India's WTO challenge

Here is my op-ed with Srikar on the need to align national economic policies with our WTO commitments.

Codex Alimentarius Revised General Standards Allow for Higher Levels of Food Irradiation

Updated excerpt from  
Codex Alimentarius -- The End of Health Freedom

Brandon Turbeville

Activist Post 

Although the questionable means by which the General Standards For Irradiated Food was ratified are enough cause for concern in and of themselves, the revision of Codex’s position presents an even bigger danger to the food supply than the original version.  This revised policy seems to be part of an ongoing disregard by federal agencies who are charged with protecting the public.  Just recently, the EPA modified their Protective Action Guides for radiation exposure to Americans in the wake of the Fukushima disaster. 

The revised General Standard For Irradiated Food is remarkable because of its crafty use of technical wording to allow much higher, even limitless, amounts of irradiation in food. Prior to the change in 2003, the limits were set at 10 kGy, an amount of radiation that is the equivalent of 330 million chest x-rays, a procedure that is dangerous in and of itself when only done once. [1] 

However, even the limit set prior to 2003 is not as strict as the current FDA regulations and the regulations of most other nations. Currently, the FDA sets limits on the amount of food irradiation on a case-by-case basis with some foods allowed to receive more radiation than others.[2] 

Codex, however, makes no such distinction and levels a blanket endorsement of irradiation regardless of the type of food. [3] Nevertheless, most of the upper limits for radiation set by even the FDA (which are themselves intolerable) are lower than those set by Codex.  By FDA standards, only two categories are allowed the pre-2003 Codex 10kGy maximum.

The revised version of the Codex standards moves significantly beyond those of the FDA in terms of allowable doses of radiation. This is achieved mainly by including a semantical loophole in the wording of the standards. In the section titled “Absorbed Dose,” it reads: “The maximum absorbed dose delivered to a food should not exceed 10 kGy, except when necessary to achieve a legitimate technological purpose.”[4] 

While appearing to retain the previous set limit of 10 kGy, the new Codex standards actually weaken if not remove it completely. By adding the latter half of the phrase that states, “except when necessary to achieve a legitimate technological purpose,” Codex effectively produces a loophole through which irradiation can exceed the limit of 10 kGy. [5]

Nowhere in the revised standards is there a definition as to what a “legitimate technological purpose” might be. Therefore, there is the distinct possibility and likelihood that food may be irradiated at virtually any dose for whatever purpose declared to be a legitimate technological usage by the producer or the regulator. Indeed, the Codex Standards do not indicate who would even be responsible for determining what a “legitimate technological purpose” might be and makes no mention of the regulatory bodies that might make that decision.

This may seem remarkable to some, but the regulatory agencies in the United States such as the FDA, USDA, and FTC have largely already become nothing more than enforcement arms for the corporate/government partnership known as the New World Order. They have all but renounced their original purpose of ensuring the safety of the general public. So while it seems likely that Codex might set the standard for what determines a “legitimate technological purpose” and the international regulatory agencies would enforce them, it seems even more probable that the phrase will be left undefined and that various compromised regulatory agencies would decide the outcome of any disputes that may arise. Nevertheless, the window to unfettered use of irradiation is left wide open.

Yet Codex does not stop there. Another manner in which irradiation levels are allowed to reach limitless amounts is through the process of re-irradiation. Codex generally prohibits the re-irradiation of foods that have low moisture content, or those already irradiated in accordance with Codex guidelines. However, this is largely empty language as a loophole similar to the one mentioned above (“except when it is necessary to achieve a legitimate technological purpose”) is provided shortly thereafter.

Codex goes on to say that food is not to be considered as re-irradiated when:

(a) the irradiated food is prepared from materials which have been irradiated at low dose levels for purposes other than food safety, e.g. quarantine control, prevention of sprouting of roots and tubers; (b) the food, containing less than 5% of irradiated ingredient, is irradiated; or when (c) the full dose of ionizing radiation required to achieve the desired effect is applied to the food in more than one increment as part of processing for a specific technological purpose.[6] 

According to this statement, food made up of irradiated ingredients can once again be irradiated so long as the irradiated ingredients have been “treated” for “purposes other than food safety.”[7] However, it will not be considered re-irradiated. Likewise, a food can be re-irradiated (though not considered irradiated) as long as less than 5% of its ingredients are irradiated, or if the irradiation process is fulfilled in more than one increment.

Keep in mind, these standards are not in addition to one another, they are separate. This means that an irradiation facility does not have to meet all of these standards to re-irradiate food. They only have to meet one.

Claiming that re-irradiation is for purposes other than hygiene or safety opens the door for a potentially unlimited amount of radiation into the food supply. So does the process of irradiating food over and over again, which in most circles would be called re-irradiation. However, under the Codex Standards, a facility need only claim that the successive irradiating was part of a single process and the food will not be considered re-irradiated.

While the standards do state that the absorbed dose of radiation should not rise above 10 kGy, there are two escape hatches provided by the language in the statement.  The section reads “The cumulative maximum absorbed dose delivered to a food should not exceed 10 kGy as a result of re-irradiation except when it is necessary to achieve a legitimate technological purpose, and should not compromise consumer safety or wholesomeness of the food.”[8] 

 

First, it should be noted that the amount of radiation in the food is not to exceed 10 kGy “as a result of re-irradiation,” not necessarily the irradiation process as a whole. Second, the same loophole exists here as in the standards for irradiation mentioned earlier as the “except when necessary to achieve a legitimate technological purpose” clause appears in this instance as well. [9] 

Through the standards on food irradiation set by Codex and its subsequent revisions, Codex clearly facilitates and encourages irradiated food to enter the food supply. Indeed, in concert with guidelines and policy set by the FDA, irradiated food will not only enter the food supply, it will become a staple.

Notes:

---

[1] “WTO Codex to Allow Dangerous Levels of Food Irradiation,” Organic Consumers Association. July 10, 2003. http://www.organicconsumers.org/corp/071403_wto_irradiation.cfm  Accessed May 24, 2010. 
[2] Morehouse, Kim M., Komolprasert, Vanee. “Irradiation of Food and Packaging: An Overview.” Food and Drug Administration.http://www.fda.gov/Food/FoodIngredientsPackaging/IrradiatedFoodPackaging/ucm081050.htm Accessed May 24, 2010. 
[3] General Standard For Irradiated Foods Codex Stan 106-1983, REV.1-2003. http://www.codexalimentarius.net/download/standards/16/CXS_106e.pdf Accessed May 24, 2010.  
[4] Ibid. 
[5] Ibid. 
[6] General Standard For Irradiated Foods Codex Stan 106-1983, REV.1-2003.http://www.codexalimentarius.net/download/standards/16/CXS_106e.pdf Accessed May 24, 2010.
[7] Ibid. 
[8] Ibid. 
[9] Ibid. 

Brandon Turbeville is an author out of Mullins, South Carolina. He has a Bachelor’s Degree from Francis Marion University where he earned the Pee Dee Electric Scholar’s Award as an undergraduate. He has had numerous articles published dealing with a wide variety of subjects including health, economics, and civil liberties. He also the author of Codex Alimentarius - The End of Health Freedom  and his latest book 7 Real Conspiracies

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Codex Alimentarius and Food Irradiation in the U.S.

Food irradiation symbol -- Wiki Commons

Updated excerpt from  
Codex Alimentarius -- The End of Health Freedom

Brandon Turbeville

Activist Post 

I have written several articles dealing with the risk assessment methods used by Codex Alimentarius in order to water down the levels of nutrition available in vitamin and mineral supplements, as well as the potential removal of many supplements from the market entirely. All of this is of vital importance. However, Codex Alimentarius Guidelines are relevant to many more issues than just vitamins and minerals. One of these issues has to do with food irradiation.

Clearly a threat to public health, irradiated foods are not safe for human consumption and contribute to a host of health problems such as cancer and birth defects. Irradiation also causes genetic damage to cells.[1] One of the reasons for this is the fact that irradiated food is exposed to gamma rays of radioactive material or electron beams causing chemical changes in the food. 

Essentially, the food becomes mutated by this exposure, a condition which does not occur in nature, and is the cause for many forms of cancer and genetic modification.[2]  Yet, Codex pushes irradiation as if it were a great tool of disinfection with no adverse side effects at all. 

Indeed, prior to the easing of restrictions on food irradiation by Codex, the United States had been irradiating food at an alarming rate. The process began in 1963 when wheat flour became the first food allowed to be irradiated. In 1964, white potatoes were added to the list and the process continued until the present day. In 2011, almost the entirety of the food supply is eligible for irradiation.

It should be noted that under current US law, organic food cannot be irradiated. However, that is not the case with Codex standards, as there is no categorization of what foods can and cannot be “treated” with radiation.

It should also be mentioned that current US law states that all irradiated food must be labeled with the radura symbol and some amount of text stating its irradiation. However, that labeling only has to be made visible to the “first consumer” and that is generally individuals such as the distributor, not the average grocery store shopper. [3]
 

However, even these labeling requirements are severely inadequate. While these “first consumers” must, by law, be able to see the words and symbol on some products the law does not require the labeling of many others.[4] 

It would seem that the FDA, USDA, NRC (National Regulatory Commission), and the DOT (Department of Transportation), if truly concerned with the health and welfare of consumers, would require clear and appropriate labeling for any and all foods that have been irradiated. Although not irradiating at all would be the best policy, at least allowing the real consumer an opportunity to choose seems like a bare minimum in terms of public health and basic fair business practice.

However, in contrast to their rhetoric and stated objectives, it is also clear that these regulatory agencies have no real interest in protecting the public from any danger or insuring fair business dealings.

The FDA governs most aspects of food irradiation but the USDA, DOT, and NRC regulate some aspects as well. There are some differences in policy, but it should be noted that the latter three agencies only deal with specific aspects of the process. For instance, the USDA deals only with meat/poultry and fresh fruits, while the NRC addresses the safety of the facilities used in irradiation. The DOT regulates the transportation of the materials.

For the most part, the differences between the policies of these agencies are very slight. Most of the differences exist between the FDA and the USDA but deal only with things such as where labels should be posted and what size type and font should be used. For instance, the USDA requirement for multi-ingredient products that contain irradiated meat is that it should be stated to the consumer by the label yet the FDA has no such requirement at all.

But before one mistakenly gets the impression that the USDA is somehow more interested in protecting the consumer than the FDA, consider the fact that the USDA even allows claims touting the “beneficial effects” of irradiation.[5] Ironically, vitamin and mineral supplements such as Vitamin C are highly regulated in the claims that can be made about their health benefits but radiation may be touted as safe and beneficial.

To add to the shady language of the labeling requirements already in existence, in 2002 Congress created a loophole that had been the desire of the meat and poultry industry for some time. With the creation of this new escape hatch, companies can now use terms like “electronically pasteurized” instead of “treated with radiation” or “irradiated” by bypassing the FDA and going straight to the Secretary of Health and Human Services to request permission to use the new semantically gifted term.

The HHS Secretary has the authority to grant them such permission. Indeed, in 2007, the FDA itself proposed a new rule similar to the congressional loophole. This rule would allow irradiated food to be labeled as “pasteurized” as opposed to “irradiated.”[6] The very fact that this rule would even be proposed should worry every American.

Clearly, if the FDA were truly concerned about those individuals they are supposed to be protecting from adulterated foods, they would, at the very least, require that companies label their products honestly. This proposal, however, clearly shows the true intent behind FDA policies and regulations. 

Notes

---

[1]  Krebs, Al. “WTO Codex To Allow Dangerous Levels of Food Irradiation.” Organic Consumers Association. July 10, 2003. http://www.organicconsumers.org/corp/071403_wto_irradiation.cfm Accessed May 24, 2010.[2] Nausoulas, Andrianna. “Codex Alimentarius and the International Politics of Food Irradiation.” Toronto Food Policy Council, July 2003. http://www.publiccitizen.org/documents/codextoronto.pdf Accessed May 24, 2010.[3] Ibid.[4] Ibid.[5] Ibid. [6]  Ibid. 

Brandon Turbeville is an author out of Mullins, South Carolina. He has a Bachelor’s Degree from Francis Marion University where he earned the Pee Dee Electric Scholar’s Award as an undergraduate. He has had numerous articles published dealing with a wide variety of subjects including health, economics, and civil liberties. He also the author of Codex Alimentarius - The End of Health Freedom   

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Time to Quit Pining for a “Level Playing Field” in International Trade

Ian Fletcher

Activist Post

One of the most common plaints from those who are upset about America’s current trade mess is “just give us a level playing field.”  In particular, this is what one tends to hear from American businesses (at least those which have resisted the siren song of offshoring) that are hard pressed by “unfair” foreign competition.  It’s hard not to be sympathetic, and on an individual basis, my heart goes out to them.

Unfortunately, the whole idea of a level playing field in international trade is basically a mirage as an aspiration, and we’ll all be better off if we stop pining for one right now.

As I pointed out in a previous article, the concept of “fair” trade, while of some finite usefulness in the context of things like fair trade coffee, is basically a non-starter as a serious solution for economic problems, either here or abroad.  And unfortunately, the cry of  “all we want is a level playing field” is just another way of asking for fair trade. 

The fundamental problem is this: a true level playing field would require not just equal rules for international trade, but also that nations have the same domestic economic policies, as these can also confer an export advantage.

First, consider international trade rules. Foreign protectionism doesn’t only mean obvious policies like tariffs and quotas; it also includes local content laws, import licensing requirements, and subtler measures (some of them covert, hard to detect, or infinitely disputable) such as deliberately quirky national technical standards and discriminatory tax practices.

That’s not even mentioning outright skullduggery such as deliberate port delays, inflated customs valuations, selective enforcement of safety standards, and systematic demands for bribes. One study by the Congressional Research Service identified 751 different types of barriers to American exports worldwide.

Now consider purely domestic ways in which foreign governments put their thumbs on the scale in trade.  There are literally thousands of places in an economy where export subsidies can be hidden, from the depreciation schedules of the tax code to state ownership of supplier industries, land use planning, credit card laws, non-performing loans, cheap infrastructure, and tax rebates.

Thanks to all these practices, a true level playing field would require America to supervise the domestic policies of foreign nations, which is obviously not feasible. Even if we reached agreements on paper to end these subsidies, we would still have to enforce these agreements on the ground, as the other side would have a multi-billion dollar incentive to cheat.

Foreign governments often face strong domestic political pressures to keep these subsidies in place even when they want to strike a deal with the U.S. to eliminate them. China, for example, is full of effectively bankrupt state-owned companies that can’t be allowed to collapse for fear of unleashing a tidal wave of unemployment.

In other nations, subsidies are products of the day-to-day political bargaining that goes on in every country as governments buy political support and buy off opposition, so eliminating subsidies just to keep America happy would risk unraveling the balance of power.  Our own difficulties abolishing unjustified agricultural subsidies illustrate just how hard it is to repeal entrenched subsidies.

Level playing fields tilt the other way, too: Americans tend not to realize how many subsidies ourown economy contains. But judging by the same standards the Commerce Department applies to foreign nations, they are legion.

Agricultural subsidies are just the beginning, and already a flashpoint of international trade disputes. (They basically scuttled the Doha round of WTO talks in 2008.) But there are thousands of others, ranging from the Import-Export Bank (cheap loans for exporters) to the Hoover dam (cheap electricity).

This is just on the federal level; states and localities constantly bid subsidies against each other to attract businesses. Every tax credit, from R&D and worker training on down, subsidizes something, and if that something is exported, then it constitutes an export subsidy.

So unless we are prepared to have foreign bureaucrats pass judgment on all these policies, subsidies both here and abroad are unavoidable and a true level playing field is impossible. And if a level playing field is impossible, then no free-market (or to be realistic, “free” market) solution will ever balance trade, and balanced trade will have to be some kind of managed trade.

Managed trade doesn’t have to be a scary word.  It doesn’t imply a bunch of Soviet commissars determining who buys what.  We basically had a system of managed trade under the 1945-71 Bretton Woods system of fixed exchange rates and capital controls. During that period, we had more economic growth, and much lower trade deficits, than we have today.  There’s a lesson in that.

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank founded in 1933 and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.

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WTO Judicial Activism vs. America

Ian Fletcher

Activist Post

The WTO’s latest outrage has brought this odious organization to public attention again, but this is hardly the first time it has sided against American interests.

For example, it has for years engaged in judicial activism aimed at systematically rewriting American trade law to our disadvantage. As Robert Lighthizer, a former Deputy U.S. Trade Representative, told a hearing of the House Trade Subcommittee in 2007:

Rogue WTO panel and Appellate Body decisions have consistently undermined U.S. interests by inventing new legal requirements that were never agreed to by the United States....Our trading partners have been able to obtain through litigation what they could never achieve through negotiation. The result has been a loss of sovereignty for the United States in its ability to enact and enforce laws for the benefit of the American people and American businesses. The WTO has increasingly seen fit to sit in judgment of almost every kind of sovereign act, including U.S. tax policy, foreign policy, environmental measures, and public morals, to name a few. [Hearing on “Trade Enforcement for a 21st Century Economy,” Finance Committee, U.S Senate, June 12, 2007.]

To take only one example of this, the WTO ruled in 2007 that the Unlawful Internet Gambling Enforcement Act interfered with free trade in “recreational services.” 

More importantly, the WTO has made a string of rulings too technical to inflame public sentiment but nonetheless important for their behind-the-scenes effects.  

For example, it ruled against so-called “zeroing” in antidumping cases (don’t ask, but it’s bad for us); deemed America’s “foreign sales corporation” provision an export subsidy; and repudiated the long-standing understanding that it would generally defer to national authorities in dumping cases. 

(Dumping is when foreign producers sell products in the U.S. at below production cost, or below their home-market price, in order to destroy American producers and capture the market; China does it all the time.)

Another example: the WTO forced repeal of the Byrd Amendment, a 2000-2006 American law that caused penalty tariffs in dumping cases to be paid to the victimized industries themselves, rather than to the U.S. Treasury. 

The WTO’s unelected judges ruled this amendment illegal in 2002 despite the fact that there is nothing in any WTO treaty even mentioning what governments may do with penalty money. Backed by WTO permission, the European Union then imposed a 15 percent retaliatory tariff on American paper, farm goods, textiles, and machinery. In 2006, Congress folded and repealed the amendment.

This is standard procedure: the WTO has no enforcement powers of its own, but works by authorizing retaliation by the injured party against goods chosen to maximize political pressure.

The WTO harbors an inexorable bureaucratic will to power. The desires of the multinational corporations and relentlessly power-accreting bureaucrats that are its driving force are a constant in international relations, even if both are pragmatic enough to draw back occasionally. 

The WTO’s tendency is to expand over time on two separate tracks. 

Track one, for those powerless to resist its dictates (poor nations) or foolish enough to actually believe in them (Uncle Sam), consists in ever-more-rigid rules, of ever greater scope, designed to usher in a borderless world economy, at least on paper. Its ultimate ambition has been described as “writing the constitution of a single global economy.” 

Track two, for nations shrewd enough to practice mercantilism while preaching free trade, is a puppet show designed to square these nations’ policies with the legal framework that props open their foreign markets.

Despite the WTO’s undemocratic and authoritarian implementation of an economic ideal (free trade) that makes no sense even in theory, it actually has failed to deliver where free trade might do some good. Thanks to the many ways in which trade is manipulated, it is, in fact, estimated that only about 15 percent of world trade is genuinely free.

Rational protectionism is the best policy, followed by a genuinely level playing field; the WTO has delivered neither.  The sooner the U.S. withdraws from the organization, the better.

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank founded in 1933 and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.

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WTO Sides With Chinese State Capitalism Against the U.S.

Ian Fletcher

Activist Post 

The World Trade Organization has a long history of anti-American actions.  They’ve just handed us another one, and in the process handed a big freebie to Chinese state capitalism.

Unbeknownst to most Americans, huge sections of our nation’s trade policy aren’t set in this country anymore.  They are set by panels of WTO judges in Switzerland, to whom we have signed over the right to rule on the legitimacy of our policies.

At issue in a WTO ruling handed down last Friday is how much scope the U.S. is entitled to in trying to level the playing field for American companies competing against companies subsidized under China’s system of state capitalism.

The specific products at issue in the ruling are steel tubing, off-road tires, and woven sacks.  However, as in domestic legal rulings, the implications go far beyond the immediate subject matter.

Since July 2008, the U.S. has imposed tariffs on $200 million worth of steel pipe imports from China, South Korea, and Mexico.

Why?  The American position is that we are entitled to apply what are called “countervailing duties” against products that are subsidized by foreign governments. And on top of that, we are also entitled to apply duties designed to counteract the practice of dumping, or selling a product below cost in order to destroy foreign competitors.

Both these responses on our part have long histories of being accepted as legitimate, both under international trade law and in economics.  (This is why the WTO had originally accepted our position; the new ruling is actually the result of an appeal by China.)

In terms of international law, one can trace the legitimacy of our policies at least as far back as the founding of the General Agreement on Tariffs and Trade, the WTO’s predecessor, in 1947.

In terms of economics, their justifying logic is very simple.

In the case of subsidies, free trade only makes sense if it really is free, which means that a thumb on the scale at one end of the transaction justifies a tariff, or counter-subsidy, at the other end.

In the case of dumping, free trade is not justified if one side sells below cost in order to wipe out the other and thus eventually grab the market (or most of it) for itself.  Even if the attempt fails, the damage done to our industries will be real, and by then it will be too late.

There’s no serious question about whether China engages in subsidies and dumping.  That’s why, in this case, we imposed duties of up to 200 percent to offset their subsidies, plus up to 265 percent to counteract their dumping.

Enter state capitalism. The flashpoint of the current dispute centers on the vexed question of what price constitutes dumping in a non-free-market economy.

In a free-market economy like our own, dumping is considered to occur when a product is sold abroad for either less than its production cost, or less than what it is sold for domestically.  Unfortunately, in an economy like China’s, which is so tightly controlled by the government that many prices are essentially whatever the government says they are, this logic doesn’t work.  There are no normal prices to observe in order to figure out how big the subsidy is.  So the U.S. Government has been using various statistical techniques to calculate the relevant prices. 

The WTO has ruled that our techniques are not legit.  Bottom line? We're supposed to overlook the vast panoply of subsidies—ranging from free land to cheap loans and a million different tax credits—because state capitalism makes them tricky to calculate.

Free traders are celebrating this ruling.  Unfortunately, “free” is the last thing trade with subsidized state capitalism is. It’s controlled.  Just not in our interests. 

As with many of America’s trade problems, it’s not like we didn’t see this coming.  As Leo Gerard, president of the United Steelworkers, has rightly pointed out in protest against this ruling,
When China joined the WTO in 2001, it agreed to be treated as a non-market economy in dumping cases and to be subject to countervailing duty laws, but today the Appellate Body appears to have created special carve outs for China that neither the U.S. nor anyone else agreed to ten years ago.

When will we ever learn?  China views trade as economic warfare by other means, and we keep expecting the WTO to somehow make them play fair.  We will keep losing jobs and industries until we wise up.

Ian Fletcher is Senior Economist of the Coalition for a Prosperous America, a nationwide grass-roots organization dedicated to fixing America’s trade policies and comprising representatives from business, agriculture, and labor. He was previously Research Fellow at the U.S. Business and Industry Council, a Washington think tank founded in 1933 and before that, an economist in private practice serving mainly hedge funds and private equity firms. Educated at Columbia University and the University of Chicago, he lives in San Francisco. He is the author of Free Trade Doesn’t Work: What Should Replace It and Why.

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The Hypocrisy Clause

Guest post by Timothy A. Wise of TripleCrisis

Trade officials in the Obama Administration have made it abundantly clear that they will move forward in the WTO's Doha Round of negotiations only if the larger developing countries agree to open their economies more to U.S. exports. As Kevin Gallagher pointed out on the Triple Crisis Blog ("Obama's New Trade Agenda"), the administration's trade policies, and its announced goal of doubling U.S. exports, backtrack from those of the Bush Administration, renege on the basic principles of the Doha Development Round, and undermine precisely the kind of multilateralism President Obama claims to stand for.

Such intransigence does not bode well for the WTO, nor does it give much hope that the Obama Administration will use the current TransPacific Partnership negotiations to forge what it promises will be a "21st century trade agreement."

Clearly, a creative new approach is needed to break the trade deadlocks. I offer a modest proposal here: Instead of negotiating reductions in tariffs and farm subsidies, it's time to negotiate reductions in hypocrisy. I call it the Hypocrisy Clause, which mandates phased reductions in "trade-distorting hypocrisy," with the greatest reductions coming from the most developed hypocrites.

Why focus on hypocrisy? Ask the unemployed workers who voted for Obama based on his campaign commitment to reform NAFTA and future trade agreements.

Ask any developing country negotiator. Ask the Brazilians, who have been waiting six years for the U.S. government to respect the WTO ruling that U.S. cotton subsidies violate WTO rules. The U.S. has flaunted the WTO finding, appealing twice (and losing), and now Obama's trade officials have the gall say they'll step up enforcement of existing trade rules. They even cut a side deal with Brazil to stave off Brazil's approved retaliatory trade measures, further delaying compliance with WTO rules. Meanwhile, Mexico waits for its NAFTA partner to comply with the NAFTA ruling on Mexican trucks entering the U.S.

But if you want to know why we should negotiate hypocrisy reductions, ask the so-called "Cotton 4" countries in Africa. Their cotton farmers have suffered more than Brazil's from the U.S failure to respect the WTO ruling. Now they listen as U.S. negotiators insist that no movement on cotton can occur until the larger Doha agreement is signed, in direct contradiction of the 2005 Hong Kong commitments to treat cotton "ambitiously, expeditiously and specifically" ahead of the broader Doha agreement.

Who cares what the rules are or what the negotiators agree to if the rich countries then just do what they want?

Under my Hypocrisy Clause, that stops. The United States, as a developed country that has benefited greatly over many years from its past hypocrisy, would have to eliminate such actions immediately. So would the European Union, whose own hypocrisy may not compare with current U.S. levels (much to the EU's delight) but still offers large trade-distorting benefits. The EU could start by scaling back its export subsidies for dairy products, which it raised last year to dump surplus milk despite its loudly proclaimed commitment to end all export subsidies under Doha.

Under the proposed Hypocrisy Clause, rich countries will have to reduce or eliminate "trade-distorting hypocrisy." Hypocritical acts and negotiating positions deemed non-trade-distorting will still be permitted. (Otherwise there would be no politicians to negotiate.)

But what about middle-income hypocrisy? Isn't Brazil one of the world's largest agro-export powers with a well-cultivated reputation for defending the interests of other countries' small-scale farmers? Isn't Brazil also guilty of hypocrisy? Absolutely. In fact, as part of its side agreement on cotton with the United States, Brazil got a multi-million dollar fund for investment in its cotton sector. Talk about hypocrisy: Africa's Cotton 4 will now have to compete in global markets not only with subsidized U.S. cotton but with Brazilian cotton subsidized by the United States!

Middle-income countries such as Brazil, which have only recently begun to benefit economically from their hypocrisy in international negotiations, will have to reduce such trade-distorting actions, but they will be given more time. This reflects the Doha principle of "special and differentiated treatment" for developing countries, with reduction schedules that demand "less than full reciprocity" from developing country hypocrites.

And the Least Developed Countries? Their governments will be allowed to be as hypocritical as they want, since their countries have yet to benefit economically from such positions.

Does my Hypocrisy Clause proposal stand any chance of success, given the rampant hypocrisy in global trade negotiations? It has at least as good a chance as the current efforts to negotiate fair tariff and subsidy reductions when the world's largest trading partner won't respect the Doha mandate, doesn't comply with existing WTO rulings, and demands further liberalization in developing countries' financial sectors after its own deregulated financial sector nearly provoked a global depression.

If rich countries are going to keep using trade negotiations to "kick away the ladder" of development, outlawing the very trade measures they themselves relied on to grow, then we're better off abandoning the pretense of negotiating about industrial tariffs, agricultural subsidies, and service-sector liberalization.

Instead, let's cut the hypocrisy.

[PHOTO CREDIT: Harvesting cotton in Brazil, by Farming Matters (CC).]

Alas, We Are Not All Keynesians Now

Policy Innovations contributor Susan Aaronson suggests that the G-20 can use trade and labor policy coherence to fight the global economic downturn, especially its effect on developing countries (Originally posted on VoxEU.org):

The most famous economist of the 20th century, John Maynard Keynes, had an evocative image of capitalism. He once said that markets were propelled by animal spirits. These spirits could yield growth, but at times they must be domesticated to ensure that the law of the jungle—eat or be eaten—does not apply. As markets run wild, policymakers must work at both the national and international levels.

Keynes was particularly concerned with how these animal spirits might affect workers. His views were colored by the massive unemployment he saw during the Great Depression. Keynes feared a "senseless international competition" for jobs. He wanted "new and better arrangements" to link trade and employment. These views influenced the international economic architecture.

After years of negotiation, policymakers agreed to new and better arrangements, as stated in the preamble of the General Agreement on Tariffs and Trade (GATT), which governed trade from 1948–1995, and its successor organization, the World Trade Organization (WTO). Both affirm the parties recognize "that their relations in the field of trade and economic endeavour should be conducted with a view to raising standards of living, ensuring full employment and a large and steadily growing volume of real income and effective demand."

Thus, the members of the GATT and WTO posited trade could create a virtuous circle: By regulating protectionism, trade would expand. Firms could achieve economic efficiencies—producing more goods and services at lower costs. More people would have jobs, access to new opportunities, and ultimately see improvements in economic welfare. By collaborating to regulate protection, the signatories could ensure that trade works for more workers.

However, as the world confronts the worst downturn since the Great Depression, the idea that expanded trade will create and maintain jobs is losing support. The World Bank has forecast that in 2009 global industrial production could decline by 15 percent and world trade may record its largest decline in 80 years. Policymakers have not yet devised effective multilateral responses. Most countries have adopted a wide range of domestic strategies including domestic stimuli; make-work programs; buy-local policies; and sector-specific subsidies. After examining these strategies, last month the WTO found "limited evidence" that its members were adopting trade-distorting measures.

However, while such strategies may not be protectionist in intent, they are not internationalist in their ends. Few policymakers appear to have considered how these strategies designed to restore domestic employment and growth might affect conditions abroad. Because they have eschewed collaboration, the fabric between global trade and national employment is increasingly frayed.

In 2008, for the first time, the WTO and the International Labor Organization partnered to examine the relationship between trade and national employment. The two organizations recommended that national policymakers find ways to make their trade and labor policies more coherent. They also suggested that policymakers could focus on their own citizens' employment needs and act to help developing countries job markets and policies. Many developing countries don't have the funds or capacity to provide such services. But the report suggested no incentives to make such strategies a reality.

So here is a suggestion. The world's largest economies (which include developed and industrialized countries) met in London. These members of the G-20 should consider a two-pronged approach to expanding trade and increasing employment. As evidence of their commitment to multilateralism, these countries should go beyond their pretty words about the Doha Round and commit funds to help developing countries build a social safety net for their workers, and establish programs for lifetime learning.

Along with this incentive, these countries should agree to (and ask other WTO nations) to adopt a "no standards lowering clause." With such a clause, members agree that they will not attempt to attract or maintain investment by lowering labor (or other standards) in the interest of maintaining jobs. Such a clause is consistent with a key objective of the WTO: to increase market access. Governments can distort market access when they change the rules governing markets. 1

In addition, the WTO should disclose (on a public website) which countries are adopting trade-distorting policies, discuss the specific policies these countries have adopted, and encourage scholars to examine how these policies might affect national and international employment. Such transparency can also play an important role in making global markets more efficient and more equitable. 2

Some have argued that, because so many governments have adopted Keynesian solutions to the downturn, "We are all Keynesians now." But we are not truly Keynesian unless we are willing to find global strategies that expand trade and stimulate employment at home and abroad.

Susan Ariel Aaronson is Research Associate Professor and 2009 Policy Research Scholar at the George Washington University.

1. Kyle Bagwell; Petros C. Mavroidis and Robert W. Staiger, "It's a question of market access," American Journal of International Law, 96, No. 1 (Jan. 2002), 56–76.

2. Susan Ariel Aaronson and Jamie M. Zimmerman, Trade Imbalance: The Struggle to Weigh Human Rights in Trade Policymaking (Cambridge: 2007), Conclusion, 186–207.