Weekly Briefing

NAFTA on steroids?

WB-1008

New “trade” deal is really about giving multi-national corporations more power than ever

Few American states have experienced the devastating impact of global “free” trade more directly and painfully in recent years than North Carolina. Our shuttered manufacturing plants and record unemployment rates both serve as powerful daily reminders of the lasting impact of NAFTA, CAFTA, the WTO and other alphabet soup trade deals negotiated by far-off politicians and corporate giants that helped crush the state’s manufacturing base.

Now, amazingly enough, yet another such trade agreement is being negotiated in secret, and it could be the worst one yet. As you read this, trade officials from the U.S. and 11 Pacific Rim nations are negotiating something called the “Trans-Pacific Partnership” (or TPP) in hopes of reaching agreement this fall.

According to Lori Wallach, Director of the Global Trade Division at the Washington, DC-based government watchdog, Public Citizen, this would almost certainly be a huge disaster for American workers and consumers.

Wallach was in Raleigh on September 26 to speak at an NC Policy Watch Crucial Conversation luncheon. As she told a large and enthusiastic audience (you can watch the event and view her PowerPoint slides by clicking here), the results of past so-called “free trade’ agreements (a label that she dismissed as absurd for agreements that include hundreds of pages of rules unrelated to tariffs) have been overwhelmingly negative – both for the U.S. and North Carolina.

Among the ills she attributed in whole or in part to NAFTA and other similar agreements of recent decades:

  • A huge decline in middle class manufacturing jobs and facilities,
  • A flood of unsafe imported food, pharmaceuticals and consumer products,
  • Financial deregulation and instability,
  • A constant assault on health, labor and land use laws,
  • A loss of 170,000 family farms, and
  • The highest income inequality since the “robber baron” era.

North Carolina, she noted, is one of the nation’s hardest-hit states. During what she characterized as the NAFTA-WTO era (1994-2012) North Carolina lost 46.2% (374,612) of its manufacturing jobs. Moreover, more than 200,000 North Carolinians were certified by the U.S. Department of Labor as having lost their jobs to imports and “offshoring” (not always an easy classification to obtain).

The TPP

According to Wallach, the Trans-Pacific Partnership promises even more of the same. This is because, unlike actual trade agreements of bygone eras that focused on the taxes and tariffs applied to exports and imports, the new breed of agreements is based on the premise that signatory countries must alter their domestic non-trade policies in order to participate.

In plain English, this means that when a country signs up, it promises to conform its laws and rules governing issues like worker rights, the environment and consumer protection to the standards spelled out in the agreement. What’s more, if a country fails to do so, it can be subjected to enforcement proceedings in international tribunals and forced to endure penalties and sanctions.

While no one knows for sure what the TPP will include since it has been negotiated in secret by private industry actors without participation by members of Congress, we do know enough from leaks and a limited number of public disclosures to understand that it could be very, very bad.

First off, we already know that a dozen major countries have signed on and that others will be free to join if they conform their laws to its terms. Second and more ominously, we also know that the latest draft would (among many other things):

  • Provide special rights and protections for companies that offshore jobs,
  • Require changes to immigration laws to allow more high-skilled workers to come to the U.S.,
  • Ban “buy American” policies in government procurement,
  • Allow foreign corporations to skirt U.S. courts,
  • Endanger new Wall Street regulations,
  • Allow the importation of more unsafe food and consumer products, and
  • Limit access to lower priced foreign medicines.

The rationale

Given the secrecy of the agreement and its terms, understanding the reasoning behind such a massive and potentially negative shift in American law is not easy. By and large, however, it appears that U.S. negotiators are simply (and more-or-less blindly) “just doing what they’ve always done” — i.e. operating as adjunct staff to the U.S. Chamber of Commerce and other powerful corporate interests.

Sadly, even the Obama administration seems largely oblivious to the potential impacts of what it is doing and the extremely limited potential benefits – a matter on which there should be little doubt

In recent days, experts at the Center for Economic Policy Research in Washington released a new report entitled “Gains from Trade? The Net Effect of the Trans-Pacific Partnership Agreement on U.S. Wages.” What they found is not encouraging:

Recent estimates of the U.S. economic gains that would result from the proposed Trans-Pacific Partnership (TPP) are very small—only 0.13 percent of GDP by 2025. Taking into account the un-equalizing effect of trade on wages, the median wage earner will probably lose as a result of any such agreement.

In fact, most workers are likely to lose—the exceptions being some of the bottom quarter or so whose earnings are determined by the minimum wage; and those with the highest wages who are more protected from international competition. Rather, many top incomes will rise as a result of TPP expansion of the terms and enforcement of copyrights and patents.

The long-term losses, going forward over the same period (to 2025), from the failure to restore full employment to the United States have been some 25 times greater than the potential gains of the TPP, and more than 5 times as large as the possible gains resulting from a much broader trade agenda.”

Going forward

These are complex times in global public policy. Syria, Iran, Iraq, Pakistan, Russia, China: each of these remarkably complex situations would be enough on their own to keep a responsible U.S. foreign policy establishment fully occupied. That these nations and the innumerable challenges they present are just the tip of a vastly larger iceberg is enough to boggle the mind of the average American and make one worry about the mental wellbeing of the President and his staff.

Daunting as these situations are, however, they cannot and should not serve as an excuse for the Obama administration to simply flip on the “auto-pilot” button when it comes to dealing with other, less overtly threatening matters. Unfortunately, however, this appears to be exactly what’s happening with the TPP.

Indeed, as a growing chorus of concerned experts is making clear, the TPP is a grave threat to the wellbeing of American workers and consumers and our national security itself.

Let’s hope the chorus of critics continues to grow and becomes loud enough to burst the bubble in which this potential disaster is being hatched.

For more information on the details of TPP, click here to visit Public Citizen’s dedicated website.

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