IPEF, APEP, etc: New Worker Centered
Model or Not?

The Biden administration has announced regional negotiations, including the Indo-Pacific Economic Framework (IPEF), and has recently suggested they seek similar talks among Latin American countries, as well as talks with Taiwan and other nations. The Biden administration has pledged to create a new “worker-centered” trade agreement model. This is not only smart policy, but politically necessary. Decades of corporate-rigged trade pacts caused such significant harm to people and the planet that the last of such deals, the Trans-Pacific Partnership (TPP), couldn’t garner a majority in Congress during the Obama administration. The TPP debacle proved the old trade model is no longer politically viable.
Creating a new policy requires a new inclusive and transparent process that includes input from the people who will be affected. Past pacts like the TPP were shaped by and for the hundreds of corporate interests that dominate the official U.S. government trade advisory system; and negotiating texts were kept secret.

To date, IPEF and the possible Latin American negotiations – dubbed the Americas Partnership for Economic Prosperity (APEP) by administration officials – have been extremely problematic. The public and Congress have not had meaningful roles in shaping the policy or what countries might be involved. And some administration officials, like Commerce Secretary Gina Raimondo, have announced that Congress won’t have a role or a vote on any resulting pact. The U.S. Constitution grants Congress exclusive authority over the terms of trade, so certainly any agreement that locks in binding rules on what policies Congress can enact requires an early, significant, and ongoing role for Congress and the public.

And, meaningful consultations with the public and Congress require that negotiating texts must be public. Otherwise those who will be affected will have no way of knowing what is being considered. The proposed talks would cover wide ranging issues organized under four “pillars.” This includes trade – with a worrying focus on the “digital trade” agenda Big Tech is pushing – plus climate and infrastructure; strengthening supply chains; and countering tax evasion, bribery, and other financial crimes.

Absent basic guarantees for transparency and robust public and congressional input, these negotiations could undermine, not promote, critical policy goals people nationwide demand and Congress is considering – from ending Big Tech abuses against workers, consumers, and smaller businesses; to ensuring more reliable access to safe and affordable medicines, food, and other goods; to promoting better wages and fair treatment for workers; to protecting the environment.

We know from the TPP what “trade” deals should not be. The TPP text was the result of 500 official U.S. trade advisors representing corporate interests involved in years of closed-door negotiations while the public, press, and Congress were locked out. At the heart of the TPP were new rights for thousands of corporations to sue the U.S. government before a panel of three corporate lawyers that could award unlimited sums, including for loss of future expected profits, to be paid by American taxpayers when the corporations claim U.S. policies violate the new entitlements the TPP would provide them. The TPP also included extreme new monopoly protections for pharmaceutical firms that would have blocked competition and ensured high medicine prices. The deal’s environmental standards, negotiated by Democratic President Barack Obama’s trade ambassador Mike Froman, were a rollback from those included in the last four agreements negotiated by President George W. Bush. The labor standards replicated ones that had failed to stop egregious labor abuses in agreements with other countries, and the TPP included several nations notorious for labor abuses.

The 2020 revised North American Free Trade Agreement (NAFTA) largely eliminated the corporate “Investor-State Dispute Settlement” tribunals at the heart of past pacts and included stronger labor standards and enforcement. But it also maintained NAFTA’s threats to food safety and special monopoly rights for Big Pharma, and it added new powers for Big Tech corporations to continue their abuses against workers and consumers. The revised NAFTA provided a new floor from which to create a new U.S. trade agreement model that delivers for people and the planet. But any prospective deals emerging from the IPEF and APEP process will likely only meet these goals if the process ensures that the countries involved share the same goals and the public and Congress have ongoing roles in the process.

Could IPEF or APEP Talks Implement the Worker-Centered Trade Agenda?

In May 2022, the Biden administration announced the launch of IPEF negotiations and a dozen participating countries. These included Australia, Brunei, India, Indonesia, Japan, Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam. Shortly after, Fiji was added. Many in Congress and civil society expressed concern about the lack of consultation on participating countries and the agenda.

The administration is framing these talks as promoting its worker-centered vision of harnessing trade policy as an instrument to contribute to social welfare, equality and economic security, to combat the climate crisis, to support democratic governance and human rights, and to promote such values at home and abroad. But whether IPEF can meet these goals will depend on what terms any resulting pact includes and what countries ultimately sign on.

Prominent prospective IPEF partners have serious labor problems, including violence against unionists and expansive use of child labor, as documented year after year by U.S. agencies. Many prospective IPEF nationals also have significant human rights problems and include countries controlled by military juntas, a one-party authoritarian government, or an absolute theocratic monarchy. The participation of these countries in the TPP was one reason that deal was unacceptable to many in Congress and to labor unions and civil society groups.

To avoid previous mistakes, the administration must create a process for public and congressional input, including setting standards on labor and human rights that are a precondition for participation in talks. This will be critical to ensuring that any resulting agreements in any of the current four pillars of proposed IPEF talks include strong and enforceable labor, human rights, and environmental standards:

  • Connected Economy: On trade, we will engage comprehensively with our partners on a wide range of issues. We will pursue high-standard rules of the road in the digital economy, including standards on cross-border data flows and data localization. We will work with our partners to seize opportunities and address concerns in the digital economy, in order to ensure small and medium sized enterprises can benefit from the region’s rapidly growing e-commerce sector, while addressing issues is such as online privacy and discriminatory and unethical use of Artificial Intelligence. We will also seek strong labor and environment standards and corporate accountability provisions that promote a race to the top for workers through trade. 
  • Resilient Economy: We will seek first-of-their-kind supply chain commitments that better anticipate and prevent disruptions in supply chains to create a more resilient economy and guard against price spikes that increase costs for American families. We intend to do this by establishing an early warning system, mapping critical mineral supply chains, improving traceability in key sectors, and coordinating on diversification efforts.
  • Clean Economy: We will seek first-of-their-kind commitments on clean energy, decarbonization, and infrastructure that promote good-paying jobs. We will pursue concrete, high-ambition targets that will accelerate efforts to tackle the climate crisis, including in the areas of renewable energy, carbon removal, energy efficiency standards, and new measures to combat methane emissions. 
  • Fair Economy: We will seek commitments to enact and enforce effective tax, anti-money laundering, and anti-bribery regimes that are in line with our existing multilateral obligations to promote a fair economy. These will include provisions on the exchange of tax information, criminalization of bribery in accordance with UN standards, and effective implementation of beneficial ownership recommendations to strengthen our efforts to crack down on corruption.

This is the only way in which IPEF will not incentivize race-to-the-bottom trade that past deals have underpinned.

Latin American Talks Could Be Used to Redress the Issues with the Old FTAs Signed with Latin American Countries

During the opening ceremony of the 2022 Summit of the Americas, President Biden announced an “Americas Partnership for Economic Prosperity” as a prospective new agreement to be negotiated with countries in the Western Hemisphere. Congress was unaware of even the concept of such a deal until days before it was announced. There was no consultation with Congress or the public on the proposal. Like the IPEF, the administration announced participation of many countries that would not make appropriate partners for a “worker-centered” agreement.

The proposed agenda is similar to IPEF: a trade pillar which, according to the White House, will focus on trade, and specifically on “digital trade,” improved labor and environmental standards, and better cooperation on “good regulatory practices” and customs facilitation; resilience in our energy and food supply chains; coordination on decarbonization and infrastructure; and incentives for corporate accountability with respect to taxes and countering financial crimes.

To achieve many of these goals, first, we need to fix the problems created by the old trade agreements that the United States has negotiated with countries of the region. The free trade agreements (FTAs) with Chile, Peru, Colombia, and Panama, as well as the Dominican Republic–Central America Free Trade Agreement (DR-CAFTA), generated a lose-lose situation. They included new rights for corporations to be able to sue the U.S. government and other nations before a panel of three corporate lawyers that could award unlimited sums, including for loss of future expected profits, to be paid by taxpayers. These FTAs also included new monopoly protections for pharmaceutical firms that blocked competition and ensured high medicine prices. All of this while not contributing to the inclusive development of our Latin American partners, nor to the protection of workers rights or the environment.

The first step of any U.S negotiations with Latin American countries, including APEP, must be devising an agenda to revisit these past deals to fix their problems and, finally, promoting a new worker-centered trade agenda in the region.

IPEF and APEP Must Not Be Fora to Replicate Past Digital Trade Rules

Any IPEF or APEP agreement dealing with the digital economy must avoid the Big Tech-friendly rules that impose limits on digital governance and anti-monopoly policies that were included in previous agreements. Instead of this flawed framework, IPEF and APEP countries must create a new model that is focused on cooperative approaches to the real problems of the digital economy, such as online privacy, discriminatory and unethical use of artificial intelligence, and the problems arising from millions of low-value, direct-to-costumer shipments skirting customs controls.

Rethink Trade is fully engaged with the IPEF and APEP processes and will closely monitor the discussions to make sure that the initiatives live up to the promise of a different and better trade deal model.