The high price we’ll pay for their “free” trade

November 17, 2015

Nolan Rampy looks at the newly published--and frightening--details of the Obama administration's cherished Pacific trade deal as it heads toward a congressional battle.

ON NOVEMBER 5, the White House finally published the full text of the Trans-Pacific Partnership (TPP). Administration officials say that after the 90-day period of Congressional review, President Obama will sign the agreement and send it to Capitol Hill for what will likely be a contentious battle to push the deal through Congress.

But the battle in Washington will barely focus on the broader reasons why this agreement is a bad deal for working people, both in the U.S. and other countries that are party to it.

The TPP is a neoliberal trade deal covering the U.S. and 11 other nations along the Pacific Rim: Canada, Mexico, Australia, Vietnam, Chile, Japan, New Zealand, Singapore, Brunei, Malaysia and Peru. The agreement is a massive 6,000-page document with 30 chapters covering a wide range of issues--very few of which have anything to do with trade--including reduction of tariffs and import quotas, intellectual property protection, investor rights and labor regulations.

If ratified by all 12 countries, the area covered by the TPP will encompass 40 percent of global gross domestic product, making it the largest trade deal in history.

Leaders of some of the countries covered by the Trans Pacific Partnership trade deal
Leaders of some of the countries covered by the Trans Pacific Partnership trade deal

The Obama administration claims that creating a standardized set of rules covering all nations in the agreement will create a level playing field, but as Ashley Smith wrote for SocialistWorker.org, the reality is that provisions in the agreement will "impose neoliberal rules to the advantage of U.S. capital."

By opening up Asian markets to foreign investment and allowing multinational corporations to outsource jobs overseas, the agreement will "pit workers in different countries against one another [and] drive down wages in a race to the bottom."

The pro-corporate nature of the TPP should come as no surprise considering that it was corporations that wrote it. While Obama did everything in his power to block input from any organization representing the people who will suffer most from this agreement, his administration brought in more than 500 representatives from multinational corporations to help craft the deal.


BUT THE trade deal is about more than just economics--it's also a key part of U.S. imperial strategy. Containing China's growing influence in the region has become a top priority for protecting U.S. hegemony.

In recent years, the U.S. empire has strained under the weight of a global economic crisis and a series of disastrous military campaigns in the Middle East. With Washington's global power challenged, its main imperial rival, China, has become increasingly assertive.

A territorial dispute between China and a number of Asian countries--Brunei, Taiwan, Malaysia, the Philippines and Vietnam--over a cluster of islands in the South China Sea has become a flashpoint in the conflict between the U.S. and China. These islands are mostly uninhabited, but whoever controls them controls a shipping lane with significant strategic importance. The U.S. is using its political influence and military power to block China from claiming sovereignty over the islands.

In a recent escalation of tensions, the Pentagon sailed several military vessels near one of the islands claimed by China, a provocative move justified by Washington's assertion that its ships were in international waters. Although China has issued statements warning against such actions, the U.S. knows that China won't risk a direct military confrontation.

On the economic front, the TPP is priority number one. By bringing many of the Asian-Pacific countries under a single neoliberal trading bloc, the Obama administration hopes to contain China's economic expansion and marginalize its political influence in the region.

The goal is not so much to permanently exclude China from the trading bloc as to force it to conform to neoliberal economic policies if it wants a piece of the pie. For example, the TPP places restrictions on the role of State-Owned Enterprises (SOEs). Since many of the most important sectors of China's economy fall under this category, the Chinese state would be forced to significantly restructure its role in the economy in order to reap the economic benefits of the agreement.

Obama is blunt about the geostrategic purpose of the TPP. "These kinds of agreements make sure that the global economy's rules aren't written by countries like China," he said in June. "They're written by the United States of America."

Privatizing social services, reducing tariffs and removing restrictions on foreign investment, are political as well as economic aims. "As much as aircraft carriers and military bases," Ashley Smith wrote, "the TPP is a weapon of U.S. imperialism."


FOLLOWING THE model of previous neoliberal trade agreements like North American Free Trade Agreement (NAFTA), the TPP contains, among other things, regulations that will make it easier to exploit cheap labor overseas, drive down wages, undercut workers' rights, and undermine environmental, health and food safety regulations.

In other words, the neoliberal trade deal will be a cash cow for multinational corporations while wreaking havoc on the lives of working-class people.

Peasants and workers in the Pacific Rim will almost certainly pay the heaviest price. Reduced tariffs on heavily subsidized agricultural produce from the U.S. will destroy local crop production and lead to a migration of farmers and peasants into cities looking for work. The influx of surplus labor will drive down wages and living standards in urban areas. To make matters worse, social services will be cut in these countries at a time when the population will need them the most.

One of the most disturbing aspects of the agreement is its direct attack on national sovereignty. Like NAFTA, the TPP will create supranational corporate tribunals that will essentially be a parallel legal system existing outside of any local or federal judicial system. As left-wing writer Jack Rasmus explained in an article for Telesur:

The TPP gives corporations in general even more rights. Under the TPP, they can sue governments to prevent legislation or regulations that contradict the TPP treaty. Want to do something about big Pharma "price gouging," as in the U.S.?...Forget it, see you in TPP court.

What the ban on any legislation and regulation contrary to the TPP means is that democracy and national sovereignty does not exist if it does not conform to free trade deals negotiated by the corporations themselves.

Although these tribunals cannot technically strike down government legislation, the financial cost could be so high that governments are forced to rescind the laws because they can't afford to pay the damages. This essentially gives the tribunal de facto veto power over legislative decisions in all 12 countries involved in the agreement.

Environmental activists have already pointed out that this will seriously undermine nations' ability to combat the climate change, regardless of the size of popular support for such actions. Any government that attempts to protect the environment through policies such as banning fracking, limiting the use of tar sands oil or shifting towards green energy resources opens itself up to litigation from fossil fuel companies seeking compensation for lost profits.

"In short," explains Jason Kowalski, policy director at 350.org, "these rules undermine countries' ability to do what scientists say is the single most important thing we can do to combat the climate crisis: keep fossil fuels in the ground."

And we have every reason to believe that this is exactly what will happen. In the two decades since NAFTA went into effect, companies have repeatedly used the "investor rights" provisions in the agreement to block or overturn environmental regulations. Canada, for example, ended its ban on a gasoline additive linked to health problems after a U.S. company sued the government for lost profits.


OPPONENTS OF the TPP are also concerned about the chapter covering intellectual property rights. The agreement will extend patent protections for brand name drugs, thereby delaying access to much cheaper generic alternatives. In addition, poorer Asian countries that previously had no patent protection laws will now be legally obligated to enforce these new rules.

According to Ruth Lopert, a professor at George Washington University, "As many as 40,000 people in Vietnam, the poorest country in the agreement, could stop getting drugs to fight HIV because of provisions that will boost the price of [pharmaceutical] therapy."

Meanwhile, Evan Greer of the internet advocacy group Fight for the Future notes that Section J of the agreement will undermine free speech and access to information online:

This section requires Internet Service Providers to play "copyright cops" and assist in the enforcement of copyright takedown requests--but it does not require countries to have a system for counter-notices, so a U.S company could order a website to be taken down in another country, and there would be no way for the person running that website to refute their claims if, say, it was a political criticism website using copyrighted content in a manner consistent with fair use.

[This] makes it so [Internet Service Providers] are not liable for any wrongdoing when they take down content--incentivizing them to err on the side of copyright holders rather than on the side of free speech.


WITH THE end of formal negotiations, the Obama administration is turning its attention to gathering the political support necessary to push the agreement through Congress.

The battle for support will likely be contentious within Obama's own party, because of the widespread opposition to the TPP among Democratic Party voters. Labor unions and other progressive groups are lobbying Democratic lawmakers to vote it down, and many of these groups have withheld funding from the 28 House Democrats who voted in favor of giving Obama "fast-track" authority last spring.

Democrats are desperate to keep the left wing of their base inside the party tent after eight years of Obama's betrayals. All of the Democratic presidential candidates have come out against the agreement. Even Hillary Clinton, who had previously referred to the TPP has "gold standard" for free trade agreements, recently reversed her position stating that she could not support the deal.

Obama will likely have an easier time getting Republicans on his side. In fact, the president was only able to push through fast-track authority in the spring because of strong Republican support, led by former House Speaker John Boehner.

It is possible, however, that this support will not be as forthcoming this time around. Some political analysts have argued that Boehner's strong-arming of far-right Republicans who generally oppose the TPP was an important part of what ultimately forced his resignation as Speaker.

As George Zornick notes in the Nation, "The fast-track vote actually played an underrated role in the coup [against Boehner]. Wyoming Rep. Cynthia Lummis voted against fast track and was subsequently kicked off the GOP whip team. Lummis joined the House Freedom Caucus, the loudest band of Boehner critics."

If this group of far-right Republicans is successful in winning key leadership positions, they will be in a strong position to pressure moderate Republicans to withdraw their support for the deal.


DESPITE THESE obstacles, the TPP's importance for securing U.S. strategic interests (a consistently bipartisan issue) means there is good reason to believe that without external pressure from popular movements, he deal will make it through Congress.

According to Robert Moran, a partner at the Washington consulting firm Brunswick Insight, "A pretty large majority of the policy elite thinks this will get approved...You can make economic arguments about it, but at the end of the day, the last big argument is the commander-in-chief says this is important for national security and strategy."

The pressure that many Democrats feel to publicly oppose the agreement speaks to the potential power of a popular movement, but it should not be interpreted as evidence that Democrats are on our side.

Hillary Clinton's newfound opposition to the TPP is nothing more than a cynical ploy she's using in hopes of absorbing Bernie Sanders' supporters into her campaign if she gets the nomination. In all likelihood, she, like many other Democrats, will reverse her stance after the elections.

The best chance of defeating the TPP will come from making a yes-vote politically untenable--but this will require labor unions and other liberal groups to make good on their threats to withhold support from the Democratic Party and instead focus on organizing solidarity with workers internationally.

If history is any indicator, the leadership in these organizations will not arrive at this conclusion on their own. It will be up to rank-and-file union members along with activists on the left the push them there.

Recent articles

Friday, January 18th

Thursday, January 17th

Wednesday, January 16th

Tuesday, January 15th

Monday, January 14th

Friday, January 11th

E-mail alerts

Further Reading

Latest Stories

From the archives