Source: Carnegie
For Immediate Release: March 31, 2003
Contact: Carmen MacDougall, 202-939-2319, cmacdougall@ceip.org
OR Jayne Brady, 202-939-2211, jbrady@ceip.org
Provision in Proposed US-Singapore Free Trade
Agreement Creates Unprecedented Loophole
Congressionally Mandated Labor and Environmental Concerns Ignored
A little-noticed provision in the proposed US-Singapore Free Trade Agreement
allows products produced on two Indonesian islands to get the benefits of the
agreement without adhering to key labor, environmental, and other obligations.
A new issue
brief by Carnegie Senior Associate Sandra Polaski argues that this problem
is serious enough to torpedo the entire agreement. The brief is available at
www.ceip.org/trade.
The "Integrated Sourcing Initiative" (ISI) in the US-Singapore Free
Trade Agreement (FTA) allows products produced on the Indonesian islands of
Bintan and Batam (and perhaps other territories to be added later) to be treated
as if they were of Singaporean origin for benefits under the agreement. However,
neither Indonesia nor Singapore would be required to assume any of the obligations
of the agreement with respect to production in those two islands. Adherence
to labor laws, environmental protections, and any other provisions of the trade
agreement requiring effective law enforcement simply would not apply.
If the provision is included, a U.S. congressional mandate that all U.S. trade
agreements include such protections will be flouted, and a dangerous precedent
will be set, says Polaski. She argues that it will create second-class areas
where labor and environmental objectives can be ignored. The concern is real
in Indonesia, the author writes, citing labor rights problems as an example.
The State Department has found little enforcement of minimum wage, child labor,
and other labor laws as well as credible evidence of collusion between employers
and police and military in intimidation of workers who try to exercise their
rights.
This critical loophole should be closed before President Bush signs the FTA
in May, she writes.
The author suggests several ways in which this problem can be addressed, and
argues that a timely solution would both preserve the letter and spirit of the
Trade Act of 2002 and give Indonesia a timely incentive to tackle longstanding
problems with rights and rule of law.
Sandra Polaski
is a senior associate with the Trade,
Equity, and Development Project at the Carnegie Endowment. She served from
1999 to 2002 as the special representative for international labor affairs at
the U.S. Department of State, the senior official handling labor matters in
U.S. foreign policy.
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