NAFTA Negotiations Start in Secrecy. Lobbying Heats

After promises of transparency, Americans aren’t allowed to know what’s being negotiated at their expense.

The first round of re-negotiating the North American Free Trade Agreement between the US, Canada, and Mexico began on Wednesday and is scheduled to last through Sunday. And the one thing we know about it is this: Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations “classified” and they’ll be cloaked in secrecy.

But corporate lobbyists have access. And they’re all over it.

The Electronic Frontier Foundation put it this way:

Once again, following the failed model of the Trans-Pacific Partnership (TPP), the USTR will be keeping the negotiating texts secret, and in an actual regression from the TPP will be holding no public stakeholder events alongside the first round. This may or may not set a precedent for future rounds, that will rotate between the three countries every few weeks thereafter, with a scheduled end date of mid-2018.

But during his confirmation hearing in March, Lighthizer had promised to make the negotiations transparent and to listen to more stakeholders and the public. The EFF reported at the time that in response to Senator Ron Wyden question – “What specific steps will you take to improve transparency and consultations with the public?” – Lighthizer replied in writing (emphasis added):

“If confirmed, I will ensure that USTR follows the TPA [Trade Promotion Authority, aka. Fast Track] requirements related to transparency in any potential trade agreement negotiation. I will also look forward to discussing with you ways to ensure that USTR fully understands and takes into account the views of a broad cross-section of stakeholders, including labor, environmental organizations, and public health groups, during the course of any trade negotiation.

He said that “we can do more” to ensure that we “have a broad and vigorous dialogue with the full range of stakeholders in our country.”

Senator Maria Cantwell tried to have Lighthizer address the skewed Trade Advisory Committees that currently advise the USTR, by asking:

“Do you agree that it is problematic for a select group of primarily corporate elites to have special access to shape US trade proposals that are not generally available to American workers and those impacted by our flawed trade deals?”

Lighthizer replied:

“It is important that USTR’s Trade Advisory Committees represent all types of stakeholders to ensure that USTR benefits fully from a diverse set of viewpoints in considering the positions it takes in negotiations.”

He also said that he’d look forward to discussing “additional means for ensuring public input into US trade negotiations.

All of them were fake promises. The negotiations and the texts are classified and secret, and unless something is leaked, Americans (along with Canadians and Mexicans) will not know what is being negotiated at their expense.

But lobbyists have access, and they’re being listened to. One big topic is the inclusion of an Investment State Dispute Settlement (ISDS) procedure.

This is important for Big Oil, as represented by the American Petroleum Institute, which said in its brief that “NAFTA must include Investor-State Dispute Settlement.” It called ISDS “a neutral, international arbitration procedure” that “is necessary to ensure that, when US oil and natural gas companies invest abroad, they can seek protection for their investments if they do not have access to developed and independent court systems.”

This also goes for Mexican and Canadian oil and gas companies that invest in the US. But API doesn’t give a hoot about that.

ISDS is an arbitration procedure outside of the national court system. Its rulings force legislatures to change laws in favor of foreign corporations, and the courts are helpless. The Big Oil lobbying group also said this in the brief:

API is not aware of any adverse decisions among the handful of ISDS cases ever brought against the US. US companies have won or favorably settled many of the approximately 35 cases they have brought against Canada and Mexico.

“Adverse decision” is in the eye of the beholder. Here is an arbitration case that the US lost against Canada and Mexico. It whacked American consumers and reduced Congress to a rubber-stamping entity.

On December 2015, a WTO arbitration panel, in siding with Canadian and Mexican beef and pork producers, ruled against the US Country-Of-Origin Labeling (COOL) requirements for beef and pork, originally passed by Congress in 2002 and strengthened in 2013.

After that strengthened act became effective, beef and pork products sold in the US had to show where the animal was born, raised, and slaughtered. Americans finally could make decisions based on this knowledge. The labeling was very popular in the US. A little consumer knowledge goes a long way.

But the WTO claimed that the labeling requirements discriminated against Canadian and Mexican meat imports. And to heck with consumers. It allowed those countries to impose up to $1 billion a year in trade sanctions against US exports if the COOL requirements weren’t removed. Congress buckled in no time and voted to repeal the COOL law.

This is how ISDS operates. Consumers and workers have no seat at the table. What matters are corporate interests lined up against the rules and laws put in place by elected governments. The ruling is a deal made between companies and an arbitration panel, and Congress then has to repeal its offending laws.

ISDS provisions are an attack on national sovereignty. Big Oil doesn’t want governments to get in the way with rules and laws that might trim their profits or limit their power or curtail their freedom to operate wherever and however they see fit.

So if the USTR contemplates handing over this power to some arbitration panel, the negotiations should at least be public, and the documents should be public, and the lists of lobbyists and their priorities should be public so that outrageous portions of the agreement could elicit public outrage. And it should be public from the very beginning, not just when the final package of thousands of pages is presented to Congress, which then is under tremendous pressure to rubber-stamp the thing.

But fat chance. Already, penalties imposed during the first half of 2017 on Wall Street firms by their regulators have plunged compared to the same period in 2016. The Financial Crisis is forgotten. Even sounds of gentle wrist-slapping fade. Read… Wall Street Firms Win Again, Regulators Capitulate 

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  50 comments for “NAFTA Negotiations Start in Secrecy. Lobbying Heats

  1. Peter Boardman says:

    “… fulsome input …” is a worry. Hope there’s a dictionary around!

  2. Jack3h says:

    I don’t know why, when I voted, I thought it might be different this time. Screwed again. Another Republican disappointment.

  3. mean chicken says:

    “Deplorable Americans aren’t allowed to know what’s being negotiated at their expense.”

    There, I fixed it. And agree with Jack3h, the sewers run deep.

  4. nick kelly says:

    High level negotiations are often held without news coverage. A typical example is arbitration of union versus company (or government). If it gets down to the wire and an arbitrator agreed to by both sides takes over, there is always a news black out. Even the union side doesn’t want its militant hot heads agitating from the side lines.

    The TPP failed? True. It failed because the US pulled out. China is rushing
    to fill the vacuum.
    The problem with inviting public input into trade is that trade is complicated and the public has no idea what’s involved. How about you send your negotiator and we send ours? They will each need at least ten years experience.
    Whatever they work out will then have to be approved by elected representatives. The negotiators can’t do anything themselves.

    The highly qualified US reps had recommended TPP but it was killed after all those secret negotiations.

    What the anti-NAFTA crowd could do is really screw things up.
    Take a pair of jeans that says ‘Made in Mexico.’

    In the case of one famous brand it works like this: cotton is grown in the US, spun in the US, made into denim in the US. Then sheets of denim are cut layers at a time by auto cutter in the US.
    Finally, the panels are shipped to Mexico to be sewn together, then back to the US for sale.
    The tag says made in Mexico but its 70% US content.

    If a populist politician insists they have to sewn in US, they become uncompetitive with Asian jeans that are 100 % Asian, and the 70 % is lost.

    It gets much more complicated with autos and parts. But instead of thinking it’s US versus Canada and Mexico, look in your driveways. It’s North America versus Asia and Europe (i.e. Germany)

    Both of these global competitors use nearby, low-cost, sources of labor.

    • nick kelly says:

      PS: Of course the jeans will be sold elsewhere than the US.
      Also, this whole enterprise is American, and the profit flows to it.

      • George McDuffee says:

        RE: PS: Of course the jeans will be sold elsewhere than the US.
        Also, this whole enterprise is American, and the profit flows to it.
        In reality transnational corporate external profits external to the U. S. are largely profits are largely allocated/diverted to a tax havens, while costs are allocated to high cost operations domiciled in high cost jurisdictions such as the U. S. through the magic of transfer pricing. The answer is unitary taxation whereby total corporate revenue is allocated for tax purposes pro rata to business activity, for example if the XYZ Corporation does 50% of their business in the United States by sales volume, then 50% of their total worldwide income is assumed to have been earned in the U. S. and subject to Federal/state taxes.

        • nick kelly says:

          Pretty much agree. I see Apple is not thrilled at being told to pay Ireland 13 billion or so by the EU, as all EU profit was booked in ultra- low tax Ireland, that obviously predatory tax rate (1%?) violating EU regs.

    • fajensen says:

      If letting “experts do the best deal for everyone” was the idea, then what are the lobbyists doing there?

      “Competition” doesn’t matter, that is a political decision. Meaning: If the populist responds to popular demand of US made jeans, surely there will also be an import duty on the foreign ones.

      Maybe there are consequences, but, the people wanted it (comes from “populist”) and they are the ones carrying the consequences anyway. It is unfair to have special concessions made by the state to interest that really have no representation.

      • James Levy says:

        Jesus, just letting experts do the best for us could have been the Clinton campaign platform. Unlike many here, I actually believe in democracy and have little faith that system-nominated experts (as opposed to real experts, who do exist but rarely get their hands anywhere near the throttles of power) are going to solve our problems. The technocratic approach is hopelessly blinkered and one-sided. Ordinary people make plenty of mistakes, but so do so-called experts (I’m looking at YOU, Mr. Greenspan). I’m for more public input, not less.

    • Petunia says:

      The problem with your example is that it isn’t true. Cotton is no longer grown in high enough volume in the US. I’m in cotton country and I’m not sure why that is, but they are definitely not making cotton fabric in America. I can’t buy a decent set of cotton sheets made in America. The last set I bought cost $100 was from India and shrank in the wash.

      Nafta gave away every advantage we had for campaign contributions on both sides.

      • nick kelly says:

        US is third largest grower of cotton at 18 million bales.
        The cause of probs in the denim industry according to the site I checked are many.
        The key competitor was China, so nothing to do with NAFTA on that score.
        The site put a lot of blame on US industry for not reacting and not cooperating.
        It also mentions our old friend Private Equity that often targeted budget apparel outfits for their schemes.

        Here are some odd ones cited: the rise of jeans as ‘hip’ as distinct from work wear at the same time youth became fashion aware and had more money than ever before. They were less quality oriented because they would buy jeans far more often.

        The fad of young women, and not so young, tearing holes in their jeans on the knees fits well with that idea. It was edgy at first but is now looks silly IMO.
        Can you buy them pre-ripped I wonder.

        • Petunia says:

          Yes, you can buy jeans pre-ripped, from high end to low end stores. I think jeans are less in demand because they don’t look good on aging and spreading women. You can get away with things at 25 that you can’t get away with at 50, that goes for the guys too. And the jeans come from many different countries.

          It is hard to find natural fabrics anymore. I think the chemical companies have something to do with it. Everything is a cotton blend with some trademarked name. The sheets I buy now are from India and the quality is low. I used to buy American made and they lasted for years. Now I’m lucky to have Indian sheets last one year. I buy 93% cotton underwear because it is the best I can find, from Sri Lanka. I stock up when I can because I can’t always find it when I need it. Most underwear for women is all petroleum and chemical based fabric.

          At one time we were the highest producers of cotton in the world. Now it is all imported and a luxury product. I see it as more dysfunction in the system.

  5. Wolf Richter says:

    Thanks!! This is big.

  6. Tony of Ca says:

    We don’t have any form of representative democracy. We just have Oligarchs running wild. I find it interesting the NAFTA renegotiation isn’t receiving any press coverage.

    • Lee says:

      The USA was founded as a Republic with a democratic basis.

      All the crap that has come out of the US CONgress and Courts over the past fifty years or so has transformed the Republic into the worst form of democracy which in turn has been co-opted by small groups of elites throughout the country.

      Fundamentals rights have been lost, the rule of law abandoned, and an uneducated bunch of voters elect idiots.

      That is what you have now in the USA: idiots at all levels of society that have no knowledge of history or the law being played.

      Mass hysteria and stupidity rule.

      What cesspool the country has become.

      • TJ Martin says:

        Amen ! Could hardly say it better myself . Though I personally prefer the term I coined during the whole 2016 campaign ;

        The Collective Stupidity of America

        Problem is .. We The People helped create it then later cementing it with our addiction to infotainment , dependency on the digital and addled by celebrity

        Which is to say all you ‘ victim ‘ types on both sides . Take a good hard look in the mirror before running to one conspiracy theory or another in the desperate attempt to find/create the scapegoat for all yours and this country’s current problems

  7. Dey says:

    Don’t these revisions have to be passed by Congress? Then they will say, but Congress is corrupt. But people elected them, so the people are corrupt.

    Stop blaming forces which simply take advantage of the fact that the American people are corrupt. Study their corruption. Don’t pretend it doesn’t exist. When the collapse comes, the people’s corruption will entirely explain how it happened. Americans are simply awful people. Get over it.

    • Dan Romig says:

      Not every American person “elected them”, so not all the “people are corrupt.” There are many Americans who do not support and vote for the two party duopoly. There are Independent voters. There are Green Party voters. There are Libertarian voters.

      While Wolf does not want this site to be politically slanted, his quote, “Congress buckled in no time and voted to repeal the COOL law.” says quite a bit about the corruption of the political system which has a stranglehold on our Executive and Legislative branches.

      Another quote regarding the USTR and Lighthizer: “All of them were fake promises.” This means, at least in my simple view, Lighthizer lied to Senator Wyden when he was questioned (presumably under oath) during confirmation hearings.

      This doesn’t equate to “Americans are simply awful people.”, but it does equate to “America has an awful system with some awful individuals in positions of power.” No, I won’t get over that, and I won’t vote for a Democrat or Republican in hopes that my state and nation can get over corruption politicians who write our laws and Trade Agreements cloaked in secrecy.

      • Dan Romig says:

        Gotta proof read better: get over corrupt politicians …

      • TJ Martin says:

        Everybody lied … from the top on down . To their benefit and victories and ultimately if they get their way our collective demise … which in the end will bring about their downfall as well as they shoot themselves right in their collective foot .

        Aint Hyper – Capitalism …. brilliant ?

  8. fajensen says:

    There is a big difference between Stakeholders and Stickholders …… and which end of the stick.

  9. Rates says:

    The negotiators are calling Travis Kalanick for advice on how to make this country an Uber Swamp.

  10. Truth Always says:

    Same as Obama’s TPP ?

    BTW what gives Americans the right to still call their Govt as ‘…of the people and for the people’ anymore?

    Can no one move supreme Court for this?

  11. George McDuffee says:

    RE: …and they’ll be cloaked in secrecy.
    All this means is that you will have to read on Wikileaks rather than the official USTR website.

  12. IdahoPotato says:

    “The negotiations and the texts are classified and secret, and unless something is leaked, Americans (along with Canadians and Mexicans) will not know what is being negotiated at their expense.

    But lobbyists have access, and they’re being listened to.”

    Where are the Libertarians? Oh, wait, this is exactly what they mean by “free markets”.

  13. nick kelly says:

    You know what would be kind of funny (this not seriously intended) would be to tie up someone who wanted the latest info on trade negotiations. put earphones on him and start reading from the thousand page TPP.

    ‘Not withstanding subsection 112 (a) this section deals with allocation of country of origin credits where (1) ore is mined in country A. refined in country B, made into steel in country C, the steel then being shipped to countries A or B, being then fabricated into a product deemed not protected by patent or design, for example, reinforcing bar, which is then shipped to countries A, B or C.

    The method used to calculate the Value Added Component (VAC) shall not allow a depreciation allowance to be used by country mining the ore, even if this be part of the accounting by a non-sovereign company operating in the jurisdiction, however in the case of a sovereign enterprise in a country deemed to be Developing….,

    Twenty four hours of that, for a few days…

  14. Ambrose Bierce says:

    The meat labeling issue came to issue during the outbreak of Madcow disease? and of course if you stop labeling seafood made in China you might as well just pour the poison in the water supply.

  15. Paulo says:

    Good comments Nick Kelly,

    Yes, in big and serious negotiations you have to let/permit experts to do their best work, and then let them be responsible for the results.

    I have no problem with letting ‘country of origin’ be included with NAFTA products going forward. The way things are going these past few months, I now buy from almost any originating country other than the US. I used to always try and buy North American…always, but when you are considered to be, and treated as an enemy by the US administration, any allegiance goes poof. Of course, I also live in softwood country, a place of the battle of imposed duties we have won 5 times in the past. The US just imposed protectionist duties and our prices for lumber just went up as a result. The consumer in both countries are paying for this policy.

    I also live in a sought after vacation destination. We are waiting for Labour Day to arrive and for the tourists from both countries to go home. Canadians are staying away from the US in droves due to politics and exchange rates, and many Americans are visiting their northern neighbour for the same reasons.

    I would like to see, after the NAFTA negotiations conclude, a more sincere and serious effort to broaden our trade relationships with other countries. I think it would also be interesting to negotiate other defense treaties, at the very least, invite goodwill stops in our ports. Right now, Trudeau (Boy Wonder) is tip toeing around Trump and trying to stay on his good side. Screw it. We are running out of sick sacks around here.

    • nick kelly says:

      I might agree with parts of your sentiment but we can’t afford to antagonize the world’s richest market conveniently located next door.
      It sounds that like me you are retired with a reasonable income, but
      others would pay the price of a trade war, or even a trade cooling with the US.
      And if you had your choice of much larger neighbors, who else would you pick?
      Even in biz to biz it’s natural to put up with some cr%p from a big customer. Up to a point, this need not mean sacrificing national pride or sovereignty.
      That being said of course other markets should be sought.

      But as for finding someone else to defend North America in much more than words, I see no prospect or even desirability.
      The only territorial dispute with the US is the North West Passage, claimed by Canada as its own, but as an international waterway by the US. The US has offered to let the World Court decide, but Canada refuses.
      Some years back the US briefly put machine guns on patrol boats on one of the Great Lakes. Canada objected, citing the treaty ending the War of 1812, that de-militarized the Lakes, and the guns were removed.

      Could be worse.

      • james wordsworth says:

        Would do Canada a lot of good if we could get our fellow citizens to stop visiting south (which finally seems to be happening) and to stop buying american stuff. Unfortunately just like petro nations we become hooked on the big market to the south to the exclusion of the more difficult task of selling elsewhere in the world. A higher wall may actually help us.

  16. SimplyPut7 says:

    The Canadian government does not like transparency. The public is used to finding things out after they happen in Canada.

    If there is something important that they want public feedback on from the NAFTA negotiations, they will leak the information themselves to the media.

    I believe many of the Canadian organizations/associations (lobbyists) have already told provincial, federal and territorial ministers what they want to see from NAFTA.

  17. robt says:

    It should be noted that the US Constitution was developed in-camera, with the participants sworn to secrecy.
    Most things that significantly affect citizens’ lives usually are. If they are allowed to ‘contribute’, it’s just a patronizing gesture and their contributions are typically ignored. The red flag is when they use the term ‘stakeholders’, though stakeholders is a flexible term, too. It can also mean that those who put nothing into a system expect everything out of it at the expense of those who do materially contribute.

    • TJ Martin says:

      ” It should be noted that the US Constitution was developed in-camera, with the participants sworn to secrecy ”

      US History 101

      More importantly it should be noted there was good reason back then for keeping things secret as times were still perilous and this United States future was still tenuous at best

      Whereas today ? Other than serving self interests , the corporate world and greed in general … aint nary so much as a reasonable excuse to be found of such secrecy

      • Raymond C Rogers says:

        Apparently people like to ignore the Federalist and Anti-Federalist papers, and the debates surrounding these issues.

        The Constitution was not as secretly crafted as you say. State legislators had to be convinced to sign on. This was not a group of industry titans trading favors. Where are the debates today?

        • TJ Martin says:

          1) Actually the debates were kept relatively secret among the legislators with no input from the public they served …

          …but ..

          2).. In light of the preponderance of remaining Loyalists ( approximately 30% of the population ) .. a network of British spies intent on bring us down before we so much as got on our feet .. including a phalanx of Canadian spies in service to the king…

          …As I stated .. there was good reason to maintain a level of secrecy back then .

          Whereas today especially when it comes to Trade we have no excuse what so ever

  18. Mary says:

    Illuminating post. This kind of information is available elsewhere, but Wolfstreet always presents it in such clear, easy to understand fashion. Thanks

  19. james wordsworth says:

    A view from across the border. Canada is the one about to be screwed. We have been screwed on softwood lumber over and over again, and now the dispute mechanism is on the table (that is the only way Canada can stay in – take it out and we should walk – the US is notorious for using corporate pressure to force smaller nations to abide by their wishes.- – see cigarette policy). Then there is supply management which actually gives us stable prices. Up here not everything has to be based on the lowest price. We are already overrun by US retailers that use their large size to kill off local brands. Enough is enough. We don’ need american milk, eggs, hormone filled chicken, or more “culture” from down south. Enough ranting for now … but just a bit of info that we are going to fight this thing too!

  20. RSDallas says:

    Trump has made it clear that the Globalist thieves and the one world order phycopaths have won. It is a sad day for America!

  21. Sound of the Suburbs says:

    The Adam Smith Institute won’t be happy.

    Adam Smith:

    “The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

  22. walter map says:

    “For every one that doeth evil hateth the light”

    John 3:20

    “All for ourselves and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”

    Wealth of Nations, III.4.10

  23. Craig Welch says:

    “ISDS is an arbitration procedure outside of the national court system. Its rulings force legislatures to change laws in favor of foreign corporations, and the courts are helpless.”

    ISDS tribunals have no power to change legislation, or tell Governments to change legislation. They have the ability to make a financial award against a government if that government is found to have breached the terms of the agreement (in this case NAFTA).

    • Wolf Richter says:

      Read the rest of the article to see how ISDS worked with the WTO ruling on COOL requirements… see how it worked with NAFTA rulings. Among the teeth are punitive tariffs.

      • Craig Welch says:

        You seem to have conflated WTO arbitration panels (which are country v. country) with ISDS disputes (which are investor v. country).

        The COOL disputes were not ISDS proceedings.

  24. d says:

    “Despite promises in March by US Trade Representative Robert Lighthizer (USTR) that the negotiations would be transparent, the USTR now considers the documents and negotiations “classified” and they’ll be cloaked in secrecy.”

    Considering how the US congress works, this was the only way to develop TPP.

    The only group really unhappy with this, on the whole pacific rim .

    The Anti TPP Luddites in the US.

    And now the very Trumpeters who were so against the “Secrecy” in TPP wish to renegotiate NAFTA, a public trade agreement.


    This glaring Hypocrisy. States that the only way to do things, due to the corrupt US congress, is to negotiate trade agreements, IN SECRET.

    So that the bribe givers, get very little time to bribe, the bribe takers. Prior to a vote.

    This Tactic ultimately protects the interests of 1 group.

    The public.

    Unless the agreement is negotiated by the like’s of the Trumpeters. Then it only protects the interests of the Trumpeters.

    Nothing in the US Corporate Oligarchy, is perfect.

    • Wolf Richter says:

      Secret means secret from the public. The “bribe givers,” as you call them – the corporate lobbyists – have full access. And they help write the agreement. This process has already started. For example, there has been some laudable efforts by the administration to keep ISDS out of NAFTA or make it voluntary for countries to accept – great compromise. But the corporate lobbyists are waging war against the USTR on this. This fight has now spilled into the public, and that’s good.

      • d says:

        “This fight has now spilled into the public, and that’s good.”

        Having this fight in public, in most systems, is in the interest of.

        “The public good”.

        In the US, not so much.

        As the US Political system, is so corrupt. Both sides are owned, by the Corporate Oligarchy.

        As we have discussed before, any attempt at reforming the US political systems, must be an incremental “long term” process.

        As the entrenched Politicians with their Corporate Ogliarch owners, DO NOT WANT change, at least on their watch..

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