Trade, Labor, and the FTAA
For Submission to the Adam Noel Darling Memorial Essay Contest

Cara M. Morrow
1264 Shell Avenue
Pacific Grove, CA 93950
(831) 375-5509
cara.morrow@miis.edu
MACD 2002

Cara M. Morrow

Thank you. Chairman Thomas and other distinguished Committee members for inviting me to represent the organization for which I am president/ the Socially Responsible Business Roundtable. 

The mission of the Roundtable is to work with the US business community,
legislators and civil society groups towards the creation of trade policy that is both liberalizing in its scope and socially responsible in its nature. While/ as an organization, we are constantly looking for ways to advance the competitive edge of the companies we represent/ we try not to stray too far from the "big picture" perspective - we lobby for trade policy that is as fair/ free and humane as possible.

It is with this in mind that renowned trade scholar Jagdish Bhagwati has stated -numerous times/ in many different places and to diverse audiences - that the first task for the first decade of our new millennium regarding trade policy will be for free traders and civil society groups with specific social agendas to learn how to walk hand-in-hand towards systemic liberalization. I am grateful for the opportunity to address the Committee on the need for such cooperation as it pertains specifically to the Free Trade Area of the Americas and labor standards. 

Though the successful advancement of the FTAA negotiations at next month's Quebec Summit is our organization's principle focus and first priority/ we believe that there is no one "best" method/ formula or process for the creation of socially responsible trade policy. With so many players in a game that affects every person on the planet/ and whose rules are far from perfect/ the victories are small/ but far-reaching. We specialize in compromise/ just as you do. Thus, from our perspective, there are two separate issues at hand here today. The first concerns fast track legislation/ and whether or not labor standards should be the
"price" of its passage. The second pertains to the bigger picture - that is/ whether
or not labor standards can be worked into the final text of the Free Trade Area of
the Americas.

To the first issue' the members of the Socially Responsible Business Roundtable say no: labor standards should not be the end-all' be-all bargaining chip that determines whether President Bush receives fast track negotiating authority. To the second, though, the Roundtable says yes - there are ways to incorporate basic labor standards into the agreement without necessarily distorting the trade liberalization process.

The FTAA and Fast Track Negotiating Authority
As the Committee knows, there is an urgency to the debate currently swirling around the FTAA and the possible inclusion of labor (and environmental) standards into fast track negotiating authority. This is due/ in part, to the harsh realities of the market in Latin America. As our counterparts at the Business Roundtable have testified/ the Latin American market is growing exponentially, but the US is being shut out by third party countries who are negotiating trade agreements by the dozens. The European Union has been particularly busy: it is aggressively reinforcing its presence in the region by brokering an FTA with Mexico in November 1999 and by entering into negotiations with Mercosur.
Though both actions were direct reactions to US initiatives - the EU/Mexico agreement was designed to achieve parity with NAFTA/ and the negotiations with Mercosur are meant to counter the FTAA - the point is this: the Union is gaining a competitive edge in this hemisphere.

Part of Europe's competitive edge in Latin America/ in particular/ stems from the belief that United States does not fully support trade liberalization - that our own lack of domestic consensus has buried "the big picture" under a mass of infighting. We have been accused of using social consciousness to disguise protectionist agendas. The previous administration's inability to secure fast track negotiating authority is cited as the prime factor behind all of this.

With this said, though, the Socially Responsible Business Roundtable is very optimistic. Firs, we are confident that President Bush has the best interests of the business community, civil society and the larger US national interest firmly in mind. Second, we have great faith in the FTAA itself. As Regina Varga, Deputy Assistant Secretary for the Western Hemisphere at the Department of Commerce stated in her testimony to House Committee on International Relations in May 2000, the FTAA represents a negotiating arena in which real action is being taken and where real negotiating texts are being tabled.

The FTAA and Labor Standards

As the Committee knows, in trade, fear is suddenly in greater abundance than consensus. Domestically, our own workers now face a volatile economy, and they are unconvinced, when subject to competition from low-cost labor markets, that their jobs are secure. Unions want, simply/ to guarantee the rights of these workers, and businesses - especially those that our organization represents - are striving to be to be both competitive and socially responsible. Internationally, the developing countries in the region are worried about the loss of their comparative advantage as it pertains to labor. If labor standards were to be incorporated into the FTAA, however, the ideal strategy would be to bring theedges of the spectrum into the middle. There are numerous ways in which this
could be done. Since the Committee has heard much in the last months regarding
this issue, I will be brief. However, there are three general points that I would ask
the Committee to consider.

First, the Socially Responsible Business Roundtable believes that labor standards should be kept separate from levels of development - a "one size fits all" approach to their inclusion into the FTAA is inappropriate, but one that deals with the absolute "basics" in human rights is not. Thus, we advocate for the consideration of a small set of "core" labor standards as identified by the OECD. As the minimal embodiment of basic human rights, they include the elimination of child labor exploitation, the prohibition of forced labor, the freedom to associate, the right to organize and bargain collectively and non-discrimination in employment.

Secondly, we believe that a system rooted in domestic law is ideal. Up to this point, the strongest labor provisions in trade agreements have been commitments to enforce one's own domestic laws. If this remains true with the FTAA negotiations, then those members of Congress, the business community and civil society who are concerned with the President's ability to change domestic law through fast track authority will see that this is not the case.
Third, and on a different note, we are in agreement with the recent statement by Commerce Secretary Evans that trade sanctions are not the best way to address labor concerns. Sanctions, rather, are awkward, inappropriate and ineffective instruments; they do nothing to contribute to a "fairer" international trade regime. Instead, they perpetuate fear and put governments in developing countries on the defensive. All of this makes it harder for us to do business, not easier.

With these points in mind, I would now ask the Committee to consider the following three ways in which labor standards could be specifically integrated into the FTAA. None of these suggestions disturb the flow of trade. 

• First, a simple statement, included in the final text of the agreement, could commit each Member State, at their own individual pace, to conscientiously work towards improved living standards for all citizens. Though seemingly basic in nature, this statement would be a good start. It would imply a much-needed reliance on domestic law, and could act as a launching point for further commitments. It would help to develop the link between labor and trade without necessarily frightening our trading partners.

• Second, a system of trade policy reviews, similar to those commissioned by the WTO, could act as a mandated means of reviewing the labor standards of each Member State. This idea forms a basis for accountability, and would help to generate the awareness of labor standards across the region.

• Finally, in an effort to further allay the fears of the developing Member States4/6/01/ a labor standards "review body," comprised of the five most populated Member States and a rotating group of smaller Member countries, could meet as specific cases come to bear. The panel could issue judgments/ but it would have no power to punish. In this case, sanctions could be avoided, and embarrassment in front of the larger FTAA community would be review body's best mechanism for change.

Conclusion
  
In conclusion,I would once again like to relate the current debate regarding the link between labor standards, fast track legislation and the Free Trade Area of the Americas to an analogy furthered, on many occasions, by Jagdish Bhagwati. Our organization, like this Committee, walks a fine line in its attempt to "kill two birds with one stone." In seeing the FTAA through to its working completion, we would like nothing more than to claim a dual set of successes. First, that the FTAA becomes an agreement that is truly liberalizing in its scope - that it progresses the spirit of the multilateral trading community and effectively breaks down barriers to trade. Second, as representatives of a business community that is serious about social responsibility, we would like to see labor standards incorporated into the national consciousness of every participating country. If this incorporation translates into the inclusion of a minimum set of labor standards into the text of the agreement - in a form that is as fair and as minimally distorting to the market as possible - we will certainly be able to "claim both birds." However, as Bhagwati warns, the danger lies in missing both birds.
The advancement of any social agenda is secondary, in our eyes, to the advancement of trade, if only because the first simply does not, and cannot, come without the second. However, the need for a domestic consensus on trade is paramount. The Roundtable understands how difficult it is to sell the magic "end result" of responsible trade policy: citizens on the street are told that liberalization of their markets and that competition will make them wealthier - that their situation in life will improve. What is eventual, though, is not immediate, and in more individual cases than not, it is the immediacy of every day life that is scary and difficult to. see past. The attempt at integration of labor rights into trade policy, to us, represents a bridge between the immediate and the eventual. Workers, for example, who have the right to a safe workplace, willnotice a positive difference in their daily routines; the effect is immediate. This opens up the possibility/ then, that these workers will make it to that "better day" in which they are lifted up the ladder of wealth.
We certainly acknowledge that it is a trying time for all involved in the trade game. There is nothing glamorous about the technical tasks at hand, and the political realities are staggeringly complex. Consensus on any level, whether it be between business and community leaders, nationally or internationally, seems to be more of an ideal than a feasible reality. However, trade negotiations are a process of give-and-take, of goodwill and of reciprocity. Labor's linkage to the FTAA negotiations is an issue not just because you, as policy makers, or I/ as a businesswoman, want it to be one - it is an issue because our constituents, and all of civil society, is demanding it. However, an amazing opportunity has presented itself to the hemisphere - the opportunity to unite 700 million people under the auspices of a common community. We cannot afford to lose the end result because we have placed a prematurely high price on labor and environmental standards. The process is too important; the end result is simply too critical. Thus, the middle ground is the high ground. 

Thank you for your time.