Under Threat:
Workers and
democracy under the
new generation of
trade deals
Minnesota Fair Trade Coalition
By: Resource Center of the Americas &
Labor Education Service, University of MN
Evolution of global free trade rules
• A corporate global agenda
– growth of multi-national corporations – national
borders become less important
– growth of service sector – 60% globally
– political agenda to maximize profits emphasizing
privatization and deregulation
• “Less government is better”
– extends “less government” philosophy into trade
in goods and services
– addresses not just tariffs, but “non-tariff trade
barriers”
• government rules, policies, subsidies, laws,
regulations, court decisions
The result: millions of good
jobs lost
In recent years, Free Trade
Agreements have cost this country
millions of good jobs.
• 3,000,000
manufacturing jobs
lost to free trade
since 1994
• Over 750,000 jobs
lost under NAFTA
alone
Sweatshops-R-Us Globalization
• Many jobs sent to
poor countries
• Work often done
under sweatshop
conditions
• Workers often
denied unions and
basic human rights
Trade deals of the 1990s, such as
NAFTA, focused mainly on trade in
manufactured goods.
• The point was to increase manufacturing
profits by lowering the living standards
associated with manufacturing work
• So manufacturing workers bore the brunt
Now the barons of global capitalism
have their eyes on the living standards
of service workers.
New Trade Deals
and Democracy
• Negotiations are underway on:
– FTAA (Free Trade Area of the Americas)
– GATS (General Agreement on Trade in Services)
• These agreements could:
– mandate privatization of government services
– threaten environmental protections, safety and
human rights laws.
– undermine worker rights and protections
We’ve all heard of
NAFTA …
NAFTA
(North American Free Trade Agreement)
• Took effect January 1, 1994
• Between U.S., Canada and Mexico
• Applies mostly to goods and
commodities; first trade deal to
include some services (trucking,
legal, engineering, etc.)
• Focuses on “non-tariff barriers”
(government rules, environmental and
safety regulations, etc.)
NAFTA’s Devastating Effects
• 750,000 jobs (mostly in
manufacturing) lost in
the United States
• Mexican manufacturing
wages drop 23%
Now …
The Bush administration wants
to put NAFTA on steroids.
FTAA
NAFTA
FTAA (Free Trade Area of the Americas)
• FTAA extends NAFTA
to 34 western
hemisphere nations
• FTAA greatly expands
coverage of NAFTA
• Negotiations aim to be
done in 2004 -- voted
on by Congress in 2005
NAFTA also contains Chapter 11
• Suing Governments Allows
“investors” (directors, executives, and
shareholders) to sue foreign national
governments for damages
can sue for: “measures tantamount to
nationalization or
expropriation”
Chapter 11 was meant to protect
corporations from having assets
seized or nationalized.
But these trade rules are now
eroding our democratic process.
• Under NAFTA Chapter 11, a
Canadian company sued
the U.S. for almost $1 billion
when California banned a
toxic gasoline additive.
• In 1998, the WTO ruled new
U.S. clean air standards
were barriers to free trade –
and they forced the U.S. to
change them.
The Next Generation:
Going after services
GATS (General Agreement on Trade in Services)
• Goal is to cover all services, all
methods of delivering services,
and every government measure
at all levels affecting trade
• GATS is administered by the
World Trade Organization (WTO)
• GATS covers 146 nations,
including U.S.
• Negotiations aim to be done in
2004 -- voted on by Congress in
2005
Potential services covered by
GATS: • Professional
(legal, nursing, computer, etc.)
•
•
•
•
•
•
•
•
Communications (postal, radio and TV, video, etc.)
Construction (general building, installation, assembly, etc.)
Distribution (wholesale and retail trade)
Educational (higher education, primary and secondary ed)
Environmental (sewage, waste disposal, sanitation, etc.)
Financial (health and life insurance, banking, etc.)
Health and Social (hospitals and social services, etc.)
Tourism and Travel (hotels, restaurants, agencies,
etc.)
• Recreation and Cultural (theater, news agencies,
libraries, museums, parks, etc.)
• Transport (passenger and freight, pipelines, etc.)
This includes public services
• Covers government services
– exempt only if public service is not
• “commercial” (i.e. charges a fee)
• “competitive” (i.e. there is a
competing private sector provider)
• GATS aim: privatize public
services
GATS targets
all government measures
•
•
•
•
•
•
rules
policies
laws
subsidies
regulations
court decisions
GATS limits what laws we can pass
• Will likely prohibit measures
that are “more burdensome
than necessary” for foreign
companies or give an
advantage to local companies
• Measures would have to be
the “least trade restrictive”
possible
• Would prohibit government
from setting conditions on
awarding contracts except
those necessary for product
quality or supplier capability
Sample MN Laws at Risk
• Prevailing wage
• Corporate subsidy reform
reporting and wage standards
• Corporate feedlot restrictions
• Electricity rate regulations
• HMO non-profit requirement
• Cost clean-up requirements for
pipeline spills
• Many other environmental, labor,
and corporate accountability laws
These new trade agreements
threaten our jobs and basic
labor standards …
New Trade Deals and
Construction Workers
• GATS and FTAA could:
– undermine prevailing wage laws
– undermine union wages and jobs
– undermine project labor agreements
Prevailing wage threatened
• Would likely be judged
“more burdensome than
necessary” for foreign
construction firms
• Prevailing wage laws
could be attacked for
going beyond what is
necessary to ensure
service quality or supplier
capability
Project labor agreements threatened
• Agreements that
require union labor
could be prohibited
• Would likely be judged
to go beyond what is
necessary to ensure
quality, or be the
alternative that is least
restrictive to trade
Temporary Foreign Workers
• New GATS rules will
almost certainly make
it easier to import
temporary foreign
construction workers
“[GATS negotiations are now] addressing
issues that were previously considered to
be untouchable due to their political
sensitivity (e.g. visa and immigration
procedures)”
-- high ranking WTO official
India’s Proposal
• Service workers (including
construction workers) could
work in other countries
under “GATS visas”
• Companies would not even
have to follow the country’s
minimum wage laws
• WTO internal memo: India’s
proposal is getting “serious
attention” from U.S., the
European Union, and others
GATS workers as indentured servants
As proposed:
• GATS visa workers would have
few rights or protections
• Workers who tried to form or
join a union could find
themselves fired or deported
New Trade Deals and
Public Workers
• GATS and FTAA could:
– Could require many public services to be
opened to bid by private foreign
companies
– Public employees would have to
compete with these foreign service
corporations to try to keep their own jobs
So,
What public services
are targeted?
Water Services
• Water collection,
purification and
distribution
• Waste-water treatment
Many of these services are now
provided by municipal water districts
and staffed with union public
employees
This continues a corporate push to
control water supplies
The World Bank
estimates a fullyprivatized global
water market is
worth $800 billion
a year
Rebecca Mark, former CEO of
Enron’s Water Division, said she would
not rest until she had:
“fully privatized the
global water market.”
Surprise …
Enron worked closely with
the Bush administration to
define U.S. goals for GATS
Waste Management Services
• Waste management is
also targeted under
GATS
GATS will likely allow foreign firms
to bid on municipal sanitation and
incineration work – areas already
under heavy pressure from
privatization.
Air and Water Protection Services
• Protection of ambient
air and climate
GATS will likely allow foreign firms
to bid on the work currently done by
the U.S. Environmental Protection
Agency (EPA), state Pollution
Control Agencies (PCAs), perhaps
even OSHA.
Environmental Protection Services
• Protection of
biodiversity and
landscape
GATS targets for privatization
services that include work done
currently by the National Parks
Administration, U.S. Forest Service,
Bureau of Land Management, and
state Departments of Natural
Resources
Transportation Services
• Urban mass transit and
other transportation
services
GATS could allow foreign firms to
bid on mass transit services –
buses, trains, metro mobility, etc.
It may even include school bus
transportation.
Education Services
• Higher education, adult
education and various
training services
Currently negotiations are underway
to cover all education beyond
secondary school.
New Trade Deals and
Postal Workers
• GATS and FTAA could:
– mandate privatization of postal services
– undermine prevailing wages under the
Service Contract Statutes
Postal services targeted
• Both the European
Union and the
United States are
specifically seeking
to include postal
services under
GATS rules
So,
What specific postal
services are targeted?
Europe wants open to bid …
•
the
clearance
• sorting
• transport
•
and
delivery
of
“addressed written communications
on any kind of physical medium.”
United States is targeting
• express delivery
services that are
subsidized by government
monopolies -- like those
provided by the USPS.
This is only what we know so far.
With both the U.S.
and E.U. targeting
postal services … it is
likely that GATS will cover
many USPS services.
And,
this means:
• USPS services covered by
GATS will be open to
bidding by private
foreign companies.
But that’s not all …
• Since GATS and FTAA will also
likely prohibit governments
from setting conditions for
awarding contracts except
those necessary for product
quality or supplier capability…
The Service Contact Act
would almost certainly not
meet this test.
• The Service Contract Act mandates
prevailing wages for certain services –
this goes beyond ensuring product
quality or supplier capability.
Democracy at Risk.
• The new trade agreements challenge
fundamental concepts of democratic
government and national sovereignty.
• And they threaten to put many key
public services under corporate – not
public – control.
Let’s look at a hypothetical case …
• Assume GATS rules
are already in place
This is how the new trade agreements
might undermine democracy in local
communities…
A couple of years
ago,
U.S. Filter tried to take
control of New Orleans’
water system.
But …
Citizens fought back.
• 65% of New Orleans voters signed a
petition demanding public control of their
water.
• The Water and Sewerage Board rejects
U.S. Filter’s bid.
• And the coalition secures a requirement
that any future privatization effort must
be put to a public referendum.
They thought they had won.
This is what
democracy is
supposed to
look like.
But one day,
a few months after the new
GATS takes effect in 2006, the
City of New Orleans receives a
letter …
… on behalf of
U.S. Filter …
… by its parent company
Vivendi.
Vivendi …
… is a French-based multi-national
corporation and one of the world’s
largest private water companies.
… is also one of the “water
barons” criticized for providing
poor service at a higher cost to
consumers in their African and
Latin American water privatization
schemes.
Their letter says,
New Orleans seeks help.
It asks for an opinion from the U.S.
Trade Representative’s Office.
The U.S. Trade
Representative replies:
• New Orleans must allow U.S. Filter to bid.
• If they refuse, the U.S. must use all
means at its disposal to force compliance
– or else face huge penalties.
New Orleans complies.
• US Filter submits a bid and it is the low
bid – under GATS New Orleans must
accept it.
• It doesn’t matter that New Orleans’ law
requires a citizen referendum.
• It doesn’t matter that New Orleans
citizens want to retain control over their
water.
This was
fiction.
But if GATS rules are
adopted as currently
envisioned, this fiction
could become all too real.
In the 1990s
corporate freetraders began
their assault on
workers and our
democracy.
Now they are stepping up the
attack.
What can be done?
• Build awareness
– educate your membership
– write opinion piece or letter to editor
– write article for local newsletter
• Contact Congress
– write Congress about specific issue
– encourage your organization or local
elected officials to contact Congress
• Make it an election issue
– put question on candidate screening
– talk to local elected officials about
local impacts
• Mobilize people nationally
– prepare for November Miami rallies