The US has been working on the finalization of two multi-nation trade agreements – the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP). Both these agreements have deliberately excluded India and China besides Brazil, South Africa and Russia. The agreements are aimed at putting all these countries at a disadvantage in international trade and reinforcing the supremacy of US.
The objective of the US government is obvious from the statement of the President of USA in 2014, “Russia's aggression toward former Soviet states unnerves capitals in Europe, while China's economic rise and military reach worries its neighbours. From Brazil to India, rising middle classes compete with us.”
The intention of the US to dictate trade rules to other countries is also evident from the statement President Obama made after signing of the TPP agreement: “TPP allows America – and not countries like China – to write the rules of the road in the 21st century, which is especially important in a region as dynamic as the Asia-Pacific.”
The Indian government is concerned about the impact of this new trade bloc on Indian trade and that is why the Economic Survey presented on 26 Feb 2016 has a whole section dealing with “The TPP and Its Implication for India”. The Indian government is still weighing the gains and losses of joining the ‘extended TPP’. While the government is concerned only about the impact on trade and therefore on large companies, the implications of TPP like agreement for people are much worse, as this article shows.
As the name suggests the trade deal is between several countries that border the Pacific Ocean. The 12 countries are: US, Canada, Mexico, Peru, Chile, Japan, Singapore, Vietnam, Malaysia, Brunei, Australia, and New Zealand. The TPP is considered the largest free trade agreement ever negotiated, with the countries involved contributing 40 percent of global GDP. The main justification for the deal (from the American government's standpoint) ostensibly is that it will remove barriers to exports and protect American jobs. However a detailed examination of many of the issues shows in fact that the TPP will have many negative consequences and will result in handing over sovereignty of nation states to transnational corporations. Therefore, it is increasingly receiving push back from the American population at large. Let us look at some of the details behind the TPP.
This trade agreement was recently signed in Auckland, New Zealand. The remoteness of this location fueled speculation that this was done by design, to minimize the publicity of this agreement in the United States. There are many aspects of the agreement that are worth noting.
An extremely unusual part of this agreement is that it was pushed by President Obama, with support from more Republicans (his “opposition” party, historically the party of big business, Obama’s bitter rivals and obstructionists on most other issues) than Democrats (members of his party – which has historically labeled itself the people’s party in theory, although their actions have often belied that label). This is about the only policy during Obama's two terms in office where the Republicans have supported him more than the Democrats. The strange dynamics of this immediately gives pause to consider why this is the case, and what’s really going on. An in depth look at the TPP is well warranted.
It is important to note that the TPP was negotiated in secret and the document has only recently been made public, as it awaits a vote in Congress before it can be made “official”. During the crafting of the document and related negotiations, only members of Congress and staffers with security clearance were able to access it. And even they couldn’t make copies or even carry their own handwritten notes out the door. However, lobbyists from various industries were allowed full access to the content, and in some cases have even helped create the content!
The justification of this secrecy seems to be “This is how trade negotiations with other countries work. If we make the terms of the trade agreement public during the negotiations, it will give the negotiators from other countries an unfair advantage as they will know what we are thinking. Therefore we will keep the terms secret until the deal is finalized.”
However, this contradicts the standard conventional thinking viewpoint that we are fed by the mainstream media: that “free trade” is a win-win and good for everyone. Clearly, if this were the case there would be no need for all this secrecy. This secrecy and the associated “negotiations” imply that there will be winners and losers. And when the people of a country are unable to impact the negotiations, even through their elected representatives, it brings into question who wins. The logical answer is that the “insiders” and “special interests” that are able to impact the content will win, even to the detriment of the people of their own country. In the case of the United States, the insiders are the capitalist corporations and their lobbyists. In the case of other countries, it could be dictators, ruling families and the like.
This secrecy is at the heart of one of the biggest criticisms of the deal. But the TPP has several other problems. First and most critically, the TPP expands the rights of corporations to challenge regulations established by the governments (federal, state or local) of sovereign nations.
The TPP establishes special legal rights of foreign corporations to challenge new regulations that it views could impact future profits. These corporate rights, first established under NAFTA would be granted to corporations in all TPP countries. NAFTA is the North American Free Trade Agreement, which was ratified in 1994 between the US, Canada and Mexico.
These special rights granted under NAFTA extend far beyond commonly understood current rights of corporations and seriously undermine the voice of the people of a sovereign country. As an example of this, consider the current situation of the Keystone pipeline. The Keystone pipeline is a several thousand mile long pipeline that was planned to bring the dirty crude tar sands oil from Alberta, Canada to the gulf coast of the United States to be refined. However, environmentalists, concerned about climate change and other environmental degradation caused by the pipeline created serious opposition to the pipeline (including civil disobedience) ultimately forcing President Obama to refuse permitting of the pipeline through the United States. Now TransCanada, the Canadian capitalist corporation that would have owned, operated and profited from the pipeline is considering suing the United States for lost profits because of the cancellation of the pipeline. Such a lawsuit would be permitted under NAFTA and if similar privileges were granted to corporations, similar lawsuits would be permitted to corporations of TPP countries under TPP as well.
How ridiculous this could turn out to be is can be seen from the following hypothetical (but realistic) example:
A multinational corporation, let’s call it Corporation A in Country X builds automobiles that are exported to the United States. The automobiles meet current regulations. Then the state government of California in the United States which is a leader in combating climate change (due to citizen pressure) passes a law to further reduce carbon emissions, requiring that cars that are sold in California meet stricter emission standards. Corporation A concludes that it will cost a lot more to build cars with reduced emissions as required by California and hence will reduce profits. Under the TPP, Corporation A can sue the state of California for future lost profits. The lawsuit will be argued by corporate lawyers - not before a federal court, but before three private international arbitrators (possibly appointed by the corporation). It doesn't take a genius to figure out that the three arbitrators have a vested interest in resolving the suit in favor of their employers. The likely result? The state of California could be made to pay Corporation A for its future lost profits or to repeal the new emissions law!
Consider another realistic scenario: the city government of San Francisco decides to raise its minimum wage. Corporation B of Country Y that owns 15 restaurants in the city could sue the city of San Francisco for lost profits due to the minimum wage increase of its wait staff. The suit again would likely be decided in favor of the corporation and would be financially disastrous for the city of San Francisco.
This is an unprecedented expansion of corporate power. As a byproduct of this expansion of corporate power the TPP opens the door to a whole host of other problems:
1. The TPP allows foreign private or state-owned enterprises to continue to undermine small business.
The current TPP text doesn’t adequately protect small businesses from the predatory tactics of foreign state-owned and state-subsidized companies. Often, these large corporations are subsidized by their governments and could and do use their advantage to drive out small businesses of a particular market. As a real life example, consider the Wal-Mart Corporation of the US, the largest retailer in the world. Its profits are greatly increased by subsidies from US taxpayers on at least 2 levels; first, US taxpayers indirectly subsidize their employees with food stamps and other federal assistance as even full time Wal-Mart employees in many cases live well below the poverty line and are eligible for such benefits and second, many states and towns where they open new stores in the US give them tax breaks under the guise of “creating jobs” in that town. Wal-Mart in turn could and use these increased profits to drive out small retailers in TPP countries. TPP would open up member countries to such predatory tactics by the multi- national corporations and promote the process of monopolization even more.
2. The TPP could facilitate more privatization of public services
Public services such as sanitation, transit and utilities should be carved out of trade deals—but the TPP puts them at risk. The current TPP text does not ensure that governments can pull out of wasteful and failing public service privatization efforts without shelling out taxpayer dollars to compensate foreign firms.
3. The TPP makes medicines less affordable
Quality, affordable and accessible health care is a human right and trade policy should not interfere with public health care choices. Unfortunately, the current TPP text threatens access to affordable medicines by including new monopoly rights for pharmaceutical companies—delaying competition by affordable generics—and allowing companies more opportunities to interfere with government cost-saving efforts. This has a major impact outside the United States where several governments impose price caps on medicines.
4. The TPP gives global banks even more power
The TPP expands the rights of international banks to use to challenge bank regulations in front of private tribunals. Giving global banks more power makes another global financial meltdown much more likely. Also the more power these big banks have, the less power consumers have. Therefore, the more power that is given to these big banks, the less control that ordinary citizens have of their own lives.
5. The TPP drives natural gas exports and production
The TPP mandates the automatic approval of Liquefied Natural Gas (LNG) export permits to TPP countries, a policy the Sierra Club – a leading pro-environment organization in the US - says is likely to lead to an increase in fracking. (Fracking is the process of releasing natural gas from the earth by first drilling into it and then injecting high pressure water into the drilled holes). Fracking has not only been linked to air and water pollution; the process is a high emitter of greenhouse gases, and it further locks in a fossil-fuel based system of energy over renewable options.
6. TPP can weaken labor rights protections
As per AFLCIO (American Federation of Labor and Congress of Industrial Organizations – the largest federations of unions in the US) there are extensive, well-documented labor problems in at least four TPP countries (Mexico, Vietnam, Brunei and Malaysia) but the administration has not committed to requiring all countries to be in full compliance with international labor standards before they get benefits under the agreement. Worker rights obligations have never been fully enforced under existing free trade agreements, which have provided too much discretion for worker complaints to be delayed for years or indefinitely (e.g., Honduras, Guatemala). A progressive TPP would eliminate this shortcoming, not repeat it. Given that no administration has ever self-initiated labor enforcement under a free trade agreement, any promise to “strongly enforce” the TPP should be met with skepticism.
In summary, the TPP threatens to seriously undermine the sovereign rights of individual countries and their people to self-govern by handing over rights to transnational corporations. It is also notable that with the exception of the US and Japan, the other countries involved in the trade deal have relatively small economies and therefore, almost no influence on the deal. Thus it is very likely to hurt these countries, especially their workers.
The TPP is likely to result in a “race to the bottom” - a move by corporations to produce goods in the countries with the lowest human rights and environmental standards, to exploit the workers of these countries even further and to cause job losses and much economic hardship for the working class of more prosperous countries.
While the TPP was signed by member countries, it still needs to be ratified. There are two paths to ratification: the first path will make the TPP effective two months after all the original signatories complete their own domestic ratification procedures.
The second path is more preferred because it’s likely that at least one of the signatories will fail to ratify it internally. In that event, the agreement can still come into force if at least six countries, which between them represent at least 85 percent of the total GDP of the original 12, have ratified it within two years. As the US and Japan together account for about 80% of the GDP of the signatories it means that both the US and Japan need to ratify it internally, along with 4 other countries.
This means that in order to prevent the TPP from being ratified, the opposition has to come in the US and/or Japan. In the US, it is unlikely to come up for a vote in Congress until the next election in November 2016. That means there is still time to build up citizen opposition to it in the US to prevent a repeat of the NAFTA disaster.
What we need is a truly new vision for trade: to reflect the values of a new economy. Such a vision would start by radically restricting corporate power, ensuring adequate environmental and labor standards and protections, enabling human rights and reducing or eliminating inequities. It would reject the current secretive process, for negotiating future trade deals. The fight against TPP is an important political opportunity to reject an outdated economic model, while developing the vision for the new economy.
People in countries like India must be made aware of the real hidden goals of the big corporations and their supporters while proposing such mega-trade agreements. People alone can force Indian government not to succumb to the pressure of the supporters of big corporations within India and outside to bind the country to such deals.
- C Gharpurey, California, USA