The Washington Outsider

TPP No Longer Secret:  Trade Policy Outline Implications Must Be Reviewed Thoroughly

11/7/2015

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 The Transpacific Partnership (TPP) text was finally released in the US for the mandatory 60-day Congressional review, plus the added 30-days before the legislation can be signed into Law.  Almost immediately, proponents started chastising opponents for reintegrating their past criticism of assumptions made about the secret free trade agreement before they were able to review the 6,000-page document.  Although these proponents are correct when it comes to criticizing the details of the TPP agreement before a proper analysis can be done, which it is equally inappropriate to prematurely parade around the assumed benefits of TPP, criticism targeting the structure of the agreement is valid.
 
The simple truth is that the length of the TPP agreement makes the task of reading it a time-consuming challenge.  Meanwhile, it is the policy implications of the agreement that truly matter.  Understanding how the language of the text will affect new trade policies is necessary before the Peoples of TPP countries can accept the agreement.  Skimming over the actual text, TPP reads more like a revision to the weak World Trade Organization (WTO) that attempts to sneak free trade into the global economy as a standard.  Relying on policy commitments and pledges, TPP is far from the detailed contract it needs to be.  Nearly six thousand pages may appear to be a lot, but not when it comes to coordinating trade between 12 very different economies. ​
Given TPP addresses the trade policies of 12 very different countries, seeks to liberalize trade along geopolitical borders, instead of focusing on the treatment of industrial sectors across the globe, affects over 800 million people, and impacts about 40% of the world’s economy, the Peoples and governments of TPP nations need time to fully review, comprehend, and adjust their parts of the deal based on what their Peoples are willing to accept. 
 
Where poorer countries like Vietnam, Indonesia, South Korea, Philippines, Thailand, and Taiwan stand to lose the most if they reject TPP, the US, Japan, and Canada are the three countries with the freedom to improve upon TPP.  For countries that fear rising Chinese aggression, however, TPP fails to help, because China can simply shift production over to countries like Vietnam, i.e. act like the world’s largest corporation, in order to gain tax benefits.  In doing so, China is able to gain added political and economic leverage over its own People, thus TPP becomes beneficial to China instead of harmful.
 
Learning the wrong lessons from the Obamacare struggle, the Obama Administration has sought to keep the free trade agreement from public scrutiny.  In doing so, the Democratic Administration repeated the Clinton Administration’s approach to healthcare reform by writing a piece of legislation then expecting the American People to simply accept it.  Unlike the Affordable Care Act where the prototype of the bill had been scrutinized since the mid-90s and adapted over a year-long debate that devolved when Republicans politicized the healthcare reform effort, the Obama Administration is truly using TPP to cram free trade and other flawed trade policies down the throats of the American People without proper review.  
 
Focusing solely on the free trade aspects of TPP, TPP continues to suffer from the same structural flaws of NAFTA.  The simple fact is that free trade deleverages workers, businesses, and entire industries in poor and rich countries alike. 
 
 
1.  Although TPP attempts to address labor rights issues like collective bargaining, minimum wage, work conditions, forced labor, and child labor, it does so by setting diplomatic goals.  Given efforts like the Universal Declaration of Human Rights have already failed to eliminate many of these issues, more commitments, even if they come with economic incentives, are likely to be just as limited in their success. 
 
Even if successful, the simple fact is that improved labor conditions in developing countries will not trump economic realities.  Poorer countries have lower standards of living, so their workers are paid than less than their American counterparts, which means workers in wealthier countries will still be at a sharp disadvantage.  This means workers are deleveraged in poor and rich countries alike when seeking to improve their wages and standards of living.
 
2.   Beyond the distorting effects of wages and standards of living, the massive number of exemptions in the TPP agreement defeats the entire purpose behind using free trade as a basis for improve trade.   
 
In addition, apparent preservation of certain import quotas, which are actual trade barriers, undermines the very reason for eliminating trade.  If anything, quotas do far more to distort and inhibit trade than tariffs, which help balance the cost of doing business in wealthier countries and limit the distorting effects of economic disparities.
 
Free Trade is a model used to eliminate the distorting effects government policies have on economies and trade; however, TPP cannot address the distorting effects of economic disparity between countries.  Meanwhile, governments will always have interests in asserting their will on their economies, so government will always distort their economies.  As such, free trade is a not a real world policy to be pursued. 
 
That said, the truth is that these expectations are probably what the TPP negotiations should have focused on.  Unlike Mexico and Vietnam, the US demands very few exemptions from the overall provisions of free trade.  In doing so, the US fails to address its own economic interests and sets free trade up for long-term failure once again.
 
Quite frankly, the world needs more trade, but not necessarily more free trade.
 
In accordance, free trade provisions of the TPP agreement should be negotiated bilaterally and attempt to balance the trade interests of both partner nations.  Because diplomatic interests change with time, TPP needs to develop the diplomatic infrastructure needed for countries to continually evaluate and reassess their bilateral trade agreements. 
 
3.  The simple fact is that every dollar of tariff eliminated is a dollar advantage to foreign competitors, because they do not need to pay domestic taxes, obey regulations, and pay prevailing wages.  Where “lack of tariffs” is the basis for free trade agreements, the necessary costs of doing business in countries like the US demands tariffs should be equal to domestic tax rates.
 
The cold economic truth is that American businesses have to pay taxes to support the US government and the services it provides the US economy as well as global economy in the case of the US subsidized global security.  Because this tax burden is higher in countries like the US, as well as countries like India thanks to their high social welfare costs, not taxing foreign competitors the same amount as domestic businesses displaces those costs onto American business and consumers.
 
4.  Trade barriers often exist to address an issue.  The Obama Administration argues TPP will open foreign markets to US agriculture, yet US agriculture is subsidized via tax cuts to help lower prices for American consumers. 
 
Because commodities like oil and grains are already priced based on global supply and demand when their contracts are traded on the commodities markets, greater access to foreign markets means American supplies will prices on global demand.  Because global demand is practically limitless and production of capacity agricultural goods is very limited,   food prices can only be expected to go up.  Those in poorer countries will eventually be unable to buy American agricultural goods, yet others will be able to sell their grains to the US.  Because costs will have to be cut, outsourcing means American farmers will be hurt in the long-run.  Just as the world has seen steep prices shifts in oil prices, the fragile globalized economy is easily disrupted.   
 
Trade barriers help to counteract the fragility of a global economy and the economic disparities between countries.
 
5.  Furthermore, TPP is about more than free trade.  Unfortunately, free trade is the central goal of TPP; whereas, other trade performance enhancing measures seem to take a back seat in terms of their significance.  Instead easing trade barriers by making commerce more efficient and raising standards on regulations, TPP basically outlines aspirations for improved cooperation.   
 
6.  Meanwhile, intellectual property, for example, is poorly addressed.  Instead of developing a universal patent process to balance the need to protect intellectual property and open the world to innovation, the Obama Administration has extracted some concessions and pledges.  Mainly, it gives various parties the ability to challenge patent claims in all TPP Nations, thus creating an opportunity to tangle patent litigation across the globe.  Not only will this add costs to the patent process and make it effectively impossible to enforce patent claims, it will allow big companies to further suppress patent claims of small innovators.
 
7. At the same time, the TPP threatens the economic sovereignty of member nations.  For example, foreign investors would be given the opportunity to sue governments over policies that harm their interests.  In essence, it opens governments up to never-ending litigation and neuters the ability of governments to pursue the public good over special interests. 
 
Although TPP also undermines the sovereignty of nations by dictating policy on matters like immigration, the text ends with a laundry list of vague statements that basically dissolve governments of following provisions they do not like and can justify.  As a sponsor of TPP, the US will try to follow the provisions, but others will cheat while the US will be accused of cheating.  Given it took 7-years to finalize the TPP agreement, trade complaints are unlikely to be resolved in a timely manner.  In essence, TPP simply adds another lay of bureaucracy to the trade issues TPP members already face.
 
8.  Finally, TPP fails to address the fundamentals behind currency manipulation.  What this means is that benefits of TPP cannot be realized, because the TPP nations will simply be trading one set of trade barriers for another. 
 
 
Moreover, TPP is flawed, because it is written too broadly and too vaguely to be used as an actual trade agreement while it does not address any of the contentious problems that actually need addressed between trade partners.  The 7-years worth of work that the Obama Administration did, however, is not necessarily wasted.  There are critical issues with the WTO and already existing trade policies that need addressed.  After some recalibrations, this TPP agreement, minus the free-trade provisions, could be used as a template for building better trade relationships on a global scale.
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      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
      • Was the California Supreme Court Right in Legalizing Gay Marriage?
      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
      • The Second Amendment: Not Outdated >
        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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