Dayton Miami Valley AFL-CIO

BREAKING: President Obama has delayed moving the Panama trade deal because of union objections. Read more here.

Congress should not consider the U.S.-Panama trade agreement until Panama implements labor law and tax reforms and the Obama administration lays out a comprehensive, principled trade strategy for the United States.

Testifying before the U.S. Senate Finance Committee today, AFL-CIO Policy Director Thea Lee said the union movement will oppose the Panama deal unless these issues are resolved.

The AFL-CIO has called on Panama to bring its labor laws into compliance with the International Labor Organization’s (ILO’s) minimum standards. For example, Panama’s laws effectively prohibit the forming of a union in most workplaces and seriously limit the right to strike. A growing problem in Panama are the laws that allow employers to circumvent unions by repeatedly hiring the same workers on a temporary basis, rather than hiring them as full-time workers, Lee said.

Even when the laws meet international standards, the Panamanian government does not effectively enforce them. Lee pointed out that child labor is a concern in Panama because the age limits for workers are not enforced.

The Panama agreement does not reach the standards that Barack Obama set for trade deals during the 2008 presidential campaign, Lee said. In the Democratic Party platform, Obama emphasized the need for trade policy to “be an integral part of an overall national economic strategy that delivers on the promise of good jobs at home and shared prosperity abroad.” Now, instead of laying out a new trade policy, the administration is pushing a “patchwork policy” left over from the Bush administration, Lee said.

The nation’s global competitiveness should not be determined based on the profitability of U.S. multinational corporations operating abroad, but rather on the ability of U.S.-based producers to compete and thrive on American soil in a dynamic global economy, Lee told the panel. By this standard, she said, our trade policy needs deep reform. 

 Current U.S. trade policy has failed to deliver good jobs at home; equitable, democratic, and sustainable development abroad; or a stable global economy. We need to review and reform our trade policy with respect to the overall framework of rules; our chronic and large trade imbalances; and the impact of our trade and investment policies on U.S. manufacturers, farmers, service providers, consumers, workers, and the environment. 

This review is especially urgent in light of the current economic crisis and the weakness of the U.S. labor market, Lee said.

As long as we continue to run trade deficits on the order of 5 percent of GDP [Gross Domestic Product], the arguments that we need more trade liberalization to succeed in the global economy ring hollow—especially to our members, who have seen too many jobs go offshore while their wages and benefits stagnate.

At the same time, the Organization for Economic Cooperation and Development (OECD), among others, has raised serious questions about Panama’s self-advertised role as a tax haven for multinationals. This is a serious problem, especially since the Obama administration has signaled its interest in closing egregious tax shelters.

In addition to the Panama agreement, the AFL-CIO opposes Bush-negotiated trade pacts now on the table with Colombia and South Korea, Lee told the committee.

Colombia continues to be the most dangerous country for trade union members with more than 2,700 trade unionists murdered since 1986, including more than 500 since President Álvaro Uribe took office in 2002. Forty-nine trade unionists were killed in 2008—a 25 percent increase over the previous year. Seventeen trade unionists have been murdered this year as of May 15.

The Korea-U.S. Free Trade Agreement, as negotiated, would decimate our auto sector and increase pressure on other key industrial sectors, potentially costing tens of thousands of good U.S. jobs, said Lee.  South Korean labor unions also have concerns about the agreement, as their government and employers have recently cracked down on union activities and exploited loopholes in Korean labor law.

We stand with them in demanding that both of our governments respect all the International Labor Organization’s core labor standards, in both law and practice.

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