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Monday, June 22, 2015
The Trans-Pacific Partnership is a terrible deal
In his June-17 Op-Ed Professor Allen Parkman described very well the how trade among nations benefits all parties. He gave a qualified nod to the Trans-Pacific Partnership (TPP) on the basis that if some trade is good, more is better.
For some three decades after World War II mutually beneficial trade occurred with our trading partners. We helped the European and Japanese economies recover. So, they provided markets for us, and we for them.
Then it all changed with the expansion of the neoliberal economics of the past forty years. Instead of investing in and upgrading our manufacturing facilities, large domestic companies moved their production facilities to underdeveloped countries to exploit their labor for quick profits. Investment in underdeveloped economies were minimal, so markets were not developed for us.
The US economy became the market for the goods now produced abroad. As a result our trade deficits exploded by a factor of ten over those experienced before the neoliberal expansion. As Prof Parkman noted, countries that import benefit by acquiring real goods in exchange for currency of unknown future value. But, the magic is lost without programs to employ the workers, who lose their jobs as a result of persistent trade deficits.
Now we have the TPP, which is less about trade than subordinating democratic governments and their laws to the interests of big business profits. That is part of the neoliberal agenda.
TPP negotiations are in secret and led by Michael Froman, a protege of Robert Rubin. Froman followed Rubin to Citigroup before returning to government. As a graduate of Citigroup management he is in good company with the corporate representatives, who participate in the negotiations.
The TPP is doubling down on the provision called Investor-State Dispute Settlement (ISDS), by strengthening existing ISDS procedures intended to protect investors. According to “The Economist,” The ISDS will, “give foreign firms a special right to apply to a secretive tribunal of highly paid corporate lawyers for compensation whenever a government passes a law to, say, discourage smoking, protect the environment or prevent a nuclear catastrophe.”
Another problem with TPP
Claims of billions of dollars, either settled or in arbitration, include Occidental Oil Company against Ecuador over a contract termination, a Swedish utility operator against Germany for shutting down nuclear plants, Phillip Morris against Australia and Uruguay over anti-smoking messages. In 2011, 2012, and 2013 there were over 50 ISDS dispute settlement cases.
Other cases involve the fossil fuel industry going after Quebec for a ban on fracking, and a large French company contesting minimum wage increases in Egypt.
On the financial front, “Public Citizen” has reported that TPP would forbid countries from banning risky toxic derivatives. Also, it would prohibit policies to deal with “too-big-to-fail” banks and banks that would speculate with our savings. In addition, TPP would prohibit the proposed “Robin Hood” taxes on Wall Street speculation.
The neoliberal dogma extolls the free market on the one hand, and demands guaranteed profits on the other. How’s that supposed to work?
The TPP is a terrible deal. To demand that we submit our democratically formed laws and procedures for review by some secret, supranational authority is an assault on Democracy and the prosperity of Main Street.