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Testimony of Thea Mei Lee
Policy Director, American Federation of Labor and Congress of Industrial Organizations
Before the U.S. House of Representatives
Committee on Foreign Affairs
Subcommittee on Terrorism, Nonproliferation and Trade
On "Trade, Foreign Policy, and the American Worker"
March 28, 2007

Thank you, Mr. Chairman, and members of the Subcommittee, for the opportunity to testify today on behalf of the more than ten million working men and women of the AFL-CIO on the important question you have posed: Is current U.S. trade policy successfully promoting American policy objectives at home and around the world?

We would argue that U.S. trade policy has failed in almost every important dimension. It has failed to create good jobs and healthy communities at home. It has failed to foster equitable, democratic, and sustainable development abroad. It has failed to safeguard our long-term national security interests. And it has utterly failed to ensure that American producers and workers are able to compete successfully in the global economy.

Foreign policy objectives are often invoked to garner support for free trade agreements and other proposed trade policies. On the simplest level, it is often argued that "free trade" will automatically bring prosperity to our trading partners, especially those in the developing world, and that prosperity in turn will solve a host of related problems: enhance democracy, reduce poverty, strengthen the rule of law, end workers' rights and human rights abuses, and provide resources to clean up the environment.

With all these problems solved, it is argued, U.S. friendships and alliances will be strengthened, pressure for illegal immigration will be lessened, and terrorist tendencies will be eradicated. Unfortunately, trade policy has not uniformly delivered on these promises; in many cases, it has had the opposite effect. Until we dramatically overhaul the content of our trade policies, we will not see the results we seek, either at home or abroad.

In the Middle East, geopolitical concerns have driven a series of free trade agreement negotiations with countries that lack basic democratic rights and that do not allow their workers to exercise fundamental human rights in the workplace, especially the right to organize and bargain collectively. These trade negotiations send mixed signals: on the one hand, we are rewarding countries with abysmal human rights records with market access, while our rhetoric abroad promotes "democratic values."

USTR recently concluded a free trade agreement with Colombia - a country with an atrocious record of violence against trade unionists and impunity for the perpetrators of that violence. Colombia is the most dangerous country in the world in which to be a trade unionist. More than 2000 union officers and rank-and-file members have been brutally and systematically murdered since 1991. Fewer than thirty people have been convicted of murder in any of these cases, and only one since 2004.

In those cases where the perpetrator is known, government-supported paramilitary organizations or the armed forces or police are most often responsible. Numerous legislators, judges and senior government officials, many with close ties to President Alvaro Uribe, have been arrested or are being investigated for collaboration with these right-wing paramilitary organizations.[1] Designated as a "foreign terrorist organization" by the U.S. State Department, Colombian paramilitaries have committed numerous atrocities and crimes, including massacres, murder, torture and trafficking illicit drugs into the United States. Again, our foreign policy and trade policy seem to be in conflict, rather than in harmony.

What are the key foreign policy interests of the United States? Certainly, it is in our interest for our trading partners to grow and prosper - but to do so in an equitable and democratic way. Economic growth that enriches a tiny corporate or oligarchic elite, while the vast majority of the population lives in poverty, does not promote our interests, nor does it enhance global political stability.

Supporting strong and vibrant democracies is certainly in the U.S. interest. Today, global solidarity on behalf of democracy, freedom of association and basic human rights is more important than ever. Across the world, totalitarian rulers combine the power of the state with the power of the market in powerful, new and non-democratic forms. New and old forms of dictatorship cynically use the backlash against the injustices of the global economy to consolidate their hold on power. There is an effort to disconnect corporations from the accountability of democratic governance through a "constitution" for global trade that only guarantees the rights of investors. And, too often, nationalist, fundamentalist and xenophobic reactions to this new economic regime generate disorder, violence and the grisly tactics of modern terror.

Democracy is not easy. It cannot be exported at the end of a bayonet or a missile. Formal guarantees and institutions are vital, but are only a beginning. The words of democracy, expressed in charters and constitutions, must reflect the values and aspirations of the people. Understanding and respect for democratic values are built, person by person, organization by organization, in the fabric of civil society. Trade unions are an essential building block in that process. This is why we in the U.S. labor movement, together with our brothers and sisters in unions around the world, have worked so hard to insist that protection of core international workers' rights must be a crucial component of international trade rules.

U.S. national interests are not well served by the enormous - and growing - imbalance between our imports and exports. Our trade deficit hit a staggering $764 billion in 2006. Real median wages and family income continue to stagnate, while productivity growth soars. We have lost more than 3 million manufacturing jobs since 2000-many of them to trade-and good white-collar jobs that pay well are increasingly vulnerable. Estimates range from 14 million to 42 million service-sector jobs that could be subject to offshoring over the next decade -- offsetting many of the promised benefits of trade liberalization.

Our declining manufacturing capacity poses a serious and growing threat to both our economic and national security. The loss of millions of skilled jobs, the closure of nearly 40,000 manufacturing facilities and the exporting of design, engineering and research and development capacity mean the next innovation, the next generation of products and the next investment will be made in other countries. At the same time, we are losing the capability to supply our military troops with ammunition, uniforms and other essential equipment in a timely and flexible manner. The offshoring of our manufacturing capacity is underwritten by a toxic brew of workers' rights violations, lax environmental standards, currency manipulation and illegal subsidies that global corporations take advantage of.

Decades of trade deficits - all record-breakers in recent years - have contributed to a mounting cumulative international debt, which now exceeds $3 trillion. This unsustainable debt has greatly increased our vulnerability to financial crises and speculative currency movements. And the U.S. image abroad has suffered as our government is increasingly perceived as imposing an anti-development, anti-worker trade agenda on behalf of our multinational corporations. Indeed, workers' rights have not improved, and in some cases have worsened, in Central America, since CAFTA was put in place. Nor have the promised jobs materialized in most CAFTA signatories. It is no wonder that tens of thousands of workers and farmers have taken to the streets in Korea, Costa Rica and Thailand-among many other countries-to protest proposed trade deals put forward by the U.S. government.

It doesn't have to be this way. The movement of goods, services, money and people across national borders can and often does bring many benefits: increased economic growth and dynamism, as well as the beneficial spread of technology, culture and ideas across borders. The key missing part is how those benefits are distributed-and how to resolve the uneasy compromise between enforceable international rules and democratic decision-making.

The Promise of Globalization: New Rules for the Road

For globalization to live up to its promise to improve the lives of workers and the poor, not just the wealthy and the powerful-here and around the world-we need an entirely new set of rules and institutions.

We need global trade rules that link market access to strengthening protection for workers' fundamental human rights, 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. These must be enforceable requirements, subject to the same binding dispute settlement and enforcement mechanisms as commercial provisions. No government should gain a comparative advantage in global markets by offering to violate its own workers' human rights-just to keep labor costs down. And no company should profit by taking advantage of vulnerable workers in one country to produce goods to sell to wealthy consumers in another.

Similarly, international environmental commitments under multilateral environmental agreements should be reaffirmed and protected in trade rules. Private investors must not have the right to challenge domestic environmental and public interest laws and regulations before closed international tribunals - leaving taxpayers liable for huge payouts.

We need to strike a better balance between domestic rule-making and international obligations-ensuring that trade rules do not threaten governments' ability to provide affordable and high-quality public services or to regulate labor markets, the environment, public health and consumer safety. Trade agreements must not require privatization or deregulation as a condition of market access, nor should they obstruct developing countries' right to address HIV/AIDS and other health crises through public access to essential medicines. Procurement provisions must not undermine the ability of federal and state governments to use tax dollars to create and maintain good jobs, to promote economic opportunity and development and to achieve other legitimate social goals. Changes in our immigration laws should be made by Congress, not through irreversible commitments offered up in trade negotiations.

We need more transparency and much broader public participation in the negotiation of trade rules, at both the national and international levels. Business is not the only constituency affected by trade and capital market liberalization, and it should not be the only non-government group at the table when these deals are cut.

The Wrong Track: A Record of Failure

On each of these fronts, our own government has let us down over and over again. Since 2001, the Bush administration has failed to seek meaningful protections for workers' rights and environmental standards in free trade agreement negotiations with more than a dozen countries and at the World Trade Organization in multilateral talks.

In fact, the administration recently proposed abandoning the internationally recognized ILO workers' rights as a standard and replacing them with U.S. labor laws in the Peru, Colombia and Panama free trade agreements. This proposal would replace decades of expertise and jurisprudence and hard-won international tripartite consensus at the ILO with a vague standard that our trading partners should have labor laws that are generally equivalent to U.S. labor laws. This is an arbitrary, unworkable and ill-conceived idea that would be an international embarrassment.

At the same time, the administration has aggressively sought excessive trade rules on investment, intellectual property rights, government procurement and service sector access on behalf of multinational corporations-heedless of the impact on workers, the poor or governments' capacity to regulate. In fact, our trade regime pursues corporate rights while leaving other concerns off to the side of the road.

The Bush administration has given America's workers, farmers and producers few reasons to have confidence that it will fight for our interests in the international arena. The administration has failed to enforce our own trade laws, rejecting strong 421 safeguard cases in defiance of the findings of the U.S. International Trade Commission. It refused to even consider four separate Section 301 cases challenging China's violation of workers' rights and currency manipulation. It has failed to effectively enforce workers' rights provisions in existing U.S. trade laws, including the generalized system of preferences and bilateral agreements. It has done far too little to protect our trade laws from international challenge, leading to erosion of those laws as we lose challenge after challenge at the WTO.

President Bush has asked Congress to renew Fast Track (also called Trade Promotion Authority) when it expires in June of this year. We will vigorously oppose any attempt to extend the current flawed Fast Track authority. We cannot simply continue the status quo approach, which has resulted in bad trade agreements, lost jobs, stagnating wages and a spiraling trade deficit.

We welcome a national debate over how best to reform our trade policies-and how to strengthen the role of Congress in this important and contentious area.

The Right Track

The first step in any new trade policy must be a serious strategic review of existing trade agreements before the initiation of any new trade negotiations. We need to re-examine the content and performance of current agreements to measure their strengths and weaknesses and determine how we can do better in the future. Tracing the actual trade and investment patterns that result from trade deals by sector and by state, as well as their impacts on employment, living standards, social regulation and communities, would allow a much more nuanced debate about the actual outcomes of trade deals rather than their promised benefits. Such a review must also include recommendations on how to address problems in existing agreements, up to and including renegotiation.

Second, Congress should have a role in choosing trade partners, which it does not have under our current set of rules. Congress should lay out "readiness criteria" to assess any potential trade agreement partner, including: the economic opportunities available for U.S. workers, firms and farmers; a country's legal framework and enforcement regimes; a country's compliance with ILO standards, multilateral environmental agreements and fundamental human rights; and the existence of a democratic governance system. Only countries that meet these readiness criteria should be eligible for negotiations. With these rules, we would not have negotiated a trade agreement with Colombia, whose government is responsible, by act or omission, for the deaths of thousands of trade unionists.

The third key element is to make the negotiating objectives laid out by Congress mandatory, rather than optional. Current Fast Track authority simply lists negotiating objectives without any requirement that each objective be met. For labor in particular, this has yielded terrible results: the corporate sector's objectives jump to the top of the list and ours limp along in last place. In fact, workers' rights have been among our negotiating objectives for more than 30 years, with very little progress being made. The U.S. Trade Representative has consistently ignored Congress's instructions with respect to protecting our trade laws and insisting on reciprocal market access, among many other things. These mandatory negotiating objectives should, at a minimum, address the issues listed above: labor, environment, investment, procurement, protecting our trade laws, intellectual property rights, services and immigration.

Fourth, Congress must certify that an agreement has met all the mandatory objectives before the agreement can be signed. Without such certification, an agreement will not receive expedited and preferential consideration and will be subject to amendment.

These represent only the most crucial changes that are needed to get our trade policy back on the right track.

Getting all the Tracks Right: Trade Enforcement, FTA's and Doha.

Last month, the Treasury Department once again, in its biannual currency report to Congress, announced that it was unable to find any "technical violations" of the law by the Chinese government with respect to currency manipulation. Once again, the Secretary assured the members of the Senate Banking Committee that another high level strategic dialogue will change the situation. Frankly, the time for talk is over, and it is time to act.

We have fully supported the introduction of H.R. 782, the Fair Currency Act, in the House. The AFL-CIO is grateful to Senators Stabenow, Bunning, Bayh, Snowe, Casey, and Levin for their leadership in introducing the companion bill in the Senate. We look forward to working with our business, farm and community allies on this important legislation. .

The revived Doha Round of negotiations can only be greeted with pessimism. Unfortunately, the framework of the talks laid out in Doha in 2001 fails to address the concerns of working families, both in the United States and in developing countries.

The key WTO issue for the labor movement is moving forward a constructive discussion about how the global trading system can strengthen international protections for workers' rights. If WTO rules can be applied to protect copyrights and patents across national borders, judge whether national environmental or public health laws are legitimate, and pressure governments to eliminate or reform subsidy programs, then surely the WTO can clarify that no country should gain a competitive advantage by violating the human rights of its own workers.

A second crucial issue not on the WTO agenda is currency manipulation. Even though WTO rules in principle forbid frustrating WTO commitments "through exchange action," this provision has never been applied. The WTO's failure to address this issue effectively strains the entire global trading system. Nor will the negotiations address needed institutional reforms at the WTO, especially in the areas of transparency and accountability.

While issues that labor would most like to see addressed by Doha are not even on the table, many issues of great concern are under discussion. U.S. trade and immigration laws are vulnerable, as many countries have expressed interest in weakening our trade laws, and in obtaining new commitments to raise current limits on temporary entry visas. NAMA negotiations put enormous pressure on the few remaining industrial sectors with high tariffs - while offering little hope of progress on workers' rights or significant reciprocal market access concessions. Services negotiations threaten the viability and quality of some public services.

Our nation no longer can continue with status quo trade policies. Those policies have failed-and failed miserably. They have failed our workers, our communities and our environment, and they pose a serious threat to our national security.

We look forward to working with you over the coming years to meet these challenges.

Congress must act now to reassert its voice and control over trade policy, which increasingly affects many areas of domestic policy. Without deep reform, we cannot come together to meet the many challenges we face as a nation.

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[1] See, e.g, Forero, Juan, , Paramilitary Scandal Takes Colombian Elite by Surprise, Wash. Post, Feb. 22, 2007. "In all, eight congressman are now jailed, and investigators have questioned dozens of other nation and local lawmakers about suspected ties to death squads." Amnesty International USA reports that the Attorney General is investigating over 100 cases of collaboration.