The Trans-Pacific Partnership: A Trade Agreement for Protectionists

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This post originally appeared in Truthout.

Obama Meets Trans-Pacific Partnership Leaders
President Barack Obama speaks with Hassanal Bolkiah, the Sultan of Brunei, after meeting with Trans-Pacific Partnership leaders in Honolulu, Hawaii in November 2011. (Photo Credit: Kent Nishimura-Pool/Getty Images).

The Trans-Pacific Partnership (TPP) stands at the top of the Obama administration’s trade agenda. The argument from its supporters is that this agreement is part of the never-ending quest for freer trade. The evidence from what we know of this (still secret) pact is that the TPP has little to do with free trade. It can more accurately be described as a pact designed to increase the wealth and power of crony capitalists.

At this point, with few exceptions, formal trade barriers, such as tariffs and quotas, are not very large. If lowering or eliminating the formal barriers that remain were the main agenda of this pact, there would be relatively little interest. Rather, the purpose of the pact is to use an international trade agreement to create a regulatory structure that is much more favorable to corporate interests than they would be able to get through the domestic political process in the United States and in the other countries in the pact.

The gap between free trade and the agenda of the TPP is clearest in the case of prescription drugs. The US drug companies have a major seat at the negotiating table. They will be trying to craft rules that increase the strength of patent and related protections. The explicit purpose is to raise (as in not lower) the price of drugs in the countries signing the TPP.

Note that this goal is the opposite of what we would expect in an agreement designed to promote free trade. Instead of having drug companies at the table, we might envision that we would have representatives of consumer groups who would try to negotiate rules that could ensure safe drugs at lower prices. Instead of using a “trade” agreement to try to push drug prices in other countries up, we could actually use trade to bring the price of drugs in the United States down to the levels seen elsewhere.

Insofar as this creates problems for the model of government granted patent monopolies as the main tool for financing research, we could even look to promote methods of research financing that don’t have their origins in the medieval guild system, like patents. Everyone, including the drug companies, seems to think that the $30 billion we spend on research each year through the National Institutes of Health is extremely valuable. This suggests that there are other ways to finance research.

We could also look to have freer trade in doctors. The doctors’ lobbies have erected numerous barriers to keep qualified foreign physicians from practicing in the United States. There are enormous potential gains from eliminating these barriers. If we got the pay of doctors in the United States in line with doctors’ pay in other wealthy countries, the savings would be close to $1 trillion over the next decade. That comes to around $7,000 per household.

It is striking that we openly make deals to bring in foreign nurses to lower the pay of nurses in the United States, but can never even discuss doing the same with doctors. The potential benefits to the United States from importing doctors are certainly much larger than for importing nurses.
In fact the potential gains from bringing in foreign physicians are so large that we could tax a portion of the earnings of foreign doctors to repay their home countries and allow them to educate two to three doctors for every one that comes to the United States. This would ensure that everyone benefits from freer trade in physicians’ services. The lack of interest in this sort of free trade likely has something to do with the fact that doctors make up a large chunk of the richest one percent.

There are many other areas where we could envision freer trade bringing real gains to the bulk of the population. However this is not what the TPP is about. The TPP is about crafting rules that will favor big business at the expense of the rest of the population in both the United States and in other countries.

For example, we can expect to see limits on the ability of national and sub-national governments to impose environmental restrictions, such as requirements that companies engaging in fracking disclose the list of chemicals they use. There may also be limits on the extent to which governments can restrict the sale of genetically modified foods, with rules on labeling. And, the TPP may prevent governments from imposing restraints on financial firms that would prevent the sort of abuses that we saw during the run-up of the housing bubble.

The world has benefited from the opening of trade over the last four decades. But this opening has been selective so that, at least in the United States, most of the gains have gone to those at the top. It is possible to design trade deals that benefit the population as a whole, but not when corporate interests are literally the negotiators at the table. Rather than being about advancing free trade, the TPP is the answer to the question: How can we make the rich richer?

Dean Baker is a macroeconomist and co-director 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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  • Letthemsee

    I agree…if somebody doesn’t see the reality of “big money” making rules for themselves….they are blind ….dig deeper, your own corporations abandoned you to make more profit by getting cheaper labor elsewhere and taking these goods back to you to buy it at same price or even higher than it used to be when they (goods) were made here…

  • Letthemsee

    great article!

  • Garrett Connelly

    TPP is a criminal conspiracy between lying, cheating backroom traitors selling out their own countries.

  • Jbsilva

    Thank you. This guy is clearly an academic who does not understand the harsh realities of this “free trade” agreement. He would benefit immensely from a ten minute conversation with an automotive engineer.

  • Anonymous

    Did you even read the article?…It is the profits of the parties to the negotiation that are being protected, over and against the parties not participating. In other words, the folks whose jobs were decimated, just as you said.

  • Anonymous

    I’m confused about the lack of foreign doctors that he speaks of…I’m shocked if I meet a doctor who doesn’t appear to have come from India, Africa or the Middle East. I’m fine with all of them- as long as they know what they’re doing and have a pleasant personality- I’m happy with ANY doctor! But honestly, I think we’ve been “importing” doctors for a long time now!

  • Proud Primate

    Somebody obviously likes seeing the people and even the Congress excluded from the discussion, while 600 reps of multinationals log in to a secure site.

    Just let the Congress discuss the terms. Let the people see what this is made of.

    That’s all we ask. Nota bene: IT WILL NEVER STAND THE LIGHT OF DAY.

  • Proud Primate

    I have been studying this subject to the exclusion of just about everything else since early Spring and I have to say, this is the clearest, most cogent, most accurate comment I have yet heard. Not that I’m surprised because I know Dean Baker’s work. It’s typical.

    This damn treaty is the nastiest, most treasonous thing we will face in this barely-begun new decade. In the words of Congressman Peter de Fazio, “if it passes, kiss your economy good-bye!” I would expand that to, “your democratic republic”.

  • Proud Primate

    And you’re clearly a shill that gets paid by the lie.

  • Enquiring Mind

    What existing legal framework allows these corporados to supersede the laws of nations? How on earth can they make rules in secret that, for example, allow them to force any nation whose environmental laws do (or might!) cost them money, to pay them the amount they thought they’d make? Why don’t the nations they try to extort like this just laugh in their faces?

  • Gjilan Prague

    I think what was missing from the TTP broadcast was a fuller explanation of how disputes under “free” trade agreements work. It would be very educational for people to understand the International Center for Settlement of Investment Disputes (ICSID) arbitration process where most of these disputes land. The process basically hands over to international arbitration boards the authority to settle “investment” disputes between foreign investors and the states where they invest. The mere threat of an arbitration claim under ICSID can cause states — particularly poor states — to reduce health, environmental, labor and other standards or face huge damages. The panels almost always rule in favor of investors because the panels are made up of a small set of private arbitrators who also serve as private attorneys in other ICSID cases. It’s pretty self-serving. The whole process is worthy of further exploration. But before we in the US get too up-in-arms about this, we along with the Europeans essentially invented the process to protect our investors from too much government regulation in developing world states. Now the bird is coming home to roost.

  • Pam Swoner

    It is wrong to outlaw the choices and voices of our citizens. If members of congress were doing their jobs this would not and could not happen.

  • Anonymous

    I think it’s mostly HMOs that hire foreign doctors. There the bottom line almost requires it. Those doctors are paid salaries, not paid by the services they order, whether needed or not. In other words, not-for-profit.

  • Dani Long

    @Jbsilva & Bob Sloan: Did we read the same article? The one I read was not exactly pro-TPP.

  • Emmit Kahn

    But the doctors from foreign countries have to take on further schooling (i think 4 more years due to FDA regulations) to practice medicine in the i think the article is saying it impedes the amount of certified physicians who can practice soon as they get here.

  • Call Me Mom

    So this is how deathcare will replace those physicians who choose not to be made into slaves. Not a big surprise. And without the patent system, why would I bother with the expense of bringing anything new to market, be it prescription drugs or the latest ipad cover? I know this is a shocking concept to some, but businesses exist to make a profit and there’s nothing wrong with that.
    If you want to ensure ethical business practices, maybe we should be working harder to shore up the system of Christian values that make such practices the unspoken law of the land instead of degrading and berating those same values at every turn.
    Let the flaming begin.

  • John Purvis

    I wonder if you even understand what you are saying. Drug companies don’t produce drugs in this country. They use cheap labor to do this and they make billions of dollars. They are fighting to stop generics because their biggest drugs of which they have already made 5000% profit is reaching the end of it’s patent date and they want to keep the cash cow going. They want to charge more here and abroad. You can compare it to walmart and there products. They are made in China owned largely by American businessman and sold here for cheap. The drug companies want to do this and charge more. They want no restraints. Also do you understand that healthcare is bankrupting this country, it’s why other countries have already moved to one type of reform or another. We are going to have to make it more affordable one way or another. That is just plain fact. We could always kill off the minorities, would that make you happy. Would that fit into you christian values.

  • Anonymous

    Nice for what consumer? The price for replacement auto parts has not gone down. Corporations are screwing us in every orifice they can find. We have 2 choices: A) Fight back, and hopefully that means through our representatives. or B) Allow the corporations to turn our nation into a 3’rd world slum.

  • April Manier Haapala

    Wow! What a jump in thinking and educating to rediculousness.You discredited yourself with your last line.

  • Anonymous

    Don’t argue, just unrec. Argument is for those capable of rational engagement.

  • Jenny

    twitter #VoteNoTPPFasttrack

    This backroom secret agreement must be more transparent and give the people the chance to say no.

  • Chris petition to the White House to not sign the TPP, needs 100,000 signed by January 31, 2015 pass it on.

  • Chris

    see WH petition to sign, pass it on.

  • Chris

    sign wh petition

  • Chris

    sign the WH petition against TPP

  • Chris

    sign the wh petition

  • Chris

    same for dentists at exorbitant fees, if you spent 8 years in school and are a certified md, dentist why make them jump through hoops. My husband’s niece is a dentist, came from India, very smart. It would have been almost 4 more years and $150,000 in tuition and fees. She got a MS in dental pathology, cheaper.

  • Chris

    I am a RN with 45 years experience, worked in a teaching hospital. My experience, usually foreign MD’s are better.

  • Chris

    Congress would end up approving it because of the massive lobbyists that run congress and big money