Citizen Action Monitor

TPP is an ethical flop, trading profits over people

24 of 29 chapters cater to corporate interests: the pro-corporate TPP legislation was written by corporations, for corporations.

No 1581 Posted by fw, January 29, 2016

“The TPP is hard to defend from a utilitarian perspective. It was written by and is intended to benefit the wealthiest members of society at the expense of the common good. The intellectual property chapter, for example, extends copyrights on brand name drugs, restricting millions of poor impoverished people from accessing live-saving drugs and treatments. The deal prioritizes corporate profits, some would say, even over human lives. The other provisions embrace the same methodology, sacrificing internet freedoms to aid corporate profit, preventing environmental regulations that might harm corporate profits. The keynote of the so-called “trade agreement” is taking from those with the least and giving more to the few who already have too much. It seems inconceivable the TPP would maximize welfare among the people it affects. Thus, a utilitarian will disapprove TPP.”Mark Anderson, Seven Pillar Wisdom

Yesterday’s post, If the TPP is an immoral system that can’t be changed, will it do harm? Yes, said ‘citizen’ Chrystia Freeland, introduced the issue of morality into the fractious TPP debate. Continuing this theme, Mark Anderson asks: Is the Trans-Pacific Partnership a ‘corporate’ good or a ‘common’ good? Following a brief but convincing ethical analysis, he concludes: “It seems inconceivable the TPP would maximize welfare among the people it affects.”

Mark Anderson was a Research Associate for Seven Pillar Institute (SPI) during the summer of 2015: he is currently completing his studies in economics and mathematical finance at Dartmouth.

Below is a repost of Mark’s essay, greatly abridged, focusing entirely on the TPP segment, which includes added subheadings and text highlighting. To read his original, longer analysis, click on the following linked title.

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Trans-Pacific Partnership: Common Good or Corporate Good? by Mark Anderson, Seven Pillar Institute, July 26, 2015

Free trade receives strong support from US public, so why the acrimonious debate over the TPP?

There are a few issues on which liberals and conservatives agree. The idea that free trade has the potential to benefit all is one. Free trade receives strong support from the American public, with over seventy percent of Americans reporting they believe free trade is good for the American economy*. So why then has there been such contentious debate over the Trans-Pacific Trade Agreement (TPP) despite the support for free trade? One answer is that TPP is less about free trade than managed trade, mostly to the advantage of corporate interest. [*Source: Irwin, Douglas A. Free Trade Under Fire (Third Edition), Princeton University Press, 2009].

***** Section omitted *****

Empirical Evidence on Free Trade and Unemployment: Canada-U.S. Free Trade Agreement

In an era before NAFTA and TPP, long-run Canada-US free-trade gains were a net benefit to both economies

Going back to the Canada-U.S. FTA [1989-96]* example, we also can use employment statistics from the time before and after the policy was implemented to analyze the relationship between unemployment and free trade liberalization. After the FTA was put into effect, manufacturing experienced a five percent reduction in employment, a three percent decrease in output, and the number of manufacturing firms decreased by four percent. While these short-run adjustment costs are sizeable, they diminished quickly, as manufacturing unemployment and output have rebounded since 1996. Meanwhile, the long-run gains from free trade are larger and benefit all economies involved for as long as they remain in effect. [*NOTE: This FTA pre-dates NAFTA which did not come into force until January 1, 1994].

The Trans-Pacific Partnership Agreement – what it is, how it will affect the American and global economies, and whether it should be adopted

It’s a mistake to presume that agreements like the TPP are desirable

Economic theory and empirical analysis affirm free trade can be a net-benefit for all nations involved. Free trade may be generally appreciated as a means of attaining higher levels of economic welfare. Yet, this does not necessarily mean trade agreements like the Trans-Pacific Partnership are desirable.

TPP is not a trade agreement; moreover, it will have a negligible effect on the American economy

“This is not a trade agreement…David Ricardo is irrelevant” writes American Economist Paul Krugman on the TPP. While trade agreements of old strengthened the American economy as postulated by Ricardian theory, TPP opponents like Krugman argue the United States has already achieved such a high level of economic integration that further efforts to increase trade liberalization will hardly have any effect. For example, in 1995 when the average tariff on imported goods was roughly 3.3%, the welfare gain from trade liberalization was expected to be a 0.38% increase in GDP. By 2013, the average import tariff in the U.S. dropped to around 1.3%, and the expected welfare gain from trade liberalization fell to a small fraction of its 1995 value – an estimated 0.01% increase in GDP, or 1/38th of the projected gains from 1995. Japan’s conversion from virtual autarky to free trade resulted in a sizeable increase in per-capita GDP. In contrast, TPP will have a very marginal, almost negligible effect on the American economy.

What Does the TPP Contain?

Even if the TPP marginally benefits Americans, why has it aroused such stark opposition? First, we do not know what the deal contains because the government has yet to reveal text of the TPP to the public. Why the opacity? Senator Elizabeth Warren says, “We can’t make this deal public because if the American people saw what was in it, they would be opposed to it.” Thankfully, several members of congress have spoken about the deal, and a few chapters of the classified trade agreement have even been published by WikiLeaks.

Only 5 of 29 Chapters of TPP are about Trade

First, of the 29 chapters of the TPP, only 5 are about trade. Julian Assange, editor-in-chief of WikiLeaks reports:

“The others are about regulating the Internet and what Internet—Internet service providers have to collect information. They have to hand it over to companies under certain circumstances. It’s about regulating labor, what labor conditions can be applied, regulating, whether you can favor local industry, regulating the hospital healthcare system, privatization of hospitals.”

The remaining 24 chapters cater to corporate interests, including provisions that sacrifice internet freedoms in favor of corporate copyright protections

In other words, the remaining twenty-four chapters of the TPP cater to corporate interests. For instance, the Intellectual Property chapter of the TPP includes provisions that sacrifice internet freedoms in favor of corporate copyright protections. Specifically, the trade agreement compels internet services providers to block access to websites that violate copyrights, require they terminate service to customers with multiple allegations of copyright infringement, filter all internet content for copyright-infringing materials, and most concerning of all, forces internet providers to disclose copyright-infringing customer identities.

Environment: Corporations can Sue Governments

Environmental chapter gives corporations right to sue governments – domestic and foreign

The Environmental chapter of the TPP sings a similar tune. This portion gives corporations the ability to sue governments – domestic and foreign – for enacting public interest legislation that may reduce corporate profits. This public interest legislation that corporations can challenge in court include environmental regulations and industrial efficiency standards. Presidential candidate and Vermont Senator Bernie Sanders gives another example of what the TPP would allow “If a country or a state wants to protect its kids from tobacco and smoking, they could be taken to an international tribunal because they’re threatening the future profits of Phillip Morris.”

Corporations Helped Formulate TPP Policy

Of 566 TPP negotiators, 306 were from private industry, 174 from trade associations, only 71 from labor

How did these corporate-empowering segments, unrelated to free trade, find their way into the TPP? While the terms of the agreement are withheld from the public, corporations not only get to see the details – they actually helped formulate the policy.

“Of the 566 committee members, 306 come from private industry and an additional 174 hail from trade associations. All told they represent 85% of the voices on the trade committees. They attend private meetings with administration officials and get access to documents that the public cannot see.” Meanwhile, only 31 labor representatives are on the TPP committee.

The pro-corporate TPP legislation was written by corporations, for corporations

The overwhelmingly pro-corporate TPP is no coincidence; it is legislation written by corporations, for corporations.

Ethical Analysis

The TPP is hard to defend as an agreement intended to serve the common good; rather, it serves the wealthiest at the expense of the common good

The TPP is hard to defend from a utilitarian perspective. It was written by and is intended to benefit the wealthiest members of society at the expense of the common good. The intellectual property chapter, for example, extends copyrights on brand name drugs, restricting millions of poor impoverished people from accessing live-saving drugs and treatments. The deal prioritizes corporate profits, some would say, even over human lives. The other provisions embrace the same methodology, sacrificing internet freedoms to aid corporate profit, preventing environmental regulations that might harm corporate profits. The keynote of the so-called “trade agreement” is taking from those with the least and giving more to the few who already have too much. It seems inconceivable the TPP would maximize welfare among the people it affects. Thus, a utilitarian will disapprove TPP.

The TPP does the opposite of protecting democratic values: TPP secrecy and ‘fast tracking’ was undemocratic

The TPP doesn’t fair well from a deontological* perspective either. Americans emphasize freedom and democracy as moral law. Our nation and its political figures have a moral obligation to protect these values. But the TPP does the opposite. The secrecy of the deal makes it inherently undemocratic. The Senate’s vote to “fast track” Trade Promotion Authority on June 23rd, gave the President power to bring trade legislation to congress to vote on, but denies congress the ability to negotiate, amend, of filibuster the trade deal. This move is similarly undemocratic. The unjustifiably pro-corporate trade policy will remain unjustifiably pro-corporate. [*Refers to that which is an obligation or duty].

Bernie Sanders said this about the TPP —

“The Trans-Pacific Partnership is a disastrous trade agreement designed to protect the interests of the largest multi-national corporations at the expense of workers, consumers, the environment and the foundations of American democracy. It will also negatively impact some of the poorest people in the world.” -Bernie Sanders

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