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The TPP: What’s there to fuss about? The Snapper asked an alum

Julia Scheib
News Editor

In his recent state of the union address, President Obama didn’t explicitly talk about the Trans-Pacific Partnership (TPP) – which is being negotiated in secret – but he alluded to it, making a statement using the usual rhetoric about small-business owners and competing on the world stage. Breaking down trade barriers would open up new markets for businesses and, he said, “help them create even more jobs.”

The signatory countries of the Trans-Pacific Partnership are: the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Singapore, Peru, New Zealand and Vietnam.
The signatory countries of the Trans-Pacific Partnership are: the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Singapore, Peru, New Zealand and Vietnam.

The Trans-Pacific Partnership is a free trade agreement (FTA) that many are calling “NAFTA on Steroids.” It is being negotiated between the Pacific Rim countries, with plans for further expansion: so far, the U.S., Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam are in on the agreement. In America, the TPP is being talked about in secret and even legislators have limited access to working documents, but information provided by Wikileaks offers some insight to citizens.

An important thing to recognize about the agreement is that it will, more than anything else, benefit multinational corporations, granting them a higher degree of impunity for environmental pollution and unfair working conditions, while allowing them to reap higher profits.

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And leaders of this country’s major multinationals (who are also major political donors) are the only people, aside from select members of the administration, with official access to the working documents. According to Maplight.com, the trade advisory committee on intellectual property rights contains representatives from AT&T, General Electric, Verizon, Johnson & Johnson, Cisco, the Biotechnology Industry Organization, the Pharmaceutical Research and Manufacturers of America, and many others.

In other countries, massive protests are breaking out against the agreement: in Mexico City earlier this month, 65,000 people marched to protest the TPP because they saw it as a threat to the well-being of their society.

To understand why people are upset about the TPP and why our government and media are keeping it out of sight, we need to understand NAFTA.

NAFTA (The North American Free Trade Agreement) went into effect Jan. 1, 1994, between the US, Mexico and Canada. A few minutes before he signed NAFTA into law, Clinton said in a TV broadcast, “I believe we have made a decision that will permit us to create an economic order in the world that will promote more growth, more equality, better preservation of the environment, and a greater possibility of world peace.”

Farmers protesting the Trans-Pacific Partnership in Tokyo.
Farmers protesting the Trans-Pacific Partnership in Tokyo.

Twenty years later, said author Lori Wallach on Democracy Now!, “one million net US jobs have been lost to the growing trade deficit under NAFTA with Mexico and Canada.” Companies like Caterpillar, GE and Chrysler had promised to create American jobs, only to offshore them after the agreement passed. Post-NAFTA, there is higher competition among Americans for a limited number of low-wage service jobs.

NAFTA hurt Mexico, too. It allowed the U.S. to unload its subsidized corn on Mexico at very low prices. As a result, 1.5 million campesinos (small farmers) were displaced and poverty exploded, forcing a mass migration of Mexicans to the U.S.

The Snapper asked Courtney Lawson, a 2013 MU economics alum, for some insight into free trade agreements and what they mean for citizens and corporations.

FTAs are, he said, “used to eliminate restrictions to trade: tariffs, taxes, etc. This allows capital to move more freely between countries and eliminates any obstacles to trade between two or more countries.” This is good news for companies that can and will work between countries, and bad news for workers in domestic industries that can be outsourced, as well as domestically produced goods that can be bought cheaper from other countries.

The U.S. has been very aggressive in pursuing its interests in this trade deal; according to leaked documents, this country is willing to forsake the already weak environmental regulations it proposed in order to get what it wants in other areas.

“China and Europe aren’t standing on the sidelines. And neither should we,” Obama said in his state of the union address, after the line about opening up markets to U.S. companies. But the U.S. is not in danger of becoming a wallflower.

Much of our foreign policy could be called “economic imperialism:” the U.S. goes into other countries to spread its economic agenda, squashing left-leaning governments by sponsoring violent coups and then supporting new rulers and supplying them with policies friendly to free international trade. This allows corporations from our country to take the natural resources and labor from poorer countries and turn it into U.S. wealth – but the poor, working and middle class in this country barely see this wealth. The concept of neoliberalism explains this pattern.

“Neoliberalism,” Lawson said, “Is an economic doctrine that attempts to restore the true capitalist ideal, laissez-faire capitalism. The neoliberals believe that the market will sort out of all of its own problems, so there is no need for government other than to maintain an army and to protect private property. They argue that taxes, regulations and nationalized industry (the USPS, etc.) are a fetter on economic growth. The TPP comes into play when trade begins to move abroad.

“Many countries use taxes or tariffs to make foreign goods more expensive in order to bolster local production and support local business. However, these taxes and tariffs are a hindrance to global capital, and represent government interference in the market and must be smashed.”

In addition to breaking down trade barriers, the TPP would create an “investor-state” system, within which corporations and investors are elevated to equal standing with each TPP signatory country’s government, and above all, its citizens.

Within the investor-state system, foreign corporations are above domestic courts and laws. According to the Daily Kos, corporations have the right to sue governments for taxpayer compensation for “any domestic law that investors believe will diminish their ‘expected future profits.'” So far under NAFTA, more than $3 billion has been paid to foreign investors under US trade and investment pacts, and $14 billion is pending. The lawsuits target the environmental, energy, and public health policies meant to benefit citizens. In other words, it allows corporations to sue governments over laws that protect citizens.

According to the Daily Kos, the TPP would undermine domestic environmental regulations in all of the signatory countries. “Due to lack of government oversight, pollution is rampant in countries with FTAs, which directly affects the citizens’ quality of life,” Lawson said.

Another possible consequence of the agreement, which will strengthen patents and other intellectual property rights, is that companies will not be as able to produce generic versions of name-brand drugs, so developing countries will no longer have access to some life-saving medicines. It may also enable surgical procedures to be patented.

What could be the positive effects of the TPP for regular citizens in poor countries?

Poor countries sign on to deals like this, Lawson thinks, because they are told corporations from the rich countries will give them jobs. But these (mostly manufacturing) jobs are usually low-wage and non-union; in the U.S., many would have been union jobs.

What do regular citizens in rich countries get in exchange for job losses and weaker public health standards? “In developed countries,” said Lawson, “generally, FTA agreements lower the cost of goods that we purchase.”

Is this a fair trade? Citizens may not have the time to think about it; the Obama administration is trying to get “fast-track” authority so as to get the agreement signed into law with no amendments and limited debate allowed from the House and Senate.

For more information go to stoptpp.org or whitehouse.gov.