Tag Archives: Trans Pacific Partnership

More Drivel: Trump, Trade, and Unicorns

For those who haven’t had enough of the Trumpian penchant for stringing together cliches, generalizations, buzz words, dog whistles, and nonsense, there’s a heavy dose of all the above in the Pensacola Speech…including “America First” isolationism.  Evidently, the United States of America will be “great again” when we posture, pose, and pound our way to the elimination of international trade agreements.  Gone the Trans Pacific Partnership.

Lovely.  The TPP was a flawed proposal, but it was a close version of what the Chinese thought it was — a way to contain Chinese influence in the region.  So, instead of ongoing negotiations we have the increasing importance of the Regional Comprehensive Economic Partnership spearheaded by (Guess Who?) China. [CNBC]

“The mainland is already the biggest trading partner for the bulk of Asian countries, but it’s gradually increasing its political and economic sway by leading projects that impact the region. Those included the Asian Infrastructure Investment Bank and the “One Belt, One Road” infrastructure program.”  [CNBC]

The Australians have figured this out, with one analysis observing the TPP model was better fitted to large developed economies (read: US, Australia, Japan) but without US participation and leadership, the Chinese version RCEP is currently the only game in town.

“We will hopefully keep NAFTA…” he said in Pensacola, but the talks are stalled.  As of November 22, 2017 the outlook wasn’t all that optimistic healthy:

“The United States, Mexico and Canada failed to resolve any major differences in a fifth round of talks to rework the NAFTA trade deal, drawing a swift complaint from the Trump administration on Tuesday that the lack of progress could doom the process.” [Fortune]

And more:

U.S. President Donald Trump has threatened to withdraw from NAFTA unless he can rework it in favor of the United States, arguing that the pact has hollowed out U.S. manufacturing and caused a trade deficit of over $60 billion with Mexico.  The U.S. official expressed frustration that Mexico and Canada were not engaging in talks on the auto content proposal and others aimed at “rebalancing” trade in the region. [Fortune]

Here’s a Pro Tip:  In order to negotiate you have to have a partner.  In this case, partners. If the partners are not at the table then instead of a “reworked” agreement in favor of the US we have nothing.   Trump is also wrong to assume that NAFTA is the only game in town:

“This year, for the first time, 94% of goods moved tax-free across borders in the Pacific Alliance, a trading bloc that includes Mexico, Colombia, Chile and Peru. Formed in 2011, it accounts for half of all trade in the region and covers about 200 million people.

“We are trading as a group of countries in agreement on free trade,” Mexico’s foreign minister, Luis Videgaray,said Wednesday evening in New York. Videgaray spoke alongside the presidents of Colombia and Chile, as well as a Peru’s trade minister.” [CNNMoney]

In other words, watch what happens in the Pacific Alliance, and the South American trade bloc Mercosur.   And, the current  trade negotiations between Mexico and Argentina likely aren’t founded on Mexican reaction to Trump’s continual references to His Wall, but are more likely the result of comments like the ones he made in Pensacola — that NAFTA should benefit the US, and everyone else gets the hind quarters.  Moving from the general to the specific issues with agricultural trade between Mexico and South American nations:

“Mexico bought 100,800 tonnes of yellow corn from Brazil in September and 41,000 from Argentina — a drop in the ocean compared with the 10.5m tonnes bought from the US. But so far this year, it has bought 11 per cent more of the commodity from the two South American countries than in all of 2016, according to government data.” [FinancialTimes]

Pro Tip Number Two: Always assume a negotiator has a back up plan, and it probably won’t be the one you want.  Are we Great yet?  Have we rounded up all those Unicorns Trump said we were going to get?

Unicorn driven negotiations aren’t successful.  The Trump administration appears to believe a tenuous notion: if you start with a Unicorn then you can negotiate your way into getting the Unicorn.  Unicorn 1: The US gets 80+% content on cars in NAFTA (even though auto manufacturers say this will make their autos noncompetitive in the marketplace.}  Saying, “I want my Unicorn, and I’m walking away if I don’t get it,” assumes there’s a Unicorn in the first place, and you can get the thing in the second.

Those who persist in believing there are Unicorns may explain their elusiveness by saying they must all be grazing somewhere else.  Fine.  However, the Trump administration chasing its trade Unicorns would be well advised to remember that if they exist but are elusive it’s because they have other pastures in which to play.  The Chinese are more than willing to step in to fill the vacuum created by the loss of American leadership in the TPP, and the Mexicans are perfectly willing to increase their trade with Pacific Alliance and Mercosur partners in South America.  They’ve already done so.

The rhetorical sound track of Trump speeches in which we are promised Unicorns (American Made, America First, American Work) is a thin and tinny cover for inept trade talks during which bluster replaces substance and the Unicorns are no more substantial than the empty promises.

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Filed under Economy, Politics

New Year’s Revolutions: Trading Away Our National Sovereignty

Cargo ShipThat was a nice vacation!  The only sticky part was watching too much cable broadcasting, which is almost sufficient to render a person capable of believing that THE most important feature of any news story is “how it will affect the 2014, — or even the 2016 U.S. elections.”   Not. So. Fast.  There are some stories worth watching because they have implications for our economy — whether they determine election outcomes or not.   Here’s one to watch in 2014.

The Trans Pacific Partnership Treaty.  “The Trans-Pacific Partnership Agreement (“TPP”) is a free trade agreement currently being negotiated by nine countries: The United States, Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. Although the TPP covers a wide range of issues, this site focuses on the TPP’s intellectual property (IP) chapter.”  [TPP]  There are some serious issues involved in this agreement, not the least of which is the secrecy in which it is wrapped.

There is every appearance that the trade negotiators don’t want the proposed elements discussed in the press, because if people found out about them then opposition would increase.  As it is, the TPP is being referred to as a Corporate Wish List.   [Alternet]

One question which as defied explication is the extent of corporate control over sovereign nations.  For example, under a current trade agreement British-American Tobacco is suing to prevent the implementation of Australia’s anti-smoking campaign, contending that the regulations are impinging on its trademark rights.  [ModestoB] Americans have every right to know if the provisions of the TPP would make the enforcement of American regulations on environmental impact, public health, labor relations, and other state and local statutes, impossible in the face of corporate opposition.

There’s ample reason for more public discussion of these provisions because:

“The 95-page, 30,000-word IP Chapter lays out provisions for instituting a far-reaching, transnational legal and enforcement regime, modifying or replacing existing laws in TPP member states. The Chapter’s subsections include agreements relating to patents (who may produce goods or drugs), copyright (who may transmit information), trademarks (who may describe information or goods as authentic) and industrial design.

The longest section of the Chapter – ’Enforcement’ – is devoted to detailing new policing measures, with far-reaching implications for individual rights, civil liberties, publishers, internet service providers and internet privacy, as well as for the creative, intellectual, biological and environmental commons. Particular measures proposed include supranational litigation tribunals to which sovereign national courts are expected to defer, but which have no human rights safeguards. The TPP IP Chapter states that these courts can conduct hearings with secret evidence. The IP Chapter also replicates many of the surveillance and enforcement provisions from the shelved SOPA and ACTA treaties.”  [Salem]

There’s one sentence in there which ought to attract far more notice than it has received thus far: “…supranational litigation tribunals to which sovereign national courts are expected to defer, but which have no human rights safeguards.”   We might indulge in a bit of imagination — If the Behemoth Corporation subcontracts the production of a line of children’s clothing to its subsidiaries in a member country, and if the fabric used doesn’t meet the standards established by the Consumer Products Safety Commission, can the Corporation sue to have the CPSC standards declared an infringement on its trademark or industrial design rights?  And, must the “supranational” court’s secret ruling be the Law of the Land in the United States of America?

The draft of the intellectual property provisions have been leaked and are available here.   Among those elements are some suggestions which would have an impact on public health, and on the cost of health care in the U.S.

The draft contains features which would (a) expand the scope of pharmaceutical patents; (b) lengthen the drug monopolies; (c) require the enforceability of patents, even those which should not have been granted, such that generic medications are frozen out; and (d) give the pharmaceutical manufacturer’s five years of “exclusivity,” or commercial control over regulatory information.  [pdf Citizen.Org]

In short the U.S. would be signing away its sovereignty to the multi-national pharmaceutical corporations.   The  multi-national pharmaceutical manufacturing corporations — backed by that secret Supranational Tribunal — could control the regulation of prescription drugs in the U.S. very possibly at the expense of the generic prescription manufacturers.   This situation isn’t some ethereal trade calculation, it would have some very real ramifications for the elderly.  The AARP has weighed in:

“AARP, which represents Americans 50 and older and their families, sent a letter to U.S. Trade Representative Michael Froman saying the U.S. should not sign onto a TPP agreement that binds it to a 12-year market exclusivity period for branded biologic medicines, which can be used to treat diseases like cancer and rheumatoid arthritis.

Biologics — medicines developed through biological processes — tend to be more expensive than so-called “small molecule” drugs, something AARP attributes, at least in part, to the long market exclusivity period, which prevents generic drug makers from entering with follow-on biologic drugs, also known as “biosimilars.” [Law 360]

So, if the pharmaceutical manufacturers now have a seven year “exclusivity” period, the TPP would bestow upon them another five years…to the betterment of their bottom lines, but to the detriment of seniors trying to purchase generic versions of the medication.  What the AARP fears is that the TPP would simply lock in higher drug prices. [TheHill]

No wonder the trade negotiations have been conducted secretly.  The Investor State provisions have already been problematic.  Witness NAFTA and high fructose corn syrup —

“If implemented, the “investor-state” provision laid out in Section B would grant investors broad rights to challenge public policy decisions and to receive millions of dollars in compensation for the loss of expected profits.

This kind of provision has already been used under NAFTA to challenge Mexico’s implementation of trade barriers to High Fructose Corn Syrup (HFCS) in favor of domestically produced sugar. Three firms in three separate cases—Corn Products International, ADM/Tate & Lyle and Cargill—sued the Mexican government over this protection. In each case, the dispute panel ruled against Mexico, awarding a total of $169.18 million USD to the firms in compensation.   The arguments in this case were about whether the Mexican government’s actions constituted unfair limits on investors’ expected profits, not about possible public health concerns over HFCS versus sugar. But even if the government had wanted to raise that issue, under the rules in NAFTA, they would have been simply deemed irrelevant.”  [IATP]  (emphasis added)

Thus, IF the United States of America decided that flame resistant fabric be used in all infant-wear, and SweatShop Inc. determined that this statute or related regulation “constituted an unfair limit on investor’s expected profits,” then the Supranational Tribunal could fine us for daring to enforce child safety regulations?

IF the U.S. continued to provide subsidy payments to dairy farmers in the Farm Bill (should it ever be passed) could the dairy producers in New Zealand file litigation with the Supranational Tribunal to contest the subsidy?

And, even more egregious — let’s talk about food safety standards.  Do we really want a system in which the “lowest common denominator” is the standard for the production, packaging, and sale of food products designed for human consumption?  Or for livestock consumption?  Or for pet consumption?  If we assume that the EU has higher standards than those proposed in the TPP, then do we risk the loss of exports to those nations? Or, risk exports to China? [IATP]

Proponents of the treaty squeal that the opposition has been based on Leaks and Lies, however this objection could have been resolved by the public release of draft provisions and a call for public commentary.  That the process remains secretive calls the content into question.

This proposed agreement shouldn’t be “fast-tracked” it ought to be derailed.  Contacting Senator Harry Reid,  and/or Senator Dean Heller would be helpful in this regard.

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Filed under Economy, Nevada politics, Politics

Floss to Gold? Asking Better Economic Questions

While Nevada sits with an 11.6% statewide unemployment rate, an 11.8% rate in the Las Vegas Metropolitan Area, an 11.5% rate in the Reno-Sparks area, an 11.7% rate in Carson City and environs, (Elko County micro area is at 6.1%) [DETR] the national debate over jobs and economic policy gets waged in Sound Bites and Furious Advertising.  Everyone feels “our pain,” but there are two very different ideological positions for dealing with it.

The General Policies

The Romney Campaign summarizes the candidate’s Job Creation formula as follows: “His plan seeks to reduce taxes, spending, regulation, and government programs. It seeks to increase trade, energy production, human capital, and labor flexibility. It relinquishes power to the states instead of claiming to have the solution to every problem.”  [Romney]

The categories on the Obama website promote the President’s interest in  (1) Investing in American manufacturing and innovation, including doubling the tax deduction for domestic advanced technology manufacturing from 9% to 18%, and offering a 20% tax credit against expenses incurred in relocating jobs back to the United States;  (2) cutting taxes for small businesses and streamlining the patent process; and (3) restraining the excesses of the Financial Sector and curbing practices on Wall Street that leave American taxpayers holding the bag for financial sector errors in judgment.

Both campaigns are heavy on tax cuts, but diverge from that point.  Both campaigns place the jobs category in a wider economic framework.  The frames are very different.  Romney’s summation is a classic compilation of conservative notions all predicated on the assumption that government is the problem.   Obama’s summation is a centrist amalgam of tax policy and consumer protections.

Bush 2.0

The Romney proposals are little more than Bush Redux, the Trickle Down Theory of economic growth.  As noted previously:

“We should also bear in mind that what Governor Romney is calling a “job creation” proposal would more accurately be labeled a tax reduction plan which he hopes might could would should in some idealized ideological world of Trickle Down economics produce the job growth we want IF it works — we’re still waiting for the tax reductions on corporations and wealthy individuals to work from the last round. [DB 7/9/12]

Governor Romney also hits all the correct notes in the stump speeches about small businesses, but once again it’s with a philosophy which assumes that if the yachts are rising, with the tide or not, then everyone’s boat will float a bit higher.  [DB 7/10/12]

When the components of the Gross Domestic Product were discussed in terms of what kinds of economic growth would we need to convince firms to add more employees we found there volatility in private economic investment, negatives in government spending, and the overall GDP muddling along.  [DB 7/10/12]

Simplistic prescriptions like “cutting regulations,” and “increasing labor flexibility” from the Romney camp should be looked as as closely as the proposal to fast track the Trans-Pacific Partnership — or, NAFTA on steroids. [DB 7/9/12]

He Did It Too!

One of the weaker arguments made by the Romney campaign is that the Obama Administration has been derelict in its duty to protect American jobs.   The first charge was “he did it too.” From the former Massachusetts Governor campaigning in Colorado:

“It is interesting that when it comes to outsourcing that this president has been outsourcing a good deal of American jobs himself by putting money into energy companies — solar and wind energy companies that end up making their products outside the United States,” Romney said. “If there’s an outsourcer-in-chief, it’s the president of the United States, not the guy who’s running to replace him.”  [CNN]

First, there’s an interesting split here.  The former Massachusetts Governor is speaking only of the products used to transform solar and wind energy into electric power — not the power itself.   It would be nice if the Chinese didn’t manipulate their currency, and it would be well if there were more American manufacturers of solar and wind energy components.  It would be nicer still if the U.S. were not so dependent on fossil fuels to produce electrical power.

Secondly, the slap at solar and wind technologies implies that Governor Romney is firmly in the Fossil Fuel camp, and the attempt to equate renewable energy with off shoring jobs is a rhetorical trick, not necessarily the explication of any policy not already associated with the Bush Administration.

The second charge was a bit more nuanced, but not much:

“In addition to Priebus’ event, Romney’s campaign is also pointing to a new story in The Washington Post that details criticism of Obama for allowing domestic jobs to shift overseas. “American jobs have been shifting to low-wage countries for years, and the trend has continued during Obama’s presidency,” states the article, published online Monday night.”  [CNN]

Now, why would “jobs shift to low wage countries” for years?  Any reference to tariffs is asking for an immediate torrent of “Protectionism!”  And, an obvious question to ask at this juncture is whether trade agreements promote economic growth or “high productivity poverty?”

Any globalized corporation seeking to reduce its labor costs is going to locate plants in regions with a competent labor supply and a local infrastructure capable of supplying energy needs and providing adequate transportation and distribution for products.  “If only labor costs could be reduced, and union contract  requirements be eliminated — then we would have prosperity,” cry the manufacturers.  The numbers don’t seem to validate this contention.

If unionization and hourly compensation costs are the down fall  of economic growth, then why is Germany seven places above the United States?  However, as long as Chinese workers are comfortable with monthly compensation of $636, or workers in India will accept wages averaging $295/mo. or Pakistan’s labor force averages $255/mo. [BBC] then manufacturers who seek low hourly compensation costs will “shift jobs to …..” and there won’t be much any chief executive can do about it.

Asking Better Questions

A better question is how to replace manufacturing jobs for clothing or textiles — already long gone — with new manufacturing in new technologies.  We can ante-up to create new firms, or in the worst scenario, throw up both hands and allow the Germans and the Chinese to take the field.

We can get entangled in small arguments about whether Ralph Lauren, Inc. should have clad our Olympic team in Chinese manufactured clothing, or we can ask whether we want “Buy American” provisions in government procurement processes.   Conservatives, such as Governor Romney,  have generally been opposed to Buy American legislation.  [OF]

We can spew and sputter about backing start up loans to individual niche market solar panel manufacturers — or, we can ask how we might best coordinate the efforts of our manufacturing and higher education resources toward creating energy technology for the 22nd century.

We can bash unions, create more “right not to work” states, and restrict workers’ capacity to bargain for wages, hours, and working conditions; or we can focus more attention on retraining employees for modern jobs.  We can grouse about environmental regulations to abate air and water pollution, or we can put additional effort into devising and manufacturing the best quality filtration systems on the planet.

In short, we can cut taxes and regulations until every cow in the Intermountain West comes home — but until we broaden our focus from a narrow view of what is good for the financial markets to a wider perspective including what it will require to advance our manufacturing capabilities, we’re still going to be stumbling in the sagebrush trying to transform “high productivity poverty” floss into “high employment opportunity” gold.

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Filed under 2012 election, Bush, Bush Administration, Nevada economy, Nevada politics, Obama, Romney

Jobs? The Romney Plan: NAFTA on Steroids

Governor Romney proposes a platform to create nearly 11 million jobs in four years, or at least that’s what he was saying as of September 6, 2011. [CSMonitor] Let’s take him at his word that he stands by what he said, whatever it was.

Trading It All Away

There are a couple of significant components in his “job creation” package.  The first we should look at very carefully is the promotion of the Trans-Pacific Partnership. [Romney] If you like NAFTA you’ll love this one.

The TPP, set in motion during the Bush Administration in 2008 and continued in fits and starts during the Obama Administration, would create a trade framework including Australia, Brunei, Chile, Malaysia, New Zealand, Singapore, Peru, Vietnam, Canada, Mexico, and Japan. [Brookings]   Russia and China are also included. [HuffPo] The Obama Administration’s negotiating position begins with the provisions of the Korea FTA as the model.

However, thanks to intense corporate pressure the proposed TPP doesn’t stop there:

“Think of the TPP as a stealthy delivery mechanism for policies that could not survive public scrutiny. Indeed, only two of the twenty-six chapters of this corporate Trojan horse cover traditional trade matters. The rest embody the most florid dreams of the 1 percent—grandiose new rights and privileges for corporations and permanent constraints on government regulation. They include new investor safeguards to ease job offshoring and assert control over natural resources, and severely limit the regulation of financial services, land use, food safety, natural resources, energy, tobacco, healthcare and more.”  [Wallach, CD] (emphasis added)

Why don’t we know more about this?  Because the negotiators agreed not to release any information about the talks until 4 years AFTER ratification.  [Wallach, CD] What’s the reason for all the secrecy? The proponents of the TPP say it is necessary because a leak brought down the Free Trade Area of the Americas, and therefore no public scrutiny should be allowed.  The USTR attempted to explain away the secrecy in classic agency-speak.  [USTR]   Maybe a little bit of light is in order?

US negotiators have proposed new rights for Big Pharma and pushed into the text aspects of the Stop Online Piracy Act, which would limit Internet freedom, despite the derailing of SOPA in Congress earlier this year thanks to public activism. In June a text of the TPP investment chapter was leaked, revealing that US negotiators are even pushing to expand NAFTA’s notorious corporate tribunals, which have been used to attack domestic public interest laws. [Nation]

The Trans Pacific Partnership would certainly cut “red tape,” if by “red tape” you mean environmental protection laws, worker safety regulations, and consumer protection acts, enacted by national legislative bodies, and there’s more:

“Countries would be obliged to conform all their domestic laws and regulations to the TPP’s rules—in effect, a corporate coup d’état. The proposed pact would limit even how governments can spend their tax dollars. Buy America and other Buy Local procurement preferences that invest in the US economy would be banned, and “sweat-free,” human rights or environmental conditions on government contracts could be challenged. If the TPP comes to fruition, its retrograde rules could be altered only if all countries agreed, regardless of domestic election outcomes or changes in public opinion. And unlike much domestic legislation, the TPP would have no expiration date.” [Nation] (emphasis added)

Little wonder Governor Romney, founder of Bain Capital, would like to put this agreement on the fast track!  Speaking of taking a knee before foreign laws — this agreement, as it stands, would have the U.S. genuflecting to the corporate TPP tribunals into time out of mind.  Australia and New Zealand have already announced they have no intention of submitting to a “parallel corporate court system.” Under the TPP proposals the “jurisdiction” issues are problematic:

In another concerning development, the “outline” indicates that the TPP is likely to include much of the same investment text as NAFTA—including the provisions that give foreign investors the extraordinary right to bypass U.S. courts and sue the U.S. government in an international arbitration panel if the investor feels it hasn’t been treated “fairly” or if a federal, state, or local law interferes with its expected profits. These same rules give U.S. firms an incentive to invest overseas (taking U.S. jobs with them), so they can bypass the judicial process in foreign countries and sue our trading partners (often developing countries) before international arbitration panels. We can’t let another trade agreement give U.S. companies more reasons to send jobs offshore! [AFL-CIO] (emphasis added)

In other words, if any corporation thought a local, state, or federal statute interfered with their profits, the TPP allows access to that parallel corporate court for a ‘decision.’

How easing job off-shoring is supposed to create “good well-paying American jobs” is something of a mystery.   Proponents argue the partnership will ease export facilities for small businesses.  Maybe, but the price tag is that major tobacco, pharmaceutical, food manufacturing, and international banking corporations will get free rein to ride rough shod over any national legislation they don’t like.

They don’t like labor protection laws.

“…with regard to labor rights, the “outline” reads “TPP countries are discussing elements for a labor chapter that include commitments on labor rights protection and mechanisms to ensure cooperation, coordination, and dialogue on labor issues of mutual concern,” but fails to mention ILO core labor standards or even whether the labor provisions will be enforceable.”  [AFL-CIO]

And, they don’t care for paying American level wages:

“According to the U.S. State Department, the per capita income in Vietnam was only $1,068 in 2010. This compares with a per capita income of $40,584 for the United States in the same year. This massive differential shows the skewed nature of the agreement. Of course companies are going to choose to manufacture items in a country where they can pay pennies on the dollar for labor. America as we know it would not exist if workers labored for those kind of wages, but if the TPP is passed companies will have a choice between hiring a worker in the United States, or hiring a much cheaper worker in Vietnam. America will lose this battle in all but the strangest of situations.”  [EIC]

Rather than actually promoting those well-paying American manufacturing jobs, the TPP offers corporations more incentives to off shore their production in the cheapest areas possible — hardly a recipe for encouraging the hiring of American workers.

The Trans Pacific Partnership is good for bankers, tobacco companies, Big Pharma, food manufacturers, and other multi-national corporations; whether it gets us any closer to better employment numbers is highly questionable.  Whether the TPP officially enters us into the lists for another Race to the Bottom really isn’t.

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Filed under 2012 election, Bush Administration, Economy, labor, Romney