The TPP is a bad deal

Friday night I attended a town hall meeting on the proposed Trans Pacific Partnership (TPP) in Bethesda, MD. The TPP is

a proposed regional regulatory and investment treaty. As of 2014, twelve countries throughout the Asia-Pacific region have participated in negotiations on the TPP: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam.

Two Maryland Democratic members of Congress – Donna Edwards and Chris Van Hollen – spoke against the treaty.  Also participating were: AFL-CIO Metro Washington Council President Joslyn Williams; Stephen Shaff, President of the Chesapeake Sustainable Business Council; Ilana Solomon, Director of the Sierra Club’s Responsible Trade Program; Jorge Aguilar of Food and Water Watch’s Southern Region Director, and Lindolfo Carballo, Virginia State Director of We Are CASA.  In a short video, former US Labor Secretary Robert Reich explained his strong opposition to the TPP.

At the town hall, Congresswoman Edwards spoke first and denounced the TPP in no uncertain terms.  She stressed the difficulties that she and other Congress members have when trying to review the plain language of the proposed treaty.  Twenty-nine chapters long, she is afforded the opportunity to review only one chapter at a time so she cannot compare possibly contradictory passages in different parts of the bill.  Note-taking is not permitted.

She commented that the provisions protecting intellectual property like drug and electronic patents are strong and that corporations can enforce them in binding arbitration via the Investor State Dispute System (ISDS) – a group of international lawyers and arbitrators who are untethered to any country.  The ISDS also serves as the dispute resolution system when companies challenge state action that, they claim, negatively impacts on their ability to make profits.  These provisions are problematic since they will likely lead to higher prices for drugs, computers, and software and more corporate-friendly adjudication of civil disputes.

After Donna Edwards spoke, labor leader Joslyn Edwards decried the exodus of American jobs that trail in the wake of trade deals like NAFTA.  In response to President Obama’s claim that he has been a friend of working people, Edwards awarded him an F grade for championing job-killing bi-lateral “free trade” agreements with Colombia in 2011 and Korea in 2012.

Edwards noted union labor leaders remain under constant threat of violence in Colombia with unsolved murders continuing to scar the landscape.  Yet the provisions of the pact remain in full effect.  Likewise, the Korea deal has harmed American workers, Edwards pointed out that a net of 55,000 American jobs have been lost as a result.

Speaking as a representative of small businesses, Stephen Shaff argued that free trade agreements like the TPP, which Robert Reich has called NAFTA on steroids, have been destructive.  For retailers, the significant drop in the number of well-paid American workers means fewer customers.  For many American manufacturers, the penetration of cheap imported goods into domestic markets has been fatal.

The Sierra Club’s Ilana Solomon criticized the weak environmental provisions in the TPP.  Acknowledging that the drafters did demonstrate a nodding concern for issues like deforestation and trade in endangered species, Solomon contended that there did not appear to be any viable enforcement mechanism for environmentalists to enforce the scant protections in the bill.

She noted that there have been no suits brought against corporate polluters pursuant to recent free trade agreements but hundreds by corporations against governments trying to prevent or reduce ecological harm.   Solomon also reviled the TPP’s reliance on the ISDS to settle disputes.  She noted that pursuant to NAFTA and CAFTA [the Central American Free Trade Agreement] multi-national corporations are even now using the ISDS to bludgeon towns, counties, provinces, and countries to choose between allowing them to engage in harmful but highly profitable activities or risking the award of a king’s ransom in claimed lost profits.

One particularly egregious example is a lawsuit brought against the province of Quebec for banning fracking due to environmental risks under the St. Lawrence Seaway.  Lone Pines Resources, a company with plans to drill for oil and gas using the controversial technique, is now suing Quebec claiming $241 million under the ISDS.

Up next was Jorge Aguilar who focused on probable negative effects on our food and water.  The TPP would bar laws requiring country of origin and GMO labels.  The dangerous trend towards self-inspection by food plant operators would likely accelerate.

After Aguilar’s presentation, El Salvador native Lindolfo Caballo spoke passionately about the devastation that his home country has suffered due to “free trade” with the United States.  He described peasants forced out of farming due to the crash in prices caused by a flood of cheap American foodstuffs.  He attributed the high crime rate and endemic poverty in San Salvador to the resulting surplus of workers and low wages.

Congressman Chris Van Hollen was the last speaker.  He noted that he supports international trade but opposes the TPP in its current form due to its reliance on ISDS, the absence of provisions addressing currency manipulation, and insufficient protections for workers.  One attendee challenged Van Hollen’s support for more international trade in the abstract.  She noted that transnational transport by trucks and transoceanic transport by diesel-burning container ships and jet planes is a significant factor in global warming.

President Barack Obama supports quick passage of the TPP and both houses of Congress are moving with bipartisan support to give him fast-track authority to negotiate terms.  If such authority is granted, Congress could not amend the language of the final agreed-upon proposal but would be limited to a strict up or down vote.

Responding to concerns raised by Reich, Senator Elizabeth Warren, and others, President Obama and current Secretary of Labor Thomas Perez have staunchly defended the deal.  Earlier this week, Obama lashed out at those, including Warren, calling the deal secret: “Every single one of the critics who I hear saying, ‘this is a secret deal,’ . . . can walk over today and read the text of the agreement.  There’s nothing secret about it.”  Obama did acknowledge that the TPP is incomplete.

In his Saturday April 25 Weekly Address, the President claims that he supports the TPP because it is in the best interests of working families:

It’s the highest-standard trade agreement in history. It’s got strong provisions for workers and the environment – provisions that, unlike in past agreements, are actually enforceable. If you want in, you have to meet these standards. If you don’t, then you’re out. Once you’re a part of this partnership, if you violate your responsibilities, there are actually consequences.  And because it would include Canada and Mexico, it fixes a lot of what was wrong with NAFTA [the North American Free Trade Agreement], too.

On April 20, Labor Secretary Perez acknowledged that previous large trade deals like NAFTA have not necessarily benefited the American people but, he says, the TPP cleans up some of the more problematic aspects of that venerable deal.  Specifically, Perez claims, that signatories to the TPP must enact meaningful protections for workers and cannot hide behind tariffs and other gimmicks that keep American imports out.

Both Obama and Perez argue that the the absence of penalties for currency manipulation shouldn’t kill the bill since they are working on the issue in parallel discussions with the same countries.  Currency manipulation occurs when countries keep the value of their currency artificially low.  It makes American-made goods relatively more expensive and therefore uncompetitive versus similar goods manufactured in the manipulating nation.  At least one study has estimated that America has nearly 1,000,000 fewer auto-manufacturing jobs due to Japanese currency manipulation.

So who’s right?  The President and other TPP supporters, including large corporations, their lobbyists, and politicians friendly to multi-nationals or labor and environmental leaders and more liberal politicos.

The President and Secretary of Labor Perez make some legitimate points.  They claim that Vietnam, one of the worst countries when it comes to protecting workers and labor organizers, will have to enact pro-worker legislation if it wishes to enjoy the benefits of the TPP.  It is true that penalties for currency manipulation can be agreed upon outside the TPP negotiations. Likewise, members of Congress have been afforded a chance to review the treaty’s language.

Nevertheless, obvious flaws in the TPP render it untenable.  The ISDS empowers foreign arbitrators to bankrupt American jurisdictions if they reject corporate demands.  Given the centrality of currency manipulation to American job loss to countries like Japan, addressing the problem within the text of the TPP should be a prerequisite to approval.

Moreover, the President’s heated reaction to those calling the deal secret smacks of disingenuousness.  Yes, Senators and representatives can look at the text of the TPP.  But severe restrictions on access and the fact that some aspects have not been committed to paper devalue that access.  Although negotiations have been ongoing for over three years, much remains unknown to the public because a shroud of secrecy has enveloped the talks.  What we do know strongly suggests that corporate interests have been paramount.

Ultimately, the concerns of labor and environmentalists cannot be dismissed.  Economic inequality and climate change are the defining challenges of 2015.  The rapid rise of international trade over the past twenty years has significantly exacerbated both.  It is almost certain that any multi-lateral trade agreement, now matter how well-crafted, would continue these damaging trends.

Large integrated corporations are best-equipped to exploit the geographic and demographic advantages (including low wages and weak environmental protections) of manufacturing in one nation and selling in another.  More goods being shipped means more diesel-powered trucks, trains, and container ships churning up sea waters and emitting CO2-dense smoke plumes.  Simply put, more international trade means aggravating the environmental crisis and greater economic control by global elites.  The TPP is a bad deal for American and for the world at large.

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6 Responses to The TPP is a bad deal

  1. Betsy Johnson says:

    Thank you Hal for this very good recap of our town hall. One thing you might include is the report by Jorge Aguilar of Food and Water Watch on the TPP’s effect on our food supply. It would eliminate country of origin labeling and GMO labeling, eliminate inspections on fish from Vietnam and enshrine in a trade agreement many things that corporations have been unable to get via democratic means – things like longer patents for drugs, no net neutrality, less restrictive financial regulations to note just some of these. Once in a trade agreement these provisions cannot be amended should they be proved problematic.

  2. Shade2 (previously attempted post as Shade repeatedly failed) says:

    One thing that I think you would have to admit is that free trade has gone a long way towards preventing military conflict with China. However, shipping our dollars to China in exchange for cheap goods has also served to increase China’s economic & military power. Worse, the U.S. is now addicted to cheap Chinese manufactured goods, giving China entirely too much leverage over us.

    Politically what is stated is that the TPP will help decrease the price of imported goods & that this will serve to stimulate the economy for the American worker. However, what I suspect the TPP is in reality a large part about is to undercut the economic & military power of China & instead economically empower third-world countries that might otherwise fall victim to China’s growing influence. For certain, this agreement will force China to compete harder on price, and thus China is likely to see less profit and development. This agreement is also likely to increase the difficulty for China to continue to manipulate their currency in ways that undercuts the U.S.

    So do I think that the TPP agreement will help the American worker get high-paying jobs? Probably not, though that genie is pretty much already out of the bottle. The U.S. now manufactures little but weapons and some other extremely sophisticated technological products. However, undercutting the power of China may be a good thing for world peace & stability, and that ultimately does help the American worker. Over time, the agreement is also likely to bring lower prices on many of the necessities of life that those working in low-paying service-sector jobs much purchase.

    So do I fully support the TPP? No! I’m just saying that there are other aspects to this agreement that I believe Obama is considering but of which many don’t seem to be cognizant of. To me, free trade is a good thing for world peace, but the terms of our trade agreements should be fair & well thought out. To date, this agreement & the ones before it don’t seem to pass that test. In balance however, if world wars and a nuclear winter is prevented, then I’d have to say such agreements are a good thing in spite of some obvious faults.

    • halginsberg says:

      I don’t accept the administration’s arguments that the TPP is necessary to help us stay ahead of China in the race for influence in the Pacific rim. I also don’t agree that our asymmetrical trade relationship with China has reduced the likelihood of war with that country. If anything, China’s recent economic rise, fueled by exports to the US, has helped the Communist Party maintain its grip on that country, extended its global sphere of influence, and financed its ever more powerful military.

      • Shade 2 says:

        I think it is hard to argue that our countries being so deeply economically intertwined makes war less likely. If today China & the U.S. went to war, both countries would be thrown into an economic death spiral & both countries know this. Before Nixon went to China, the two countries had nuclear weapons aimed at each other & they wouldn’t even talk! Money talks!

        Now the power brokers in both countries talk just fine (though those in the working classes are poorly represented). The countries are still at odds with each other, but fortunately our battles are now primarily ones of political & economic influence.

        China’s current expansion of its military is just a reflection of its economic might. If by signing the TPP we can force China to compete with the third world instead of economically & militarily dominating them, it is likely a good thing for world peace. I would hope that an agreement can be hammered out that addresses both of our concerns, although at this point this seems unlikely. I can’t say that I could support the agreement as I understand it to currently exist, yet in the big picture, even this agreement might be better than allowing China to go economically unchecked on its present course.

  3. Shade 2 says:

    It might surprise you that I too support Bernie Sanders. However, as I said before, I always felt that Hillary is more Liberal than you give her credit for & that she leans more Liberal than her spouse.

    Getting back to the topic of your post, there is a lot to be said for free trade. As previously stated, one of the most compelling arguments in its favor is that free trade has quickly caused the world to become inextricably interdependent. World wars have thus become less in the interest of anyone, due to the “mutually assured destruction” economic aspect.

    It seems odd that one would argue, at least from an ugly American perspective, that third-world countries (like China) using virtual slave labor to manufacture and ship us goods at pennies on the dollar (compared to if produced here) is disadvantageous to our country. Products that would otherwise cost us substantial portions of our gross domestic income have become inexpensive and disposable, and the resultant quick replacement cycle has encouraged technological & manufacturing innovation (such as with computers & TVs).

    The real problem with “free trade” is the unfair/unwise aspects that have been allowed to accompany it. The most major problem component has been the unfair distribution of income and wealth, both domestically & abroad.

    Free trade of artificially cheap goods has also encouraged environmentally unsustainable consumption and other environmental insults. For example, China’s growth rate over the past 20 years has averaged 10% per year and China now produces twice as much CO2 as the U.S. The result is that even if the U.S. could magically reduce its CO2 emissions to zero, within only four years China would replace our reduction! (Put that in your gasoline Draconian tax pipe and smoke it Hal, LOL.)

    There has also been an undesirable shift of intellectual property and technological infrastructure to China. China has become an economic & military powerhouse, and we must therefore now consider actions that might somewhat alter their course without causing retaliation. One method of accomplishing this goal is to make China compete with other third-world countries for our business, and this in large part is what I think the TPP is about.

    Getting back to how I opened this post, of the political candidates, I most trust Bernie Sanders to identify and state the correct balance in trade that we should now aim for. I agree with Bernie that the TPP agreement should be rejected as it is currently proposed (though since the agreement is currently secret, few really know its terms).

    Where I might depart from Bernie is if he was to state that our trade policy should be entirely protectionist. However, I have not heard Bernie say that. Bernie just correctly states that our agreements to date have been disastrously unfair to American workers, and with that point I agree.

    My primary concern about supporting Bernie over Hillary is that Hillary, being more mainstream, might be more politically capable of architecting accomplishments towards what should be our goals. However, this is not too much of a concern at this point, as Bernie’s candidacy currently only serves to move the political conversation to more Progressive concerns. My political contributions to the presidential candidates therefore at this time are going to Bernie. Should Bernie falter, I would consider supporting Elizabeth Warren (should she decide to assume Bernie’s role).

    Ultimately, I still think free trade is to the world’s advantage. However, there is a fairness balancing act that also needs to be considered in applying this philosophical outlook. It is this aspect of our current free trade agreements that has failed.

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