Noted Economist Sachs Calls TPP “Too Flawed” To Approve

Dave Johnson

The Trans-Pacific Partnership (TPP) is a lot more than a “trade” deal. Among other things, it includes provisions that limit how governments can regulate corporations and allows corporations to sue governments in “corporate courts” that bypass the sovereignty of governments.

In a Boston Globe op-ed, “TPP is too flawed for a simple ‘yes’ vote,” noted economist Jeffrey Sachs describes TPP as having four parts.

First is a free-trade deal, in which “tariff rates would come down to zero; quotas would drop; trade would expand; and protectionism would be held at bay.” Second is “a set of regulatory standards for trade. Most of these are useful, requiring that regulations that limit trade should be based on evidence, not on political whims or hidden protectionism.”

Then come what he sees as the fatal flaws:

The third is a set of regulations governing investor rights, intellectual property, and regulations in key service sectors, including financial services, telecommunications, e-commerce, and pharmaceuticals. These chapters are a mix of the good, the bad, and the ugly. Their common denominator is that they enshrine the power of corporate capital above all other parts of society, including labor and even governments.

The fourth is a set of standards on labor and the environment that purport to advance the cause of social fairness and environmental sustainability. But the agreements are thin, unenforceable, and generally unimaginative. For example, climate change is not even mentioned, much less addressed boldly and creatively.

He concludes that “Congress should vote “no’’ on the current TPP, while simultaneously endorsing its trade provisions as well as continuing the work with our counterparts on the other chapters.”

Sachs considers the “free trade” part to be OK, even beneficial. But keep this in mind. Governments impose tariffs for reasons. Some of those reasons are to protect key industries and the standard of living of their citizens. Economists will tell you that increasing trade is always good, but consider this: When a company closes a factory in the U.S. and reopens it in a country that pays very little and doesn’t protect worker safety or the environment, and then brings the same goods back here to sell in the same stores, that is “increased trade” because now those goods cross a border.

Sachs says parts two and three are the flaws. But maybe that whole “free trade’ idea is also a flaw.

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