A treaty to declare economic war

April 30, 2015

Ashley Smith explains what's at stake in the fight over the Trans-Pacific Partnership.

BARACK OBAMA is locked in a battle to win Trade Promotion Authority, otherwise known as "fast track authority," from Congress. Obama needs this to complete negotiations for the largest trade agreement in history: the Trans-Pacific Partnership (TPP). This deal would involve 12 Pacific Rim countries, from Japan to Chile to the U.S. Altogether, they comprise about 40 percent of global economic output.

Once Obama secures fast track--which looks inevitable, especially after it was approved by the Senate Finance Committee in April--he will be able to present the TPP and a similar pact with Europe called the Transatlantic Trade and Investment Partnership (TTIP) to Congress for an up-or-down vote, with no possibility of any amendments.

America's corporations have rallied behind Obama to turn up the heat on Congress. Tom Donahue, president of the U.S. Chamber of Commerce, stated, "Without [fast track], the United States will be relegated to the sidelines as other nations negotiate trade agreements without us--putting American workers, farmer and companies at a competitive disadvantage."

Marching against the Trans-Pacific Partnership in New Zealand
Marching against the Trans-Pacific Partnership in New Zealand (Peg Hunter)

Trade unions, global justice NGOs, and liberals within the Democratic Party like Elizabeth Warren and independent Bernie Sanders have launched a campaign to stop fast track and the TPP. At a recent union-sponsored rally, Florida Democrat Rep. Alan Grayson denounced Obama for betraying his base to serve corporations, declaring, "We've had, I hate to say this, a sellout government."

Obama responded with equal ferocity. At first, he gently criticized his most prominent critic, Warren, saying, "I love Elizabeth. We're allies on a whole host of issues, but she's wrong on this." But as their war of words intensified, Obama denounced the Massachusetts senator as "misinformed" and even "dishonest."

In attacking the TPP's opponents, Obama has found new friends--among his erstwhile enemies in the Republican Party. In fact, he delayed his push for fast track until after last year's midterm elections for fear that it would undermine Democrats posturing on the side of workers.

Now he is taking advantage of the Republican sweep last November to push through fast track and the TPP. Despite opposition from some in their Tea Party wing, Republicans will likely provide Obama with the margin of victory in Congress.

OBAMA IS determined to win passage of the TPP to reassert American geopolitical and economic dominance in Asia against a rising challenge from China, which is excluded from the pact. Obama wants the TPP "to shape the rules so that our businesses and our workers can compete in those markets," he says. The president warns that if Congress doesn't ratify the agreement, "China will set up rules that advantage Chinese workers and Chinese businesses."

This is not hyperbole from Obama. The U.S. is indeed challenged by China as a potential rival. The Beijing government has taken advantage of the relative decline of U.S. political and economic after its disastrous wars in the Middle East and the Great Recession.

Despite the recent slowing of its economy, China has emerged as a potential global power. Just last year, the IMF announced that it surpassed America as the world's largest economy. It has integrated Asia economically, expanded its trade with Europe, and incorporated Latin America and Africa as suppliers of raw materials for its booming industry.

Based on this economic rise, China has asserted itself militarily, increasing its defense budget at a double-digit rate over the last decade to project its power against rivals in Asia like Japan and the Philippines. It has also established geopolitical alliances such as the Shanghai Cooperation Organization, which includes Russia, several central Asian states and even Iran as an observer.

China has united Brazil, Russia, India and South Africa in the so-called BRICS (an acronym for the countries involved) alliance as a potential alternative economic pole in the world system. The BRICS have announced the formation of their own bank, the New Development Bank (NDB), and the Contingency Reserve Arrangement as rivals to the World Bank and International Monetary Fund, respectively.

In Asia, China is pursuing a rival trade pact to the TPP called the Free Trade Area of the Asia-Pacific. It excludes the U.S., just as the TPP excludes China. China also recently announced the formation of the Asian Infrastructure Investment Bank (AIIB), and it managed to get traditional U.S. allies like Britain and Germany to join a bank that Washington opposes.

To contain and co-opt China's rise, Obama and his former Secretary of State Hillary Clinton designed their celebrated "pivot to Asia" as a geopolitical strategy. The U.S. is redeploying the majority of its Navy from the Middle East to police the Asian Pacific. It has also positioned itself as the imperial arbiter in disputes between China and America's traditional allies like Japan.

The TPP is the economic leg of the pivot to Asia. As the Washington Post wrote in an editorial, the TPP "would organize trade in the Pacific Rim according to U.S. free-trade principles rather than China's mercantilist goals." Obama's Defense Secretary Ashton Carter went so far as to declare that "passing TPP is as important to me as another aircraft carrier."

OBAMA AND his corporate backers have designed the TPP to be a bonanza for American multinationals--and a disaster for workers, peasants and the environment throughout the Asia Pacific.

The administration invited 566 corporate representatives and their allies to help craft and negotiate the agreement in total secrecy. U.S. Trade Representative Michael Froman has blocked public access to the TPP. We only know the nature of the agreement thanks to WikiLeaks, which has secured and published chapters of the deal.

It is the stuff of nightmares. Only four of the TPP's 29 chapters deal with trade. Those will bring down tariff barriers, enabling capital to move freely across national borders for any country that signs on. U.S. multinationals will use this to pit workers in different countries against one another, to drive down wages in a race to the bottom.

The other 25 chapters aim to impose neoliberal rules to the advantage of U.S. capital. Thus, one of the key features of the agreement is its expansion of copyright laws that will benefit Big Pharma, Hollywood and other industries.

But the impact on people will be devastating, particularly in health care. Public Citizen reports that the TPP will extend "drug patents for big pharmaceutical companies, making it harder for countries to produce or procure low-cost generic medications for people with HIV, tuberculosis and other life-threatening diseases." In other words, the TPP will kill sick poor people who are unable to afford expensive patented medicine.

The neoliberal investment rules of the TPP will encourage deregulation, privatization and the dismantling of welfare state structures in all signatories to the pact. One of the most reckless features is the agreement's deregulation of the financial industry. This will make it easier for corporations and banks to engage in the shady speculation that led to the 2008 crash.

One of the most outrageous parts of the TPP is its Investor-State Dispute Settlement (ISDS) system. This grants capitalists the right to sue states over so-called non-tariff-related obstacles to commerce--which could mean something like an anti-pollution regulation. The disputes are heard not by ordinary courts, but private tribunals with corporate-appointed judges. This will help corporations undermine reforms like minimum wage laws, food safety regulations and environmental restrictions against practices such as fracking.

As an antidote to the frightening powers granted to capital by the TPP, the Obama administration claims the treaty will include safeguards to protect the environment and labor. But as WikiLeaks pointed out, "The environmental chapter clearly shows the intention to, first and foremost, protect trade, not the environment." No doubt the chapter on protecting workers' rights will be just as toothless.

If the TPP passes Congress, it will produce the same results that the North American Free Trade Agreement (NAFTA) did in the 1990s when it was pushed through Congress and implemented under another Democratic president, Bill Clinton.

U.S. corporations accelerated the relocation production from the country's industrial heartland to the newly established maquiladora zone on the U.S.-Mexico border. The U.S. Labor Department estimates that workers in the U.S. lost 2.5 million jobs as a result of NAFTA.

NAFTA had similar if less devastating impact in Canada. Labor journalist David Bacon estimates that 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."

But the worst havoc of all was inflicted on Mexican workers and peasants. The new maquiladora jobs paid poverty wages so low that Mexican workers couldn't buy the products they made. The deregulation of agriculture devastated peasants, who were unable to compete with U.S. state-subsidized staple crops like corn that flooded into the Mexican market. Millions of people abandoned the countryside--many migrated to the U.S. in search of poverty-wage jobs as undocumented workers.

NAFTA's environmental impact, especially in Mexico, was horrific. The Sierra Club has 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.

OBAMA'S RELENTLESS drive to pass fast track, the TPP and the TTIP has triggered opposition among liberal Democrats, unions, environmentalists and progressive NGOs. They have exposed how Obama is trampling democracy.

Over 62 percent of people in the U.S. oppose fast track and, according to the Wall Street Journal, a whopping 75 percent think that TPP should rejected or at least delayed. Obama is ignoring mass public opposition and using fast track to prevent elected representatives from amending the treaty.

Liberal commentary Jim Hightower concludes that the TPP is "a corporate coup d'état that is about to be rammed down the American people's throats." But this is nothing new. The U.S. state has always served the capitalist class, even when that required ignoring the will of the majority of people, especially when it comes to imperial economic policy.

As President Woodrow Wilson admitted 100 years ago, "Suppose you go to Washington and try to get at your government. You will always find that while you are politely listened to, the men really consulted are the men who have the big stake--the big bankers, the big manufacturers and the big masters of commerce...The masters of the government of the United States are the combined capitalists and manufacturers of the United States."

Many liberal opponents of the TPP focus on the argument that the agreement undermines American sovereignty. It is true that the ISDS courts open the possibility of foreign corporations suing the federal government and state governments to overturn laws like environmental regulations. But the U.S. state and the corporations it represents have been happy to use such lawsuits as a cover to undo reforms they, too, oppose, as the experience of NAFTA shows.

More importantly, however, the nationalist fears that Vietnam, for example, will sue to overturn U.S. minimum wage laws are vastly exaggerated. It is American capital that poses the real threat to the sovereignty of less developed countries. The U.S. and other powerful governments are far more likely to use the ISDS star chambers to attack laws in less developed 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.

Here's a typical example: The U.S.-based Occidental Petroleum successfully sued Ecuador for ending its contract allowing the U.S.-based multinational to drill and pump oil. Even though the Ecuadoran government was well within its right in the country's constitution to do so, the ISDS court awarded Occidental a $2.3 billion settlement.

UNION LEADERS, environmentalists and NGOs have turned to Bernie Sanders and liberal Democrats like Elizabeth Warren to stop fast track and the looming economic agreements. But this strategy failed to stop NAFTA--and it is unlikely to work this time around.

First of all, the Democratic Party's standard-bearer, Barack Obama, is leading the free trade charge. The Democrats who do oppose him based on some progressive principles are a minority in their party. They are creating the illusion that the Democrats represent the interests of workers and the oppressed, while their party carries out the agenda of Corporate America.

In some cases, some of these dissenters may turn out to be future hucksters like Obama himself. Remember back in 2008, as a presidential candidate, Obama boasted, "I voted against CAFTA, never supported NAFTA, and will not support NAFTA-style trade agreements in the future." Now we know all his rhetoric was hot air to win votes for a stealth free trade campaign backed by Wall Street.

Those Democrats who do stick to principles will be marginalized in their party--especially considering that the main candidate to succeed Obama is Hilary Clinton. While she is ducking questions about the TPP now, no one should forget that she played a big role in its design and went so far as to celebrate it as "the gold standard of trade deals."

Neoliberal Democrats like Clinton and those in Congress may posture against the TPP for cynical reasons. They know well that the Republicans are likely to give Obama the margin of victory for fast track and the economic agreements. So they have nothing to lose by posturing as critics of the TPP.

This accomplishes two goals at one time. First, these liberal Democrats can co-opt the union leadership and NGOs into supporting them and their party in elections. Second, since there is little chance the liberals will actually block the TPP, corporations will tolerate their dissent as a minor irritant and continue bankroll them to play their role of preventing the development of genuine political alternative.

The worst mistake that opponents of the TPP could make is retreating into American nationalism. Many, including progressive like Bernie Sanders, are attacking the agreement mainly for undermining "Buy American" laws, threatening U.S. jobs, making Americans vulnerable to unsafe foods and rewarding authoritarian regimes like Vietnam.

In reality, the TPP is, most of all, an essential part of U.S. capital's imperialist agenda against China in Asia. The American state in this case is the main threat to workers in the U.S. and the Asia Pacific.

Instead of relying on the neoliberal Democrats or retreating into 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 people, democracy and the environment before profits.

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