The truth about the Trans Pacific Partnership.
February 17, 2015
Suppose that by enacting a particular law we’d increase the
U.S.Gross Domestic Product. But almost all that growth would go to the
richest 1percent.
The rest of us could buy some products cheaper than before. But those gains would be offset by losses of jobs and wages.
This is pretty much what “free trade” has brought us over the last two decades.
I
used to believe in trade agreements. That was before the wages of most
Americans stagnated and a relative few at the top captured just about
all the economic gains.
Recent trade agreements have been wins for
big corporations and Wall Street, along with their executives and major
shareholders. They get better access to foreign markets and billions of
consumers.
They also get better protection for their intellectual
property – patents, trademarks, and copyrights. And for their overseas
factories, equipment, and financial assets.
But those deals haven’t been wins for most Americans.
The
fact is, trade agreements are no longer really about trade. Worldwide
tariffs are already low. Big American corporations no longer make many
products in the United States for export abroad.
The biggest
things big American corporations sell overseas are ideas, designs,
franchises, brands, engineering solutions, instructions, and software.
Google,
Apple, Uber, Facebook, Walmart, McDonalds, Microsoft, and Pfizer, for
example, are making huge profits all over the world.
But those profits don’t depend on American labor — apart from a tiny group of managers, designers, and researchers in the U.S.
To
the extent big American-based corporations any longer make stuff for
export, they make most of it abroad and then export it from there, for
sale all over the world — including for sale back here in the United
States.
The Apple iPhone is assembled in China from
components made
in Japan, Singapore, and a half-dozen other locales. The only things
coming from the U.S. are designs and instructions from a handful of
engineers and managers in California.
Apple even stows most of its profits outside the U.S. so it doesn’t have to pay American taxes on them.
This
is why big American companies are less interested than they once were
in opening other countries to goods exported from the United States and
made by American workers.
They’re more interested in making sure
other countries don’t run off with their patented designs and
trademarks. Or restrict where they can put and shift their profits.
In
fact, today’s “trade agreements” should really be called “global
corporate agreements” because they’re mostly about protecting the assets
and profits of these global corporations rather than increasing
American jobs and wages. The deals don’t even guard against currency
manipulation by other nations.
According to Economic Policy Institute, the North American Free Trade Act cost U.S. workers almost
700,000 jobs, thereby pushing down American wages.
Since
the passage of the Korea–U.S. Free Trade Agreement, America’s trade
deficit with Korea has grown more than 80 percent, equivalent to a loss
of more than
70,000 additional U.S. jobs.
The U.S. goods trade deficit with China increased $23.9 billion last year, to $
342.6 billion. Again, the ultimate result has been to keep U.S. wages down.
The
old-style trade agreements of the 1960s and 1970s increased worldwide
demand for products made by American workers, and thereby helped push up
American wages.
The new-style global corporate agreements mainly enhance corporate and financial profits, and push down wages.
That’s
why big corporations and Wall Street are so enthusiastic about the
upcoming Trans Pacific Partnership – the giant deal among countries
responsible for 40 percent of the global economy.
That deal would give giant corporations even more patent protection overseas. It would also guard their overseas profits.
And
it would allow them to challenge any nation’s health, safety, and
environmental laws that stand in the way of their profits – including
our own.
The Administration calls the Trans Pacific Partnership a key part of its “
strategy to make U.S. engagement in the Asia-Pacific region a top priority.”
Translated: The White House thinks it will help the U.S. contain China’s power and influence.
But it will make giant U.S. global corporations even more powerful and influential.
White
House strategists seem to think such corporations are accountable to
the U.S. government. Wrong. At most, they’re answerable to their
shareholders, who demand high share prices whatever that requires.
I’ve
seen first-hand how effective Wall Street and big corporations are at
wielding influence — using lobbyists, campaign donations, and subtle
promises of future jobs to get the global deals they want.
Global
deals like the Trans Pacific Partnership will boost the profits of Wall
Street and big corporations, and make the richest 1 percent even
richer.
But they’ll bust the rest of America.
Robert B. Reich has served
in three national administrations, most recently as secretary of labor
under President Bill Clinton. He also served on President Obama's
transition advisory board. His latest book is "Aftershock: The Next
Economy and America's Future." His homepage is www.robertreich.org.
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