Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
Bernie Sanders, speaking on the Senate floor
Mr. President, I rise in strong opposition to the free trade agreements with Korea, Colombia, and Panama.
Let's be clear: one of the major reasons that the middle class in America is disappearing, poverty is increasing and the gap between the rich and everyone else is growing wider and wider is due to our disastrous unfettered free trade policy.
If the United States is to remain a major industrial power producing real products and creating good paying jobs we must develop a new set of trade policies which work for the American middle class and working class and not just for the CEOs of large corporations. In other words, we must rebuild our manufacturing sector and, once again, manufacture products that are made in the United States of America.
Mr. President, over the last decade, more than 50,000 manufacturing plants in this country have shut down; over 5.5 million factory jobs have disappeared; and we now have fewer manufacturing jobs today than we did in May of 1941. Back in 1970, 25 percent of all jobs in the United States were manufacturing jobs. Today, that figure is down to just 9 percent. In July of 2000, there were 17.3 million manufacturing workers in this country. Today, there are only 11.7 million manufacturing workers.
According to a recent study conducted by the well-respected economists at the Economic Policy Institute, Permanent Normal Trade Relations with China has led to the loss of 2.8 million American jobs. In fact, the United States has lost an average of about 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.
Further, the Economic Policy Institute has also found that NAFTA (the North American Free Trade Agreement with Mexico and Canada) has led to the loss of over 680,000 jobs. We cannot keep outsourcing our future to low-wage countries by passing even more unfettered free trade agreements.
Mr. President, I know that my colleagues who are supportive of these unfettered free trade agreements will be throwing out all kinds of statistics about how wonderful these trade deals will be for the U.S. economy and how many jobs will be created. Mr. President, we've seen this movie before and it ain't gonna happen. Those jobs didn't materialize after Permanent Normal Trade Relations with China. Those jobs didn't materialize under NAFTA. And, they won't materialize under the Korea, Panama, and Colombia trade agreements that we are debating today. Unfettered free trade has destroyed jobs in my state of Vermont and in every single state in this country.
Mr. President, Albert Einstein once said "The definition of insanity is doing the same thing over and over again and expecting different results".
Mr. President, let's be clear: approving these trade agreements is insane. Unfettered free trade has failed us in the past, and they will fail us in the future. We need trade policies that are based on fair trade, not unfettered free trade.
Advocates of unfettered free trade claim that these deals with Korea, Panama, and Colombia will create American jobs.
The U.S. Chamber of Commerce has said that "This is foremost a debate about jobs. At a time when millions of Americans are out of work, these agreements will create real business opportunities that could generate hundreds of thousands of new jobs."
Really? I would remind my colleagues that this is the same U.S. Chamber of Commerce that is on record calling on companies to outsource U.S. jobs.
Let me quote from an Associated Press article that was written on July 1, 2004. The headline says it all: "Chamber of Commerce leader advocates offshoring of jobs."
Here is what this article says: "U.S. Chamber of Commerce President and CEO Thomas Donohue urged American companies to send jobs overseas as a way to boost American competitiveness ... Donohue said that exporting high-paid tech jobs to low-cost countries such as India, China and Russia saves companies money ... Donohue acknowledged the pain of individuals who have lost jobs to offshoring - an estimated 250,000 a year, according to government estimates. But pockets of unemployment shouldn't lead to 'anecdotal politics and policies,' he said, and people affected by offshoring should 'stop whining.' 'One job sent overseas, if it happens to be my job, is one too many,' Donohue said. 'But the benefits of offshoring jobs outweighs the cost.'"
The U.S. Chamber of Commerce is the leading advocate for the outsourcing of American jobs. So, when they tell us that these unfettered free trade agreements will generate "hundreds of thousands of jobs," I suspect that they are probably correct. But, what they don't tell you is that these jobs will be created in Korea, in Colombia, in Panama, and in China, not in the United States of America.
Mr. President, the United States Department of Commerce has reported that over the last decade U.S. multi-national corporations slashed 2.9 million American jobs. Let me repeat that. Over the last decade, the Commerce Department has told us that U.S. multi-national corporations have laid-off 2.9 million workers. These great American corporations who are telling us just how much they need these unfettered free trade agreements to pass, are the same corporations who have laid-off 2.9 million American workers over the last 10 years. That's the bad news.
Here's the good news. Over this same time period, these same U.S. multi-national corporations did create 2.4 million new jobs. Unfortunately, all of those jobs were located abroad, mostly in low-wage countries. That's what these free trade agreements are all about --making it easier for U.S. multi-national companies to ship even more jobs abroad.
Mr. President, I've been in Congress now for 20 years and I have heard this argument before. During the debate over NAFTA in the '90's we were told that unfettered free trade with Mexico and Canada would create "hundreds of thousands of jobs."
Senate Minority Leader Mitch McConnell, a supporter of the pending unfettered free trade deals claimed in 1993 that "American firms will not move to Mexico just for lower wages."
Well, Mr. President, was the Minority Leader correct?
Let's just take a look at the state of Kentucky.
On April 5, 2000, Mattel laid-off 1,200 workers who were manufacturing infant toys in Murray, Kentucky and shifted that production to Mexico.
On November 17, 1999, Lexmark International laid-off 630 workers who were making computer laser printers in Lexington, Kentucky and shifted that production to Mexico.
On July 1, 2000, Texas Instruments laid-off 452 computer workers in Versailles, Kentucky and shifted that production to Mexico.
On April 1, 2000, Tyco Electronics laid-off 361 workers who were making electrical relays and circuit breakers in Marion, Kentucky and shifted that production to Mexico.
On March 15, 2001, General Electric laid-off 285 workers manufacturing motors and shifted that production to Mexico.
On April 11, 2001, Levi Strauss laid-off 248 workers in Hebron, Kentucky and shifted that production to Mexico.
These are just a few of the dozens and dozens of mass layoffs that have occurred in the State of Kentucky alone as a direct result of companies shipping jobs to Mexico in search of lower wages.
But, of course the Minority Leader and his state of Kentucky are not alone. I have quotes from Senators from Texas, Indiana, Ohio, and others who told us how many jobs would be created in their states if NAFTA was signed into law. And, NAFTA has destroyed jobs in each and every one of those states.
And, Mr. President, let me be clear. I'm not just talking about Republicans. Many of my Democratic friends were saying the same thing.
In fact, the Clinton Administration estimated that NAFTA would create 100,000 American jobs over a two year period.
Well, Mr. President, the results are in. Instead of creating 100,000 American jobs, the Economic Policy Institute has found that NAFTA destroyed more than 682,000 American jobs, including the loss of 150,000 computer and electronic jobs; and more than 108,000 auto industry jobs. Every state in the nation has lost jobs as a result of NAFTA.
In 1993, the year before NAFTA was implemented the United States actually had a trade surplus with Mexico of more than $1.6 billion.
Since NAFTA was implemented 17 years ago, the United States has run up a cumulative trade deficit with Mexico of more than $660 billion.
Last year alone, the United States trade deficit with Mexico was over $66 billion, and we imported a record-breaking $229 billion in Mexican made products.
Mr. President, the supporters of NAFTA have been proven wrong. NAFTA did not create American jobs, it destroyed them.
Now, I am sure that we will be told that these new unfettered free trade deals with Korea, Colombia, and Panama are not NAFTA. I'm sure they will tell us that, unlike NAFTA, there will be no "job-killing concessions" in the Korea, Colombia, and Panama free trade agreements.
Mr. President, we have heard that argument before -- during the debate over granting permanent normal trade relations (PNTR) with China.
In fact, during the debate over Permanent Normal Trade Relations with China in 2000, most Republicans, too many Democrats, and editorial boards all across the country told us that Permanent Normal Trade Relations with China would increase jobs in the United States.
During the debate over PNTR with China in May of 2000, Senator Chambliss, who was a member of the House at the time, said that "Rejecting [PNTR with China] would only frustrate efforts by American businesses to expand their worldwide sales and create jobs here at home."
My good friend Nancy Johnson who served in the Congress as a Republican from Connecticut told us that PNTR with China was "the bargain of the century" that would "bring down the curtain of Chinese protectionism" and would increase jobs in Connecticut and throughout the country.
My friend Bill Archer a Republican from Texas who served as the Chairman of the House Ways and Means Committee in 2000, told us that PNTR with China "creates potentially hundreds of thousands of new higher-paying jobs for American workers."
Jerry Jasinowski, who headed the National Association of Manufacturers (representing the largest multi-national corporations in the world such as Exxon Mobil, Intel, Xerox, Dow Chemical, and Proctor and Gamble), told us on November 1, 2000 that Chinese consumers are "hungry for the opportunity to buy more American products" and "will create hundreds of thousands of good-paying jobs for U.S. workers."
In 2000, Alan Greenspan was the Chairman of the Federal Reserve, and also a strong supporter of PNTR with China. CNBC reported on May 18, 2000 that "Greenspan calls permanent normalized trade relations with China, or PNTR, crucial to American long-term growth potential."
And, here is what President Clinton said about PNTR with China in 1999: "In opening the economy of China, the agreement will create unprecedented opportunities for American farmers, workers and companies to compete successfully in China's market."
Well, Mr. President, the results are in. Since PNTR with China was signed into law in 2000, the U.S. trade deficit with China has exploded. In 2000, the U.S. trade deficit was $83 billion. Last year, the U.S. trade deficit with China was a record-breaking $273 billion.
Since 2000, 2.8 million American jobs have been eliminated or displaced as a result of the increased trade deficit with China.
And, after all of the talk on the floor of the Senate, and on the floor of the House, and in the editorial boards of major newspapers, and by the President about how PNTR with China would create jobs in America before it passed, I want my colleagues to listen carefully to what corporate CEOs said after this unfettered free trade deal was signed into law.
Remember, PNTR was debated and passed by Congress in 1999 and 2000. During this period, we heard a constant drumbeat about how many American jobs would be created. In 2001, China was permitted into the World Trade Organization. And, then, Mr. President, we found out the truth. It turns out that the CEOs of large corporations had no intentions of creating jobs in America -- what they really planned to do was to create jobs in China.
On December 6, 2002, Jeffrey Immelt, the CEO of General Electric was quoted on this subject at an investor meeting (just one year after China was admitted to the World Trade Organization). Here is what Mr. Immelt said: ``When I am talking to GE managers, I talk China, China, China, China, China. You need to be there. You need to change the way people talk about it and how they get there. I am a nut on China. Outsourcing from China is going to grow to $5 billion. We are building a tech center in China. Every discussion today has to center on China. The cost basis is extremely attractive. You can take an 18 cubic foot refrigerator, make it in China, land it in the United States, and land it for less than we can make an 18 cubic foot refrigerator today, ourselves.''
Mr. President, that's what China PNTR was all about. It was not about creating American jobs. It was about allowing companies like General Electric to ship decent-paying American jobs to China. Since 2001, GE has laid-off 34,000 American workers, while creating 25,000 jobs abroad.
Mr. Immelt and GE are not alone.
In 2003, the National Labor Committee documented that Wal-Mart used over 4,400 factories in China where workers were paid as little as 13 cents an hour and worked as many as 16 hours a day, 7 days a week.
Mr. President, while I expect that these labor conditions are better now than they were in 2003, the reality is that there are still millions of Chinese workers who make extremely low wages making products for Wal-Mart.
Jack Smith, the former chief executive at General Motors told the Economist on September 27, 2003, "Walk around Wal-Mart, and it looks as if everything is made in China."
What Jack Smith said about Wal-Mart was true in 2003. It is even more accurate today.
But, Mr. President, let's be clear: It's not just Wal-Mart. Take a walk around any department store and pick up a product and it will probably say "Made in China". And, I'm not just talking about sneakers, or t-shirts, or bicycles, or furniture, or toys. I'm talking about high-tech products.
Let me tell you just how bad it is and how absurd it has become.
Last year, I visited the Smithsonian's American History Museum to do some holiday shopping for my grandkids. What I discovered is that most of the products sold in the Smithsonian's gift shops are not even made in America, but they are made in China and other developing countries. And, it's not just the Smithsonian. Go to the gift shops of the Jefferson Memorial, the Washington Monument, the FDR Memorial, and the Lincoln Memorial and you will find the same thing. Product after product made in China, made in Honduras, made in Mexico. After I raised this issue with the Smithsonian and the Park Service, some progress is being made to increase made in America products, but much more needs to be done.
The ability of Wal-Mart to use cheap labor from China has decimated the middle class in the United States, while making the Walton family extremely wealthy. According to Forbes magazine, the six wealthiest members of the Walton family are worth a combined $93 billion. The middle class is collapsing. The real unemployment rate is over 16%. 25 million Americans are unemployed or under-employed. A record-breaking 46 million Americans are living in poverty. We now have the most unequal distribution of wealth and income in this country. And, if you want to understand why take a look at what's happened at Wal-Mart. The Walton family is now worth nearly $100 billion, while millions of blue-collar American workers have seen their jobs shipped to China and other low-wage countries.
But, it's not just blue-collar workers. One of the things we were told during the debate over PNTR with China was that we may lose blue-collar workers, but that's ok. Those are the jobs of the 20th Century. PNTR with China will allow us to create millions of high-paying white collar technology and computer jobs. Well, that also turned out to be wrong.
On October 10, 2003, the Wall Street Journal reported that "Andy Grove, the founder of Intel, predicted last year that the U.S. will lose the bulk of its information technology jobs to China and India over the next decade . . . . Given cost and productivity pressures, the Santa Clara-based semiconductor maker reluctantly ‘has no choice' but to continue sending work abroad, Grove said."
Well, it turns out that Mr. Grove was right.
During the past four years, the cumulative trade deficit with China in advanced technology products totaled more than $300 billion. Last year, our trade deficit with China on advanced technology products was a staggering $92 billion.
ust think about all of the wonderful innovations we have made in technology. The i-pad, the i-phone, the i-pod, the blackberry, IBM computers, Dell Computers, the Microsoft X-Box, big screen tv's. Yet, none of these American inventions are made in the USA. Most of them are manufactured in China. According to a December 15, 2010 article in the Wall Street Journal, "One widely touted solution for current U.S. economic woes is for America to come up with more of the high-tech gadgets that the rest of the world craves. Yet two academic researchers estimate that Apple's iPhone - one of the best-selling U.S. technology products-actually added $1.9 billion to the U.S. trade deficit with China last year."
Michael Dell, the founder of Dell Computers, told a group of Southern Methodist University students on May 10, 2004 that "I get frustrated when I hear the word outsourcing related to China. CNBC plays a video of the Dell factory in China as an example that this evolution is bad . . . . When you hear the word outsourcing, I would encourage you to substitute the word trade. I happen to believe that trade is a very good thing."
Michael Marks, who was the CEO of Flextronics, a company that manufactures X-Box consoles for Microsoft, personal computers, and other computer hardware, told Businessweek in 2003 and 2004 that "All electronics hardware manufacturing is going to China ... Our employment base is actually at a record high: about 100,000. We've done this by cutting the workforce in high-cost locations and adding in low-cost places. We put a lot of consumer products in Asia, where they belong in the first place. China has been the hottest location. We have 35,000 there. For example, we moved all of the production of Microsoft's Xbox consoles from Mexico to China."
On October 21, 2004, John Chambers, the CEO of Cisco, said that "China will become the IT center of the world, and we can have a healthy discussion about whether that's in 2020 or 2040. What we're trying to do is outline an entire strategy of becoming a Chinese company."
And, on and on it goes. Politicians and editorial writers tell us how many American jobs will be created by the passage of unfettered free trade deals before they get signed into law; once they are passed the CEOs of multi-national corporations tell us the truth and in fact ship American jobs to low-wage countries. That has been our free trade policy since 1993 and that is exactly what will happen if the Senate approves the unfettered free trade deals with Korea, Colombia, and Panama.
Yet, Mr. President, instead of recognizing how disastrous unfettered free trade has been for American jobs, we are now being told we need more, more, and more.
The same cast of characters who told us that NAFTA and PNTR with China would create American jobs, are now telling us that we need to pass more unfettered free trade agreements with Korea, Colombia, and Panama that were negotiated by President George W. Bush because they will create jobs.
When President Barack Obama was campaigning for President in 2008 he recognized just how bad these trade deals were.
In fact, on April 2, 2008, here is what candidate Barack Obama told the AFL-CIO in Philadelphia: "what I refuse to accept is that we have to sign trade deals like the South Korea Agreement that are bad for American workers. What I oppose - and what I have always opposed - are trade deals that put the interests of multinational corporations ahead of the interests of Americans workers - like NAFTA, and CAFTA, and permanent normal trade relations with China. And I'll also oppose the Colombia Free Trade Agreement if President Bush insists on sending it to Congress because the violence against unions in Colombia would make a mockery of the very labor protections that we have insisted be included in these kinds of agreements. So you can trust me when I say that whatever trade deals we negotiate when I'm President will be good for American workers, and that they'll have strong labor and environmental protections that we'll enforce."
Unfortunately, that statement was made in 2008. Today, President Obama is urging us to approve the same job-killing unfettered free trade agreements with Korea, Colombia, and Panama that candidate Obama opposed when he was running for President. That is sad.
In 1993, we were told that NAFTA would create jobs. Instead, over 680,000 American jobs were lost.
In 2000, we were told that China PNTR was not NAFTA, and that we did not make a single job-killing concession. We were told that China PNTR would create "hundreds of thousands of jobs." Instead, 2.8 million American jobs were lost as a result of this unfettered trade deal with China.
And, now, as sure as the sun rises in the east and sets in the west, the defenders of unfettered free trade will tell us that the Korea, Colombia, and Panama, agreements are not NAFTA or China PNTR.
Mr. President, they were wrong in 1993. They were wrong in 2000. And, they are wrong today.
The American people already know that unfettered free trade costs jobs and is bad for our economy. In a September 2010 NBC News Wall Street Journal poll, 69% of Americans believe that "free trade between the United States and other countries cost the U.S. jobs."
53% of Americans believe that free trade agreements have hurt the U.S., up from 30% in 1999. Only 17% of the American people believe that free trade agreements have benefitted the United States.
The Economic Policy Institute has estimated that the Korea Free Trade Agreement will lead to the loss of 159,000 American jobs and will increase the trade deficit by nearly $14 billion over a 7 year period.
President Obama has estimated that the Korea FTA will "support at least 70,000 American jobs." But, the headline of a December 7, 2010 article in the New York Times says it all: "Few New Jobs Expected Soon From Free-Trade Agreement With South Korea."
According to this article the Korea FTA "is likely to result in little if any net job creation in the short run, according to the government's own analysis."
That analysis was done by the U.S. International Trade Commission, which projects that our overall trade deficit will increase, not decrease, if the Korea FTA is implemented. I would like the President or anyone in this Chamber to explain to me exactly how increasing the U.S. trade deficit will equate to a net job gain for the American people.
Mr. President, let me touch on one particular aspect of the Korea Free Trade Agreement that I find especially troubling. And that is that this particular Free Trade Agreement will force American workers to compete against workers in North Korea the most undemocratic country in the worldand will financially benefit the communist dictatorship of Kim Jong Il.
Mr. President, we all know that under current law, the U.S. has an embargo on all North Korean goods -- for a very good reason. Workers in North Korea are the most brutalized in the world, have virtually no democratic rights, and are at the mercy of the most viscous dictator in the world.
But, if the South Korean Free Trade agreement is signed into law, the United States would have a new obligation to allow South Korean products to come into our country tariff-free that contain major parts made by North Korean workers who make pennies an hour.
According to a January 2011 report from the Congressional Research Service, "There is nothing to prevent South Korean firms from performing intermediate manufacturing operations in North Korea, and then performing final manufacturing processes (sufficient to confer origin) in South Korea".
For example, as much as 65% of the value of a South Korean car coming into the United States (if not more) could actually be made in North Korea if this trade agreement goes into effect.
And, Mr. President, if you believe that South Korea would prevent that from happening, you would be mistaken.
Today, over 47,000 North Korean workers are currently employed by more than 120 South Korean firms, including Hyundai, at the Kaesong Industrial Complex in North Korea. This facility is located just six miles north of the demilitarized zone with direct road and rail access to South Korea and just an hour's drive from Seoul.
These North Korean workers officially make a minimum wage of 35 cents an hour, but they actually receive much less than that.
Instead of paying these workers directly, Hyundai and the other South Korean firms, pay the North Korean government. And, according to the Congressional Research Service, up to 45 percent of the official wage actually ends up going to the North Korean government run by the ruthless dictator Kim Jong Il. Hyundai has estimated that the money they are providing to the North Korean government for the workers at Kaesong will total more than $9.5 billion over a 9 year period.
In 2007, Han Duck-soo, who was then the Prime Minister of South Korea and is now the current South Korean Ambassador to the U.S., said: "The planned ratification of the South Korea-U.S. free trade agreement will pave the way for the export of products built in Kaesong [North Korea] to the U.S. market."
Mr. President, subsidizing the brutal and repressive Kim Jong Il regime -- a regime that is hell bent on developing a nuclear weapons program -- and forcing American workers to compete against North Korean workers who make as little as $8 a month -- may make sense to someone. It does not make sense to me.
Mr. President, I understand that President Obama and others have said that products cannot come into the United States from North Korea under this free trade agreement. That's correct. But, there is a loophole in this trade agreement that allows products and parts from North Korea to be shipped to South Korea and then sent to the United States tariff free or virtually tariff free. And, that is what I am concerned about.
Mr. President, what about the Colombia trade agreement? It is understandable why the CEOs of multi-national corporations would like this free trade agreement. After all, Colombia is one of the most anti-union countries on the planet.
Since 1986, over 2,800 trade unionists have been assassinated in Colombia -- more than the rest of the world combined. Less than 6 percent of these murders have been prosecuted by the Colombian government.
Last year alone, more than 50 trade unionists were assassinated in Colombia, up nine percent from 2009. 23 trade unionists have been murdered this year alone. One was hung by barbed wire and tortured; another was shot by men on motorcycles as he left a union meeting; one was killed walking home with her mother; one was shot in the head as he celebrated his 46th birthday.
Mr. President, think for a moment. If we found out that 50 CEOs had been assassinated last year in Colombia, do you think we would be on the verge of approving a free trade agreement with that country? I don't think so.
Again, President Barack Obama eloquently spoke out against the trade union violence in Colombia when he was campaigning for President in 2008. On October of 2008, candidate Obama said that "the history in Colombia right now is that labor leaders have been targeted for assassination on a fairly consistent basis and there have not been prosecutions."
Candidate Obama was right to oppose this trade agreement in 2008. He is wrong to support it now that he is President.
Finally, Mr. President, let's talk about the Panama Free Trade Agreement.
Panama's entire annual economic output is only $26.7 billion a year, or about two-tenths of one percent of the U.S. economy. No-one can legitimately make the claim that approving this free trade agreement will significantly increase American jobs.
Then, why would we be considering a stand-alone free trade agreement with this country?
Well, it turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in off-shore tax havens. And, the Panama Free Trade Agreement would make this bad situation much worse.
Each and every year, the wealthy and large corporations evade $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.
According to Citizens for Tax Justice, "A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters. Panama has all three of those. ... They're probably the worst."
Mr. President, the trade agreement with Panama would effectively bar the U.S. from cracking down on illegal and abusive offshore tax havens in Panama. In fact, combating tax haven abuse in Panama would be a violation of this free trade agreement, exposing the U.S. to fines from international authorities.
In 2008, the Government Accountability Office said that 17 of the 100 largest American companies were operating a total of 42 subsidiaries in Panama. This free trade agreement would make it easier for the wealthy and large corporations to avoid paying U.S. taxes and it must be defeated. At a time when we have a record-breaking $14.7 trillion national debt and an unsustainable federal deficit, the last thing that we should be doing is making it easier for the wealthiest people and most profitable corporations in this country to avoid paying their fair share in taxes by setting-up offshore tax havens in Panama.
Adding insult to injury, Mr. President, the Panama FTA would require the United States to waive Buy America requirements for procurement bids from thousands of foreign firms, including many Chinese firms, incorporated in this major tax haven. That may make sense to China, it does not make sense to me.
Finally, Panama is also listed by the State Department as a major venue for Mexican and Colombian drug cartel money laundering. Should we be rewarding this country with a free trade agreement? I think the answer should be a resounding no.
Mr. President, let me talk for a few minutes about the impacts of our current trade policies on access to medicines, both here and abroad.
The proposed Korea Free Trade Agreement, for example, threatens both the 340-B drug program (which requires drug companies to provide discounts on covered outpatient drugs purchased by federally funded health providers, such as Community Health Centers and other safety net providers) and the ability of Medicare Part B to hold down the prices of outpatient drugs (Part B drug prices are set by a statutory formula to provide outpatient drugs used in medically necessary services to the disabled and seniors).
The Korean Free Trade Agreement would potentially allow Korean drug manufacturers to challenge the pricing under these programs on the grounds that the prices are not market-derived. And this is something that was pushed by our trade representatives, not theirs! In essence the pharmaceutical industry's lobbyists, with complete indifference to the plight of millions of the most frail and vulnerable Americans, have succeeded in inserting provisions into this agreement that could allow Korean companies to maximize their profits by challenging the cost-control measures under the 340B and Medicare Part B programs.
But unfortunately, Mr. President, this just the tip of the iceberg. Right now, the pharmaceutical lobby and the United States Trade Representative are negotiating a new trade agreement, the so-called the "Trans Pacific Partnership," that I fear very much will make a bad situation in terms of drug access for the developing world much worse. Their aim, yet again, is to maximize drug company profits at the expense of the most vulnerable populations by tying the hands of health authorities here and in other developed and developing countries abroad who seek to provide access to low-cost, generic pharmaceutical drugs for their citizens.
While the tax-paying and voting public is being left in the dark about the specific content under negotiation - despite that many Big Pharma representatives on trade advisory boards have access to the negotiating documents - drafts of some pieces of it leaked to the public are cause for concern, to say the least.
In negotiating the Trans Pacific Partnership, our government is actively pushing intellectual property laws for medicines that are more restrictive than we impose even here in the United States, with the effect of making it far more difficult to get generic drugs on the market in those countries. One of them, Vietnam, is a good example.
Vietnam has received more than $320 million from the President's Emergency Plan for AIDS Relief (PEPFAR), created under President George W. Bush and continued under President Obama since 2004, providing life-savings treatments to thousands of people living with HIV in no small measure because generic treatments are available.
The PEPFAR program has actually had significant success and is credited with savings millions of lives in 15 developing nations over the last seven years. In the face of one of the most severe humanitarian crises in modern history, the United States put billions of dollars into doing something about it and we are. So why in the face of this success by one arm of our government would another arm work to pull the rug out from underneath it? Yet the United States Trade Representative's office is doing just that.
This isn't just me talking. The 2010 PEPFAR program's annual report states that "PEPFAR support for antiretroviral (ARV) drugs has dramatically increased the numbers of people on HIV treatment in Vietnam..... Generic drugs have helped bring down the annual cost of first-line treatment to as low as $100 per patient...." Great, right? But the same report goes on to note that "Expectations that the cost of Lopinavir/Ritonavir [a very effective combination HIV therapy] would fall by 50% in 2009 due to the introduction of generic versions were dashed when it was discovered that Abbott has patents pending in Vietnam and that Abbott intended to use the patents to prevent the procurement of generic alternatives."
So, just when we are making serious progress in combating AIDS in Vietnam through effective use of taxpayer dollars and reliance on generic drugs, the USTR is simultaneously pushing aggressive trade terms at the behest of the pharmaceutical industry as part of a future trade agreement that are designed to keep generics off the market there and undermine the effectiveness of one of our most successful humanitarian programs. Higher prices for drugs and higher profits for PhRMA, less access to life-saving medicines for people suffering from AIDS in Vietnam and higher costs to our taxpayers in trying to help them.
It appears from the leaked document that the USTR is pushing the eight other Pacific countries in the negotiations to grant more patents on each drug than they do now, so that patents will be granted for changes in the drug formulation or delivery mechanisms, even when the changes don't make much of a difference. This effort to force developing countries to embrace what is called the "ever-greening" of patent protection is designed to extend drug monopolies even longer, after the initial 20 year patents expires.
There are also new provisions recently proposed by the United States, in the Chicago Round of negotiations, which are secret. These secret provisions reportedly require, among other things, some combination of patent extensions, restrictions on the registration of generic drugs under so called "data exclusivity" rules, and restrictions on government efforts to negotiate lower prices for drugs, such as by comparing domestic prices to prices in other countries. Collectively, the leaked and still secret provisions are designed to drive up drug prices in all countries, both developed and developing.
What could be more revolting that forcing higher drug prices in a poor country so that big drug companies can squeeze out just a little more profit, leaving tens and tens of thousands of HIV-positive people there to suffer and die? What kind of country have we become if that is what our representative is advocating on behalf of the United States of America?
Of course, AIDS is not the only terrible illness for which new medicines can be important. Take the case of cancer. Mr. President, nearly everyone I know has not one but several stories they could tell about friends, family and colleagues that have had cancer, a disease that is life threatening, and involves considerable suffering. Two thirds of the drugs on a list of key cancer drugs and vaccines published by the National Cancer Institute are only available from a single manufacturer, and the prices are extremely high. Today it is not uncommon for a new cancer drugs to be priced at more than $5 thousand per month, or as much as $50,000 to $75,000 or more for a course of treatment, for just a single drug!
Almost no one in developing countries can afford these newer patented cancer drugs. Not surprisingly, there are no patented cancer drugs on the World Health Organization (WHO) list of essential medicines - not because the drugs don't work, but because they would break the budgets of health systems in developing countries. In the Trans Pacific Partnership Agreement negotiation, the United States Trade Representative is asking government officials from developing countries to put in place policies that will without any doubt prevent poor persons with cancer from getting access to the newest cancer drugs.
What type of perversion of democracy is it that a handful of trade negotiators, none of them accountable to the voters, operating in secret, can do this?
You might ask, well, isn't this necessary to support R&D for new medicines? The answer is no, it is not necessary. It is a choice, and a bad choice. A World Health Organization expert working group on R&D is soon expected to recommend new global negotiations on an R&D treaty to make sure each country carries an appropriate share of the R&D burden by providing both sufficient private incentives for R&D and sufficient public sector spending, but in ways that are most appropriate for each country and that are not designed to undermine universal access to life-saving treatments. This should be the focus of global trade policy - making sure each country carries its appropriate share of funding medical R&D- not forcing Peru, Chile, Vietnam, Thailand and other developing countries to pay higher prices or let their people die so that big drug companies (some of the most profitable corporations the world has ever seen) can squeeze out just a little more money.
Mr. President, we have got to fundamentally rewrite our trade policy so that American products, not jobs are our number one export. The middle class will not survive and our economy will not flourish if large corporations continue outsourcing American jobs to China, Vietnam, and other low wage countries.
Over the past thirty years, we have been told by the Administrations of Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, and now Barack Obama that unfettered free trade will increase jobs in America. They have been proven wrong. NAFTA has led to the loss of over 680,000 American jobs. Permanent Normal Trade Relations with China has led to the loss of nearly 3 million American jobs. Over the last decade, more than 50,000 manufacturing plants have been shut down in America. And mark my words, if the George W. Bush unfettered free trade agreements with South Korea, Colombia, and Panama are signed into law by President Obama, even more American jobs will be lost.
The word has got to go out loud and clear, to companies like Wal-Mart, GE, IBM, Microsoft, Boeing, Hewlett-Packard, Cisco, Intel and hundreds of other corporations, that they cannot keep sending America's future overseas. Trade is a good thing, but it must be based on principles that are fair to American workers. The U.S. Congress can no longer allow corporate America to sell-out the middle class and move our economy abroad.
We need to tell Jeffrey Immelt, the CEO of General Electric that it was unacceptable for him to say in December of 2002 that: "When I am talking to GE managers, I talk China, China, China, China, China. You need to be there .... I am a nut on China. Outsourcing from China is going to grow to $5 billion."
We need to tell Thomas Donahue, the CEO of the U.S. Chamber of Commerce, that it was not acceptable for him to "urge" American companies to send jobs overseas, as he did in July of 2004.
We need to tell Bill Gates, the wealthiest man in America, that it was unacceptable for him to say in January of 2005 that China has created, "a brand new form of capitalism, and as a consumer it's the best thing that ever happened."
It is those kinds of statements and actions that are turning the United States of America into a third world country, while China, and other low wage countries are rapidly becoming an economic powerhouse. We must tell these corporate leaders to stop outsourcing our jobs to China and other low wage countries.