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February 26, 2015

Forthcoming TPP Sales Pitch So Predictable, We Decided to Predict It

In the coming days, the U.S. Trade Representative (USTR) will release its annual report on the Obama administration’s trade policy agenda.  We know that you can’t wait to see what it will say. 

Good news.  You don’t have to.  Below we present the world’s first look at the report’s contents. 

How do we know in advance what the annual trade report will say?  No, we don’t have a mole at USTR (though if any of our USTR readers would like to volunteer…). 

We have a pretty good idea of the report’s contents, given that these reports tend to recycle the same old sales pitches that the administration has been disseminating ad nauseam (figuratively and, sometimes, literally). 

Since the status quo trade platitudes have become predictable, we thought we might as well predict them. 

So, you heard it here first – below are some of the administration's standard TPP-related talking points likely to be rehashed in USTR’s forthcoming report, followed by an explanation of why they do not bear repeating:

95 percent of the world’s consumers live outside our borders.

[But our trade pacts have not helped us reach them.]

Yes, this statistic shows a basic understanding of geography and population.  But it shows little else.  The official government trade data reveal that past trade deals have not been successful in helping U.S. firms reach consumers who live abroad.  In fact, U.S. goods exports to our “free trade” agreement (FTA) partners have grown 20 percent slower than U.S. exports to the rest of the world over the last decade.

The TPP would grant U.S. firms greater access to the world's fastest-growing region.

[But the relevant TPP countries have been growing one-fourth as fast as that region.]

The United States already has FTAs with six of the 11 TPP negotiating partners.  The combined GDP of the other five countries (the ones that could offer “greater access”) has been growing at a paltry 1 percent annually over the last decade – one fourth of the growth rate of the Asia-Pacific region overall.  Yes, the region has been growing quickly.  That just happens not to be relevant to the TPP. 

Exporters tend to pay their workers higher wages.

[But jobs displaced by imports pay even higher.]

What this talking point fails to mention is that jobs lost to imports under unfair trade deals tend to pay even higher wages than jobs in exporting industries, according to new data unveiled by the Economic Policy Institute (EPI).  If a manufacturing worker making $1,020 per week loses her job to imports under a raw trade deal and gets re-hired in an exporting firm where she gets paid less than $870 per week (the actual numbers from EPI’s analysis), it’s probably small consolation that she could be making even less in a non-traded sector like restaurants.  But that is the very argument – that exporting industries pay more than non-traded industries – that the administration has been using to push for the TPP’s expansion of the trade status quo.

Their pitch omits the fact that far more jobs have been lost in the higher-paying import-competing industries than have been gained in exporting sectors under existing trade deals, judging by the burgeoning U.S. trade deficit with FTA partners, which has grown 427 percent since the deals took effect. It also does not mention that most trade-displaced workers do not actually get rehired in exporting industries, but in non-traded sectors, spelling an even bigger pay cut than the example given above.

China wants to write the rules for commerce in Asia. Instead, we should write the rules.

[We didn’t write the TPP’s rules – multinational corporations did. The TPP would hurt our national interests while failing, like past FTAs, to affect China’s influence.]

Ah yes, the boogeyman tactic.  When the economic sales pitch for a controversial new FTA falters on the existing FTA record of lost jobs, lower wages and increased trade deficits, FTA proponents frequently resort to raising the specter that without the controversial pact, the influence of a foreign opponent will rise further.  But the notion that the establishment – or not – of any specific U.S. trade agreement would affect China’s rising influence is contradicted by the record.  Proponents of the North American Free Trade Agreement (NAFTA) and NAFTA expansion pacts similarly warned that those deals were necessary to prevent rising foreign influence in Latin America.  But in the first 20 years of NAFTA, the share of Mexico’s imported goods coming from China increased from 1 to 16 percent, while the U.S. share dropped from 69 percent to 49 percent.  And from 2000 to 2011, a period in which U.S. FTAs with eight Latin American countries took effect, the share of Latin America’s imported goods coming from China increased from 1 percent to 7 percent, while the U.S. share fell from 25 percent to 16 percent.  Why should we believe the recycled pitch that another FTA would keep China’s economic influence in check?  

And the attempt to paint the TPP as a battle between “our rules” and China’s rules is absurd.  “We” did not write these rules.  The draft TPP text was crafted in a closed-door process that granted privileged access to more than 500 official U.S. trade advisors, nine out of ten of them explicitly representing corporations.  It is little surprise then that leaked TPP terms include new monopoly patent rights for pharmaceutical companies that would increase healthcare costs, limits on efforts to reregulate Wall Street, a deregulation of U.S. gas exports that could increase domestic energy prices, maximalist copyright terms that could thwart innovation and restrict Internet freedom, and new investor protections that incentivize offshoring.  Good luck selling that as advancing U.S. interests. 

The TPP is a 21st-century agreement with strong labor and environmental standards.

[Government reports show that those standards have proven ineffective.]

The vaunted inclusion in the TPP of labor and environmental provisions that were hatched in a May 10, 2007 deal is nothing new. These provisions have been included in existing FTAs, but have proven ineffective. The George W. Bush administration, for example, included "May 10" terms in the FTA with Colombia, where anti-union violence and repression remain rampant. Indeed, a U.S. Government Accountability Office report released in November 2014 found broad labor rights violations across five surveyed FTA partner countries, regardless of whether or not the FTA included the “May 10” labor provisions. As for environmental standards, the TPP would empower foreign corporations (e.g. oil/gas companies) to demand taxpayer compensation before extrajudicial tribunals for new environmental protections in TPP countries (e.g. rejection of a proposed controversial pipeline). 

And despite recent claims to the contrary, the evidence shows no correlation between an FTA’s inclusion of the “May 10” standards and its trade balance impact. Though the Korea FTA, the U.S. template for the TPP, included the “May 10” standards, the U.S. trade deficit with Korea has grown more than 70 percent in the three years since the deal’s passage. According to the administration’s trade-jobs ratio, that equates to the loss of more than 70,000 U.S. jobs – the same number of jobs that the administration promised would be gained under the deal. 

98 percent of U.S. exporters are small or medium-sized enterprises (SMEs).

[The few small businesses that export have endured slow and falling exports under FTAs.]

Only 3 percent of U.S. SMEs export any good to any country. In contrast, 38 percent of large U.S. firms are exporters. Even if FTAs actually succeeded in boosting exports, which government data show they do not, exporting is primarily the domain of large corporations, not small businesses.

The relatively few small businesses that do actually export have endured even more disappointing export performance under FTAs than large firms have experienced.  U.S. small businesses have watched their exports to Korea decline even more sharply than large firms under the Korea FTA (a 14 percent vs. 3 percent decrease).  And small firms’ exports to Mexico and Canada under NAFTA have grown less than half as much as large firms’ exports. Indeed, small firms’ exports to all non-NAFTA countries has exceeded by more than 50 percent the growth of their exports to NAFTA partners.

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Comments

Daniel Slade

It is very important that the opponents of TPP force a strict time limit on the vote for fast track. If they don.t the Tpp supporters and their Corporate backers willKeep the vote open for hours untill they have suceeded in their efforts to bribe extort and economically terrorize enough House Members to vote for Fast Track. so that it passes.

Newsworld

The Cleveland Plain Dealer has the audacity do ask its readers this question Do foreign trade deals help or hurt U.S. workers? We have miles of streets with empty stores and empty factories. Millions of workers have lost their jobs and businesses due to free trade. The trade deficit has broken records for years but this is put off as being just an economic measurement. No one asks where did the money go. The industrial revolution wasn't over. The free traders just sent it out of our country. More than a million lost their jobs in the computer industry while the news reports concentrated on the rust belt jobs that were lost because it was obsolet. This was our response to the Plain Dealer's question: ( I know most newspaper and news channels will likely bury this letter but someone somewhere needs to take up the challenge and tell it like it is.

THE AMERICAN DREAM IS BURNING – OUR ECONOMY BASED ON MAKING MONEY ON MONEY INSTEAD OF MAKING THINGS IS BURNING AWAY

Even former Federal Reserve Chairman Ben Bernanke said the best way to stimulate the economy is to "buy domestically produced goods."

Free trade is an economic nightmare. Our own federal government sponsored the moving of factories outside of the U.S. starting in 1956. It was suppose to be a temporary program but it never ended. Somewhere along the way, the program was labeled free trade although it was not about trading products but moving production anywhere in the world for the sake of cheaper labor for the sake of investments. The value of workers and labor was degraded and deflated.

This represents trillions of dollars in value lost forever. This value is a real asset. It is the best way to grow value. It is a better money standard than all the funny money created out of nothing by the Federal Reserve. This money has to go through a lot of manipulations to grow value. The greater the value of workers and labor is – the greater our economy is. The more money some one has to buy things, the money adds value along the way. It recycles our economy. The more values that remain local, the more money there is. With free trade economics, all the money spent at the retail or end user level quickly fans out to where the products are made and the investments reside. It does not stay in place to recycle our economy. And cheaper imports cost jobs. Our middle class production worker class was smashed by free trade. A new working poor class was created and it is not able to support free trade economics. Many of the working poor need government assistance and private charity to survive.

In 1995, President Clinton had to bail out the free trade process by rushing billions of dollars to Mexico to save the peso and the Mexican economy. This happened even though more than 4,000 U.S. factories were moved to Mexico. The flood of Mexican workers coming to America seeking economic survival continued. Free trade was a failure.

The Cleveland Plain Dealer headlines in the 1990s were about major companies and businesses closing down or firing workers. Free trade has produced the most massive dislocation of jobs in U.S. history including the Great Depression. Millions of workers lost their jobs and it was not only in the rust belt. More than a million workers in the computer industry lost their jobs, More than a 1000 computer businesses in just Ohio, Michigan and Pennsylvania closed down. Hundred of major computer manufacturers across the country closed down too. Others moved their production outside of the U.S.

Other headlines followed telling about the record breaking bankruptcies, home foreclosures and trade deficit . The hurricane in New Orleans exposed a vast previously unreported under class living in a silent depression. The same applied to other major cities in our country proving our unemployment rate was fiction.

Not much has changed. Then in 2008 President Obama had to bail out free trade economics by borrowing trillions of dollars from the future. He bailed out big money interests, investment communities, banks,wall street and the "too big to fail" corporations. He ignored the suffering of millions who lost their jobs and businesses. There were too many businesses " too small to save." They were put on the economic rubbish heap.

And so it goes. The globalist free traders have been bailed out and the Plain Dealer has the nerve to ask us if free trade economics is good or bad. God help us now. Just think what all the lost values and money could have accomplished for out country and for that matter the whole world. We could have had many humanitarian programs instead of war.

http://tapsearch.com/ray-tapajna-journals http://tapsearch.com/bewildered-global-economy http://ray-tapajna-tapsearcher.page.tl

Ray Tapajna - Tapsearch Tapart News - Advocate for workers dignity, local economiies, real world trade and real free enterprise


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