http://www.mercurynews.com/mld/mercuryn ... 833660.htm
Posted on Tue, Jun. 07, 2005

`Free trade' pacts can use `barriers to trade' clause to undercut U.S. laws

By Neil Struthers and William Nack

Everybody knows that international trade agreements -- misleadingly called ``free trade'' -- focus on removing or lowering barriers to trade. However, most people do not understand what constitutes a ``barrier to trade.''

When the economy was based on physical goods such as shoes, cars and produce, the barriers sought for removal were tariffs, border taxes or customs regulations.

However, today, approximately 70 percent of the global economy consists of services such as banking, business management and construction. Along with this new service economy, a new generation of trade agreements has arrived that radically changed the definition of a ``barrier to trade'' to include domestic laws that protect workers, the environment and fair business competition. Using so-called ``free trade'' agreements, conservatives have accomplished via trade treaty what they could not have accomplished through an open, democratic political process.

This is the case with the Bush administration's Central America Free Trade Agreement (CAFTA) -- an expansion of the failed North America Free Trade Agreement (NAFTA) trade model beyond Mexico and Canada to include Nicaragua, Costa Rica, Guatemala, El Salvador, Honduras and the Dominican Republic. CAFTA requires changing significant U.S. laws without having passed through the U.S. democratic process.

For example, hidden within CAFTA's more than 2,400 pages is an insidious clause (Article 9. that would undermine time-honored U.S. laws that help ensure our highways, water systems, government buildings and schools are built in an efficient, high-quality manner that is safe for workers, children, and the public. Under this clause, both prevailing wage laws and project labor agreements could be ruled in violation of U.S. obligations as unfair ``barriers to trade,'' despite their continued domestic support and proven effectiveness. Because these laws are of vital importance to millions of working families in this country, CAFTA presents a direct threat to both our community and our democratic process.

CAFTA also threatens to restrict the freedom of state and federal governments when spending U.S. taxpayer money. CAFTA's Chapter 9 would curtail communities' ability to spend public funds in a manner consistent with their values. For example, if we, as U.S. taxpayers, decided to forbid purchasing U.S. federal marshal's uniforms that were made by children in Nicaraguan sweatshops, CAFTA could define this decision as a ``barrier to trade.'' CAFTA law could force the United States to overturn its decision to oppose child labor, or face strict trade sanctions. Just as CAFTA would undermine domestic labor laws, it curtails our ability to pressure other nations to improve their treatment of their workers, even children.

Additionally, CAFTA includes a replica of NAFTA's Chapter 11 -- of no relation to U.S. bankruptcy law. This rule grants greater rights to foreign investors than citizens and U.S. businesses have under the U.S. Constitution. Originally designed to shield Western investors in unstable Eastern bloc and developing nations, today's incarnation of investor protections are used as a sword to challenge and overturn justified and democratically supported domestic laws. In fact, two California laws face Chapter 11 suits, filed by private Canadian businesses that seek more than $1 billion from U.S. taxpayers.

The laws in question -- addressing groundwater contamination and open pit mining -- underwent years of scientific inquiry and passed through our democratic process before becoming law. These laws are necessary to protect our environment, our economy and our public health. Yet according to the edict of ``free trade,'' California law is a ``barrier to trade.''

As NAFTA's history clearly illustrates, agreements such as CAFTA are only partially about reducing tariffs. In reality the vast majority of ``free trade'' rules address issues that have nothing to do with international trade, attacking instead important worker, environmental, public health and fair competition laws. While we strongly support international trade and believe in the promise of globalization, the devil is in the details. Congress should reject CAFTA. Now is the time to create an honest and responsible model for international trade agreements that create new economic opportunities, while ensuring that workers and the fundamental principles of democracy are not sacrificed in the process.

NEIL STRUTHERS is the CEO of the Santa Clara and San Benito Counties Building & Construction Trades Council, AFL-CIO.

WILLIAM NACK is the executive officer of the San Mateo County Building & Construction Trades Council, AFL-CIO. They wrote this article for the Mercury News.