A Secret Deal That Protects Special Interests
By Paul Rosenberg, Senior Editor
President Barack Obama turned heads when he appeared on MSNBC’s Hardball on April 21.
Obama leveled harsh criticism of his critics on trade policy, both on two upcoming trade deals—the Trans-Pacific Partnership, or TPP, and the Trans-Atlantic Trade and Investment Pact, or TTIP—and on the framework for approving them, (“fast track,” rebranded as “trade promotion authority,” or TPA). This would apply to all trade agreements as far forward as 2021. Fast track means that Congress can only vote up or down on trade agreements in a very limited time window and would give enormous power to one or two presidents.
“I love Elizabeth. We’re allies on a whole host of issues,” Obama told Hardball host Chris Matthews, speaking of Sen. Elizabeth Warren (D-Mass), an outspoken opponent of the trade deals and the fast track mechanism itself. “But she’s wrong on this.”
Obama called the TPP “the most progressive trade deal in our history…When you hear folks make a lot of suggestions about how bad this trade deal is, when you dig into the facts, they are wrong.”
There’s just one problem: Unless you’re a member of Congress, you can’t dig into the facts—a slight detail that Warren herself pointed out.
“The Obama Admin says I’m wrong—we shouldn’t worry about TPP. So why can’t the American people read the deal?” she tweeted the next day.
Warren linked to a blog post, “You Can’t Read This,” where she warned: “Don’t bother trying to Google it. The government doesn’t want you to read this massive new trade agreement. It’s top secret.” The reason? “Here’s the real answer people have given me: ‘We can’t make this deal public because if the American people saw what was in it, they would be opposed to it.’”
That same day, Warren also went on the Rachel Maddow Show to explain more fully.
“Senators can go and read it; people in the House of Representatives can read it, but we’re not allowed to talk about it,” she explained. “The president says that he wants the American people to judge the bill based on the facts, but to do that he’s got to make the deal public. Otherwise, the American people can’t judge it on the facts; he won’t put the facts out there…. The press should be able to see this; people should be able to dig into it. If it’s a great deal for families, like the president says, or a great deal for workers, then put it out there, and let ’em see it, before we have to grease the skids.”
Maddow then asked about a White House promise to put the agreement online before a vote.
“They’re asking us now to grease the skids, so we give up any chance to be able to amend it, any chance to block it, any chance to slow it down,” Warren responded. “Give that up, and then you’ll be able to see the deal on the other side. I just don’t think that’s reasonable.”
In fact, some details of the deal are known, though perhaps not in final form, thanks to a series of major document leaks facilitated by Wikileaks. The most recent and most damaging release, the “Investment Chapter,” was picked up by the New York Times. On March 26, it reported the remarks of Sen. Charles E. Schumer of New York, the Senate’s No. 3 Democrat.
“This is really troubling,” Schumer told reporters. “It seems to indicate that savvy, deep-pocketed foreign conglomerates could challenge a broad range of laws we pass at every level of government, such as made-in-America laws or anti-tobacco laws. I think people on both sides of the aisle will have trouble with this.”
Schumer is considered a top Wall Street ally among Senate Democrats—yet here he is sounding more like Warren on this.
We also have the record of past deals, whose costs in lost jobs and massive trade imbalances were vastly under-anticipated. Plus, there is the continuity of those corporate leaders, lawyers and lobbyists empowered to craft these deals behind closed doors, as well as the intellectual and economic history of trade theory and practice that has brought us to the current situation. All these factors point in the same direction: that those negotiating the TPP have every right to fear making it known to the American people.
Warren cut to the most salient point with her next argument:
“There’s one fact the American people can see and that’s how the negotiation process worked,” Warren said. “These negotiations have been going on for a long time and there are 28 different working groups for it. Eighty-five percent of the people in those working groups are senior executives in various industries that are going to be affected, or they are lobbyists for those industries. They’re the ones who helped shape the deal. They’re the ones who have helped determine what that deal is going to look like on the other side. And, my view is when the process is rigged, the outcome is likely to be rigged.”
Notably absent from these negotiations are senior labor leaders, environmentalists or consumer protection advocates. They are all locked out and are justifiably critical.
On Hardball, Obama also claimed TPP had “unprecedented labor standards, unprecedented environmental standards,” and “fixes a lot of the problems that you had in things like NAFTA.”
But according to whom? There were no labor or environmental leaders involved in crafting those standards and none will be able to read a word of them until after fast track is approved. Only then is TPP expected to move forward.
An obvious parallel is labor. Would any labor leader go ask his members to vote on a contract that no labor representatives were involved in negotiating? Much less, would he or she recommend that they approve it?
The closest labor leaders have gotten is giving testimony to Congress, as AFL-CIO president Richard Trumka did last week, telling senators, “We were told by the [United States Trade Representative] general counsel that murdering a trade unionist doesn’t violate these standards, that perpetuating violence against a trade unionist doesn’t violate these agreements.”
They’ve also been heard in support of protest rallies, as when hundreds protested this past December when TPP negotiators met in Washington, D.C.
“The voices of millions of working, middle-class Americans cannot be ignored,” Hoffa said, in a prepared press statement from Public Citizen. “They are tired of being the casualties of bad trade deals that send good-paying jobs overseas. The Teamsters Union will continue to fight against fast track authorization and the Trans-Pacific Partnership—American workers cannot pay the price of another bad trade deal.”
George Kohl, senior director of Communications Workers of America, echoed Hoffa in that same press release.
“We believe in trade,” Kohl said. “We are fighting against old trade policy that literally guarantees corporate profits at the expense of working families in all nations.”
Public Citizen presented opposition that came from environmentalists as well, represented by Ilana Solomon, director of the Sierra Club’s Responsible Trade Program.
“We can’t let negotiators secretly shape trade pacts behind closed doors that will open up the floodgates for fracking, make environmental safeguards vulnerable to polluter attacks and worsen climate disruption,” Solomon said. “We’re raising our voices to say ‘no’ to fast tracking a flawed trans-pacific partnership, and ‘yes’ to protecting our families and communities.”
In addition to his criticism, Trumka has also been outspoken about what labor wants instead.
“We know what we’re looking for in these agreements,” Trumka said at a March 25 event with the Center for American Progress. “We want trade agreements to contribute to democratic global economic governance and to promote good jobs, full employment and rising wages. A key element, of course, is strong labor rights protections so that every worker in every country can exercise fundamental human rights on the job — without fear. So we are looking for every trade agreement to require nations to adopt, maintain and enforce the core labor rights — as agreed by the International Labor Organization — and as set out in the ILO core conventions and their related jurisprudence. These include freedom of association and the right to organize, and bans on child labor, forced labor and discrimination in employment.”
Reporting on Trumka’s speech, progressive news magazine In These Times added, “Leaked portions of the TPP and TTIP have not included any mention of these rights.”
This is hardly surprising. While earlier trade agreements really did focus on reducing tariffs—the traditional definition of “free trade”—since the 1970s, the focus has shifted to reducing so-called “non-tariff” barriers, including health, environmental and labor laws and regulations. A January report from the Congressional Research Service laid out this history:
“For roughly the first 150 years of the United States, Congress exercised its authority over foreign trade by setting tariff rates on all imported products,” the report stated.
However, following the disastrous Smoot-Hawley tariff, which only worsened the Great Depression, the Reciprocal Trade Agreements Act of 1934 “authorized the president to enter into reciprocal trade agreements that reduced tariffs within pre-approved levels.”
The most recent trade agreement signed under this system was the “Kennedy Round” of the General Agreement on Tariffs and Trade (GATT), “the last round in which tariff reduction was the primary focus of trade negotiations” [Italics in original].
There were two non-tariff provisions as well: one related to customs valuation, the other to anti-dumping provisions. The presence of these agreements lead to a prolonged debate, not only about those provisions, but about the whole trade negotiation process. While many wanted to require implementing legislation to be treated like any other congressional business, others objected — ironically, in light of how things now stand. They said that doing so “would defeat a major purpose for delegating trade agreements authority to the president in the first place: to reduce the special interest pressures inherent in trade policymaking.”
This was the logic that prevailed when fast track was first approved in 1974. But rather than eliminating special interest pressure, the fast track process has greatly favored the most powerful special interests that are now directly involved in writing so-called “trade agreements.” These are no longer even primarily about trade.
“[T]his is not a trade agreement,” Nobel Prize-winning economist Paul Krugman wrote on his New York Times blog. “It’s about intellectual property and dispute settlement; the big beneficiaries are likely to be pharma companies and firms that want to sue governments. Those are the issues that need to be argued.”
Economist Dean Baker, co-director of the Center for Economic Policy and Research, added even more telling detail on his Beat the Press blog, the oldest economics blog on the Internet.
“The formal trade barriers between the parties to these deals are already low, which means there is not much room to lower them further,” Baker said. “These deals are mostly about putting in place a business-friendly structure of regulation. Some of this business-friendly regulation involves increasing barriers in the form of stronger and longer patent and copyright protection.” (Yes, that is “protection,” as in protectionism.)
And, MSNBC host Chris Hayes summarized the irony in a tweet:
“Amazing to hear an ostensible free trade deal sold in the zero-sum language of mercantilism.”
Mercantilism was the dominant trade ideology prior to the 19th century. Wikipedia says it “promoted governmental regulation of a nation’s economy for the purpose of augmenting state power at the expense of rival national powers. It is the economic counterpart of political absolutism.”
In the era of Citizen’s United, the 2010 Supreme Court decision that removed restrictions to corporate contributions in political fundraising, it’s really no surprise to see it making a return. What’s surprising—and disturbing—is to see Obama continue to argue for it, when only a small handful of other Democrats support him in doing so.