[CTC] Stopping the Race to the Bottom in Trade Policy

Tue Mar 16 05:08:53 PDT 2021

https://prospect.org/economy/stopping-the-race-to-the-bottom-in-trade-policy/

Stopping the Race to the Bottom in Trade Policy
Agribusiness giant Bayer/Monsanto claims that Mexico’s proposed restrictions on the active ingredient in its Roundup herbicide violate the country’s trade agreement with the U.S. Will the Biden administration agree?

BY KAREN HANSEN-KUHN <https://prospect.org/topics/karen-hansen-kuhn/>, TIMOTHY A. WISE <https://prospect.org/topics/timothy-a.-wise/> MARCH 15, 2021

With the confirmation of Katherine Tai as President Biden’s new U.S. trade representative expected in the coming days, will we see a new approach to trade? In her confirmation hearing <https://truthout.org/articles/bidens-trade-rep-nominee-backs-policies-that-hinder-global-vaccine-distribution/>, Tai acknowledged that trade had failed to “bring up standards with respect to workers and environmental protection,” instead often producing “a race to the bottom.”
Tai’s nomination received bipartisan support, including from progressive Democrats who gave her high marks for her earlier work to strengthen labor and environmental provisions in the U.S.-Mexico-Canada Agreement (USMCA), which replaced NAFTA. She also helped win the elimination of investor-state dispute settlement, which allows corporations to sue governments over rules that threaten their profits.
But Tai will face an early test from Mexico, which on New Year’s Eve issued a presidential decree banning the cultivation and importation of genetically modified (GM) corn and phasing out the use of the herbicide glyphosate, the active ingredient in Bayer/Monsanto’s Roundup herbicide. Under pressure from industry, Tai’s predecessor, Robert Lighthizer, last year warned the Mexican government not to take such actions, and threatened to sue Mexico under the new trade agreement.
Tai will no doubt face similar pressure. The question is: Will she accept Mexico’s actions as legitimate attempts to stop the race to the bottom in the areas of public health and the environment? Or will she use the USMCA to impede Mexico’s ability to protect its citizens?
Mexico’s Bold Decree
In issuing the decree, Mexican President Andrés Manuel López Obrador made good on long-standing campaign promises, decreeing the phaseout of glyphosate use over three years. He cited the growing body of scientific research <https://www.conacyt.gob.mx/cibiogem/index.php/sistema-nacional-de-informacion/documentos-y-actividades-en-bioseguridad/repositorio-glifosato> showing the dangers of glyphosate, the active ingredient in Roundup. The government had stopped imports of glyphosate since late 2019, citing the World Health Organization’s warning that the chemical is a “probable carcinogen.” In the United States, glyphosate has been the subject of thousands of lawsuits over such health impacts, with Bayer setting aside more than $11 billion for settlements <https://www.reuters.com/article/bayer-results/bayer-takes-10-billion-writedown-flags-higher-roundup-settlement-bill-idUSKBN27J26A>.
The immediate ban on permits for cultivation of GM corn formalizes current restrictions, ordered by Mexican courts in 2013. A citizen lawsuit challenged government permitting of experimental GM corn planting by Monsanto and other multinational seed companies on the grounds that cross-pollination would contaminate Mexico’s significant native corn varieties.
The new decree goes a step further, ordering the three-year phaseout of imports of GM corn produced with glyphosate. Under NAFTA, U.S. corn exports to Mexico increased 400 percent, the vast majority of that GM yellow dent corn, destined mainly as feed for livestock. Those imports were part of an extreme race to the bottom in public health and rural livelihoods in Mexico. Millions of Mexican farmers unable to compete with the flood of cheap imports saw their crop prices plummet; many were displaced from agriculture. Consumption of meat, dairy, and processed foods based in part on corn skyrocketed.
The import ban cites the threat of contamination of native corn varieties, but it goes further, advancing the López Obrador administration’s goals of promoting domestic corn production to achieve greater food self-sufficiency in key crops.
President López Obrador’s agricultural policies have begun to favor Mexican producers, particularly small-scale farmers, and protect consumers alarmed by the rise of obesity and chronic diseases associated with high-fat, high-sugar processed foods. The populist president received unprecedented support from rural voters in his landslide 2018 victory, with his new Movement for National Renewal (MORENA) claiming majorities in both houses of Congress.
Standing Up to Industry 
López Obrador took action despite intense lobbying by Bayer/Monsanto and U.S. government representatives. A February 16 exposé in The Guardian <https://www.theguardian.com/business/2021/feb/16/revealed-monsanto-mexico-us-glyphosate-ban> revealed efforts by Bayer/Monsanto, industry lobbyist CropLife, and U.S. government officials to deter the glyphosate ban. According to email correspondence obtained by the Center for Biological Diversity through Freedom of Information Act requests, officials in the Trump administration’s Environmental Protection Agency, U.S. Department of Agriculture, and Office of the U.S. Trade Representative were in touch with Bayer representatives, and they warned Mexican officials that restrictions on glyphosate could put the country in violation of the USMCA.
New provisions <https://www.iatp.org/blog/201905/new-report-secret-regulatory-talks-threaten-public-protections> on agricultural biotechnology, chemicals, and so-called “good regulatory practices” provide tools for corporate meddling in public-health and environmental standards, as well as grounds for official trade complaints. The restriction on GM corn imports could run afoul of USMCA “nondiscrimination” provisions, even though Mexico is not discriminating against the United States since it is banning GM imports from any country. Though industry sources immediately warned that Mexico would lose key supplies for its growing livestock industries and U.S. farmers would lose one of their most important export markets, U.S. farmers are perfectly capable of producing non-GM corn at comparable prices <http://www.spectrumseed.com/bottom-line-results/>.
Mexican officials have been very clear that the rationale for the decree is not to restrict trade but to further the government’s goals of protecting public health and the environment while promoting rural development. Rural revitalization would also advance President Biden’s stated objective to address the root causes of migration. Many Mexican migrants flee not just gang violence but poverty.
Victor Suárez, Mexico’s undersecretary of agriculture for food and competitiveness, told us, “Our rationale is based on the precautionary principle in the face of environmental risks as well as the right of the Mexican government to take action in favor of the public good, in important areas such as public health and the environment … We are a sovereign nation with a democratic government, which came to power with the support of the majority of citizens, one that places compliance with our constitution and respect for human rights above all private interests.”
Trade policy has long been employed to ratchet down regulations and give industries protections they could never gain through traditional legislation. In recent years, Democrats have claimed to reject this approach; it was one of the primary rationales for progressive rejection of the Trans-Pacific Partnership (TPP).
Tai emphasized that she would reconsider many existing trade policies and disputes, based on broad consultations. That reassessment should include refraining from using agreements such as USMCA to undermine government actions that stop the race to the bottom in labor and environmental standards. Rather than continuing to use the threat of trade disputes to compel other countries to adhere to U.S. standards and interests, the U.S. should support this and other efforts to protect human health and the environment.
Many are also calling on Tai to end U.S. opposition at the World Trade Organization to loosening patent protections to facilitate broad access to COVID-19 vaccines. These will be two early indicators of the administration’s willingness to prioritize public interest over corporate demands at the international level.

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826

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