Important Report Says TPP “Skews Benefits To Economic Elites”

Dave Johnson

The congressionally created Labor Advisory Committee for Trade Negotiations and Trade Policy (LAC) has just released a scathing report that urges President Obama “in the strongest possible terms” to send the Trans-Pacific Partnership “back to the negotiating table” instead of to Congress, saying the treaty “will harm our economy overall.”

This report was commissioned by Congress to advise Congress and others on whether U.S. trade negotiators met the objectives they were supposed to when negotiating this trade deal. On three basic questions – whether the TPP serves the economic interest of the country, achieves its principal objectives and equitably addresses worker interests – the answers to all three were “no.”

“The TPP is likely to harm U.S. manufacturing interests, cost good jobs, suppress wages, and threaten our democracy and economic security interests,” the report said.

“Total Disregard Of Important Recommendations”

The LAC had previously made recommendations to the U.S. Trade Representative for provisions that needed to be included in TPP to protect workers rights, the American economy and our standard of living. In a press release about the LAC report on TPP, AFL-CIO President Richard Trumka used rather strong language to describe the report’s conclusions:

The final TPP text demonstrates the Administration’s total disregard of important recommendations to protect America’s workers. We will therefore oppose it.

The LAC made numerous recommendations that would have helped reduce our trade deficit, support good jobs, raise wages, and promote inclusive global growth. As negotiated, the TPP will make it harder for working families to succeed in our economy and easier for global corporations to undermine our democracy and outsource our jobs. The President should not send this flawed trade deal to Congress, and Congress should oppose it if he does.

The LAC Report

Trumka used strong language to describe the report. A letter from the Chairman of the LAC to the President that accompanied the release of the report also used strong language in rejecting TPP:

The LAC strongly opposes the TPP, negotiated between the United States (U.S.), Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. We believe that the Agreement fails to advance the economic interests of the U.S. and does not fulfill all of the negotiating objectives identified by Congress in the Trade Priorities and Accountability Act of 2015. The threat to future economic gains here in the U.S. and the standard of living of our people will be put in jeopardy by the Agreement. These threats will grow over time based on the potential for open-ended expansion of the TPP to countries ranging from Indonesia to China.

The LAC believes the agreement should not be submitted to Congress or, if it is, it should be quickly rejected. The interests of U.S. manufacturers, businesses, workers and consumers would be severely undermined by the entry into force of the TPP.

“Skewing Benefits To Economic Elites”

The report’s Executive Summary begins:

On behalf of the millions of working people we represent, we believe that the TPP is unbalanced in its provisions, skewing benefits to economic elites while leaving workers to bear the brunt of the TPP’s downside. The TPP is likely to harm the U.S. economy, cost jobs, and lower wages.

Explaining how this happens, the report continues,

Trade rules that enhance the already formidable economic and political power of global corporations—including investor-to-state dispute settlement, excessive monopoly rights for pharmaceutical products, and deregulatory financial services and sanitary and phyto-sanitary rules—will continue to undermine worker bargaining power, here and abroad, as well as weaken democratic processes and regulatory capacity across all 12 TPP countries.

The Executive Summary concludes:

The LAC urges the President in the strongest possible terms to reverse course now. Do not send this TPP to Congress. Instead, the TPP should go back to the negotiating table. We want to work with you and our counterparts in the other TPP countries to create a truly progressive TPP that uplifts working people, creates wage-led growth, diminishes income inequality, promotes infrastructure investment, protects intellectual property without undermining access to affordable medicines, and respects our democracy.

Press Call

On a press call Monday, several labor leaders explained why they are so strongly opposed.

Thomas Buffenbarger, President of the International Association of Machinists & Aerospace Workers (IAMAW) (“The Machinists”) said it is “our firm belief that TPP will weaken workers rights by undermining nations and standards.”

Leo Gerard, President of the United Steelworkers (USW) said TPP “did not achieve the so-called high standard that those promoting TPP were alluding to.” Citing Vietnam as one example, he said, “Vietnam gets 5-7 years of tariff benefits before they have to comply with anything.”

“It has a standard of requiring a minimum wage, but doesn’t say what it should be. It could be 5 cents an hour and be legal,” Gerard said.

Celeste Drake, Trade & Globalization Policy Specialist with the AFL-CIO, said “existing trade policy already costs average workers about $1,800 a year, according to the Economic Policy Institute (EPI). TPP will only make this worse.”

“TPP is little more than a special interest giveaway specifically designed to help companies offshore,” Drake said.

Drake also spoke of the impact that offshoring that results from our trade policies has on the public sector:

“When manufacturing centers shut down, as they will, the multiplier effect of manufacturing disappears as well. Suppliers and other businesses like the businesses the workers shop at go under. Communities lose income and sales tax revenue. This reduces the ability of the public sector to provide services often at the exact time those services are needed.”

Dan Maurer of the Communications Workers of America (CWA) talked about the effect TPP will have on call center employment. He said call centers are a large industry that is increasingly under threat. Jobs move to TPP countries like Mexico, and prospective TPP countries like the Philippines. The investor-state dispute settlement language in the treaty provides for opening up businesses overseas but not strong labor protections. The countries where these business will operate have low wages and a lack of worker rights. TPP also opens up the government procurement market for services like call centers. This is one-sided because U.S. workers lose the business and get nothing back.

Owen Herrnstadt, also of IAMAW, said that labor violations in TPP are limited only to those that affect trade and investments between parties, so TPP does not cover other labor violations in those countries. TPP seemingly advances labor, but the LAC report notes that TPP’s obligations are satisfied as determined by each country – in effect, any country can deem itself as satisfying labor requirements. Meanwhile acknowledgments of Vietnam’s inadequacies in protecting labor standards are relegated to a side agreement.

Clearly TPP is not a “high standard” agreement as promised. All of labor opposes it.

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