GAO: "Free Trade" Not Improving Environment, Labor

Max Baucus asked GAO to look at four Free Trade Agreements--Jordan, Singapore, Chile, and Morocco--to measure the economic, environmental, and labor benefits of the FTA. And while the report touts Jordan's 400-person environmental law enforcement force, the reality is that our trade partners are making little progress in environmental and labor issues.

FTA negotiations spurred some labor reforms in each of the selected partners, according to U.S. and partner officials, but progress has been uneven and U.S. engagement minimal. An example cited was Morocco’s enactment of a longstalled overhaul of its labor code. However, partners reported that enforcement of labor laws continues to be a challenge, and some significant labor abuses have emerged. In the FTAs we examined, Labor provided minimal oversight and did not use information it had on partner weaknesses to establish remedial plans or work with partners on improvement.

The selected partners have improved their environmental laws and made other progress, such as establishment of an environmental ministry and a 400- strong environmental law enforcement force in Jordan, according to U.S. and foreign officials. However, partner officials report that enforcement remains a challenge, and U.S. assistance has been limited. Elements needed for assuring partner progress remain absent. Notably, USTR’s lack of compliance plans and sporadic monitoring, State’s lax management of environmental projects, and U.S. agencies’ inaction to translate environmental commitments into reliable funding all limited efforts to promote progress.

The shortcoming in achieving labor or environmental goals, GAO reports, is largely due to the failure of US agencies, particularly the US Trade Representative. In addition, there simply isn't the institutional structure to support efforts to improve labor and environmental conditions.

A reliable, well-functioning monitoring and enforcement effort helps sustain congressional and public confidence in the President’s trade strategy and fosters support for continued trade liberalization. The key steps we have identified in monitoring and enforcing trade agreements include identifying problems, setting priorities, gathering and analyzing information, developing responses, and taking enforcement action. However, according to officials at ILAB, State, and USTR, U.S. agencies are not required to proactively monitor and report on FTA partners’ labor commitments after the agreements enter into force. FTAs rely on passive monitoring structures, through which outside parties can raise concerns that the U.S. government can or must react to.

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U.S. agencies responsible for the implementation of the environmental provisions and cooperation mechanisms lacked key steps in monitoring and enforcing trade agreements (1) identifying problems, (2) setting priorities, (3) gathering and analyzing information, (4) developing responses, and (5) taking enforcement action. USTR is the agency responsible for overseeing the overall implementation of FTAs, and State’s OES is responsible for negotiating the environmental side agreements under the FTAs and implementing cooperative environmental projects. We found that USTR does not proactively monitor the implementation of environmental provisions and that OES lacks a structure to manage and monitor implementation of environmental projects.

This study appears to be preparation to Congressional consideration of the Colombia, Panama, and Korea free trade deals. And what it shows is that--regardless of the claimed economic benefits--the US doesn't have the institutional structure to support the claimed goals of those insisting Free Trade can be "fair."

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