President Obama is in Vietnam promoting the Trans-Pacific Partnership (TPP). Vietnam? Really?
A year ago the post “Obama To Visit Nike To Promote the TPP. Wait, NIKE? Really?,” noted how Nike pioneered moving jobs out of the country to take advantage of low wages and lack of environmental protections in places like Vietnam, which led to many of the problems in our economy today. It seemed that Nike was possibly the worst company to use to support claims that the TPP would benefit the American economy.
President Obama is scheduled to visit Nike’s Oregon headquarters on Friday to promote the Trans-Pacific Partnership (TPP). Yes, Nike — a company that grew to billions by outsourcing jobs to overseas sweatshops, a company that sets up P.O.-box subsidiaries in tax havens to avoid paying U.S. taxes, a company that uses threats to extort tax breaks from its “home” state.
Phil Knight, head of Nike, is now worth $23 billion because America’s trade policies encourage companies like Nike to create and move jobs outside of the U.S. The 23rd-richest American is one more symbol of the kind of inequality that results from outsourcing enabled and encouraged by these trade policies. Workers here lose (or never get) jobs; workers there are paid squat; a few people become vastly, unimaginably wealthy.
One of the Worst Companies, One of the Worst Countries
Just as Nike might have been one of the worst companies to put forward to promote the TPP to regular Americans, Vietnam is one of the worst countries to highlight.
Human Rights Watch explains some of the problems with Vietnam, in their statement Vietnam: “Obama’s Visit Should Advance Human Rights”:
In a letter sent to President Obama in April, Human Rights Watch highlighted key human rights issues including the problems of political prisoners, beatings and harassment of activists, legal reform, labor rights, and democratic governance.
… Recent weeks have seen worrying ongoing examples of human rights violations, Human Rights Watch said. Following an environmental disaster, police have beaten, choked, and detained protesters worried about the health effects of contaminated fish. State media has persecuted protesters and their supporters further by denouncing them by name and accusing them of taking money and orders from foreign “reactionary” forces. The government has also used pre-emptive house arrest to prevent potential protesters from attending demonstrations. This tactic has long been deployed against government critics when important foreign dignitaries visit the country.
Aside from its terrible record on human rights, Vietnam also has a terrible record on labor rights. Some members of Congress released a public letter asking the president to understand why opening free trade with Vietnam is a bad idea. In the letter, “Reps. Slaughter, DeLauro, and Tonko Urge President Obama to See Firsthand Why the TPP Is Bad for American Workers During Vietnam Visit,” the signers “urged President Obama to meet with dissidents, civil society organizations, and labor unions to see firsthand why its inclusion in the Trans-Pacific Partnership (TPP) is bad for American workers.”
The letter explains that under the TPP, Vietnam would get immediate trade benefits, but has 5 years to establish labor rights. Even then, there are no guarantees that the TPP’s labor standards, such as they are, will ever be enforced. Currently “workers do not have the right to strike,” and “Independent labor activists are treated like political dissidents: arrested and jailed.” “Not only are collective bargaining and the right to join independent unions absent from the entire economy, other abuses including forced labor and child trafficking exist as well, particularly in garments, bricks, and agriculture.” If the TPP is signed, it will pit American workers directly against these conditions for at least 5 years, assuming the best-case enforcement scenario. American workers will, of course, lose.
Regarding the hope of enforcement of any labor rights that Vietnam says it will grant in 5 year, the letter states, “Moreover, the United States government has never initiated a labor case under a free trade agreement, and any action against Vietnam pursuant to the side agreement would be at the discretion of, not just your successor, but the winner of the 2020 presidential election.”
The Real Reason Corporations and Wall Street Want the TPP?
A recent Washington Post story hints at the real reason the giant multinational corporations and Wall Street are pushing the TPP so vigorously, with the president’s blessing: extremely low wages will cause even more (much more) production to move to Vietnam, boosting its economy and tying the country to the US and the multinationals. The report, “Buoyed by U.S. firms, Vietnam emerges as an Asian manufacturing powerhouse,” says, “Aides said Obama will use his Vietnam trip to promote the trade pact with business leaders.”
Wolverine Worldwide exemplifies a sharp shift among American footwear and garment producers away from China toward an emerging manufacturing hot spot: Vietnam.
Over the past three years, the Rockford, Mich.-based maker of brands such as Keds, Hush Puppies and Saucony has more than doubled its production in the Southeast Asian nation, taking advantage of the lower labor costs there. Vietnam now constitutes nearly 30 percent of Wolverine’s output, while China’s share has fallen from 90 percent to 50 percent, company officials said.
Many other U.S. firms have made a similar move, brightening the economic fortunes of Vietnam, where President Obama will arrive Monday for a two-day visit to Hanoi and Ho Chi Minh City. If Obama has his way, the communist country will become even more appealing to U.S. capitalists through the Trans-Pacific Partnership (TPP), an expansive 12-nation trade deal that would phase out steep import tariffs on Vietnamese-made goods.
Business leaders want to lower their “costs” by moving jobs to places like Vietnam that have extremely low wages and lax environmental protections. The TPP further opens Vietnam to this purpose. By lowering tariffs on goods coming back to the US, corporations will gain more profits as production is forced out of our country. Executives and Wall Street shareholders can then pocket the differential for themselves, and tell the American public this is great because they get “lower prices.”
The TPP is not about boosting the American economy, Not at all. We can understand why the multinational corporations want to move these jobs to low-wage countries — they get to pocket the difference in wage and environmental costs.
But why does the Obama administration want to push US production to places like Vietnam?
Foreign Policy Is the Real Point
The Obama administration has its own reasons for wanting the TPP and obviously they have nothing to do with American jobs. They explain that the TPP is needed as a counter to China in Asia. On this Vietnam trip they talk about the TPP “increasing ties” to that country.
The TPP will indeed increase business ties with Vietnam. More and more production will move to places like Vietnam from China as well as the US. Vietnam will become increasingly dependent on these multinational corporations and American customers to boost their economy and keep it going. As the WaPo story says:
But it is on trade and commerce where the administration sees perhaps the biggest potential to draw Vietnam closer to the United States. An economic-impact study from the World Bank in January said Vietnam stands to become the biggest beneficiary of the TPP pact, with its gross domestic product surging by 10 percent by 2030.
Under the trade deal, U.S. footwear tariffs, which can be as high as 40 percent, would be phased out over seven years in Vietnam. That would give Vietnam an advantage over China, Cambodia, Indonesia and the Philippines, which are not TPP members, and accelerate a manufacturing boom inside the country that is already underway.
… The study found that shoe company imports to the United States would rise by an additional 23 percent among TPP countries, mostly from Vietnam, over the next 15 years.
Sacrifice US Jobs to Pull Asian Countries Into the Fold
Again, the TPP obviously is not about increasing American jobs. Not at all. The WaPo goes on to explain that this is the death knell for American manufacturing by companies like New Balance.
This is about foreign policy and the US “pivot to Asia” confronting China. What is really happening here is the President telling Asian countries that the US will sacrifice jobs to bring them into the fold in opposition to China. Doyle McManus explains in the LA Times, in“Obama’s pivot to Asia is working”:
Almost every country in the region is clamoring for a closer relationship with the United States.
The most striking case is Vietnam, most of whose leaders are old enough to have fought in their country’s war with the United States. The communist regime has been openly courting a deeper military relationship, and has even invited the U.S. Navy to return to Cam Ranh Bay, its base during much of the war. During his visit, Obama is expected to announce an expansion of American military sales.
… “Any time China tries to put its thumb on any of its neighbors, that makes them enthusiastic about getting close to us,” noted Derek Chollet, a former Defense Department official.
Only a few hundred miles from Vietnam’s coast, Chinese construction teams have been dredging the seafloor and using landfill techniques to increase the size of China’s territories, then building infrastructure to support military facilities.
The telling factor is that the president is not just in Vietnam to promote the TPP. He is also there promoting arms deals. Monday morning, the president ended the decades-old US arms embargo on Vietnam. The US will now make “appropriate” arms sales to that country. The New York Times explained, “American officials have portrayed lifting the embargo as part of a strategy to help Vietnam defend itself against an increasing threat from China in the South China Sea. Analysts have speculated that in return, Vietnam would grant the United States access to the deep water port at Cam Ranh Bay.”
The TPP appears to be a promise to countries in the Asian region to move production to boost their economies. American workers will pay the price. The gamble is that this will create opposition to China and align these countries with the US, meaning in this case Wall Street and the giant multinational corporations, not the American people.