TPP: U.S. world leadership?
Or corporate takeover?
The Trans-Pacific Trade Partnership, to be voted on by Congress soon, is a quilt of many colors, disparate pieces stitched together. This is a complex bill which you probably will support if you believe it will strengthen U.S. leadership in the world, but you will oppose if you think corporations should not be given excessive political power to overrule national laws and sovereignty.
What is it? Trade pacts are designed to expand a country’s exports. NAFTA did not live up to its promise to increase U.S. jobs, and this trade pact is patterned after NAFTA. so there is no reason to believe that this new trade pact will stop the decades-old increase in imports, export of jobs and decline in our middle class. In any event, previous trade agreements already have brought tariffs in the major countries to a low level.
Most of the 29 chapters in the trade pact protect corporate patents and intellectual property by extending the duration of the copyrights, patents, etc.
Here is how dispute settlement under the TPP would work. Corporations from member countries can sue member governments who impose health, safety, climate or environmental rules which are detrimental to the profits of the suing corporation exporting to the member countries.
To handle trade disputes, tribunals are set up, staffed by attorneys from member countries. These attorneys play two distinct roles: sometimes they are employed by the corporations to bring suit against a government for unfair national regulations while at other times these same attorneys serve as judges on three-member judicial panels with full power to decide the cases, which cannot be appealed.
What is wrong with it? The TPP provides increasing monopoly-like power to the corporations, limiting competition. This outcome is not surprising since the agreement was written by 500 largely corporate representatives. To make clear that this trade treaty transfers power from the World Trade Organization and the national court systems to the corporations themselves, consider the following. Since the disputes are presided over by three-judge panels made up of the same attorneys who previously had represented the corporations in other cases, the conflict of interest is staggering.
The TPP, as did the NAFTA previously, transfers sovereignty from nation states, who write their own environmental and safety laws, to the TPP tribunals who can overrule the national laws and fine countries unlimited amounts for damaging the profits of member country corporations. Who rules?
The answer is fairly apparent as the current Canadian case about the Keystone Pipeline attests. Canada’s Keystone pipeline company is suing the U.S. for lost profits of $50 billion, the estimated profits their corporation would have earned over the life of the Keystone Pipeline. If Keystone wins, then the penalty the judges decide would have to be paid by U.S. taxpayers to the Canadian corporation
What’s right with it? President Obama avoids the just discussed subject of neoliberalism, namely the transfer of a nation’s ability to determine its own destiny to a veto by large international corporations. He focuses on a different and important subject, U.S. world leadership. The Cold War is long gone, the new world order emerging after 1989 has been stillborn, and emergent nationalism is now driving the world into uncharted waters of competitive power blocs. China is seeking to build a regional system to serve as a rival trade bloc to the American pact, along with large investments around the world. The ability of the U.S. to call the tune for world economics, finance and security is ebbing. The cause for this is not ineptness on our part, but the welcome economic growth in what once were the less developed countries – China first, then India, Brazil, Indonesia, Malaysia, Vietnam, Thailand and Chile. Understandably they now demand a seat at the table of world management. U.S. leadership for many years has been devoted, largely successfully, in building a liberal, democratic, rule-based international order – a globalized system in which all countries gain. China is now asserting regional and even world leadership based on state-led economic power and little concern for human rights while disparaging democracy. Russia just throws bricks into the gears.
Given this picture of a messy world landscape, President Obama’s major argument for ratification by Congress of the TPP is that it will buttress the U.S. in building a liberal world order with the U.S. providing ongoing leadership. He argues that it would be an unforgivable abdication of leadership for the U.S. to lead 11 other countries into 14 years of negotiation to make a better trade world, and then to say no, we have changed our mind.
Two closing questions First, would the creation of the TPP really lead to restoring U.S. world leadership and creating an accepted set of trade rules for the world? Two, what kind of a world do we want? Do we want corporations in their search for profits to make international commercial policy and have the ability to veto the environmental and food safety laws of “sovereign” nations?
Roy Wehrle of Springfield is Emeritus Professor of Economics, University of Illinois Springfield.