Trans Pacific Partnership trade agreement – TPP repeats NAFTA mistakes
Over the past few months, protests have erupted in the halls of the U.S. Capital, and in the streets outside, to thwart the passing of the Trans-Pacific Partnership (TPP)—a boon to corporate interests, the protesters argue, and an anathema to U.S workers.
The Trans-Pacific Partnership is a pending trade agreement that brings together 12 countries along the Pacific Rim, in what would be the world’s largest free trade area, accounting for 40 percent of the global economy. After five years of negotiations, intense lobbying, and heated debate, the agreement is nearing the finish line.
Obama wants the power to do the TPP negotiations himself with no input from congress, what’s wrong with this picture?
President Obama has positioned the Trans-Pacific Partnership as a signature achievement of his administration. During the 2015 State of the Union, he stressed the importance being economically out front in the Asia Pacific, and promised that the TPP would create more and better jobs, and benefit small business. He also asked for increased executive authority: “I’m asking both parties to give me trade promotion authority to protect American workers,” he said, “with strong new trade deals from Asia to Europe that aren’t just free, but fair.” This means that the President would negotiate and sign the TPP without formal congressional input until after the fact, and even then, members could not offer amendments.
The TPP aims to increase commerce and investment through reducing trade barriers among participating countries. Such barriers typically include import tariffs, but also environmental and labor regulations, known as “nontariff barriers to trade,” or NBTs. Economists vary widely in their assessments of the TPP, but there’s general agreement across ideological stripes that tariffs are already low. In fact, some reports claim that only five of the 29 draft chapters in the agreement actually relate to lowering tariffs. The protest-worthy part of the deal regards the NBTs—the reduction of regulatory measures, and “freeing” of market activity, in the name of standardizing rules and lowering costs.
Free market trade liberalization efforts like the TPP are not new. In the 1970s and 80s, catchphrases like “trickle-down economics” and the “Washington Consensus” named the series of policy prescriptions pushed by supranationals like the World Bank and International Monetary Fund (IMF) that combined trade liberalization with privatization and deregulation schemes, and fiscal austerity, under the rubric of structural adjustment. As economic crisis left much of the developing world in dire straights, IMF and World Bank debt programs helped pry open their markets for foreign investment, undermining indigenous industries and placing them in a sisyphean struggle against default. In some cases, like Chile, it was not the IMF that brought free markets, but the iron fist of dictators like Augusto Pinochet, in collusion with U.S. corporate and political leadership, and laissez faire economists like Milton Friedman.
Critics of the TPP reference the failures of NAFTA, which was first conceived during this period by the original champion of trickle-down, Ronald Reagan. Leading up to the 1994 elections, NAFTA garnered bipartisan support, but lone wolf, Independent candidate Ross Perot warned of the “giant sucking sound” that America would hear if NAFTA passed and American jobs were drawn south. Global Trade Watch’s assessment of NAFTA’s “20 year legacy” demonstrates just how right Perot was. An estimated one million jobs have been lost to NAFTA. It’s put downward pressure on wages, and exacerbated America’s income gap. And while pre-NAFTA, the U.S carried a trade surplus with Mexico, and was just $26 billion in the hole with Canada—as of 2014, we had a combined trade deficit with both countries of $177 billion.
The TPP repeats many of NAFTA’s mistakes, as well as those of other bilateral trade treaties, like the Permanent Normal Trade Relations with China, which cost some 2.7 million U.S. jobs, and the Korea Free Trade Agreement, which failed to deliver the 70,000 jobs its brokers promised. The Economic Policy Institute estimates that under the TPP we stand to lose more than 130,000 jobs to Vietnam and Japan alone, with American workers having to compete with their counterparts in Vietnam, where the minimum wage is just 56 cents an hour.
It’s not just jobs and trade deficits, however. The TPP also threatens Internet freedoms and civil liberties, collective bargaining rights, public and environmental health, food safety, financial stability—and American democracy. The closed-door nature of the negotiation process has positioned Congress and the American people as passive recipients of public policy, rather than agents of it – and left us out of decision-making processes that will have broad and deep implications in our everyday lives. Meanwhile, 500-plus corporations have been seated at the TPP negotiation table from the start.
The good news is that some lawmakers, union leaders, and grassroots activists are voicing their opposition. Because of WikiLeaks, public advocates and journalists have been able to assess contradictions between what Executive leadership has disclosed about the TPP and what’s actually in the agreement. Progressive Senators like Bernie Sanders (I-VT) and Elizabeth Warren (D-Mass.) have written letters to the U.S. Trade Representative in protest against the secret negotiation process, and the TPP’s adverse effects on financial regulation. Sanders has also said that he would introduce legislation to require disclosure of all future trade agreement negotiations.
Street protests are also gearing up, echoing the large-scale demonstrations in Seattle against the World Trade Organization in the late 90s. These spurred a global movement against corporate-driven globalization, and for “fair” as opposed to “free” trade, spanning many of the environmental, health, and labor concerns that the TPP is now raising. In Latin America, particularly hard hit by structural adjustment, a regional trade alliance emerged among left wing countries in opposition to Bill Clinton’s Free Trade Area of the Americas. The Bolivarian Alliance for the Peoples of Our America, or “ALBA,” now accounts for over 10 percent of Latin America and the Caribbean’s GDP and has produced a broad range of social and economic programs, from literacy and hunger relief to health and medical interventions and oil-trading, as well as telecom initiatives like TeleSur. In a radical departure from U.S.-brokered trade agreements, ALBA emphasizes public, rather than private ownership, domestic development over exports, and cooperation over competition.
Progressive regional partnerships like ALBA may not provide an immediate answer to our TPP troubles, especially given Venezuela’s current instability. But they do suggest more people-centered values for shaping the global economy over the long haul. In the meantime, the vote to fast-track the TPP is coming soon. Let’s learn our lessons from NAFTA, and avoid the “giant sucking sound” of fleeting jobs, and basic human freedoms, that’s looming over the Pacific.