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You will be hearing a lot about the upcoming Trans-Pacific Partnership (TPP) agreement. TPP’s negotiations are being held in secret with details kept secret even from our Congress. But giant corporations are in the loop.

TPP is a “trade” agreement between several Pacific-rim countries that is actually about much more than just trade. It will be sold as a trade agreement (because everyone knows that “trade” is good) but much of it appears to be (from what we know) a corporate end-run around things We the People want to do to reign in the giant corporations — like Wall Street regulation, environmental regulation and corporate taxation.

One-Sided Process

The TPP process appears to be set up to push corporate interests over other interests. The TPP is being negotiated in secret, so what we know about it comes from leaked documents. Even our Congress is being kept out of the loop. But 600 corporate representatives are in the loop while representatives of groups that protect working people, human, political and civil rights and our environment are largely not in the loop.

This one-sided participation unfortunately indicates that the interests of giant corporations are likely to override the interests of working people and those who want to protect non-corporate interests. Otherwise there would be more representation by representatives of organizations representing these concerns, and greater transparency into the process.

TPP Is A Very, Very Big Deal

The coming TPP is a very, very big deal. If it is agreed to by the Senate and signed by the President it will override American laws in many areas. We won’t be allowed to enforce laws and regulations that impede the “rights” granted to big corporations under this agreement, and it will be very hard to rescind the agreement once signed, no matter how much damage might result. Just look at how NAFTA, China’s entry into the WTO and other agreements are causing huge trade deficits and sending jobs, factories and industries out of the country while dramatically increasing income and wealth inequality.

Making the TPP work for We, the People should be up there on our “litmus test” of things we require of our elected officials — right along with pledging no cuts to Social Security and Medicare. (more…)

In polite circles in the United States’ support for free trade is a bit like proper bathing habits. It is taken for granted. Only the hopelessly crude and unwashed would not support free trade.

There is some ground for this attitude. Certainly the United States has benefited enormously by being able to buy a wide range of items at lower cost from other countries. However this doesn’t mean that most people in the country have always benefited from every opening to greater trade.

And it certainly doesn’t mean that the country will benefit from everything that those in power label as “free trade.” That is the story we are seeing now as the Obama administration is pursuing two major “free trade” agreements that in fact have very little to do with free trade and are likely to hurt those without the money and power to be part of the game.

The deals in questions, the Trans-Pacific Partnership (TPP) and the U.S.–European Union “Free Trade” Agreement are both being pushed as major openings to trade that will increase growth and create jobs. In fact, eliminating trade restrictions is a relatively small part of both agreements, since most tariffs and quotas have already been sharply reduced or eliminated.

Rather, these deals are about securing regulatory gains for major corporate interests. In some cases, such as increased patent and copyright protection, these deals are 180 degrees at odds with free trade. They are about increasing protectionist barriers.

All the arguments that trade economists make against tariffs and quotas apply to patent and copyright protection. The main difference is the order of magnitude. Tariffs and quotas might raise the price of various items by 20 or 30 percent. By contrast, patent and copyright protection is likely to raise the price of protected items 2,000 percent or even 20,000 percent above the free market price. Drugs that would sell for a few dollars per prescription in a free market would sell for hundreds or even thousands of dollars when the government gives a drug company a patent monopoly.

In the case of drug patents, the costs go beyond just dollars and cents. Higher drug prices will have a direct impact on the public’s health, especially in some of the poorer countries that might end up being parties to these agreements. (more…)

The economy faces a persistent budget crisis.

Pushback from Wall Street has gutted most of the banking reforms, unemployment is stuck around 8 percent, corporate profits have been soaring while there is no wage growth — and the newest White House proposal is… a free trade zone with Europe.

This idea of a Trans-Atlantic Free Trade Area was tossed in, reportedly at the last moment, to President Obama’s State of the Union, and is being promoted in the government’s latest report on trade.

You don’t know whether to laugh or cry. This is a classic case of changing the subject to a cause that will not address any of the economy’s deeper ills and could well worsen them.

It recalls the very old joke about the drunk looking for his keys under a lamp post. He mentions to a cop that he lost the keys somewhere else, but “this is where the light is.”

Bipartisanship is not doing so well this season, but the one thing that Republicans and Wall Street oriented Democrats can agree on is more free trade deals.

The fact is that there is already massive trade between the U.S. and Europe — about $650 billion last year, an increase of two-thirds just since the turn of the 21st century. Tariffs are already at very low levels.

The remaining issues dividing the U.S. and the EU are ones where no agreements are in sight. The Europeans, for instance, have much higher standards to protect their consumers from Franken-foods, and are not about to give them up. (more…)

The U.S. and 10 other countries are negotiating our next big trade agreement, called TPP. It’s time to re-examine what works and what doesn’t work.

Imagine a thought experiment, where we put environmentalists in each country in charge of negotiating the next trade agreement. Preposterous! I know. Stick with me. This is a thought experiment.

So, in this thought experiment our environmental negotiators would prioritize their interests — CO₂ in the atmosphere, deforestation, endangered species, renewable energy, safe food, clean air and clean water.

As negotiators, each side would “trade” something it has, for what it wants. In a trade deal, the other countries want access to our markets. At a TPP meeting last summer, a negotiator from New Zealand made this very clear to me. She was adamant that New Zealand absolutely must have access to US consumers for her country to prosper.

So, in my thought experiment, our environmental negotiators will grant New Zealand and other countries favorable access to our economy, on the condition that they endorse sustainable environmental practices and agree to abide by international standards for fishing, access to fresh water, and carbon reduction and whatever other green provisions we can negotiate.

If New Zealand or other countries in the agreement fall short of their commitments, the deal would invoke a new Global Environmental Organization (GEO) for dispute resolution, comparable to dispute settlement tribunals that have already handled hundreds of cases in the World Trade Organization (WTO).

If environmentalists negotiated a web of such agreements with all major trading countries, they would steadily achieve their environmental goals, in exchange for access to our markets.

OK. Impractical. I know. Still, in my thought experiment, China might avoid 750,000 pollution-related deaths per year. We would amplify global efforts to produce abundant renewable energy and preserve sustainable conditions so our children could enjoy life on our planet. This would be no mean feat.

Wouldn’t that be admirable and perfectly aligned with the public good and our national interests?

Imagine a second thought experiment. This time, we let labor and human rights activists negotiate trade agreements. Preposterous! I know. Remember — this is a thought experiment.

Labor and human rights negotiators would grant access to our markets, but only on the condition that other countries agree to basic international standards for labor rights, human rights and public health. Through a web of such agreements, workers in other countries would gain political and market power to claim a fair share of the gains from trade and improved productivity. This would be huge, by the way.

Negotiators would create a global institution, perhaps a World Social Organization (WSO), with its own dispute settlement process, comparable to trade tribunals in the WTO, to enforce language for stronger social cohesion. (more…)

If the United States implemented trade policies to end currency manipulation—especially by China—not only would that reduce the U.S. trade deficit by $190 billion to $400 billion over three years, it would be a major first step in reviving the nation’s manufacturing sector and creating up to 4.7 million jobs, according to a new report from the Economic Policy Institute (EPI).

The report, Reducing U.S. Trade Deficits Will Generate a Manufacturing-Based Recovery for the United States and Ohio: Ending Currency Manipulation by China and Others Is the Place to Start, finds that:

Reviving U.S. manufacturing requires eliminating a jobs-destroying U.S. trade deficit in goods by ending currency manipulation and investing in a series of coordinated manufacturing policies.

Currency manipulation is the largest single cause of the U.S. trade deficit and the Chinese government is the world’s biggest currency manipulator. It deliberately keeps the value of its currency artificially low and that artificially raises the price of U.S. exports to China and suppresses the price of Chinese imports into the United States. This artificial price advantage is one of many pull factors that encourages U.S. businesses to shut down operations here and manufacture in China instead.

Manufacturing jobs have been the hardest hit as a result of the nation’s trade deficit, and the EPI report says that the reduction in the trade deficit engineered through new trade policies would over three years:

• Create between 2.2 million and 4.7 million U.S. jobs (equal to between 1.4% and 3% of total nonfarm employment).
• Reduce the national unemployment rate by between 1.0 and 2.1 percentage points.
• Create some 620,000 to 1.3 million manufacturing jobs (27.5% of all jobs created by eliminating currency manipulation).
• Increase U.S. GDP by between $225.0 billion and $473.7 billion (an increase of between 1.4% and 3.1%).³
• Shrink the federal budget deficit by between $78.8 billion and $165.8 billion (reductions that would continue as long as the trade balance remained stable), as growth in output expands tax receipts and reduces safety net payments. (more…)

In D.C., the geniuses are busy with the billionaire agenda, fighting the things We, the People, do to make our lives better. Meanwhile, in the real world yet another report is out that shows how one-sided trade deals with China and others are killing off our jobs and factories and industries and economy. And while DC’s geniuses work themselves into a frenzy over the budget deficit — money that we Americans mostly owe to each other — they ignore the real problem: the trade deficit, and hundreds of billions of our dollars continue to bleed out of our country, year after year.

The Report

A new report is out, from economists Justin Pierce of the Federal Reserve Board and Peter Schott of Yale University’s School of Management. The report, titled, The Surprisingly Swift Decline of U.S. Manufacturing Employment is available at the National Bureau of Economic Research. The summary,

This paper finds a link between the sharp drop in U.S. manufacturing employment after 2001 and the elimination of trade policy uncertainty resulting from the U.S. granting of permanent normal trade relations to China in late 2000. We find that industries where the threat of tariff hikes declines the most experience greater employment loss due to suppressed job creation, exaggerated job destruction and a substitution away from low-skill workers. We show that these policy-related employment losses coincide with a relative acceleration of U.S. imports from China, the number of U.S. firms importing from China, the number of Chinese firms exporting to the U.S., and the number of U.S.-China importer-exporter pairs.

What It Means

Hint, for those who don’t like to read long academic papers: one-sided trade deals have cost us millions of good-paying manufacturing jobs, closed tens of thousands of factories and greatly weakened the essential ecosystems that enable key strategic industries to remain in the US.

Hint, for those who haven’t noticed: this devastated the surrounding communities and small businesses, devastated entire regions of our country and forced people and communities into debt just to get by.

Hint, for those who have trouble making connections: it also enabled the giant corporations to break unions and force down everyone else’s wages as millions went looking for work, decreasing demand in the economy and further devastating other businesses and the rest of our economy.

Hint, for those who don’t read the news: all of this greatly enriched a few already-wealthy billionaires who use their enormous fortunes to bribe keep our country’s policies the way they are because the way things are does so well for them.

Reporting On The Report

The Wall Street Journal reports on the report, in Remember That Jobless Recovery? China’s Fault,

[The 2001 recession] ushered in a huge decline in manufacturing employment. About 1.5 million manufacturing jobs were lost in the first year of that downturn –and continued to fall for years afterward– far more than the 900,000 manufacturing jobs lost in the first year of the so-called Great Recession of December 2007 through mid-2009.

What happened? In a word: China.

Economists Justin Pierce of the Federal Reserve Board and Peter Schott of Yale University’s School of Management argue in a recent paper that import competition from China had a devastating impact on U.S. manufacturing jobs. …

How much damage did PNTR do to manufacturing jobs? (Emphasis added, for emphasis.) (more…)

Why are we having a jobless recovery? One reason is that the manufacturing sector in the United States — at least as relates to employment — has been denuded to such an extent that even if consumer spending starts to move up, more manufacturing jobs are not created. The things that are being made and sold to our more optimistic consumers are not being made here.

What is the problem? A big part of it is that the trade policy we pursue in this country is left over from the 20th century. We are utilizing the same policy and fighting the same battles we did in 1985. But it’s not 1985 anymore and the world has changed dramatically. We need a trade policy for the 21st century.

In the aftermath of WWII, as the U.S. became a dominant world power and the greatest generation came home from the war, a number of basic tenets informed our trade policy. One, we needed a centralized system, based in Geneva and then called the GATT (General Agreement on Tariffs and Trade), which would promulgate the benefits of an open trade economic system. One of the main reasons for this plan was to fight back communism and to make sure development occurred on a capitalist basis. The second tenet was that the United States would be an exemplar of this system, and would encourage capitalist development by opening our market to all foreign producers.

The United States succeeded wonderfully in achieving these objectives. At our urging, we grew the GATT into a sort of world government — now called the World Trade Organization, (WTO) — that has the power to change our internal economic regulations as a result of the mandatory dispute settlement system that is a part of it. We also have a wonderfully open market — and the endemic large trade deficit that goes with it. But perhaps it was worth it. For a short time, around the year 2000, we were truly on top of the world. We won.

But we are no longer in a post-WWII world, we are no longer fighting Communism (at least of the traditional kind), and capitalist economic development in the developing world is no longer a main foreign policy goal. The world has changed, but our trade policy has not. (more…)

Everyone I know is in favor of trade done right.

Recently, I heard a congressman explain how investors interpret that.

From that perspective, trade is done right when the investor’s property is protected from capricious foreign governments who might snatch property. I think he meant Hugo Chavez or Fidel Castro — China, or maybe Peru. I got the impression that in 1917, Bolsheviks left a deep, traumatic scar on the collective investor psyche. But let’s walk through this, because I think it has a strong streak of truth.

Our congressman put this into context, saying it took America 200 years to act in the public interest while protecting business and property rights. When we build a freeway, we seize private property for the public good, then pay owners fair compensation. We regulate cigarettes, set emissions standards for automobiles and power generating stations, and we want assurance that drugs are safe and effective.

Our 200-year process found a balance between public and private interests. How? We had a strong civil society — an active free press, public advocacy, and political power in the hands of organized workers, environmental groups, and public health advocates. Our political process held elected officials accountable, at least from time to time.

Since we did it in our domestic society, the logical leap was that our trade agreements would produce a similar outcome. Done right, we could have clean air, clean water, good schools and roads, a strong middle class, stable political institutions, and investors could make lots of money. Globalization would be fine indeed, if we follow our domestic history.

Except we’re not.

Instead, global trade agreements go overboard in protecting investor rights. “Free trade” deals largely exclude public interest, devaluing the environment, labor rights, human rights, public health and financial regulation. The interests of global investors are elevated to top priority, and effectively decoupled from the public interests in every country where trade agreements operate.

Badly done “free trade” agreements shield global companies from domestic regulation. By the end of 2011, global corporations have launched 450 “free trade” challenges against 89 governments, including the United States.

• Chevron used trade dispute tribunals to shirk an $18 billion environmental penalty from Ecuador.
• An American multinational company used trade tribunals to challenge Quebec’s decision to suspend drilling permits while the province studied fracking.
• Global tobacco companies went to a trade tribunal to overturn an American regulation on cigarettes marketed to young smokers.
• Another trade tribunal is deciding whether Australia can require plain packaging of cigarette packs as a public health measure in the face of 15,000 smoking-related deaths per year and $30 billion in economic damage. (more…)

The Romney campaign said that it won’t “be dictated by fact-checkers”—in other words, they won’t be driven by facts. But whether the truth matters in this election isn’t up to the Romney campaign, it’s up to you.

Romney’s new ad lies about President Obama’s jobs record and doesn’t reveal the facts behind the Romney-Ryan plan to ship 800,000 jobs overseas—including 73,000 to China.

The Romney ad also says the President hasn’t challenged China over unfair trade policies—a statement Mitt Romney knows isn’t true. Mitt Romney actually attacked the President for being too tough on China when they were flooding the market with tires. You can check that out on page 119 of Romney’s own book, “No Apology.”

And Romney isn’t apologizing for the investments he still holds in China. Or the American jobs he outsourced to China as the president, CEO, chairman, and sole shareholder of Bain Capital.

President Obama has stood up for American workers, by filing trade cases against China at twice the rate of his predecessor. President Obama has fought for manufacturing jobs since day one, and now he’s set a goal of 1 million new manufacturing jobs by the end of his second term.

That’s the truth. No wonder the Romney campaign doesn’t want to be guided by the facts.