Planet Not For Sale

New Report Documents Corporate Meat’s Takeover Through TTIP

Language:  English IATP author(s):  Shefali Sharma File:  2016_07_12_SellingOffTheFarm_PR.pdf Brussels – Today at the European Parliament, Institute for Agriculture and Trade Policy (IATP) Europe, Arbeitsgemeinschaft bäuerliche Landwirtschaft e.V. (AbL) (member of peasant farmers’ organisation Via Campesina), Compassion in World Farming (CIWF) and PowerShift released a new report documenting how the Transatlantic Trade and Investment Partnership (TTIP) empowers the global meat industry and undermines family farming. The new report, Selling Off the Farm: Corporate Meat’s Takeover Through TTIP, is based on an in-depth examination of public negotiating positions, leaked negotiating texts, and industry documents. It analyses how TTIP’s “regulatory cooperation” agenda would affect existing rules...

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Public Health Takes a Hit Even as Uruguay Prevails in Infamous Philip Morris Investor-State Attack

Eyes on Trade - 12 July, 2016 - 21:21

Thankfully, a years-long campaign to shame Philip Morris and the investor-state dispute settlement (ISDS) system for the tobacco giant’s infamous ISDS attack on Uruguay ultimately prevailed, but not without leaving deep and damaging scars to global tobacco-control efforts. An ISDS tribunal ruled that Uruguay did not have to compensate Philip Morris after the firm attacked Uruguay’s public health law requiring that 80 percent of tobacco product packages feature graphic medical warning labels.  

But what happens when a government “wins” an ISDS attack should be a cautionary tale for the threats posed by the Trans-Pacific Partnerships (TPP). If enacted, the TPP would double U.S. ISDS liability overnight.

Uruguay only managed to dodge this bullet because billionaire Michael Bloomberg stepped in to cover its millions of dollars in costly legal defense during six years of litigation. When Philip Morris initiated the ISDS case in 2010, the Uruguayan government reportedly was prepared to immediately cave and change their anti-tobacco law, since defending the case was financially impossible for the tiny country. 

Late last year, another ISDS tribunal ruled that it did not have jurisdiction in the Philip Morris case against Australia for similar tobacco-control policies, but Australians saw more than $50 million of their tax dollars go to legal costs to defend against the attack, according to World Health Organization Director General Margaret Chan. This includes having to pay the three corporate lawyers who served as “judges” during the four-year ordeal. They bill at least $375 per hour and, in a manner that would be unethical for real judges, often rotate between suing governments for corporations and “judging” cases.

And, just by launching these cases, Philip Morris managed to chill other nations from enacting similar legislation for years to avoid being the next target. One example: New Zealand held off on its own plain packaging proposal to see what happened with Australia. Canada’s efforts to enact plain-packaging legislation died after R.J. Reynolds sent a memorandum to the House of Commons arguing the policy would constitute an illegal expropriation under the North American Free Trade Agreement’s ISDS regime, exposing Canada to millions in liability.  

With six million people dying from tobacco-related deaths each year globally, it is not hyperbole to say that the years of litigation of these ISDS cases contributed to needless loss of life.

The Obama administration touts that the TPP will exclude tobacco companies from using ISDS to challenge public health policies. But as Senator Elizabeth Warren put it, the ISDS tobacco exclusion is “pretty much an admission that ISDS can be used to weaken other public health laws.”

And, the favorable ruling in the Uruguay case unfortunately does not assure governments of their policy space. Among the fatal flaws baked into the very structure of the ISDS system is how capricious and subjective ISDS tribunals are. When a particularly egregious case gets massive negative attention and becomes highly politicized, it is in the interest of the tribunal to “make it go away” in order to preserve the ISDS system as a whole. 

When Canadian companies Methanex and Glamis Gold launched some of the few ISDS cases against the United States — against California regulations of toxic substances and mining respectively — the public outrage by members of Congress and others likely affected the outcomes, and the United States dodged the ISDS bullet. Other, less high-profile cases with very similar fact patterns and based on the same claims ended with the taxpayers of other countries having to pay multi-million dollar awards to corporations. 

For now, we breathe a sigh of relief that these cases against Uruguay and Australia did not result in millions in taxpayer compensation to the tobacco giant and congratulate all the public health advocates that helped to spotlight the travesty of Philip Morris’ ISDS attack against the countries. 

But, at the same time, we must redouble our efforts to stop the TPP, which would dramatically expand this dangerous and capricious ISDS regime.

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Selling Off the Farm: Endnotes only, no report

IATP author(s):  Sharon Anglin Treat Shefali Sharma File:  SellingOffTheFarm_endnotesOnly_f.pdf Endnotes for the report Selling Off the Farm: Corporate Meat's Takeover Through TTIP. Related documents:  Selling Off the Farm: Corporate Meat's Takeover Through TTIP Selling Off the Farm: Executive Summary Selling Off the Farm: Report only, no endnotes

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Selling Off the Farm: Report only, no endnotes

Language:  English IATP author(s):  Sharon Anglin Treat Shefali Sharma File:  SellingOffTheFarm_reportOnly_f.pdf Report with not endnotes for Selling Off the Farm: Corporate Meat's Takeover Through TTIP. Related documents:  Selling Off the Farm: Corporate Meat's Takeover Through TTIP Selling Off the Farm: Executive Summary

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Selling Off the Farm: Executive Summary

Language:  English IATP author(s):  Sharon Anglin Treat Shefali Sharma File:  SellingOffTheFarm_executiveSummary_f.pdf The Executive Summary for the report Selling Off the Farm: Corporate Meat's Takeover Through TTIP. Jointly published with Arbeitsgemeinschaft bäuerliche Landwirtschaft e.V. (ABL), Compassion in World Farming and PowerShift. Related documents:  Selling Off the Farm: Corporate Meat's Takeover Through TTIP

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Selling Off the Farm: Corporate Meat's Takeover Through TTIP

Language:  English IATP author(s):  Sharon Anglin Treat Shefali Sharma File:  SellingOffTheFarm_full_f.pdf Executive Summary Citizens in both the European Union (EU) and the United States (U.S.) are demanding a healthier, more just and more sustainable food system. As parties negotiate the Transatlantic Trade and Investment Partnership (TTIP), proposed trade rules threaten to undermine the good food and farm movements on both sides of the Atlantic. The negotiations are taking place at a formative time: consumer interest in locally grown, organic and minimally-processed food is expanding in both regions, along with public policy supporting these consumer choices. At the same time, globalisation and an increasingly concentrated and vertically...

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New ITC Report Finds Disturbing Trends in U.S. Economy After Implementation of Free Trade Agreements

Eyes on Trade - 5 July, 2016 - 20:19

 

On June 29, the U.S. International Trade Commission (ITC) released a study on the economic impacts of trade agreements on the United States economy. This study was among those required by the 2015 Fast Track legislation. The report:

  • Estimates that U.S. trade agreements have increased the wage gap in America between higher- and lower-skilled workers (page 122).
  • Tried to cover up the reality that the United States has a large and growing trade deficit with its Free Trade Agreement (FTA) partners. The aggregate U.S. trade deficit with FTA partners has increased by about $141 billion, or 418 percent, since the FTAs were implemented while the aggregate trade deficit with all non-FTA countries has decreased by about $46 billion, or 6 percent, since 2005 (the year before the median entry date of existing FTAs). To avoid discussing this reality, the study’s representation of FTA trade flows focuses on percentage figures versus nominal figures, which would reveal the deficit. The report notes that U.S. exports to FTA countries represented 47 percent of total U.S. exports while imports from FTA countries only claimed 34 percent of total U.S. imports (page 29). A more honest portrayal of the relationship shows that U.S. exports to FTA partners were less than $593 billion in 2015, yet U.S. imports from FTA partners were more than $767 billion, a 2015 trade deficit of $175 billion.
  • Estimates all the U.S. bilateral and regional FTAs combined have led to an increase in real GDP and aggregate U.S. employment by less than 1 percent (page 122). In other words, the average U.S. monthly employment growth over the past year (i.e. 200,000 jobs) is larger than the ITC’s estimates for the increase in total employment that all U.S. FTAs have delivered since 1985 (i.e. 159,300 jobs) (page 17). But even this tiny estimated increase in employment is an odd conclusion given that the increase in the U.S. trade deficit under U.S. FTAs of $141.3 billion, if plugged into the Obama administration’s trade-to-jobs ratio, implies the loss of more than 745,000 U.S. jobs counting both imports and exports.
  • Fails to discuss or review the 2.9 million jobs certified by Trade Adjustment Assistance (TAA) as trade job losses since the passage of the North American Free Trade Agreement (NAFTA) – and it is known that TAA numbers significantly undercount trade-related job loss because until recently the program only covered a subset of manufacturing jobs lost to trade and only counts job losses that are voluntarily reported to the agency. Nor does the study explicitly discuss the nearly 5 million manufacturing jobs lost since NAFTA and the FTAs that followed, including many job losses resulting from multinational corporations moving their operations overseas to take advantage of cheap labor and undervalued currencies. Also missing from the report, is any coverage of the loss of nearly 200,000 U.S. small farms in America, which has devastated the traditional family farm in favor of large farm conglomerates. The ITC does admit that trade agreements have led to transitory unemployment and labor relocation – a reality it failed to account for in its study on the TPP’s impact on the U.S. economy (page 122).
  • Finds that certain trade agreements have lowered employment levels in many industries including autos as well as textiles and apparel. The report highlights that the tariff reductions the U.S. undertook as a result of the Uruguay Round and NAFTA led to U.S. steel imports increasing by 14.7 percent, or $1.2 billion in 2000 (page 149). The report also states that NAFTA and the Central American Free Trade Agreement (CAFTA) led to lower U.S. employment and production levels in the auto (page 173) and textile and apparel sectors (page 150).
  • Finds that all the U.S. FTAs since 1985 have increased real GDP by a minuscule 0.21 percent (page 127).

The ITC has traditionally overstated the benefits that FTAs have had on the U.S. economy by incorporating deceptive and downright false assumptions in its models. The aggregate U.S. trade deficit with FTA partners has increased by $141 billion, or 418 percent, since the FTAs were implemented. In contrast, the aggregate trade deficit with all non-FTA countries has decreased by about $46 billion, or 6 percent, since 2005 (the year before the median entry date of existing FTAs). Using the Obama administration’s trade-to-jobs ratio, counting both exports and imports, the FTA trade deficit surge implies the loss of over 745,000 U.S. jobs.

While the ITC report implies that more recent FTAs include higher standards on labor and environmental provisions and thus may yield trade balance improvements (Page 94), there is no correlation between an FTA’s inclusion of the higher standards of the May 10, 2007 deal and its trade balance. The Korea FTA included the “May 10” standards, and yet the U.S. trade deficit with Korea has grown over 80 percent in the four years since the deal’s passage. Meanwhile, most post-NAFTA FTAs that have resulted in (small) trade balance improvements did not contain the “May 10” standards. Reducing the massive U.S. trade deficit will require a more fundamental rethink of the core status quo trade pact model extending from NAFTA through the Korea FTA, not more of the same.

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The Clean Power Plan

Subtitle:  Let's Make It Work for Rural America Language:  English IATP author(s):  Tara Ritter File:  2016_06_27_CPP_shortened_TR.pdf The Clean Power Plan is the most significant policy shaping the future of the United States’ energy sector. As such, it will affect rural communities that have long produced much of the nation’s energy supply. Although rural counties house only 15 percent of U.S. residents, they account for 72 percent of the nation’s land area.1 Rural communities will also create much of the nation’s clean energy future through forests, farms and rangelands that can capture carbon when managed appropriately; land and resources for wind, solar and other renewable installations; and...

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Rock Against the TPP

Eyes on Trade - 22 June, 2016 - 18:41

The corporate forces behind the Trans-Pacific Partnership (TPP) kept the deal as secret as possible for as long as possible. And they would love for that silence to continue as Big Business lobbyists push Congress to vote on this terrible “trade” deal.

But We the People will not stay silent. We the People are going to get LOUD.

The Rock Against the TPP roadshow — which has already generated buzz in Rolling Stone and Billboard — is a nationwide concert series going on throughout the summer.

Audiences at the free shows will be treated to performances by Tom Morello, activist and guitarist of Rage Against the Machine, Audioslave and Prophets of Rage; Evangeline Lilly, advocate and actress best known for Lost and The Hobbit; the infamous political punk rock group, Anti-Flag, and many more.

In addition to musicians and celebs, expert speakers from major organizations will explain how the TPP would threaten U.S. jobs, food safety, access to medicines and other aspects of our daily lives.

The first show is July 23 in Denver, Colorado. Other locations after that will be announced — check www.RockAgainstTheTPP.org regularly to see if a city near you is added to the list.

Fight for the Future is hosting the concert series, along with help from a diverse coalition of groups including Public Citizen, Sierra Club, the Communications Workers of America, the Citizens Trade Campaign and others.

See the full line-up and tour dates at www.RockAgainstTheTPP.org!

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Don’t Believe the Hype: Agricultural Exports Lag under Trade Deals, Belying Empty Promises Recycled for the TPP

Eyes on Trade - 14 June, 2016 - 18:04

Time and again, U.S. farmers and ranchers have been promised that controversial “free trade” agreements (FTAs) would provide a path to economic success by boosting exports. Time and again, these promises have been broken. Data from the U.S. Department of Agriculture reveal that U.S. agricultural exports have lagged, agricultural imports have surged and family farms have disappeared under existing FTAs. Undeterred by its own data, USDA has repeated the standard FTA sales pitch with a factsheet claiming that the Trans-Pacific Partnership (TPP), which would expand the status quo trade model, would “support expansion of U.S. agricultural exports, increase farm income, generate more rural economic activity, and promote job growth.”[1] That promise contradicts the actual outcomes of the FTAs that serve as the TPP’s blueprint.

Agricultural exports stagnate under most recent FTA: Before the 2011 passage of the Korea FTA – which U.S. negotiators used as the template for the TPP – U.S. Secretary of Agriculture Tom Vilsack stated, “we believe a ratified U.S. Free Trade Agreement [with Korea] will expand agricultural exports by what we believe to be $1.8 billion.”[2] In reality, exports of all U.S. agricultural products to Korea fell $1.3 billion, or 19 percent, from the year before the FTA took effect to its recently-completed fourth year of implementation. During that same period, total U.S. agricultural exports to the world have only declined by 9 percent. Even if comparing the average agricultural export level in the three years before the FTA took effect (including 2009, when global trade declined due to the worldwide recession) with the average level in the more recent three FTA years, U.S. agricultural exports to Korea have declined by $36 million, or 1 percent. U.S. agricultural exports to the world during that period have risen 9 percent.[3]

Agricultural trade surplus turns into a trade deficit under NAFTA: the U.S. agricultural trade balance with NAFTA partners has fallen from a $2.5 billion trade surplus in the year before NAFTA to a $4.2 billion trade deficit in 2015 – the largest NAFTA agricultural trade deficit to date. Even if one includes agricultural trade over the preceding several years, when agricultural export values were inflated by anomalously high international food prices, the average U.S. agricultural trade balance with NAFTA countries over the last five years still fell 94 percent below the average balance in the five years before NAFTA.

Agricultural exports to FTA partners lag behind: USDA data show that U.S. food exports to FTA partners have trailed behind food exports to the rest of the world in recent years, despite the claim in USDA’s TPP factsheet that “in countries where the United States has free trade agreements, our exports of food and agricultural products have grown significantly.”[4] The volume of U.S. food exports to non-FTA countries rebounded quickly after the 2009 drop in global trade following the financial crisis. But U.S. food exports to FTA partners remained below the 2008 level until 2014. Even then, U.S. food exports to FTA partners were just 1 percent higher than in 2008, while U.S. food exports to the rest of the world stood 10 percent above the 2008 level.

FTA partners account for most U.S. agricultural imports, relatively few agricultural exports: The USDA factsheet makes no mention of agricultural imports that undercut business for U.S. farmers. Most U.S. food imports come from FTA countries, while most U.S. food exports are not sold in FTA countries. This counterintuitive outcome is the opposite of what FTA proponents have promised U.S. farmers and ranchers. In 2015, the 20 U.S. FTA partners were the source of 72 percent of all U.S. food imports, but were the destination of just 38 percent of all U.S. food exports (measuring by volume).

Agricultural trade balance suffers under FTAs:
Due to stagnant U.S. food exports to FTA countries and a surge in food imports from those countries, the U.S. food trade balance (by volume) with FTA countries has fallen 11 percent since 2011, the year before the most recent FTAs took effect. In contrast, the U.S. food trade surplus with the rest of the world has risen 8 percent since 2011.

Small U.S. farms disappear during FTA era: Smaller-scale U.S. family farms have been hardest hit by rising agricultural imports and declining agricultural trade balances under FTAs. Since NAFTA and NAFTA expansion pacts have taken effect, one out of every 10 small U.S. farms has disappeared. By 2015, nearly 198,000 small U.S. farms had been lost.[5]

Most of the agricultural products that USDA highlights in its factsheets as prospective winners under the TPP have actually been losers under the FTA model that the TPP would expand:

  • Apples: U.S. exports to Korea of apples have fallen 8 percent in the first four years of the Korea FTA.[6]
  • Beef: U.S. beef exports to Korea have stagnated under the Korea FTA, falling below the historical growth trend and defying the administration’s promises that beef exports to Korea would grow even more than in the past.[7] Even without an FTA, U.S. beef exports would be expected to grow as a product of Korea’s population and economic growth. Instead, they have flatlined.

  • Corn: U.S. exports to Korea of corn have plummeted 57 percent under the Korea FTA’s first four years – a loss of more than 3.6 million metric tons of corn exports each year.
  • Dairy Products: U.S. exports to Korea of milk, cream and whey have plummeted 88 percent in the first four years of the Korea FTA – a loss of more than 2.6 million liters of dairy exports each year.
  • Distilled Spirits: U.S. exports of distilled spirits to U.S. FTA partners have declined 13 percent (10.4 million liters) while growing 42 percent (49.8 million liters) to the rest of the world since 2011 (the year before the most recent FTAs took effect).
  • Feeds and Fodder:S. exports of feeds and fodder to U.S. FTA partners have fallen 6 percent (more than 410,000 metric tons) while growing 44 percent (more than 4.8 million metric tons) to the rest of the world since 2011 (the year before the most recent FTAs took effect).
  • Hides and Skins: S. exports to Korea of hides and skins have dropped 27 percent under the first four years of the Korea FTA.
  • Potatoes: S. net exports of potatoes to Canada and Mexico have fallen 521,000 metric tons under 22 years of NAFTA.
  • Poultry: S. exports to Korea of poultry have plummeted 35 percent under the first four years of the Korea FTA – a loss of more than 25,300 metric tons of poultry exports each year.
  • Soybeans and Soybean Products: S. exports of soybeans and soybean products to U.S. FTA partners have grown 21 percent while growing 46 percent to the rest of the world since 2011 (the year before the most recent FTAs took effect).
  • Vegetables: S. exports of vegetables to U.S. FTA partners have fallen 36 percent (more than 23,000 kiloliters) while growing 451 percent (more than 8,937 kiloliters) to the rest of the world since 2011 (the year before the most recent FTAs took effect).
  • Wine: S. net exports of wine to Canada and Mexico have fallen more than 28,000 kiloliters under 22 years of NAFTA. And while FTA proponents have claimed wine as a winner under the Korea FTA, U.S. exports to Korea of wine have fallen 6 percent under the Korea FTA’s first four years – a loss of nearly 239 metric kiloliters of wine exports each year.

ENDNOTES

[1] U.S. Department of Agriculture, “The Trans-Pacific Partnership: Benefits for U.S. Agriculture,” USDA factsheet, February 2015. Available at: http://www.fas.usda.gov/sites/default/files/2015-03/tpp_agriculture_fact_sheet.pdf.

[2] U.S. Department of Agriculture, “Agriculture Secretary Tom Vilsack Highlights Benefits of the U.S.-Korea Trade Agreement for U.S. Agriculture,” USDA press conference, March 8, 2011. Available at: http://www.usda.gov/wps/portal/usda/usdamobile?contentidonly=true&contentid=2011/03/0108.xml

[3] The source of all agricultural trade data in this document, unless otherwise specified, is: Foreign Agricultural Service, “Global Agricultural Trade System,” U.S. Department of Agriculture, accessed May 12, 2015. Available at: http://apps.fas.usda.gov/gats/default.aspx. FATUS classifications used for all data. All data not stated in dollar amounts is measured in volume. (Volume is preferred for products to eliminate the effect of price shifts, but value is used for some aggregations of products with different volume-based units of measurement to avoid agglomeration problems.) All dollar values have been inflation-adjusted and are expressed in 2015 dollars according to the CPI-U-RS series of the Bureau of Labor Statistics.

[4] “Food” includes FATUS classifications: dairy products, fruits & preparations, grains & feeds, livestock & meats, oilseeds & products, other horticultural products, planting seeds, poultry & products, sugar & tropical products, tree nuts & preparations, and vegetables & preparations.

[5] National Agricultural Statistics Service, “Quick Stats,” U.S. Department of Agriculture, accessed March 5, 2015. Available at: http://quickstats.nass.usda.gov/.

[6] All data on agricultural trade under the Korea FTA compare the average annual export level in the four years before the FTA took effect and in the four years after the FTA took effect (April 2008 through March 2012 vs. April 2012 through March 2016).

[7] U.S. beef exports to Korea rose 3,967 metric tons if comparing the year before implementation and the FTA’s fourth year, or rose 63,729 metric tons if comparing the four year averages before and after the FTA.

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Slaughter: The Flawed TPP Agreement Would Shift the Balance of Power Toward Foreign Corporations

Eyes on Trade - 7 June, 2016 - 18:07

This is a guest post by Representative Louise Slaughter (NY-25)

The American people are increasingly realizing the perils of the pending Trans-Pacific Partnership (TPP) agreement between the U.S. and eleven other countries. After decades of NAFTA-style deals costing millions of jobs and devastating entire industries, workers across America are speaking out against this dramatic expansion of failed trade policy. But because of a little-known provision tucked into this deal, the TPP would actually stack the deck even further against our workers and innovative companies across the country.

As the representative for Rochester, New York, I have never seen a trade agreement that benefited the American manufacturer or American worker. There are hundreds of reasons why the TPP would be a particularly bad deal for our country. It would force our workers into unfair competition with countries like Vietnam, where the minimum wage is less than 65 cents an hour, and it has no effective provisions to address foreign currency manipulation – the single-most pressing trade issue facing U.S. manufacturers. For American families, the TPP would open the door to a flood of unsafe food imports and threaten to raise prices for vital drugs.  It would encourage environmentally destructive practices and do nothing to address climate change. This deal would also represent a dramatic step in the wrong direction by tying the U.S. to countries that do not value the rights of women.

But worse still is that the TPP would pave the way for an unprecedented attack on our nation’s sovereign right to protect the health and welfare of our people, all in the name of corporate profits. This process, called investor-state dispute settlement (ISDS), would allow multinational corporations to challenge U.S. laws they don’t like outside of the standard judicial system. This could leave laws on everything from requiring stringent drinking water standards to raising a state’s minimum wage in the hands of three unelected and unaccountable arbitrators. It’s blatantly undemocratic, and would represent a major victory for foreign corporations.

There are only a handful of these arbitrators in the world, and some are even allowed to go back and forth between serving as a judge and doing the bidding of corporations by bringing cases against governments. This dynamic is ripe for conflicts of interest and would be seen as unethical in almost any legal system.

Since our previous trade agreements have largely been with less developed countries that have little investment in the U.S., these types of cases used to be rare. But in recent years, more and more corporations have learned to exploit the system and ISDS cases have become more common. In the first 30 years since this ISDS became a reality, just 50 of these types of cases were launched. But from 2011 to 2013, corporations brought 50 cases every year. These cases brought by foreign corporations have attacked our policies governing everything from climate to energy to labor safeguards.

This growth could skyrocket even further if the TPP becomes a reality and adds the likes of Japan and Australia as sources of potential challenges. Although supporters of this misguided trade deal like to point out that the U.S., unlike many other countries, has never lost a ISDS case, it would be foolish to bet the farm on this record as the incentives for corporate profit continue to grow.

If we were to lose a case, the damages would be astronomical, since there is no limit on the amount of taxpayer dollars that a foreign corporation could ask for from our government. This process allows a winning company to ask for its expected lost profits calculated in perpetuity. The U.S. doesn’t have to lose a case to be impacted by this process – even if the United States ultimately prevailed in a case, we could be forced to spend millions in the process. In fact, millions in taxpayer funding have already been spent defending our laws against ISDS challenges.

America has the best workers and most innovative companies in the world, and we can compete and win in the global economy if given a fair and level playing field. Unfortunately, the TPP and the ISDS system in particular would shift the balance of power toward foreign corporations and exacerbate the weaknesses of past trade deals. It’s just the latest reason why we should walk away from this flawed trade agreement and finally implement policies that truly protect American jobs and American workers.  

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Five key takeaways from the TTIP leak for food and farming systems

Language:  English IATP author(s):  Karen Hansen-Kuhn Shefali Sharma Dr. Steve Suppan Sharon Anglin Treat File:  2016_05_25_TTIP_LeakAnalysis.pdf The leaked Transatlantic Trade and Investment Partnership (TTIP) negotiating texts published by Greenpeace Netherlands1 on May 2 provide a crucial snapshot of the status of the trade talks. While a fair amount of information has either leaked or been published by the European Commission on its positions, this is the first detailed information on U.S. TTIP proposals.2 The information is incomplete. Many key chapters, such as those on investment and on energy, remain undisclosed to the public. Annexes that specify exactly...

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USITC ignores TPP food safety costs, overstates benefits for farmers

Language:  English IATP author(s):  Dr. Steve Suppan File:  2016_05_18_USITC_Report_PR.pdf Minneapolis – The U.S. International Trade Commission (USITC) has published its assessment of the potential impacts of the Trans-Pacific Partnership (TPP) on the U.S. economy and on the “interests of U.S. consumers,” as required by the Trade Priorities Act. Judging by the agricultural trade deficits of past Free Trade Agreements, the USITC projections of the agreement’s impact on U.S. agriculture exports and imports are likely optimistic. Despite the best efforts of the USITC, it is questionable whether the report analyzes adequately the costs of trade that affect the interests of U.S. consumers. Steve Suppan, Senior Policy Analyst at the Institute for Agriculture and Trade...

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New GTW Researcher Keeping an Eye on Trade

Eyes on Trade - 18 May, 2016 - 16:03

Today, Public Citizen’s Global Trade Watch (GTW) released a study on the United States International Trade Commission’s (USITC) General Equilibrium Model for estimating export and import growth as a result of trade agreements. I helped compile the background of the report, and I wanted to take a second to introduce myself.

My name is Justin Fisk, and I am the Senior Researcher at GTW. Since I first arrived in Washington, D.C. four years ago, I have been increasingly interested in international trade and its impact on the United States. During my graduate work at George Washington University, I focused my studies on international trade. At the same time, I interned full-time in many positions within the federal government and the private sector, including the Trade Promotion Coordinating Committee at the Department of Commerce and the government affairs division of a trade law firm. After I completed graduate school, I worked for two years at the Council of State Governments helping states develop export promotion plans for small businesses in the United States.

I decided to leave the comforts of my previous job to take a more challenging role at Global Trade Watch. I am excited to be here, and I look forward to sharing the findings of our research in the coming months.

For my first blog, I wanted to discuss the USITC model. It is an important time to review and analyze this model since the USITC’s next report is expected to be released next week on May 18, which will analyze the impact of the Trans-Pacific Partnership on the United States.

Policymakers need to understand the data limitations of the current model employed by the USITC. Not only does it fail to take into account currency manipulation – which the TPP has no enforceable provisions against – it also assumes that workers who lose jobs to trade can easily and seamlessly find other opportunities for work (more examples of the assumptions the model incorporates can be found in the official report here). It shouldn’t be surprising that the USITC has consistently failed to estimate in any meaningful way the impacts of a free trade agreement.  

Looking back, the USITC predicted improved trade balances as a result of the 1993 North American Free Trade Agreement (NAFTA) and 2007 U.S.-Korea Free Trade Agreement. The agency projected only a small deficit increase from China’s 1999 World Trade Organization entry deal and the granting to China of Permanent Normal Trade Relations status.

Instead, the U.S. trade deficits with the trade partners increased dramatically and, as detailed in the text of the new study, manufacturing industries from autos to steel and farm sectors such as beef that were projected to “win” saw major losses. A government program to help Americans who lose jobs to trade certified 845,000 NAFTA jobs losses alone.

The USITC report also estimates changes of exports and imports of certain products. For example, the USITC concluded that NAFTA would result in little or no impact on meat imports into the United States because of already low U.S. tariff rates, and that if anything, U.S. exports of meat to Mexico would increase. The report projected that U.S. beef exports to Mexico would increase in the long-term by 16 percent or more. In reality, American cattle producers experienced the opposite outcome from NAFTA. In 1993, the United States exported 39,000 metric tons of beef and veal to Mexico and imported only 13,000 metric tons. By 2015, the United States imported more than 30,000 metric tons of beef and veal from Mexico more than it exported to Mexico.

In the China study, the USITC report estimated that U.S. exports of iron and steel would increase by 5.1 percent. The report does not project changes in import levels. In reality, U.S. exports of iron and steel increased by $1.1 billion or 239 percent. The USITC report did not however anticipate that U.S. imports from China of iron and steel would increase by $12.3 billion or by nearly 300 percent. The U.S. trade deficit with China in steel and iron products has worsened by nearly $7.9 billion, increasing from $2.7 billion in 2000 to $10.7 billion in 2015. In November 2015, nine steel associations wrote a joint letter insisting that China’s “overwhelmingly state-owned and state-supported steel industry” is the root problem of the 700 million metric tons of excess steel capacity in the world today, which is making it difficult for private sector firms in the U.S. to compete.”

The USITC report also projected that the U.S.-Korea FTA would likely increase exports of grain to Korea, “particularly exports of corn.” In reality, U.S. exports of corn have decreased by $1 billion or by 64 percent in the first 4 years of the Korea FTA. The Center for Economic and Policy Research released an interesting study in April that found, “there is no clear relationship between the expected effect of the KORUS on exports to Korea and the actual change in exports relative to trend.”

As mentioned earlier, the USITC model utilizes false assumptions which surely impact its results. With this in mind, policy makers should approach USITC report on TPP’s impact with caution.

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With Trade Commission TPP Review Due Next Week, New Study Shows Past Pacts’ Actual Outcomes Were Opposite of Agency’s Rosy Projections

Eyes on Trade - 18 May, 2016 - 16:02

Administration Expected to Tout Imminent USITC Study in New Push for TPP Passage Despite Agency’s Systematic Failure to Accurately Assess NAFTA, China and Korea Pacts

WASHINGTON, D.C. – The reliability or usefulness of an imminent government assessment of the Trans-Pacific Partnership (TPP) was called into question by a study released today that shows that past U.S. International Trade Commission (USITC) projections of trade agreements’ benefits were systematically contradicted by the pacts’ actual outcomes.

The new study reviews USITC trade balance, job and economic sector projections in the statutorily required reports for the three most economically significant trade pacts prior to the TPP and finds the government study on each pact proved dramatically inaccurate – not only in degree, but in direction.

“Past government studies have systematically projected positive outcomes that were contradicted by the actual results, which is why members of Congress requested, without success, that the agency alter its approach to assessing the TPP,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

The USITC predicted improved trade balances, gains for specific sectors and more benefits from the 1993 North American Free Trade Agreement (NAFTA) and 2007 U.S.-Korea Free Trade Agreement (FTA) in reports on those pacts. The agency projected only a small deficit increase from China’s 1999 World Trade Organization (WTO) entry deal and the granting to China of Permanent Normal Trade Relations status.

Instead, the U.S. trade deficits with the trade partners increased dramatically and, as detailed in the text of the new study, manufacturing industries from autos to steel and farm sectors such as beef that were projected to “win” saw major losses. A government program to help Americans who lose jobs to trade certified 845,000 NAFTA jobs losses alone and econometric studies concluded that millions of jobs were lost from the China deal, in contrast to gains projected by the USITC reports.

The new report also reviews how the USITC’s use of a computable general equilibrium (CGE) model leads to projections entirely unrelated to actual outcomes by simply assuming away the very results that have often occurred under past pacts: long-term job loss, trade deficit increases and currency devaluations.

Under the model, the USITC collects information on current exports, imports, gross domestic product (GDP), tariff rates, investment flows and more. It creates equations to calculate how trade flows would change if a pact’s terms were fully implemented. The model looks to an endpoint, not the process of getting there. It does not consider whether there may be increases in trade deficits along the way, or whether other nations may not fully implement or enforce a pact’s terms. Rather it projects a final outcome assuming full implementation. Running this simulation generates data on potential changes in exports and imports. By design, it assumes the trade balance does not change and that employment levels remain consistent – that workers who lose jobs simply obtain new jobs in other sectors where wages are presumed to increase.

A growing body of academic criticism of the CGE model employed by the USITC has focused on the numerous assumptions researchers make, including what economic factors are included and excluded, and what included factors are assumed to remain constant. For instance, implicit in the assumption that the trade balance does not change is the assumption of flexible exchange rates. But in reality, currency manipulation is a significant problem among some of the TPP countries. The U.S. Department of Treasury just recently included TPP nation Japan on its new Monitoring List in its semi-annual report on “Foreign Exchange Policies of Major Trading Partners of the United States.”

The assumptions baked into the model can contribute to gaps between projections about import and export levels and actual outcomes. Also, given that the results of the trade flow simulations are then used to project broader outcomes (such as on U.S. economic growth), assumptions piled on assumption can cause results that are incorrect, not only in degree, but in direction.

Different assumptions can result in diametrically opposed outcomes, as demonstrated by the recent Peterson Institute for International Economics and Tufts University studies on the TPP. The Peterson Institute used a CGE model with assumptions similar to those employed by the USITC in past studies and found the TPP would result in a modest increase in U.S. GDP, but not impact overall U.S. employment. Using an economic model that allows for the possibility of less than full employment and rising income inequality, called the United Nations Global Policy Model, Tufts University economists concluded that the TPP would reduce U.S. growth rates and lead to 448,000 American jobs lost.

The Tufts findings spotlight just how drastically the assumptions baked into a model affect the outcomes; the Tufts economists actually employed the Peterson Institute trade flow simulation data. They plugged the Peterson findings on import and export levels at full TPP implementation derived from one set of unrealistic assumptions into a model that applies more realistic assumptions about how trade flow changes affect growth and employment – and got the opposite results on growth and jobs.

Finally, the output of any model also is greatly affected by the data put into it. Issues to watch for in this regard for the USITC’s TPP study include:

  • How will the USITC TPP study treat “non-tariff barriers” (NTB)? What an international bank may consider an NTB may be what a policymaker or consumer considers an important safeguard to avoid costly financial crises. But recent trade pact projection studies have included guesstimates of gains resulting from the elimination of NTBs.
  • Will the USITC TPP study consider how TPP investment rules could affect decisions about where to invest in production and whether the TPP will alter foreign direct investment trends?
  • How will the USITC TPP study assess intellectual property provisions, given that longer monopolies may increase some U.S. firms’ profitability but also may cost governments and consumers more for medicines and access to information?

Under the Fast Track authority passed last year, the USITC is required to release a report projecting the economic effects of the TPP no later than May 18, 2016.

 

 

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Notice of Proposed Rulemaking (“NPRM”): Regulation Automated Trading (“AT”)

Language:  English IATP author(s):  IATP File:  CFTC ATS comment 3 16 15 final.pdf The Institute for Agriculture and Trade Policy (“IATP”)2 appreciates this opportunity to comment on the Commission’s proposed regulation for Automated Trading Systems (“ATS”). IATP commented on the Commission’s “Concept Release and System Safeguards for Automated Trading Environments” (“Concept Release”) in December 2013.3 We became interested in the impact of ATS on commodity prices after reading research demonstrating the sustained and high price correlations among agricultural contracts, energy contracts and the S&P E Mini Futures Index of equities resulting from High Frequency Trading (“HFT”). Indeed, as the open interest share of...

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Contribution to Asia Regional Meeting on Agroecology

Subtitle:  Supporting Agroecology by Securing and Building on Appropriate Rights Language:  English IATP author(s):  Dr. M. Jahi Chappell Shiney Varghese File:  2016_05_05_Asia_FAO_JC.pdf Minneapolis, May 10, 2016—The Regional Meeting on Agroecology in Asia in November of 2015 marked the culmination of four FAO meetings on Agroecology. These vibrant meetings confirmed a rising tide that we have written about previously: agroecology’s prominence is growing worldwide. The importance of its concepts, tools, knowledge and its emphasis on respect for and collaboration with producers have been borne out by the reception it has seen across FAO meetings on four continents. More...

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New Data Reveal That Obama’s Korea Trade Pact on Which the TPP Was Modeled Resulted in Doubling of Trade Deficit

Eyes on Trade - 4 May, 2016 - 19:03

Likely to Fuel Bipartisan Trade Revolt in Presidential and Congressional Campaigns as White House Gears up Push for Congressional Passage of TPP

WASHINGTON, D.C. – As the Obama administration intensifies its efforts to persuade Congress to pass the Trans-Pacific Partnership (TPP), new U.S. government data released today reveal an “inconvenient truth” about the Korea Free Trade Agreement (FTA) that served as the template for the TPP. The new data covering the first four years of the pact reveal that the U.S. goods trade deficit with Korea has more than doubled. This 115 percent deficit increase with Korea comes in the context of the overall U.S. trade deficit with the world decreasing slightly. 

The increase in the U.S. trade deficit with Korea equates to the loss of more than 106,000 American jobs in the first four years of the Korea FTA, counting both exports and imports, according to the trade-jobs ratio that the Obama administration used to promise job gains from the deal.

The Census Bureau data showing the outcomes of the Korea pact are the opposite of the Obama administration’s 2011 “more exports, more jobs” promises for the deal. The administration is now employing similar claims to try to sell the TPP to Congress and the American public as bipartisan opposition to more-of-the-same trade policies surges and presidential and congressional candidates spotlight the problems with the TPP and the failure of U.S. trade policies.

“President Obama has stepped up his efforts to do a hard sell on the TPP, but much of the TPP text was literally cut and pasted from the Korea agreement, so to see what a disaster the Korea deal has been is a stark warning,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “President Obama has repeatedly asked that the TPP not be judged against his predecessors’ failed trade deals, but now we can see the disastrous results from President Obama’s signature trade package, which helps to explain why in this election cycle Americans are on the warpath against our trade policies.” 

Despite the Korea FTA including more than 10,000 tariff cuts, 80 percent of which began on day one:

  • The U.S. goods trade deficit with Korea has increased 115 percent, or $16 billion, in the first four years of the Korea FTA (comparing the year before it took effect to the fourth year data).
  • Since the FTA took effect, U.S. average monthly exports to Korea have fallen in 11 of the 15 U.S. sectors that export the most to Korea, relative to the year before the FTA. Exports of machinery and computer/electronic products, collectively comprising 28.6 percent of U.S. exports to Korea, have fallen 22.6 and 6.6 percent respectively under the FTA.
  • The 115 percent surge in the U.S.-Korea goods trade deficit in the first four years of the FTA starkly contrasts with the 5 percent decrease in the global U.S. goods trade deficit during the same period.
  • While U.S. goods imports from the world have decreased by 6 percent, U.S. goods imports from Korea have increased by 19 percent, or $11.5 billion, during the FTA’s first four years.
  • U.S. goods exports to Korea have dropped 9 percent, or $4.4 billion, under the Korea FTA’s first four years.
  • U.S. exports to Korea of agricultural goods have fallen 19 percent, or $1.4 billion, in the first four years of the Korea FTA despite the administration’s oft-touted point that almost two-thirds of U.S. agricultural exports by value would obtain immediate duty-free entry to Korea under the pact. U.S. agricultural imports from Korea, meanwhile, have grown 34 percent, or $123 million, under the FTA. As a result, the U.S. agricultural trade balance with Korea has declined 22 percent, or $1.5 billion, since the FTA’s implementation. The Obama administration promised that U.S. exports of meat would rise particularly swiftly, thanks to the deal’s tariff reductions on beef, pork and poultry. However, U.S. exports to Korea in each of the three meat sectors have fallen below the long-term growth trend since the Korea FTA took effect. Compared with the exports that would have been achieved at the pre-FTA average monthly level, U.S. meat producers have lost a combined $62.5 million in poultry, pork and beef exports to Korea in the first four years of the Korea deal – a loss of more than $5 million in meat exports every month
    • Despite the promises made by U.S. officials that the pact would enhance cooperation between the U.S. and Korean governments to resolve food safety and animal health issues that affect trade, South Korean banned nearly all imports of American poultry at the beginning of 2015 due to several bird flu outbreaks in Minnesota and Iowa. Comparing the FTA’s fourth year to the year before it went into effect, U.S. poultry producers have faced a 93 percent collapse of exports to Korea – a loss of nearly 100,000 metric tons of poultry exports to Korea. U.S. beef exports are finally nearing pre-FTA levels after declining an average of 11 percent during the first three years of the agreement. U.S. pork exports have also nearly recovered to pre-FTA levels after falling by an average of 16 percent in the first three years of the agreement
  • Record-breaking U.S. trade deficits with Korea have become the new normal under the FTA – in 47 of the 48 months since the Korea FTA took effect, the U.S. goods trade deficit with Korea has exceeded the average monthly trade deficit in the four years before the deal.

The Office of the U.S. Trade Representative (USTR) has tried to obscure the bleak Korea FTA results, as congressional ire about the pact is fueling opposition to the TPP. The USTR’s standard data omissions and distortions include:

  • The USTR tries to dismiss the decline in U.S. exports to Korea under the FTA as due to a weak economy in Korea. But the Korean economy has grown each year since the FTA passed, even as U.S. exports to Korea have shrunk. Korea’s gross domestic product in 2015 was 11 percent higher than in the year before the FTA took effect, suggesting that U.S. exports to Korea should have expanded, with or without the FTA, as a simple product of Korea’s economic growth. Instead, U.S. exports to Korea have fallen 9 percent in the first four years of the FTA.
  • The USTR selects a few products that have gained exports to emphasize, while omitting the low value of such exports and the net trade deficit increase of 115 percent.

 

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Leaked TTIP Documents: Threats to Regulatory Protections

Eyes on Trade - 2 May, 2016 - 21:58

Statement of Robert Weissman, President, Public Citizen

Note: Today, Greenpeace Netherlands leaked negotiating texts of the Transatlantic Trade and Investment Partnership (TTIP) agreement, the proposed trade deal between the United States and Europe. The leaks include 13 of 17 consolidated texts, as well as a European Union memorandum on the negotiating state of play. This statement provides a preliminary analysis of one of the leaked chapters, Regulatory Cooperation.

Europe, beware. The leaked TTIP text confirms that the United States is trying to export its failed regulatory model. If the United States succeeds in its project, Big Business will gain enormous power to block, slow, undermine and repeal European regulations.

The leaked text makes clear that there are serious issues requiring analysis in particular sectors, but also that the Regulatory Cooperation chapter poses a major threat to health, safety, environmental, labor, consumer, civil and political rights, and other regulatory protections. The U.S. proposals in the Regulatory Cooperation chapter seek to export many of the worst features of U.S. rulemaking.

There is a lot to recommend about the U.S. regulatory process in theory, but in practice, the U.S. rulemaking process now evidences a massive tilt to favor the interests of regulated industries. It is far too slow; regulators are bogged down in seemingly endless analytic requirements that are themselves biased to favor the interests of regulated parties. Its veneration of “cost-benefit analysis” provides a pseudo-scientific cloak to industry’s apocalyptic claims about the costs of the next regulation and operates at loggerheads with application of the precautionary principle.

In the days ahead, Public Citizen will issue a more detailed analysis of the draft Regulatory Cooperation chapter. These are among our top line concerns from the U.S. proposals in that chapter:

  • Regulatory Delay – Paralysis by Analysis: Article X.13 would require parties to provide detailed and expansive justifications for their decision to issue a regulation, including consideration of regulatory alternatives. This is an inherently unequal obligation, because there is no burden to provide justification for doing nothing. In practice, the need to provide detailed justification for issuing a rule dramatically slows U.S. rulemaking.
  • Corporate-Biased Cost Benefit Analysis: Article X.13.1.c would require parties to conduct detailed cost-benefit studies of regulations and regulatory alternatives. It is important to understand that the U.S. understanding of the phrase “anticipated costs and benefits” is fundamentally different than the European conception of regulatory impact assessment. In the United States, cost-benefit analysis is an extremely technical concept involving extensive data collection and elaborate modeling, and it is generally understood to be a near-absolute decision-making criterion. Its highly technical nature obscures the fact that cost estimates frequently rely on regulated industry-provided data and are excessive, and that non-quantifiable or indirect benefits are frequently not captured.
  • One-Sided Analytic Requirements: Article X.13.2 would require parties to assess the impact of regulations on small businesses, a formal assessment under U.S. in certain circumstances that imposes extensive delay. It is also a one-sided required analysis, both under U.S. law and the U.S. TTIP proposal, because the specially required analysis looks to burdens (“adverse economic impacts” in the TTIP proposal) but not pro-competitive or other benefits to small business.
  • Look Back, Not Forward: Article X.16 would require parties to undertake retrospective reviews of regulations. This is, again, an inherently uneven process, because the instruction is to search for rules to revise or repeal, not for regulatory shortcomings or gaps requiring new initiatives. In practice in the United States, the obligation to undertake regulatory reviews demands valuable time and resources from agencies, and interferes with their ability to conduct forward-looking activity.
  • Trade Over the Public Interest: Article X.9 would impose a requirement for parties to consider trade effects of proposed regulations, and implicitly to justify any detrimental effects on trade. This is admittedly a soft requirement, but is notable inserting purely commercial considerations into regulatory decision-making and should be viewed as precursor to more robust demands in this area to follow.

Taken in their entirety, the U.S. Regulatory Cooperation proposals are affirmatively hostile to the precautionary principle. The precautionary principle counsels taking protective action in the face of uncertainty. The U.S. cost-benefit standards, demands for consideration of alternative regulatory approaches, and expansive analytic requirements also counsel for inaction in the face of uncertainty. Moreover, U.S.-style cost-benefit analysis places a premium on industry-provided cost estimates while effectively discounting benefits from action to prevent possible harm.

There is no need to overstate this tension; it is in fact possible to take precautionary action in a cost-benefit framework, as the United States sometimes does – but it is also the case that U.S.-style cost benefit is generally discordant with precautionary approaches.

The U.S. proposal notably does not include a requirement for judicial review of regulatory impact analytic requirements. This feature is central to the U.S. rulemaking process, but U.S. negotiators have recognized its incompatibility with European institutional arrangements. It remains to be seen how a regulatory cooperation chapter will intersect with the investment chapter. But irrespective of the intersection with the investment chapter, Europeans should be aware that, if the U.S. Regulatory Cooperation proposals are accepted and TTIP is approved, it is only a matter of time before the United States and U.S. corporations begin advocating judicial review of European compliance with the provisions of the Regulatory Cooperation chapter.

Judicial review is an inherent part of the logic of the U.S. system, and there is no doubt that U.S. corporate interests will insist that judicial review is required to enforce the terms of the Regulatory Cooperation chapter.

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Leaked TTIP text shows U.S. negotiators push to lower food safety standards, farmer protections

Subtitle:  Corporate fingerprints evident in U.S. trade negotiating positions Language:  English IATP author(s):  Karen Hansen-Kuhn File:  2016_05_02_TTIP_Leak_PR.pdf Minneapolis – Leaked negotiating texts for the Transatlantic Trade and Investment Partnership (TTIP) expose the heavy influence of corporate agribusiness in the negotiations, pushing to lower trade restrictions and public health regulations affecting food production, according to analysis of the texts by the Institute for Agriculture and Trade Policy (IATP). The leaks, released by Greenpeace Netherlands today, provide compelling evidence in support of demands by opponents on both sides of the Atlantic for more democratic and transparent processes in trade...

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