Government cables from Dan Sullivan’s time at the U.S. State Department paint a picture of a globe trotting cheerleader for neoliberal policy.
Sullivan served as the Assistant Secretary of State for Economic, Energy, and Business Affairs under Condoleezza Rice from 2006 until Barack Obama took office in 2009.
Neoliberalism gained traction during the administrations of Ronald Reagan in the U.S. and Margaret Thatcher in the U.K. The dominant policy ever since, neoliberalism is a philosophy of trade liberalization, deregulation, and mass privatization.
The tool of neoliberalism is the free trade agreement (FTA), the most well known of which is the North American Free Trade Agreement (NAFTA) passed under Bill Clinton. FTAs set trade rules between partner countries while eliminating trade tariffs.
In place for 20 years, NAFTA is one of the most well established FTAs and has been closely watched by economists. According to the Council on Foreign Relations, the U.S. has developed a trade deficit with Mexico under NAFTA. In addition,
Edward Alden, a senior fellow at the Council on Foreign Relations, notes that wages haven’t kept pace with labor productivity and that income inequality in the United States has risen in recent years, in part due to pressures on the U.S. manufacturing base. To some extent, he says, trade deals have hastened the pace of these changes in that they have “reinforced the globalization of the American economy.”
Globalization is the end product. Ultimately, the origin of products becomes irrelevant or impossible to determine. Companies have no loyalty to nations or workers. Instead, they move from place to place seeking the lowest operating costs (i.e., the lowest wages and fewest regulations).
An example of FTAs fostering the questionable provenance of goods is the United States-Korea (KORUS) FTA. KORUS was negotiated under George W. Bush and passed in 2011 under Obama. Critics of the agreement worried that North Korean goods manufactured in the Kaesong Industrial Complex would enter the U.S. without tariffs.
While the analysis of the Congressional Research Service generally disputed this, it acknowledged, “when a finished product’s component parts are manufactured in many countries, as is often the case in today’s global trading environment, determining origin can be a complex process. The automotive sector is a prime example because the global supply chain is extensive.” It concluded that North Korean car parts could easily make their way into a vehicle marked “Made in Korea” and exported without tariff to the U.S.
Alaska’s senators and lone congressman, Don Young (R-Alaska), who is running for re-election, all voted in favor of the Korea FTA. Mark Begich (D-Alaska), running against Sullivan for re-election to the U.S. Senate, issued a statement in December 2010, saying, “Korea is one of Alaska’s major trading partners, purchasing millions of dollars worth of Alaska energy, seafood and other products. This agreement is welcome news for the Alaska business community.”
Alaska exports to Korea totaled $705 million in 2013, second only to exports to China. FTAs support 36 percent of Alaska exports. “During the past 10 years, exports from Alaska to these markets grew by 67 percent, with NAFTA, Singapore, Korea, Australia, and Panama showing the largest dollar growth during this period,” according to the U.S. Department of Commerce International Trade Administration.
Sullivan Touts FTAs in North and Central America
While direct impacts on U.S. jobs have been hard to quantify under NAFTA, the clear losers of the deal have been poor Mexicans. Two million small farmers have lost their jobs due to the impact of subsidized U.S. corn entering the Mexican market. Many of these farmers have sought agricultural work in the U.S.
After Sullivan’s visit to Mexico late in 2007, when he promoted “harmonizing” the various FTAs in North and South America, a confidential government cable admitted, “Mexicans are well aware that they have failed to extend the benefits of NAFTA to the 40 percent of its population still living in poverty.” Mexican Secretary of Finance Agustín Carstens told Sullivan and company that Mexico would continue to see migration to the U.S. under NAFTA without rural development. Mayor Marcelo Ebrard of Mexico City agreed.
Anticipation of NAFTA’s impact led to an uprising on the day of its implementation in the Mexican state of Chiapas. The Zapatistas (EZLN), named after the revolutionary leader Emiliano Zapata, took over a chunk of southern Mexico to draw attention to the plight of Mexico’s impoverished and indigenous population. Today, the Zapatistas advocate indigenous autonomy through community schools and health clinics.
The U.S. passed the Dominican Republic-Central American FTA (CAFTA-DR) during the second Bush Administration. Sullivan made several trips to Central America in 2007 to promote the first anniversary of CAFTA-DR’s implementation in most signatory countries.
In November 2007, Sullivan made the same pitch to Ana Vilma de Escobar, Vice President of El Salvador, that he did in Mexico City, touting the successes of trade liberalization and seeking a “‘knitting together’ [of] the different hemispheric agreements[.]” (That plan was later dubbed Pathways to Prosperity in the Americas. Begun under Bush, the program has grown under Obama.)
But those successes are subject to debate. On that same visit, Salvadoran non-governmental organization (NGO) officials told Sullivan that “the main beneficiaries of CAFTA-DR have been the big firms already exporting to the United States. Rural agricultural communities faced significant hurdles.” The maquila industry, which assembles clothing from imported components, was already suffering in 2007 from Chinese competition.
Meanwhile, Fruit of the Loom and two other unnamed American clothing companies established operations in El Salvador in 2006 under CAFTA-DR that created 2,600 jobs — jobs that could have otherwise gone to American workers.
Undermining Democracy in Central America
A day before arriving in El Salvador in February 2007, Sullivan flew to Nicaragua to discuss CAFTA-DR with the country’s leaders. He got into a de facto debate with Nicaraguan President Daniel Ortega, who said that CAFTA was “not delivering sufficient poverty relief.” Sullivan pointed out the recent Cone Denim factory construction in Nicaragua, a $100 million project the American company said would not have happened without CAFTA.Photo by: Palacio de Carondelet, rueda de prensa del Sr. Presidente de Nicaragua, Daniel Ortega. Creative Commons Licensing.
Ortega said his government had honored its commitment by building an access road to the factory. According to an unclassified cable, Ortega “noted that in order to eliminate extreme poverty, the [government of Nicaragua] needed to encourage projects such as the large textile factory, but also to provide incentives for small producers that are ‘disadvantaged under CAFTA.'” He pointed to U.S. corn subsidies as an example. “[Ortega] stated that after years of privatization and neoliberalism there has been economic growth, but poverty and illiteracy still remain.”
Later that day, Sullivan met with the Executive Board of the American Chamber of Commerce (AmCham). AmChams are independent organizations that promote trade between their countries and the U.S. They are affiliated with the U.S. Chamber of Commerce.
AmCham Board members told Sullivan that “AmCham committees are creating public positions on rule of law and economic abuses on the part of the [government of Nicaragua],” according to a confidential cable. “Sullivan applauded this move saying that it is not just businesses at stake, but the future of Nicaraguan democracy.”
In a meeting with Eduardo Montealegre, who lost to Ortega in the 2006 presidential election, Sullivan doubled down on his comments to AmCham, “emphasiz[ing] that the private sector is attentive to Ortega’s moves and that this group could potentially provide leverage if Ortega starts to get out of control.”
These are indelicate remarks by a U.S. official in Nicaragua. As Sullivan intimated in his 2007 speech to AmCham, the history of U.S. intervention in Central America is bloody. During the Reagan Administration, officials orchestrated the illegal sale of weapons to Iran, covertly funding the Nicaraguan Contras, a rebel group fighting the socialist Sandanista government. The whole episode came to be known as the Iran-Contra Affair.
Ortega is a Sandanista, democratically elected in what the Carter Center calls an “undisputed victory.” Sullivan’s remarks in 2007 threatened to destabilize a very young democracy in a country that suffered from a terrible civil war.
Nicaragua is not the only country where the U.S. put trade ahead of national sovereignty. In September 2007, Pedro Miguel Gonzalez was elected president of the Panamanian National Assembly. Gonzalez was acquitted in Panama in the death of a U.S. serviceman, but is still wanted in the U.S. The business community was concerned that his election could jeopardize an FTA negotiated between the U.S. and Panama and pressured Gonzalez to step down.
Shortly after Gonzalez’ election, U.S. Commerce Secretary Carlos Gutierrez traveled to Panama, telling Panamanian media that a “problem now exists that did not exist before.” A confidential cable addressed to Sullivan summarizing the visit described Gonzalez as a “boil” to be “lance[d].” Gutierrez met with Panamanian President Martin Torrijos and advised him that Gonzalez “complicate[d]” congressional approval of the FTA. He recommended Torrijos “resolve the issue sooner rather than later.”
However, at a lunch during Gutierrez’ visit, the National Assembly’s Commerce Committee Chairman Yasir Purcait told the American delegation that removing Gonzalez from the presidency to further a trade deal with the U.S. would be a blow to Panamanian sovereignty.
The Panama FTA was eventually passed under Obama in 2011. Opponents were critical of the deal, citing Panama’s record on human rights, the environment, and reputation as a corporate tax haven. While Don Young voted for the FTA, Begich voted against it.
Sullivan and the Colombia FTA
The Colombia FTA was even more controversial than that of Panama. In 2006, after negotiations were completed, Sullivan met with leaders from several of Colombia’s trade unions, the deal’s harshest critics. The three men represented about 250,000 Colombian workers.
Sullivan told them that the new FTA would reduce poverty by making Colombia more competitive, but the unionists disagreed. Carlos Rodriguez of the Central Union of Workers said that 75 percent of workers were employed under temporary contracts or subcontracts. “Rodriguez argued that organized labor could not accept poor work conditions under the argument of, ‘We have to compete,'” according to a confidential cable.
Rodriguez argued that the FTA eliminated protections from the scale of the U.S. economy and its technological superiority. Colombian industries, such as agriculture, would not be able to compete, he said. William Millan of the General Work Confederation added that Colombia did not have the necessary production surplus for export. Nor, said Apicedes Fernandez of the Confederation of Colombian Workers, did workers have sufficient salaries to contribute to the economy.
“We do not say no, simply for no’s sake,” concluded Colombia’s labor leaders.
In a January 2008 return visit with Condoleezza Rice, Sullivan met with the same union leaders and several others. They raised the same economic concerns, saying the FTA would cost thousands of Colombian jobs due to imports from the U.S.
Jose Luciano Sanin, Director of the National Unionist School, repeated the complaint that Colombian employers were contracting with agencies instead of directly hiring workers, thereby skirting benefit and social security payments.
The unionists also raised the issue of anti-union violence, which they said the government was not sufficiently addressing. Colombian President Alvaro Uribe told Rice and Sullivan in a separate meeting that, under his presidency, murders of unionists had fallen from 250 per year to 26 in 2007.
Colombian Prosecutor General Mario Iguaran told Rice and Sullivan during that same visit that his office had achieved convictions in 27 union murder cases in 2007 and arrested 69 members of the military for extrajudicial killings.
Despite these efforts, violence against trade unionists continues in Colombia. 29 unionists were murdered in Colombia in 2011 alone. Colombians filed suit against Coca-Cola in the U.S. for the intimidation, torture, and murder of trade unionists at the hands of paramilitaries employed by Coca-Cola. The case was dismissed largely for jurisdictional reasons.
2011 saw ten unionists murdered in Guatemala, like Colombia, one of the most dangerous countries in the world to be a unionist. After six years of pressure from the AFL-CIO and Guatemalan unions, the U.S. announced in September that it will seek arbitration for Guatemala’s failure to enforce its own labor laws under CAFTA-DR.
Sullivan and the WTO
The use of FTAs to enforce labor rights is unprecedented in the U.S. More often, trade deals are used to enforce the wills of corporations over governments.
In a February-March 2007 visit, Sullivan and U.S. Ambassador to El Salvador Charles Glazer accused Vice President de Escobar and Salvadoran government ministers of non-compliance with CAFTA-DR by not allowing imports of American frozen chickens, frozen turkeys, and eggs. In a preparatory meeting, Glazer and a small delegation threatened the Salvadoran Minister of Economy with World Trade Organization proceedings over the issue, according to a confidential cable.
The World Trade Organization (WTO) is the regulatory agency of global free trade. According to the book Whose Trade Organization?: A Comprehensive Guide to the WTO, “In most WTO cases, the country that launches the challenge wins. As a result, mere threats of WTO action now cause many nations to change their policies. The challenging country prevailed in an astonishing 75 out of 88 completed WTO cases — a success rate of 85.2%.”
One example is the pressure the U.S. applied to the European Union (EU) regarding genetically modified organisms (GMOs). The company most frequently associated with GMO crops is Monsanto, which has genetically modified crops like corn to be resistant to its Roundup herbicide. The EU would not import these crops under the precautionary principle, saying insufficient testing had been done verifying the safety of GMOs to warrant exposing its population.
The WTO ruled against the EU in 2006. In 2007, U.S. Ambassador to France Craig Stapleton sent a confidential cable to Sullivan warning that France was considering the suspension of cultivation of a common strain of Monsanto corn. Stapleton worried that the law would set a precedent and tilt the EU away from GMO. “Moving to retaliation will make clear that the current path has real costs to EU interests and could help strengthen European pro-biotech voices,” wrote Stapleton. “Country team Paris recommends that we calibrate a target retaliation list that causes some pain across the EU since this is a collective responsibility, but that also focuses in part on the worst culprits.”
By the time Sullivan visited France in 2008, the law had been watered down. Monsanto corn was still banned, but the French Trade Minister told Sullivan that could be lifted.
“We will continue to seek full EU compliance with the 2006 WTO ruling against the EU de facto moratorium on approving agricultural biotechnology,” Sullivan wrote in a cable to ambassadors and other officials. The U.S. would “increase access to, and markets for, biotech” in part by “[t]aking full advantage of the WTO biotech ruling by explaining the significance of the case, particularly to developing countries, and by stressing the global scientific consensus on the safety of ag-biotech products noted by the final WTO panel decision.”
The U.S. hasn’t always come out on top in WTO decisions. Shrimp producing Asian countries challenged the U.S. after the U.S. banned shrimp imports from countries that did not use sea turtle exclusion devices in their shrimp nets. The WTO ruled that the other countries had to agree to such a requirement, and the U.S. was forced to amend the Endangered Species Act. In a similar 2012 ruling, the WTO ruled that the U.S. “dolphin-safe” label on tuna cans discriminated against Mexican fishermen whose techniques could harm dolphins.
Most recently, the WTO ruled against the U.S. in July for imposing duties on China for alleged dumping of steel products and solar panels. The U.S. failed to prove that its domestic producers were harmed by the dumping, the WTO said.
Decisions like these led thousands of people into the streets during the 1999 WTO Ministerial Conference in Seattle. Some chained themselves together in major intersections near the conference in acts of civil disobedience, drawing an outsized reaction from police. The protests marked the first time that environmentalists cooperated with unions on such a large scale. While the “Turtles and Teamsters” disrupted the conference, it eventually collapsed because nations of the Global South felt they were being bullied by the U.S. and other developed economies.
Don Young voted in 2000 to withdraw from the WTO, but Sullivan, currently running for the upper chamber, encouraged developing countries in Asia to join. The U.S. formed an Economic Partnership Commission with Azerbaijan in 2006. Sullivan served as the American chair. The U.S. Embassy in Baku encouraged the commission to push Azerbaijan’s accession to the WTO, according to a confidential cable.
Joining the WTO was a focus of the inaugural committee meeting in February 2007. U.S. Trade Representative Paul Burkhead encouraged Azerbaijan to hurry because “standards go up and accession becomes harder every year, and he urged Azerbaijan to take advantage of the opportunity to have a seat and help shape the international trade agenda.” By August of 2007, however, Azerbaijan officials seemed to realize that bringing their various economic sectors, such as banking and insurance, into compliance with the WTO would take some time. Seeming impatient, Sullivan encouraged them to “press ahead,” according to another confidential cable.
On that same August 2007 trip, Sullivan also encouraged Turkmenistan to join the WTO.
Sullivan Uses Government Role to Help Private Corporations
Progressives and trade unionists have always despised neoliberalism, FTAs, and the WTO because of the perception that they tilt the balance of power toward multinational corporations. Libertarians, meanwhile, are enthusiastic about deregulation and privatization.
But libertarians tend to break philosophically with neoliberals on the subject of national sovereignty, subverted by trade deals and WTO decisions. In addition, rather than reducing the size of government, neoliberalism creates an extra layer with the WTO.
Also, in contrast to free market principles, neoliberalism picks winners and losers. In Sullivan’s case, the winners were multinational corporate behemoths and the losers the governments that challenged them.
Cargill, a multinational food producer and the largest private company in America, built a $150 million sweetener plant in Turkey in 2000. In 2006, the designation that allowed Cargill’s industrial activity on agricultural land was threatened. In addition to requesting a meeting with the Prime Minister of Turkey, Cargill asked to meet with Sullivan over the matter. In a confidential cable, U.S. Ambassador to Turkey Ross Wilson asked Sullivan to tell Cargill that embassy officials were discussing the matter with the government of Turkey.
When Sullivan visited Turkey later in 2006, the situation had magically been resolved. The American delegation thanked the government of Turkey for intervening on behalf of Cargill, “despite domestic criticism.”
The State Department used Sullivan as a tool to directly help oil companies. In 2007, the Nicaraguan government seized a fuel depot owned by Esso, the international trade name of ExxonMobil. Nicaragua sought to use the facility for imported Venezuelan gasoline. U.S. Ambassador Paul Trivelli recommended that Sullivan tell the Nicaraguan ambassador to the U.S. that Nicaragua was breaking its own laws and should return the property to Esso.
In another dispute between Chevron and Bangladesh’s state oil company Petrobangla, the embassy in Dhaka recommended Sullivan write a letter stating,
The United States Government is aware of the ongoing dispute between the People’s Republic of Bangladesh and Chevron which has been referred to arbitration with the International Centre for Settlement of Investment Disputes (ICSID). It is of serious concern to the United States government that the Government of Bangladesh is attempting to block the jurisdiction of ICSID in this matter, despite clear language in the Production Sharing Contract specifying ICSID as the proper venue for such disputes. I would like to point out the risk this situation presents to Bangladesh’s commercial reputation, as other companies watch this case closely for signals about the sanctity of contract in Bangladesh and treatment of foreign investors.
Sullivan also warned the government of Pakistan that it needed to pay Chevron on time or the company could leave.
What is intriguing about these examples is the U.S. government’s intervention on behalf of private entities with sovereign nations when it has no clear interest.
Neoliberal Policies to Continue?
The next person elected senator from Alaska will almost certainly face a vote on free trade. Obama ushered several FTAs through Congress that were negotiated by Bush, but he is keen to advance two of his own agreements that are currently being negotiated.
The Trans-Pacific Partnership (TPP) is a massive FTA involving the U.S. and 11 other countries on the Pacific Rim. The Trans-Atlantic Trade and Investment Partnership is an FTA between the U.S. and EU. Both have been negotiated in secret, although Wikileaks released TPP chapters on the environment and intellectual property rights. Critics say the documents foreshadow more of the same deference to corporations.
Sullivan has demonstrated his unabashed support for similar agreements. Mark Begich, however, has voted against two of three FTAs during his tenure in the Senate.
Though it runs counter to the messaging of the 24-hour news networks, and though it will result in cognitive dissonance for many readers, it must be said that economically, there is little difference between the policies of Obama, Reagan, George H.W. Bush, Clinton, and George W. Bush.
It is therefore ironic that Sullivan and conservative groups are running ads saying Begich votes in lockstep with Obama. Dan Sullivan spent three years turning the U.S. government into a corporate agent, traveling the world to convince people they needed more of it in their lives.
When it comes to trade, Dan Sullivan and Barack Obama speak the same language.