TPP is Dead. Trump’s favorite punching bag, China, wins! Huh?
I marched with labor leaders and 50,000 others in the 1999 Seattle protests against WTO (the World Trade Organization) because the US was to sign off on a trade agreement that could have eliminated local environmental and labor protections. Opposition to the Trans Pacific Partnership, although arguably marginally better, was not subject to public scrutiny to address the similar issues. The WTO protests were not about being against trade but about being for fair-trade. It is a critical discussion that needed to take place with regards to the TPP. But President-elect Donald Trump’s simplistic message was the voice heard above the rest, drowning out any rational discussion.
The public is due a much-needed critical examination of the TPP in order to separate out private business interests from public national interests. Unfortunately that exercise has been left by the side of the road as Trump’s troops stormed over any meaningful dialogue. Demagoguery works. It gets results. It moves public opinion faster and more enthusiastically than any legislative body can accomplish.
Bernie Sanders came the closest to capturing the attention of Trump’s followers because he was an open and unrelenting critic of TPP, but he came to that position from an understanding of what the problems were with it and with the expectation that they could be addressed in a rational and public fashion. Trump has no plan; he probably has very little technical understanding of how TPP works. And sadly, many of those who voted for him probably didn’t care. They just want their jobs back.
The proponents of TPP made their biggest mistake by not listening to the critics demanding that the people’s representatives, i.e. Congress, have the time and resources to review the conditions of TPP and advise on them. Hilary Clinton initially displayed that mistake until she switched to becoming a critic. But she was a late and reluctant convert who displayed some hesitancy. She had a mindset of being an earnest manager not a bold leader. Those who should have voted for her didn’t because they wanted a leader not a manager. So the barn door was left wide open for Trump to unleash the rightful suspicions that many have about how government elites are making decisions without consulting the average citizen.
Trump promised that he can get manufacturing jobs back. I suspect that many thought, why not try him? The answer is that Trump, like any good rabble-rouser, doesn’t need a plan, he just needs a simple answer to a simple question: “I’ll make America Great Again.” Answers the question, “Haven’t the others messed it up?” The truth is that reality is not simple; it’s complex.
So where are we now? Jackie Calmes, of the New York Times, provides a good prognosis of what the US will be facing in light of Trump opposing the TPP. Much of the following analysis flows from Calmes’ article, which can be read here:
Senator Chuck Schumer of New York, the incoming Democratic leader, says that Congress will not approve the largest regional trade agreement in history. With the Republicans in control of both houses, unless they split from their Republican President’s lead, which could happen, the US will pull out of the TPP. It will then collapse even though the other countries have approved the pact or are in the process of doing so, because it does not take effect without US approval.
This will most likely lead to other countries being pulled into China’s alternative trade partnership, — the Regional Comprehensive Economic Partnership, known as R.C.E.P., which includes China, Japan and 14 other Asian countries but excludes the United States.
“In the absence of T.P.P., countries have already made it clear that they will move forward in negotiating their own trade agreements that exclude the United States,” Mr. Obama’s Council of Economic Advisers wrote days before the election. The CEA wrote, “These agreements would improve market access and trading opportunities for member countries while U.S. businesses would continue to face existing trade barriers.” Is that important?
Calmes provides an excellent example of what is already happening in the absence of a TPP agreement. Currently there is a bilateral agreement between Australia and Japan, which gives Australian beef exporters, a price advantage over American producers whose exports are subject to higher Japanese tariffs; those tariffs would ultimately have been removed under the Pacific agreement.
“We are experiencing lost sales without T.P.P.” of about $400,000 a day as a result, said Kevin Kester, a California cattle rancher and vice president of the National Cattlemen’s Beef Association.
“Multiply that over several hundred more products and several dozen more free-trade relationships,” said President Obama’s trade representative Michael Froman in an interview.
The T.P.P. would have phased out some 18,000 tariffs that the other 11 countries have on imports from the United States, thus reducing their cost to foreign buyers.
For the first time in a trade agreement, state-owned businesses like those in Vietnam and Malaysia would have had to comply with commercial trade rules and labor and environmental standards. The agreement would have committed all parties to the International Labor Organization’s principles prohibiting child labor, forced labor and excessive hours, and requiring collective bargaining, a minimum wage and safe workplaces.
However, the TPP also had serious problems that would have harmed our job market. Democrats, organized labor and the Ford Motor Company were especially opposed to the trade agreement because it did not include what they considered enforceable protections against other countries’ manipulation of their currency’s value to gain price advantages for their products.
And returning full circle to the reason why so many of us marched in opposition to the WTO meetings, this proposal still allowed foreign subsidiaries to go to special trade tribunals to sue to block local, state or federal policies — environmental or consumer safety rules, on grounds that the rules conflict with corporations’ rights under the trade pact. This was without doubt the major and rightful objection from the progressive wing of the Democratic Party to the TPP.
Could that feature of TPP been fixed under Clinton? We don’t know, but she had moved significantly toward opposing the TPP on grounds that reflected Sander’s concerns, which were these features. We do know however that these are not Trump’s concerns given his strong opposition to environmental and consumer safety rules. Realistically there will not be any renegotiation. It took 7 years to negotiate this agreement, far longer than Trump’s attention span.
Who is the winner? The American workers? It’s not clear. But the opportunity to shape the future of the fastest growing trade market in the world, the Pacific Rim, is being turned over China, with the world’s second largest economy. In this new role, China will be in a position to push the US from being number one. That is not the way to “Make America First”, as Trump repeated at his rallies.
If the US starts to slip in the world trade market, you can count on Trump continuing to tweet that the Media is not telling the truth. The big difference however, is that with Trump as President of the United States he can now claim that he has the truth that cannot be shared with the public for security concerns. Be prepared to hear that as the justification for why President Trump will always be right and the Media wrong.