FREE TRADE AGREEMENT WITH OMAN DISREGARDS BEST INTERESTS OF U.S.

By Diane M. Grassi

Since the United States became a party to the North American Free Trade Agreement (NAFTA) in 1994, U.S. construct of the Foreign Trade Agreement (FTA) has changed considerably. Such agreements now have a much more profound impact on state and local economies across the country.

Generally, treaties with foreign governments were a vehicle for regulating tariffs and quotas relative to the export and import of products, but within the parameters of U.S. law. However, since 1994, FTAs have expanded to include non-tariff barrier issues and regulated under the purview of international law.

Unbeknownst to most of the public regarding the Dubai Ports World agreement with the U.S., approved by the Committee for Foreign Investments in the U.S. (CFIUS) in February 2006, enabling the country of Dubai to take over port operations of six major U.S. east coast ports, was that the U.S. had been in negotiations for a FTA with the United Arab Emirates (UAE) since March 2005. While members of both houses of the U.S. Congress feigned shock that there was such a deal in the works, that FTA in particular provided the backdrop to allow such takeover of U.S. strategic assets, regardless of national security risks.

Since Dubai verbally agreed in March 2006 to sell its rights in the U.S. port operations to a U.S. entity, which to date does not exist in writing, the FTA with the UAE, of which Dubai is one of its seven emirates, has been put on hold. However, a similar deal with the country of Oman, also negotiated since March 2005, was approved by the U.S. Senate on June 28, 2006. The passage of the Oman FTA, still to be ratified by the entirety of the House of Representatives in July 2006, is considered to enable easier passage of several other U.S. FTAs pending, which include Peru, Thailand, Vietnam, as well as the UAE, among several others.

Unlike other federal legislation, however, the FTA is signed by the President prior to ratification, as President Bush did so on January 19, 2006 with the Oman FTA. Unlike most pending legislation, the Oman FTA is under the auspices of the Trade Promotion Authority (TPA). The 2002 Trade Promotion Act allowed for “fast track” status before the Congress which hands over its authority to the President to negotiate the terms of the agreement. The President then hands over to the Congress the finalized legislative package. However, the Congress is not given the right to amend any of the agreement’s provisions but only to take a vote. Also, the Congress must vote upon its passage within 90 days subsequent to its formal submission from President Bush, which was on June 26, 2006.

Yet, due to the complex nature of such an agreement, the rush-to-ratification style lawmaking does little to clarify the voluminous rules and regulations for lawmakers. And passage of such legislation includes irrevocable provisions once the pact is signed. There are arguably three or more major areas of concern with the Oman FTA with the U.S.

At issue are the present labor laws in Oman, its continued boycott of products from Israel and the dispute resolution process which stands to override U.S. national, state and local laws. According to numerous national and international labor rights organizations as well as the AFL-CIO, Oman labor abuse practices are rampant. All workers are denied basic labor rights. They include the inability of workers to organize in order to impact fair wages and safe working conditions as well as humane treatment.

Oman has failed to measure up to the International Trade Organization requirements for fair labor practices. Additionally, 80% of Oman’s laborers are from the South Asian countries of Bangladesh, India and Pakistan, and have no legal rights to demand any changes in labor abuses, as they are foreign nationals. The only stipulation in the agreement is that Oman enforce its own labor laws. Yet, U.S. FTAs with Communist countries or those previously under Communist regimes have far more stringent language concerning labor rights abuses, upon which the U.S. insists. According to U.S. Trade Representative spokesman, Stephen Norton, “We have no reason to suspect that goods made with slave labor would be imported from Oman into the U.S.”

Although Oman assured the U.S. during negotiations that it no longer abides by the Arab League Ban of refusing Israeli imported goods and would disengage from the boycott, such is not the case. Oman’s Directorate of General Customs Mohammed Nasser recently told the Jerusalem Post that “even catalogs of commercial products that mention Israel would likely be seized by Omani authorities.”

And the hot button issue which has not been publicly addressed by the Congress is the potential for U.S. law conflicts under the terms of the U.S.-Oman FTA. Deeply buried in Chapter 11 of the agreement along with Annex 2, establishes that commercial disputes be settled under the realm of International Tribunals. Therefore, commercial activity agreed upon which includes operations of seaports, stevedoring and loading and unloading of goods either by Oman or any foreign entity or country which buys any of Oman’s service contracts or proprietary company interests, would override local, state or national U.S. laws. No distinction is made between commercial interests and those considered strategic national assets of the U.S., with no reference to national security considerations.

The objective of these trade deals, specifically in the Middle East is for the U.S. to garner support with allied nations in the interest of ending terrorism, as is the case with Oman, which is geographically closest to Yemen, Saudi Arabia and the UAE. But it could as easily be argued that the U.S is throwing the proverbial baby out with the bath water in approving such lax controls and oversight in such a vast agreement.

And it also can be argued that such agreements with the third world will put the final nail in the coffin for U.S. workers in the textile industry. They cannot compete with slave wages, nor should they. The U.S. has led the way for workers’ rights and wages and in eliminating child labor. Yet, federal trade agreements without enforcement will only continue to erode away any progress realized for workers not only outside of the U.S. but on its very shores.

While much lower energy costs also remain attractive for U.S. multi-national corporations setting up shop in the third world, it does not excuse the U.S. from making demands in the interest of human decency over strategies to accumulate immediate profits. The waiving of 100% of the tariffs, in this case between goods and services flowing between the U.S. and Oman, does not alleviate such U.S. obligations as fairness and decency, which the U.S. has always represented.

While once the world’s watchdog on human rights, the U.S. has given new meaning to “free” trade in 2006. And it comes at the cost of not only the American worker’s quality of life but predominantly on the backs of those third world workers who remain without the right to take a stand. Worst of all, it is but another example of the flagrant failure of both houses of the Congress to realize the ramifications of its members’ inactions and laziness. For if lawmakers were given a questionnaire on the provisions of this latest U.S.-Oman FTA, rest assured that as many as 90% of them probably would take the Fifth.

Copyright 2006 Diane M. Grassi
contact: dgrassi@cox.net