Washington’s Trans-Pacific Power Play

April 23, 2014

The U.S. military wants it, and so does Corporate America--which is why we should beware. Ashley Smith introduces you to the Trans-Pacific Partnership.

BARACK OBAMA is headed to Asia for a four-country tour designed to revive diplomatic and economic attention on the region that Washington's imperial strategists believe is crucial to the future.

Obama will travel to Japan, South Korea, Malaysia and the Philippines, the U.S. government's main allies in the region. But looming over each stop and every meeting will be a country that definitely isn't on the presidential itinerary: China.

The Obama administration's celebrated "pivot to Asia" is specifically aimed at countering China's growing influence--economic, political and military. China is now the second-largest economy in the world, with the second-largest military budget behind the U.S., and its rulers have been increasingly aggressive in asserting both forms of power, especially in their own "backyard."

During Obama's trip, you'll read a lot about something you may not have heard much about: The Trans-Pacific Partnership (TPP). The TPP is a trade agreement-and-much-more--the economic component to U.S. imperialism's response to China, meant to draw together other Asian countries in a U.S.-led economic bloc that excludes China. As much as aircraft carriers and military bases, the TPP is a weapon of U.S. imperialism.

Heads of state gathered to negotiate the Trans-Pacific Partnership
Heads of state gathered to negotiate the Trans-Pacific Partnership

OBAMA'S DRIVE to establish the TPP is yet another violation of his campaign promises from 2008. Back then, he declared that "decades of trade deals like NAFTA and China [sic] have been signed with plenty of protections for corporations and their profits. But none for our environment and our workers, who've seen factories shut their doors and millions of jobs disappear."

But like so many other promises of 2008, Obama the president has a different agenda than Obama the candidate. With the whole-hearted support of Corporate America, he has crafted the TPP into what activists call "NAFTA on steroids"--a neoliberal economic agreement like the North American Free Trade Agreement of the Clinton era, but on a wider scale.

U.S. officials are currently negotiating the TPP with 11 others countries--Japan, Canada, Australia, Mexico, Malaysia, Singapore, Chile, Peru, New Zealand, Vietnam and Brunei. Including the U.S., these countries account for 40 percent of the world economy. The 11 represent 60 percent of U.S. trade and 25 percent of foreign direct investment into and out of the U.S.

If the TPP is finally established, it would be the largest trade pact in history.

There's no question about who wins and who loses from the agreement. As Public Citizen's Lori Wallach writes, the TPP fulfills "the most florid dreams of the 1 Percent--grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguard to ease job offshoring and assert control over natural resources and several limit regulation of financial services, land use, food safety, natural resources, energy, tobacco, health care and more."

All this to exclude and isolate China--though the U.S. is careful not to be too blunt about this. Former U.S. Trade Representative Ron Kirk said he "would love nothing more than for China to join" the negotiations. But Foreign Policy in Focus's Christine Ahn cut through the diplomatic niceties: "By increasing U.S. market access and influence with China's neighbors, Washington is hoping to deepen its economic engagement with the TPP countries, while diminishing their economic integration with China."

Many of the TPP's current provisions are intentionally designed to exclude China--for example, restrictions on the role of State Owned Enterprises (SOEs). Since some of the most important sectors of China's economy, especially its strategic energy companies, are state-owned, China would be disqualified from the start.

Unsurprisingly, China has retaliated with a proposed trade bloc of its own--the Regional Comprehensive Economic Partnership (RCEP), which includes 16 countries in the Asia Pacific, but not the U.S. Tellingly, China's RCEP has far fewer and less far-reaching neoliberal economic stipulations than the TPP.

IF YOU don't know much about the TPP, that's by design. The agreement has been developed in utmost secrecy. The Obama administration has neither publicized the treaty, nor even shared the full text with members of Congress. "Think of the TPP as a stealthy delivery mechanism for the policies that could not survive public scrutiny," writes Lori Wallach.

But corporate scrutiny? That's another matter. The U.S. capitalist class has played a central role in designing and negotiating the TPP--starting with central figures in the Obama administration. According to the Republic Reports website:

Stefan Selig, a Bank of America investment banker nominated to become the Under Secretary for International Trade at the Department of Commerce, received more than $9 million in bonus pay as he was nominated to join the administration in November...Michael Froman, the current U.S. Trade Representative, received over $4 million as part of multiple exit payments when he left Citigroup to join the Obama administration."

Froman's office reportedly consults with more than 600 bankers and corporations who have helped shape the U.S. negotiating position on the TPP.

Unsurprisingly, Obama wants to keep this corporate plot secret. He intends to bypass the democratic process by securing "trade promotion authority"--popularly known as "fast track" authority--allow the U.S. Trade Representative's office (USTR) to negotiate the treaty and permit representatives only a yes-or-no vote, robbing Congress of the ability to amend the deal.

The only reason we have any idea what is actually in the TPP is thanks to WikiLeaks. It managed to secure and publish the chapters on investment and the environment. These confirm treaty critics' worst fears.

As Lori Wallach points out, the TPP is "not mainly about trade. It is a corporate Trojan horse. The agreement has 29 chapters, and only five of them have to do with trade." Japan in Focus's Sachi Mizohata elaborated on this point:

The TPP agreement affects not only trade issues, but also non-trade matters that immensely impact lives of citizens in all participating countries. The areas at stake include, for example:

Domestic court decisions and international legal standards (e.g., overriding domestic laws on both trade and non-trade matters, foreign investors' right to sue governments in international tribunals that would overrule the national sovereignty);

Environmental regulations (e.g., nuclear energy, pollution, sustainability);

Financial deregulation (e.g., more power and privileges to the bankers and financiers);

Food safety (e.g., lowering food self-sufficiency, prohibition of mandatory labeling of genetically modified products, or bovine spongiform encephalopathy--BSE--or mad cow disease);

Government procurement (e.g., no more buy locally produced/grown);

Internet freedom (e.g., monitoring and policing user activity);

Labor (e.g., welfare regulation, workplace safety, relocating domestic jobs abroad);

Patent protection, copyrights (e.g., decrease access to affordable medicine);

Public access to essential services may be restricted due to investment rules (e.g., water, electricity and gas).

IF APPROVED, the TPP will sacrifice workers, peasants and the environment on the altar of profits. Anyone who doubts this has only to look at the impact of the North American Free Trade Agreement over the 20 years since it went into effect in 1994. It has left ravaged labor and the environment in all three countries.

U.S. corporations took advantage of NAFTA to relocate factories to the maquiladora zone along the U.S.-Mexico border. "By 2010, trade deficits with Mexico had eliminated 682,900 good US jobs, most (60.8 percent) in manufacturing," wrote Robert E. Scott of the Economic Policy Institute. "Jobs making cars, electronics, apparel and other goods moved to Mexico, and job losses piled up in the United States, especially in the Midwest, where those products used to be made."

NAFTA had a similar if less devastating impact in Canada. According to labor journalist David Bacon, Canada "lost 400,000 manufacturing jobs in NAFTA's first four years, then gained enough to replace them by 2001, only to again lose 198,000 jobs by 2006. Meanwhile, personal income grew by a tiny 0.6 percent per year. As in the United States, unionization rates fell, from 45.5 percent in 1988 to 32.6 percent in 2003, as unionized jobs were offshored."

But the effects of NAFTA in both these countries pale compared to Mexico. While Mexican billionaires enriched themselves, NAFTA wrecked the lives of countless peasants and workers.

The treaty opened up Mexico to the exports of government-subsidized U.S.agribusiness. U.S. exports of corn to Mexico increased from 2 million tons in 1992 to 10.3 million tons 2008. The flood of U.S. agricultural goods destroyed Mexico's peasant economy, as Andrea Brower documented: "In the 10 years following the passage of...NAFTA, 1.3 million Mexican farmers went bankrupt because they were unable to compete with highly subsidized U.S. corn entering the market."

NAFTA boosters like Democratic President Bill Clinton promised that new industry in Mexico's maquiladora zone would absorb the displaced peasants. But the new factories were based on a system that could be described as "high-productivity poverty."

The maquiladoras were so highly mechanized that they required fewer workers and couldn't even begin to provide jobs for all the displaced peasants. And workers who actually got jobs made wages so low that they couldn't even buy the products they made, let alone those from other factories. They were producing primarily for export, not Mexican consumption.

Thus, industrial growth didn't stimulate the development of the national economy--and even worse, Mexico ultimately lost whole industries to new low-wage havens, such as China, after it joined the World Trade Organization in 2001.

Twenty years after NAFTA, 51 percent of Mexicans now live below the poverty line. One consequence of this impoverishment is that the poor were forced to migrate to the U.S. to find jobs, providing American corporations with cheap labor. The number of Mexicans working in the U.S. swelled from 4.5 million in 1990 to a peak of 12.5 million in 2007--until the Great Recession kicked in, and the population flow reversed.

The U.S. state and the corporations it serves colluded to criminalize these NAFTA refugees, deprive them of rights, subject them to sweated labor, and then turn around and scapegoat them for the ills of American capitalism.

One last impact from NAFTA deserves to be mentioned: The "free trade" deal wreaked havoc on Mexico's environment. The Sierra Club documented how maquiladora industrialization overwhelmed cities on the border that lacked sanitation, waste disposal systems, and regulations on the use of dangerous chemicals. These conditions led to a massive increase in pollution, along with illnesses among workers and their families.

THE TPP--this "NAFTA on steroids"--will have an even more devastating impact on workers, peasants, the environment, democratic rights and much more.

The proposal's stipulation that state-owned enterprises be pushed toward privatization threatens some of the better-paying jobs in the Asian Pacific region. To take one example, health care activists are worried that the TPP's emphasis on privatization could lead to attacks on national health care systems--potentially introducing the nightmare of American-style private health care throughout the region.

The TPP's rules protecting intellectual property rights would threaten poor people's access to vital medicines. These rules would enable Big Pharma to maintain patents on their drugs for longer periods, thus delaying the release of cheaper generics. This will protect industry profits--but drive up the cost of medicine and health care treatments for workers.

For these reasons, Doctors Without Borders declares: "The TPP remains the most damaging trade agreement we've ever seen, particularly for patients living in middle-income countries, where the vast majority of the world's poor people live. This is a massive, far-reaching trade deal that is putting lives at stake."

On the environmental front, the TPP's commitment to deregulation threatens the ability of governments to enact consumer protections like GMO labeling, something that is done by national law in New Zealand. The Sierra Club notes that the TPP's would allow the U.S. Department of Energy to get around public review of plans for further natural gas fracking: "The TPP...could mean automatic approval of liquid natural gas export permits--without any review or consideration--to TPP countries."

The TPP's chapter on digital rights is a threat to what's left of freedom on the Internet. It essentially internationalizes the Stop Online Piracy Act (SOPA) that died in the U.S. Congress in 2012. In fact, Obama just nominated SOPA lobbyist Robert Holleyman, the former CEO of the Business Software Alliance, to join the USTR's team of negotiators. The TPP would ensure the intellectual property rights of corporations and police the sharing of information.

The proposed TPP also includes an investor-state tribunal, that would allow corporations to pursue legal action to overturn national laws and regulations, thereby undermining democracy. We already have an example of this threat in the Asia Pacific--the Hong Kong subsidiary of Phillip Morris is challenging an Australian law, which requires plain packaging of cigarettes, as an unfair trade practice.

As an antidote to the frightening powers granted to capital by the TPP, the Obama administration claims the treaty will include safeguards to protect labor and the environment. But as WikiLeaks pointed out when it published several chapters of the TPP:

The environmental chapter clearly shows the intention to first and foremost protect trade, not the environment. The principle is spelled out in the draft that local environmental laws are not to obstruct trade or investment between the countries. Furthermore, there is great emphasis on the self-regulatory principle when it come to environmental protection, and emphasis on "...flexible, voluntary mechanisms, such as voluntary auditing and reporting, market-based incentives, voluntary sharing of information and expertise and public-private partnership." But even such measure should be designed in a manner that "...avoids the creation of unnecessary barriers to trade."

No doubt the chapter on protecting workers' rights will be just as toothless. Obama's promises to include protections of the environment and labor are sugar-coating on a poison pill.

DESPITE ITS aggressive efforts to ram through the TPP, the Obama administration has run into increasing opposition among the 11 other countries negotiating the pact.

Many of the signatory countries, especially the more powerful sub-imperialist powers like Japan and Australia, understand that the TPP has been drafted very much on U.S. terms, to their disadvantage. In reaction, some have instead pursued bilateral free trade agreements (FTA).

Thus, the Japanese and Australian governments just inked an FTA that more effectively serves their respective interests. For example, Japan protected its agribusiness sector--to the consternation of U.S. agribusiness. This FTA can bolster Japan's bargaining position in the ongoing TPP negotiations--or it can be an alternative if the TPP fails.

Latin American countries involved in the TPP negotiations are increasingly concerned that the agreement is yet another version of the Free Trade Area of the Americas--a previous initiative that failed when the elites of South and Central America abandoned it, under pressure from the mass movement against neoliberalism. As Kevin Zeese and Margaret Flowers reported:

Rodrigo Contreras, Chile's lead TPP negotiator, quick 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...

Likewise, Peru's parliament passed a resolution "requesting that the government open a 'public, political, and technical debate' on the binding rules being negotiated in the TPP."

Finally, the U.S. government's exclusion of China from the TPP poses a problem for the other signatories in the Asia Pacific. Each is deeply integrated with China's economy, and many are simultaneously in negotiations with China to join its RCEP trade bloc. It will be problematic to sign on to an agreement that disrupts their economic relationship, however politically conflicted, with China.

The TPP may thus founder on the shoals of the contradictions of the world economy today. However much globalization has integrated the capitalist system, it remains divided between capitalist nation states, making multilateral trade pacts--especially ones involving inter-imperial antagonists like the U.S. and China and Russia--very difficult to secure. These conflicts have stalled the WTO and could do the same for the TPP.

MEANWHILE, THERE is mounting opposition to the TPP within the U.S. A coalition of more than 550 labor unions, environmental groups and consumer advocacy organizations signed an open letter sent to Congress opposing Obama's demand for fast-track authority to negotiated the TPP. Under this pressure, Democratic Party leaders in the House and Senate joined some Republicans in opposing fast-track, which will delay any vote until after the mid-term election this November.

The opposition to the TPP is mixed. Some among the Tea Party wing of the Republican Party oppose the agreement, yet they don't care at all about workers' rights or the environment. The basis of their opposition lies in bigoted nationalism.

Labor unions, environmental activists and anti-imperialists form the progressive wing of the opposition--exemplified by AFL-CIO President Richard Trumka, who recently called Washington's free trade deals as "thinly disguised tools to increase corporate profits by poisoning workers, polluting the environment and hiding information from consumers."

But even among the progressive opposition, there are significant political differences.

First of all, not all the signatories to the open letter actually oppose the TPP. The AFL-CIO, for one, is hoping to convince the Obama administration to transform the TPP into a "fair trade" pact.

Union leaders really should know better by now. Neither Barack Obama nor the Democratic Party are going to craft a new trade agreement in the interests of workers, peasants and the environment.

The Democratic Party has been the principal agent of neoliberal globalization. Remember that it was Bill Clinton who pushed through NAFTA. Now, the Obama administration has secured approval of the Central American Free Trade Agreement (CAFTA) and is principal architect of the TPP.

Most of the Democratic leadership in Congress voted in favor of NAFTA and CAFTA. For example, House Minority Leader Nancy Pelosi, who postured against passage of fast-track authority for the TPP, voted in favor of NAFTA and voiced only lukewarm opposition to CAFTA, once she knew it would pass.

The other principal question is American nationalism. In the discussion about the TPP--like NAFTA before it--this often takes the form of an argument that the U.S. is a weak state that must be defended against domination by foreign corporations and unelected investor-state tribunals.

In this vein, Curtis Ellis of the American Jobs Alliance wrote at the Huffington Post that the TPP could--especially as a consequence of legal action in the tribunals--"[relegate] the U.S. to the status of a captive colonial market for manufactured goods from Asia."

This turns the world upside down. The truth is that U.S. capital is the mastermind behind the TPP. Corporate America and its state are only too happy to use--or let other "foreign capitalists" use--the tribunal system to undermine popularly supported regulations, at home or abroad. As Dean Baker put it in a Guardian article, they are trying "to use the holy grail of free trade to impose conditions and override domestic laws."

But in reality, "foreign capitalists" have not used free-trade-agreement tribunals against the U.S., nearly as much as U.S. capital has used them against developing countries. As the Sierra Club reports, "By the end of 2012, corporations launched 514 known cases against 95 governments. Developing countries most often find themselves in the position of defending their policies against transnational corporations; 61 of the 95 countries facing investor-state disputes are from developing countries; 18 from developed countries and 16 from economies in transition."

Instead of relying on the neoliberal Democrats or retreating into American nationalism, opponents of the TPP need to build a common struggle that unites activists from the U.S. to Japan, and Chile to China. The inter-imperialist competition over the terms of globalization must be met by globalization from below--international working class solidarity to put democracy, people and the environment before profits.

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