All over the media, assorted luminaries are selling the Trans-Pacific Partnership, which would be the largest trade agreement in American history and a signature achievement, if one sees it that way, by President Obama. An example is this op-ed in the Seattle Times by former Washington Gov. Chris Gregoire and former Massachusetts Gov. Deval Patrick.
Anti-TPP forces have far less money and cohesion. But you can get a flavor of their concerns for American jobs and living standards from this post at Public Citizen and articles here and here from the essential site, Naked Capitalism.
Supporters, and they include most big American corporations, want the agreement to receive a “fast track” from the Congress — an up or down vote, no amendments — as has been granted to presidents on so-called free-trade agreements for decades. And with a Republican Congress, they are likely to get it. TPP, supporters claim, will be a 21st century, “high standard” trade pact. It includes 12 Pacific Rim nations, but not China (or India).
The biggest problem: The public doesn’t know what’s in TPP; the text, negotiated in secret, hasn’t been released. Wikileaks provided a sample chapter, which only added to concerns and controversy. Trade advocates say that more than 700 “stakeholders” have been part of the process. The U.S. Trade Representative provides this broad outline.
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Globalization has scrambled the whole notion of “free trade.” In other words, the United States doesn’t design and manufacture iPhones and a host of other electronic gadgets here, put them on ships and send them to China. That’s the way it mostly used to work. Now, American corporations design them here (for now) and make them in China. This has been the template since passage of the North American Free Trade Agreement. Americans could once wholly support trade because the United States was the world’s largest trading nation and made the most stuff, with the benefits widely shared, including with workers. That is mostly not true now.
David Ricardo’s theory of comparative advantage has given way to a combination of wage arbitrage played around the world and different sets of rules played by some countries (e.g. currency manipulation). The idea of “carrying coal to Newcastle” has been turned on its head. In recent years, any Newcastle, whatever its abundance, would be at risk of having “coal” mined more cheaply elsewhere dumped on it and its workers thrown into being Wal-Mart greeters.
Thus, “free trade” has played a big part in depressing the wages of American workers. The persistent trade deficit means millions of lost jobs and we can’t export our way out of it, despite the promises from Democratic and Republican presidents. Not for nothing did Alexander Hamilton and later, especially, the 19th and early 20th century Republican Party, insist on tariffs to protect American “manufactures” and jobs. (China is closer to Hamilton than the recent champions of neo-liberal economics).
NAFTA and TPP are managed trade agreements. The winners and losers are stark. In the latter category for NAFTA, you can find everyone from millions of factory workers who saw their jobs and good salaries disappear and Mexicans in rural areas whose entire lives and livelihoods were “disrupted” by Yanqui big agriculture — and they were forced to emigrate el norte. Even so, NAFTA backers can claim it as a “win” as American exports to Mexico (and Canada) have soared.
There is an unspoken geopolitical element, which is to enhance American “soft power” in Asia at a time when China — free from endless wars — is doing this with such projects as the Asian Infrastructure Investment Bank.
Both sides — and I am always reluctant to risk the “both sides” cop-out — are in danger of overplaying their hands with TPP. There will certainly be American winners, especially corporations seeking intellectual-property protection. But NAFTA and other pacts show the danger of over-promising. There will be losers, especially another downdraft on wages and jobs in this country. But TPP is not an evil conspiracy against the working class. If one has reservations about the neo-liberal agenda and its intellectual enablers, one returns to Talleyrand: “It was worse than a crime; it was a blunder.”
Again, one big step forward would be releasing the document as soon as possible. To paraphrase Dutch, Mr. Obama, tear down this wall of secrecy. Only then can we see what we’re getting.
Today’s Econ Haiku:
The chicken and egg
With density discontent
Change or ugliness?