The Trans-Pacific Partnership (TPP) is currently a point of contention among Democrats. Some want to see a policy statement included in the Democratic Party's official platform or for Hillary to speak out more strongly against it; other Democrats support the TPP and are against both of the former actions.
Either way, it's being hotly debated here on Daily Kos as well as in the country at large. I have seen statements made in favor of the TPP which keep getting repeated as though they are obvious truths. A closer examination exposes them as myths, if not downright falsehoods.
When you see these myths inserted into conversations and articles, here's what you need to know about them.
Myth #1 — The TPP is a free trade agreement
Let's say your economic philosophy endorses free trade as always being a good thing. Okay, then this is what you would want in a “free trade agreement.”
All goods and products of any nation signatory to this agreement can be imported to or exported from any other signatory nation without customs duties, tariffs, licensing, or any other let or hindrance. This shall not apply to military equipment or weaponry, the trade of which shall be determined by mutual agreement of the governments of both nations involved.
You might need another couple of paragraphs to list the countries who will join the agreement, to specify the date when it will become effective, and so on. Still, it should fit on half a page and leave you the other half to do something useful with (“I can make a hat or a brooch or a pterodactyl”).
Most of us have probably at least picked up a Bible or the collected works of Shakespeare at one time or another, perhaps fanning its pages if not actually reading it; War and Peace by Tolstoy is famous for being an immense novel. Let's see how they stack up against the TPP, the so-called free trade agreement.
| Printed Material |
Number of words |
Comparison of epic works
| King James Bible |
783,137 |
| War and Peace |
587,287 |
| Collected works of Shakespeare |
884,647 |
| TPP |
2,056,560 |
So if we put the Old Testament, the New Testament, all of Shakespeare's plays and poems, and Russia's literary masterpiece together the combined work would be just a bit longer than the TPP. How can anyone pretend that the TPP in its epic-length wordiness is a free trade agreement even remotely related to the simple pair of sentences above?
In addition to the main text of the agreement—supposedly freeing trade from its burdensome shackles—there are 41 separate appendices and addenda just to deal with all of the various rules and exceptions regarding tariffs and quotas.
The aggregate quantity of originating goods of Australia described in subparagraph (e) that shall be permitted to enter free of duty in a particular year is specified below:
| Year |
Metric Tons |
Aggregate Quantity
|
2016
|
2,076 |
| 2017 |
2,139 |
| 2018 |
2,203 |
| 2019 |
2,269 |
| 2020 |
2,337 |
| 2021 |
2,407 |
Starting in 2022, the quantity shall increase at a compounded annual growth rate of three per cent.
That is just one clause of six that will regulate the “free trade” of butter to be exported from Australia to the U.S. Notice that even after 2022, five years into “free trading” with the TPP, there will still not be actual free trade—the quotas will continue to rise but they will not be eliminated, ever. So proponents can't even claim that the TPP will eventually result in free trade; these aren't transitional baby steps in that direction, to be phased out in time, but permanent locked-in regulatory barriers.
There are hundreds of pages of similar rigidly detailed rules of “free trade” for other products among the various TPP nations.
In short, the TPP is not a free trade agreement. It is a controlled trade agreement which assures that some countries, some industries, and some corporations will receive preferential treatment of their products or services and others will not. The TPP is designed to pick winners and losers.
Myth #2 — It's still an important trade deal even if it's not really free trade
Nope. There are two myths packed into that one statement above.
First, it isn't terribly important in terms of general trade. As we'll see in the next section, we already have trade with the eleven other TPP partner nations. Lots of trade. 1½ trillion dollars of trade.
Economics isn't an exact science, especially in its predictive powers. Yet most economists will analyze a situation and key data and generally arrive at a reasonable range of estimates about it. So it is with the TPP: within a small range, the consensus is that ratifying and implementing the TPP will add about 0.4% annually to the United States' GDP (Gross Domestic Product, which is essentially saying "our economy") by its tenth year in effect.
That's right, the TPP is not expected to boost our economy even a single percentage point, even after ten years. Would any U.S. president brag about "growing the economy" at such a measly rate? No, in most circumstance that would be considered to not even match inflation. It's hard to see how anyone can claim such a trade deal is vital or important or even the bees' knees.
Just as it doesn't create actual free trade, it doesn't have that much of an effect on trade in general. That 0.4% number is a tip-off that trade isn't the primary concern of the TPP or else we would expect it to be much higher.
So, we can say as the second point that the TPP isn't really even a trade deal. Yes, it has aspects that concern imports and exports and tariffs and things we associate with trade but the salient points of the TPP are more ominous goals: delivering unprecedented power to global corporations, as we will see in myth #7.
Myth #3 — If you are against the TPP and “free trade” then you are an isolationist
This myth attempts to shame TPP opponents by asserting that they don't want the U.S. to trade with other nations in general and with the TPP partner nations in particular. The implication is that without the TPP, trade between the U.S. and the TPP nations will be almost non-existent.
The reality is that we already have robust trade with all of these countries. With some, we run trade surpluses (more exports than imports) and with others we run trade deficits. All of that is currently happening under existing trade agreements, whether they be NAFTA, WTO, or others such as bilateral pacts.
|
Exports in $ |
Imports in $ |
U.S. trade with TPP nations in 2015
| Australia |
25 billion |
11 billion |
| Brunei |
133 million |
19 million |
| Canada |
281 billion |
296 billion |
| Chile |
15 billion |
9 billion |
| Japan |
62 billion |
131 billion |
| Malaysia |
12 billion |
34 billion |
| Mexico |
236 billion |
296 billion |
| New Zealand |
4 billion |
4 billion |
| Peru |
9 billion |
5 billion |
| Singapore |
28 billion |
18 billion |
| Vietnam |
7 billion |
38 billion |
| Total |
680 billion |
843 billion |
Note: amounts rounded up or down to nearest million or billion. Source: U.S. Census Bureau
Total trade, both exports and imports, between the U.S. and the TPP nations amounted to more than $1.5 trillion in 2015. That volume of trading will happen regardless of the fate of the TPP; none of these nations have any desire to cut off trade with the U.S. in the event that the TPP is not ratified.
Supporters of the TPP realize that such a level of trade will continue either way so it is a “pants on fire” prevarication to say that opponents want to isolate America from foreign trade. Rejecting the TPP will not isolate America from trade in the Pacific Rim region nor in the rest of the globe.
Myth #4 — Even FDR supported lowering tariffs and he's a Democratic hero—opposing the TPP is like opposing FDR
This myth turns history upside down. It's not a myth that FDR was, in the minds of many Democrats, one of our greatest leaders. It's also not a myth that he lowered tariffs. Nevertheless, a glance at history reveals that people are playing loosely with the facts, to put it kindly.
Throughout the first century and a quarter or so of our country's history, tariffs were high by modern standards (nearly 30% on average). There were two principal reasons for this: the federal government largely operated on tariffs (customs duties) and excise taxes. There was, as yet, no income tax so tariffs were vital for keeping the government running.
President Franklin D. Roosevelt, hijacked by pro-TPPers as a mythical proponent
Also, America was a new nation, with little developed industry and expanding frontiers. Keeping tariffs relatively high encouraged Americans to "shop local" (meaning Made In America), protecting our young and growing industries and our developing agricultural base from foreign imports.
The subject of tariffs and economic protection is complicated. Experts argue about the relative merits of tariff rates for specific purposes under varied conditions. It's not something that can be reduced to "High/low tariffs are always good/bad."
As the Great Depression devastated the economy, President Hoover promoted and eventually signed the Smoot-Hawley Tariff Acts in 1930. This jacked up the rates—which had been greatly reduced at the beginning of the century—to an average of about 20% on all goods and 46% on dutied goods (meaning some imports had no tariff whatsoever, thus lowering the "all goods" average). Republicans, and some Democrats, felt it was necessary to protect domestic production at a time of severe economic distress.
At first, it seemed to have a beneficial effect. The world was in an economic meltdown, however, and in short order U.S. exports fell dramatically. Partly this was due to higher reciprocal tariffs on our exports to other countries but the general economic chaos played a larger role. Other nations were in economic freefall as well and could not afford to import goods from America nor anywhere else at levels similar to the previous decade.
At the start of the Depression, U.S. exports played a small role in the economy anyway (about 5% of GDP) so any effects of tariffs—high or low—were probably not significant factors as the Depression played out.
After FDR took office, the now Democratic Congress passed the Reciprocal Tariff Act of 1934, which let the President negotiate lower mutual tariffs with other nations. By 1935, the American average tariff was down to about 14% and then dropped to about 12% in the following year. It had little measurable effect with both GDP and employment rates struggling through the rest of the 1930s.
So, yes, FDR did work to reduce tariffs. Now what about the TPP and today's tariffs?
Our average tariff is the lowest in the entire history of the country: about 1.2%. That's ten times lower than the tariffs negotiated by FDR. It's so low that it's hardly more than a rounding error. It's so low that it stretches credulity to compare it to the rates set under FDR.
If we agreed to emulate FDR and set tariff levels at the rate established by that great Democratic leader—12%—the proponents of the TPP would faint from horror.
Myth #5 — TPP opposition is hypocritical if you wanted the UK to remain in the European Union
This has become a common false equivalence recently. The argument is that anyone who opposes the U.S. ratifying the TPP agreement should logically support the Brexit position: both involve rejecting membership in international trade pacts.
That would make sense if the TPP and the European Union were alike. Both greatly reduce or eliminate tariffs and other restrictions on trading products and services but the similarity ends there.
|
EU |
TPP |
European Union versus the TPP
|
Free movement of goods and services
|
X |
X |
|
Free movement of capital (money)
|
X |
X |
| Free movement of people |
X |
|
| Elected parliament or Congress |
X |
|
| Executive administration to protect and manage the environment |
X |
|
| Constitution to define rights and laws |
X |
|
| Court & Justice system to protect human and civil rights |
X |
|
| Organizational Humanitarian aid and relief |
X |
|
| Organizational R&D for science and technology |
X |
|
| Executive administration for consumer protection, safety standards, and public health |
X |
|
| Reciprocal responsibilities to ensure all citizens, of any E.U. country, have universal health care |
X |
|
| Space program and coordinated application of policies on energy and transportation |
X |
|
Clearly these two international arrangements are not at all the same. The most glaring difference, which tells the rest of the story, is that goods and money move freely among TPP nations but people do not. The European Union is a joint endeavor by 28 nations to improve the well-being of all their citizens; the TPP is a vehicle to let capital (money) find the greatest profits without the burden of delivering commensurate benefits to the citizenry of the partner nations.
Give us even half of the benefits of the European Union as part of a TPP package and we might find it to have merit. As it is, it offers virtually none of the EU benefits to average Americans, allocating its perks, rights, and privileges to corporations and the 1% instead.
Myth #6 — It's unprogressive to oppose the TPP because it helps poor people in other countries
You are selfish and don't want to help poor people in other nations—bad phony liberal, bad! So goes the recent false logic being peddled by TPP advocates.
This myth peddles the "zero sum" theory: in any trade agreement, some people will gain and other people will lose. That means when America loses jobs and manufacturing capability, when wages are depressed in competition with foreign wages, when global corporations dominate supply chains and markets and squeeze out local businesses, those are all expected and desired outcomes. The winners win, the losers lose.
As part of that process, some people in foreign lands have more opportunity to move from abject poverty to plain old poverty, working in exploitative factories and sweatshops for a fraction of American wages. They "win"—at least in a tiny way—and Wall Street, the 1%, and mega-corporations win also, pocketing virtually all of the gains. The American working and middle classes lose, but that's how the theory works: there's only so much to go around, so if you have a plus on one side of the equation it must be matched by a minus on the other side, with the whole thing balancing out at zero.
By this theoretical myth, American progressives demonstrate that they're really selfish hypocrites, unwilling to aid the desperately poor of the world if it means they have to sacrifice their pampered lifestyle of entitlement.
Oddly, nobody ever suggests that the rich and powerful winners mentioned above should sacrifice some of their gains instead if it's truly necessary to balance out the equation to zero.
Sweatshop work is not the path to the middle class
Of course, there's a myth within a myth in the previous scenario: "zero sum" is not and never has been a goal of business, industry, labor, or the government. Instead, all parties expect growth: plus one or two or ten percent more, year after year. A zero sum economy would be stagnant, frozen in time, with no progress. It would grind to a halt, as businesses refused to invest in expansion with no expectation that demand would eventually make it worthwhile.
The decades after World War II saw steady dramatic growth in the United States. Industrial capacity increased, wages rose, the middle class gained both in numbers and in economic strength. There were many reasons for this, but one of the key driving factors was strong unions that put pressure on capital to share the rising wealth through higher wages and benefits.
That resulted in a positive feedback loop, one which benefited all parties: a larger and richer middle class had more disposable income with which to purchase more goods and services, providing capital with more customers and greater sales. It was a win-win situation, not a zero sum game.
Although there was always tension between capital and labor over the division of the spoils, the balance was recognized as good for everyone: neither side should take all of the marbles and go home or it would ruin the party for everyone. That changed in time, especially after Ronald Reagan took office and neoliberalism gained status as the "smart" economic theory for a new age.
In short, capital broke the social compact. It dressed up greed and irresponsibility as economic theory, such as that of "shareholder value" (which says that corporations' sole purpose and goal should be increasing profits for owners right now, no matter the negative effects on future viability, employees, the local community, or even the nation as a whole).
We have seen the results. Communities have been laid low as corporations sought higher profits by slashing workforces and moving operations to areas of the cheapest labor possible, both at home and abroad. Executive pay skyrocketed as CEOs were rewarded for measures that lifted stock prices, even if they later resulted in rendering the company unsustainable. Wages were depressed to boost profits, and the middle class—in terms of real income and purchasing power—declined.
With the race-to-the-bottom strategy of offshoring production to extremely low wage countries, the TPP partner nations are not going to be lifted into a new middle class. The profits will be skimmed off by the economic aristocracy at home and back on Wall Street.
If TPP proponents were truly concerned about the plight of the poor, they would insist that the agreement include real and enforceable mandates to improve their lot. Instead of this:
Each Party shall adopt and maintain statutes and regulations, and practices thereunder, governing acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.
we would have something like this:
Each Party shall adopt and maintain statutes and regulations, and practices thereunder, mandating a living wage with respect to the local community and standards, as determined by the International Labor Organization; guarantee payment of overtime wages for work beyond 40 hours weekly; require compliance with international standards for occupational safety and health and perform regular inspections to that purpose.
The first quotation, from the TPP's chapter on labor, is meaningless. There are no standards set, so a country could comply by passing a law that minimum wage will be 1 cent per day. There is no enforcement mechanism even for the warm and fuzzy platitudes, much less any actual laws or regulations.
If TPP advocates want to stuff some bromides about labor and the environment into the TPP in hopes of gulling people into supporting it, the language they have included will suffice. If they want to use the trade agreement to make a real and positive difference in the welfare of people and nations, they need to rewrite it and put some teeth into it. Otherwise, it offers nothing useful to citizens for improving their lives.
By raising standards for workers as a condition for participating in the trade pact, the TPP could "share the wealth" and help create new middle classes and bolster the economic security of working classes in the partner nations. That would go a long way to truly "levelling the playing field" for American workers, bringing everyone up rather than pitting workers everywhere against each other in order to maximize shareholder wealth.
Myth #7 — TPP fairly balances the rights of corporations and the rights of people
This myth really deserves an entire diary or two all on its own: there are just too many examples of falsehood in it to even list here, much less discuss with any depth.
Let's start by playing a game, like those questions found on SAT and IQ tests. You know how it goes, you read words or sentences and have to pick out the ones that don't belong: apple, strawberry, banana, armadillo, cherry, pineapple, firetruck. It's easy and fun!
Spot the difference in TPP clauses game
| 1 |
Each Party retains the right to exercise reasonable enforcement discretion and to make bona fide decisions with regard to the allocation of enforcement resources between labour enforcement activities among the fundamental labour rights and acceptable conditions of work enumerated in Article 19.3.1 (Labour Rights) and Article 19.3.2 (Labour Rights) |
| 2 |
Each Party shall provide for criminal procedures and penalties to be applied at least in cases of wilful trademark counterfeiting or copyright or related rights piracy on a commercial scale. In respect of wilful copyright or related rights piracy, “on a commercial scale” includes at least: significant acts, not carried out for commercial advantage or financial gain, that have a substantial prejudicial impact on the interests of the copyright or related rights holder in relation to the marketplace. |
| 3 |
Subject to paragraph 3, each Party shall provide for criminal procedures and penalties for one or more of the following: the fraudulent disclosure, or alternatively, the unauthorised and wilful disclosure, of a trade secret, including by means of a computer system. |
| 4 |
Each Party shall endeavour to encourage enterprises to voluntarily adopt corporate social responsibility initiatives on labour issues that have been endorsed or are supported by that Party. |
| 5 |
Therefore, in accordance with its laws, regulations or policies and to the extent it considers appropriate, each Party shall encourage: the use of flexible and voluntary mechanisms to protect natural resources and the environment in its territory; |
| 6 |
With respect to the offences described in paragraphs 1 through 5, each Party shall provide the following: Penalties that include sentences of imprisonment as well as monetary fines sufficiently high to provide a deterrent to future acts of infringement, consistent with the level of penalties applied for crimes of a corresponding gravity. |
[1] Article 19.5: Enforcement of Labour Laws
[2, 6] Article 18.77: Criminal Procedures and Penalties
[3] Article 18.78: Trade Secrets
[4] Article 19.7: Corporate Social Responsibility
[5] Article 20.11: Voluntary Mechanisms to Enhance Environmental Performance
So, did you notice that items 2, 3, and 6 all mandate criminal punishment for violations of the particular TPP terms? If so, you win the game! Items 1, 4, and 5 all merely suggest or encourage compliance with the relevant terms.
The difference is that the "criminal" clauses require countries to use their police and judicial powers to punish individuals who commit offenses against corporations. The other clauses do not require the state to enforce violations by corporations against individuals (labor) or the nation as a whole (environment).
The TPP co-opts the power of the state to criminalize and punish citizens, even for relatively minor infractions. For item 2 in the table above—which could be as simple as uploading to Youtube a home video of a child's birthday party which has some copyrighted music playing in the background—the TPP mandates that the state prosecute the infringement as a criminal matter rather than leaving it to the corporation itself to file a civil action.
Dedicated to making new criminals across the globe
Conversely, willful and malicious acts by corporations that harm the environment or cheat and abuse workers are not criminalized. Instead, the TPP merely encourages nations to enlist voluntary cooperation of corporations to act as better "citizens."
TPP takes a carrot-and-stick approach to the actions of corporations and citizens. However, it doesn't use both for each group: corporations get all the carrots while citizens get beaten with the sticks.
The agreement is chock full of such clauses which reward corporations unduly and treat human beings as second class citizens. Entire diaries could be (and should be, if someone has the energy to write them) filled with more examples.
For now, let's look at just one more: ISDS. Investor-State Dispute Settlement is a method for resolving conflicts between investors (aka corporations) and nations. The TPP spells out details about how it should work when a corporation feels aggrieved by actions of the state. The investor may initiate a complaint which will be heard by three non-judge arbitrators—private lawyers—who will decide who is in the right and award monetary damages accordingly.
The problems and perils of ISDS are legion but two should jump out at a glance. First, only corporations can file an ISDS suit; nations cannot file a suit to compel corporations to modify their behavior.
Nor can public interest groups use ISDS against corporations or nations. If a corporation violates labor laws, and the state fails to act, ISDS offers no remedy for a labor union. Grossly polluting a community would similarly result in an environmental group being denied access to ISDS as a means to rectify the violation and seek remediation.
So it's a one-sided system of pseudo-justice.
The premise of ISDS is that many nation's judicial systems are corrupt or incompetent and thus, in the interest of fairness, outside tribunals are needed. Yet it limits those tribunals to the pursuit of favorable rulings and cash awards to corporations; citizens, as individuals, groups (such as a company's workforce), or even as a whole (such as in environmental damage) are purposely locked out of ISDS and expected to somehow find justice in those same corrupt and incompetent courts that corporations avoid.
Second, ISDS elevates global corporations to equal status with sovereign nations. In the past, prior to ISDS, corporations requested intervention by their home nation's government. That government analyzed the situation, including its relations with the other nation and that nation's circumstances of the moment, and then decided whether or not to act on behalf of the petitioning corporation.
For example, Apple generated $53.4 billion in net income last year. The government of Vietnam had revenue of $32.8 billion that year but had greater expenditures, so it ended up with a net deficit rather than net income.
If Apple had a dispute with Vietnam, it could easily afford to gamble ten or twenty million dollars as the costs of an ISDS suit, with the hope of gaining ten or a hundred or a thousand times that amount if successful. For Vietnam, the costs of fighting an ISDS suit would add another anchor to its sinking fiscal ship and the possibility of losing and being liable for hundreds of millions, or even a billion or two, in damages would be terrifying. Such a loss could force it to cut vital programs for public health, education, social welfare and more. That could cascade into social unrest and imperil the stability of the country itself.
In such circumstances, Vietnam might acquiesce to any demand made by Apple. The consequences of gambling would too severe. Justice might have nothing to do with the outcome but rather corporate power and venality would have extorted the result it desired.
ISDS is about profit, not justice
In short, if a corporation can spare the cash to play the high-stakes ISDS game, it can win even without filing an action—most of us would call that extortion.
Without ISDS, Apple would have to convince the U.S. government of the reasonableness of its case. Even then, officials would weigh the consequences in terms of our national interests: would it fatally weaken an ally, leading to possible collapse of the government? would it have a domino effect, creating discord or hostility with Vietnam's neighbors? could it result in an all-out trade war, cutting off access to the Vietnamese market by other American firms? would seeing starving Vietnamese children while Apple recorded record profits damage America's reputation globally?
None of those things need be considered by corporations under ISDS. They are free to pursue their own goals, no matter how dangerous or negative the consequences for their home nation. In short, they are free to act as sovereign nations themselves, independent and without responsibility or accountability to anyone except their shareholders.
The bottom line—something corporations and CEOs always find important—is that the TPP vaults corporations to positions of exceptional privilege while casting citizens to the wind, at best, when not outright treating them as criminals. That's not balance, that's transformation of society into corporate mastery and individual serfdom.
It's not the trade we oppose. We oppose the malignant and insidious metamorphosis of the civic and social compact, both at home and abroad, that the TPP will impose in the guise of free trade.
