TPP and Corporate Control

No thanks to the Obama administration who wanted to keep the agreement a secret, the New Zealand government released the full text of the Trans-Pacific Partnership (TPP).  This “free trade” agreement currently includes 12 member countries encompassing 40% of world GDP (Singapore, Brunei, New Zealand, Chile, United States, Australia, Peru, Vietnam, Malaysia, Mexico, Canada and Japan).  President Obama tried to assure the public that it need not know what is in the trade deal because he and the corporate lobbyists who shaped the deal had the public’s best interests in mind.  With the release of the full text, we now know that it is worse than even its harshest critics feared.

We also know that Hillary Clinton lied several times about the TPP.  First, back in 2012 she said:

This TPP sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field.

Her remarks were particularly Orwellian then.  If the TPP is the “gold standard” in terms of “open free, transparent” and “fair trade”, then I shudder to think what Clinton believes what a substandard agreement looks like.  The TPP was negotiated in secret.  Only a privileged few representing heads of state and corporations were able to be a part of the negotiation process — real transparent.

Clinton, of course, lied about its transparency.  She then lied again in the first Democratic primary debate about her having called the TPP the “gold standard.”  Either Clinton did not know what was in the TPP, in which case she had no authority and knowledge to call it the “gold standard.”  Or she did know, which is likely given her position at the time as Secretary of State and her enthusiastic endorsement of the TPP as “exciting,” “innovative,” “ambitious,” “groundbreaking,” “cutting-edge,” “high quality,” “high-standard” and a plethora of other positive adjectives,  in which case she lied to the American people about its contents.

There is a lot to cover in the TPP (it’s about 6,000 pages). I’ll leave the many other issues dealing with patents, monopolies, environmental regulations (or the lack thereof) to future posts. I’m just going to focus on some of the more egregious examples of how the TPP is harmful to the working class: investor-state dispute settlements.  As we will see, contrary to what President Obama said, the TPP is not a “new type of trade deal that puts American workers first.”

Solidifying Corporate Control: Investor-State Dispute Settlements

Investor-state dispute settlements (ISDS) are a particularly nefarious aspect of the TPP.  In an interview with Truthout, Evan Greer, Campaign Director of Fight for the Future, describes ISDS as follows:

[ISDS] essentially allows corporations to sue governments in order to strike down laws that they feel threaten their profits or potential future profits. [my emphasis]

So imagine a country passes a law that prevents copyright holders from taking down information without a court order. A company could then sue that country in an international tribunal and force them to take down that law, even though it benefits the public interest. You can imagine this in a number of other scenarios, like companies suing a country over environmental or worker protections, for example.

As David Dayen writes in The Intercept, ISDS would allow corporations to veto government regulations.  “That could nullify a proposal by Hillary Clinton to impose a “risk fee” on financial firms — or the Elizabeth Warren/Bernie Sanders plan to reinstate the firewall between investment and commercial banks.”

This puts Clinton’s remarks about how “tough” she is on Wall Street in a new light.  Having been instrumental in crafting and promoting the TPP, Clinton and her sponsors in the large financial institutions knew that her proposed regulatory measures were weak.  They also understood that the ISDS system would allow for state fines paid to corporations and/or the removal of regulatory measures that lowered expected future profits.  This allows Clinton to campaign on the facade of progressivism without her corporate backers fearing any serious institutional change — as if they had much to fear with large donations to both her personal account and to her campaign.

Having crafted the rules, of course the ISDS system is set up in favor of the corporations.  Dayen explains

[ISDS] allows foreign companies operating in TPP member countries to enforce the agreement without using that country’s court system. Instead, corporations can sue for monetary damages in independent tribunals before corporate lawyers who can rotate between advocating for investors and judging the cases themselves. [my emphasis]

The lawyers have an inherent incentive to encourage more challenges with favorable rulings, so they can be paid to arbitrate them. Labor unions who allege violations of the trade deal cannot use ISDS directly; only international investors, i.e. large corporations, can. [my emphasis]

Dean Baker provides additional insight on the ISDS tribunals:

The investor bringing the complaint gets to appoint one of the three judges hearing the complaint. A second judge is appointed by the country against whom a complaint is being brought. The third judge is jointly appointed by the investor and the government. This panel is then empowered to impose fines of whatever size it considers appropriate. This is entirely an extra-judicial process. The verdict is not appealable to any domestic court.

So not only do corporations essentially judge their own cases, the TPP prohibits mechanisms for popular, democratic accountability.  Labor unions, environmental groups, community organizations, and other organizations for popular causes are banned from effective representation.  The TPP formalizes what was before only known in secret: the true constituency of the government is corporations.  Average people are not meant to have any say or popular control in economic and political life.

Global Race to the Bottom

President Obama and Clinton (before the latter started her “progressive” campaign reversals) tried to sell the TPP to the American people on the grounds that it would improve wages, increase the amount of jobs in the United States and make the United States more competitive.  Only one of these things is true.

Like all free trade deals, there are provisions in place to induce market mechanisms to lower wages in the United States.  As already mentioned, ISDS has the power to decimate labor rights and regulations.  In addition, the TPP favors outsourcing of jobs from high wage countries to low wage countries like Vietnam.  Binoy Kampmark explains:

States such as Vietnam have a five-year pass on the issue of implementing complimentary labour standards. Given that there are also vast differences in the basic minimum wage in Vietnam, the notion that US, Australian or Canadian workers would be in an equal position of competition is patent nonsense. Companies will do the rest, exerting a downward pressure on wages on other parts of the zone. There is no reason why off shoring will continue with greater enthusiasm than ever. Welcome, in other words, to a rather grizzly future touched up in Orwellian dress.

What we will see is exactly what happened with NAFTA (also promoted and signed by a Democratic president — truly the party of the working class).  Corporations will relocate labor intensive industries to low wage countries.  Rising unemployment in high wage countries will exert a downward pressure on wages.  As wages tend to rise in the low wage countries due to the demand for labor and labor organizing of the working class in those countries, corporations will relocate to even lower wage countries.  Indeed, China is going through its own outsourcing problem as corporations relocate to even lower wage countries like Vietnam and Malaysia.  The net effect of this is what political economists call the “global race to the bottom.”  On average, wages decrease in order to remain “competitive” for businesses.

These low wage countries often have no or little enforceable labor standards and authoritarian governments.  The United States will provide support for corporations relocating to places like Vietnam. It will also help the authoritarian governments remain control over its population as their working classes eventually begin to organize and revolt against inhumane working conditions and miserable wages.  The United States will encourage the outright repression of labor movements in the countries to which American corporations relocate.  The United States will also suppress movements for political reform on the grounds that they’re “communist” or “against national security” or “against freedom” — the last excuse being the moniker for “against freedom of corporations to exploit freely around the world.”  All of this is consistent with how the United States has used its military and diplomatic power in the past: a fact rarely reported in the mainstream media, but well-known to the victims of the empire.

Domestically, the United States will continue to see a worsening standard of living, declining and stagnant wages and new definitions of “full employment” as more and more of the labor force becomes redundant.  This is what politicians and corporate spokespersons mean by “making America more competitive.” Low wages, little or no benefits, increased unemployment but high profit margins.

With corporations legally able to undermine nominally democratic legislative powers, the United States will likely intensify worrying authoritarian trends in its system of social control. The traditional method of co-opting dissent has been to absorb it into the Democratic Party.  Now that the Democratic Party once again is spearheading a deal that openly subverts systems of popular control in a time when anti-establishmentarianism is at a height, the veil of the Democrats’ subservience to corporate needs has been lifted.  Should the anti-establishment fervor transform into a real, radical movement with mass popular support, the State will resort to using its militarized police force and mass surveillance programs to stifle dissent.

Even should mass protest against the TPP force Democrats in Congress and the President to reject the deal they helped create, we must not forget where the Democratic Party stands.  When it can get away with it, it will sell this country to corporations.  When mass resistance demands change, it co-opts the dissent, shaping it to be harmless to the Party’s corporate masters.  Every election cycle, Democrats play “good cop” while Republicans play “bad cop.”  The winning party decides just how much benefits from the State corporations receive and what faction of the ruling elite is benefited.  The fundamental structure of capitalist domination and control of political and economic life will remain unchanged so long as the pendulum oscillates between two factions of the business party.

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