TOPICS > Economy

U.S. to Set Trade Guidelines on Environment, Labor

May 11, 2007 at 6:10 PM EDT

JUDY WOODRUFF: The compromise between the White House and Congress over free trade agreements came after months of stalled negotiations.

Under the new deal, when the U.S. enters into trade agreements with other countries, those countries must agree to: ban child labor and forced labor; guarantee rights to organized labor; and enforce existing national and international environmental law.

The pact also calls for expanded access to generic drugs for developing countries for public health emergencies. The new regulations would be applied to pending trade deals with Panama and Peru, which are involved in bilateral pacts with the U.S., as well as with South Korea and Colombia, where negotiations could prove more complicated.

Joining us to explain what is in this new agreement and its significance is Sherman Katz. He’s a senior associate in the trade, equity and development project at the Carnegie Endowment for International Peace.

Sherman Katz, good to have you with us.

SHERMAN KATZ, Carnegie Endowment for International Peace: Pleasure to be here.

JUDY WOODRUFF: Just to help us all understand, put into layperson’s terms what exactly has been agreed to here by the Democrats and the administration.

SHERMAN KATZ: On labor, the Democrats have been pushing hard for some time that new trade agreements, free-trade agreements, should include the right for labor to bargain collectively, to organize, and a prohibition of forced labor and child labor.

Republicans have resisted this on the ground that this is going to interfere with trade. And so Congressman Rangel, Chairman Rangel of House Ways and Means, and Secretary Paulson, Treasury, and U.S. Trade Representative Susan Schwab yesterday agreed that there is a set of principles that they can both accept to incorporate in U.S. trade agreements on that subject.

JUDY WOODRUFF: Now, those are the main features. There was also language in this agreement around pharmaceuticals, generic drugs.

SHERMAN KATZ: Correct. The problem always for policymakers on patents versus generic drugs is, how much should we reward people who’ve invented drugs? And how much interest do we need to give to poor people who need to have access to drugs?

And the Democrats have insisted that trade agreements should expand the opportunity for people in poor countries to have access to generic drugs earlier.

Agreements on the environment

Sherman Katz
Carnegie Endowment for Int. Peace
It's been the contention of labor that, when goods come from countries that have no unions or child labor, of course it's tough for Americans to compete.

JUDY WOODRUFF: There was also environmental language in here.

SHERMAN KATZ: Correct. Now we have provisions in trade agreements, we will have in FTAs, concerning seven extremely important international agreements on the environment -- one on endangered species, another on the ozone, another on wetlands -- in which we say, in these principles, nothing in this trade agreement that we're doing will interfere with these major agreements.

JUDY WOODRUFF: Now, assuming this agreement, which is between the leadership of the Congress and the president, the trade representative, assuming it's agreed, what is the impact going to be on the ordinary American consumer?

SHERMAN KATZ: Well, it's an interesting question. It remains to be seen whether, by giving an opportunity for workers abroad to organize, this raises their wages and, therefore, makes goods that come into the country from abroad a little less damaging or threatening to American industry.

It's been the contention of labor that, when goods come from countries that have no unions or child labor, of course it's tough for Americans to compete. And so the AFL-CIO and other unions have been saying, "We need to give these workers abroad the right to organize, because we think, a, that's going to make them more profitable and better consumers of U.S. goods and services, but, b, it also might mean that we can compete more effectively, because their wages will move up a little bit and not be so much lower than ours."

JUDY WOODRUFF: So impact on the worker, the American worker, is a significant piece of this, as well?

SHERMAN KATZ: That's the hoped-for result. We will have to see, as this works its way through, but, in general, I think it's -- there's a strong feeling that we need to do a better job of distributing the benefits of globalization broadly, and this is going to do that.

Compromise on both sides

Sherman Katz
Carnegie Endowment for Int. Peace
[T]he president of the United States wants to negotiate in this global trade round with the assurance to our trade partners that he will get a yes-or-no vote from Congress.

JUDY WOODRUFF: In the media today, Sherman Katz, they were describing this as a major achievement. This is something that had been argued about, fought over for not just months, but years. How big a deal is this?

SHERMAN KATZ: I think it's very big. It's required the White House to move its constituency, the business community, off of the business communities' insistence that including labor and environmental principles could kill the goose that's laid the golden egg, that is, all the profits from trade.

And it's also required Chairman Rangel and the Democratic Party to move away from the idea that we should blow the whistle and stop liberalization of trade. The idea is that this is a process that can be better managed, and that's what Sandy Levin, the chairman of the Trade Subcommittee, and Charlie Rangel have been saying. And so far, it appears that they've persuaded the leadership, at least, and we hope the caucuses, as well, to go along with this idea.

JUDY WOODRUFF: And why has this happened now? After years of arguing, why now?

SHERMAN KATZ: Well, the United States is engaged in global trade negotiations under what's called the Doha Round. Doha is the capital of Qatar. And this is where, two months after 9/11, the 150 members of the World Trade Organization declared that trade barriers should be lower and that we should pay particular attention to developing countries.

The subtext unspoken was that terrorism comes in part from unemployed young people and we need to do a better job of bringing them into the global deal. And the president of the United States wants to negotiate in this global trade round with the assurance to our trade partners that he will get a yes-or-no vote from Congress.

This is so-called fast-track authority. That authority will expire June 30th. From time to time, the Congress gives the president this authority for limited periods.

JUDY WOODRUFF: Why is that authority so important to this president and other presidents?

SHERMAN KATZ: Because the Congress of the United States looks out very carefully for the individual interest of its constituencies. And when trade agreements come along, the tendency always is for Congress to say, "Well, we've got to change this to protect the beef industry or the lumber or the oil industry," but under this fast-track authority, Congress agrees, "We'll only vote yes or no."

And that makes it easier for other countries to negotiate with us, understanding that the opportunity for change of the deal is more limited.

Trust between Congress, White House

Sherman Katz
Carnegie Endowment for Int. Peace
I'm not a Pollyanna, but I think, by and large, there are many winners.

JUDY WOODRUFF: So this agreement that was announced yesterday, you're saying, opens the door to that taking place in a few months?

SHERMAN KATZ: We hope so. It doesn't necessarily follow, because one has to keep in mind that these provisions on labor and environment are not now part of the global trade negotiation, but they have established much more trust between Congress and the administration that we can work together on global trade problems. And the hope is that this will pave the way toward Congress agreeing to a further extension of fast track.

JUDY WOODRUFF: Quickly, any losers in all this?

SHERMAN KATZ: I really don't think so. I'm not a Pollyanna, but I think, by and large, there are many winners. I think the pharmaceutical industry may look carefully at what's going to happen in their area, but I think, by and large, it's a win-win.

JUDY WOODRUFF: Sherman Katz, good to have you with us, thank you.

SHERMAN KATZ: Thank you very much.