Braley and Populist Caucus Demand Answers from Obama on Trade Agreements

Oct 4, 2011

Call on Obama to Keep Campaign Promise and Oppose Free Trade Agreements
 
Washington, DC – Today, Congressman Bruce Braley (IA-01) and Vice Chairs of the House Populist Caucus demanded answers from President Obama on the pending free trade agreements with South Korea, Colombia and Panama.  In a letter to the President, the Populist Caucus leadership questioned why Obama changed his position on the pending free trade agreements.  The letter points out many instances where Obama said he was opposed to the free trade agreements while he was campaigning for President.
 
“When it comes to trade, American workers prefer candidate Obama to President Obama.” said Rep. Braley.
 
Congressman Braley serves as the Chairman of the Populist Caucus, which has advocated for proposals to create jobs in America.  The Caucus has supported various job creation legislation including bills that would reinvest in American manufacturing, rebuild our aging infrastructure and encourage more products to be made in America.

A PDF copy of the Populist Caucus letter to Obama can be viewed at the following link: http://go.usa.gov/8Jz

October 4, 2011
 
President Barack Obama
The White House
1600 Pennsylvania Ave., NW
Washington, DC 20500
 
 
Dear President Obama:
 
As members of the House Populist Caucus, we are opposed to the free trade agreements (FTA) with South Korea, Colombia and Panama signed by President Bush in 2007 that you have just submitted to Congress.  During your presidential campaign, you repeatedly stated your opposition to the Colombia and Korea agreements while pledging to “shut offshore tax havens”[i] of which Panama is one the world’s most significant.

Given your past opposition to the FTAs with South Korea and Colombia, we are eager to understand the basis for your change in position.  We recognize that your administration attempted to tackle some of the issues that you raised. However, the outcomes of these efforts have fallen far short of effectively addressing the serious problem that you rightly raised during your campaign. Thus, it is not surprising that most Democrats in the House of Representatives continue to oppose these deals
 
In 2008, during a speech at the AFL-CIO convention in Pennsylvania, you stated that you were opposed to the Colombia FTA “because the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements”[ii].  During the final presidential debate, explaining your opposition to the Colombia FTA, you said: “The history in Colombia right now is that labor leaders have been targeted for assassination on a fairly consistent basis and there have not been prosecutions... we have to make sure that violence isn't being perpetrated against workers who are just trying to organize for their rights.”[iii]
 
Yet, targeted violence against unionists continues to be a major problem in Colombia. Indeed, since you made that statement, the number of unionists assassinated in Colombia annually has grown. And, the evidence is gruesomely compelling that the “Labor Action Plan” that your trade officials signed with Colombia in April 2011 is not altering the reality on the ground in Colombia that you in the past deemed unacceptable for a prospective trade partner country. This year 22 labor leaders have been killed in Colombia.  Fifteen of these assassinations have occurred since your administration’s Labor Action Plan was signed. Threats of violence continue to escalate. And, there is no turnaround with respect to the shameful record of impunity for the perpetrators of these attacks, with convictions in only six percent of the 2,860 trade unionists murder cases since 1986. Yet your trade officials continue to certify that Colombia is meeting its obligations under the Plan.[iv]

Given this grim reality, and, given violence against union leaders was a primary reason for your opposition, why have you changed your position on the Colombia FTA?
 
You have also stated your opposition to the South Korean FTA calling it “badly flawed” and noting that “the terms of the agreement fall well short of assuring effective, enforceable market access for American exports of manufactured goods and many agricultural products” in a 2008 letter you sent to President Bush[v].  You have also stated: “As President, I will work to ensure that the U.S. again leads the world in ensuring that consumer products produced across the world are done in a manner that supports workers, not undermines them”[vi]. As well, you answered “yes” to an Oregon Fair Trade Coalition candidate questionnaire stating: “Will you require new trade agreements to include core International Labor Organization (ILO) Conventions?”[vii]
Now you support the same South Korea FTA deal. Yet, it still includes footnote #1 of it labor Chapter inserted by President Bush in 2007 that  forbids reference to the ILO Conventions. You did not obtain the removal of this offensive prohibition during the administration’s 2010 supplemental negotiations on the Korea FTA. And, the only changes in those supplemental talks with respect to agricultural market access was not to improve it, but to extend for several years Korea’s tariffs on U.S. pork.
 
Nor did you remedy the FTA’s rules of origin which thus still allow various categories of goods, including autos and many categories of electronics, to have as much as 65 percent of their value produced outside the U.S. or South Korea and still obtain FTA benefits.[viii]  Given South Korea’s close proximity to China, Vietnam and other cheap labor nations, corporations will likely use this loophole to flood the U.S. with cheap materials tariff free. This loophole is simply unacceptable and could decimate what’s left of the U.S. auto supply chain and undercut numerous other industries. In a time where we are struggling to reinvigorate our manufacturing sector, why are you supporting yet another free trade agreement that will send good paying American jobs overseas while boosting the bonuses of “cost–cutting” corporate CEO’s?
 
This rule of origin provision has been passionately opposed by the unions of both countries and is loved by large U.S. and Korean multinational manufacturers as it facilitates the offshoring of manufacturing supply chains to China and other low-wage labor-rights-free zones. Even the North American Free Trade Agreement (NAFTA) required 50 percent domestic content for autos, while the European Union’s recent FTA with Korea requires 55 percent. Even though the U.S. FTA is projected to greatly increase the U.S. auto trade deficit with South Korea, the Korean auto workers union, which represents workers in both final assembly and supply chain manufacturing, opposes the FTA because the extremely low rules of origin will see their workers replaced by parts imports from China. And, in the United States, where many more workers are employed making the glass, steel, tires and parts that go into autos than in final auto assembly, the U.S. auto supply chain unions such as the Steelworkers, Machinists, Teamsters, CWA-IUE and others remain opposed to the Korea FTA along with the AFL-CIO, which recently reiterated that it will score votes on each of these FTAs on its congressional vote chart.
 
Finally, with respect to human rights, there was nothing in the text of the agreement President Bush signed that specified that the 65 percent of allowable third-country content cannot come from North Korea[ix].  A significant problem was created when U.S. negotiators did not specify in the FTA text that the U.S. would not permit access to goods that meet the FTA’s rules of origin unless they also met the licensing requirements of the Office of Foreign Asset Control (OFAC).  This problem was pointed to your administration by various Members of Congress.  The FTA also generally bans import licensing yet while the U.S. listed exception to this for licensing regimes for timber and other goods, no exception was provided for the OFAC licenses that implement our trade sanctions on North Korea.
 
The issue of “leakage” around the OFAC North Korea sanctions program of goods assembled in South Korea by containing inputs from North Korea was highlighted by the Congressional Research Service (CRS). CRS also provided details on the North Korean Kaesong Industrial Complex where 122 South Korean firms employ 40,000 North Korea workers for whose work the Kim dictatorship is paid in hard currency. About half of the 25-40 cent-per-hour wages are then paid back to the workers in North Korean currency or scrip. The workers are bussed in daily to work under North Korean government supervision and have no basic labor rights. Even the current U.S. Ambassador to Korea, Han Duk-Soo, who was Prime Minister when the FTA was signed, noted: “The planned ratification of the South Korea-U.S. free trade agreement will pave the way for the export of products built in Kaesong to the U.S. market.”[x]
 
Clearly, conditions in the Kaesong zone in North Korea do not meet your principle for worker’s rights.  Yet, the failure to fix the loophole in the Korea FTA means that products that have final assembly in South Korea with up to 65% of the product’s value being comprised of parts and inputs made in Kaesong would meet the FTA’s rules of origin and thus the U.S. would have a new obligation to allow access for such goods, which are currently forbidden. This sets up a scenario where the U.S. government would not only be creating a new market for production under the most abysmal labor and human rights conditions, but could be providing a new hard currency revenue stream for North Korea’s Stalinist dictatorship to build up the weapons systems with which it threatens the United States.
 
Given the FTA still bans the ILO Conventions and still has rules of origin that favor chronic-offshoring multinational corporations over U.S. workers, why do you now support it? Also, why did your negotiators not prioritize closing the Kaesong loophole? If the reason is that South Korea could not agree to this after promising its corporations that the FTA would allow new Kaesong access, as per the former Prime Minister, then why would you permit the pact to go forward with this serious problem rather than maintain your past opposition?  
 
Given that you may be sending the FTAs to Congress imminently; we would greatly appreciate an expeditious reply. We give these agreements high priority given their potential implications. According to even the official U.S. International Trade Commission study of the pact, the Korea FTA will increase the U.S. trade deficit and thus puts at risk tens of thousands more U.S. manufacturing jobs. Colombia remains the country where more labor unionists are murdered than the rest of the world combined, with the number of assassinations growing from 37 when the FTA was signed to 51 in 2010. Panama is a major tax haven that the U.S. State Department identifies as the major venue for Mexican and Colombian drug cartel money laundering.
We ask that you reply to our questions before the House votes on the pending FTAs.  Thank you in advance for your reply.  Please feel free to contact any of us if we can provide further assistance.
 
 
                                                            Sincerely,
 
 
 
                                                                                                                                  
            Bruce L. Braley                                             Peter DeFazio
            Chairman, Populist Caucus                      Vice Chair
 
 
 
                                                          
            Betty Sutton
            Vice Chair
 
 
 

[i] http://findarticles.com/p/news-articles/political-transcript-wire/mi_8167/is_20081026/sen-barack-obama-delivers-remarks/ai_n50772511/ (Sen. Obama Delivers Remarks at a Campaign Event, Reno, Nevada, October 25, 2008)

[ii] http://blogs.wsj.com/washwire/2008/04/02/obama-vows-opposition-to-colombia-trade-deal/

[iii] http://latimesblogs.latimes.com/washington/2008/10/debate-transcri.html

[iv] http://thehill.com/business-a-lobbying/183909-afl-cio-sends-list-of-killed-colombian-labor-leaders-to-obama

[v] http://www.reuters.com/article/2008/05/24/us-usa-trade-idUSN2329555020080524

[vi] Obama’s response to a Texas Fair Trade Coalition questionnaire, March 3, 2008. Available at: http://www.citizen.org/documents/TXFairTradeCoalitionObama.pdf

http://www.citizen.org/documents/ORFairTradeCoalitionObama.pdf

[viii] http://www.ustr.gov/sites/default/files/uploads/agreements/fta/korus/asset_upload_file680_12704.pdf

[ix] http://www.ustr.gov/trade-agreements/free-trade-agreements/korus-fta/final-text

[x] Yoo Cheong-mo, “Prime Minister Han visits N. Korean industrial park,” Yonhap News Agency, December 12, 2007,Available at: http://english.yonhapnews.co.kr/national/2007/12/12/18/0301000000AEN20071212008600315F.HTML