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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Sanders, Krugman: Why Overreaching TPP Should Be Defeated

Imagine for a minute that you don’t really have a strong opinion one way or the other about the Trans Pacific Partnership (TPP). You are concerned about trade agreements in general, and you get it that the TPP is an especially big deal. But you are keeping your mind open, recognizing that in economic theory, at least, there is a chance that expanded trade can actually add to the stock of stable jobs in your country.
It’s likely that many Americans feel this way, and are waiting for a good briefing which touches on all of the key points from both sides of the argument. For the time-challenged, Sen. Bernie Sanders, a candidate for the Democratic nomination for the presidency, has a HuffPo op-ed, “The TPP Must Be Defeated,” which makes a strong case against the deal in four major points. Sanders writes:

First, the TPP follows in the footsteps of failed trade agreements like NAFTA, CAFTA, Permanent Normal Trade Relations (PNTR) with China, and the South Korea Free Trade agreement. Over and over again, supporters of these agreements told us that they would create jobs. Over and over again, they have been proven dead wrong.
Since 2001, nearly 60,000 manufacturing plants in this country have been shut down and we have lost over 4.7 million decent paying manufacturing jobs. NAFTA has led to the loss of nearly 700,000 jobs. PNTR with China has led to the loss of 2.7 million jobs. Our trade agreement with South Korea has led to the loss of about 75,000 jobs. While bad trade agreements are not the only reason why manufacturing jobs in the U.S. have declined, they are an important factor.
The TPP continues an approach towards trade which forces Americans to compete against workers in Vietnam where the minimum wage is 56 cents an hour, independent labor unions are banned, and people are thrown in jail for expressing their political beliefs. This is not “free trade.” This is the race to the bottom. While we must help poor people around the world improve their standard of living, we can do that without destroying the American middle class.
Secondly, when we are talking about the TPP it’s important to know who is for it and who is against it.
Large, multi-national corporations that have outsourced millions of good paying American jobs to China, Mexico, Vietnam, India and other low-wage countries think the TPP is a great idea. They understand that this legislation will allow them to accelerate efforts to hire cheap labor abroad. The TPP is also strongly supported by Wall Street and large pharmaceutical companies who believe their global profits will increase if this agreement is passed.
On the other hand, every union in this country, representing millions of American workers, is in opposition to this agreement because they understand that the TPP will lead to the loss of decent-paying jobs and will depress wages. Virtually every major environmental organization, including the League of Conservation Voters, the Sierra Club, the Natural Resources Defense Council, and 350.org[350.org], among many others, also oppose this legislation. They understand that the TPP will make it easier for multi-national corporations to pollute and degrade the global environment. Major religious groups such as the Presbyterian Church U.S.A. and the United Methodist Church, also oppose this legislation because of what it could do to the poorest people on earth.

Whose views should we trust on this legislation? Wall Street and corporate America or organizations that represent working families, the environment and the religious community?
Third, the TPP would also undermine democracy by giving multi-national corporations the right to challenge any law that could reduce their “expected future profits” through what is known as the Investor State Dispute Settlement (ISDS) system. Under existing trade agreements, Phillip Morris is using this process to sue Australia and Uruguay for passing laws designed to prevent the children in those countries from smoking. These countries should be rewarded for taking action to protect the public health of their citizens. Instead, they are being taken to an international court because their laws are hurting the bottom line of one of the largest tobacco companies in the world.
Vattenfall, a Swedish energy company, has used this process to sue Germany for $5 billion over its decision to phase out nuclear power. Should the people of Germany have the right to make energy choices on their own or should these decisions be left in the hands of an unelected international tribunal?
A French waste management firm, Veolia, used this process to sue Egypt for $110 million because Egypt increased its minimum wage and improved its labor laws. In other words, Egypt’s “crime” is trying to improve life for their low-wage workers.
Do we really want to tell governments all around the world, including the U.S., that if they pass legislation protecting the well-being of their citizens they could pay substantial fines to multi-national corporations because of the loss of future profits? What an incredible undermining of democracy! But that’s exactly what will happen if the TPP goes into effect.
Fourth, this legislation, strongly supported by the major drug companies, would substantially raise the prices of medicine in some of the poorest countries on earth. The drug companies are doing everything they can to prevent countries from moving to lower cost generics, even if it means that thousands will die because they cannot afford higher prices for the drugs they need. That is unacceptable. Doctors Without Borders has stated: “The TPP agreement is on track to become the most harmful trade pact ever for access to medicines in developing countries.”

So far proponents of TPP have made only general arguments for the trade agreement, which many genuinely open-minded voters won’t find adequately satisfying. Until supporters of TPP provide a persuasive point-by-point rebuttal of the issues raised by Sanders, it is doubtful that Democrats, much less the nation, are going to unite behind the proposal. As Nobel Prize-wining economist Paul Krugman writes in his column on “Trade and Trust,”

I don’t know why the president has chosen to make the proposed Trans-Pacific Partnership such a policy priority. Still, there is an argument to be made for such a deal, and some reasonable, well-intentioned people are supporting the initiative.
But other reasonable, well-intentioned people have serious questions about what’s going on. And I would have expected a good-faith effort to answer those questions. Unfortunately, that’s not at all what has been happening. Instead, the selling of the 12-nation Pacific Rim pact has the feel of a snow job. Officials have evaded the main concerns about the content of a potential deal; they’ve belittled and dismissed the critics; and they’ve made blithe assurances that turn out not to be true.
The administration’s main analytical defense of the trade deal came earlier this month, in a report from the Council of Economic Advisers. Strangely, however, the report didn’t actually analyze the Pacific trade pact. Instead, it was a paean to the virtues of free trade, which was irrelevant to the question at hand.

That’s what’s bothering me about the debate. The pitch for TPP has the feel of an intelligence-insulting Econ 101 gush about the virtues of free trade. Surely the advocates of TPP can do better.
Krugman goes on to echo Sanders’ concerns and add some objections of his own about the deal’s worrisome provisions regarding copyrights, international dispute settlement an the role of “partially-privatized tribunals.” Further adds Krugman,

Instead of addressing real concerns, however, the Obama administration has been dismissive, trying to portray skeptics as uninformed hacks who don’t understand the virtues of trade. But they’re not: the skeptics have on balance been more right than wrong about issues like dispute settlement, and the only really hackish economics I’ve seen in this debate is coming from supporters of the trade pact.

Like Krugman, I would credit President Obama with exceptional honesty and candor on a range of major issues, economic and otherwise. But a credible, straightforward defense of TPP is not one of them.
In addition to the concerns of Sanders and Krugman, I worry about the consequences of saddling Democrats in tough campaigns with the burden of explaining why they would support TPP, when even the most articulate supporters of the proposal can’t present a coherent case for it. If TPP supporters have a better pitch, now would be a good time to bring it.

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