By Helen Scharber, CPE Staff Economist, Assistant Professor of Economics, Hampshire College and Steering Committee, ClimateActionNowMa.Org
Leaders of TPP Countries
The Trans-Pacific Partnership (TPP) is a trade agreement that the U.S. and 11 other nations—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam—have been negotiating behind closed doors for four years. Now President Obama wants Congress to “fast track” the agreement, so that it can be passed without debate or amendments. Perhaps the secrecy and urgency sound suspicious, but you may still be wondering “Why should I care about the TPP? Will it be good for me?” To address these questions, we’ve developed a short quiz to help you determine whether you’ll benefit from the TPP:
- Are you a major shareholder in a multinational corporation who has lost (or has the potential to lose) profits from frustrating environmental and labor regulations?
- Are you a pharmaceutical patent-holder who would prefer that generic versions of your drugs not be made available to people in developing countries?
- Are you an important player in the financial industry who spends too much energy trying to innovate around existing regulations?
If you answered yes to one or more of the above questions, congratulations! You are likely to benefit from the TPP!
As with any new rules, though, some parties will not benefit. As economist Paul Krugman has pointed out, international trade itself is unlikely to get much of a boost if the TPP is signed. According to Krugman, “most conventional barriers to trade — tariffs, import quotas, and so on — are already quite low, so that it’s hard to get big effects out of lowering them still further.” Even pro-TPP researchers Peter A. Petri, Michael G. Plummer and Fan Zhai were only able to squeeze U.S. GDP gains of 0.1 percent over 10 years from their model of its economic impact.
If the TPP is only minimally about making trade freer or increasing GDP, what is the purpose? The agreement is likely to reduce other “trade distortions” (sometimes known as democratically-determined regulations) by empowering corporations to sue governments for taxpayer compensation if national laws are thought to impinge upon expected future profits.
Despite the President Obama’s faith that the TPP will create new jobs and encourage environmental protection, it is unlikely to do either. Experience with NAFTA suggests that we greet job promises with skepticism: Bill Clinton projected that NAFTA would create 200,000 U.S. jobs within the first year of the agreement, but by 2003, researchers at the Economic Policy Institute blamed the agreement for the loss of at least 850,000 U.S. jobs. Further, in a recent study on the effect of the TPP on U.S. wages, David Rosnick at the Center for Economic Policy Research found that “the median wage earner will probably lose as a result of any such agreement,” though “many top incomes will rise as a result of TPP expansion of the terms and enforcement of copyrights and patents.”
Due to the profits-over-people bias of the TPP, rights to a safe environment and health are likely to suffer as well. The leaked environment chapter pays lip service to the right of sovereign nations to set environmental priorities and to the importance of upholding multilateral environmental agreements, but unlike the enforceable rules outlined for perceived loss of profit, environmental protections in the current version are not binding. Rather, in the case of environmental difficulties, parties are encouraged to “consider whether the matter could benefit from cooperative activities.” To its credit, the Office of the United States Trade Representative (USTR) has been trying to uphold the May 2007 deal made by then-President Bush and Congress that all future trade agreements include binding environmental rules, but the U.S. appears to be fighting that battle alone. If environmental laws end up being subjugated to anticipated profits, we can expect to see more lawsuits like the one under NAFTA in which a U.S.-incorporated company, Lone Pine Resources Inc., is suing the Canadian government for more than $250 million in lost profits due to Quebec’s moratorium on fracking.
The TPP would also extend patent protection for pharmaceutical companies, an industry whose profits are already well sheltered from the vicissitudes of the free-market. Economist Dean Baker estimates that, without patent and other similar protections, the U.S. would spend around $30 billion per year on prescription drugs, instead of the $300 billion we spend now. That’s a $270 billion transfer from consumers’ pockets to Big Pharma profits, and the TPP would extend their reach across both time (more years of protection) and space (to countries where generic versions of name-brand drugs improve health and save lives).
The editors of the San Francisco Gate wrote in support of fast-tracking the TPP, noting that “Prior trade pacts used the same path, the better to empower U.S. negotiators and minimize political interference back home.” They’re right: fast-tracking the agreement would undermine the ability of polities to “interfere” with corporate profits by passing or enforcing laws to protect jobs, wages, human rights and the environment. Fortunately, people are becoming wise to the false promises of trade agreements. According to a 2012 Angus Reid Public Opinion poll, only 15 percent of Americans believe the United States should “continue to be a member of NAFTA under the current terms,” while 53 percent of Americans believe the United States should “do whatever is necessary” to “renegotiate” or “leave” NAFTA. Some legislators, as well, are standing up for democracy. In November 2014, 151 members of Congress signed a letter to President Obama expressing opposition to fast-tracking the TPP.
If you think you or your loved ones may not benefit from the TPP, you’re not alone. But what to do?
First, check out the excellent resources at Public Citizen, then tell your friends, sign a petition, write a letter to the editor, and call or write your representative. In this case, political interference is exactly what is required.
