Our so-called “free trade” policies are, quite simply, not about freeing up trade among people and businesses across national boundaries. Instead, they are about freeing transnational corporations to increase their reach and profitability, and to reduce any risk that large companies and investors might face. This is particularly true of the Trans Pacific Partnership (TPP) and the Trans Atlantic Trade and Investment Partnership (TTIP), both of which have now entered the final stages of negotiation. Based on this, I’ve summarized in several categories below why I believe the TPP to be a very bad proposal. Some of these issues relate to specific provisions in this proposal (as best as we can know, given the secrecy), while others pertain to the results of other trade deals, results which are likely to be repeated and exacerbated, given the extraordinarily overwhelming influence of major multi-national corporations in the current negotiations.
Deficits
- In 1993, before the signing of NAFTA, the US trade deficit with Canada and Mexico totaled $27 billion. By 2012, our deficit with these NAFTA partners had increased almost seven-fold to $181 billion.
- More recently, we signed a trade agreement with South Korea, called KORUS, an agreement said to be one of the models on which the TPP agreement is being based. In just two years, our trade deficit with South Korea has grown by $8.7 billion while our exports to them have fallen by $3 billion.
Jobs
- In the 2 years since implementation of KORUS, Robert Scott (Economic Policy Institute) estimates that 60,000 US jobs, mostly in manufacturing, have been lost due to the increased trade deficit and reduced US exports.
- Between 2001 and 2011, EPI estimates that 3.3 million US jobs were lost as a result of ballooning trade deficits with China, whereas only 1/6 of that number, 538,000 new jobs were created. Six times as many jobs lost as new jobs created.
- David Autor, in a paper in the American Economic Review, estimated that between 1990 and 2007, growing imports from China (and rising trade deficits) accounted for fully ¼ of all manufacturing jobs lost in the US, as well as lowering wage rates.
Wages
- Between 2009 and 2012, of US workers who lost their jobs due to offshoring of manufacturing but who found new jobs, two thirds had to take a pay cut, most at 20% or lower wages. Of course, hundreds of thousands of displaced workers have not found new employment.
- Nine of the eleven nations in the TPP have significantly lower average wages than the US, making further downward pressure on American wages highly likely.
Currency manipulation
- Even though many members of Congress have asked the US Trade Representative to make currency manipulation a key part of the TPP negotiations, and even though he has acknowledged that it is critical reason why US exports lag in relation to imports, as recently as April of this year he was still telling members of Congress that they have not included it even in the discussions taking place.
Patent Law
- Patent Law, which already favors big, “incumbent” companies over smaller businesses and individual inventors and entrepreneurs, is likely to further extend both the scope and duration of patentsfor major multi-national corporations through the TPP. This is true in terms of pharmaceuticals, internet and information companies, and others. This has at least three negative impacts:
- First, inventors, innovators and entrepreneurs, who generate 16 times as many new patent innovations than do large corporations (per dollar of revenue) will now face more legal and bureaucratic hurdles as a result of these trade deals;
- Second, much of what now continues to be in the “public sphere” – particularly in the realm of creativity, the arts and the exchange of ideas across the internet – will likely face pressures of privatization and control by large providers;
- Third, pharmaceutical companies will make critical, sometimes life-saving drugs, much less available and affordable, by maintaining patents for longer periods, precluding the availability of lower cost “generics”. This will almost surely cost lives, probably tens of thousands of lives. If you think that the big drug companies must do this to cover the high cost of research and development, consider that they spend more on promotion and marketing than they do on R & D, and that they are already among the most profitable companies in the world.
Secret Negotiations
- The intense public secrecy and the extreme restrictions even on elected officials in being able to view the proposals is absurd, unjustifiable and really, quite an offense to citizens and the public interest. Even the Bush administration, for goodness sake, provided more information on pending trade deals. President Obama, to my knowledge, has never explained the need for such secrecy and for the great access granted to corporate representatives in the negotiations.
Investor State Dispute Settlement agreement – ISDS
- Existing ISDS agreements in NAFTA, the WTO and other trade agreements is already very bad, but the TPP’s setting up of “independent” panels, to whom only corporations and investors can bring a claim (not citizens, unions, or local/state governments) makes a very unfair system far worse. The use of ISDS by corporations to bring suit against communities has grown dramatically over the last ten years, now averaging about 60 such suits annually. Here’s a very short sampling of some of those suits:
- Phillip Morris has brought suit against both Australia and Uruguay for their efforts to reduce smoking, especially among young people, through stronger mandatory health warnings and smoker cessation campaigns.
The Renco Group filed an $800 million suit against Peru for closing the company’s Zinc smelter, which they had refused to adequately clean up. Even though the WHO found that 99% of children living nearby had lead levels 3x greater than safe levels, and eventhough Time Magazine cited the community, LaOroya as one of the “world’s most polluted places”, Uruguay was forced to reopen the smelter as a result of the lawsuit.
- After Ontario adopted its “Green Energy and Green Economy” plan in 2009, the growth of businesses, jobs and revenues in renewable energy grew dramatically in the province. In part this was due to the law’s requirement that a minimum of 40% of materials in the solar industry be sourced from within the province. That generated a great deal of investment in solar manufacturing, including a state-of-the-art Italian facility, Silfab, to produce super efficient PV panels. Japan and the EU brought suit, investment dried up, and the Silfab company and others are stuck in limbo, unlikely to ever open.
- Phillip Morris has brought suit against both Australia and Uruguay for their efforts to reduce smoking, especially among young people, through stronger mandatory health warnings and smoker cessation campaigns.
I think that all of these examples, and countless more, point to the fact that what we’ve been pursuing through these treaties is not “free trade” but “corporate trade”. When corporations are invited into all of the negotiations, for several years running, but the US public is kept completely in the dark, and our elected representatives have only very limited access to see portions of the proposed agreement, what else can we call it? When the US has steadily shed jobs, especially better paying jobs by the millions, while its trade deficit has grown, how is this good for workers, our communities, our nation? When major multi-nationals are able to sue governments for working to protect their citizens from deadly pollutants, for discouraging smoking, or for building a home-grown, job-creating solar industry, how does this square in any way with the well-being of people, or with the development of more resilient, healthy and bottom up economies? Cleary it does not.
It is time to take a stand against the TPP and the TTIP. Beyond that, it is time for a completely new approach to international trade agreements, an approach that puts people, their communities and their environment at the top of the agenda, not ever-increasing corporate profits and ever-expanding corporate control. Trade could be about the fertile exchange of ideas and innovations across borders, about filling the critical gaps in what a nation needs, and that other countries can produce better. Current trade policy has nothing to do with these goals. It must change, dramatically.
*Originally published at BottomUpEconomy.org