Tuesday, May 29, 2012

Neoliberalism in action: Trans-Pacific Partnership (TPP) edition

One of the hallmarks of the economic doctrine of neoliberalism has come to dominate the major parties in the US and the EU, the doctrine that is currently laying waste the economies of Greece, Ireland, Italy, Spain and Portugal, is the "free trade" agreement. NAFTA, negotiated under Old Man Bush's Administration, concluded and approved under the Clinton Administration, has been the prototype for American trade deals ever since.

There are many problems with the "free trade" agreements from the viewpoint of American workers as well as the less-developed countries who are often the partners on the other side. One of the most disturbing is that corporate lobbyists have been trying to use such treaties as backdoor mechanisms for undermining national regulations to protect workers and consumers.

Alyona Minkowski on her Alyona Show of 05/25/2012 addressed some important aspects of the Trans-Pacific Partnership agreement currently under negotiation, included the selective secrecy of the negotiations. Democratic Sen. Ron Wyden has objected to the fact that Congress is receiving little information about the terms being offered by the United States. Representatives of Chevron, Comcast, Halliburton, and the Motion Picture Association of America, on the other hand, seem to have generous access to that information. As The Alyona Show's summary at the YouTube video site reports (Fireside: Trans-Pacific Partnership, No Transparency):

Senator Wyden is also the Chair of the Senate Finance Subcommittee on International Trade, Customs, and Global Competitiveness. And it would make sense that someone with that title would have access to details surrounding trade agreements that our government is making, right? Well, turns out the Obama administration, isn't granting that access. This is all surrounding the Trans-Pacific Partnership, an international trade agreement between nine nations about which we know very little.
The American Prospect recently ran a special report section on trade agreements, with special focus on the TPP. In one of the articles, Clyde Prestowitz describes the foreign policy context of the TPP negotiations (The Pacific Pivot 03/13/2012). He warns that our experience with such agreements should make us all skeptical of the claimed benefits for American workers, something that is always part of the marketing campaign for such agreements:

Between 1960 and today, there have been four full-fledged rounds of global negotiations under the aegis first of the General Agreement on Tariffs and Trade (GATT) and then of the WTO that engaged the United States and the Asia-Pacific countries. In addition, there was a continuing series of talks with Japan under rubrics such as the Market Oriented Sector Specific Initiative (MOSS, ridiculed as More of the Same Stuff), the Semiconductor Negotiations, the Nippon Telegraph and Telephone talks, and more. There was the creation of the Asia-Pacific Economic Cooperation association, founded in the early 1990s to spread liberal democratic ideals within the Pacific Rim through trade and investment. There were the negotiations both to bring China into the WTO and for America to grant it permanent "most favored nation" treatment. The North American Free Trade Agreement and bilateral free-trade agreements with Peru, Chile, Singapore, Australia, and Korea are also part of this saga of trade deals that only widened trade imbalances.

Each of these projects had its causes, purposes, and dynamics, but certain critical patterns repeated. The premise was that all participants embraced the same free-trade philosophy and rules and that if the rules were set properly, the results would automatically be satisfactory for all. The fundamental difference in philosophy between laissez-faire, free-trade America and export-driven Asia was never directly confronted. One reason for this was that free trade was a kind of religion of U.S. policymakers, for whom any management of results was original sin. Another was that America was long considered economically invulnerable. Yet another was that the purpose of the deals was usually more to cultivate geopolitical allies, to stimulate development of struggling neighbors, or to facilitate U.S. investment abroad. But the agreements were always sold to the U.S. Congress and public as arrangements that would increase U.S. exports, reduce trade deficits, and create jobs.

They never did. Rather, the trade deficit relentlessly rose, offshoring of U.S.–based production and jobs accelerated, and trade became a drag on growth of U.S. gross domestic product as well as a cause of rising income inequality. As economic strategy, the trade deals and their logic were unsuccessful, or irrelevant, or both. [my emphasis]
The current US foreign policy of global dominance (as über-Realist Stephen Walt calls it) has been an overriding factor in the American negotiating position, Prestowitz argues, and it has been the major influence in making these agreements disadvantageous economically for the US - or at least for US workers:

There are, however, two clear purposes that all the deals have served. The first is the geopolitical grand strategy objectives of the United States. By making the United States the market of last resort, the trade agreements have helped persuade allies to accept U.S. hegemony. The second purpose served is that of U.S. businesses that profit immensely from outsourcing and offshoring to Asia but that need the security provided by Uncle Sam to do so. These realities reveal the flaws in U.S. trade efforts—misplaced priorities, a false doctrine, and false assumptions.

Most misplaced has been the geopolitical priority with its subordination of long-term economic interests to short-term political/military objectives. Washington continually makes concessions, refrains from insisting on application of the GATT/WTO rules, or backs away from taking actions to counter mercantilism on national--security grounds. In the 1980s, the Reagan administration declined to invoke GATT rules against European subsidization of the Airbus, because Secretary of State George Shultz said doing so would shatter the North Atlantic Treaty Organization. Today, Washington declines to respond to China's blatant currency manipulation. Why? It thinks it needs the Chinese to help with problems like Iran and North Korea. It doesn’t understand that erosion of U.S. wealth-producing capacity is the most important national--security threat. [my emphasis]
Prestowitz makes the case that the Obama Administration sees the TPP is an tool in an ill-conceived approach to China policy.

Another trade agreement that facilitates corporate job export out of the United States is not what we need. I was struck in this connection by Prestowitz' comment quoted above, "One reason for this was that free trade was a kind of religion of U.S. policymakers, for whom any management of results was original sin."

This is the dogmatic obsession to which I'm referring when I talk about the theology of the Great God Free Market. For the Republican Party, and for way too many Democrats, the Free Market has become a dogma every bit as rigid and abstracted from reality as the worst of Cold War dogmatism. And it persists even in the face of facts and real-time experience that contradict its claims. It often functions much like a religion, a faith in which the Free Market becomes an end in itself and the results are blessed as optimal, whether or not more people are hurt than helped by the actual results.

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