Free Trade Scenario

Let’s look at a hypothetical situation to see what could happen to USPS employees trade rules such as those proposed under the new GATS and FTAA were in place.

In the months before the new GATS takes effect....

German based Deutsche Post (DHL) and Holland based TPG Post both have partially privatized national postal services that now compete in other countries. They gain the agreement of the European Union to challenge the U.S. Private Express Statutes -- which give USPS the exclusive right to carry letters for compensation -- as an illegal trade barrier under GATS.

About the same time, TransForce, Canada’s second largest trucking company, gets the agreement of the Canadian government to challenge the Service Contract Act as an illegal trade barrier under GATS.

As soon as the new GATS takes effect, the EU and Canada both file challenges before the World Trade Organization.

The EU claims that the Private Express Statutes violate GATS obligations to allow companies from other GATS nations to compete for the right to provide postal services in the United States.

Canada claims that the Service Contract Act is an illegal condition under GATS for awarding government authority contracts.

The United States chooses to contest the charges.

The World Trade Organization assigns the case to a panel of three “trade experts.” They meet in secret, at WTO headquarters in Geneva, Switzerland. Their ruling will be essentially final -- subject only to a very technical internal WTO appeal process.

After months of testimony and deliberation the WTO announces the panel’s findings.

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It rules that the Private Express Statutes and the Service Contract are, in fact, both violations of GATS rules.

It orders that the United States must bring these laws into conformity with GATS rules so that carriers from other WTO member countries are allowed to bid for the right to provide postal services in the United States.

And so companies from other WTO member countries are allowed to bid for USPS work without being required to pay prevailing wages to their workers.

The United States would have the option to refuse to honor the panel’s findings, but in that case the WTO would assess hundreds of millions of dollars of trade sanctions against US exports -- a politically near impossible position to maintain, even if we had a President committed to fair trade rather than “free” trade.

Thus Congress agrees to change the Private Express Statutes and the Service Contract. But US carriers -- such as FedEx -- put up a howl, insisting that foreign companies not get greater opportunities than US companies.

In the end, Congress changes the laws so that all competing carriers -- foreign and domestic -- are allowed to bid for USPS services, with no requirement that a prevailing wage be paid.

Duetsche Post and TPG, along FedEx and other companies, begin “cream-skimming” -- bidding to pick off USPS’s largest customers --such as Capital One with 1.4 billion pieces per year of presorted permit mail and Quebecor, the world’s largest commercial printer, which drop ships two billion pieces per year.

At the same time, USPS is required to accept TransForce’s bid to provide long-haul mail transportation on 30 key routes, even though the TransForce drivers will be paid less than $10 per hour and receive minimal benefits.

And US trucking firms begin to bid on other routes without having to abide by prevailing wage requirements.

We leave this hypothetical scenario now.... But if new GATS rules are adopted as currently envisioned this fictional case could become all too real.