Monday, February 16, 2015

Trade Pact Secrets

Another critical article exposing the secret trade deals. 

The bulk of the world’s wealth is in the hands of just 80 people, a recent report by Oxfam noted. These individuals control this wealth through investments, corporations (many of which they own), as well as through political influence. This influence through campaign contributions and lobbying efforts gives them unprecedented access to government policies for such things as regulatory issues and taxation. The global nature of the economy has made controlling that influence difficult to minimize. Via their corporate interests, the influence of the richest one percent is felt in all corners of the world. That power is most obviously on display via international trade agreements.

Trade agreements, also known as trade pacts, allow governments to reduce barriers to access other markets for goods and services. These pacts can be bilateral (between two nations), or multilateral agreements, in which two or more nations decide terms for imports and exports. They create the legal framework for the kinds of products that can be sold and tariffs that must be paid. The World Trade Organization (WTO) sets rules for these agreements for the 154 nations that are part of the WTO. However, many of the member nations feel that the WTO process is too cumbersome and enter into Free Trade Agreements (FTAs). Based on the WTO framework, FTAs are more comprehensive and are viewed as more able to address the complicated nature of international trade. The United States currently has 20 free trade agreements. The United States is finalizing a new free trade agreement that will cover 40 percent of imports and exports. Called the Trans-Pacific Partnership, the deal involves the U.S. and Canada, as well as ten nations in the Asia-Pacific region. The decade long negotiations are coming to a conclusion and while details are scarce, initial reports show that the new deal will benefit corporations – and the one percent — in an unprecedented way. The negotiations have been shrouded in secrecy by the Obama Administration. While members of Congress have been briefed, they are only allowed to view the text of the agreement in the Trade Office and are not allowed to make copies. This secrecy has prevented the public from hearing nothing about how this will impact them.

Nations will do what they can to protect their interests, creating stipulations which protect and improve their local economies. However, multinational corporations have little loyalty in the global economy and are constantly seeking new ways to increase their profits. The Clinton-era North American Free Trade Agreement (NAFTA) has long been criticized in that it allowed U.S. corporations to move manufacturing jobs to Mexico due to their cheaper labor and lax workplace regulations. The United States also has the highest price drugs since other nations limit the amount pharmaceutical companies can charge for drugs. The regulations governing such things as labor and environmental standards are not part of trade agreements since it is understood that companies must follow the laws of the countries in which they operate.

Leaked details of the Trans-Pacific Partnership agreement (TPP) suggest that corporations are trying to change that. In an unprecedented move, industry groups and corporations are at the negotiation table. They are carving out specific details for their industries to determine regulations, which have nothing to do with trade. These groups are ensuring that the agreement limits free trade and hurts consumers and labor. They are attacking environmental regulation by determining the rules under which corporations can operate. Drug companies are trying to remove limits on what they can charge in poorer countries, as well as trying to expand patent protections so that patents last even longer, meaning generics will come to the market at a much slower rate. Other issues being targeted include Internet policy, copyright protection, and even food safety standards. A select number of multinational corporations, through industry representatives, are trying to ensure that they can override domestic environmental, labor and workplace safety laws. They are also seeking to loosen investment regulations, making it harder to trace their profits.

Yves Smith, an expert on investment banking who has been paying close attention to the negotiations, said that “It’s a mistake to call it a trade agreement.” She continued, “This is really an agreement that’s purpose is substantially to weaken nation-based regulation while at the same time strengthening intellectual property protections.”

 A recent report by the Center for Economic and Policy Research says that the TPP will exacerbate income inequality, hitting the middle class the hardest. In other words, all economic gains from the TPP, which is being negotiated by the one percent, will only benefit the 1%.  

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