Administration Peddling Increasing Blatant Canards on Proposed “Trade” Deals

We’ve both written and spoken about the wildly mislabeled “trade” deals that the Obama Administration is still trying hard to conclude, despite its abject failure to meet an arbitrary deadline of year end 2013.

The two pending deals, the Trans-Pacific Partnership and the Trans-Atlantic Trade and Investment Partnership, have perilous little to do with trade. But invoking the magic incantation “free trade” seems to neutralize the reasoning ability of economists and the media. As we wrote last year:

By way of background, the Administration is taking the unusual step of trying to negotiate two major trade deals in the same timeframe. Apparently Obama wants to make sure his corporate masters get as many goodies as possible before he leaves office. The Trans-Pacific Partnership and the US-European Union “Free Trade” Agreement are both inaccurately depicted as being helpful to ordinary Americans by virtue of liberalizing trade. Instead, the have perilous little to do with trade. They are both intended to make the world more lucrative for major corporations by weakening regulations and by strengthening intellectual property laws. The TPP has an additional wrinkle of being an “everybody but China” deal, intended to strengthen ties among nations who will then be presumed allies of America in its efforts to contain China…

Baker describes in scathing terms why these types of deals are bad policy:

…these deals are about securing regulatory gains for major corporate interests. In some cases, such as increased patent and copyright protection, these deals are 180 degrees at odds with free trade. They are about increasing protectionist barriers..
These deals will also lead to more upward redistribution of income. The more money that people in the developing world pay to Pfizer for drugs and Microsoft for software, the less money they will pay for the products that we export, as opposed to “intellectual property rights”….

This is yet another case where the government is working for a tiny elite against the interests of the bulk of the population.

If that isn’t bad enough, there’s another side of these planned pacts that is often simply ignored. These “trade” deals are Trojan horses to erode or eliminate national regulations. Baker anticipates that these deals will include sections that would limit government regulation (including at the state and local level) on fracking and could revive much of the internet surveillance that reared its ugly head in the failed SOPA [notice this was written in the innocent pre-Snowden era].

And this sort of erosion of the right to regulate will most assuredly extend to financial services. Dodd Frank? The Brown-Vitter bill that some see as a great new hope for tougher financial regulation? They are already unworkable under existing trade agreements.

In a sign that the Financial Times is gaining more influence in the US, a piece about these that was on the front page last night looks to be a clear media plant. The pink paper is dutifully falling in with the official line.

One of the tricks of dealmaking and legislating is to try to create the impression that the negotiations/vote herding are going well, even when they aren’t. That tactic was fully on display with the Administration’s failed effort to get Congressional approval for intervention in Syria. The White House kept messaging that it was getting support lined up even when whip counts showed that putting the measure to a vote would result in an overwhelming rejection.

Now while things are not as clear cut on the trade deals, they were already in trouble last year. Foreign news reports indicated that various proposed signatories to the TransPacific Partnership simply weren’t on board with provisions that the Americans regarded as critical. A State Department press conference after talks in Bali was so out of tune and arrogant that the press representatives there were openly skeptical. And that was before the Wikileaks disclosure of the text of one of the draft chapters, on intellectual property. It both showed how extreme the American position is and how much opposition it was getting from the other supposed “partners”. We don’t know as much about where the European deal stands, but there’s reason to believe that those potential signatories have much less reason to make the world safer for US IT companies in the wake of ongoing revelations about NSA snooping.

So what line is the Administration, via the Financial Times, pushing? (Note my surmise is this article comes directly or from sources close to the US Trade Representative’s office; it very mildly complains that Obama hasn’t spoken forcefully enough about trade, as if that’s going to make any difference).

In the article, Obama challenge on selling trade deals to resurgent left, there is astonishingly no mention of the issues the prospective partners have with the deal or how the Wikileaks publication showed that the critics if anything had understated how bad the deal is. And the headline pretty accurately reflects the spin of the article: Obama’s is supposedly those damned pinkos, as opposed to his lame duck status and the increasingly obvious outrageousness of the deal. But to an uninformed reader, it’s easy to sell the prejudice that only Luddite lefties are against the motherhood and apple pie of economists and the business community, “free trade”.

Look at the canards:

From the days of the North American Free Trade Agreement, launched 20 years ago, trade has always been a tough sell politically in the US – and, for a Democratic president, it means taking on allies among labour, environmental and consumer groups who are often staunchly opposed to the agreements.

Their scepticism about trade boils down to a belief that the US too often negotiates trade deals for the benefit of its multinational corporations, rather than ordinary workers, exacerbating wage stagnation and income inequality.

Mr Obama – and his top administration officials – do not see it that way by any stretch…They acknowledge that US trade policy has had problems in the past, but have vowed to do things differently this time, by insisting on tougher standards on workers’ rights, environmental regulations, the role of state-owned enterprises and intellectual property protections.

They say these will help “level the playing field” in the global economy in a way that can be squared with what the president has described as his “north star” of improving the lives of middle-class Americans.

Puhleeze. First, these “allies” that the Administration must manfully contend with are wusses. They make a show of opposition and let Team Dem carry on catering to powerful monied interests as usual.

Second, the notice how opposition to the deals are subtly presented as uninformed, as mere prejudice? The resistance is based on mere “belief”. In fact, NAFTA led to nearly a million lost jobs, and as we recounted in a weekend post, also wrecked much of the agricultural sector in Mexico. Tell me exactly how that helped regular people? And further notice the subtle bias in “ordinary workers”. To an FT reader, those are not part of their cohort, which are those directly connected to capital and the technocratic elite (executives, senior managers, policy wonks).

Third, the resistance extends well beyond the usual toothless leftie suspects. Over 200 Representatives, including some Republicans, have signed letters or otherwise voiced reservations about the trade deals. and another 30 to 40 are believed to be concerned. The opposition goes well beyond the small cohort of “progressives”.

Fourth, the Financial Times, rather than doing actual journalism (as in investigating) runs the blatant lie that the Administration is working to get tougher regulations via these deals. The most fundamental provisions of both pacts involve gutting regulations via strengthening the rights of foreign investors to sue governments at all level for anticipated losses (mind you, they don’t even have to prove they’d occurred) before secret international tribunals. As the group Public Citizen has documented in considerable detail, these panels are corrupt and bend over backwards to issue pro-investor rulings. Consider this description from a July presentation by Public Citizen:

What is different with TAFTA [pending Trans Atlantic Free Trade Agreement] (and TPP) is the extent of “behind the border” agenda

• Typical boilerplate: “Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.” …

• These rules are enforced by binding dispute resolution via foreign tribunals with ruling enforced by trade indefinite sanctions; No due process; No outside appeal. Countries must gut laws ruled against. Trade sanctions imposed…U.S. taxpayers must compensate foreign corporations.

• Permanence – no changes w/o consensus of all signatory countries. So, no room for progress, responses to emerging problems

• Starkly different from past of international trade between countries. This is diplomatic legislating of behind the border policies – but with trade negotiators not legislators or those who will live with results making the decisions.

• 3 private sector attorneys, unaccountable to any electorate, many of whom rotate between being “judges” & bringing cases for corps. against govts…Creates inherent conflicts of interest….

• Tribunals operate behind closed doors – lack basic due process

• Absolute tribunal discretion to set damages, compound interest, allocate costs

• No limit to amount of money tribunals can order govts to pay corps/investors
• Compound interest starting date if violation new norm ( compound interest ordered by tribunal doubles Occidental v. Ecuador $1.7B award to $3B plus

• Rulings not bound by precedent. No outside appeal. Annulment for limited errors.

And it’s even worse than you imagine once you understand how these panels work. Recall how Public Citizen mentioned the role of the panelists who go between working for the companies and serving on the panels? A small and tight-knit group has disproportionate influence (click here to enlarge):

Consider the implications of the fact that the 15, and the larger community of panel “regulars,” work both sides of the street. They draw cases that go before the trade panel, as well as hear them. Thus it’s in their interest to issue aggressive rulings in order to facilitate more cases being filed.

Not surprisingly, this self-reinforcing system is, as expected, producing more claims even before its gets its hoped-for turbo-charging through the pending trade deals. (Click here to enlarge):

Now let’s go back to the dictation taken by the Financial Times. The last bit of nonsense in the extracted section was:

They say these will help “level the playing field” in the global economy in a way that can be squared with what the president has described as his “north star” of improving the lives of middle-class Americans.

Why does America have any duty to “level the playing field” if it is not concerned about the welfare of multinational? And spare us Obama’s pretenses to care about the middle class. Un and underemployment languishes in the mid-teens. And our Liar in Chief has taken to trying to depict physically demanding, below living wage jobs (for anyone supporting a household, as opposed to one person) in Amazon warehouses as “middle class”.

And the pretext for the piece is not news. The Senate Finance Committee is gearing up to move a Trade Promotion Authority, which is just another term of art for what is also called “fast track”. Fast track gives Congress a limited amount of time to respond to a tabled trade deal with a simple up or down vote. This is just the old effort to move the pacts forward.

But this messaging means the Administration is still keen to get these deals done, which means it is also incumbent to keep the pushback going. Please call or e-mail your representative and tell them “Hell no!”