Made in the USA Reports
A Publication of the Made in the USA Foundation
Vol. 25 No. 1 © Made in the USA Foundation January, 2013
Foundation Makes a Splash at Davos
World Economic Forum
The Made in the USA Foundation made its first appearance at the World Economic Forum in Davos Switzerland. Joel Joseph, Chairman of the Foundation, presented his views on reformation of the World Trade Organization. A copy of his statement is reproduced in this newsletter.
Mr. Joseph met with economic leaders around the world and found a consensus for improving the WTO, including developing a permanent World Trade Court with much more openness than it has currently, better procedures ensuring fairness and a Free Trade Bill of Rights or Constitution setting ground rules for international trade.
Joseph met with scores of CEOs and non-profit leaders, including the Walmart CEO, the Yahoo CEO, JP Morgan Chase CEO, Bank of America CEO and the CEO of Habitat for Humanity.
NEW POLL SHOWS 75% OF AMERICANS WILL PAY MORE FOR AMERICAN-MADE PRODUCTS
The Made in the USA Foundation released the results of a new poll conducted online by Harris Interactive on its behalf. Seventy-five percent of American consumers said that they would pay more for American-made products of the same or better quality than imports. The poll was conducted December 27-31, 2012 with 2,135 consumers participating.
In addition, 23% were willing to pay ten percent more for American-made products than comparable imports. Fourteen percent were willing to pay 20% more, five percent were willing to pay 30% more and 2% were willing to pay 40% more for comparable products. Eleven percent were willing to pay a whopping 50% or more for U.S.-made goods.
The poll was tabulated regionally, by sex, age, income and educational status. Support for buying American-made products was higher in the Midwest and South. Seventy-six percent of those living in the South would pay more for American products, 75% in the Midwest, 74% in the West and 71% in the Northeast.
Males in the 18-34 year age bracket were the group that preferred American-made goods by the largest margin–80%. Females from ages 35-44 showed high support for buying American-made products—79%. These are surprising results, as often senior citizens are thought to be the biggest advocates of buying American-made products. The reason for this may be that the Great Recession of the last several years has made younger Americans very aware of the connection between buying American products and jobs. This bodes well for the future as younger consumers will help boost the economy for many years to come.
American consumers have a strong belief that American-made products are of better quality than imports. Eighty-three percent of American consumers believe that U.S.-made goods are better in quality than Mexican products, 82% believed U.S. products surpassed Indian products in quality and 78% agreed that U.S. products were better in quality that those from China. By a lesser margin American consumers believed that U.S. products were superior to those from Germany (55%) and Japan (53%).
This survey was conducted online within the United States by Harris Interactive on behalf of Made in the USA Foundation from December 27-31, 2012 among 2,135 adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.
Harris Interactive is one of the world’s leading market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll® and for pioneering innovative research methodologies, Harris offers proprietary solutions in the areas of market and customer insight, corporate brand and reputation strategy, and marketing, advertising, public relations and communications research. Harris possesses expertise in a wide range of industries including health care, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Additionally, Harris has a portfolio of multi-client offerings that complement our custom solutions while maximizing our client’s research investment. Serving clients in more than 196 countries and territories through our North American and European offices, Harris specializes in delivering research solutions that help us – and our clients—stay ahead of what’s next.
How We Can Reform the WTO to Create a Fair Judicial System for the Settlement of International Trade Disputes
by Joel D. Joseph, Chairman, Made in the USA Foundation
Presented at the World Economic Forum
The World Trade Organization is seen by Americans as an anti-United States, biased organization that desperately needs to be reformed. Popular sentiment in the United States is strongly against recent rulings by the WTO.
The United States passed three laws in recent years that the WTO has ruled violates the rules of free trade. One is the Country of Origin Labeling Act (COOL) that requires all grocery stores in the United States to label the country of origin of fresh vegetables, fruit, chicken, beef, pork and seafood. The purpose of the law (and in the interests of full disclosure, I worked on writing the law and lobbied for seven years for its passage) was to inform consumers where products came from so that they could make informed decisions. If there were contaminated raspberries in Guatemala, consumers could avoid them. If mad cow disease was found in Canadian cows, consumers could avoid Canadian beef.
Another American law that ran afoul of the WTO was the Dolphin Safe Tuna Act. This law was passed to allow tuna fisherman to use a “Dolphin-Safe” label on its cans of tuna fish so that consumers could, if they so desired, purchase tuna fished in a more humane manner. Nothing in this law was designed to harm fisherman from other countries. The labeling by fisherman was voluntary, but those using the Dolphin-Safe label had to meet strict standards.
The third U.S. law to be questioned by the WTO was a law outlawing flavored cigarettes. The purpose of this law was to prevent children from getting hooked on cinnamon, bubblegum or lemon flavored cigarettes. Indonesia challenged this law because the law prevented clove cigarettes being sold in the United States.
More than a decade ago Bruce Stokes and Pat Choate warned that the WTO needed to be more democratic:
The lack of public accessibility, transparency, and due process
in the functioning of the WTO is the source of mounting public
criticism of that organization, its decisions, and, most important,
the trade that it regulates. The WTO’s failure to follow
transparency principles tarnishes its credibility, diminishes the legitimacy of its decisions, and threatens its political acceptance.Ultimately, the closed nature of the institution threatens public support for the global trade expansion that the United States seeks. Council on Foreign Relations, Stokes and Choate, “Democratizing U.S. Trade Policy,” November, 2001.
The Made in the USA Foundation is a non-governmental, non-profit organization of U.S. manufacturers and consumers that seeks to promote worldwide American-made products. The Foundation’s position is that a World Trade referee for trade disputes is needed, but that the current structure of the World Trade Organization has five critical flaws:
The WTO does not have a Permanent Judiciary;
The WTO does not have Conflict of Interest or Ethical Rules;
WTO Panels Operate in Secrecy;
WTO Panels Do Not Allow for Participation by Corporations and Non-Profit Organizations; and
The WTO does not have a “Bill of Rights” or Constitution guiding the Rule of Law.
Creating a Permanent WTO Judiciary
The most pressing matter is that the WTO should develop a permanent court to decide disputes with judges who have tenure, not ad hoc appointees for one case. The creation of a permanent court system will give the WTO more credibility and respect. We cannot expect judges appointed for one case to be experienced, fair and impartial.
Susan Esserman, former general counsel to the U.S. Trade Representative and Robert Howse, law professor at the University of Michigan wrote that the WTO should create a permanent judiciary:
The manner in which the WTO’s panelists are chosen also needs to change. At present, selection is ad hoc and often not based on expertise in trade law. As long as that remains the norm, the Appellate Body will continue to revise extensively the rulings of the lower panels, all but ensuring that the Appellate Body continues to be accused of inappropriate activism. The WTO therefore should create a professional corps of judicial panelists, as the European Commission has proposed. Using full-time panelists who are experts in the law and properly compensated would enhance the quality of their decisions and reduce the tendency of the Appellate Body to substantially revise them. Reliance on a professional corps of panelists also might help prevent rulings that disregard international law and WTO precedent. “The WTO on Trial,” Foreign Affairs Magazine, January/February 2003, Vol. 82, Num. 1.
The highest appellate body, the WTO Supreme Court, should have nine members, like the U.S. Supreme Court. It should include two Americans, two representatives from the European Union, one from Japan, one from China and one from Russia, one from India and one from Brazil.
These judges should be appointed by their respective nations (or the European Union) and serve for a long term. I suggest a ten-year term. The judges should then be confirmed by a majority of the nations in the WTO. This will give the judiciary independence.
The WTO Supreme Court can then create lower courts to hear trade disputes. Lower court judges should be appointed by the Supreme Court.
The WTO does not have Conflict of Interest or Ethical Rules
WTO court appointees should not be allowed to be partisans who have represented one county involved in the trade dispute before the court.
I disclosed my interest in one WTO case. I helped draft and lobbied for the U.S. Country of Origin Labeling Act. This law, known as COOL, was passed by the U.S. House of Representatives and the Senate, was signed into law by President George W. Bush. COOL requires that fresh produce, chicken, beef, pork and seafood be labeled with its country of origin. The purpose of the law was to allow consumers to choose the source of their food products, and be able to avoid products from a particular country. If, for example, Canada had a mad cow disease problem, consumers could avoid eating beef from Canada.
Mexico and Canada filed complaints with the WTO challenging the Country of Origin Labeling Act. They claimed that COOL created a non-tariff trade barrier. The WTO panel rule against the United States finding that COOL was a non-tariff trade barrier.
The fact that the WTO appellate panel that ruled against the United States in the Country of Origin Labeling Act case included an attorney from Mexico, when the complaint in the case was filed by Mexico, screams out “conflict of interest.” This obvious conflict of interest weakens respect for the World Trade Organization.
The WTO judiciary should not allow judges with conflicts of interest to hear a proceeding. Further, if judges have ethical conflicts because of investments or familial relationships, they should not hear a case because it would undermine the public’s respect for the institution.
The WTO should also have a system for parties to raise conflict of interest and ethical matters to disqualify a judge.
WTO Courts Should Be Open to the Public
President John F. Kennedy said, “The very word ‘secrecy’ is repugnant in a free and open society; and we are as a people inherently and historically opposed to secret societies, to secret oaths, and to secret proceedings.” “The President and the Press: Address before the American Newspaper Publishers Association,” given at the Waldorf-Astoria Hotel in New York City, April 27, 1961.
WTO proceedings are now secret. This is repugnant to those living in free and open societies. No members of the press or outside parties are allowed to watch or listen to court proceedings. WTO proceedings should not be secret, they should be open to the public as they are in most advanced democracies.
Nearly all court proceedings in democratic nations, and some non-democratic nations, are conducted in public. Article 31 of the Statutes of the European Court of Justice provides, “The hearing in court shall be public, unless the Court of Justice, of its own motion or on application by the parties, decides otherwise for serious reasons.”
In the United States the Supreme Court has ruled that almost all court proceedings are open to the public. Gannett Co. v. DePasquale, 443 U.S. 368 (1979).
Article 125 of China’s Constitution provides: “All cases handled by the people’s courts, except for those involving special circumstances as specified by law, shall be heard in public.” While China may not live up to this constitutional provision, it nonetheless demonstrates that China’s leaders realize that a public hearing is an essential civil and criminal right.
Susan Esserman, former general counsel to the U.S. Trade Representative and Robert Howse, law professor at the University of Michigan wrote that the WTO should scrap its secrecy:
The WTO’s arbitral system also needs to improve its transparency and due process. The rulings of WTO judges affect the public interest in the broadest sense, as is especially evident in cases related to health and the environment. Yet the WTO’s hearings and submissions remain secret, an unacceptable vestige of the old days of cloak-and-dagger diplomacy. Conducting hearings and appeals in secret undermines the legitimacy of the WTO and gives rise to unwarranted suspicions. Moreover, such secrecy is unnecessary; there is no good reason why WTO hearings should not be open to the public. Public input would also be enhanced by reaffirming the Appellate Body’s decision to permit amicus curiae submissions. “The WTO on Trial,”
Foreign Affairs Magazine, January/February 2003, Vol. 82, Num. 1.
Why are the courts of nearly all nations open to the public and the press while the World Trade Organization’s judicial proceedings are conducted in private? The WTO’s secrecy clearly must change if the WTO proceedings are to be given respect by the citizens and nations of the world.
WTO Panels Do Not Allow for Participation by Corporations
and Non-Profit Organizations
In the European Court of Justice, non-governmental organizations can intervene in cases before the court. Similarly, in all states of the United States, there is a provision for intervention by non-parties.
Article 40 of the Statute establishing the European Court of Justice provides:
“Member States and institutions of the Union may intervene in cases before the Court of Justice.”
In the United States in Federal Courts, intervention is freely allowed. Rule 24 of the Federal Rules of Civil Procedure provides:
Intervention of Right. On timely motion, the court must permit anyone to intervene who:
is given an unconditional right to intervene by a federal statute; or
(2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant’s ability to protect its interest, unless existing parties adequately represent that interest. (Emphasis added).
Interested companies and non-governmental organizations (NGOs) should be allowed to participate in WTO proceedings as intervenors or as amicus curiae. For example, organizations of cattlemen should be allowed to intervene in cases involving beef; manufacturers of cigarettes should be allowed in intervene in cases involving cigarettes; and similarly, growers of corn should be allowed to intervene in cases involving corn products.
The WTO does not have a “Bill of Rights” or Constitution
Guiding the Rule of Law
The WTO needs a “constitution” or a bill of rights to establish the ground rules for disputes between nations. For discussion purposes, I have taken the liberty of creating a rough draft for such a bill of rights:
Free Trade Bill of Rights
1. The Country of origin shall be permanently marked on all products.
2. The manufacturer’s name and address shall be prominently marked on all products.
3. All manufactured products must be designed to be recycled.
4. All manufactured products shall have at least a one-year warranty.
5. Children’s products, such as toys, must be lead free, non-toxic
and safe for children.
Food Safety and Health
6. The country of origin of all ingredients must be disclosed on the package.
7. Genetically-modified ingredients must be disclosed on food products.
8. Seafood must disclose if it was farmed.
9. Pesticide, hormone and chemical additives must be disclosed on the package.
10. Uniform standards for organic products shall be developed.
11. Artificial food coloring, because it does not provide nutritional value and is likely to be harmful, is prohibited.
12. No product made by children under the age of 14 can be exported.
13. No product made by prison or slave labor can be exported.
14. No product can be exported if workers are paid less than the Global Minimum Wage.
15. The WTO shall establish World Environmental Standards for steel mills, power plants, refineries and other types of factories.
16. Nations shall be allowed to establish and enforce countervailing tariffs to be imposed for environmental harm caused during the manufacture of products that violate World Environmental Standards.
If we are going to have free trade, and a referee to regulate it, we must have a structure designed to provide fair results.
The free market only works if all countries play by the same rules. We don’t have to have the same minimum wage in all nations, but we must establish a floor so that trade with poor nations can raise their standard of living.
If one country allows pollution and another does not, production will shift to the nation with the weakest environmental rules. This does not help the planet or clean the air. For these reasons, we need minimum global rules that will protect the world’s water and air.
The Free Trade Bill of Rights will establish minimum standards for the world that will promote health of the world, encourage children to be educated and increase the wealth of all citizens.