COMMISSION ON INTERNATIONAL TRADE AND STATE SOVEREIGNTY
MINUTES
Monday, July 16, 2007
Approved 9/11/2007
Members Present: Sen. Ginny Lyons, Co-chair; John Boomhover; Lawrence Bruce, Jr.; Daniel Brush
Members Absent: Rep. Kathie Keenan, Co-chair; Elliot Burg; Dana Eidsness
Also Present: Legislative staff, the public, and the press
Recording: CD 2007 – 13, 14, 15
Convene
At 9:15 a.m., Sen. Lyons convened the meeting in Room 10 of the Vermont State House, and explained that Rep. Keenan would be absent due to a funeral and Elliot Burg would be absent due to a back injury. Sen. Lyons also announced that David Anger would replace John Waite as the business representative.
Approval of Minutes from Commission Meeting of May 21, 2007
John Boomhover moved to approve the minutes of May 21, 2007. Lawrence Bruce seconded the motion, and the commission approved the minutes by a vote of 4-0-3.
Sen. Lyons introduced Nedene Martin as the new staff assistant for the Commission on International Trade and State Sovereignty.
Future Meeting Planning and Discussion
The commission discussed future meeting planning. The commission decided to hold a public hearing for each of its four major topics: agriculture, the environment, business competition, and health care. The commission decided that there should be a presentation on one topic at each hearing and that the public should be invited. The commission decided to hold one public hearing in each of the four months remaining prior to the legislative session. The commission decided to send out educational materials to interested parties prior to the hearings so that the public could develop questions.
John Boomhover asked if the State House IT staff could set up an e-mail address for the commission so that the public could submit comments and questions.
Sen. Lyons stated that the commission should start with the topic of agriculture. However, Sam Burr stated that because of the Farm Bill and the stalled Doha roundtable negotiations on agricultural subsidies, it might be better to delay that hearing until November. Sen. Lyons asked that the commission invite Secretary of Agriculture Roger Albee to the public hearing on agriculture so that the commission could draw on his trade experience.
The commission decided to split into two subcommittees, each of which will work on two subject areas. One group will address environment and agriculture and the other will address health care and business development. Sen. Lyons will chair the subcommittee on agriculture and the environment, and Rep. Keenan will chair the subcommittee on business development and health care. The goal of the public hearings is to both educate and seek input on the risks and benefits related to free trade agreements (FTAs).
The commission set a tentative schedule for the public hearings: Business Competition on September 11; Environment on October 9; Health Care on November 13; and Agriculture on December 11. The hearings will start at 6:30. The location of each is to be determined.
Commissioner Powden, Vermont Department of Labor
Commissioner of Labor Pat Moulton Powden introduced Andrea Hussey, the career grants program administrator who handles the Trade Adjustment Assistance (TAA) program at the Vermont Department of Labor (DOL), and Andy Condon, economic and labor chief at the Department of Labor.
Sen. Lyons reviewed the testimony of Andy Condon at the meeting on May 16, 2007. Mr. Condon today was invited to discuss the federal requirements for TAA and how TAA is handled by the state.
Commissioner Powden stated that the role of the department in the trade‑related arena is limited to TAA. At the May commission hearing, the state DOL provided a list of TAA petitions granted and the number of jobs lost that are attributed to international trade. Currently, the state DOL lists 1600 lost jobs that have qualified for TAA. Any other job losses cannot be attributed directly to trade. The number of jobs gained and other gains due to trade cannot be accounted for.
Commissioner Powden distributed a summary sheet describing the TAA process. TAA is a U.S. DOL program. The state DOL can file a claim with the federal department of labor for TAA. The U.S. DOL investigates the petition for TAA. The state DOL does not participate in the investigation, and does not communicate with state businesses during the investigation. After the U.S. DOL grants a TAA petition, the state DOL becomes involved to provide services to the affected workers. Services are provided through the regional offices to “mature workers” who are unable to obtain employment at their former wage level. There is also a health care tax credit that affected employees may be able to utilize.
The state DOL tries to bring services to affected workers, Commissioner Powden said. The department notifies the employees of the TAA program, but it is important to note that employees must act to take advantage of the benefits. The services available are typically training or extension of unemployment compensation. Commissioner Powden acknowledged that there are instances when many people are affected, and it can take the department a substantial amount of time to respond.
Ms. Hussey stated that the state is notified by e-mail when the U.S. DOL initiates a TAA investigation. Ms. Hussey and Commissioner Powden stated that the state DOL does not do anything at this point. Commissioner Powden clarified her response by stating that when there is a mass layoff or firing, the state DOL provides rapid response services by scheduling a meeting with the human resources department of the company to inform it of the services available to the company and its workers through the state DOL and under TAA. This assistance occurs before the TAA certification process.
Commissioner Powden stated that the state receives some federal funding—up to approximately 15% of the funds granted for TAA—for the cost of administering the TAA program. Funds not used within three years of receipt revert to the federal government. Vermont is not a big user of the TAA program, as indicated by a U.S. General Accounting Office national report. Consequently, when Vermont asks for assistance, the state typically receives it.
Sen. Lyons asked if the state DOL works with employees when there are mass layoffs or firings. Commissioner Powden responded that when the Vermont DOL knows of a mass firing or layoff, the department asks the company for the opportunity to speak to the affected employees and to obtain a mailing list. Most employers cooperate, she said.
John Boomhover asked whether a company needs to certify that a firing or layoff is trade-related. Commissioner Powden stated that she does not know the specific process. Mr. Boomhover asked who initiates the TAA process, the company or the workers? Ms. Hussey said it can happen either way.
Commissioner Powden stated that when the U.S. DOL issues a notice stating that a TAA petition has been granted, it includes a notice that the job loss was trade-related.
Sen. Lyons asked whether there is a benefit to a company to go through the TAA investigation to determine that the job loss was trade-related. Ms. Hussey stated that there is no benefit to the company; the TAA program benefits the worker.
Sen. Lyons asked what role the agency of commerce and community development (ACCD) plays in making contact with companies that may be at risk of moving out of the state or country. Commissioner Powden responded that the Vermont DOL tracks all rumors of job loss or outsourcing. Typically, Commissioner Powden is in contact with Mike Quinn, the commissioner of economic development, and others, to try to help a company maintain its presence in the state. Secretary of Commerce Kevin Dorn and Mr. Quinn at ACCD also talk with companies; however, assistance is only possible when a company cooperates with the state.
Mr. Brush asked whether, when the Vermont DOL implements its rapid response program, it hands out information about TAA and recommends that affected workers form groups of three or more employees to apply for a TAA petition. Ms. Hussey stated that state DOL offers information to the workers, the company, and the union, but the state DOL goes no further than offering the information because the state does not have the resources or authority to do TAA investigations.
Sen. Lyons asked whether, once the application is approved certifying that jobs have been lost due to free trade, the department meets individually with employees. Commissioner Powden responded that the department tries to hold group meetings to inform the workers that they have been certified and that services are available under TAA. After the group meeting, the TAA services typically are offered in a one-on-one process.
Lawrence Bruce asked what percentage of people who are eligible for TAA take advantage of the program. Commissioner Powden stated that the department does not have the specific numbers, but that the majority of the affected workers try to take advantage. Mr. Bruce asked to what extent the program works. Commissioner Powden responded that most employees that want to work, find work, but not necessarily at the wage they earned previously. She said it is important to note that TAA is not available to people who want to start their own business. The state DOL does not track individual employees who received assistance, but does know that the majority of workers get back to work relatively quickly.
Sen. Lyons asked if the state DOL could respond to the questions that the commission posed to the department by letter and at the May commission meeting. Commissioner Powden responded that her department cannot provide all of the requested information due to some informational barriers. TAA is only available to manufacturing jobs.
Mr. Condon stated that the Vermont DOL can provide industry data on how jobs moved or were lost, but cannot attribute the job loss to trade. He stated that the department provided the information that the commission asked for, but not necessarily in the detail requested. He said that the occupational data are not well suited to looking at changes over time because of the way the data are collected.
Mr. Condon stated that the department has collected the occupational information only since 2002, so the relevant information pre-FTAs is not available. The federal program under which the department collects information is called the occupational employment survey (OES). In the late 1990s the OES changed from surveying a discrete set of occupations each year and moved to a system of collecting information on all occupations every two years. Vermont DOL has the pre-2002 data but it is impossible to determine from those data what caused job losses or gains. In addition, the definition of “occupation” under the federal standard occupational categories (SOC) has changed since 1998.
Commissioner Powden stated that the problem with the historical data for Vermont is that there are different definitions of occupation and different data. She said that the Vermont DOL does not want to mislead the commission, and the historical data may not make sense because of the changes to the federal law.
Mr. Brush asked if Vermont follows the federal guidelines when collecting information. Mr. Condon stated that the OES is collected according to federal guidelines, which all states are required to follow.
Sen. Lyons asked how the U.S. Business Roundtable report summarizes the jobs created by trade. Commissioner Powden stated that she had the U.S. Business Roundtable February 2007 report, which indicates that approximately 78,000 net jobs have been added in Vermont due to trade. Commissioner Powden stated that the roundtable report is a fairly liberal interpretation of jobs that are trade-affected. Sen. Lyons stated that the jobs reported by the Business Roundtable are not due to trade agreements. Commissioner Powden agreed. Mr. Condon spoke about how the U.S. Business Roundtable identified the jobs affected by trade and described how the Business Roundtable uses input/output models, which track the products a country sells and identify the amount of labor needed to generate and sell them.
Commissioner Powden stated that she does not think that there is information available from state agencies regarding the number of jobs lost in Vermont due to FTAs. What the department has is the information related to TAA, and she cautioned the commission not to use this as an indicator of jobs lost.
Commissioner Powden stated that Mr. Condon submitted information at the May commission meeting regarding the overall job loss picture, but that determining how to attribute this job loss to trade is a dilemma. Mr. Condon’s program is entirely federally funded, and the federal government sets the collection requirements. Thus, she said, the department likely will not collect the information requested by the commission until the federal government requires the department to do so.
Commissioner Powden stated that the department has tried to be as responsive as it could be. To dig deeper would require more resources. Federal funding to collect this job information is downward trending, she said. Sen. Lyons requested that the department bring to the public hearing in September recommendations for supporting the department’s ability to collect information so that the commission could make a request to Vermont’s congressional delegation on behalf of the department.
Mr. Brush asked if there is a department of labor website reviewing how the job classifications have changed over the past seven years. Mr. Condon stated that he does not have an answer to the question, but can make the information available to the commission.
Testimony on Labor Implications of Free Trade Agreements and Navigation of and Problems with the TAA Process
Gary Murphy, former second delegate of the Graphic Communications Conference of the International Brotherhood of Teamsters (GCC/IBT Local) Local 1L at Capital City Press, talked about real-world experiences with the DOL. The state DOL rapid response team was a very good thing, he said.
Mr. Murphy worked in the composition division of Capital City Press, which was the first division to lose its jobs to outsourcing to India. The workers filed for TAA assistance in September 2005. When the job losses were announced, the state DOL did respond and did provide benefits other than TAA, he said. The workers were initially denied TAA benefits by the U.S. DOL because of rules allowing benefits only to workers who produce a tangible product. The composition department at Capital City Press produced electronic files, which the U.S. DOL initially did not construe to be tangible. The company and the workers originally worked together to apply for TAA assistance. When the petition was denied, the company was not interested in appealing. The union did appeal, but the process was costly and time-consuming. Mr. Murphy asked if the state DOL has the ability to assist companies or workers that don’t have a union in their attempts to qualify for TAA benefits or appeal TAA decisions.
Mr. Murphy spoke about the experiences that some of his co-workers had with the Vermont DOL. He understands that some of his criticism is due to the funding shortfalls at the state DOL, but he said it is important for the commission to know the information so that the commission can have some impact on the finances that the department receives. Mr. Murphy stated that the Vermont DOL was not an active enough advocate for the workers. He said that job loss is very stressful and workers may be confused as to how and what to do to pursue a new job. When workers waited to determine what to do, the state DOL was not as helpful as it could have been, he said. There should be some entity, either at the state DOL or elsewhere, that could more actively pursue the interests of employees who lose jobs, he said.
Sen. Lyons stated that the commission heard from the state DOL that the department provides one‑on‑one counseling to affected workers. She asked Mr. Murphy if he was stating that such counseling was not as effective as it could have been. Mr. Murphy replied that the senator was correct. Sen. Lyons stated that this is an important point and that any counseling should follow up with employees in reaching their goals.
Mr. Murphy stated that the other area where communication needs to be improved is that when people elect retraining, the retraining is paid for and unemployment benefits are provided. The department of employment and training encourages workers to seek part time jobs, but having a part time job diminishes the amount of unemployment compensation that a worker may receive. Many people do not understand this, and it is difficult for the average person to find specific information in the statutes. He recommended that the state establish a position or service that can sit down with workers and discuss the possible impacts of their decisions.
Sen. Lyons asked Mr. Murphy if he was recommending additional follow-up assistance with impacted employees. Mr. Murphy replied yes. Mr. Murphy said he believes such services will be needed in the future.
Mr. Murphy stated that he worked with 35 people at Capital City Press and many of them looked for jobs for a long time. Despite reports that there is a labor shortage in the state, Mr. Murphy said that many of his colleagues could not find adequate jobs.
Jonathan Kissam followed Mr. Murphy and introduced himself as a member of Local 221 of United Electrical (UE) Workers of Burlington. UE represents 800 workers around the state. Many of the facilities receiving TAA assistance employ or used to employ UE members.
Many of the jobs leaving the state are not doing so due to business competition, Mr. Kissam said. The Stanley Tools plant in Shaftsbury was the most profitable Stanley Tools plant in the world when it closed, he said; business competition did not force its closure. Jobs have left, due to companies taking advantage of trade agreements, that are not reflected in the state DOL job data.
Mr. Kissam also stated that the UE surveyed federal senators and representatives regarding the impact that NAFTA had on creating jobs in their district. The UE could only find senators or representatives who pinpointed a job created in their district due to NAFTA.
Mr. Kissam stated that he can see a growing inequality between classes in Vermont. He said he thinks it is important to study how trade agreements impact job loss and the growing inequality in the country.
Mr. Kissam said people tend to think of trade agreements as being about tariffs, but that most of these agreements are about barriers to trade, which include things such as Social Security systems, health care systems, and drug patents. In addition, trade agreements—such as the Korea-US FTA—include incentives for countries to lower environmental and other standards, he said. He said that the regulation of the labor market could come under attack under FTAs. Mr. Kissam stated that if we were to focus our trade agreements on helping countries create middle class economies rather than on utilizing cheap labor, we likely would see less immigration.
Traven Leyshon of the Vermont State Labor Council testified after Mr. Kissam. Mr. Leyshon stated that the information provided by the state DOL in May is the tip of the iceberg; the situation is worse. Thousands of Vermont families are suffering from job losses, he said. It is not a good sign, he said, that Governor Douglas’ administration keeps referring to the U.S. Business Roundtable report. Mr. Leyshon stated that this report is not credible data. He stated that the report is more about marketing a particular agenda than about credible analysis. For example, he said, Wal-Mart jobs are included in the U.S. Business Roundtable report. This is how the report concludes that there have been 78,000 jobs in Vermont linked to trade. Mr. Leyshon stated that another study by the Economic Policy Institute estimates a net loss of 4,900 jobs in Vermont between 2001 and 2006 due to a growing trade deficit with China alone. Mr. Leyshon stated that Working Vermont is reviewing the state DOL job information in order to provide some of the information that the commission requested and that the information should be available on www.highroadvermont.org.
Mr. Leyshon stated that Vermont DOL only reported jobs lost from 2003 to 2007 even though the department has information going back to 1977. It would be helpful for the state to provide all available data. The U.S. DOL reports 2,194 jobs affected between 2002 and 2006, while the state only reported 1,689 jobs affected. The state offered no information about what happened to the affected workers; Mr. Leyshon stated that he thinks Vermont DOL should report on workers’ status— whether they retired, found other jobs, etc. Mr. Leyshon stated that the state DOL did not report according to the NAFTA TAA certifications. The more than 2,000 jobs adversely affected represents 0.71% of all seasonally adjusted non-farm jobs in Vermont, he said. Mr. Leyshon said this does not sound like a lot, but that if one compares information among states, Vermont ranks 42, which is not good—number 1 is best—and has taken a particularly hard hit. Of all the workers displaced by trade between 2001 and 2006, only 51% were employed seven to nine months after losing their jobs, he said, and most of those took pay cuts and earn only 72% of what they earned at their previous jobs.
Mr. Leyshon stated that there are problems with data at the federal level. Previously, the U.S. DOL compared wages of workers prior to their being laid off with their wages after they were laid off, he said. In fiscal year 2006, the U.S. DOL changed its methodology for collecting information and in 2007 it will stop collecting it. Thus, going forward, there will be no record of the good wages previously earned by workers and the pay cuts that they will take. Mr. Leyshon stated that the Vermont State Labor Council called the U.S. DOL to get an explanation of why they will no longer collect the wage information. Mr. Leyshon stated that the U.S. DOL refused to provide an answer, but that he suspects it is due to the government supporting a particular trade agenda.
Mr. Leyshon stated that Vermont ranks 37th among states for earnings changes among displaced workers. Vermont DOL provided data on job changes and wages for the largest export industries, he said. The state DOL provides the percentage changes but not the actual figures for jobs gained or lost, and the state’s data only went through 2005, he noted. Seventeen of the top 19 importing industries have lost 9,500 jobs since 2000, a loss of more than 1 out of 5 jobs, he said. Several businesses have lost more than one third of their jobs and only two have more employees than in 2000, Mr. Leyshon said. He stated that the state wage information is not adjusted for inflation and did not show 2006 data. Mr. Leyshon stated that while some jobs in exporting industries pay well, not all of them do; indeed, he said, thousands of workers in these industries earn less than a livable wage.
Mr. Leyshon stated that free market fundamentalists characterize trade losses as small and concentrated. They examine only the workers directly displaced by trade, he said, but the largest cost of trade agreements is the permanent and steady downward drag on wages in sectors otherwise unaffected by trade, as people who lose their jobs due to trade enter the labor market.
Earl Mongeon and Ralph Montefusco testified together.
Earl Mongeon is vice president of Alliance@ IBM, a union organizing effort. Mr. Mongeon said that some IBM workers who lost their jobs in 2003 have been hired back, but at lower wages and with fewer benefits and lesser pensions; only one employee found a better paying job, but he had to look outside the state.
Mr. Mongeon stated that in regard to TAA, most of the workers at IBM are in the services sector and do not receive assistance even though jobs are being outsourced to India and elsewhere. In 2003, IBM had 3,000 jobs in India; today they have over 50,000. All of the multinational companies are moving to cheaper countries because of labor and environmental standards, he said.
Mr. Mongeon stated that IBM is now planning the construction of a semiconductor plant in China. Semiconductors are what Burlington manufactures. Mr. Mongeon stated that the CEO of the Burlington IBM operation always praises the work of Burlington, but since the company is building a plant in China, many employees are concerned they are going to lose their jobs. He said there is also high attrition in jobs as many are temporary positions and people leave due to low wages. There is no commitment to the worker at IBM, he said.
Ralph Montefusco introduced himself as a former IBM employee, now a staff member for the Communication Workers of America working with the Alliance@IBM. Mr. Montefusco stated that a good part of the manufacturing process at the Burlington IBM facility has been sent to other countries, and consequently thousands of jobs have been lost.
Update on Fast Track, Free Trade Agreements, and the Doha Negotiations
Michael O’Grady briefed the commission on trade-related issues. He stated that Fast Track/Trade Promotion Authority[1] expired June 30, 2007. The President and U.S. Trade Representative Susan Schwab have requested renewal of Fast Track. House Speaker Nancy Pelosi (D-Cal.), House Majority Leader Steny Hoyer (D-Md.), House Ways and Means Committee Chair Charles Rangel (D-N.Y.), and Senator Baucus, Chair of the Senate Finance Committee, do not support the renewal of Fast Track. Congress’ decision not to take up Fast Track renewal makes it extremely unlikely that this negotiating authority will be considered prior to the 2008 elections. Despite expiration of Fast Track/Trade Promotion Authority, the Free Trade Agreements (FTAs) between the United States and Peru, Colombia, Panama, and South Korea will all be considered under the Fast Track Rules. Fast Track/Trade Promotion Authority extends to all trade agreements entered into before July 1, 2007.
Two of the four pending FTAs—Peru and Panama—have been submitted to Congress. Submission of the Colombia and South Korea FTAs may be delayed due to congressional opposition. Speaker Pelosi and Reps. Hoyer and Rangel issued a joint statement supporting the Peru and Panama FTAs. However, there is significant opposition within the Democratic Party regarding both the Peru and Panama FTAs.
Submission and action on the Colombia FTA may be delayed due to concern over violence in Colombia. Much of the violence in that country has been directed against trade union members, and U.S. labor organizations strongly oppose the Colombia FTA. Speaker Pelosi and Reps. Hoyer and Rangel currently do not support the FTA with Colombia and do not plan to address it until concrete evidence indicates progress toward reducing violence.
Significant congressional opposition also exists with respect to the U.S.-South Korea FTA. Speaker Pelosi and Reps. Hoyer and Rangel do not support the South Korea FTA because it does not adequately address non-tariff barriers in South Korea, particularly those blocking access for U.S. manufactured products to the South Korean market. Senator Baucus, among others, noted that he will continue to oppose the U.S.-South Korea FTA so long as U.S. exporters of beef find it difficult to crack the South Korean market. The problems with market access and a one-sided trading relationship will likely undercut support for the U.S.-South Korea agreement, and there has been speculation that it will not be submitted to Congress until after the 2008 elections.
The possibility of congressional consideration of the Peru, Panama, Colombia and South Korea FTAs resulted from a bipartisan deal between the leadership and President Bush’s administration. This bipartisan “side deal” was announced in mid-May, but details were not announced until late May. In June, the USTR made public a revised version of the U.S.-Peru FTA that included the changes required by the side deal. According to the USTR, the revised FTAs should include additional language and requirements addressing labor, the environment, intellectual property, and investment rights.
Labor: The bipartisan trade agreement requires the Peru, Panama, Colombia, and South Korea FTAs to include an obligation to adopt and maintain laws that accord with internally recognized labor principles, including the ILO Declaration on Fundamental Principles and Rights at Work. These principles include: freedom of association; recognition of collective bargaining; elimination of forced labor; abolition of child labor; and the elimination of discrimination in respect to employment and occupation. The FTAs must oblige effective enforcement of labor laws. However, for these principles to be enforceable, a violation must occur in a manner that affects trade or investment between the party countries. Only a government can invoke dispute settlement for a labor violation.
Environment: Each of the FTAs must include a commitment from the party country to a list of multilateral environmental agreements. These include: the Convention of International Trade in Endangered Species (CITES), the Montreal Protocol of Ozone Depleting Substances, the Ramsar Convention of Wetlands, and the International Whaling Convention. The U.S. is already a signatory to each of the environmental agreements incorporated into the FTAs. Enforcement shall be pursued in the same manner as violations of commercial provisions through dispute settlement procedures, fines, and trade sanctions. To establish a violation, a party country must demonstrate that the other party country has failed to adopt, maintain, or implement laws, regulations, or other measures to fulfill an obligation under a covered agreement in a manner affecting trade or investment between the parties.
Intellectual Property/Pharmaceuticals: The bipartisan side deal requires the FTAs to include certain “flexibilities” that are intended to protect U.S. corporations and their patents while allowing developing countries to provide life-saving medicine. The FTAs must: limit the period of protection for pharmaceutical test data to the period for such protection in the U.S.; authorize developing countries to implement exceptions to normal rules protecting test data if necessary to protect public health; require developing countries to adopt a new approach to restore and protect patents; and affirm commitment to the 2001 Doha Declaration on the TRIPS Agreement and Public Health. The investment chapter of the U.S.-Korea agreement notes that issuing compulsory licenses for medicines is not a breach of the investment chapter even though intellectual property rights are included in the definition of investment.
Investment: The preamble provision of each FTA must recognize that foreign investors in the United States will not be accorded greater substantive rights with respect to investment protections than is accorded to U.S. investors in the United States. States and other interested parties requested that the language on “no greater rights” be included in the text of the investment chapter instead of the preamble. Authority for investment claims remains in the FTAs despite efforts by the National Council of State Legislatures to remove “investor” provisions. Consequently, corporations from countries party to the Peru, Panama, Colombia, or South Korea FTAs could sue the U.S. government. Enforcement of investment claims under the FTAs would be settled through dispute resolution before arbitration panels.
Mr. O’Grady discussed the recent negotiations of the Doha roundtable talks regarding the General Agreement on Trade in Services (GATS). Negotiations in June among the “G-4” countries/blocs (U.S., European Union, Brazil, India) collapsed when the U.S. refused to budge on agricultural subsidies, and Brazil and India rejected demands for market-opening provisions and tariff reductions in manufactured goods and agricultural products. The collapse makes it ever more unlikely that the Doha Round could be concluded prior to U.S. elections in 2008, although it is possible that World Trade Organization Secretary General Pascal Lamy may present his own “compromise text” between now and September.
Current Trade Disputes
Michael O’Grady discussed current trade complaints against the United States. The U.S. announced that it would use GATS Article XX provisions to withdraw its commitment on gambling under “Other Recreational Services.” Article XX allows for a country to withdraw a commitment, although it may need to compensate other WTO members by making new commitments or market-access concessions elsewhere in its GATS schedule. The U.S. continues to adhere to its position—rejected by the WTO’s Dispute Resolution Body—that because it never intended to schedule “gambling” among its commitments, no trading partner should expect compensation for this change in schedule.
The Government of Antigua took a very aggressive position in its long-running WTO dispute with the U.S. on internet gambling, announcing that it sought compensation amounting to $3.4 billion. Further, Antigua noted that it could not impose tariffs or sanctions on U.S. imports without hurting its own economy, and that therefore it intended to retaliate against the U.S. by suspending intellectual property and trademark protections.
Other nations with internet gambling interests “piled on” to Antigua’s request, as is allowed under GATS rules. Those also seeking compensation include the European Union, Japan, Canada, Costa Rica, and others. There is no precedent at the WTO for the withdrawal of a commitment like this, so procedurally it is not clear what will happen next. States should be aware that any adjustment of the U.S. GATS schedule could have implications for state/local regulation of services.
Finally, Canada took the next step forward in
challenging U.S. corn subsidies at the WTO. This was seen as a way to put
pressure on the United States Congress at a time when a new federal Farm Bill
is being negotiated. The agricultural subcommittee dealing with subsidies in
the House recently voted
19–0 to continue the ‘status quo’ on subsidies, which will almost certainly
provoke Canada into calling for a WTO Dispute Resolution Panel to hear this
case. In 2004, the United States lost a WTO subsidies case with Brazil regarding cotton; Brazil has not yet chosen to retaliate against the U.S. for the finding of “serious prejudice” against its cotton producers.
Final Issues and Commission Discussion
Sen. Lyons stated that she would like the commission to send a letter the Vermont congressional delegation regarding the TAA process and ways to streamline the procedure for access to benefits. Dan Brush stated that he would like to see documentation of the percentage of workers in qualifying companies that utilized TAA. Mr. Brush and Mr. Broomhover asked that data be collected to indicate why businesses have left Vermont, thereby creating the need for TAA.
The commission discussed the requirements for importing food and other products into the United States and whether the products need to be labeled with the country of origin. Mr. Boomhover briefed the commission on possible new requirements for the certification and registration of companies that import food into the U.S.
At noon the commission adjourned.
Respectfully submitted,
/s/ Michael O’Grady and Nedene Martin, Legislative Council