By The Hill Staff - 02/21/07 12:00 AM EST
Rep. John Murtha (D-Pa.), a close ally of House Speaker Nancy Pelosi (D-Calif.), is calling elements of a Peru free-trade agreement (FTA) signed by the Bush administration a threat to national security. The chairman of the House Defense Appropriations subcommittee has warned Democratic leaders on trade that the deal grants a United Arab Emirates company the ability to invest in U.S. ports.
Murtha has asked Ways and Means Chairman Charles Rangel (D-N.Y.) to demand that the administration alter the free-trade deal it negotiated with Peru to prevent enterprises there from investing in U.S. landside port activities.
If the administration fails to make such changes, Murtha and Rep. Gene Taylor (D-Miss.) charge that a “trade pact-granted right” to invest in U.S. ports would be handed to Dubai Ports World (DPW). The United Arab Emirates-based company last year found itself at the heart of a controversy when the administration gave it the go-ahead to operate several U.S. ports.
Murtha and Taylor argue that the issue is particularly sensitive with the pending Peru FTA because Dubai Ports World has acquired a 30-year concession to develop and operate a new container terminal just outside of Lima. The move makes DPW an enterprise in Peru that under the FTA would be able to make investments in the U.S., according to the congressmen.
Congress seemed set to approve legislation blocking
DPW’s ability to take over U.S. ports before the company voluntarily backed out of the deal. DPW last week completed its sale of U.S. ports.
Like other U.S. free-trade agreements, the one with Peru includes a provision allowing the U.S. to block investments if they are considered national-security threats. Murtha and Taylor, however, argue the provision is insufficient since Peru could in turn sue the U.S. under the deal’s dispute-settlement system. A successful challenge could cost the U.S. millions in taxpayer dollars, the two congressmen say.
Under the Peru FTA, a dispute could be brought either to a World Trade Organization panel, or to a tribunal set up under the Peru FTA that would consist of one U.S. national, a Peruvian national and a national from a third country.
“Members of Congress again will be asked to support these agreements relying on the hope that a foreign tribunal deigns to permit us to justify our violation of the agreements by accepting our claim of an Essential Security Exception,” Murtha and Taylor wrote in a letter last month to Rangel and Rep. Sandy Levin (D-Mich.), the chairman of the Ways and Means Trade subcommittee.
“It is unconscionable to knowingly agree to any trade agreement that contains obligations that limit our national security authority regarding sensitive infrastructure such as our ports,” the letter said.
A Ways and Means spokesman noted that Rangel and Levin raised the same questions during debate over the U.S.-Oman free-trade deal last summer, and said Rangel and Levin would stay in touch with Murtha and Taylor on the issue. A Levin spokeswoman went further and said Levin’s view is that the landside port provision needs to be changed in the Peru deal.
So far this year, public discussions between House Democrats and the administration on the Peru FTA and a similar deal with Colombia have centered on labor provisions. For example, Rangel and Levin did not raise the ports issue with U.S. Trade Representative Susan Schwab during a hearing on trade policy last week.
The ports issue nearly sank the generally uncontroversial Oman deal. The Republican-controlled House approved the Oman FTA in a 221–205 vote, with only 22 Democrats voting in favor.
During the Oman debate, the Office of the U.S. Trade Representative argued that under the “essential security” provision in U.S. trade deals, nothing in a deal can prevent the country from applying measures it deems necessary for protecting essential security. USTR also emphasized that this essential-security exception is self-judging, meaning that the validity of the defense in a trade dispute before an international tribunal would be based on what the U.S. government considers necessary to protect essential security, rather than the conclusions of a tribunal.
“This is really a red herring,” said USTR spokesman Sean Spicer, adding that USTR has worked to educate members about the essential-security provision since the Oman debate. USTR also has noted that those participating in landside port activities do not control, manage or operate a U.S. port. Landside port activities include operating and maintaining docks and loading and unloading vessels.
Rangel, Levin, then-Rep. and current Sen. Ben Cardin (D-Md.) and Rep. Xavier Becerra (D-Calif.) last year asked the administration to clarify how this self-judging interpretation was consistent with trade deals the administration has pursued. They noted the essential-security exception could be challenged in dispute settlement under the Peru FTA, and that World Trade Organization panels have suggested they could interpret whether the use of this exception was valid.