Robert Reich, who served as Secretary of Labor in President Bill Clinton’s administration, is currently the Chancellor’s Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies. Yesterday, Reich posted a column on his blog titled How Trade Deals Boost the Top 1 Percent and Bust the Rest.
Reich wrote that he used to be supportive of trade agreements. He said believed in them “before the wages of most Americans stagnated and a relative few at the top captured just about all the economic gains.”
Suppose that by enacting a particular law we’d increase the U.S.Gross Domestic Product. But almost all that growth would go to the richest 1 percent.
The rest of us could buy some products cheaper than before. But those gains would be offset by losses of jobs and wages.
This is pretty much what “free trade” has brought us over the last two decades.
Reich said that big corporations and Wall Street, “along with their executives and major shareholders,” have been the ones who have benefitted from trade agreements with other countries. He noted that those entities “get better access to foreign markets and billions of consumers.” He added that they “also get better protection for their intellectual property – patents, trademarks, and copyrights. And for their overseas factories, equipment, and financial assets.”
Unfortunately, those trade deals have not been so beneficial for most Americans. Reich said the trade agreements “should really be called ‘global corporate agreements’ because they’re mostly about protecting the assets and profits of these global corporations rather than increasing American jobs and wages. The deals don’t even guard against currency manipulation by other nations.” He added that these trade deals aren’t like the “old-style trade agreements of the 1960s and 1970s” that “increased worldwide demand for products made by American workers, and thereby helped push up American wages.” He said that the “new-style global corporate agreements mainly enhance corporate and financial profits, and push down wages.”
According to Economic Policy Institute, the North American Free Trade Act cost U.S. workers almost 700,000 jobs, thereby pushing down American wages.
Since the passage of the Korea–U.S. Free Trade Agreement, America’s trade deficit with Korea has grown more than 80 percent, equivalent to a loss of more than 70,000 additional U.S. jobs.
The U.S. goods trade deficit with China increased $23.9 billion last year, to $342.6 billion. Again, the ultimate result has been to keep U.S. wages down.
All this should be of great concern to Americans because President Obama has been trying to fast track a new trade agreement called the Trans-Pacific Partnership (TPP) through Congress.
Elizabeth Warren’s Remarks On Trade Deals (Trans Pacific Partnership)
In an article in U.S. News & World Report today, David Brodwin said that TPP is a “beast of a trade pact” that “is lumbering, claws outstretched, towards American small business owners, consumers and workers, and it’s not clear if anyone can stop it.”
Behind the lofty language of partnership, and the stated goal of stimulating trade worldwide, it aims to strengthen multinationals at the expense of nearly everyone else. Most importantly, and most dangerously, the pact undermines the power of governments everywhere to encourage local entrepreneurship, protect consumer health and assets, and preserve clean air and water.
The Trans Pacific Partnership has been negotiated largely in secret by representatives from major multinational corporations. No drafts have been released. Involvement by the U.S. government has been closely-held, even though Congress must ultimately vote on the treaty. Only the Obama administration’s Office of the U.S. Trade Representative knows the details. Even your senator or representative has little insight and less input into the discussions.
The pact threatens our economic security in two ways. The first threat involves the particulars contained in it, which have not been officially disclosed (but portions have been leaked). It’s a grab-bag of special interest provisions: Pharmaceutical companies want greater leverage to prevent third world countries from making affordable generic drugs. Content companies — the media giants — want to extend copyright provisions out to 120 years in some cases. Tobacco companies want to limit countries’ ability to run anti-smoking campaigns…
Even more troubling is the mechanism that is being set up to enforce the particular provisions. According to leaked drafts, the pact empowers a system of tribunals that circumvent U.S. courts. These tribunals will allow corporations to force governments to retract laws the voters have approved.
A Broad Range of Special Interest Giveaways
Back in April of 2013, Brodwin wrote another article about TPP titled Obama’s Pacific Trade Deal Is No Deal At All. In that article, Brodwin listed some of the “most problematic aspects of TPP”:
Many provisions of TPP have little to do with trade per se. They simply promote the interests of powerful global industry groups and use legal and political mechanisms to limit true competition in the market place. For example:
- Provisions of SOPA, the so-called “Stop Online Piracy Act” which was rejected last year by Congress. SOPA would give a competitive advantage to the film industry and other content-creators while restricting innovation on the internet.
- Provisions that would extend patent protection on pharmaceuticals while restricting governments from negotiating lower prices.
- Provisions that would privilege major banks and financial institutions over credit unions and the emerging sector of public banks.
- Provisions that would disadvantage organic farmers and others who adopt safer and more environmentally-sound agricultural practices.
- Provisions that would extend the dominance of coal and oil and hinder alternative energy producers, by blocking regulations and limiting deployment of smart grid and other infrastructure.
In NAFTA on Steroids (The Nation, June 2012), Lori Wallach wrote the following:
Countries would be obliged to conform all their domestic laws and regulations to the TPP’s rules—in effect, a corporate coup d’état. The proposed pact would limit even how governments can spend their tax dollars. Buy America and other Buy Local procurement preferences that invest in the US economy would be banned, and “sweat-free,” human rights or environmental conditions on government contracts could be challenged. If the TPP comes to fruition, its retrograde rules could be altered only if all countries agreed, regardless of domestic election outcomes or changes in public opinion. And unlike much domestic legislation, the TPP would have no expiration date.
Failure to conform domestic laws to the rules would subject countries to lawsuits before TPP tribunals empowered to authorize trade sanctions against member countries. The leaked investment chapter also shows that the TPP would expand the parallel legal system included in NAFTA. Called Investor-State Dispute Resolution, it empowers corporations to sue governments—outside their domestic court systems—over any action the corporations believe undermines their expected future profits or rights under the pact. Three-person international tribunals of attorneys from the private sector would hear these cases. The lawyers rotate between serving as “judges”—empowered to order governments to pay corporations unlimited amounts in fines—and representing the corporations that use this system to raid government treasuries. The NAFTA version of this scheme has forced governments to pay more than $350 million to corporations after suits against toxic bans, land-use policies, forestry rules and more.
Siri Srinivas (The Guardian) also reported on the secrecy surrounding the TPP, which is reportedly “one of the largest international trade agreements the US will sign…” Srinivas noted that the agreement “is mired in secrecy.” She said that Congress will not “have access to the TPP before it is signed, and the terms won’t be publicly disclosed – ironic since the negotiations include 600 corporate advisers, including representatives of Halliburton and Caterpillar.”
A chunk of the trade deal was leaked most recently by a Wikileaks release. “Everything we know about it are from document leaks,” says Maira Sutton, a policy analyst at the Electronic Frontier Foundation.
That sets light to the anger of Senator Bernie Sanders, who has called the TPP “disastrous” and “written behind closed doors by the corporate world”. He denounced its purpose “to protect the interests of the largest multinational corporations at the expense of workers, consumers, the environment and the foundations of American democracy.”
Defeat the Trans-Pacific Partnership (January 2014)
Srinivas said that 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.” After NAFTA, 700,000 American jobs were offshored–60.8% of those jobs were 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.
One thing that truly concerns Wallach–as well as many other people–is that the terms of the TPP agreement “won’t be open to debate.” That’s because a fast-track treatment of the trade deal “is likely, with Congress implementing the deal without changes.” Wallach said that President Obama wants the authority to railroad that agreement through Congress.
Robert Reich takes on the Trans-Pacific Partnership
How Trade Deals Boost the Top 1 Percent and Bust the Rest (Robert Reich)
Fast Track to a Bad Deal: Congress shouldn’t give the president authority to fast track a lousy trade deal. (U.S. News & World Report)