Creative Destruction: The Trans-Pacific Partnership, Jobs, and Labor Rights

Matthew Rimmer


In the United States, there has been a fierce debate over the Trans-Pacific Partnership (TPP), and its impact upon jobs, employment, and labor rights and standards. This sweeping trade agreement spans the Pacific Rim, and includes such countries as Australia, New Zealand, Canada, Mexico, Peru, Chile, Malaysia, Singapore, Vietnam, Brunei, and Japan. There has been concern over the secrecy surrounding the Trans-Pacific Partnership — particularly in respect of labor rights. The United States Trade Representative blandly asserts:

Trans-Pacific Partnership 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. They agree on the importance of coordination to address the challenges of the 21st-century workforce through bilateral and regional cooperation on workplace practices to enhance workers’ well-being and employability, and to promote human capital development and high-performance workplaces.

However, there has been no detail revealed about the labor rights chapter — nor has been any substance leaks by organisations, such as WikiLeaks. There has been much debate about the substance of the Trans-Pacific Partnership in the United States, and its impact upon jobs, labor rights, and human rights. There are tensions and conflicts between the West Wing, the United States Congress, and labor unions over the agreement.

The West Wing

In Season Five of The West Wing, there is a memorable scene, in which President Bartlet and his advisers discuss his talking points in respect of trade agreements. President Bartlet was keen to discuss the economics of trade deals. He wanted to tell the American people that ‘any economic advancement involves what Schumpeter called “creative destruction”.’ President Bartlet insisted that ‘global economic forces are unstoppable just like technology itself.’ His advisers, CJ and Josh, countered that President Bartlet should instead engage in simple sloganeering about trade deals: ‘Free trade produces better, higher paying jobs. It’s got to be that simple.’

In his 2014 State of the Union address, President Barack Obama adopted just such a rhetorical strategy, arguing that regional trade deals would boost jobs:

When ninety-eight percent of our exporters are small businesses, new trade partnerships with Europe and the Asia-Pacific will help them create more jobs. We need to work together on tools like bipartisan trade promotion authority to protect our workers, protect our environment, and open new markets to new goods stamped “Made in the USA.”

There was no concession that such trade deals may also result in ‘creative destruction.’ His stance on trade has certainly shifted from his time as a United States Senator — where he expressed deep concerns about the impact of trade deals upon employment and labor standards in the United States.

The United States Trade Representative, Michael Froman, has used a similar rhetorical strategy to President Barack Obama in public debate. He told the United States Congress: ‘Done right, trade policy creates opportunities for American workers, farmers and ranchers; manufacturers and service providers; innovators, creators, investors and businesses – large and small.’ Froman maintained:

The ambitious trade agenda I laid out today creates opportunities for new, well-paying jobs, higher growth, and a stronger middle class. It incentivizes individuals and companies to expand production, start new production,and bring back production in the United States. At its core, the trade agenda emphasizes strong, enforceable rules that promote core U.S. values and interests, including protection of U.S. creativity and innovation, access to medicines, fundamental labor rights, and robust environmental commitments. And of course, we can only accomplish these shared goals and priorities through strong bipartisan cooperation between Congress and the Administration.

The United States Trade Representative maintained: ‘Working together, we can ensure that our trade policy creates opportunities for all Americans.’ Froman insisted: ‘In the end, trade can be a force that improves the quality of life for American families in every state, county, and city.’

However, there has been much concern amongst labor groups, civil society organisations, and the United States Congress about the impact of the trade deal upon jobs, working conditions, and labor rights.

The United States Congress

Senator Elizabeth Warren on the Trans-Pacific Partnership

The United States Congress has refused to grant the Obama Administration a ‘fast-track’ authority to pass the Trans-Pacific Partnership.

In a speech to the National Press Club, United States Senator Elizabeth Warren expressed concerns about the impact of the Trans-Pacific Partnership upon jobs:

From what I hear, Wall Street, pharmaceuticals, telecom, big polluters and outsourcers are all salivating at the chance to rig the deal in the upcoming trade talks. So the question is, Why are the trade talks secret? You’ll love this answer. Boy, the things you learn on Capitol Hill. I actually have had supporters of the deal say to me ‘They have to be secret, because if the American people knew what was actually in them, they would be opposed.” Think about that. Real people, people whose jobs are at stake, small-business owners who don’t want to compete with overseas companies that dump their waste in rivers and hire workers for a dollar a day—those people, people without an army of lobbyists—they would be opposed. I believe if people across this country would be opposed to a particular trade agreement, then maybe that trade agreement should not happen.

The Democrat congressional leaders, Nancy Pelosi, and Harry Reid have warned President Obama that they will not to give the President a ‘Fast-Track’ authority in respect of the Trans-Pacific Partnership.

The new chair of the Finance Committee, Senator Ron Wyden, has argued that there is a need to modernize trade agreements:

Senator Ron Wyden on Creating Jobs and Transparency in American Trade Agreements https://www.youtube.com/watch?v=abSfijzrMLY&feature=youtu.be

Wyden called for greater transparency in trade negotiations: ‘Unlike 20 years ago, Americans expect to easily find online the information they want on key issues like trade’. He feared: ‘Yet too often, there is trade secrecy instead of trade transparency’. Wyden called for wider democratic deliberation over trade deals: ‘It’s time to more fully inform Americans about trade negotiations and provide our people more opportunity to express their views on trade policy’. He maintained: ‘Bringing the American people into full and open debates on trade agreements that have the effect of law is not too much to ask.’

Wyden noted: ‘At present, many Americans are questioning if trade developments have contributed to persistent long-term unemployment, stagnant wages for far too many, and students with good degrees unable to find high-quality jobs while they’re saddled with debt.’ He observed: ‘Responding effectively to the trade changes of the last generation is absolutely essential to instilling more confidence that trade policy will be good for America’s working families and bring more of them into the economic winners’ circle.’

Wyden argues that ‘the new breed of trade challenges spawned over the last generation must be addressed in imaginative new policies and locked into enforceable, ambitious, job-generating trade agreements’. He maintains that trade deals ‘must reflect the need for a free and open Internet, strong labor rights and environmental protections’. He contends that there is a need to ‘develop an approach toward trade and globalization that meets the test of producing more good-paying American jobs.’

There are only a few Democratic supporters of the deal, in its present form. Texan Representative Henry Cuellar, for instance, has argued that the Trans-Pacific Partnership will boost exports and jobs.

Unions and Civil Society

CWAers standing against fast track and the TPP with Rep. Dan Maffei, D-N.Y. on Friday, January 24, 2014. Wendy Colucci of the CNY Area Labor Federation, AFL-CIO. Creative Commons Flickr

The umbrella federation representing US unions, AFL-CIO observed of the Trans-Pacific Partnership: ‘Negotiations must include provisions that will benefit US workers, not simply the largest global corporations.’

AFL-CIO argued the Obama administration must ‘improve the US trade positions so they work for the 99%, not just the 1%.”’The union body lamented: ‘Unfortunately, for years the global corporate agenda has infused trade policy with its demands for deregulation, privatisation, tax breaks and other financial advantages for Big Business, while shrinking the social safety net in the name of ‘labour flexibility’’.

Celeste Drake, the trade specialist for AFL-CIO, has provided an extensive analysis of investment clauses from an industrial relations perspective. She comments: ‘The risk is that foreign property owners can use this system to challenge anything from plain packaging rules for cigarettes, to denials of permits for toxic waste dumps, to decisions expand public services, to increases in the minimum wage!’ Drake observes: ‘If a foreign investor doesn’t like a law, rule, judgment or administrative decision, all it has to do is argue that the decision or measure violated its right to “fair and equitable treatment” or that it might reduce its expected profits.’

Drake cites a case of a French company suing Egypt over a number of labor market measures, including an increase in the minimum wage. The investor-state dispute settlement case of Veolia Propreté v. Arab Republic of Egypt is particularly disturbing. In this matter, a French multinational company has launched a claim against Egypt over labor wage stabilization promises, as well as a terminated waste contract.

Drake comments: ‘ISDS isn’t good for working people.’ She concludes: ‘That’s why countries like South Africa and Ecuador have been working to reduce their exposure to ISDS and the United Nations Conference on Trade and Development (UNCTAD) has recommended reform.’

James Hoffa, President of the Teamsters https://www.youtube.com/watch?v=5Ch19AJ5Jyw

The Teamsters have also been active in the debate over trade and labor rights in the context of the Trans-Pacific Partnership. James Hoffa, the President of the Teamsters, has noted that ‘the Teamsters, other unions and fair trade advocates have for years criticized a proposed Pacific Rim trade deal for its lack of transparency’. He lamented:

The latest leaks show the U.S. is pushing forward with policies that further investor privileges and investor-state dispute settlement that expose our laws to foreign tribunals. They also expand incentives to move more U.S. jobs abroad, hurting hard-working Americans who are already paying the price for previous financial policy disasters. Meanwhile, enforceable labor and environmental standards remain unresolved. And efforts to rein in unfair subsidies for state-owned entities like New Zealand’s dairy industry remain undone.

Hoffa argued that the Trans-Pacific Partnership should protect fair trade objectives. He maintained that a Pacific Rim trade deal should protect workers’ rights through a strong labor chapter; protect the environment through a strong environmental chapter; protect American investors in the investment chapter — no “investor-state” dispute resolution; protect food safety and family farmers; and allow for “Buy American” government purchasing rules in the procurement chapter.

The Communications Workers of America have also been vocal about the trade deal. The Union alleges: ‘The main goal of the Trans-Pacific Partnership seem to be making the world safe for corporate investment and profits by harming workers, consumers, the environment and democracy.’ The union is concerned that the Trans-Pacific Partnership is ‘part of the overall corporate and Wall Street agenda to make the world safe for corporate investment and profits by reducing labor costs and undercutting workers’ rights’ and ‘dismantling labor, environmental, health and financial laws and regulations that could impact profits’

The advocacy group, Public Citizen has been concerned that Obama’s trade policies create incentives to send jobs offshore. Lori Wallach observed:

Since the implementation of our existing Free Trade Agreements, more than 60,000 US manufacturing facilities have been shuttered and we have lost five million manufacturing jobs — fully one quarter of America’s manufacturing jobs prior to the agreements’ implementation.

Public Citizen has expressed concerns that the TPP will incentivize off-shoring of jobs: ‘The TPP is slated to include the extreme foreign investor protections that help corporations offshore American jobs to low-wage countries.’

Human Rights

Public Citizen on Labor Rights, Human Rights, and Trade

There has been a particular concern about the inclusion of Vietnam in the Trans-Pacific Partnership, given its poor record on labor rights and use of child and forced labor. A Vietnamese constitutional scholar, Cu Huy Ha Vu, has expressed his concern about human rights in Vietnam. He observed: ‘After Vietnam became a member of the World Trade Organization and gained permanent normal trade relations with the United States in early 2007, the Vietnamese government launched a brutal crackdown that has swept up intellectuals, artists, bloggers, journalists, labor activists and religious leaders.’ The academic noted that the government has used laws ‘against anyone who peacefully organizes to oppose the party’s dominance or its policies’ — including ‘Independent labor unions, nascent political parties, religious organizations, civil society associations that refuse to submit to government oversight’. Cu Huy Ha Vu argued that the United States should all venues, including negotiations to trade, to address labor rights and human rights in Vietnam: ‘Only by dismantling the instruments of repression will there be real and irreversible improvements in human rights in Vietnam.’

There has also been grave concerns about the lack of protection of human rights in Brunei. Jay Leno and other Hollywood celebrities, such as Ellen deGenneres, and Frances Fisher, have called upon President Barack Obama and the United States Trade Representative to exclude Brunei from the Trans-Pacific Partnership because of its extreme criminal laws relating to adultery, and homosexuality. United States Congressional Representative Mark Pocan has called for action:

We urge you to insist that Brunei address these human rights violations as a condition of the United States participating with them in any further Trans-Pacific Partnership trade negotiations. Protecting fundamental human rights is a cornerstone of American values. American trade policy should also promote human rights, not reinforce bad actions by nations like Brunei.

The Teamsters note that the case of Brunei raises larger issues about workers’ rights: ‘While how a leader of another country chooses to govern his own people is not necessarily a U.S. concern, it should in this instance raise some questions about how workers in Brunei will be treated’. The Teamsters wonder: ‘Will they be respected, working in safe conditions and producing goods that are safe to be sold in the U.S.?’

Conclusion

The Trans-Pacific Partnership raises important questions about jobs, labor rights, wages, and human rights.

Professor Joseph Stiglitz has warned that the Trans-Pacific Partnership may exacerbate problems with respect to employment and wages:

Today, there are 20 million Americans who would like a full-time job but can’t get one. Millions have stopped looking. So there is a real risk that individuals moved from low productivity-employment in a protected sector will end up zero-productivity members of the vast ranks of the unemployed. This hurts even those who keep their jobs, as higher unemployment puts downward pressure on wages. We can argue over why our economy isn’t performing the way it’s supposed to — whether it’s because of a lack of aggregate demand, or because our banks, more interested in speculation and market manipulation than lending, are not providing adequate funds to small and medium-size enterprises. But whatever the reasons, the reality is that these trade agreements do risk increasing unemployment.

Stiglitz comments: ‘There is a real risk that it will benefit the wealthiest sliver of the American and global elite at the expense of everyone else.’ He worries about the impact of the deal upon equality: ‘The fact that such a plan is under consideration at all is testament to how deeply inequality reverberates through our economic policies.’ He warns: ‘Enriching corporations — as the Trans-Pacific Partnership would — will not necessarily help those in the middle, let alone those at the bottom.’

Dr Matthew Rimmer is an Australian Research Council Future Fellow, working on Intellectual Property and Climate Change. He is an associate professor at the ANU College of Law, and an associate director of the Australian Centre for Intellectual Property in Agriculture (ACIPA). He holds a BA (Hons) and a University Medal in literature, and a LLB (Hons) from the Australian National University, and a PhD (Law) from the University of New South Wales. He is a member of the ANU Climate Change Institute. Dr Rimmer is the author of Digital Copyright and the Consumer Revolution: Hands off my iPod, Intellectual Property and Biotechnology: Biological Inventions, and Intellectual Property and Climate Change: Inventing Clean Technologies. He is an editor of Patent Law and Biological Inventions, Incentives for Global Public Health: Patent Law and Access to Essential Medicines, and Intellectual Property and Emerging Technologies: The New Biology. Rimmer has published widely on copyright law and information technology, patent law and biotechnology, access to medicines, clean technologies, and traditional knowledge. His work is archived at SSRN Abstracts and Bepress Selected Works.