A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.
- Fix the Debt campaign
- fix the debt
- student loans
- tax holiday
- Tax Havens
- territorial tax system
- tax policy
- OtherWords lineup
- Elizabeth Warren
Baltimore Nonviolence Center
Barbara's Blog, by Barbara Ehrenreich
Blog This Rock
Busboys and Poets Blog
CODEPINK's Pink Tank
Demos blog: Ideas|Action
Dollars and Sense blog
Economic Policy Institute
Editor's Cut: The Nation Blog
FOE International blog
Kevin Drum (Mother Jones)
The New America Media blogs
Political Animal/Washington Monthly
Southern Poverty Law Center
US Campaign to End the Israeli Occupation
Entries tagged "Trade Agreements"
November 14, 2012 · By Manuel Perez-Rocha
I paid a visit this week to the Canadian Embassy with colleagues from the Institute for Policy Studies and other environmental and public policy organizations to deliver a letter to the Canadian Ambassador to the United States. We are demanding that his government tell Pacific Rim — the Vancouver-based mining company — to stop bullying the people of El Salvador.
Our letter was co-signed by Greenpeace, Sierra Club, Public Citizen, Friends of the Earth, Earthworks, the Center for International Environmental Law, and others. We wrote:
“Given the severe environment and human rights implications associated with Pacific Rim’s investment in El Salvador and the gold mine and cyanide leach-water processing plant it is proposing, we urge the Canadian government to alert Pacific Rim that its investor-state claim against the Salvadoran government for enforcing its own environmental laws and striving to protect its water and communities tarnishes the image of the Canadian mining industry.”
Salvadoran community leaders tell us that, since 2009 when they came to Washington DC to receive the Letelier-Moffitt human rights award from IPS, Pacific Rim has been trying to transform itself from victimizer to victim. This behavior is reprehensible. Some have lost their lives due to anti-mining activities, such as Marcelo Rivera, the brother of one of those who received the awards, who was assassinated for speaking out about the perils of gold mining.
This is the effect of free trade agreements.
Despite the prospect of major environmental damage, Pacific Rim says it has the “right,” under the investor–state regime allowed by investment rules in free trade agreements, to reap the profits that would have been brought by gold mining. In pursuit of these so-called lost profits, Pacific Rim is demanding up to hundreds of millions of dollars in compensation at the International Centre for Settlement of International Disputes (ICSID), an unaccountable World Bank tribunal that operates behind closed doors.
The Sierra Club “opposes trade and investment agreements that allow foreign corporations to attack environmental and public health protections in secret trade tribunals,” says Ilana Solomon, trade policy expert at the Sierra Club. “This lawsuit by Pacific Rim, which threatens the health and safety of communities in El Salvador, is a case in point for why we oppose these secret tribunals."
Using large roll-out maps of El Salvador watersheds that he brought along, IPS director John Cavanagh explained to the First Secretary of the Canadian Embassy that, though there is always danger from the mining and processing necessary to extract gold, Pacific Rim’s activity in El Salvador is particularly threatening given that El Salvador is the second most water-starved country in our hemisphere. A full 98 percent of El Salvador’s surface water is contaminated, some of it from mining activity halted decades ago. Yet Pacific Rim stands to exacerbate El Salvador’s water problems, threatening the river that supplies water to over half the population.
There is a broad consensus in the department of Cabañas and throughout the country that opening a mine in the Lempa River watershed presents a dangerous risk that El Salvador cannot afford. Polling shows that the people of El Salvador oppose gold mining and the government supports this mandate.
Pacific Rim claims that those who oppose gold mining are “certain,” “rogue,” and “anti-developmental” organizations. But hundreds of environmental organizations in the United States, Canada and globally stand firm to defend the right of the people of El Salvador — the first nation to halt gold mining — to defend their environment and to implement public policies to this end. Yesterday we asked the embassy official to notify his government that we expect an escalation in worldwide protests demanding that Pacific Rim drop its suit at the World Bank’s ICSID, and leave El Salvador.
In addition to environmental concerns, Pacific Rim’s project has caused divisions and severe human costs. As our letter states:
“We are deeply troubled by the human rights abuses associated with the Pacific Rim mine. Already, four environmental activists have been assassinated and many more have been threatened, including journalists who operate a local radio station.”
No company should have the right to threaten a country like this.
September 8, 2011 · By Sarah Anderson
This blog post was originally published in Triple Crisis.
While doing some archaeological digging into old treaties, I discovered that the Reagan revolutionaries were relative softies on at least one issue — government meddling in capital markets.
The vast majority of the 52 existing U.S. trade agreements and bilateral investment treaties forbid governments from putting controls on capital flows. But buried in the annexes to four Reagan-era treaties, I found exemptions allowing trade partners to apply such controls during financial crises. Capital controls are various measures including (gasp!) taxes designed to prevent speculative bubbles or rapid capital flight.
Tea Partiers should give Obama credit for adhering more strictly to free market orthodoxy on this issue. His officials have made clear they are pushing for a ban on these crisis prevention tools in the Trans-Pacific Partnership (TPP), the first trade deal to be negotiated under Obama’s watch. The eighth round of these nine-party talks is set for September 6-15 in Chicago.
Earlier this year, more than 250 economists sent a letter to the administration urging a re-think. “Given the severity of the global financial crisis and its aftermath, nations will need all the possible tools at their disposal to prevent and mitigate financial crises,” they wrote. Treasury Secretary Timothy Geithner responded by arguing that this was unnecessary because governments could find other ways to deal with volatility. USTR spokeswoman Carol Guthrie confirmed in a Bloomberg interview that U.S. negotiators expect to push for open capital-transfer rules in the Trans-Pacific Partnership negotiations.
That rigid position places the Obama administration to the right not only of Reagan, but also both Bush presidencies and the International Monetary Fund.
After decades of blanket opposition, the IMF now endorses capital controls on inflows of speculative capital under certain circumstances. They have recommended outflows controls in a number of countries facing capital flight, such as Iceland and Ukraine. And they have been even more broadly supportive of emerging market countries that are using controls on inflows to prevent speculative bubbles.
In Brazil, for example, where hot money has driven up the value of the real, the government has imposed a one percent tax on currency derivatives and a six percent tax on foreigners’ purchases of bonds. On August 3, the IMF executive board described the country’s use of capital controls as an “appropriate” tool to manage foreign investment inflows.
A recent IMF report on one of the countries that received a Reagan exception — Bangladesh — credits capital controls with preventing the “global flight to safety” that left so many poor economies in shambles after the crisis erupted in 2008. Bangladesh instead doubled its central bank reserves during that period.
Reagan also allowed crisis-time exceptions in investment treaties with Turkey and Egypt, while a 1985 trade agreement with Israel has no restrictions whatsoever. All three have used these policies in the face of financial volatility.
President George H.W. Bush was no fan of capital controls, but he did allow limited exceptions in the North American Free Trade Agreement and bilateral investment treaties with Sri Lanka and Tunisia. His son’s administration beat back attempts by Singapore and Chile to obtain similar waivers, but softened its stance with South Korea, a country scarred by uncontrolled capital flight in the late-1990s crisis.
Aside from the handful of exceptions, 44 U.S. agreements prohibit capital controls even during a financial collapse. According to the IMF, these deals are outliers. The global norm is to “provide temporary safeguards on capital inflows and outflows to prevent or mitigate financial crises, or defer that matter to the host country’s legislation.” Indeed, as I’ve detailed in this new study, other TPP countries’ existing agreements include broad safeguards.
What can happen without such safeguards? Global corporations and financiers have the power to sue governments that resort to capital controls and demand compensation, even as a nation is reeling from severe economic catastrophe. That’s something Federal Reserve Board member Daniel Tarullo has described as not only “bad financial policy and bad trade policy,” but also “bad foreign policy.”
And yet the Business Roundtable, U.S. Chamber of Commerce, Financial Services Roundtable, and 14 other business groups have called on the administration to reject proposals to permit capital controls under trade agreements.
Thus, while Obama might seem lonely standing so far out on the anti-regulation end of the spectrum on this issue, if he sticks to his guns, he’ll have lots of admirers on Wall Street and in the executive suites.
Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and served on the Investment Subcommittee of the U.S. State Department’s Advisory Committee on International Economic Policy in 2009.
January 31, 2011 · By Sarah Anderson
Who says economic policy has to be polarizing? In a remarkable sign of consensus, more than 250 economists across the ideological spectrum have signed a letter to the Obama administration in support of capital controls.
Until quite recently, this would have been unthinkable. For decades, the International Monetary Fund and the U.S. government led a crusade to eliminate capital controls, which include taxes and other measures to manage cross-border "hot money" flows.
As part of a broader liberalization agenda, the IMF used loan conditions and the U.S. government used trade and investment agreements to try to end such policies. U.S. officials even insisted that trade rules allow foreign investors to sue governments in international tribunals over violations of their "rights" to free capital mobility.
Then, after several countries used capital controls effectively to insulate themselves from the ravages of the 1990s financial crises, the IMF's opposition began to soften. And since the 2008 financial meltdown, the IMF has actually recommended such controls in certain circumstances, such as to prevent massive capital flight in Iceland or to stem assest bubbles in emerging markets.
The U.S. government, meanwhile, has carried on the old crusade and now has trade or investment agreements with 52 nations that prohibit capital controls.
In the statement delivered to to the Obama administration, economists are urging the Obama administration to end these outmoded policies. Initiated by the Institute for Policy Studies and the Global Development and Environment Institute at Tufts University (GDAE), the letter carries endorsements from:
- Former IMF Economists: e.g., Arvind Subramanian, now a Senior Fellow at the Peterson Institute for International Economics, and Olivier Jeanne, a Professor at Johns Hopkins University.
- Free Trade Supporters: e.g., Center for Global Development President Nancy Birdsall and her colleague Kimberly Elliott, who, while critical of capital control restrictions, have been generally supportive of U.S. trade policies, from the Central America pact of 2005 to the pending U.S.-Korea deal.
- A Nobel Laureate: Joseph Stiglitz.
- Former High-ranking Government Officials: Harvard's Ricardo Hausmann, a former Inter-American Development Bank Chief Economist and Minister of Planning of Venezuela; Y. Venugopal Reddy, former Governor of the Reserve Bank of India; and José Antonio Ocampo, former Finance Minister of Colombia.
As the letter points out, this is a timely issue since "in recent months, a number of countries, from Thailand to Brazil, have responded to surging hot money flows by adopting various forms of capital regulations."
The Obama administration has ample opportunities to bring a fresh approach to ongoing negotiations in its:
- Efforts to conclude pending trade agreements with Colombia, Korea, and Panama.
- Review of the U.S. model bilateral investment treaty, which will be the basis for new deals with India, China, and several other countries.
- Talks over a "Trans-Pacific Partnership Agreement" with eight other nations.
Making sure these deals don't prevent governments from using sensible capital controls would be one important part of a pro-worker, pro-environment, pro-democracy trade reform agenda. If we've learned anything from the current crisis, it's that we're living in a globalized financial system, where chaos in one part of the world can be devastating for businesses and workers elsewhere.