The Trans-Pacific Partnership: Obama’s Globalization Agreement (Part 2)

Read Part 1 of The TPP by Rebecca Smith from Tuesday here.

Rebecca Smith is the author of “Union Hypocrisy” and is a new, regular contributor for The Brenner Brief.

The TPP continues what Bill Clinton started with NAFTA, which helped create the World Trade Organization and gave China new permanent access to the U.S. market.  Consequences of these kinds of trade agreements include offshoring of U.S. manufacturing and service sector jobs, inexpensive imported products and expanded global reach of U.S. multinational companies.  While it can be argued that NAFTA gave Americans access to cheaper goods and increased trade, it also came with a hefty price tag.

In 1992, NAFTA was highly controversial for a number of reasons. Third-party presidential candidate and businessman Ross Perot argued that it would cause a “giant sucking sound” of American jobs heading to Mexico. Today, the U.S. has lost one out of every four manufacturing jobs that existed before NAFTA – over 5 million with 42,000 factories closed. A modest trade surplus with Mexico was supplanted with a large, persistent deficit. As documented in “The Selling of Free Trade,” NAFTA’s new investor protections dramatically increased the ability of corporations to outsource entire factories to Mexico.

The most controversial part of NAFTA is the investment provision. It not only removes the risks usually associated with offshoring production to low-wage countries, but it also allows foreign corporations investing in the U.S. extra-legal rights to dispute American environmental, labor or consumer protections in foreign tribunals favorable to corporate interests, and to demand taxpayer compensation for having to meet the same norms as domestic firms.

NAFTA is just one agreement. U.S. trade agreements, including the World Trade Organization, also allow imposition of indefinite trade sanctions if the U.S. does not change its domestic laws to meet the pact’s limits on financial, environmental and other public interest regulations.  Recent cases of U.S. law being slammed by the WTO include dolphin-safe tuna labeling requirements, country-of-origin meat labeling and the ban on candy and clove-flavored cigarettes. In addition, states and municipalities must bear the cost of helping to defend their regulations in international tribunals, such as California’s spending $8 million to successfully defend its right to ban the harmful gasoline additive MTBE or regulate mining on state lands.

There is an argument that by including countries in the Pacific region in the agreement, and not including China, there is a balance of power.  However, this is not true. The TPP will have no serious impact on U.S. supply chain dependence on China.  China would be free to sign on to TPP at any time as stated in the agreement and, in fact, USTR Kirk told Reuters that he “would love nothing more” than for China to join.

In 2008, Barack Obama pledged to renegotiate NAFTA. In particular, he said he would revisit the investment chapter of the agreement, and set out a new model of trade agreements for the U.S. He has broken these campaign promises he made to the union workers.  How does the AFL-CIO explain this to their members?

As is explored in my book Union Hypocrisy, time and again, the unions have been sold out by the Democratic party.  NAFTA was one of the most damaging trade deals — to the ability of unions to utilize the labor force in influencing the corporations — since President Carter.  Yet unions continue to support the liberal left in an agenda that leaves the labor force with a real median wage that now hovers at 1972 levels, with levels of income inequality equaling those of the pre-New Deal state.

What is truly confounding is that the Tea Party and Libertarian party have been unable to reach out to union members with a message that illustrates this — and we must.  Strangely enough, in areas such as TPP, the right’s relationship with the unions does matter. How in the world do we allow the liberal left to indoctrinate our labor force to the point where they refuse to see the destruction of the middle class by the left they support without question and with slavish devotion?

The United States needs to grasp the logic of industrial interdependence and be aware that the only way for the United States to achieve its most vital national aims is to force its corporations to reposition the machines on which it depends. The United States does not need to bring all or even any of these systems of production home. However, it can no longer continue to live in a world in which many activities remain in one location, under the control of one state — especially a strategic rival (China).

The TPP does not mitigate the threat of Chinese advantage over the American supply chain at all. It does very little except further undercut the supremacy of American government to maintain consumer, environmental and labor laws, and protect public assets. The TPP is heralded in elite circles as the answer to the China dilemma. Do not buy in to the rhetoric. Perhaps the biggest danger inherent in the TPP is that the enormous threat in China — controlling America’s industrial base — is being ignored, yet again.  The AFL-CIO, however, has not taken a position on the agreement, preferring to remain as a stakeholder at the negotiating table.

I am all for capitalism and trade with foreign countries.  I am unequivocally against our laws being subjugated to foreign panels or tribunals. As Benjamin Franklin famously said, “We must all hang together, or assuredly we shall all hang separately.”

Trackbacks

  1. […] amenities. Britain, being an island, makes it more difficult for people to pack up and leave. With NAFTA removing tariffs on trade, we may need to think about what is stopping people from making the short […]

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