The secret text of the Trans-Pacific Partnership (TPP) trade agreement has finally been made public. No time has been lost in debating its terms. Congress adopted a “fast track” procedure that limits floor debate and bans the filibuster and any consideration of amendments to the legislation required to implement the agreement by changing American law. President Barack Obama would like a vote by the end of this year. However, due to a short and crowded schedule, Congress is unlikely to get to the issue until next year. Thus, everyone will have time to voice opinions and interpretations.
Before getting into the specific details of the text, one thing must be understood from the outset. TPP is not about “free trade” in the sense of that great sophistry of economic theory. If this was about academic notions it would not have taken diplomats from 11 countries six years to negotiate its terms (after earlier attempts collapsed). As Alexander Hamilton noted, “There are some who maintain that trade will regulate itself [but] this is one of those speculative paradoxes…rejected by every man acquainted with commercial history.” Each nation entered the talks with the objective of gaining an advantage for its own interests. The verdict on the TPP should rest entirely on whether sober analysis concludes that the agreement promises net gains to U.S.-based producers.
The White House and U.S. Trade Representative’s websites have been festooned with “Made in America” banners. There are two ways to bolster the amount of goods and services produced in domestic enterprises employing American workers: expand exports or limit imports. In other words, use government policy to help beat foreign competitors in all markets. Of course, any notion of an active trade strategy is anathema to “free trade” theory; the objective of which is to get the nation-state out of the picture. Proponents of “free trade” need to be herded back to their faculty lounges. They have no place in the real world where national societies compete with every weapon conceivable to gain the largest share of the world’s wealth and power they can.
Joining the theorists in their airy cloisters should be the corporate lobbyists who use the rhetoric of “free trade” to cover their attempts to escape their larger responsibilities to society. To the lobbyists, removing government “restrictions” means their firms can take whatever action boosts their profits; which may well entail out-sourcing production and jobs to other lands. Indeed, the creation of “global supply chains” has been a major result of the liberalizing of trade in past agreements. In business circles, the term “globalization” has replaced “international” when discussing trade, ignoring the fact that people still live, work and identify with their national communities—- something too many denizens of corporate boardrooms no longer do. These elites somehow believe they are above or at least outside the concerns of normal society. It is the duty of government to remind them that they are not.
Looking around the world, no one can really believe that the geographical distribution of economic assets—aircraft factories, shipyards, research labs, steel mills, high tech facilities, fabrication plants, pools of capital, skilled workers, et al; do not impact the balance of power and prosperity, national security and living standards, growth rates and individual opportunity.
It is the ultimate responsibility of those in government to insure that the United States continues to lead the world on all counts in the 21st century as in the 20th century. Trade is a piece of this larger strategy; it is not an end in itself or the sole province of narrow, private interests. As the great economic thinker Joseph Schumpeter put it in his seminal work Capitalism, Socialism and Democracy: “We have seen that the industrialist and the merchant, as far as they are entrepreneurs, also fill a function of leadership. But economic leadership of this type does not readily expand…into the leadership of nations. On the contrary, the ledger and the cost calculation absorb and confine.” It can also lead to dangerous decisions such as transferring capital, production capacity and technology to strategic adversaries like China in order to make a fast buck.
China is not part of the TPP, but the Obama administration has not been clear about the future. When challenged on national security grounds, the administration has claimed that TPP will strengthen the alignment of Pacific Rim countries with the U.S. (and against Beijing). On other occasions, to placate transnational business groups who don’t want strategic considerations to get in the way of commerce, it has implied the trade pact could be expanded to the mainland.
For over twenty years I worked as part of the effort to build a bipartisan coalition in Washington to look at trade deals from a nationalist perspective. I came at the task from the Right, with national security and the balance of power as my principle concerns. It was not, however, easy to find allies on the Left despite the fact that most of the votes against past trade agreements have come from Democrats.
Labor unions are the natural ally of “patriotic” business leaders who want to keep their enterprises open in America. They share a common national interest in defeating foreign rivals who would close U.S. plants and relocate jobs overseas. Other elements on the Left, however, have different ideological agendas which make cooperation difficult and which alienate many conservatives from reaching across the aisle. At its core, the Left is anti-nationalist, especially when the nation in question is the United States.
For example, the U.S. has a major competitive advantage in modern medicine, particularly in pharmaceuticals. Everyone the world over wants the advanced therapeutic drugs, life-saving treatments and biotechnology that only American firms with their deep research capabilities can create—-but they don’t want to pay for them. They want to steal the formulas and produce them overseas for less by skipping the high costs of research and development. The Left sides with the foreign interests, denouncing “Big Pharma” for wanting to protect its intellectual property. In this, the Left jettisons any nationalist pretensions to indulge in another anti-capitalist tirade.
Health Gap put out a statement claiming “the real impact of Pharma’s extortionate pricing will be felt on the ground, in hospitals, clinics, and communities around the Pacific rim where patients, insurers, and governments will be priced out of the market or forced to forego other needed services simply to stay alive. Once again, we have a trade deal that puts profits over human lives.” There is no recognition here that it costs huge sums to develop new drugs or medical equipment; not to mention money spent on projects that turn out to be dead ends. According to the Tufts Center for the Study of Drug Development, the R&D cost for a new drug is over $1 billion (in 2013 dollars). Slower sales of new drugs, weak prices for older drugs replaced by generics, and reduced productivity of R&D as the limits of science are being pushed, are weakening the industry. The Left would kill the goose that lays the golden eggs. Its ideology makes a virtue out of the theft of intellectual property. A crown jewel of American science and industry is to be vilified and plundered rather than rewarded.
The Left also sides with foreign governments who put restrictions on the import of American agricultural goods, the most productive farm sector in the world. And they throw in irrelevant issues such as the “failure” of the TPP to give employment “rights” to lesbian, gay, bisexual and transgender (LGBT) individuals.
Americans might actually be thankful for foreign objections to demands from the Green movement to set new and crippling standards on energy use and production. Greenpeace denounced TPP,
It doesn’t reference climate change at all, while enshrining new legal means – including investor-state dispute settlement (ISDS) provisions – that would give corporate polluters the right to directly challenge state and federal regulations. It would also accelerate the climate crisis by facilitating the build-out of new liquid natural gas (LNG) export terminals. More LNG trade means more fracking for natural gas….By introducing this treaty on the cusp of the Paris climate summit, President Obama has contradicted his own stated commitments to do everything in his power to solve the climate crisis.
The credit for excluding climate change from the TPP does not go to President Obama, who has been on a tear to cripple the U.S. energy industry. Credit goes to foreign governments who have not bought into the Left’s silly notion that economic progress is a bad thing. It does foretell of the difficulties that the Greens will face at the UN conference in Paris where the same governments, reinforced many fold, will resist any mandates to cut back their attempts to improve their people’s living conditions.
And so should be the case in the United States. TPP is a mixed bag. It needs to be carefully read and considered to determine whether on balance it improves the position of America in the world economy. With the trade deficit on the rise, hitting $727 billion last year, U.S. international commercial policy continues to be in crisis. Millions of “discouraged” Americans have dropped out of the economy because their careers have been destroyed by foreign rivals. If TPP turns out to be just more of the same failed approach, it needs to be rejected and a new strategy adopted. That is the proper question to put at the center of the debate.