House Should Separate Trade And Non-Trade Parts Of TPP

Dave Johnson

There is a new dispute over whether the Trans-Pacific Partnership (TPP) is a “trade” agreement or not. One side says TPP is about trade, and sells it that way. The other side says that most of TPP is not about trade so it is important to examine the effect of the non-trade parts.

Here is a simple solution: the House should change the pending fast track trade authority bill to require separate votes on the trade and non-trade parts of TPP.

Pro-TPP Argument Is About “Trade”

The pro-TPP argument is entirely about trade issues. They promise jobs. Proponents say some countries impose high tariffs on certain U.S. goods, TPP will result in lower tariffs, and this will increase U.S. exports. They sell TPP using arguments like “95 percent of the world markets are outside of the U.S. so we need to pass TPP,” “we can’t just withdraw from trading with the world,” etc., as if the U.S. will just stop trading with the rest of the world if fast track does not pass.

Politico’s” What’s actually in Obama’s secret trade deal?” talks with U.S. Trade Representative Michael Froman (representing Citigroup in the negotiations),

“…the heart of the deal is an effort by the twelve participating countries to phase out tariffs and other export barriers for more than 11,000 categories of commodities, and Froman is frustrated that isn’t getting more attention. n an interview with POLITICO, he said export-supported U.S. jobs pay 13 to 18 percent more than the average job, and argued that freer trade along the Pacific Rim would create a lot more of them.”

Getting into specifics of who imposes tariffs and who doesn’t,

Overall, the U.S. imposes an average tariff of 1.4 percent on foreign goods, less than half the average for the rest of the nations Froman is negotiating with, barely a fourth the average in Vietnam and Malaysia. And it can get much worse for specific industries and products. TPP nations have tariffs ranging up to 100 percent on textiles, 87 percent on corn, and 75 percent on consumer goods, not to mention selected Japanese tariffs that amount to 189 percent on U.S. shoes and a don’t-even-think-about-it 778 percent on U.S. rice above a certain annual quota.

Of course, we might ask how it came to be that we lowered our tariffs while they didn’t, which almost forces U.S. companies to move jobs and factories out of the country and did force our trade deficit to increase to enormous, humongous levels.

It also begs the question of what these countries are getting for lowering their tariffs, since we start from such a terrible negotiating position of our own making… In the Politico piece Froman says what they get is “improved access to U.S. markets” (meaning we get even more imports, increasing our trade deficit and killing jobs and wages) and “the opportunity to lure U.S. businesses away from a restrictive China” (meaning offering even lower wages than China). It is not clear how this helps bring jobs to the U.S. economy. The countries that will lower tariffs can’t afford U.S. goods. Our agriculture sector is mechanized and doesn’t employ many people at good wages. But corporate plutocrats who send U.S. jobs out of the country and pocket the wage differential will do great.

Anti-TPP Argument Is About Corporate Power Over Government And Us

Opponents of TPP and the fast track process that essentially pre-approves TPP and future “trade” agreements say that while the corporations are selling TPP as a “trade” agreement, most of TPP covers non-trade policies that should be handled using the normal procedures our government uses to consider policy issues.

For example, a few years ago the Congress considered whether to pass the Stop Online Piracy Act (SOPA), which opponents argued would lead to widespread censorship of Internet content if enacted. Congress decided not to, so now SOPA has reappeared in TPP, and if TPP passes this imposes SOPA on us even though our own Congress already decided against it.

In another example, economist Joe Stiglitz writes that TPP includes an end-run around “takings” rules that corporations tried to get through Congress, but failed. Sitglitz writes in The Secret Corporate Takeover:

When I chaired President Bill Clinton’s Council of Economic Advisers, anti-environmentalists tried to enact a similar provision, called “regulatory takings.” They knew that once enacted, regulations would be brought to a halt, simply because government could not afford to pay the compensation. Fortunately, we succeeded in beating back the initiative, both in the courts and in the US Congress.

But now the same groups are attempting an end run around democratic processes by inserting such provisions in trade bills, the contents of which are being kept largely secret from the public (but not from the corporations that are pushing for them).

One more example is banking regulations. Sen. Elizabeth Warren (D-Mass.) warns that fast track will enable Wall Street to sneak deregulation of banking into future trade agreements. A Bloomberg Fact Check explains, in Why Obama Is Wrong and Warren Is Right on Trade Bill Quarrel:

The Massachusetts senator has warned fellow Democrats that a fast-track trade bill now in Congress could undo U.S. laws such as the Dodd-Frank banking regulations later. A number of constitutional scholars and other legal experts say she’s right.

The reason: An arcane trade-bill provision that would make it easier for a future president and Congress to undercut existing statutes, even ones with little to do with trade.

An “advisor” who is privy to the secret text of TPP also warns, I’ve Read Obama’s Secret Trade Deal. Elizabeth Warren Is Right to Be Concerned.

Sneaking Pro-Corporate Stuff Past Us Happens All The Time

It happens all the time in Congress. When big corporations want something to get through Congress without the public knowing about it, they get someone to “attach” it to a “must-pass” bill. For example, in the recent budget battles that threatened to lead to a “government shutdown.” A provision that was actually written by and for the benefit of Citibank was inserted into the budget at the last minute. This provisions repealed part of the Dodd-Frank Wall Street regulations, and allowed Citibank to resume trading in certain risky derivatives.

The post How “Citibank Budget” Push Foreshadows “Fast Track” For Trade Deals described what happened. The provision was slipped into a bill that had to pass or the government would shut down. So instead of examining the merits of deregulating risky derivative trading public attention was focused on whether the bill would “fail” and the government would shut down.

The big corporations have become very good at bypassing our Congress and the procedures of transparency and accountability that our government is supposed to follow. Now they are using “trade” bills to get things they can’t get any other way.

There Is An Easy Solution

There is an easy solution to this dispute over whether TPP is a “trade” bill or not: When trade bills come up for a vote, separate the voting on trade and non-trade parts.

The fast track process is currently coming up for a vote in the House. Fast track essentially pre-approves TPP. Congress could today insert a provision into TPP requiring separate votes on the trade and non-trade provisions of TPP.

When TPP is finally revealed to the public Congress could debate and vote on the provisions that reduce tariffs, and other “trade”-related sections.

Then Congress could take up the non-trade provisions of TPP, like the provisions that set up special “corporate courts” that let corporations sue governments if they feel their profits are reduced by laws and regulations. Other non-trade provisions (according to leaks) include extending the time that copyrights and patents last so giant corporations can collect even more “rents.”

If these were separated, the pro-trade people could get a vote on lower tariffs. Nike could get a vote on a tariff reduction on the shoes they already import from Vietnam so their profits could be even higher, causing New Balance to shut down its American manufacturing and move those jobs to Vietnam, too. Other companies would be in the same boat, because apparently closing factories here and moving them to countries that have low wage, safety and environmental protections is called “trade.”

Then Congress could have an open vote on non-trade issues where the giant corporations use so-called “trade” agreements to bypass our system of government and laws.

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