Countries negotiating the Trans-Pacific Partnership (TPP) say they have reached a deal. So here it comes.
Monday morning it was announced that a “Trans-Pacific Partnership Trade Deal Is Reached,” presented as much as a foreign policy success as a “trade” deal.
“The United States, Japan and 10 other Pacific basin nations on Monday agreed after years of negotiations to the largest regional trade accord in history, an economic pact envisioned as a bulwark against China’s power and a standard-setter for global commerce, worker rights and environmental protection.
… The trade initiative, dating to the start of his administration, is a centerpiece of Mr. Obama’s economic program to expand exports. It also stands as a capstone for his foreign policy “pivot” toward closer relations with fast-growing eastern Asia, after years of American preoccupation with the Middle East and North Africa.
The effect the deal will have on actual “trade” is unclear, since the U.S. already has trade agreements with many of the participating countries. Also much of the deal appears to be about things people would not usually consider “trade”, like investor rights and limits on the ability of countries to regulate.
Though the deal remains secret, here is some of what is known about the agreement deal.
● Currency manipulation is not addressed in TPP, even though Congress’ “fast track” legislation said it must be. To get around this, a “side agreement” supposedly sets up a “forum” on currency. Past side agreements have proven unenforceable. For this reason Ford Motor Company has already publicly announced opposition to TPP.
● A “tobacco carve-out” is in the deal, in some form. This was added because the agreement contains investor-state dispute settlement (ISDS) provisions that will allow corporations to sue governments that use laws or regulations to try to restrict what the companies do. These provisions restrict the ability of governments to protect their citizens so thoroughly that tobacco companies have used ISDS provisions in similar agreements to sue governments that try to help smokers quit or prevent children from starting smoking. TPP proponents felt that this carve-out will help TPP to pass, while the ability to limit other laws and regulations remains.
● President Obama has said TPP includes the “strongest labor provisions of any free trade agreement in history.” Previous “trade” agreements do not even stop labor organizers from being murdered, so even if TPP has “stronger” labor provisions, that is an extremely low bar.
● TPP reduces or eliminates many tariffs, further encouraging companies to move factories out of the U.S. to low-wage countries like Vietnam. An example of the effect TPP will have on U.S. manufacturing is Nike vs. New Balance. Nike already outsources its manufacturing to take advantage of low wages, while New Balance is trying to continue to manufacture in the U.S. When tariffs on imported shoes are eliminated Nike will gain an even greater advantage over New Balance. New Balance has said that the tariff reductions in TPP will force it to stop manufacturing inside the US.
● The reduction and elimination of tariffs reduces revenues for the governments involved.
What Next?
Here is a brief rundown on what to expect as TPP begins to make its way toward a Congressional vote:
● The TPP is still secret and according to the terms in this year’s fast-track legislation it will remain secret for 30 days after the president formally notifies Congress that he will sign it. That could be a while still, as the agreement’s details need to be “ironed out.” After that 30-day wait the full text has to be public for 60 days before Congress can vote. The full timeline is yet to unfold and will be reported here as it does.
● Expect a massive and massively funded corporate PR push. The biggest corporations very much want TPP. It massively benefits the interests of giant corporations and the “investor” class, even as it incentivizes moving jobs and production out of the U.S.
● While only a small portion of TPP is about what people would normally consider to be “trade,” TPP will be heavily pushed as a “trade” deal. Many people believe that “expanding trade” increases jobs. Note that closing a U.S. factory and importing the same goods “expands trade” because those goods cross a border.
Also see the American Prospect, “What’s Next for the TPP: Clyde Prestowitz in Conversation with David Dayen.”
Questions To Ask About TPP
When the still-secret TPP becomes public, these are some of the questions the public will want answered:
● What do regular, non-wealthy people in the U.S. get from TPP? Will it increase American wages? Will it have provisions that force wage increases in countries that currently pay very little, thereby helping those workers (and helping them buy American-made products, too) and reducing downward pressure on American wages? Or will there be NAFTA-style provisions encouraging outsourcing to low-wage countries like Vietnam, creating further downward pressure on wages and increasing inequality?
● What do people in the U.S. lose? For example, the Los Angeles Times explains, “U.S. industries such as auto, textiles and dairy, however, could experience some losses as they are likely to face greater competitive pressures from Vietnam, Japan and New Zealand.”