Racing to the Bottom Across the Pacific

President Obama wants the Trans-Pacific Partnership (TPP) to go into effect before he leaves office, but he is encountering opposition from within his own party, as well as from trade unions and environmental groups. [1] The concern is that the TPP, like the North American Free Trade Agreement (NAFTA), will result in factory closures and job losses.  

The president thinks that’s just silly. The criticism is out of date, he says, because the new agreement will contain strong protections for labor. “You need to tell me what's wrong with this trade agreement, not one that was passed 25 years ago,” he says. 

It may seem like he makes a good point, but there is a problem: the public doesn’t know what is going to be in the TPP. That’s because the negotiations are secret, even from Congress. So the president is saying that people shouldn’t criticize the TPP because they don’t know what they’re talking about, while at the same time depriving any of the TPP critics of the information necessary to gain the knowledge he demands.

Former U.S. Trade Representative Ron Kirk has said that this secrecy is necessary in order to “preserve negotiating strength,” and also to “encourage our partners to be willing to put issues on the table they may not otherwise….” [2] In other words, there are those involved in the negotiations who have something to hide, and it is critical that this information be hidden even from our elected representatives.  

With such machinations going on, the president, and Mr. Kirk, shouldn’t be surprised that there are those who smell a rat. The odor has only been enhanced by proposed provisions that have come to light through the efforts of Wikileaks, and concerns have been raised about such things as a proposal that would allow corporations to sue nations for diminution of potential profits due to government regulations in international tribunals, and rising costs of medicine brought about by TPP created difficulties in introducing generic drugs. [3]  

But the disclosure of what was meant to be secret isn’t necessary to know that the TPP will have an adverse effect on American working people. What all of these trade agreements accomplish, from NAFTA to this one, is the acquisition of cheap labor outside of the United States by American companies. The Office of the United States Trade Representative informs us at its website that a major goal of the TPP is “to eliminate tariffs and other barriers to goods and services trade and investment, so as to create new opportunities for our workers and businesses and immediate benefits for our consumers.” [4] In other words, trading partners with the United States under the TPP won’t have to worry about the U.S. imposing tariffs to protect American workers, and will be able to take advantage of their own cheap labor as they access the American market. What’s more, American companies will be able to utilize the same advantage by moving their facilities to other TPP countries.

Tariffs have not been a major part of American policy for some time, and the idea of protectionism is anathema to the devotees of the free trade, which has nearly risen to the level of a civic religion. So we have to go back some time in American history to find an American president espousing the principle. To this end, President William McKinley will do nicely:  

Under free trade the trader is the master and the producer the slave. Protection is but the law of nature, the law of self-preservation, of self-development, of securing the highest and best destiny of the race of man. [It is said] that protection is immoral.... Why, if protection builds up and elevates 63,000,000 [the U.S. population] of people, the influence of those 63,000,000 of people elevates the rest of the world. We cannot take a step in the pathway of progress without benefiting mankind everywhere. Well, they say, ‘Buy where you can buy the cheapest’.... Of course, that applies to labor as to everything else. Let me give you a maxim that is a thousand times better than that, and it is the protection maxim: ‘Buy where you can pay the easiest.’ And that spot of earth is where labor wins its highest rewards.” [5]  

The free trade ideology, when it is put into practice, is ultimately self-defeating. Its tendency is to put a downward pressure on wages. But that, in turn, reduces the size of markets, because fewer and fewer people can afford what is produced. If the United States continues its free trade policy, the effect will be to further impoverish working people at home, and exacerbate the poverty of working people elsewhere. 

Jack Quirk