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Dean Baker | Election Results Indicate Huge Mandate for New Trade Pacts

Monday, 10 November 2014 10:13 By Dean Baker, Truthout | Op-Ed
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A protest against TTIP in Berlin - a subject practically unheard of throughout the recent US election.A protest against TTIP in Berlin - a subject practically unheard of throughout the recent US election. (Photo: Jakob Huber/ECI Stop TTIP)

Apparently that is how the DC-insider crowd saw the elections last week. The elite media were filled with news and opinion pieces on how the election opened the door for the approval of the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Pact (TTIP). According to the purveyors of elite opinion this is one of the key areas on which the Republicans in Congress and President Obama can agree.

That assessment is striking since few, if any, of the winning candidates in last week's election made a point of running on their support of these agreements. Nor did President Obama highlight his work on these pacts in his re-election campaign. In fact, the last thing most voters probably remember President Obama saying about trade was his pledge to renegotiate NAFTA when he was running for president the first time, back in 2008.

The turn of the leadership of both parties and the centers of elite opinion to these trade deals shows the incredible contempt they have for the general public and the political process. We just completed lengthy and expensive campaigns where they had ample opportunity to push the case for these deals. Instead we got panicky commercials highlighting everything from the Ebola threat to ISIS beheadings.

But in the view of our political leaders that stuff was just for the kids. Now that we have the election out of the way, the adults are prepared to return to real business.

Let's just be clear what these trade deals are about. They have nothing to do with "free trade," in spite of the fact that the media routinely use that term to help sell TPP and TTIP. The formal trade barriers in the form of tariffs and quotas are already very low. This means that the traditional argument of gains from trade does not apply. These pacts are about putting in place a set of pro-business rules and regulations that would never pass through the normal political process.  

To start with the most egregious example, one of the main goals of the United States is to establish a system of special courts that would override the legal system in each country, including the United States. These investor-state dispute settlement (ISDS) tribunals would have the final say on most matters involving conflicts with foreign investors.

The rationale for a system of ISDS is that foreign investors may be wary about investing in a country without a tradition of an independent judiciary that can be trusted to treat them fairly. While this may be an arguable position in some cases, does anyone really think that German, Dutch or US courts can't be trusted to treat foreign investors fairly?

In addition to establishing this extra-legal structure, these deals would also limit the ability of national and state governments to impose environmental regulations, workplace safety regulations, food safety regulations and Internet privacy regulations. It could also limit the ability to have labor regulations like a higher minimum wage or rules on paid sick days.

The pacts are also likely to include a number of protectionist measures that will raise costs and reduce trade and growth. In particular, the pharmaceutical industry is trying to increase the length and scope of government granted patent monopolies. This will mean more drugs like Sovaldi selling for $84,000 a treatment, when the generic version can be sold for a few hundred dollars. And, they want longer and stronger copyright protection so they can imprison people for sharing music and videos without permission.

TPP and TTIP are everything that people hate about Washington. They are deals being crafted in secret by business interests for business interests. They are never going to be subject to any serious political debate involving the public at large. And the leaders of both political parties are in cahoots on the trade deals and the route for pushing them through Congress.

Just to be clear, there are trade deals that could boost growth and benefit most of the public. We could eliminate licensing rules that make it difficult for foreign professionals like doctors and lawyers from practicing in the United States. Bringing the pay of our professionals down to levels in Europe and Canada would save consumers hundreds of billions of dollars a year and provide a real boost to growth. We can also have trade agreements that reduce rather increase patent protection, saving us hundreds of billions of dollars on prescription drugs and other items.

But that would be the structure of trade agreements negotiated in the public interest. That is not we see in the United States. We instead get the elite media and politicians shoving TPP and TTIP down our throats regardless of how people vote.

Copyright, Truthout. May not be reprinted without permission.

Dean Baker

Dean Baker is a macroeconomist and codirector of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.


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Dean Baker | Election Results Indicate Huge Mandate for New Trade Pacts

Monday, 10 November 2014 10:13 By Dean Baker, Truthout | Op-Ed
  • font size decrease font size decrease font size increase font size increase font size
  • Print

A protest against TTIP in Berlin - a subject practically unheard of throughout the recent US election.A protest against TTIP in Berlin - a subject practically unheard of throughout the recent US election. (Photo: Jakob Huber/ECI Stop TTIP)

Apparently that is how the DC-insider crowd saw the elections last week. The elite media were filled with news and opinion pieces on how the election opened the door for the approval of the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Pact (TTIP). According to the purveyors of elite opinion this is one of the key areas on which the Republicans in Congress and President Obama can agree.

That assessment is striking since few, if any, of the winning candidates in last week's election made a point of running on their support of these agreements. Nor did President Obama highlight his work on these pacts in his re-election campaign. In fact, the last thing most voters probably remember President Obama saying about trade was his pledge to renegotiate NAFTA when he was running for president the first time, back in 2008.

The turn of the leadership of both parties and the centers of elite opinion to these trade deals shows the incredible contempt they have for the general public and the political process. We just completed lengthy and expensive campaigns where they had ample opportunity to push the case for these deals. Instead we got panicky commercials highlighting everything from the Ebola threat to ISIS beheadings.

But in the view of our political leaders that stuff was just for the kids. Now that we have the election out of the way, the adults are prepared to return to real business.

Let's just be clear what these trade deals are about. They have nothing to do with "free trade," in spite of the fact that the media routinely use that term to help sell TPP and TTIP. The formal trade barriers in the form of tariffs and quotas are already very low. This means that the traditional argument of gains from trade does not apply. These pacts are about putting in place a set of pro-business rules and regulations that would never pass through the normal political process.  

To start with the most egregious example, one of the main goals of the United States is to establish a system of special courts that would override the legal system in each country, including the United States. These investor-state dispute settlement (ISDS) tribunals would have the final say on most matters involving conflicts with foreign investors.

The rationale for a system of ISDS is that foreign investors may be wary about investing in a country without a tradition of an independent judiciary that can be trusted to treat them fairly. While this may be an arguable position in some cases, does anyone really think that German, Dutch or US courts can't be trusted to treat foreign investors fairly?

In addition to establishing this extra-legal structure, these deals would also limit the ability of national and state governments to impose environmental regulations, workplace safety regulations, food safety regulations and Internet privacy regulations. It could also limit the ability to have labor regulations like a higher minimum wage or rules on paid sick days.

The pacts are also likely to include a number of protectionist measures that will raise costs and reduce trade and growth. In particular, the pharmaceutical industry is trying to increase the length and scope of government granted patent monopolies. This will mean more drugs like Sovaldi selling for $84,000 a treatment, when the generic version can be sold for a few hundred dollars. And, they want longer and stronger copyright protection so they can imprison people for sharing music and videos without permission.

TPP and TTIP are everything that people hate about Washington. They are deals being crafted in secret by business interests for business interests. They are never going to be subject to any serious political debate involving the public at large. And the leaders of both political parties are in cahoots on the trade deals and the route for pushing them through Congress.

Just to be clear, there are trade deals that could boost growth and benefit most of the public. We could eliminate licensing rules that make it difficult for foreign professionals like doctors and lawyers from practicing in the United States. Bringing the pay of our professionals down to levels in Europe and Canada would save consumers hundreds of billions of dollars a year and provide a real boost to growth. We can also have trade agreements that reduce rather increase patent protection, saving us hundreds of billions of dollars on prescription drugs and other items.

But that would be the structure of trade agreements negotiated in the public interest. That is not we see in the United States. We instead get the elite media and politicians shoving TPP and TTIP down our throats regardless of how people vote.

Copyright, Truthout. May not be reprinted without permission.

Dean Baker

Dean Baker is a macroeconomist and codirector of the Center for Economic and Policy Research in Washington, DC. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is a regular Truthout columnist and a member of Truthout's Board of Advisers.


Hide Comments

blog comments powered by Disqus