TPP Is Another Upward Transfer of Wealth

Lambert here: The Democratic leadership has been doing a lot of head fakes to the left, lately. But not on trade! So I guess they care about that.

Roger Bybee, a Milwaukee-based freelance writer and University of Illinois visiting professor in Labor Education. Originally published at Triple Crisis.

Those at the top have never done better,” President Obama ruefully acknowledged in his January 28 State of the Union speech. “But average wages have barely budged. Inequality has deepened.”

Yet, moments later, Obama heartily endorsed the Trans-Pacific Partnership (TPP), which as drafted directly reflects the demands of “those at the top” and would, if passed, severely intensify the very inequality spotlighted by the president. The TPP would provide transnational corporations with easier access to cheap labor in Pacific Rim nations and new power to trump public-interest protections—on labor, food safety, drug prices, financial regulation, domestic procurement laws, and a host of others—established over the last century by democratic governments. The nations currently negotiating the TPP—which together comprise nearly 40%of the world economy—include the United States, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Among them, Malaysia, Brunei, Mexico, Singapore, and Vietnam, are all notorious violators of labor rights The TPP’s labor provisions are far too weak to begin uplifting wages, conditions, and rights for workers in these nations.

As with NAFTA, the TPP will benefit U.S. companies relocating jobs to low-wage, high-repression nations, argues economist Mark Weisbrot, co-director of the Center for Economic and Policy Research (CEPR). This would also exert strong downward pressures on the pay of U.S. workers, “Most U.S. workers are likely to lose out from the TPP,” Weisbrot says. “This may come as no surprise after 20 years of NAFTA and an even-longer period of trade policy designed to put lower- and middle-class workers in direct competition with low-paid workers in the developing world.”

Obama has billed the TPP as a “trade agreement” that will create U.S. jobs. The pact, however, actually has little to do with reducing trade restrictions. Tariffs are now a minimal factor for most global trade. Lori Wallach, director of Public Citizen’s Global Trade Watch, points out that only five of the TPP’s twenty-nine chapters are about trade at all. But the remaining provisions cover such immensely important measures as the creation of a kind of corporate supremacy over the democratically established regulations enacted by member nations. If an existing law threats to diminish profits, corporations in the TPP nations would be entitled to bring their complaint to an international dispute panel of anonymous corporate members, who could impose major financial penalties on the “offending” countries. “The Trans-Pacific Partnership,” Wallach concludes, “is a Trojan horse for a host of awful measures that have nothing to do with trade and would never get through Congress in the light of day.”

Some of the most controversial TPP features have become public only thanks to Wikileaks. American participation in the TPP negotiations has been limited to a tiny circle of just 600 top corporate executives. Numerous members of Congress have complained about the secrecy surrounding the negotiations, charging that it exceeds even that practiced by the Bush-Cheney administration. The public’s understanding of the massive stakes involved in the TPP has been further hampered by the failure of major media to offer even minimal analysis. The major-network news shows, according to a new study by Media Matters, made no mention at all of the TPP from August 2013 through January 2014.

Despite remaining in the shadows, the TPP has met fierce opposition from both elected representatives and hundreds of labor, consumer, small-farmer, health-reform, and other civic organizations. TPP’s only foreseeable path to passage in the near future had been the use of a “fast-track” procedure, under which NAFTA and subsequent international agreements have been negotiated. Instead of the normal process of deliberation and debate by Congress, the fast-track process (which requires separate congressional approval) substitutes minimal debate and permits no amendments. Senate Majority Leader Harry Reid, acutely aware of residual public resentment against NAFTA’s 20-year legacy of job loss and wage decline, has firmly ruled out the fast-track route for the TPP. Influential Democratic senators like Elizabeth Warren (D-MA) and Sherrod Brown (D-OH) have already directed their fire at the TPP, with Warren demonstrating her seriousness by voting against Obama’s nominee for U.S. Trade Representative, former Citigroup director Michael Froman. Meanwhile, 150 House Democrats and several dozen Republicans signed a November letter opposing the fast-track process.

“We’re seeing ‘trans-partisan’ opposition to the Partnership,” said Michael Dolan, the International Brotherhood of Teamsters (IBT) legislative representative on trade issues. As with NAFTA where some conservative Pat Buchanan-style nationalists saw a transnational corporate threat to U.S. sovereignty, some normally pro-corporate members of Congress are adopting an oppositional stance. The Republican opposition to the TPP includes Tea Partiers Michele Bachmann (R-MN) and Louie Gohmert (R-TX) and over 20 others. According to Arthur Stamoulis, executive director of the Citizens Trade Campaign which is leading opposition to the TPP, the stance of these Republicans goes beyond their seemingly-reflexive opposition to any Obama initiative.

While a number of Tea Party Republicans voted in favor of the three Obama-promoted free-trade agreements in 2011, they are viewing the TPP differently because of its magnitude and due to pressure from the Republican base. “Because of its massive size, the TPP has captured a lot more attention from the Right than the Korea pact ever did,” Stamoulis says. “With Republicans’ base much more engaged on the TPP—the Tea Party Nation and others opposing it—I expect to see a lot more Republican opposition this time around, and indeed, we already are seeing that.” The visceral dislike of Obama by many on the Right may add fuel to rightist opposition to the TPP and the fast-track procedure, Stamoulis concedes, but he points out that opposition to corporate-style globalization has been mounting among Republican voters for some time. “Polls showed that Republican voters’ opposition to free-trade agreements existed back during the Bush administration as well,” he notes.

On the Democratic side, only a relative handful of remaining “free-traders” (their ranks having been thinned in recent elections that unseated a number of the pro-globalization Dems) like Rep. Ron Kind (Wisc.), stand with Obama at this point. Unlike the NAFTA vote in 1993, where about almost half of House Democrats and over 3/4 of Senate Republicans voted for the measure, Democrats in both Houses have become notably disenchanted with the results of “free trade” and the resultant offshoring of jobs. “Democratic opposition to job-killing Free Trade Agreements has hardened in recent years,” says CTC’s Stamoulis.

“Not only do more members of Congress understand the disastrous effects of pacts like NAFTA, but they also see that two years into President Obama’s biggest trade agreement to date—the Korea Free Trade Agreement—not only is our deficit with South Korea up, but the promised exports are actually down.” The Democratic base, as reflected in polling data, also seems more actively opposed to any massive new free trade agreement, based on their experiences with 20 years of job losses and community devastation that they see as products of NAFTA. A wide array of mostly progressive organizations, including 564 labor, environmental, family farm, human rights and other groups, signed on to a letter opposing the fast-track route to passing the TPP. With this pressure from the grass roots, “Democrats in Congress are beginning to understand not only the policy folly of TPP, but the political folly associated with it as well,” Stamoulis states.

With implacable opposition to the TPP among both the president’s strongest allies and most ardent enemies, the TPP has little realistic passage before the November mid-term elections, the Teamsters’ Dolan told Dollars & Sense. But there is still a danger that Obama might seek to gain passage of the Trans-Pacific Partnership, using the fast-track procedure, in the “lame-duck” session after the elections when defeated and retiring members of Congress are no longer accountable to voters.

However, such a ploy would leave Obama with a legacy of making little headway for workers against rising inequality*, while succeeding only in promoting the TPP and other trade agreements that will worsen America’s glaring economic fault lines.**

NOTE * Lambert here. That’s not a bug. It’s a feature.

NOTE ** Dittoez.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. John

    High tariffs are a fact of life. We have very high tariffs here in Europe. To make matters worse, we don’t have a uniform policy across the EU. Member states charge what they want and they intentionally keep the tariff schedule non-transparent. Import a product one week, the charges could be different on the next import – for the same product. As expected, the cost of doing business in the EU goes way up because of red tape. Unfortunately, this gets next to no media coverage so everyone repeats the same meme that global import tariffs are low. That is simply not true. They are generally low in the US, but elsewhere they are high.

  2. hunkerdown

    One does not discuss trade populism within earshot of the client states, when any weakness in resolve can and will be used against one at the negotiating table. On the other hand, in matters of domestic policy, the insiders already know the outcome and merely need to act out the correct dramas to keep the flock(s) captivated, observant and tithing.

  3. Ulysses

    The TPP is desired by the transnational kleptocrats who are the de facto rulers of our world. They would like the TPP essentially to create a mechanism for establishing their status de jure as well. If we succeed in blocking the TPP, it gives us the opportunity to maintain some distance between the harsh de facto reality and the more comforting de jure fantasies of national and popular sovereignty.

    Make no mistake, keeping alive the theoretical possibility of meaningful alternatives to full spectrum kleptocratic dominance is not without value. Yet we are not going to reverse the disastrous trends that are inexorably destroying life on our planet by clever maneuvering within the current kayfabe system.

    The pressure points in the kleptocratic regime don’t lie in the desires of congresscritters to get re-elected. That just means a huge pay raise for most of them as they move from Capitol Hill to K Street. No, we’ll start to get their attention when we grow a backbone and stop enabling their system to continue its smooth looting and hoarding for the sole benefit of kleptocrats. A week-long, well-disciplined and coordinated trucker’s strike in the U.S. and EU would make kleptcrats sweat far more than seeing Cornel West elected governor of New York and Bernie Sanders president of the U.S. Our political and judicial systems serve mostly to delude folks into thinking they have some basic rights and protections beyond the right to create wealth for the kleptocrats.

    This was recognized centuries ago by that dangerous, anti-capitalist radical Adam Smith when he wrote: “Laws and government may be considered in this and indeed in every case as a combination of the rich to oppress the poor, and to preserve to themselves the inequality of the goods which would otherwise be soon destroyed…” (Lectures in Jurisprudence, IV,23)

    Put not your faith in politicians, but in your own capacity to resist!

    1. jgordon

      I think the far more practical and immediate way to stop the transnational oligarchs would be to divest yourself of their currency as much as possible–and then go about having the majority of your needs taken care of locally, by people you know, in a sustainable manner. Meanwhile, by all means take advantage of your new low-income lifestyle and get on any benefit program you can.

      Honestly, your quality of life will probably go up, and this will weaken the system both from the front door and through the back door. And as an added benefit when the whole society collapses (as it certainly will at the rate we’re going) you’ll have a network and way of life in place that will be highly resistant to it.

  4. allcoppedout

    Dare one suggest trade doesn’t work anyway? It focuses attention into the stupidly saleable and away from what we sensibly need. In the process of trade we burn and poison the planet, and as importantly, force screaming monkey serfdom on ourselves, doing far more work than we need to and destroying the potential quality of life.

    Various work ethics are involved in this, though they all mean ‘flog your tripes off so the rich can enjoy themselves’. We understand little of the role of money in this, especially in terms of how having it reduces the need to do real work and the need to disguise this from the monkeys not getting the ‘grapes’. We have The Disorder (TM) and this may be a real collective condition amongst screaming monkeys. The finest examples of deregulated free trade today can be seen in Nigeria and boko haram slavery.

    Trade agreements are major contributors to the acid tears of joy. Pleasurable as these are, Uncle Screwtape’s engineers have worked out the humans are such successful dupes, that they may well explode the planet before our estimated departure date 300 years from now. He is considering giving them fusion technology, but as he says, ‘look what the bastards did with oil’. There is a proposal to teach them trade is simply mutual exchange, but one only has to view their sexual practices to know how much difficulty they will have with that.

    1. diptherio

      Yeah, isn’t it strange how the mutually exclusive nature of increased trade and ecological sustainability never seems to occur to “left” defenders of “free trade”? Environmentally, what we need to be focusing on is dramatically shortening supply chains and encouraging production and consumption on local and regional levels. This implies less international trade, not more.

      ISTM that discouraging long-distance, fossil-fuel-intensive trade through high tariffs would have environmental benefits that might offset any decrease in well-being caused by there being less cheap plastic crap to buy at WallyWorld. All Ricardo ever showed was how to maximize the amount of stuff produced and consumed–but that’s not the problem we’re facing now. We’ve got plenty of stuff, it’s distribution and environmental devastation that are our major concerns at the moment.

      1. allcoppedout

        Spot on Dip. Richardo was wrong in his own time as far as I’m concerned. I think harking back to ‘ancient scripture’ shows how biblical economics is as a subject.

        1. F. Beard

          You means the ones that limit usury to only from foreigners and forbid theft and oppression of the poor and helpless? And which impose capital punishment for working more than 6 days a week?

          The problem is that John Calvin did not write Scripture; he just misinterpreted it because, I guess, he saw no way around the need for usury.

          1. allcoppedout

            No my friend, I mean the hermeneutic method no harm, nor your remarkable use of scripture which is honestly selective concerning a way we might live. It is the economists’ use of false origin never reviewed in the context of its own time and class interests and treated as eternal when it is not I detest. I know more of Kelvin than Calvin, as the former expressed something eternal or at least Popper’s World 3. These people would remove temperature and pressure from chemistry through their method of exclusion, and yet still cite Boyle. They leave the morality out of Adam Smith,

      2. President Costanza

        Great comment. The fact that the economics profession cannot see past the maximization of personal consumption shows just how bankrupt the profession is. What’s worse is that the “free trade” agreements championed by the profession are being used to stop any action on climate change. Apparently, in the view of neoliberals, the “right” to profit maximization trumps the right to live in a habitable planet.

        1. allcoppedout

          I guess Mr President, that the economists would say that economic forces will force us to go green under rational consumer choice. I think they are just creatures of habit who have learned to make easy argument instead of good argument. I would like to pull out and live like a hermit (strike), but they have taken even that away as an option. Against your criteria 999 out of 1000 economics papers are not relevant to what we need to do. It’s likely profit is no longer even relevant to widespread development now, let alone groaf, groaf, groaf.

  5. trish

    head-fakes to the left. that’s perfect.

    And it works so well w/ the media. like a bunch of chickens.
    If you toss a morsel or a faux-morsel even off to a bunch of chickens, they’ll all race frantically en masse over and that bit, that one noodle, can occupy them for quite a while (one’ll get it, the rest’ll chase, that one’ll drop, another gets it, chase, drop, chase, drop…until it’s eaten or they realize it’s not edible).
    Only I love chickens. All these head -fakes to the left – gay marriage, death penalty review, paltry “climate initiatives,” whatever- don’t threaten economic interests of the governing elite so they placate and/or distract so perhaps something odious can be pushed through.
    Insidious, Obama is.
    Fantastic for the elite precisely because of success of the “progressive against the evil republicans” PR via the media and the beltway “liberals.” His legacy will be as a major contributor to the rip-tide of growing inequality- precisely a feature not a bug. Of the elite, a huge boon to the elite.
    Of course, excepting a few like Warren and Brown, the only reason more elected officials understand- or care about- the disastrous effects of pacts like NAFTA, TPP, is because of the fierce opposition of those civic groups, media like Wikileaks, and suddenly they’re forced to care because elections.

  6. allcoppedout

    “The whole philosophy of Hell rests on recognition of the axiom that one thing is not another thing, and, specially, that one self is not another self. My good is my good and your good is yours. What one gains another loses. Even an inanimate object is what it is by excluding all other objects from the space it occupies; if it expands, it does so by thrusting other objects aside or by absorbing them. A self does the same. With beasts the absorption takes the form of eating; for us, it means the sucking of will and freedom out of a weaker self into a stronger. “To be” means “to be in competition”.”
    Screwtape Letters

    Strange that the Xtians are so good at trade agreements. Genuine trade agreements would be about building large scale green energy, exchanges of labour and doing stuff for grandma Entwistle and Choo.

    1. F. Beard

      A Secret Service man was asked: “You guys must study a lot of counterfeit bills to do your job.”
      He replied, “No, we only study genuine bills and then the fakes become obvious.”

  7. Synoia

    Senate Majority Leader Harry Reid, acutely aware of residual public resentment against NAFTA’s 20-year legacy of job loss and wage decline, has firmly ruled out the fast-track route for the TPP.

    Form which one can infer the plan is for the Ds to loose the senate in November 2014, and the Rs to pass the fat fast track authority under reconciliation.

  8. Jacob

    “The TPP would provide transnational corporations with easier access to cheap labor in Pacific Rim nations and new power to trump public-interest protections . . .”

    Access to cheap, compliant labor is the primary goal of TPP, NAFTA, CAFTA and all the other transnational trade agreements because labor is the primary source of value, estimated to be as high as 70 percent of manufacturing costs. Offshoring enables capital to avoid the relatively high cost of American labor.

  9. President Costanza

    How come access to cheap labor hasn’t resulted in a diminution in executive compensation. It seems like the oligarch class are the only ones not affected by the relentless pursuit of lower labor costs. Coincidence?

  10. allcoppedout

    They could presumably have found cheaper CEOs abroad and brought them in. I think this was a class-distancing thing. Previous examples were the scientific management and bonuses of ‘Red Rubber’ and extra payments and the drafting of outsiders (as bailiffs and stewards) in the Scottish Enclosures – the formation of an officer class prepared to eat 5 course meals while the men starve. They claimed it was about the scarce skills and genius of the CEOs – but when did they ever let us test these and create huge numbers through training to reduce their own wage costs? And what is a human being who thinks he is so special and worth so much more than others really worth? A creep and a thief?

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