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The False Promise of Obama's Trade Deals
'21st-century' trade deals proposed by the Obama administration won't help American workers – and will hurt foreign ones
It is bad enough that President Obama is reversing his campaign pledge and supporting Bush-era trade deals with Korea, Colombia and Panama. Starting this week in Chicago, the US will be hosting the first major trade negotiations since the "Battle in Seattle" World Trade Organisation talks came here in 1999. This occasion is for the Trans-Pacific Partnership (TPP) with a wide range of industrialised and developing Pacific Rim countries.
President Barack Obama pauses as he speaks during a Rural Economic Forum in August. (Photograph: Carolyn Kaster/AP)
As part of his plan to revive the US economy and create jobs, Obama claims he will be unveiling "a trade agreement for the 21st century". Ironically, though, he will be pushing the same "Nafta-style" trade pacts he campaigned against, and to howls of protest from his own electoral base. Let us not forget what he said:
"I voted against Cafta, never supported Nafta, and will not support Nafta-style trade agreements in the future," Obama told Ohio voters (pdf) in 2008. "While Nafta gave broad rights to investors, it paid only lip service to the rights of labor and the importance of environmental protection."
"Lip service" would be a good way to describe the reforms in US trade policy under Obama. As co-chairs of a three-country task force to reform Nafta, we can say that not only do the administration's TPP proposals fail to reform most of Nafta's worst provisions, they actually take several steps backward.
From an economic perspective, the TPP would be the largest US trade agreement since Nafta, since it involves not only developing countries (Peru, Vietnam, Malaysia, Brunei, Singapore), but also four OECD countries (Chile, the United States, Australia and New Zealand). But while some argue that this makes the TPP "the single most important US trade initiative", a UN study (pdf) points out that the economic impact of the TPP will be quite limited because most of the participants already have bilateral trade agreements with TPP counterparts.
"Lip service" would be a good way to describe the reforms in US trade policy under Obama. In 2007, congressional Democrats won some minor but important reforms to post-Nafta trade agreements, in the areas of labour enforcement, environmental protection and intellectual property rules. Obama hasn't even held onto these in current negotiations, giving up important language to allow easier access to generic medicines in the pending agreement with Korea. By all accounts, the administration won't put them in the TPP either. As one unnamed trade official told Inside US Trade, "2007 was 2007, 2011 is 2011."
US Secretary of State Hilary Clinton recently gave the TPP her own lip service in Hong Kong. There, she touted the TPP as setting "a new high standard for multilateral free trade", one that could achieve "sustainable, inclusive growth". Clinton alluded to the agreed 2007 protections on labour rights, the environment and intellectual property, then added that these "21st-century" US proposals actually are all about "regulatory coherence".
If that sounds to you like a sanitised term for deregulation, you're right. The "21st-century trade agreement" will not better balance the rights of multinational firms with the needs of the majority; rather, it will grant more rights to investors.
By all accounts, the US TPP negotiators continue to push for the controversial investor-state dispute provision, which allows multinationals to directly sue a foreign government for regulatory actions – rather than have such disputes be conducted by governments, as is the case at the WTO. The US-Australia free trade agreement does not include the investor-state investment provision, and the Australian government has indicated strongly that it will not consider such a provision for the TPP. No matter. What did Obama say in 2008 about no longer "giving broad rights to investors"?
Then, with the power to sue other governments that try to regulate in hand, the US proposals would force trading partners to open their financial services sectors to the very companies that brought us the recent financial crisis. Such provisions fly in the face of recommendations on investment from a group of over 250 US and globally renowned economists, recommendations that merely echoed those from some of the members of President Obama's own state department panel named to review the US language.
At this point, US proposals for the TPP hardly break from the Nafta mold, and many weaken or eliminate the few important advances we've seen since Nafta in US trade proposals. Like Nafta, current US proposals fail to account for asymmetries among trading partners and restrict the ability of the US and its trading partners to provide the regulations that their democracies want to enable financial stability, economic growth and jobs.
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8 Comments so far
Show AllIt is incredible that democrats can just roll over and accept these job killing deals proposed by Obama. Another proof that despite claims to the contrary there are two right wing parties in the United States.
Any protests planned?
Awful news, but then we are getting numb to the constant flow of the same.
Yet our Democratic Congressmen, like Jason Altmire, saying that they support "fair trade" also go along with this on the premis that the Korean agreement will improve exports and increase US jobs. All Jason asks for is enough window dressing to say that he's still for fair trade. Not surprisingly Obama is happy to oblige. Our labor leaders ae not much better. It is revealing to see how labor fractures. USW opposing the Korean free trade act on the premise that it will hurt US steel, rubber and glass jobs--undoubtedly true, vs. UAW which supports it, buying into the notion that we might sell more US cars to Korea increasing US auto jobs. I doubt that this will prove to be the case but it certainly demonstrates just how weak labor is, how little solidarity it shows, how easy it is to fracture it. Go ahead and stomp on me--I'm a US worker supported by my union and represented by the .my government.
The great benefit of "trade" deals like NAFTA, CAFTA and TPP is that they increase both the complexity and interdependency of the world's so-called "economies".
That way, when the fraudulent schemes of the investor class crash one country's ponzi-conomy, the contagion can quickly spread to all of the others.
A historical parallel to this is World War I, only in a military sense. European nations wove a tapestry of complex treaties so that the assassination of one archduke was enough to collapse the whole world order.
"Trade". The word is constantly invoked, but never defined. Let me take a whack at it.
For the USA, trade generally means to export jobs, agricultural products and raw materials while importing finished goods.
A good name for this would be reverse colonialism. Export raw materials, import finished goods. Export apples, import Toyotas. Create jobs for migrant apple pickers, lay off well-paid union auto workers. Brilliant.
Export tobacco and cotton, import cloth and tea. Rebellion anyone?
"Trade" American's jobs for Multi-national corporate profits.
Even when foreigners buy American TV (their most likely American purchase), it creates jobs for trained foreigners to install more cable TV but it creates no additional US jobs to send American TV channels over satellites to the entire world.
Ford, GM etc will build cars and car parts in Korea with Korean labor for both Korean and American buyers.
This is analogous to auto parts coming in from Mexico and China currently.
Check out "WalMart the High Cost of Low Prices" and "Company Men" for info-tainment.
Indeed written by eminent minds. But first let us take the issue at hand: Jobs creation bill - largely as yet about home challenges: the circumstantial first step of the moment, with the lull we see in the international market relatively tied to one or the other forms of regional trade and investment progressive relationships. It is still possible to catch two birds with one string, yet it appears a bird in hand is worth twice in the bush. "Trade deals" should be in focus as argued because of what needs be done with outdated capitalist practices and on issues like that it is rather hard to too quickly pre-empt falsehood, if we are to believe "the mouth speaketh at the fulness of the heart"!
It is common place that reforms with one or a few clearly defined goals and a limited number of actors soon become an involved episode - one giving rise to various types of resistance and or support, thus allowing for different ways to evaluate the outcomes. In politics up-to-date, we won't deny having gone through this and noting how "bottom-heavy" it has been! Surely, it has been a good lesson whatever the contexts they show-up here.
Trade deals are also foreign-policy bound and in the area continuous mending of reputation, as you all know will go a long way for the confidence and courage needed for crucial steps rightly argued here. For now, however, join on the chorus of "Jobs creation bill" to tame internal economic and political problems to avoid anger and hieghten trust - a kind of social capital necessary to face the external world by proving own credibility for all that has been seen so far. It is the hard truth and yet that is it!
As a former "Constitutional Law Professor", President Obama should not have to be reminded that there is no provision in the U.S. Constitution to pass agreements, only laws and treaties.
NAFTA failed to pass as a treaty. Enforcement of this fraud gives aid and comfort to the modern day successors of the East India Company.
Prosperity will return to the American people only when we have driven the corporate quislings from Congress and elected those willing to repudiate NAFTA.