Wayne O'Leary

Retrograde Trade

Correct me if I’m wrong, but haven’t we been down this road before? Press reports over the past month suggest that an international trade agreement involving the US called the Trans-Pacific Partnership (TPP), which has been in negotiations since 2010, may be coming to fruition by year’s end.

By all accounts, the TPP represents a return to the pre-recession glory days of liberalized trade represented by the North American Free Trade Agremeent (NAFTA) and permanent normal trade relations (PNTR) with China, the pacts that first brought us the beneficence of outsourcing and offshoring. However, things have evolved since the consummation of those comparatively limited agreements; as befits globalization’s accelerated evolution, the TPP will include no fewer than 12 Asia-Pacific countries, ranging from advanced First World nations (the US, Canada, Australia, New Zealand, Mexico, Chile, Singapore and Japan) to less developed representatives of the Third World (Malaysia, Brunei, Peru, and Vietnam).

The TPP is being sold to the public as a “high-standard” deal aimed at integrating most of the Pacific’s largest economies aside from China — for the betterment of all. But the secretive nature of the ongoing negotiations implies there’s more to it than that. Sporadic news leaks indicate the final product will go far beyond mere tariff reduction to address what The Economist characterizes as “non-tariff barriers,” easing such purported roadblocks as local-content requirements in government contracts and conflicting interpretations of intellectual property rights.

Trade “facilitation” (by means of common customs procedures and simplified logistics) is the watchword, but free-trade critics see another agenda, namely a power grab by multinational corporations. Laurel Sutherlin, writing on the AlterNet website in September 2012, pinpointed 26 TPP chapters under discussion, very few of which had any direct relation to trade; they represented, in her words, “a wish list of the 1%,” an attempt to enshrine corporate rights and privileges at the expense of nation states seeking to protect consumers, labor, domestic agriculture, and the environment.

Other critics have included Public Citizen and the Occupy movement, as well as numerous congressmen, mostly liberal Democrats, worried that Big Pharma will use the TPP to restrict access to inexpensive generic medicines by eliminating Third World drug subsidies, shielding long-term drug patents, and the like. Elected officials, notably Sens. Bernie Sanders-(I-Vt.), Elizabeth Warren (D-Mass.), and Ron Wyden (D-Ore.), and Rep. Alan Grayson (D-Fla.), have focused on the questionable secrecy aspects of the TPP negotiations, especially the closed-door tactics applied by Ron Kirk, US trade representative from 2009 to 2013, who was appointed by President Obama explicitly to continue participation in the trade talks tentatively begun in 2008 by the Bush White House.

In many respects, the TPP initiative is just a larger and more comprehensive version of what has gone before in US trade policy. It’s bipartisan, of course; vested corporate interests, backed by the usual elites, remain constant from one administration to the next — a seamless web of influence peddling that knows no party. Unsurprisingly, the TPP seeks to eliminate barriers to free-market globalization (such as state-owned enterprises) that might interfere with maximizing multinational profits, regardless of the impact on individual national economies. The purely commercial objective of the pact is the reduction of regional trade tariffs to zero by 2015.

Additionally, however, there’s an emphasis on what advocates refer to as “trade remedies” — that is, a legal framework by which foreign corporate investors can challenge and have set aside local governmental standards and regulations of a “protectionist” nature simply by appealing to a sympathetic international trade tribunal. In practice, this amounts to ceding national (and, in the case of the US, state) sovereignty to the multinationals in the name of “investment protection,” a higher value than worker or environmental protection. Individual governments, in other words, will be forced to lower their national standards or face lawsuits by corporations.

As a final blast from the past, the Obama administration, like others before it, is calling for congressional “fast-track” trade-promotion authority to pass the TPP in an up-or-down vote with minimal debate and no attached amendments. This would bypass the normal treaty-ratification process and ram the trade pact through before the public, let alone Congress itself, can really react. Fast track has been the accepted means of approving potentially controversial free-trade deals for two decades now. When multinational corporate concerns are at stake, the American people and their representatives are to be kept in the dark.

The prospective TPP does not exist in a vacuum; it’s a symptom of what’s transpired in the US (and, indeed, the world) economy for over a generation: broadly speaking, the triumph of capital over labor. Since the passage of NAFTA in 1993, followed by PNTR with China in 2000 and the Central America Free Trade Agreement (CAFTA) in 2005, free-trade deals have been presented without exception as beneficial to the countries that subscribe to them. This has been the consensus view of three successive American administrations, those of Clinton, Bush, and Obama. We’ve had 20 years of what could be described as a free-trade regime.

So, the question is, Who has really benefitted? According to the Organization for Economic Co-operation and Development (OECD), labor in the advanced countries collectively received a 4% lesser share of overall income in the second decade of the 2000s than in the early 1990s, down from 66 to 62 percent, a precipitant decline in a percentage allocation that had previously been roughly constant. In the US, labor’s share of national income as a proportion of GDP fell 5% during that period — the era of free trade. And research sponsored by America’s Federal Reserve System concludes that three-quarters of labor’s income decline can be directly attributed to outsourcing by US companies, whose ownerships have pocketed labor’s loss.

By contrast, US corporate profits as a share of GDP have more than doubled in the years since NAFTA and (especially) PNTR with China began generating the cheaper imports produced by low-cost foreign labor. Meanwhile, statistics culled from IRS records in 2012 by University of California economist Emmanuel Saez, an authority on income distribution, indicate that over half of all income gains garnered after 1993 (the year of NAFTA) went to the top 1%. A coincidence? Perhaps, but the TPP, latest gift of the globalizers, deserves a hard second look. Up to now, beneficiaries of the free-trade regime have included precious few average Americans.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He is the author of two prizewinning books.

From The Progressive Populist, January 1-15, 2014