In Letter to Colleagues, Scott & Doggett Outline Concerns with Fast Track & Trans-Pacific Partnership

June 8, 2015

Dear Colleague:

As the debate about Fast Track trade authority for the Trans-Pacific Partnership (TPP) continues, we write to address the frequently repeated assertion that the TPP will have the strongest labor and environmental standards ever.  To assess whether the TPP is setting a high watermark, we should look to past agreements to see if we are progressing or simply remaking mistakes of the past.

In 2007, House Democrats worked with President George W. Bush’s administration to improve labor, environmental, and other standards in U.S. trade agreements with Peru, Panama, Colombia, and South Korea. That agreement, now known as the “May 10th agreement”, also made labor and environmental chapters subject to the same dispute settlement provisions as most other issues in the trade deals (with the exception of investor initiated disputes, which retain their own extrajudicial mechanism) and ensured that trade sanctions – not just fines – could be imposed for violations of labor and environmental obligations.  This agreement represented the most progress that could be achieved by a Democratic-controlled Congress under a Republican administration.

The Peru deal went into effect in 2009 and the other three in 2012.  ­­We now have several years of evidence since the enactment of both the May 10th agreement and other trade pacts that predated that agreement:

  • Last November, the Government Accountability Office (GAO) criticized enforcement of existing labor commitments in free trade agreements (FTAs), writing that the United States Trade Representative (USTR) and the Department of Labor: “lack a strategic approach to systematically assess whether partner countries’ conditions and practices are inconsistent with labor provisions in the FTAs. Despite some proactive steps, they generally rely on labor submissions [by third parties] to begin identifying, investigating, and initiating steps to address possible inconsistencies with FTA labor provisions.” The TPP cannot advance the agenda of creating a level playing field if the U.S. government is a passive bystander waiting for violations to be flagged by third parties. Nothing in the TPP will change that. 
  • Threats, murders, and physical assaults undermine workers’ rights to freedom of association guaranteed by national law in both Guatemala and Honduras and embodied in trade agreements. However, allegations of government toleration of – and indeed, potential participation in – acts of violence have not been addressed.  For example, a submission filed by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) and 26 Honduran unions and civil society organizations on March 26, 2012 with the Office of Trade and Labor Affairs (OTLA) alleged that the government of Honduras failed to investigate and prosecute violence and threats against trade unionists.  However, in its report, the OTLA declined to make findings with respect to the issue of labor violence.
  • According to research conducted by Escuela Nacional Sindical (the National Union School in Colombia), there have been 105 anti-union murders since the implementation of the Labor Action Plan in Colombia that was adopted parallel to the U.S.-Colombia Trade Promotion Agreement. On February 26, 2015, writing in support of the TPP, Director of the National Economic Council Jeffrey Zients explained that the administration would act “on its own” accord to protect labor and environmental standards in the TPP.  However, the administration currently has this ability to act in Colombia, yet it has failed to do so.  In response to third-party submissions, it took 7 years for the USTR to reach a dispute settlement after violations of the labor chapter in Guatemala, and almost 3 years in Honduras just to issue an initial report; moreover, labor conditions have still not improved in either country.
  • There is also a marked lack of progress on the abolishment of forced labor with our trading partners. The State Department ranks countries based on a government’s compliance with the Trafficking Victims Protection Act’s minimum standards.  Three countries – PanamaColombia, and Morocco – have been downgraded at least once since entering into trade agreements with the United States, reflecting a lack of willingness to combat trafficking and forced labor, even when trade agreements exist.  This is especially troubling since some TPP countries, such as Malaysia, struggle to enforce laws already on the books.
  • Four trade agreements in Latin America (Colombia, Panama, CAFTA, and Peru) require the U.S. government to help partner countries strengthen labor laws, improve enforcement, and build the capacity of civil society to assist workers in securing rights spelled out in these trade agreements. Congress has consistently provided the needed funding, but USAID and the State Department have not consistently implemented their trade capacity building responsibilities. This is another example of a breached labor commitment.
  • The United States’ record on enforcing environmental obligations also raises concerns.  For example, the United States-Peru Free Trade Agreement included a Forest Annex aimed at stopping illegal timber trade between Peru and the United States.  In April 2012the Environmental Investigation Agency (EIA) published a multi-year investigative report, which documents at least 112 illegal shipments of cedar and mahogany wood – laundered with fabricated papers and signed off on by Peruvian government officials – were made to the U.S. between 2008 and 2010.  Despite a formal request from civil society organizations, USTR declined to use the tools in the Annex to hold Peru accountable, and specifically has not ensured that the comprehensive five year audits be performed.  Just last week, EIA published a status report which demonstrated the failure of USTR to enforce the environmental obligations in the trade agreement Moreover, recently enacted Peruvian Law 30230, “Tax Law Establishing Measures, Simplified Procedures and Permits for the Promotion and Dynamization of Investment in the Country,” likely violates the U.S.-Peru trade pact by weakening environmental laws in order to attract investment. 
  • While the USTR has never used free trade agreement rules to bring a case against another country for failure to meet environmental obligations, corporations are increasingly using the investor-state dispute settlement (ISDS) mechanism to challenge climate and environmental policies.  In April, a North American Free Trade Agreement (NAFTA) ISDS tribunal ruled that Canada violated the minimum standard of treatment provision in NAFTA, a vague standard replicated in the TPP, by denying the construction of a controversial quarry project in an environmentally sensitive part of Nova Scotia.  The ruling paves the way for the tribunal to order the government to compensate the foreign firm, Bilcon, which is seeking $300 million.

In short, as elected officials concerned about leveling the playing field in international trade, ending the race to the bottom, and creating a global economy that builds shared prosperity and sustainable environmental practices, we cannot accept that vague promises will achieve a high standard without an effective means to trigger enforcement of our trade agreements. We must make sure that the tools included in trade agreements are useable, effective, and actually enforced.  Anything less fails our constituents and our country.


 /s/      /s/
Rep. Robert C. “Bobby” Scott   Rep. Lloyd Doggett
Ranking Member        Senior Member
House Committee on Education & the Workforce   House Ways & Means Committee