So, what’s the deal with the TPP?

as published in The Hill


At the World Trade Organization (WTO) ministerial in Seattle, held under the last Democrat president, I was beaten, pepper-sprayed, and left blinded for hours on a sidewalk engulfed by a police riot. Seattle was the opening salvo in the now epic political battle over the new rules of the global economy. The WTO built on the North American Free Trade Agreement (NAFTA) to lock-in global rules rigged in favor of the 1 percent, threatening a race to the bottom in, well, everything: wages, workers rights, access to clean water and other essential services, food sustainability, environmental protections, and more.

Since then, environmentalists, organized labor, and public health advocates have won significant progress on their headline issues. The massive 5,544 pages of the Trans-Pacific Partnership (TPP), finally released last week after five years of furtive negotiations, reveal the best deal yet for workers and sea turtles worldwide.

The TPP text, along with side agreements between the U.S., Vietnam, Brunei, and Malaysia, guarantee groundbreaking human rights protections for workers—including the right of people to organize and prohibitions on child labor. Unfortunately these paper protections will be nearly impossible to enforce. Theoretically the U.S. could seek remedies through a trade dispute panel if, for example, Vietnam locks-up striking workers (after a 5-year implementation grace period expires). But human rights violations are difficult to document and case specific, and country complaints are easily captured by political trade-offs since governments need to balance labor commitments with a vast number of other strategic interests. The standard state-to-state dispute settlement process created by the TPP is like a powerful but lumberous ocean liner, when what’s required is a fleet of nimble motorboats. As seen by the embarrassingly weak historical track record of the U.S. in actually bringing labor complaints under existing Free Trade Agreements, enforcement is unlikely without a Keystone-Pipeline-sized lobbying effort from organized labor. More effective would be to create an independent monitoring body to investigate violations and propose sanctions, or to empower victims of labor rights violations to bring claims to an independent panel.
Likewise for the environment. The TPP advances environmental protections directly, with a long chapter of environmental commitments, and indirectly, by stating that environmental protections cannot be considered unfair barriers to trade. These are valuable benchmarks. However, as with human rights, and for the same reasons, monitoring and enforcement of the TPP’s paper environmental commitments will be nearly impossible in practice.

While better in some respects than past deals, the TPP is still massively unfair for most of us. The worst sell-outs can be traced to a U.S. negotiating agenda that prioritized the interests of well-financed U.S. corporate constituencies over, say, desperately poor people who cannot afford bazillion dollar medicines, or communities that want to prevent nuclear meltdowns in their neighborhoods or underwater mine blasting in their fisheries.

Take Chapter 9, which gives foreign corporations the right to bring private lawsuits through secretive supra-national tribunals when governments pass laws that protect the public interest, but might harm profits. A hallmark of U.S. investment treaties since the 1960s, U.S. multinational companies are the driving force behind the Investor State Dispute Settlement (ISDS) chapter. It’s in the TPP only because other countries reluctantly folded to U.S. pressure. Extensive economics research finds zero evidence that ISDS does anything useful for economic growth or foreign investments. Histrionic claims of proponents aside, it’s also totally unnecessary to protect companies from government expropriation (investors in volatile countries have lots of market options to purchase political risk insurance, while investors in countries with independent judicial systems should take disputes to court like the rest of us). Giant companies just use ISDS as regulatory blackmail to challenge democratically enacted laws on everything from nuclear power to tobacco advertising to mining to minimum wages. While the version in the TPP contains some new exceptions barring the most obnoxious lawsuits (tobacco claims won’t be allowed, for example), it still allows foreign companies to dodge national justice systems and sue governments in front of self-selected panels of private arbitrators. The cleanest and most coherent approach would be to get rid of ISDS entirely.

And then there is the truly life and death issue of access to medicines. Drug monopolies make life-saving drugs unaffordable for poor people in poor countries, literally killing the most vulnerable. U.S. Big Pharma won the lobbying campaign, arguing that longer monopolies are needed to increase profits and incentivize investments in drug research, especially for complex drugs based on microorganisms (called Biologics). But there is no evidence that the new lengthy data protections created by the TPP, over the fierce resistance of countries like Australia and Malaysia, actually lead to more investment or better innovation in drug treatments. The profit returns to companies like Pfizer will be enormous, while the cost to the rest of us in human lives, public health, and access to affordable medicines is unconscionable.

And then there is what’s missing. Currency manipulation can act like a hidden tariff, driving-up prices for imports in countries that are playing the currency markets, and penalizing companies in countries that play by the rules. Without safeguards against currency manipulation, all the thousands of pages of text pledging countries to reduce tariffs item-by-item can be washed away with a few massive government bond purchases. Currency is a contentious issue for two countries in the TPP, Korea and Japan, but there is still negotiating space to lock-in narrow but enforceable rules. The International Monetary Fund (IMF) already prohibits currency manipulation through rules agreed-to by virtually every country (including China), but it cannot enforce these agreements. A currency chapter in the TPP and future trade deals should be based on the IMF rules to reinforce existing country commitments, but with enforcement built into the core of trade treaty agreements.

Done right, trade and investment agreements should establish fair and transparent rules to govern the global economy and secure U.S. interests and values in an increasingly interconnected world—protecting workers and the environment both at home and abroad, fostering innovation and efficiency, and creating a level playing field for all entrants, so growth is inclusive and sustainable. But these goals are aspirations, not automatic outcomes; possibilities, not presumptions. Just as new global economic rules can level the playing field, they can also make it more unfair and more skewed—entrenching inequality and creating a race to the bottom in wages, workers’ rights, access to medicines, and environmental protections.

While supporters argue that “no deal is perfect,” sadly the main shortcomings of the TPP are not attributable to compromises among trading partners. The deal is at its best where it embraces the interests of the global 99 percent. It’s shortcomings are a straight-up sell-out to the highest bidders.