On TPP, it looks like 1993 all over again

President Obama railed against the North American Free Trade Agreement (NAFTA) during his first presidential campaign and drew passionate support from American labor unions that had bitterly opposed it in 1993. They still do, despite its contribution to the booming ’90s and 14 million new jobs between its implementation and President Clinton’s last day in office.

{mosads}Today, the Obama-negotiated free-trade pact with eleven other Pacific Rim countries — the Trans-Pacific Partnership (TPP) — is bitterly opposed by labor unions and many Democrats in the House and Senate who decry all trade agreements. Vermont Sen. Bernie Sanders (I), for example, is running for president saying “I have never voted for a free trade agreement.” Senate Minority Leader Harry Reid (D) says not only “no” to Obama’s TPP, but “hell no!”

The Clinton-supported NAFTA passed the House only because most Republicans, led by then-House Minority Whip Newt Gingrich (R-Ga.), voted for it; Clinton couldn’t convince even half of Democrats to vote for NAFTA. Those “no” people are still around, voting no.

Anthony Perrone, president of the United Food and Commercial Workers International Union, recently wrote this in a letter to members of Congress: “During the recent era of free-trade agreements, families have endured lost jobs, stagnant wages and rising levels of income inequality. In the face of these truths, we are told by those who support this bad trade deal that we are misunderstanding the positives. In actuality, we understand the harsh reality that workers and families will again pay the price.”

Contradicting this view is Obama’s Council of Economic Advisers, which issued a report “promoting the economic benefits of trade. … [T]rade agreements the United States has signed onto in the past had not, in fact, led to the outsourcing of any American jobs.”

The average loss of jobs during recessions since World War II has been 2.5 million jobs per. In contrast, 500,000 jobs were lost between 1994 and 2004 that were documented to the NAFTA agreement with Mexico and Canada. Thus, recessions endanger jobs far more than NAFTA ever did or will do. During its first six years in force, NAFTA helped create 13.7 million new jobs, as documented by the Bureau of Labor Statistics.

Can TPP do the same? Obama thinks so. Additionally, because Canada and Mexico are two of the 12 countries involved, he claims that TPP resolves some negative issues that — he says — are in NAFTA.

Several objections by labor unions and Sens. Elizabeth Warren (D-Mass.) and Sanders are: (a) TPP is being negotiated in total secrecy; (b) fast-track trade authority enables the president to seek and receive an up-or-down vote and prevents Congress from amending the agreement; and (c) American workers are not protected by the agreement.

In an article from Politico, we find “many of the leaders of the opposition, administration aides argue, are people who aren’t used to dealing with classified information and don’t realize how standard this secrecy is. And by the way, they note, neither congressional conference committees nor labor contract talks allow even this level of access to negotiations while in process.”

In other words, these anti-TPP people might be the junior varsity of politics and Congress.

The Constitution of the United States creates this conflict between Congress and the president in two sections. Section Two of Article II stipulates that the president “shall have power, by and with the advice and consent of the Senate, to make treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the advice and consent of the Senate, shall appoint ambassadors.” In other words, the president is charged with dealing and negotiating with foreign countries.

On the other hand, Article I, Section Eight is clear in its mandate to Congress: “Congress shall have power … to regulate commerce with foreign nations.” Congress has to vote on whatever the president puts before it; Congress can and has previously waived its right to amend agreements by granting fast-track authority.

That is where we are today. Final negotiations are being conducted and an agreement will be presented to Congress for an up-or-down approval if Congress first votes for fast-track authority.

Here are some elements that are currently being negotiated:

  • Intellectual property: The U.S. wants tighter patent protection for its industries, such as film and pharmaceuticals;
  • State-owned enterprises: The economies of Vietnam, Malaysia and Singapore are dominated by state-owned enterprises; the U.S. and other countries want limitations on state-owned companies from unfairly competing with private enterprise.
  • Market access: For example, the U.S. wants Japan to open Japan to American carmakers, and countries like New Zealand to drop tariffs that, for example, add so much to a Ford F-150 pickup that it costs $50,000 in New Zealand when it costs only $20,000 in the U.S.
  • Investor-state dispute resolution: This allows companies to sue governments when governments violate terms of the agreement that negatively affect business.

Critics like blogger Dave Johnson publish criticisms as if they are facts. For example:

TPP is a massive “trade” treaty between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam. “Trade” is in quotes because only five of the treaty’s 29 chapters actually deal with trade. Others set rules on investment, set limits on the ability of governments to regulate corporations, restrict a government’s ability to spend its own tax dollars on goods made in that country (such as “Buy America” procurement policies) and other things well beyond the usual scope of what would be considered a trade agreement. This leads many to claim that the treaty is really about limiting the ability of governments to reign in the giant corporations.

Buttressing these arguments are alleged studies and projections of traditional free trade opponents of a left-wing persuasion, like the Center for Economic and Policy Research (CEPR), where David Rosnick states that “the median wage earner will probably lose as a result of any such agreement.”

Johnson continues his critique, referencing a report from Public Citizen:

In “Trade Deal Would Mean a Pay Cut for 90% of U.S. Workers,” Public Citizen’s Eyes on Trade blog explains just who would lose: “[CEPR’s] Rosnick shows that if we assume that trade has contributed just 15 [percent] of the recent rise in inequality (a still conservative estimate), then the TPP would mean wage losses for all but the richest 10 [percent] of U.S. workers. So if you’re making less than $87,000 per year (the current 90th percentile wage), the TPP would mean a pay cut.”


Will TPP be good for the United States or not? We know that NAFTA critics were woefully wrong in their “giant sucking sounds” of Mexico stealing American jobs. We know that Mexico is a true partner with the U.S. and Canada and that the three NAFTA countries combined are the No. 1 powerhouse of the energy world. Can TPP emulate NAFTA success for the U.S. and its potential 11 partners?

It very well can. Ask President Obama and congressional Republican TPP supporters. Strange allies, for sure. It’s 1993 all over again.

This piece has been corrected to remove a quoted sentence mistakenly attributed to the Center for Economic and Policy Research (CEPR); an accurate and properly attributed quoted sentence has been substituted.

Contreras formerly wrote for Creators Syndicate and the New American News Service of The New York Times.

Tags Bernie Sanders Elizabeth Warren Free trade Harry Reid Nafta North American Free Trade Agreement TPP Trade Trans-Pacific Partnership
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