Trade Deals Will Only Hurt Working Americans

07/16/2015 12:00am

Dean Baker
Milwaukee Journal Sentinel, July 16, 2015

View article at original source.

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Many people are touting the bipartisan coalition that recently got a package of trade legislation through Congress.

The effort was indeed impressive—in the same way that one can admire a well-executed act of accounting fraud. It showed a lot of ingenuity, but is not the sort of thing you would want to see catch on.

Passing Trade Promotion Authority and Trade Adjustment Assistance involved a coalition of major donors of both political parties that was designed to fend off each party’s base.

A large majority of both political parties would likely oppose the deals and the Trans-Pacific Partnership, a proposed trade agreement between several Pacific Rim countries yet to be passed. But the folks who pay for elections have a different view.

While proponents of TPP like to extol the virtues of free trade, everyone knows this is nonsense.

The TPP has almost nothing to do with traditional concepts of liberalizing trade by reducing tariff barriers and ending import quotas. With few exceptions, these barriers are already very low with the TPP countries, a majority of whom already have trade deals with the United States.

The TPP is about putting in place a business friendly structure of regulation, full stop.

The Obama administration asked all the major business lobbies, the pharmaceutical industry, the financial industry, the telecommunications industry and others, what they wanted in a trade deal and then went about negotiating on their behalf.

This is why we often hear the complaint that all this effort would be wasted if Congress didn’t approve the TPP.

It would be not the efforts of ordinary people that would be wasted; we didn’t spend the last six years negotiating the TPP. It would be the efforts of the people who really matter in this country: the rich people who make large campaign contributions.

While the draft of the TPP is still secret, we know the gist of the deal from what has been leaked.

A major part of the TPP is setting up an extra-judicial process through which foreign investors can sue state, local or federal governments over laws and regulations they claim are violations of the agreement.

Under this process, the foreign investor who brings the suit directly appoints one of the three members of the panel.

One will be appointed by the federal government and one will be appointed jointly. This process may not work well for a county in New York that will have to rely on a future Bush administration appointee to protect its environmental regulations.

The ostensible rationale for these tribunals is almost laughable on its face. Foreign investors can’t count on U.S. courts to treat them fairly.

In other areas, most notably prescription drugs, the TPP is about increasing protectionism, the exact opposite of free trade.

The leaked intellectual property chapter shows the United States is seeking stronger and longer patent-type protections for drugs. The purpose of these government granted monopolies is to make people in TPP countries, including the United States, pay more for drugs.

And the price differences are enormous. Patent protected drugs can sell for a hundred times as much as the free market price.

For example the Hepatitis C drug Sovaldi sells for $84,000, while a generic version in India sells for less than $1,000. This is the same as having a 10,000 percent tariff on the drug.

The story in other industries will undoubtedly be similar. This is why a bipartisan coalition of business groups is anxious to push for the TPP. It’s about putting a lot of money in their pockets at the expense of the rest of us.

Rather than being the basis for future bipartisan agreements, the maneuvering that gave us fast-track is likely to lead to the opposite as middle and working supporters of both parties rebel against having the rules set by the wealthy.

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