Trade Pacts: How Super Rich Get Richer

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November 14, 2013

Want Real Free Trade? Start With Big Pharma

Trade Pacts: How Super Rich Get Richer

by DEAN BAKER

Free trade is like apple pie, everyone is supposed to like it. Economists have written thousands of books and articles showing how everyone can gain from reducing trade barriers. While there is much merit to this argument, little of it applies to the trade pacts that are sold as “free-trade” agreements.

These deals are about structuring trade to redistribute income upward. In addition these agreements also provide a mechanism for over-riding the democratic process in the countries that are parties to the deals. They are a tool whereby corporate interests can block health, safety, and environmental regulations that might otherwise be implemented by democratically elected officials. This is the story with both the Trans-Pacific Partnership (TPP) now being negotiated by General Electric, Merck and other major corporations who have been invited to the table, as well as the EU-US trade agreement.

But trade agreements don’t have to be designed to make the rich richer. It is possible to envision trade deals that actually would liberalize trade. Nafta and it successors were designed to push down the wages of manufacturing workers by making it as easy as possible to set up operations overseas. This put US steelworkers and autoworkers in direct competition with the low-wage workers in the developing world, pushing down wages of manufacturing workers in the United States, and by reducing the number of manufacturing jobs, the wages of less educated workers more generally.

This is all very simple and straightforward. But suppose that instead of designing trade deals to give us cheaper manufacturing workers we designed trade deals to give us cheaper doctors. In the United States we pay our doctors almost twice as much as the average in other wealthy countries, and almost three times as much as in countries like Sweden or Norway. Suppose we structured a trade deal to get our doctors’ pay in line with pay in other wealthy countries.

If we could save an average of $100,000 per doctor, this would translate to savings of roughly $85bn a year, which would come to more than $1tn over the next decade. Throw in dentists and a few other highly paid professions and we would be talking real money. Just the savings on doctors’ pay would come to more than $12,000 for an average family of four over ten years. This dwarfs the potential gains that are projected even by supporters of the trade agreements now being negotiated.

But we can be sure that freer trade in physicians’ services will not be on the agenda in these trade deals. While the United States brings in Stem workers, nurses, and even teachers from other countries in order to keep their wages down in the United States, no one in a policy position will talk about doing the same with doctors.

The reason is very simple: doctors have lots of money and power. Roughly a third of them can be found in the top 1%, and nearly all would be in the top 3% of the income distribution.

Of course, trade can be used to bring down prices in other areas as well. The United States pays close to twice as much for its prescription drugs as people in other wealthy countries. This is the deliberate result of a patent policy that gives unchecked monopolies to drug companies for decades. In contrast, every other wealthy country couples patent monopolies with price controls, negotiated prices or some other policy that limits the extent to which drug companies can exploit their monopoly.

The United States could simply change its patent policy, but with that route being politically blocked, it could in principle use free trade to bring about the same result. With the country spending over $300bn a year on drugs at present, the potential gains here also could be well over $1tn over the course of a decade.

The industry will claim that lower drug prices will hurt the incentive to develop new drugs, but we can switch to more modern and efficient methods for financing research. By raising prices by tens or even hundreds of times above their free market price, drug patents create the same sort of distortions and waste that we would expect from tariffs of several thousand percent. It’s not hard to envision a system that leads to less waste and corruption.

There are many other areas where trade could, in principle, be used to bring about gains for large segments of the US population as well as its trading partners. Unfortunately, we are not likely to see trade agreements that will produce such broad gains. This has nothing to do with trade per se, it has due to with the fact that these trade deals are developed and negotiated by corporate interests for corporate interests.

With the drug companies sitting at the negotiating table at the TPP, does anyone think the deal will actually lower drug prices? Do we expect good rules regulating fracking when the oil and gas industries are writing them? And will the big banks working on the financial section produce good rules for regulating finance?

Yes, free trade can benefit the country as a whole. But the trade deals we will see in the next year have nothing to do with free trade, they are just one more item on the agenda for redistributing wealth upward.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

This essay originally ran in the Guardian.

http://www.counterpunch.org/2013/11/14/trade-pacts-how-super-rich-get-richer/

Corporate America Wants the Trans-Pacific Partnership for Christmas This Year

In Secret Negotiations, U.S. Officials and Corporate Representatives Trade Our Human and Constitutional Rights for Corporate Profit

by Christopher Fisher / November 11th, 2013

When “Everything That’s Fit to Print” doesn’t include the content of a proposed trade agreement, who represents the public interest at the bargaining table?

The New York Times – likely the most influential newspaper on the planet – last week editorialized in favor of the Trans-Pacific Partnership (TPP), a trade and investor rights agreement currently being negotiated in Washington D.C. by the United States Trade Representative (USTR) and eleven other nations which border the Pacific Ocean. Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam are all currently participating in the talks.

The Times’ editorial is of great interest – given the enormous influence the paper has upon public debate – and may represent yet another low point in the paper’s 21st century journalism, despite its benign title, “A Pacific Trade Deal.” 

As the Electronic Frontier Foundation (EFF) recently pointed out, the text of the TPP remains a secret, known only to the trade representatives involved in the talks and the 600 corporate representatives who have been invited to comment on it. The EFF’s Maira Sutton wrote:

That raises two distressing possibilities: either in an act of extraordinary subservience, the Times has endorsed an agreement that neither the public nor its editors have the ability to read. Or, in an act of extraordinary cowardice, it has obtained a copy of the secret text and hasn’t fulfilled its duty to the public interest to publish it.

So which is it – subservience to elite, undemocratic decision-making, or a cowardly deference to the exclusive authority of those elites?

Endorsing a trade agreement which has yet to be seen by the public, public interest groups, or our representatives in the House or Senate raises alarming questions about the New York Times’  view of the role of journalism in a functioning democracy. If all parties to public policy discussions agree that the policies in question should remain a secret, and the institutions of journalism which are indispensable to an informed citizenry find that acceptable, how is the public to voice its opinion of those policies?

U.S. negotiators have made no secret of their rationale for keeping the nearly-complete text of the agreement from the public. According to former U.S. Trade Representative Ron Kirk, once the mayor of Dallas, Texas and a golfing partner of President Obama, releasing the text before finished could raise such public opposition to the agreement that participants might later refuse to sign it. Kirk suggested in an interview with Reuters that this was the case in 2001, when the administration of George W. Bush released a highly edited, draft text of the Free Trade Agreement of the Americas and subsequently failed to reach a final agreement.

Congress, it seems, is no more inclined to demand a review of the trade documents in question, much less insist upon more public input. This is despite the fact that the U.S. Constitution grants Congress exclusive authority to negotiate the terms of trade agreements between states and with foreign countries.

In June, Senator Elizabeth Warren (D-Mass) sent Obama’s nominee to replace Kirk, Michael Froman, a letter requesting the TPP text, stating “I believe in transparency and democracy, and I think the U.S. Trade Representative (USTR) should too.” The USTR’s argument against releasing the text was, Warren wrote, “exactly backward.”

“If transparency would lead to widespread public opposition to a trade agreement, then that trade agreement should not be the policy of the United States.”

On June 19, 2013, Sen. Warren announced that she would not vote for Froman to take the trade office position due to his refusal to release the TPP text, even in an edited or redacted form. The Senate approved Froman’s nomination that day by a vote of 93 to 4, with few other senators willing to join Warren’s stand for transparency and the public interest. California Senator Barbara Boxer voted “present.”

Good Reason to Fear the TPP

According to information leaked from the secret negotiations over the past several years, as well as Public Citizen, Food & Water Watch, and other public interest organizations, there are numerous areas in which the public should be concerned as the negotiations conclude. Many of the proposed rules in the agreement read like an extended Christmas wish list for corporate predators. Rules currently being negotiated would allow corporations to:

• Buy land, natural resources, and factories without governmental review
• Demand compensation from member countries for loss of “expected future profits” due to member countries’ health, labor, or environmental laws
• Sue governments directly, before tribunals of private sector lawyers

A primary goal corporations have pushed the TPP to achieve has been the elevation of individual corporations and their investors to an equal standing with member nations; citizens of the member nations have no standing under the proposed TPP rules, and no legal recourse.

There are numerous other areas of concern:

• Food safety - U.S. food safety laws governing pesticide residues, bacteria, and additives could be outlawed and weakened. Food labeling laws such as organic, animal-welfare, and GMO identification could be eliminated as an “illegal trade barrier.” Many TPP nations are huge farmed fish producers which use chemicals and antibiotics prohibited in the U.S. The TPP would increase the import of unsafe fish into the country.
• Local foods - “Buy local,” “Buy American,” or other preferential purchasing programs, designed to strengthen local food systems and economies could be declared barriers to trade, with corporations and investors suing to force their elimination.
• Fracking - The TPP would remove the Department of Energy’s authority to regulate natural gas exports to TPP member countries, eliminating DOE review of environmental and economic impacts of fracking on our communities. Given Japan’s insatiable demand for natural gas – representing a third of the world’s import market – pressure to increase fracking in the U.S. would certainly grow. This would also increase pollution and carbon emissions in the U.S., as the energy required to cool and liquefy natural gas into an exportable state renders it nearly as dirty as coal production.
• Jobs - The TPP gives incentives to corporations to relocate jobs to lower wage TPP member nations, by guaranteeing both low risk and lower cost of doing so.
• Banking - The TPP prohibits transaction taxes currently being discussed worldwide as a means to control financial speculation, which repeatedly threatens the international economy with financial crises. It also limits national “too big to fail” rules and reforms that separate consumer banking from riskier investment banking.
• Internet - Despite their failure to pass last year’s wildly unpopular Stop Online Piracy Act (SOPA), which was derided as a gift to corporate desires to control and profit from the internet, many of SOPA’s provisions were folded into the TPP. The agreement would empower corporations to monitor our activities, arbitrarily cut off our internet access, remove content, and impose fines.

Fast-Track Authority

The White House and other participants to the TPP talks recently stated they’re on target to complete the trade negotiations by the end of the year. Consequently, Obama has requested that Congress grant the administration fast track authority as the deal is finalized.

Fast track authority limits Congressional oversight – and therefore our only public analysis and input – of international trade deals. In recent years public interest advocates, activists, and others have successfully brought fast track to the public’s attention by pointing to its inherently anti-democratic nature – limiting public debate, Congressional review, and oversight removes the sole means by which the public can influence trade deals which impact us all.

Unfortunately the limited response of corporate negotiators and their associated friends and allies in the United States has been to rebrand fast track authority as “trade promotion authority” (TPA).

Senate Finance Committee leaders, Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) recently stated they will be working with their counterparts in the House to grant Obama the TPA he’s requested very soon.

Public interest groups are attempting to mobilize public opinion to oppose fast track authority and focus attention upon the Trans-Pacific Partnership, but time is running short. A group of fourteen organizations recently sent members of Congress a letter urging them not to grant the Obama administration fast track authority, citing the secrecy surrounding the TPP’s negotiation and the subsequent lack of accountability to the public that fast track would encourage.

The letter read, in part:

The American public has a right to know the contents of the international agreements its government is crafting. Corporations cannot be the only interests represented in this agreement, since they do not advocate for policies that safeguard or even represent the interests of the public at large. Given the administration’s complete lack of transparency in negotiating the TPP, it is vitally important that democratically elected representatives are at least given the opportunity to conduct a review and push for fixes.

Conclusion

Economist Dean Baker commented recently on the New York Times’ endorsement of the TPP.

Bizarrely, the NYT editorialized in favor of the TPP, concluding its piece:

A good agreement would lower duties and trade barriers on most products and services, strengthen labor and environmental protections, limit the ability of governments to tilt the playing field in favor of state-owned firms and balance the interests of consumers and creators of intellectual property. Such a deal will not only help individual countries but set an example for global trade talks.

Yes, boys and girls, Goldman Sachs, Exxon-Mobil and Pfizer will put together a deal that does all these things. This is serious?

Citizens concerned about the health and well-being of our communities, our food supply, our environment, jobs, freedom of speech and association, and the corporate takeover of our human rights are encouraged to contact their elected representatives and discuss the TPP with their colleagues, friends, and relatives.

Ask your reps to deny the administration the inherently undemocratic fast track authority. Insist upon a thorough, public review of the TPP by Congress. Though our nation increasingly appears to be run by, and for, the benefit of corporate America, those corporate elites and their benefactors’ greatest fear is an informed citizenry which is actively involved in the civic and political life of the country. We the people have the power. We have only to exercise it.

Resources for further information and for exercising your rights:

Contact your elected representatives

The Trans-Pacific Partnership and intellectual property rights

Expose the TPP

The Electronic Frontier Foundation

Public Citizen

• This article originally appeared at The Raucous Rooster

Christopher Fisher is an independent Sonoma County journalist whose work has appeared at Truthout, Civil Eats, Grist, and the Petaluma Bounty blog. He is also the Vice President of the recently reborn Petaluma Grange, one of the rapidly growing California Granges, which support democratic communities, sustainable agriculture, and fair local food systems. Read other articles by Christopher.

This article was posted on Monday, November 11th, 2013 at 7:00pm and is filed under Corporate Globalization, Trade.

http://dissidentvoice.org/2013/11/corporate-america-wants-the-trans-pacific-partnership-for-christmas-this-year-2/

The People Can Defeat the Trans-Pacific Partnership

Time to end the failed experiment with rigged corporate trade and put in place fair trade for the people and planet before profits

by Kevin Zeese and Margaret Flowers / November 14th, 2013

Momentum is growing in the campaign to stop the Trans-Pacific Partnership (TPP).  Yesterday, the TPP was dealt two blows. Each could be lethal but the TPP, and its Atlantic counterpart, called TAFTA, are not dead yet. It is time for the movement of movements that formed to oppose the TPP to stand in solidarity, defeat these agreements and end the era of rigged corporate trade.

Yesterday’s first blow came from Wikileaks, showing once again that when government works in secret with big corporations, exposure by whistle blowers is critical to changing the corrupt direction of government and the economy.  Wikileaks published the full text of the intellectual property chapter; the leaked document included the positions of all the parties.  It will take time for all the corporate rigging in this lengthy document to be understood, but already it is evident that Internet freedom will be curtailed, access to health care will become more expensive and access to information will be undermined.

This is not the first leak of TPP text. Previous leaks are consistent with the Wikileaks leak – enhanced corporate power that puts profits before the needs of the people and the protection of the planet.  The Wikileaks release shows that the United States is by far the most aggressive advocate for trans-national corporate interests, often isolated in pushing for harmful policies.

The second blow came from members of the U.S. House of Representatives.  In recent days, several letters were sent to President Obama opposing Fast Track Trade Promotion Authority.  Fast Track undermines Congress’ responsibility under the Commerce Clause to regulate trade between nations by allowing the president to sign the agreement before Congress even sees it. The letters made public on November 13th demonstrate broad bi-partisan opposition to Fast Track with 179 Members signing at least one of the three letters.

A letter spearheaded by Rep. Rosa DeLauro (D-CT) and Rep. George Miller (D-CA) garnered the support of three-quarters of House Democrats with 151 Members telling President Obama they oppose Fast Track, writing:

We will oppose ‘Fast Track’ Trade Promotion Authority or any other mechanism delegating Congress’ constitutional authority over trade policy that continues to exclude us from having a meaningful role in the formative stages of trade agreements and throughout negotiating and approval processes.

Important leaders of the Democratic Party signed the letter including 18 out of 21 Ranking Members who would chair committees if the Democrats were in the majority.  This means that to pursue Fast Track authority, President Obama will need to challenge three-quarters of his own party.

But, that is not all. In another letter, organized by Mike Thompson (D-CA) and Earl Blumenauer (D-OR) and signed by 12 of the 16 Democratic Party members of the Ways and Means Committee, which is primarily responsible for Fast Track legislation, members expressed opposition to Fast Track unless it was radically different from previous grants of authority. The letter says it “cannot just be an extension of earlier trade promotion authorities. Any new proposed TPA must . . . ensure Congress plays a more meaningful role in the negotiating process.”

And, the opposition is bi-partisan. Rep. Walter Jones (R-NC) and Rep. Michelle Bachmann (R-MN) drafted a letter signed by 23 Republicans.  The Republican letter emphasized that Congress has the “exclusive authority to set the terms of trade.” Further, “The Founders established this clear check and balance to prevent the president from unilaterally negotiating with foreign nations and imposing trade policies that Congress would deem to be against the national interest.” They write that they refuse to “cede our constitutional authority to the executive” through Fast Track.

These are just the latest problems in the quest for Fast Track, indeed a bill has yet to be introduced.  The previous US Trade Representative, Ron Kirk,  said in 2012: “We’ve got to have it.” He wanted the authority by the end of 2012.  In April, Sen. Max Baucus (D-MT) promised Obama Fast Track by June of 2013.  The broad bi-partisan opposition announced this week shows that winning Fast Track has very little support in Congress.  In fact, the letters may be the death knell for such legislation.

The Wikileaks documents show there is a lot of division among the negotiating nations with important disagreements on key aspects of the text. Without Fast Track to guarantee passage of the TPP, these nations will be even less likely to agree to demands by the U.S.  Further, Asian countries are negotiating their own competing agreement, which does not include the United States but, unlike the TPP, does include China.

Latin American countries are also speaking out against the TPP. Earlier this year, Rodrigo Contreras, Chile’s lead TPP negotiator quit to warn people of the dangers of the TPP – highlighting how big financial institutions will dominate their governments and how the TPP “will become a threat for our countries: It will restrict our development options in health and education, in biological and cultural diversity, and in the design of public policies and the transformation of our economies. It will also generate pressures from increasingly active social movements, who are not willing to grant a pass to governments that accept an outcome of the TPP negotiations that limits possibilities to increase the prosperity and well-being of our countries.” And, recently the Parliament of Peru passed a resolution “requesting that the government open a ‘public, political, and technical debate’ on the binding rules being negotiated in the TPP.”

In the United States, cities and counties are beginning to pass TPP Free Zones, saying they will not obey the TPP if it becomes law.  These local governments are concerned with provisions that would not allow them to give preference to buying local, buying U.S. made goods or other provisions that undermine their sovereignty.

In addition to opposition in the U.S. government and foreign governments, a mass citizen uprising is developing against the TPP.  There have been large protests in many of the countries involved in the negotiations as well as in the United States. The night before the Wikileaks documents were released, 13 cities did visibility protests opposing the TPP in light shows.  In September we joined with activists in Washington, DC in a series of protests, including covering the office building of the US Trade Representative in banners to expose their secret trade agreement. Protests are scheduled for Salt Lake City, UT on November 19th where lead negotiators from 12 countries will hold meetings. A global day of protest is planned for December 3 against not only the TPP but also the WTO and all toxic trade agreements.

The TPP is running into resistance in Congress, local governments and among Pacific nations in Asia and Latin America; and by people who oppose the agreement all over the world. This is part of a growing movement of movements – all of the movements impacted by corporate trade; e.g. labor, environmental, Internet freedom, health care, food sovereignty, immigrants’ rights, banking regulation – are joining together to defeat it.

The people are winning. Fourteen trade agreements have been stopped in the last 14 years and as Tom Donohue of the US Chamber of Commerce wrote this week “the WTO has not concluded a single new multilateral trade agreement since it was created in 1995.” Mass protest against rigged corporate trade agreements can end the experiment in trade that puts profits ahead of the people and planet.

We are on the verge of defeating Fast Track. It is important that we keep the pressure on Congress. Neither the TPP nor TAFTA will become law if people learn what is in them and Congress fulfills its constitutional responsibility to review their impact. Denying the President Fast Track is the essential step to defeat both of these agreements.

Once we defeat Fast Track and prevent TPP and TAFTA from becoming law, we need to remain in solidarity and work to transform trade so it becomes “fair” trade that puts the necessities of the people and the protection of the planet first. The people will have firmly established that they will not tolerate rigged corporate trade deals. If corporations want to see trade between nations, they need a new approach – transparent, participatory and fair – with new goals of serving the people and planet.

To get involved in the campaign to stop the Trans-Pacific Partnership visit Flush the TPP.

Kevin Zeese, JD and Margaret Flowers, MD co-host Clearing the FOG on We Act Radio 1480 AM Washington, DC, co-direct Its Our Economy and are organizers of the Occupation of Washington, DC. Read other articles by Kevin Zeese and Margaret Flowers.

This article was posted on Thursday, November 14th, 2013 at 3:51am and is filed under Activism, Corporate Globalization, Obama, Trade, WikiLeaks.

http://dissidentvoice.org/2013/11/the-people-can-defeat-the-trans-pacific-partnership/