How Low Would We Go for TPP?

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

The Trans-Pacific Partnership, the huge new 12-country trade deal, raises the question: How low would we go to get the next NAFTA-style deal?

The basic idea of a trade deal is that we will lower our tariffs, you will lower your tariffs, and trade goes up. That would be a trade deal.

TPP is much more than that. The tariff schedules in TPP are not controversial. Really, TPP will not pass or fail based on the tariff schedule.

Rather, the rules in TPP are very controversial because the rules define power relationships, and those power relationships determine who will take the gains from globalization.

President Obama wants us to set the rules, so China doesn’t. Good.

But “our” rules were written by and for global investors. Those rules are very favorable to corporations who want to move production to low-wage countries with weak social and political systems.

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Sentiment on Trade Policy is Shifting: TPP is Bad Policy, After All

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

This year’s political campaign has forced the economics profession to reconsider the fraying orthodoxy of free trade.

 

Last week, Martin Khor documented the shift in thinking by several economists. In particular, the new NAFTA-style trade deal - the Trans-Pacific Partnership, is in deep trouble. Khor makes the key economic point:

“[free] trade ... can cause net losses under certain conditions. The gains from having cheaper goods and more exports could be more than offset by loss of local businesses, job retrenchments and stagnant wages.”

One economist from the Obama administration, Jared Bernstein, says the end of the free trade era is a good thing.

“We should no longer buy the statistically strained arguments about [free trade policies] delivering growth and jobs. The evidence just isn’t there, a fact not lost on those campaigning for president.”


He then faces a fundamental political fact that is hard for economists to see, but is pretty obvious to opponents of NAFTA-style trade deals. It is increasingly obvious to voters: Trade deals are more about politics than economics.

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How to Tell TPP Is a Bad Deal

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

How do you tell if the 12-country Trans-Pacific Partnership (TPP) is a good deal or a bad one?

Consider the recent climate summit agreement in Paris. Nearly 200 countries negotiated the deal, more or less in public for the world to see.

All signatory countries wanted a sustainable planet where their citizens could prosper.

The climate change deal in Paris is not air-tight. Still, it is a significant political, social and moral commitment by leaders of most countries in the world to do better.

TPP defines bad rules for globalization. It sets up skewed power relationships for dealing with climate change, inequality and many other important public policies.

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Is TPP a "Living" Document?

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

Is TPP a

Congress is responsible for managing major government policies year-by-year, as our experience and goals evolve. How does that work in the case of huge trade deals like the Trans-Pacific partnership (TPP)?

In the American political tradition, elected officials hold hearings, request studies, speak to constituents, take public comments, try experiments at the state and local level, and periodically face voters to work out what we want for Medicare, tax policy, education, defense and all other major policy areas.

With trade, not so much. TPP was negotiated in secret, under the influence of corporate advisors, and is largely set in stone for generations. Or is it?

Our negotiators insist TPP cannot be modified and must be voted, as is. Others see it as a "living" agreement once it is passed.

The recently released text establishes roughly 20 committees to manage trade in agriculture, government procurement, the Internet, food safety, financial regulation, and other topics covered in the deal. Some committees have narrow authority, but others have open-ended scope, such as the Committee on Trade in Goods which will "...undertak[e] any additional work that the Commission may assign to it."

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Inequality - "X" Marks the Spot - Dig here

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

In 2002, I heard an economist characterizing this figure as containing a valuable economic insight. He wasn't sure what the insight was. I have my own answer.


Figure 1. Something happened in the mid-70's

The economist talked of the figure as a sort of treasure map, which would lead us to the insight. "X" marks the spot. Dig here.

This figure tells three stories. First, we see two distinct historic periods since World War II. In the first period, workers shared the gains from productivity. In the later period, a generation of workers gained little, even as productivity continued to rise.

The second message is the very abrupt transition from the post-war historic period to the current one. Something happened in the mid-70's to de-couple wages from productivity gains.

The third message is that workers' wages - accounting for inflation and all the lower prices from cheap imported goods - would be double what they are now, if workers still took their share of gains in productivity.

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Why We're Still Fighting the Last War on Trade Policy

Stan Sorscher

Stan Sorscher Labor Representative, Society for Professional Engineering Employees in Aerospace

Why We're Still Fighting the Last War on Trade Policy

The other day, President Obama spoke to 100 top CEOs from the Business Roundtable. He was asked about two huge new trade deals, favored by global companies, known as TPP and TTIP. The President taunted critics of our failing trade policy, telling them, "Stop fighting the last war."

That sounds patronizing. Is it true that companies trying to manufacture in America, workers, communities and environmentalists need the President to explain their interests to them, as if 25 years of lived experience with NAFTA-style trade deals haven't been sufficiently clear?

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