(R. M. Smith) – What is potentially the most significant foreign and domestic policy initiative of the Obama Administration? The Trans-Pacific Partnership. The what?
It is worth understanding just what this agreement is, and why it matters. To that end, I do apologize for the length, but I knew no other way to shorten it without leaving something vital out.
It is hard to know what is exactly in the TPP (Trans-Pacific Partnership). You certainly have not heard about it on any of the major news networks. Not CNN, not Fox News, and not MSNBC, let alone the local affiliates. Why has the news industry on both the left and right ignored TPP?
Today on the fundamental question of these trade agreements, the parties agree. President Barack Obama has pledged to double U.S. exports as a core policy goal, and the Democratic platform lists the TPP as a “historic high-standard agreement” that will help accomplish this. The GOP platform pledged, “a Republican President will complete negotiations for a Trans-Pacific Partnership to open rapidly developing Asian markets to U.S. products.” Both party leaders argue that exports are one key to creating high-quality American jobs.
So now, Americans are faced with the leadership of both political parties who are largely supportive of more NAFTA-style trade agreements. Yet, this isn’t new since NAFTA was passed with Republican support under a Democratic president. It does add evidence to the idea that the 2012 election is a carefully cultivated political debate in which core economic issues have been carved out.
Nevertheless, perhaps we should take a closer look at something that is so wonderful for our trade that cannot be read by the public or congress. What was it Nancy Pelosi said a about a similarly wonderful bill – “we have to pass it so we can see what is in it”?
There are two major concerns about agreements like this. One is that these agreements continue a transition from a democratic system toward one in which the rights of foreign corporations can trump laws passed by legislative bodies. Every time you have a new trade agreement, you expand the number of companies who can challenge American laws.
The second concern is that the TPP could become a conduit for the U.S. to become more dependent on China. American tensions with China cause genuine friction. This is not far-fetched, as America is positioning military assets in the region.
While negotiations started in 2007 (yes, with President Bush), most negotiating documents and draft chapters are classified. Stakeholders — including 600 corporations but also several labor unions including the AFL-CIO — can see the draft text, but the public and Congress cannot.
On Nov. 14, 2012 in Mexico City, Mexico, the PRD group of the Mexican Senate, along with the Mexican labor federation UNT and the campesino federation CONORP, hosted a one-day summit looking at the social and economic impacts of the Trans-Pacific Partnership Free Trade Agreement. The summit was held at the same time as delegations from the 11 TPP countries (Australia, Brunei Darussalam, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam and the United States) were meeting elsewhere in Mexico to negotiate the agreement.
Speakers at the summit included Sen. Isidro Pedraza Chávez (PRD, Mexico), Melinda St. Louis of Public Citizen (U.S.), Max Correa, Secretary-General of CONORP (Mexico), Rick Arnold of Common Frontiers (Canada) and Celeste Drake, trade policy specialist for the AFL-CIO.
Nevertheless, thanks to a few congressional representatives, one being Darryl Issa (R-CA), a few draft chapters have been leaked. One of the more controversial aspects that have been exposed include banning “Buy American” preferences in our procurement procedures. Other aspects that the American public may have issues with are the infamous “investor-state dispute settlement” (ISDS) provisions, which allow a single foreign company sue an entire country in a private arbitration court to challenge laws or regulations it does not like.
The agreement strengthens investor provisions, allowing a whole set of new disputes to be removed from the U.S. courts and remanded to international tribunals run by corporate trade attorneys. There are also concerns that the TPP would undermine access to HIV drugs and other essential medicines in countries that sign the agreement. A spokesperson for Doctors Without Borders even claimed, “Bush was better than Obama on this.” The ACLU claims that the copyright provisions in the TPP are “the biggest threat to free speech you’ve never heard of.”
Some of the other damaging clauses of TPP include natural resource concessions from the federal government, contracts to run utilities (public-private partnerships), and procurement contracts relating to infrastructure construction. In order words, if a government entity wanted to prioritize awarding a government contract to a local firm, the TPP would allow foreign firms to challenge this as a TPP violation. And the challenge wouldn’t be in an American court, it would be held in an international tribunal.
In another concerning development, the “Outlines of the Trans-Pacific Partnership Agreement” indicates that the Trans-Pacific FTA is likely to include much of the same investment text as the North American Free Trade Agreement (NAFTA). This includes the provisions that give foreign investors the extraordinary right to bypass U.S. courts and sue the U.S. government in an international arbitration panel if the investor feels it hasn’t been treated “fairly” or if a federal, state, or local law interferes with its expected profits.
These same rules give U.S. firms an incentive to invest overseas (taking U.S. jobs with them), so they can bypass the judicial process in foreign countries and sue our trading partners (often developing countries) before international arbitration panels.
This agreement is a core part of the “Asia pivot” that has occupied the activities of think tanks and policymakers in Washington but remained hidden by the drama of the election. More than any other policy, the trends the TPP represents could restructure American foreign relations, and potentially the economy itself.
The TPP is the first international commercial agreement pursued by the Obama administration to date from scratch. It would be the largest one since the 1995 World Trade Organization. It would link Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, Mexico and Canada into a “free trade” zone similar to that of NAFTA. The subject matter being negotiated extends far beyond traditional trade matters. TPP’s 29 chapters would set binding rules on everything from service-sector regulation, investment, patents and copyrights, government procurement, financial regulation, and labor and environmental standards, as well as trade in industrial goods and agriculture.
The TPP is being negotiated by the Office of the United States Trade Representative (USTR). As with other such agreements, Congress must vote to approve it, most likely under a “Fast Track” provision that prohibits any amendments and limits debate. Trade, though constitutionally a congressional prerogative, is now firmly in the hands of the executive branch. And “trade” negotiations have become an a venue for rewriting domestic non-trade policy traditionally determined by Congress and state legislatures.
The current USTR is a former Dallas mayor and former corporate lobbyist named Ron Kirk. Also involved is Michael Froman, a deputy assistant to the president and deputy national security advisor for international affairs. Froman headed the Obama transition team in 2008, and apparently led the hiring of Tim Geithner for Treasury Secretary.
The TPP continues what Bill Clinton started with NAFTA, which helped create the World Trade Organization and gave China new permanent access to the U.S. market. Consequences of these kinds of trade agreements include offshoring of U.S. manufacturing and service-sector jobs, inexpensive imported products, and expanded global reach of U.S. multinational. While it can be argued that NAFTA gave Americans access to cheaper goods and increased trade, it also came with a hefty price tag.
In 1992, NAFTA was highly controversial for a number of reasons; third-party presidential candidate and businessman Ross Perot argued that it would cause a “giant sucking sound” of American jobs heading to Mexico. Today, the U.S. has lost one out of every four manufacturing jobs that existed before NAFTA – over 5 million with 42,000 factories closed. A modest trade surplus with Mexico was supplanted with a large, persistent deficit. As documented in “The Selling of Free Trade,” NAFTA’s new investor protections dramatically increased the ability of corporations to outsource entire factories to Mexico.
The most controversial part of NAFTA is the investment provision. It not only removes the risks usually associated with offshoring production to low-wage countries. It also allows foreign corporations investing in the U.S. extra-legal rights to dispute American environmental, labor or consumer protections in foreign tribunals favorable to corporate interests, to demand taxpayer compensation for having to meet the same norms as domestic firms. NAFTA is just one agreement; U.S. trade agreements, including the World Trade Organization, also allow imposition of indefinite trade sanctions if the U.S. does not change its domestic laws to meet the pact’s limits on financial, environmental and other public interest regulation.
Recent cases of U.S. law being slammed by the WTO include dolphin-safe tuna labeling requirements, country-of-origin meat labeling and the ban on candy and clove-flavored cigarettes. In addition, states and municipalities must bear the cost of helping to defend their regulations in international tribunals (such as California spending $8 million to successfully defend its right to ban the harmful gasoline additive MTBE or regulate mining on state lands).
There is an argument by including countries in the Pacific region in the agreement and not including China, counters this power. However, this is not true. The TPP will have no serious impact on U.S. supply chain dependence on China. China would be free to sign on to TPP at any time as stated in the agreement and in fact USTR Kirk told Reuters that he “would love nothing more” than for China to join.
In 2008, Barack Obama pledged to renegotiate NAFTA. In particular, he said he would revisit the investment chapter of the agreement and set out a new model of trade agreements for the U.S. He has broken these campaign promises he made to the union workers. How does the AFL-CIO explain this to their members?
As is explored in my book ‘Union Hypocrisy,” time and again, the unions have been sold out by the Democratic party. NAFTA was one of the most damaging trade deals to the ability of unions to utilize the labor force in influencing the corporations since President Carter. Yet unions continue to support the liberal left in an agenda that leaves the labor force with a real median wage that now hovers at 1972 levels with levels of income inequality equaling those of the pre-New Deal state.
What is truly confounding is that the Tea party and Libertarian party have been unable to reach out union members with a message that illustrates this – and we must. Because strangely enough – in areas such as TPP – it matters. How in the world to we allow the liberal left to indoctrinate our labor force to the point where they refuse to see the destruction of the middle class “built by unions” by the left they support without question and with slavish devotion.
It is easy to scorn left-leaning union members; however, there are areas where we really are on the same side. Simply a matter of overcoming the communication chasm that exists – or not allowing the politically elite divide and conquer us.
The United States needs to grasp the logic of industrial interdependence and be aware that the only way for the United States to achieve its most vital national aims is to force its corporations to reposition the machines on which it depends. The United States does not need to bring all or even any of these systems of production home. However, it can no longer continue to live in a world in which many activities remain in one location, under the control of one state, especially a strategic rival (China).
The TPP does not mitigate the threat of Chinese advantage over the American supply chain at all. It does very little except further undercut the supremacy of American government to maintain consumer, environmental, labor laws, and protect public assets. The TPP is heralded in elite circles as the answer to the China dilemma, do not buy in to the rhetoric perhaps the biggest danger inherent in the TPP is that the enormous threat in China controlling America’s industrial base is being ignored, yet again. The AFL-CIO, however, has not taken a position on the agreement, preferring to remain as a stakeholder at the negotiating table.
I am all for capitalism and trade with foreign countries. I am unequivocally against our laws being subjugated to foreign panels or tribunals.
As Benjamin Franklin famously said, “We must all hang together, or assuredly we shall all hang separately.”