What’s in a word? Lessons on ‘Trade’, ‘Partnership’

As some countries, with open and vulnerable economies, chase after this thing called ‘free trade agreements’, multilateral and bilateral, there is always that misplaced confidence in some fanciful, equivalent negotiating strength against the prospective ‘partner’.

Two US-initiated trade partnership proposals, Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (TTIP), have provoked interest and opposition – even in the US. The reasons? The word, ‘trade’, disguises more than it reveals; and these proposals are being negotiated in secret with overwhelming corporate input. Some leading US economists such as Krugman and Baker and a few activist groups have come out in strong opposition, and their arguments have been corroborated by reality – the citizens of those countries, less powerful negotiating ‘partners’, have long had to endure the consequences of such unbalanced agreements.

A sample of articles on the TPP provides the arguments and the cautions that should be, or should have been, ever present in negotiations – the multinational corporation (MNC) deploys the government and its negotiators to serve as its proxy. As now yet another leak on the TPP negotiations raises that red flag.

A post in common dreams by the editor of The Nation gets to the point, Trans-Pacific Partnership Proves Rules Are Rigged in Favor of the 1 Percent. Katrina vanden Heuvel notes, disabusing many of their still lingering romantic illusion,

“China wants to write the rules for the world’s fastest-growing region … We should write those rules,” President Obama declared in his State of the Union address. To sell Congress on giving him authority to “fast track” consideration of the Trans-Pacific Partnership (TPP), a trade and investment treaty with 12 nations that has been under negotiation for five years, the president argues it is vital that “we” write the rules. The real question, of course, is what does he mean by “we”?

[snip]

Our global trade and tax policies have been and still are controlled by corporate and financial interests. They, not workers or consumers, write the rules.

Many an analyst of the ’emerging’, ‘developing’ economies have long argued quite similar points regarding the MNCs, whose interests are usually strongly represented and protected locally by their diplomats.

Joe Firestone at new economic perspectives adds more depth to the challenge of, and threat posed by the MNC in trade deals. He examines law and regulations, the proposed Investor-State Dispute Solution (ISDS), and ongoing challenges to state sovereignty posed by MNCs or states that represent them.

Paul Krugman is finally emphatic, unambiguous on the proposed TPP with its 12 members. In his post at his NYT blog (paywall after a few freebies), which includes slides, he states,

Not to keep you in suspense, I’m thumbs down. I don’t think the proposal is likely to be the terrible, worker-destroying pact some progressives assert, but it doesn’t look like a good thing either for the world or for the United States, and you have to wonder why the Obama administration, in particular, would consider devoting any political capital to getting this through.

Back in 2012 US economist Dean Baker, Co-Director of CEPR, was ringing the alarm bells. We have this timely article in The Guardian, The Pacific free trade deal that’s anything but free

In reality, the deal has almost nothing to do with trade: actual trade barriers between these countries are already very low. The TPP is an effort to use the holy grail of free trade to impose conditions and override domestic laws in a way that would be almost impossible if the proposed measures had to go through the normal legislative process. The expectation is that by lining up powerful corporate interests, the governments will be able to ram this new “free trade” pact through legislatures on a take-it-or-leave-it basis.

And on that matter of Intellectual Property (IP) rights, which features prominently, Baker notes,

Note that stronger copyright and patent protection, along with data exclusivity, is the opposite of free trade. They involve increased government intervention in the market; they restrict competition and lead to higher prices for consumers.

(In November 2013 Baker would return to the TPP on Moyers & Co in an interview together with Yves Smith.)

The commendable assertiveness of Brazil and India, and refusal to be intimidated, in the area of pharmaceuticals does come to mind. (Baker would only just recently allude to the relative cost of a generic to Sovaldi in India and the cost of Sovaldi in the US.)

Thus, the very recent WikiLeaks leak of the draft chapter on investment merely confirms doubts of prescient sceptics.

Clearly, the move away from neoliberalism (and the ‘Washington Consensus) has spared the Latin America and the Caribbean regions the fate of the heavily promoted but ultimately rejected Free Trade Area of the Americas (FTAA), and its still hopeful MNCs. The VII Summit of the Americas in early April should provide further evidence of the wisdom of that rejection.

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