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Robert Reich: Why the Trans-Pacific Partnership Agreement is a Pending Disaster

It’s no longer free trade versus protectionism. Big corporations and Wall Street want some of both.

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Image from Flickr user CHRISTOPHER DOMBRES

By Robert Reich
By arrangement with Robert Reich

Republicans who now run Congress say they want to cooperate with President Obama, and point to the administration’s Trans-Pacific Partnership, or TPP, as the model. The only problem is the TPP would be a disaster.

If you haven’t heard much about the TPP, that’s part of the problem right there. It would be the largest trade deal in history—involving countries stretching from Chile to Japan, representing 792 million people and accounting for 40 percent of the world economy—yet it’s been devised in secret.

Lobbyists from America’s biggest corporations and Wall Street’s biggest banks have been involved but not the American public. That’s a recipe for fatter profits and bigger paychecks at the top, but not a good deal for most of us, or even for most of the rest of the world.

First some background. We used to think about trade policy as a choice between “free trade” and “protectionism.” Free trade meant opening our borders to products made elsewhere. Protectionism meant putting up tariffs and quotas to keep them out.

For three decades, free trade worked. It was a win-win-win.

In the decades after World War II, America chose free trade. The idea was that each country would specialize in goods it produced best and at least cost. That way, living standards would rise here and abroad. New jobs would be created to take the place of jobs that were lost. And communism would be contained.

For three decades, free trade worked. It was a win-win-win.

But in more recent decades the choice has become far more complicated and the payoff from trade agreements more skewed to those at the top.

Tariffs are already low. Negotiations now involve such things as intellectual property, financial regulations, labor laws, and rules for health, safety, and the environment.

It’s no longer free trade versus protectionism. Big corporations and Wall Street want some of both.

They want more international protection when it comes to their intellectual property and other assets. So they’ve been seeking trade rules that secure and extend their patents, trademarks, and copyrights abroad, and protect their global franchise agreements, securities, and loans.

But they want less protection of consumers, workers, small investors, and the environment, because these interfere with their profits. So they’ve been seeking trade rules that allow them to override these protections.

That will be a good deal for Big Pharma but not necessarily for the inhabitants of developing nations.

Not surprisingly for a deal that’s been drafted mostly by corporate and Wall Street lobbyists, the TPP provides exactly this mix.

What’s been leaked about it so far reveals, for example, that the pharmaceutical industry gets stronger patent protections, delaying cheaper generic versions of drugs. That will be a good deal for Big Pharma but not necessarily for the inhabitants of developing nations who won’t get certain life-saving drugs at a cost they can afford.

The TPP also gives global corporations an international tribunal of private attorneys, outside any nation’s legal system, who can order compensation for any “unjust expropriation” of foreign assets.

Even better for global companies, the tribunal can order compensation for any lost profits found to result from a nation’s regulations. Philip Morris is using a similar provision against Uruguay (the provision appears in a bilateral trade treaty between Uruguay and Switzerland), claiming that Uruguay’s strong anti-smoking regulations unfairly diminish the company’s profits.

Anyone believing the TPP is good for Americans take note: The foreign subsidiaries of U.S.-based corporations could just as easily challenge any U.S. government regulation they claim unfairly diminishes their profits—say, a regulation protecting American consumers from unsafe products or unhealthy foods, investors from fraudulent securities or predatory lending, workers from unsafe working conditions, taxpayers from another bailout of Wall Street, or the environment from toxic emissions.

In other words, the TPP is a Trojan horse in a global race to the bottom.

The administration says the trade deal will boost U.S. exports in the fast-growing Pacific basin where the United States faces growing economic competition from China. The TPP is part of Obama’s strategy to contain China’s economic and strategic prowess.

Fine. But the deal will also allow American corporations to outsource even more jobs abroad.

In other words, the TPP is a Trojan horse in a global race to the bottom, giving big corporations and Wall Street banks a way to eliminate any and all laws and regulations that get in the way of their profits.

At a time when corporate profits are at record highs and the real median wage is lower than it’s been in four decades, most Americans need protection—not from international trade but from the political power of large corporations and Wall Street.

The Trans Pacific Partnership is the wrong remedy to the wrong problem. Any way you look at it, it’s just plain wrong.

Robert B. Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written thirteen books, including the best sellers Aftershock: The Next Economy and America’s Future and The Work of Nations: Preparing Ourselves for 21st Century Capitalism. His latest, Beyond Outrage, is now out in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

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12 comments for Robert Reich: Why the Trans-Pacific Partnership Agreement is a Pending Disaster

  1. Comment by Gary Reber on April 25, 2015 at 12:15 pm

    Trade deals mostly benefit the wealthy ownership class, not workers.

    If the President really wants ensure that the United States succeeds far beyond China, then he would advocate broadening personal productive capital ownership of ALL future productive capacity formed by American corporations, and unleash the productive power of the non-human factor––the “tools” and “machines” that can produce products and services far more efficiently than labor alone.
    Not surprisingly, it appears that the agreement will promote the interests of giant, multinational corporations over the interests of labor, environmental, consumer, human rights, or other stakeholders in democracy, AND FURTHER CONCENTRATE OWNERSHIP OF THE NON-HUMAN PRODUCTIVE CAPITAL MEANS OF PRODUCTION!

    The REAL STORY is a story about the collusion among a globally wealthy ownership class to further concentrate private sector ownership in ALL FUTURE wealth-creating, income-generating productive capital asset creation on a global scale. A sorta FREE TRADE ON STEROIDS!

  2. Comment by Michael Fjetland on April 25, 2015 at 12:25 pm

    Sorry Robert, but as an international lawyer who helped sell American products in dozens of countries around the world, I go with the President. No one needs a trade deal to move jobs overseas, but we DO need a trade deal to get lower tariffs to sell American products (made HERE) overseas.

  3. Comment by Dolores Nelson on April 25, 2015 at 3:36 pm

    I don;t understand why President Obama is championing it. Can you explain that?

    Thanks

  4. Comment by Susan Doran on April 25, 2015 at 4:35 pm

    I’ve just become aware of this magazine and will continue reading it. I’m a fan of Mr. Reich and have enjoyed having access to these articles.

  5. Comment by Paula Marques on April 25, 2015 at 7:48 pm

    It’s hard to understand how is it that 95% of the world population is at the mercy of a handful of people and helpless to stop them. Were is the “strength in numbers”???

  6. Comment by John de Clef Pineiro on April 25, 2015 at 8:12 pm

    The TPP is “a free-to-trade-away our national sovereignty” pact that is of, by and for the multinational corporations.

    And it is brought to us care of the most insidious “apostle of change” we’ve ever voted for twice.

    “When will they ever learn, when will they e—ver learn?”

  7. Comment by Magdalene Ruzza on April 25, 2015 at 9:06 pm

    I still am confused. I trust president Obama; given the crap the conservatives have thrown at him, he has managed to get so much done, kept us out of new wars, and continues to maintain more worldwide respect for his intelligence, compassion and dignity.

    So why would he support an initiative that is bad fir America?

  8. Comment by Phoebe Sorgen on April 26, 2015 at 12:50 am

    Stop the biggest corporate coup in history like we stopped the MAI back in the day. Dane County WI became a TPP Free Zone in 2013. Berkeley became a TPP & TAFTA Free Zone in 2014. In February, Richmond CA declared itself a TPP & TAFTA & TiSA Free Zone.
    Wherever you live, get a sympathetic member of your City Council or Board of Supervisors to put a similar resolution on the agenda and then get everyone you know to lobby for it. Copy Richmond’s, substituting TTIP, as it is now called, for TAFTA. That and TiSA are newer agreements also being negotiated in secret. Via leaks, it’s clear that, together, they’d adversely affect over 90% of the world. Most of the terms have nothing to do with trade and everything to do with increasing the profits of the 1% at everyone else’s expense. Fortunately, word is spreading. Time to wise up and rise up. Use resource on that website. For additional sourced facts, see Berkeley’s Resolution footnotes viii – xix. (To Dolores Nelson, it’s a pay to play system with officials beholden to the corporatocracy that gets them elected.

  9. Comment by Phoebe Sorgen on April 26, 2015 at 1:08 am

    Magdalene Ruzza, Obama has indeed done much good work, and is far better than Republicans imo, but in this case he is under the influence of powerful corporations, as are most federal elected officials now, rather than truly representing We the People. A recent Princeton study shows that the USA is no longer a democracy but a plutocracy. We need to get the laws changed that gave corporations so much power. Big corporations already had too much power prior to the SCOTUS decision in “Citizens United v FEC.” The only way to change laws made by the Supreme Court is via a constitutional amendment. We need one that will establish that only people, not corporations, are persons entitled to constitutional rights, AND that spending money is not equivalent to expressing free speech. Because, due to SCOTUS rulings, a corporation is a legal person with the 1st amendment right to free speech, and spending $ is like using free speech, so corporations may spend unlimited amount$ on elections, drowning out voters who have more limited resources, which is why this is no longer a democracy. You may want to support this inspiring coalition by signing the petition: http:www.MoveToAmend.org

  10. Comment by Guy Jones on April 26, 2015 at 6:16 pm

    This is a deal breaking / making position for you as a member of the Arkansas Congressional Delegation. I, along with my family, extended family and everyone that I can reach, will remember your VOTE AGAINST “FAST TRACK” a/k/a/ TPA – THIS MUCH FAIL ! ! !

    And remember YOUR VOTE against the TPP (Trans-Pacific Partnership) THIS MUCH FAIL ! ! !

    Secrecy has its drawbacks – the TPP is not made public before YOUR VOTE on the TPA – “Fast Track” and that’s just wrong, wrong, WRONG. The materials leaked on the TPP are astoundingly divisive, invasive and driving America into a 3rd world status which KILLS THE AMERICAN DREAM, what small amount still exists.

    Guy Jones
    Conway, AR 72034
    501 908 3399

  11. Comment by John de Clef Piñeiro, Esq. on April 26, 2015 at 10:01 pm

    It’s all about the American people’s RIGHT TO KNOW what our government is negotiating.

    How is it that Mr. Obama thinks it’s okay for the corporations to know and be at the table, but it’s not okay for We, The People, to know and be at the table?

    DEMAND TRANSPARENCY, DEMAND DISCLOSURE of what can affect each and every one of us.

    Secret agreements are the hallmark of oligarchy, not democracy.

    (JdeCP)

  12. Comment by Bert Wolfe on August 25, 2016 at 7:36 am

    The “monied corporations”, having engaged the American federal government in an epic contest of strength, as predicted over 200 years ago by President Thomas Jefferson, seem to have declared that it is now a fight to the death and only one will survive. Now that the corporations are global and multinational in their reach they are seeking to impose David Rockefeller and the plutocrats “New World Order” through these so-called “free trade” agreements, like the World Trade Organization (WTO), NAFTA, and now the TPP and TTIP. These treaties establish arbitration boards made up of corporate lawyers that “arbitrate” disputes between the corporations and the member governments. These arbitration boards can overturn member nations laws, impose huge fines, and award large sums of money if member nations pass laws that interfere with and prevent the corporations from making the maximum amount of profit that the corporations had anticipated making. This is nothing less than an unprecedented assault by the corporations on the national sovereignty of the United States and the other member countries. Any President or Senator who would agree to these sovereignty threatening treaties are effectively traitors selling America out to the multinational corporations.

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