Uninformed Vermont Legislator Makes Big Stink About China's WTO Objections To State's Waste Rules

http://www.wptz.com/news/17172503/detail.html













For Sending A Letter, Vt. Lawmaker Says China Overstepped Its Bounds

5 WPTZ.com


BURLINGTON, Vt. -- A state senator from Chittenden County said a letter received from a Chinese official criticizing legislation she has pending in Montpelier "flies in the face of state sovereignty and democratic principles."
http://www.wptz.com/video/17173558/index.html


Sen. Virginia Lyons of Chittenden County chairs the Natural Resources and Energy Committee. Lyons held a news conference Tuesday to discuss the implications of the undated letter she said she received in April.


The three-page communication, in both English and Chinese, was signed by "Wang Ni Ni" who identified himself as director general for the "China WTO/TBT National Notification & Enquiry Center" and listed an address in "Hai Dian District, Beijing."


The letter opened by saying "we appreciate the opportunity to submit comments on the regulation under the notification proposed by the State of Vermont."


Wang then outlined objections to Lyons' bill that would impose fees on manufacturers of electronic goods sold in Vermont. The fees, which would be calculated based on the weight of an item, would establish a fund for eventual recycling of e-waste. Wang suggests the mechanism would affect manufacturers unevenly and amount to an "unfair restriction of trade."


Lyons said her bill would effectively reduce the volume of electronic waste now winding up in Vermont landfills. Her proposal has yet to see debate at the state capital. But most of her ire focused on what she considers an unwelcome intrusion.





"It's simply not OK for other governments, foreign national governments, to feel they have a right to intervene in our state legislative process in the way China has," Lyons said.


[MAY WE SUGGEST THAT SENATOR LYONS TAKE A WTO COURSE FROM THE USTR?? HOW ABOUT A REFRESHER COURSE IN THE U.S. CONSTITUTION FROM NONE OTHER THAN THE FACULTY OF VERMONT LAW SCHOOL??]




She said Maryland and Missouri legislators have also felt "push back" from the Chinese over proposals they don't like. Lyons said she recently sent a complaint to the U.S. Department of Commerce. A spokeswoman there - and at the Office of the U.S. Trade Representative - both declined comment.


Lyons said she worries Vermont lawmakers would feel a "chilling effect" from the Chinese official's letter. She said she was "a little unnerved" the communication listed her home phone and address.




[WE SUGGEST THAT VERMONT STATE SENATOR LYONS WAKE UP FROM HER DEEP SLEEP OR SELF-IMPOSED STUPOR AND LOOK OUT OVER THE GLOBAL HORIZON TO SEE A BRAVE NEW WORLD OF INTERNATIONAL TRADE, THE INTERNATIONAL LEGAL FRAMEWORK OF WHICH HAS CONTINUED TO EVOLVE SINCE 1947. WITH THE CONCLUSION OF THE URUGUAY ROUND OF TRADE NEGOTIATIONS DURING 1994, AND THE CREATION OF THE WORLD TRADE ORGANIZATION AND ITS BINDING DISPUTE SETTLEMENT MECHANISM, AS WELL AS, THE EXECUTION OF NEW MULTILATERAL TRADE AGREEMENTS, INCLUDING THE TECHNICAL BARRIERS TO TRADE (TBT)AGREEMENT, THE FEDERAL, STATE & LOCAL GOVERNMENT TECHNICAL REGULATIONS OF ALL WTO NATIONAL MEMBERS, AND EVEN THE PRODUCT & PROCESS STANDARDS OF RECOGNIZED PRIVATE STANDARDS BODIES OPERATING WITHIN THE JURISDICTIONS OF WTO MEMBERS, ARE NOW SUBJECT TO INTERNATIONALLY AGREED UPON RULES.]

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http://www.worldtradelaw.net/chinavermont.pdf


115 STATE STREET STATE OF VERMONT PHONE: (802) 828-2228

MONTPEUER, VT 05633-5201 FAX: (802) 828-2424


SENATE CHAMBER


For Immediate Release Contact: Katie Manaras
August 12, 2008 (802) 828-3806


Senator Virginia Lyons Statement on Chinese Objection
to Proposed Environmental Legislation in Vermont

Vermont State Senator Virginia Lyons held a press conference on Tuesday, August 12, 2008 at 2:30 p.m. at Main Street Landing in Burlington, Vermont to make a statement regarding a letter she received from a foreign nation, asking her to "cancel" or "revise" a bill she had introduced during the legislative session. The subject of the bill is control and disposal of electronic waste. The nation complaining about the Vermont bill is the People's Republic of China.


In an official communication-which was sent to the home address of this citizen-legislator- China asserted that Senator Lyons' bill (S.256) presents an obstacle to international trade. In its letter, China cited an existing U.S. commitment under World Trade Organization (WTO) rules as a reason why Senator Lyons should withdraw her bill.


This wasn’t the first such occasion in which the People's Republic of China has 'pushed back' on state legislation they didn't like. China earlier had complained about state bills dealing with lead, phthalates, and other toxic materials found in children's toys. On that occasion, federal trade negotiators in Washington told the state legislator who introduced the bill that the communication from China was a 'mistake' and wouldn't be repeated.


However, the 'mistake' was repeated-this time in relation to a proposed Vermont law on electronic waste-and Senator Lyons felt it was extremely important to address this problem now.


According to Senator Lyons, "The People's Republic of China questions the authority of the Vermont legislature to enact legislation to protect human life and the environment. This attempted interference by the People's Republic of China in the democratic process in Vermont is alarming and threatens basic principles of our system of government. Common sense solutions to health issues at the state and local level should not be subject to international pressure."


She stresses that, "This is part of a disturbing trend toward undermining state's rights. Its simply not OK for other governments to feel that they have a right to intervene in our state legislative process in this way. It wouldn't matter whether the bill addressed by the Chinese government was about health care, workers benefits, land use permitting, or in this case, electronic waste recycling, the underlying principle is the same: respect for democratic decisionmaking. And so, we have to let folks in Washington DC and in Beijing know that this an unacceptable intrusion."


Senator Lyons was taken aback by how quickly China obtained the information about an introduced bill. "It appears that the Bush Administration alerted the Chinese," Lyons said. In a letter to Bryan O'Byrne, at the Department of Commerce's Trade Compliance Center, Senator Lyons asked about how-and why-this notification took place. See attached letter.

[DEAR MS. LYONS: IT IS THE LEGAL OBLIGATION OF THE U.S. GOVERNMENT TO NOTIFY OTHER WTO PARTIES IF U.S. FEDERAL, STATE OR LOCAL LAWS AND REGULATIONS BEING PROPOSED, ADOPTED and/or APPLIED (ENFORCED) WILL AFFECT THE FLOW OF TRADE FROM THAT OTHER WTO PARTY AND IMPACT THE RIGHTS OF THEIR CONSTITUENTS.]

Whatever the case, it appears that China is taking an aggressive stand to push back on recycling and product-registration requirements for consumer electronics-and the push-back has now 'gone global.'

[DEAR MS. LYONS, YOU SHOULD GET OUT MORE AND READ THE NEWSPAPERS. FOR EXAMPLE, CHINA IS NOT THE FIRST WTO MEMBER TO CHALLENGE THE FEDERAL LAWS OF OTHER NATIONS ON WTO GROUNDS. SINCE THE MID-1990'S, THE U.S. GOVERNMENT UNDER THE ADMINISTRATIONS OF TWO PRESIDENTS (DEMOCRAT & REPUBLICAN) HAVE CHALLENGED THE NON-SCIENCE AND NON-ECONOMICS-BASED ENVIRONMENTAL & FOOD SAFETY LAWS OF THE EUROPEAN UNION and ITS MEMBER STATES, ALLEGING, AS HAS CHINA, HERE, THAT THE FAILURE OF THE EUROPEAN LEGISLATURE TO SUBJECT THE PRODUCTS IT WAS SEVERELY RESTRICTING OR OUTRIGHT BANNING TO A SCIENCE-BASED RISK ASSESSMENT, AND THEN TO EMPLOY ECONOMIC COST-BENEFIT ANALYSES IN ASCERTAINING WHICH OF THE AVAILABLE RISK MANAGEMENT MEASURES THAT ARE LEAST TRADE RESTRICTIVE COULD BE ADOPTED IN LIEU OF THE DISPUTED MEASURES. IN PARTICULAR, THE U.S. GOVERNMENT OBJECTED TO THE EU REGULATIONS ON CHEMICALS ('REACH'), AND ITS DIRECTIVES ON WASTE RECYCLING, 'TAKE-BACK', E-WASTE, HAZARDOUS SUBSTANCES ON ELECTRICAL AND ELECTRONIC EQUIPMENT, ETC. THE U.S. GOVERNMENT ALSO PREVIOUSLY RAISED OBJECTIONS CONCERNING CHINA'S ADOPTION OF SIMILAR RULES.]

[See Lawrence Kogan, Exporting Precaution: How Europe's Risk-Free Regulatory Agenda Threatens American Free Enterprise, Washington Legal Foundation (Nov. 2005), at:

http://www.itssd.org/White%20Papers/KoganMonograph.pdf ].

"Electronic products, such as computers and televisions, contain lead, mercury, cadmium, and similar hazardous materials," Lyons explained. "My bill simply provides a system for the recycling of electronic products as a means of limiting the release of these dangerous heavy metals from landfills and thereby protecting the environment and public health in Vermont."


"After S256 was introduced and was under consideration in committee, I received an e-mail from Beijing. The e-mail included a World Trade Organization document indicating that the U.S. federal government had notified a WTO Committee that S256 could be in violation of international trade law. Also attached was a cover letter from Wang Ni Ni, Director General of the China WTO Notification and Enquiry Center, and official comments by the Peoples Republic in response to the U.S. notification to the WTO regarding S. 256."


"And right on the front of that mailing from China was my home address and telephone," Lyons added, "which wasn't exactly what I would expect from an official communication regarding a WTO matter. It was a bit unnerving."


Two weeks ago, at the Annual Meeting of the National Conference of State Legislatures, Senator Lyons introduced a resolution deploring China's action, and alerting other state legislators to this new pushback. [The text of this Resolution can be found at
http://www.ncsLorg/printlstandcommlsclaborecon/ChinaLyons.pdf ] The resolution passed unanimously from the initial committee of jurisdiction and is now pending in a second committee.


"This was an important step to educate legislators about what's at stake here. I understand that the global trade rules mean that the United States is supposed to notify the WTO about major regulatory changes. How the Chinese concluded from this that they had a right to intervene in a state legislative process, long before new regulations are written, is quite beyond me.

[WAKE UP MS. LYONS!!!!]

"I just hope the Chinese weren't being encouraged to file complaints against state legislation by our own federal trade officials in Washington," concluded Senator Lyons.


WTO/TBT
China WTO/TBT National Notification & Enquiry Center
No.7, Ma Dian Dong Ac, Uai Dian District, Beijing, China, TeL 86 10 8226 0618 Fax: 86 0 8226 2448


FAX
TO.
National Center for Standards and
Certification Information (NCSCI)
National Institute of Standards and
Technology (NIST)
100 Bureau Drive
MS-2 160 Gaithersburg, MD USA
20899-2160
Tel:-i-(1301)975 4040
Fax ±(1 301)9261559
E-mail: ncsci@nist.gov
Website:http:/!ts.nist.gov/ncsci

Senator Virginia Lyons
241 White Birch Lane
Williston,VT 05495 USA
Tel: +(802) 863 6129
Email: vlyons@leg.state.vt.us
url: http://www. legstate.vt.us

Date: , 2008
Number of pages: 2+3
Copies:

Department for WTO Affairs, Ministry
of Commerce of P.R.China
Fax: +86 10 65 197726;65 128304
E-mail: wtonoti@mofcom.rnv.cn
liuna@mofcom.gov.cn
Permanent Mission of P.R. of China to WTO
Fax: +41-22-9097699/9097688
E-mail: guoxueyan9999@gmail.com

WTO Affairs Office, General,
Administration for Quality, Supervision, Inspection and Quarantine, PR.C.

Fax: +86 10 82260553
E-mail: jo@atsig.gov.ca
xuj @aqsiq.gov.cn

Department for Supervision on Inspection, AQSIQ of P.R.China
Fax: +86 10 82261949
E-mail: ijusy@agsig,gov.cn
From:

China WTO/TBT National Notification & Enquiry Center, Standard and Regulation Researching Center, AQSIQ, P.R,China
Tel: 86-10-82260618
Fax: 86-10-82262448
E-mail: tbtP aqsiq.gov.c n
Subject:

Comments on USA Notification G,TBT/N/USAJ34O
An Act Relating to the Disposal of Electronic Waste. S256

Comments on USA Notification G/TBT/N/USA/34O

An Act Relating to the Disposal of Electronic Waste, S256

Dear Sir or Madam,

We appreciate the opportunity to submit comments on the regulation under the notification proposed by State of Vermont.


Enclosed please find comments in English and Chinese.


Please acknowledge receipt of the comments by e-mail to tbt@agsig.gov.cn. Thank you very much in advance for State of Vermont consideration of our comments.


Formal reply from State of Vermont will be appreciated.


Best regards


Wang NiNi
Director General
China WTO/TBT National Notification & Enquiry Center
No. 9 Ma Dian Dong Lu, Hai Dian District, Beijing
Post Code: 100088
Tel: 86-10-82260611/0619
Fax:86- I 0-82262448
E-mail: 4kt@aqsiq.gov.cn


Comments from China on USA Notification
G/TBTIN/USA/340

An Act Relating to the Disposal of Electronic Waste, S256


China appreciates U.S. for fulfilling WTO transparency obligation, to notify Notification G/TBT/N/USA/340. After careful study, we hereby put forward the following comments on the notified regulation.


I. China thinks the registration fee referred in Article 7303-(a) of the notified regulation lacks science, which is likely to result in unfairness, and will create unnecessary obstacles to the trade. The article is not in consistency with Article 2.2 of TBT Agreement, "Members should ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade." Therefore, China suggests canceling or revising the article of the regulation. Specific reasons are as follows:


a) In Article 7303(a) (2) of the notified regulation, "The registration fee for the initial program year during which a manufacturer's video display devices are sold is $5,000.00. Each year thereafter, the registration fee is equal to a base of $2,500.00, plus a variable recycling fee calculated according to the formula in subdivision (3) of this subsection."; as wet! as in Article 7303-(a) (6) of the notified regulation, "The registration fee for the initial program year and the base registration fee thereafter for a manufacturer who produces fewer than 100 video display devices for sale annually to households is $1,250.00."


b) The manufacturer pays the "variable recycling fee" according to provisions of the proposal, and both registration fee for the initial program year and the base registration fee thereafter added based on this are unreasonable. Difference in the market sales amounts results in difference in unit cost increase of the manufacturer. which is obviously unfair. Therefore, we don't think it is scientific for the determination of above registration fees. b) What's more, similar proposals involved in the notifications of US confederation member states Missouri and Virginia, G/TBTINIUSAI332, G/TBT/N/USA1333, G/TBTINIUSAI342, all don't provide for payment of registration fee.


c) In Article 7303-(a)-(3)(E) of the notified draft, E (the estimated per pound cost of recycling used to calculate the variable recycling fee) is set at 0.5 dollar per pound. which may obviously increase the cost of the video display devices sold to households. Take CRT display devices as an example, it is estimated that the cost will increase by IO3O%. Please provide detailed scientific basis for such determination of the value, taking account of reducing the value as much as possible.

d) d) In Article 73O3(a)(3) (C) of the notified regulation, it is provided that, "C = the number of pounds of recovered electronic devices recycled by a manufacturer from households during the previous program year, as reported to the agency under section 7305 of this title", it is lack of science and operability to determine the data, which is likely to create unfairness. Reasons are in below:


i For small manufactures newly entering into the market of the state, compared with large and local manufactures in the terms of recovery and collection channels or recovery technology control and use, they are obviously in an inferior position, which may likely result in more cost for them to obtain pounds for equivalent recovery designated electronic devices.


ii. The value relies on statistics and feedback of the recycler, while there isn't any provision relating to obligation of the recycler to provide true and comprehensive recovery data in the regulation, which is likely to result in incorrect value statistics as well as bad operability.


2. Effective date and approval time limit


a) It is stipulated in Article 73O2(b)-(5) that, "A registration is effective upon receipt by the agency and is valid until July 1 of each year". We think it is inappropriate to fix the effective date of registration to a fixed date, and it is suggested for U.S. to revise this article.


b) It is suggested to clearly define the acceptance and approval time limit of the agency of natural resources after the manufacturer applies for registration with the agency,


3. It is suggested to consider adding in Article 73O5(b): the recycler should cooperate with the manufacturer in the inspection and tracking, and provide the evidence indicating the recycling and disposal of covered products by the manufacturer and whether the product of the manufacturer is recycled without permission or sold after simple repair.


4. The responsibility of the collector throughout the recycling link is not stated in the regulation. It is suggested that the responsibility of the collector be added in the article.

Comments in Chinese are as follows…

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Forum on democracy & trade


Preliminary Analysis of Allegations by the Peoples Republic of China (PRC) Regarding S.256 (2008) Introduced by Senator Virginia Lyons


Introduction


International trade agreements are negotiated by the United States Trade Representatives (USTR). Individual states are not involved in the negotiations, although trade agreements are presented to Congress. The 1974 Trade Act gives states very little policy input on trade, despite the fact that economic decisions regarding trade have powerful consequences for cities and states. There is only one advisory group to USTR that includes representatives from states.

States have not found this limited input to be sufficient to protect state interests. As a result, several states, including Vermont, Maine and New Hampshire, have created special Commissions to explore the impacts of international trade agreements on state sovereignty and to communicate state interests with USTR, other states, and Congress.


Analysis of Objections


The United States sent a notice to the World Trade Organization (WTO) about Senator Lyons bill, S,256. Based on a notification document issued by the WTO Committee on Technical Barriers to Trade, it appears that the PRC allegations are a response to a U.S. notification filed with the WTO related to Senator Lyons' bill.


The WTO Agreement on Technical Barriers to Trade contains various rules governing "technical regulations." The term "technical regulation" is defined as a "document which lays down product characteristics or their related processes and production methods...." (TBT Agreement, Annex 1). The proposed Vermont legislation, it might be argued, constitutes a "technical regulation" because it is related to product characteristics - i.e. specified types of electronic products containing heavy metals and other dangerous substances. At the same time, it might be argued that the essential thrust of the bill, to establish and finance a system of electronic product recycling, is not "technical regulation." Furthermore, it is not even clear that Chinese manufacturers are covered by the definition of "manufacturers" in S25, although any additional regulatory and financial burdens carried by their U.S. distributors as a result of the legislation might have some impact on the volume of sales in Vermont that could indirectly reduce the profits of Chinese firms. Nonetheless, the PRC, the U.S. federal government, and the WTO are treating it as a technical regulation subject to WTO jurisdiction.


Under Article 3.2 of the TBT Agreement, WTO member nations, including the United States, are required to notify other members whenever a state or provincial government such as Vermont proposes to enact a "technical regulation" that is not based on international standards and that will have a "significant effect on trade of other IWTOI Members." See Articles 3.2 and 2.9.2.


The notification is required to be made "at an early appropriate stage, when amendments can still be introduced, and comments taken into account." It seems that the U.S. federal government notified the WTO of the Lyons legislation pursuant to Article 3.2 of the TBT.


The WTO notification on S256 cites the "protection of human life and health" as the 'objective and rationale' of the legislation. Unlike several other WTO agreements, the TBT does not have a 'general exception' regarding the "protection of human life and health." A country might attempt to challenge such a legislative measure by claiming that the regulation will not be implemented in the 'least trade restrictive' way possible; is discriminatory against foreign commerce; does not follow international standards; gives too much discretion to regulators; etc.


These are the kinds of complaints that might be made by the PRC.


The PRC alleges that the Lyons bill violates WTO law, Without much explanation, the Peoples Republic declares that Senator Lyons' bill is inconsistent with Article 2.2 of the TBT Agreement, which states that "Members should ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade." Under this strict "necessity test," trade values arguably trump other public policy values unless there is no conceivable alternative policy that is less burdensome on trade. The PRC asserts, also without much factual or legal explanation:


• That registration fees and recycling fees paid by manufacturers under S256 are unfair and not determined on a scientific basis;

• That similar regulatory proposals in Missouri and Virginia do not require payment of a registration fee by manufacturers (perhaps suggesting that a registration fee is an "unnecessary obstacle" to international trade?);

• That the variable recycling fee may increase the cost of video display devices by 10 to 30 percent;

• That the annual administrative process for calculating the pounds of electronic devices recycled by a manufacturer from households has no scientific basis, is unfair to small manufacturers entering the Vermont market, and relies on statistics and feedback from recyclers who are under no obligation to furnish reliable data; and

• That revisions are needed in the bill related to the effective date for registration by manufacturers, a more clearly defined time schedule for agency acceptance and approval of a registration, and greater specification of the responsibilities of collectors and recyclers.


Conclusion


As illustrated by this event, other countries could and are beginning to use the trade system to apply pressure to state legislatures and to impact the state legislative process. Since trade promotion authority has expired, states see an opportunity to evaluate the process for providing input on trade issues and to improve federal-state communication. A new system for improving communication between states, USTR, and Congress should be a strong priority for the next Congress and President to ensure that out democratic system of government is protected.


For more information, contact Peter Riggs, dggs@forumdemocracy.net or William Waren, wtw2@law.georgetown.edu

[APPARENTLY, FORUM FOR DEMOCRACY, A POLITICALLY MOTIVATED DEMOCRATIC PARTY NON-GOVERNMENTAL ORGANIZATION, IS ADVOCATING U.S. TRADE POLICIES THAT CLOSELY RESEMBLE A BILL THAT WAS PROPOSED DURING SPRING-SUMMER 2008 IN CONGRESS, WHICH WOULD HAVE CAUSED GREAT HARM TO U.S. INTERNATIONAL TRADE AND FOREIGN RELATIONS. See OBAMA-BROWN-MICHAUD Non-Tariff Trade Barrier Act Likely to Devastate US Economy, Trigger a Global Trade War & Endanger World Peace, ITSSD Journal on Disguised Trade Barriers, at: http://itssddisguisedtradebarriers.blogspot.com/2008/06/us-trading-partners-beware-obama.html ].

[STATES MUST REMEMBER THAT THEY CANNOT ENACT INITIATIVES THAT INTERFERE WITH THE CONSTITUTIONAL AUTHORITY OF THE PRESIDENT AND THE CONGRESS TO CONDUCT FOREIGN COMMERCE AND FOREIGN AFFAIRS, OR OTHERWISE IMPAIR THE TREATY POWER ENJOYED BY THE EXECUTIVE & LEGISLATIVE BRANCHES OF THE FEDERAL GOVERNMENT. See New Jersey, Other States Tread on Thin LegaI Ice: Declare Right to Impair President's & Congress' Constitutional Authority to Conduct Foreign Commerce, ITSSD Journal on Disguised Trade Barriers, at: http://itssddisguisedtradebarriers.blogspot.com/2008/08/new-jersey-other-states-tread-on-thin.html .]

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115 STATE STREET STATE OF VERMONT PHONE: (802) 828-2228
MONTPELIER, VT 05633-5201 SENATE CHAMBER FAX: (802) 828-2424


7 August 2008


Bryan O'Byrne
Trade Compliance Center
International Trade Administration
Deartment of Commerce
14 Street and Constitution Avenue NW
Washington, D.C. 20230


Dear Mr. O'Byrne,


During the 2008 Vermont legislative session, I put forward a bill designed to regulate the movement and handling of toxic materials from used electronics, a so-called se-waste bill.' Imagine my surprise when several weeks later I received a threatening notice [???] from the People's Republic of China's WTO Compliance Center in Beijing, attempting to dissuade me from pursuing this bill in the Vermont Senate. Given your role in the Department of Commerce's Trade Compliance Center I am wondering if you could shed some light on this turn of events.


I chair the Vermont's Senate Natural Resources Committee. I have a Master's Degree in Nutritional Biochemistry (Rutgers) and a Doctorate from the University of Vermont in Planning and Administration, and consequently am very familiar with both the science and legislative politics of electronic waste disposal debates. As a board member of Parent to Parent Vermont and mother of two daughters, I am also deeply concerned about the impact of toxics in our environment. The e-waste bill (S. 256) was designed to address those concerns in a manner that in no way discriminates against foreign electronics manufacturers, or impacts negatively on international trade in any way.

[MS. LYONS - YOU WOULD NEED TO PROVE IT, IF YOU CAN.]

The bill was published in committee on January 7. It notes that "the establishment of a system to provide for the collection and recycling of electronic devices in Vermont is consistent with the state's duty to protect the health, safety, and welfare of its citizens; maintain and enhance the quality of the environment; conserve natural resources; prevent pollution of air, water, and land; and stimulate economic growth." The bill did not pass during this legislative session-due to limited time available during the legislative session, rather than any local opposition.


Opposition, it seems, has come from a very different quarter. By following the 'paper trail' back from China, we have found that the Department of Commerce, and/or the Office of the United States Trade Representative (USTR), notified Beijing of the August 7th 2008 existence of this bill by January 10th -just a couple days after the bill would have been published on a state website. The China WTO-TBT Compliance Center sent a letter challenging provisions of my bill in early April of this year. Most disturbingly for me, China referenced my home address in making their complaint.


I would very much appreciate it if you could respond to these questions and concerns:


a) Is your office designated the national inquiry point' for the WTO-TBT agreement? How do you and your staff interact with other 'national inquiry points', such as the one that wrote me from China?


b) Do you prepare a listing of proposed state laws with any new regulations potential impacts on international trade to notify other countries? Does the Trade Compliance Center have dedicated staff working to review state laws and proposed technical standards?


c) How do you interpret the phrase, "draft regulations"? We understand that the United States has an obligation to notify other WTO member states if the U.S. has proposed changes in regulations that could impact on international commerce. Is it standard procedure to notify trading partners before such laws are passed-that is, well in advance of the actual drafting of regulations?


d) How does the Department of Commerce interpret the provision in the TBT that allows for a comment period before the publication of new technical standards and regulations? Is it Commerce's position that foreign trading partners should be allowed to comment on proposed state laws prior to their debate on the floor of the legislature?


e) Does the Department of Commerce have resources available to assist state legislatures, executive agencies, and offices of attorney general to respond to comments submitted by U.S. trading partners?


The Commerce Department website indicates that the United States previously raised concerns about China's regulatory environment regarding toxic chemicals. Could you briefly state what those concerns were? Do you feel that China's action against Vermont's law-making powers could be a form of retaliation against the US inquiry?


Knowing that China pushed back' on the 2003 European Union-Directive on Waste Electrical and Electronics Equipment-and that most of the action in addressing c-waste concerns within the U.S. is happening at the state level-I am concerned that China's TBT notification to Vermont was an attempt to weaken emerging global standards on e-waste and on cradle-to-cradle' manufacturing standards. A weakening of these standards may very well provide international competitive advantage to Chinese firms, given that they do not have strict c-waste standards to adhere to in their home markets.


Let me close by stating how much we appreciate the work that you do on behalf of American exporters. As a percentage of total exports by value, Vermont is more dependent on 'high-tech' exports than any state in the nation. The Department of Commerce's support of marketing opening efforts, and its 'US Notify' website, are important tools in expanding opportunities for U.S. companies. We are concerned about the competitiveness of our own electronics firms; we wish to maintain the high standards of environment and public health which are a key part of Vermont's market 'brand' and its attractiveness as a business destination; and at the same time, we intend to take every democratic measure necessary to keep e-waste out of our landfills and to protect our environment and the health of Vermont's children.


Thank you very much for your kind attention to these matters, I look forward to hearing from you in writing via my legislative office:


Sincerely yours,


Senator Virginia Lyons


cc: Dana Eidsness, Vermont International Trade Director, USTR State Point of Contact
Kay Wilkie, Chair, InterGovernmental Policy Advisory Committee (IGPAC)
Tiffany Moore, Director, Public Liaison Office, USTR
Peter Shumlin, Senate ProTem, Vermont Legislature
Hon. Peter Welch, Representative
Hon. Bernie Sanders, Senator
Hon. Patrick Leahy, Senator

[HALLELUJAH!!! MS. LYONS IS LEARNING!!]

Democratic Party Trade Protectionism Rhetoric Reveals Promises That Cannot Be Delivered: Unions Beware!

http://167.206.188.34:2000/article/wtMostRead/idUKN0563245720080305?virtualBrandChannel=10112


NAFTA reform just the start - U.S. trade critics


By Doug Palmer


March 5, 2008

WASHINGTON (Reuters) - The next U.S. president needs to fundamentally redirect U.S. trade policy to preserve manufacturing jobs and reduce the huge trade deficit -- not just tinker with the North American Free Trade Agreement, critics of U.S. trade deals said on Wednesday.


"We need to change the whole discussion about investment, about subsidies, about enforcement of trade laws," said Leo Gerard, president of the United Steelworkers union. "How does any country continue to prosper when it's accumulating an average annual trade deficit of about $700 billion per year?"


On Tuesday, Sen. Hillary Clinton revived her chances of winning the Democratic party's presidential nomination by beating her rival Sen. Barack Obama in three of the four states that held contests that day.


In recent weeks, both Clinton and Obama have increased their criticism of NAFTA and said they could pull the United States out of the pact if Mexico and Canada did not agree to renegotiate it.


[EVERYONE KNOWS THAT THEY ARE NOT SPEAKING THE TRUTH]


The two candidates have talked mainly about adding enforceable labor and environmental provisions to the pact.


[LABOR & ENVIRONMENTAL PROVISIONS WILL DO NOTHING TO KEEP JOBS IN AMERICA, WHEN THE BASIC COSTS OF LABOR ARE SO MUCH LESS TO BEGIN WITH. CLINTON & OBAMA PROMISES OF ENFORCEMENT OF THESE TYPES OF PROVISIONS WILL ONLY ANGER OUR TRADING PARTNERS AND FURTHER ALIENATE THE U.S. FROM THE WORLD, EXCEPT, PERHAPS, FROM THE EUROPEAN UNION, WHICH FAVORS SUCH NUANCED TYPES OF TRADE PROTECTIONISM. UNIONS SHOULD BEWARE OF DEMOCRATIC PARTY PROMISES THAT CANNOT BE DELIVERED.]




But Lori Wallach, director of Public Citizen's Global Trade Watch, said it was more important in the short term to change the agreement's investment provisions because they encourage U.S. companies to move jobs to Mexico.


Similar reforms are needed in other trade agreements, including the one that set the terms of China's entry into the World Trade Organization in 2001, she said.


[MS. LORI WALLACH IS ANTI-INDUSTRY, ANTI-FREE MARKET, ANTI-PRIVATE PROPERTY, AS THE ITSSD UNFORTUNATELY FOUND OUT WHILE ATTENDING SEVERAL U.S. GOVERNMENT STAKEHOLDER MEETINGS HELD IN WASHINGTON, DC IN THE PAST. SHE IS 'SHORT' ON BUSINESS & ECONOMICS KNOWLEDGE, BUT 'LONG' ON EMOTION AND RHETORIC.]


Wallach blamed NAFTA, China's WTO accession and other trade agreements for many of the roughly 3 million manufacturing jobs the United States has lost since 2000.


[UNFORTUNATELY, MS. WALLACH IS OUT OF TOUCH WITH REALITY. U.S. MANUFACTURERS FROM NUMEROUS INDUSTRY SECTORS HAVE BEEN FALLING OVER EACH OTHER TO MOVE MANUFACTURING JOBS & INVESTMENTS OVERSEAS, ESPECIALLY TO CHINA, SINCE THE MID-1990'S WHEN THE WORLD TRADE ORGANIZATION WAS CREATED. THE WTO PROVIDED FOR THE EVENTUAL PHASE-OUT (OVER A TEN YEAR PERIOD SPANNING 1995-2004) OF IMPORT QUOTAS, INCLUDING U.S. IMPORT QUOTAS IMPOSED ON CHINESE TEXTILES, WHICH FINALLY FELL TO ZERO, PURSUANT TO THE WTO AGREEMENT ON TEXTILES AND CLOTHING (ATC), ON DECEMBER 31, 2004. THE U.S. IS STILL PERMITTED, BY A BILATERAL AGREEMENT REACHED WITH CHINA DURING NOVEMBER 2005, TO IMPOSE QUOTA RESTRICTIONS ON CERTAIN CHINESE TEXTILE EXPORTS UNTIL DECEMBER 31, 2008. SEE: http://www.ustr.gov/assets/Document_Library/Fact_Sheets/2005/asset_upload_file813_8339.pdf CHINA'S VIRTUAL MONOPOLIZATION OF THE WORLD TEXTILE MARKET HAS EVEN PLACED TURKEY'S FORMIDABLE TEXTILE INDUSTRY IN A NONCOMPETITIVE POSITION. PERHAPS INDIA POSES THE ONLY REAL CHALLENGE. WHILE RICARDIAN SPECIALIZATION PROVIDES THE WORLD WITH AN OVERALL BENEFIT - AFFORDABLE TEXTILES, THERE WILL BE LOSERS, NAMELY LABOR, IN MOST OTHER COUNTRIES.


CHINA'S ACCESSION TO THE WTO DURING DECEMBER 2001 SOLIDIFIED CHINA'S PLACE AMONG THE WORLD'S MAJOR TRADING NATIONS, AND THUS BEGAN THE PROCESS OF SLOWLY OPENING UP CHINA'S MARKETS TO FOREIGN INVESTMENT. IF ANYTHING, CHINA MUST BE PREVENTED FROM MANIPULATING ITS FOREIGN INVESTMENT RULES AS DISGUISED MARKET ACCESS BARRIERS. IN ADDITION, CHINA MUST BE HELD TO STRICT WTO STANDARDS AS CONCERNS ITS INSUFFICIENT PROTECTION OF U.S. INTELLECTUAL PROPERTY RIGHTS. SO, YES, MS. WALLACH, THERE IS A NEED FOR ENFORCEMENT OF WTO RULES TO SAVE U.S. JOBS & KNOW-HOW. HOWEVER, ENFORCING WTO LABOR OR ENVIRONMENTAL RULES WILL NOT BRING BACK U.S. JOBS.]


The Bush administration -- noting that U.S. manufacturing output and exports set records last year -- argues that increased worker productivity and advances in manufacturing technology account for many of the lost jobs.


Also, total U.S. employment has grown 24 percent since Congress approved NAFTA in 1993, and U.S. unemployment has averaged 5.1 percent since the pact went into force compared to 7.1 percent in 1980 to 1993, the U.S. Trade Representative's office said in a NAFTA fact sheet.


The Steelworkers' Gerard called USTR's statistics "bullshit" because they gloss over real job losses in key industrial sectors such as steel and autos.


[U.S. AUTO MANUFACTURERS UNFORTUNATELY DO NOT MAKE QUALITY PRODUCTS THAT CAN EFFECTIVELY COMPETE WITH THE LIKES OF TOYOTA, NISSAN & HONDA, LET ALONE, KIA & HUNDAI. THERE ARE NO CHINESE MANUFACTURED CARS EXPORTED TO THE U.S. DUE TO MUCH LOWER BASIC LABOR COSTS IN INDIA & CHINA, THE U.S. STEEL INDUSTRY BEGAN MIGRATING THERE YEARS AGO. THE DEMOCRATS ONLY NEED LOOK AT FORMER U.S. STEEL TOWNS SUCH AS PITTSBURGH TO SEE HOW JOBS CAN BE CREATED WITHOUT TRADE PROTECTIONISM. PITTSBURG HAS SINCE RECREATED ITSELF AS A HI-TECHNOLOGY RESEARCH & START-UP MECCA. THE PROBLEM IS NOT ONLY A CHINESE PROBLEM. IT IS ALSO AMERICAN RELUCTANCE TO ADAPT TO CHANGE.]


NAFTA ALSO MEANS CHINA


The next president also needs to take a tougher stance on trade with China, which is responsible for a large portion of U.S. trade gap, said, Sen. Sherrod Brown, Ohio Democrat.


"In my state and in much of middle class America, NAFTA stands for trade policy generally," Brown said.


Many lawmakers believe Beijing deliberately undervalues its currency to give its companies a trade advantage.


Brown said he and other freshmen Democratic senators would continue pushing this year for legislation aimed at forcing China to revalue its currency, and have drawn a line in the sand against approving a free trade pact with Colombia.


[BROWN & OTHER DEMOCRATS ARE PLAYING POLITICAL ROULETTE HERE. THIS IS A FOOLISH GAME OF LOSE-LOSE. CONGRESSIONAL DEMOCRATS SIMPLY WILL NOT ADMIT TO THEIR LIBERAL CONSTITUENCIES THAT THEY CANNOT BRING AMERICAN JOBS BACK. THIS IS NOTHING MORE THAN VOTE PANDERING.]


In a separate speech, U.S. Trade Representative Susan Schwab said NAFTA had been good for all three countries and warned reopening it could backfire on the United States.


"The notion that you can reopen an agreement like NAFTA and not expect Canada or Mexico to ask for things from us that they didn't get last time" is unrealistic, she said.


Instead of preserving U.S. jobs, changing the pact could put at least some jobs at risk, Schwab said.


She described Clinton and Obama's sparring over who was toughest on NAFTA as a "rhetorical race to the bottom."

Congressman Rangel and Other House Ways & Means Committee Majority Members Provide Political Cover for Clinton & Obama to Promote Trade Protectionism

http://waysandmeans.house.gov/


U.S. Must Enforce Laws to Break Down Trade Barriers


March 28, 2008


Committee on Ways and Means, U.S. House of Representatives


WASHINGTON, DC – Senior House Democrats today sent a letter to President Bush, renewing their call for stricter enforcement of U.S. rights under trade agreements. The letter was sent in anticipation of the Administration’s annual "National Trade Estimate" (NTE) report listing barriers to U.S. exports.

[The 2008 National Trade Estimate (NTE) Report is accessible here:
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2008/2008_NTE_Report/asset_upload_file365_14652.pdf ].

In their letter, the Democrats expressed hope that the Administration would move past merely inventorying the systemic, recurring trade barriers that U.S. companies face, and, and to take a positive step forward and begin enforcing U.S. rights more vigorously."


In the Democrats’ view, stricter enforcement of trade laws would avoid further growth of the U.S. trade deficit and unsustainable levels of foreign-owned U.S. debt.


In 2007, the U.S. trade deficit was $711.6 billion – the third highest in history and a shocking five percent of the U.S. economy. Over the past six years alone, foreign-owned debt has more than doubled, currently standing at $2.4 trillion or 17 percent of U.S. gross domestic product (GDP). As noted in the letter, the Bush Administration has accumulated more debt to foreign governments and individuals than all previous administrations combined.


The Democrats' letter is accessible here: http://waysandmeans.house.gov/media/pdf/110/cbr%20potus.pdf .


[A REVIEW OF THE POINTS MADE IN THIS LETTER WILL REVEAL CERTAIN TRUTHS, THEY BEING: 1) THE ADMINISTRATION ARGUABLY HAS FAILED TO PROTECT U.S. PROPERTY RIGHTS BY NOT VIGOROUSLY ENFORCING WORLD TRADE ORGANIZATION (WTO) RULES AGAINST VIOLATING WTO MEMBER NATIONS; 2) THE U.S. TRADE DEFICIT NO LONGER REFLECTS STRICTLY LOW-COST, VALUE-ADDED IMPORTS - RATHER IT NOW INCLUDES ALSO HIGH TECHNOLOGY IMPORTS DUE TO CORPORATE OUTSOURCING/ OFFSHORING; AND 3) THE RESULTING TRADE DEFICITS FROM NONENFORCEMENT OF WTO LAWS AND THE GROWING HI-TECHNOLOGY IMPORTS ARGUABLY CREATES MORE FOREIGN-OWNED U.S. DEBT AS U.S. CITIZENS BUY MORE & MORE OF PRODUCTS DESIGNED, DEVELOPED & MANUFACTURED FROM OVERSEAS SOURCES ON CREDIT. ]


[AND, ARGUABLY, THE USTR SHOULD HAVE LONG AGO BEGUN CONSULTATIONS WITH VARIOUS U.S. KEY TRADING PARTNERS, AS A PRESAGE TO COMMENCING A POSSIBLE WTO ACTION AGAINST PARTICULAR WTO MEMBER GOVERNMENTS IF U.S. CONCERNS ABOUT MARKET ACCESS TRADE BARRIERS ARE NOT ADEQUATELY ADDRESSED.


THE QUESTION, HOWEVER, IS WHICH KEY TRADING PARTNERS HAVE IMPOSED THE MOST EXTENSIVE, SYSTEMIC AND DAMAGING TRADE BARRIERS AGAINST CRITICAL U.S. PRODUCTS AND PROCESSES, OR HAVE DIMINISHED THE VALUE OF OR OTHERWISE EXPROPRIATED KEY U.S. ASSETS UNDERLYING HI-TECHNOLOGIES WHICH SERVE AS THE CORE OF AMERICA'S 21ST CENTURY ECONOMY?? HERE IS WHERE THE RANGEL REPORT GOES ASTRAY AND IS ARGUABLY DISINGENUOUS. THE RANGEL LETTER FOCUSES ON THE FOLLOWING U.S. TRADING PARTNERS: CANADA, CHINA, THE EUROPEAN UNION, JAPAN, KOREA, MEXICO RUSSIA AND THE UNITED KINGDOM].


[IT IS INTERESTING TO SEE IN THE RANGEL LETTER THAT WHILE THE EUROPEAN UNION (EU) IS INCLUDED AS A KEY U.S. TRADING PARTNER WITH WHICH THE USTR SHOULD ENGAGE IN CONSULTATIONS TO PROTECT U.S. RIGHTS, NOT MUCH IS MENTIONED ABOUT THE MANY VERY EXPENSIVE AND COMPLEX NON-TARIFF ENVIRONMENTAL AND HEALTH (SUSTAINABLE DEVELOPMENT)-RELATED SANITARY AND PHYTOSANITARY, LABELING & TRACEABILITY, PRE-MARKET REGISTRATION, CONFORMITY ASSESSMENT REGULATORY-BASED TECHNICAL BARRIERS TO TRADE WHICH THE EU HAS ADMITTEDLY ERECTED AGAINST THE U.S. SINCE AT LEAST 2002. THESE REGULATORY RESTRICTIONS WHICH DOUBLE AS DISGUISED TRADE BARRIERS, HAVE AFFECTED BILLIONS OF DOLLARS $$$$ OF U.S. EXPORTS, AS WELL AS, DIMINISHED THE EXERCISE AND VALUE OF U.S. PROPERTY RIGHTS. CONSEQUENTLY, THEY HAVE RESULTED IN A SIGNIFICANT TRADE DEFICIT WITH EUROPE, WHICH THE RANGEL REPORT FAILS TO MENTION.


APPARENTLY, THERE IS A 'GOOD' REASON FOR THIS. MR. RANGEL AND HIS COLLEAGUES ARE UNLIKELY TO ADMIT IT, BUT THEY WISH TO ADOPT THESE VERY SAME EXPENSIVE AND COMPLEX REGULATORY REQUIREMENTS HERE IN AMERICA SO THAT AMERICAN BUSINESS ARE PLACED ON THE SAME COSTLY FOOTING AS THEIR EUROPEAN COUNTERPARTS. THIS IS WHAT THE DEMOCRATS AND THE EUROPEANS REFER TO AS 'LEVELING THE PLAYING FIELD' OR TRANSATLANTIC 'REGULATORY HARMONIZATION'. PERHAPS, THIS IS LARGELY WHY CONGRESSMAN RANGEL AND HIS COLLEAGUES HAVE EFFECTIVELY GIVEN EUROPE A 'PASS'.


INDEED, REGULATORY RESTRICTIONS NOW LOOK POLITICALLY PALATABLE TO THE DEMOCRATIC PARTY PRESIDENTIAL CANDIDATES AS A 'QUICK FIX' FOR THE CURRENT TRADE DEFICITS, EVEN THOUGH THEY KNOW FULL WELL THAT EARLY 20TH CENTURY HISTORY HAS SHOWN HOW TRADE PROTECTIONISM BY ONE COUNTRY CAN DEVOLVE INTO A SERIES OF SIMILAR PRACTICES EMPLOYED BY OTHER NATIONS THAT RESULT IN MORE & MORE TRADE PROTECTIONIST DEVICES BEING ERECTED. IN FACT, THE TRADE PROTECTIONISM OF THAT ERA WAS PARTLY RESPONSIBLE FOR THE EVENTS THAT LED TO WORLD WAR II!!! THE INTERNATIONAL TRADING SYSTEM WAS CREATED TO PREVENT THAT FROM EVER OCCURRING AGAIN.


[IN ADDITION, THE RANGEL LETTER FAILS TO MENTION EITHER BRAZIL OR THAILAND, TWO OF THE LEADING NATIONS RESPONSIBLE FOR TRYING TO CHANGE THE INTERNATIONAL LEGAL PARADIGM FOR INTELLECTUAL PROPERTY - PATENTS, COPYRIGHTS & TRADE SECRETS, SO THAT THEY MAY ACQUIRE U.S. SCIENCE & TECHNOLOGICAL KNOW-HOW AT CONCESSION-RATE PRICES!!! DOCUMENTARY EVIDENCE DEMONSTRATES HOW THESE TWO NATIONS HAVE, FOR AT LEAST 8 YEARS, LED AN INTERNATIONAL GROUP OF DEVELOPING COUNTRIES, WITH THE ASSISTANCE OF WELL-FUNDED HEALTH & INFORMATION ACTIVIST GROUPS, TO CHANGE INTERNATIONAL TRADE, INTELLECTUAL PROPERTY AND HEALTH LAW. THEY HAVE UTILIZED A NUMBER OF DIFFERENT UNITED NATIONS AGENCIES & ORGANIZATIONS TO CONVERT PRIVATE INTELLECTUAL PROPERTY RIGHTS INTO THE PUBLIC INTERNATIONAL GOODS OF FREE HEALTHCARE AND FREE DIGITAL KNOWLEDGE. BRAZIL AND THAILAND HAVE WORKED TOGETHER IN THE WTO, WORLD HEALTH ORGANIZATION (WHO), WORLD INTELLECTUAL PROPERTY ORGANIZATION (WIPO), THE UN COMMISSION ON HUMAN RIGHTS (UNCHR), THE UN DEVELOPMENT PROGRAM (UNDP) AND UN EDUCATION, SCIENCE & CULTURAL ORGANIZATION (UNESCO). IN FACT, BOTH BRAZIL AND THAILAND HAVE, WITHOUT LEGAL JUSTIFICATION, ISSUED COMPULSORY LICENSES AGAINST U.S.-OWNED DRUG PATENTS, WHICH IS ESSENTIALLY THE SAME THING AS A GOVERNMENT DECLARING EMINENT DOMAIN ON ONE'S PRIVATELY OWNED HOME. INTERESTINGLY, U.S. SENATOR PATRICK LEAHY AND OTHER CONGRESSIONAL DEMOCRATS HAVE PROPOSED LEGISLATION WHICH WOULD ALLOW THE U.S. GOVERNMENT TO DECLARE COMPULSORY LICENSES ON THE PATENTS AND COPYRIGHTS OF U.S. TAXPAYER-OWNED HI-TECHNOLOGIES!!! PERHAPS, THIS IS LARGELY WHY CONGRESSMAN RANGEL AND HIS COLLEAGUES HAVE GIVEN BRAZIL AND THAILAND A 'PASS'.


[INSTEAD, MR. RANGEL AND HIS COLLEAGUES DEVOTE CONSIDERABLE INK TO 'BASHING CHINA' WHICH, FOR SOME UNEXPLAINABLE REASON, DEMOCRATIC POLITICIANS ARE OBSSESSED WITH, AS ARE THEIR EUROPEAN COMMISSION COUNTERPARTS.]


[A CLOSE REVIEW OF THE NATIONAL TRADE ESTIMATE REPORT WILL REVEAL THAT EUROPE IS SECOND ONLY TO CHINA IN THE NUMBER OF 'TRADE BARRIERS' LISTED AND DESCRIBED. THE REPORT DEVOTES 45 PAGES TO EUROPE, AND 67 PAGES TO CHINA, BUT EUROPE IS NOT REALLY BEING FOCUSED ON BY MR. RANGEL!!].


FURTHERMORE, THE NATIONAL TRADE ESTIMATE REPORT SHOWS THAT THE FOLLOWING COUNTRIES HAVE BETWEEN 10 and 20 PAGES OF DESCRIBED TRADE BARRIERS, BUT ONLY JAPAN & RUSSIA ARE MENTIONED, NOT TAIWAN, SOUTH AFRICAN CUSTOMS UNION OR INDIA. HAVE MR. RANGEL AND HIS COLLEAGUES GIVEN THESE COUNTRIES A 'PASS' AS WELL???


[THE FOLLOWING COUNTRIES HAVE FEWER THAN 10 PAGES ALLOCATED TO THEM, BUT THEY ARE ALSO INCLUDED ON MR. RANGEL'S 'BAD BOY' LIST:

- KOREA – 5 PAGES;
- CANADA – 10 PAGES;
- UNITED KINGDOM – ¼ PAGE.

WHAT IS INTERESTING HERE IS HOW THE U.K. IS CITED FOR PHARMACEUTICAL MARKET ACCESS BARRIERS BASED ON OVERLY CONTROLLED PRICING SCHEMES: THIS PROVIDES ONE MAJOR EXAMPLE OF WHY U.S. DRUG PRICES ARE SO HIGH – NAMELY, B/C U.S. PHARMA COMPANIES FIRST SUBSIDIZE THE COST OF DRUG DEVELOPMENT IN OTHER COUNTRIES WHICH DO NOT PAY HIGH ENOUGH PRICES FOR APPROVED DRUGS THAT WOULD PROVIDE THESE SAME U.S. COMPANIES WITH ADEQUATE RETURN ON INVESTMENT (ROI) TO REINVEST INTO NEW INNOVATIVE PRODUCTS.


ARGUABLY, IF MR. RANGEL AND HIS COLLEAGUES ON THE COMMITTEE ON WAYS AND MEANS FOCUSED INSTEAD ON ASKING THE ADMINISTRATION TO NEGOTIATE WITH OTHER COUNTRIES, INCLUDING THOSE IN EUROPE, TO RAISE THE ACCEPTABLE LEVEL OF DRUG PRICES PER THEIR GOVERNMENT-RUN MEDICINE REIMBURSEMENT PROGRAMS, SAY 10-15%, THIS WOULD EASE PRICE PRESSURES IN THE U.S. SOMEWHAT, AND MOST LIKELY RESULT IN MORE AFFORDABLE, CUTTING-EDGE MEDICINES].


[The OECD nations, including the United States, have effectively been subsidizing the health care costs of developing country governments and citizens. Unfortunately, this subsidization has not occurred with all OECD members paying their fair share. Considering the extent of pharmaceutical price controls currently being imposed in countries such as Australia, Canada, Japan, and the Member States of the EU, some of which are extremely proud of their social welfare systems, it is arguable that Americans are likely to bear most of these costs, especially in the near term.


In fact, this concern was duly noted within a recent 2004 United States Commerce Department study evaluating pharmaceutical pricing in high income countries. It called for higher patented drug prices in Canada, Europe, Japan, Australia and other OECD countries in order to reduce the degree to which American consumers subsidize global drug development costs.


The report concludes that these countries have been free-riding off American patent rent extraction by setting government reimbursement prices too low. . . A recent speculative estimate, based on industry data and calculations . . . suggests that eliminating OECD price controls on patented drugs would increase revenues by $17.6 to $26.7 billion per
year, with additional R&D of $5.3 to $8 billion per year. Implicit in this estimate is the assumption that about a third of incremental revenues would be spent on R&D. . . ."

See Kevin Outterson, Nonrival Access to Pharmaceutical Knowledge, Submitted to the CIPIH (Jan. 3, 2005), at note 190, ¶ 7.2., available at: http://www.who.int/intellectualproperty/submissions/KevinOutterson3january.pdf. ]

Clinton & Obama Protectionist Trade Rhetoric Will Harm Developing Country Economic Growth Prospects and America's Image Abroad

http://www.newsweek.com/id/117841?from=rss


What the World Is Hearing


A senior Latin American diplomat says, 'We might find ourselves nostalgic for Bush, who is brave on trade.'


By Fareed Zakaria


NEWSWEEK

Updated: 1:01 PM ET Mar 1, 2008


Despite their spirited squabbling, the two Democratic candidates are united in the view that one of the big benefits of electing either of them would be an improvement in America's reputation and relations with the world. Hillary Clinton promises to send special envoys to foreign capitals the day after she's elected. Barack Obama offers to reach out to America's foes as well as friends. Unfortunately none of this will matter if they continue to spout dangerous and ill-informed rhetoric about trade.


For the rest of the world—particularly poorer countries—nice speeches about multilateralism are well and good. But what they really want is for the United States to continue its historic role in opening up the world economy. For a struggling farmer in Kenya, access to world markets is far more important than foreign aid or U.N. programs. If the candidates think they will charm the world while adopting protectionist policies, they are in for a surprise.


Already the mood is shifting abroad. Listening to the Democrats on trade "is enough to send jitters down the spine of most in India," says the Times Now TV channel in New Delhi. The Canadian press has shared in the global swoon for Obama, but is now beginning to ask questions. "What he is actually saying—and how it might affect Canada—may come as a surprise to otherwise devout Barack boosters," writes Greg Weston in the Edmonton Sun. The African press has been reporting on George W. Bush's visit there with affection and, in some cases, by contrasting his views on trade with the Democratic candidates'. The Bangkok Post has compared the Democrats unfavorably with John McCain and his vision of an East Asia bound together, and to the United States, by expanding trade ties.

For Obama, the backlash could be greatest because he's raised the highest hopes. A senior Latin American diplomat, who asked to remain unnamed because of the sensitivity of the topic, says, "Look, we're all watching Obama with bated breath and hoping [his election] will be a transforming moment for the world. But now that we're listening to him on trade—the issue that affects us so deeply—we realize that maybe he doesn't wish us well. In fact, we might find ourselves nostalgic for Bush, who is brave and courageous on trade and immigration."


The facts about trade have been too well rehearsed to go into them in any great detail, but let me point out that NAFTA has been pivotal in transforming Mexico into a stable democracy with a growing economy. And, in Lawrence Summers's words, "[it] didn't cost the United States a penny. It contributed to the strength of our economy because of more exports and because imports helped to reduce inflation." Trade between the NAFTA countries has boomed since 1993, growing by about $700 billion.


There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.


An argument one often hears from the candidates' supporters is that they don't really mean what they say, that their actual proposals on trade agreements involve only minor tinkering. It is an odd defense of candidates promising change, honesty and a new approach to politics to say that they are being cynical and hypocritical. Besides, both candidates are proposing to renegotiate NAFTA, which is a terrible idea. (And one that has prompted the Canadian prime minister to retort that if that happens, his country, too, would like to get more concessions from the United States.) Hillary Clinton has proposed that free-trade deals be re-evaluated every five years, which is absurd. The benefits of trade deals rest on the fact that they are permanent.


But both candidates surely know that no one is really paying attention to their policy papers on the topic. It is their general attitude and rhetoric that matter. And on this crucial topic they are pandering to the worst instincts of Americans, encouraging a form of xenophobia and chauvinism and validating the utterly self-defeating idea of protectionism.


I know, I know. This is all about the Democratic primaries in states like Ohio and the support of unions. But you can't target these messages so easily anymore. What is said in Ohio is heard in Ghana and Bangladesh and Colombia as well. And isn't the point of leadership to educate and elevate people, not to pander and drag them into the swamp of ignorance and fear? There is a way to speak about the pain of globalization—and about the need for investments in retraining, education, health care and infrastructure—so that we can both compete but also absorb the shocks of a changing global economy. Unfortunately that is not what the Democratic candidates are talking about.


I'm not even sure that protectionist rhetoric works that well in a general election. Americans like optimists. They want leaders who look out at the world and see broad, sunlit uplands. Railing against Mexicans, Chinese and Indians for stealing American jobs smacks of anger, paranoia and fear of the future. Americans want hope, as Obama says, "hope in the face of difficulty, hope in the face of uncertainty, the audacity of hope." Where is that courage now?


URL: http://www.newsweek.com/id/117841



http://news.yahoo.com/s/mcclatchy/20080303/wl_mcclatchy/2867869

Mexicans say changing NAFTA may force them to move to U.S.

By Franco Ordonez, McClatchy Newspapers
Mon Mar 3, 6:17 PM ET



MEXICO CITY — Jesus Velasquez doesn't want to move to the United States. He fears, however, that he may have to if he loses his job selling avocados. Velasquez, 36, says he and his family have benefited from the North American Free Trade Agreement. For him, the alternative is to immigrate to the United States.


"The trade act is good because we have jobs," he said Sunday, speaking loudly over the clamor of hundreds of workers hauling fruits and vegetables off rumbling trucks. "If there are no jobs, more people are going to go to the U.S. I have so many friends who can't find jobs and leave."


As voters in Ohio , Texas , Rhode Island and Vermont prepare to go to the polls Tuesday, some workers and distributors at this 800-acre food market, one of the biggest in the world, are expressing concern about presidential candidates Hillary Clinton's and Barack Obama's threats to pull out of NAFTA unless it's renegotiated.


NAFTA is unpopular in Ohio, a key battleground state for Clinton and Obama, where thousands of manufacturing workers have lost jobs.


Several vendors at the Central de Abasto food market said NAFTA isn't perfect. Prices on many products have risen, and many corn farmers said they've been run out of business because of the influx of cheaper American grown corn. But overall, they say, NAFTA has been good for the country, and they worry what changes the U.S. would seek should it return to the negotiating table with Mexico and Canada.


"People are worried," said Gerardo Peralta, 55, who sells rice, nuts and condiments. "If the U.S. tries to renegotiate, they are going to do what's best for them. That could be bad for Mexico."


Some Mexican leaders sought to downplay the candidates' statements as political rhetoric and "campaign talk."

Sen. Ricardo Garcia Cervantes said that any renegotiation of NAFTA would be based on the issues and not on the "heated statements" made by the American political candidates in hopes of gaining their party's nomination.


"In this electoral environment, one that we have to be very attentive to, we also have to be aware that many of these declarations by the Democratic candidates and Republicans are made for gaining votes," Garcia Cervantes , chairman of the Mexican Foreign Relations Commission for North America , said in a statement.


Mexico has gained because of NAFTA, according to Mexican Economy Secretary Eduardo Soto. He told a gathering last week of U.S., Canadian, and Mexican representatives that the Mexican economy has grown 51 percent because of NAFTA, that nearly 5 million jobs have been generated and that exports to the U.S. and Canada have multiplied five times.


"As representatives of the Mexican government, we do not want to insert ourselves into the U.S. political campaigns," he said. "However, we are convinced that what North America needs is more integration and not less integration. North America needs to look to the future and not return to the past."


Avocados have flourished under NAFTA, but not everyone is in favor of the trade agreement. Last month, hundreds of thousands of farmers clogged Mexico City streets with tractors to protest lifting corn tariffs under the free-trade agreement.


Corn farmers said the entry of cheap imported corn has undermined their profits, and towns are emptying because thousands of small farms have gone out of business. Many head to the U.S. illegally looking for better pay.


"It's not that we're against free trade," said Victor Suarez, the executive director of ANEC, a farmers' coalition, who helped organize the Mexico City rally. "We're in favor of free trade that is balanced— not one that is for corporations and monopolies. We want free trade that is fair for all parties involved."


(Ordonez reports for The Charlotte Observer.)

WTO Finds That China Employed Illegal Protectionist Border Tariffs & Indirect 'Local-Working' Subsidies

WTO rules against China on car parts; Finds in favour of Canada, U.S. and EU


http://www.theglobeandmail.com/servlet/story/LAC.20080214.RCHINA14/TPStory/Business


theglobeandmail.com


STEVEN CHASE


With files from AP


February 14, 2008


OTTAWA -- The World Trade Organization has for the first time ruled against China for breaking global trade law in a precedent-setting case over car part imports that is expected to spur further challenges aimed at forcing Beijing to open its markets.


Yesterday's interim decision by the WTO found in favour of Canada, the United States and the European Union, all of which complained that China is raising unfair barriers to imports of foreign car parts.


China only joined the 151-member WTO in 2001 and while the state-heavy economy faces several challenges to its trade behaviour at the global body, yesterday's ruling is the first decision handed down.


International Trade Minister David Emerson cheered the ruling - which is officially secret until March despite being leaked yesterday - saying the decision may help open up a new market for
Canadian auto parts makers.


Print Edition - Section Front


"Hopefully it will bring about change in the practices that China's been applying," he said. "With our companies in such tough shape right now, a growing market is critically important to restoring health to our Canadian auto parts industry."


The WTO ruling is only an interim decision but the global referee's adjudicators have never changed their minds in the final version of their rulings. It could take more than a year for the case to conclude, but when it does, China may be forced to alter its behaviour or face trade sanctions from Ottawa, Washington and Brussels.


The WTO reportedly found that China was breaking agreed-upon global trade rules by taxing imports of car parts at the same higher rate levied on foreign-assembled autos.


"It's rendering it uneconomic for Canadian parts suppliers in this market," Mr. Emerson said of China's tax rate.


Toronto trade lawyer Lawrence Herman with Cassels Brock & Blackwell LLP predicts more WTO challenges of Chinese trade barriers.


Mr. Herman noted China's growing importance as an export destination, particularly for U.S. goods. "I think it's the beginning of many more such cases where the U.S. is taking on China, rightly or wrongly, for not complying with WTO rules," he said. "The huge U.S. trade deficit with China can't be ignored."


U.S. exports to China have more than quadrupled between 1996 and 2006, when they hit $55.2-billion (U.S.). That same year, the U.S. trade deficit with China hit $233-billion.


The three trade powers argued at the WTO that China's tariff was discouraging auto makers from using imported car parts for the vehicles they assemble in China. As a result, car parts firms had an incentive to shift production to China, costing Americans, Canadians and Europeans their jobs, they said.


The ruling will be closely watched by makers of batteries and brakes, seats and spark plugs on both sides of the Atlantic, including U.S.-based Delphi Corp. (General Motors' former parts supplier) and Robert Bosch GmbH in Germany.


China, which can appeal the ruling, claims the tariffs are intended to stop whole cars being imported in large chunks, allowing companies to avoid the higher tariff rates for finished cars. It argues all measures are consistent with WTO rules and do not discriminate against foreign auto parts.


But the U.S. and EU say China promised not to treat parts as whole cars when it joined the WTO in 2001.


[This point is significant in light of the prior 1998 WTO case Indonesia – Certain Measures Affecting the Automobile Industry (WT/DS54,55,59 & 64/R). US and EU allege that two sets of Indonesia measures constitute subsidies that cause ‘serious prejudice’ to their interests within the meaning of SCM Art. 5 (c). They alleged that the effect of the ‘subsidies’ was to displace or impede imports of ‘like’ products from the EC and US into the subsidizing Indonesian market. In other words, the prices of 'like' EC and US autos were significantly undercut by the subsidized national car company, and thus discriminated against in the marketplace.


The first set of measures entailed a ‘grant’ of National Car company status to Indonesian car companies that met specified criteria as to ownership of facilities, use of trademarks and technology. The ‘benefits’ provided were exemption from luxury tax on car National Car sales and exemption from import duties. They were maintainable by meeting increasing local content requirements.


The second set of measures provided that National Cars manufactured in a foreign country by Indonesian nationals and that fulfill (20%) local content requirements shall be treated the same as ‘National Cars’ (exemption from luxury tax and import duties). The 20% local content requirement was deemed satisfied if the overseas car manufacturer ‘counter-purchases’ Indonesian parts and components that account for 25% or more of the cost & freight (C&F) value of the imported cars. Indonesia maintained a duty of 200 percent on imports of finished passenger cars. As a result, almost ALL passenger cars imported into Indonesia including the EC and US models in question were imported as ‘completely knocked down’ (CKD) kits and assembled in Indonesia.


The WTO Appellate Body (AB) did not consider that an unassembled product ipso facto was NOT a ‘like’ product to that product assembled. The AB considered that a tariff classification was a useful tool in ‘like’ product analysis. It noted how the Gen’l Rules for Interpreting Harmonized System stated that any reference in a heading to an article shall include a reference to that article incomplete or unfinished, provided, the incomplete or unfinished article has the essential character of the complete or finished article.


The AB believed that a comparable approach to the relation between assembled and unassembled products made good sense in the context of that dispute. Due to the high Indonesian duties, ‘completely built-up, EC and US producers shipped ‘cars in a box’ to Indonesia. Consequently, they could properly be considered to have characteristics closely resembling those of a completed car. In WTO jurisprudence, the AB employed a ‘Big Accordion’ of ‘likeness’.]

"It will be instructive to see how China responds," U.S. Trade Representative Susan Schwab said in a recent interview with Associated Press. "If, as we hope and expect, China will be found in contravention of its WTO obligations, hopefully that will help those forces within China that have been advocating reform."

Are Cuban Trade Sanctions a Vestige of the Past??

http://www.latimes.com/business/la-fi-cubaecon20feb20,1,7782700.story?track=rss


From the Los Angeles Times


FIDEL CASTRO STEPS DOWN: U.S. businesses are eager to jump in


For many, the question is when, not if, trade barriers against Cuba will be lifted, a veteran observer says.


By Marla Dickerson

Los Angeles Times Staff WriterFebruary 20, 2008


MEXICO CITY — With Fidel Castro stepping aside, California vegetable growers, Alabama chicken producers and Kansas wheat farmers -- not to mention scores of other nonagricultural businesses -- see new opportunity to push for an expansion of U.S.-Cuba trade.


America has quietly become the largest foreign supplier of food products to the communist nation, thanks to a loosening of the long-standing U.S. trade embargo against the island nation in 2000. U.S. farmers sold an estimated $437 million worth of agricultural products to Cuba last year, according to the U.S.-Cuba Trade and Economic Council. The Cuban government puts the figure even higher, at more than $600 million.


Though the U.S. has limited its trade to mostly agricultural items, economic rivals such as China have been much more aggressive -- cutting deals with Cuba to develop its oil reserves and other natural resources. With a population of more than 11 million just 90 miles off the U.S. coast, Cuba is a largely untapped market for American goods and services.


"We're leaving billions of dollars on the table," said Kirby Jones, president of Alamar Associates, a Maryland-based consulting firm that advises companies interested in doing business in Cuba. "By any measure, [U.S. policy] has been a failure."


U.S. officials said Tuesday that there were no immediate plans for further easing of the 46-year-old trade embargo. Experts said American policymakers would proceed cautiously given that Castro is still alive, and given that Florida, with its powerful anti-Castro lobby of Cuban Americans, may play a decisive role in the U.S. presidential election.


Still, some veteran observers said that Castro's departure marks another small but inevitable step toward closer trade ties with Cuba, particularly at a time when globalization is forcing the U.S. to fight for market share in every corner of the globe.


"Most [American] businesspeople are thinking in terms of 'when' instead of 'if' " the embargo is lifted, said Mario Sacasa, senior vice president for international programs with the Beacon Council, a Miami-based economic development organization. "Their question is always: 'Why does the U.S. trade with other non-democratic governments but not with Cuba?' "


For nearly half a century, the trade embargo has been an unassailable feature of U.S. foreign policy, strongly supported by South Florida's conservative Cuban American community. Thousands of people lost their homes, businesses and other private property to Castro's communist regime, a bitter memory that has shaped U.S. policy ever since.


But another powerful U.S. lobby -- farmers -- has managed to crack that blockade ever so slightly.


Under pressure from agriculture groups, Congress in late 2000 approved sales of commodities and food products to the island, as long as Cuba paid upfront in cash and the transactions weren't handled by U.S. banks.


Despite those tricky terms, trade took off almost immediately. By 2003, the United States had surpassed the European Union as Cuba's largest foreign supplier of agricultural products, according to the U.S. International Trade Commission.


Major exports include corn, chicken, wheat, soybeans and rice. A parade of U.S. representatives and trade delegations have traveled to Cuba in recent years to try to strike trade deals.


But California, America's largest farm state, sells virtually nothing to Cuba. Exports in 2006 totaled a paltry $735,000, mostly in tomatoes, almonds and table grapes, according to the latest figures available from the state.


Last month California sent a large agricultural delegation to Cuba in the hopes of cultivating stronger trade ties with the Caribbean nation. Golden State growers are looking for opportunities wherever they present themselves, said Ken Gilliland, director of international trade for the Western Growers Assn.


He said critics' contention that California farmers would be propping up a communist regime by selling fruit and vegetables to Cuba just doesn't ring true with the state's producers.


"We're not talking about some sensitive technology or computers or arms or anything like that. We're talking about food," Gilliland said. "Practically the whole world is already trading with Cuba." U.S. policy "just kind of puts us growers and producers at a disadvantage."


Countries such as China and Canada are exploring for petroleum in Cuban waters and helping the country develop its nickel reserves. Spanish companies have invested heavily in Cuba's tourism sector, and Brazil is looking to build roads and other infrastructure. India wants to cooperate with Cuba in science and high technology.


Some U.S. firms complain that the Cuban government has pressed them to lobby their legislators for an end to the American trade embargo in exchange for contracts -- a price some have found too steep, according to John Kavulich, a senior policy advisor with the U.S.-Cuba Trade and Economic Council.


"The problem is when the Cubans start putting conditions" on the contracts, said Kavulich, who declined to name companies that have been pressured in such a way.


Kavulich said that so far, U.S. businesspeople have shown little excitement about the changing of the guard in Cuba. "They know that nothing has changed," he said.


Still, consultant Jones said that the real shift that American businesses are waiting for will come out of Washington, not Havana, with the U.S. elections in November.


He said the departure of Castro, an impossibly polarizing figure, combined with new leadership in the White House could lead initially to small changes such as liberalizing U.S. travel restrictions to Cuba -- and perhaps bigger ones down the road.


"It's a recipe for rethinking and change," he said.

Trade Outlook for China: China to Face Growing Trade Frictions

Trade Outlook for China: China to Face Growing Trade Frictions


http://www.china.org.cn/english/business/238596.htm


China.org.cn


January 8, 2008


China is going to face growing trade frictions in the years to come, said Li Ling, director of the Bureau of Fair Trade for Imports and Exports, inside the Ministry of Commerce, during an interview with the Economic Information Daily run by the state Xinhua News Agency.


The whole world will perceive China's rapid development in a more global and strategic view, said Li.


Chinese export products will encounter the most trade frictions around the world, said Li, warning steel, textile, machinery and electronic products and information products against such frictions this year.


As China has successively been the country that is subject to the most anti-dumping investigations in the world for many years, it has also become the country that has encountered the most anti-subsidy investigations in 2007.


Nowadays, trade barriers are set up in more diversified and disguised ways, said the director.


She gave five suggestions to help enterprises to cope with possible frictions:


1) better understanding of WTO rules and trade remedy investigations;

2) positive reactions in case of trade frictions;

3) improvement of internal management;

4) intensified industry discipline and observation of business ethics and market rules;

and

5) better adaptation to the international market.


For more details, please read the full story in Chinese (http://jjckb.xinhuanet.com/wzpd/2008-01/08/content_80555.htm).