The Trans-Pacific Partnership Treaty is the Complete Opposite of 'Free Trade'

The TPP would strip our constitutional rights, while offering no gains for the majority of Americans. It's a win for corporations

by Mark Weisbrot

A protestor demonstrates agains the Trans-Pacific Partnership in New York City. (Photograph: Julia Reinhart/Demotix/Corbis)The proposed Trans-Pacific Partnership agreement among 12 governments, touted as one of the largest "free trade" agreements in US history, is running into difficulties as the public learns more about it. Last week 151 Democrats and 23 Republicans (pdf) in the House of Representatives signed letters to the US chief negotiators expressing opposition to a "fast track" procedure for voting on the proposed agreement. This procedure would limit the congressional role and debate over an agreement already negotiated and signed by the executive branch, which the Congress would have to vote up or down without amendments.

Most Americans couldn't tell you what "fast track" means, but if they knew what it entails they would certainly be against it. As one of the country's leading trade law experts and probably the foremost authority on Fast Track, Lori Wallach of Public Citizen's Global Trade Watch, put it:

[Fast track] authorized executive-branch officials to set US policy on non-tariff, and indeed not-trade, issues in the context of 'trade' negotiations.

This means that fast track, which first began under Nixon in 1974, was not only a usurpation of the US Congress' constitutional authority "to regulate commerce with foreign nations".

It also gave the executive branch – which is generally much less accountable to public pressure than the Congress – a means of negating and pre-empting important legislation by our elected representatives. Laws to protect the environment, food safety, consumers (from monopoly pricing), and other public interest concerns can now be traded away in "trade" negotiations. And US law must be made to conform to the treaty.

How ironic that this massive transfer of power to special-interests such as giant pharmaceutical or financial corporations has been sold to the press as a means of holding "special interest" groups – who might oppose tariff reductions that harm them but are good for everyone else – in check.

But the TPP and its promoters are full to the brim with ironies. It is quite amazing that a treaty like the TPP can still be promoted as a "free trade" agreement when its most economically important provisions are the exact opposite of "free trade" – the expansion of protectionism.

Exhibit A was released by WikiLeaks last week: the latest draft of the "intellectual property" chapter of the agreement, one of 24 (out of 29) chapters that do not have to do with trade. This chapter has provisions that will make it easier for pharmaceutical companies to get patents, including in developing countries; have these patents for more years; and extend the ability of these companies to limit access to the scientific data that is necessary for other researchers to develop new medicines. And the United States is even pushing for provisions that would allow surgical procedures to be patented – provisions that may be currently against US law.

All of these measures will help raise the price of medicines and health care, which will strain public health systems and price some people out of the market for important medicines. It is interesting to see how much worse the TPP is than the WTO's Trips (Trade-Related Aspects of International Property Rights). This, too, was a massive rip-off of consumers and patients throughout the world, but after years of struggle by health advocates and public interest groups, some of its worst features were attenuated, and further consolidation of pharmaceutical companies' interests were blocked.

In case you were wondering why we had to get this information from WikiLeaks, it's because the draft negotiating texts are kept secret from the public. Even members of the US Congress and their staff have extremely limited access. Thus the much-maligned WikiLeaks has once again proven how valuable and justified are their efforts to bring transparency to important policy-making that is done in the darkness – whether it is "collateral murder", or other forms of life-threatening unaccountability.

One part of the TPP that shows why negotiators want to minimize public awareness of the agreement consists of provisions giving corporations the right – as is the case under the North American Free Trade Agreement (Nafta) – to directly sue governments for regulations that infringe upon their profits or potential profits. This, too, is much worse than the WTO, where a corporation has to convince its government to file a case against another government. These private enforcement actions – which if won collect from the defendant government – are judged by special tribunals outside of either country's judicial system, without the kinds of due process or openness that exists, for example, in the US legal system. A currently infamous example is the action by Lone Pine Resources, a Delaware-incorporated company, against the government of Quebec for its moratorium on fracking.

Perhaps less known than its other failings, the TPP doesn't even offer any economic gains for the majority of Americans who are being asked to sacrifice their constitutional rights. The gains from increased trade turn out to be so small that they are equivalent to a rounding error in the measurement of our GDP. The study most touted by proponents of the agreement, published by the Peterson Institute of International Economics, shows a cumulative increase of 0.13% of GDP by 2025. This would be trivial in any case; but the worse news is that, taking into account some of the unequalizing effects of the agreement – these treaties tend to redistribute income upwards – a Centre for Economic and Policy Research study showed that most Americans will actually lose because of the TPP.

US corporate interests are, rather obviously in this case, driving the agenda of the TPP. The agreement is in many ways a "plan B" after the last 12 years of WTO negotiations have stagnated – in large part due to considerable, well-organized public resistance in dozens of countries – and failed to achieve many of the goals of its corporate architects. But other branches of the US government have geostrategic goals as well. The world's would-be rulers also hope to separate the "bad kids" from the "good kids" among developing countries. It is no coincidence that in Latin America, the negotiating partners are Mexico, Chile, and Peru, and none of the leftist governments that now prevail in most of the region. And of course, a main goal of the agreement is to try and "isolate" China.

The Obama administration will no doubt appeal to some members of Congress on the basis of this neocolonial world view. But for Americans who are learning about the agreement, it is clear that the real "us against them" is not America against the more independent nations of the developing world, but TPP countries' citizens against a corporate swindle being negotiated behind their backs.

 

Mark Weisbrot is Co-Director of the Center for Economic and Policy Research (CEPR), in Washington, DC. He is also president of Just Foreign Policy. He is co-author, with Dean Baker, of Social Security: The Phony Crisis. E-mail Mark: weisbrot@cepr.net

 

Localists of the World, Unite! An Urgent Call

Localists of the World, Unite! An Urgent Call to Join the Movement Against the Corporate "Trade" Deals

by Brian Emerson

(Photo: popularresistance.org)

Over the past two decades, communities across the world have been working to build more just, sustainable and locally based alternatives to the global corporate economy. As a result, pro-local initiatives have grown by leaps and bounds, including farmers markets, food cooperatives,“buy local” and “move your money” campaigns, small business alliances, and local renewable energy projects. However,“free“ trade treaties are a mortal threat to local economies worldwide. Like trade treaties before them, the TPP and TTIP facilitate a race to the bottom that favors large, mobile corporations at the expense of local producers, small businesses, and workers. What’s more, these treaties subordinate local democracy to corporate interests, and hamstring the ability of communities to shift direction toward more prosperous local economies. To continue the inspiring success of their movements, localists need to join the global resistance against these treaties.

Ever since the North American Free Trade Agreement (NAFTA) was proposed more than 20 years ago, critics have warned about the negative implications of “free” trade treaties and other efforts to deregulate global trade and investment. Today, after two decades of deregulation, the impacts are exactly as feared: endemic unemployment and economic ‘precarity’, massive social dislocation in the global North and South, a widening gap between rich and poor, financial instability, growing hunger and food insecurity, and the weakening of public interest laws meant to protect people and the environment. Meanwhile, global corporations and big banks have grown larger and ever more powerful.

Thanks to “free” trade treaties, corporations have become unfettered and less rooted to place: in a global “race to the bottom” they can move wherever wages and benefits are low, and where tax rules and social and environmental laws are weak. This race imposes a downward pressure on wages, and compels every level of government to reduce sorely needed taxes and protective regulations, or risk losing businesses and jobs. As footloose corporations and speculative capital move from one place to another in search of profit, they leave behind shattered communities, economic insecurity, gutted regulations, and forced bankruptcy.

At the time of its ratification, proponents of NAFTA promised that it would stimulate job creation and economic prosperity. Two decades later, the treaty has become notorious for its disastrous effects on both sides of the Mexican-US border. For instance, Public Citizen has found that nearly 5 million manufacturing jobs have been lost in the US alone since NAFTA and the WTO took effect, with over 60,000 facilities closing down or moving elsewhere. During the same period, NAFTA uprooted millions of Mexican farmers who were unable to compete with imports of heavily-subsidized US corn dumped into their local markets. An estimated 2 million Mexican smallholders have been forced out of farming altogether since NAFTA’s inception. And contrary to the claims of NAFTA’s proponents, new jobs have not materialized to replace the destroyed livelihoods.

NAFTA on steroids”

Despite all the evidence, policymakers continue to promote further corporate deregulation via trade treaties. The latest and most far-reaching treaties include the Trans-Pacific Partnership (TPP), and the Transatlantic Trade and Investment Partnership (TTIP, also known as TAFTA). The scale of these new treaties is truly massive: the TPP includes the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, while the TTIP is being negotiated by the US and EU countries. The countries negotiating the TPP account for roughly forty percent of global GDP, leading some critics to call the treaty “NAFTA on steroids”. Together, the TPP and TTIP would create “free trade” zones encompassing the vast majority of global trade.

Negotiations for both treaties have been held behind closed doors, with the public left to depend on leaked documents for information about what is being proposed. Literally hundreds of corporate ‘trade advisors’, on the other hand, have had seats at the negotiating tables from the beginning.

A continuing threat to local livelihoods and food security

Governments often have good reasons to regulate the flow of goods and capital across their borders: they can aim to heighten food security, promote economic stability, protect resources and the environment, or nurture their local economies. But when global trade is deregulated through the elimination of import tariffs and other “barriers to trade”, governments lose this vital tool.

Though tariffs are already quite low between the US and the EU, negotiations for the TPP aim to eliminate tariffs on literally thousands of commodities, including agricultural products. Liberalizing agricultural trade has always been a contentious issue, with governments trying to promote the interests of their own producers. New Zealand, for instance, is hoping to gain market access to US dairy markets, a possibility opposed by US producers. Similarly, the US, New Zealand and Australia are pushing for greater access to Japan’s agricultural markets, and the elimination of key tariff protections for staples such as rice and barley. If agricultural trade liberalization goes forward, millions of small producers in Japan and other TPP countries would face the same fate as the Mexican smallholders displaced by NAFTA. Furthermore, the flood of cheap imports likely to follow liberalization would heighten dependence on imports for basic necessities, compromising food security and self-sufficiency, and increasing vulnerability to the food crises that have become more and more common in the era of globalization.

Corporate protectionism and the assault on democracy

As important as the issue of trade liberalization is, the TPP and TTIP are not primarily about trade. Instead, both treaties will likely push regulatory changes that promote corporate interests at the expense of democratically enacted laws. In short, the treaties represent an astonishing assault on democracy and national sovereignty, threatening not only existing public-interest laws, but the ability of governments to pass such laws in the future.

The treaties give corporations sweeping rights and protections in such areas as intellectual property rights, food labeling and safety standards, environmental regulations, public health laws, rules on the use of toxic chemicals, patents on critical medicines, government procurement, energy, access to labor markets, internet freedom, and banking and finance. Both treaties seek to achieve “regulatory coherence” or “harmonization” – euphemisms for reducing high national or local regulations to much lower corporate-friendly standards.

What’s worse, leaked documents suggest that both treaties are likely to contain so-called “investor-state dispute resolutions” that would give corporations still more leverage over elected governments, including the ability to sue against environmental, labor, health, and other public interest regulations that might limit their“expected future profits” (a controversial provision taken from NAFTA’s investment chapter). To date, there have been over 500 investor-state disputes in which corporations – or states at the behest of corporations – have sued against national laws, often in markedly undemocratic, international tribunals. Recent examples include Philip Morris v. Uruguay and Australia, in which the US tobacco giant is suing Australia and Uruguay in an attempt to overturn laws mandating anti-smoking labels on cigarette packages, and Lone Pine v. Canada, in which a US energy corporation is attempting to overturn a moratorium on hydraulic fracturing (‘fracking’) imposed by the province of Quebec.

In sum, global “free trade” is profoundly subversive to democracy. Trade liberalization, part and parcel of corporate globalization, has narrowed the policy options available to sovereign democracies, and helped to further concentrate corporate power.

Handcuffing pro-local policies

Trade watchdog groups have warned that the TPP and TTIP could constrict local and national governments’ ability to protect and promote their local economies – a fact that should inspire localists around the world to join the movement against these treaties.

For instance, a recent Institute for Agriculture and Trade Policy (IATP) report notes that Malaysia currently “prohibits foreign investment in supermarkets, fostering the development of locally owned grocery stores”. Several chapters in the TPP could directly challenge this law and open the way for Wal-Mart or other transnational supermarket chains to put locally-owned stores out of business. Study after study have shown that these big-box corporate behemoths are an “economic cancer” on our communities.

The TPP and TTIP could also include provisions that prevent local and national governments from instituting pro-local procurement programs, such as local purchasing preferences that favor sustainable and locally grown foods (e.g. Farm to School programs in the US). According to IATP trade expert, Karen Hansen-Kuhn: “Both the U.S. and EU have criticized ‘localization barriers to trade’. The EU, in particular, has been insistent on the inclusion of procurement commitments in TTIP at all levels of government, for all goods, and in all sectors…”

In fact, certain free trade regimes already restrict pro-local procurement programs, requiring governments to treat foreign companies the same as local ones. For instance, the WTO’s “national treatment” rules restrict governments from favoring local suppliers over non-local companies in public contracts. Says Hansen-Kuhn, “for public programs to favor the use of sustainably produced local foods in school lunch programs, or to require a certain percentage be sourced from local, small-scale farmers, could be deemed to unfairly discriminate against foreign suppliers.” In a recent example, the WTO has ruled against a cutting-edge policy in Ontario, Canada designed to strengthen the local clean energy economy and create jobs in the province.

Local governments around the world have started implementing local procurement policies for many of the same reasons consumers support “buy local” campaigns. Buying from local farmers can help preserve dwindling farmland, promote local food security and re-link urban and rural economies. Government “buy local” policies are also important tools for community economic development: re-circulating taxpayer money in the community can help revitalize local economies, stimulate job creation, and build community wealth that’s anchored in place. That’s smart policy in an economic context dominated by footloose corporations whose comings and goings can devastate local livelihoods and uproot whole communities. It also offers one powerful way for communities to flex their local democratic muscles, reclaim their right to community self-determination, and take back their economies from distant corporations. It’s no wonder that corporate interests seek to use the TPP and TTIP to prevent governments from implementing such pro-local policies.

Act locally, resist globally

Over the past two decades, communities across the world have been working to build more just, sustainable and locally based alternatives to the global corporate economy. As a result, pro-local initiatives have grown by leaps and bounds, including farmers markets, CSAs, local food cooperatives, “buy local” and “move your money” campaigns, small business alliances, local finance, and community renewable energy projects. However, free trade treaties are a mortal threat to local economies worldwide. Like trade treaties before them, the TPP and TTIP facilitate a race to the bottom that favors large, mobile corporations at the expense of local producers, small businesses and workers. What’s more, these treaties subordinate local democracy to corporate interests, and hamstring the ability of communities to shift direction toward more prosperous local economies. To continue the inspiring success of their movements, localists need to join the global resistance against these treaties.

Take action

TPP chief negotiators will meet in Salt Lake City, USA, on November 19th through the 24th (click here for local actions). The next full round of TPP meetings will be held in Singapore from December 7th-9th. Negotiators could reach an agreement as soon as the end of 2013. Before the TPP can be implemented, it will not only need to be signed by the negotiators, but in most countries it will need to be ratified by another branch of government. In the US, for example, Congress will need to ratify the treaty once it is signed. But President Obama, one of the TPP’s biggest advocates, is pushing to ‘fast track’ the process by which it would be ratified, limiting Congress to a simple yes-or-no vote rather than allowing for extended debate.

There’s still time for the public – which has so far been kept in the dark about the implications of the treaty – to make its voice heard.

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For more information about the TPP and ways to get involved, go to: Expose the TPP

The TTIP negotiations just got underway in 2013. It’s unclear how fast negotiations are moving, but the stakes are high. To learn more and stay informed, go to: Public Citizen Global Trade Watch  or Corporate Europe Observatory

 

Brian Emerson works with ISEC in the US and India where he has coordinated alternative development and localization initiatives, and developed ISEC’s education-for-action projects. His expertise is in the area of new policies, strategies and institutions for fostering more just, democratic, and sustainable local economies worldwide.

 

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