A Nod To The Gods

Didn’t have an opinion on the TPP. After reading this article, sounds like the people making decisions in our government are, as Trump puts it, idiots.

What’s in the Trans Pacific Partnership? 

1. A Legislative Body Superior To Congress

The Commission would not be particularly powerful if its decisions could be ignored. However, the “Arbitration Tribunals” in the pact will have the power to award multi-billion dollar judgments against any member government that violates its decisions.

2. A Vehicle to Pass Obama’s Climate Change Treaty

When President Obama finished negotiating the Iran Nuclear Deal, he went first to the UN Security Council, not to Congress, to get the deal approved. More or less the same thing could happen with the multilateral environmental agreement that Obama negotiates in Paris. It will be incorporated into the TPP, whether Congress agrees with its terms or not.

This wouldn’t matter, except that the “Arbitration Tribunals” in the TPP can impose multi-billion dollar fines upon the U.S. government if the U.S. violates anything that is in the pact. In other words, the tribunals can force whatever Obama negotiates in Paris upon the American people, and Congress will have very little say.

3. Increased Legal Immigration

These provisions could lead to a massive flow of immigrants who had been hired abroad by foreign companies to provide services within the United States. Germany’s experience with “temporary” workers from Turkey demonstrates that once they arrive in a developed country from a poor country, they find a way to stay. Under some interpretations of U.S. law, if they have a baby while they are in the United States, that baby is awarded automatic U.S. citizenship.

If Congress were to try to slow the massive immigration flow that could stem from these provisions, it could be sued by the foreign service providing companies under the arbitration procedures of the TPP. Under the threat of billions of dollars of damage assessments, Congress would be forced to withdraw such limitations.

4. Reduced Patent Protection on U.S. Pharmaceuticals

A few weeks before Chapter 18 was leaked to Wikileaks, the stock prices for companies in the U.S. pharmaceutical and biotech industries fell 10% in stock value, probably due to insider trading by people who knew the then-secret treaty’s terms. But it is not just falling stock prices that should concern the American people. The pharmaceuticals industry generates exports and growth to the American economy. Also, many people will be condemned to premature deaths because the drugs that would have saved them would no longer be profitable to develop.

5. Quotas On U.S. Agriculture Exports

The small co-ops that share their profits with their farmer owners won’t get very many of these certificates. Only the big agribusinesses will have the resources and knowledge needed to game the system. They are the ones that can afford to pay the necessary political contributions. 

But this treaty is not designed to open markets to free trade. It is designed to give big American agricultural companies big profits in return for big campaign contributions. This is the crony capitalist deal of trade deals. Governments decide who gets the profits, and only the biggest companies will be able to pay to play.

6. Increased Currency Manipulation

Moreover, the Declaration just says that governments that engage in currency manipulations should not do it. There are no penalties, whatsoever. In fact the Group can’t even complain about a country’s currency manipulations unless such a conclusion reflects “the collective views of the Group.” That means that any decision to condemn must be agreed to by the country being condemned!

All of this is simply unenforceable window dressing that ignores the fact that Malaysia, Vietnam, Mexico and Japan (four of the countries in the agreement) are already active currency manipulators, giving them huge trade surpluses with the United States. For the 12 months ending in September 2015, they had merchandise trade surpluses with the U.S. of $21 billion (Malaysia), $30 billion (Vietnam), $57 billion (Mexico) and $68 billion (Japan).

7. Reduced U.S. Power

After World-War II, the U.S. adopted a low tariff system, which worked great until Japan and Germany and then many other countries, mostly in Asia, discovered the power of currency manipulation. Their government-owned banks, especially their central banks, forced loans upon the United States by buying U.S. assets such as U.S. Treasury Bonds, so that the United States dollar would go up in exchange rate and their currencies would go down in exchange rate.

As a result, the currency-manipulating countries, especially China, Japan and Germany rapidly grew in wealth and power while the U.S. lost wealth and power. The TPP could be another nail on America’s coffin by further constraining U.S. action to rebalance trade.

Doesn’t sound like a good deal to me.

If the TPP is enacted, some Americans will benefit, but the effect upon the American economy would be unambiguously bad. There would be soaring electricity prices resulting from the climate treaty. There would be a loss in service sector jobs due to increased immigration. There would be a reduction in the research and development of pharmaceuticals and biologics due to reduced patent protection. There would be a loss of factories due to continuing currency manipulation. And there would be a decline in U.S. power due to continuing trade deficits.

In short, the TPP is not worth the 5,466 pages that it is printed upon. A free trade treaty just with countries that don’t cheat, such as Canada, would be worthwhile. But this trade agreement includes countries that manipulate exchange rates to give themselves trade surpluses and give the U.S. trade deficits.