Who’s Down With TPP?

Trans Pacific

A trade partnership sounds like a good thing. Trade—good. Partnerships—good! Then why have Democrats been so worried about the Trans-Pacific Partnership bill? Why did President Obama team with John Boehner, of all people, to push the thing through? And why has the massive document detailing this agreement been kept under lock and key? Now that the bill has passed both the House and the Senate, a complete Trans-Pacific Partnership bill could be ready for the president to sign by Independence Day. Let’s talk about whether that’s such a good thing after all.

Three weeks ago House Democrats rejected a measure to provide aid to workers displaced by global trade agreements. This was something of a surprise, since aid for workers has historically enjoyed Democrats’ support. At the time of this vote, however, the Trade Assistance Agreement (TAA) bill was attached to a component of the Trans-Pacific Partnership (TPP) called the Trade Promotion Authority (TPA). The TAA had to pass in order for the rest of the trade package to get the green light. The TPA guarantees that trade deals be made by votes alone, without the possibility of later amendment; this “fast-track” option makes it easier for the president to negotiate with partner countries. Obama, Boehner and others saw it as a reassurance to these trading partners—which include Japan, Australia, Chile, Singapore and Vietnam—while opponents worried it amounted to a method for passing bad deals without the opportunity for later revision.

But the initial defeat of the fast-track option wasn’t the final decision in this massive deal. Obama, Republican supporters of free trade and the 11 other countries ready to sign on to the accord—representing 40 percent of the world’s GDP—weren’t ready to give up just yet. Two weeks ago the fast-track option passed in the House on its own, unattached to the TAA, and last week the bill went back to the Senate, which had previously approved it when it was still attached to the TAA. The New York Times felt your confusion over all these acronyms, joking in a recent Twitter-friendly recap, “Mr. Obama really wants to get TPP, but he needs TPA and that requires TAA. Democrats like TAA but will kill it to block TPA. #LOL.”

Trans_Pacific_connects_sideSo, will the TPP ultimately be good or bad? One model for how it could turn out is NAFTA, the North American Free Trade Agreement of 1994. Some argue that the F in NAFTA has really meant “free for corporations to do anything they want.” Under this agreement, tariffs were incrementally eliminated, new markets were opened, and cheap labor became more and more available. Most of this stuff, this argument goes, has been great for corporations but not so good for everybody else.

The Council on Foreign Relations reports mixed results: “One lofty, unrealized promise of NAFTA was that the treaty would narrow the gap between the per capita incomes of Mexico, the United States and Canada. Per capita income in Mexico rose at an annual average of 1.2 percent over the past two decades…far slower than Latin American countries such as Brazil, Chile and Peru.” Yet experts claim trade liberalization also “led to a dramatic reduction in Mexican prices for clothes, televisions and food, which helps offset slow income growth.” And in what the Council calls an “intangible benefit” of NAFTA, Mexico “has adopted orthodox economic management practices and is no longer prone to crises.”

All clear now? At least Hillary Clinton’s recent hedging on the TPP may make more sense to you. Not being part of the 1 percent myself, I am concerned about a few key aspects. For one thing, the secrecy surrounding the talks. As CNN reported, “Only members of Congress and staffers with security clearance can access [the classified document]. And they can’t make copies or even carry their own handwritten notes out the door.” WikiLeaks has managed to publish a few of the bill’s 30 chapters, including the one on environmental protection, which is troubling. “With the exception of fisheries, trade in ‘environmental’ goods and the disputed inclusion of other multilateral agreements, the chapter appears to function as a public relations exercise,” WikiLeaks notes. There are no binding rules about environmental issues, only good-faith agreements, and we have some experience with how those go.

Finally, negotiations about intellectual property could have far-reaching consequences in an unexpected area: prescription drug prices. In January Nobel Prize–winning economist Joseph E. Stiglitz wrote in The New York Times, “If big pharmaceutical companies hold sway—as the leaked documents indicate they do—the TPP could block cheaper generic drugs from the market. Big Pharma’s profits would rise, at the expense of the health of patients and the budgets of consumers and governments.” And trade agreements, Stiglitz warns, “are typically far more difficult to alter or repeal than domestic laws.”

Once the TPA is officially in place, partner countries will try to rush to negotiate a provisional deal by late July, before the U.S. Congress takes its August vacation. If that happens, a Pacific trade pact could be up for a vote in Congress in December. Other countries, of course, would still need their own lawmakers’ approval, but Obama’s success on this issue marks another pillar of his legacy and sets the scene for future debate on the next desired deal: a transatlantic trade partnership between the U.S. and the European Union that’s poised to make headlines in 2016. Let’s hope the TPP sets a good, responsible example.

Photo courtesy of Wikimedia