The North American Free Trade Agreement (NAFTA) cost United States workers 700,000 jobs. But another effect was to drive Mexican small farmers out of business.
In the brave new world of free trade, Costco makes tortilla chips and salsa in the US and trucks them to its stores in Mexico.
US Congress will soon debate whether to “fast-track” a trade deal that would make job-killers like NAFTA look puny. The Trans-Pacific Partnership is being negotiated by Australia, Brunei, Chile, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
It would give corporations the right to sue national governments if they passed any law, regulation, or court ruling interfering with a corporation’s “expected future profits”.
They could also sue over local or state laws they didn’t like. The TPP would cover 40% of the world’s economy.
Existing laws and regulations on food safety, environmental protection, drug prices, local contracting, and internet freedom would all be up for challenge.
And the decision-makers on such suits would not be local judges and juries; they’d be affiliated with the World Bank, an institution dedicated to corporate interests.
Citizen groups believe they can stop the TPP if there is enough outcry. They point to previous victories over the World Trade Organisation and Free Trade Area of the Americas (FTAA).
Most US unions, however, have been slow to get on board ― even though the TPP would jeopardise, according to the AFL-CIO, millions of jobs. The Teamsters and Communications Workers have been the most active.
Greg Junemann, president of the Professional and Technical Engineers, says unions have given up, certain that “what Obama wants to do, they [Congress] are going to do”. Junemann, with other union heads, sits on a labor advisory committee (LAC) on trade ― which, he said, has been completely ignored.
Obama has singled out the TPP as a priority in this year’s State of the Union speech and wants Congress to give him “fast-track” authority.
Veterans of the fight against Bill Clinton’s NAFTA will remember fast-track ― Congress gives away its ability to amend an international agreement, in favour of a simple up-or-down vote. Each house may debate the bill for no more than 20 hours.
But most Democrats in the House are opposed to fast-track and the TPP, says Arthur Stamoulis of the Citizens Trade Campaign, and many Republicans will also vote against it (some because they want to deny Obama any appearance of success).
Junemann counters that, in the end, doing what big business wants will weigh more with Republicans than hurting Obama.
Stamoulis said: “When we defeated the FTAA [in the early 2000s], the first step was cross-border people’s movements dragging the proposal out of the shadows, shining a light on it, and introducing accountability and scrutiny to the negotiations.”
Light and scrutiny have both been sorely lacking so far, but leaks about TPP’s contents are alarming.
Corporations could sue governments over laws not to their liking. They are already doing so under existing “trade” agreements, but TPP would vastly expand the number of corporations and countries involved.
For example, Australia passed a law requiring plain packaging for cigarettes. US-based Philip Morris is in court over predicted lost sales.
After the Fukushima disaster, Germany enacted a moratorium on nuclear power; a Swedish energy company is now suing the German government. Bechtel sued Bolivia for undoing the privatisation of its water supply.
Under TPP, a corporation would sue the federal government, whether the case pertained to a federal, state, or local law or court decision. If the tribunal awarded damages to the corporation, the federal government would pay.
So if the government doesn’t want more suits, it has to change its laws (or pressure the local government to do so). Under NAFTA, the US chemical company Ethyl Corp sued Canada because it had banned the use of a gasoline additive called MMT, as a public health measure. Canada backed down, allowed MMT, and paid Ethyl $13 million.
It would give international firms equal access to federal government contracts.
TPP would include aggressive intellectual property rules to protect Big Pharma’s patents and restrict access to generic medicines. The consequences for those unable to afford HIV drugs, for example, especially in poor countries, would include hundreds of thousands of deaths.
The US Department of Energy has the authority to regulate exports of natural gas ― but not to countries that have free trade agreements with the US.
And presumably, when US states, counties, and cities ban fracking, energy companies from any interested country could try to get those bans overturned. Domestic oil and gas companies are already suing over local fracking bans, such as in Longmont, Colorado, and Dryden, New York.
These new rights for corporations are horrifying, but the most widespread effect of TPP would be job loss. The minimum wage in Vietnam, for example, is $2.23 a day, so labour-intensive industries are already eager to move there.
The TPP would accelerate that process:
It would remove US tariffs on goods produced in Vietnam and any other TPP country.
Manufacturers in capital-intensive industries (heavy machinery factories, paper mills), who might be reluctant to risk investment, would be protected against the threat of other countries passing new environmental or regulatory costs.
TPP’s protections against loss of “intellectual property” would reassure investors about building in Vietnam, where the majority of college grads are in maths and science. Such concerns are now a big disincentive for IT or research work in Vietnam, as its intellectual property practices are far looser than those in the US.
The Free Trade Area of the Americas would have extended NAFTA to 31 more countries in the hemisphere. Some Latin American countries said no. Big protests were held in Quebec City in 2001 and in Miami in 2003, and the FTAA died.
To stop the TPP, a similar-scale campaign is needed.
[Abridged from Labor Notes.]