Trans-Pacific Partnership is really about protecting US big business from the China threat, not fair trade

Kevin Rafferty says there's little evidence Obama's transpacific pact will provide big economic gains or jobs for all

PUBLISHED : Thursday, 02 July, 2015, 5:59pm
UPDATED : Thursday, 02 July, 2015, 5:59pm

Embattled US President Barack Obama won widespread plaudits from mainstream commentators last week for finally getting back his fast-track authority for trade agreements. But there will be a heavy price to pay.

The two trade deals on the table, the Trans-Pacific Partnership (TPP), which the US is negotiating with Japan and 10 other Pacific rim countries, and the Transatlantic Trade and Investment Partnership (TTIP), being negotiated with Europe, are supposedly about enhanced fair trade, business, economics and more jobs for all.

But the TPP, especially, is really about politics with a capital and a small "p" - the Politics of a rivalry with China and the politics of providing opportunities for big American business.

The TTIP is not so far advanced. It is facing vociferous opposition from European opponents, such as John Hilary of War on Want, who said it is "an assault on European and US societies by transnational corporations". Because the TTIP will have to be agreed by all 28 EU governments, the current crisis has moved the timetable back to next year at least.

Obama has openly admitted using the TPP as a weapon. He declared at a Nike factory in Oregon in May: "We have to make sure America writes the rules of the global economy, and we should do it today while our country is in a position of global strength. If we don't write the rules for trade around the world, guess what, China will. And they'll write those rules in a way that gives Chinese workers and businesses the upper hand."

To regain control of fast track, Obama had to alienate his Democratic supporters and get into bed with the Republicans. It means that when the negotiations are finished, the Obama administration will present TPP to Congress, which will then have to accept or reject it without being able to pick at it or change the details. TPP supporters say its members account for 40 per cent of the world economy, so this is a real game-changer. Secretary of State John Kerry quoted "estimates" that it could provide US$77 billion a year in real income and support 650,000 new jobs in the US alone.

Ah, yes, lies, damned lies and economic statistics! When the numbers have been crunched, most economists concede that the immediate economic gains will be modest, though Japan could see falls in food prices if Prime Minister Shinzo Abe uses the TPP to put his country's agricultural house in order.

The real gains, supposedly, come from further opening trade opportunities and setting new global standards. When TPP talks were widened to include Japan, Long Yongtu, a former trade minister, who negotiated China's entry into the World Trade Organisation, saw the promises of new higher standards of global trade, including environmental and labour protections, as useful for future Chinese entry and even helping President Xi Jinping's internal policies of "deepening market reform".

But such hopes have been dashed by US rhetoric suggesting the TPP as a means of stealing a march on China. When Abe visited the US in April and discussed security and the TPP with Obama, China was the ghost hovering over their conversations.

When you strip the TPP down, it is basically the US and Japan and a bunch of smaller players. There is something absurd about a proclaimed Pacific trade deal that excludes China and its 1.3 billion people. It also excludes South Korea, Taiwan, Indonesia, the Philippines and Thailand, as well as India. It does begin to look like the Washington bully at work.

By pressing so hard without inviting China, Obama has boxed himself in. If, after all the fuss, Obama fails to seal the deal, he leaves himself looking foolish and lacking levers of power in Asia.

Meanwhile, Beijing is moving on and using its financial muscle to build its own improved economic and business relationships not only in Asia, but all over the world.

But the TPP is also murky politics with a small "p". Most people outside the negotiations have been kept in the dark. Even members of Congress have to visit the office of the US trade representative to read the text one section at a time; they are not allowed to take staff members or experts, or take away copies or take notes.

Michael Wessel, a trade policy expert with almost 40 years' experience of working on deals including the North American Free Trade Agreement and the WTO Uruguay Round, said the secrecy was unprecedented. Writing in Politico, he said: "Anyone who has read the text could be jailed for disclosing its contents. I've actually read the TPP text provided to the government's own advisers, and I've given the president an earful about how this trade deal will damage this nation. But I can't share my criticisms with you." Yet Obama maintained that the criticisms of the TPP are vague.

But these deliberations are not totally secret. US trade advisory bodies representing leading businesses have been let in on the ongoing discussions. Companies such as AT&T, General Electric, Apple, Dow Chemical, Nike, Walmart and the American Petroleum Institute are allowed to follow and play a part in shaping the text.

This has given rise to fears that it is a vehicle for protecting and enhancing big-business interests. Such fears have grown by leaks of parts of the text through Wikileaks and other whistle-blowers.

In particular, there are questions about intellectual property, medical costs and investor protection. Everyone should be concerned about clauses that extend patent protection for drugs and seem set to benefit big pharmaceutical companies and inevitably raise the prices of medicines.

Other clauses regarding dispute settlements threaten to enhance the rights of big corporations by curbing the role of national governments and the courts in exercising jurisdiction in international disputes with investors.

US trade unions are worried that job protection and workers' rights will be further damaged by remorseless corporate pressure to outsource jobs.

Even Hillary Clinton, previously a TPP supporter, warned: "We shouldn't be giving special rights to corporations at the expense of workers and consumers."

The final text may not be as bad as feared, but if it is, Congress will have a difficult choice: to vote for US bullying; or reject the TPP and leave Washington looking foolish.

Kevin Rafferty is a political commentator