Negotiations on the Trans-Pacific Partnership (TPP) free trade treaty between the U.S. and 11 other Pacific Rim countries were concluded Oct. 5, 2015.
Although the full TPP document is still a secret – to all but the representatives of multinational corporations who chaired the 30 committees and told the government trade representatives what to negotiate – some details of the super-secret deal have been leaking out.
And if the leaks are any indication of what’s to come when full details are released, consumers, workers, and everyone concerned about the growing global “corporatization” of democracy, are in for a big shock.
Some Early Leaks
One of the most onerous of the TPP provisions leaked involves big pharmaceutical companies. In the U.S. they have been given 12 years of monopoly rights over the sale of certain life-saving drugs. Lower cost generics are banned for that period. That ban on competition has already resulted in runaway price gouging of U.S. consumers desperately in need of life-saving drugs. The accelerating cost of the drugs in the U.S. is also making insurance premiums unaffordable. This multi-year protection from lower cost generic drugs for “Big Pharma” is now embedded into the TPP as well. Those ill and in need of life-saving drugs throughout the other 11 countries – mostly the poor and much of the working classes – will now be denied lower cost alternatives for life saving drugs, as in the U.S.
The minimum years of price protection from generics under the TPP is being reported as between 5 to 8 years. But the 5 to 8 years can be extended up to 11 years. So millions of people throughout the 11 countries, who might have been able to get the generic drug versions, and save their lives, will now go without for more than a decade to come.
Another area is auto parts manufacturing. The U.S. has agreed to allow more Japanese auto parts imported into the U.S. But it will be Japanese auto parts manufactured in Japan’s factories in China. In exchange, U.S. auto companies will be allowed to set up more plants and production in Southeast Asia. Both provisions will result in lost jobs in the U.S.
Another people-killer provision involves the Tobacco companies. Disputes with governments trying to reduce smoking have in the past led to tobacco companies suing governments. Now the disputes must be arbitrated in special TPP courts. That means, at best, token limitations on tobacco sales. In exchange, it also means governments are effectively banned from limiting tobacco product sales by legislation or regulation. They must go to TPP courts to arbitrate efforts to regulate tobacco sales, where the companies will tie up decisions for years while continuing their current practices.
The TPP gives corporations in general even more rights. Under the TPP, they can sue governments to prevent legislation or regulations that contradict the TPP treaty. Want to do something about big Pharma “price gouging,” as in the U.S.? Forget it. Legislation addressing price gouging contradicts the treaty. Want to regulate? Forget it, see you in TPP court.
What the ban on any legislation and regulation contrary to the TPP means is that democracy and national sovereignty does not exist if it does not conform to free trade deals negotiated by the corporations themselves. The TPP thus represents a major leap toward a global corporate political system, where the economic interests of corporations take precedence over national governments, elected representatives, and popular sovereignty.
Selling the TPP
The Obama administration has publicly declared the TPP will reduce U.S. tariffs on 18,000 exports. This will lower the cost of U.S. businesses trying to sell to the other countries and create more export jobs. But there’s nothing to stop countries from lowering their currencies to more than offset the tariff reductions. Japan and most of the 11 countries have already been doing that and will continue as the global economy slows. Japan has been the biggest currency manipulator, reducing its Yen by more than 20 percent to the dollar. But no one in the U.S. complains. They complain instead about China “manipulating” its currency, even though China’s currency has been pegged to the dollar for years.
The TPP is not primarily about exporting more goods from the U.S. The TPP is about creating more favorable conditions for U.S. corporations to invest in the other countries, and then re-export from those countries at lower costs, and thus higher profits, back to the U.S. without having to pay tariffs. The TPP is also about containing China.
China’s recent global economic initiatives have the U.S. on the economic defensive, challenging its global economic hegemony. China’s recently created Asian Infrastructure Bank, its ‘silk road’ trade initiative, its forming of its own Asian free trade zone, the imminent approval of its currency, the Yuan, as a global reserve and trading currency by the IMF, and its deepening economic relationships with the U.K., Germany and other Euro countries has the U.S. on the economic defensive. The passage of the TPP is thus strategic for the U.S. to counter these China initiatives and its economic momentum. Should the TPP fail, that momentum would no doubt accelerate. That in turn would make the U.S. political and military strategy to contain China even more difficult. The TPP is thus the lynchpin for U.S. policy in general in Asia – economic, political and military.
The TPP and Obama’s Free Trade Legacy
The TPP is the brainchild of U.S. multinational corporations, who demanded a pacific region free trade treaty as soon as U.S. President Barack Obama took office in 2009. In quick response to multinational U.S. corporate pressure, in early 2010 Obama appointed then-CEO of General Electric Corporation, Jeff Immelt, to head up the administration’s initiatives to expand free trade. Along with recommendations to protect U.S. patents and expand tax breaks for exporters, the Immelt Committee introduced proposals for the TPP in 2010.
Although Obama had campaigned for office in 2008 on the promise of renegotiating existing free trade treaties that were costing U.S. workers millions of jobs, like NAFTA, and promised not to introduce new treaties, he quickly embraced, pushed, and signed new free trade treaties with Latin America (Panama, Colombia) and Asia (South Korea).
In fact, Obama has either initiated or restarted bilateral, country-to-country, free trade negotiations with no fewer than 18 different countries since taking office. That 18 is in addition to free trade negotiations that have been launched with the 28 countries in the European Union, and a similar multi-country free trade negotiation initiated with various Middle East countries.
One of Obama’s dubious legacies therefore will be the recognition that he has been the biggest promoter of free trade in U.S. history – bigger than even his predecessors, George W. Bush and Bill Clinton. That dubious legacy depends, however, on the passage of the TPP first. Should it pass in 2016, which is more likely than not, the TPP will no doubt serve as the “template” for pending deals involving more than 50 countries, which will quickly fall in line once the TPP is ratified. The fight against free trade is therefore only beginning. Lined up behind TPP are free trade deals with scores of other countries.
Jack Rasmus is the author of ‘Systemic Fragility in the Global Economy’, Clarity Press, November 2015. His website is www.kyklosproductions.com.