Sunday, October 18, 2015

TPP And Fair Trade

Walmart Container Ship Is Poster-child Of Bad Policy
The recent signing of the Trans-Pacific Partnership (TPP) brings together 12 nations that account for about 40% of the global economy and would mark the biggest liberalization of world trade in more than a decade. As things stand Congress will only be able to vote up or down on ratifying the final negotiated agreement and will not be able to amend it. Rejection of this agreement would be seen as marking the upper limit in the decades of steady trade liberalization that has fueled globalization. Many critics exist because these trade deals over the years have been blamed for environmental problems and exacerbating economic inequality within many developed economies as manufacturing jobs have been outsourced to low-wage countries. Internet activists also claim the deal would curb freedom of speech, other detractors even charge it would enshrine currency manipulation.

Americans should expect the politically heated debate over the new trade agreement to continue. To clarify, what we are looking at are two separate agreements, the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). As we view the global economy we must ponder how much of this is about individual governments giving up control and becoming subservient to corporate “efficiency” and the desire of companies to both develop and control future rules. Many people see the global economy as currently being run as an ill-regulated business model tilted to favor big business. With this agreement is the promise it will create new jobs, we would be wise to expect that will turn out to be largely a myth.

The more controversial of the two agreements is the TPP and it is most front and center in the news. This agreement is a new U.S. led Pacific trade pact that pointedly excludes China, many of those promoting it hope it could cause China to lose influence and key export markets, but observers say the web of bilateral deals Beijing has forged is enough to maintain its global clout. At issue is the exact language and details of the agreement, summaries indicate the agreement will affect tariffs, workers' wages, intellectual property, and environmental regulations in the U.S. and 11 Asia-Pacific countries. Some people view the Trans-Pacific Partnership (TPP), currently being pushed by the Obama administration and its corporate allies as a blatant attack on labor, farmers, food safety, public health and even national sovereignty.

Details of the agreement which will have broad implications have been kept largely secret so most of us have little knowledge of its contents. While being negotiated even members of Congress didn't know much of its details because it is mostly the product of corporate lawyers. Making the agreement even more controversial is the belief held by many Americans that bad trade deals with low-wage countries have contributed to our current economic woes. When Massachusetts Senator Elizabeth Warren, came out strongly against these agreements Obama said the Massachusetts senator was “absolutely wrong” and accused her of speculating about the contents of the emerging 12-nation trade deal for personal gain. Many people see Obama's criticism of Elizabeth Warren as not only disrespectful but as disingenuous. His statement did little to quell the controversy, instead, it seemed to throw fuel on the fire.

It should be pointed out that just because the President says someone is wrong on an issue does not make it true. Former Labor Secretary Robert Reich called the TPP “NAFTA on steroids”  Senator Warren and those concerned that a trade agreement with low wage nations will not be a great job creator for America have history on their side. Economist Dean Baker said, “This really is a deal that’s being negotiated by corporations for corporations, and any benefit it provides to the bulk of the population of this country will be purely incidental.” It is difficult to say why Obama sees this as a big plus, but it’s worth noting that in 2008, as a presidential candidate, he said, “I voted against CAFTA, never supported NAFTA, and will not support NAFTA-style trade agreements in the future.”

Historically, trade laws are geared to enrich the “mother” country and was often used to build a nation. Following World War II free trade arguably benefited the economies of the countries involved. But the new laws, starting with 1994’s North American Free Trade Agreement (NAFTA), recognized that capital is now mobile, it moves about the world and owes allegiance to shareholders rather than loyalty to any one country. With the old saying that "all politics are local" in mind, politicians remain mixed on these plans. Those supporting the TPP, claim it will be a boon for America when it reduces tariff barriers to vast Asian markets and strengthens protection for intellectual property a strong plus for America.  Moreover, the overall gain is more than just economics. In our competition with China for influence in the region, they reason it would anchor our relations with Pacific Rim nations keeping them out of China's orbit.

In heralding the agreement which he touted as historic, U.S. President Barack Obama said: “We can’t let countries like China write the rules of the global economy” and implied without it America will be left dangling in the wind with American businesses and American agriculture suffering in ways that will cost the U.S. jobs. While all signatories championed the benefits TPP will bring in kick-starting sluggish global growth, much of America's political motivation revolves around the idea it provides a strategic bulwark to China’s growing  economic and military power. Ironically, it is a Republican controlled Senate that is most inclined to give the administration the approval it wants while job protecting Democrats backed by unions rile at the deal. We should also remember that other countries might still hesitate to fall in line and embrace TPP as they realize they gain little by changing the status quo.

Politicians and trade negotiators in every country have their own issues and are facing domestic constraints, it is only prudent that we question the merit of these agreements. Free trade is often credited for creating more jobs than it does and the TPP in some ways is more objectionable than NAFTA. At least NAFTA was intended to improve our neighborhood, it was thought that when Mexico and Canada benefited, America would gain some degree of "safer borders" and a mutual interest would be served. NAFTA is the paradigm of what are most accurately called deregulation deals. It promised better jobs in both the United States and Mexico. Instead, as well-paid workers in the United States were losing jobs to low-paid workers in Mexico, badly paid Mexican workers were losing jobs to those in China who would work for even less. This, in turn, places more pressure on workers in the United States.

We should not lose sight of the fact that while free trade is important, fair trade is far more so and should be the main issue. Developing a long-term sustainable economic system that is balanced would contribute to both global cohesion and the world economy. Nationalistic exploitation of trade agreements has occurred throughout history and it is naive to think such schemes will suddenly end. The changes brought about by the development of the global economy have been hard for many. Promises of widespread prosperity have fallen short and we have seen the benefits flow to only a few. Considering this, it is little wonder trade has become such a heated issue. I see no quick fix nor can I be optimistic the proposed agreements will bring about anything other than another system and legal framework for long drawn out arbitration that dispenses solutions that neither thrill or satisfy.


  1. Any agreement done without transparency is suspect. What is fascinating is that the sheep have not had enough of democrat and republican nonsense.

  2. Agreed, and just the size of this agreement over 5,500 pages, means it is far from transparent!