The straight talk on the Trans-Pacific Partnership Agreement
What is the Trans-Pacific Partnership Agreement?
The Trans-Pacific Partnerships Agreement (TPPA) is a free trade agreement being negotiated by 12 countries in Asia and the Pacific. The negotiations involve not only the reduction/elimination of tariffs but also regulatory and policy issues such as increased intellectual property rights, regulation of government procurement (i.e. government buying), investor privileges, and environmental deregulation. In these regards, the TPPA goes beyond a trade agreement and into domestic regulations and policies.
Who are the 12 countries involved?
The TPPA was originally an open trade agreement between Chile, New Zealand, Singapore, and Brunei that went into effect in 2008. This meant that while these four countries began the process, other countries would also be allowed to enter (i.e. ascend) into this agreement. The scope and participation of this agreement was expanded with the US playing a leading role. The countries in negotiation, in order of economic size, are: United States, Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei. South Korea has expressed interest in joining. Notably absent is China.
Why is China absent?
As the leader of the TPPA negotiations, the United States is pushing for a trade agreement that will force participants to adopt economic and development standards favorable to it. Many of these standards go counter China’s development and economic model. Thus we come to one of the unofficial yet widely accepted truths about the TPPA: its role as an economic pillar of Obama’s “Pivot to Asia” strategy of isolating/containing China while re-strengthening US presence in the Asia-Pacific region.
China and the United States are at different stages of development and have different development and economic models. First of all, the US is a major producer of cutting edge technology and pharmaceuticals and, thus, has interests in strengthening intellectual property rights. However, given China’s need to catch up technologically with the developed nations, stronger intellectual property rights would limit its access to technology. This is even truer for developing countries with lower levels of technology. By protecting their technological knowledge, the developed countries lock in the development gap between the poorer and richer states. Secondly, the state plays an important role in regulating and directing China’s economy. The opening up of government purchasing (i.e. “government procurement”) and limiting of governments’ favorable treatment towards state owned enterprises (i.e. completion clauses) run counter the planned elements of China’s economic and development model. The US is not explicitly banning China; given China’s growing role in the world and US economy, doing so would be a political and economic liability. However, the US is attempting to design a TPPA that would be unfavorable and difficult for China to participate in.
What’s so bad about the TPPA?
Simply put the TPPA grants agribusiness, corporations, and investors greater rights, privileges, and access to foreign markets. This is great news if you have industrial sized farms, cargo ships that can traverse oceans, insider information about currency exchange or stock markets, great amounts of money to invest, or factories abroad. If you don’t, this is horrible news. Granting the wealthy few even greater rights and immunities to exploit the rest of us can only impoverish and dis-empower us.
Regardless of the current practice of democracy or the actions and policies of our current governments, government is meant to be a vehicle for people to promote their interests and safeguard their needs. Yet, by granting investors and corporations supranational rights, immunities, and access to domestic markets, the TPPA weakens the government’s ability to regulate corporations and investors or to consciously develop and guide the economy on behalf of their people.
One of the most toxic of provisions under discussion is the Investor-State Dispute System (ISD) which limits the scope of policy making by allowing investors and corporations to sue (or threaten to sue) governments against legislation that hurts their profits. They do this not through the legal system, but through international arbitration that is inherently biased towards investors. Let that sink in: foreign corporations and investors can circumvent the legal system and file lawsuits for taxpayer money in extralegal courts that favor them.
Won’t the TPPA at least create more jobs?
It may create some jobs, but it will ultimately eliminate many more and drive down wages and working conditions. Twenty years after NAFTA came into force, a million jobs disappeared from the US. Many of these jobs went to Mexico in the form of sweatshop jobs. Furthermore, the flooding of cheap subsidized US corn drove 1.5 million peasants out of their land and forced them to join the unemployed in the urban centers. Who won? The corporations that got to exploit cheap Mexican labor and large subsidized US agribusinesses. Who lost? The millions of Mexican farmers that were forced off their land and the million workers in the US who lost their jobs.
Don’t be fooled, the ability of investments to freely travel between national borders benefits only those that can do it. In fact, the ability to freely move money across countries makes it harder for governments to create regulations and policies that protect their citizens. This is because free mobility allows corporations to pit one country against another and demand less regulation. It sparks a race to the bottom. Countries have to compete to provide the cheapest labor and the least regulations in order to attract or retain capital. That means more low-paying unstable jobs and less protection from corporate misbehaving.
I’m already struggling with low wages; won’t the TPPA help make things cheaper?
Sure, things might get cheaper, but how will that be any better if it also means you will get paid less, become more economically insecure, and your power to do something about it will decrease. Worse, the entry of cheap subsidized food into poor developing countries will collapse peasant food production. As with the case of corn in Mexico (its birthplace), the collapse of domestic agriculture will force countries to import their basic foods making them highly vulnerable to the fluctuations of global food prices. In 2008, when global food prices spiked, riots broke out as poor hungry people took to the streets. As climate change intensifies and sends ever more shocks to the world food supply, relying on import for foods can only lead to food insecurity. The answer for farmers AND consumers is food sovereignty which allows domestic farmers to survive and which safeguards domestic food supply. The TPPA with its elimination of tariffs would dismantle any such policies. When we look at free trade agreements like the TPPA, we need to examine them in their totality, not just in terms of cheaper kiwis and pineapples.
If the TPPA is so important why haven’t I heard about it?
That’s because the TPPA negotiations have been kept from the public. Even legislatures voted by the people to make laws and policies have been shut out of the process. Furthermore, those that do participate in the negotiations must sign an agreement to keep the content of the negotiation secret for four years after the agreement comes into force or collapses. This allows a 4 year buffer from political repercussions: elected officials would be able to re-run for office; the issue would slip from the public consciousness. On the other hand, 600 corporations have been part of these negotiations as “advisors.” Let that sink in: Corporations can participate and “advice” government negotiators, but legislators, that represent the will of the people, are shut-out.
What little is known comes from leaked negotiation documents and educated guesses based on countries’ motivations, levels of influence, and past trade agreements. In particular, as the giant in the room, US interests and past trade agreements (especially the Korea-US FTA) have a strong influence on what a final document may look like.
If it’s so bad, why is my government doing it?
First, there is a lot of corporate and investor lobbying for passing these agreements. For example, developed countries such as the United States want to strengthen intellectual property rights. In particular,US pharmaceutical companies want to extend their patent imposed monopolies on life saving drugs so that they can charge higher prices. As any introductory economics class teaches, monopolies always produce less than the amount society requires. That’s because contracting supply, allows you to increase prices by intensifying demand. Maybe that wouldn’t be such a big problem if we were talking about luxury Gucci bags, or sports cars, but when we are talking about expanding monopolies (through extension of patents) on drugs that treat AIDS, we are talking about people’s lives.
Developed countries also want to secure rights for their investors to minimize risk and maximize and extract short-term profits from developing countries. Some may think any investment is good, but short-term speculative ones are not. They not only fail to contribute to long-term development, but their rapid entry and exit into and out of countries can be disruptive and even fatal to economies as the 1997 Asian IMF crisis shows.
Developing countries are also heavily lobbied by their corporations who are hoping that access to foreign markets would yield greater profits than selling to their too-poor-to-buy population. Thus, export based production allows the ruling class a way around dealing with growing wealth inequality and poverty in their countries.
Beyond corporate interests, there is also a market logic that reinforces the need for free trade agreements: production, and the jobs and wages connected to them, depend upon the ability of a small percentage of the population that holds the means of production to make a profit (i.e. capitalism). In these instances, GDP grows, but so does inequality and suffering. That’s because free trade agreements give greater freedoms and power to get wealthy to the wealthy. In other words, wealth is generated, but it fattens the pockets of a few.
This market logic is not a given. In fact, one of the areas in the world paving a path to a new politico-economic and trading system is Latin America which was first ravaged by unbridled market logic. Countries in Latin America, led by Venezuela, Cuba, and Bolivia are creating new models of trade and exchange such as the Bolivarian Alliance of Our America (ALBA in Spanish) that are centered on people’s needs and built upon cooperation and solidarity between nations.
Alright, you got me all worked up. What can I do?
We need to build a movement against the TPPA. This involves breaking through the media blackout and demanding that our governments be transparent about the full implications and realities of the TPPA. One of the ways that we plan to do that in South Korea is through a TPPA international forum of activists and intellectuals from April 16 to the 18. We expect that President Barak Obama’s visit to Korea in April will be when President Park Geun Hye declares Korea’s joining of the TPPA. We intend to stop her.
