Post #76 – TPP: A Deeply Flawed Partnership

(Note: A longer version of this post was subsequently published at

http://japanfocus.org/-Mel-Gurtov/4318/article.html.)

The American people have become used to government trickery in foreign affairs—wars and interventions based on lies and falsified evidence, “national security” used to justify the whittling away of privacy, classification of documents to hide embarrassing disclosures, massaging of budget figures to mask outrageous spending on arms, and claims of weakness in weapons systems that mask actual overkill capacity.

Now comes trickery in a different domain: trade and investment. It is called the Trans-Pacific Partnership (TPP), and it has the dubious distinction of being a piece of legislation that has substantial bipartisan support and strong presidential approval.  Eleven countries are awaiting the outcome in Congress as President Obama seeks approval to put the TPP on a “fast track,” meaning skipping hearings, public input, and amendments and going directly to an up-or-down vote.  Once passed, the TPP will do for US corporations operating in Asia what the North American Free Trade Agreement (NAFTA) did for them in Canada and Mexico—provide new incentives to send jobs abroad, increase corporate earnings, and remove more protections from both overseas and US environments and workers.

The TPP is partnership alright, but not of the sort you or I are likely to appreciate.  Instead of enhancing partnership with working people who need higher wages and job training, and with grassroots organizations that are fighting to protect our natural environments, the TPP will promote the interests of trading and investment firms in the cutthroat competition that has come to define globalization.  It’s all about providing a “level playing field” for US multinational corporations, as Assistant Secretary of State Daniel Russel recently explained (see http://www.state.gov/p/eap/rls/rm/2015/04/240121.htm). President Obama, who once resoundingly criticized all such mega-trade agreements, is now its biggest fan, proving once again that money talks just as loudly with liberal as with conservative leaders.  (But of course we all knew that from the Clintons’ ties to Wall Street, its favoritism to corporate donors, and its vigorous pushing of NAFTA.  Hillary, by the way, has waffled on TPP.)

Here are some of the specific drawbacks to the TPP.  Every one of them is also true of NAFTA.

 

  • Administration claims to the contrary, TPP will export far more jobs than it will create. It will encourage countries to further weaken their currencies’ value to promote exports to the US, thus widening the US trade deficit and reducing US jobs. At the same time, TPP will encourage US companies to invest abroad, and thus create jobs there. This consequence applies to free-trade agreements generally. Public Citizen, which tracks the impact of trade agreements, gives the example of the US-South Korea FTA since 2013. It has resulted in “a downfall in U.S. exports to Korea, rising imports and a surge in the U.S. trade deficit with Korea that equated to 60,000 more American jobs lost.”
  • By shifting jobs to low-wage countries, TPP will further undermine attempts by workers to unionize. The threat by companies to move from one low-wage country to an even lower-wage country is always there.
  • No provision is made to protect workers sidelined by the effects of the agreement. As Dana Milbank points out in the Washington Post, President Obama lost an opportunity when the TPP was being drafted to insert provisions for worker training and spending on public works (“infrastructure”), both areas that the US spends far less on than the Europeans (http://www.washingtonpost.com/opinions/the-trans-pacific-partnership-trade-deal-is-an-abomination/2015/04/24/903e5a12-ea85-11e4-aae1-d642717d8afa_story.html).
  • Poor people in agriculture abroad also face the prospect of having to emigrate when corporate exports from, say, the US outprice locally produced goods. (Under NAFTA, the classic case is imports of cheap American corn, which flooded the Mexican market and forced thousands of campesinos off the land.)
  • It will undermine environmental, health, and safety laws because, as with the infamous Chapter 11 of NAFTA, TPP will allow countries that are blocked by regulations in another country from exporting certain below-standard goods—such as fish, fuel, timber, tobacco, and fruit—to sue in a special international court of arbitrators for financial redress on the basis of “restraint of trade.” Under the TPP, the special court’s ruling cannot be challenged in US courts. This crucial provision, called Investor-State Dispute Settlement, reduces environmental and public-health protections to the least common denominator.  (Senator Elizabeth Warren has warned about this provision at washingtonpost.com/opinions/kill-the-dispute-settlement-language-in-the-trans-pacific-partnership/2015/02/25/ec7705a2-bd1e-11e4-b274-e5209a3bc9a9_story.html. On the threat TPP poses to local food safety laws, see Mark Bittman’s article, www.nytimes.com/2015/04/22/opinion/obama-and-republicans-agree-on-the-trans-pacific-partnership-unfortunately.html.)
  • The special court operates in secret. Its decisions are binding on governments, and prevail over local laws and regulations.
  • The approval process for TPP is entirely undemocratic. The public has no “right to know” about the agreement’s contents.  And putting the TPP on a fast track is simply a way to avoid Congressional and public debate.

 

But TPP is more than a trade agreement; it has, at least for Washington and Tokyo, an equally important strategic dimension. The US Office of Trade Representative stated last year:

 

“TPP is as important strategically as it is economically. TPP would bind together a group that represents 40 percent of global GDP and about a third of world trade. Strategically, TPP is the avenue through which the United States, working with nearly a dozen other countries (and another half dozen waiting in the wings) is playing a leading role in writing the rules of the road for a critical region in flux.”

 

Translated into plain English, it’s all about China, the “800-pound gorilla in Asia [that] will create its own set of rules,” according to the President.  And for some governments, such as Japan’s, and influential pundits, such as Thomas J. Friedman of the New York Times, determining the rules of the game to outflank China should be the essence of the argument in favor of the TPP.  As Friedman wrote, agreements like TPP “would both strengthen and more closely integrate the market-based, rule-of-law-based democratic and democratizing nations that form the backbone of the World of Order” (www.nytimes.com/2015/04/29/opinion/thomas-l-friedman-on-trade-obama-right-critics-wrong.html).

A clearer “us versus them” world view could not have been written. You can see why some folks in Beijing see the TPP not as an opportunity for cooperation but as another element in the US strategy to encircle China—and why, in Washington, the selling of TPP requires hyping the China threat, thus reinforcing Chinese suspicions.  To be sure, the Chinese are not standing still when it comes to Asia-Pacific economy; they are lining up their own tariff-cutting, investment-friendly, loan-approving groups in Asia, and those groups will have even less environmental and safety protections built into them than the TPP or NAFTA.

Since they have been invited to join the TPP but not to set its rules, the Chinese are doing what comes naturally these days: creating groups where they have preponderate influence in setting the rules, just as happened at the end of World War II when the US led the way in founding the World Bank and International Monetary Fund, and later the Asian Development Bank. The China-backed groups are the Regional Comprehensive Economic Partnership, the Asian Infrastructure Investment Bank, and a Free Trade Area of the Asia-Pacific, not to mention a Silk Road Economic Fund.  Of course Washington resents these Chinese “intrusions,” especially since China is signing up countries friendly to the US, including the European Union and possibly Taiwan, in the AIIB.  US officials are encouraging the Koreans and Japanese, among others, to stick with the TPP and not join China-sponsored organizations.  But the pressure isn’t working, nor should it.  Americans believe in competition, don’t they?

Regardless of what China does, Congress should defeat the TPP legislation.  From a human-interest point of view, it fails the test of genuine partnership.  No trade or investment agreement should be undertaken that pays mere lip service to environmental protection, puts corporate profits ahead of human rights, and interprets globalization to mean nothing more than getting ahead of the competition.  There is a national security dimension to this bill, but it has to do with the way trade contributes to inequality in our streets and not to strategic balancing against China.  Think Baltimore, not Beijing.

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2 Comments

  1. The issues covered in post #76 sadly tell where we are going. Opposing this steamroller feels hopeless and letters to politicians have been answered without reference to the secretive supra-national ISDS court or retraining victims of jobs shipped out. It is very hard to understand why Obama, so far from his beginnings, failed to insist on retraining plans. One aspect that Congress might possibly influence could be insisting on provisions for funds to retrain those who do lose jobs to TPP outsourcing. But that provision must be accompanied by a very clear and broad, inclusive path on how to attribute the job losses to TPP to ensure eligibility for retraining and to keep funders from weaseling out of the obligation to discharged employees. Yes, I’m skeptical that Congress can succeed, but it should try. Wyden is a particular disappointment on this issue. Merkeley gets it.

  2. This president is so anxious to provide one last great give-away to corporate greed and Wall Street finance (his backers) that consideration of what’s best for the US hasn’t even entered his mind. He is the best Republican since Bill Clinton, and they both ran on the Democratic Party ticket. What frightens me most of all however are the Finance and Investment measures limiting capital controls and allowing individual companies to bring disputes against governments. This nearly guarantees economic crashes in every signatory country every few years (except the US and possibly Japan, if they sign). Economic and human development will be severely hindered under the TPP. As far as Congress altering the trajectory of TPP approval, I don’t see that happening. The Congress hasn’t done what is in America’s best interest since the Johnson Administration (or at least it feels like it’s been that long).

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