April for all of the work she has done - not only on the Soto case, but for human rights and workers rights in El Salvador.

Gilberto Soto's death was before CAFTA, and so there were some who argued that CAFTA will make the labor rights situation in CAFTA countries better. So far, this has not been the case.

The Central American countries vowed to strengthen worker rights as they attempted to get votes for passage of CAFTA. According to diplomats, labor inspectors, workers and managers there has been little, if any, progress. Just this year, Pedro Zamora, who was the head of the port workers union in Guatemala, was killed when gunmen shot him twenty times. Zamora was in the midst of contentious negotiations with management.

For the record, I have submitted a Washington Post article dated March 16, 2007 titled Labor Rights in Guatemala Aided Little by Trade Deal. The article spoke of Zamora's murder, and also the current labor, human rights, and trade climate in Guatemala. There are many examples and quotes throughout the article that make clear that for many corporations and for Guatemala, good labor laws and the enforcement of them hinder their competitiveness with China and other countries. It is only by killing trade unionist and locking workers into factories and not paying them overtime, that companies can compete. This race must end, and our government and multinational companies' contribution to it must also end.

As members of the Committee are well aware, we have been especially concerned with USTR's willingness to enter into an FTA with Colombia. Colombia leads the world in the assassination of trade unionists. According to the Esceula Nacional Sindical (ENS), highly regarded labor institutes based in Medellin, Colombia, 2,262 union officers and rank-and-file members have been murdered since 1991. In 2006, 72 trade unionists were gunned down. This is an average more than one killing a week. It is an outrage that USTR would even think that the Congress would support an FTA with a country that allows the killing of trade unionists. No FTA with Colombia should be considered until the union killings stop and until Colombia brings its laws into conformity with ILO recommendations.

The U.S. is also in process of negotiating an FTA with South Korea, the seventh largest economy in the world. Many key issues remain unresolved, such as automotive trade, intellectual property, and agriculture. The labor chapter currently is the same rubber stamp labor chapter used in the other FTAs. There has not been much public discourse on the labor situation in Korea. The Change to Win and the AFLCIO Labor Federations have been working in solidarity with our union brothers and sisters in Korea throughout the FTA negotiations in an effort to highlight these serious problems, and our concerns with the direction of the negotiations.

The labor situation in Korea has been worsening during the last couple of years, rather than improving. Last year the government unjustly shut down the offices of the Korean Government Employees Union. Dozens of trade unionists are now serving time behind bars for the legitimate exercise of trade union rights, including the organization of strikes and demonstrations. Some of the sentences are quite severe lasting for years. Irregular workers, which are similar to independent contractors and temporary workers, are now becoming the norm in Korea. They are not able to exercise their fundamental labor rights, including the right to organize, and earn, on average, 50 percent less than regular workers. This situation has left our union brothers and sisters in Korea concerned with the future of Korea's workforce, especially if a race-to-the-bottom type FTA is implemented with the U.S.

Moving Beyond the Labor Chapter

While most of the problems with the FTAs have centered on the labor chapter, it is critical that other sections of the FTAs be renegotiated and addressed as well. A better balance must occur between domestic rule-making and international obligations. We need to ensure that trade rules do not threaten a government's ability to provide affordable and high-quality public service or important labor, environmental, consumer safety, and public health regulations.

We must ensure that international environmental commitments under multilateral environmental agreements are reaffirmed and protected in trade rules.

Our trade policies must also stop requiring privatization or deregulation as a condition of market access. The privatization and deregulation of essential services such as water, healthcare, and education must end. This makes it virtually impossible for many workers, especially women and the poor in developing countries, to ensure their families are provided with adequate health care, education, and basic services.

It is also interesting to recognize that under the Peru FTA, Peru is forced to open its Social Security system to private for-profit competition. This is something that the President has wanted to do here in the U.S., but Congress won't let him, yet it is being done under the Peru FTA to Peru, and nothing is being done to address this.

Our trade policies should not prevent developing countries from addressing the horrors of the HIV/AIDS epidemic through public access to essential medicines. The FTAs intellectual property provisions, restrict access to life-saving medicines, through unnecessarily long patents and data-protection provisions. According to Doctors without Borders, after the first five years of the trade deal, between 700,000 to 900,000 Peruvians are expected to be excluded from receiving medicines. How can USTR and Congress allow this to happen?

Our trade policies should not have procurement provisions that undermine the ability of federal and state governments to use tax dollars to create and maintain good jobs, and to promote economic opportunity and balance. If the procurement chapter is not adequately or correctly fixed, our Buy-America laws, anti-offshoring directives, anti-sweatshop procurement rules can potentially be threatened.

The Investment chapter is also of great concern and needs to be fixed. Unfortunately, special investor privileges are given to firms that relocate production to low-wage nations. Goods are then guaranteed tax-free access back into the United States for sale. These rules provide special treatment-better than our laws give U.S. firms and citizens to foreign companies operating here and provide the same special treatment if a U.S. firm goes someplace else. This means U.S. companies leave and the foreign firms gain the right to directly attack U.S. labor, worker safety, zoning and other laws in foreign trade tribunals and demand payment of our tax dollars if their special privileges have been limited.

Our ports are also being threatened under the investment chapter. There is absolutely no reason why our FTAs should provide the right for foreign port service providers to demand compensation if they are denied the right to acquire U.S. port operations. This language was of issue in the Oman FTA, and is also an issue within the Peru FTA. Making matters worse, and even more ironic is the fact that Dubai Ports World already operates in Peru. This gives the company immediate "right of establishment" to operate U.S. ports or take us before an international tribunal. It is critical that an exception be made in the investment chapter to ensure that the question of port ownership and control is not an investor right under these FTAs.

Looking Beyond the FTAs

China Trade-The Big Elephant in the Room

China is a global economic powerhouse that is setting the global norm for working standards around the world. It is the focal point for many of the economic insecurities that people feel about globalization.

Over the past twenty years the U.S. trade deficit with China has increased from $5 billion to more than $230 billion. What this means is that 5 out of 6 ships that come to our docks from China filled with items manufactured there instead of here, return to China empty.

If Congress wants to take real action on China, then it should pass comprehensive legislation that does the following: end China's currency manipulation; allow U.S. companies to challenge subsidized imports from China; fix China safeguard statute and other import relief remedies to protect U.S. manufacturers against surges and unfair imports from China; and, reinstate Super 301 of U.S. trade law. Such actions will truly combat China's unfair trade practices by providing us with the tools necessary to take action against China and in support of U.S. jobs.

It is also important that we support the labor law reforms that Chinese workers are demanding. When China moved forward in attempting to pass a few labor reforms, some U.S. companies waged an intense lobbying campaign to defeat the law through the American Chamber of Commerce in Shanghai. Some have even threatened to leave China and go to Vietnam if such labor reforms are implemented.

This opposition by U.S. multinationals to oppose and stop labor law reform in China reinforces what the Teamsters have always said-- China PNTR has nothing to do with access for our U.S. businesses to sell goods to China, and everything to do with the exploitation of workers in a country with weak labor laws.

The World Trade Organization Doha "Development" Round Will Only Exacerbate the Current Globalization Crisis

During the last several years, there has been World Trade Organization (WTO) negotiations occurring. These negotiations have been cynically called the Doha "Development" Round. While the notion of "development" sounds good, the reality is that the direction in which these negotiations have so far gone will not achieve "development", but instead further undermine worker's rights, regulations, and democracy.

While the WTO has been in place, the percentage of people living on less than $1 a day, which is the World Bank definition of extreme poverty, has increased. More recent World Bank studies found that Doha would yield $16 billion for developing countries and $96 billion to the world by 2015. This means that the developing country share of Doha gains would be only about 16 percent. This means that less than one cent per person per day would go to the developing world, or about 4 cents per person per day to the world as a whole. The research also revealed that 50 percent of the limited gains for developing countries would only go to eight countries: Argentina, Brazil, China, India, Mexico, Thailand, Turkey, and Vietnam, while the Middle East, Bangladesh, and much of Africa would face net losses.

The discussions have even failed to put worker's rights on the table. The WTO refused to include the concerns of working families in the discussions; that alone means that these rounds have failed. While worker's rights are not being considered, what is are our immigration laws, our trade remedy laws, our public services, and our manufacturing sector is under attack. We also have not been very successful in winning cases brought under the non-transparent WTO; in fact we have faced loss after loss when safeguarding U.S. interests under the WTO. (The U.S. loses 9-in-10 challenges under the WTO.)

Very little attention has been paid to these negotiations. However, unless these negotiations take a completely different approach, they have failed and must not be supported. There has been discussion by some that Fast Track should be extended if there is a deal on Doha. I would argue just the opposite. Fast Track should not be extended at all, especially not for the anti-worker and anti-development Doha negotiations.

Fast Track is the Wrong Track

"Fast Track" is the process that gives the Executive Branch the authority to negotiate and write trade agreements and strips away Congress' constitutional power to set the terms of U.S. trade policy. The idea was created under President Nixon in 1974.

Under Fast Track, the president is authorized to negotiate trade agreements with foreign countries with very little consultation with Congress or state legislators. Fast Track creates special rules for considering trade agreements by allowing the Executive Branch to sign an agreement before Congress votes on it, while only giving Congress 90 days to consider the agreement. In fact, Fast Track ensures that Congress' role is performed too late to do any good since your vote happens after the agreement has been signed.

There is a misconception that Fast Track must be extended or all trade will end. Trade happened before 1974 when Fast Track was first created, and has continued during times when Fast Track expired. The Jordan FTA, while not perfect, was still the best FTA negotiated thus far with respect to the labor chapter. Jordan was negotiated and passed without Fast Track authority.

Fast Track will expire on June 30th of this year. It is because of the expiration of Fast Track that there is such urgency to renegotiate the Peru FTA and hastily finish the Korea FTA negotiations by March 31st. The Fast Track clock is ticking and USTR and Congress are being rushed. Congress should not be rushed! These discussions will impact millions of workers and livelihoods, and should not be done in a hurry just because of the ticking "Fast Track clock".

The Teamsters strongly oppose the renewal of Fast Track. We also oppose the idea of making a few changes to Fast Track in order to "fix" a fundamentally flawed idea. As I have stated throughout my testimony, a new model is needed, not a model that has been tweaked or edited, and so Fast Track must be retired and an alternative and fair model should be put in place.

We have been working with Change to Win, the AFLCIO, environmental organizations, Public Citizen, and the Citizens Trade Campaign on this new alternative for several months now.

Earlier this month, Change to Win passed a resolution on Fast Track. The Resolution opposed Fast Track and laid out a fair trade process that:

  • Restores balance between Congress and the Executive Branch with respect to trade negotiations, consistent with the intent of the U.S. Constitution, to ensure that trade agreements meet the interests of U.S. workers, firms and farmers while promoting global growth, economic stability and environmental protection;

  • Restores Congress' right to decide with which countries it is in our national interest to negotiate new trade agreements by establishing readiness criteria that prospective negotiation partners must meet;

  • Requires mandatory, binding negotiating objectives in trade agreements: Requiring that countries maintain and enforce core International Labor Organization (ILO) standards and core Multilateral Environmental Agreement (MEA) requirements, and that these standards are enforced equally with commercial provisions; and

  • Specifying what cannot be in any trade agreements, such as procurement rules that undermine anti-offshoring and prevailing wage policies, special rights for foreign investors, including operation of critical U.S. infrastructure, patent extensions that undermine access to affordable medicine, or mandatory privatization or deregulation requirements;

  • Requires Congress to vote on a trade agreement before it can be signed to ensure that congressional objectives have been met;

  • Enhances congressional participation, review and oversight throughout trade negotiations by establishing a new congressional committee review process that empowers Congress to determine whether objectives have been met and a trade agreement is ready for Congress' consideration under expedited rules; and

  • Requires oversight on the effects of and the operation of past agreements with a mechanism to ensure that Congress can hold negotiators accountable to fix problems by reopening trade agreements.

This New Day Has Arrived

It is clear that there is a real crisis for all American workers, under the current trade model. It is critical that Congress act now and take control over our trade policies and ensure that globalization can in fact live up to its promise. Our workers deserve and demand this.

With the discussions that have taken place this week regarding the renegotiation of the Peru FTA, of future trade agreements, of China policy, and an overall new outlook on the trade agenda, we are encouraged that real reform will happen. While a step has been made in the right direction, it remains to be seen if it is the real reform and change that U.S. workers need. It is critical to do this right. We will be taking a close look at the proposals that are put forward, and we look forward to working with you on them.



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