One of the most important legislative battles of this century comes back to the Senate on Tuesday, June 23, 2015. For those who do not know what is going on, I am not surprised (because a lot of it is secret). But I will simplify it all: what is the Trans-Pacific Partnership; what is Fast Track; who is for it and who is against it; the expected results of the TPP and the legislative wrangling that has led us up to Tuesday’s crucial vote.
What is the Trans-Pacific Partnership?
For those of you who know nothing at all about The Trans-Pacific Partnership (TPP), it is a Free Trade treaty between the USA, Canada, Mexico, Australia, New Zealand, Brunei, Chile, Peru, Japan, Vietnam, Thailand and Singapore. What “Free Trade” Treaties do is it eliminates import taxes and therefore, theoretically, increases trade between countries. So, why have import taxes in the first place? Right? Nobody likes taxes.
The Reason For Import Taxes
After the US Constitution was ratified, our Founding Fathers, at the very beginning, had placed a 95% tax on all imports (like other countries did at the time). The reason: they wanted to assure that American businesses had a fair shot at staying in business (so England did not overrun U.S. businesses) and to raise money for the government. Through the 20th Century, the US gradually decreased rate on import taxes.
Free Trade Treaties
Then, in 1990, US businesses got even more aggressive and start pushing “Free Trade” Treaties – eliminating all import tax form countries that had treaties with the U.S.. The first modern Free Trade Treaty was the North American Free Trade Act (NAFTA) between the US, Canada and Mexico, which became law on January 1,1994. The next year, and an even bigger Free Trade Treaty came into being on January 1, 1995, called the World Trade Organization (WTO) which presently encompasses 144 countries with China joining in 2001. Today, the average import tax rate into the US is 2.5% (which is almost non-existent).
What is the Result of Free Trade Treaties?
The results of Free Trade Treaties has been very mixed. The winners: people who like $6 shirts from Old Navy (and don’t care how it got that way); China; India; Multi-national Corporations; and anti-union people. The losers: small businesses, the American middle class, small towns (the multiple manufacturing ghost towns caused by offshoring), manufacturing jobs and its related jobs, and multiple other conditions (see the movie “The True Cost“).
Why Have Free Trade Treaties been Bad for the United States?
When Free Trade Treaties were initially discussed, economists knew that there would be loss of some US jobs, especially the industrial type jobs. It was 1994, America was in the middle of an economic boom, loss of US jobs didn’t seem to be such a big deal. However, the economists were greatly off in their predictions. According to the Economic Policy Institute, NAFTA costs the US 3.1 million jobs (examples: car manufacturers moved many plants to Mexico; Hersheys moved all of its operations to Mexico), and the World Trade Organization costs the US over 20 million jobs (even a recent report by the Congressional Research Service acknowledges that America lost over 2 million factory jobs just to China).
Why were the economists so far off? First, globalization – all of the world became instantly interconnected by telephone, internet and travel. Because of this interconnectedeness, US corporations suddenly became multi-national corporations to take advantage of several issues: decreased of costs of wages, minimal safety regulations for workers, minimal regulation of pollution standards, subsidies from the US government to move their US companies overseas, avoid American taxation, and special kickbacks to CEOs from foreign governments to take advantage of the 0% import tax into the United States. To become multi-national corporations, CEOs had to offshore millions of U.S. jobs, not only manufacturing jobs, but also technical and service jobs. And it is still going on.The US offshored more than 2.6 million jobs in 2013 and there is a potential of offshoring another 25% of the American workforce or around 40 million jobs in the next few years according to the Congressional Research Service. These are all products of the Free Trade Treaties.
For more details (and graphs and citations) on the Global economy see my Blog entry: The global economy: A Short Lesson.
Who Are For the TPP and Who Are Against It?
The people who are for are the ones that wrote the Trans-Pacific Partnership, obviously. The people who wrote the TPP: 28 trade advisory committees have been intimately involved in the negotiations. Of the 566 committee members, 480, or 85 percent, are senior corporate executives or representatives from industry lobbying groups. Many of the advisory committees are made up entirely of industry representatives. From leaked documents, we know that Big Pharma is a big player. The TPP has written sections to increase the length of their drug patents and make generics more difficult to produce. Big Ag has been a big player and they have been trying to get countries to accept their GMO vegetables/fruits or hormonally treated livestock. We also know that intellectual property is also another section that has been leaked, which means this involves number of large corporations, Wall Street as well as Hollywood/Big Media. So, in a couple of words the ones that wrote the TPP: Big Businesses (small companies not allowed).
Politically, who supports Big Business? The biggest supporter is the Republican Party. Even most Tea party members support the TPP, see the voting record. Another group of supporters are big corporate Democrats, called “bought” Democrats, which are less than 15% of all Democrats. And, of course, President Barack Obama.
Who is against the TPP? The middle class, the poor, progressives, Tea Party members who have seen US jobs offshored, people who care about the US economy and its future as well as organized labor. If you do see anything printed in the newspaper about the TPP, it says that the only opponents to the TPP is organized labor. Really?!! Organized labor comprises only 7% of private businesses. It is the ordinary citizens who are against the TPP and we don’t even get to vote on this. Not only do we not get to vote on the issue, we are forbidden to read it. And Big Media rarely report anything about the TPP. But, the grassroots movement from the opponents of the TPP have been making the legislative process bumpy.
The Legislative Process of the TPP
Now this is where things get a little hairy. After years and years of private negotiations, the TPP finally was brought to Congress, just at a time when things seemed favorable for passage, a Republican majority in both the Senate and The House. To get around the usual wrangling in Congress, the President with the permission of Congress is trying to pass the Trade Promotion Authority – which is used to be called “Fast Track” (probably changed the name to confuse the public), which means Congress can not debate aspects or add amendments to the bill, just an up or down vote. This was introduced to the Senate, however it could not pass the 60 vote filibuster needed to send it to the House. So, to entice some Democrats, the Senate added another bill that would help out workers that will be displaced by the TPP, called the Trade Adjustment Assistance Enhancement Act (TAA). These two bills were coupled and sent to the House of Representatives to be passed. However, the House couldn’t get enough votes to pass the coupled package. Then, this where the wrangling starts. The House of Representatives then de-coupled the two bills and just voted on the Fast Track (TPA) and passed it on a 219-211 vote. However, it is not law because the two bills were de-coupled. So, the House just kicked the can over to the Senate to see if they can pass Fast Track without the Trade Adjustment Assistance Enhancement Act. The Senate vote is scheduled for Tuesday, June 23rd. Write to your Senators. We have seen what previous Free Trade agreements have caused. The TPP is absolutely no different. And China can join this treaty as well. Why President Obama is pursuing this is beyond me. Stop The TPP. My prediction: The TPP, if passed, will cause a loss of more than 5 million US jobs in 15 years and make income inequality worse.