As the House of Representatives prepares to take up President Barack Obama’s trade plans in June, opponents have found new ammunition from an unlikely source: the World Trade Organization.
The global trade body in Geneva set off a scramble on Capitol Hill last week when it sided with Canada and Mexico in a dispute over the U.S. country-of-origin meat-labeling law, saying it put foreign competitors at a disadvantage.
Congress passed the law in 2002, responding to demands by consumers who wanted to know where their meat came from. But hoping to stave off sanctions, the House Agriculture Committee voted quickly last week to scrap the labels for beef, chicken and pork.
With Obama now pushing for a new 12-nation Pacific Rim trade pact, critics fear that other U.S. laws could be jeopardized by a new international tribunal that would be created to resolve disputes.
“We should expect similar results,” said Rep. Rosa DeLauro, D-Conn., one of Obama’s leading trade critics.
Rep. Mike Thompson, D-Calif., said he worries that his state’s air and water laws could be at risk if they’re challenged by Asian businesses as trade barriers.
And Sen. Elizabeth Warren, D-Mass., said that even the federal minimum wage could face a legal challenge from foreign corporations.
Trade backers say that’s all very far-fetched, but opponents are ready to take advantage of the WTO ruling and hope it will steer more votes their way.
Lori Wallach, director of Public Citizen’s Global Trade Watch, said the WTO ruling “could not have come at a more inconvenient time” for Obama.
And Arthur Stamoulis, executive director of the Citizens Trade Campaign, a coalition of farm, labor, environmental, consumer and human rights groups, said the ruling shows how global trade rules “are being rigged against domestic producers and consumers alike.”
While the fallout has sparked plenty of anger, Obama and his trade allies say opponents are using scare tactics and that there’s no reason to worry that U.S. laws would get overturned under the new trade pact, known as the Trans-Pacific Partnership.
They note that previous U.S. trade agreements have included rules for settling disputes – they’re known as the “investor-state dispute settlement” process, commonly called ISDS.
The debate is part of a larger argument over whether to give the bill fast-track status, which would set the rules of debate for the Trans-Pacific Partnership after it’s submitted to Congress for approval. It would prohibit members of Congress from filibustering or amending the trade pact, making it easier for Obama to get it passed.
Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, said the ISDS process allows companies to challenge unfair or discriminatory treatment in binding arbitration instead of going to ordinary courts.
He said “it would be a shock” if the trade pact did not include such a process, because the U.S. has routinely demanded the language in trade deals.
“It is only in the overly hyperbolic and borderline fictional world of political debate that ISDS provisions impact the lives of everyday people,” Hatch said.
Sen. Ron Wyden of Oregon, the top Democrat on the Finance Committee, said U.S. investors need the dispute panels in case their business enterprises run into trouble overseas.
“What happens, for example, if a Malaysian judge decides to vote against an American company and it costs them millions?” he asked.
When the Senate took up the bill, Warren tried unsuccessfully to strip the fast-track rules from any trade deal that includes the ISDS provisions. She said the dispute rules threaten U.S. sovereignty and serve as “an end run around the democratic process.”
“If a country wants to adopt strong new protections for workers, like an increase in the minimum wage, a corporation can use these corporate-friendly panels to seek millions or billions in taxpayer compensation because the new rules might eat into the company’s profits,” Warren said.
While the Senate passed Obama’s fast-track request by a vote of 62-37, opponents say the White House remains dozens votes short in the House of Representatives.
Only 14 of the 188 House Democrats have made public statements pledging to vote for the bill, with Washington state Rep. Rick Larsen the latest to join the list, on Wednesday. Opponents hoped to swing more votes this week, targeting House members at 100 events around the country. In Sacramento on Wednesday, opponents delivered giant Q-tips to California Democratic Rep. Ami Bera, a fast-track supporter, urging him to “clean out his ears” and listen to his constituents and vote against the bill. Larsen and Bera are the only Democratic House members from their states who have said they’ll vote for Obama’s fast-track request.
DeLauro said the WTO ruling makes it clear that U.S. laws dealing with everything from food and drug safety to financial regulation could be challenged under a new trade pact. Allowing consumers to know where their meat comes from is “one of the pillars of a free-market economy,” giving families more security in knowing their food is safe, she said.
“We spent a lot of time and effort to get that accomplished,” DeLauro said. “And now these important and popular consumer protections will be nullified.”
The county-of-origin labeling law, known as COOL, has been contentious from the start.
California Democratic Sen. Dianne Feinstein said the WTO ruling now could mean billions of dollars in retaliatory tariffs against U.S. products. She said California could get hit the hardest, with new tariffs on wine, cheese, beef, apples, tomatoes and chocolates and other products that “could cripple many companies.”
Feinstein said she already has asked her staff to prepare legislation to address the WTO ruling.
“Consumers deserve to know where the food they buy comes from, but we need to make sure it’s done in a way that doesn’t destabilize California exports,” she said.
If the law disappears, fast-track opponents say, it will just be the latest victim of globalization.
Montana Democratic Sen. Jon Tester, a backer of the labeling law, told reporters last week that he butchers his own meat on his farm, bringing it with him when he commutes to Washington. He said he knows where his meat comes from, but that not all Americans do. And he said that’s why it’s so important for the U.S. to label its meat, despite what the WTO says.
“This is a horrible ruling,” Tester said. “And it goes against what this country stands for. . . . It’s exactly what’s wrong with free trade agreements in this day and age.”