Trans-Pacific Partnership: Free Trade vs. Democracy

By Cliff DuRand  | Americas Program | April 12, 2013

As closed-door negotiations concluded in Singapore on the Trans-Pacific Partnership, opposition begins to build in many countries. At the urging of the United States, Canada and Mexico have joined the nine countries in the talks and now Japan has announced it too wants to be part of this new free trade pact of Pacific rim countries, described by its critics as “NAFTA on steroids”.

Going into its 17th round of negotiations, the Obama administration aims to wrap up an agreement by October, hoping to push ratification through the Senate on a fast- track basis. Called Trade Promotion Authority, fast track would mean an up or down vote without amendments or even hearings on the agreement presented to it. It is a profoundly anti-democratic procedure because it shuts down debate.

But from start to end, TPP has been thoroughly anti-democratic. On the first day of the Singapore talks a broad range of civil society organizations issued an open letter to Congress calling for greater transparency in the proceedings. The agreement is being hammered out in secret discussions among trade ministers. Even Senators have been denied a look at its draft provisions.

However, some 600 transnational corporations are in the inner circle. They are writing the rules for trade in their own interests without any democratic input from the people whose lives will be profoundly affected. If adopted, TPP will deny citizens their democratic rights to shape public policies on a host of domestic issues, conceding those decisions to the large corporations.

Some sections have been leaked. They reveal “an agreement that actually formalizes the priority of corporate power over government,” according to Lori Wallach of Public Citizen’s Global Trade Watch. Only 5 of the 29 chapters have to do with trade. Wallach says the rest of the draft “include[s] new rights for the big pharmaceutical companies to expand, to raise medical prices, expand monopoly patents, limits on Internet freedom, penalties for inadvertent noncommercial copying, sending something to a friend. There are the same rules that promote off-shoring of jobs that were in NAFTA that are more robust that literally give privileges and protections if you leave. There is a ban on ‘buy American’ and ‘buy local’ or ‘green’ or sweat-free procurement. There are limits on domestic financial stability regulations. There are limits on imported food safety standards and product standards. There are limits on how we can regulate energy towards a more green future – all of these things are what they call ‘Behind the Borders’ agenda. And the operating clause of TPP is: ‘Each country shall ensure the conformity of its domestic laws, regulations and administrative procedures with these agreements.’”

Global Class War

Free trade is about more than trade. It is about favoring corporations over the democratic rights of citizens and the sovereignty of nations. As the former Director-General of the WTO, Renato Ruggiero, said in 1995, “We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy.”# What is being created is a global governance order in which corporations are the citizens, not flesh and blood humans like you and me. With free trade, corporations are making an end run around democracy.

TPP is the latest offensive in a global class war. For nearly 40 years now, since the mid 1970s, corporations have been rolling back the popular gains of the New Deal era and the 1960s. Democracy has been the target of a class war to restore the class power of capital. And there has been weak resistance, at best, by the popular classes. But the stakes have become increasingly clear to more and more. Indeed, on the issue of free trade, there is now a broad public sentiment against this aspect of the corporate offensive.

The US has become the world advocate of “free trade,” promoting it through trade agreements like NAFTA and other bi-lateral agreements as well as through global governance institutions it has sponsored such as IMF, World Bank and WTO. The US has promoted free trade for much the same reason Great Britain promoted it in the 19th century, viz. the economically strongest country in the world benefits from free trade. It is the weaker countries that seek tariff protection for their infant industries, protection from competition with cheaper and higher quality imports. That protection is what enabled the US to industrialize in the last half of the 19th century. But then when the US became economically strong enough to compete regionally and eventually globally, it became an advocate of free trade and demanded that others abandon protectionism.

The justification for free trade rests on the theory of comparative advantage. This is the view that if countries trade free of government impediments, the market will tend to direct each to export that which they can produce most efficiently and import what can be produced more efficiently and thus more cheaply elsewhere. The invisible hand of the market will guide each to specialize in producing what they have a comparative advantage in. Thus a rational production and trading system will emerge that maximizes efficiency.

Free trade agreements like NAFTA were sold to the US public by appealing to consumer’s interest in having access to cheaper goods imported from Mexico. What was deliberately soft-pedaled was their interest as workers in having jobs. Organized labor opposed NAFTA, fearing it would pit US workers in competition with low wage Mexican workers. Independent presidential candidate Ross Perot warned of “a giant sucking sound” as jobs would be off-shored to Mexico.

But the Clinton administration said US exports to Mexico would create new jobs. And so, ignoring opposition from its traditional base in the unions, new Democrat Clinton pushed ratification of NAFTA through the Senate as his first priority. Perot proved to be correct as US companies shifted production to low wage Mexico – until even lower wage Chinese workers were brought into play when China joined WTO. But Clinton was also right as cheaper consumer goods from abroad filled the shelves of Wal-Mart with bargains welcomed by US workers who found their wages reduced. Free trade proved to be a mixed blessing.

Capital Becomes Global

One important point about free trade that is often overlooked is that it is not only about the free, frictionless movement of goods and services across borders, unrestricted by tariffs, quotas and regulations. It assures the free movement of capital, as corporations are freed to invest abroad. The mobility of investment capital is of utmost importance, with profound economic consequences and consequences for democracy.

Unable to find sufficiently profitable venues for investment in the overdeveloped US economy, large corporations have increasingly moved abroad. They sought not just new outlets to sell their commodities, but low wage workforces that would decrease their production costs and thus boost their profits. Frequently that would involve locating different stages of the productive process in different countries so as to take optimal advantage of local conditions. The assembly lines of US industry were disaggregated and disbursed across the globe.

Global assembly lines emerged. These global production chains have become a signature feature of contemporary capitalism. Components may be manufactured in Singapore, transported to China for subassembly and then shipped to Mexico for final assembly before sale in the United States. Although global assembly lines are geographically dispersed, they overcome the limitations of the fixed assembly lines of the Fordist era in that they no longer have to rely on a fixed labor force that can organize itself to effectively claim a share of the surplus they create.

Instead, the global assembly line gives capital the flexibility to seek out the lowest wage workforce and friendliest business environment available anywhere in the world. This has been made possible by the development of a global computerized network of instant communications via satellite. That and the computerization of banking have made money transfers and the movement of capital both easy and instantaneous. The communications network also allows the decentralization of technological development and design. Technicians can work at points distant from the processes of production to which they address themselves. And the entire process can be coordinated by management located anywhere on the globe. The limitations of space and time have been overcome by digital communications and cheap energy for transporting goods to their ultimate consumers.

For such globalized production to be possible, capital must be able to flow freely across national borders and products have to be able to move with minimum friction across those borders, unhampered by tariffs or quotas or non-uniform standards. In other words, there must be free trade for transnational capital to optimize accumulation.#

But transnational corporations also need legal protection of their investments. They need protection from expropriation of their assets, laws and governments that can ensure their property is secure. A crucial part of free trade agreements is protection of what are called investor rights. This involves more than just protection from expropriation, as happens with revolutions. It also involves protection from governmental actions that might reduce the value of their property or potential profits by environmental and health regulations, labor laws or other such measures even though they might be for the public good. What in US law is called “regulatory takings” are seen as tantamount to expropriation.

When such governmental actions do occur, free trade treaties give the foreign corporation the recourse to sue. The suit is not adjudicated in a national court, but by a transnational body of experts operating in secret. States are expected to enforce its decisions on their own nation’s taxpayers and consumers. This favors investor rights (i.e. the interests of transnational corporations) over the democratic rights of a nation.

Super NAFTA

As corporations have globalized, morphing into transnational corporations, they have promoted free trade agreements to get national governments to assist them. But when “investor rights” trump the democratic rights of citizens, the transnational corporations become the real citizens of the emerging global order. TPP is a further step in this direction, making an end run around a number of important issues –banking regulation, extension of patent protection, food inspection, environmental protection, food sovereignty, internet freedom, health care, job creation policies, and more, denying voters the opportunity to decide such matters when they impinge on corporate profit making.

Here are a few of the issues around which opposition to TPP is beginning to emerge.

* Doctors Without Borders (Medecins Sans Frontieres, MSF) is concerned that TPP would “enhance patent and data protections for pharmaceutical companies, dismantle public health safeguards enshrined in international law and obstruct price-lowering generic competition for medicines.” The intellectual property provisions would give pharmaceutical companies prolonged monopoly protection for medicines and delay access to cheaper generic versions. This would have disastrous consequences in poorer countries.

* Internet freedom is also in danger. The Council of Canadians and OpenMedia have warned that the TPP would “criminalize some everyday uses of the Internet,” including music downloads, making no distinction between commercial and non-commercial copyright infringement. The TPP imposes a “three strikes” system for copyright infringement, where three violations would result in the termination of a household’s Internet access.

* Japanese farmers are concerned that TPP will force removal of protections from Japan’s agriculture needed to maintain food sovereignty for the country. They are protesting Japan’s decision to enter into TPP negotiations at all.

* Guaranteed compensation for loss of “expected future profits” from health, labor or environmental regulations.

* Corporate performance requirements are banned.

* Capital mobility is to be guaranteed, preventing capital controls in event of a financial crisis. TPP will require countries to let capital flow in and out without restriction, not allow the banning or regulation of risky investments like derivatives and credit-default swaps and will prevent the formation of much-needed public banks

Democratic sovereignty

Most fundamentally what is at stake with TPP and existing free trade treaties is the sovereignty of nations and the ability of their peoples to make democratic decisions. This is a concern on both the Left and the Right, suggesting the possibility of a broad coalition opposing TPP, bridging our otherwise polarized politics.

A major NBC News-Wall Street Journal poll from September of 2010 revealed that “the impact of trade and outsourcing is one of the only issues on which Americans of different classes, occupations and political persuasions agree,” with 86% saying that outsourcing jobs by U.S. companies to poor countries was “a top cause of our economic woes,” with 69% thinking that “free trade agreements between the United States and other countries cost the U.S. jobs.” Only 17% of Americans in 2010 felt that “free trade agreements” benefit the U.S., compared to 28% in 2007.

Arthur Stamoulis, executive director of Citizen Trade Campaign  said: “If they were to negotiate an agreement that put human rights ahead of corporate profit, creating more just and sustainable social policy, the TPP could be a tool for incredible good. But if you look at who has a seat at the table, with the public shut out and more than 600 corporate lobbyists included, there is nothing to indicate that’s the deal we’re going to get.”

The developing opposition to the corporate coup that the TPP represents has the potential to win. It’s about time for the people to win one victory in the corporate class war. Our first chance in this campaign will be over granting fast track Trade Promotion Authority. And that battle will be followed by the fight over Senate approval of TPP itself. This is one that we can win. The stakes are high. The alternatives are democracy or plutocracy.

******

Cliff DuRand is a Research Associate at the Center for Global Justice and a contributor to the CIP Americas Program http://www.cipamericas.org. He is co-author and co-editor of Recreating Democracy in a Globalized State (Clarity Press, 2012). Contact him at global.justice.cliff@gmail.com

For More Information:

Public Citizen’s Global Trade Watch  http://www.citizen.org/trade

on TPP http://www.citizen.org/TPP

Citizens Trade Campaign www.citizenstrade.org

A coalition of labor, environmental, religious, family farm, and consumer organizations united in the pursuit of socially and environmentally just trade policies.

It’s Our Economy www.itsoureconomy.us

It’s Our Economy seeks to educate, organize and mobilize Americans to shift the power from concentrated capital to the people.  http://itsoureconomy.us/occupy-the-tpp-stop-the-global-corporate-coup/

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What the One-Percent Heard at the State of the Union

By SHAMUS COOKE | CounterPunch | February 19, 2013

When President Obama speaks, most Americans hear what he wants them to hear: lofty rhetoric and a “progressive” vision.   But just below the surface the president has a subtly-delivered message for the 1%, whose ears prick up when their buzzwords are mentioned.

Obama’s state of the union address was such a speech – a pro-corporate agenda packaged with chocolate covered rhetoric for the masses; easy to swallow, but deadly poisonous.

Much of Obama’s speech was pleasant to the ears, but there were key moments where he was speaking exclusively to the 1%. Exposing these hidden agenda points in the speech requires that we ignore the fluff and use English the way the 1% does. Every time Obama says the words “reform” or “savings,” insert the word “cuts.”

Here are some of the more nefarious moments of Obama’s state for the union speech:

“And those of us who care deeply about programs like Medicare must embrace the need for modest reforms [cuts]…”

“On Medicare, I’m prepared to enact reforms [cuts] that will achieve the same amount of health care savings [cuts] by the beginning of the next decade as the reforms [cuts] proposed by the bipartisan Simpson-Bowles commission.”

This ultra-vague sentence was meant exclusively for the 1%.   What are some of the recommendations from the right-wing Simpson-Bowles commission? Obama doesn’t say. Talking Points Memo explains: 

-Force more low-income individuals into Medicaid managed care.

-Increase Medicaid co-pays.

-Accelerate already-planned cuts to Medicare Advantage and home health care programs.

-Create a cap for Medicaid/Medicare growth that will force Congress and the president to increase premiums or co-pays or raise the Medicare eligibility age (among other options) if the system encounters cost overruns over the course of 5 years.

There were many other subtly-delivered attacks on Medicare in Obama’s speech, all ignored by most labor and progressive groups, who clung tightly to the “progressive” smoke Obama blew in their face.

Obama’s speech also included a frightening vision of a national privatization scheme to previously publicly owned resources. But it was phrased so inspirationally that only the 1% seemed to notice:

“I’m also proposing a Partnership to Rebuild America that attracts private capital [wealthy investors] to upgrade what our businesses need most: modern ports to move our goods; modern pipelines to withstand a storm; modern schools worthy of our children…we’ll reward schools that develop new partnerships with colleges and employers [corporations]…”

Obama’s proposal plans to “rebuild America” in the image of the wealthy and corporations, who only put forth their “private capital” when it results in a profitable investment; resources that previously functioned for the public good will now be channeled into the pockets of the rich, to the detriment of everyone else.

Allowing the rich to privatize and profit from public education and publicly owned infrastructure (ports and pipelines, etc.) has been a right-wing dream for years. This will result in massive user fees for the rest of us, while further dismembering public education, which Obama’s ill-named Race to the Top education reform is already successfully accomplishing.

Obama’s speech also put forth two massive pro-corporate international free trade deals, which would further drive down wages in the United States:

“We intend to complete negotiations on a Trans-Pacific Partnership [a massive free trade deal focused mainly on Asian nations]. And tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership [free trade deal] with the European Union – because trade that is free and fair across the Atlantic supports millions of good-paying American jobs.”

While praising free trade Obama disarmed labor and progressive groups by throwing in the meaningless word “fair.”

Lastly, Obama’s drone assassination policy was further enshrined in his speech. Drone assassinations are obvious war crimes — see the Geneva Convention — while also ignoring that pesky due process clause — innocent until proven guilty — of the constitution.

But Obama said that these programs will be “legal” and “transparent,” apparently good enough to keep most progressive groups quiet on the issue.

There were plenty of other examples of sugar-coated poison in Obama’s speech. It outlined a thoroughly right-wing agenda with no plan to address the jobs crisis — sprinkled with pretty words and “inspiring” catchphrases.

Some labor leaders and “progressive” groups seem dazzled by the speech. President of the union federation, AFL-CIO, Richard Trumka, praised Obama’s anti-worker speech:

“Tonight President Obama sent a clear message to the world that he will stand and fight for working America’s values and priorities. And with the foundation he laid, working families will fight by his side to build an economy that works for all.”

And here is the real problem; as President Obama follows in the footsteps of President Bush, labor and progressive groups have found their independent voice stifled. The close ties between these groups and the Democratic Party have become heavy chains for working people, who find themselves under assault with no leadership willing to educate them about the truth, let alone organize a national fightback to win a massive jobs-creation program, prevent cuts to social programs, and fully fund public education. Obama’s second term will teach millions these lessons via experience.

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org) He can be reached at shamuscooke@gmail.com

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What is wrong with the Trans-Pacific Partnership (TPP)

By Carolina Rossini and Maira Sutton | EFF | August 21, 2012

EFF has been fighting against the Trans-Pacific Partnership (TPP) intellectual property chapter for several years. This agreement poses a great risk to users’ freedoms and access to information on a global scale.

We have created this infographic to capture the most problematic aspects of TPP, and to help users, advocates and innovators from around the world spread the word about how this agreement will impact them and their societies. Right-click and save the image for the PNG file, or you can download the PDF version below.

We thank Lumin Consulting for working with us on this project.

Attached Documents

tpp.pdf

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Secret Obama Trade Agreement Would Allow Foreign Corporations to Avoid U.S. Laws

By Noel Brinkerhoff | AllGov | June 15, 2012

In order to secure a new international trade agreement with Pacific nations, the Obama administration appears willing to grant foreign corporations the power to avoid U.S. laws.

This revelation came in the form of a leaked document posted online by Citizens Trade Campaign. The material came from negotiations to establish a Trans-Pacific Partnership (TPP) trade pact and its authenticity verified by Public Citizen.

According to the Huffington Post, which also reviewed the document, foreign corporations operating within the U.S. could disregard certain domestic requirements and regulations by appealing to an international tribunal—that would have the power to overrule American law.

“The outrageous stuff in this leaked text,” wrote Lori Wallach, director of Public Citizen’s Global Trade Watch, “may well be why U.S. trade officials have been so extremely secretive about these past two years of [trade] negotiations.”

Both Republican and Democratic lawmakers in Congress have complained about the secretive talks and being kept in the dark. Senator Ron Wyden (D-Oregon) has introduced legislation requiring the administration to disclose details of the discussions.

Although Congress has not been privy to the negotiations, 600 U.S. corporate advisers have enjoyed access to TPP texts and been permitted to advise U.S. negotiators.

~

Obama Trade Document Leaked, Revealing New Corporate Powers And Broken Campaign Promises (by Zach Carter, Huffington Post)

Public Interest Analysis of Leaked Trans-Pacific Partnership (TPP) Investment Text (by Lori Wallach and Todd Tucker, Public Citizen)

Trans-Pacific Partnership Trade Agreement Chapter (CitizensTrade.org)

What will be in the New U.S. Asia-Pacific Trade Agreement? It’s None of Our Business (by Noel Brinkerhoff, AllGov)