Ensuring Tax Exempt Organizations the Right to Appeal Act

Floor Speech

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Mr. MERKLEY. Mr. President, returning to the conversation about trade policy and its impact on American workers and businesses, President Kennedy once said, ``The trade of a nation expresses, in a very concrete way, its aim and its aspirations.'' Well, what are our aims and aspirations in crafting a new trade structure? The President says that his aim and aspiration is to be the writer of rules for trade in Asia. I have a different aspiration. My aspiration is that we create trade that creates living-wage jobs in America, that puts people to work making things in America. If we don't make things in America, we will not have a middle class in America.

So as we contemplate a massive new trade deal, the Trans-Pacific Partnership, and the bill before us to fast-track consideration of that Trans-Pacific Partnership, we should ask ourselves this question: Is this about our geostrategic goal of being the leader in writing the rules or is it about writing rules that actually work for working Americans? Because, you see, working America has done very poorly under this goal of geostrategic influence. Oh, yeah, we had NAFTA, the North American Free Trade Agreement. We had CAFTA, the Central American Free Trade Agreement. What was the result of that? Well, we lost 5 million jobs in America. We lost 5 million jobs.

We lost 50,000 factories. If you go around Oregon, you can see those factory sites. I recently visited the Blue Heron site. Just a few years ago, there were hundreds of workers at the Blue Heron paper factory, but under the structure of one trade agreement--WTO--those jobs went to China. Paper manufacturing went to China. The equipment was pulled up out of that factory, leaving a big hole, and shipped overseas. That is what happened. We lost our factories. We lost our jobs.

There has been a lot of discussion that this is a new trade agreement, that it establishes enforceable standards for labor. Well, perhaps the single most important standard is minimum wage. Minimum wage is about resisting the full exploitation of workers, the full race to the bottom. So, of course, I am sure the proponents would say: Well, of course we have addressed that. That is central. That is the central ingredient, is to make sure that there is not a race to the bottom and that we address the fact that every nation that will be part of this agreement will have to have a minimum wage, a minimum wage that rises over time, a minimum wage that provides a basic standard of living so that we do not have conditions of full exploitation, miserable sweatshops, if you will, that are producing the goods we are buying here in America under this agreement.

So it may come as a shock to people across America that this most fundamental standard of minimum wage is not addressed in this agreement.

What do we have right now? We have 12 countries. We have two countries--Brunei and Singapore--with no minimum-wage standard at all. Then we have Mexico at 66 cents and Vietnam--for Vietnam, they set a monthly minimum wage and they set it regionally. So the number varies according to how you calculate it. Some would call it 57 cents; others would say 74 cents. Let's just put it this way: The minimum wage in Vietnam is way under $1 per hour. In Malaysia, it is $1.54; Peru, $1.55; Chile, $2.25.

So does this Trans-Pacific Partnership have a requirement that there be a minimum wage that will rise up workers and stop these sweatshops across the world so that we are not buying products from sweatshops with miserable, slave-like conditions? It does not. It has no such provision. It has no minimum wage, which leads us to another fundamental observation.

What this trade agreement does is set up a dynamic between these very low wage countries and countries that are developed and aspiring to create living-wage jobs here. But what happens when you have manufacturing in these high-wage countries, high-environmental-standard countries, high-labor-standard countries and high-enforcement countries and the manufacturer looks out and sees a competitor, in a free-trade regime, in these very low-wage, low-labor, low-environmental, and low-enforcement countries? Well, it is obvious: The manufacturing migrates to the place that is the cheapest. That is the way free enterprise works--it goes to where you can make the most profit.

So it is not some absurd, unexpected result that NAFTA resulted in the loss of 5 million good-paying jobs in America. It is not some unexpected result that we lost 50,000 factories.

When he was campaigning for President, Ross Perot said: If you adopt NAFTA, you will hear the sound of the jobs leaving America.

Well, that is exactly what happened--exactly what happened.

So is it a fact that this new-generation trade agreement actually address this core problem? Well, the answer is, it does not.

It does not do anything to address this disparity between very low wages and prosperous countries. This is going to be, as Ross Perot put it, another situation with a giant sucking sound of jobs leaving America.

Proponents of this treaty say: Well, we have done something very significant. We have taken the labor and environmental side agreements and we have put them in the center of the agreement. This is pretty much like moving deck chairs on the Titanic. You move them from one location to another location. How does that change the outcome? Well, it doesn't. It just means they are printed in a different part of the text. That is not very good news, if you will, to workers across the United States of America who have been assured there is something fundamentally different about this agreement.

These labor standards and these environmental standards that are in the agreement--we have heard a lot about enforcement, and there is nothing new to enforce in these labor and environmental standards.

I want to take a little detour here because there are some important enforcement standards that my colleagues have put forward. My colleague from Oregon has put forward the ENFORCE Act. This is important for enforcing tariffs. This is important for enforcing the movement of goods illegally through third parties in order to bypass tariffs in the United States. That is a good step forward, but that does not address the core of this issue which is enforcement of the labor and environmental standards.

Now, we have the same basic standards in various trade agreements, and they are never enforced because there is no effective mechanism for enforcement. Let me expand a little bit on what has gone on and then point out that nothing has been done to fix it. You essentially have a set of standards and these standards are the International Labor Organization standards, ILO standards. These ILO standards address a series of things. These ILO standards are things such as child labor. That is a bad idea. It should stop. It addresses that union organizing should be allowed, and that is a good thing. So the standards themselves are solid and respectable.

But when a nation becomes part of the trade agreement, how do you have them enforce those standards. That is what is missing--no enforcement for these standards.

There is a government-to-government process for consultations when the United States is upset that someone is not enforcing. Ultimately, they can file a case. That case can take years and years and years to adjudicate, and it never gets done.

The number of labor standard enforcement actions that have been completed is zero. The number of environmental enforcement standards that have been completed is zero--zero, zero. So if we take a broken system from existing trade treaties and slip it into a new trade treaty, what is the expected result? No enforcement of these standards. All the parties know that. They can put these laws on the books, but there is not going to be enforcement.

There is one case--one case alone--that we have sought to proceed to enforce and that is with Guatemala. With Guatemala, they have massive labor violations. They are not making the slightest attempt to follow the ILO. We held consultations, more consultations, and more consultations, and finally filed a case. It has gone on and on and on and never gotten to a conclusion. So we still have zero, zero enforcement.

Now, one reason it doesn't get to a conclusion is because there is no enthusiasm behind any form of enforcement, and why is that? First, our government says: Well, if we try to enforce it, it will create ripples in the relationship. That country will be upset with us if we try to enforce a labor standard and an environmental standard.

Then, second, they will say: No, there be will retaliation. They will file suits against us, and we will have to spend all this time responding, and what is the point of that. That is unproductive. We say they are not meeting it. They say we are not meeting it.

Then, third, and very importantly, the companies that have invested under that trade agreement in that nation, they come out and tell the government: What are you doing? The goal of the trade agreement was to create a stable environment for investments. You are destabilizing that by filing a grievance against this country, so don't do it. In the end, if you ever got to an enforcement action, well, that would hurt us because we put our factory there, and now we would be subject to tariffs.

So this combination means that structure is completely dysfunctional, and that structure is exactly what is in TPP. So this is why we are coming forward and saying now is the time to fully debate how we tackle this problem so we can stop pontificating about strong labor and environmental standards and actually have a structure that creates that within the 12 nations that are considered being part of TPP. So that is the distinction.

Significant, valuable attention is being paid to enforcement of tariffs and efforts to bypass through third-party shipments, our Customs structure--and that is important. But the labor standards and the environmental standards, enforcement is zero, and that same broken system is being imported into the TPP.

Yesterday, I came to the floor and I tried to pull up amendments. We are being told the leaders on this bill want to choose, pluck, and pick just the amendments they want to allow to be debated, unlike in the past, where we have had a situation where people have been invited to come to the floor and make their amendments pending, and then we worked through those amendments. So we spent time addressing

the issues that Senators thought were important. That is a robust and open process.

But despite the promises of the majority leader for an open and robust amendment process, we do not have that. We have a behind-the-scenes negotiation with amendments picked and plucked according to what the proponents of this deal want to have, and the rest of us are out in the cold.

So I have these four amendments that I would be happy to pull up at any time that is allowed. I already tried yesterday, so I will not try to do it again, but let me tell you the types of things they address. One is it takes on the core deficiency in the Trans-Pacific Partnership, which is that it does not have any minimum wage. So it simply says:

FOR AGREEMENTS THAT SUBJECT UNITED STATES WORKERS TO UNFAIR COMPETITION ON THE BASIS OF WAGES.--The trade authorities procedures shall not apply to an implementing bill submitted with respect to a trade agreement entered into under section 103(b) unless the agreement--

(A) establishes a minimum wage that each party to the agreement is required to establish and maintain before the trade agreement is implemented; and--

So it is not something that is done down the road; it is done before it is implemented. Second--

(B) stipulates that the minimum wage required for each party to the agreement increase over time, to continuously reduce the disparity between the lowest and highest minimum wages [in these very low countries and these very high countries].

Now, currently, the disparity of the minimum wage between the United States and Mexico is about tenfold. Here we are: Mexico at 66 cents, the United States at over $7. Mexico's minimum wage is 9 percent of our minimum wage--one-tenth.

So, of course, it made sense that factories would be shipped from the United States to Mexico. Not only do you have poor enforcement, poor environmental standards that are not enforced, but you have a minimum wage that is one-tenth of what it is in the United States.

So I don't specify in this amendment that the minimum wage has to be set at any particular level. That can be the subject of the negotiations. I don't specify that it has to be raised by 10 percent a year to narrow the difference between the very low countries and the higher countries so we reduce the disparity.

This is like taking a playing field that is tilted 10 to 1 against the workers of the United States of America--10 to 1. It is not close to a level playing field. The American minimum wage is more than 10 times the Mexican minimum wage. It is a 10-to-1 disadvantage to American workers.

That is what we are talking about--the proponents are talking about--embedding into this trade agreement. So I am suggesting: OK. At a minimum, the negotiated process, where that playing field is gradually brought to a more level situation, where the disparity is decreased, shouldn't that be a primary negotiating objective of the United States in these agreements? Aren't we right now talking about explaining to the administration what they should negotiate in this agreement?

My colleague from Utah spoke earlier about the provision regarding currency manipulation and explained why he thought it would be unproductive to have it here--while it is very important--unproductive to have the amendment that Shaheen and Portman, my colleagues, are presenting. But that is the purpose of this debate on the floor, to allow that amendment to be called up, to hear the views for it, to hear the views against it, and to lay out our vision to the administration.

Now, my colleague has pointed out that the administration has said it will not accept establishing a goal of enforceable currency manipulation provisions. Why is that? I can tell you because the administration told me. They said, if we had put this on the table in the beginning, then we could probably raise it and have it be part of the conversation. But, you see, we have already negotiated this agreement. It is 95 to 98 percent done, and so we can't possibly introduce something new into this process. That would disrupt all the groundwork we have laid.

So this is where the cart came before the horse. The treaty was negotiated without consultation with Congress about what should be in it. We all understand currency manipulation is a form of tariff. It is a form of tariff and subsidy.

When I came into the Senate, China's currency manipulation was calculated to be equal to a 25-percent tariff on American products going to China and a 25-percent subsidy to Chinese products coming to the United States. Well, that is a huge tariff. Combine the two together--50 percent differential. That is not fair and appropriate in a trade agreement that was supposed to reduce--under the WTO--barriers. No. So we know it is a problem. Why not fix it, why not address it, why not debate it, why not discuss it, and why not struggle to find a solution. That is what Senators Shaheen and Portman are saying; that that is an important element related to this unbalanced situation that is going to remove jobs from the United States.

Now, I am pointing out another deficiency; that is, that there is no minimum wage, that we are starting out with a 10-to-1 differential with Mexico, approximately a 10-to-1 differential with Vietnam, that there should be a minimum wage so we can stop the race to the bottom, and it should be gradually raised to decrease the disparity.

That is an issue worthy of debate, but I can't get that debate onto this floor because the proponents don't want to allow debates on these amendments. They just want to choose and pick the subjects that they want to allow to be debated rather than the ones the Senators want to allow to be debated. That is not a robust and open amendment process.

Now, there is another flaw in this TPA, which is it has negotiating objectives. An objective is simply a wish, a hope, it is a desire, it is an inclination, but an objective is not an actual provision.

So we can say all the beautiful things we want about what our objectives should be, but instead we should be asking, What are the standards? What are the standards that need to be in a treaty that are brought back in order to benefit from fast-track? What are the actual standards that should be in an agreement that is brought back to the Senate under fast-track--because fast-track gets special privileges on the floor of the Senate.

So setting an objective doesn't do the work because it doesn't define what will come back to this body under this special privilege. We should convert those objectives into actual requirements. That is what one of my amendments does.

Then we can turn to the situation where the TPA has another deep flaw that many have pointed out that hasn't been addressed, and this deep flaw is it sets up an international tribunal, an international tribunal that can essentially assess fines on our local government, it can assess fines on our State government, it can assess fines on the U.S. Government, unless our local government or the State government or the Federal Government change their laws.

Establishing a judicial organization with no accountability to the U.S. judiciary, that is a grant of sovereignty. That is our courts' sovereignty being shipped to a tribunal of three corporate lawyers who get to decide whether there are massive fines levied against our local, State, and national governments.

Well, that is certainly something that should be deeply concerning to us.

Now, the goal of this was to have some sort of judicial process substitute in countries that have a dysfunctional judicial process, and thereby encourage international investment. So you could have a situation where Vietnam and Malaysia would say: We know our judicial organization is corrupt or dysfunctional, so we will opt in for this dispute resolution structure because we want investment to come to our country. But why would we give away U.S. judicial powers to an international tribunal of three corporate lawyers--corporate lawyers for whom there is no conflict of interest standard? They could be the advocates on one case and the judge on the next. That is really not in accordance with our norms of judicial conduct. So we aren't even requiring our norms of judicial conduct to be applied to this international tribunal.

Furthermore, when we pass at the State or local or national level laws designed to protect the health and safety of our citizens, foreign investors are granted special privileges under this agreement because they can file and say: Your laws for consumer protection or the health and welfare of your citizens or to take on significant environmental hazards have hurt our investment, and we want to be compensated.

That is just wrong. Sure, if there was an unfair expropriation of someone's assets, that is judicable under American law. It doesn't require an international tribunal.

But what about when something is done for the safety and wellness of our citizens? Take, for example, asbestos. We tried to regulate asbestos in 1991. It was the last time any toxic chemical was considered under the Toxic Chemicals Act. We have done nothing in the intervening years. But let's say we get over the hurdles that existed in 1991, and we have a new law, a new process, such as has been debated in the Committee on Environment and Public Works. That bill had bipartisan support. If we create that structure and we regulate asbestos, now the foreign investor says: Oh, we have an asbestos factory so you have to compensate us. That is a privilege that the domestic--the United States; the red, white, and blue--investor would not have.

Let's say we regulate e-cigarettes--an effort by the tobacco company to addict our children to become lifetime users of nicotine and to do so through fancy flavors--chocolate, strawberry, cotton candy, and every candy flavor on Earth. You name it, they have a flavor of e-cigarette liquid designed to addict our children. So let's say we ban that, and the foreign investor gets special privileges because they say: Oh, well, I set up a factory, and I was going to make $1 billion over the next 20 years, so I need $1 billion of compensation.

That is the type of structure that is embedded in here. So at a minimum, I think this international tribunal should be opt-in. If we want to attract investment and we have a poor judicial system, opt in to this substitute to encourage investment. Maybe that is a win-win for a country with a poor judicial system and an investor who wants a strong way to make sure their rights are protected. But the United States would not opt in because we don't have a dysfunctional judicial system.

Here is an even more narrow provision. This narrow provision talks about when we do laws at the local, State or Federal level that are about consumer protections and wealth-stripping predatory loans. For example, we ended those loans in the mortgage market. We don't want a foreign investor saying: Well, our whole business was built on that; you owe us $1 billion. No, we are ending predatory wealth- stripping practices and replacing them with fairer, 30-year amortizing mortgages with full disclosure and no kickbacks, which were allowed under the previous law. They were called steering payments. We ended steering payments.

Or on this issue of e-cigarettes, we are ending an effort to directly addict our children, which is terrible for their health and certainly terrible for the cost of our health care system. It is a lose-lose. We should be regulating it. We passed a law to regulate it, but we just have never gotten the regulations done. The FDA has now completed those regulations. They have shipped them to OMB--Office of Management and Budget. We hope someday that regulation will be in place. When it is in place, a foreign investor should not have special privileges to be compensated because we are protecting our citizens.

Therefore, we should carve out and say that our laws related to the environment and public health and consumer protection cannot be the subject of ISDS--that is the name of the tribunal, ISDS--attacks.

Then let us look at basic consumer information, such as the labeling of products. A lot of manufacturers don't like it when products are labeled. They consider that labeling might have information that might be prejudicial because consumers might prefer the content of one product, when honestly labeled, over the product of another.

We had a law in Oregon that took on growth hormones in milk. The basic compromise was that we printed on every package of milk. If it had growth hormones, it had to say it contained growth hormones; and then there was a little clause saying it was not shown to have ill health effects. But consumers wanted to choose the milk that didn't have the growth hormones in it. That was the value of labeling. It empowered choice by the consumer, by the individuals exercising their rights as to what they put into their body, their right as to what they feed their children.

We have a very similar situation with regard to meat. Americans often want to know whether their meat was made or grown in America. So we have a law called COOL--country-of-origin labeling. Well, COOL is very well received. People like to choose meat grown in America. Not everyone cares, but some do. That is their right. They know there are different standards for how animals are treated overseas. There are different rules for what type of ingredients go into the feed in other nations. So wanting to support good practices, they might choose American meat. Wanting to support something healthy for their children, they might want to choose American meat.

And what just happened this week? Well, one of these tribunals, in a different trade agreement, struck down America's country-of-origin labeling law. That is what I am talking about when I say we are giving the sovereignty of our judicial branch away to an international tribunal of corporate lawyers who can make decisions that affect our fundamental rights. That is simply wrong. We must fix this.

So I have an amendment that I would like to hear debated on this floor. Others may disagree with me. We have been elected to carry our views forward. There will be people here saying: No, it is fine we strip consumers of the ability to know where their meat is grown. It is fine to strip consumers of the knowledge of what ingredients have gone into their milk, if milk is imported, and so on and so forth. But I fundamentally disagree. I want to see us debate.

We are here to debate, so let us get these amendments up. Let us debate them, and let us quit stalling. Let us quit engaging in this process of trying to rush this through in a manner where these fundamental issues have not been addressed--fundamental issues such as the fact that there is no minimum wage in this agreement, and that the playing field is tilted deeply against manufacturing in America; fundamental issues such as that there are negotiating objectives that should be negotiating requirements for a bill to have the privilege of getting fast-track here on the floor of the Senate; fundamental issues such as that we should not have our environmental, public health, and consumer laws subject to an international tribunal; fundamental issues such as Americans having the right to label their products the way they decide, according to their statutes, and not have that overruled by an international group.

I would love to see this Senate function and to actually debate these amendments. I hope that happens. And any effort to shove this bill through without having those types of debates is certainly not the open and robust amendment process that was promised by the majority leader.

I yield the floor.

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