Free Trade with Martinelli’s Panama: A Bad Deal for All

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Washington is currently considering three free trade agreements (FTAs) that await congressional ratification. While U.S. lawmakers hesitate to approve deals with Colombia and South Korea, the proposed U.S.-Panama FTA does not seem to generate much controversy. Although the ongoing transgressions in Panama have not made big headlines in the States, the events transpiring in that country warrant very serious scrutiny. Law 30—nicknamed the “sausage law” because it crams many unrelated provisions into one omnibus piece of legislation—was recently passed by Panama’s National Assembly in an effort to fast-track U.S. approval of the FTA. While the new law simultaneously amends the penal code and regulates commercial aviation, some of its other stipulations dramatically weaken Panama’s labor standards.

Panamanian Lawmakers intentionally slipped these provisions into the new legislation in order to minimize opposition from civil society. The move reeks of political and economic opportunism on the part of President Ricardo Martinelli and his pro-big business cronies in the National Assembly. Though the measure ostensibly seeks to improve the investment climate, it does so at the expense of the average Panamanian worker, dismantling traditional labor rights in an attempt to encourage ratification of the FTA. Given its controversial aspects, U.S. lawmakers ought to reject this FTA lest they condone the intolerable labor conditions espoused by the increasingly authoritarian Martinelli.

Law 30 stipulates that employers are no longer required to automatically deduct union dues from workers’ pay, effectively ensuring that union funding will decrease dramatically and therefore severely weaken the country’s independent labor movement. Furthermore, the law sanctions the right of employers to dismiss and replace striking workers. As soon as the measure passed, a Chiquita subsidiary announced its decision to forgo paying the now-optional union dues, provoking a massive strike by angry workers. Police moved in to quell the mounting protest. The heavy-handed government reaction resulted in three deaths—two of them by police bullets—while official sources reported hundreds of injuries as well as others being held under detention. The Martinelli administration backed off by temporarily suspending the controversial provisions of the anti-labor legislation but has not agreed to repeal Law 30.

With abuses ranging from arbitrary arrests of protesters to the repression of journalists, the Martinelli administration is demonstrating its utter contempt for human rights when narrow economic objectives are at stake. This attitude has manifested itself in a state effort to clamp down on what it sees as unfriendly media coverage, arresting journalists without filing any specific charges. Law 30 also frustrates environmentally-motivated protesters due to a provision that relaxes ecological regulations for certain projects duplicitously said to be in the nation’s “social interest.” Moreover, resistance to Martinelli’s authoritarian tendencies is coming from both ends of the political spectrum and all sectors of society, with lawyers, intellectuals, business leaders, economists, and human rights activists decrying his belligerent style of governance.

As for perceptions back in Washington, Obama approached the subject of FTAs with caution and even outright opposition in the past. During his presidential campaign, he vocally opposed a FTA with Colombia—a position he has since changed—due to Bogotá’s notorious record against organized labor. He also originally opposed CAFTA-DR because it did “little to address enforcement of basic environmental standards in the Central American countries and the Dominican Republic,” as he stated in an Op-Ed that appeared in the Chicago Tribune in 2008. In the past, many had regarded Panama’s labor and environmental laws as fairly commendable, but the increasingly relaxed standards dramatically altered that reputation for the worse. Given the current state of affairs, Obama’s support for the Panama FTA demonstrates a complacent disregard for decent labor and environmental standards, priorities and principles he held high during his campaign. The U.S. must, in the name of fair trade and genuine respect for the basic rights of Panamanian workers, stand up to what is now a patently bad deal. Those who supported Obama during his campaign look on in hopes that he will not disappoint by turning back on his once-progressive foreign policy agenda.