Monday, January 26, 2015

Why the TransPacific Partnership is a "pending disaster" for America and the world


By Joseph Brenner

(Daily Kos) There's been very little mention of what Obama's State of the Union speech has to say about the Trans-Pacific Partnership treaty proposal.

As Robert Reich [Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century] has commented:

"If you haven’t heard much about the TPP, that’s part of the problem right there. It would be the largest trade deal in history — involving countries stretching from Chile to Japan, representing 792 million people and accounting for 40 percent of the world economy – yet it’s been devised in secret."

Reich calls the TPP a "pending disaster".  So what does Obama have to say? ...

Obama, in his State of the Union Address, has said:

"In the Asia Pacific, we are modernizing alliances while making sure that other nations play by the rules in how they trade,
...
That’s why I’m asking both parties to give me trade promotion authority to protect American workers with strong new trade deals from Asia to Europe --(applause) -- that aren’t just free but are also fair. It’s the right thing to do. 
Look, I’m -- I’m the first one to admit -- I’m the first one to admit that past trade deals haven’t always lived up to the hype, and that’s why we’ve gone after countries –- (applause) -- that break the rules at our expense. But 95 percent of the world’s customers live outside our borders. We can’t close ourselves off from those opportunities. More than half of manufacturing executives have said they’re actively looking to bring jobs back from China. So let’s give them one more reason to get it done."

The first question is, does that make any sense?  And the answer is no, none at all.  If you read anything at all about this, you'll find people ranging from Robert Reich to Dean Baker to Paul Krugman all pointing out that the trade barriers with Asia are already low: the borders are not closed off.  So what is this really about?

Robert Reich explains:

Tariffs are already low. Negotiations now involve such things as intellectual property, financial regulations, labor laws, and rules for health, safety, and the environment.
It’s no longer free trade versus protectionism. Big corporations and Wall Street want some of both. 
They want more international protection when it comes to their intellectual property and other assets. So they’ve been seeking trade rules that secure and extend their patents, trademarks, and copyrights abroad, and protect their global franchise agreements, securities, and loans. 
But they want less protection of consumers, workers, small investors, and the environment, because these interfere with their profits. So they’ve been seeking trade rules that allow them to override these protections.

Dean Baker  [American macroeconomist and co-founder of the Center for Economic and Policy Research. He previously was a senior economist at the Economic Policy Institute and an assistant professor of economics at Bucknell University. He has a Ph.D. in economics from the University of Michigan] has written similar comments:

In TPP and TTIP we are not talking about the textbook trade story. The actual trade barriers between the United States and the countries in these deals, with few exceptions, are already quite low. This means that there is little to be gained by lowering them still further. ... 
The pharmaceutical industry and entertainment industries will get longer and stronger patent and copyright protection. And the food and pesticide industries will be able to able to limit the ability of governments to impose safety and environmental regulations. 
Best of all, these trade deals will set up a new legal structure that goes outside existing system in the United States and elsewhere. All the businesses that didn't think German or British courts could be trusted to give them a fair deal can turn to the investor-state dispute settlement tribunals established as part of these trade pacts. These tribunals will effectively make their own law. The trade deals allow no appeal back to U.S. courts or the courts of any other country that is included. 
In short, these trade deals are a real bonanza for business.

Even Paul Krugman [Op-Ed columnist for the NY Times and professor of economics and international affairs at Princeton University], who remains committed to "free trade" in principle, is beginning to smell a rat:

I am in general a free trader; there is, I’d argue, a tendency on the part of some people with whom I agree on many issues to demonize trade agreements, to make them responsible for evils that have other causes. And my take on both of the trade agreements currently under negotiation — Pacific and Atlantic — is that there’s much less there than meets the eye. 
But my hackles and suspicions rise when I listen to the advocates.
Tom Donohue, head of the US Chamber of Commerce, warns against economic populism, which he says is really a push to create a “state-run economy.” Yep — so much as mention rising inequality, and you’re Joseph Stalin (unless you’re Mitt Romney.) But what really gets me is the Chamber’s supposed agenda for growth. Topping the list — the number one priority — is completing those trade agreements.
This is absurd, and disturbing. 
Think about it. The immediate problem facing much of the world is inadequate demand and the threat of deflation. Would trade liberalization help on that front? No, not at all.
... you have to suspect that the reason is that some of his important clients think that the non-trade aspects of the deals — stuff like intellectual property protection — will yield them a lot of monopoly rents.

Myself, I'm skeptical of "free trade" agreements because they're negotiated largely in secret, they end up being a dozen volumes long, and no one knows what's in them until long after they've been approved (it's not like the people voting on them are actually going to read them).  Putting something like this on a "fast track" is even worse.

As Siri Srinivas comments at the Guardian UK:

The Trans Pacific Partnership is a trade agreement so significant and important, its details can’t be disclosed.

He takes the job-loss argument (which Krugman implicitly rejects) seriously:

What makes the TPP distasteful to experts is its resemblance to the North American Free Trade Agreement (Nafta), signed in 1994 between the US, Canada and Mexico.
Post-Nafta, the US saw a mass exodus of jobs, with nearly 700,000 jobs offshored, 60.8% of them in manufacturing. 
Now as the Obama administration uses the same verbiage as the Clinton administration used two decades ago, trade experts are alarmed at what is to come. The incentives of the Trans Pacific Partnership are going to cause millions of additional jobs to be lost, says Lori Wallach, the director of Global Trade Watch. 
Wallach quotes the Department of Labor statistics to show that the workers in the US who lose their jobs to trade agreements in the manufacturing sector when re-employed earn only three-quarters of their original earnings, in three out of five cases.

Srinivas also discusses the EFF's opposition:

For instance, there is a scuffle around the TPP’s rumored treatment of Digital Rights Management tools, which corporations use to limit access to digital devices – often to prevent piracy. 
TPP has provisions that make it a crime to break these locks, and to do things that aren’t even copyright infringement. 
“These DRM laws prevent us from doing that research legally,” says Maira Sutton, a policy analyst at Electronic Frontier Foundation. “That’s our main concern.” 
Sutton objects that the TPP will extend problematic US laws into international law. One example: the Computer Fraud and Abuse Act, which prosecutors used to hound open-web advocate Aaron Swartz. 
“Similar provisions in the TPP that will prevent whistleblowers and journalists from accessing or ‘disclosing’ trade secrets through a computer system,” Sutton says. ... 
The third issue the EFF is concerned with is that of intermediary liability, which burdens ISPs and websites with stricter copyright infringement laws in a way that is veiled censorship, cautions Sutton.

And further, Elizabeth Warren has had some long-standing objections:

“Elizabeth Warren too has come out against the deal. In a letter to Froman last year, Warren and two other Senators objected that the TPP “could make it harder for Congress and regulatory agencies to prevent future financial crises."

Original article published at the Daily Kos.


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