The TPP Is Dead! Long Live the TPP!

Yves here. Established readers know we were very vocal opponents of the TransPacific Partnership, aka the TPP, and its evil European sister, the TTIP. We were delighted to see it die. Public Citizen did phenomenal research, particularly on the noxious Investor-State Dispute Settlement provisions, and they deserve a lot of credit for this win.

Jomo Kwame Sundaram warns that contrary to our belief, the TPP is not really dead but is in political suspended animation, and its backers hope to revive it in a rebranded/maybe sorta modified form. But the horrible Investor-State Dispute Settlement program is very much part of the scheme.

By Jomo Kwame Sundaram, former UN Assistant Secretary General for Economic Development. Originally published at Inter Press Service

The Trans-Pacific Partnership (TPP) Agreement should be dead and buried after President Trump announced US withdrawal immediately after his inauguration in January 2017. After all, most major US presidential candidates in the last election, including Hillary Clinton, had opposed the TPP.

Encircling China with Trade Pact

However, the Japanese, Australian and Singaporean governments have kept the TPP alive, first by mooting TPP11, i.e., minus the USA, later pretentiously relabelled the Comprehensive and Progressive TPP (CPTPP), with the hope that the US will rejoin later.

Other governments have remained ‘on board’ for various reasons, mainly foreign policy considerations, rather than with serious expectations of economic benefits, while ignoring the dangers and risks.

Last week, yet another ministerial meeting reiterated pious claims of steady progress as CPTPP boosters try to remain relevant despite the fast declining appetite for regional trade deals.

The CPTPP did not even get rid of the most onerous TPP provisions, but only suspended some intellectual property (IP) and other provisions, mainly of interest to the USA. These can easily be reincluded to bring the USA back in after the November election.

However, other onerous aspects, such as investor-state dispute settlement (ISDS) provisions, remain. In the wake of Covid-19, lawyers are already advising foreign investors how to use extraordinary coping measures to sue governments, which will cost them even if they win.

If re-elected, the Trump administration’s opposition to ISDS can easily be accommodated to bring the US back on board as it seeks new measures to isolate and weaken China. Biden will also revive a TPP avatar, having supported it before as Obama’s loyal Vice-President.

But reselling the TPP in the USA will not be easy. Already, many US manufacturing jobs have been lost due to corporations automating and relocating abroad. Trump has changed US public discourse so much that most Americans now blame globalization, immigration, China and foreigners for the problems they face.

False Claims for Trade Deal

Various studies have shown that supposed trade gains from the TPP claimed by its advocates were greatly exaggerated and misleading. This should come as no surprise.

The US already has free trade agreements with six of the other 11 TPP countries. Trade barriers with the other five were already low in most cases, so there was little scope for further trade liberalization, except for US post-Vietnam war legislation.

All twelve also belong to the World Trade Organization (WTO) which concluded the ‘single largest trade agreement ever’ over a quarter century ago. For trade liberalization guru Jagdish Bhagwati, both bilateral and plurilateral FTAs undermine trade liberalisation welfare arguments.

For the Peterson Institute of International Economics (PIIE), the principal TPP advocate, gains mainly come from additional foreign direct investment (FDI), due to more investor rights, implying greater concessions from, and less gains for host economies.

But the official US International Trade Commission doubted PIIE claims of significant growth benefits in mid-2016, well before Trump was elected. Supposed gains were either dubious or paltry over the long-term time horizon involved.

Investor Friendly Rules?

Rather than promoting trade, the TPP really sought more transnational corporation (TNC)-friendly rules. After all, the 6350-page deal had been negotiated by various working groups including hundreds of major US corporate representatives. But by involving lobbyists, US negotiators may well have locked themselves into a deal of little interest to most other businesses.

Doubts also remain over whether most TNCs really value the CPTPP’s enhanced investor rights. The World Bank has found that investment treaties rank far below other considerations such as infrastructure, natural resource endowments, market size and growth potential.

Also, rules favouring foreign investors do not necessarily improve investment flows to host countries, let alone ensure development benefits without good national industrial policies in place.

Enriching Rentiers

There is no evidence that stronger IP rights increase innovation, research and development. Strengthening IP monopolies for powerful TNCs, such as pharmaceutical firms, would raise the value of trade through higher prices, not more goods and services.

Extending IP protection would raise the prices of pharmaceutical drugs, including ‘biologics’, significantly increasing health costs. For Medecins Sans Frontieres, the TPP would go down in history as the worst “cause of needless suffering and death” in developing countries.

US laws cannot protect consumers anywhere. Martin Shkreli infamously raised the price of a drug whose patent he had bought by 6000%, from USD12.50 to USD750! As ‘price-gouging’ is not unlawful in the US, he was convicted for unrelated financial fraud.

Meanwhile, powerful pharmaceutical TNCs have made clear their intention to charge high prices for new vaccines despite enjoying government subsidies. Whereas vaccines for smallpox, polio, tuberculosis and other communicable diseases were available at cost, higher costs, due to enhanced IPRs, will impose heavy human and economic tolls.

Enabling Foreign Corporate Bullying

FDI was expected to go up, thanks to enhanced TPP investor protection. Foreign companies could then sue TPP governments for ostensible loss of profits due to policy changes, even if in the national or public interest, e.g., to contain Covid-19 contagion.

ISDS is arbitered by private tribunals. This extrajudicial system supersedes national laws and judiciaries, with secret rulings not bound by precedent or subject to appeal.

All who have seriously studied TPP impacts concede that it offers little additional growth. Even the modest trade growth claims are premised on US market access, no longer on offer with the CPTPP, which incredibly, now claims even more growth benefits.

Without the USA, the CPTPP will mainly strengthen Japanese TNCs. With greater rights for foreign investors, domestic investments may even relocate abroad, e.g., to CPTPP tax havens. Declining foreign investment in recent years could thus accelerate with the CPTPP.

From the Frying Pan into the Fire

The Covid-19 pandemic has precipitated severe recessions, which threaten to become depressions, as many governments had to impose nationwide ‘stay in shelter’ lockdowns with physical distancing and other preventive requirements disrupting economic life.

It is now clear that the CPTPP has not slowed growing trade protectionism. Instead, transborder supply chains have been disrupted, sometimes deliberately, with the US and Japan demanding ‘onshoring’, urging TNCs to withdraw investments and outsourcing from China, also hurting suppliers, many from Southeast Asia.

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40 comments

  1. Cripes

    The PTP have never abandoned their Quest 4 Global markets and immortal Intellectual property rights governed by corporations. Trump’s xenophobic demagoguery notwithstanding, they will resume their efforts by rebranding TPP By Any Other Name to achieve the same results.

    I am not surprised, and neither should anyone reading here, that this is and always was the case.

    Reply
    1. km

      Remember how Trump promised to “renegotiate NAFTA”?

      The USMCA was basically NAFTA with a new name and a few cosmetic tweaks.

      Reply
  2. Ignacio

    My intuition is that that train already left the station en route to nowhere and Covid won’t help to bring it back.

    Reply
  3. Christopher Herbert

    Global ‘grabitization’ run amok. Above the nation state. International, private, extra judicial courts will rule the world of commerce. They will need to build armies in order to enforce their rulings.

    Reply
      1. BlakeFelix

        Or he embarrassed them, which takes some doing these days. Glory hounding is frowned upon by sensible gangsters. Too many headlines and it courts bad luck.

        Reply
  4. verifyfirst

    Well of course it is still alive, and it will be the very first thing President Biden signs, as it would have been under President Clinton II.

    Reply
    1. William Hunter Duncan

      I have been predicting since Biden started running for President in 2019, that one of his first acts would be to revive TPP. When the pandemic hit, I could hear him saying, “We need this to revive the economy.” I suspect it is on the short list of the “Clinton/Obama alumni”, the power behind Biden. I also expect that if Trump does not bring it up Biden and his people won’t either, not a word until after the election. And if Biden becomes president and revives TPP, I can hear the media rejoicing that ‘good sense has returned to America.’

      I called TPP tyranny and treason back in 2015: https://offthegridmpls.blogspot.com/2015/11/tpp-tyranny-and-treason.html

      Reply
      1. Olga

        It had also occurred to me that with Biden, TPP will be back. Seems like a no-brainer. Just wish we had the background story of why DT abandoned it. He could make it a campaign issue, but I wonder how many voters still remember what it was.

        Reply
        1. William Hunter Duncan

          TPP was one issue that united the working class left and right in 2015-2016. Many a working class person recognized it as corporate power grab, to make the Nation-States subservient to global corporations, negating local control of anything at all. I believe it was the issue that put DJT over the top for President. Most working class people left and right recognized in Ms Clintons “deplorables” comment that she was referring to them, and her disavowal of TPP was a lie she would forget the minute she won. Many a Bernie fan voted for Trump in part because of that issue. Which is why many a neoliberal Democrat despises Bernie and his fans even more viscerally than DJT and his “fascists”.

          Believe me, working class people have not forgotten. As for Biden and his people, the Talleyrand quote Lambert uses in the water cooler is accurate: “They had learned nothing, and forgotten nothing.” I half expect them to revive TPP merely out of spite.

          Reply
      2. Oh

        I suspect it is on the short list of the “Clinton/Obama alumni”, the power behind Biden.

        How else is Obomba going bolster his looting retirement fund?

        Reply
    1. WobblyTelomeres

      Trump could do a lot of things that would win the election. Off the top of my pointy psuedo-intellectual little head, just one of (1) legalize marijuana, (2) extend Medicare to 50+, (3) cancel the F35, (4) complete withdrawal from the middle east would be sufficient.

      Reply
      1. Alex Cox

        He will not be allowed to withdraw troops from the Middle East, or anywhere else (unless it involves moving them closer to the Russian border). The Blob has already spoken re. this.

        Reply
      2. Copeland

        All good things, granted! — but how many working class voters know that the F35 is garbage, vs. how many working class voters actually build F35’s, or know someone who does?

        It was a brilliant move by LM to distribute F35 construction throughout many states.

        Reply
        1. WobblyTelomeres

          Trump could do a lot of things that would win the election. Off the top of my pointy psuedo-intellectual little head, either (1) legalize marijuana or (2) extend Medicare to 50+ would be sufficient.

          Better?

          Reply
  5. The Rev Kev

    In reading this article, I realized that the whole world has dodged a very large caliber bullet in this not being passed. So lets wind back the clock to 2016 and Hillary gets in who rubber-stamps the TPP passing into law within the first 100 days of her Presidency. So by the beginning of this year the TPP is firmly ground in the laws of member countries like the United States. And then the pandemic hits. Can you imagine?

    So the member countries all undertake to fight the Coronavirus in their own particular way as has been happening the past six months or so. But as these counties order their people and business to go onto lock-down, a whole bunch of corporations say ‘Wait! Wait! We will lose profits so we are invoking the investor-state dispute settlement (ISDS) provisions to stop you closing your economies down. By law, we will make you KEEP EVERYTHING OPEN! You have no choice.’ It would be chaos.

    And you know that this would happen. They would, through the ISDS actions, make it all but impossible to fight the virus in those member countries. Unfortunately, as so many of these corporations are based in the US, the US itself would become absolutely despised as causing all this to happen with who knows what geopolitical consequence.

    Reply
    1. Darius

      Obama would have engineered passage of the TPP by a lame-duck Congress as one of his last acts. Hillary would have tut-tutted a little for public consumption. Pelosi would have expressed continuing qualms, but let’s pass it as a tribute to the out-going Awesome One. Hillary could have taken office with the TPP under her belt but no fingerprints on it.

      Don’t forget that Pelosi publicly opposed Fast Track authority for Obama to negotiate the TPP, but whipped the vote behind closed doors to ensure it had just enough Democrats supporting it to pass. Classic Pelosi. Classic Democrats.

      Reply
    2. RBHoughton

      ISDS will be the end of the merchant-led form of capitalism that the Anglosphere adopts. With the traders hands in the pockets of government, all wealth will leak away to treasure islands to be recycled to the Fed and keep the house of cards standing a little longer.

      Reply
  6. Jesper

    Not even a single one country benefits from ISDS and that single fact should be sufficient to stop it from even being negotiated about. However, even though not even one country would benefit there are several representatives supposedly arguing for the benefit of their electorate that the electorate will benefit.
    The capture of the government by private corporate interests ISDS is clear to be seen in any and every country where the governments are arguing for the ISDS.
    But for those who want to be ruled by an ‘enlightened technocratic and dispassionate’ elite then the ISDS is a dream. The ISDS will dispassionately side with the ones with the most power and money in a way that is both technically correct (in at least one interpretation) and also shows the brilliance of their intellect in making what appears to be simple and straightforward into something lengthy and almost incomprehensible in finding that the public good is best served by ruling in favour of the private interests.

    As for the IP-laws….
    If IP-protection was shortened then companies would be forced to spend more money on research and development instead of as now getting fat on (often someone elses) previous work. So of course in trying to balance the interests of the public good versus the interest of the private companies then our elected leaders opt to favour (their own) private interests over their duty to work for the public good.
    As it currently is then companies can cut research budgets now and the result in the short term is increased profits and the long term is someone elses problem…

    Reply
    1. Jesper

      I might add that while what we are sold is that ISDS will protect ‘our’ companies from corrupt foreign governments the actual situation is that in corrupt countries then ‘our’ companies use the corruption to their advantage and pay the necessary bribes/protection so what ISDS is all about it protecting ‘our’ companies from democratic and transparent action in our own country. The ‘our’ is a very accurate description when some people are describing ‘our’ companies or even ‘our’ employer.

      Reply
    2. Jason

      AFAIK the ISDS provisions were insisted upon by the US. Once it pulled out, they were probably left there to speed up negotiations and provide a carrot for the US to return.

      Japanese companies don’t have the habit of using ISDS to settle problems, and the Japanese government has not faced ISDS cases. http://arbitrationblog.kluwerarbitration.com/2018/05/30/isds-cptpp-beyond-japanese-perspectives/?doing_wp_cron=1597221795.7909069061279296875000

      New Zealand has signed side letters with 5 other CPTPP countries to disallow or restrict ISDS. https://hsfnotes.com/arbitration/2018/05/09/new-zealand-signs-side-letters-with-five-cptpp-members-to-exclude-compulsory-investor-state-dispute-settlement/

      In short, the CPTPP is less toxic than the TPP precisely because the US is out…

      Reply
  7. Plague Species

    I opposed, and still do oppose, the TTP for many reasons, the reasons Yves does in addition to, and especially because of, global trade’s impact on the planet’s biosphere and all life on the planet. Whereas the TTP may not have resulted in overall net growth, which is a good thing as far as I’m concerned because perpetual growth means the certain death of the planet, it would have increased trade mobilization which would only further destroy the living planet. In otherwords, what we need to manage the environmental catastrophe that’s unfolding is contraction and localization. We need less mobility, not more. We need a much slower economy, a world made by hand, because when you make it by hand, it’s slow. It’s deliberate. It’s less wasteful, because if you’re going to take the time to produce something by hand, there is less chance that something is going to be a throwaway item.

    That being said, as Yves noted, the TTP was also, amongst many other things, a China containment strategy. For the wrong reasons, of course, but nonetheless, it was a non-militaristic, or at least not directly militaristic, way to bridle China’s increasing power and influence. Let’s face it, China is not some innocent in this discussion. It’s effectively one giant corporation in and of itself and it is not and should not be immune from criticism and beyond reproach.

    What we have instead of a non-militaristic containment strategy as it relates to China is Trump’s militaristic strategy, if that can even be called a strategy. Recently a link was provided to a John Pilger article. Pilger believes America will nuke China. The chances of that are much greater with a Trump administration. Let’s face it, Trump will stop at nothing to play to his fictional base. If he believes his fictional base wants a war with China, and his advisors goad him in that direction and they are, then there will be a war with China — a hot war and not just a half-assed trade war. He has been willing to murder over 162,000 Americans thus far and counting in order to play to his fictional base. Considering that, he would also be willing to murder millions upon millions of innocent, non-combatant Chinese civilians to play to that same fictional base.

    Reply
    1. Darius

      That’s why the Republicans are a death cult. They’re trying to bring on the Apocalypse.

      The Democrats actually are doing the same. They’re just doing it in a crockpot, with measures like the TPP. Stop paying attention for little while, and ding! It’s all done.

      I suppose another metaphor for the TPP is an anaconda. It slowly strangles you to death.

      Reply
    2. John Wright

      Can someone explain why the TPP was a “non-militaristic containment strategy as it relates to China”?

      For example, if China is outside the proposed TPP, how is China harmed by not being a party to the ISDS and IP agreements embedded in the TPP?

      China could arrange separate trade pacts with each of the players, including the USA, perhaps with advantages to both partners relative to TPP constraints.

      And it is certainly a given that a lot of Chinese trade is related to US sponsored factories internal to China selling to many countries, including the USA.

      This would weaken the US political will to impose higher tariffs on Chinese produced US consumer goods that help pacify the US population,

      Given the US-corporate centric cast to the TPP (ISDS, IP protection, pharmaceuticals) not being a signer of the TPP could be a competitive advantage to China.

      Maybe China would not mind being “contained” by the new TPP and the alleged “Chinese containment” was an assertion to help sell the TPP agreement to a reluctant US population.

      Reply
      1. drumlin woodchuckles

        It can’t be explained because it never was true. “Contain China” was never any slightest part of the reason for TPP.

        Obama and his trade hasbarists didn’t offer the “China excuse” until TPP was losing in the marketplace of public opinion. He then played the “China excuse” card in order to guilt and extort people into supporting TPP by implying they were unpatriotic secret-agents of China if they opposed it.

        Reply
      2. Plague Species

        The deal, by its very nature, inherently, was a China containment strategy, generally speaking and also specifically speaking. The deal’s ultimate goal was to keep America at the center of trade in Asia. China is rising and America knew, and knows, if it doesn’t do something comprehensive, China will dictate a new trade paradigm. Obama got out in front of that. Now, it’s too late. The agreement specifically addressed many features related to how China conducts business. Therefore, there is specific verbiage and rules related to SOE (state owned enterprises), for example. The goal was not to isolate and preclude China. That would be impossible. The goal was to bring China to heel. To bridle China. To prevent China from calling the shots and setting the rules, rules no doubt that are not as favorable to Western and American finance. America and the West want China to acquiesce and do it their way. And their way is the financialization of China’s economy. China has it backwards. The communists control business. America and the West want China to reverse that. Business runs government, not the other way around. Business owns government. Government is a division of business — the enforcement arm. And business is finance, maybe not always but these days at least.

        Reply
        1. John Wright

          Perhaps I’m being obtuse, but it seems that the US has little to trade (farm goods, some high tech, military goods, aircraft) while China has the factories and goods.

          Here is a snapshot of trade with China:

          “The U.S. goods trade deficit with China was $419.2 billion in 2018. Trade in services with China (exports and imports) totaled an estimated $77.3 billion in 2018. Services exports were $58.9 billion; services imports were $18.4 billion. The U.S. services trade surplus with China was $40.5 billion in 2018.”

          Can you give an example of how the earlier version of the TPP would have influenced a China that did not sign on to the TPP?

          You state “there is specific verbiage and rules related to SOE (state owned enterprises)” in the earlier TPP.

          How would these TPP rules be of concern to a China that was not a signatory to the TPP?

          What was the earlier TPP’s enforcement mechanism to change China’s behavior?

          China might be influenced if the USA stopped buying from its factories, but is that conceivable, earlier TPP or not?

          Reply
  8. Carla

    “when you make it by hand, it’s slow. It’s deliberate. It’s less wasteful, because if you’re going to take the time to produce something by hand, there is less chance that something is going to be a throwaway item.”

    This is so true. Perhaps it’s belaboring the point to add that many fewer things would be made at all, and that would be a great advantage as well.

    Reply
    1. mpalomar

      From the earlier China war post – Larry Wilkerson’s comment in his interview with Paul Jay:

      “You know, this consumption culture is driving us into hell. We have to figure out a way to get off this predatory, capitalist fuelled consumption culture. We must. It’s debilitating for our minds, our souls, our psyche. It destroys us when all we do is think about the next 24 hours of consumption. It’s incredible. It’s ruined even the productivity of this country to the extent that we now make products and products to last two or three years when we used to make them to last 20 because we want to sell eight or nine of them in that 20-year span rather than just one. We have built a system that is poisonous, perverse, and it’s killing our very soul, and not to mention our pocketbook.”

      I’ve followed Paul Jay and his ongoing interviews with Larry Wilkerson for years and I think the estimable Colonel Wilkerson has made an impressive intellectual journey over that time.

      Reply
  9. William Hunter Duncan

    If I am remembering correctly, the labor and environmental topics in the the 6800 page TPP amounted to about a dozen pages of greenwashing and virtue signaling.

    As a local example of the insidiousness of ISDS, Glencore and Antagofasta, two of the largest (and most corrupt) mining companies in the world, want to mine precious metals in water-rich northern Minnesota. The hard rock geology is full of sulfides, which when in contact with water and oxygen, makes sulphuric acid, which then leaches heavy metals etc carcinogens from the rock.

    The MN DNR and MPCA both recognize two generations of mining will leach such pollutants into local waters for 500 years. A majority of Minnesotans are against it. But, the State of Mn and most of it’s pols have ok’d Glencore at least, and are in the process of ok-ing Antagofasta, because, you know, renewable progress.

    With TPP, we wouldn’t have a choice, really. Let the mining happen, or pay them the profits they were denied. Which is mafia like, but then who games America more, corporations, banks and billionaires, or the “mafia”?

    Reply

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