Trans-Pacific Partnership: Free and Fair Trade?

Yesterday, President Obama sent a brief message to the White House email list making the case for Congress to pass Trade Promotion Authority. This would enable the President to negotiate the Trans-Pacific Partnership (TPP) and send Congress a trade proposal to adopt or reject, but not amend. The negotiations are taking place in secret–not a first for the self-proclaimed “most transparent administration in history”–and we have to rely on a leaked chapter (on investment) to learn anything about the TPP. The President’s email tries to brand the partnership as a trade agreement but, as Paul Krugman has previously noted, TPP is not “especially important” when it comes to trade.

Here is part of the president’s e-mail with most of the emphasis placed on trade, workers’ interests, and commitments to labor and environmental standards:

Exports support more than 11 million jobs — and exporters tend to pay their workers higher wages. Failing to seize new opportunities would be devastating not just for our businesses, but for our workers too.

That’s why my Administration is currently negotiating the Trans-Pacific Partnership — so we can benefit from trade that is not just free, but also fair.

But beyond greater access to the world’s fastest-growing region, the agreement will establish enforceable commitments to protect labor, environmental, and other crucial standards that Americans hold dear.

Trade, as Lori Wallach wrote in The Nation, is only covered by two of the twenty-six chapters of TPP, while the rest “embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.” It’s no wonder activists have dubbed the TPP a corporate coup.

According to Joseph Stiglitz, the purpose of trade agreements is no longer to reduce tariffs, which are already considerably low, but rather to reduce non-tariff barriers–the most important of which are government regulations: “Huge multinational corporations complain that inconsistent regulations make business costly. But most of the regulations, even if they are imperfect, are there for a reason: to protect workers, consumers, the economy and the environment.” This is what corporations would seek to undo under TPP, rights won through centuries of struggle.

Failure to comply with these rules may result in governments being sued by corporations in secret tribunals which favor corporate interests above all else. The leaked investment chapter, writes Wallach, “also shows that the TPP would expand the parallel legal system included in NAFTA. Called Investor-State Dispute Resolution, it empowers corporations to sue governments—outside their domestic court systems—over any action the corporations believe undermines their expected future profits or rights under the pact.”

For an example of how the Investor-State Dispute Resolution functioned consider the Mexico-Metalclad dispute. In 2001 The Mexican government was forced to pay $16 million to Metalclad, a US company, in a dispute over toxic waste dump. Mexico had sought to prevent a waste disposal plant from being set up in an ecologically sensitive environmental zone, which was viewed by Metalclad as obstructing free trade. The Mexican government was forced to pay a fine to a US-based corporation for the crime of protecting its environment. This is the mechanism the TPP would considerably expand.

TPP is quite obviously not another trade agreement. Here is how Joseph Stiglitz explains the implications of the agreement:

When agreements like the TPP govern international trade — when every country has agreed to similarly minimal regulations — multinational corporations can return to the practices that were common before the Clean Air and Clean Water Acts became law (in 1970 and 1972, respectively) and before the latest financial crisis hit. Corporations everywhere may well agree that getting rid of regulations would be good for corporate profits. Trade negotiators might be persuaded that these trade agreements would be good for trade and corporate profits. But there would be some big losers — namely, the rest of us..