Froman Takes Heat from Senators for a TPP that Does Not Promote "Our Values"
“Done right, trade policy promotes not only our interests, but also our values.” Those were the words of U.S. Trade Representative Michael Froman in his testimony today before the Senate Finance Committee. Froman proceeded to defend the Trans-Pacific Partnership (TPP) – the sweeping deal mired in deadline-missing negotiations with 11 countries – as trade policy “done right.”
If the TPP promotes our values, what does that say about our values? Do we value the ability of pharmaceutical corporations to reap monopoly profits during extended patent periods over the ability of cancer and HIV patients to access affordable medicines? Do we value the ability of banks to engage in high-risk trading over the financial stability of a nation? Such threats are manifest in the leaked texts of the TPP.
Or what about the Obama administration's oft-touted value of transparency? The administration has kept TPP texts under a remarkable degree of secrecy, providing limited access to members of Congress and zero access to the U.S. public, despite repeated congressional calls for transparency. When Senator Wyden (D-Ore.) specifically asked Froman if he would release a copy of the TPP text before President Obama signed and sealed the deal, Froman refused to answer.
Another instance of congressional defiance arose when Senator Schumer (D-N.Y.) asked Froman whether the administration's TPP negotiators have complied with the demand expressed by a majority of both houses of Congress to include currency manipulation disciplines in the deal. Froman admitted that they have not.
Senators at the hearing called out Froman for such non-compliance and openly cast doubt on the notion that the TPP could gain congressional approval.
At one point in the hearing, Senator Thune (R-S.D.) asked whether there was a risk that the U.S. government could be challenged under the North American Free Trade Agreement (NAFTA) for not approving the highly-controversial proposed Keystone XL pipeline. Such a challenge is possible under the extraordinary provisions in NAFTA, slated for expansion in the TPP, that empower foreign corporations to circumvent our domestic courts and directly challenge the U.S. government before extrajudicial tribunals over environmental and health policies.
Senator Thune’s question was not hypothetical. Yesterday the Canadian press reported that TransCanada – the Canadian corporation behind Keystone XL – may be considering using NAFTA’s foreign investor privileges to demand that the U.S. government provide compensation for delaying approval of the polemical pipeline.
That’s right. TransCanada is reportedly contemplating using a “trade” pact to argue that U.S. taxpayers owe the corporation money because the Obama administration has not okayed a widely-opposed project that environmental groups project would increase carbon emissions and oil spills.
How could such a claim be substantiated? Apparently TransCanada could argue that the pipeline delay violates its NAFTA-protected right to “fair and equitable treatment.” On the basis of this same claim, tribunals have ordered governments to pay foreign firms hundreds of millions of dollars under NAFTA and related pacts for natural resource policies, environmental protections, and health and safety measures. TPP would expand these corporate privileges even further, empowering thousands more foreign firms to join TransCanada in contemplating extrajudicial attacks on public interest policies.
Froman, of course, did not dwell on such threatening core provisions of the TPP. What did he say about the pact? Unsurprisingly, he recycled the tired pitch that the controversial deal would boost U.S. exports. He stated, “The Obama Administration has a strong record of success in promoting U.S. exports…” -- a claim ostensibly intended as a credit to the status quo trade policy that the TPP would expand.
Actually, U.S. exports grew by zero percent in 2013, rendering virtually impossible Obama’s stated goal to double exports by the end of 2014. (At the export growth rate seen over the past two years, the export-doubling goal would not be reached until 2054.) That’s hardly a success story upon which to promote a more-of-the-same TPP.
But perhaps the dismal export record of late is due to exports to countries with which we don’t have a “free trade” agreement (FTA) not keeping up with exports to our FTA partners?
Nope. U.S. goods exports to our 20 FTA partners actually fell slightly from 2012 to 2013, while exports to the rest of the world increased slightly. This greater export growth to non-FTA partners than to FTA partners is not an anomaly. Growth in U.S. goods exports to non-FTA partners has actually been 30 percent higher than growth in exports to FTA partners over the last decade.
Froman particularly singled out agriculture and manufacturing as two sectors on whose behalf the administration is pushing the TPP and similar deals. On manufacturing, he stated:
In 2013, the United States exported nearly $1.4 trillion in manufactured goods, which accounted for 87 percent of all U.S. goods exports and 61 percent of U.S. total exports. To support the growth of manufacturing and associated high-quality jobs here at home, the Obama Administration will continue to pursue trade policies aimed at keeping American manufacturers competitive with their global peers.
Last year, the United States ran a trade deficit in manufactured goods with its 20 FTA partners that topped $52.4 billion. This represented an 8 percent increase from the $48.7 billion manufacturing trade deficit with FTA partners in 2012. In contrast, the U.S. manufacturing trade deficit with non-FTA countries declined by 3 percent from 2012 to 2013. Supporting U.S. manufacturing requires rethinking status quo trade policies, not “continuing to pursue” them.
On agriculture, Froman stated:
Agriculture is vital to the American economy. In 2013, U.S. farmers and ranchers exported a record $148.4 billion of food and agricultural goods to consumers around the world. In 2014, the Administration aims to help them build on that record performance.
The U.S. agricultural trade balance with U.S. FTA partners last year was a $7.7 billion deficit, which represented a doubling of the U.S. agricultural trade deficit with FTA partners from 2012. That's hardly a “record performance” for the trade policy model that the TPP would expand.
Froman was right to say that trade policy can promote our values when “done right.” Based on the evidence, we must not be doing it right.