June 28, 2017
Thomas Friedman, who is legendary for his boldly stated wrong assertions, got into the game again making absurd claims about the Trans-Pacific Partnership (TPP) and the great loss the U.S. suffers from it going down. Friedman tells readers:
“It was not only the largest free-trade agreement in history, it was the best ever for U.S. workers, closing loopholes Nafta had left open. TPP included restrictions on foreign state-owned enterprises that dumped subsidized products into our markets, intellectual property protections for rising U.S. technologies — like free access for all cloud computing services — but also anti-human-trafficking provisions that prohibited turning guest workers into slave labor, a ban on trafficking in endangered wildlife parts, a requirement that signatories permit their workers to form independent trade unions to collectively bargain and the elimination of all child labor practices — all to level the playing field with American workers.”
This is of course wrong. First, and most importantly, all the provisions on items like human trafficking, child labor, and trading in endangered wildlife depended on action by the administration. In other words, if the TPP had been approved by Congress last year we would be dependent on the Trump administration to enforce these parts of the agreement. Even the most egregious violations could go completely unsanctioned, if the Trump administration opted not to press them. Given the past history with both Democratic and Republican administrations, this would be a very safe bet.
In contrast, the provisions on items like violations of the patent and copyright provisions or the investment rules can be directly enforced by the companies affected. The TPP created a special extra-judicial process, the investor-state dispute settlement system, which would determine if an investor’s rights under the agreement had been violated.
Friedman also bizarrely seems to be claiming that increased intellectual property restrictions will benefit U.S. workers. These forms of protectionism (yes folks, patent and copyright protection are protectionism — even if you like them) are directly antithetical to the interest of most U.S. workers. It means that foreign countries will pay more money to Microsoft for its software and Pfizer for its drugs. This means that they will have less money to buy U.S. manufactured goods. This is pretty straight and simple economics; in other words, way over the head of Thomas Friedman. (He wrongly uses the term “free-trade” in reference to the TPP four times. This is a propaganda term used to sell the deal. It is not accurate since the increased protections in the pact likely more than offset the tariff reductions in the deal.)
In this respect, it is worth noting that the projected gain to GDP of $130 billion by 2030 by the strongly pro-TPP Peterson Institute for International Economics (the non-partisan United States International Trade Commission projected a more modest gain of 0.21 percent of GDP by 2032) does not take into account any negative impact from the increased copyright and patent related protections in the TPP. It is quite plausible that a model that actually took account of the negative effects of these protectionist provisions would show a loss to the U.S. from the TPP and especially to the bulk of the workforce who are not situated to benefit from these protections.
This raises the issue of currency rules, which are notably absent from the TPP. The deliberate decisions by China and other countries to prop up the dollar against their currencies has led to the enormous U.S. trade deficits of the last two decades. This both cost millions of manufacturing jobs and led to the huge imbalances that provided the basis for the housing bubble and the subsequent crash.
For this reason, it would have been reasonable to include enforceable provisions on currency management in the deal. Remarkably, the TPP includes nothing on the topic of currency. (There is a separate letter of understanding that has exactly zero legal status.)
In short, there are very good reasons why anyone who cared about workers, the environment, and access to medicine, both in the U.S. and elsewhere, would strongly object to the TPP. It is unfortunate that Friedman seem completely unfamiliar with these issues.
In this respect it is ironic that Friedman twice criticized Trump for rejecting the TPP without having read the deal. Thomas Friedman himself famously declared that there is no need to read these deals:
“I was speaking out in Minnesota — my hometown, in fact — and a guy stood up in the audience, said, ‘Mr. Friedman, is there any free trade agreement you’d oppose?’ I said, ‘No, absolutely not.’ I said, ‘You know what, sir? I wrote a column supporting the CAFTA, the Caribbean Free Trade initiative. I didn’t even know what was in it. I just knew two words: ‘free trade.'”
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